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175-TNG Radio – Bill Shipp-Young 5-22-10

Friday, May 21st, 2010

Bill Shipp

Bill Shipp, California Real estate Investor

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This week Bruce is joined by Bill Shipp. Bill has been investing in Riverside real estate for many years. Bruce thinks Bill is Riverside’s best kept secret.

Bill believes it is important to be true to your word when doing business. Bill has been working with his contractors for 10 years, and he has never had a bid on a home repair. These contractors know that if Bill hires them, they will get paid at the time he specifies. This is even more important than having people skills.

Bruce has taught many real estate investors. Some of them have great people skills, and that is what gets them business. There are also people that are trustworthy, and that is also attractive to business partners.

In the last segment, Bill said that he is willing to do his job every day, and that attitude has allowed him to accumulate a wealth of knowledge. Bill’s knowledge of his market place allows him to live in Utah while still making good investment decisions in Riverside.

Bill has never closed an escrow with a person in it, and he has never bought a house at the steps. Bill does not want to deal with those hassles. This is why he uses the MLS and agents who know what they are doing. Bill gets over 50 percent of the houses that he makes offers on, because his realtors know not to call him unless a home shows promise. Bill works regularly with two realtors, but he receives calls occasionally from other REO agents as well.

Bill has a specific skew number for the paint which he uses on all his houses. Because he uses the same paint for his houses, it is easier for him to calculate how much repairs will cost when buying a new home. This also makes it much simpler for his repair men, because they know exactly what to do for every new job.

Bill discourages investors from traveling to see their investments. Do it for the first two properties, so you can figure out how to do the job. After the second, you should know what kind of property is worth your time, and trust your contractor to do his job. Traveling to your investment homes will cost you money and time. Also, Bill suggests that investors not bring their wives. His wife always has minor problems with his investments, such as the amount of flowers in the yard.

The typical repair cost for Bill’s investment houses is $15,000 or less. However, he has had home repairs that cost $100,000. In the early 2000s, he bought older homes. The oldest home he ever bought was developed in 1828. The house was so old that the home began to dissolve when the repair man tried to pressure wash it. Bruce once bought a home in 1898. Bruce had a termite investor inspect the home, and the inspector told him that there were no termites because the wood was petrified.

Bill does not have a construction background, but he has learned some things about that trade over time. When you buy a lot of older homes, you have to be creative to find a style that people will want to buy. In the late 1980s, Bill only bought homes that were 5 to 10 years old and did not need work, but Bill now only works with fixers built before the 2000s. Bill does not like to compete with home owners. When you are flipping new homes, you are not creating value. Bill thinks that working in the trustee market requires too much work. This is what Bruce’s company does, and Bruce agrees that the trustee market is too much hassle for Bill’s business model.

When reselling a property, Bill uses the listing agent that found the home for him, and he only uses two agents to keep the process simple. Using a large number of agents makes it difficult to determine whether or not those agents are doing their jobs correctly.

When Bill is selling his properties, he tries to control the escrow, but he never controls which lender is used. Bill’s buyers are always cross checked with the lender. Bill’s agent will not tell him that he has an offer until the buyer has been cross checked, and until he can know if he will get a good offer.

Bill is constantly educating himself in real estate. He reads many books, he has attended Bruce’s seminars, and he has been trained as a certified financial planner. Bill believes that many people know how to make a lot of money, but they do not know how to spend it. People do not often plan for downturns in the market, and their lack of planning ruins their financial health.

In the early 1990s, Bill had 40 rentals. It took 8 years to get those homes sold, and it was very frustrating because the market kept going down.

Bill began investing in Texas during 1989. He bought homes for $10,000 each and he owned them free and clear, but he was receiving negative cashflow every month because of property taxes. Repairing one roof could wipe out your positive cashflow for a year. In the end, he only made money on one of those homes. Do not buy real estate in other cities and states if you do not know what you are doing.

In 1986 Bruce was asked to speak on a panel of real estate experts. There were two well known attorneys on the panel, and all of their claims regarding out-of-state property ownership contradicted Bruce’s practical experience. When Bruce asked those attorneys how they came to their conclusions, he discovered that they had no out-of-state investment experience and were relying on theoretical knowledge. When people come from other states and tell you to buy homes in their areas, be careful. Why would someone travel across the United States to encourage you to buy their property if they cannot even get the people from their own state to buy?

If there are more listings in a region than sells, you should be nervous. On the other hand, if there are more sells than listings, then you should be happy. This is all Bill looks at when predicting whether or not he should be investing. Bill does not pay much attention to economic forecasts. He only pays attention to Riverside’s market, so he does not have to worry about general market forecasts.

The best deal Bill ever had was a wholesale in Corona. The property sold in 2 weeks and he earned over $100,000. If you want to find deals, you need to be watching the market every day. You never know why a seller might want to get rid of their property quickly. An agent once called Bill and told him that the seller was offering five houses and two lots on one street. The seller was the chairman of a bank who had stock options which were about to expire. The banker needed the money for those properties quickly, so that he could buy his stock. This deal shows that you never know why and when a great deal is going to show up. Bruce once bought a house from an agent once who was getting into the plastic extrusion business. The agent needed to buy an extrusion machine for $10,000, so Bruce bought two of his homes for that amount.

Bill has been approached with bulk buying opportunities over the last few months. The people offering these bulk buy deals told Bill that they have had bulk buys in the past that sold quickly. When Bill asked for an example of one of these bulk deals, he never received a response and he still hasn’t. Bill received a bulk buy opportunity from a company in Los Angeles as well. Because the company seemed professional, Bill had his agent check out the properties. The agent discovered that all 20 of the properties for bulk sale were short sales.

Bruce will be a moderator for Fannie and Freddie in June. These companies are putting together bulk sale divisions, so perhaps bulk sale opportunities will be available in the future.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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174-TNG Radio – Bill Shipp-Young 5-15-10

Friday, May 14th, 2010

Bill Shipp, California Real estate Investor

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This week Bruce is joined by Bill Shipp. Bill has been investing in Riverside real estate for many years. Bruce thinks Bill is Riverside’s best kept secret.

Bill began flipping homes in 1986. He did his first flip deal when he was 18 years old. He had a family member who had bought the lot but could not afford it, so Bill agreed to buy it for 2,600 dollars and he sold it a couple years later for $6,000.

Before his first real estate investment, Bill was an airforce brat. He moved around a lot which made him wish he could own a house. Prior to 1986, Bill was working a corporate job and strongly disliked it. He had a good friend who was a real estate investor in the Long Beach area. This friend encouraged Bill to learn real estate. Bill’s friend explained that Bill would most likely not become very wealthy if he continued to work in the corporate world, and he would always have to worry about his job security. If you own your own business of buying and selling real estate you can never get fired. This encouraged Bill to quit his job and begin working as a real estate agent.

Bill did learn some important lessons from the corporate world. He learned to run his real estate business the same way as if he was working a corporate job. He did not sleep in just because he owned his own business. He would begin working at 8, and he worked normal hours.

Bill’s mentor taught him how to buy homes, and how to figure out prices and fixing costs. His mentor was very regimented. If Bill was even a minute late, his mentor would leave him. Bill listened to all of his mentor’s phone calls, and he learned how he conducted business with other visitors.

Bill’s mentor never got into educating people. He simply picked a few people that he new personally to work with him. Bill thinks he was the lucky person to be picked by this mentor because he showed good discipline.

Bill has bought and sold 360 houses. He does not have make many deals in which he personally speaks to the home owners he buys from; he probably only talks about 10 percent of these home owners. He never used mailers or signs.

If Bill was beginning to invest in Riverside with all his current knowledge, he would first call his agent and show them his accomplishments. Agents hear from many people who claim to be real estate investors but are not truly serious. For this reason, Bill keeps a portfolio of every house he has bought and sold. He shows this portfolio to agents during interviews. He then tries to persuade these agents that working with him is a good idea. He interviews multiple agents until he finds a couple of agents who are willing to be trained for his specific style of work.

Bill has not tried to develop relationships with people who control the most popular sources of REOs, but his name is somewhat well known by these people because of the business he does.

A typical investor will receive a call from an agent in which the agent explains what kinds of new inventory have recently come up. This agent might tell the investor that 20 new listings showed up. The agent and the investor would then look at many of those houses and attempt to narrow down their options. The kind of calls that Bill receives from his agents is very different. Bill’s agents will tell him which one of those 20 properties he would most likely be interested in. Bill would then ask who is listing the home, and the realtor would be able to tell him whether or not he had done business with that person previously. His Realtor would also be able to tell him what kind of neighborhood it is in, and whether or not he has done business in that area before. This Realtor would also give him a description of the other houses on sale in that area, the price they are listed at, and a description of the property Bill wants to buy. He would then make an offer slightly below the typical asking price of that neighborhood, and his offer would be made within just a few hours of being listed. This is how you beat the competition. You have to be able to make offers and close deals before the competition arrives.

What really gives Bill an advantage over his competition is the ability of his realtors to identify houses within specific streets of his city. Bill’s realtors are so familiar with their areas that they can look at a specific street, compare the prices of the other properties for sale on that street, and quickly determine whether or not a specific house is a good deal.

Agents are often skeptical of whether or not there are whole sale deals on the market. Part of the problems is that they are not disciplined, they are not experienced, and they are not accustomed to doing their job every day. It takes time for agents to spot a good deal quickly. Bill can buy properties out of the MLS even when the market is going up, and people claim there is no way to find a deal. When Bill told Bruce this in 2004, Bruce was very surprised and it taught him something.

During the real estate boom, everyone was an investor; you did not need to be good at investing during that time to make money. During that time, Bill was not worried about competition because there was so much business.

Name familiarity is very important when dealing with people who control the source of inventory. People who know Bill know that he has only backed out of 1 offer in his entire real estate career. If people know you are going to go through with your offers, they will be more willing to do business with you.

Bill typically puts a $5,000 deposit on his offers regardless of the home price. Bill recently lost an offer to someone who gave an offer for 100 percent of the purchase price. This was an investor trained by Bruce Norris.

Bill usually offers a 10 day close, or the seller’s preference. He has actually lost offers in the past because the bank felt the closing time was too quick, so allowing the seller to choose the closing time is best.

When Bill discovers that he has made an offer on a property with multiple offers, he simply responds by giving them his highest and best offer. Bill doesn’t have a problem with making only $20,000 on a property which gives him an advantage when making offers. Some investors will not bother making a deal if they cannot buy it for 62 percent of the price.

Bill may be one of the biggest investors in California, but he actually lives in Utah. He has developed a business model which does not need him to make full time deals. Bill cannot think of anyone with a business model like this, and that is why he sticks to one city. Having all his properties within a very specific region allows him to easily manage all his properties. Bill does not invest at all in Utah.

Bill typically buys under the $200,000 price range. Many of his buyers are FHA buyers, and many of them are conventional. When the market gets slow, Bill does not fight it, he just quits and waits until things pick up. Bill did have some trouble getting back into the market not long ago, because many rules had changed since his last transaction. When Bill re-entered the market, the 90 day FHA rule was still in place, and Bill did not know about it. His first offer was an FHA and the appraisal came in $15,000 low. He chose to be satisfied with the $10,000 dollars he made off the property and move on. Bill encourages people to not fall in love with their properties, so they will make smart selling decisions. Bill decided to leave the market in 2007 because he was receiving multiple offers on all his homes, and the offers were too high. Things were getting too crazy. When Bill looked at the loan documents, his buyers would have a 10 percent interest rate with a 700 FICO score. Bill wanted to tell these people, “What are you thinking?”

Bill does not buy and hold rentals. Bruce thinks that is interesting because many people think that is the best way to invest. Bill believes that if you are a full time investor, flipping houses will be more profitable then renting. However, renting is a good option for passive investors. Passive investing is what Bill did when he first started investing. When he first starting buying properties, he bought 45 rentals and he eventually ended up with negative cash flow. When times get tough, people start moving which leaves you with vacant rentals.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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173-TNG Radio – Leslie Appleton-Young 5-8-10

Friday, May 7th, 2010

Leslie Appleton-Young

Leslie Appleton-Young,
Chief Economist of the California Association of Realtors

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This week Bruce is joined by Chief Econ0mist for the California Association of Realtors, Leslie Appleton-Young.

The peak of the median home price in May 2007 was almost $600,000. Bruce believes there were indications that we were no longer in the peak in May 2007 despite the fact that median prices reached that level. Transactions slowed in the 4th quarter of 2005. In Sacramento, there was a lot of new construction, affordable housing, and subprime borrowing. In areas like Sacramento, homes were purchased in 2003 and 2004, but they began adjusting in 2006. These properties started faltering for a full year before they showed up in the data. Sales at the moderate and low end shrunk, but sales at the high end were doing fine, so the median home price became skewed. Prices went down in 2007 and 2008, but at the same time, sales were increasing by over 25 percent.

We have never experienced a price decline like this recent one. However, the San Fernando Valleys had a significant drop in 1990’s when there were fires, floods and riots. At that time, the median went from $225,000 to $165,000 in that area.

There are many owners who put down 20 percent on their home, but now owe more than their house is worth. There were people with good jobs and good mortgages, but got in trouble once prices decreased. In the future, we need to be more aware of cash-out refis. People who had equity would use it for vacations and toys rather than investment. We had such a long run –up in price that people began to think that real estate could not hurt them. They thought that pulling out equity now would be replaced by more equity later, and that was not true.

There are many people who are defaulting strategically presently, because they don’t want to pay for a property which won’t return to its previous value in many years. However, you have to weigh this benefit against the damage done to your credit. Strategic defaults are becoming more prevalent, and it is becoming more socially acceptable. It was once considered bad to choose to stop paying on a mortgage, but now people find it acceptable. Fannie Mae just came out with a statement which allows people to get financing within 2 years if you will give a deed-in-lieu of foreclosure. This new rules will come into affect July 1st. The new mortgage you get in 2 years will likely require 20 percent down.

Distressed sales have never been this high. ForeclosureRadar.com provides a tremendous educational opportunity for those interested in learning about the distressed sales market. In areas like Riverside, distressed sales represent nearly 80 percent of all sales. Short sales are also beginning to increase.

Distressed sales have been more common in the lower end of the market. However, now that the downturn has been going on for so long, foreclosures are becoming more common in the upper end of the market.

In Riverside County, there are approximately 3,000 homes with over 3,000 square feet which are pending for sale. Bruce doubts that we have buyers for all those homes, and the loan balance for many of those homes is probably over $1 million. Bruce thinks that we are going to have a price hit and glut of inventory in the upper end of the market.

Leslie thinks that first time buyers are in good shape with the stimulus package, but the trade-up buyers are having trouble. When you have a median price of $600,000 and the government programs are specifically designed to help people that owe less than the Fannie Mae maximum loan balance, then you are probably missing 35 percent of the market. People who owe $1 million dollars have no encouragement to buy again. Bruce thinks that having a home above 3,500 sq. feet will be less meaningful in appraisal values than ever before.

The spread in the jumbo loan market has come down to 1 percent. Many of these borrowers are putting down 30 to 40 percent down for jumbo loans. To get those loans, you need to have a large down payment and a strong FICO score. Many loans are being held in portfolio by the lender, because they want to have a cushion going forward.

People have different reasons for buying now than they did in 2006. People are not buying homes expecting to get rich off of their homes. They thought they could sell their homes once the interest adjusts or refinance, and when the adjustment time came, neither of those options were available. Now people realize that they are not going to get rich over night just because they own a house, and they are looking for a place to raise a family.

There is a strong disconnect in the mind of a person in congress between the word investor and speculator. In this market, the speculator has gone home, but investors are working to fix up houses and they are needed. Banks do not have the resources to rehab and get homes onto the market in a timely fashion.

Bruce will be a moderator on an interestingly panel coming up in June for Fannie Mae and Freddie Mac. These two companies are starting bulk divisions. Bruce wonders what size of bulk deals they are planning for, and whether or not there will be restrictions on detaining those properties. Bruce is not sure when Fannie and Freddie will finalize their decision on this subject. Bruce is also trying to get Sean O’toole from ForeclosureRadar.com to be a moderator as well. REO agents can benefit from listing homes ten at a time, rather than 1 at a time. There is a huge chunk of negative equity properties that need to get through the process, and anything that speeds that process up in a reasonable manner is a good thing.

There are many people in California who are showing tremendous character by paying for an upside down property. The best way to reward these people is to show them that there is hope for equity replacement in the near future.

60 percent of people are not buying homes, yet very few are renters. Leslie thinks many of these people are moving in with their parents and children. The housing downturn has affected very aspect of the economy, so people need to save.

There is a statistic showing that 200,000 homes are built every year. Builders are looking at this statistic and thinking they need to build more houses, but you have to be more realistic than that. The reason why builders aren’t building homes is because nobody is willing to buy. However, all these people that have moved in with their families to save money will someday want to move out. We are artificially skewing our building to the low side right now. There will be a day when builders will be behind the curve, and demand will accelerate far faster than the inventory.

Many jobs have been lost in the California construction industry, but these jobs are starting to return. Leslie thinks that this industry will make a comeback in a few years. We need to make jobs from new products and services. We usually expect construction to provide jobs at the end of a downturn, but that will probably not happen this time. Consumer confidence increased in March, but it is still only half of what it was one year ago. The opportunity for builders lies in creating multigenerational housing.

A report was just made on the demographics of California through 2050. The numbers show that we are very different from the other states, and that we will probably grow. Our growth will cause more demand for housing, but it will not happen over the next few years because of the problems we’ve had.

In Riverside, unemployment is close to 15 percent, but that probably translates to around 20 percent because many people have stopped looking for jobs. Riverside County used to be the leading county in California in regards to employment growth. People will always migrate to places with more jobs. California is currently losing people to other states with better employment. Uhaul recently came up with a report on moving destinations, and one of the top destinations was Sacramento. People are moving there because housing is more affordable and they have been able to find some sort of employment. It will take time to work through California’s negative equity position, but we will improve eventually.

Unemployment is usually an instigator of foreclosure, but this time unemployment has lagged from foreclosure yet is increasing the problem. There are areas that were not subprime focused that are being dragged into the overall problem because prices have gone down.

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172-TNG Radio – Leslie Appleton-Young 5-1-10

Friday, April 30th, 2010

Leslie Appleton-Young

Leslie Appleton-Young,
Chief Economist of the California Association of Realtors

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This week Bruce is joined by Chief Econ0mist for the California Association of Realtors, Leslie Appleton-Young.

Leslie has had a tough job for the past few years, but things have changed for the better this year. Leslie can see the light at the end of the tunnel, and people’s expectations of the market have become more realistic. People are not as afraid of the downturn. However, she does not feel that this is true in all price bands. Over the next 24 months, the upper end of the market will experience many more price reductions. In the moderate to low end of the distressed market, Leslie predicts that prices will remain flat, and possibly increase slightly. The upper end of the market has seen some adjustment, but nothing like the lower end of the market. As the economic turmoil hits upper end markets, sellers will have to be more realistic about what they expect to get for their homes. In Riverside, there are some great homes with loans on them worth $1.5 million, but they cannot even sell for $700,000.

The lower price, subprime inventory has been absorbed, and that part of the market seems to be coming back. The stimulus for first time buyers and the decreased rates have had a significant influence on home purchases.

Every area in California is unique and different, but the dichotomy in today’s housing market has more to do with price than location. Part of the problem is that people are having trouble qualifying for loans. Demand for homes at the low end of the market exceeds the supply, but the opposite is true for the high end.

In the past, Bruce has found that inventory levels are pretty accurate leading statistics. When you are below a certain months level of inventory, you can often reasonably assume that things will turn around. There are a lot of lenders with properties that are not on the market. Default rates have also exploded, but the lenders will not file NODs. There is a penned up group of buyers, and there may also be a penned up group of buyers. Leslie thinks that government intervention will determine how this problem is rectified. It is difficult to predict how the government will deal with this problem.

California has benefited from the stimulus programs. We are starting to see more green shoots, and Leslie thinks that the iPad may have positively affected our economy. The state deficit has decreased over the last few months. California is an outlier. We boom harder, we sell more, and we improve quicker. However, our recovery is generally rather flat. We had a 5.9 percent GDP growth in the 4th quarter of 2009, and 4 percent of that was inventory restocking. Leslie wonders how much of our retail sales growth is tied to all those homes that are behind on their mortgages. We are not out of this downturn yet, but we are improving. The government stimulus is going away, and that is why there is some uncertainty about the outcome of the second half of this year. We will likely see interest rates increase. They have already increased a bit, but only by a quarter point. If interest rates climbed above 6 percent, Leslie thinks that there would be a strong negative reaction in the market.

Sometimes when rates increase, people feel encouraged to buy before rates become unreasonable. It is important for people to remember that it is not clear that prices have bottomed in all categories, but it is pretty clear that rates will be higher in a year than they are now. People need to measure the tradeoff between the cost of increased rates and decreased prices.

When Bruce became an investor, he refinanced his home in 1981 at 17.5 percent. One year later, he was delighted to refinance at 12.5. Very smart people told him that rates would never go below 10 percent, but now many people would feel jipped if they bought at a rate above 6 percent even though that is a historically incredible rate.

One thing that is really different this time around is the role of equity, or the lack of it, has played in the cycle. If you don’t have equity, you are not a homeowner. The policies for home buying and selling during the boom caused many of our current problems. When you have to pony up 20 percent, and you have equity in your home, you treat home buying and selling very differently than someone who is buying without documentation and zero down. In 2006, 40 percent of Realtors working with first time home buyers said that the buyers did not put down any money.

Bruce thinks the timing of the no down program was atrocious, because the price to income level was absurd. However, Bruce actually thinks we should have a no-down program in our current market. We have to create households that are fit to own. We have just taken back hundreds of thousands of homes from people that wanted to be owners, which are now credit damaged and cannot re-enter the market. We could make a no-down payment program, but when somebody doesn’t make a payment, we could let the loan go forward to the next owner without qualifying just like how the FHA once operated. The other option is to let the opening bid for the next 5 years to consist of just the late payment. If we used this program, there would never be an REO. The nothing down program would create a lot of interest in new owners, and we might retain the current percentage of homeownership that we already have. Bruce fears that we will have a national decline in the 62 percent range, and California will have another downturn in homeownership. Bruce loves the statistics that Leslie puts out.

There is a big difference between the net dollar amount coming to the seller now in comparison to the past. It was once around $200,000, but now its only about $50,000. One-third of these sellers sold at a lost. This creates a negative perspective on real estate which discourages people from investing in a home in the future. In a recent survey, 60 percent of past homebuyers claimed to have no future interest in buying again.

California homes are very affordable right now, because of the price decrease and the low interest rates. However, we are still feeling that it is necessary to encourage potential buyers to enter the market. The tax credit was truly a present to first time buyers. First time buyers are now approximately 50 percent of the volume of current home buyers.

We now have a healthy volume of sells. For 19 consecutive months, we have had a pace of over 500,000. We never even passed the 500,000 pace until 1999. The accumulative dollars are very different now from the peak. Commissions earned by realtors are very different from 2006 and 2007. Incomes have changed the membership of CAR, but not as much as Leslie was expecting. In 2007, there were 211,000 realtors in California. This year, we will probably have around 172,000. That is a significant drop, but considering the significant drop in profit volume, that is a rather small drop. This isn’t surprising though because the economy has not left with people with many other job options. If you work hard enough, you can still be successful. This market works well for the first time agent because there are a lot of first time buyers.

Website presence is critical right now. A recent buyers’ survey asked, “Did you look in the newspaper during your home search?” The results showed that only 10 percent of people were using the paper as a reference. People are searching for homes using very different methods, but it is actually very cheap to advertise online. All of the brokerages have cut back on overhead and expenses. A realtor may not have an office, but they can still be visible online if they have a laptop.

The internet has allowed the consumer to shop around without spending the realtor’s time. However, Leslie has found that 85 percent of home buyers were shown their current home by an agent. Perhaps the internet is presenting too much information for uneducated buyers. Also, in a market where properties are selling quickly, you need to have an agent helping you to be the first potential buyer in line.

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The Norris Group Real Estate News Roundup 2/10/10

Wednesday, February 10th, 2010

Today’s News Synopsis:

The MBA reports that mortgage application volume decreased by 1.2 percent from last week. According to the NAHB, there were approximately 234,000 homes for sale at the end of 2009. Statistics from Zillow show that the national median price was $186,200 in Q409 of 2009. The total number of FHA-insured single-family mortgages in default reached 531,671 in Q409 of 2009.

In The News:

Mortgage Bankers Association – “Purchase Applications Decline in Latest MBA Weekly Survey” (2-10-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending February 5, 2010. The Market Composite Index, a measure of mortgage loan application volume, decreased 1.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 0.6 percent compared with the previous week.”

Wall Street Journal – “Spec Houses Rise as Builders Bet on Buyers Before Tax Credit Ends” (2-10-10)

“Houses typically take between four and six months to build, so the window to start construction is closing quickly. And current inventory is low. At the end of 2009, there were 234,000 homes for sale, the lowest level since April 1971, according to the National Association of Home Builders. It’s difficult to measure the total number of spec homes nationwide. But according to a survey conducted by John Burns Real Estate Consulting, based in Irvine, Calif., home builders have about three finished homes with no buyer per community. That’s up slightly from 2.8 finished homes in November but much lower than the peak of six finished homes in July 2008.”

Mercury News – “Bay Area home prices may drop, real estate firm warns” (2-10-10)

“The median estimated value of all Santa Clara County homes at the end of the fourth quarter was $568,401, up a fraction from $564,360 in the third quarter, Zillow reported. In San Mateo County, prices have already begun to fall. The median estimated value of all homes was $635,264 in the fourth quarter, down 0.68 percent from $639,600 in the third quarter. Home values fell in San Mateo County from September through December, Zillow said, after four months of increases from May through August.”

Housing Wire – “Zillow Warns on Double Dip in House Prices” (2-10-10)

“The Zillow Home Value Index put the national median price at $186,200 in Q409, a 5% decrease from Q408. Compared to Q309, prices declined 0.5% during the last quarter of 2009. The index is a measure of median home values of all single-family residences, condominiums and cooperatives, both on the market and not for sale. Q409 marked the 12th consecutive quarter of year-over-year declines, Zillow said.”

Housing Wire – “Defaults on FHA Mortgages Pass 9 Percent” (2-10-10)

“The default rate in the single-family FHA portfolio reached 9.12% in Q409, climbing from 6.82% in Q408, according to the Federal Housing Administration December monthly report. The total number of FHA-insured single-family mortgages in default reached 531,671 in Q409, a 66% increase from 319,741 in Q408. In that same period, modifications on FHA-backed loans increased 54% to 23,973 in Q409.”

Housing Wire – “Feds Outline Mortgage Securities Exit Strategy” (2-10-10)

“And according to Federal Reserve chairman Ben Bernanke, a series of policy wind-down methods are being tested. The Fed may first drain excess reserves built up over many months through extraordinary asset-purchase programs, and then begin to raise interest rates. Or the Fed could pursue both options simultaneous to facilitate a quicker exit. Ultimately, economic developments will determine the exit process.”

Housing Wire – “Freddie Mac Will Buy Out 120-Day Delinquent Mortgages” (2-10-10)

“Government-sponsored mortgage securitizer Freddie Mac (FRE: 1.24 +3.33%) said today it will buy ’substantially all’ mortgages delinquent by at least 120 days from the company’s related fixed-rate and adjustable-rate mortgage (FRM and ARM) Participation Certificate (PC) securities. Freddie said the loan purchases will show up in the PC factor report published after March 4, 2010. The corresponding principal payments on affected PCs will pass through to FRM and ARM PC holders on March 15 and April 15, respectively.”

Housing Wire – “Option ARMs Don’t Measure Up in HAMP: BofA” (2-10-10)

“Of all mortgage collateral sectors, pay-option adjustable-rate mortgages (ARMs) are the least modifiable under a federally-subsidized modification program, according to research Monday by Bank of America Merrill Lynch (BofAML). Researchers found that, in general, collateral with higher delinquencies see higher modification rates. But despite the wave of option ARMs set to recast monthly payments over the next several years, these types of loan fall in ‘the least modifiable sector’ under the Home Affordable Modification Program (HAMP) because of their failure to measure up to eligibility requirements and net present value (NPV) test requirements.”

Orange County Register – “Expect more price cuts on high end homes” (2-10-10)

“Data from 2009 MLS sales for Laguna Beach show that last year started out extremely slow. February 2009 recorded a record low of only 6 residential properties sold for the entire month. By contrast, buying activity picked up enough by year end that December was the highest single month of sales since May 2006.”

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The Norris Group Real Estate News Roundup 12/10/09

Thursday, December 10th, 2009

Today’s News Synopsis:

According to RealtyTrac, foreclosure activity decreased  by 8 percent in November. Hanley Wood Market Intelligence reports that Orange County builders had their first positive month in October, after 13 months of contract declines. A survey from HomeGain shows that 48 percent of agents and brokers believe that home prices will stay the same, and 24 percent believe that prices will increase.  Data from the U.S. Treasury Department shows that 31,382 of the 1 million three-month modifications have become permanent.

In The News:

DSNews - “Foreclosure Activity Recedes for Fourth Straight Month: RealtyTrac” (12-10-09)

“The foreclosure tide appears to be subsiding, according to the latest numbers from RealtyTrac. The company said Thursday that foreclosure activity fell 8 percent in November, compared to October – it’s the fourth consecutive month that RealtyTrac’s data has shown a decrease in foreclosure filings.”

CBIA - “California New-Home Market Breaks into Positive Territory, CBIA Announces” (12-10-09)

“The monthly CBIA/Hanley Wood Market Intelligence (HWMI) New-Home Sales and Pricing Report showed that sales in new-home communities of 10 units or more were 25 percent above October 2008, a strong improvement from the lingering year-over-year decline last month and represents the first notable increase since the start of the housing downturn. During October, 2,294 new homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 1,838 in October 2008. Sales of single-family homes were up by 4 percent, while sales of townhomes and ‘plexes’ – duplexes, triplexes, etc. – were up 36 percent and sales of condominiums were 94 percent higher than a year ago thanks to strong sales at projects in the Los Angeles and San Francisco areas.”

Orange County Register – “Losing streak ends for O.C. builders” (12-10-09)

“Hanley Wood Market Intelligence says after 13 straight months of annual declines in new home sales contracts, Orange County builders recorded their first up month in October. According to the Costa Mesa research firm, homebuyers signed 90 contracts to buy a new Orange County home that month, up 13.9% from October 2008.”

Inman - “Survey: Hopeful on home prices” (12-10-09)

“Forty-eight percent of agents and brokers surveyed think home prices will stay the same and 24 percent think prices will go up, the company reported. That’s a slight increase from the third-quarter survey, when those numbers were 46 percent and 23 percent, respectively. This marks a major change from HomeGain’s first-quarter survey when 36 percent thought prices would remain flat and 11 percent thought prices would increase. The survey had 928 respondents.”

Housing Wire – “30,000 Trial HAMP Mods Go Permanent” (12-10-09)

“Of the 1m homeowners who have been offered three-month trial modification under the Home Affordable Modification Program (HAMP), 31,382 have received a permanent modification, according to from the US Treasury Department.”

Housing Wire – “Mortgage Volume to Decline in 2010, Says Dorado” (12-10-09)

“Mortgage origination volume will decline next year compared to 2009 levels, but the use of software-as-a-service (SAAS) applications will rise, San Mateo, Calif.-based SAAS developer Dorado Corporation said in its projections for next year. Dorado projects more than 30% of mortgages created next year will be originated with SAAS applications, which generally work as Web-based tools a developer hosts on its own servers and distributes access through subscription licenses.”

Housing Wire – “Treasury Used $364bn of TARP funds in 2009″ (12-10-09)

“The Treasury Office of Financial Stability (OFS) used $364bn of the $700bn available funds, mostly in investments according to the report, and $73bn of the TARP funds have already been repaid. Bank of America last week committed to repaying the $45bn it received through the program.”

Housing Wire - “Mortgage Rates Rise off Record Lows” (12-10-09)

“Freddie Mac’s (FRE: 1.12 +0.90%) survey put the 30-year fixed-rate mortgage (FRM) at 4.81% with an average 0.7 point for the week ending Dec. 10, up from the previous week when it was a record low average of 4.71%. A year ago, Freddie Mac put the 30-year FRM at 5.47%.”

Bloomberg – “Wells Fargo Cuts as Much as 30 Percent in Principal” (12-10-09)

“Wells Fargo & Co., the bank that gained a portfolio of option adjustable-rate mortgages when it bought Wachovia Corp. last year, cut the principal for delinquent borrowers in some loans by as much as 30 percent. Wells Fargo has forgiven an average of $46,000 in principal, or 15 percent, for the 43,500 option-ARM loans it has modified this year through September, said Franklin Codel, chief financial officer at the bank’s home-lending unit.”

Looking Back:

One year ago, Orange County tax collectors reported that property tax collections decreased by $145 million. One hundred twenty-seven financial companies received preliminary approval for $60.4 billion from TARP.

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The Norris Group Real Estate News Roundup 12/04/09

Friday, December 4th, 2009

Today’s News Synopsis:

The unemployment rate declined to 10 percent during November. As of September, less than 0.3 percent of all trial modifications have become permanent. The FDIC announced plans that may require some lenders to make principal reductions on mortgages, rather than forbearing payment and reducing interest rates.

In The News:

Wall Street Journal – “Unemployment Rate Falls to 10%” (12-4-09)

“U.S. job losses in November posted the smallest drop since the start of the recession and the unemployment rate unexpectedly declined, a sign the labor market is finally healing as the economy recovers.”

Time - “Why the Loan-Modification Program Isn’t Working” (12-4-09)

“The problem the Administration is out to tackle is related to the structure of the Home Affordable Modification Program (HAMP). The first three months of a mortgage rewrite are something of a probation period— and very few homeowners are making it out of that trial. More than 650,000 borrowers have been placed in trial modifications, but as of September, fewer than 2,000 had become permanent.”

Housing Wire – “Moody’s Links Option ARM, Subprime Performance” (12-4-09)

“More than $200bn of outstanding pay-option adjustable-rate mortgages (ARMs) originated and securitized from ‘04-’07, according to market commentary by Moody’s Investors Service this week. This sector shows ‘dismal’ performance, with more than 40% of borrowers 60 or more days past due on payments. And many of these loans have yet to experience a recast event, when initial minimum monthly payments jump as much as 60%, according to sources interviewed by HousingWire for an upcoming issue.”

Housing Wire – “Forget Forbearance; FDIC Eyes Principal Forgiveness” (12-4-09)

“Institutions that acquire failed banks taken over by the Federal Deposit Insurance Corp. (FDIC) may soon be required to cut principal off mortgages instead of simply forbearing a portion until a later day or lowering interest rates, according to comments and FDIC official made to Bloomberg this week. The principal forgiveness might apply to as much as $45bn of mortgages from failed banks. Regulators so far in 2009 shut down 124 banks, costing the FDIC’s insurance fund billions of dollars and putting billions more in assets up for acquisition.”

Housing Wire – “Foreclosure Activity Outpaces Mods in October: Hope Now” (12-4-09)

“The mortgage servicing industry completed 271,563 total loan workouts in October, according to Hope Now, the private sector alliance of mortgage servicers, investors, insurers and non-profit counselors. Workouts included 198,373 repayment plans and 73,190 modifications. At the same time, the industry completed 94,450 foreclosure sales and initiated another 222,107 foreclosure starts.”

Press Enterprise - “Low interest rates are no panacea for region’s housing” (12-4-09)

“Inland experts say a shortage of inventory is suppressing sales of existing homes. Also, the high cost of land that home builders acquired makes it impossible for most of them to construct houses that can sell cheaply enough to compete with the foreclosure-ridden resale market.”

Mercury News – “Now’s really the time to buy a home, many say” (12-4-09)

“Mortgage rates are hovering at historic lows, home prices are just starting to edge up from total collapse, and the government is offering tax breaks to first-time and move-up buyers. It all adds up to this: In the real estate agent’s overworked phrase, there may never be a better time to buy a house. And this might not last for long, brokers and real estate agents say, especially since mortgage rates are probably headed up.”

Inman - “Buyer discounts continue slide” (12-4-09)

“For the ninth month this year, buyer discounts — the price paid compared to the last listing price of homes — shrank in October to a median of 2.7 percent, according to Zillow’s Real Estate Market Reports. That’s down from 2.9 percent in September and 4.6 percent in January.”

Bloomberg - “Banks Take Losses on Short Sales as Foreclosures Soar” (12-4-09)

“Banks are beginning to go along with short sales in increasing numbers, three years into a U.S. housing slump that pushed the economy into a recession and cut resale values by 30 percent from the peak in July 2006. Short sales almost tripled to 40,000 in the first six months of 2009 from the same period a year earlier. Yet for each short sale, there were 25 foreclosures started or completed in the first half of this year, according to data from the Office of Thrift Supervision and the Office of the Comptroller of the Currency. ”

Looking Back

One year ago, a little over 42,293 new and resale houses and condos were sold for the year. Orange County was listed as the 9th riskiest home lending market. Bernanke estimated that as many as 20 percent of all homeowners owed more on their homes than their homes were worth.

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The Norris Group Real Estate News Roundup 11/25/09

Wednesday, November 25th, 2009

Today’s New Synopsis:

The MBA’s survey shows that mortgage applications decreased by 4.5 on a seasonally adjusted basis from last week. Freddie Mac’s survey shows that the 30-year FRM decreased by 0.7 points from the previous week. Standard & Poor’s, Moody’s, and Fitch are being sued for inflating ratings.

In The News:

Mortgage Bankers Association - “Mortgage Applications Decrease in Latest MBA Weekly Survey” (11-25-09)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending November 20, 2009.  The Market Composite Index, a measure of mortgage loan application volume, decreased 4.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5.8 percent compared with the previous week.”

Housing Wire – “30-Year Fixed Mortgage Rates at Historic Lows” (11-25-09)

“Freddie Mac’s (FRE: 1.12 -0.88%) weekly survey put the 30-year FRM at 4.78% with a 0.7 point, down from last week when it was 4.83% and one year ago when it was 5.97%. This week’s rate ties the record for lowest ever in the weekly survey’s history, which was previously reached twice in April this year.”

Housing Wire – “Fannie’s MBS Issuance Slides 31% in October” (11-25-09)

“Fannie’s gross mortgage portfolio declined at an annualized rate of 27.8% and stood at $771.4m at the end of the month, according to the monthly summary”

DSNews - “Rating Agencies Face Lawsuit for Allegedly Misleading MBS Investors” (11-24-09)

“Cordray is suing Standard & Poor’s, Moody’s, and Fitch for allegedly providing inflated ratings of mortgage-backed securities (MBS) in exchange for lucrative fees from the securities issuers the agencies say they were objectively evaluating. The lawsuit was filed Friday in a U. S. District Court on behalf of five Ohio public employee retirement and pension funds. Cordray says the case is not intended to take on the status of a class-action lawsuit.”

DSNews - “Bank of America Helps 100,000 Homeowners Avoid Foreclosure” (11-24-09)

“In an effort to help borrowers with Countrywide subprime and option-ARM mortgages avoid foreclosure, Bank of America created its National Homeownership Retention Program (NHRP), providing mortgage relief to 100,000 eligible homeowners in just 10 months. In the third quarter alone, more than 31,000 customers received assistant through the NHRP, according to the bank’s quarterly progress report.”

Bloomberg - “Sales of New Homes in U.S. Rise to Highest Since 2008″ (11-25-09)

“Purchases of new homes in the U.S. rebounded more than anticipated in October as buyers rushed to take advantage of a government tax credit before it expired. Sales rose 6.2 percent to an annual pace of 430,000, the highest level since September 2008, the Commerce Department said today in Washington. The median sales price fell 0.5 percent and the number of unsold homes reached a four-decade low. ”

Bloomberg - “Fed Officials Watch Asset Prices for Signs of ‘Excessive Risk’” (11-25-09)

“Federal Reserve policy makers said for the first time that their decision to cut interest rates to zero may be fueling undue financial-market speculation even as they called the dollar’s decline ‘orderly.’ The Federal Open Market Committee said its policy of keeping rates low might cause ‘excessive risk-taking’ or an ‘unanchoring of inflation expectations,’ according to minutes of its Nov. 3-4 meeting released yesterday.”

Bloomberg - “First American Flips Real Estate Stocks to Beat Fund Rivals” (11-25-09)

“John Wenker and Jay Rosenberg, managers of First American Real Estate Fund, buy and sell stocks more often than their peers, a strategy that helped them outperform 98 percent of rivals in the past decade. The $1.1 billion fund’s turnover ratio, a measure of how often its holdings are traded, is 150 percent, according to data from Morningstar Inc. That compares with an average of 104 percent for all real estate funds. ”

Realty Times – “Internet Stealth Auctions Protect Brand, Generate New Homes Sales” (11-25-09)

“Brown needed to sell his five models. He hired an internet marketing company to help him, then challenged them to design a program around a ‘call to action.’ The company, SaleAMP, suggested the developer give new home buyers what resale real estate thrives on: the opportunity to make an offer- but to do it quietly, fast and with internet marketing thrust at full throttle.”

Realty Times – “Short Sale Sellers Need To Guard Against ‘Double Whammy’ By Bank and I.R.S.” (11-25-09)

“Bad enough that a short sale involves the loss of one’s home with no equity to show for it, and a credit negative that may last for years; it also has the potential to produce two very bad after-effects. One is that the lender, or the lender’s assignee, may continue to pursue the beleaguered seller for the remainder of the debt. The other is that the I.R.S. may come knocking on the seller’s door, seeking tax on the amount of debt that was unpaid. ”

Looking Back:

One year ago, a survey from AARP showed that 25 percent of baby boomers desired to move from their current home. The MBA reported that 32.9 percent of all mortgage applications were government-insured. Total home sales in 2008 increased by 17 percent from 2007.

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The Norris Group Real Estate News Roundup 11/11/09

Wednesday, November 11th, 2009

Today’s News Synopsis:

The CBIA report shows that September sales for new-home communities have decreased by 11 percent from 2008. Foreclosure activity increased by 5 percent from August to September. According to Trulia, nearly 26 percent of homes were decreased in price from the previous month, and the total value of those price reductions is $28.1 billion.

In The News:

CBIA - “California New-Home Sales Down Again in September, CBIA Announces” (11-11-09)

“The monthly CBIA/Hanley Wood Market Intelligence (HWMI) New-Home Sales and Pricing Report showed that sales in new-home communities of 10 units or more were 11 percent below September 2008, an improvement from the 13 percent year-over-year decline last month and the much higher declines in previous months. During September, 2,310 new homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 2,580 in September 2008. Sales of single-family homes were down by 17 percent, while sales of townhomes and ‘plexes’ – duplexes, triplexes, etc. – were down 11 percent and sales of condominiums were 12 percent higher than a year ago.”

Orange County Register – “Foreclosure notices hit record 8,800″ (11-11-09)

“September’s total was up 5% from August and 90% from a year ago. The chart (click for larger image) shows outstanding auction notices going back to January 2007. Auction notices, also known as notices of trustee’s sale, are a warning that a property will be offered for sale, usually at a local courthouse.”

Los Angeles Times – “Existing-home prices slide in most metropolitan areas” (11-11-09)

“The U.S. median sale price for an existing single-family home was $177,900, an 11.2% drop from the same period a year earlier, according to the National Assn. of Realtors in Washington. Distressed sales continued to weigh on prices despite a popular tax credit fueling the volume of deals. Still, the median was higher than in the second quarter of this year, when it was $174,200.”

Housing Wire – “CMBS TALF May Bring New Issue in November: Sources” (11-11-09)

“Industry reports indicate a number of firms are gearing up to sell the first round of debt under the Fed’s CMBS TALF program for new issuance. The firms include Developers Diversified Realty Corp. (DDR: 9.02 +5.99%), which in October said it obtained new first mortgage financing of $400m from Goldman Sachs Commercial Mortgage Capital, an affiliate of Goldman Sachs & Co.”

Housing Wire – “Loss Severity May Reverse Recent Stability: Amherst” (11-11-09)

“the firm sees ‘temporary’ stabilization of house prices, as 7.5m units or 13.5% of US homeowners are in non-payment status. Amherst previously explained its reasoning for calculating 7m of those are ‘destined’ to liquidate, which hangs a shadow of distressed inventory over the positive signs seen in the US housing market.”

Housing Wire – “Refinancing Interest Boosts MBA’s Weekly Mortgage Apps” (11-11-09)

“MBA’s refinance index increased 14.5% from the previous week. The association’s purchase index decreased 1.8%. Refinance applications took a 66.1% share of all applications, up from 62.3% in the previous week. The adjustable-rate mortgage (ARM) share of all applications decreased to 6.1% from 6.9%.”

Bloomberg - “U.S. Home Sellers Slash Prices by $28.1 Billion, Trulia Says” (11-11-09)

“The average discount was 10 percent, little changed from a month earlier, the San Francisco-based real estate data provider said today. Almost 26 percent of homes for sale were reduced at least once. Luxury properties — those costing $2 million or more — accounted for 25 percent of the dollar value of reductions and less than 2 percent of listings, Trulia said. ”

Inman - “Realogy in the black for Q3″ (11-11-09)

“Real estate franchisor and brokerage Realogy Corp. said it turned a $58 million profit in the third quarter, thanks in part to a debt restructuring that allowed the company to claim a $75 million gain and stay in compliance with agreements governing nearly $3 billion in loans.”

Inman - “GMAC Real Estate unites with Real Living” (11-11-09)

“A major real estate brokerage company merger gives GMAC Real Estate a new name while expanding the Real Living real estate brand and growing the U.S. operations of Canada-based Brookfield Residential Property Services. The merger of GMAC Real Estate and Real Living, which will operate under the Real Living name and under parent company Brookfield, represents the second sizable U.S. expansion of Brookfield operations in the past two years.”

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The Norris Group Real Estate News Roundup 11/3/09

Tuesday, November 3rd, 2009

Today’s News Synopsis:

According to Experian, approximately 588,000 borrowers walked away from their homes last year. In Q3 of 2009, California accounted for over 25 percent of the nation’s foreclosure activity. MIT reports that commercial real estate transaction prices rose by 4.4 percent in Q3 of 2009.

In The News:

USA Today – “More walk away from homes, mortgages”
(11-3-09)

“Walking away from a mortgage is serious business — it can knock 100 points off your credit score and make you ineligible for a new mortgage for seven years. Yet, about 588,000 borrowers walked away from homes last year, double the number in 2007, according to a recent study by credit-scoring firm Experian and management consultants Oliver Wyman.”

DSNews - “California AG Calls on Lenders to Outline Option ARM Modification Plans” (11-3-09)

“In the third quarter, California accounted for more than 25 percent of the nation’s foreclosure activity, with 250,000 homes receiving foreclosure filings statewide. California homeowners hold 58 percent of the country’s option ARMs originated between 2004 and 2008, Brown said. Approximately one million of these mortgages will reset nationwide in the next four years, resulting in higher payments and a dramatic increase in foreclosures, he said. ”

Wall Street Journal – “Five Reasons the U.S. Doesn’t Need More Home-Buyer Perks” (11-3-09)

“Subsidies raise prices, and house prices are already too high. The house subsidy has little value as economic stimulus. The benefits of stimulus spending are unproven.”

Housing Wire – “Commercial RE Prices Rise 4.4% in Q309: MIT” (11-3-09)

“Transaction prices rose 4.4% on commercial real estate properties sold in Q309 by major institutional investors, according to the MIT Center for Real Estate (MIT/CRE).”

Housing Wire – “Fannie Raises Lenders’ Net Worth Requirement Ten-Fold” (11-3-09)

“Fannie Mae (FNM: 1.15 +11.65%) updated its eligibility requirements for lenders wanting to sell and service residential first mortgages, according to the new selling guide released Friday. To do business with Fannie Mae, lenders must now have a net worth of at least $2.5m — 10 times the previous required net worth — plus a dollar amount equal to 0.25% of the outstanding principal balance of any Fannie Mae portfolio it services.”

Bloomberg - “Bernanke Housing Plan May Prompt Calls to Extend Aid” (11-3-09)

“Federal Reserve Chairman Ben S. Bernanke is gambling that come March, he can stop the purchases of mortgage-backed securities that have propped up the U.S. housing market. Congress may have other ideas. The central bank says it must eventually withdraw its unprecedented economic stimulus to avoid a surge of inflation as a recovery takes hold. Plans to buy $1.25 trillion of housing debt are the centerpiece of its program to pull the nation out of the worst recession since the 1930s.”

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