Tag Archives: investors


Florida Cities Top List of 'Hot Spots' for Retiring, Investing

Although Florida is often recognized for its high foreclosure rate, the state also holds a handful of cities that are retirement “hot spots” due to their real estate opportunities, according to RealtyTrac.

On Thursday, RealtyTrac released a list of the top 15 markets for retiring. In order to be considered, at least one-third of the population in the markets had to be aged 65 or older. Overall, 40 fit that criteria, and 15 of those markets stood out due to their strong annual price growth.

Out of the 15 markets, seven were in Florida.

Dunnellon, Florida, came out ahead of other cities, with a 31.4 percent annual increase in home prices. Naples, Florida ranked second with a 26.8 percent annual increase in prices.

Other Florida cities on the list include North Fort Myers (+19 percent), Punta Gorda (16.7 percent), Sun City Center (14.7 percent), Venice (11.5 percent), and Orange City (8.8 percent).

Cities outside of Florida that were placed high on the list included Hot Springs Village, Arkansas (+25.9 percent), Douglassville, Pennsylvania (22.3 percent), and Sun City, Arizona (19.9 percent).

RealtyTrac’s ranking also included other data that might be of interest to retirees such as capitalization rate, median sales price in May 2013, annual chance of sunshine, among other factors.

Florida cities were also strong candidates for those who are considering the option of owning rentals into retirement. Orange City, for example, held the highest capitalization rate of 12.9 percent, followed by Dunnellon (10.3 percent) and North Fort Myers (9.4 percent).

“These popular retirement cities will very likely be an area of growth in the housing market over the next 15 years as baby boomers retire in greater numbers,” said Daren Blomquist, VP at RealtyTrac. “The baby boomer generation started retiring in 2011, a trend that will continue at least through 2029, ensuring plenty of demand for both rentals and owner-occupant purchases in these markets for the foreseeable future.” 

By: Esther Cho with DSNEWS

 


How the New 3.8% Tax Works

The 3.8% tax on net investment income beginning Jan. 1 applies to dividends, interest (except from municipal bonds), net capital gains, rents, royalties and investment annuities for most joint filers with adjusted gross income of $250,000 or more ($200,000 for singles).

Example: A couple has adjusted gross income of $240,000, not counting their investment income. If they have $2,000 of interest, $4,000 of dividends and $1,000 of net capital gains, the 3.8% tax won’t apply. But if they have the same interest and dividends plus a $10,000 net capital gain, then they’ll owe a new tax of $228 on $6,000, the amount of their investment income above $250,000.

Things get more complex for retirees. Defined-benefit pension payments and individual retirement account payouts aren’t themselves subject to the 3.8% tax, but they can raise adjusted gross income.

Example: A widow has $210,000 of adjusted gross income from pensions and IRA withdrawals, so she doesn’t owe the new tax even though that income is above $200,000.

But if instead she has $120,000 from pensions and IRA payouts, plus a $100,000 net taxable gain from the sale of her home—after subtracting her cost basis and the $250,000 exclusion—then she will owe $760 of new tax on $20,000.

“For people under the thresholds, the timing of investment income will become very important,” notes Sharon Kreider, a CPA in Sunnyvale, Calif., who has studied the new levy.

By: Laura Saunders, Wall Street Journal


Warren Buffet Bets Big on Real Estate

As reported on Bloomberg:

“Warren Buffett’s Berkshire Hathaway Inc. is extending its bet on the U.S. housing market by forming a venture with  Brookfield Asset Management Inc. as low interest rates, inventory and prices spur a real-estate rebound. Berkshire’s Home Services of America Inc. unit will be the majority owner of the venture to manage a U.S. residential real-estate affiliate network… The firms plan to offer a new franchise brand, Berkshire Hathaway Home Services, starting next year. Brookfield’s network has operated under the Prudential Real Estate and Real Living Real Estate brands.”

According to the new company’s announcement:

“This new franchise brand joins the existing brands and affiliate networks of Prudential Real Estate and Real Living Real Estate and will be available in 2013.The resulting combined networks of more than 53,000 Prudential Real Estate andReal Living Real Estate agents were responsible for generating in excess of $72 billion in residential real estate sales volume in 2011, and operate across more than 1,700 U.S. locations.”

Mr. Buffett purchased a large number of real estate companies and plans to use the iconic Berkshire Hathaway name in the rebranding. We assume this is a great sign that he believes a real estate recovery is guaranteed.

Source: KCM Blog


Once-Invisible Inventory Can Be Seen on Zillow

Instead of finding clever ways to chase shadow inventory, Zillow has decided to make things easy for thrill-seeking homebuyers and investors who are trying to track down unlisted, invisible inventory.

The real estate data provider announced Thursday it is now providing information on 1.2 million pre-foreclosure and foreclosed properties at no cost. The homes provided through Zillow are not yet listed and apparently, are yet to be found on any Multiple Listing Service (MLS).

Before, only certain investors were privy to such information.

“For the first time, home shoppers are able to see the entire scope of housing inventory in their area, both pre-market and for-sale, side by side,” the company said in a release.

According to Zillow, 55 percent of homebuyers have considered purchasing a foreclosure, but the problem was where to find the information.

“This is another tremendous step forward in consumer empowerment. Zillow is taking information that was really only available to a select group – in this case, savvy investors – and making it more easily available to interested home buyers,” said Spencer Rascoff, Zillow’s CEO. “What’s more, bringing this information to light, and taking this inventory out of the shadows, can help bring these homes to market faster than ever before.”“

The pre-market inventory includes nearly 1 million pre-foreclosure properties, or homes that have begun the foreclosure process or have been scheduled for auction.

In addition, Zillow’s inventory has more than 260,000 unlisted foreclosed properties.

Zillow will also include its own estimate of the sale price of the home if sold as a foreclosure with the percentage and dollar discount based on fair market value. Foreclosure details will also be included, such as the timeline of the foreclosure process, unpaid balance, and the lender.

Another added feature will be 147,000 Make Me Move properties. For this feature, homeowners name a price for which they might sell their home.

Users can view pre-foreclosure, foreclosed, and Make Me Move inventory by visiting Zillow.com and conducting a search using the pre-market filter. Foreclosure details are available for those who sign in.

Seattle-based Zillow is a real estate information marketplace and provides information about homes, real estate listings, rental listings, and mortgages through its mobile applications and websites.

By: Esther Cho, DSNews


Analysis: Investors Driving Recovery as Activity Surges

A recent analysis from John Burns Real Estate Consulting suggests that investors may be the biggest driving force in the housing recovery.

In a report from the company, senior research analyst Erik Franks noted that investors are buying homes at an increased pace and at prices that allow for a reasonable rental return.

“Investors are buying homes at a more rapid pace than ever before, and this time their investments actually make sense,” Franks wrote.

Across the 167 metro areas analyzed by the company, investor activity as a share of all transactions rose to 29.6 percent in the first quarter of 2012, up from a low of 23.6 percent in the last quarter of 2009. Furthermore, the company’s “on the ground” research leads analysts to believe this year’s second-quarter activity exceeded the first quarter’s, with investor activity spiking 2 percent.

Investor activity has returned to Stockton, Miami, Las Vegas, Riverside-San Bernardino, Sacramento, and Phoenix, all areas investors were previously reluctant to enter after their old investments crashed. According to the report, some markets are now “completely dominated” by investors, such as Las Vegas (where investor activity makes up 50 percent of total activity) and Phoenix (46 percent).

Investors also seem to be attracted to small markets-particularly those in inland California, the report notes. Second home buyers are also making their way into smaller markets, leading to large activity increases in Naples, The Villages, Tucson, and Panama City.

While Franks conceded that these signs of increased investor interest may point to a false recovery, he said John Burns Real Estate Consulting is not concerned and welcomes the return of private capital.

“Most of these investors are paying all cash and buying homes below replacement cost,” Franks wrote. “They are helping the market recover by removing supply at the low end of the market and driving real buyers to higher price points, including new homes.”

Franks also wrote that the company doesn’t foresee a scenario in which investors dump their stock on the market unless it’s clear prices are dropping again. For now, Franks said he and his colleagues feel comfortable for the near future.

“We are hyper-focused on the potential positive result, which is that rising prices get fence-sitting consumers off the fence. We are seeing this occur in some pockets around the country.”

 

By Tory Barringer, DSNews

 

Past Due Mortgages = 6,298,000

There were 6,298,000 mortgages going unpaid in the United States as of the end of October, according to Lender Processing Services (LPS).

It’s a daunting number, but the data show that it’s actually been on a fairly steady decline for nearly two years now.
At the start of 2011, the total number of non-current mortgages in the U.S. stood at 6,870,000. In January 2010, it was 8,118,000.

LPS’ more recent reports show the industry is slowly but surely chipping away at the number each and every month – the result of both loss mitigation workouts and removing loans that cannot be resolved from the inventory through foreclosure.

At September month-end, the tally of non-current mortgages was 6,373,000. It was 6,397,000 at the end of August and 6,538,000 at the end of July.

LPS’ data indicates mortgage delinquencies are declining while the nation’s foreclosure inventory is growing.
Of the 6,298,000 loans past due at the end of October, 2,329,000 were behind on their payments by 30-89 days and 1,759,000 were 90 or more days delinquent but not yet referred to foreclosure.

Combined, these tallies represent 7.93 percent of the nation’s outstanding mortgages that are delinquent but not in foreclosure. The October delinquency rate is down 2.0 percent from the previous month and is 14.6 percent lower than the rate recorded in October 2010.

The foreclosure inventory rate, on the other hand, is up by both measures. LPS says 4.29 percent of the nation’s mortgages are winding their way through the foreclosure process, a month-over-month increase of 2.5 percent and a year-over-year increase of 9.4 percent.

By LPS’ calculations, there were 2,210,000 residential mortgage loans in foreclosure at October month-end.
States with highest percentage of non-current loans – which combines foreclosures and delinquencies – include: Florida, Mississippi, Nevada, New Jersey, and Illinois.

Montana, Wyoming, South Dakota, Alaska, and North Dakota have the lowest percentage of non-current loans.

This article is from DSnews.com.


Freddie Mac's Winter REO Sales Promo Pays Extra to Selling Agents

Freddie Mac has announced the launch of a nationwide winter sales promotion to move its inventory of foreclosed homes and put them back into the hands of responsible homeowners purchasing a primary residence.

HomeSteps, the GSE’s REO sales division, will pay selling agents a $1,000 bonus for offers received on Freddie Mac-owned homes in select locations.

Initial offers must be received between November 15, 2011 and January 31, 2012 with escrow closed on or before March 15, 2012. The offer is valid only on HomeSteps homes sold to owner-occupant buyers.

Selling agent bonuses will be offered on HomeSteps sales in the District of Columbia and the following 28 states: Colorado, Connecticut, Delaware, Iowa, Idaho, Illinois, Indiana, Massachusetts, Maryland, Maine, Michigan, Minnesota, Montana, North Dakota, Nebraska, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, South Dakota, Utah, Virginia, Vermont, Wisconsin, West Virginia, and Wyoming.

The GSE is also extending additional incentives to its owner-occupant buyers. Throughout the winter sales promotion, HomeSteps will pay up to 3 percent of the final sales price towards the buyer’s closing costs.
Some HomeSteps homes are also eligible for a two-year Home Protect limited warranty that covers electrical, plumbing, air conditioning, heating, and other major systems and appliances. Home Protect also provides discounts of up to 30 percent on appliance purchases.

Freddie Mac held 59,596 single-family REO homes as of the end of September. According to the company, its HomeSteps properties accounted for about 4.4 percent of the nation’s inventory of foreclosed homes as of September 30, 2011.
The GSE says the pace of REO acquisitions remains slow due to continued delays in the foreclosure process – delays the company expects will continue into 2012. Freddie Mac acquired 24,385 REO homes through foreclosure during the third quarter of this year.

Currently, the GSE is selling more homes than it’s taking in. REO sales totaled 25,387 over the third quarter period.
Seventy-percent percent of HomeSteps homes are purchased by buyers intending to live in the homes as owner-occupants. Freddie Mac says its REOs sell for an average of 94 percent of the estimated market price.

This article is from DSnews.com.


Mortgage-Related Jobs Are on the Rise: Report

The third quarter of 2011 saw a net increase of 2,738 mortgage-related jobs, according to recent industry data. This increase is the first recorded in five quarters.

The recent increase in refinances – encouraged by remarkably low interest rates – sparked a demand for loan originators and processors, while continuing high levels of delinquencies and foreclosures bolstered the need for servicing staff.

The third quarter saw 2,502 layoffs countered by 5,240 hirings, according to the Third-Quarter 2011 Mortgage Employment Index released by MortgageDaily.com.

The 2,738 gain compares to a net loss of 464 jobs in the previous quarter and a loss of 936 jobs a year ago.
JPMorgan Chase was a major source of the rise in hirings in the third quarter with 3,314 hirings of its own.
MetLife added 351 jobs, and CashCall Mortgage added 230.

Wells Fargo (-686), CoreLogic (-600), and Bank of America (-364) all lost jobs during the quarter.
California-based CoreLogic anticipates about 1,000 layoffs during the second half of 2011, according to MortgageDaily.com.

With an increase of 699 mortgage-related jobs, Texas posted the largest increase, and according to the index, “[t]he Dallas area has become a Mecca for mortgage servicers.”

Iowa, on the other hand, saw a decrease of 159 positions, largely due to Wells Fargo’s downsizing.
So far, the fourth quarter is seeing more hirings than layoffs.

This article is from DSnews.com.


Economist: ARMs Not as Risky as Some Think

Long-term, fixed-rate mortgages are often seen as a “safe” loan product, but one Federal Reserve economist says adjustable-rate mortgages (ARMs) are not as risky as some perceive them to be and did not play a major role in the recent housing crisis. To those who believe payment shocks caused by ARMs were a major player in the foreclosure crisis, Paul Willen, senior economist at the Federal Reserve Bank of Boston, says, “The data refute that theory.” Willen shared his views before the Senate Banking Committee at a hearing titled “Housing Finance Reform: Continuation of the 30-year Fixed-rate Mortgage.”

In a survey of 2.6 million foreclosures, Willen found mortgage payments at the time of foreclosure were the same or lower than the initial payment for 88 percent of the mortgages.

Those with ARMs “were almost as likely to have seen a payment reduction as a payment increase” says Willen because interest rates in any recession – including the recent one – fall rather than rise. Only 12 percent of foreclosed borrowers experienced payment shock, according to Willen. More than half of borrowers whose homes were foreclosed – 60 percent – had fixed-rate mortgages. Willen points to falling prices combined with life events, rather than payment shock, as the major proponent of the foreclosure crisis.

When borrowers have positive equity, it makes more financial sense for them to sell their property than default on their mortgage when they encounter a negative life event such as job loss, divorce, or illness. However, when prices fall and borrowers have negative equity, disruptive life events are much more likely to lead to foreclosure, Willen says in his testimony.

“It does turn out that fixed-rate mortgages default less often than adjustable-rate mortgages, but that fact reflects the selection of borrowers into fixed-rate products, not any characteristics of the mortgages themselves,” Willen says. He suggests that some ARM borrowers enter their mortgages without intending to stay in the homes long-term. When these borrowers’ home values fall, they are more likely to default, according to Willen.

Article is from DSnews.com.


Big Four Set to Participate in HARP 2.0

The industry’s four largest mortgage servicers all say they will be taking part in the revamped Home Affordable Refinance Program (HARP).

Bank of America, Chase, Citigroup, and Wells Fargo have each expressed their support of the program and the changes that will allow more underwater homeowners to refinance at today’s lower interest rates.
Government officials expect the program’s revisions – particularly the GSEs’ waiver on representations and warranties – to increase competition for mortgage refinancing.

An executive with JPMorgan Chase told the company’s investors this week that HARP 2.0 will facilitate “cross-servicing refinancing” because with the rep and warranty waiver, the new lender is not required to assume responsibility for underwriting deficiencies that may have occurred with the original loan.

Chase explains that HARP may be used to replace an adjustable-rate or interest-only loan with a standard fixed interest rate loan, and typically reduces the borrower’s monthly payment.

Frank Bisignano, CEO of mortgage banking at Chase, estimates that with the new HARP guidelines, thousands of Chase customers could lower their mortgage payments by an average of $2,500 a year.

Citi said in an emailed statement that it “supports the program and expects to participate.”
Wells Fargo, likewise, said in a statement that it “welcomes the addition of the new HARP features.”
Veronica Clemons, a spokesperson for Wells Fargo Home Mortgage, says the company is waiting for specific guidelines and requirements from Fannie Mae and Freddie Mac in order to put the changes into practice.

She adds that once the company’s mortgage servicing team has the guidelines in hand, “it will take us some time – depending on the complexity of the guidelines – to make the necessary systems changes to begin offering the new enhancements to our customers.”

The GSEs’ regulator, the Federal Housing Finance Agency (FHFA), says Fannie and Freddie plan to issue guidance with operational details about the HARP changes by November 15th.

“Since industry participation in HARP is not mandatory, implementation schedules will vary as individual lenders, mortgage insurers, and other market participants modify their processes,” FHFA said.

Bank of America says it will participate in the enhanced Home Affordable Refinance Program announced by the administration, and it expects the new guidelines and eligibility criteria to go into effect after December 1st.
“Despite ongoing economic challenges, nearly 90 percent of our customers remain current on their mortgage,” BofA spokesperson Rick Simon said. “HARP helps these homeowners who remain current on their mortgage with options to lower their monthly payment when, otherwise, conventional funding options are limited.”

The GSEs have removed the 125 percent loan-to-value (LTV) cap under the program. Now any borrower with an LTV ratio above 80 percent is eligible for a HARP refinance, as long as the loan was sold to Fannie or Freddie prior to May 31, 2009, and the borrower is not delinquent on their payments.

Since HARP was launched in 2009, nearly 900,000 loans have been refinanced through the program. Government officials estimate that an additional 1 million homeowners will receive assistance under the new guidelines.
In its announcement of the program changes, FHFA encouraged borrowers to “contact their existing lender or any other mortgage lender offering HARP refinances.”

Article from DSnews.com.