Category Archives: Housing News

What to Do With This Rhode Island Village

Low-cost housing is up for auction

Twenty-two houses in Medina Village, one of the poorest communities in West End are going up for auction amidst a very controversial issue that the village is currently facing. According to the exclusive report by The Providence Journal, “The sale comes as the federally subsidized Section 8 rental properties — representing 83 units of housing — continue to decline and the current owners have failed to make mortgage payments to the federal Department of Housing and Urban Development, which foreclosed on the complex in 2009… If the houses are not sold at the foreclosure sale, as housing officials expect, Rhode Island Housing has agreed to take control of the sites for a nominal $1 purchase price, with the purpose of keeping the apartments as subsidized, affordable housing, according to HUD spokeswoman Rhonda Siciliano. The state housing agency would then find a developer to make the necessary repairs, which HUD estimates to cost more than $11 million, says RI Housing spokeswoman Kristine Allard.”

The Housing and Urban Development (HUD) may have its good intentions for the residents of Medina Village but it certainly doesn’t make sense to spend $11 million for repairs alone. First, the tenants weren’t able to maintain the place properly so there’s no assurance that they’d be keeping it in good condition for the next ten years, not even five at that. I don’t mean to degrade anyone but it’s common for subsidized housing to fall into disrepair when its residents are taking advantage too much of the situation that they’re in.

Second, there’s no way that commercial investments will start pouring in once the redevelopment is completed. In the same report, City Councilman Leon F. Tejada says, “We’re trying to improve the conditions in that area. A lot of new businesses are coming to Cranston Street, but a lot of others don’t want to come there because they don’t want to be next to these abandoned properties.”

Abandoned or not, the community itself seems to drive off businesses in the area. There’s no point in rehabilitating it then for $11 million.

I’ve got two suggestions. First, when the properties don’t get auctioned off, the HUD must build environment-friendly homes that are not only cost-effective, they’re more durable as well. This can begin a wave of new nature-friendly residential constructions in the entire city.

Second, the HUD must conduct regular inspections on the houses to regulate its inhabitants. If they violate rules, they must face consequences like getting evicted in order to maintain the quality of the homes.

Racial Concerns on Real Estate

Some trends are starting to emerge

Recently, Memphis was featured in the New York Times . But it wasn’t about an early tribute to the Carnival Memphis nor about another Hollywood film shot in the area. The NYT focused this time on the real estate downturn that the city has never experienced in the past decades. The newspaper highlights the unjust treatment of Wells Fargo to its residents, majority of which are black and had no clue on how they’ve gotten into the mortgage mess that they’re currently in.

Thomas E. Perez, the assistant attorney general in charge of the Justice Department’s civil rights division, told a Congressional committee, “The more segregated a community of color is, the more likely it is that homeowners will face foreclosure because the lenders who peddled the most toxic loans targeted those communities.”

In need of a proof? The report cites, “During the post-World War II boom years, banks and real estate agents steered blacks to segregated neighborhoods, where home appreciation lagged far behind that of white neighborhoods.” Fast forward today, Wells Fargo has repeated the past: “Several state and city regulators have placed Wells Fargo Bank in their cross hairs, and their lawsuits include similar accusations. In Illinois, the state attorney general has accused the bank of marketing high-cost loans to blacks and Latinos while selling lower-cost loans to white borrowers. John P. Relman, the Washington, D.C., lawyer handling the Memphis case, has sued Wells Fargo on behalf of the City of Baltimore, asserting that the bank systematically exploited black borrowers. A federal judge in Baltimore dismissed that lawsuit, saying it had made overly broad claims about the damage done by Wells Fargo . City lawyers have refiled papers.”

This isn’t any new to followers of industry news but the fact that the last statements have proven that justice was denied among these pathetic homeowners is a wake up call to the government to prosecute bank officials who should be behind bars today.

Another report about racial concerns in the country comes from the Brookings Institution. It’s interesting to note that based on its State of Metropolitan America, an analysis of 2008-09 census data, suburbs now have more minorities since a “white flight” is currently observed in key areas – the first time that more than half of all racial and ethnic groups residing in large metro areas live in the suburbs.. It states, “At one extreme are slow-growing, black/white metro areas like Detroit with a longstanding pattern of racial and ethnic segregation. Today, more than four-fifths of residents in Detroit’s suburbs are white, compared to less than one-fifth of the city’s population… In fact, Atlanta and a few other cities experienced a somewhat new phenomenon in the 2000s—a gain in the share of population that is white. In Atlanta, whites increased from 32 percent of population in 2000 to 36 percent in 2008. Similar, though smaller, increases occurred in New York, Washington D.C., San Francisco, Boston, and primary cities in another seven of the nation’s 100 largest metro areas.”

This is a seminal output from the institution as it will guide most real estate developers and analysts on how the market in these cities must evolve to spur demand from people moving in. In the words of William H. Frey, a demographer at Brookings as reported by The Associated Press, “A new image of urban America is in the making. What used to be white flight to the suburbs is turning into ‘bright flight’ to cities that have become magnets for aspiring young adults who see access to knowledge-based jobs, public transportation and a new city ambiance as an attraction.”

Indeed, we should all watch out.

Where Arizona Differs from Colorado

Two states are miles apart in terms of real estate prices

Arizona’s once strong real estate market is now teetering as home values in the Grand Canyon State are down to extremely disappointing low figures. In a report by the Arizona Daily Star, “Home values dropped more in Arizona in the last year than in any other state. The price of an average Arizona home in the first quarter of this year is 13 percent less than at the same time a year ago, new figures from the Federal Housing Finance Agency showed Tuesday. Home values in the state, on average, are now more than 20 percent below where they were at this time in 2005, while prices were going up but before the housing bubble burst. And there is no real sign that the slide in values is slowing: The prices dropped by 3.4 percent just between the last quarter of 2009 and the first quarter of this year.”

Following the 1Q10 results of the Case Shiller Home Price Index, Phoenix is one of the thirteen metro areas that reflected a decline in March with a 51.8 percent fall. However, there’s still some hope to this. Its YoY change is recorded at 2.4 percent, not something as high as in other cities like Cleveland with 6.7 percent, San Diego with 10.8 percent and San Francisco with 16.2 percent.

It may look grim for the entire state but I’d like to count on Bob Beemis, CEO of Arizona Multiple Listing Services who thinks that these drastic numbers shouldn’t put much pressure on us. azcentral.com writes, “He reminds people that national numbers have a severe lag time and real time is more important. More people are trying to sell their homes. 14,000 new listings flooded the market in both March and April. But foreclosures and short sales are still the majority. 26% of the new listings in April were foreclosures. 27% short sales. And of all active listings, 39% are short sales. The highest in the past two years.”
If that doesn’t sound good news to you, I wouldn’t know what kind of optimism should be presented.

On the other hand, Denver, Colo. is in an upswing. Real estate prices are faring better despite the continued recession. According to The Associated Press, “The drop from February to March marked the sixth straight decline. Prices in 13 of the cities fell. Six metro areas, including Denver, recorded price gains. Metro Denver recorded a month-over-month gain of 0.6 percent, and the local index is up 4.1 percent for the year, double the 2 percent increase in the U.S. national index.”

This doesn’t come as a surprise after all. The Wall Street of the West has been hanging on the crisis and this maintains a general atmosphere of stable prices. Let’s get our hopes up, shall we?

Are Art District Benefits Still Necessary During Recession?

Why recent disputes are causing a fiasco

They’re found in culture-savvy Europe and pockets of art scenes here in the country. If in London they have Shoreditch and Broadway Market, we match them with Noho in L.A. and Pearl District in Portland . Art districts are teeming with all things beautiful to the eye and yes, all other senses as well. It’s where investors, sellers and curious individuals gather together to do business and celebrate famous and upcoming artists who remain true to their passion despite the risk it has to their personal finances.

Art districts are supposed to spur galleries, performance spaces, exhibitions, etc. without the heavy levying of taxes. In return, a city’s reputation for cultivating a mix of creativity is diffused. That’s why every district would like to imitate SoHo perhaps. However, not everything turns out the way they want it to be. In a recent article by the New York Times, Baltimore was put in the spotlight for not reaping the benefits of its arts district. The report states, “The idea for a west side arts district has been around at least since the administration of Kurt L. Schmoke, Baltimore ‘s mayor from 1987 to 1999. Over the years, the city took steps to improve the area, though without official arts district designation… The idea for a west side arts district has been around at least since the administration of Kurt L. Schmoke, Baltimore ‘s mayor from 1987 to 1999. Over the years, the city took steps to improve the area, though without official arts district designation.”

So the issue therefore boils down to the use of space: artsy enclaves or residential pursuits? Think about it, while many people give importance to art, there are a lot more who believe that its purpose is subordinate to better and urgent matters like city revenues and private real estate investments. In the same report, it describes Maryland as having “18 state-approved arts districts, including two in Baltimore . In each district, developers receive property tax reductions for building or renovating arts-related properties. In addition, artists are exempt from Maryland income tax for work created in the district. But according to a state official, there was no way to know how much that exemption costs the state each year.”

And it may not be too long before officials start to think about reconsidering the tax benefits. Two years ago, Commissioner John Thompson Jr., proposed that eliminating property tax credits for artists and entertainers who revitalize buildings in the City of Frederick ‘s downtown, another glitzy art escape. In an interview with the Gazette.net, he says, “I believe that artists and entertainers should pay property taxes at the same rates and proportions as other taxpayers. I believe in across-the-board tax cuts, rather than going interest group by interest group. You have a government program doing nothing. You get rid of programs that don’t apply anymore. There is no interest in this.” I bet he’s ready to bust the party when Baltimore decides to create another art district soon.

Here’s my simple take on this matter. While it is important that the city takes enough revenues every month, it must also give due consideration to the period when an arts district achieves the status of SoHo . It doesn’t happen overnight and in a recessionary economy like this, it would take a while before artists reestablish the district into a profitable hub. If the economy gets back to its feet and still, nothing happens to Baltimore ‘s art venues, I say they should take heed of Commissioner Thompson’s idea.

Case in point: they’ve transformed Fall Church, Washington, D.C. into an arts district last year. Apparently, it’s still testing the weather if it’ll work out. So give Baltimore a chance and if it doesn’t work out, have the city think about its future seriously.

Washington, D.C. Still the Fittest City

Get ready to shed those pounds off.

If you’re bordering on the overweight side and you’re planning to buy a house at the same time, why not consider Washington, D.C.? The American College of Sports Medicine recently revealed that the city topped its American Fitness Index for the third straight year. Aside from the state of health and fitness in an area, the index also “evaluates the infrastructure, community assets, policies and opportunities which encourage residents to live a healthy and fit lifestyle “. It explains, “Characteristics of the D.C. area that helped it achieve the top ranking are a relatively low smoking rate, a higher-than-average percentage of folks eating the recommended daily serving of fruits and vegetables, and lower-than-average rates of chronic health concerns such as obesity, asthma, cardiovascular disease and diabetes. D.C.-area residents also use public transportation regularly, meaning they are likely to walk to and from their places of work or transit stations. Also, the area of parkland as a percentage of the city’s land area is significant, providing residents with lots of space to run, bike, play sports or take a leisurely walk.”

If you prefer other areas, you may want to settle in Boston, MA, the Twin Cities of Minneapolis and St. Paul, MN, Seattle, WA, Portland, OR and Denver, CO. The biggest year-on-year jumpers in the list are Sacramento, CA (from 12th to 7th), Jacksonville, FL (from 28th to 24th) and Riverside, CA (from 40th to 36th).

Speaking to Forbes Magazine, Washington Mayor Adrian Fenty expressed, “We are thrilled to be the fittest city in the nation for the third consecutive year. We are investing in our recreation centers, building new swimming pools and opening more parks so our residents can exercise, swim, walk, bike and compete in sports.”

On the other hand, stay away from Oklahoma City, OK which is last, dropping 5 places to 50th. It’s a major concern for city officials to say the least. According to the same report, Mayor Rick Cornett explains, “I’m not saying we shouldn’t be last. There are issues here that are real that we’re not running away from. We have an obesity problem.” He contends the ranking procedure however since the city doesn’t run schools and so its playgrounds won’t count in the survey’s city-owned parks criterion.

I have some suggestions on the method though. First, while the rate of illnesses can speak highly of a city’s current state of health, it must also find a way how to measure the frequency of usage of exercise facilities that it has originally counted. This can put more relevance on the criteria.

Second, while it has included smoking rate among a city’s population, it must also take into account the various health campaigns that its local government is implementing. While access to fitness facilities is important, it must also evaluate the programs that each public office is instituting as a preventive measure against diseases and illnesses.

Support the Homeowner Advocate Office

Finally, one politician is recognizing a real problem.

Independent non-profit newsroom Pro Publica Inc. reports that “about 97,000 homeowners in the government’s mortgage modification program have been stuck in a trial period for over six months. Most of them, about 60,000, have their mortgages with a single mortgage servicer, JPMorgan Chase… about 475,000 homeowners have been in a trial modification for longer than three months.”

Now if that doesn’t concern you, you should be getting back to reality. The government’s aim of reducing the number of underwater homeowners must be achieving significant results by today. However, not even the HUD can take them out of the debt pool. With this, Sen. Al Franken, D-Minn., has proposed the creation of the Homeowner Advocate Office to detect which mortgage lenders are taking advantage of their borrowers. Speaking to The Minnesota Independent, Sen. Franken states, “Too many Minnesotans have lost their jobs through no fault of their own, and are now in danger of losing their homes. When they feel they’re being treated unfairly, they need to know there’s someone who has their back. My proposal creates an office dedicated to these families. They’re doing their best with an incredibly stressful situation in a tough economy that they didn’t create, and we ought to do what we can to help them.”

Now there’s no denying that this plan would be a major change in the government’s existing programs. Obama’s HAMP project to alleviate 4 million homeowners out of this mess is certainly no good. Franken’s idea would correct the loan servicers’ mistakes (deliberate or not) when they process modification applications. In fact, he lambastes the government in his interview with The Huffington Post : “What happens is that one of the problems is that the servicers or representatives who talk to people on the phone don’t seem to be expert as they might be. That’s sort of the problem that this is addressing. Or they’re told you’re too late, or this form didn’t come in, or that, or we didn’t get this thing. Of course the person did send that thing. So there’s just a lot of people reporting kind of frustrating interactions with the servicers’ representatives.”

My only concern is the time it would take for this proposal to finally get approved. It would be scrutinized in a heated deliberation that to me is utterly senseless when the benefits of this plan far outweigh its costs.

Isn’t it time the Congress and the Senate speed up the process of reviving the real estate market? This is getting tiresome lately.

The House Hogs Built

Never underestimate your teen and her pets

I was active in extra-curricular activities in school and I must say I’ve concentrated too much on sports and social orgs that provided me with initial networking strategies for my future career. To date, I’ve participated in several competitions and some of my prize winnings either went straight to the piggy bank or to my hobbies. Years later, I broke my piggy bank but I have a faint idea where I spent the money for. I guess it was a skateboard or something.

But if prize winnings were to be judged, Lindsey Binegar, of Greenfield, OH, is on top of her league. The fourteen-year old amassed a total of $40,000 since she started winning at H4 competitions by showing her grown hogs. The Columbus Dispatch writes, “The Greenfield teenager has been saving money since she was 4 years old and won $100 showing a hog… And so the pattern began. She’d raise a few hogs every year on the family farm in Highland County, show them at competitions and add any winnings or sales proceeds to her savings account… That included $15,540 for showing the reserve champion and grand champion hogs at the county fair in recent years. By the time she graduated from Greenfield McClain High School last June, she had saved more than $40,000 for college.”

But the 4-H winnings didn’t go to her tuition fee in Ohio University where she’s now a freshman. Lindsey’s father told her to buy a house. And so she found a two-storey abode during an auction. It was a smart move for the senior homecoming queen who’s now renting the house to relatives. The report adds, “She’s saving the $450-a-month rent payments from the house so she and her 22-year-old finance, Heath McNeal, can buy a small house when they get married in 2011. Eventually, the couple wants to buy land and build their dream home on top of a hill.”
There’s no age requirement for one person to buy a house except that given most teenagers’ financial situation, not everyone can save up for such large investment so loans are definitely hard to secure. This should be an inspiring story for children and teenagers to resist the urge of splurging on things that they’ll soon outgrow. Parents should encourage their children to start saving early by accompanying them to open a bank account. Teenagers can also read books about wise personal financial management. There are also plenty of money management columns in local and national dailies.
The thing is, age should not deter one from investing in a worthy purchase be it a house, a car, a gadget or even education as long as one won’t fall into massive debt. Parents should be behind their children to plan out wise investments.

“Field of Dreams” Location for Sale

Better prepare a huge sum.

Years before Kevin Costner bombed at the box office with his disappointments in “Waterworld” and “The Postman”, he made a name in Hollywood with “Field of Dreams” in 1989. The baseball drama was a critical success albeit the A.M.P.A.S. shunned it out during the Oscars. But it was one of the best films of that decade that everyone’s still talking about. Count the field where they shot the movie. Twenty-one years after it was shown, the famous adjoining farms in Dyersville, IO is now in the market.

Private owners Don and Becky Lansing have lived in the area together with their kids but they’re doing a wise move this time by selling the property for $5.4 million. Here’s a look at the site from the movie trailer. Apparently, the Lansings have done a great job preserving the site.

Dyersville is part of the Dubuque Metropolitan Statistical Area. The property’s cost may be too much but it has a number of features that can attract the interested buyer: 193 acres with 7 buildings (home, 2-car garage, barn, machine shed, corn crib, souvenir stand/store). The sales page writes, “The current owners have a merchandising agreement with Universal. While this agreement is not transferable, if requested the owners will assist the buyer in securing a new agreement. The field and grounds have been preserved to recreate the movie experience, and the Lansings have not sought to commercialize the property. On average, 65,000 people come to visit the field each year.”

I surmise then that the potential buyer must be someone who’s interested in keeping this as a tourist attraction and not something that he’ll plan on keeping as a farm/baseball field. According to The Des Moines Register, “The value of the real estate would be difficult to determine because of its tourism value. The Lansings haven’t charged visitors, but they have maintained a gift shop. The Lansings are catching land values near their top. A 2009 farmland value survey by Iowa State University showed average values for top-quality land in Dubuque County, where the field is located, as high as $4,685. Land in neighboring Delaware County has an even higher value – as much as $5,152 per acre, according to the ISU survey. Farmland values in Iowa have doubled in the last decade. Land experts note that in Iowa 80 percent of farmland sales are to neighboring farmers.”

Interested? Visit the owner’s official sales website for a piece of Hollywood history. But you better hurry. According to the Associated Press, “Former major league pitcher Ken Sanders, now a real estate consultant overseeing the sale, said he’s already received a number of inquiries about the property. Sanders said the majority of those who’ve reached out have shown interest in preserving the property. But he’s also heard from people thinking about putting up a hotel, water park and even some contemplating whether to build a minor league ballpark on the site. There’s little doubt, though, that the property’s iconic place in sports movie history will help its resale value.”

Is Housing Affordability Doomed?

Why it’s difficult to own a home for some people.

Can housing affordability still be a possible solution to the growing demands of home ownership of the less privileged? That seems to be a dream among those whose incomes don’t qualify them for a home purchase. According to the Center for Housing Policy’s “Paycheck to Paycheck: Wages and the Cost of Housing in America” last year’s workers had a harder time making ends meet to afford a house. The report states, “While more workers can afford typical housing costs in their community in 2009 compared with 2008, a substantial gap remains between many workers’ salaries and the income needed for housing. Despite lower interest rates, relatively low home prices, and moderate rent increases, many workers are still unable to affordably buy a median-priced home or rent a typical apartment in the communities they serve. The somewhat higher-paid workers in the green economy – people who make the nation’s homes and businesses more energy efficient and who help to produce clean and sustainable energy – are better able to afford housing than other working families but still struggle with housing affordability in many markets.”

All the while we thought that we’re in a buyer’s market considering the bargain prices in key areas are creating frenzy among hunters. But the report presents the fact that not everyone is keen to shop around mainly because their incomes spoil their dreams of homeownership. It further states that “For many U.S. workers the median-priced home is unaffordable even at today’s relatively low prices. Even many workers in the growing green economy cannot afford to purchase a home of their own. For workers in more expensive areas, renting a typical two-bedroom apartment is also unaffordable.”

And many would highly suspect that aside from income, there are many factors that can limit one’s chances of owning a home. For example, a first time buyer may have found a home that suits his taste but if a competing big time investor can match his deal with a down payment higher than 20 percent, there’s no way that a very eager seller would refuse the investor’s tempting offer.

Second, low credit scores still discourage many interested buyers from pursuing what they want because most banks have already raised their qualifying scores for borrowers. Underwriting requirements are generally stringent these days and improving one’s credit score remains a tough challenge.

Third, the first quarter’s dismal employment figures sent laid off workers into more woeful conditions. Although we’ve had slight improvements since April, the job market still has to provide a ray of hope for more than 9.9 percent who are out of work.

Finally, the government can only do s home tax credit program may have been successful but it was costly according to the New York Times . In a report, it says, “many tax policy experts say it has been singularly cost-ineffective: most of the $12.6 billion in credits through end of February was collected by people who would have bought homes anyway or who in some cases were not even eligible… real estate agents say there are at least three others who collected the credit even though they would have bought without it. That means for each new buyer who was truly lured into the market by the credit, the federal government paid more than $30,000.” And you thought that it was good enough to spur significant economic activity!

The Basics of Mortgage Lock-in

A quick guide to securing a worry-free mortgage

Ever been duped by a mortgage ad that catches your attention because of their intriguing low interest rates? Well, count yourself in. Everyday, thousands of homeowners who are eager to find a desirable rate are trapped by the senseless teasers that these companies make.

Rate quotes are published everyday and if you happen to see one that’s low, chances are, you’ll never get the same number once you apply for a loan. That’s because mortgage rates change from time to time. The numbers are dependent on a number of factors that make it difficult for ordinary citizens to predict. Debt supply and demand is one factor. Falling bond prices (those issued by the government) increase bond interest rates. Inflation is another reason and so is market sentiment.

In order to make sure that the interest rate that best suits you is the one that your monthly payments will be based upon for a specific period, you have to lock-in that interest rate.

A rate lock guarantees the borrower that the lender will offer the same rate. It is your defense against fluctuating rates and would secure you a good rate once your loan is finally approved. Take note too that most lenders won’t process your application right away considering the number of documents that they have to process everyday. If not for a rate lock, you’d definitely be at the mercy of market forces.

But this isn’t always a good resort because lenders are still longing to profit. Thus, every time a borrower gets an approved rate lock, a mortgage lock in fee, a mortgage lock in deposit, or another fee that they may ask from you. Some charge additional points if the lock-in rate is lower than the prevailing rate during the day. Also, the longer the lock-in duration, the higher the fee that is to be charged.

Lock-in rates differ in terms of validity. The most common are 30-60 days while some may last as long as 120 days. A good lender will offer you enough days for the loan application and process to be completed. Of course, borrowers will also have to estimate how long mortgage applications are usually processed in their area.

So what happens if the rate lock isn’t approved within the specified date? The borrower can lose his desired interest rate. It may be because he has failed to submit the correct requirements or the lender has not responded to his application. Worse, if market conditions rise, the lender will absolutely charge the borrower more for his loan. If the borrower believes it was not his fault, he can try to talk about it with the lender. If it doesn’t workout, he can write to any state agency and complain about his problem.

An important tip: if you want to make sure that you’re lock-in rate is worth it, consider asking about the lock-in fees, loan processing time and expiration of lock-ins.