After several years of negative trends in the real estate industry, finally a sign of life: A market study just out by a Stuart real estate marketing firm shows budding consumer confidence in the second- or vacation-home market.
Read More: http://www.sunshinestatenews.com/story/survey-vacation-home-market-rebound
Sales in many vacation communities across the U.S. soared last year to levels not seen since boom times, driven by deep discounts, cash purchases and buyers’ rising stock portfolios.
But will it last?
Read More: http://online.wsj.com/article/SB10001424052748704482704576071984006994652.html
Here’s a great report from NAR’s Senior Regulatory Representative, Russell Riggs
ImmigrationWorks USA and the U.S. Chamber of Commerce have teamed up to develop a positive report on the H-2B program. The report – “The Economic Impact of H-2B Workers” – concludes that many areas and economic sectors of the country, including resort areas, would be unable to thrive as a result of the H-2B workers that come to the U.S. on a temporary basis. The report uses economic analysis and anecdotal case studies to examine the impact of H-2B workers and concludes that, contrary to critic’s claims, the program does not depress the wages of U.S. workers in similar occupations and H-2B workers do not take jobs from their U.S. counterparts.
The report also makes some recommendations on how to improve the program: cut burdensome regulations that make the program difficult for employers to access and streamline employee processing procedures. These types of changes will make the program more effective for companies and workers and make it more responsive to changing labor markets. Here’s hoping that the shake-up in Congress draws attention to the this important program.
Read the entire report at http://www.immigrationworksusa.org/index.php?p=1 . The report, in PDF format, is listed in RED in the right-hand column of the page and is called IW-Chamber H-2B report.
This is a great article that highlights other possibilities in the Resort and Second Home market that may be untapped at this time. It’s not just about beaches and snow! Enjoy!
by: Lara Hertel of Reuters
TORONTO — San Fransisco Bay-area couple Kate and Dale never expected to be landlords. But that’s exactly what happened when they decided to buy a three-bedroom townhouse for their daughter in her sophomore year at University of Washington in Seattle.
“Some of the campus housing we saw was horrible, and it was expensive, too,” says Kate. “We decided we could create a safe, good quality home for her and we thought it would be a good investment on top of it.”
Kate and Dale represent a new trend in the already-popular college town real estate market: they’re called “parent investors,” a savvy group of homebuyers who are opting to purchase a house in their kids’ college town instead of spending money on rent or dorm fees. A new survey from Coldwell Banker found that 64 percent of its real estate agents are seeing a “significant number” of parents investing in homes for their kids to live in while attending university.
“Interest in college towns is always going to be high, especially for people who once went to school there — and people are seeing value in this investment,” says Jim Gillespie, CEO of Coldwell Banker.
The lure of college real estate appears to be recession-proof. Seventy-three percent of those surveyed said they see a significant number of investors buying homes near campus and renting them out despite the economic downturn, with only 21 percent seeing a decrease in this trend over the past five years.
For Kate and Dale, the investment didn’t exactly pay off in spades. The $520,000 townhouse they bought three years ago has dropped in value, so they’ve decided to hold on to the property for a few more years until the market turns around. (Their daughter Sarah has since graduated and moved out.) Still, Kate says the decision to buy a home saved her a lot of unnecessary worry. They installed a security system, it was close to campus and two roommates helped to pay the mortgage.
“The rent in some of these college towns is so high and in my mind, I’d rather pay myself rent,” she says.
Costs are a big factor: Room and board fees for 2010-2011 have seen a 4.6 percent jump at a public four-year state universities and a nearly 4 percent rise for private nonprofit universities, the College Board reports.
But not all college towns are as pricey as Seattle. Coldwell’s college home listing report provides the average home listing price of four-bedroom, two-bathroom properties for sale in markets home to the 120 schools in the Football Bowl Subdivision. The listing finds that nearly two-thirds of the college town markets have an average home listing price of less than $250,000.
Topping the most-affordable list is Muncie, Indiana — home to Ball State University – where the average home listing price is $105, 115. (By contrast, Stanford University’s Palo Alto, California is the most expensive college town market, with an average home listing price of $1,385,652.)
And college towns aren’t just for investors: Fifty-one percent of the survey respondents noted they’re seeing a lot of alumni homebuyers, and 49 percent see a significant number of retirees moving to their college town.
Gillespie is one of them. Last September he bought a 3-bedroom townhouse for $120,000 in Champaigne, Illinois to be near his alma matter, the University of Illinois. He travels from his home in New Jersey to Champaigne about six times a year, often to cheer on the Illinois Fighting Illini. He says the value of his home has already increased, and it will likely serve as his retirement home some day.
Besides the sporting events, college towns have plenty to offer in terms of culture, restaurants, medical facilities and a robust economy, Gillespie says.
“This is quintessential America. People have a special spot in their hearts for these places,” he says. “Some of the best times of their lives were spent in college.”
WASHINGTON (October 12, 2010) – The National Association of Realtors® and the National Housing Conference have partnered to host a regional forum in Honolulu today to address workforce housing. The goal is to help create more affordable housing opportunities for full-time public and private sector workers who cannot afford to live in the community where they work.
Realtors® joined local and state housing leaders at the Bring Workers Home forum to examine the region’s workforce housing challenges, highlight regional best practices to address those challenges, and share and discuss strategies for how workforce housing programs can help more working families find affordable, decent housing near their places of work.
“Homeownership is an investment in your future – and anyone who is able and willing to assume the responsibilities of owning a home should have the ability to pursue that dream,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “The goal of the Bring Workers Home forum is to do just that, to identify effective workforce housing strategies and help more working families achieve attainable, sustainable homeownership.”
For many full-time working individuals like emergency personnel, teachers, retail clerks, hospitality staff and office employees, finding a decent, affordable home in the communities where they work can be a challenge, especially in high-cost areas. According to a recent NAR survey, having a full-time job but still not making enough to afford a home or apartment close to work was considered an obstacle by more than three-fourths of respondents.
The lack of affordable housing choices close to where residents work can lead to longer commutes, urban sprawl and traffic congestion, which can degrade the quality of life for all residents. Increasingly, communities have come to recognize that affordable housing impacts the economic and social well-being of the entire community and is good for everyone. In fact, the same NAR survey found that nearly eight out of 10 respondents supported workforce housing and believe it’s important for people who provide community services also be able to live in the community where they work.
The Bring Workers Home forum drew more than 85 attendees including Realtor® associations and their Realtor® members, business leaders, housing and community development professionals, city council members and other elected and appointed officials, as well as human resource and employee benefit professionals.
The forum began with a morning panel discussion where experts discussed Hawaii’s growing “cost of place” – the combined costs of housing and transportation – and how workforce housing strategies can help address those issues.
Forum keynote speaker Darlene Porter, senior manager at Aflac™, shared with attendees the success of her organization’s employer-assisted housing benefits program, which provides down payment and closing cost assistance to its employees through a first-time home buyer grant program.
Two afternoon panels shared case studies of successful workforce housing programs in California, Hawaii and Washington, and discussed how community partnerships can help advance workforce housing.
Tomorrow, Realtors will participate in NAR’s Employer-Assisted Housing class. The four-hour class helps real estate professionals better understand employer-assisted housing benefits and teaches them to work with local businesses and organizations to implement housing benefits for their employees.
Today’s Bring Workers Home forum is the last of a series of four regional forums hosted by NAR and NHC to address workforce housing. The forums took take place throughout 2010 in Atlanta, Minneapolis, and Austin, Texas.
The following regional and national partners helped NAR and NHC plan the forum: Federal Reserve Bank of San Francisco; Hawaii Association of Realtors®; Hawaii Housing Alliance; International Economic Development Council; Metropolitan Planning Council and Urban Land Institute Hawaii.
Since 1931, the nonprofit National Housing Conference has been dedicated to helping ensure safe, decent and affordable housing for all Americans. To learn more about the National Housing Conference and its research affiliate, the Center for Housing Policy, please go to www.nhc.org.
The National Association of Realtors, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
NAR airs grievances with lenders
Realtors: credit too tight, REO and short-sale policies unclear
By Inman News, Wednesday, October 13, 2010.
Inman News
Flickr photo courtesy of TheTruthAbout…Flickr photo courtesy of TheTruthAbout…
The National Association of Realtors is holding a series of meetings with major lenders over the difficulties would-be homebuyers have in obtaining loans, as well as what the trade group characterized as lenders’ problematic policies on short sales and “real estate owned” (also known as bank-owned or REO) properties.
Too often, the Realtors’ trade group complained in a report on its initial two meetings with Bank of America and Wells Fargo, decisions by lenders and loan servicers are made in a “black box” and appear to be inconsistent and sometimes irrational.
“If the lenders and (Fannie Mae and Freddie Mac) disclosed more detail about their policies for underwriting loans, valuing property, selecting brokers for REO listings, and evaluating and approving a short sale, Realtors would be able to close more deals — to the benefit of everyone involved,” the report said.
FHA and the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac “have become over-focused on safety at the expense of their mission,” and should return to “a reasonable center” in determining credit policies, NAR said.
Credit for condo purchases is a “special problem,” the group said, as extra fees and a policy restrictions have “doomed whole buildings in many areas to long-term vacancy.”
Inaccurate appraisals on all types of residential properties continue to be a concern, especially in markets that have bottomed or started to recover, and also in areas with large numbers of distressed sales, NAR said.
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In the short-sale arena, the Obama administration’s Home Affordable Foreclosure Alternatives Program (HAFA) has yet to have an impact, NAR said, because lenders’ front-line loan-servicing staff know little about the program.
Realtors are also concerned about last-minute attempts to reduce their commissions on short sales, an issue HAFA attempts to address by setting commissions up front.
On non-HAFA short sales, NAR “urges lenders to make commissions policies more transparent and to treat real estate professionals fairly by agreeing not to reduce commissions at or shortly before closing.”
The report also raises concerns that lenders haven’t spread their REO listings among enough brokers, leaving some brokers with “so many REO listings that they are unable to market and show the property, assess all offers, and give the best offer to the bank.”
NAR said it met with the leaders of Bank of America Home Loans on July 7, and with Wells Fargo Home Mortgage on Aug. 26. A meeting with Chase Home Mortgage is planned for Oct. 26, and with CitiMortgage on a date to be determined.
“Both banks sought to assure NAR that they understand the problems our members are facing and are working hard to address them,” NAR said.
When it comes to underwriting standards, lenders say that for the most part they must follow the lead of FHA, Fannie Mae, and Freddie Mac.
Wells Fargo officials outlined lending principles adopted at the beginning of the downturn that have resulted in essentially no growth in residential mortgage lending in the last three years, the report said. Those policies also laid the groundwork for future growth, the report said.
“NAR is not yet seeing improvement, and communicated that reality to the banks,” NAR said in its report. “We have resolved to work more closely together on solutions.”
Lenders are “well aware” of issues with appraisals, and “report they are working to address these problems,” NAR said. Bank of America officials briefed NAR on a new geographic proximity policy the bank believes will help alleviate the issue of appraisers working in markets they are unfamiliar with, the report said.
Wells Fargo has published a short-sale guide for Realtors, which NAR has posted on Realtor.org for access by its members.
Bank of America offers a website that provides educational materials on short sales for real estate professionals.
Wells Fargo told NAR that about 90 percent of HAFA applicants are unable to complete a short sale because the property, the loan, or the borrower does not qualify. The most common reason a short sale does not qualify for HAFA is that the property is vacant, and that with limited exceptions for job transfers, HAFA requires owner occupancy.
NAR said lenders acknowledge that a key provision of the HAFA program — identifying the required minimum net proceeds up front — can improve their own proprietary programs.
Lenders all have their own short-sale programs, NAR noted, and Bank of America is undertaking a pilot program that includes identifying the required net proceeds up-front to facilitate both marketing the property and approval of the short sale. Under the program, Bank of America reduced the average time for processing a short sale to under 60 days, NAR said.
NAR acknowledged that lenders waste time processing short-sale offers from “straw buyers” that are not genuine offers. The fake offers are made to determine what price the bank will approve the sale at when a real offer is submitted, NAR said.
“While this behavior is understandable in light of the extreme frustration with the delays getting a decision whether to approve a sales contract, it is inappropriate. NAR urges its members not to participate in this technique,” the report said.
Although NAR started meeting with lenders before the “robo signing” scandal over foreclosure procedures broke, it said the controversy only drives home the point that lenders are often better off approving short sales or entering into loan modifications with borrowers than foreclosing.
“NAR has long urged the lending industry to take every feasible action to keep families in their homes with a loan modification and, if that is not possible, to give them a ‘graceful exit’ through a short sale,” the group said in a letter to federal regulators.
“These options are far better than a foreclosure, and nothing has driven this point home more clearly than the questions being raised about foreclosures. Lenders should place additional resources into processing loan modifications and short sales.”
In the letter — to the Treasury Department, the Department of Housing and Urban Development, and the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac — NAR said banks need to move quickly to assure that the rights of borrowers are protected, and to remove doubt that buyers will receive clear title to their purchase.
Banks implicated in the robo-signing scandal should be allowed to finish their reviews of their internal procedures and resume foreclosures quickly in order “to return stability to families, the housing market and the economy,” NAR said.
NAR said it’s receiving reports from Realtors that foreclosure moratoriums put into effect by some lenders are already creating some anxiety among purchasers as transactions are being delayed, and that some foreclosure listings are being removed from the market.
Vacation properties and second homes are wonderful real estate properties to own. And the real estate salesperson who sells these knows the importance of vacation property marketing.
If they are actually houses, they will be advertised as houses. But if they have some other special appeal, like they are located in Palm Beach, Florida, for example, they should also be found in vacationing magazines. And there is also the internet, of course, to market your vacation property globally.
A very specific audience is geared toward looking into these flyers and magazines. They are perhaps snowbirds seeking a place to live during the winter months, or they love a specific area and want to have a place to visit every summer.
Whether your clients enjoy a cute, little cottage by the beach, or a bungalow among others and with a public pool, there is a place to please them all. And they will search ads in local papers, the internet, and magazines to find just the perfect property for them.
Condos and timeshares may also appeal to the vacation property seeker. Some do not want the hassles of a house with a yard, and so on. And if someone intends to visit the same resort area during the same time of every year, of course a timeshare would be perfect for them.
Vacation properties should not only be marketed in the areas in which they are located, but in areas that are far from them, and in fact, opposite. For example, you might market a property in North Carolina or Florida to people living in the northern states where it is chilly even in June. There will certainly be an interest in them, and if they see the same ad during the springtime months, they may just give you a call and take a ride to see some summer properties.
For more info and questions in regards to Vacation Property Marketing please visit the Onlinevpm Group at www.onlinevpm.com
that the bill to extend the NFIP was passed by the House on Thursday, Sept. 23 and awaiting the President’s signature. This bill passed the Senate last week as well and extends the program, which was slated to expire on Sept. 30, 2010, until Sept. 30 , 2011.
Second-home market offers first-rate deals for boomers
By Eugene L. Meyer
U.S. NEWS & WORLD REPORT
The housing market reflects a paradox of the current economy: Though some baby boomers are struggling to prevent their primary residences from sliding into foreclosure, others are realizing their dream of purchasing a vacation getaway
Many people “still have a lot of money that sits on the sidelines waiting,” said Michael Saunders, a Sarasota, Fla., broker active in the second-home market. “I think the wait is over for them. Anywhere you look, you are going to find prices we haven’t seen since 2001,” largely because of foreclosures and short sales of homes for less than what’s owed on them.
However, boomers without disposable income should steer clear of the second-home market, even if they believe they can get financing, advised Christine Karpinski, author of “How to Rent Vacation Properties by Owner.”
“Don’t get yourself caught up in the mess millions of Americans are in right now,” she cautioned. “Don’t overleverage. If you are already retired or close to retirement, that’s not a risk I would take.”
Conversely, for the fortunate who are flush with cash, have high credit scores and possess sufficient disposable income to make down payments of 20 percent or 30 percent, now may be the time to jump into the market. Sharply reduced prices and the lowest interest rates in decades have combined to create a buyer’s market. Moreover, with the stock market in the doldrums, some boomers are finding that a second home can be a worthwhile long-term investment.
Marleen and Scott Karns, who live near Harrisburg, Pa., cashed
in stock inDecember to buy a condo with relatives on St. Croix, in the U.S. Virgin Islands, for $310,000. This was well below the original asking price of $390,000. “It’s our ‘CD’ in St. Croix,” Marleen said. After incurring some signifl-
MCT PHOTO
Vacation property in warmer climates entices many snowbirds.
cant startup costs, including interior decorating and the purchase of a flat-screen TV the Karnses now rent out the property when they are not using it themselves as a vacation home.
“We feel like we’ve kind of landed in our dream come true,” Marleen said.
What is unclear is how many couples have the ability to capitalize on the market as the Karnses have. In 2009, the typical second homebuyer was 46 years old with a median household income of $87,500 (down from $99,100 in 2007), according to surveys by the National Association of Realtors. And while income has gone down, second-home prices rose 12.7 percent in 2009, the NAR notes. Though these factors have closed the market for some, the simultaneous increased demand for rentals of vacation and weekend properties has made these
purchases feasible for others.
If you are a prospective buyer, consider three key issues:
1. Can the property generate enough rental income to cover carrying costs (mortgage plus maintenance, insurance, utilities and property taxes)?
2. Will the rates you charge, especially for the most expensive properties, attract a pool of renters that is both sufficiently large and sustainable (particularly during economic downturns)?
3. If you intend to use the second home more than you will rent it, do you have the means to carry two mortgages and to pay
associated costs?
Some boomers who bought second homes at their peak price now find themselves alarmingly underwater on their mortgages, which means they owe more than the property is worth. For these owners, Karpinski recommends renting to cover expenses and waiting out the market to give the properties a chance to appreciate.
New buyers, however, “can purchase a vacation home and have it break even from rental revenue… because the prices of properties are lower,” she said. “If in 2005 you bought for $500,000, and the rental market was $1,500 a week, you’d be hard-pressed to break even.” But with a property today at $300,000, “you can indeed break even. The rental rates have not gone down.”
Saunders said many sophisticated boomers are searching not for home equity but for “lifestyle equity” They care more about their environment than rising property values. Saunders promotes the Sarasota area as the “Culture Coast,” offering opera, theater and other amenities.
That “absolutely compelling lifestyle” is what attracted Vic and Sandy Motto. The couple’s primary residence is in Califor-
nia’s Napa Valley, which Vic said is suffering from a “very depressed” real estate market. In contrast, Sarasota offers “good values” and “mortgage interest rates which are at an all-time low.”
The Mottos ? he’s 71, she’s 62 ?paid $1,085 million in April for a 2005 contemporary with a 47foot swimming pool that was listed at $1.23 million. When prices plunged during the recent downturn, “all the bells went off,” explained Vic, a wine industry investment banker. “We said, ‘This is it. Let’s jump on a plane and do something about it.’ ”
In Arizona, second homes are available at fire-sale prices, hav¬
ing plummeted as much as 70 percent from their highs in some areas. Foreclosures and short sales have driven prices down, said Phoenix-area agent Debora Nichols. Most of her clients are out-of-staters and Canadians, who are able to obtain lines of credit.
For many prospective secondhome owners, “the difficult part is financing,” said Tom Kelly, co-author of “How a Second Home Can Be Your Best Investment.” “Lenders are even tougher with second homes than with primary residences.”
In some instances when a buyer cannot obtain traditional financing, Kelly said, the seller
may be willing to hold the mortgage, acting as a banker. “Go in there and ask what’s possible,” he advised.
Saunders still sees real estate as a good long-term investment. Those who dream of a second home should consider this, Saunders said: “If you look at return on investment from 2000 to 2009, even though real estate has lost a lot of that [price] run-up we saw, it was still a better investment than the Dow, Standard & Poor’s and Nasdaq” stock indexes.
Distributed by Tribune Media Services
TORRY BRUNO/TRIBUNE NEWSPAPERS PHOTO
A vacation property expert says that many sophisticated baby boomers are searching not for home equity but for “lifestyle equity,” caring more about their environment than rising property values.
On Tuesday evening, Sept. 21, the Senate passed a bill to extend the National Flood Insurance Program (NFIP) through September 30, 2011. The House is expected to take up the bill on Thursday, September 23, with passage likely. The program was set to expire on September 30, 2010.
This is great news for a couple of reasons: first, because it keeps the program operating for at least a year. For the past year Congress has allowed the program to expire twice. An expired NFIP throws real estate markets into turmoil, especially water-dependent Resort communities. Without an NFIP, no new flood insurance policies or renewals can be written, which places property in a floodplain (such as coastal and lakeshore resorts) at a risk of flooding without insurance. Private flood insurance is expensive and difficult to obtain. Having flood insurance for at least a year eliminates one more obstacle to a resurgent housing market.
Second, having the program operating for a year gives Congress more time to reform the program and place it on a more viable financial and actuarial foundation. House-passed legislation earlier this year would have made some reforms to the program; unfortunately the Senate did not have time to discuss the legislation. NAR will continue to push for reasonable reforms, such as more accurate maps and higher coverage limits, while also making sure affordability is taken into account when premium rates are established.
The Senate held a hearing on reforming the NFIP on Sept. 22, at which NAR was ably represented by Nick D’Ambrosia, a Realtor from Maryland – witnesses discussed a variety of NFIP reform options, and I would encourage everyone to spend a few minutes viewing the attached hearing to hear all of the complexities of NFIP reform.
Russell Riggs
Senior Policy Representative and
Government Affairs Liaison to the Resort and 2nd Home Committee
