Realtors to open listings to online brokers

From Reuters:

The National Association of Realtors will open its vast listing of homes for
sale to cheaper, Internet-based brokers in an agreement to settle a federal
lawsuit, the government said in a statement on Tuesday.

The change could save those who buy or sell a home thousands of dollars since commissions could drop as much as 1 percent of the selling price, said Deborah Garza, the deputy assistant attorney general for antitrust, in a telephone briefing with reporters.

The settlement will lead to "more choice, better service and lower commission rates," Garza added.

Essentially the deal requires the 800 multiple listings services associated with the National Association of Realtors for various local markets to give access to Internet-based competitors, the government said.

This is a great thing for real estate investors who have been looking to use the MLS services to sell their homes, but have not wanted to pay a full real estate commission to do it.

We’ve seen it happen in other businesses: once the internet gets a toehold in a commissioned industry, prices for the consumer tend to plummet. Look at the rates consumers pay to book travel or buy and sell stocks; each has dropped dramatically as the internet has become a more popular way to book trips or invest.

More and more business is conducted online, and the first place most potential purchasers go to look for a new home is the internet. By opening up the MLS listings to online brokers, we can expect greater innovation which will just benefit the real estate investor. That is, by making the purchasing process cheaper and more simple for that potential buyer, investors stand to gain.

How long before we see realestate.google.com? You be the judge.

Photo: Computer city #1: Downtown, originally uploaded by Rune T.

Banks miss an easy housing fix

From CNN:

Banks say they want to help troubled homeowners, but they are delaying deals
that could save everyone - including the lenders themselves - a lot of time and
money.

Lenders are taking much longer than necessary to approve short sales,
according to Duane LeGate, of House Buyers Network, a short sale specialist.
In a short sale, a homeowner who cannot keep up with their loan asks the
lender to take a dollar amount less than what is owed on a home's mortgage, and
forgive the remainder of the unpaid debt.

So if a borrower has a mortgage balance of $100,000 and finds a buyer who will pay $95,000 for the house, the lender agrees to accept that $95,000 and close out the loan.

"There was a much greater chance of success with these in the past," said LeGate

Ideally in a short sale, everyone wins. Borrowers avoid the ugly foreclosure process
that destroys their credit, while lenders recoup more of their costs than they
would by spending the time and money it takes to kick an owner out and resell
the property.

The CNN article is worth a read, and it discusses a number of problems that sellers, investors, and agents are having as they try and get short sales approved in today’s housing market.

In our experience as closing attorneys who work with investors, the entire short sale experience differs greatly from lender to lender, and there are few industry-wide standards that can be applied when negotiating a short sale. Some lenders require that their borrower be down a payment before talking short sales. Others don’t. Some are very responsive and work quickly to get potential short sales approved. Others drag their feet. Overall, it is impossible to paint with broad strokes the attitude of the mortgage lenders toward short sales, just because individual lenders approach them very differently.

To be fair, though: the recent rise in the number of short sale requests is unprecedented, and frankly something the mortgage industry was not prepared for. While years ago a lender might have a very few individual short sale loss mitigators, today they’ve had to create entire departments, with all of the policies, procedures, and bureaucracy that entails.

Still, with home prices continuing to fall and an increasing number of homeowners finding themselves upside-down in their mortgages, short sales are becoming ever more common. As they do, one should expect those lenders who have yet to streamline their short sale processes to do so, and the overall experience to become smoother and more uniform from lender to lender.

Photo: Safe And Secure, originally uploaded by bob1217.

Case-Shiller: Prices continue to decline

From the Wall Street Journal:

In the first quarter, the Case-Shiller indexes showed home prices across the
country fell 14% from a year earlier, representing the largest drop in the
20-year history of the indexes. From the fourth quarter, prices fell 6.7%.

“The steep downturn in residential real estate continues,” David M.
Blitzer, chairman of S&P’s index committee, said. He added, “There are very
few silver linings that one can see in the data. Most of the nation appears to
remain on a downward path.”

According to the indexes, released by ratings firm Standard & Poor’s, home prices in 10 major metropolitan areas fell 15% in March from a year earlier and 2.4% from February.

In 20 major metropolitan areas, home prices dropped 14% from a year earlier and 2.2% from February.

In Atlanta, the decline in prices continues to accelerate, with homes shedding 1% in value from last month, and 6.5% from last year. Still, it could be much worse: Las Vegas has lost almost 26% over the past year, with Miami and Phoenix dropping 24.6% and 23.0%, respectively.

While there is no question that house prices in Atlanta are falling, Atlanta’s continued desirability as a place to live has acted as a buffer to the effects of the housing market as seen in the rest of the county. Prices here have not fallen as much as they have elsewhere and will most likely rebound earlier than in other areas.

Still: as the availability of mortgage loans remains limited, it continues to be a challenging time to sell a home. With that being said, it remains an ideal time for real estate investors, with many, many homes available, and homes more affordable than they have been in years.

Photo: Flying ego, originally uploaded by Laurent Filoche.

Home sales up, home sales down

Existing home sales are down to another record low, from the New York Times:

Sales of previously owned homes, which make up the bulk of the housing market,
dipped 1 percent in April, to an annual rate of 4.89 million, the second
consecutive month that sales have declined. That figure represents another
record low, although the report, put out by the private National Association of
Realtors, dates only to 1999.

But, on the other hand new home sales are up. From CNN:

New home sales rose unexpectedly in April but remained near historically low
levels, according to a key government report on the battered housing market.

April sales came in at a seasonally-adjusted annual rate of 526,000, a
Census Bureau report showed, up 3.3% from a revised 509,000 in March, but 42%
below April 2007. The reading was above the consensus forecast of 520,000,
according to economists surveyed by Briefing.com.

The median price of a new home sold in April was $246,100, up 1.5% from $242,500 a year earlier.

The report showed a 10.6-month supply of homes available on the market.

Perhaps all of the discounting, upgrading, and other perks offered by homebuilders are finally having some effect on new home sales.

Photo: See-Saw, originally uploaded by pittsinger.

Single-family construction falls to 17-year low

From CNN:

Initial construction of U.S. homes rose unexpectedly in April, but the
all-important single-family housing start measure fell to another 17-year low,
according to a government report released Friday.

Privately owned housing starts rose to a seasonally adjusted annual rate of 1,032,000 in April, according to the Commerce Department. The rate was up 8.2% from March’s revised reading of 954,000 but 30.6% lower than April of 2007.

and:

Total housing starts got a boost from multi-family homes. Buildings with
five or more units rose 7.3% to a seasonally adjusted rate of 294,000, and homes
with two to four units rose 2.7% to 38,000.

and:

Construction of new single-family homes registered the lowest reading of
that measure since January 1991. Single-family housing starts were at a rate of
692,000 in April, 1.7% below March’s number. Single-family homes are considered
the core of the housing market.

Applications for building permits, however, rose to a seasonally adjusted annual rate of 978,000 last month. That’s 4.9% above the revised 932,000 rate in March. Economists were expecting permit applications to fall to 912,000.

That’s encouraging news for homebuilders, because building permits are considered a reliable sign of future construction activity. Single-family housing permits rose 4% to 646,000 in April, and multi-family homes rose 7.3% to 294,000.

With the number of homes under construction declining, and the numbers of apartments increasing, one can expect that there will be a more and more renters in the near future.

Photo: FOR RENT -- Snowbank!, originally uploaded by DavyRocket.

No respite, yet: US foreclosures rise 65 percent in April

From Housing Wire:

Foreclosure filings — default notices, auction sale notices and bank
repossessions — were reported on 243,353 properties in April, a 4 percent
increase from March’s total and a nearly 65 percent increase from one year
earlier. The data, reported Wednesday by foreclosure marketplace and data firm
RealtyTrac, shows that the housing market has yet to cycle through a
preponderance of bad mortgages.

“The total number of U.S. properties with foreclosure activity in April was the highest monthly total we’ve seen since we began issuing the report in January 2005,” said James J. Saccacio, chief executive officer of RealtyTrac.

“Although only about 2 percent of households nationwide are in foreclosure, these properties contribute to already bloated inventories of homes for sale, and put downward pressure on home values.”

Georgia was again in the top ten states with the greatest number of foreclosures, ranking seventh overall, with one out of every 422 homes affected.

Photo: Button, originally uploaded by d-stop.

Home prices continue sharp descent

From CNN:

Single-family home prices dropped 7.7% in the first quarter in the largest
year-over-year decline since the National Association of Realtors began
reporting prices in 1982.

The median sales price fell to $196,300, down 4.8% compared with the last three months of 2007.

Lawrence Yun, the chief economist of NAR, attributed much of the record decline to liquidity problems dragging down high-priced markets.

and:

Hurting home prices were big rises in foreclosure rates over the past 12 months,
which threaten to get even worse. Delinquencies more than doubled over that time
and more than 155,000 lost their homes in bank repossessions during the first
three months of the year.

All that foreclosure activity added to the glut of homes on the market. The total inventory has risen to an average of 10 months worth of unsold homes. In addition, a record number - 2.9 million - of vacant homes are up for sale, according to the Census Bureau.

The big inventory has led to aggressive price slashing and increased incentives by
builders looking to sell homes. They’ve also cut way back on housing starts,
which are at a 17-year low.

With the latest readings on home prices from the National Association of Realtors showing the largest year-to-year drop since the group began reporting prices, it is becoming clearer that the housing market is under increasing pressures.

As the group maintains: all real estate is local; but unfortunately, more and more local markets are facing increased downward pressure on prices: according to the NAR, 77 metropolitan statistical areas showed price declines in the last quarter of 2007. In the first quarter of 2008, that number increased 10 an even 100.

In the south, the median existing single-family home price was $164,200 in the first quarter, down 7.5 percent from a year earlier.

Blamed by the NAR for the most-recent record low were, once again, rising foreclosures and decreased availability of mortgage loans. As the number of foreclosures are expected to increase, and banks continue to curtail lending, there is every indication that home prices will continue to slide.

For real estate investors (and their closing attorneys) looking for a bottom, this is yet another sign that the troubles in the housing market will continue for some time to come. With falling prices, though, come opportunities never seen by investors before: there are more potential deals out there than ever, banks are desperate to get rid of REO properties, and more and more short sales are being approved every day. Investors who understand the overall market forces at play and turn them to their advantage are the ones best poised to succeed.

Photo: down, originally uploaded by nick3216.

Signs of the Times: Condo Discounts

Condo developer roundup from this weekend’s AJC Homefinder:

• Tribute Lofts: Up to $22,222 in incentives;


• Central City Condos: “Foreclosed Yesterday. For You Today.” Discounts of $77,100 on two-bedroom units;


• Atlantic Station: Up to $50,000 off;


• Viewpoint: Up to $75,000 off on selected homes;


• Twelve Centennial Park: up to $75,000 off select “move-in-ready” residences;


• Aqua: Get a BMW Mini Cooper convertible; and


• The Reynolds: New pricing and incentives;

With recent mortgage insurance program changes making it more difficult to obtain financing, and an increasing inventory of homes as more condo projects are finished, condo developers are fighting hard to lure potential purchasers in the door. In one word, they’re desperate.

It’s a tough time for developers, who are competing against individual sellers and investors, along with a surging number of foreclosures for those few buyers who can qualify for a mortgage.
Still, it’s a fight that most developers are in a position to win: most individual sellers or real estate investors can’t absorb the deep discounts that the developers can offer. Nor can they offer perks such as a free car or no mortgage payments for a year.

On the other hand, intown condos offer a lifestyle that cannot be found elsewhere; and for buyers attracted to the convenience of intown living, that lifestyle comes cheaper than ever.

As a closing attorney in Atlanta, I’d strongly advise any investor from seriously looking at condos right now as investment opportunities. Unless you are able to get a unit at a ridiculous discount, there’s just not enough equity in most properties to allow competition with the developers. Additionally, since most condo developments limit the number of rentals, there is a good chance that an investor would be prohibited from leasing out a newly-acquired unit as a buy-and-hold investment.

Photo :Balcony of Midcity Lofts, originally uploaded by a u b r e y.

Pending home sales hit another low

From CNN:

The number of homes under contract for sale fell in March, hitting a record low
for the second consecutive month, according to a report released Wednesday.

The National Association of Realtors' (NAR) Pending Home Sales Index
fell to 83 in March, down 1% from a downwardly revised reading of 83.8 in
February. The rate of decline was in line with a consensus estimate of
economists compiled by Briefing.com.

March's reading was down 20.1% from the same period last year and 35% from the index's peak in April 2005.

and from Bloomberg:

Fewer Americans signed contracts to buy previously owned homes in March for the
second consecutive month as falling prices and tougher loan rules discouraged
buyers.

The index of pending home resales fell 1 percent to 83,
following a 2.8 percent drop in February that was larger than previously
reported, the National Association of Realtors said today in Washington. The
decline matched the median forecast of economists surveyed by Bloomberg News.

The glut of unsold properties is driving down home values, while rising
defaults on subprime mortgages have prompted lenders to restrict access to
credit, representing more hurdles for buyers. The slump in residential real
estate may persist for much of the year, hurting economic growth.

Yet another record low in the pending-sales index .

With home prices falling, inventory surging, and credit and mortgage options limited, the downward trend in home sales seems to have reasserted itself after a brief uptick last fall.

These latest NAR numbers, which show a continuing decline in pending home sales as well as a downward revision from the last report, only serve to confirm what’s been said many times before: that we are still months away from a recovery in the real estate housing market.

The pending-sales index reports contracts signed, but not closed, and the value of the index lies in its forward-looking predictive ability to forecast existing home sales. Existing home sales represent the bulk of the market.

Real estate investors should take the lastest NAR figures as a sign that the downward pressure on prices will continue, and that a rebound in the short-term is highly unlikely. Still, tremendous opportunities abound on individual properties for the motivated investor willing to find them.

Photo: UP or DOWN / BLACK or WHITE, originally uploaded by Luichi74.

Linens ‘N Things files for bankruptcy

From the Pacific Business News:

Home furnishings retailer Linens ‘N Things filed for Chapter 11 bankruptcy
protection Friday and said it will close 120 underperforming stores as part of
its restructuring.

Clifton, N.J.-based Linens Holding Co., parent of the
chain, said the Chapter 11 filing was largely the result of the economic
downturn.

“The significant deterioration in the mortgage, housing and
credit markets and the resulting impact on the retail marketplace, particularly
the home sector, has overwhelmed the operating and merchandising improvements
that we have made over the past two years,” said Robert J. DiNicola, Linens
Holding executive chairman, in a release. “We are making the strategic decision
to use a Chapter 11 filing to proactively address our capital structure and
ensure that our stores will remain well stocked while we work through the steps
to align the capital structure of the company with the realities of today’s
business environment.”

Proof positive that the problems in the housing market are spilling over into related industries. Earlier Home Depot announced it was laying off 1,300 employees and closing 15 stores. Now, Linens ‘N Things has filed for bankruptcy.

Not to mention Starbucks.

Real estate investors should expect some great deals on props for home staging!

Photo: Color Your Life, originally uploaded by Orangeya.