Daily Archives: November 9, 2010

Homeownership Rate at Lowest Level in a Decade | Mount Kisco Real Estate

The nation’s homeownership rate remained at its lowest in more than a decade, the AP’s Alan Zibel reports, hampered by a rise in foreclosures and weak demand for housing.

The percentage of households that owned their homes was unchanged at 66.9% in the July-September quarter, the Census Bureau said Tuesday. That’s the same as the April-June quarter. The last time the rate was lower was in 1999, when the rate was 66.7%. The  homeownership rate was around 64% from 1985 through 1995. It then rose dramatically during the Clinton and Bush administrations, hitting a peak of more than 69% in 2004 at the height of the housing boom.

After the housing bubble burst, the rate has been declining gradually. About 18.8 million homes, or 14.4 percent of all houses and apartments, were vacant, according to the government survey.

Without vacation homes, that rate would be 11%. The number of vacant homes has soared over the past four years from about 16 million at the start of 2006. It has been hovering around 19 million since the end of 2008. There are around 131 million housing units nationwide, according to the Census Bureau.

WSJ Article

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Obama administration sings new tune on foreclosures

NEW YORK (CNNMoney) — The Obama administration is singing a different tune about foreclosures.

A year ago, officials focused on stemming the foreclosure tide. Now they are touting the need for foreclosures to rebuild the housing market.

Last week Phyllis Caldwell, head of the Treasury Department’s Homeownership Preservation Office, told a congressional panel that “an important part of ensuring longer-term stability in the market is to enable properties to be resold to families who can afford to purchase them.”

And White House Press Secretary Robert Gibbs last month told reporters that without sales of homes in distressed areas the “recovery in the housing market stops. It’s frozen.”

“That obviously can have — we believe and others believe — a very negative and detrimental impact to our economic recovery efforts and the housing markets in states that have been hardest hit,” Gibbs said.

But when Obama unveiled his signature foreclosure prevention program in February 2009, he said loan modifications were a key way to prevent the housing crisis from deepening. His initiative called for reducing distressed borrowers’ monthly payments to 31% of their pre-tax income.

“We’re not just helping homeowners at risk of falling over the edge; we’re preventing their neighbors from being pulled over that edge too — as defaults and foreclosures contribute to sinking home values, and failing local businesses, and lost jobs,” the president said.

The shift in rhetoric signals the Obama administration is recognizing that its loan modification program is foundering, experts said. Also, it is acknowledging that banks must address their swelling ranks of delinquent loans.

To be sure, the administration is still concerned with helping homeowners avoid foreclosure. Officials have rolled out a series of initiatives in 2010 aimed at assisting the unemployed and the underwater who owe more than their houses are worth.

And, they have called for reviews into the institutions’ foreclosure policies and procedures, stressing that servicers must comply with the law.

But they also now acknowledge more vocally that foreclosures must continue for a normal housing market to return. And that, in part, is why the administration is not supporting a nationwide foreclosure freeze despite the paperwork scandal that is roiling the mortgage industry.

The administration says there has been no change in either policy or rhetoric surrounding foreclosures and the housing market. The loan modification program was never meant to save every homeowner and officials always acknowledged the role of foreclosures in the market’s recovery, according to a Treasury spokeswoman.

“We have always thought some foreclosures needed to happen for there to be a full housing recovery,” said the spokeswoman, Andrea Risotto.

But, experts say, the new tone eminating from the White House also recognizes that the modification program is not living up to its initial goals of helping up to 4 million people avoid foreclosure. Some 496,000 distressed borrowers have received long-term modifications through September.”What they have now realized is there are a lot of borrowers who can’t be saved and have to be moved through the foreclosure process,” said Laurie Goodman, senior managing director with Amherst Securities.

And they must break this news to Americans.

Officials are “trying to soften everybody up” to the fact that foreclosures are necessary, said Guy Cecela, publisher of Inside Mortgage Finance, an industry newsletter.

The new talking points, however, won’t likely result in a change in policy, said Anthony Sanders, a real estate finance professor at George Mason University. Administration officials will continue to support foreclosure alternatives because they are more palatable.

“As long as politics are involved, they’ll keep doing it,” said Sanders.

Full Story CNN Money

Obama administration sings new tune on foreclosures

NEW YORK (CNNMoney) — The Obama administration is singing a different tune about foreclosures.

A year ago, officials focused on stemming the foreclosure tide. Now they are touting the need for foreclosures to rebuild the housing market.

Last week Phyllis Caldwell, head of the Treasury Department’s Homeownership Preservation Office, told a congressional panel that “an important part of ensuring longer-term stability in the market is to enable properties to be resold to families who can afford to purchase them.”

And White House Press Secretary Robert Gibbs last month told reporters that without sales of homes in distressed areas the “recovery in the housing market stops. It’s frozen.”

“That obviously can have — we believe and others believe — a very negative and detrimental impact to our economic recovery efforts and the housing markets in states that have been hardest hit,” Gibbs said.

But when Obama unveiled his signature foreclosure prevention program in February 2009, he said loan modifications were a key way to prevent the housing crisis from deepening. His initiative called for reducing distressed borrowers’ monthly payments to 31% of their pre-tax income.

“We’re not just helping homeowners at risk of falling over the edge; we’re preventing their neighbors from being pulled over that edge too — as defaults and foreclosures contribute to sinking home values, and failing local businesses, and lost jobs,” the president said.

The shift in rhetoric signals the Obama administration is recognizing that its loan modification program is foundering, experts said. Also, it is acknowledging that banks must address their swelling ranks of delinquent loans.

To be sure, the administration is still concerned with helping homeowners avoid foreclosure. Officials have rolled out a series of initiatives in 2010 aimed at assisting the unemployed and the underwater who owe more than their houses are worth.

And, they have called for reviews into the institutions’ foreclosure policies and procedures, stressing that servicers must comply with the law.

But they also now acknowledge more vocally that foreclosures must continue for a normal housing market to return. And that, in part, is why the administration is not supporting a nationwide foreclosure freeze despite the paperwork scandal that is roiling the mortgage industry.

The administration says there has been no change in either policy or rhetoric surrounding foreclosures and the housing market. The loan modification program was never meant to save every homeowner and officials always acknowledged the role of foreclosures in the market’s recovery, according to a Treasury spokeswoman.

“We have always thought some foreclosures needed to happen for there to be a full housing recovery,” said the spokeswoman, Andrea Risotto.

But, experts say, the new tone eminating from the White House also recognizes that the modification program is not living up to its initial goals of helping up to 4 million people avoid foreclosure. Some 496,000 distressed borrowers have received long-term modifications through September.”What they have now realized is there are a lot of borrowers who can’t be saved and have to be moved through the foreclosure process,” said Laurie Goodman, senior managing director with Amherst Securities.

And they must break this news to Americans.

Officials are “trying to soften everybody up” to the fact that foreclosures are necessary, said Guy Cecela, publisher of Inside Mortgage Finance, an industry newsletter.

The new talking points, however, won’t likely result in a change in policy, said Anthony Sanders, a real estate finance professor at George Mason University. Administration officials will continue to support foreclosure alternatives because they are more palatable.

“As long as politics are involved, they’ll keep doing it,” said Sanders.

Full Story CNN Money

3 ways low mortgage rates can work for you

(MONEY Magazine) — Just when it looked as if mortgage rates couldn’t fall any further, they did.

Rates on 30-year fixed-rate mortgages (excluding jumbos) hit an average of 4.3% in September, the lowest level since 1953, according to Freddie Mac, and are still hovering below 4.5%.

Fifteen-year rates are even more mouthwatering: 3.8%. Mind you, those are averages. The most creditworthy borrowers can do even better, snagging rates perhaps a quarter of a percentage point lower.

So what’s in this for you? A lot, potentially. If you have a credit score of 720 or higher and at least 20% equity in your home, you might use these crazy-low rates to shorten your mortgage term, free up cash, or even add to your real estate holdings, for example.

Whatever you decide, don’t wait too long. Home prices expected to slide another 8%

“The consensus is that rates will gradually move up in the new year,” says Frank Nothaft, chief economist for Freddie Mac. Freddie projects that the average 30-year fixed will hit 5% by the end of 2011.

Read full story on CNN Money

The Powerful Role of Laughter in Small Groups in Bedford NY | Bedford NY Real Estate

Recently, researchers from North Carolina State University used jury deliberations recorded during a capital murder case to study the role of laughter in small group dynamics. They were particularly interested in using the transcripts of jury deliberations (of a capital punishment case) to study laughter because there is very little research on the role of laughter in communication, particularly when divorced from humor.

What the researchers found was that laughter in this situation was used in a multitude of ways; namely to question, control, and regulate relationships, procedures, and information in the group. For example, sometimes laughter was used to signal support for a group member; at other times it was used to signal a lack of support. At times people used laughter as a tool, intentionally and strategically, to control communication and affect group dynamics, or to shift power.

Full Story on Psychology Today

Chinese Are the New Big Buyers of Distressed Property | Bedford NY Real Estate

The impact of the financial crisis on the housing market in the United States has provided more opportunities for international investors, with Chinese buyers one of the more active.

The National Association of Realtors said Chinese investors account for about 10 percent of international buyers in the US real estate market. Experts predict this trend will only increase.

“The US has very good environment for real estate investors and Chinese buyers expect to have some bargain prices which wouldn’t have existed b efore,” said Richard Dai, CEO of Beijing-based SouFun Holdings Ltd, China’s largest property website.

A recent SouFun.com survey showed that among its 18 million members in China, the US is the top foreign country for property investment. Many buyers aim for residential properties, with some looking for cheap ones for business purposes, Dai said.

Housing prices in big cities such as Beijing and Shanghai have risen sharply in the past few years, prompting Chinese buyers to take advantage of the slump in US home prices.

Dai said a two-bedroom apartment in Beijing can cost up to 2 million yuan ($300,000) while a house with four or five bedrooms in some US states can be bought for $500,000. “The calculation is very obvious here,” he said.

Dai said that more and more Chinese buyers are eyeing properties in countries such as the US, Canada, the United Kingdom and Australia. Most recently, the Jeju Island in South Korea has also become popular.

Eileen Hsu, a Manhattan real estate agent who specializes in Asian clients, particularly buyers from China, told China Daily: “Foreclosures contribute to the fact some Chinese buyers are looking more in the US, but there are not many in New York compared to California and Florida.”

Hsu said some wealthy and sophisticated Chinese buyers prefer to diversify their real estate portfolio.

“They feel that US real estate is a mature and equity safe market to invest,” she said.

“The US has a reputation of a beautiful and happy country. The Mandarin name for the US, meiguo, means beautiful country. Thus, it is a status symbol for those who can afford to buy here.”

Many of Hsu’s Chinese clients buy houses in the US as their second home as they own townhouses or apartments in China.

“They are well-established business people ranging in age from 40s to early 50s,” she said, adding that 90 percent of them buy with cash.

“If they use mortgages, they will have to put up to 50 percent or more (as a deposit) and sometimes pay higher interest rate.”

The US has historically been attractive for international investors, because of its strong private property rights, independent judiciary, growth-oriented tax laws and liquid capital markets.

Hsu said US law welcomes foreign buyers, although each country may have restrictions as to transferring money out.

While the US west coast, particularly California, has traditionally been a destination for Chinese buyers, due to its large Chinese community, the east coast has been attracting attention in recent years.

“Manhattan is popular for Chinese buyers because many are from metropolitan cities such as Beijing and Shanghai, and are familiar with New York and the cosmopolitan lifestyle,” Hsu said.

Prestigious neighborhoods such as near Central Park, Central Park West, Fifth Avenue, Park Avenue – with price ranging from $5 million to $55 million – are among the top choices, Hsu said.

So me Chinese buyers are also choosing the US for their children.

Hsu said some entrepreneurs and business owners have become successful in the past decade and are applying for US visas and sending their children into US schools, she said. “They purchase the houses for the children.”

With an increasing number of Chinese coming to the US for education, more young Chinese graduates are also becoming homeowners.

Zhang, a young woman who prefers not to reveal her full name, is one of them. After graduating from a university in New York and working as a banker for two years, she decided to buy an apartment instead of paying about $2,000 a month in rent.

“The biggest reason for my purchase is the appealing prices in the US housing market,” said Zhang, who bought a one-bedroom apartment for $450,000, about 20 percent lower than its usual price, in a luxurious apartment building in New Jersey in May.

It was not an impulse buy but she didn’t spend much time looking.

“I paid for about 20 percent as down payment and pay a mortgage every month,” she said, adding that the paperwork was fairly easy.

Zhang, in her mid 20s, said she will return to China after a few years. “But it is a good investment and I thought I would seize the opportunity to buy. I can either rent it or sell it when there is a good price later,” she said.

Traditionally, the Chinese are astute in determining the value of currency and value of ownership versus rentals, with many believing owning is a must-have asset.

China Business News

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