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Category Archive: ‘Ideas/Solutions’

Happy Anniversary

We’ve heard all the hubbub about higher mortgage rates having a negative effect on the real estate market.  But the non-taper has caused rates to come back a bit – we are now down around 4.375% for 30-year conforming rates.

For those who had their heart set on having payments lower than what you get with a 4.375%, 30-year mortgage rate, then there are options available:

  • Buyers can pay more points to lower their rate.
  • Buyers can have the sellers buy down their rate.
  • They can take an interest-only loan, instead of fixed-rate.
  • Buy a cheaper house.

Or, in this cash-happy environment, they can borrow less:

Microsoft PowerPoint - 2013 Florida Saltmarsh Conference [Compat

The stir-up from higher rates might cause some changes in the buyer psychology, but the baseline problem hasn’t changed – there aren’t any great buys available, and even the decent buys are loaded with compromise.

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We’ve wrapped up eight years of www.bubbleinfo.com!  Thanks for participating, and most of all, thank you to those have become clients. 

I do this to demonstrate my abilities, and want to help more people buy and sell homes.  If you, or someone you know, is thinking of moving, I’d love to hear from you!

Posted by on Sep 25, 2013 in About the author, Ideas/Solutions, Interest Rates/Loan Limits, Mortgage News | 7 comments

Container Condo

The first U.S. multi-family condo built of used shipping containers is slated to break ground in Detroit early next year.

Strong, durable and portable, shipping containers stack easily and link together like Legos. About 25 million of these 20-by-40 feet multicolored boxes move through U.S. container ports a year, hauling children’s toys, flat-screen TVs, computers, car parts, sneakers and sweaters.

But so much travel takes its toll, and eventually the containers wear out and are retired. That’s when architects and designers, especially those with a “green” bent, step in to turn these cast-off boxes into student housing in Amsterdam, artists’ studios, emergency shelters, health clinics, office buildings.

Despite an oft-reported glut of unused cargo containers lying idle around U.S. ports and ship yards – estimates have ranged from 700,000 to 2 million – the Intermodal Steel Building Units and Container Homes Association puts the number closer to 12,000, including what’s sold on Craigslist and eBay.

Joel Egan, co-founder of HyBrid Architecture in Seattle, which has built cottages and office buildings from shipping containers for close to a decade and coined the term “cargotecture” to describe this method of construction, warns that although containers can be bought for as little as $2,500, they shouldn’t be seen as a low-cost housing solution.

See more examples here:

http://news.yahoo.com/shipping-containers-become-condos-detroit-110032447–abc-news-topstories.html

Hat tip to daytrip for sending this along!

Posted by on Nov 30, 2012 in Ideas/Solutions | 2 comments

Researching Realtors

It is getting easier to investigate realtors on-line.

We’ve already seen that www.neighborcity.com allows you to research an agent’s recent sales history.  The realtor-groups that pool all the team’s sales under one agent are still deceiving (Redfin and most top-producing agents), but at least you have some way of verifying that somebody has been successful in getting people to the finish line.

In a different twist, www.homelight.com allow you to search your preferred neighborhoods to find an agent, and then screen by price range, and agent characteristics too.

The data provided by both of these websites is less than 100% accurate – the actual sales counts fluctuate, and homelight says that one of the areas I work is Castle Park?  But at least there is independent data available.

The best gauge of how an agent can help you is simply the number of closed sales – that verfies the agent’s skill and ability to successfully juggle all the wide-ranging variables encountered in each sale.  An agent who sells at least 1-2 houses per month is nimble, and experienced in navigating this market.

The only common thing about agents is that each of us has gotten at least 70% correct on the state’s 150-question multiple-choice test.  Other than that, you are left to believe what the agent tells you – unless you do some research on websites like these.

Posted by on Nov 17, 2012 in Ideas/Solutions | 0 comments

Bulk Sale at 95.8% of Value

Bulk investors are willing to pay up to 95% of value for Fannie properties in Florida? All we hear is that foreclosures sell for 20% to 30% off – but rarely do you see actual evidence. Hat tip to Daniel for posting this, from the latimes.com:

A San Diego real estate investment firm has won an auction of nearly 700 homes owned by Fannie Mae in Florida, part of a government initiative to sell vacant and distressed properties to investors.

Pacifica Companies, which describes itself on its website as a “privately held, vertically integrated real estate developer, owner, investor and investment manager” was announced as the winner of the auction by the Federal Housing Finance Agency, regulator for Fannie Mae and Freddie Mac.

The firm paid $78.1 million, or close to 96% of the properties’ estimated worth.

Nearly 2,500 properties up for sale by Fannie Mae have been split up into eight geographic pools, and winning bidders are required to rent out the homes for at least three years.

The sale is a pilot program by the agency, intended to help clear the large numbers of foreclosed homes on the books of the two mortgage giants without crashing the housing market’s recovery.

Several hedge funds and other big investment groups backed with Wall Street money have lined up to bid on the homes. These big investors view a lucrative market for foreclosed homes converted to rental properties.

But groups associated with real estate agents, particularly the California Assn. of Realtors, have objected to the bulk sales of foreclosed homes to big firms, complaining that the housing market is actually suffering from a dearth of properties and could absorb more foreclosures.

Several Fannie Mae properties in the Inland Empire are up for bid. The winning bidders in other geographic areas will be announced in coming weeks, the federal housing agency said.

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This purchase at 95.8% of value will quickly be swept under the rug by this one – and/or doomers will say that the investors overpaid:

Posted by on Sep 10, 2012 in Auctions, Ideas/Solutions, Market Buzz, Shadow Inventory | 9 comments

Hi-Rise Parking Solution

Hat tip to Joe for sending this in, from treehugger.com:

At first glance it is a bit ostentatious, having your Maserati in your living room and  a car elevator to get it there, but in some ways it makes sense. Underground parking is expensive to build and inefficient, with about 125 square feet of circulation and ramping for every 200 square feet of parking. With a car elevator there is no extra floor space at all, just the area of the elevator shaft and the extra wall enclosing it.

 It’s nice, not having to carry your groceries from the car to the elevator to the apartment, even though the trunk of a Lamborghini doesn’t hold very much. It is also nice not having to interact with another human being in the lobby or the elevator, but to be able to live your life in an air conditioned cocoon , from home to garage to car to mall or office. In fact, for the $7.5 million that these apartments cost, you get all the benefits of a suburban home. Not only is there a car elevator, but there is a service elevator for the help so you never have to talk to anyone.

Posted by on Aug 27, 2012 in Ideas/Solutions | 8 comments

Candidates and Housing

From HW (If the candidates need help, see JtR answers in italics):

President Obama and GOP challenger Mitt Romney should start talking about their housing policy intentions, experts in the industry said.

A group of associations, nonprofits and think tanks made speeches and conducted a panel discussion in Washington, D.C., Wednesday to elevate the housing debate onto the national stage. They challenged political candidates to address the still ailing housing market as the presidential campaign shifts into high gear.

Both presidential candidates have been mostly silent on housing policy aside from Obama’s push to allow more homeowners to refinance and Romney’s comments early on the campaign trail to let the foreclosure process run its course.

Neither campaign, to date, has released substantive housing policy proposals.

“We are entering a critical phase of the presidential campaign,” said David Abromowitz, a senior fellow at the Center for American Progress. CAP and the National Council of La Raza, among others, sponsored the event.

In conjunction with the event, CAP released a set of seven housing questions it said it sent to each presidential candidate in a “Home for Good” campaign to bring more awareness to the still struggling housing market:

1. What will you do to prevent more unnecessary foreclosures and keep more families from losing their homes?

JtR: Foreclosures are only necessary if borrowers stop making their payments.

2. How will you address the problem of “underwater” mortgages?

JtR: What’s the problem? That people can’t move? We need to get used to having what we have.  “Stick and Stay and It Will Pay.”

3. How will you revitalize communities already hit hard by the foreclosure crisis?

JtR: Investors are willing to buy at make-sense prices. Once we hit that floor in hard-hit areas, owner-occupiers should be interested in buying at those prices too.  Keep FHA as the low-down alternative, and closely monitor their default reserves. 

4. How will you meet the pressing need for affordable rental housing?

JtR: Sell more homes to investors?  Encourage lease-options.

5. What will you do to assure that working and middle-class families can achieve homeownership in the future?

JtR: Keep FHA around, and promote lease-option plans to investors.  Encourage multi-generational families to live together.  Lobby NAR to do something productive.

6. What do you plan to do with the government-backed mortgage giants Fannie Mae and Freddie Mac, and what will take their place in the mortgage market of the future?

Don’t replace them, just quit subsidizing them.

7. How do you plan to protect households from predatory lending and discrimination in the U.S. mortgage market?

JtR: Make it a reality TV show where realtors and mortgage people are seen going to jail.

“We’ve caused extraordinary damage, my industry has,” said Mortgage Bankers Association President David Stevens, who spoke on a panel at the event. “The question is, How do we get hope back into the housing system?”

Stevens said he doesn’t want to create irrational exuberance over recent good news about home sales and house prices, but rather seeks balance in the housing market, including a balance between homeownership and renting.

“Clearly we had too many people promoted into homeownership and it disparaged and destroyed communities,” he said.

Homeownership needs to shift toward well-qualified borrowers with fully documented loans who can prove their ability to repay while balance on the renter side requires addressing a shortage of affordable rentals in key urban markets, Stevens said.

Posted by on Aug 16, 2012 in Ideas/Solutions, Local Government | 14 comments

Rollover Your Negative Equity

An opinion seen at HW:

Here’s a familiar scenario: Jane and John live in a nice house and pay their mortgage on time every month. Their outstanding loan amount is higher than the home’s market value, making them underwater borrowers.

They wish they could move into a bigger house in a better neighborhood, but realize they’re stuck because they can’t sell for what they owe — let alone turn a profit into a down payment.

The most responsible type of borrower today is jaded, to say the least. And they’re exactly the borrowers we should be helping. Banks need to create lending programs for perfect-credit borrowers who are underwater and held hostage by their current mortgage. Of course, it’s not as easy as all that — but it is doable — and is exactly the kind of program that the recent attorneys general national mortgage settlement should inspire.

Why not help the creditworthy homeowner by using some of the recent attorneys general mortgage servicing settlement funds to pay the difference between market value and unpaid balance for those borrowers who wish to move?

  • We could make the investor whole at the time of sale
  • We could roll the deficiency into a new, performing unsecured loan
  •  The bank recoups the AG money over the unsecured loan amortization period
  •  The borrower’s credit profile would be unharmed
  •  The housing market gets moving
  •  Increased buyer activity instills confidence in the market
  •  The bank gains a customer for life

Let’s actively invite responsible owner-occupant homeowners into the market — and stop catering to whiners and walk-aways (where all of the focus is today).

What’s more, if banks take an active (rather than a passive) role to get the industry moving, they’ll find myriad ways to turn problems into profits.

This isn’t much different than rolling your last few car payments into a new lease. The biggest pool of potential buyers, the market’s biggest catalyst, is people who are stuck in a house they’d rather leave. They can’t or won’t take a loss and bring money to the table in order to sell — money they’d rather invest in a new home.

According to the National Association of Realtors, 63% of recent homebuyers were repeat or move-up buyers, and 60% of buyers were first-time sellers. Simply put, the largest pool of potential homebuyers consists of those who already own a house.

All of today’s existing assistance programs cater to the person who is delinquent or calculated to be at risk of imminent default. And the irony is, the root of that person’s problems is deeper than any of our programs can solve.

Forgiving principal on a loan in default won’t solve the problem. But what would a stand-up homeowner say if you removed their shackles and helped them move? I’m picturing a dance, cartwheels and exclamations of joy.

This is a giant population of people you can count on, who can pay a bigger bill, who would love to pay a larger mortgage if it meant they lived in the home of their dreams.

This is how it looks: The Big Bad Bank turns into The Big Generous Community Institution, approaches Mr. 850 Credit Score and says, “We have a once in a lifetime opportunity for you. Because you have willingness to repay, because we see how diligent you’ve been in consistently paying your mortgage, because we agree that it’s awful to be underwater, we want to make you a deal. We’ll help you get out of the house you’re in and into a new house with a new loan from our bank. We’ll help you take advantage of today’s low interest rates and depressed pricing. We want to reward good values.” Now the bank is a good guy, not the enemy.  A bank for life.

It could even be more far-reaching. Banks could partner up with homebuilders and give preferential treatment to current customers who would consider new construction. Or, what if the bank took the REO and short sales already on its books and turned them from losers into special opportunities for current, paying customers?

Part of the inventory problem today is that the biggest pool of buyers is prohibited from purchasing. Let’s drive the economy with new homes, with people who want to spend money, who have good jobs and good credit. Let’s shift the large percentage of housing inventory from investors to owner-occupants — who can and will improve the neighborhoods they live in.

So far in 2012, investors have purchased more than 40% of the REO sold via OfferSubmission and more than 55% of transactions were closed with cash. These telling numbers suggest that the liquidation strategy of bank-owned properties is weighted heavily toward moving volume and less about creating value for shareholders and taxpayers alike.

Those who can turn the housing economy around are owner-occupant buyers leveraging traditional financing options — with a twist. We need to embrace the homeowners who pay their bills, and create the programs that turn this ongoing crisis into a once-in-a-lifetime opportunity.

Jasgur is president of Woodward Asset Capital.

Posted by on Jul 11, 2012 in Ideas/Solutions | 14 comments

HARP Refinances Double in 1Q12

Are government programs finally starting to solve the housing crisis? From HW:

The number of refinanced Fannie Mae and Freddie Mac mortgages nearly doubled in the first quarter as the largest banks launched the expanded Home Affordable Refinance Program.

Servicers refinanced roughly 180,000 GSE loans in the first three months of 2012, nearly double the 93,000 completed in the fourth quarter, according to Federal Housing Finance Agency data. In March alone, servicers refinanced 80,000 borrowers under the program.

HARP launched in April 2009 to allow more borrowers who owe more on their mortgage than their home is worth to refinance. But few severely underwater borrowers could take advantage of historically low rates. The FHFA expanded the program last fall to remove the loan-to-value ceiling of 125% — the so-called HARP 2.0 — and to reduce upfront fees and eliminate repurchase risk if the original servicer on the loan completes the workout.

With the surge in the first quarter, total HARP refinancing now totals more than 1.2 million loans.

And more severely underwater borrowers are finally being included.  More than 4,400 borrowers with LTVs above 125% refinanced through HARP in the first quarter. More than half of them were located in California, Florida and Arizona, states hardest hit by the foreclosure crisis.

Borrowers in the 105% to 125% range were often shut out as well, but that changed under the expanded program as well. In the first quarter, nearly 37,000 of these underwater borrowers refinanced, nearly triple the 13,000 in the previous quarter.

Lawmakers are considering another expansion of the program. Most of the HARP business is going to the largest banks because of the reduced repurchase risk, which is generating higher profits for these firms. Smaller lenders want in on the action and are busy lobbying Congress for more competition, specifically asking to remove repurchase risk for all lenders.

Posted by on Jun 4, 2012 in Bailout, Ideas/Solutions, Inventory, Loan Mods | 0 comments

Disclose Agent Statistics/Feedback

We might still be having some newcomers joining us as a result of the Realtor Magazine article, which was posted on the NAR website last week. The actual magazine just arrived at my house yesterday by mail.

Welcome agents!

Let’s discuss the publishing of each agent’s sales statistics, and the insane paranoia surrounding it.

Redfin had their agent-scouting tool for about a week, but couldn’t shut it down fast enough once the whiners got a hold of it. 

Now www.neighborcity.com is trying to make a living by generating leads that they can sell to local agents for a 30% share of the eventual commission.  They have the typical home-search website, but they also include each agent’s sales over the last 12 months.  Theirs is a statistical analysis, not opinions like you see on Yelp, so it looks straight-forward and objective.

But, of course, they are now being sued for copyright infringement by a local MLS company, with N.A.R.’s financial support.  NeighborCity is fighting back:

http://www.prnewswire.com/news-releases/neighborcity-fires-back-against-mls-lawsuits-152361715.html

Realtors as a group, led by the N.A.R., will always come out looking like big-monied bullies who are just scared to give up the old monopoly.  By now the monopoly is an illusion anyway, let’s admit it and move into this century!

The N.A.R. should publish each agent’s sales statistics, and a feedback forum.

Such a package would help verify accuracy, give a reason for more people to use realtor.com, and hopefully generate some respect from consumers for providing  transparency to the process.

Most importantly, it would help achieve two things:

1. Allow consumers to better judge who they are hiring.

2. Cause agents to focus on delivering top-quality, ethical service.

Instead of the glamour shots, fancy cars, and plastic surgery, the publishing of sales statistics and feedback from previous clients would force agents to deal with the truth.

Posted by on May 23, 2012 in Ideas/Solutions | 8 comments