Realty Reality: June 2008

Monday, June 30, 2008

Advantages of Remodeling Now

Rising energy costs and a middling economy have dampened consumer confidence, but for many homeowners, recent adjustments to the market may actually have a silver lining. For homeowners who've been looking to make updates to their property, there are a number of reasons that make this an attractive time to tackle a remodeling project.

Lower Costs
While it's unlikely that a contractor will offer to remodel your bathroom or finish your basement for fifty cents on the dollar, many are offering deals to encourage homeowners to invest in their services. Some companies are offering rebates or discounts to attract business. Others are simply more open to negotiating the bottom line. Generally speaking the better deals are for smaller projects, but exceptions can be found.

Shorter Waits, Faster Timelines
With new construction slowing in many areas and fewer homeowners funneling money into their own remodeling projects, many contractors have more time to take on new work. In years past homeowners often had to take a spot at the end of the line with their contractor of choice, as many companies had a backlog of work. In some cases start dates were set weeks or months out, and the total timeline for a project could be extensive if the contractor was working multiple projects at once.

Today, many companies are more able to schedule projects to begin in the short term. Timelines too are becoming more flexible.

Hiring the Best
During periods of construction boom, the average homeowner can have a tough time securing the services of the best local contractors. At those times the consumer has to compete for the contractor's business. While the situation is not completely reversed today, the average homeowner does stand a much greater chance of hiring a top-notch remodeling contractor than would have been possible even a year or two ago. Quality contractors are looking for new avenues of business, even if it means taking on minor jobs that may not have been on their radar in the recent past

The article is taken from one of our recent Newsletters that was e-mailed to all registered subscribers, via our RE/MAX of New Jersey web site.

Visit my web site for additional services and support: LawrenceYerkes.com [NJ/PA]

and visit Besthomes-NJ.com to find the latest New Jersey Real Estate property listings (Residential, Commercial, Multi-Family, Farm, Land).

Thursday, June 26, 2008

May Existing-Home Sales Show Modest Gain

WASHINGTON - Existing-home sales increased in May with buyers responding to lower home prices, according to the National Association of Realtors®(NAR).

Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 2.0 percent to a seasonally adjusted annual rate 1 of 4.99 million units in May from a level of 4.89 million in April, but are 15.9 percent below the 5.93 million-unit pace in May 2007.

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said buyers are seeing value in the current housing market. “Home buyers are starting to get off the fence and into the market, drawn by drops in home prices in many areas and armed with greater access to affordable mortgages,” he said. “Today’s buyer plans to stay in a home for 10 years, which is a good strategy for building long-term wealth.”

The national median existing-home price2 for all housing types was $208,600 in May, down 6.3 percent from a year ago when the median was $222,700.

Lawrence Yun, NAR chief economist, said there’s still a lot of inventory in the market. “The large supply of homes on the market clearly favors buyers, and it should take several months to draw the inventory down,” he said. “Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets. Foreclosures and short sales appear to be a larger part of the market, particularly in California, and are creating a drag on current home prices.”

Total housing inventory at the end of May fell 1.4 percent to 4.49 million existing homes available for sale, which represents a 10.8-month supply3 at the current sales pace, down from a 11.2-month supply in April.

Although conditions remain mixed around the country, unpublished snapshot data shows a number of areas are experiencing much higher sales activity than May 2007, including Sacramento, the San Fernando Valley and Monterey County in California; Sarasota, Fla.; and Battle Creek, Mich.

“Keep in mind that the volume of home sales is the primary driver of economic activity that is tied to housing,” Yun said. “It’d be premature to say the improvement marks a turnaround. The market is fragile, so a first-time home buyer tax credit and a permanent raise in loan limits would be important steps to get the housing engine humming.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.04 percent in May from 5.92 percent in April; the rate was 6.26 percent in May 2007.

Single-family home sales rose 1.6 percent to a seasonally adjusted annual rate of 4.41 million in May from 4.34 million in April, but are 14.5 percent below the 5.16 million-unit pace in May 2007. The median existing single-family home price was $206,700 in May, which is 6.8 percent below a year ago.

Existing condominium and co-op sales increased 5.5 percent to a seasonally adjusted annual rate of 580,000 units in May from 550,000 in April, but are 24.6 percent lower than the 769,000-unit level a year ago. The median existing condo price4 was $223,400 in May, down 2.1 percent from May 2007.

Regionally, existing-home sales in the Midwest rose 5.5 percent in May to a pace of 1.16 million but are 16.5 percent lower than a year ago. The median price in the Midwest was $165,300, which is 0.7 percent below May 2007.

In the Northeast, existing-home sales rose 4.6 percent to an annual rate of 910,000 in May, but are 15.0 percent below May 2007. The median price in the Northeast was $278,000, down 2.4 percent from a year ago.

Existing-home sales in the West increased 2.0 percent to an annual pace of 1.02 million in May, but are 12.8 percent below a year ago. The median price in the West was $286,600, which is 16.0 percent lower than May 2007.

In the South, existing-home sales slipped 0.5 percent to an annual rate of 1.91 million in May, and are 17.0 percent below May 2007. The median price in the South was $175,000, down 4.3 percent from May 2007.

# # #

1The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample – nearly 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.

2The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the geographic composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if more data is received than was originally reported.

3Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982. Condos were tracked quarterly prior to 1999 when single-family homes accounted for more than nine out of 10 purchases (e.g., condos were 9.5 percent of transactions in 1998, 8.5 percent in 1990 and only 6.1 percent in 1982).

4Because there is a concentration of condos in high-cost metro areas, the national median condo price can be higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.

Existing-home sales for June will be released July 24, and the next Forecast/Pending Home Sales Index is scheduled for July 8.

Visit my web site for additional services and support: LawrenceYerkes.com [NJ/PA]

and visit Besthomes-NJ.com to find the latest New Jersey Real Estate property listings (Residential, Commercial, Multi-Family, Farm, Land).

Wednesday, June 25, 2008

Saving Money on Your Summer Road Trip

Americans have loved the open road seemingly from the day that the automobile was invented. This year, the rising cost of gas could threaten one of the season's most cherished traditions: the summer road trip. Here are some fuel-saving (and cost-cutting) tips for summer's road warriors.

Plan Shorter, Smarter Trips – While you don't have to stay sequestered at home this summer, it might not be the year to plan your cross-country odyssey along Route 66. The simplest way to save money on your money road trip is to shorten the distance traveled. If your family makes an annual trek to the coast, look for lakefront vacations closer to home. If your family has a favorite camping spot, check around for similar outdoor opportunities nearer to you. Less time on the road will help you cut costs (and may help you preserve your sanity).

Car Choices – If you have more than one vehicle, of course you’ll want to choose the most fuel-efficient option whenever only one car is needed. If you need to transport a large group, however, you may save gas by packing everyone into one larger, less fuel efficient vehicle rather than splitting everyone into two smaller, more efficient cars.

In Tune – Keeping up with car maintenance is a cost effective way to improve the vehicle's fuel efficiency. By scheduling regular tune ups, checking and changing dirty air filters, using the recommend motor oil and keeping tires inflated to factory specifications, you can improve fuel economy by as much as 19% overall.

Equivalent Gas Savings:
-Regular Tune Ups $.15 per gallon
-Clean Air Filters: $.37 per gallon
-Fully Inflated Tires: up to $.11 per gallon
-Using Correct Motor Oil: $.04 to $.07 per gallon

Fuel Smart – Only use the grade of gas required for your car (as stated in the owners manual). Putting premium fuel into a car that recommends regular won’t help your fuel efficiency and will hurt you more at the pump. If Premium is recommended but not required, fueling up with regular should not result in any significant change in engine performance.

Ideal Speed – Each vehicle reaches optimal fuel economy at a different speed (or range of speeds), but in general mileage decreases rapidly as you pass 60mph.

Equivalent Gas Savings: $.26-.$86 per gallon (for each 5mph over 60mph)

Avoid Traffic – While no one seeks out traffic, getting stuck in gridlock burns fuel needlessly. Idling gets 0 miles a gallon, and larger engines usually waste more gas idle than smaller models.

Cruise Control/Overdrive – Cruise control can help you avoid unnecessary acceleration and deceleration (which wastes gas), while using the overdrive gearing lowers your car’s engine speed (which both improves gas efficiency and reduces engine wear).

Packing Light – Every 100lbs added to your vehicle’s weight reduces fuel economy by 1-2%. Extra weight affects smaller cars more drastically than larger vehicles.

Equivalent Gas Savings: $.04-$.07/gallon for each 100lbs

Packing Right – While roof racks and roof-top bins are useful, they increase your car’s drag and can sap the fuel economy by as much as 21%. Even empty roof-rack cross bars cut fuel efficiency by around 1%. Pack only what you can fit inside your vehicle and remove empty roof-racks if possible.

Gas Prices at Your Destination – When trying to budget your transportation costs, don't forget that the gas pumps at your destination may not be as forgiving (or, perhaps, as staggering) as those in your neighborhood. If you're trying to keep costs down, keep an eye on gas prices around the endpoint of your trip and along your route (should you need to refuel along the way).

* Cost savings were based on a fuel price of $3.72 per gallon, so when gas prices increase the above costs and savings are even greater.

Data provided courtesy of www.fueleconomy.gov.

The article is taken from one of our recent Newsletters that was e-mailed to all registered subscribers, via our RE/MAX of New Jersey web site.

Tuesday, June 24, 2008

U.S. Monthly House Price Index Fell 0.8 Pct.

WASHINGTON, DC – U.S. home prices fell 0.8 percent on a seasonally-adjusted basis from March to April, according to OFHEO’s monthly House Price Index. For the 12 months ending in April, U.S. prices fell 4.6 percent. As April 2007 was the peak of the monthly HPI, 4.6 percent is also the total fall from the peak.

More details...

Friday, June 20, 2008

Pew Report on the Internet and 2008 Election

According to a recent Pew/Internet report, a record-breaking 46% of Americans have used the internet, email or cell phone text messaging to get news about the campaign, share their views and mobilize others. And Barack Obama's backers have an edge in the online political environment.

Furthermore, three online activities have become especially prominent as the presidential primary campaigns have progressed: First, 35% of Americans say they have watched online political videos -- a figure that nearly triples the reading the Pew Internet Project got in the 2004 race.

Second, 10% say they have used social networking sites such as Facebook or MySpace to gather information or become involved. This is particularly popular with younger voters: Two-thirds of internet users under the age of 30 have a social networking profile, and half of these use social networking sites to get or share information about politics or the campaigns.

Third, 6% of Americans have made political contributions online, compared with 2% who did that during the entire 2004 campaign.

More details...

Visit my web site for real estate services and support: LawrenceYerkes.com [NJ/PA]

and visit Besthomes-NJ.com to find the latest New Jersey Real Estate property listings (Residential, Commercial, Multi-Family, Farm, Land).

Thursday, June 19, 2008

FHA Reaching Out to At-Risk Homeowners

FHA IS REACHING OUT TO 675,000 AT-RISK HOMEOWNERS IN SECOND PHASE OF DIRECT MAIL CAMPAIGN

Hundreds of thousands of homeowners urged to consider safer, more affordable FHA-backed mortgages.

WASHINGTON - This week, HUD's Federal Housing Administration (FHA) is mailing hundreds of thousands of letters to homeowners at risk of losing their homes through foreclosure and urging them to consider a safer, more affordable alternative to the high-cost mortgages they are currently paying. The first round of 280,000 letters was mailed in February. FHA's public awareness campaign will continue through September, ultimately reaching 850,000 distressed homeowners.

"This letter might be the most important piece of mail many of these families will receive all year," said HUD Secretary Steve Preston. "This information could not only help save their current home, it could help provide them with long term financial security. This outreach campaign will ensure families are aware of the safe mortgage alternative offered by FHA."

Letters are being sent to homeowners who have already faced or are experiencing the first reset of their adjustable rate mortgages. Through the end of the year, FHA can insure home loans valued between $271,050 and $729,750. Normally these loan limits are set between $200,160 and $362,790 but were expanded through President Bush's Economic Stimulus Package. Bipartisan FHA Modernization legislation awaiting final action by the Senate and House of Representatives would permanently increase the loan limits to an acceptable level.

FHA-insured loans are backed by the full faith and credit of the government, which typically allows lenders to offer mortgage products at a lower, more affordable interest rate. More than 90 percent of FHA-backed mortgages are 30-year, fixed rate products. FHA also provides a one-of-a-kind loss mitigation program that helps protect borrowers against foreclosure. Finally, FHASecure, which allows borrowers who are current and delinquent on their loans to refinance with the FHA, is saving tens of thousands of families on average $400 a month compared to their exotic subprime loans.

Below is a copy of the letter being sent to homeowners...

-----

Dear Homeowner,

Do you need help with your mortgage?

Your area is experiencing a disturbing home foreclosure rate that has accelerated in recent months. News reports cite the damaging effects of "sub prime loans" as a major factor in the unsettled market. By focusing on education and safe mortgage alternatives, though, the Federal Housing Administration (FHA) of the United States Department of Housing and Urban Development (HUD) is working diligently to address this unacceptable foreclosure trend.

Over the past few months, FHA has worked with mortgage loan servicers to identify solutions for the crisis facing current homeowners. Your current mortgage does not have to be FHA insured for you to benefit from our help. If you are facing financial difficulties due to a recent or imminent mortgage reset, or other housing-related difficulty, I urge you to contact us at 1 (800) CALL-FHA or to visit www.fha.gov. There you will have the opportunity to learn about foreclosure prevention, legal rights, and credit counseling, among other topics.

Many homeowners may also be able to take advantage of our recently announced FHASecure program. This new program allows eligible homeowners to refinance into a secure, fixed-rate FHA loan even if they are in default.

Additionally, a new partnership between mortgage companies and non-profit housing counselors called HOPE NOW is available to you. Their mission is simple: reach out to homeowners who may be having difficulty paying their mortgages. For more information or to see if your mortgage company is a member of this caring coalition please go to www.hopenow.com.

Again, please contact us at 1 (800) CALL-FHA (800-225-5342) or go to www.fha.gov. As part of the federal government, the Federal Housing Administration wants to help you protect and preserve the American dream - your home.

Sincerely,

Brian D. Montgomery
Assistant Secretary for Housing
Federal Housing Commissioner

###

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development, and enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov. For more information about FHA products, please visit www.fha.gov.

Source: HUD No. 08-086

Wednesday, June 18, 2008

Commercial Real Estate Easing in Economic Slowdown

Commercial real estate vacancies are trending up modestly, while investment has dropped sharply in the wake of the credit crunch, according to preliminary information for the latest COMMERCIAL REAL ESTATE OUTLOOK* of the National Association of Realtors®(NAR).

NAR Chief Economist Lawrence Yun said economic weakness is impacting commercial real estate. “Although the supply-demand fundamentals are broadly favorable in most commercial real estate markets, vacancy rates are rising modestly and rent gains are slowing,” he said. “Slow economic growth is lowering demand for commercial space, mostly in the office and industrial sectors. Despite the slowdown, the commercial real estate market is in much better shape compared to conditions during the 2001 recession.”

Patricia Nooney of St. Louis, chair of the Realtors® Commercial Alliance Committee, said credit has been a problem. “Tight credit availability has significantly slowed the volume of commercial real estate transactions,” she said. “Even so, institutional investors, along with foreign investors who are encouraged by the drop in the dollar, remain active in the current market. Because conditions are so varied across the country, we recommend investors or businesses looking for space consult with Realtors® in their area who specialize in commercial real estate.”

Investment in commercial real estate during the first four months of 2008 was $48.2 billion, down 69.5 percent from $157.8 billion during the same period in 2007 when the credit markets were functioning normally; those totals do not include transactions valued at less than $5 million or investments in the hospitality sector.

The NAR forecast in four major commercial sectors analyzes quarterly data for various tracked metro areas. The sectors are the office, industrial, retail and multifamily markets. Historic data were provided by Torto Wheaton Research and Real Capital Analytics.

Office Market

With a growth in inventory, office vacancy rates are projected to increase to 13.7 percent in the fourth quarter of this year from 12.5 percent in the fourth quarter of 2007. As a result, annual rent growth in the office sector is expected to be 3.0 percent this year, following an 8.0 percent jump in 2007.

Estimates for the second quarter show vacancies rising sharply in Phoenix and West Palm Beach, Fla., to nearly 20 percent, double the levels of a year ago. Other central business districts in Florida have shown notable increases. The housing market downturn is having a spillover effect on commercial real estate in some local areas.

Net absorption of office space in 57 markets tracked, which includes the leasing of new space coming on the market as well as space in existing properties, is likely to total 31.3 million square feet this year, about half of the 60.0 million absorbed in 2007. “Part of the slowdown in office absorption results from new space coming online and the challenge of back-filling older class B and class C buildings,” Yun said.

Office building transaction volume has dropped significantly. In the first four months of 2008, a total of only $18.5 billion in office buildings traded hands, compared with $95.0 billion during the same timeframe in 2007. The greatest decline was in suburban markets.

Industrial Market

Warehouse demand has fallen because of the economic slowdown, although the demand for light manufacturing space has risen slightly. “The drop in the dollar is favoring American goods, stimulating some manufacturing with a solid pickup in exports,” Yun said.

Even so, overall vacancy rates in the industrial sector are forecast to rise to 9.9 percent in the fourth quarter of this year, up from 9.4 percent in the same period of 2007. Annual rent growth should be 1.2 percent by the end of the year, down from 3.6 percent in the fourth quarter of 2007.

Markets in the West and Florida have been most impacted by the economic slowdown. Industrial markets with rising availability include Orlando, Fla.; Phoenix; Tampa, Fla.; and West Palm Beach.

Net absorption of industrial space in 58 markets tracked is estimated at 68.8 million square feet this year, down from 158.3 million in 2007. Most of the new industrial completions have been built-to-suit, leaving many obsolete or nearly obsolete structures on the market.

Secondary markets have become most attractive to institutional investors and users. Industrial transaction volume during the first four months of 2008 was $8.5 billion, down from $11.9 billion in same period of 2007. The biggest slowdown is in the mid-Atlantic and the Midwest.

Retail Market

Retail spending has been hurt by high oil prices with consumers throttling back on their spending habits, even in the retailing hotbed of Southern California. “Fortunately, the construction of retail space has slowed, which is helping preserve some balance in the market,” Yun said.

Vacancy rates in the retail sector will probably edge up to 9.3 percent in the fourth quarter from 9.2 percent in the fourth quarter of 2007. Average retail rent is expected to rise 1.3 percent in 2008, compared with a 2.9 percent gain last year.

Net absorption of retail space in 53 tracked markets is projected to grow to 18.2 million square feet in 2008 from 12.9 million last year.

Retail transaction volume during the first four months of 2008 totaled $7.5 billion, significantly below the $27.7 billion in the same period last year. Markets like Cincinnati and Detroit have seen a 100 percent decline in investment activity so far this year. Only Sacramento, Calif., is showing a gain, up 47 percent.

Foreign buyers are focused on retail strip centers in Southern California, Chicago, the Northeast and the Southeast. Even so, strip center transaction volume is down 77 percent from a year ago.

Multifamily Market

The apartment rental market – multifamily housing – could see less demand during the second half of the year as some first-time home buyers jump off the fence and into the market.

Multifamily vacancy rates are likely to rise to 5.7 percent in the fourth quarter from 4.8 percent in the fourth quarter of 2007. Average rent is forecast to rise 4.0 percent in 2008, up from a 3.1 percent increase last year.

Multifamily net absorption is seen at 219,900 units in 59 tracked metro areas this year, up from 230,900 in 2007.

Transaction volume in the multifamily market so far this year is only $13.7 billion, compared with $23.2 billion in the first four months of 2007. Even so, some markets have seen increasing sales including San Francisco; San Jose, Calif.; Tampa; Portland, Ore.; and Raleigh, N.C.

The COMMERCIAL REAL ESTATE OUTLOOK* is published by the NAR Research Division for the Realtors® Commercial Alliance. The RCA, formed by NAR in 1999, serves the needs of the commercial market and the commercial constituency within NAR, including commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and NAR affiliate organizations.

Organizations in the RCA include the CCIM Institute, the Institute of Real Estate Management, the Realtors® Land Institute, the Society of Industrial and Office Realtors®, and the Counselors of Real Estate. The RCA also provides commercial products and services.

More than 80,000 NAR members offer commercial services, and 60,000 of those are currently members of the RCA.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

# # #

*Publication of the full report is not expected until early July.

The next Commercial Leading Indicator index will be August 20; the next commercial real estate market forecast is scheduled for September 17.

Friday, June 13, 2008

John McCain Holds Town Hall Meeting Held At Burlington County College, NJ

GOP Presidential hopeful, John McCain, held a major Town Hall meeting at the Burlington County College (BCC) auditorium, a host to many past political events because of it's facilities and location.

Full Details

Thursday, June 12, 2008

Builders Offer Congress Recommendations On Making Affordable Housing Green

NAHB suggested new ways to improve sustainability and energy efficiency in housing while simultaneously supporting housing affordability. (June 11, 2008, NAHB)

More Information. . .

Wednesday, June 11, 2008

Federal Reserve Beige Book June 2008 Report

Reports from the Federal Reserve Districts suggest that economic activity remained generally weak in late April and May. Three Districts described economic activity as softer, weaker, or lower, with an additional four Districts reporting slower, sluggish, or modest economic growth. The remaining five Districts of Philadelphia, Cleveland, Atlanta, St. Louis, and San Francisco described activity as stable or little changed in recent weeks.

Consumer spending slowed since the last report as incomes were pinched by rising energy and food prices. Higher energy prices also appeared to damp domestic tourism. Reports on nonfinancial services varied across Districts and industries. Manufacturing activity was generally soft in recent weeks, with weak demand for housing-related and some other products but with increasing demand for exports. Residential real estate markets remained weak across most Districts. Commercial real estate conditions varied across Districts, as did reports on nonresidential construction activity. Lending activity also varied across Districts and market segments, though tighter credit standards were reported for most loan categories. Districts reporting on the agriculture and energy sectors noted improved crop conditions and increased drilling and extraction activity.

Reports of higher input costs were widespread. Manufacturing contacts in several Districts noted some ability to pass along higher costs to customers. Retailers reported mixed results with respect to raising final goods prices. In most Districts, wage pressures were reported as moderate or limited for all but a few skilled-labor positions, as hiring activity remained spotty in most Districts.

In the Philadelphia (Third District) region, Business conditions showed signs of stabilizing during May, overall, as some sectors strengthened slightly and others weakened. Manufacturers, on balance, reported nearly steady rates of new orders and shipments in May, after decreases in April. Retailers continued to post lackluster sales results, with many stores experiencing year-over-year decreases. Sales of motor vehicles continued to fall. Bank lending has been increasing slowly. Residential real estate sales and construction activity remained well below the pace of a year ago, although there has been a slight seasonal increase in home sales. Commercial real estate leasing and construction activity has diminished in the past few months. Reports of increases in input costs and output prices were about as common in May as they were in April. Employers in the District continued to describe wage increases as moderate.

The outlook among Third District businesses varies. Manufacturers' forecasts have become more positive since the last Beige Book. On balance, they expect increases in shipments and orders during the next six months. Retailers generally do not foresee a significant increase in the sales pace during the summer. Auto dealers expect sales to weaken further. Bankers anticipate slow expansion in overall lending. Residential real estate agents and home builders expect sales to continue to be slow during the next several months despite the recent slight upturn. Contacts in commercial real estate expect leasing and construction activity to remain soft until financial conditions improve.

Source Beige Book

Click here for the Federal Reserve June 2008 Beige Book [Beige Book Archives]

See related blog articles:
Federal Reserve Beige Book For Economic Conditions (What is the "Beige Book"?)
The Federal Reserve - Making Sense In Plain English

Tuesday, June 10, 2008

HUD: Setting The Record Straight

The following was posted on HUD's new News Release page...

"Today (June 10, 2008), the Washington Post, citing former HUD officials and academics, claimed HUD’s affordable housing goal requirements of Fannie Mae and Freddie Mac helped to fuel the collapse of the subprime mortgage market. This is a gross misrepresentation of much larger forces that were at work in the mortgage market. We believe it’s time for a reality check..."

You can decide for yourself who has the straight record:

Full HUD Article (6/10)

Original WP article (6/9)

Monday, June 09, 2008

Modest Rise for Home Sales Possible Before Broader Upturn in Second Half Of 2008

A modest gain in the level of home sales is possible over the next couple months, and an improvement is forecast for the second half of this year as more buyers are able to access affordable mortgages, according to the latest forecast by the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in April, rose 6.3 percent to 88.2 from a reading of 83.0 in March. It’s the highest index since last October, but remains 13.1 percent lower than April 2007 when it stood at 101.5.

Lawrence Yun, NAR chief economist, said pending sales contracts have picked up notably in areas undergoing significant price drops. “Bargain hunters have entered the market en masse, especially in areas that have experienced double-digit price declines, but it’s unclear if they are investors or owner-occupants,” he said. “Sharp price reductions are leading to a quicker discovery of price equilibrium points. The West is already seeing year-over-year gains in pending contracts.”

The PHSI in the West rose 8.3 percent to 98.8 in April and is 4.0 percent higher than April 2007. In the Midwest, the index jumped 13.0 percent to 83.7 in April but remains 13.1 percent below a year ago. The index in the South increased 4.6 percent to 88.8 but is 22.5 percent below April 2007. In the Northeast, the index declined 1.9 percent in April to 79.3 and is 12.2 percent below a year ago.

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the market may be breaking its holding pattern. “It appears that more buyers are realizing they can take advantage of a favorable combination of mortgage interest rates, home prices and family income,” he said. “Overall affordability conditions are the best we’ve seen since the middle of the housing boom in 2004, but with far more choices and much less pressure than buyers experienced four years ago to make an investment in their future. Recent declines in mortgage rates on conforming jumbo loans and a return to sound but not overly stringent underwriting standards will permit more people to qualify for a loan.”

NAR’s housing affordability index has been trending up this year and is projected to rise 15 percentage points to 128.0 for all of 2008.

“Although mortgage interest rates will remain historically favorable, they will start to steadily inch up,” Yun said. The 30-year fixed-rate mortgage should rise gradually to 6.3 percent by the end of this year, and then hold at that level for most of 2009.

Yun said the underlying fundamentals point to a pent-up demand. “Home sales are at about the same level as they were 10 years ago, yet the population has grown by 25 million people and we have over 10 million more jobs,” he said. “The housing market has been underperforming by historical standards, partly because buyers were hampered by mortgage availability issues, but that’s improved and an upturn is more likely. On the other hand, it’s unclear what role consumer confidence will play in the coming months.”

Existing-home sales should increase from an annual pace of 5.05 million in the second quarter to 5.83 million in the fourth quarter. For all of this year, existing-home sales are expected to total 5.40 million, and then rise 6.3 percent to 5.74 million in 2009. “Sales gains will be greatest in areas that underwent sharp price declines,” Yun said.

After unprecedented home price declines in the first half of the year, many markets can anticipate stabilizing price trends in the second half. The aggregate median existing-home price is likely to decline 8.4 percent in the first half of this year, and then begin to stabilize in the second half before rising 4.4 percent next year to $213,900. “Policymakers need to be attentive to the fact that many homeowners have seen a reduction in housing equity, or are in an ‘underwater’ situation. More needs to be done on the policy front to alleviate hardships and bring fence-sitters back into the marketplace,” Yun said.

A great mix of conditions continues around the country. “We’re seeing healthy price gains in moderately priced areas like Erie, Pa., and Corpus Christi, Texas, and double-digit gains in others,” Yun said. “Our most recent data shows sales rising strongly from a year ago in some areas that experienced sharp price drops, including Detroit and Las Vegas.”

New-home sales will probably fall 31.7 percent to 529,000 in 2008 before rising 12.5 percent to 595,000 next year. Housing starts, including multifamily units, are projected to drop 27.2 percent to 987,000 this year, and then slip 0.6 percent to 980,000 in 2009.

“Rising construction costs will provide less room for price cuts on new homes,” Yun said. The median new-home price is forecast to decline 3.1 percent to $239,500 in 2008, and then rise 5.4 percent next year to $252,400.

Yun sees an improving economy. Growth in the U.S. gross domestic product (GDP) should be 1.7 percent in 2008 and 2.0 percent next year. The unemployment rate is estimated to average 5.3 percent this year and 5.6 percent in 2009.

Inflation, as measured by the Consumer Price Index, is expected to be 3.6 percent this year and 2.4 percent in 2009. Inflation-adjusted disposable personal income should grow 1.4 percent in 2008 and 2.5 percent next year.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

# # #

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales. View

Existing-home sales for May will be released June 26; the next Forecast / Pending Home Sales Index will be released July 8.

Friday, June 06, 2008

FTC Published Final Rule on CAN-SPAM Definitions and Implementation

Federal Trade Commission (FTC) recently published (5/31/08) in the Federal Register a Final Rule: "Definitions and Implementation Under CAN-SPAM Act."

The rule becomes effective on July 7, 2008 and provides definitions, modifications and clarifications to the "Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003" (CAN-SPAM). [See also Wikipedia]

Previous FTC Press Release

Thursday, June 05, 2008

Permit Extension Act Approved by Assembly Committee

The Assembly New Jersey Housing and Local Government Committee unanimously approved the Permit Extension Act, A2867.

The bill aims to boost New Jersey's real estate sector and extends for six years the life of building permits for commercial and residential development projects. NJAR® is part of a coalition in support of the legislation.

It now heads to the Assembly Environment and Solid Waste Committee for further review.

Source: NJAR

Home Buyer Tax Credit Will Aid Housing Recovery

The National Association of Realtors®(NAR) testified today that a temporary tax credit would be the best incentive to move hesitant home buyers into the market. NAR based its support on the success of a 1975 temporary tax credit designed to "clear an over-supply of newly constructed homes during an economic downturn."

More details...

Tuesday, June 03, 2008

HUD Study Finds Consumer Confusion Leads To Higher Closing Costs

WASHINGTON - Many American consumers overpay by thousands of dollars in total closing costs when they purchase their homes, according to a recent nationwide report from the Urban Institute (UI). The study found that there are significant and unsupported variations in loan charges, title fees and other closing costs charged to homebuyers, and that minority borrowers pay hundreds of dollars more in total loan origination fees than do non-minority homebuyers.

In A Study of Closing Costs for FHA Mortgages, noted economist Dr. Susan Woodward analyzed more than 7,500 mortgages originated in May and June of 2001, a period of relative interest rate stability. The Urban Institute's study found significant disparities in closing costs even when it compared borrowers with identical credit scores, loan terms and mortgage amounts. In addition, variations appeared to be based on education level, geography, race and ethnicity. Even after accounting for these factors, there remain very substantial variations in what consumers pay at settlement.

"This report demonstrates once and for all that the process consumers endure when they buy their homes is entirely too confusing," said HUD Deputy Secretary Roy A. Bernardi. "Clearly, we need to open the window and allow consumers to understand the fine print and shop more effectively for the largest purchase of their lives."

HUD is currently proposing to improve disclosure of the loan terms and closing costs consumers pay when they buy or refinance their home. For the first time ever, HUD is proposing that all mortgage lenders and brokers provide consumers with a standard Good Faith Estimate. By more openly disclosing the key elements of the loan and by controlling "fee creep" at closing, the Department seeks to provide consumers with enough information to allow them to shop for the lowest cost loan. In addition, HUD's proposed Good Faith Estimate will promote comparison shopping and market competition by clearly articulating to borrowers their total estimated settlement charges. Ultimately, HUD's own economic analysis finds that by offering consumers clearer, more certain cost estimates, the average borrower will save approximately $700.

Key findings of the report include:

- Total loan fees can vary by thousands of dollars from borrower to borrower even for the same loan amount.
- Loan charges and title fees vary considerably from state to state even for similar loans. Even in the same state, disparities in title costs among identical borrowers can be more than $1,000.
- On average, borrowers see no reduction in out-of-pocket fees when they agree to higher interest rates. Ideally, consumers ought to receive a dollar-for-dollar credit for paying a so-called "yield spread premium" that results from agreeing to a higher interest rate loan. In fact, many borrowers see no reduction at all and even pay more in total loan fees.
- African-American families pay an average of $415 more in total loan origination fees than non-minorities.
- Hispanic borrowers pay an average of $365 more in total loan origination fees than non-minorities.
- Consumers obtaining loans for which comparison shopping is easiest, so called "no-cost loans," enjoyed an average cost savings of $1,200.

Brian Montgomery, HUD Assistant Secretary for Housing and Federal Housing Commissioner, said, "The core problem is that too many Americans sign a mountain of documents they don't understand and pay thousands of dollars for services that they've probably never heard of. This report proves that the more informed you are, the less you pay. Our common goal should be to increase competition and transparency, and to help take the mystery out of buying a home."

Dr. Woodward examined data from a national sample of 7,560 FHA-insured, 30-year fixed-rate home purchase loans. Data were collected on how much borrowers paid for lender or broker services, title services and real estate agent services. The data were then linked to information on borrower and loan characteristics including loan amounts, interest rates, credit history, income, borrowers' race and ethnicity and the racial composition and educational attainment in the borrower's neighborhoods.

Woodward is an expert in financial economics and has held appointments in both academia and government. She has been on the faculties of the University of California at Los Angeles and at Santa Barbara and the University of Rochester's Simon School. She has also served as Chief Economist of the Securities and Exchange Commission (SEC), Chief Economist of HUD, and Senior Staff Economist for Financial Markets and Institutions at the Council of Economic Advisers. Dr. Woodward is currently the founder and chairman of Sand Hill Econometrics, Inc. in Palo Alto, California.

The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance problems facing the nation. The views expressed are those of the author and should not be attributed to the Urban Institute, its trustees, or its funders.

To read the full report, visit HUD's website.

Sunday, June 01, 2008

Real Estate Cyber Tips - June 2008

CYBER MAGIC TRICKS

TRICK#1

Find Out If They Read Your E-mail!
Anyone ever tell you they didn’t get your e-mail? Ever have a time when it was really important for you to know that your email got through and was read? If so then here’s a great trick for you.Now you can secretively find out when your e-mail was read and where they were when they read it by simply typing a few letters after the recipient’s e-address when you send your message. Moments after the addressee opens your message you will receive a confirmation showing the exact date and time that the message was opened with other confirmation information plus a map showing where the recipient was when opening your message. And the recipient will never know! Scary stuff -- but if you are so inclined you can track up to 10 messages a month on the house. Premium services are available for a modest monthly fee.
Click Here for This Cyber Trick

TRICK#2

E-mail your Huge Files With Ease!
It happens to the best of us. We need to get a file to a friend or associate in a hurry but it’s too big to e-mail because our internet service provider blocks big files. Where to turn? There are a lot of options and this one may be the easiest to use. Just type in your message and upload any file up to 100MB. Your recipient will receive an e-mail just about instantly with a link to the file -- ready to download. No registration required – and you can use their free service to send files up to 100MB in size without any cost. This will usually satisfy the casual user but these nice folks have other services for power users that will accommodate files of up to 2 GB with all sorts of bells and whistles – all for a modest monthly fee.
Click Here for This Cyber Trick

GREAT PLACES!

GREAT PLACE #1

What Did Your Neighbors Donate?
With politics all around us this is an interesting site you can use to snoop on our neighbors to see who they are supporting – and with how much money.This great place is easy to search by name, address or zip to see which candidates your friends, family, co-workers, or neighbors are contributing to. An interesting feature allows you to search celebrities by name and zero in on a map showing their registered address. Now you can find out if the vociferous neighborhood political bigshot is putting his money where his mouth is!
Click Here for This Great Place

GREAT PLACE #2

Get the Walk Score For Your Neighborhood
Some like to walk - some like to sit – and some like to ride. For those who like to walk, this great place will rate your neighborhood for “walkability”.They calculate the walkability for your address by locating nearby stores, restaurants, schools, parks, etc. and presenting them on a map around your house. Then they score the walkability of your house’s location on a scale of 0-100 with 90-100 being a “Walkers' Paradise” where errands and entertainment can be accomplished on foot and you could get by without owning a car. 0-25 is a “Driving Only” location where virtually no neighborhood destinations are within walking range. Perhaps if you really like to walk very loooong distances you could go for a “0” – or you could get your exercise walking to your car!
Click Here for This Great Place

The information contained in Real Estate CyberTips is believed to be true and correct but no warranties or guarantees are provided and readers should rely solely on their own information and advisors in connection with any sites, services or products reviewed. All content Copyright 2008, RECS. All rights reserved.

Visit my web site for additional services and support: LawrenceYerkes.com [NJ/PA]

and visit Besthomes-NJ.com to find the latest New Jersey Real Estate property listings (Residential, Commercial, Multi-Family, Farm, Land).

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