Current Real Estate News

Winter Heating Costs May Ease On Drop in Natural-Gas Prices

2006-10-17T07:28:00.000-07:00

By Stephanie I. Cohen

The recent drop seen in natural gas prices is likely to help soften consumer heating bills this winter, the American Gas Association said at a briefing.

The group said consumers may see a drop of as much as 10% compared with last year's bills, but officials also warned that consumers heating with natural gas shouldn't expect a sharp decrease in their utility bills.

Consumers have faced a steady increase in winter heating costs in the past five years. The Energy Department is slated to release its annual outlook for residential winter heating bills today.

The impact of natural-gas prices is felt by a large portion of U.S. residents -- roughly 68 million American homes, or 52% of U.S. households, heat with natural gas.

Although wholesale natural-gas prices began to drop in September, the price of natural gas throughout the year, not just during the winter months, determines consumer bills, American Gas Association officials said. Utilities typically begin purchasing and stockpiling a significant portion of the natural gas they use to meet customer demand six to 18 months prior to the heating season, according to the group.

"Bills will be lower if the weather is the same as last year but weather is never the same," said Paul Wilkinson, vice president for policy analysis at the American Gas Association. "We've been on a price roller coaster for six years now," he said.

But officials for the group feel confident consumers won't see the sharp price increases of recent years thanks to natural-gas spot market prices in the first nine months of 2006 and the fact that natural gas in storage is at a record high.

During the first three months of this year spot prices were significantly higher than for the year-earlier period. But from April to June prices were about the same as the prior year and for the most recent three months prices have been significantly lower than the year-ago period, the group said.

While customers are also likely to benefit from the lack of hurricanes in the oil-producing regions of the U.S. this year, a cold snap during the winter that leads to higher demand is still the primary driver in determining winter heating bills during the heating season.

"This year, the industry has repaired much of the damage to its infrastructure and wholesale prices are lower, but the weather is a wild card," the American Gas Association said.

Natural-gas utilities don't make a penny more in profit if the price of natural gas rises but they can typically pass the increase in fuel prices along to consumers.

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As Housing Market Slows, Rental Market Heats Up

2006-10-17T07:27:00.000-07:00

By Christine Haughney

From The Wall Street Journal Online

Bidding wars, once waged by prospective home buyers in a red-hot housing market, may be moving to a new front: rental apartments.

As rising interest rates and flattening home values have made renting more attractive, renters are beginning to resort to the same one-upmanship tactics to secure a choice apartment.

In Washington, D.C., the owner of the Ellington, a 190-unit rental building on U Street, has a 12-person waiting list, and nearly a half dozen renters are paying rent two to three months before their move-in dates. San Francisco renters are showing up early to open houses and racing to fill out applications before other applicants. In Manhattan, some renters are offering landlords more money than asking rents, while others are paying the equivalent of the entire year's rent upfront in cash.

In August, Adrian and Amanda Liang agreed to pay $5,300 a month for a two-bedroom apartment on Manhattan's Upper West Side -- $100 more than the asking rent and $1,000 more than they intended to spend. "I just wanted to get this done as soon as possible," says 31-year-old Mr. Liang, who moved to New York from San Francisco with his wife after selling his software-services company. "I was sick of looking at places." The couple had spent a month looking at nearly two dozen Manhattan apartments and had lost two apartments to other tenants because when they showed up at open houses, the landlords said they already had plenty of qualified applicants.

Justin Lindblad, a broker with New York-based Citi Habitats Inc. who represented the Liangs, says another client secured a $2,300-a-month, two-bedroom apartment on the Upper West Side only after offering to pay $13,800 in rent upfront and a $13,800 security deposit. "You're not in a situation anymore when you can wait around a week and think about an apartment," says Mr. Lindblad. "You take it on the spot on that day, or you move on."

Rental landlords, who used to fret as prime would-be tenants jumped into the housing market instead, suddenly are in the driver's seat. Nationally, rent for a 1,000-square-foot apartment has jumped 3.7% to $1,389 a month from $1,339 a year ago, according to data collected by Boston-based research firm Property & Portfolio Research Inc. Rent increases haven't been this high since the fall of 2001, when rents jumped by 4.1%.

A big reason for the rising rents -- and the emerging bidding wars -- is a smaller stock of apartments, caused partly by developers who built condominiums instead or converted existing apartments into condos to take advantage of the once-hot housing market. Rental vacancy rates dropped to 5.3% in the second quarter of 2006 from 6.2% in the second quarter of 2005. The vacancy rate could shrink to 5% by year end, according to Encino, Calif.-based real-estate investment brokerage Marcus & Millichap.

In Manhattan's pricey Tribeca neighborhood, where Citi Habitats says vacancies are a miniscule 0.55%, finding an apartment has been much tougher than Kerry Stichweh anticipated. After looking at 10 different apartments to buy in downtown Manhattan, Ms. Stichweh, a 34-year-old choreographer and interior designer, and her boyfriend, a 50-year-old hedge-fund executive, abandoned their purchasing plans for the more affordable rental market.

But after touring nearly three dozen apartments, they couldn't find anything they liked within their $5,000 monthly rent budget. So next month, they are moving into a fifth-floor, two-bedroom Tribeca apartment that rents for $6,500 a month and initially won't have a working elevator. Still, the couple figures that is a better deal than buying a similar unit -- which would cost more than $1.5 million with monthly payments of about $10,500 including taxes and maintenance fees, according to their broker, Craig Filipacchi of Brown Harris Stevens.

The boom in demand for rental apartments follows several brutal years for landlords. From 2002 to 2005, 438,000 renters from age 20 to 34 nationwide took advantage of low interest rates and became first-time homeowners, says Hessam Nadji, managing director of Marcus & Millichap's research services. Landlords offered free rent for a time and paid brokers to find them tenants.

To be sure, the good times for rental landlords may not last. With the rapidly cooling home-buying market, many condo developers are expected to switch units back to apartments. "The rents aren't going to continue growing like they have," says Manhattan developer Douglas Durst, whose second residential apartment building, which has 600 units, has filled up in the past 18 months. While rents have risen roughly 10% from the year before, he is cautious about developing more rental projects.

But for now, it is a landlord's market. In the second quarter, AvalonBay Communities Inc., of Alexandria, Va., which owns 45,000 apartments nationally and is concentrated in the Northeast, raised its asking rents by 4.7% from the year before and cut concessions by 67% for incentives such as free rent for a month or more and gifts including vacations, microwaves and televisions.

San Francisco renters are increasingly anxious, says Abigail Glynn, a broker with San Francisco-based firm Davis Realty Co. "A lot of them run into the apartment and come running out to hand you the [rental application] papers," she says.

Rob Hielscher, a 31-year-old commercial-real-estate broker, recently moved back to San Francisco from Chicago with his girlfriend, Lisa Lombardi, a 29-year-old occupational therapist. After two trips to the Bay Area and visits to 12 apartments, they moved into a two-bedroom apartment with a private backyard in the Potrero Hill area. To Mr. Hielscher, the $2,300 monthly rent was a better deal than buying a similar unit -- which would cost nearly $900,000, or about $3,800 a month after a mortgage payment, tax savings and homeowners' fees, according to Potrero Hill real-estate broker Greg Angilly.

"I don't plan to be a renter for the rest of my life," Mr. Hielscher says. But "even if the house appreciated, I wouldn't have the money to go to [Lake] Tahoe or take trips because I would be putting all of my money into a mortgage."

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Tricks of the Trade: How to Spot Leaky Plumbing Early to Save Cash

2006-10-17T07:25:00.000-07:00

By Sarah Tilton

From The Wall Street Journal Online

A small water leak is like a snowball rolling down a hill, says Ed Del Grande, a plumber with more than 25 years of experience. The longer you leave it alone, the more it will drip and eventually it will become an emergency.

He says his city water meter can help reveal hidden leaks. The meter has a visible wheel that moves and measures every drop that goes through the system. So Mr. Del Grande turns off everything in his house that uses water and then checks if the wheel is moving. Ideally, the wheel stops. If it's still moving, there's a leak. The most common culprits: toilets.

To keep his drains in shape, he plunges them every few months, more often if they become slow. For washing machines, he recommends upgrading rubber hoses to ones wrapped in stainless steel. He always turns off the water to the washing machine when he goes on vacation as the water damage from a burst hose could be major.

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Urban Growth Supplants California's Orange Groves

2006-10-17T07:22:00.000-07:00

By Maura Webber Sadovi

From The Wall Street Journal Online

A cooling economy and rising commercial vacancy rates in Southern California's Inland Empire haven't slowed a torrent of new stores, offices and supersize distribution warehouses.

The two-county area extends east from Los Angeles to the Arizona and Nevada borders and includes a mix of suburban tracts, dwindling agricultural land and expansive desert as well as the longtime resort destination of Palm Springs and such fast-growing cities as Riverside and Ontario.

The region traces its nickname to the 19th century, when it was known as the "Orange Empire" because of its citrus crop. In the past 20 years it has become a wunderkind of the warehouse-distribution sector, and more recently, a haven for residents priced out of coastal Southern California. That pushed up the population to 3.9 million last year and made it more populous than about two dozen states. "We are today's Orange County," says John Husing, an economist with consulting firm Economics & Politics Inc., based in Redlands, Calif.

During the past year, both population and economic growth have downshifted, albeit from white-hot levels to still enviable above-average rates. Total net migration dropped to 91,400 last year from a peak of 109,700 in 2003. New residents still were arriving at about three times the national rate in the 12 months ended June 30, according to Moody's Economy.com. Year-to-year job growth for the region in August fell to 3%, from a 5% pace in the year-earlier period, according to the Bureau of Labor Statistics.

At the same time, new construction is expected to nudge up vacancy rates in the warehouse, office and retail sectors, though rental rates are also forecast to rise, according to Property & Portfolio Research Inc., a Boston-based real-estate research firm. The shift is subtle but notable in the robust warehouse sector, where vacancy rates ticked up slightly to 5% in the second quarter from 4.7% in the first quarter -- the first quarterly upward movement since early 2003, PPR says.

Developers -- led by the warehouse sector, including some of the country's largest distribution centers -- appear undaunted. The Inland Empire was the biggest warehouse builder in the nation of 54 major markets surveyed by PPR for the 12 months ended in June, during which some 15.4 million square feet were completed. The average annual pace of supply growth will slow through 2010, but PPR says the market will remain the nation's lead warehouse builder over the period, followed by Chicago and Dallas-Fort Worth. Other sectors are also ramping up. About 4.7 million square feet of retail space is scheduled to be completed this year, up 13% from last year, plus 2.5 million square feet of office space, up 18% from 2005.

Market watchers say the warehouse sector will remain strong, thanks to the region's proximity to the flood of Asian imports coming into the ports of Los Angeles and Long Beach, and to its relatively cheap rents -- at least compared with coastal prices.

Denver-based ProLogis, which owns more than 26 million square feet of industrial distribution space built or under development in the region, is continuing to expand. This summer, ProLogis purchased a 700,000-square-foot industrial building in Redlands for an undisclosed price, and recently signed leases with clients that will fully occupy a 1.2 million-square-foot speculative distribution warehouse it completed last year in nearby Rialto. "The Inland Empire is at a high point in the cycle," says Larry H. Harmsen, managing director of North American capital deployment for ProLogis. "I think it's a broad peak that will last some time because of the fundamentally strong demand."

Office developers, who have enjoyed strong demand for space from mortgage companies and home builders, could be more vulnerable to a housing slowdown. More than half of the 120,000 jobs created in the area between the first quarter of 2002 and the first quarter of 2005 were tied to the housing market, PPR says.

Chris Atkinson, vice president of Bates Co., a real-estate company in Monrovia, Calif., says the profile of tenants he expects to fill his planned 10-story speculative office building in Ontario by the time it's completed in about two years could shift to include more accountants and law firms and fewer real-estate companies. However, he says new office construction is the natural follow to the industrial and retail expansion the region has seen to date. "Everyone's skeptically optimistic," he says.

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Where Boomers Are Buying And What They Want in a Home

2006-09-26T07:22:00.000-07:00

By Amy Hoak

From MarketWatch

http://www.realestatejournal.com/

The country's more than 77 million baby boomers represent more than a quarter of the U.S. population and have a substantial build up of spending power. As more of them move toward retirement age, businesses are paying attention to what this generation's real estate needs are.

And if they learn anything about the boomer consumers, it's to not classify them as over the hill.

"Don't call them aging, don't call them seniors and certainly don't offer them early-bird specials," said Neale Redington, national director of hospitality practice at Deloitte & Touche LLP. They don't like it, he said. For good reason.

After all, this is a generation that expects to work past the traditional retirement age, said Paul D. Prescott, the national director for Deloitte Tax LLP's home-building sector. It's also a generation with active, healthy lifestyles that are in turn helping them live longer.

Deloitte's recent conference call, "The Aging Population: The Impact on the U.S. Real Estate Market," aimed to give some perspective on what this generation wants from its homes, communities and vacation spots.

Residential

On the residential side, people aren't waiting until retirement to acquire a second -- or even a third -- home, Prescott said. Sometimes the additional home will be located in a favorite vacation spot; oftentimes the intent is to retire there eventually, he said. Many baby boomers want these second homes to be located near a body of water or close to recreational activities.

While retirees tend to gravitate toward places that complement their active lifestyles or provide them a lower cost of living, they're also getting more comfortable with the idea of owning real estate in other countries, Prescott said. Mexico offers retirees warm weather, lower property taxes and more affordable health care, while areas including Panama and Costa Rica offer tax breaks to foreigners seeking to retire there, he added.

On the other hand, many boomers expect to "age in place," given their active lifestyles and plans to work past the traditional retirement age, he said.

What they want from their homes and communities is the flexibility to accommodate a range of physical abilities and medical needs -- along with other amenities including accessibility to services and wired houses that have convenient access to the Internet, Prescott said.

"As a group, the boomers have unprecedented wealth and this wealth gives them choices that earlier generations may not have had," he said.

Although this generation doesn't view itself as being old, the boomers also could create more demand for assisted living down the line. "Even though you think you aren't old, your body is going to have a need for those kinds of facilities," Prescott said.

Retail/hospitality

Teens may frequent their local shopping mall more, but older customers are bigger spenders -- and retail centers have been moving to cater to boomers as a result, said James E. Maurin, chairman of Stirling Properties and a past chairman of the International Council of Shopping Centers.

For one, safety concerns that mature customers have about going to the mall are being addressed in some locations, Maurin said. For example, "malls are starting to clamp down on unruly teenagers," he said, adding that some shopping centers have escort policies for younger customers.

Mall owners also are taking steps to make their buildings easier to navigate, sometimes even offering valet parking services to shoppers, he said. More sit-down restaurants, day spas, even doctors and dentists are being incorporated in malls for convenience.

When it comes to travel, boomers want "adventure without great risk," Redington said. This could mean dog sledding in Alaska with warm accommodations and hot meals or room service in Machu Picchu, he said. "Pre-arrival" Internet research on a hotel's services also is becoming a staple, allowing customers to their homework before they check in.

Good spenders, bad savers

Despite the spending power that boomers have, it's also important to note that they haven't traditionally been the best savers, said James P. Gaines, of the Real Estate Center at Texas A&M University. Gaines wasn't involved with the conference call, but has been studying baby boomers and their housing needs.

"I don't think the boomers are going to retire the same way our parents did," he said. "They're terrific spenders but no great savers."

He also anticipates baby boomers seeking quality over quantity in new homes, more interested in granite counters and Internet wiring than the amount of space they have.

But acknowledging that boomers have much of their wealth concentrated in their home equity, he also thinks that retirees looking to relocate will look for places with lower costs of living, lower taxes and where home appreciation rates have been modest.

"Some of the states that are going to experience some growth (in retirees) are not the ones that have had a run-up in home prices," he said.

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Consumers' "No cost" mortgage benefits purchase or refinance

2006-09-26T07:21:00.000-07:00

Asbury Park Press 09/24/06

The "No Cost" mortgage program benefits all homeowners today, not just first-time buyers or those with low down payments, according to Douglas C. Reilly, the president of Consumers Mortgage Corp. of Middletown.

The program is considered best for the buyer with little down payment available because almost all closing fees are paid by the lender. However, the program is also advantageous to buyers with 20 percent down and more.

"All buyers benefit not only by an added tax benefit (by eliminating non-tax deductable closing costs), but also should the rates drop after the initial closing even by 1/4 to 1/2 of 1 percent, the homeowners may refinance into a new "No Cost' mortgage, and not have thrown away all the fees from closing of the purchase," Reilly said.

In today's real estate market, the amount of cash required to purchase a home is the primary problem, according to the Federal National Mortgage Association. However, with the availability of the "No Cost" mortgage program, the necessary amount of cash required to effect a home purchase has been decreased.

The "No Cost" mortgage program covers closing costs including: appraisal, credit report, title search, title insurance up to the mortgage amount, recording fees, attorney review fee, flood certification, wire fees, courier and tax service fees, $300 toward a survey, and $500 toward buyers' attorney fee.

The additional funds made available by use of this program can frequently make the difference in enabling borrowers to accumulate a sufficient down payment for the purchase of a home. In addition, the extra funds may be used for several other purposes such as "buying down" the interest rate for a lower monthly payment, or to help borrowers qualify for a larger loan amount. For example, if borrowers have $32,500 available for a down payment plus closing costs of $3,500 and are putting 10 percent down, they can purchase a $325,000 home. If they can save $2,500 in closing costs, they could then have a 10 percent down payment of $35,000 which enables them to purchase a $350,000 home, (assuming of course their income will support the higher mortgage amount). Thus the $2,500 increase in down payment actually increases their purchasing power by $25,000.

The additional funds may also be used toward a larger down payment, and in some cases, this additional down payment may eliminate the need for Private Mortgage Insurance or reduce the PMI premium which is required on loans with less than 20 percent down and is more expensive for loans with less than 10 percent down. Eliminating the additional cost of PMI reduces the monthly payment, increases funds available for a down payment, and helps the borrower qualify for a larger loan amount.

In addition to the obvious benefits in increasing buyers' purchasing power, there are added tax benefits to be gained for purchasers as well. In packaging closing costs, which are normally not eligible as an immediate tax write-off, into a tax write-off, buyers have reduced the real after-tax cost of home ownership.

Other options are available today for "low asset" buyers to help increase purchasing power such as 100 percent mortgages, loans that do not require any cash reserves and higher qualifying ratio loans, and loans that avoid the additional cost of PMI with 10 percent down — usually an additional cost when a buyer puts less than 20 percent down.

Combining these programs with Consumers Mortgage Corp.'s "No Cost" program significantly increases the borrowers' purchasing power and enables some borrowers who could not otherwise purchase to have the opportunity to own their own homes.

The "No Cost" mortgage is available for refinances as well as purchases. Refinancing of a mortgage with all closing costs eliminated makes it advantageous to refinance even if the new interest rate is only 1/4 to 1/2 percent lower than the homeowners' current mortgage interest rate. Also at a time when the adjustable rate mortgages are increasing, it is the right time to lock into a fixed rate with the "No Cost" mortgage. All closing fees are covered in the "No Cost" refinance program.

For more information, call (732) 671-0001.

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The Price Is Right: Finding Home Financing to Suit Every Budget

2006-09-25T09:12:00.000-07:00

By: Rivka Yablonsky

It's only natural that the homebuying process comes with many anxieties. For many people, one of the biggest is wondering how to afford a home at all. But this is often due to misconceptions which keep the customer from methods that could make it possible but may be less well-known. With the right information, you can set aside much of your concern about affording a down payment and financing a new home. The knowledgeable customer and the right Realtor^® can shift the focus from saving money to saving much worry.

The 2002 Fannie Mae National Housing Survey revealed widespread assumptions holding back potential homeowners needlessly. One of the biggest is that buyers need 20 percent of the purchase price ready as a down payment to purchase a home. But today several specialized mortgage programs require little or no down payment.

A Veteran's Administration (VA) Loan lets eligible military personnel finance up to 100 percent of a home, even if their credit is imperfect. An FHA Loan requires less than three percent as a down payment. There are also Community Lending Programs that let homebuyers who meet local HUD median-income guidelines pay $500 or one percent of the purchase price, whichever is less.

In addition, mortgage products are available specifically for the self-employed and for those with bad credit scores (including, in the latter case, CreditWorks, a mortgage program that comes with debt-management counseling). Another advantage to keep in mind is not just the discounts you can gain going into a home purchase, but the ones you can obtain from making the purchase itself – over a third of those who answered the Fannie Mae survey didn't know that mortgage interest is tax-deductible, but it's a benefit that can substantially relieve your financial concerns.

The survey also found many people believing that housing lenders are legally required to give the best possible loan rates; actually, many factors influence a range of rates offered by various lenders, so there's no substitute for shopping around and doing your homework.

Of course, there is more than one way to make sure it gets done. Qualified professionals can lead you through the maze of options to the most efficient and economical solution for you. The professionals at ERA Mortgage can help you determine your financial abilities and meet your financing needs. ERA Mortgage offers over 100 products, including loans designed especially for first-time homebuyers or even clients who have recently had a bankruptcy. This range covers the array of programs mentioned above, and some other helpful options that are unique to ERA Mortgage.

Whichever way you proceed toward your homeownership dreams, it's good to know they can become reality sooner than you think, and important to get the best guidance you can on how. If you believed you couldn't afford to buy, information like the facts above are something you can't afford not to have.

Author: Rivka Yablonsky is the owner of ERA Othello Realty and a licensed real estate broker/agent.

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Rooms for Improvement: The Joys and Challenges of Fixer-Uppers

2006-09-25T09:11:00.000-07:00

By: Rivka Yablonsky

The house that needs work – it's not for everyone. But then, the secret of real estate success, for both a professional like me and a potential customer like yourself, is finding the one home that's right for you. And a fixer-upper even offers the opportunity to have your dream house not be found, but made.

It's important to keep in mind the balance of challenges and chances that a fixer-upper presents. For buyers with cost as a concern, a house needing work will definitely be more affordable – though the discount can stem from some major problems, and the price savings go hand-in-hand with later renovation expenses.

Even so, at the initial bargain price some families find a fixer-upper comfortable enough to live in while saving for renovation. This kind of at-home pioneering makes fixer-uppers not the best idea for first-timers. However, experienced homeowners have an edge, being more familiar with renovations in previous houses and knowing what to expect in both inconvenience and rewards.

In any case, the standard rules for all home purchases apply to fixer-uppers – and often more so. Getting a thorough home inspection, for instance, is crucial, to learn all you need to about homes whose history and condition can be unknown (or in some cases undisclosed). But once again remember that turning up problems can also identify economic breaks; since the purchase price for an "as is" home will be lower, so will related costs such as transfer taxes, and property taxes might be too.

If the fixer-upper is just your kind of challenge, then you have the chance to shape your space to just your type of taste – and that of potential future residents. The fix-up can enhance the possibility of appreciating the home's resale value. As with any home, you'll want to think carefully about which improvements will make up their cost, but with a fixer-upper the benefits can be reaped not just from the house but its location – older neighborhoods can be preferred by many buyers to newer housing developments, so getting a like-new home you prepared in a more old-fashioned area can be a strong attraction.

One resource you may want in your fix-up tool kit is the services of a qualified real estate professional. Not only can we advise you on financing options (like the extensive alternatives available through ERA Mortgage), but we also often have fixer-uppers we'd love to find the right buyer for, and can call you about as soon as they're available. If you're ready for the challenges and rewards, your neighborhood agent may be ready to "fix you up" with your future dream house.

Author: Rivka Yablonsky is the owner of ERA Othello Realty and a licensed real estate broker/agent.

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If you need assistance selling your house ERA Othello Realty can share their expertise and experience with you in a friendly and professional manner. From all aspects of selling your house: from getting a qualified CMA (Comparative Market Analysis) to advising you on the presentation of your house, marketing your home online and in print, conducting an open house, showing your house within your guidelines and discretion, constant communication, negotiating the best price for your home and being with you until closing and beyond. We can also assist you in your search for a new home. Please call us at 732-364-2015. We are the realtors NJ! Look at these Listings of Homes for Sale in NJ.

Doubling Your Investment: Do Income-Generating Properties Pay?

2006-09-25T09:10:00.000-07:00

By: Rivka Yablonsky

Buying or selling a house is one of the biggest decisions most people will ever make with their finances and their lifestyle. Getting the best bargain in the purchase or making the most profit on the sale give buyers and sellers so much to think about that many may never stop to consider keeping that old house – or buying another – as an income-generating property. But the rewards, in savings, profits and problem-solving, can be high.

One option for buyers who otherwise might consider home prices beyond their reach is the property that pays for itself: a house you live in part of and rent the rest of. This offers not only an obvious balance of cost and income, but perhaps lesser-known benefits in taxes and mortgage. The rental units can be depreciated over time; considered to offset the rental income, this can lower your taxes on that income. At the same time, the rent's addition to your finances helps you qualify for a larger mortgage, and investors who occupy their rental properties can, under certain conditions, get interest rates lower than those who do not. (A professional like those at ERA Mortgage can tell you more.) Of course you'll want to decide if the demands of being a live-in landlord are for you (and find out if rent-control laws in your area might limit the return on your investment).

If being an offsite landlord is more appealing, you could always keep your current home as a rental after you move into the new one. Your long-tern familiarity with the home's features and condition could lend a certain confidence both to yourself and your potential tenants. As with any investment property, you'll first want to calculate whether the rental income will make up for the needed expenses. (This is another consideration in which a qualified real estate sales professionals can help, with his or her knowledge of the local rental market and its prospects over time.) And of course being a long-distance landlord has its headaches too, so you have to enjoy the challenge and be ready to meet the needs.

But if solving problems appeals to you, then you may even prefer a fixer-upper to your familiar former home. With a thorough inspection to answer any questions, and a realistic budget and disciplined schedule to handle all improvements, your outlays can prove to be well worth it. Renovations can range from reconfiguring the floorplan to simply replacing a now-unfashionable décor. The attraction of "move-in" quality can draw renters who share your appreciation of state-of-the-art living but not your passion for the do-it-yourself effort behind it.

Owning an income-generating property is not for everyone, but – from younger buyers offsetting their purchase costs, to seniors easing the expenses of their retirement years – it can be for all kinds of people. Talk to a real estate sales professional to find out if rental property would be double trouble or two times the success.

Author: Rivka Yablonsky is the owner of ERA Othello Realty and a licensed real estate broker/agent.

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Housing Boom Is a Memory: Lennar Is Latest Builder to Fret

2006-09-15T09:14:00.000-07:00

By Janet Morrissey

From The Wall Street Journal Online

It was a tough week for the biggest U.S. home builders, as one company after another slashed earnings guidance to deal with a faster-than-expected downturn in the housing market.

Lennar Corp., based in Miami, was the latest bearer of bad news when it warned Friday that earnings in its fiscal third quarter, which ended Aug. 31, would be much lower than analysts on Wall Street were anticipating.

"The U.S. housing market has continued to deteriorate," said Stuart Miller, Lennar's chief executive. He blamed increased use of sales incentives and certain land adjustments for the shortfall, and cut fiscal-third-quarter guidance to a range of $1.25 to $1.35, down from Thomson Financial's consensus estimate of $1.81.

However, Lennar fared better than many of its rivals when it came to orders. It reported only a 5% decline in orders, which is significantly better than its peers. Los Angeles-based KB Home, for example, said on Thursday that orders for new homes fell 43% in its fiscal third quarter, ended Aug. 31, and the company cut earnings guidance to a range of $1.85 to $1.95 a share, down from Thomson's estimate of $2.31.

Beazer Homes USA Inc. said on Thursday that orders fell 49% and cancellations surged to 50% in the first two months of its fiscal fourth quarter.

As a result, the Atlanta builder reduced its 2006 earnings guidance to a range of $8 to $8.50 a share, down from previous estimates in the range of $9.25 to $9.75 a share.

Meanwhile, St. Joe Co., based in Jacksonville, Fla., announced late Thursday it planned to leave its home-building business altogether. The company said it would continue to entitle and develop its massive land holdings in Florida, but would no longer build homes. Instead, it would sell lots to home builders. The decision came after the company had seen orders fall 50% in the first quarter and 55% in the second quarter.

So, does the small order decline at Lennar mean the company is faring better financially? Not necessarily.

Raymond James analyst Rick Murray sees the small order decline as a warning sign that Lennar has been far more aggressive at offering incentives and slashing prices than its rivals. He said this will likely take a toll on Lennar's gross profit margins, which he estimates fell 6.10 percentage points to 18.9% in the quarter from 25% a year earlier.

Morgan Stanley analyst Rob Stevenson said the difference in orders between Lennar and other builders reflect different strategies. He'd prefer to see builders be frugal about incentives -- even if it means giving up sales.

"If you're just throwing as much product out there regardless of the price, that's a dangerous slope for these guys," he said. That's because once prices fall on a widespread basis, home buyers will sit on the sidelines waiting for prices to trough. This will delay sales, and make it tougher for home builders to bring pricing back up to previous levels.

Mr. Stevenson hasn't seen any builder get overly aggressive yet, "but that is the fear at the back of your mind."

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Bankers and Regulators Clash Over Surge in Real-Estate Loans

2006-09-15T09:13:00.001-07:00

By Bernard Wysocki Jr.

From The Wall Street Journal Online

Federal regulators are trying to hit the brakes on commercial real-estate lending. That annoys Bradley Rock, the chief executive officer of Smithtown Bancorp Inc.

Wheeling his black Lexus sedan toward the clubhouse of the Fox Hill Golf & Country Club, Mr. Rock gazed at the lush fairways of the 175-acre property, appraised at more than $15 million. The owners of the club owe $2.7 million to his bank. "You could sell the property for massively more than the debt," Mr. Rock said. "It's impossible for the bank to lose money."

Like thousands of community banks across the U.S., Smithtown, of Hauppauge, Long Island, has feasted on commercial real-estate loans. About 80% of Smithtown's $800 million loan portfolio is concentrated in that category, which Mr. Rock calls "the last safe, profitable niche" for community bankers trying to compete against giant banks. The banks consider these loans -- the $1 million to $10 million loan to a home builder or strip-mall owner -- to be their sweet spot.

To bank regulators, the rapid growth in commercial real-estate loans -- up 16% in 2005 alone to $1.3 trillion -- is alarming. In January, four regulatory agencies, including the Federal Reserve, proposed a clampdown. In a draft of new "guidance," they said banks exceeding certain levels of lending in construction and commercial real estate should step up risk monitoring or add capital, or both.

The proposed guidance wasn't a hard rule and didn't impose limits on lending, but the bankers went bonkers. The Independent Community Bankers of America, the American Bankers Association and more than 1,000 banks wrote protest letters. The community bankers, citing the government's own reports, said commercial real-estate loan performance is healthy and growth is driven by employment and population growth. Bankers argued that their lending practices had become far more sophisticated since the last real-estate bust in the early 1990s, while the regulatory guidance had all the finesse of a meat cleaver.

A hearing on the issue before a House subcommittee is set for Thursday. Regulators probably will issue final guidelines sometime after that, and the implications could be significant. If regulators are too lax, there could be a raft of bad loans. If they are too tough, they could prompt a credit crunch, with small business owners unable to get loans. That could cast a chill on the entire U.S. economy.

Commercial real-estate loans "can be the sweet spot -- or the tar pit" for banks, says Susan Bies, a governor of the Federal Reserve. It supervises bank holding companies and about 900 state banks, including the Bank of Smithtown, a wholly owned subsidiary of Smithtown Bancorp.

The regulators conjure up memories of the late 1980s and early 1990s, when aggressive lending led to overbuilding, vacant properties, price collapses and huge losses for taxpayers. From 1987 through 1994, more than 1,100 banks and nearly 1,000 savings-and-loan institutions failed or required financial assistance, according to the Federal Deposit Insurance Corp.

"It is hard to overstate the impact of that crisis on our economy," John Dugan, the comptroller of the currency, said in a speech to New York bankers in April. Mr. Dugan's agency, part of the U.S. Treasury, supervises more than 2,500 nationally chartered banks.

Cracking Down

Though the guidance isn't finalized yet -- and, even when completed, won't include hard-and-fast lending caps -- examiners already are cracking down, say bankers. TransAtlantic Bank, of Miami, has cut back commercial real-estate loans in reaction to the regulators' proposals, while expanding unsecured loans to doctors, lawyers and other business customers. Chief Executive Miriam Lopez says the unsecured loans are actually riskier; the bank has more than doubled its credit department to handle the change in strategy.

"Talk about unintended consequences," says Mr. Rock, who as vice chairman of the American Bankers Association is helping lead the charge against regulators.

The 54-year-old banker grew up in Hauppauge, 50 miles east of Manhattan, where he was a high-school football star. He worked as a lawyer before becoming chief executive at Smithtown in 1990.

He has produced strong results: soaring loan and deposit growth, rising profits and minimal bad loans. The bank says investors who bought its Nasdaq-listed stock in 1995 have enjoyed a more than 20-fold return on their investment.

The Smithtown formula involves gathering deposits, currently about $835 million, at 13 branches on Long Island. The bank then lends out the money at interest rates that are more than four percentage points higher, on average, than what it pays on deposits. Demand is robust in Long Island's mostly white-collar economy, which has enjoyed strong job growth in health care and education, according to Moody's Economy.com Inc., although it says high costs could crimp that growth.

The bank mostly steers clear of consumer lending, such as auto loans and credit cards. Residential real estate is just 14% of the loan portfolio. Mr. Rock says Smithtown can't compete with the big banks that blanket the greater New York market.

"Citibank, Chase, Bank of America, they spend enormous amounts of money on the mass market," Mr. Rock says. "You need to be on television every night" with advertising, he says. "There's no way we can afford to do that."

Instead, Smithtown has a small lending team of five people who specialize in making real-estate loans to businesses. One banker focuses on loans to homebuilders. Mr. Rock's 24-year-old son recently joined the bank and is cutting his teeth on mortgages for small commercial buildings. The bank also lends to owners of multitenant office buildings and family restaurants.

In recent years, Mr. Rock has moved into the five boroughs of New York City, lending to smaller developers who might, for example, need a $5 million loan to convert an industrial building in Brooklyn's trendy Williamsburg section into condominiums or rental apartments.

He has an army of loyal borrowers, such as Vincent Di Canio, a Smithtown developer who has received dozens of real-estate loans from the Smithtown bank over the past 25 years. Mr. Di Canio says he goes to the big banks only when he needs more than $10 million. He is worried the regulators' guidance will cause Bank of Smithtown to cut back lending. "It would be detrimental to me and all midsized entrepreneurs," he says.

Mr. Rock acknowledges that real-estate busts occur and can be devastating. In his first years as CEO, in the early 1990s, his own bank had several loans go sour. Often, the bank hadn't paid attention to the income stream on the borrower's property, he says.

He slows his car to an intersection in Melville, just off the Long Island Expressway, and gestures at rows of 250,000-square-foot office buildings that were built in the 1980s, sometimes with financing from big banks. By the early 1990s, a number of the Melville buildings lay vacant and were sold at a loss.

"Here's your 1980s real-estate bust," Mr. Rock proclaims. "The biggest amounts came from the biggest banks putting mortgages on the biggest buildings."

Mr. Rock believes most smaller banks such as his aren't engaging in the sort of indiscriminate lending that caused trouble 15 years ago. Nowadays, he says, he ensures that a developer's income from property is enough to pay down the mortgage, and he leaves an ample margin of safety in his loan portfolio in case real-estate prices turn south.

Mr. Dugan, who took over as comptroller in August 2005, is less sanguine. A former Washington lawyer with many financial institutions as clients, Mr. Dugan was heavily involved in the savings-and-loan cleanup as a U.S. Treasury official from 1989 to 1993. He declined to be interviewed, but his speeches leave no question about his concerns.

At a conference last October of credit experts from the Office of the Comptroller of the Currency in Atlanta, Mr. Dugan noted that about a third of national banks had commercial real-estate loans amounting to 300% or more of their bank capital. In its simplest definition, capital is equal to a bank's assets minus liabilities. Under U.S. regulations, banks are required to hold a certain amount of capital, measured in various ways, as a financial cushion. Mr. Dugan urged his credit staffers to continue "carefully monitoring banks where these concentrations could become, or already are, significant."

Warning Letters

Within weeks, the office's regulators in the field were sending out letters to banks, warning about concentrations.

Community bankers say the letters made them shudder. "I was very upset," says Everett Crawford, chief executive of First National Bank of Artesia, N.M. If he has to cut back such lending, "it will diminish the franchise," says Mr. Crawford, who worries the 103-year-old institution may have no choice but to sell itself.

By all accounts, banks have a much better handle on their loan portfolios these days than two decades ago. Nonetheless, regulators fear standards still aren't strict enough sometimes.

The letter Mr. Crawford received was from Kay Kowitt, a deputy comptroller of the currency. She didn't single out his bank but dwelt on several emerging problems among the 400 banks supervised by the western district of the agency. Noting that "competition in virtually all markets is intense," the letter fretted about "liberal terms for speculative land loans" and said some borrowers had only a thin margin between the cash flow from their property and their loan repayments. It also questioned whether some banks are getting fully independent property appraisals.

Regulators also believe new forces in the market are pushing up real-estate prices. One new factor: Unlike small banks, the biggest banks often are selling their commercial loans to be packaged into securities and sold to global investors. That market is making it easier for banks to come up with money for loans, which in turn boosts demand for commercial property.

In April, Mr. Dugan sounded the alarm bells again, this time before the New York Bankers Association. In the late 1980s and 1990s, he said, failed banks had three times the real-estate concentrations of banks that survived. With Mr. Rock looking on, Mr. Dugan also defended the guidance proposed by his agency and three others. It would single out for scrutiny banks that have lent more than 100% of their capital in construction or more than 300% of their capital in commercial real estate generally.

Smithtown's portfolio is way over the guidelines because its commercial real-estate loans amount to 750% of, or 7.5 times, its capital. Mr. Rock believes it is simplistic to lump all commercial real estate into "a single bucket." His portfolio, he argues, should instead be viewed as "75 buckets" of diverse loans with different maturities and risks. Mr. Rock says he welcomes examinations, but he thinks examiners should dig down and assess the risks of individual loans and various types of loans.

In a June 20 meeting that Mr. Rock and officials from the American Bankers Association held with regulators, Mr. Rock complained that field examiners are using the measures in the guidelines to "beat up" banks with heavy concentrations of commercial real-estate loans. "Susan, here's the essence of the disconnect," he says he told Gov. Bies of the Fed. "You call it guidance, but examiners are in my bank, criticizing me for having too many commercial real-estate loans."

Gov. Bies, in an interview, says she hasn't received concrete evidence of overzealous activity by bank examiners, but she says the Fed will start a training program for its staff once the guidance becomes final. Regulators say their metrics are a valuable screening device to flag potential problems. Bankers say the definition of a commercial real-estate loan is too broad.

On a recent afternoon, Mr. Rock drove around Suffolk County, his prime lending area, and stopped outside a medical office building. He has extended a $350,000 line of credit to the doctors backed by the property, which he said is valued at two to three times that amount. He drove past one of Mr. Di Canio's housing developments, with 34 single-family units under construction, and said his lenders minimize risk by doling out money little by little as the work progresses.

Then Mr. Rock drove a few miles out to the Fox Hill golf club. If the property ever got developed into houses on half-acre lots, he said, it could be worth $40 million or more. "This is just my idea of an absolutely great loan," Mr. Rock said. "But the regulators are saying I have a 'concentration.' So if another one comes along like this, I'm supposed to turn it down."

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Invasion of the Roof Snatchers; The Flat-Top Look Catches On

2006-09-15T09:13:00.000-07:00

By Sara Schaefer Munoz
From The Wall Street Journal Online

When it comes to flat roofs, beauty is clearly in the eye of the homeowner.

Eager to squeeze in more square-footage -- and increase property values -- while adhering to community height restrictions, a growing number of builders and homeowners are building homes with flat roofs. But these box-like structures and their party-friendly roof decks are sparking a backlash among neighbors who think the houses are homely, detracting from neighborhood character and blocking views and sunlight. Now, a number of communities are slapping new rules on builders that require sloping roofs.

Communities everywhere from Delaware to Washington are addressing roof pitch. The waterfront town of Bethany Beach, Del., several months ago passed a minimum-roof-pitch requirement after a spate of new, box-like homes dwarfed the town's older cottages. St. Augustine, Fla., last fall banned flat roofs for homes on some smaller lots over concerns about style and rooftop parties, and the city of Kirkland, Wash., near Seattle, is holding a series of community meetings with homeowners and developers on house-to-lot ratios, which address, in part, concerns about the increase in flat-roofed homes.

Many popular home styles, of course, such as Prairie and Pueblo, have flat or low-pitched roofs. And in some parts of the country, such as Santa Fe, N.M., some ordinances even aim to keep roofs flat. Still, in many suburban American communities, the majority of homes have sloping roofs. But now, some Realtors, builders and local officials say, flat tops are increasingly infiltrating neighborhoods that traditionally featured sloping-roofed cottages and bungalows.

The trend is being driven in part by people seeking the best return on their investment amid soaring property values in recent years. It also demonstrates how zoning restrictions communities passed in recent years have backfired. In response to runaway development, many municipalities tried to prevent oversized homes on small lots. But in some cases, the unintended result was flat-roofed, boxy homes seen as out of character with surrounding styles. By using a flat roof, builders can sometimes squeeze in a second or third floor, adding square footage while staying under neighborhood height restrictions.

Kirkland, a city of about 50,000 people near the headquarters of Microsoft Corp., several years ago limited square footage on smaller lots, but officials say that move -- coupled with height restrictions -- may have encouraged flat roofs and boxy homes as people sought more space on the upper floor. "We may have gotten that wrong," says Kirkland Mayor Jim Lauinger. "When you have people taking away a peaked roof and putting on a flat roof to get additional volume, you've really altered what the neighborhood used to look like."

Steve Rabuchin, a Kirkland resident, learned that first-hand when a 5,000-square-foot, flat-top home went up recently on the lot below his 2,700-square-foot hill-side property. Because workers on the house chopped down trees, the Rabuchins now have a view of Lake Washington -- but with a broad expanse of flat, black roof in the foreground. "They maxed out everything they possibly could and ended up with a box," he says.

Yet builders say the flat-roof style allows them to get the best return in areas where land is pricey. John Lux, a Kirkland-area developer, built five homes with flat roofs this year, compared with one in the previous two years, squeezing in two stories and a partially exposed basement by using the flat-roof style. "The city is wanting to see smaller homes on these lots, but it just doesn't make sense financially," he says.

Flat roofs can also have drawbacks for owners. They generally don't stand up well to heavy rain and snow, and can require more frequent maintenance than roofs with a traditional pitch, contractors say. Flat roofs can also be more expensive to build, requiring more structural support. Yet Realtors say that flat-roofed homes can have a "wow" factor from inside, offering higher ceilings and the possibility of roof decks.

But some Realtors say that out-of-place flat-roofed homes could be tougher to sell. "Most people don't want a place that sticks out like a sore thumb," says Chuck Riley, a Realtor in the Washington, D.C., area.

Most homes going up with flatter roofs are in older neighborhoods, where the lots are so expensive that developers build as big as they can to make the investment worthwhile. Some big home builders are espousing the design: Pulte Homes Inc., based in Bloomfield Hills, Mich., recently put flat roofs on a town-home development in Baltimore as a way to offer roof decks and add more living space. The Maryland division president says the company is planning more homes in the same style.

Flattening the roof isn't the only way builders are staying under height restrictions in certain neighborhoods. Builders will also grade the land higher at the base of the house, so the first story is partially underground and they can build higher, says Vince Butler, chairman of the Remodelers Council of the National Association of Home Builders. "When folks are trying to get the most space in their house they end up going up or down."

Builders also report that people on small lots increasingly are putting in big basements and protruding dormers -- portions of a home that often don't count against square footage restrictions. In some areas where regulations are strict and land is in short supply, it's not uncommon for builders to lift an entire house up on hydraulic jacks and put in a partially exposed first story underneath. This adds another story without going over height limits; it also makes for easier approval by architectural review boards because the addition is partially underground, says Paul Winans, a California remodeler and chairman of the National Association of the Remodeling Industry.

Flat roofs can spur some strong emotions. In St. Augustine, Fla., residents in a series of meetings debated the merit of boxy homes before local officials passed an ordinance requiring that roofs on smaller lots have a minimum pitch. "When you plunk down one of these square boxes, it stands out -- it's an affront to the historic nature of the town," says John Marples, a resident who spoke at one of the hearings.

But residents Thomas and Elizabeth Dreisbach are chafing under the new restrictions. They own a 1,300-square-foot home on one of the city's smaller lots. They would like to enlarge their house by adding a flat or slightly pitched roof to get a deck, more space and increase the home's value. Now, they will have to request a variance. Otherwise, they'll try to put a large roof deck on top of a sloping one, which Mr. Dreisbach says won't look as nice. "These restrictions are just causing architecture to be uglier and are taking money out of people's pockets," he says.

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Foreclosure Figures Suggest Homeowners in for Rocky Ride

2006-09-15T09:12:00.002-07:00

By Danielle Reed

From The Wall Street Journal Online

By any measure, things are getting tougher for American homeowners.

Online foreclosure-data service RealtyTrac of Irvine, Calif., said yesterday 115,292 properties nationwide entered some stage of foreclosure last month, a rise of 24% from July and nearly a 53% increase from a year earlier.

Also yesterday, Foreclosure.com of Boca Raton, Fla., which also tracks foreclosures nationwide, said new residential foreclosures fell by 6.7% in August from July to 26,255 nationwide. The company's figures, however, show that foreclosures are up 7.3% compared to August 2005.

The divergent results can be explained by the way each company counts foreclosed properties. RealtyTrac data includes properties in the early stages of a foreclosure proceeding, even before the bank actually owns those properties. About 60% of these get remedied or the properties are sold before they get to the auction stage, said Rick Sharga, vice president of marketing for RealtyTrac.

A spokesman for Foreclosure.com said it only reports properties officially foreclosed and in the hands of the banks.

The trend is supported by data collected by the Mortgage Bankers Association, which reports the number of U.S. households late on mortgage payments fell slightly in the second quarter, but that a modest rise in delinquency and foreclosures is expected going forward.

The delinquency rate for residential mortgages was 4.39% in the April-June period, down from 4.41% in the previous three months, the MBA said in a survey that included 42.5 million loans. Home mortgages in foreclosure made up 0.99% of total mortgages at the end of the quarter, up from 0.98% three months earlier.

The MBA expects further cooling in the economy and the housing market, which in turn could lead to "modest increases in delinquency and foreclosure rates in the quarters ahead," said Douglas Duncan, MBA's chief economist and senior vice president of research and business development.

RealtyTrac Chief Executive James J. Saccacio noted that billions of dollars of adjustable-rate mortgages that have benefited from a stable fixed rate of interest over the past two years are due to shift to higher floating rates in coming months.

"With home-price appreciation continuing to decelerate," he said, August's "increase could be the beginning of an upward shift in the foreclosures market."

Foreclosure.com President and CEO Brad Geisen said while the company has continued to see fluctuations in month-to-month data, "as we near the end of the third quarter, most housing and economic indicators point to a sustained period of increased new foreclosure activity across the country."

Foreclosure.com noted that the West was becoming "an emerging foreclosure hot spot," with new foreclosures in Arizona up 155% in August from July. Foreclosures in California were up 32% and New Mexico saw a 10% increase.

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Locals urge U.F. to keep Sharon Station Road

2006-09-15T09:12:00.001-07:00

BY JANE MEGGITT

http://examiner.gmnews.com/

UPPER FREEHOLD - For at least a quarter of a century, the township has been asking the county to take jurisdiction over Sharon Station Road.

However, at the Sept. 7 Township Committee meeting, the governing body voted 4-1 to ask the township engineer to suspend all work related to the transfer of jurisdiction until the township attorney completes a review of local truck bans and related matters. Deputy Mayor William Miscoski abstained from the vote.

Patrick Nolan, a resident of the Woods at Cream Ridge housing development, read a presentation submitted by members of his and other subdivisions who call themselves Concerned Residents of Upper Freehold.

After citing several dangerous truck traffic incidents occurring on Sharon Station Road and near the Galloping Brook development off Route 526, Nolan said it is the safety of their children that most concerns residents.

Nolan said that residents have met with the county about this situation, and were encouraged by the answers given about possible remedies to the problem.

"We are disappointed," he said, "that our [Township] Committee advised us to perform this task ourselves rather than doing it on our behalf."

Nolan said that the Township Committee had cited the need to connect county roads with other county roads as a reason for transferring the jurisdiction of Sharon Station Road to the county. He said Township Engineer Glenn Gerken has stated that the township would benefit from the alleviation of maintenance costs associated with the road.

However, Nolan said that the county does not budget for additional miles of road and would only accept Sharon Station Road if the township agreed to take some other roads back into its own budget.

Nolan asked the committee if it has the power to control speed limits, set weight restrictions and divert truck traffic. He also asked if it would be willing to keep the road under township control and assist in enacting and enforcing laws that would prohibit trucks on the road. He cited the public safety concerns of the three developments already along the road in addition to a subdivision that has final approval and one that has preliminary approval from the Planning Board.

Nolan said the township has a weight-limit ordinance on Sharon Station Road between Route 526 and Herbert Road. He suggested the committee amend the ordinance to change the start of the weight limitation to Route 539. Nolan said a similar restriction on Breza Road, which is not fit for truck traffic, would seal up the traffic from flowing to the west side of town, creating no greater need for the controversial westerly bypass than there is at the present time.

Nolan also asked the committee to consider an alternative truck route for trucks heading north on Route 539 and turning right onto Route 537 to Exit 116 of Interstate 195.

"We are not asking trucks to go significantly out of their way, nor are we offering them no alternate solution," he said.

Nolan said the planned closing of the Allentown bridge for repairs, which is estimated to take two years, will give the township, the borough and the county a window of time to work cooperatively on limiting truck traffic on the segments of existing county roads.

"We do not wish to, in any way, harm trucking companies that provide a great service to our economy," he said. "We merely ask them to accept a reasonable alternate route - traveling on wide roads that are better equipped with facilities to service them."

Township Attorney Tennant Magee said the committee could, by statute, direct the township engineer to prepare a report on the suggestions. He said power lies with the state Department of Transportation (DOT) in terms of whether roads could be limited to certain classes of vehicles. He also said truck traffic can never be prohibited from its origin or destination, or from being able to access food, rest and repairs.

Committeeman Stephen Alexander, who has been working with the Woods residents on this issue, said, "The bottom line is, the DOT has final say. There's very little remedy if the DOT says no."

Mayor Stephen Fleischacker praised Nolan's report, saying the committee could authorize the use of municipal funds for a study with the goal of seeking DOT approval.

Deputy Mayor William Miscoski said the township gave letters of exemption to several local truckers who were over the 10-ton limit because of an origin and destination clause. However, he said the New Jersey State Police ticketed those truckers anyway.

"What are you going to do with the local guys?" he asked. "Do them in again?"

Fleischacker said the situation needs to be documented as part of the study.

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Builders offer incentives to entice new home buyers

2006-09-15T09:12:00.000-07:00

Asbury Park Press on 09/15/06

BY MICHAEL L. DIAMOND
BUSINESS WRITER

Melissa and Frank Picciolo had already made a deposit this summer on a new Manalapan home built by Hovnanian Enterprises Inc., when they decided to press their luck.

They wanted a finished basement. They wanted upgraded kitchen cabinets. And they didn't hesitate to ask.

"Within two weeks after we put a deposit down, we went back and forth; could we include this and that? They would go back to their administration, come back and say, "Yes we can do that,' " said Melissa Picciolo, 30.

Shore-area home builders are struggling with a downturn in the residential real estate market for the first time in nearly a decade. Builders are holding the line on price increases, but they're offering incentives and slowing their production.

It has created opportunities for buyers such as the Picciolos, but it has also created financial difficulties for builders.

"With the economy the way it is, we're ready to negotiate, which is something home builders haven't had to do a lot of" in recent years, said Douglas Fenichel, spokesman for Red Bank-based Hovnanian. The company, New Jersey's largest home builder, has seen its stock price fall nearly 50 percent during the first eight months of the year.

Home builders are slowing down nationwide. New home sales in July were down 21.6 percent from the same month a year ago, according to the U.S. Commerce Department.

New Jersey's decline hasn't been as pronounced, but the state isn't immune from the nation's real estate troubles.

"We've come off a little bit from last year, but the market here is not slowing anywhere near as rapidly as in other areas of the country," said Patrick J. O'Keefe, chief executive officer of the New Jersey Builders Association. "We weren't at the white-hot levels that were prevalent elsewhere."

What's the problem? O'Keefe and other experts said it's a combination of rising interest rates and workers' wages that aren't keeping up with home prices.

Mortgage rates, which were at historic lows, essentially allowing home buyers to afford more expensive homes, have been rising for several months. The average 30-year fixed-rate mortgage in New Jersey was 6.5 percent for the second quarter, compared with 5.79 percent for the same quarter a year ago, according to the National Association of Realtors.

Moreover, homes are getting less affordable. New Jersey consumers who want to buy a median priced home, which was $373,900 during the second quarter, need to make $90,768 a year. The median family income, however, was $81,309, according to the association.

Economists have said much of New Jersey's job growth this decade has come from lower-paying jobs instead of the technology, telecommunications and pharmaceutical sectors that once were synonymous with the state.

"There is a very cautious eye being cast on the horizon, not solely because of cyclical reasons, but because New Jersey's competitive position is weak and getting weaker relative to the rest of the country," O'Keefe said. "An economy that is losing its economic momentum is one where the housing sector is in danger of losing customers."

Home builders have been hurt this year. Hovnanian in August lowered its third-quarter earnings expectations to $1.10 to $1.20 a share from its previous guidance of $1.40 to $1.50 a share, in part because of a slower sales pace and more pronounced use of concessions and incentives.

Meanwhile, Toll Brothers Inc., a Horsham, Pa.-based company that regularly builds in New Jersey, said its net income of $174.6 million, or $1.07 a share, for the third quarter, was down from net income of $215.5 million, or $1.27 a share, the same quarter a year ago. Its stock is down about 30 percent this year.

"The continuing malaise in the housing market, we believe, is the result of an oversupply of inventory and a decline in (consumers') confidence," said Robert I. Toll, the company's chairman and chief executive officer.

O'Keefe said home builders don't want to be stuck with inventory, which is an expensive scenario since they would have to pay for property taxes and maintenance. So they have offered more incentives, such as premium lots at no extra charge, finished basements and slick kitchen appliances.

It's a scenario that puts buyers in a stronger position. The Picciolos have a 2-year-old daughter, Victoria, and they are outgrowing their Old Bridge home. So they signed a contract to buy a home at Hovnanian's Meadow Creek development in Manalapan that will give them nearly twice as much room, Melissa Picciolo said.

She said they considered the declining state of the real estate industry before they bought the house, but jumped in anyway; they think they can sell their current house relatively easily and mortgage rates are still considered low.

"It worked out really nicely," Picciolo said. "I was excited about the basement for my husband and daughter and the kitchen for me. There was something for all three of us."

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Strapped Homeowners Start To Feel the Pain of Rising Rates

2006-08-11T09:05:00.000-07:00

By Ruth Simon

From The Wall Street Journal Online

Luisa Cordova-Holmes was looking to lower her monthly payments when she refinanced her $312,000 mortgage in 2004. Instead, she wound up digging herself into a ditch.

For their new loan, Ms. Cordova-Holmes and her husband chose a so-called option adjustable-rate mortgage, which carried an introductory rate of 2.35% and gave her multiple payment choices each month. "I had a lot of financial obligations," says Ms. Cordova-Holmes, an accountant who lives near Detroit.

Two years later, however, the interest rate on her loan has jumped to 8.75%, her loan balance has climbed to $324,000 and her minimum monthly payment has risen to $2,257. She says the terms of the loan weren't clearly spelled out.

Ms. Cordova-Holmes says she would like to refinance, but can't -- in part because her loan carries a prepayment penalty that would force her to shell out thousands of dollars if she did. Instead, she's trying to sell her home. But with Detroit's economy slumping, she hasn't been able to find a buyer. When she and her husband first put the house on the market last summer, they were asking nearly $400,000. Now they're willing to accept as little as $270,000.

"We're in a very bad situation," she says. "The payments are just killing us."

In recent years, homeowners like Ms. Cordova-Holmes have embraced adjustable-rate mortgages -- and such variations as option ARMs, interest-only mortgages and "piggyback" loans, which, respectively, allow borrowers to make a minimum monthly payment, pay interest and no principal in the loan's early years, or finance 100% of the purchase price. The growing popularity of these products has helped fuel consumer spending, as well as double-digit home-price gains and rising homeownership rates.

Yet the downside of the lending boom is starting to show. Rising interest rates are taking a toll on family budgets as growth in home prices flattens -- and, in some areas, prices fall.

Mortgage delinquency rates hit 2.32% in the second quarter after bottoming out at 2.06% in the fourth quarter of 2005, according to an analysis by Equifax/Moody's Economy.com. The portion of adjustable-rate mortgages that were at least 90 days past due has climbed 141% in the past year, according to a recent study by Credit Suisse that looked at loans made to borrowers with good credit. That compares to a 27% rise in such delinquencies for fixed-rate mortgages.

Many borrowers who run into trouble have relatively low incomes or scuffed credit records. But housing counselors say they are also hearing from a growing number of middle- and upper-middle-income borrowers who borrowed heavily to finance spending or buy a house they could barely afford. NeighborWorks Homeownership Center in Sacramento, Calif., says that 38% of the borrowers it's seen this year have "moderate or above-moderate" incomes, up from 24% last year.

In Illinois, the new crop of borrowers includes people with bills for private schools, fancy cars and child care and monthly incomes of $3,500 to $10,000, says Michael van Zalingen, director of homeownership services at Neighborhood Housing Services of Chicago. Many of these borrowers took out loans that didn't require them to document their income and overstated their earnings, he adds.

Steven Schwaber, a bankruptcy attorney in the Pasadena, Calif., area, says he's getting more calls from small-business owners who had refinanced into ARMs, tapping their equity in an effort to keep their businesses afloat. "All of the sudden their budgets are out of whack because their house payment went up by 25% or 30%," he says, at the same time fuel prices are rising. Some would have wound up filing for bankruptcy anyway, he adds, but rising interest rates have pushed others over the edge.

Credit-counseling agencies say that in the past few months they've seen a growing number of homeowners pinched by rising mortgage payments. Neighborhood Housing Services of New York City says it has been "flooded" with calls from borrowers who took out ARMs two years ago and whose rates are now resetting for the first time. And Consumer Credit Counseling Services of Atlanta, which works with borrowers nationwide, says it has tripled its housing counseling staff in the past six months to keep up with increased demand.

Until recently, most mortgage-payment problems were an unfortunate byproduct of major life changes, such as job loss, medical problems, divorce or a death in the family. But for the new wave of troubled borrowers, the problems stem largely, or in part, from the structure of their mortgage, housing counselors say.

Uncharted Territory

In the past, the home mortgage "was a steadying influence; it neither rose nor fell over time," says Elizabeth Warren, a Harvard Law School professor who has studied consumer bankruptcies. "All that has changed in the last half-dozen years," she adds. "The mortgage payment is now more variable than any other expense for millions of people. We're working in completely uncharted territory."

Rising mortgage rates are causing problems for first-time home buyers such as Edward Snyder, a product manager who bought his house in St. Paul, Minn., two and a half years ago. Mr. Snyder financed the $210,000 purchase with a $168,000 interest-only ARM that carried a fixed-rate of 6.15% for the first two years and a $42,000 second mortgage with a 9.4% rate that is fixed for the first three years.

Mr. Snyder says he was stretched even before a rate adjustment on his ARM boosted his monthly payments by $200 in May. Since then, he has fallen behind on his water bills, car payments and student loan. "Now, it's a choice of what gets paid late," Mr. Snyder explains. Last month, he received a letter from his lender with the words "rate increase" on the envelope. Mr. Snyder says he hasn't opened it "because it gets too discouraging." This week, he's meeting with a mortgage broker to discuss his options.

"If I had been aware both loans were interest-only, I would have probably turned the loan down," says Mr. Snyder, who says that the terms of the mortgage were never properly explained to him. "I believe this loan is built for failure. There's no means to build up equity."

Roughly $137.5 billion in residential mortgages will face payment resets this year, with an additional $524 billion resetting over the next four years, according to a recent analysis by UBS AG that looked at loans sold to investors who buy mortgage-backed securities. Rising interest rates aren't a problem for most of these borrowers because they can refinance or have the cash to meet higher mortgage payments. Borrowers with troubled credit records may be able to refinance into a mortgage with a lower rate if they've been paying their bills on time.

But other borrowers are running into trouble, in some cases because they didn't understand the risks of their mortgage or wound up at the closing table with a loan that wasn't what they expected. More than 30% of mortgage brokers believe their clients don't understand the mortgage product they selected, according to a recent survey by Macquarie Mortgages USA, a unit of the Macquarie Group. Other borrowers didn't leave a cash cushion to cover higher mortgage payments at a time when gasoline costs and minimum credit-card payments are also rising.

"Often the reason somebody is put into an ARM or an interest-only loan...is because that's the only way the broker or loan officer could get them qualified," says Jordan Ash, director of the Acorn Financial Justice Center, an advocacy group that focuses on predatory lending issues. Acorn is currently negotiating with two large subprime lenders -- who deal with borrowers with blemished credit records -- about changes in underwriting standards and how to deal with borrowers whose interest rates are resetting.

Rising rates create new challenges not only for borrowers, but also for lenders that would prefer not to foreclose. When borrowers miss payments because of a sudden interruption in their income, a lender may structure a repayment plan that allows the borrower to make catch-up payments or do a loan modification that adds the unpaid debt to the loan balance. But if the problem stems from rising mortgage rates, a borrower may have to get a second job or prune spending.

Early Alerts

Some lenders are trying to alert borrowers to a payment reset well in advance, either through their Web sites or with phone calls or letters. They are also offering refinance options, such as switching from an ARM to a fixed-rate interest-only mortgage. A switch could mean higher monthly payments, but it insulates the borrower from future rate increases, says Bill Merrill, director of nonperforming loans at mortgage giant Freddie Mac.

But for some borrowers, "there may not be a solution," says Doug Duncan, chief economist of the Mortgage Bankers Association. "ARMs always have higher delinquency and foreclosures" than fixed-rate loans, he says.

Some borrowers are opting to sell homes they can no longer afford. Last year, James Zito, a retired salesman, refinanced into an option ARM in a deal that allowed him to pull out $50,000 in cash without increasing his monthly payments. Mr. Zito had been pulling out cash when he refinanced every three or four years. But this time, when his mortgage payments began adjusting, he realized he couldn't afford the higher payment, and refinancing yet again wasn't an option.

In June, Mr. Zito sold for $745,000 the three-bedroom, two-bath house in San Jose, Calif., he had lived in for 43 years and bought a smaller home in a retirement community. "I wanted to get out from under the mortgage," he explains. With an option ARM, "your monthly payment increases, and you don't make any headway."

Some California brokers say they are beginning to see a return of "short sales" -- transactions in which the sales price isn't large enough to cover outstanding loans. Patti Vaughan, an agent with Assist 2 Sell in Temecula, Calif., says in recent months she has begun to get calls from borrowers looking to unload houses they can no longer afford. "They've upgraded their houses, put in a pool and bought themselves Hummers and BMWs," she says. "Now they can't get it refinanced and they can't sell."

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Court's Eminent-Domain Edict Is a Flashpoint on State Ballots

2006-08-11T09:03:00.000-07:00

By Christopher Cooper

From The Wall Street Journal Online

Last year's Supreme Court ruling validating a Connecticut city's authority to seize private property for economic development has sparked a backlash. In several states, conservative groups are pushing ballot initiatives to curb local governments' abilities to exercise not only eminent domain, but also land use and environmental controls.

When a divided court ruled in Kelo v. New London that private landowners had no constitutional grounds to resist eminent-domain property seizures, it effectively kicked regulation of government condemnation suits back to the states. The reaction has been swift: Several states are considering laws that would limit a local government's ability to exercise eminent domain, or the taking of private property for public purpose. Other measures that voters are likely to consider deal with "takings," or government restrictions on private property, such as zoning and building regulations.

In Ohio last month, the state Supreme Court ruled that cities must have a specific reason to seize private property under eminent domain and can't rely on broad justification like economic development to force unwilling landowners to sell. This fall, voters in several states will decide on property-rights proposals.

In the South, four states are entertaining ballot proposals that would tighten the eminent-domain process. A Florida initiative requires local governments to sell expropriated property back to the owners if the land isn't used for the stated purpose, while ballot initiatives in Georgia and South Carolina would crimp government use of eminent domain. In populist-leaning Louisiana, a ballot proposal would prevent local or state government from condemning property and then transferring it to another individual or group, a measure that could affect how the state rebuilds after two devastating hurricanes last year.

But in the fast-growing West, where building and environmental concerns often pit government against developers, a different kind of property-rights movement is under way. Call it Kelo with a twist: Tapping antieminent-domain sentiment that conservatives say runs high among voters, some groups are pushing to limit how governments regulate private property. Measures heading for ballots in a half-dozen states this fall would require governments to compensate landowners if they apply more restrictive zoning retroactively, impose more stringent environmental rules on undeveloped property or apply aesthetic-development regulations on private land as a way to counter urban sprawl.

Some of these measures, called "takings" proposals, began as pure eminent- domain initiatives but have been modified by small-government advocates to make it more difficult to put antisprawl and stricter building-density burdens on current owners. In some cases, the ballot measures would allow a government to waive the requirements for existing landowners; others are tougher, seeking to discourage additional land-use regulations by requiring governments to make cash payments to landowners whenever new rules are imposed.

Versions of these property-rights initiatives are heading for the ballot in Arizona, California, Idaho, Montana, Nevada and Washington.

Some conservatives say it is ironic that the rush to property rights arose from the Kelo case's Supreme Court ruling, which they didn't feel went their way. Grover Norquist, who heads Americans for Tax Reform, a conservative group in Washington, has pushed similar proposals for years but got little traction from national advocates until the Kelo decision. "Two years ago if you walked down the street yelling that the government was taking our property, people would walk around you, they'd think you were a lunatic," he said. "Since Kelo, property rights has become the center of attention."

It is an issue, Mr. Norquist says, that is ripe for citizen balloting, which is allowed in many Western states. Voter propositions, which make it to a ballot through signature collecting, often are employed for issues that state legislators are reluctant to address, such as term limits and budget-growth restrictions. Takings present a similar issue: One that state and local governments are unlikely to embrace on their own.

As with many propositions, such as minimum-wage increases, heading toward voters this fall, pushing the takings issue costs less to advocate than to counter. Mr. Norquist said the issue polls well with voters, which makes it easier to promote than to oppose. Also, some conservative political groups, such as Americans for Limited Government, said it is relatively easy to piggyback the proposal with other ballot measures they are already pushing.

History suggests that supporters of these proposals may have the upper hand, especially in Western states, where governments have moved in recent years to impose restrictive covenants on developers to protect the environment and contain sprawl.

In Oregon, a takings measure that required the state to exempt individual landowners from stricter land-use regulations or pay them damages passed handily. That law, called Measure 37, is serving as a template for takings measures proposed in six states this fall. Property-rights backers are returning to the ballot this year in Oregon, championing a measure that would prevent government from condemning private property if the intent is to turn the land over to a private developer.

Given Oregon's political profile and the reaction signature-gatherers are receiving as they try to place takings measures on the ballot, supporters like their chances this fall. "It's one of those things that will pass everywhere it appears, absent some massive, expensive television campaign against it," Mr. Norquist said. "It passed in liberal, deep blue Oregon already."

Opponents say they are behind in the drive to defeat the measures, in part because conservatives successfully conflated eminent-domain concerns with regulatory takings. "The right is using the reaction to Kelo to slip in these takings measures," says Oliver Griswold, a spokesman for the Ballot Initiative Strategy Center, a liberal group in Washington that tracks state-ballot initiatives. "It totally decimates a municipality's ability to plan for growth in the future. And it has nothing to do with a government taking grandma's house."

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The Right Way to Transform Fixer-Uppers Into Dream Homes

2006-08-11T08:58:00.000-07:00

By Amy Hoak

From Marketwatch

The 100-year-old Victorian on Chicago's north side was in "bulldozer condition" before Don Van Cura decided to renovate it six years ago.

By now, he figures he could have built two new homes for the cost of fixing this one up.

"When they say they don't build them like they used to ... sometimes that's a good thing," Van Cura said. On the upside, the detail of his home can't be re-created in new construction. On the downside, he has spent time and money gutting and reframing every room in the house.

Although people still romanticize the concept of the fixer-upper, finding a diamond in the rough and restoring it to its former glory isn't always a pleasant experience.

"It's not for everyone," said Van Cura, of Don Van Cura Construction Company Inc. and a member of the National Association of the Remodeling Industry. "I'm not supposed to say that -- I'm a remodeler."

That said, the Chicagoan wouldn't trade his home for anything.

Is a fixer-upper for you?

All fixer-uppers can be diamonds, said Tom Silva, a general contractor who has starred on TV's "This Old House" for 20 years. For him, restoring the luster to an old home has a high gratification quotient. But a high cost quotient also accompanies many a renovation project.

"It's expensive in most cases to take an old house and bring it back," Silva said.

The trick is for homeowners to understand how much money they are able and willing to invest in renovation costs before buying a potential fixer-upper. Some buyers even bring a remodeler into the house before actually making the purchase to discuss realistic figures for improvements, Van Cura said.

But even the added preparation won't prevent the unanticipated costs that seem to inevitably pop up during renovation.

And although there's often a temptation to save money by diving into do-it-yourself projects, Silva recommends homeowners seek the advice of a professional before committing to a job if they have any doubt about going it alone. Doing a project incorrectly has the potential of adding extra bucks to the overzealous homeowner's overall bill.

A simple kitchen cabinet installation, for example, can become problematic if the plumbing was installed in the wrong place or if electrical outlets are inadequate, Van Cura said. "It hurts, but you say 'Sorry, we can't do this,' or 'We have to start over,'" he said.

The work doesn't disappear even after every room has been tackled, either. General maintenance for these older homes often eats into weekend and evening relaxation hours.

That said, a house needing a little work may be a sensible option in areas where affordability is a challenge for home buyers, such as the San Francisco Bay area, where Paul Winans, of Winans Construction Inc. and chairman of the National Association of the Remodeling Industry, is based. In large cities such as Chicago and New York, some homeowners are choosing the cost of remodeling older homes over buying newer homes in suburbia, which come with a longer commute time to the city's core, he said.

Keeping costs down, however, requires a dose of patience in the homeowner's tool belt. Instead of a quick succession of remodeling projects, those on tighter budgets often spread the work out over several years, Winans said.

Still interested?

Not scared off by the cost and time involved in turning that fixer-upper into the home of your dreams? Read on.

While shopping around for your own personal diamond in the rough, keep your emotions in check, advises Tom Kraeutler, a former home inspector and one of the hosts of "The Money Pit," a nationally syndicated home-improvement radio show.

"Remain as objective as possible until you understand the condition," he said. That is, wait for the inspection to be completed before falling head over heels for the property.

Winans puts it this way: "Take off the rose-colored glasses and put on your magnifying glasses and look at the house closely." If you can't seem to detach from the house, get an objective friend to come along for an analysis.

It might not be evident from a simple walk through, for example, but house elements that sport materials such as lead-based paint or asbestos most likely will require safety work, said Mike Phillips, president of Century 21 All-Pro in Kansas City, Mo.

"You can get in over your head on environmental issues some of the time," he said.

Some features of older homes you may have to accept. Give some special thought to whether you consider squeaky floorboards or outdated floor plans to be charming or annoying, Van Cura said. Many older homes also come with higher energy bills, and energy-efficiency upgrades are popular improvements, Kraeutler said.

Finally, make sure that the home will meet most of your needs before buying, Van Cura added. If a buyer wants to alter 50% of the home, it probably isn't a good fit.

What to look for

You've found a house you may want to fix. But should you snap it up?

Set aside appearances for a moment -- those can be easily changed. Instead, look at the "bones" of the house, its main structural elements, Kraeutler said. Look for a healthy foundation, house frame and roof structure.

Replacing a roof's warn-out shingles isn't an exorbitant undertaking; replacing a roof's structure, however, is more involved, he said. A leaky basement might be easier to fix than some might think, but if the foundation wall is cracked because water has frozen and expanded at the home's base, it could cost a bundle to have it repaired.

Then there are termites, those pesky wood-destroying insects that can severely damage a house's structure -- and a sale. In homes with basements where an inspector can see exposed floor beams, he or she can get a good sense of whether bugs have attacked. But if the home was built on a slab, Kraeutler will usually take a high powered flashlight and hold it to the surface of a wall to detect if any termites have eaten the paper off the drywall.

Still, you might not be able to find out exactly how much damage is there. That's when you have a heart-to-heart with your inspector.

"Have a good, professional inspection done and have that done early," Kraeutler said. Ask the inspector not only what they see, but what they can't see. If there's an element that gives them pause and is considered a risk, it should be factored into the selling price. If the risk is too big, you may decide to walk away.

Most mechanical defects are easily correctible -- with the exception of a few, Kraeutler said.

Old plumbing in homes built between 1900 and 1940 was made of steel, and those pipes rust on the inside almost like a clogged artery, he said. If a homeowner doesn't replace the infrastructure because of reduced water pressure, a burst pipe often will demand the investment.

Wiring from certain eras can be another significant repair, he said.

"Most wiring put in homes after the '50s are OK," Kraeutler said, but the knob-and-tube wiring of the 1920s and 1930s often calls for a rewiring of the entire house for safety reasons. In some areas, insurance could become difficult to secure for homes with knob-and-tube, Winans said.

There was also a period from 1965 to 1972 when aluminum branch circuit wiring was used; it's now identified as a fire hazard, Kraeutler said.

After the decision

Once you've made your decision, have signed on the dotted line and maybe even moved in, do nothing -- for a while. Kraeutler recommends living with the home as is for a spell -- even if you're "chock full of energy" to dive in -- because the surroundings are still too new to you to be properly critiqued.

When you do start remodeling, attack projects one at a time, starting with any structural housekeeping that needs to be attended to, Winans said. Then move on to projects aimed at comfort, Phillips said.

"Pick your battles, prioritize your needs and make yourself comfortable," he said.

Maybe start with a master bedroom, working to the living room or kitchen -- whatever will make the space more livable. If the home is "sticking out like a sore thumb" compared with the rest of the homes on the block, it might be worthwhile to give it a little curb appeal right away, he said.

Don't let price be the only deciding factor when choosing contractors, said Van Cura. Opt for quality first -- it may end up saving money in the long haul. Involving a qualified professional also will ensure codes are met and any required building permits are secured.

Finally, plan for surprises as best you can by tacking a cushion onto your estimates, Silva said. In reality, even your best budget will often be off.

"If you have a budget, whatever that budget is, take it and add 25% to it," Silva said. If you can't afford to plan to go 25% over budget, take 20% off of your existing budget. "But forget about that extra money," he said.

And when you get discouraged midway through, go to a finished room, light a candle and enjoy a glass of wine, Silva said. It's hard work, but a home brought back to life -- with your style infused throughout its walls -- is often worth the effort.

http://www.realestatejournal.com/

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Housing Market May Land Harder Than Economists Expect

2006-08-11T08:56:00.000-07:00

By Mark Whitehouse

From The Wall Street Journal Online

Home prices in some parts of the country are falling. Builders are scaling back. Bubble or not, the biggest housing boom in recent U.S. history is coming to an end.

Now here is the big question: How bad will the aftermath be? At this point, most economists expect a "soft landing," a gradual decline that won't derail the nation's economic expansion, now in its fifth year.

But there is a good chance they are being too optimistic. The boom has depended heavily on the upbeat psychology of consumers, builders and lenders. As moods swing, the landing could be very hard indeed.

"We could be underestimating the dark side," says Mark Zandi, chief U.S. economist at Moody's Economy.com and among the first to seek to quantify the housing boom's broader effects. "Euphoria could turn into abject pessimism very quickly."

With each passing data point, signs of the housing slowdown grow stronger. In June, total single-family-home sales fell 8.7% from a year earlier, to an annualized rate of 6.9 million -- the sharpest year-to-year drop since April 1995.

The government's report on second-quarter real gross domestic product, the inflation-adjusted value of the nation's output, showed that fixed investment in housing by companies and individuals declined at an annual rate of 6.3% in the quarter. That was a sharp change from a year earlier, when it was increasing at an annual rate of 20%. As of Friday, futures markets were predicting about a 5% drop in house prices by May 2007.

Still, judging by most economists' forecasts, the fallout from a slowing housing market doesn't look all that unpleasant. Typically, they expect the decline in housing -- and housing-related activity -- to shave about a percentage point off inflation-adjusted GDP growth in 2007, compared with the estimated one percentage point the sector contributed to growth in 2005. If business investment and exports accelerate as expected, that would bring inflation-adjusted GDP growth to about 2.8% in 2007, down from a forecast 3.5% this year.

Economists, however, have few clues on which to base their predictions. Today's housing boom differs radically from its predecessors. For one, it has been bigger and longer-lived. House prices are still more than twice the level of 1991, when the boom began. Even after the recent decline, June's rate of home sales is 40% above the 20-year average.

Much of the recent increase has been driven by an unprecedented flood of cash into U.S. capital markets. Global demand for U.S. mortgage bonds, competition among big national lenders and the advent of exotic loans have made it easier than ever to borrow money to buy a house -- and to turn rising home values into cash.

Because the market has risen so far, economists worry it has the potential to fall much harder than their main forecasts would suggest. As Janet Yellen, president of the Federal Reserve Bank of San Francisco, put it in a speech last week: "We can't ignore the risks of more unpleasant scenarios developing."

One big question is how much the housing slowdown will affect consumers, whose spending accounts for more than two-thirds of the economy. If house prices plateau or fall, homeowners will feel poorer, and thus less willing to go out and buy more cars, boats and refrigerators. Typically, this "negative wealth effect" would be only about three to five cents of spending for each dollar of wealth lost.

But modern mortgage finance has magnified the effect of home values on spending, says Jan Hatzius, chief U.S. economist at Goldman Sachs in New York. He estimates that when people take cash out of their homes through home-equity loans and refinancings -- which they were doing at an annualized rate of $558 billion in the first quarter -- they tend to spend about 50 cents of every dollar. If house prices merely stabilize, people's diminished ability to use their houses like automated-teller machines would subtract about 0.75 percentage point from annualized GDP growth in 2007, Mr. Hatzius says.

Another question is how fast home sales, and consequently home building, can fall. Even after the second-quarter decline, investment in residential construction accounted for about 6.1% of the economy -- close to a 50-year high. If, as some economists expect, housing investment merely returns to the long-term average of about 4.6% over the next two years, the decline also would shave 0.75 percentage point from annual real GDP growth.

But there is reason to believe home builders will have to pull back more sharply. That is because the leveling off of house prices changes the equation of homeownership. When mortgage rates were less than 6% and house prices were rising at about double that rate, people could reasonably expect to make more on their house's appreciation than they would pay in interest on their mortgages. Now, though, inflation-adjusted mortgage rates -- the interest rate on a typical 30-year mortgage minus the percentage rise in home prices -- are on track to turn positive for the first time since 2001.

When housing took a similar turn in the 1970s, new-home sales quickly fell to their long-term norm. This time around, that would entail about a 50% decline in sales, says Ian Shepherdson, chief U.S. economist at consulting firm High Frequency Economics. He estimates that the resulting decline in residential construction would subtract about 1.5 percentage points from annual GDP growth in each of the next two years. "It's a 15-year bubble unwinding in two years," Mr. Shepherdson says. "It's going to hurt."

If Messrs. Hatzius and Shepherdson are both right, the effect of the housing slowdown on construction and consumer spending alone would subtract more than two percentage points from economic growth in 2007, bringing it well below 2%.

But that isn't all. Economists can't quantify some risks, including the biggest: the chance that a sharp drop in house prices -- what economists call a "disorderly downturn" -- would leave many homeowners owing more on their mortgages than their homes are worth. If that led to a wave of foreclosures and losses on riskier mortgage-backed securities, banks and investors could get spooked and cut back on all kinds of lending -- a move that could snuff out economic growth.

"For me, the risk of a disorderly downturn is the greater one," Mr. Hatzius says. "That's a scenario that people would worry about a lot, because typically recessions are the result of a general unwillingness to lend."

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Swimming Pools: Do They Increase Or Decrease a Home's Value?

2006-08-11T08:54:00.000-07:00

By Amy Hoak

From Marketwatch

Maybe the sweltering days of summer have you wishing for a pool as a backyard oasis.

Like Clark Griswold in "National Lampoon's Christmas Vacation," who fantasizes about buying an in-ground pool with his holiday bonus, you can see it already: The crystal clear water, the poolside deck, the floating raft just waiting for you to climb on and sunbathe.

You're not alone.

Some real estate professionals caution that a swimming pool can be a deterrent to some buyers when the home goes back on the market; having an in-ground pool in the backyard has the potential to dissuade an interested buyer with no desire for the feature or the maintenance it demands.

Still, Americans apparently can't stay away from buying personal water wonderlands, according to statistics compiled by the Association of Pool & Spa Professionals. It isn't just the pool itself, either; many times the backyard investment continues poolside with the installation of homey decks and outdoor kitchens.

In 2005, 176,500 in-ground pools were sold and installed, bringing the total number of those pools in the country up to 4.7 million, according to the association's statistics. About 4.3 million pools were sparkling throughout the country in 2002.

Also in 2005, 219,000 above-ground pools were sold, bringing the total number of them in the country to 3.6 million, the association found. About 3.4 million above ground pools were scattered throughout the country in 2002.

And in some areas of the country, a house's pool is more of a necessity than a flaw.

Smart swimming

In places where pools are common, "a house without a pool would be harder to sell," said Brian Van Bower, president of Aquatic Consultants Inc., a pool-design firm based in Florida.

Seven in 10 Arizona homes have pools, said Roger Soares II, president of Hydroscapes LLC, a pool-design and construction company based in Arizona. "In a lot of areas it's not a need, but here it's a necessity because it's so hot."

Often times, homeowners would rather buy a home with a pool than have to install it themselves, Soares said. If you do buy a home that already has a pool, make sure to get it looked at by a qualified pool inspector, said Suzanne Barrows, spokeswoman for the Association of Pool & Spa Professionals.

"We recommend that you have the pool inspected by a pool person, but in some cases home inspectors have taken education courses so they know what to do," Barrows said. "If the home inspector is a reputable inspector and he or she doesn't know how to inspect a pool, they'll say so, and the good ones will have names of people in the area who could do it."

But if you're already settled and are contemplating buying a pool for your home, it's best to think before you dive.

Above-ground pools traditionally don't add any value to a home come resale time, according to research from the National Association of Realtors. They also aren't much of a deterrent to buyers because they can be easily removed, said Wallace Perry, Coldwell Banker United, Realtors' president and chief operating officer for the Carolinas region.

"It's not enough of an economic factor to influence it (the sale) either way," he said. A seller might even take the pool down and bring it to their new home.

In-ground pools have a different story.

They do tend to add value to a home -- about 7.7%, according to National Association of Realtors statistics. Regionally, in-ground pools will add about 5% to the value of a home in the Northeast part of the country, about 6% in the Midwest and 7.5% in the Southeast and West. In the Southwest, a swimming pool will add nearly 11% to the home's value.

But because they're permanent, buyers who aren't interested in the upkeep or the energy costs of in-ground pools may turn away from a home with one, Perry said. Heated pools especially can run up a power bill, he said.

The feature seems to interfere more often in the sale of lower-priced homes -- homes with selling prices of less than $200,000, Perry said. On the higher end of the market, a pool doesn't seem to be a factor and will probably even enhance a home's appeal, he said.

In general, in-ground pools will usually return 50% of their original cost when the home is sold, Perry said. Depending on location, the age of the pool and maintenance given throughout its lifetime, the return could be even less, said Carolyn Helmlinger, president of Coldwell Banker Mid-America Group, Realtors in Des Moines.

Your own enjoyment, therefore, should be the primary reason for installing a pool.

"If you're going to put in a pool, you need to be comfortable that you're going to be there more than five years," Perry said.

Deep pockets

Another reason to tread carefully before buying a swimming pool: It's a big investment of money and time.

Again, above-ground pools aren't as permanent or as pricey, with many of them available for a couple thousand dollars or less.

Although there are still companies advertising in-ground pools around $16,000, the average price is more like $30,000 to $35,000, which would get its owner a water feature and possibly a spa, Soares said. Landscaping around the pool could cost anywhere from $3,000 to more than $100,000.

Then there's the maintenance once it's installed.

Running the filter -- assuming you have an efficient pump -- will cost an average of $20 a month if it's run all day, every day, Soares said. Chemicals could cost between $5 and $20 a month in the winter and anywhere from $20 to $100 a month during the summer. Pay someone to take care of the pool instead and the going rate is around $65 a month, he said.

Easier chemical distribution through automated dispensing has helped save time and eliminate some of the hassles of pool care, said Ed Kahn, editor of pool magazines including "Pool & Spa Living." Also popular: salt chlorination systems, which covert regular salt to chlorine and prevent pool owners from ever having to buy a chemical.

Emerging pool styles are tailoring to customers' needs as well. New, smaller pools, for example, are configured in a way to provide some of the benefits of hot tubs, Kahn said.

"It looks like a small pool, it has the propulsion system that creates a current in the water so you can literally swim in place as if you're swimming in a large pool," he said. On resting days, owners can use the pool for hydrotherapy.

Aquatic fitness centers produced by Vista, Calif.-based Dimension One Spas allow for vertical and horizontal exercises with less impact, said Bob Hallam, the company's president. They also take up less space.

The pools are so popular, the company is doubling production this year to meet demand, he said. Models run from $25,000 to $35,000, he said.

Why the surge of popularity for the product? "We're all aging, and a lot of people my age -- which is a baby boomer -- still want to keep in good shape," Hallam said. The warm water lessens impact on the joints.

Pool envy?

If the memory of a fun Fourth of July pool party at the neighbor's house still has you desiring your own aqua retreat, Barrows offers these questions to consider before heading to the show room or calling a builder:

What do you want to use the pool for? Is it for exercise or to splash around in? Look around online for styles and prices. The Association of Pool & Spa Professionals' consumer site, www.poolpeopleusa.com, is a place to start.
Who is going to use the pool? Adults? Children? The association also maintains a site for kids, www.splashzoneusa.com, that emphasizes pool safety.
Do you want the design of the pool to mesh with the rest of the yard? Landscaping can be as simple as a small deck and as elaborate as an outdoor kitchen with fire pits and pizza ovens.
What kind of pool do you want? In-ground? Above-ground? A swim spa? Consider what kinds of pools are in your neighborhood or talk with a local real estate professional if you have any concerns about what installing a pool will do to your resale value.

Above all, talk to pool owners before jumping into a purchase, Soares said. Ask them how they liked their builder. Do additional homework by checking a builder's references and finding out how long they've been in business.

"It's amazing how many people will not do that," he said.

http://www.realestatejournal.com/

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Fed Holds Interest Rates Steady As Slowdown Outweighs Inflation

2006-08-11T08:50:00.000-07:00

By Greg Ip

From The Wall Street Journal Online

The Federal Reserve left interest rates steady Tuesday for the first time in two years, gambling that a nascent economic slowdown will cap growing inflation pressures.

In leaving its short-term interest rate target at 5.25%, the Fed said: "Readings on core inflation have been elevated in recent months," but "inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors."

For the first time since Ben Bernanke took over as chairman on Feb. 1 from Alan Greenspan, the policy-setting Federal Open Market Committee didn't agree to the action unanimously. Federal Reserve Bank of Richmond president Jeffrey Lacker dissented, favoring instead another quarter-point increase.

The statement said, as it did after the last meeting in June, "Some inflation risks remain. The extent and timing of any additional (increases) ... to address these risks will depend on the evolution of the outlook for both inflation and economic growth."

The retention of that sentence in effect reflects a continued bias, but not a presumption, to raise rates in the future. In effect, the Fed gave itself some breathing room to assess the impact of the preceding 17 quarter-point rate increases before deciding whether to hike again. Mr. Bernanke has been suggesting since April that he was seeking more flexibility.

"A pause does not mean a stop," said Stephen Stanley, chief economist at RBS Greenwich Capital Markets. "And there's certainly ample evidence the economy has been on a slowing trajectory over the last couple months. There's enough evidence there for them to take six weeks off."

Signs of slowing growth and rising inflation have aroused deep disagreements among economists on what the Fed should do. Some economists think the Fed has already raised rates too far and is courting recession; some think it must raise them further to stop inflation from accelerating. Some say both things are true.

"You can't fight inflation without risking overkill on the economy," said Ethan Harris, chief U.S. economist at Lehman Brothers, who thinks the Fed shouldn't have paused and predicts it will eventually raise the rate to 5.75%. "That is a risk, and it's a risk they should take." He added: "It's not fair to Bernanke that he steps into his job just as the economy is set to decelerate and inflation takes off."

The Fed's view has been that inflation recently topped the informal "comfort zone" of 1% to 2% , excluding food and energy, primarily because firms have passed higher energy costs on to consumers. If growth does not exceed "potential" -- the rate at which the economy can grow without straining the available work force and capital stock -- and energy prices stabilize, the Fed figures inflation should drop back. Meanwhile, it believes that as the housing market cools and consumer spending slows, business investment and exports will pick up the slack.

But recent data have not been supportive of that view. Economic growth slowed to 2.5% annual rate in the second quarter in part because of a surprise drop in business equipment investment. Macroeconomic Advisers, a forecasting firm, predicts it will grow at about the same moderate rate in the current quarter. Payroll growth was sluggish and the unemployment rate rose in July.

But at the same time, inflation has ticked higher, and new data on productivity, growth and labor costs suggest that inflation pressures have been bubbling longer than previously realized. The Labor Department said nonfarm business productivity grew at a 1.1% annual rate in the second quarter, a sharp decline from the 4.3% growth rate of the first quarter, and was up 2.4% from a year earlier. At the same time, labor costs per unit of output climbed 4.2% in the second quarter, and were up 3.2% from a year earlier. Labor costs were actually declining in 2004, but have steadily accelerated since, and now are rising fast enough to eat into profit margins -- which could encourage firms to try harder to raise prices. Importantly, Tuesday's Fed statement did not repeat a reference from June's that "ongoing productivity gains have held down the rise in unit labor costs."

Revisions to economic data from 2003 to 2005 also show the economy grew less quickly and inflation was a bit higher than previously thought. That, economists say, suggests the economy's "potential" growth rate is lower than previously realized, and the economy may already be straining capacity.

None of this means the Fed is making a mistake now. Indeed, inflation and labor costs were both rising in 2000 when it last stopped raising rates after a cycle of increases. In retrospect, however, the downturn in tech stocks and subsequent decline in tech investment had already set in motion a slide into recession the following year and a big drop in inflation. There are concerns that an accelerating downturn in the housing market today could similarly undermine the overall economy now.

"There was a strong case for pausing at 4.5%," said Ian Shepherdson, chief U.S. economist at High Frequency Economics. "There was already plenty of evidence the previous hikes had begun to soften growth." He predicts the Fed will start to cut rates by next April.

Nouriel Roubini, an economist at New York University and author of a popular economics blog, says it's already too late to prevent a recession. "The Fed should have tightened earlier to avoid a festering of the housing bubble early on. The Fed is facing a nightmare now: the recession will come and easing will not prevent it."

Lakshman Achuthan, managing director at the New York-based Economic Cycle Research Institute, said the economy is not now headed into recession but it is slowing and thus more vulnerable to some kind of shock that tips it into one. At the same time, he said, inflation shows no sign of turning down soon. So, "The Fed may have to stay in the game even though there are elements slowing the economy that still have to play out."

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Real Estate Agents-Your guide to your real estate dreams

2006-06-28T08:42:00.000-07:00

by Sam D'Costa

Are you planning to buy or sell real estate all by yourself? Good, but are you acquainted with all the nuances of transacting a commercial real estate? Let's face it- selling or buying a commercial real estate is one of the most difficult jobs and most of us are not smart enough to handle all the details in the most economic manner. Selling your own land might save you the commission payable to real estate agents however; you will spend double the amount through other channels in the transaction process. It is always advisable to get an experienced real estate agent to help you with your transaction or to deal with established real estate buyers while selling your property. Choosing an expert real estate agent can make a big difference as they are most informed about all real estate investment opportunity and can ensure that you get the maximum return out of your real estate transaction. At the same time, these real estate agents would manage all the legal issues reducing your burden.

Lets now see the benefits of hiring an expert real estate agent.

Professional real estate brokers are equipped with the latest and up-to date information on real estate market. These available information are always accessible to interested clients. They provide clients with information about the latest happenings in sales price data, comparative costs and other labor costs to help clients to make the best out of their investments.

These professional real estate brokers also provide access to other information, which can make big difference in your decision about choosing the perfect real estate investment opportunity. They will provide you with information like market lease trends, popularity study and a comparative report on the changing trends in different real estate markets in different states. Addition to this, the real estate brokers also look after the economic trend that affects the real estate market. This information can be used by the prospective client to study the current real estate market and choose the ideal property that fits his purpose and pocket. They are capable of handling thousands of data and handling very large transactions that involves millions of dollars. In order to get the competitive edge, a client should get the latest information from the professional real estate brokers.

A real estate transaction involves legal issues and complexities, which are very difficult to be single handedly taken care of by any layman. These professional real estate brokers are trained to solve the complicated legal issues and thus save your valuable. Although the agents will take their share from the sale proceeds as commission, but it's worth giving that amount rather than making an improper investment.

It is advisable not to venture into a real estate transaction without the guidance and advice of an experienced real estate broker. They have the right training and equipment to give you proper advice and transaction services so that your money gets into the right channel and your real estate venture goes smoothly.

About the Author

Sam D'Costa is well known professional in Online Marketing and web promotions.

You CAN Buy Your New Home Before You Sell Your Old One

2006-06-28T08:38:00.000-07:00

Author: Rob K. Blake

Buy Before You Sell. Too Risky Right? Wrong!

Myth 14: I can’t buy a “new” house without first selling my “old” one.

This is a common myth. That is the way it is supposed work…right? You can’t have a new house without getting rid of the “old” one.

Not so.

Take for example, the story of one of our clients. They had a house (beautiful house, worth about $600,000) and had no intention of leaving.

However, one day this house in their neighborhood went on the market. You know the house. It is the one where every time you go by, you wish it was yours. Unfortunately, this house would never be for sale.

Out of the blue, the unbelievable happens: the house goes up for sale.

Now most would call this a stroke of luck, then it would dawn on them...

“We can’t have that house. Obviously, something unforeseen as happened, and they’ll want a quick sale. Waiting for us to sell our house first, won’t be acceptable to them. I guess we are out of luck.”

Luckily, this client called us to structure a safe way for him to get his dream home today, buy some time to get his “old” house sold, make both homes affordable during the marketing period, and leave him the exact same long term financing on the “new” home he otherwise would have had!

Now that’s a tall order! But we did it. And, so can you!

Here are 2 ways to buy a new house without selling your “old” one first.

Pull the equity out of your existing house using a Home Equity Line of Credit or a 2nd mortgage. If you could snap your fingers and sell your home, this would be what you’d use the buy the “new” home anyway. So just get it out now. Now, reserve enough of this money to make your “old” house payment for 6-12 months. Your house will take this long to market and with the money set aside you won’t be tempted to take a low-ball offer. Use the remainder to as down payment and get your new first mortgage to complete the purchase. When the “old” house sells, both mortgages are liquidated and you are left with one house and one mortgage…the exact same situation you’d have had you sold your “old” home before you bought the “new” one. But you accomplished it without the wait and the missed opportunity!

Another way to achieve the same result minus the “old” house payment reserve is to use an 80% first mortgage and a 20% 2nd mortgage also called 100% financing, to buy the new house. You won’t have to put any money down and when your “old” house sells, you use the proceeds to pay off the 2nd. The only difference is you don’t get any “extra” money to use to offset two house payments during the marketing period. Many of you, have existing lines of credit or other sources, so this may not be necessary.

Both scenarios leave you with great permanent financing on the new house.

The 80/20 or 100% financing scenario costs a little more in discount points than a traditional structure, but it’s only to the costs and not the rate. Refer to our website to learn more about 100% financing in our free report called, “Buy With Zero Down!”.

The biggest hurdles you’ll need to clear are 1) making two housing payments and 2) getting loan approval with two housing payments.

Here’s how you do both:

When you pull the money from your existing house, reserve enough to cover up to 12 months mortgage payments for the “old” house while it is on the market. That way you don’t have to come out of pocket for the payment. Gee, that was easy! Hurdle 1 cleared!

Since most loans are approved through a computer these days, you’ll need a mortgage broker who knows how to use the automated approval computer systems that FNMA and other agencies and lenders use. These approval systems are a Godsend when it comes to creative financing in today’s modern mortgage arena. It may seem strange to you, but to the computer, your financial picture and your need for financing, are simply numbers. It doesn’t care that some of those numbers include 2 housing payments. The new systems are allowing many of our clients an approval with abnormally high debt ratios, sometimes as high as 60%! This is very prevalent, especially with clients who have strong credit and assets after closing…like a 401K. This is your window for approval. Now, you know you’ll not be spending 60% of your income on debt, because you put the money aside in Step 1 to cover the “old” house payment, but the computer doesn’t know that or care. If done right, you’ll get the approval even with very high debt ratios.

Note: Beware! Don’t let an unscrupulous mortgage broker get you to commit mortgage fraud just so you can buy before you sell. Stick with our plan. If you get approved fine. If you don’t, live with it. One way they’d break the rules to get you approved is to “doctor up” a lease agreement on your “old” home to offset the payment and show the computer a lower debt ratio. Don’t do it…it’s a Federal crime!

How do you start?

1) Get approved through the computer system
2) If you need to pull equity out of existing house; start it now
3) Write offer on new house
4) When offer is accepted, put existing house up for sale; not before

At Integrity First Mortgage, we use these strategies to get our clients into houses every day. So don’t worry. It is ok to step out of the box sometimes and put away some of the outdated concepts about financing a house.

Lastly, don’t forget you can net a lot more for your “old” home with our revolutionary way to sell your house without paying a real estate commission, (6% commission on a 600,000 house is $36,000!). Download our free ebook, “For Sale By Owner Secrets” at my FSBO site www.financethishouse.net.

Happy House Hunting!

A Housing Slowdown Can Put the Brakes on Jobs

2006-06-28T08:34:00.000-07:00

By Mark Whitehouse
From The Wall Street Journal Online

Mortgage brokers, prepare your resumes. And while you are at it, highlight any experience you've had in health care.

The reason: Housing, the biggest generator of jobs in the current expansion, is running out of steam. As a result, tens of thousands of Americans, from bankers to hardware-store clerks, are likely to find themselves out of work over the next couple of years. For those who can transfer their skills to other industries that are still growing, such as health care, it won't be the end of the world.

"It's not going to be a big show-stopper, because there are other areas of the economy that are picking up," says Brian Bethune, U.S. economist at consulting firm Global Insight.

Few sectors can claim to have as much sway over the economy as housing. Housing-related employment has accounted for about 23% of the 4.9 million jobs created since the nation's job market began to grow in late 2003, according to Moody's Economy.com. That includes architects, contractors, real-estate agents, brokers and bankers, as well as the host of others who provide the industry with materials and services.

"There's never been a housing boom like this one in terms of the reach, in terms of the range of industries affected," says Ethan Harris, chief U.S. economist at Lehman Brothers in New York. "This is clearly unprecedented."

Now, the boom is coming to an end. Total single-family-home sales were running at an annualized rate of 7.1 million in April, down more than 6% from the June 2005 peak. Backlogs of unsold homes are rising, and price increases are slowing.

Economists expect the slowdown to affect more than just housing-related jobs: As stagnating house prices and higher interest rates limit Americans' ability to use their homes as a source of cash, they are likely to spend less money on consumer goods, meaning less work for all kinds of folks, from assembly-line workers to shop assistants.

Signs of weakness in housing-related employment are already appearing. Last week, KB Home, of Los Angeles, one of the nation's largest home builders, said it had laid off about 7% of its 6,600 workers. Earlier, ACC Capital Holdings Corp., the parent of mortgage lender Ameriquest Mortgage Co., announced plans to lay off 3,800 workers. And Washington Mutual said it would be cutting 2,500 jobs related to its home-loan business.

"There's no question that the downturn in the mortgage business has caused a lot of banks to cut jobs," says John Challenger, chief executive of Chicago outplacement firm Challenger, Gray & Christmas Inc.

From a macroeconomic perspective, the housing slowdown, and the attendant slowing of job growth, could be just what the economy needs. If, as some economists predict, the monthly average rate of growth in U.S. non-farm payrolls falls and stays a bit below 130,000 -- from about 175,000 in the first quarter -- that would help keep wages in check, relieving the inflationary pressures that have worried Federal Reserve officials and, as a result, spooked financial markets. "That's exactly what the Fed would like to see," says Mark Zandi, chief economist at Economy.com.

No single sector of the economy has the potential to make up for all the jobs likely to be lost in a housing slowdown. Still, some can provide a cushion. All across the economy, companies are running up against the limits of what they can get out of their current workers -- a situation economists say will drive more hiring.

"As long as the economy is expanding, you have to add inputs from somewhere, and labor is the easiest input to add," says David Greenlaw, an economist at Morgan Stanley in New York.

Industries that have picked up the pace of hiring in recent months include health care, finance (excluding housing-related finance), education and nonresidential construction. Manufacturing, too, is benefiting from increased capital investment in the U.S. and abroad: The sector has added 134,000 production jobs since September.

Not all of the new jobs will be a good fit for people forced out of housing-related work. Immigrants who specialize in low-skill tasks could be among the hardest hit. "The low-skilled or unskilled worker is going to be displaced," says Global Insight's Mr. Bethune.

Still, some skills are transferable. Carpenters and electricians, for example, can find jobs on commercial and public projects like office buildings and schools. People who can find ways to improve companies' productivity -- say, by making loan applications easier to fill out -- are always in demand, says Andrew Wilkinson, a managing director in Los Angeles for KForce Professional Staffing. He recently found jobs for a number of business analysts laid off by Ameriquest. Their new employer: Kaiser Permanente, the U.S.'s largest health plan.

"Those are the types of folks that our customers generally struggle to find anywhere," he says. "We put them into health care, we put them into biotech and we put them into other financial-services companies."

U.S. New-Home Sales Rise At Fastest Pace Since December

2006-06-28T08:32:00.000-07:00

By Campion Walsh
From The Wall Street Journal Online

U.S. new-home sales unexpectedly rose in May at their fastest pace since December, as sales climbed sharply in the South and the West.

Sales of single-family homes increased 4.6% last month to a seasonally adjusted annual rate of 1.234 million, the Commerce Department said Monday. Year-to-year, new home sales were still down 5.9% from the pace in May 2005.

Wall Street had expected a drop in sales last month. The median estimate of 11 economists surveyed by Dow Jones Newswires and CNBC was for the May data to show a 4.0% decline from the previous month to a 1.150 million annual rate.

Economists are watching housing data closely to gauge the magnitude of an anticipated slowdown in residential real estate activity following years of torrid market growth that has buoyed consumer sentiment and spending.

The unexpected increase in new home sales could have an effect on monetary policy. The Federal Reserve is widely expected to raise short-term interest rates again when it meets Wednesday and Thursday, extending a two-year credit tightening cycle in an effort to restrain inflation. But the course of the housing market could be a major influence on future decisions.

In the statement accompanying its last rate increase, in May, the Fed's policy-setting Federal Open Market Committee said slower economic growth was likely, "reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices."

While the direction of housing market indicators hasn't been uniform, so far this year's data generally have shown a slowdown. Last week the National Association of Home Builders reported its index for new home sales fell to its lowest level in more than 11 years.

At its meeting this week, the FOMC will have another housing market metric to consider, as the National Association of Realtors is scheduled to report Tuesday on May's existing home resales.

In Monday's report on new home sales, the Commerce Department said May sales climbed 6.0% in the South, reaching their highest point since October. Meanwhile, sales were up 5.3% in the West, reaching their higest point since January, and they were up 2.7% in the Midwest.

But in the Northeast, sales were down 7.9%, hitting the lowest regional level since July 2004.

Home prices fell last month. The average price of a home dropped to $294,300, down from an upwardly revised $302,200 in April. Meanwhile, the median price dropped to $235,500 from an upwardly revised $245,900. Compared with a year earlier, the average price in May was 2.4% higher, and the median price was 2.9% higher.

There were an estimated 556,000 homes for sale at the end of May, down from April's record 560,000. May's inventory represented a 5.5 months' supply at the current sales rate. In April, the inventory represented 5.8 months at the current sales rate.

An estimated 114,000 homes were actually sold last month, up from 105,000 in April, based on figures not seasonally adjusted.

Hiring a Contractor to Tutor You On Tricky Do-It-Yourself Projects

2006-06-28T08:31:00.000-07:00

By Gwendolyn Bounds
From The Wall Street Journal Online

For nearly a year, my guest bathroom languished in home-improvement purgatory. I had laid new wood flooring and ripped out the 1970s flowered tiles, no problem. But putting in the new tiles -- that had me procrastinating.

I'd splurged on some pricey and fragile natural stone and glass mosaic tiles, and I was reluctant to touch them. Crack a $2 ceramic tile and it's no big deal. Not so with the iridescent green glass mosaics I'd bought for $32 a square foot for my tub face and backsplash.

It's a dilemma every passionate do-it-yourselfer can face when confronted with a challenging project: whether to jump in and risk messing it up or to bow out and call in a professional. But there's a little-known third option: Call in a pro and work with him or her to get the job done.

Increasingly, some experts are willing to consider letting you apprentice with them in your own home. For the professional, it's a paying job with a free -- though potentially clumsy -- assistant. For the homeowner, it's a chance to make sure a critical project is done correctly and learn the skills you need to do it yourself in the future.

As homeowners drop some $155 billion annually on renovations, and the fix-up industry pushes us to tackle ever-tougher tasks, we can turn to books and videos and in-store classes at retailers. But sometimes there's no substitute for hands-on experience. So for my languishing bathroom project, I broke down and hired a pro. For a week, I apprenticed myself to a local builder and worked alongside him in my own bathroom.

Such collaboration can take many forms: Tim Carter, who runs the Web site www.askthebuilder.com, extols sweat equity. He says homeowners can pick up new skills while being useful -- and even saving money -- if they do the dirty work, such as moving materials around a job site, demolition and cleaning up. "Even the laborer doesn't want to do that," he says.

Beyond that, you can participate in almost every part of the job, as I did, if your expert is open-minded. At day's end, it's like having your cake and eating it too: You can boast about "doing it" and still get a professional's touch.

Some pros are reluctant to take on proteges because of liability issues. Attorney Scott Gurney with Frost Brown Todd's Construction Practice Group in Cincinnati cautions that both parties should check insurance policies to be sure that injuries or damage are covered if a homeowner is helping out, and look at warranties on materials that might be invalidated if not installed by pros. What's more, you need to be free to work contractors' hours and not hold up progress to answer emails or pick up the kids. "The contractor's main concern is that he's not slowed down," Mr. Gurney says.

Nevertheless, working in tandem is gaining favor. In its March issue, This Old House magazine touted "partnering with a contractor" as a way to save on remodeling. "I think there are a lot of projects where this could work," says Tom Silva, general contractor for the magazine and "This Old House" TV shows. "We'll probably see more of this in the future," agrees Chicago remodeling pro Ted Welch. "I'd probably add two or three days to the time span and charge accordingly."

For my first apprenticeship, I called up Bobby Dodge, a builder in Garrison, N.Y., who'd done renovations for me. I trusted his skills and honesty; he knew he could trust me to pay fairly. Since I'd already purchased materials, Mr. Dodge charged just for his time ($45 an hour) and that of his assistant, Henry Casholle ($35 an hour). If I held things up, it was on my dime -- but if I helped, I might save a few bucks.

On the first day at work, I learned I hadn't put enough screws into the cement backer board in my shower area to safely hold the weight of my heavy 12-by-12 marble tiles. What's more, my screws weren't all flush in the wall, which might affect how flat the tiles sat. I wouldn't have noticed the gaffes.

Then came the measuring. I wanted my marble tiles staggered, but didn't want lots of small pieces around the edges. Calculating where to lay the first tile while allowing for the 1/8th-inch grout lines fell to Mr. Dodge. I sat beside him on the tub edge while he explained his system, and his reckoning ended up perfect.

I finally got my hands dirty when we cranked up the wet saw, which uses a diamond blade cooled by water to cut tiles. After Mr. Dodge showed me how to hold the marble so it wouldn't crack, I slowly pushed a piece into the blade, tensing slightly at the high-pitched whine. Then I carried my piece to Mr. Casholle, who was waiting with the "thinset" mortar that would attach the tiles to the wall.

I thought slapping on mortar would be a no-brainer. Wrong. Spreading the mixture smoothly with a trowel without leaving gaps or dropping globs on the floor takes practice. Mr. Casholle patiently gave tips. He also taught me cool lingo -- terms like "butter her up" (apply extra mortar on the back of a tile) and "cut it four and a quarter light" (a sliver smaller than 4¼ inches). After one pass, I returned with a tile for Mr. Casholle and proudly pronounced I'd trimmed it "just a blade" like he asked. "Perfect," he said, pressing it to the wall.

Sometimes, I felt surprisingly helpful. The men's hands were too big to install the tiny one-inch glass mosaics in tight spots, so they enlisted me. Every night, I cleaned up. I also did the final polishing.

I definitely got the hang of tiling, but the fellows saved me in many ways. Turns out, one wall bowed outward. That required more calculations from Mr. Dodge to avoid unsightly grout lines. And when the marble tiles kept breaking, he devised strategies to milk scraps so we'd have enough to finish the job.

Ultimately my labor saved me about $200, according to Mr. Dodge, who wrote me a report card on my final bill: "The homeowner assisted in each aspect of the project, providing the materials, cutting tile, applying cement, installing tile, grouting and clean-up."

The best part: My bathroom is done.

The Pond Crashers: Owners Love Backyard Oases, as Do Wildlife

2006-06-14T09:06:00.000-07:00

By Jane Costello
From The Wall Street Journal Online

For many, the backyard pond invokes tranquil scenes of lily pads and water flowers. What some pond owners get instead are dive-bombing birds, carousing raccoons and koi-eating pythons.
The number of backyard ponds in the U.S. could reach six million this year, estimates Aquascape Designs, a pond manufacturer based in St. Charles, Ill., up from two million in 1996. But as more homeowners build backyard oases, more animals are treating those ponds as watering and feeding holes, as they dine on the expensive plants and decorative fish. In Ben Lomand, Calif., one homeowner has found mountain-lion tracks around her pond, while another in Wisconsin has played host to a roving bear. At Shoreline Wildlife Management in Clinton, Conn., pond problems account for almost 15% of its animal-control business.

"Wildlife respond to a pond almost immediately," says Craig Tufts, director of citizen science programs for the National Wildlife Federation, based in Reston, Va. And many pond owners, he adds, are "surprised at what's out there."

That apparent shock -- that outdoor ponds can attract outdoor creatures -- has given rise to a cottage industry in keeping the animals at bay. Remedies range from products like water-spraying scarecrows and plastic bird decoys to more homespun solutions such as hair clippings and mothballs. Meanwhile, commercial animal-control services say they're doing more business fighting the pond scum that visit.

It is often a losing battle. When Melissa White of Lakewood, Wash., dug a 4,200-gallon pond last summer, she set off a chain of events that led to an invasion of winged wildlife. After spotting mosquito eggs in her pond, the psychotherapist tossed in a few larvae-eating mosquito fish. The insects disappeared but the fish multiplied, and she soon had hundreds of them darting between the comets and shubunkin.

Since then, Ms. White has been dive-bombed by a kingfisher that repeatedly stopped by for dinner and fought with a pair of mallards. "When I first saw them, I thought, 'How pastoral,' " she says. But when she saw duck droppings all over the yard, she took to chasing them while screaming, "You have other places to nest!"

A Misplaced Moose
Homeowners have long contended with rabbits and deer in the garden, and as development pushes farther out, more unusual species are creeping into human territory. Last month, a 200-pound black bear was shot and killed in New Jersey after it wandered through suburban and city streets for two days, and earlier this year, a 700-pound moose surfaced in New York's Westchester County.

The proliferation of ponds adds a new wrinkle. Critter Control, an animal-control company based in Traverse City, Mich., with 110 franchises nationwide, has seen an increase in pond business over the past five years. "People buy expensive fish, and raccoons keep eating them," says spokesman Sean Carruth. Shoreline Wildlife Management in Clinton, Conn., reports that business is up 50% over the past year, with most pond owners calling about problems with beavers and snapping turtles. Animals are being displaced by waterfront construction in the area, says owner Deanna Gorski, "so they're moving to where they can find water and shelter."
In Florida, the Miami Dade Fire Rescue Anti-Venom Unit gets about 400 calls a year from local residents who spot stray snakes and reptiles, including alligators, mostly swimming in their water gardens, pools and ponds, says Lt. Jeffrey Fobb. Last fall, the eight-year-old department fielded one plea from someone who had discovered a 10-foot-long python eating koi from his pond.

Companies are pushing a range of solutions. At Drs. Foster & Smith, a pet-supply catalog in Rhinelander, Wis., sales of products designed to deter wildlife grew 50% from 2004 to 2005, says Eric Reinhard, a merchandising manager for the catalog. (Mr. Reinhard knows the animal problem firsthand; he spotted a bear walking on a bridge over his backyard pond two years ago.) The catalog recently added several products in the pond department: live traps in three sizes, from squirrel ($30) to raccoon ($60), and a $72 motion-activated water spray, which delivers a three-second blast from a hose to scare away visitors.

Two years ago, Dan Pieragostini of Littleton, Colo., found a heron on the border of his pond, eating koi -- which had cost him $5 to $20 each. So he bought a $50 plastic heron decoy to scare away the live birds. The faux heron, which is anchored onto a pole in some shrubs, has kept the live ones away so far. Mr. Pieragostini toyed with the idea of putting a net over the water for extra protection, but didn't want to ruin the scenery.

For other pond owners, the remedies can lose their effectiveness quickly -- if they work at all. Jenetta Mahr has tried multiple strategies in her six-year battle with raccoons that forage for fish and rip apart expensive water plants in her pond. She once sprinkled a powder made from coyote, fox and bobcat urine around her property. The raccoons stayed away at first; six months later, they were back. It worked better than the human hair she scattered around the yard another time. She had heard that it can be a deterrent, and collected the clippings from a beauty shop. "The hair wound up blowing around for months," she says. "I kept finding clumps in the grass."

'I Keep Getting Shot'
Ms. Mahr, a hearing technician from Ben Lomand, Calif., managed to capture several raccoons live in traps. After driving them 10 miles away and releasing them in the mountains, more raccoons returned within days. Most recently, she set up a motion-detector sprinkler in her yard, but it has been more trouble than anything else. "I forget it's out there, so I keep getting shot with it," she says.

Still, the pond business continues to grow. About 15% of homes in the country have a water feature, according to the U.S. Census Bureau. Aquascape Designs says its pond sales reached $55 million in 2005, up 28% over 2003. A pond can cost anywhere from a few hundred dollars for a small, do-it-yourself plastic model to $8,000 for a fully-installed 11-foot-by-16-foot pond with a waterfall. Bridges, decks, benches, aquatic plants and decorative fish can bring the total cost to more than $10,000. Sales of all water-gardening products doubled over the past decade, according to the National Gardening Association; it's now a $870-million-a-year industry.
Don Bryan, who installed a pond in the backyard of his Wichita, Kan., home in March, woke up one morning to discover that something had eaten $200 worth of his aquatic plants. Soon afterward, he woke up at dawn and discovered the culprit bathing in the water: a muskrat. Following a remedy he found online, Mr. Bryan scattered cayenne pepper and a box of mothballs around the pond. The next morning, half of the mothballs were gone. The muskrat wasn't. "There's no muskrat love for me," he says.

We have hundreds of listings of homes for sale in your area. If you are interested in buying a house feel free to search through our database. This is a free service and we have a low pressure policy. There is a lot of property for sale in New Jersey.

Lenders Adjust 'Option ARMs' To Lessen Impact of Rising Rates

2006-06-14T09:03:00.000-07:00

By Lingling Wei
From The Wall Street Journal Online

In a bid to lessen the impact of higher interest rates, mortgage lenders are starting to tweak the features of popular "option adjustable-rate" mortgages, which allow borrowers to lower their monthly payments in the early years of the loan.

The retooled mortgages, such as those rolled out recently by IndyMac Bancorp Inc. and American Home Mortgage Investment Corp., feature an extended fixed-rate period before interest charges reset and, in some cases, an option to defer repayment of principal for a longer period of time. Lenders say the new products allow borrowers more breathing room before the bigger payments come due. Some analysts, however, doubt that the new bells and whistles can actually help lenders reduce potential defaults among consumers pinched by rising interest rates and softening home prices.

The move to ease the payment burden comes at a time when the Federal Reserve and other banking regulators are sounding alarms about the potential "payment shocks" to borrowers for exotic mortgages. With "option ARMs," as such loans are called, borrowers decide every month whether to make a standard payment that involves paying interest and paying down part of the loan, an interest-only payment, or a minimum payment that usually isn't enough to cover all of the interest due. (In that case, the difference gets added to the mortgage balance.)

Often, the minimum payment remains fixed for 12 months, and each year thereafter it changes to reflect the prevailing rate the loans are pegged to. Now, with the new option mortgage offered by IndyMac, a borrower can opt to have the minimum monthly payment fixed for three years, five years or seven years, or until the principal due reaches 110% of the original balance. Once that "negative amortization" balance cap is reached, the monthly payment has to be adjusted higher.

The new option mortgage from American Home Mortgage offers a fixed rate for five years. A longer fixed-rate period makes the loan less sensitive to rising interest rates. In addition, borrowers typically have to start repaying both interest and principal once that preset balance cap is met. But IndyMac's new option-mortgage product allows borrowers to defer repayment of principal for as many as 10 years, even after the loan balance hits the 110% trigger for recasting.

The new option mortgage, designed to provide borrowers additional buffers to handle payment shocks, has become "the fastest-growing new product we rolled out," says Frank Sillman, head of IndyMac's mortgage business.

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A Cooling Housing Market Adds To Rental Demand in Many Cities

2006-06-14T09:00:00.000-07:00

By Ruth Simon
From The Wall Street Journal Online

It's no longer a renter's market.

For years, rents have been flat or falling in cities nationwide -- a result of the booming home-sales market, which transformed scores of renters into owners. But as the housing market cools, rentals are once again in demand, liberating landlords in many markets to raise rents at the fastest pace in years. They're also cutting back on the goodies that previously helped lure tenants, such as a free month's rent or a free DVD player.

While renters have had an easy ride for years, the current bout of rent increases could prove to be a jolt for many Americans, from seniors looking to downsize to recent grads looking for their own place. Average effective rents -- or what tenants pay after taking concessions into account -- are expected to rise 3% this year, according to Reis Inc., a real-estate research firm. Rents began picking up last year after several years of softness. As recently as 2002, rents fell 1%.
The pace of change varies greatly from market to market. In its survey of 69 metro areas, Reis found 60 markets with rising rents, with Florida's Fort Lauderdale, Palm Beach, Miami and Tampa-St. Petersburg and California's San Jose topping the list. It also found nine markets in which rents are flat or falling, including Buffalo, N.Y.; Charlotte, N.C.; Denver, and Omaha, Neb.
Generally, rents in East and West Coast cities are expected to rise the fastest. Archstone-Smith, which owns apartment buildings in 41 cities, says it is increasing rents 8% to 10% in New York City and Southern California. And in South Florida, vacancy rates are so low that some landlords are raising rents as much as 28%, according to McCabe Research & Consulting. In Chicago, just five of 34 large apartment buildings offered concessions to renters in the first quarter, down from 19 a year earlier, according to Appraisal Research Counselors, a real-estate consulting firm.

It's partly a supply-and-demand issue. Years of soaring house prices (and recent increases in mortgage rates) have simply priced many people out of the home-buying market. Indeed, the portion of U.S. households owning their own home slipped to 68.5% in the first quarter from 69.1% a year earlier, according to the Census Bureau.

Biagio Bonfrisco, a real-estate agent, began looking for his first home about two years ago, just before his wedding. "The market was too high, and it's still too high," says Mr. Bonfrisco. As a result, he and his wife rent the second-floor of a two-family house in Bergen County, N.J.
Still, tenants might be able to find some good deals. For instance, landlords of new buildings still needing the first round of renters may be more willing to negotiate concessions. It can also be worth seeking out individual owners who are unable to sell a house or condominium and may be looking to rent at a reasonable price instead.

The best season to apartment-hunt: between Thanksgiving and Christmas, when rental demand typically slows.

The higher costs for rentals come as strong job growth in recent years has boosted demand for apartments. At the same time, many apartments have been converted to condos, reducing the availability of rentals. Tenants forced out of units being converted to condos often have trouble finding another apartment with a similar rent, real-estate agents say.

The squeeze comes as average vacancy rates dropped to 6% in the first quarter from as much as 7.4% at the end of 2003, according to Property & Portfolio Research Inc., giving landlords more power to boost rents than they've had since the beginning of the decade.

Camden Property Trust, a big apartment owner, says it is raising rents in all of its 22 markets. In Miami, Camden now charges an average of $1,319 a month for its apartments, up 7.4% from $1,228 in the first quarter of 2005. In Houston, its average rents rose $20 to $800 over this same period, the company says.

Freebies are vanishing, too. United Dominion Realty Trust Inc., which operates in 17 states, says the amount it spent on free rent and other concessions fell 26% in the first quarter from the year-earlier period, to roughly $12 million, or about $265 for each new tenant. "Over the next 12 months, we expect that number to shrink practically to zero," says Thomas Toomey, the company's chief executive.

Even with the latest price increases, renting remains a bargain compared with owning in much of the country. In Las Vegas, Los Angeles and Seattle, the monthly cost of renting the average apartment was roughly half what it would cost to own the median-priced home in the first quarter, according to an analysis prepared for The Wall Street Journal by Torto Wheaton Research, a unit of CB Richard Ellis Group Inc. The cost of owning is based on a 15% down payment and a 30-year fixed-rate mortgage; it doesn't include property taxes, insurance or tax deductions.

Major landlords will sometimes offer a better deal on just a handful of units. At AvalonBay Communities Inc., which owns apartments in a number of major markets, concessions have fallen 50% over the past year. But tenants may still get a break on certain apartment models that are moving more slowly, the company says.

And even in some cities where overall rents are rising, individual investors having trouble selling condos and single-family homes are rushing to rent them instead. In Chicago, enterprising tenants can rent a luxury condo for about the same amount per month as a unit in an older apartment building. "It's harder to track those down, and you don't get the same management attention as you would in a rental building," says Ron DeVries, vice president of Appraisal Research Counselors in Chicago.

In some markets, such as South Florida, vacancy rates for large apartment buildings are down and rents are up. However, the supply of condos and homes available to rent in the region is growing as investors clamor to rent out properties they are having trouble selling. Owners of large rental buildings fear that this "shadow supply" of rental properties could eventually put a lid on rent increases in some markets where speculation has been rampant.

"We're having a flood of rental properties coming back into the market simply because the investors who bought with the intention of flipping them have not been able to," says Brenda F. Gerdes, broker-owner of Management Specialists Inc., a property-management firm in Port St. Lucie, Fla., where average rental rates for properties owned by individual investors have fallen about 20% over the past year.

Real-estate agents say individual investors need to be realistic about their asking rents, even if the rent isn't enough to cover their monthly costs. Robert Fowler, owner of HomeRentalAds.com, a rental Web site, tells clients to base their asking rents on what similar properties are fetching, not the rents charged by large apartment complexes. If tenants aren't forthcoming, "don't wait too long before making adjustments," he adds.

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Realtor Group Lowers Forecast, Asks for Interest-Rate Hike Pause

2006-06-14T08:57:00.000-07:00

By Campion Walsh
From The Wall Street Journal Online

The National Association of Realtors on Tuesday lowered slightly its forecast for existing and new home sales this year, while the group's chief economist called for the Federal Reserve to pause its interest rate hikes.

The slowdown from the previously hot housing market is positive because the economy needs a solid housing sector, and slower price appreciation will improve affordability, said NAR Chief Economist David Lereah.

"But this is a time for the Fed to pause rate hikes because we have some interest-sensitive housing markets that have become vulnerable," Lereah said.

The group lowered slightly its previous forecast for a slowdown this year in home sales and construction. Existing home sales are now projected to decline 6.8% from last year's record to 6.60 million in 2006, while new home sales are seen down 13.4% from last year's record to 1.11 million. Housing starts are forecast to decline 6.2% to 1.94 million this year.

The Realtors' group also lowered slightly its forecast for 30-year fixed mortgage rates. It now expects them to average 6.9% in the second half of the year, a tenth of a percentage point lower than its previous forecast.

The NAR said the housing boom has ended, but it still expects 2006 to be the third-strongest on record for the market. Existing home prices are still expected to grow by slightly more than the historical trend of house appreciation at 1.5-2 percentage points above inflation, Lereah said.
The group forecasts the national median existing home price will rise 5.3% this year to $231,300, while the national median new home price will rise 0.8% to $242,900. It expects inflation measured by the consumer price index to grow 3.1% this year, while the economy grows 3.4%.

In general rising inventories have eased what was unsustainable home price growth, and for most of the country future home price gains will "be much closer to normal returns we expect from housing," said NAR President Thomas Stevens. Higher interest rates have slowed sales in many high-cost markets, but job growth has boosted sales in some moderately priced areas, Stevens said.

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Owners of Million-Dollar Homes Are Not Who You'd Think

2006-06-14T08:49:00.000-07:00

By Amy Hoak
From Marketwatch

Younger baby boomers who work for a corporation -- many of whom have household incomes of less than $500,000 -- make up the majority of people living in the country's million-dollar homes, according to a Coldwell Banker Previews International study released on Monday.

But these homeowners are not living an "ultra-lavish lifestyle," characterized by amenities that might include heated floors, tennis courts and backyard putting greens, said Jim Gillespie, president and CEO of Coldwell Banker Real Estate Corp.

"In reality, the million-dollar homeowner lifestyle is not what you see in the movies," Gillespie said in a news release. Of those surveyed, only 5% had a personal assistant, 4% had a live-in housekeeper and 1% had a driver.

On the other hand, 35% of the 300 surveyed owned second homes, and another 35% are considering buying a second residence. And Gillespie said he doesn't see that penchant for owning real estate changing anytime soon, despite rising interest rates.

In fact, the study found that 70% of respondents won't change their planned luxury purchases if rates keep rising.

"The nice thing about real estate is you can buy it for an investment or buy it to enjoy it -- but it's still an investment," Gillespie said during a phone interview. Real estate also offers "tax write-offs you can't get if you invest in stocks or bonds," he added.

Forty-one percent of luxury homeowners surveyed earned between $200,000 and $500,000 per year, and 19% said the majority of their retirement holdings were in real estate, according to the report. The respondents all had primary residences valued at more than $1 million.

Respondents who lived in California had homes valued at more than $2 million. According to the First Republic Bank's Prestige Home Index survey, the average luxury home in Los Angeles was $2.29 million in the first quarter of 2006, the average luxury home in San Diego was $2.1 million, and the average luxury home in San Francisco was $2.92 million.

Looking like a million
Popular features of homes in the survey were designer kitchens, found in 65% of the residences, and original artwork, which 54% of respondents owned or planned to buy. Wine cellars are in or may soon be installed in 37% of the homes, and 89% percent have home entertainment rooms that can accommodate more than six people.

Other popular features included:
Security systems, in 86% of homes
Professional landscaping, in 67% of homes
Wet bar, in 57% of homes
Movie-theater-style seating in entertainment rooms, in 24% of homes
In-ground swimming pool, in 37% of homes
Hot tub, in 35% of homes

More than half of second homes were in recreation locations, with 32% on the beach or oceanfront, 11% on the lakefront and 11% in ski resorts or mountain areas.

But many baby boomers don't plan on retiring to their second homes in the near future: 32% don't plan to retire until they are 65 or older, and 14% plan on retiring between the ages of 60 and 64. When they do retire, 42% plan on traveling domestically and 46% plan on traveling internationally.

The survey also asked luxury homeowners where they kept the majority of their retirement holdings. The results:
Individual stocks: 29%
Mutual funds: 23%
Real estate: 19%
Mixed portfolio (including real estate): 14%
Bonds: 11%
Mixed portfolio (excluding real estate): 11%
401k: 7%
CDs: 2%
Annuities: 2%
IRA: 2%
Pension funds: 1%

http://www.realestatejournal.com/

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Buy now, pay later: exotic mortgages

2006-05-24T10:45:00.000-07:00

Mortgage lenders are offering all sorts of exotic mortgages that can help lower monthly payments, but might prove risky if home prices fall and interest rates rise.

Posted by the Asbury Park Press on 05/21/06

BY DAVID P. WILLIS
BUSINESS WRITER

There's probably a mortgage out there to meet the needs of anyone who is looking to buy a house.

Want a low monthly payment? There are mortgages that allow you to pay only the interest on the loan for the first few years. For some loans, you don't have to make a down payment or prove your income.

But some exotic loans can be fraught with peril. While they may come with low monthly payments to start, they could skyrocket later, putting the squeeze on homeowners.

"You could find that you are ill-prepared to manage (the risks) in the case of many of these products," said Keith T. Gumbinger, vice president of HSH Associates in Pompton Plains, a financial publisher that specializes in mortgages. "The prospect of higher — perhaps significantly higher — monthly payments just down the road is very real."

But there is no denying that these so-called exotic mortgages have helped sustain growing home prices and fueled a booming marketplace.

"It enables people with a given income to buy a bigger house and to reach and stretch in the housing market," said Joseph J. Seneca, an economist and professor at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.

"As the market started to progress into year two or three, it began to be fueled more by accessibility of these products," said Robert Pardes, chief lending officer and executive vice president at OceanFirst Bank.

Interest-only mortgages, where a buyer can shave his or her monthly payments initially by 20 percent or so, continued gaining in popularity last year.

In Monmouth and Ocean counties, 27.9 percent of the mortgages used to purchase homes in 2005 were interest only, up from 18.5 percent in 2004, according to LoanPerformance, a subsidiary of First American Real Estate Solutions. Interest-only deals represented 17.1 percent of the mortgage refinancings last year as well, up from 10 percent in 2004.

According to Gumbinger, here's how an interest-only loan would work:

Say you have a $200,000, 5-year adjustable rate loan with a 6.39 percent rate. Your payment, which includes a portion going toward principal, would equal $1,249.70.

But suppose you decided you wanted to pay only the interest to start. Your mortgage would come with a slightly higher interest rate. But your monthly payment would drop to $1,078.31, freeing up $171 a month.

After five years, you'll start having to pay principal. Even if the interest rate remains the same, your monthly payment will jump to $1,346. If the interest rate rises, you could end up paying $300 to $500 more a month.

The bottom line, according to Gumbinger: "You didn't save anything."

People taking a chance on interest-rate only mortgages do so with the hopes that their income will rise over time, so that when they have to start paying principal, they'll be able to afford it.

But the hike in the monthly bill may exceed the growth of their income.

"That is where the budgetary pinch comes in," Gumbinger said. "They can no longer, or not very much longer, afford to make those payments."

Used judiciously, interest-only loans make sense for some people.

Matt Magyar, who just closed on a $485,000 home in Spring Lake Heights last week, said he financed both his down payment and the mortgage balance with two interest-only loans for 100 percent of the purchase price. His monthly payment on both loans is about $3,300.

But Magyar also owns a home in Spring Lake that he is trying to sell. When he does so, the equity from that home will be used to pay off one of the interest-only loans on his current house. He'll then refinance the second loan.

"I could not have afforded it" without the loans, said Magyar, 47, owner of Third Avenue Chocolate Shoppe, which has locations in Spring Lake and Manasquan. "I would have had to come up with a bigger down payment, which would not have been possible."

Magyar, who remarried five years ago, wanted to buy a house with his wife, Kathleen.

"It is a nice piece of property," he said. "It is going to be her first house that she has owned with me."

Another type of exotic loan is called a negative amortization loan. These loans have an artificially low rate, say 1 percent, and no principal payments. For instance, instead of paying $1,300 a month on a $200,000 mortgage, you would pay $643 monthly for the first year.

The problem is that the difference between the interest rate you are paying and the true market interest rate, say 6.25 percent, is tacked on to your mortgage balance, Gumbinger said. After the first year, instead of paying down your mortgage, your balance has actually increased to, say, $208,200.

Jim Brown, executive vice president at USA Financial Services in Spring Lake Heights, said homeowners who chose negative amortization loans are reducing the equity in their homes in return for lower payments.

But these loans also have legitimate uses.

A homeowner might have built up a lot of equity in their house. That loan may help them meet their monthly expenses, Brown said.

"If you have a lot of value in your home, you will use up some of the value . . . while it allows you to make your monthly budget more affordable," he said.

Brown will only write those loans to customers who have a lot of equity in their homes and understand that they will lose some of it by opting for lower monthly mortgage payments.

Avon resident Doug Carter refinanced with a negative amortization loan with his eyes wide open.

"It allows major flexibility in my finances," said Carter, 41. "I can either pay the interest or I can pay the principal or I can do both."

Carter would not detail the amount of the loan, but said his home is appraised at $1.3 million.

"You can leverage what you have in your house and do whatever," Carter said. "If I wanted to put more money toward college, and I think I can get a better rate of return over the next five years instead of paying the principal on the mortgage, I could invest that money."

These loans do not work for everyone. People who use exotic mortgages have an eye towards refinancing later at a good rate, Gumbinger said.

People who take out interest-only loans are hoping that they can refinance later at a more attractive rate. And users of so-called "neg am" loans hope that the value of their home will rise faster than their loan balance.

But there are signs that the housing market at the Jersey Shore is starting to cool. Median home prices, which have increased at double-digit percentage rates in the past, rose by 9 percent in the first quarter of 2006 compared with the same period last year.

There are more homes on the market, and they are taking longer to sell.

Drew Anlas, senior vice president and sales manager at Select Mortgage Corp. in Brick, said some people who took out interest-only loans two or three years ago are having trouble now.

"They took for granted the rates," he said. "They took for granted the property values. Now we have to try to figure out what will keep everybody on top of their own payments."

Anlas said people are also finding ways to keep their mortgage payments low by stretching out the term of the loan from 30 to 50 years.

"We have created a way to keep people at least close to where they are now because of the rate increases," Anlas said. "People would rather have 50 years and know that they are paying some principal than have interest only."

But 40 and 50 year mortgages have their own drawbacks. The loan's principal is paid off at a slower rate, making it harder to build equity.

Spring Lake, NJ: Demographic Data

2006-05-24T10:41:00.000-07:00

Spring Lake, New Jersey

Housing	City	Metro Area	State	Nation
Median home value	$420,000	$332,900	$226,900	$185,400
Median age of homes	57.0	27.1	31.1	27.8
Home appreciation	13.4%	10.2%	13.7%	12.3%
Homes - owned	60.2%	66.5%	60.8%	63.4%
Homes - rented	15.7%	17.6%	31.8%	21.7%
Homes - vacant	24.2%	15.9%	7.4%	14.8%
Commuting by bus	5.3%	4.9%	9.6%	2.0%
Commuting by carpool	6.2%	11.4%	10.6%	14.6%
Commuting by auto	75.4%	77.0%	73.0%	71.6%
Working at home	7.1%	3.0%	2.7%	5.6%

We have hundreds of listings of homes for sale in your area. If you are interested in buying a house feel free to search through our database. This is a free service and we have a low pressure policy. There is a lot of property for sale in New Jersey.

Freehold, NJ: Neighborhood Demographic Data

2006-05-24T10:40:00.000-07:00

Freehold, New Jersey

Housing	City	Metro Area	State	Nation
Median home value	$336,500	$332,900	$226,900	$185,400
Median age of homes	45.0	27.1	31.1	27.8
Home appreciation	13.5%	10.2%	13.7%	12.3%
Homes - owned	58.7%	66.5%	60.8%	63.4%
Homes - rented	38.1%	17.6%	31.8%	21.7%
Homes - vacant	3.3%	15.9%	7.4%	14.8%
Commuting by bus	10.0%	4.9%	9.6%	2.0%
Commuting by carpool	16.7%	11.4%	10.6%	14.6%
Commuting by auto	63.6%	77.0%	73.0%	71.6%
Working at home	2.1%	3.0%	2.7%	5.6%

Monmouth-Ocean County INFORMATION

2006-05-24T10:36:00.000-07:00

Monmouth-Ocean County

EDUCATION
High School Degree:	85.6%
2-year college degree:	6%
4-year college degree:	17.9%
Graduate or Professional Degree:	9.7%
Expenditures per pupil:	$8,943.00
Student/teacher ratio:	15.3
Attending Public school:	86.8%
Attending Private school:	13.1%
SAT scores:	1016* (state)
ACT scores:	21.2 (state)
2-year colleges:	2
4-year colleges:	3
Highly Competitive Universities:	0

TRANSPORTATION
Commute Time:	33.8 minutes (one way)
Commute By Auto (Alone):	76.96%
Commute By CarPool:	11.40%
Commute By Mass Transit:	4.90%
Work At Home:	2.96%
Mass Transit Miles Per Capita:	24.8
Amtrak Service:	N
Interstate Highways:	0
Auto Insurance Cost:	$1414 annually

RECREATION
Ratings (scale 1-10, 10 is best)
Great Restaurants:	1
Outlet Malls:	8
Warehouse Clubs:	4
Pro Sports:	10
College Sports:	10
Zoos/Aquariums:	4
Amusement Parks:	10
Botanical Gardens:	4
Golf Courses:	9
Ski Rating:	4
Inland Water Area:	10
National Parks:	4
Miles of Coastline:	81.5

http://www.bestplaces.net/

Monmouth- Ocean County INFORMATION

2006-05-24T10:13:00.000-07:00

Monmouth-Ocean ,NJ GENERAL
Metro Type:	Commuter community
Location:	Northern New Jersey shore area directly south of New York City.
Elevation:	10 ft.
Time Zone:	EST (observes daylight savings time)
Area:	1108 sq. mile
Population:	1,189,500.00
Population Density:	1,065.42
Population Growth (2000-2004):	6.02%

PEOPLE
Median Age:	39.5
Household Size:	2.63

Democrat:	42.0637%
Republican:	57.0776%
Other Affiliation:	0.858641%

Religious Adherents as Percent of Population:	61.4%
Baptist:	0.95%
Presbyterian:	1.33%
Episcopal:	1.10%
Methodist:	2.00%
Catholic:	44.5%
Latter Day Saints:	0.15%
Other Christian:	1.31%
Jewish:	6.83%
Muslim:	0.88%
Other Religion:	0.01%

White:	90.1%
Black:	5.95%
Asian:	2.66%
American Indian:	0.15%
Hispanic:	4.74%
Not Hispanic:	95.2%
Diversity Index:	27.0

Single:	43.1%
Married:	56.8%
Divorced:	6.70%
Separated:	2.51%
Married With Children:	27.0%
Single With Children:	7.04%

Per Capita Average Income:	$30,567.10
Household Median Income:	$63,933.90
Household Income < $25k:	18.8%
Household Income > $75k:	37.9%
Household Income Growth (2000-2004):	50.7%

CRIME
Violent Crime Rate:	198.3 (per 100,000 population)
Change In Violent Crime:	-16.9%
Nonviolent Crime Rate:	2,007.97
Change In Property Crime:	-29.2%
Murder Rate:	2.77
Rape Rate:	10.3
Robbery Rate:	57.2
Assault Rate:	128.0
Burglary Rate:	376.1
Larceny Rate:	1,514.00
Auto Theft Rate:	117.

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Hard Money Makes It Easy to Get Rich in Real Estate!

2006-03-23T09:07:00.000-08:00

By Bill Young

Never heard of the term, “Hard Money” before?

It is one of the most valuable, yet misunderstood tools in the real estate investor’s tool box.

In this article, I will show you how several of our clients used hard money to get rich quickly in real estate and you can too!

Hard money loans are loans made, usually by private lenders; on the basis of the value of the collateral as opposed to the traditional banking criteria of credit scores, tax returns, income statements, etc. of the borrower. In other words, they are based on the “hard” assets.

Typically hard money loans carry interest rates and points 50-100% higher than traditional bank loans. This has lead to the impression that they are “hard” to repay.

However to the sophisticated investor, hard money is in invaluable because it is:

Quick

Hard money lenders can close in a few days after appraisal and title work, unlike bank loans where you are still furnishing documents weeks after submitting your application.

Easy

True hard money lenders require only an appraisal and proof of clear title. Some quasi-hard money lenders now want credit and income data from borrowers.

Versatile

Try to get a bank loan on a property that is uninhabitable. Or a small apartment or office building, a storefront, restaurant or other non-residential property. It is almost impossible in most cases.

Cheap

That’s right, cheap! Cost is a relative concept. What if the bank won’t make the loan to do your deal? You could take in a money partner. Let’s say the hard money loan cost you 2% per month with 10 points upfront and it takes you 6 months to rehab and sell the property. (These are the upper ranges of costs for hard money, to make the point!)

You have paid a total of 24% of the purchase cost of your project and let’s say you doubled your money when you sold. Your cost would now be 12% of the selling cost instead of the 50% you would have had to split with a partner!

Let me give you some real world examples of profitable deals using hard money.

A client was able to take down a package of 10 properties in Albany, NY at a bargain price from a distressed, out of state seller for $400,000. These were inner city properties that banks were not too interested in financing, despite the client’s high credit score. Also, these 1-3 unit properties needed serious rehabbing.

The client was able to sell off 7 of them, as is, and paid off the hard money. He was left with 3 homes as his profit! After rehab, he made over $175,000 on the deal.

Another client stood to make over $220,000 on a bargain property being sold for 60% of value by an estate if he could close in 30 days. Although he was credit worthy, he was not willing to take a chance that a bank could close in that time frame.

We referred him to a hard money lender that provided the cash by putting a blanket mortgage on two of his investment properties. He closed in 10 days, then refinanced the hard money out with a traditional bank refinance.

Richard, a client in Brooklyn, made a million dollars on one deal with no money down!

Several years ago, he found an owner of a dilapidated, 25 unit apartment building in a northern New Jersey suburb that was half empty. The owner was ill and could not handle the repairs needed to rent the vacant apartments. He was in foreclosure on a $75,000 mortgage. Richard made a deal to give the owner $25,000 for the deed at closing.

We referred him to one of our hard money sources who advanced $150,000. Richard paid off the delinquent mortgage and gave the seller $25,000. He cleaned up the building, eliminated the many housing violations on it, then formed a joint venture with a developer.

The developer totally rehabbed the building as his contribution to the joint venture; Richard’s contribution of course, was the building. The last I heard, Richard’s equity was over $1 Million!

In the right situation, hard money is the easy way to real estate riches!

Copyright 2006 Bill Young. Bill is a former bank mortgage officer and a licensed financial consultant. He is currently a real estate investor, author and seminar leader and offers personal real estate coaching. For information on his services and rates, call 877-291-3642 or visit: http://MotivatedSellersOnline.com/Coach

Four Real Estate Investment Tips, that you can learn from Warren Buffet, and other Stock Investors

2006-03-23T09:01:00.000-08:00

by Tony John

Some of the most successful stock investors ever have based their investing principals on value investing. Investors such as Benjamin Graham, Irving Kahn, and Warren Buffet, have used value investing to build vast empires of wealth.

Value investing was conceived by Benjamin Graham, and David Dodd, in their classic book, "Security Analysis", written in 1934. Although they were talking about stocks, there is still a lot to be learnt from value investing that can be applied to other investment vehicles. This article will show four things that real-estate investors can learn from value investing...

1: ***** Investing vs Speculating *****

In value investing, it's important to make the distinction between being an investor, and being a speculator. In "Security Analysis", it is defined as this:

"An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative".

So, there are 3 things needed for something to be an investment: - You need to have done thorough analysis. - You need to be reasonably sure that you won't lose your money. - You need to be reasonably sure that you will make some money.

In terms of real-estate, this means that just buying and selling real-estate, does NOT make you an investor. If you're buying properties at random, just because there is a boom and all property is going up in value, you are not investing. You are speculating.

There is nothing wrong with speculating, you just need to be aware when you are speculating, versus when you are investing.

2: ***** Value vs Quality *****

Value Investing doesn't really have any formulas, or rules. It is more of a theory, with some general principals. Because of this, there are many ways to do value investing, and different ways to apply it.

Benjamin Graham focused on buying stocks significantly below value, with little emphasis in the quality of the stock, in regards to their long term prospects.

This can be a useful strategy for a real estate investor, particularly when they are first starting out, and need to build up equity fast.

Warren Buffet still looks at the value of a stock, but puts a lot more emphasis on the quality of the stock. He only buys stocks that he thinks have good long term prospects, with a bright future in front of them.

This is generally a good strategy for real-estate investors to move to later on, when they have built up their portfolio. Long term, well chosen property will make significantly more capital growth than poorly chosen property, and may be worth buying even if it can only be bought at market value.

And with commercial real estate investment, it may be worth getting a lower rental yield, if this means you can have a high quality tennant, who will pay the rent reliably. This is a strategy that famous New Zealand commercial real estate investor Bob Jones has applied, with great success.

3: ***** Margin Of Safety *****

One of the most important principals in value investing is "margin of safety".

Margin of Safety is the idea of making sure that you only invest if your calculations show that there is a significant profit to be made. There is no way your analysis can be 100% accurate, so the margin of safety gives you a buffer, to use when your calculations are slightly off, or you get worse than average luck, or any number of unexpected problems occur.

So when estimating the value of a stock, you use conservative estimates for earnings etc, to come up with the value. If your estimated value comes in at $10, then you don't buy the stock if its currently selling for $9.75, because it's too risky, and if your calculations are off, you wont be buying a bargain. If the price is currently $6 though, you might buy it, because you have a $4 margin of safety to use if you estimated incorrectly.

The same principal applies to real-estate.

Suppose you are looking at a deal, and you find you can buy some land for $100,000 and you can build a 4-bedroom house on it for $150,000.

If new 4-bedroom houses in the area are selling for $270,000 then should you do the deal? Theoretically, it will only cost you $250,000 to buy/build with a sale at $270,000 so you should make $20,000 profit.

But that isn't much margin of safety. What if building costs blow out, and it cost more than $150,000 to build? What if you can't sell it straight away so you have some holding costs? What if the other 4-bedroom houses in the area have much better kitchens than you realized, and you can actually only sell for $245,000?

There are a lot of unknowns here, and because your margin of safety is so small, unless everything goes right, you can quickly find yourself making a loss.

If on the other hand, 4-bedroom houses in the area are selling for $350,000 then you have a projected profit of $100,000. You can afford for a lot of things to go wrong, and you can still make a profit.

In the first case, if building costs go up by $50,000, the deal will cost you $30,000.

In the second case, because you have a much larger margin of safety, if building costs go up by $50,000 then you will still make a profit of $50,000.

Margin of Safety is a very important concept to all investors, and all real estate investors should think about it if they want to be around for the long term.

4: ***** The myth of Risk vs reward *****

Convential wisdom says that to increase your reward in investing, you must increase your risk. This is often true, but the Magin of Safety principal can turn this around.

When margin of safety is used, a higher reward actully means a lower risk!

You can see this is the example above. The deal that is projected to make $20,000 is quite risky, whereas the deal with a projected profit of $100,000 is much safer, because a lot more can go wrong before a loss is made.

This doesn't mean than high reward always means lower risk though. The convential Risk vs Reward wisdom is still correct in general. So if you borrow more to buy a property, your risk and reward have increased. If you buy in a small town to get a higher rental yield, your risk and reward have increased.

This Risk vs Reward theory is only incorrect when directly applied to the Margin Of Safety concept. So if you buy something for $100,000 that all your analysis shows is worth $200,000, then your reward has gone up, while your risk has gone down.

About the Author: Tony John is an experienced investor, who specialises in commercial real estate investment. Get his free email course now, and find out how easy it is for YOU to get your first real estate investment. http://www.freeinvestmentcourse.com/