Friday, August 17, 2012
Thursday, August 16, 2012
Wednesday, August 15, 2012
Monday, August 13, 2012
Tuesday, August 07, 2012
Oregon Senator Steps Up with Plan for Underwater Borrowers
President & CEO
Intero Real Estate Services, Inc.
A new rescue plan is on the table for underwater borrowers.
Oregon Senator Jeff Merkley submitted a new plan last week for the government
to buy up to 8 million underwater mortgages and refinance them into lower
interest rates.
Merkley says that the lack of a robust program that enables
large numbers of American families who are trapped in high-interest loans to
refinance hurts not only the individual borrowers, but also the communities and
economy at large.
In a paper announcing the plan, the Senator details how a
Rebuilding American Homeownership Trust could be built under either the Federal
Housing Administration, the Federal Reserve or the Federal Home Loan Banks
system. He says this trust would sell bonds and use the proceeds to purchase
mortgages from originators.
Merkley says the RAH program is "designed to be a
modern version of President Franklin D. Roosevelt's Home Owners' Loan
Corp." Qualifying homeowners who are current on their mortgages would have
three options for new mortgages: one that helps to speed the rebuilding of
equity; one that lowers monthly payments; and one that provides even more
flexibility through a two-part "soft second" mortgage.
Merkley's plan would not require use of taxpayer dollars –
an appealing proposition no matter what side of the political debate you sit
on. In fact, as laid out, Merkley explains how the plan would actually turn a
profit in the future. I'm not going to get too far into the details here, but
suggest checking out the full plan as laid out in the paper at this link
(scroll to the bottom for the link to download the full paper).
All politics aside, I do think Merkley is onto something
here. The fact that one-fifth of American homeowners is underwater has a lot of
implications for the future of the market. Without equity, these homeowners
can't refinance under the current system. With negative equity, they can't even
sell. Their options are to try to sell short, strategically default, or stay
put and bear the punishment of being caught up in a housing market that seemed
to defy reality.
Negative equity is bad for the housing market and economy as
a whole. It's definitely bad for individual communities where it's rampant.
Imagine a market where either no one is selling because they can't, or in which
every sale is either short or a foreclosure. How can that possibly be better than
what Merkley is proposing?
Not sure I could even say this better myself, but in his
paper, Merkley states: "America moved boldly and generously to rescue Wall
Street and the auto industry. Let's move boldly to restore the wealth-building
power of homeownership for America's families!"
What do you think?
Thursday, August 02, 2012
3 Big Predictions for Real Estate
Tuesday, July 31, 2012
Monday, July 30, 2012
Housing Roundup: Home Values Up; Investors Eye Residential Real Estate
President & CEO
Intero Real Estate Services, Inc.
A lot of positive statistics about housing were released this past week, including stronger prices and values. In addition, two unrelated reports showed some other interesting happenings in real estate: foreign buyers seem to be showing a loss in appetite for U.S. homes, while Wall Street investors are hungrier than ever.
Sales fall with tight supply
Total existing home sales declined 5.4% in June from May, but were 4.5% higher than in June a year ago, according to stats from the National Association of Realtors. Lower inventory has likely caused some of the decline, NAR said.
Home prices and values rise
While sales fell in June from May, the good news is that home prices were up. The national median existing-home price was $189,400 in June, up 7.9% from a year ago, according to NAR. This marks four monthly price increases from a year earlier, and June's gain was the strongest since February 2006 when the median price rose 8.7% from the previous year.
Zillow's home value report released this week also showed its first annual increase in nearly five years. U.S. home values rose 0.2% in the second quarter this year from the same quarter a year ago, Zillow said. Median home values rose for four consecutive months, causing Zillow to declare a bottom in values.
Foreign buyers lose interest
Trulia reports this week that online searches for U.S. homes from buyers abroad fell nearly 10% in the past year. Miami topped the list of most searched cities by foreigners, though traffic from abroad for that city fell to 15.7% during the second quarter of this year from 16.3% the same period last year.
Wall Street invests in foreclosures
A Fortune report reveals that, in the past six months, a number of investment firms, hedge funds, private equity partnerships and real estate investors have been snapping up single-family foreclosure homes as part of their portfolios.
Private equity firm Blackstone Group now owns 2,000 single-family homes, totaling about $300 million in value. It's a small slice compared to the mega-firm's overall real estate portfolio of about $50 billion, but it's one of the largest pools of homes every intentionally put together by an institutional investor, according to the Fortune report. (Note: Banks and Fannie and Freddie have a much larger pool, of course, but that's a different situation.)
Fortune notes there are likely more and even larger investment portfolios of residential real estate out there.
This latest housing investment discovery is noteworthy because it's unusual. Normally, investors of residential real estate tend to be smaller mom-and-pop shops or single investors who then fix up and manage the properties themselves. Institutional investors like Blackstone historically have focused on apartment buildings and commercial properties like office parks and malls.
Yes, the times they are a-changing.
Monday, July 23, 2012
Saturday, July 21, 2012
Subscribe to:
Posts (Atom)