Archive for March, 2014

Author: Scott Morgan March, 2014


Recovery in the housing market is stumbling back to solid ground, thanks to a rise in home prices and existing home sales, as well as a drop in foreclosures, according to the latest Housing Barometer report released Wednesday by Trulia.

However, growth in these sectors is dragging disproportionally weaker growth in young adult employment and stagnation in the new home construction sector in its wake, and worsening conditions for borrowers and investors keeps the road to overall recovery bumpy.

The strongest growth is in the value of homes being sold, according to Trulia’s chief economist, Jed Kolko. Though homes nationally were—by Trulia’s measure—5 percent undervalued in the first quarter of 2014, this is a vaulting improvement over the 15 percent undervaluation at the bust’s 2011 low point and the 10 percent undervaluation just a year ago.

Similarly encouraging is the fact that rising home prices and an improving economy are shrinking delinquency and foreclosure rates. According to Kolko, the delinquency/foreclosure rate was 63 percent back to normal in February, up from 42 percent one year earlier. More foreclosures are also being completed and sold, particularly in Florida, New York and New Jersey, where a judicial-foreclosure process can take years.

Holding up total recovery, however, is the steady-but-agonizingly-slow growth of employment among adults age 25 to 34, who are key to creating new households. Nearly 76 percent of these adults work, which is up not even one full percentage point from last year, Trulia reported.

Similar stagnation plagues the new construction sector, which Trulia found to be only 44 percent of the way to where it should be—a 1 percentage point drop from last year.

Further complicating recovery is a tri-level worsening of conditions for buyers and investors. First, though it remains cheaper to buy a home than to rent in the 100 largest metros, rising home prices mean declining affordability and, thus, a bigger challenge for first-time buyers.
Second, investors looking to flip or rent properties are stepping back as home prices rise, meaning fewer existing homes are being sold.

Third, potential buyers are leery of rising mortgage rates and the new rules that accompany them, and mortgage purchase applications and mortgage-based home sales are declining as a result.

Kolko, however, expects this last factor may be a temporary hurdle. “Rates remain low by historical standards, and the new mortgage rules offer longer-term clarity that should encourage banks to make more loans that are within the new rules,” he said.

Overall, Kolko puts the keys to recovery in the hands of the young. “The boost to young-adult employment is especially important right now,” he said. “The less the recovery can depend on the engine of investors, the more the housing market will need to rely on young adults entering the housing market, first as renters and eventually as buyers.”

By Shandra Hill Smith

The housing outlook for 2014 includes steady rises in home prices and increasing interest rates, according to some housing professionals in the Intown market and around the nation.

As a result of the housing recovery, home prices are increasing. This means a bit of good news for those who’ve held out on selling their homes or on refinancing.
Mike Wright
“Home prices are showing steady increases due primarily to the laws of supply (low) and demand (high),” says Mike Wright, senior vice president and managing broker, Harry Norman, Realtors Intown Office in Atlanta. Some of the factors that have contributed to that low supply include: buyers holding out to sell until they can get more in line with what their home is worth, fewer foreclosures on the market and a slowdown on new construction.

A Clear Capital Home Data Index Market Report, in fall 2013, indicated that national home prices were up 10.9 percent from 2012. Home prices over the past year rose in 225 of 276 cities tracked by Clear Capital, a provider of real estate data and analysis.

Along with price appreciation, expect higher interest rates, too, particularly on 30-year mortgages. “We believe that interest rates will remain relatively stable, but will continue the slow upward trend,” says Wright, “probably ending 2014 at or near five percent for a conventional 30-year fixed mortgage.”
Michael Rogers
“As unemployment continues to decrease on a national level, home prices are moderately increasing,” says Michael Rogers, president, Dorsey Alston, Realtors in Atlanta.

The rise will be gradual, not sharp, says Dale Modica, senior vice president and managing broker, Berkshire Hathaway HomeServices Georgia Properties in Atlanta. He expects a strong year for the 2014 housing market, particularly during the first six months. “There are a lot of first-time homebuyers and people with families who haven’t bought yet,” Modica says.

Despite news over rising interest rates, Rogers says there’s no need to panic. “I think it’s important for buyers moving into 2014 to expect interest rate increases, but to have some perspective on those increases,” says Rogers. “It’s easy to be conditioned over the last several years that interest rates could be in the three percent rate. For interest rates to creep up in the fours and fives, that should not create hysteria if buyers can have perspective on interest rate averages over the last 30 years. Interest rates were in high double digits. For someone who’s lived through that time period, a five percent interest rate is a great deal.”
Lisa Johnson
For buyers in the market in 2014, a Realtor can make all the difference, says Lisa Johnson, vice president and managing broker, Atlanta Fine Homes Sotheby’s International Realty. “If we are still in a seller’s market then a buyer needs to be prepared to be somewhat aggressive in making offers, especially if there are multiple offers on the home,” says Johnson.

Wright echoes that sentiment. “Buyers need to realize that they will have to act quickly when they find the home that meets their needs,” he says. “That means getting pre-approved for their loan and not taking a lot of time to make a buying decision. The likelihood of multiple offers on any given Intown property is real, so be prepared and don’t get caught up in a bidding war without having all the information to make an informed decision. Buyers should also budget other important steps in the process: home inspections (often including separate inspections for radon gas, mold, lead-based paint, wood-destroying insects and organisms, among others), a survey, an appraisal, prepaid costs for taxes and insurance.”
Dale Modica
The word for sellers?

“Sellers still need to pay close attention to the recent sold price of truly comparable properties,” according to Wright. “While prices have been rising, the lender is still going to require an appraisal before granting the loan. They need to realize that finding the buyer is just the first step. They still have to get through inspections, an appraisal, and the buyer’s loan process before the closing. A professional Realtor is necessary to guide them through the complex process.”

Among the trends expected in 2014, says Rogers: many relocating from the suburbs to Intown to take advantage of walkable communities and the convenience of shopping and playing where they live. He also says condo and townhouse living are in demand as are properties near the Atlanta BeltLine, Ponce City Market and Downtown Decatur.

“Look for increasing emphasis on energy efficiency, high-efficiency appliances, geothermal heating and cooling, solar panels, and similar systems to play a role in buying decisions,” says Wright. “Schools remain important to Intown buyers, even those without children.”

Adds Johnson, “Outdoor living space is still hot. Gold and brass are coming back.”

The bottom line, according to Wright: “Buyers are demanding very purposeful space planning, homes with good flow, and higher-end finishes. Formal spaces are out and are being replaced with actual living space. Large kitchens with adjoining keeping rooms, outdoor entertaining space, and master suites are what’s in demand.”

By, Les Christie

Foreclosures have hit their lowest level in years, yet many cities report they are still struggling with the blight of “zombie foreclosures.”
RealtyTrac reported Thursday that foreclosure filings fell 27% year-over-year in February to a new seven-year low, indicating that the pace of filings have returned to normal levels since the foreclosure crisis. However, lingering problems loom.
Vacated by the owner and left unattended, nearly 152,000 “zombie foreclosures” are weighing on home values in states like Florida, Illinois and New York, RealtyTrac said. That’s roughly 21% of all homes in the foreclosure process.
On average, these homes have been going through the foreclosure process for 1,031 days — or nearly three years.

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“The biggest threat from foreclosures going forward is properties that have been lingering in the foreclosure process for years, many of them vacant with neither the distressed homeowners nor the foreclosing lenders staking responsibility for maintenance and upkeep of the homes,” said Daren Blomquist, RealtyTrac’s spokesman.
In some cities, every one in three foreclosed homes has been vacated, according to Blomquist.

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“That drags down home values in the surrounding neighborhood and contributes to a climate of uncertainty in local housing markets,” he said.
In Rust-Belt cities like Cleveland and Detroit, many of the zombie foreclosures are old homes in poor condition that would cost more to rehab than they would be worth and will likely be razed. Cleveland has already knocked down more than 1,000 vacant homes.
Las Vegas and other Sun-Belt cities also have a high percentage of vacant foreclosed homes. However, these homes tend to be newer and in much better shape and more likely to be bought by real estate investors, said Blomquist.
Overall, the foreclosure picture will likely continue to improve: Foreclosure starts — when lenders begin the proceedings to take possession of the homes — have fallen to their lowest level since late 2005.

Top 10 cities people are moving to                                                                                                                                                                                                     That should translate into fewer bank repossessions down the road since about half of all starts end in evictions of borrowers.  Florida, where one of every 372 properties was hit with a filing in February, had the highest filing rate of any state. Other hard hit states included Maryland, Nevada, New Jersey and Illinois.


Author: Colin Robins
Foreclosure Inventory Down by More than Half a Million

The number of loans in foreclosure has dropped by more than 500,000 since last year, according to Black Knight Financial Services (BKFS) “First Look” Report focused on February mortgage data. The BKFS “First Look Report” focuses on approximately 70 percent of the overall market.

The Data and Analytics Division of BKFS found that foreclosure inventory at the end of February was 4.1 million—nearly 1 million fewer than February of last year.

Black Knight reported that the total U.S. delinquency rate (loans 30 or more days past due, but not in foreclosure) was 5.97 percent in February, 2014. The 91,993 foreclosure starts in February marked a 2.21 percent drop from the previous month.

Foreclosure starts in February posted a 30% year-over-year decline.

“At the national level, the foreclosure pipeline continues to clear rapidly; the percentage of active loans in foreclosure has dropped over 34% in the last 12 months, representing over 500,000 fewer borrowers,” said Herb Blecher, SVP of Black Knight Financial Service’s Data & Analytics Division. “As delinquent and new problem loans have also improved dramatically, the inflow of loans in foreclosure, at roughly 92,000, is now the lowest in over seven years.”

The total number of properties that are 30 days or more past due, but not in foreclosure, was 2.9 million, down nearly 420,000 for the year.

The report found that the monthly prepayment rate, historically a good indicator of refinance activity, declined almost 64% year-over-year

States with the highest rates for homeowners who are non-current were Mississippi (14.15 percent), New Jersey (13.63 percent), Florida (12.88 percent), New York (11.75 percent), and Louisiana (11.27 percent).

The five states with the highest seriously delinquent rates were Mississippi (5.36 percent), Nevada (3.99 percent), Rhode Island (3.97 percent), Alabama (3.67 percent), and Louisiana (3.55 percent).

Author: Colin Robins
Survey: Small Banks Frustrated by Dodd-Frank
The results of a recent small-bank survey found small banks are facing rising compliance costs, and finding it harder to serve customers, due to the new regulations from the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The study was published through the Mercatus Center, a university-based research center at George Mason University.

The anonymous, online survey queried approximately 200 banks with $10 billion or less in assets. The survey banks revealed frustrations over the Dodd-Frank rollout.

One anonymous banker objected to “the maddening pace of illogical and unnecessary regulation (that would not) have done anything to prevent the 2008 collapse.”

A concern of small banks was the pace and volume of the new regulations. The survey asked banks to compare Dodd-Frank’s regulatory burden with the existing Bank Secrecy Act rules—widely perceived as compliance-intensive.

“More than 95 percent expect Dodd-Frank to be at least as burdensome,” the report said.

The survey found the new Consumer Financial Protection Bureau (CFPB) was also cited as a concern, with regulators providing additional anxiety for small banks. A third of reporting banks said they hired additional compliance or legal personnel.

Some banks polled quit offering residential mortgages altogether.

“Of the surveyed banks, nearly 6 percent already discontinued residential mortgages and an additional 10 percent anticipate doing so. Although those numbers may seem small in the scope of the national mortgage market, discontinuations will ripple through the communities these small banks serve,” the report said.

As burdens increase on smaller banks, consolidation is expected in order to combat increases in cost that are more easily handled by larger institutions.

The report commented, “The five largest banks by assets now hold more than 40 percent of assets and deposits, which is much higher than the approximately 20 percent held in 2000. Of the surveyed banks, 94 percent expect further consolidation.”

Increased regulations threaten small banks profitability, and in many ways, their very survival. The report noted that small banks serve an important purpose in the banking landscape.

“They serve small towns, rural communities, small businesses, and borrowers with unique needs and credit histories that don’t fare well in unbending large-bank credit models. Small banks can make smart lending decisions based on information gleaned from their deep ties with their communities,” the report said.

Author: Richard E. Petershack

Customarily a lender will require evidence (often in the form of an ACORD certificate) that its borrower’s insurance policy includes a “mortgagee” clause or “lenders loss payable” clause. There are good reasons for this requirement. According to the insurance industry, a mortgagee clause grants special protection for the interest of a mortgagee named in the policy, in effect setting up a separate contract between the insurer and the mortgagee. The clause establishes, among other things, that loss to mortgaged property is payable to the mortgagee named in the policy even if the loss is the result of activities of the insured (i.e., the mortgagor/borrower). In other words, even if the mortgagor/borrower was unable to collect on an insurance claim because he caused the loss, his lender could.

In a recent Wisconsin Court of Appeals case, Waterstone Bank v. American Family Insurance Company, the Court interpreted a standard mortgagee clause to not protect the lender when the insurance policy provides no coverage for losses which occur after the property is vacant for 60 or more consecutive days. Although the vacancy was seemingly an act of the borrower/mortgagor and thus covered by the clause, the Court found that while a mortgagee clause gives a lender the same protection the insured would have, it doesn’t expand that coverage. In other words, since the mortgagor/borrower never had coverage for such losses, the lender didn’t have any coverage either.

While the holding in the Waterstone case is legally sound, it will have an impact on real estate lending, especially residential real estate lending. Not all insurance policies will contain the vacancy exclusion. It’s important for every lender to know what a borrower/mortgagor’s insurance policy provides. For example, a policy for a home loan to a Wisconsin “snow bird,” or anyone who leaves home for months at a time, should not contain a vacancy exclusion under any circumstance.

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Richard Branson’s top 10 tips for success

By Alison Feeney-HartBBC News

Richard Branson

I am reposting this article because I believe it is great advice for everyone!  Many of these ideas may not be new to you, but how many of us really put them into practice. Let’s start a discussion on this Blog – I want to hear from you – as a Real Estate Investor or even if you are here just to learn – this is great advice for your success in life as well as business.  Best, Barry

Richard Branson left school at the age of 16 and set up Student Magazine with one of his friends. He went on to start Virgin Records in the 1970s and is the founder of the Virgin Group. In the 1980s he formed Virgin Atlantic airline and the 1990s saw the arrival of Virgin Mobile and Virgin Trains.

He is one of the most successful businessmen in the UK and an icon of entrepreneurship. His latest project is Virgin Galactic, which he hopes will one day become a space tourism company.

Here are his Top Ten Tips for success:

1. Follow your dreams and just do it

Follow your dreams, get involved in life, in the things that interest you. If you are going to create a business, make sure it is your hobby, your passion or something that you really enjoy.

You will live a much better life that way. Don’t just set out to do something for the sake of making money.

I think lots of people have lots of great ideas, but very few people actually go out and try to put them into practice.

There are lots of people who think that somebody must have done that before, or you’ll never raise the money or you shouldn’t take a risk in life.

It’s the people who say I’m just going to do it, that end up having a chance of having a much more exciting and rewarding life.

Student paperFor his Student Magazine Branson wrote a lot of letters to celebrities and managed to get many of them to agree to be interviewed

2. Make a positive difference and do some good

The first thing to do if you want to become an entrepreneur is basically to have an idea that is going to make a positive difference to other people’s lives. A business is simply that.

If you’re running a business you are in a position where you can make a hell of a difference in this world.

I also think it’s great for the staff of a company that they can feel good about a company that is actually getting out there and doing good.

3. Believe in your ideas and be the best

You definitely need to believe in your idea. There’s really no point in doing something in life unless people feel really good about it and proud about it. You’ve got to have passion for it and you’ve got to be able to inspire other people to have a passion for it too.

If an idea is a good idea you should be able to pitch it in two or three sentences and two or three sentences fit very neatly on the back of an envelope.

There was no point creating a new airline unless it was going to be palpably better than every other airline in the world, you’ve got to make sure that every aspect of what you do is better than the competition.

Virgin Records shopBranson’s record business started out as a mail order company

4. Have fun and look after your team

I 100% believe that it’s important to have fun and if you’re not having fun anymore, it might be time to move on. You should have fun from the top down and create the kind of environment that’s pleasant to work in.

Make sure that you’ve got the kinds of people running your companies who genuinely care about people, who look for the best in people and who praise and don’t criticise.

People are not that unlike flowers. If a flower is watered it flourishes and if a flower is not watered it dries up and dies and I think the same applies to people.

5. Don’t give up

It’s extremely important not to give up. There have been situations in my adventures, like crossing the pacific in a balloon, where the odds were stacked very heavily against us surviving.

Being an entrepreneur is not that dissimilar to being an adventurer. You have plenty of situations where your back is right up against a wall and you’ve just got to work day and night to make sure you overcome the difficulties a particular company finds itself in. Brush yourself down the next day and move on into something else.

I think I’m reasonably good at dealing with failure and not letting it get me down for more than an hour or two as long as I put everything I can into avoiding it.

Richard BransonBranson arrived on Necker Island in 1989 hanging from the bottom of a helicopter to marry his wife Joan Templeton

6. Make lots of lists and keep setting yourself new challenges

I make copious lists because I think it’s the little details that make for an exceptional company over an average company. Details are very important and I think it’s important to keep setting yourself new challenges and targets.

I do believe that the first of the year is a good time to write down your goals for the year. Unless you actually organise yourself and write down the kinds of things you want to achieve, there’s a danger that as time slips by, you don’t achieve a lot.

7. Spend time with your family and learn to delegate

One of the early things you have to do as an entrepreneur is learn the art of delegation. Find people who are better than you to run the companies on a day-to-day basis, freeing yourself up to think about the bigger picture and spend time with your family.

That’s very important, especially if you’ve got children, they are what’s going to be left when you’re gone.

I know I’m a good entrepreneur, but I’m not sure that I’d be a very good manager and there is a difference. My mind is always thinking ahead and wanting to create new things.

I just think once I’ve set something up, it’s better if someone else runs it. I can dive in and out and be a pain occasionally, but the day-to-day business is better for somebody else to do.

Richard Branson and childrenBranson has two children Holly and Sam

8. Try turning off the TV and get out there and do things

My mum brought us up very much to get out there and do things, don’t watch other people do things, and don’t watch television. I think that was a good way of bringing up kids. With my own kids, we’ve spent quite a lot of time in the Caribbean and we never watch television there.

I think I am capable of switching off on Necker Island which is where we sort of pull up the drawbridge. But what I’m doing I see as so fascinating, so rewarding, so interesting that I don’t ever really want to switch off too much because I find myself in such a wonderful, challenging position that I don’t want to waste that position and there are just so many important challenges going on.

9. When people say bad things about you, just prove them wrong

There are people who hang onto the coat tails of successful people and try to sell a few books on the back of their name. It’s unpleasant but you know that if you sue them or kick up a fuss, all it will do is publicise the book. So I’ve had to learn the art of ignoring people like that.

I think the best thing to do is just to prove them wrong in every single way. This particular book, (Branson: Behind the Mask by Tom Bower), says that our spaceship programme is a white elephant, later this year we will prove them wrong.

Richard BransonBranson stands in front of a large photo of his SpaceShipTwo – the commercial spaceship is undergoing tests in California’s Mojave Desert

10. Do what you love and have a sofa in the kitchen

You only live one life, so I would do the thing that you are going to enjoy. When life boils down, this might sound like a little much coming from me, I do have my own little island in the Caribbean, but when we are on that island, we tend to just live in the kitchen.

The truth is, so long as you’ve got a kitchen which has space for a sofa, and a bedroom, and a partner that you love, you don’t necessarily need the add-ons in life.

Then, if you’re doing something that really interests you, it will result in a much more enjoyable life rather than just doing something for the sake of making money.