Year End Numbers Will Tell The Real Story

realestateinsight — Tue, 17 Aug 2010 14:15:15 +0000

The latest housing numbers seem to tell a mixed story consistent with the bumpy road to recovery we are on. In spite of continued record low mortgage rates, fears of unemployment are keeping many people on the sidelines. People secure in their job situation are waiting for the right property, and well priced quality listings are getting snapped up quickly as overpriced listings languish on the market.

The latest NAR sales survey shows second quarter price gains in two thirds of the metro areas surveyed. In the Northeast home prices fell 3.2% to $238,000, but existing-home sales jumped 14.9 %, which was 23.6 % above 2009.

In Rhode Island, foreclosures accounted for 25.2% of sales in July ranking us 36^th in the nation, but July notices increased 15.6% over June. Nationally, July notices were down 9.7 % from 2009 but up 3.6% from June. Declines in new default notices, down year-over-year for the sixth-straight month in July, do not offset near-record increases of bank repos.

This week’s Real Estate Insight:

The end of the tax credit and the increased sales it had affected has coincided with the normal summer real estate doldrums, so naturally the next few months’ numbers will look less robust. A rebound is possible in the balance of the year, with continued job growth, record low mortgage rates, and improving demographics, but marked improvement will not likely happen until 2011.

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Commercial Real Estate

realestateinsight — Fri, 13 Aug 2010 21:11:38 +0000

This week Rich had Nelson Taylor and Joe Luca on to talk about the state of Commercial Real Estate. Commercial real estate trends are lagging indicators because shopping centers, offices and schools can take years to build and usually come after an area has the people to support it. While we never had the overdevelopment that other parts of the country experienced during the boom, the recession has created a number of commercial vacancies throughout the state. Lower prices and attractive interest rates are creating great deals in the Commercial sector.

Commercial Real Estate has always been an old boy’s club, and few encourage buyer representation. We formed RPL Commercial to address the needs of our investor clients, and bring them the same level of buyer representation and service that they had grown accustomed to at RPL. Nelson and his team started the RPL Commercial brand and his client base tends to be investors, developers and small businesses working in creative arts, architects, graphic designers, theatres, and non-profits. Joe has been doing Commercial real estate for 20 years now and comes with a wealth of experience in buyer and tenant representation, and specializes in all aspects of Commercial Real Estate. They both exemplify the type of trusted business advisor and expert Real Estate partner that today’s investors and business people need in their corner.

This week’s Real Estate Insight:

If you are thinking about starting or expanding your business, or have been thinking about getting into investing, now is a great time to negotiate a great lease or purchase a building.

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Pending Home Sales Dip in June

realestateinsight — Tue, 03 Aug 2010 16:07:04 +0000

The Pending Home Sales Index of existing U.S. homes fell 2.6 percent in June. Not surprising, these are the first numbers that do not reflect the added stimulus of the homebuyer tax credit. The Index, based on contracts signed in June, is 18.6% below June 2009.

Lawrence Yun, NAR chief economist, said lower home sales are expected in the short term. “There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve,” he said. “Over the short term, inventory will look high relative to home sales. However, since home prices have come down to fundamentally justifiable levels, there isn’t likely to be any meaningful change to national home values. Some local markets continue to show strengthening prices.”

Regionally, The PHSI in the Northeast dropped 12.2 % in June, 25.4 % lower than June 2009. In the Midwest the index fell 9.5 %, 27.8 percent lower than 2009. Pending sales rose 3.7 % in the South, still 13.3% below June 2009, and the West saw the index fall 0.2 %, 14.2 % below a year ago.

With some positive signs followed by some negatives, it seems we are bumping along the road to economic recovery. Mortgage purchase applications increased 2 percent last week according to The Mortgage Bankers Association, while refi’s were down 4%. Continuing worries about unemployment helped keep confidence down. The Fed’s Beige Book survey of economic conditions shows that while some major market areas are improving including New York and Chicago, it does see any great improvement for the near future. The latest S&P/Case-Shiller home price indexes show the May 20-city index was up 4.6% from a year ago and the 10-city measure was up 5.4%. new-home sales jumped 23.6% in June but that followed a 36.7% drop in May.

This Week’s Real Estate Insight:

With the drop in prices and interest rates in the mid 4’s, affordability is the best it has ever been, but unemployment has left millions unable to qualify for a mortgage. Until job creation picks up, many people will not feel confident enough to take on a mortgage.

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Providence City Council Proposes 88% Tax Increase for landlords

realestateinsight — Mon, 26 Jul 2010 19:48:32 +0000

On July 14th, the Providence City Council’s Finance Committee voted to increase the property tax rates for residential and commercial property and eliminate the homestead exemption for owners of 1 - 5 non-owner occupied properties. The full City Council will vote tonight, July 26th. This week Rich and Chas had Sally Herreid in studio to talk about the proposed tax hike. Sally lives and owns investment property in Providence, and is a Realtor in our Providence office. If you are the owner of investment property in the city of Providence, you should attend this meeting. The mayor was unable to call in to voice his opinion but assured me that he will veto this increase, but in the meantime let your voice be heard as well. Here are some questions from the RIAR website regarding the proposed tax increases:

How will these increases affect me?

25.5% increase in residential property tax rate: The residential property tax rate would increase from $24.21 per $1,000 of assessed value to $30.38.
88% rate increase for small landlords: The Council will vote to repeal a homestead exemption for non-owner occupied rental properties of 1 - 5 units. If approved, this will result in an additional increase in the actual property tax rate for owners of these properties. This will mean an increase from the current discounted rate of $16.14 of assessed value to $30.38 or more than 88%.
17.8% increase in commercial property tax rate: The commercial property tax rate would raise the commercial rate from $28.60 per $1,000 of value to $33.70
When will these increases take effect? Property owners will receive revised tax bills in August, (July 16th Providence Journal).
Why is Providence punishing small landlords? In the words of Finance Committee Chair Igliozzi (July 20th Providence Journal), “They are business people, and they will probably not make as much profit as they are use to, and they are unhappy”. In other words, small landlords are greedy fat cats who are rolling in dough. In the same article, Chair Igliozzi further claims that a tax break that has been in affect for years is suddenly illegal.

This week’s Real Estate Insight: We can fight City Hall! Tell your elected officials that you oppose these property tax increases. Make their phones ring off the hook.

Attend the Providence City Council hearing on July 26th.
Call Mayor Cicilline: Telephone: (401) 421-2489
Email: mayor@providenceri.com
Call City Council Telephone: (401) 521-7477
Email: Council@providenceri.com

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Fannie Mae Addresses Appraisal Issues

realestateinsight — Wed, 14 Jul 2010 15:06:43 +0000

Implemented last spring by Fannie Mae and Freddie Mac, The Home Valuation Code of Conduct (HVCC) banned lenders from selecting appraisers to valuate homes in the deals which they are brokering. The purpose was to prevent inflated and fraudulent appraisals which played a part in the bubble leading to the mortgage crisis. While The HVCC does not require lenders to use appraisal management companies, many choose them to ensure compliance with the code. Builders, Realtors and independent appraisers have reported dissatisfaction with the work produced by them. Fannie’s new guidelines will address issues that have arisen, including the widespread use of inexperienced appraisers unfamiliar with local market conditions. Effective immediately Lenders must use appraisers who “have the requisite knowledge required to perform a professional quality appraisal for the specific geographic location and particular property type, as well as access to “necessary and appropriate data sources for the area in which the appraisal assignment is located.”. If an appraiser believes a foreclosure sale or a short sale is an appropriate comp, the appraiser is required to consider any differences from the subject property, such as the condition of the home and whether any stigma has been associated with it. If comparable sales data is not available when appraising new construction, appraisers may verify recent sales of new homes by viewing a copy of the HUD-1 from the builder. Fannie Mae will continue to require at least three comparable sales and comps from the property’s neighborhood are preferred. Comps located in competing neighborhoods are allowed, but appraisers must indicate the comparables are from a different neighborhood, and address any differences that exist.

This Week’s Real Estate Insight:

As is often the case, the HVCC “cure” seems to be worse than the desease it was created to treat. Hopefully the new guidlines will address the delays and frustrations it has added to so many transactions.

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Happy Independence Day

realestateinsight — Wed, 30 Jun 2010 17:17:16 +0000

As we approach the Fourth of July weekend, I once again must sound my alarm for those renters on the fence about buying to finally declare your independence from the tyranny of your landlords! Why subsidize their lifestyle when you can be building equity in your own home ? In many parts of the country markets are showing signs of stabilization and mortgage rates are at historic lows. Of course interest rates are only part of the equation, but if you are confident that your income is secure, or if your source of income does not care where you live, there are a lot of places where the cost of housing has been dropping long term.
And for those who already own a home, consider declaring independence from the tyranny of your utility companies! The financial and environmental benefits of sustainable retrofits for the existing housing will only increase as energy costs rise. The Home Star Energy Retrofit Act offers tax credits to homeowner’s for energy efficient upgrades. If you are replacing windows, doors, HVAC systems, or insulation improvements, all work must be completed by qualified contractors and you can get 50% tax credit for up to $ 3,000. You can also can get a 50% rebate, up to $250 for caulking windows and adding insulation yourself.
This week’s Real Estate Insight:
Believe it or not, sometimes it isn’t all about Real Estate; Fireworks and parades are happening all across the state this weekend. On the third, 3, Bristol hosts the Drum & Bugle Corps Competition, featuring top musicians from the United States and Canada, a prelude to the Big Fourth of July Parade. Founded in 1785, Bristol’s festivities are the oldest continuous Independence Day celebration in America. Also on the Fourth, Chepachet hosts the Ancient and Horribles Parade, where no Politian is safe from spoofing, and if you are seeking the Rockets’ Red Glare, the Paw Sox are hosting fireworks above McCoy Stadium in Pawtucket following the July 2 and 3rd games.

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The Providence LEED Home

realestateinsight — Mon, 21 Jun 2010 21:05:07 +0000

Someday the term green will be obsolete and everything will just be done with sustainability in mind, but today, out of the 5,922 single family homes on the market in MLS only one of those, 18 Boylston Ave in Providence, will be LEED (Leadership in Energy & Environmental Design) certified Platinum by the US Green Building Council.

This week, I had Chris West, from William Kite Architects and Dave Kessler from Native Structures on to talk about this remarkable new home and let me tell you, if you had to assemble a sustainable building “Dream Team”, these two would be on it . In 2008 Christine won the Providence Sustainable Housing Competition with her design for an affordable green model house that is available to builders with incentives to redevelop lots throughout Providence and Dave’s Company, Native Structures designs builds and remodels with sustainability in mind.

The LEED Green Building Rating System^TM provides a nationally recognized certification system for environmentally sustainable construction and focuses in five areas when evaluating a project, sustainable site development, water savings, energy efficiency, materials selection, and indoor environmental quality. Developers have to register projects for evaluation, and accredited professionals then grade the project giving points for each approved design feature utilized. Structures can be accredited at four levels: Certified (40-49 points), Silver (50-69 points), Gold (60-79 points) and Platinum (80 points and above). There are 100 possible base points, and 18 Boylston hopes to achieve a 98 when completed.

This Week’s Real Estate Insight:

The environmental impact of buildings is often underestimated, while the perceived costs of green buildings are usually overestimated. A recent survey by the World Business Council for Sustainable Development finds the true average cost difference of about 5 percent for green construction.

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June is National Homeownership Month

realestateinsight — Wed, 16 Jun 2010 19:30:01 +0000

June is National Homeownership Month and HUD and the FHA have been sponsoring activities across the country. The theme this year, “Promoting and Protecting Homeownership,” emphasizes consumer education about loans and the lending process. Homebuyer Education is the first and one of the most important step towards successful homeownership

This week, Rich and Steve spoke with Christine Hannifan, executive director of The Housing Network of Rhode Island. 10 of its Associate members run the Homeownership Connection, A homebuyer education training program In addition to promoting National housing Month, June marks the 15,000^th graduate completing the education program at The Connection.

No matter what stage of homeownership you are in, from just thinking about it to homeowners looking for help to stay in their home, The Homeownership Connection offers a range of classes, counseling and workshops to low and moderate income residents throughout the state.

The Homeownership Connection offers a range of pre- and post-closing programs including:

Homebuyer education
Counseling
Home repair and maintenance
Landlord training
Lead law informational training
Financial Fundamentals
Foreclosure prevention
Predatory lending prevention and awareness campaign
How to Buy a Foreclosed Property
Foreclosure Prevention Workshops

This Week’s Real Estate Insight:

Teaching prospective homebuyers about the home buying process and basic financial literacy skills creates more mortgage-ready buyers and helps those buyers become successful long-term owners. Freddie Mac states that education and counseling help lower mortgage delinquency by 19% and improve most borrowers’ credit picture.

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Dressed To Sell, The Importance of Staging Vacant Properties

realestateinsight — Tue, 08 Jun 2010 21:50:35 +0000

When I first got into this business, my mother was my mentor, she was a very successful agent and I learned a lot from her. One thing she told me was to always dress like I was going to meet a client. That advice has done me well through the years, as people saw me out and about, they assumed I was successful and that helped to generate the client base I have today. Last week it occurred to me that staging a home is a lot like taking my mom’s advice about dressing for success

We have a great listing on the East side that just had an incredible transformation that did not involve that elaborate of a staging plan. This listing, an antique cottage in Fox Point filled with great details, seemed dingy and uninspired when we toured it empty. Fortunately the listing agent had a plan to spruce it up. First the owner hired someone to clean the whole place top to bottom, including the windows, the gardens, and power washed the outside. People often leave a few pieces of furniture in an otherwise vacant listing to make the home look cozier, but sometimes it just ends up looking like a used furniture warehouse.

In this case, a few well placed accent pieces really highlighted the wonderful features of this historic cottage, and gave the rooms some scale:

This Week’s Real Estate Insight:

Selling a vacant home brings even more challenges than a lived-in home. Vacant homes often stay on the market longer and sell for less than similar homes that are lived in. Buyers often infer that the seller is motivated and may be paying two mortgages. A little staging can really make a big difference in a vacant property.

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The Shadow Knows

realestateinsight — Tue, 01 Jun 2010 22:41:21 +0000

While home sale numbers have been pretty encouraging since the first of the year, most economists agree that these numbers may have been distorted upwards because of the federal tax credits. While I agree that many buyers rushed to complete their contracts in time for the deadline, what about the long term outlook? Won’t the continuing economic recovery keep home sales positive? Nationally, consumer’s confidence in the economy and their own incomes has been steadily increasing, and in many markets, home buyers no longer fear further price declines and in fact studies by both Case-Shiller and the National Association of Realtors show gains in the majority of the metro areas. Unemployment and fears of a shadow inventory of distressed properties are two factors that still are holding the recovery back.

This Week’s Real Estate Insight

The term “shadow inventory” refers to homes that are not currently on the market, but have the potential to come on the market as a distressed sale. But not all of these home will go through the whole foreclosure process, as long as they still have a job, many homeowners with delinquencies often are able to work through their problems.

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