4 Threats That Remain in Housing Recovery.

4 Threats That Remain in Housing Recovery. Image courtesy of Simon Howden / FreeDigitalPhotos.net

The housing recovery appears to be on track and growing stronger. Home sales and prices are up after reaching bottom in 2010, foreclosures and mortgage delinquencies are dropping, yet housing affordability still remains high.

So why are some analysts and economists concerned?

At a recent Milken Institute Global Conference in Beverly Hills, Calif., panelists said that threats to the housing recovery still remain. The biggest threats they pointed to included:

1. Land scarcity: Real estate developers are struggling to find desirable land to start new projects, which is limiting the supply of new homes. A few years ago, banks took ownership of land after developers had foreclosed on some projects. The land is worth less than its original price so banks are reluctant to write off additional losses by selling it too cheaply. Plus, lenders remain cautious about issuing loans for new land purchases.
2. House flippers should be cautious: Housing affordability is high mostly due to super low mortgage rates, and investors are taking advantage with intentions of flipping homes for profit. “No doubt you can buy a house today and get a really good price and a low-interest loan,” says Jeff Greene, president of Florida Sunshine Investments. “But if you want to sell that house to somebody two or three years later and rates go up to 5 or 6 percent, how much is he going to pay for that house?”
3. Foreign buyers potentially inflating prices: In some markets, strong demand by foreign buyers has helped home prices recover, which has made homes more expensive for Americans in some areas. Some analysts fear that it could even lead to another housing bubble if interest rates started rising quickly as well. Markets like Miami, Los Angeles, and New York are seeing strong demand among foreign buyers. Some say this is a good thing, because it reflects a strong faith in the U.S. market.
4. A ‘patchy’ recovery: Some markets are seeing rapid increases with bidding wars, rising prices, and low inventories, while other markets are still at a standstill. For example, Miami’s housing market is “on fire” while 80 miles north in Palm Beach County there’s a “huge glut of housing,” says Greene.

Source: “5 Reasons the Housing Recovery Remains Wobbly,” U.S. News & World Report (May 3, 2013)

Squatters Cite Laws to Stay in Homes for Free.

Squatters Cite Laws to Stay in Homes for Free. Image courtesy of Victor Habbick / FreeDigitalPhotos.net

With the number of vacant homes dwindling, house squatters are getting bolder. They’re moving into homes and staying for free, citing adverse possession law in some states, which allows a person to claim title to an abandoned property after occupying it for a certain amount of time.

The law has become “an excuse for squatting in foreclosed homes,” AOL Real Estate reports. And squatters are moving into homes and citing the law more frequently. For example, in Miami-Dade County in Florida, adverse possession claims are on the rise, increasing from 30 in 2011 to 70 in 2012. In the first three months of 2013, squatters had already filed 52 applications.

But not all squatters are winning rights to these homes.

For example, Cherie Fields, 25, and her husband Owen Fields, 27, moved into a foreclosed home worth $160,000 in Florida, expecting to stay for free. They even changed the home’s locks, turned on the home’s utilities, and moved in their belongings, AOL Real Estate reports.

The couple filed for “adverse possession,” but they weren’t so lucky: A judge ordered them out and charged them with burglary of a residence, grand theft, and scheming to defraud. The couple’s attempt at citing adverse possession failed because they hadn’t occupied the home for the required seven years.

“Entire communities have been taken over by squatters who claim they’re acting under rights of adverse possession,” AOL Real Estate reports. “In Tarrant County, Texas, squatters have been claiming and looting vacant homes in Fort Worth and nearby suburbs—properties with a total value exceeding $8 million. The properties that have been left by owners who recently died, or by owners absent because of job duties or illness, appear to be most at risk of squatters, and some property owners have returned home to find their houses trashed or looted.”

Source: “Squatting in Foreclosed Homes on the Rise?” AOL Real Estate (May 3, 2013)

Latest Real Estate Scam Has Agents on Alert.

Latest Real Estate Scam Has Agents on Alert. Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

Scammers are scraping rental listings off the Internet and using real estate agents’ identity from the listings to dupe would-be clients.

Practitioners may not even discover it until the clients confront them, demanding keys for a property they believed they rented and had already mailed a deposit check to the individual they believed was the agent.

Scammers are reportedly taking rental listings off Web sites and reposting them at a lower rent than the original listing. The renter than corresponds with the scammer, often through e-mail. Scammers will create e-mail addresses that reflect the listing agent’s name to dupe clients. Scammers will also use a phone number with the agent’s same area code.

The latest scam involved a Pocono Lake, Pa., real estate broker who had a client confront him over a rental listing. The scammer reposted a fraudulent listing of the rental property on the site Zillow, which also feeds it to HotPads.

The chairman of the Pocono Mountains Association of REALTORS®’ MLS, Malcolm Waring, told Inman News that after hearing about the scam, he’s considering even barring Zillow from posting the MLS’ rental listings, fearing that Zillow may be more vulnerable to these types of scams.

Zillow promptly removed the fake listing at Waring’s request so he has decided not to pursue the threat, Inman reports. But he told Inman that if he learns of a similar scam on Zillow or HotPads, he’s prepared to end the listing agreement.

Zillow assured Waring and others that after hearing about the real estate scam they are beefing up their security measures.

“We take these scams very seriously and we’re always analyzing and exploring new ways to stay ahead of this,” Cynthia Nowak, a Zillow spokesperson, told Inman News.

Source: “Sophisticated Zillow Scam Puts NAR and MLS on Alert,” Inman News (May 2, 2013)

8 Best Markets for Flipping Houses.

8 Best Markets for Flipping Houses. Image courtesy of adamr / FreeDigitalPhotos.net

More investors are rehabilitating homes and looking to sell them for profit, a move known as flipping houses.

RealtyTrac recently evaluated more than 600 metro areas to find where flipping single-family homes offers some of the highest returns based on the investor’s gross profit. The top eight metros for house-flipping are:

Orlando

Average purchase price: $103,701

Average flipped price: $168,677

Gross profit percent: 63 percent

Las Vegas

Average purchase price: $133,198

Average flipped price: $203,945

Gross profit percent: 53 percent

Phoenix

Average purchase price: $146,528

Average flipped price: $210,290

Gross profit percent: 44 percent

Tampa, Fla.

Average purchase price: $79,538

Average flipped price: $113,676

Gross profit percent: 43 percent

Memphis, Tenn.

Average purchase price: $68,318

Average flipped price: $96,870

Gross profit percent: 42 percent

Miami 

Average purchase price: $138,064

Average flipped price: $189,291

Gross profit percent: 37 percent

Lakeland, Fla.

Average purchase price: $68,444

Average flipped price: $93,715

Gross profit percent: 37 percent

Nashville, Tenn.

Average purchase price: $108,851

Average flipped price: $146,872

Gross profit percent: 35 percent

Source: “Best Markets for Flipping Homes,” HousingWire (May 2, 2013)

Loan Demand Rises as Rates Fall

Loan Demand Rises as Rates Fall. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Mortgage applications climbed 2 percent last week as several key interest rates dropped, the Mortgage Bankers Association reports.

Mortgage applications for refinancings, which make up the biggest bulk of MBA’s index, rose 3 percent for the week ending April 26, reaching its highest level since January. Meanwhile, mortgage applications for home purchases fell last week by 1.4 percent compared to a week earlier.

“Low interest rates have attracted new buyers and persuaded many home owners to refinance their mortgages,” Dow Jones reports. “However, tightened credit restrictions still bar many borrowers from filing loan applications.”

The 30-year fixed-rate mortgage averaged 3.6 percent last week, its lowest rate since December, MBA reports.

Source: “U.S. Mortgage Applications Up 2%,” Dow Jones Newswires (May 1, 2013)

Housing Price Surge ‘Simply Supply and Demand’.

Housing Price Surge ‘Simply Supply and Demand’. Strongest Job Markets Have Biggest Home Price Rises. Image courtesy of ddpavumba / FreeDigitalPhotos.net

Home prices are rising at the fastest rate in years, with some areas even seeing double-digit increases.

“Nobody that I’m aware of anticipated the kind of price growth that we’ve had,” says Budge Huskey, chief executive of Coldwell Banker Real Estate LLC. “It’s simple supply and demand.”

“Supplies have dwindled as banks have pushed fewer homes through foreclosure and because many home owners are either unable or unwilling to sell due to a variety of factors related to the housing-crash hangover,” The Wall Street Journal reports. “Meanwhile, demand has picked up as the economy has added jobs, which has boosted household formation. Rising rents and falling mortgage rates have made ownership more attractive.”

Home ownership remains highly affordable, mostly due to ultra low mortgage rates. In fact, if mortgage rates continue to remain near 3.5 percent, home values would need to increase by 32 percent nationwide for housing affordability to return to its long-run average, and by up to 48 percent in markets across the Midwest and north Florida, according to a study by John Burns Real Estate Consulting in Irvine, Calif.

Despite recent home price increases, “in many instances, owning still beats renting,” says Joseph LaVorgna, chief U.S. economist at Deutsche Bank. “I don’t think this is bubble-like at all.”

Source: “Housing Market Accelerates,” The Wall Street Journal (April 30, 2013)

Strongest Job Markets Have Biggest Home Price Rises

Strongest Job Markets Have Biggest Home Price Rises. Image courtesy of renjith krishnan / FreeDigitalPhotos.net

Job growth is helping to lift the housing market in key areas.

The three cities that are posting some of the strongest price growth year-over-year are also seeing faster job growth than the national average, according to government data.

Phoenix, San Francisco, and Las Vegas have seen home prices rise nearly 20 percent or more year-over-year. All three cities also beat the national job growth average of 1.5 percent year over year.

For example, Phoenix posted a 2.4 percent gain in jobs year over year; San Francisco a 3.6 percent rise; and Las Vegas was up 2 percent.

In Phoenix, investors are making up nearly 28 percent of March sales, Mike Orr, a real estate expert at Arizona State University, told USA Today. Phoenix is also seeing a very tight inventory, with a 2.9 month supply of homes for sale; a 6-month supply is considered balanced.

In San Francisco, the single-family home supply was also tight, averaging 3.1 months in February, according to the California Association of REALTORS®.

Source: “Rising home prices, job growth go hand-in-hand,” USA Today (April 30, 2013)

Home Ownership Rate Drops to Lowest Point in 18 Years.

Home Ownership Rate Drops to Lowest Point in 18 Years. Image courtesy of Michal Marcol / FreeDigitalPhotos.net

The U.S. home ownership rate has fallen to its lowest point since 1995, the Census Bureau reports.

The home ownership rate dropped to 65 percent in the first quarter, down slightly from 65.4 percent a year earlier.

Housing analysts say tight credit conditions, constrained inventories of for-sale homes, and an increase in single-family rental homes have caused the home ownership rate to fall.

Paul Diggle, a property economist for Capital Economics, says he predicts the home ownership rate will likely fall for the remainder of the year.

The home ownership rate peaked in June 2004 when it stood at 69.2 percent.

Source: “U.S. Homeownership Rate Falls to Lowest Since 1995,” Bloomberg News (April 30, 2013)

4 Ways to Boost Exposure on LinkedIn.

4 Ways to Boost Exposure on LinkedIn. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

LinkedIn can help real estate agents create a unique and personal professional brand by taking control of the people they connect with, the groups they join, the recommendations they give and receive, and the ways they express their real estate skills and experience.

Here’s how:

• Agents need to completely fill out their LinkedIn profiles—particularly the experience and summary sections—taking care to include past companies, education, affiliations, and activities to help them connect with other professionals.
• They should make their profiles public, create a LinkedIn vanity URL to boost their search results, link to their profile in their email signatures and on their websites, and ensure their business cards and printed materials feature a call to action that will drive people to their LinkedIn profiles.
• Agents also need to connect with clients on LinkedIn to boost their number of connections and increase their visibility, trade endorsements with other professionals, and join and participate in relevant local community groups.
• They should set aside 20 minutes twice per week for replying to comments and questions in their groups and initiating conversations in the groups they lead.  Agents need to maintain an active presence on LinkedIn and nurture their connections if they hope to generate leads.

Source: “The 8-Step LinkedIn Marketing Plan,” RISMedia (April 25, 2013)

Renters Say More Buildings Should Welcome Pets.

Renters Say More Buildings Should Welcome Pets. Image courtesy of marin / FreeDigitalPhotos.net

Seventy-five percent of renters say they own pets, yet many are not able to find enough pet-friendly rental options, a new survey of 1,100 renters by Apartments.com shows. Last year, only 43 percent of renters said they owned pets.

More than 60 percent of survey respondents say they’ve struggled to find pet-friendly rental options. Those who were able to find pet-friendly options said they had to pay a one-time pet deposit or pricey monthly fees.

“Clearly, pets are a deal-breaker for many, and apartment buildings with more flexible pet policies will be the ones to attract this growing group of pet-owning renters—and possibly keep them for a longer period of time,” says Tammy Kotula, a spokesperson for Apartments.com. “Nearly all pet owners surveyed said pet policies play a major role in their decision of where to live.”

Source: “Survey: Most Renters Have Pets, Despite the Restrictions,” AOL Real Estate (April 29, 2013)

Explore Short Sale Lease Back Programs.

Explore Short Sale Lease Back Programs. Image courtesy of Naypong / FreeDigitalPhotos.net

A Riverside, Calif. real estate broker has debuted a Short Sale Lease Back program. Other organizations are coming up with similar programs to help home owners get back on their feet again after a short sale.

Bob Irish, with Lake Hills Realty and CEO of National Short Sales, has facilitated a Short Sale Lease Back (SSLB) training program for agents nationwide. The program allows home owners to sell their underwater home to a nonprofit company that would then set up an arrangement to allow them to remain there for up to three years while paying a fair market rent on the home. If the renter keeps up with their payments, he or she would be able to buy a home again at end of the rental term.

More lenders are warming up to the idea of a short sale lease back, but some are concerned that the program may be an “escape mechanism for sellers who want to exit their underwater mortgage with no consequences and sell to a company that allows them to stay in their home,” Realty Times reports.

In order to participate in the program, a home owner must have missed payments or be nearing default and face a provable hardship. They also must demonstrate the ability to pay fair market rent for the property. If a home owner qualifies under SSLB’s terms, the program will submit an offer for the home at a fair market price to the lender. The offer would also be careful to disclose the details of the lease back agreement as well.

“Full disclosure is key,” Realty Times reports. “It’s fraud to fabricate information or withhold information from your lender to make arrangements apart from the contract for the program.”

Source: “Short Sale Lease Back Alternative to Foreclosure Available,” Realty Times (April 26, 2013)

Home Contractor Scams a Growing Concern.

Home Contractor Scams a Growing Concern. Image courtesy of imagerymajestic / FreeDigitalPhotos.net

Home contractor scams are often on the rise in the spring, and home owners should take steps to make sure they aren’t duped.

The scams often target the elderly, with scammers offering to complete yard or household work for money up-front and then never completing the work after the payment is collected. Or, contractors may complete the work but then attach a higher price than was originally agreed upon.

Several reports of home contractor scams across the country have surfaced in recent weeks. For example, a 77-year-old man in the Philadelphia area was reportedly scammed into paying for a roof repair, which he later discovered was completed using a useless, tar-like substance. In another case, an 83-year-old woman paid a contractor $4,300 and then never saw him again.

“In many cases, we see a person posing as a licensed or reputable contractor, and all checks out until the first payment is made to begin the job, and then the subject disappears,” says Tom Burnett, a spokesman for Wymoo International, a detective agency based in Jacksonville, Fla. “We see fake business cards and web sites being used, and criminals can assume the identity of a real contractor, register a company or use an alias. The goal is always the first payment.”

Burnett recommends contacting the Better Business Bureau to check for any complaints against the company or contractor, asking for references and then actually contacting those references, and asking for the contractor’s license number to verify with your state’s Department of Professional Regulation or the contractor’s state license board.

“If someone offers to do a really quick job on your house for a really low price, and it sounds too sound to be true, it probably is,” says Amy Matthews, a spokesperson for Home Advisor, an online site that matches home owners with licensed home contractors.

Source: “How to Spot a Home-Contractor Scam,” U.S. News & World Reports (April 24, 2013)