The Weekend Guide! August 31 - September 4, 2006

The Weekend Guide for August 31 - September 4, 2006.
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Why the End of the Housing Boom May Not Be Such a Bad Thing

The long-anticipated real-estate downturn has begun. The shift could welcome first-time buyers, make property attractive as an investment vehicle or for private use, and turn home-builder stocks into a good investment for patient, risk-tolerant investors.
By: James B. Stewart: The Wall Street Journal Online
Let's be honest with ourselves: Aren't you just a little glad the real-estate boom is over? No more bragging from self-congratulatory owners of property in high-priced areas. No more breathless tales of bidding wars and comparative sales.

Last week's figures for sales of new and existing homes, both showing sharp declines of more than 4%, make it clear that the long-anticipated real-estate downturn has begun. I realize that a significant downturn in any market causes hardship for some. Tales of woe are mounting from the real-estate industry, from home builders and architects, to empty-nesters and retirees hoping to cash out of big homes and move to smaller places.

There is no doubt that the real-estate industry casts a long shadow, which is why some economists and policy makers are fretting about a slumping market's capacity to drag down the whole economy.

But let's look at the bright side, too. The real-estate market during recent years had many unhealthy economic and psychological effects. Soaring prices forced many people, especially young people buying their first homes and starting families, out of many markets. It pushed too many people into dreadful mortgages. It misallocated capital to construction for which there was no fundamental demand.

Market Cooling

Like the tech bubble, the rapid double-digit annual appreciation in real-estate prices couldn't go on forever. It has clearly been cause for pervasive concern at the Federal Reserve, which helped fuel the boom with its superlow short-term rates. Surely Fed Chairman Ben Bernanke and his colleagues are pleased by a cooling of the market. The recent pause or possible end to rate increases seems well-timed to gauge just how cool it's become.

Purging the market of excess speculation will no doubt yield some tales of plunging prices and hardship. But I wouldn't expect an out-and-out collapse, or even anything as severe as the downturn in the early 1990s. As Toll Brothers Chairman Robert Toll said last week, there's no recession, long-term mortgage rates remain low, and there's still demand for housing. This is a pretty healthy environment for housing, even if there are price declines still in store.

What does this turning point mean for investors? It's time to re-think my longstanding aversion to real estate and related investments.

Hard-Hit Stocks

Stocks of home builders like Toll Brothers and Pulte Homes have suffered severe declines; expectations are so low that they seem good values for patient, risk-tolerant investors willing to wait for the market to stabilize. Some mortgage real-estate investment trusts, hard-hit by rising interest rates and fears of an overvalued market, have just begun to tick up. REITs like Annaly Capital Management and Newcastle Investment are both about 20% above their lows for the year. Other REITs, in my view, remain overvalued.

Property itself may also begin to be attractive, either as an investment vehicle or for your own use. In some markets, falling prices for condos compared with rents are beginning to make them attractive to yield-oriented investors. It is a paradox of falling real-estate values that buyers balk at paying far less than they would have in a rising market, simply because they're afraid the value may decline further after they buy. All of a sudden they're market timers, aiming for an elusive bottom.

As usual, and especially for first-time buyers, I don't believe in trying to time the real-estate market. If you like something, it fits your budget, and you plan to be there for an extended period, stop worrying about where prices are headed. Instead, be grateful you weren't buying a year ago.


James B. Stewart, a columnist for SmartMoney magazine and SmartMoney.com, writes weekly about his personal investing strategy. Unlike Dow Jones reporters, he may have positions in the stocks he writes about. For his past columns, see: www.smartmoney.com/wsj_common.
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Real estate flipping declines in California

Report cites fewer opportunities for fast money.
Inman News
The "flipping" of homes in California declined to its lowest level in more than three years, according to HomeSmartReports.com, a company that offers information on real estate sales trends and property values.

Investors are apparently pulling back, and "chances for a quick turnaround and profit are diminishing," according to a company statement.

During the second quarter, 2.4 percent of the existing homes that sold statewide had been owned for six months or less. That was down from 3.2 percent for the first three months of this year and down from 3.5 percent for last year's second quarter, according to HomeSmartReports.com.

Last quarter's activity was the lowest since first-quarter 2003, which also had 2.4 percent. The recent peak in flipping was during first-quarter 2005 at 3.8 percent, the company reported.

"Flipping activity is one of a number of risk factors we look at to see how healthy and stable a local market is, all the way down to the neighborhood level," said Mike Ela, HomeSmartReports.com president. "What we look for when it comes to flipping are the big ups and downs, which can indicate stress."

When factoring in commissions and costs, 24.7 percent of the second quarter's "flip" sales resulted in a loss for the seller, the highest percentage since 25.8 percent during first-quarter 2002, according to the report. The second quarter was up from 24.4 percent during the first quarter, and up from 14.4 percent a year ago. Of those who lost, the median loss was $30,100.

Overall, flippers sold the homes for a median $44,500 more than they paid. Profits were lower if there were improvement costs associated with the properties, the company noted.

"Flipping activity is always going on, as people identify opportunities, and they jump in if they have the money. This is not part of the core housing market, where people are putting roofs over their heads. This is a roll of the dice, and the investor may do well or not," Ela stated.

By area, flipping activity varied during the second quarter. Among the major counties, it ranged from 1.1 percent in Napa County to 4.8 percent in Kern County.
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Marathon Sellers Race Reality

Sales are slowing in many markets. Unfortunately a visible number of sellers refuse to believe that market trends apply to them. Peter G. Miller comments.
By: Peter G. Miller: Realty Times
A new species of real estate owner has begun to emerge: the marathon seller. Maybe you have them in your community, owners who believe in real estate exceptionalism, the idea that their homes are growing in value while real estate prices all around are stalled or falling.

These owners truly believe that somehow their property is unique and different, a home so wonderful that general sales trends are irrelevant

Compared with last August, in my area we have evolved from a strong seller's market to something which has more balance. Prices are up a touch, but not up insanely. Days on the market have doubled, unit sales are down 20 percent and instead of paying premiums, some buyers are getting "seller contributions" at closing.

How can you spot a marathon seller? Here are some clues:

    • The home has been on the market 400 days while local properties typically take
      88 days to sell.

    • A look at the MLS in August shows a home with snow.

    • The property has fewer visitors than a forgotten cemetery.

    • When the listing expires no broker steps forward to instantly re-list the
      property.

    • When finally re-listed, the property has a higher price - even though it could
      not be sold at a lower value.

Much of what we're seeing in today's marketplace has no relation to reality. Immovable prices seem designed more to enhance throbbing egos and party-talk bragging rights rather than produce sale results.

Surely it makes sense for sellers to test the market, to select the highest possible price they realistically think they can get. But marketing tests should not continue eternally. After a reasonable time on the market - the term "reasonable" being different for different markets and different properties - owners should have some sense of what's real and what isn't.

Unrealistic prices not only lead to marathon selling periods, they also produce excess costs. There are mortgage and utility payments to be made each month as a home languishes on the market, plus the tax bill grows.

Worse, if a replacement home has been purchased and the first property remains unsold, there may well be two mortgages and two sets of taxes and utilities.

Given that many households can barely tolerate one set of ownership costs, doubling such expenses hardly seems attractive. A house with expenses of $3,000 of month that stays on the markets for months on end means the eventual sale price has been effectively cut by thousands of dollars.

Longer selling times also change broker economics. The old expression is that brokers who are not careful "can list themselves into bankruptcy" by taking on too many homes that do not sell - or do not sell within a reasonable period. Why? Because each property must be advertised and marketed and such things are not cheap.

Owners, having once established in their minds what a property is worth, sometimes see any lower price proposal as a "loss" when that's not the case.

For instance, imagine a home that will not sell for $750,000 - but it might sell for $700,000. To the owners who dreamed of the first price, this is a $50,000 "loss" even though they never had a sale at $750,000.

In an environment where prices are rapidly rising you see buyers more willing to take a chance because there's some certainty that replacement buyers can be found if necessary. But slow the market and both the math and philosophy of home buying changes. Buying is more risky because a quick re-sale at a good price is less assured.

Slower markets also change the math and thinking needed to be a successful seller. Alas, some sellers have yet to understand that when the marketplace slows it slows for everyone.
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Demand for housing not dependent on interest rates, study finds

Increasing wealth, new mortgage products helped renters buy homes
By: Matt Carter: Inman News
The housing boom that followed the dot-com bust was not an artificial bubble created by low interest rates and speculation, but a product of increasing wealth, changing demographics, and new mortgage products that helped renters become homeowners.

That's the conclusion of a study by two economists at the Federal Reserve Bank of Chicago. If the study's assumptions are correct, it suggests there are solid economic fundamentals underpinning housing demand, and the current slowdown in the housing market won't amount to a bust.

The conventional wisdom is that the Federal Reserve helped fuel demand for housing by slashing interest rates to historic lows after the stock market tanked in 2001, economists Jonas D.M. Fisher and Saad Quayyum say in their study, "The great turn-of-the-century housing boom." (Study can be found at this link: http://www.chicagofed.org/economic_research_and_data/economic_perspectives.cfm.)

Those who subscribe to that theory say easy credit encouraged speculators to buy property, which artificially inflated home prices. Now that the Fed has restored interest rates closer to their traditional levels to keep inflation in check, credit is tighter and housing prices must fall in response - or so the theory goes.

Although Fisher and Quayyum don't tackle the issue of housing prices directly, they conclude that the underlying demand for housing was, and remains, real.

"This is not to say the monetary policy has not been unusually loose, but that to the extent it has been loose, this is not what has been driving spending on housing," the economists write.

That spending has been remarkable. Investment in residential property, measured as a percentage of gross domestic product, has risen to levels not seen since the 1950s, the authors note. In 1991, residential investment spending was at a near historic low of 3.5 percent of GDP. Last year, it passed 6 percent for the first time since the post-World War II housing boom.

The increase in spending on new housing is largely explained by wealth created by technological innovations over the last decade, Quayyum and Fisher claim. Using complex algorithms, they studied how not only monetary policy, but technological advances and their resulting economic impacts, affect investment in residential property.

The results suggest "the unusually high levels of residential investment in recent years may just be the direct result of the wealth accumulation from previously high rates of technological progress." Investment in real estate, the authors conclude, appears "to have been driven mostly by fundamentals and not unusually loose monetary policy or speculative building."

Another factor behind the high levels of residential investment is the rate of home ownership, which is at an all-time high. The rate of home ownership, which actually declined in the 1980s after four decades of growth, rebounded in the mid-1990s, reaching a record 69 percent by 2005.

About half of the increase in the home-ownership rate can be explained by changes in the demographic, income, educational and regional structure of the population, the study concluded.

In a reversal of a trend seen between 1978 and 1993 - when home-ownership rates for households headed by those under 40 declined - a growing percentage of young people are becoming homeowners. Between 1993 and 2003, the home-ownership rate for 25- to 29-year-olds grew at a faster rate than those aged 30 to 74.

Home-ownership rates are up almost across the board, regardless of race, age, gender or region. Between 1993 and 2003, home-ownership rates fell in only two types of households: those with four or more adults, or those in which the head of household has less than a high school education.

"That the increase in home ownership cuts across so many different categorizations suggests that the overall home-ownership rate is not merely reflecting changes in the distribution of the population among the categories. Something fundamental about the home-ownership process has changed," the study theorized.

What's changed, the economists say, is mortgages. In the last 10 to 15 years, a slew of new mortgage products aimed at first-time home buyers have been introduced. The secondary mortgage market has grown, allowing many different kinds of mortgages to be sold as securities. At the same time, technological advances have reduced the cost of approving mortgages and given lenders more precise measurements of a borrower's credit risk. Specialized firms have sprung up to capture different segments of the market, such as origination, servicing and securitization, the authors say.

The availability of new mortgage products like combo loans, subprime mortgages and no-money-down loans - not low interest rates - has driven up home-ownership rates, Fisher and Quayyum maintain.

"Historically, we have seen large swings in mortgage rates without large changes in the home-ownership rate. So we conclude that the cost reductions and increases in the supply of capital to the mortgage market are likely to have had a relatively small impact on home ownership," they say. "In contrast, the development and dissemination of many new mortgage products have made it possible for large numbers of people to acquire mortgages who would have been unable to previously."

The economists backed up their case with numbers. In 1993, 7.9 percent of first-time home buyers said they made no down payment on their mortgage. That percentage had risen to 12.1 percent by 2003.

Numbers on subprime loans are harder to come by, but the authors calculated that subprime mortgages were issued for 673,000 home purchases in 2002 - nearly three times the 242,000 issued in 1994.

That increase dovetails nicely with a 1.5 percent increase in vacancy rates between 1994 and 2002, allowing Quayyum and Fisher to conclude that the 431,000 extra homes purchased using subprime loans in 2002 accounted for 76 percent of the 570,000 additional vacant rental units on the market that year.

"We conclude that substitution away from rental housing made possible by developments in the mortgage market, such as subprime lending, could account for a significant fraction of the increase in residential investment and home ownership," the study said. "The current spending boom thus may be a temporary transition toward an era with higher home-ownership rates and spending on housing, which will ultimately move nearer to historical norms."
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Sound advice would have guaranteed real estate tax break

Bad news for absentee owner, mom who's not on title
By: Robert J. Bruss: Inman News
DEAR BOB: I am selling a condo that is in my daughter's name. I have lived in the condo for the last seven years and paid the mortgage payments. The sale will close the first of next month. It will show up as a $120,000 capital gain for my daughter. Can she use the sales proceeds to pay for another house for me to live in and claim it as a gift? -Sandra R.

DEAR SANDRA: Because the condo was not your daughter's principal residence at least 24 of the 60 months before its sale, she is not qualified for the Internal Revenue Code 121 tax exemption up to $250,000.

Since your name is not on the title to the condo, although you paid the mortgage payments, you are also not eligible for the $250,000 tax exemption. Therefore, when the condo sale closes, your daughter becomes liable for the capital gain tax on her $120,000 condo sale profit.

It is a shame you and your daughter didn't consult your tax advisers. If you had done so 24 months ago, and if your name was on the condo title, then you could have deducted the mortgage interest paid and you would qualify for the IRC 121 principal-residence sale-tax exemption up to $250,000.

Your daughter can give you up to $12,000 in 2006 without filing a federal gift tax return. Above that amount, she must file a gift tax return. However, if her lifetime non-exempt gifts have been less than $1 million, she will not owe any gift tax if she gives you $120,000 to buy another home. For full details, please consult your tax adviser.

DATE-OF-DEATH MARKET VALUE DETERMINES STEPPED-UP BASIS

DEAR BOB: My three sisters and I sold a house inherited from our mother. Do we owe capital gains tax on the sale proceeds? The house was sold for about $150,000 more than she paid for it some years ago -Lucy S.

DEAR LUCY: All that matters are (1) what was the "stepped-up basis" market value of the house on the date of your mother's death, and (2) what was the net amount received from the house sale?

If the net amount received, after paying sales expenses, exceeds the market value on the date of death, the difference is your taxable capital gain. In most situations where an inherited property is sold shortly after receiving title with a stepped-up basis, the capital gain tax will be very small. For details, please consult your tax adviser.

OWNER'S TITLE INSURANCE PAYS UP TO POLICY PURCHASE PRICE LIMIT

DEAR BOB: Let's assume I purchased my home 10 years ago for $150,000 and obtained an owner's title insurance policy at that time. Suppose I sell it now for its current $400,000 market value but I discover I don't own marketable title. Will the title insurance pay me $150,000 or $400,000? -Bill S.

DEAR BILL: Your owner's title insurance policy will pay you, in the event of a 100 percent total loss, the $150,000 policy limit at the time of your purchase.

However, total title losses rarely occur. In a situation such as you describe, the title insurer will attempt to negotiate a settlement with the title claimant so you will not lose the property.

If that isn't possible, perhaps because your grantor forged a signature on your deed and the true owner or the heir now claims ownership, the most the title insurer would have to pay you is the $150,000 policy limit in this example.

LONG COMMUTE DOESN'T ENTITLE HOME SELLER TO PARTIAL EXEMPTION

DEAR BOB: In October 2005 I bought my home. But in March 2006 I found an excellent job, which is a 1.5-hour drive from my home. My wife and I have put the house up for sale and are in the process of moving close to my new job. I know that to get the full $250,000 per owner principal-residence-sale tax exemption, we must own and occupy the home 24 of the 60 months before its sale. But what are the tax implications in our situation where after only a few months of ownership and occupancy we have to move due to a long commute? Is this an "unforeseen event" so our expected $20,000 net profit will be tax-free? -Abdoul K.

DEAR ABDOUL: Sorry, a long commute does not qualify as an "unforeseen event" so you can claim a partial principal-residence-sale tax exemption. Your $20,000 net profit will be taxed as ordinary income if you own the house less than 12 months.

If you own it 12 months or longer, then you qualify for the federal long-term capital gain maximum tax rate of 15 percent, plus the applicable state tax. For full details, please consult your tax adviser.

LEASE TERMS DON'T CHANGE WHEN PROPERTY IS SOLD

DEAR BOB: My husband and I own a property that is leased to a business with nine years left on the lease. What legal complications will arise if we sell that property? -Susan K.

DEAR SUSAN: There aren't any special complications when you sell a property that has an existing lease. The lease terms remain unchanged.

The new owner must honor the terms of the existing lease. The current tenant then will pay the rent to the new owner. You must transfer the tenant's security deposit to the new owner. Everything else remains unchanged. For more details, please consult a local real estate attorney.

AVOID BUYING A CONDO ON LEASED LAND

DEAR BOB: What was the name of that book you recommended some time ago about buying a condominium? I am thinking of buying a condo in New Hampshire where there are land lease payments, plus association dues. Is this a good or bad deal? -Barbara L.

DEAR BARBARA: The excellent recommended book is "Everything You Need to Know Before Buying a Co-op, Condo, or Townhouse" by Ken Roth. It is available in stock or by special order at local bookstores, public libraries, and www.Amazon.com.

I suggest you avoid buying a condo on leased land. The reason is, as the lease draws to a close, such as in 50 years or longer, the condo becomes worth less and less. When the land lease expires, unless the homeowner's association has an option to buy out the land lease, the building becomes the property of the landowner. For full details, please consult a local real estate attorney.

HOW TO SURVIVE A BAD LOCAL REAL ESTATE MARKET

DEAR BOB: We own our home in a bad local real estate market. There seem to be no jobs and no money. All our income goes to pay for gasoline and credit card interest. Two out of three houses in our neighborhood are for sale. Please help -Fred W.

DEAR FRED: I'm sure things really aren't that bad. If you are motivated to sell your house or condo, I suggest a lease with an option to buy. I've been using lease-options for more than 25 years, through good times and bad. When structured correctly, lease-options never fail.

However, if you want a fast all-cash home sale for top dollar, under the circumstances you describe, forget it. Details are in my special report, "How to Profitably Use a Lease-Option to Buy or Sell Your Home or Investment Property," available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.

CAN SISTER FORCE BROTHER TO BUY OUT HER PROPERTY INTEREST?

DEAR BOB: My sister and I inherited two 10-acre parcels as tenants in common. We each own half of each parcel. I live on one parcel and the other one has no public road access. It is landlocked. My sister wants to get an appraisal and then wants me to buy her out or sell the properties. Can she force me to sell? Can the two parcels be appraised separately? -Brett J.

DEAR BRETT: Your sister can force you to sell both parcels in which you are tenant-in-common owners. The legal action is called a partition lawsuit.

However, she cannot force you to buy her out. All she can do is bring a partition lawsuit and the judge can order both parcels sold with the sales proceeds divided between the co-owners.

If you want to keep the parcels, I suggest you somehow come up with enough cash to buy out your sister, such as by refinancing. Or maybe she will accept a mortgage for her half of the equity. Yes, the two parcels can be appraised separately. For more details, please consult a local real estate attorney.

The new Robert Bruss special report, "Five Easy Ways to Buy Your Home or Investment Property for Nothing Down," is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.
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What Do Agents Really Bring to the Table?

When it comes to real estate agents, everyone wants them to provide their services for discounted prices - even free.
By: M. Anthony Carr: Realty Times
I hate going to the dentist. I've always had good teeth, only one cavity in my head, so why spend all that money (not to mention the dental insurance) on a service I've never really needed. As long as I brush and floss, why do I need someone with a doctor's degree to look over my teeth, clean them, whiten them, etc.?

Besides, I've pulled teeth myself - when I was just a grade school kid, in fact. So if I can pull teeth at that age, with just a string and a doorknob, why on earth do I have to pay a professionally trained tooth puller now? As I reminisce on those days of my early tooth-pulling, I even recall getting paid for pulling my own teeth! That's right. Every morning after pulling my teeth, I had money under my pillow.

Obviously, anyone who has received quality dental care in the past sees right through the absurdity of this argument. However, when it comes to real estate agents, everyone wants them to provide their services for discounted prices – even free.

Licensed real estate professionals bring state-mandated training and knowledge to the table for buyers and sellers. In fact, agents have to get as much, or more, training than what it would take for some college degrees before being given permission by the state to represent buyers and sellers in the transaction.

By the time a transaction is over, it is chock full of legally-binding documents controlling the transaction, pulling two parties together to exchange hundreds of thousands of dollars to complete a transaction that they may be involved in only a couple of times in their life.

Both the buyer and seller must perform to the contract, and most times, they don't even know how or what they're supposed to do to perform the paragraphs they just agreed to perform.

Nearly half of the buyers are purchasing for the first time, according to the National Association of Realtors. They only think agents are there to usher them into houses and that's it. And that's because hundreds of thousands of agents make that tooth extraction look so easy.

Why should you have a real estate agent on your investing/buying/selling team when it comes to building wealth?

There's talk on Capitol Hill of how the real estate industry has a "strangle hold" on the business. It makes me want to, not so much defend, as much as bring to the forefront what licensed professionals actually bring to the table for consumers.

You've heard the term, "You get what you pay for," and that doesn't go wasted on agents as well. Many sellers would love to get through the transaction themselves, without any help from a "middle man," to save the commission dollars. It sounds like it makes sense, "Hey, why pay thousands of dollars of your money to sell a house when you can do it yourself?"

But every agent has a real estate license regulated by the state. This means they are knowledgeable about various aspects of real estate law, rules and regulations, such as:

    1. What rights exist for land and how they can be traded

    2. How title can be held and how to ensure clear title to the land

    3. Financing: traditional, non-traditional, owner-held, etc.

    4. Fair housing laws: federal, state and local

    5. Local limits on the sale and trade of real estate

    6. State disclosure laws and regulations on the trade of real estate

    7. Contracts and forms

Most sellers and buyers I've talked with, while having access to plenty of "information" on the internet about the sales transaction, do not have a handle on the nuances, pitfalls, and inherent dangers of legal problems they can face in the midst of this huge investment.
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Mortgage Rates Decline to 5-Month Low

A better-than-expected reading on the Consumer Price Index helped to push mortgage rates down to their lowest level since late March.
Bankrate.com: REALTOR® Magazine Online
Last week’s better-than-expected reading on the Consumer Price Index helped to push mortgage rates down to a five-month low, according to Bankrate.com’s weekly mortgage survey of large lenders.

The average 30-year, fixed-rate mortgage fell to 6.48 percent, the lowest since March 29, while the average 15-year, fixed-rate mortgage, popular for refinancing, dropped by a similar amount to 6.19 percent.

On larger loans, the average jumbo 30- year, fixed-rate declined to 6.74 percent. Adjustable-rate mortgages also backtracked. The average 5/1 ARM slid to 6.24 percent, and the average one-year ARM retreated to 6 percent.

Slower economic growth has helped bring fixed mortgage rates to a five-month low, along with the Federal Reserve Board hitting the pause button on rate increases. Although inflation remains a threat, bond investors are confident in the Fed's forecast that inflation will recede as the economy cools, Bankrate.com says in its report.

Fixed mortgage rates have fallen nearly one-half of a percentage point since the Fed last hiked rates at the end of June. At the time, the average 30-year fixed mortgage rate was 6.93 percent, meaning that the monthly payment on a loan of $165,000 was $1,090.

With the average 30-year fixed rate now 6.48 percent, the same loan originated today would carry a monthly payment of $1,040.74. With the recent pullback, fixed mortgage rates remain an attractive refinancing alternative for adjustable-rate borrowers facing sharp payment adjustments.
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Overnight real estate rates mostly flat

30-year fixed rate at 5.98%; 10-year Treasury yield at 4.81%
Inman News
Long-term mortgage interest rates barely budged Wednesday, and the benchmark 10-year Treasury bond yield held at 4.81 percent.

The 30-year fixed-rate average edged up to 5.98 percent, and the 15-year fixed-rate sank to 5.7 percent. The 1-year adjustable was unchanged at 5.33 percent.

The 30-year Treasury bond yield increased to 4.95 percent.

Rates are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

In other economic news, the Dow Jones Industrial Average lost 41.94 points, or 0.37 percent, finishing at 11,297.9. The Nasdaq was down 15.36 points, or 0.71 percent, closing at 2,134.66.

Stock and bond figures are current as of 7:30 p.m. Eastern Standard Time.
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The Weekend Guide! August 24 - August 27, 2006

The Weekend Guide for August 24 - August 27, 2006.
Full Article:
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Safe Money Author Asks Owners to be Realistic

An industry analyst advises home owners who sell in this market to price homes realistically.
REALTOR® Magazine Online
Mike Larson, Weiss Research analyst who writes the company’s Safe Money Report, advises homeowners who sell in this market to price homes realistically.

“Don't chase the market down and let your listing get stale. Incremental price reductions will not be helpful in a down market. It's better to attract the maximum number of potential buyers right at the outset by pricing your property at a very competitive price," Larson says.

He also suggests that people with adjustable rate mortgages refinance now while rates are reasonable. “As the market slumps, underwriting guidelines should become stricter, leaving you with fewer financing options.”
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NAR: Existing-home Sales Down, Prices Soften

Existing-home sales were down in July, while home prices in many areas are slightly below year-ago levels, according to the National Association of Realtors®.
NAR: REALTOR® Magazine Online
Total existing-home sales – including single-family, townhomes, condominiums and co-ops – dropped 4.1 percent to a seasonally adjusted annual rate1 of 6.33 million units in July from a downwardly revised pace of 6.60 million June, and were 11.2 percent below the 7.13 million-unit level in July 2005.

David Lereah, NAR’s chief economist, said higher interest rates dampened sales but that price softening is good news for the housing market because it is drawing buyers. “Many potential home buyers have been on the sidelines, some ‘kicking the tires,’ but mostly waiting for sellers to compromise on prices and terms,” he said. “Now sellers in many areas of the country are pricing to reflect current market realities. As a result, there could be some lift to home sales, but it’ll likely take some months for price appreciation to rise.”

The national median existing-home price2 for all housing types was $230,000 in July, up 0.9 percent from July 2005 when the median was $228,000. The median is a typical market price where half of the homes sold for more and half sold for less.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.76 percent in July, up from 6.68 percent in May; the rate was 5.70 percent in June 2005. Last week, the 30-year rate declined to 6.52 percent. “An unexpected quarter-point drop in mortgage interest rates over the last month also could help to stimulate the housing market,” Lereah said.

NAR President Thomas M. Stevens from Vienna, Va., said most sellers continue to see excellent returns on their homes. “Considering that typical sellers have been in their home for six years, the average appreciation during that time is close to 60 percent,” said Stevens, senior vice president of NRT Inc. “This demonstrates the value of housing as a long-term investment – the longer you own, the better your return.”

Total housing inventory levels rose 3.2 percent at the end of July to 3.86 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace.
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Study Finds Young Adults Are Active Buyers

Young adults are buying more homes faster than either their parents or grandparents, according to survey.
REALTOR® Magazine Online
Overall, 58 percent of respondents have owned more homes than their parents did when their parents were of a comparable age, the survey shows.

Among upper-income Americans older than 60, 66 percent have owned between two and five homes. An identical 66 percent of baby boomers who are between 41 and 59 have already owned up to five homes.

Nearly half of Gen X home owners, who are between 32 and 41, and 36 percent of Echo Boomers, who are younger than 32, have already owned between two and five homes.

Almost half of the respondents — 48 percent — say they moved because of their career; 45 percent cited a better community lifestyle; and 27 percent cited a new relationship or marriage.

Additional reasons for moving were the need to be closer to family, 16 percent; a more affordable location, 15 percent; birth or adoption/growing family, 15 percent; more affordable housing, 13 percent; warmer climate, 13 percent; displeasure with the current home, 12 percent; and divorce, 11 percent.

Among respondents who were married or living with a significant other, 83 percent waited until solidifying their formal relationships to purchase their first home.

Most Americans don’t move far. The survey found that while 81 percent of respondents live in a different town than the one in which they were raised, 56 percent still live in the same state.
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Experian Study Highlights Key Differences Between Consumers with and without Mortgages

Data shows an average credit score 55 points higher for consumers with mortgages
RISMedia
Experian Consumer Direct, a leading provider of online direct-to-consumer credit reports, scores and monitoring, has announced the results of a nationwide study showing the differences between consumers with and without mortgages and consumers with and without second mortgages (including home-equity loans or lines of credit). National and statewide results for the study can be found on Experian's National Score Index(R) Web site at www.NationalScoreIndex.com.

The study reveals that consumers with mortgages have an average credit score that is 55 points higher than consumers without a mortgage. Additionally, the study shows that consumers with second mortgages have an average credit score 81 points higher than consumers without a mortgage.

"Consumers with mortgages are doing a great job managing their credit and those with second mortgages are doing even better," said Ty Taylor, president of Experian Consumer Direct. "Although consumers with mortgages have on average about five times more debt than those without, their average credit score is 713 – compared to 658 for consumers without a mortgage. Additionally, with an average credit score of 739, consumers with second mortgages seem to be keeping their credit in check despite the additional financial responsibility."

The percentage of consumers with open second mortgages has increased 63 percent from 2001 (4.6 percent) to 2006 (7.5 percent). The average second mortgage balance in 2001 was $13,994 compared with $21,265 in 2006 - an increase of nearly 52 percent.

More information about the Experian study plus additional credit data at the state and local levels can be found on Experian's National Score Index Web site at www.NationalScoreIndex.com.

For more information, visit www.experian.com.
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Determining home's market value

Web services, agents can help
By: Dian Hymer: Inman News
If only there was a foolproof method for figuring out what a property is worth on the open market. Then it would be easy to know how much to offer so that you wouldn't overpay, or risk losing out because you offered too little. Home sellers could price to sell without having to endure a series of price reductions and months on the market.

Some buyers and sellers turn to Internet sites like Zillow.com to help them through the valuation quagmire - with varying degrees of success. A San Francisco home buyer recently got caught up in this approach when he made an offer on an attractive new listing.

The seller's agent advised the seller to list under the $2 million mark to stimulate interest. The seller, who understood that the market was challenging, took this advice and listed the property for $1.895 million.

The buyer relied on Zillow.com for pricing information when he made his offer. As it turned out, he offered too little. The seller received two offers and the property sold for $2.1 million.

The problem with Internet sites that purport to tell you what a property is worth is that they usually derive their data from the public records. This data might include such things as the last recorded sale price, the square footage or numbers of bedrooms and baths.

The sale price alone can be misleading in neighborhoods where there is a lot of variability in the size, price and condition of houses. Also, the square footage figures and room counts recorded in the public records are often wrong, either because they're out of date or they weren't right in the first place.

For example, a home recently sold on Trestle Glen Road in Oakland, Calif. The information provided by Zillow indicates that the property sold for $951,000. The additional information indicates that the house has two bedrooms, one bath and 1,470 square feet. If you were to rely on this information and pay around $950,000 for another two-bedroom house in the neighborhood, you would probably pay too much.

Actually, the house has three bedrooms, two bathrooms and a usable basement. There is also a detached studio on the property with a two-bedroom, one-bath guest cottage attached that was built with a building permit. The two-bedroom, one-bath, 1,470-square-foot house really has a lot more to offer for $951,000 than was indicated on Zillow.com.

Before the recent sale of the Trestle Glen property, Zillow gave it a value of $726,683. If you'd used this information as a guide to the appropriate offer price, you'd have been out of luck. The sellers listed their property at $849,000 and received six offers.

HOUSE HUNTING TIP: The best way to find out what a property is worth is to consult with a real estate professional who is knowledgeable in the area in which you want to buy or sell. The Internet has revolutionized the real estate business in a positive way. But you can't expect the Internet to factor in the nuances of pricing that can only be understood through years of experience selling homes in the area.

It's helpful to visit Sunday open houses to get a feel for local property values. Keep track of what sells and for how much, and what doesn't sell. The key is to see the listings before they sell. Then you'll understand why the three-bedroom house that had been completely remodeled sold for so much more than the house next door that hadn't been touched in 30 years.

THE CLOSING: It's hard to find this kind of information on the Internet.
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Single Girl Power Growing Influence in Real Estate

Ladies, take note, you've begun taking a larger role in the area of homeownership over the last few years, according to a new study from the Joint Center for Housing Studies at Harvard University.
By: M. Anthony Carr: Realty Times
"Not only are unmarried women a large segment of the home buying population," says Rachel Bogardus Drew, the author of the report, "but they are fast-growing, too, increasing their share of home buyers by 50 percent in eight years. The value of their home purchases over a 3-plus year period totaled more than $550 billion ... ."

The study is as much a report on the sociological changes in our country as on the buying practices of women. The continued breakdown of the family has pushed women to start fending for themselves, financially, instead of waiting for the combination of salaries with a mate to purchase a home.

"Two out of three female buyers were previously married, though that share drops significantly for younger buyers," Ms. Drew points out. "They also have lower incomes than unmarried men and married home buyers, but are less apt to finance their home purchase."

Still, the overwhelming buying segment is made up of married couples at 63 percent, but now unmarried women are the second highest buying group (at least when looking at marital status) at 20 percent in the last three years. Unmarried men make up 17 percent of the buying pool.

The demographics paint an admirable picture of the group, being older than their unmarried male counterparts, and facing many obstacles, demonstrating their determination to get in the real estate ownership circle. They also have lower incomes and many of them are buying with children in tow (30 percent).

Financially, they've demonstrated that even with lower incomes, homeownership is available. At $37,000, their median income is 11 percent less than single men, but account for why they are less likely than married couples to live in single family homes -- however, the majority of them were move up buyers in the last three years. They are plodding along with wealth growth, taking a patient path to building their net worth by buying low, selling when the market grows and moving into a larger, more expensive dwelling.

The growth of this demographic has not gone unnoticed, as both for-profit and not-for-profit entities have begun initiatives to help women in their quest for homeownership. One of the groups was the Women's Mortgage Industry Network (WMIN), which was launched four years ago and is sponsored by Freddie Mac. The group's goals include engaging "the mortgage industry and non-financial service providers in a targeted education and counseling campaign that it believes will help close the gap in homeownership rates," according to information from FreddieMac.com.

One of the most interesting points of this report was one of the buying options Ms. Drew uncovered in her report of single women, purchasing in a co-housing community.

"Co-housing communities, though relatively small in number -- about 50 in the U.S. -- are an attractive choice for women who want the privacy of their own home with the benefit of a supportive, surrounding community. These communities typically consist of 12 to 42 self-sufficient private dwelling units, but also include a common kitchen/dining space where meals are shared as well as communal outdoor space. Other arrangements help to pair single mothers looking for a shared living situation," she writes.

"By pooling incomes single mothers can often afford to buy a more desirable home, and by living together they can share household tasks and childcare, which can free up valuable time. Living with someone can also provide critical emotional support and help make single parenting less exhausting and lonely."

Obviously, this is a growing segment of the real estate industry and will continue it's upward trend with the aging of the baby boom generation and the natural selection of women living an average seven years longer than men.
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Price appreciation slows for high-end homes

Pace of luxury real estate sales reaches 'normal' level
Inman News
Luxury home values rose 3 percent in Los Angeles from the first quarter of 2006 to the second quarter and climbed 12.8 percent from a year ago, according to a quarterly report by First Republic Bank.

The First Republic Prestige Home Index also showed that the average home in Los Angeles is worth $2.36 million, up $268,250 from a year ago. Luxury home values increased 0.1 percent in the first quarter and 0.7 percent in fourth-quarter 2005 in Los Angeles.

San Diego values grew 1.8 percent from the first quarter of 2006 to the second quarter of 2006 and were up 6.4 percent from a year ago. Values increased 0.9 percent in the first quarter and 0.7 percent in fourth-quarter 2005.The average luxury home in San Diego reached a record $2.14 million in the second quarter, up $128,372 from a year ago.

San Francisco Bay Area luxury home values increased 0.3 percent from the first quarter of 2006 to the second quarter and rose 4.8 percent from a year ago, First Republic also announced. The average luxury home in San Francisco reached a record $2.93 million in the second quarter, up $134,978 from a year ago.

"Over the past year, the luxury home market in California has transitioned to a more normal, stable market in which properties sell at a more measured and less frenetic pace," said Katherine August-deWilde, chief operating officer of First Republic, in a statement. "Luxury home values continue to increase, but at a much slower rate due to rising inventory and interest rates. Homes are being priced more aggressively to sell because buyers have more options."

First Republic Bank produces the Prestige Home Index each quarter with Fiserv CSW Inc., a provider of automated property valuation services and home price metrics to U.S. financial institutions.

"(Los Angeles-area) agents said that the market above $10 million remains strong, although the mid tier of the luxury market has slowed. Buyers are choosier because inventory has increased markedly, and there is a greater emphasis on value," according to the First Republic announcement.

"Certainly, the white-hot market of a year-and-a-half ago is gone," said Michele Hall of Coldwell Banker's Brentwood East office. "We got used to homes selling yesterday, but now properties must be priced right. Homes that are in move-in condition will sell the fastest. Those that need work will take much longer."

Bennett Carr of Prudential Estate Properties in Beverly Hills said the number of sales between $2.5 million and $5 million is down 20-30 percent in 2006 on the West Side of Los Angeles, while sales between $5 million and $10 million are up 15-20 percent, and sales above $10 million jumped up 88 percent. "Los Angeles is becoming a national and international destination," Carr said. "The wealthy from abroad want more estate-like properties - more than we can supply."

In Orange County, homes above $5 million continue to sell well. Agent Bill Cote of Cote Private Brokerage in Corona Del Mar said sales in that price range climbed 13 percent compared to last year, although sales are off about 15 percent between $3 million and $5 million. "We've been spoiled by the market of the past few years," Cote said. "I still anticipate a solid market for the rest of 2006."

San Diego-area agents said the upper end of the market remains robust, while the lower to middle part of the luxury market has slowed noticeably. "The upper end is as strong as it ever has been, and it's amazing the prices sellers are getting," said Ozstar De Jourday of California Prudential Realty in La Jolla. He said there have been a significant number of sales above $10 million recently.

Wendy Ramp of Prudential California Realty in Del Mar said the mid-tier has clearly softened. "In the second quarter, the market stalled, although there has been a slight pick-up in the third quarter. For the past seven years, we haven't had a slowdown, and we didn't have enough product. Now we have too much for sale." She said that some sellers are reducing prices and noted that transactions are falling out of escrow at a higher rate.

In San Francisco, second-quarter appreciation was at its slowest rate since third-quarter 2004. Over the past two years, quarterly increases in the San Francisco Bay Area have been no greater than 6 percent, First Republic reported.

Agents in the San Francisco Bay Area said that the market overall has weakened over the past year, while properly priced homes are still selling.

"The market between $2 million and $6 million is really strong because of continuing demand," said Caroline Kahn Werboff of Hill & Co. in San Francisco. "If the house is priced fairly, you're seeing multiple offers at or a little over the asking price. Interest rates would have to get up to double digits to make a significant difference." In the high end of the market, Kahn Werboff said there have been some price reductions. She said some buyers are reluctant because they believe prices will decline.

David Gowan of TRI Coldwell Banker said the market is more balanced, although slower than it has been in recent years. "Instead of selling in two weeks, properties are selling in two months, just like they would in a normal market. What we've seen the past six years is unusual." Gowan said buyers are generally making offers slightly under the asking price.

In San Francisco's East Bay, the market is slowing. "Over $2 million, our inventory is up and buyers aren't in a terrible hurry," said Tara Rochlin of Village Associates in Orinda. "We're seeing more sellers willing to negotiate and lower their prices. We're headed toward a more balanced market, which is better for everyone over the long term."

The First Republic Prestige Home Index is intended to measure changes in homes valued at more than $1 million in large California urban markets. Common features of luxury homes in the Index include: 3,000 square feet to 6,000 square feet, three to six bedrooms, and three to six bathrooms.

Fiserv CSW Inc. collects and cross-checks data from multiple sources; achieves a weighted balance of validation elements such as repeat sales, comparable sales, and physical home characteristics; and combines this with First Republic's local market knowledge in creating the index.
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Cash-Out Refinancings Will Be Higher Than Ever

U.S. homeowners are expected to draw $257 billion of wealth out of their homes this year, according to Freddie Mac.
REALTOR® Magazine Online
That’s a $13 billion increase from the refinancing cash-out boom in 2005, when interest rates were lower.

"I would have thought the home-equity extractions would have been much weaker now," says Frank Nothaft, chief economist for the mortgage finance giant.

Economists say most of the money is going right back into the domestic economy and characterize it as the housing sector’s last gift to the country’s economy.

Freddie Mac expects home owners to extract $152 billion out of their homes in 2007 and $108 billion in 2008. Those numbers are much higher than a decade ago. In 1996, refinancing cash-outs were $17 billion.

Part of the increase is due to a changing view of home mortgages, says Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies. "One of the big changes is that people look at their home as a financial asset," he said. "In another generation, the notion was 'Burn the mortgage.' That phrase is not in fashion anymore."
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First Step for Buyer: Find Out Your Credit Score

Among the very first steps prospective home buyers should take on their path to home ownership is to find out their credit score and address any errors on their report.
By: Robert Bruss: REALTOR® Magazine Online
You can help them get started by educating them about how credit scores work: When deciding whether to lend, mortgage lenders consider the FICO (Fair Isaac Corp.) score, which is based on credit history, the percentage of available total credit being used, and the buyer’s record of on-time bill payments.

A credit score above 750 (850 is the maximum) will net a buyer most mortgage lenders’ best rates. If customers discover they have a credit score of less than 680, that doesn't necessarily mean they'll have trouble getting a mortgage, but they may pay more for it than someone with a higher score.

However, buyers with credit scores of less than 620 should look for a lender who routinely handles mortgages for subprime buyers because they will probably offer more options for that customer.

The first step for a buyer who doesn’t know his credit score is to obtain his credit report. The best place to obtain a FICO score and credit reports from all three credit-reporting agencies is at www.myfico.com. The report costs $45. If there are errors, the potential home buyer can ask the credit bureaus to fix the incorrect information. Credit bureaus have 30 days to verify the information and remove anything that is wrong.
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The cash-out refinance has rarely looked so good

Remember back when you refinanced your home mortgage to get a lower interest rate and pay less every month?
By: Kenneth R. Harney: Los Angeles Times
How quaint. Now the rage is refinancing into a higher interest rate while pulling out cash.

Almost nine out of 10 homeowners who refinanced during the second quarter "cashed out" additional money — often tens of thousands of dollars and more — according to mortgage investment giant Freddie Mac. The 88% cash-out refi rate was close to the all-time record and could surpass it later this year.

Meanwhile, the typical refinancer hasn't been scouring the market for an interest rate lower than his or her existing first mortgage. To the contrary, according to Freddie Mac, most refinancers are opting for larger replacement first mortgages with rates averaging about one-half of a percentage point higher than on their old loan.

Cash-outs may be booming, but they are not new. They've existed for years as a financial tool to extract equity and convert it to immediately spendable money. During the refi boom years of 2003 and 2004, for example, anywhere from a third to half of all refinancers pulled out additional cash. However, the overwhelming majority of borrowers during that period chose traditional rate-reduction replacement mortgages in which the new balance approximated the old and the new monthly payment was lower than the old.

Scroll ahead to mid-2006: Short-term interest rates no longer hover near 4%. Thirty-year fixed-rate first mortgages no longer are in the 5% range. The prime rate is 8.25% and could move higher. Standard 30-year mortgage rates are nudging 7%. Home-equity credit lines are slumping as their adjustable rates — typically set one or more points above the bank prime — start racking up bigger monthly costs.

Now consider the near-record pace of cash-out refis: Say you need $40,000 to $100,000 for home improvement, a down payment on a vacation property or to consolidate high-cost consumer credit debts. Say you also have lots more than $100,000 sitting untouched in home equity. Rather than signing up for a home-equity credit line tied to a jumpy and unpredictable prime rate plus 1%, you instead opt for a fixed-rate cash-out refi.

In effect, you trade in your existing first mortgage — say it's at 6.25% — for a replacement at 6.75%. Plus you pull out the money you need and add it to the principal balance of the new loan. Yes, your monthly payment will be higher than you were paying on the old loan, and yes, you'll have transaction costs, which you may be able to roll into the new loan amount. And yes, your total first mortgage debt may be significantly higher than it was.

But then again, would you be happier with a $100,000 credit line with a floating rate potentially heading for double digits?

Amy Crews Cutts, Freddie Mac's deputy chief economist, says another factor at work in the big shift to cash-out refis may be the estimated $500 billion in adjustable-rate first mortgages that will experience rate "resets" this year, plus another $650 billion in second mortgages and equity credit lines that will adjust upward.

Many homeowners want out of these mortgages — especially those with 40% and 50% payment increases at the first reset. Refinancing into standard fixed-rate loans suddenly looks attractive. And if homeowners can pull out some cash in the process, that's fine, says Cutts, because "many people see that their real estate has been one of the only things making money for them during the past few years."

Another key to the cash-out refi boom, according to Cutts: "Borrowers have developed new ways of thinking about their home mortgages" and increasingly see them as resources — not just debt loads — to be used to achieve financial objectives.

Should you consider a cash-out? Not unless you really need the money; you don't want to play roulette with an adjustable-rate equity line; you want to lock in your mortgage debt at a relatively low long-term fixed rate. Check out fixed-rate second mortgages as well.
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Overnight real estate rates trend lower

30-year fixed rate at 5.99%; 10-year Treasury yield at 4.86%
Inman News
Long-term mortgage interest rates were down again Thursday, and the benchmark 10-year Treasury bond yield held at 4.86 percent.

The 30-year fixed-rate average dipped to 5.99 percent, and the 15-year fixed-rate sank to 5.72 percent. The 1-year adjustable was up at 5.36 percent.

The 30-year Treasury bond yield increased to 5 percent.

Rates are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

In other economic news, the Dow Jones Industrial Average gained 7.84 points, or 0.07 percent, finishing at 11,334.96. The Nasdaq was up 8.07 points, or 0.38 percent, closing at 2,157.61.

Stock and bond figures are current as of 7:30 p.m. Eastern Standard Time.
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Don't Worry, Be Happy About the Economy

If you’re becoming negative about the nation’s economy, there may be reason to cheer up, says David Wyss, Standard & Poor’s chief economist.
By: Jeffrey R. Kosnett: REALTOR® Magazine Online
After all, there’s no impending recession, and exports are strong, Wyss says. Manufacturing, commercial construction, and finance also are doing well.

The economy is growing slowly, but Wyss says, for most people a slower growth rate is a good thing. It should encourage the Federal Reserve to stop raising interest rates. Once the Fed stops boosting rates, it typically waits for about seven months and then starts cutting rates.

If that happens, 2007 will be a good year for job hunters, investors, home sellers, and real estate professionals.
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The Weekend Guide! August 17 - August 20, 2006

The Weekend Guide for August 17 - August 20, 2006.
Full Article:
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Overnight real estate rates fall

30-year fixed rate at 6.08%; 10-year Treasury yield at 4.93%
Inman News
Long-term mortgage interest rates were down Tuesday, and the benchmark 10-year Treasury bond yield dropped to 4.93 percent.

The 30-year fixed-rate average dipped to 6.08 percent, and the 15-year fixed-rate sank to 5.8 percent. The 1-year adjustable was up at 5.37 percent.

The 30-year Treasury bond yield decreased to 5.05 percent.

Rates are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

In other economic news, the Dow Jones Industrial Average jumped 132.39 points, or 1.19 percent, finishing at 11,230.26. The Nasdaq was up 45.97 points, or 2.22 percent, closing at 2,115.01.

Stock and bond figures are current as of 7:30 p.m. Eastern Standard Time.
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Popularity of 1031 Exchanges Surges With Market Decline

Investors who want to cash in their chips on real-estate bought as an investment and defer the tax bill, in some cases forever - can do so by trading into another piece of property.
By: Tara Siegel Bernard: The Wall Street Journal Online
This strategy isn't new, but it's enjoying a resurgence in popularity now because many investors believe that real-estate values have peaked in some markets. They want to lock in their gains and shift into other holdings without a big payment to Uncle Sam.

The stratagem is called a 1031 exchange, but it doesn't actually require you to swap property with another real-estate investor. You sell one property and buy another, carefully abiding by certain restrictions and time limits.

A section of the tax code known as 1031 allows investors to make a "like kind" exchange of investment properties and thereby defer, and in some cases avoid, capital-gains taxes. (The maximum federal long-term capital-gains rate is currently 15%, while some states impose an additional tax.)

You can swap just about any kind of investment property for another - such as an apartment house for land, or a house for a store. Investors can keep exchanging into new properties of equal or greater value, while deferring the tax hit. If you hold property until death, the capital gain is erased altogether because your heirs inherit the property at its market value, making this a popular estate-planning technique as well.

'Best-Kept Tax Secret'

"It's the best-kept tax secret," says Stephen A. Wayner, first vice president at Bayview Financial Exchange Services LLC, a unit of Bayview Financial, a Miami real-estate investment, development and mortgage-finance company. "There are so many people that should be doing it. They just don't know about it."

The tax savings can be substantial - and by deferring the tax bill, investors have more capital to reinvest into the next property. Take, for instance, an individual who purchased a rental duplex 10 years ago for $150,000 that's now worth $500,000. If he simply sold the property, he would owe $52,500 in capital-gains taxes. (This doesn't include any state taxes that might be imposed, nor does it include any depreciation recapture tax which could be owed if the owner took deductions for depreciation.)

But by conducting a 1031 exchange, he could use the entire $500,000 as a down payment on a more expensive property. If you acquire a property of lesser value, you pay tax on the difference.

To get the tax benefits, however, there are caveats and very specific rules which must be followed carefully. Individuals cannot use their primary residence as part of a 1031 exchange; it must be an investment property or one that's used in a trade or business. (The exchange option also isn't available for financial assets such as stocks and bonds.)

Limited Time to Pick

While there are a few ways to structure an exchange, the most common is known as a deferred or delayed exchange. When a property is sold, a "replacement" property must be identified within 45 days of the sale closing, and a deal must be completed within 180 days.

An independent party - known as a qualified intermediary, who can't be your real-estate broker, lawyer or accountant - must hold the sale proceeds until the next property is bought.

"Once the taxpayer takes control of the proceeds, it violates the like-kind exchange and the spirit of the rule," says Robert Klein, a tax partner in BDO Seidman LLP's Woodbridge, N.J., office.

Be sure to coordinate with your tax and legal advisers, along with the qualified intermediary, to be sure you're doing everything correctly. To find a reputable qualified intermediary, you can contact the Federation of Exchange Accommodators, a qualified intermediary trade organization based in Philadelphia. It has a "QI Locator" link on its Web site, www.1031.org.

Ask Plenty of Questions

Once you find an intermediary firm in your area, make sure the people are experienced. After all, these are the folks who will be keeping watch over your proceeds. Key questions to ask: Are they insured and bonded? Do they engage in many 1031 exchanges, or only a couple a year? Who gets the interest on the account?

Fees vary. A $500,000 or $1 million exchange would cost approximately $2,000, says Dennis Helmick, president of the Exchange Accommodators group, but it also depends on who's earning interest on the account and for how long it's held. Bayview's Mr. Wayner says fees average around $750.
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Appraisals Can Help Sellers Accept Pricing

An experienced real estate professional can generally price a home for sale properly, but sometimes it pays to get a second opinion.
By: Amy Hoak: REALTOR® Magazine Online
The appraisal will analyze the health of the local real estate market, giving homeowners more personalized expectations for selling their home, which can be helpful given the plethora of national news stories generalizing the real estate market, says Alan Hummel, past president of the Appraisal Institute and chief appraiser for St. Paul, Minn.-based Forsythe Appraisals LLC.

Here are some tips from the Appraisal Institute for getting the most out of an appraisal:

    • Expect the appraisal to include side-by-side comparisons of similar
      properties, notations of major problems with the property that will affect its
      value, and an estimate of the expected time it will take the property to sell.

    • Don’t expect an appraisal to replace a home inspection. Appraisals are
      opinions of value. Inspections look for physical imperfections.

    • Suggest sellers focus on items that caused a negative adjustment to the
      appraisal. They can be a good checklist for fix-up projects before putting the
      house on the market.

    • Urge the sellers not to be shocked or angered by the results of the appraisal.
      Remind them it is an impartial report and a tool for accurately pricing the
      property.

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Foreclosed Properties May Offer Bargains, but There Are Risks

As some homeowners get squeezed by higher mortgage rates and a cooling real-estate market, many house bargain-hunters are turning their attention to foreclosures.
By: Aleksandra Todorova: The Wall Street Journal Online
They hope to get good deals by buying from homeowners who are falling behind on their mortgages or by buying after the lenders have seized such properties.

Confirming the trend, online Web sites such as Foreclosure.com, Foreclosures.com and RealtyTrac.com, which list foreclosed properties and charge subscription fees, all report an increase in listings.

"For the right buyer, foreclosures are an excellent opportunity to buy a house at a lower than market-value price," says Tim McCloud, an agent with Kelley Realty in Green City, Ohio, who specializes in selling foreclosed properties on behalf of the lenders.

Needless to say, buying foreclosure properties is more complicated - entails more risk - than going the regular home-buying route. Here's what you need to know:

Tapping Pre-Foreclosures

Buying property in a pre-foreclosure stage - the period between when the owner receives a Notice of Default from the lender and the day the lender puts the property up for an auction - may offer the best bargains, but it's also the most difficult. "Pre-foreclosures tend to be more for the seasoned investors," says Brad Geisen, CEO of Foreclosure.com.

For starters, you have to deal directly with the owner of the house, who may not even be aware that the house was made public in a foreclosure listing.

"These people don't ask for their properties to be listed on our Web site," says Alexis McGee, founder of Foreclosures.com. Rather, foreclosure Web sites get their listings from county recorders' or clerks' offices, since notices of default are public records.

Even if you come to an agreement with the owner, you may have very little time to complete the transaction.

Depending on which state they call home, the owners may have only a month before the bank puts the home up for auction.

Auction Risks

If buying pre-foreclosures is tough for the regular home buyer, buying at an auction can be downright impossible. For starters, you have to pay cash, since financing auctioned properties isn't allowed. You're also expected to buy the house sight unseen. And on top of that, you're not allowed to get title insurance: If the house has a $100,000 tax lien attached, the new owner will have to pay it off. "The auction is the most risky way to buy," says Foreclosure.com's Mr. Geisen. "We don't recommend it."

Foreclosed Deals

If no one shows up on the courthouse steps or there are no bids high enough to cover the outstanding loan, the bank will take ownership of the property and put it up for sale. This is the easiest way to buy foreclosed properties, but you are also least likely to get a discount, as the bank will typically put houses up for sale at or close to market value.

Bank-owned properties, also known as REO or "real estate owned" properties, are usually sold through real-estate brokers. To find an REO broker in your area, try REONetwork.com

Government Homes

When homes that were bought with loans guaranteed by the Federal Housing Administration or Department of Veterans Affairs go into foreclosure, they're put up for sale by the government itself. The listings at www.homesales.gov/homesales/mainAction.do are free and updated every Friday, but you can only bid through a government-registered broker.

For the first 45 days, a listing is available only for homeowner occupancy, which means you don't have competition from seasoned foreclosure investors, explains Dick Esposito, owner of ADR Properties in Maryland, who specializes in buying and flipping HUD foreclosures. "You get the first chance at all the good properties as a homeowner," he says.
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The seller as suitor

How do I lure thee? With toys and flowers, maybe even a fake family.
By: Ann Brenoff: Los Angeles Times
TRUTH is, much of the joy was sucked out of the home-buying process over the last few years. Buyers, faced with a scarcity of choices, were pressured to act faster than their comfort-zone speed limits and urged to make offers that often stretched the boundaries of common sense.

But did sellers really think they would ride the crest of the wave forever?

Welcome to real estate's Brave New World, where buyers rule and sellers drool every time someone actually shows up at an open house.

With more listings to choose from and less frenzied competition comes a sea change in how real estate is being marketed. To the chorus of "hallelujah," we have seen the end of some of real estate's ickier marketing practices; then again, others appear poised to take their place.

Under the category of goodbye and good riddance: playground-like pleas of "Pick me! Pick me!" from buyers desperate to find something, anything. Buyers promising to love, honor and faithfully water the seller's cherished rose garden if only they could own it. Impassioned letters from Mr. and Mrs. Desperate (with a photo of their adorable son enclosed) begging to buy your house so little Johnny can live up the street from his best friend.

Perhaps we are also rid of those mysterious spurts of sudden interest in the house you just looked at — the one that had sat on the market forlornly for months. And with it those frantic calls from your agent urging you to make an offer that very minute because five other families suddenly had a simultaneous epiphany and were ready to go full price, plus some. Now, it is safe to say, no one will be advising you to write up an offer on the hood of your car, just so you can be first.

Down but not out are those cold calls at dinner time from agents claiming to have a client ready to buy if only you were ready to sell. Or variations on that theme: a sister-in-law who wants to live on the block, a friend who has been admiring your home from afar, a client who is flying in for the weekend and wants to see your place — even though it's not for sale.

There is, of course, no reason to believe that the heights (make that depths) buyers and their agents reached in the last few years won't now be rivaled by the strategies of sellers and those who represent them.

Those incessant mailings from real estate agents trying to drum up business aren't going anywhere soon, they've just set their sights on a new target: buyers. So far, the "best-of-show" missive in our icky file is one that went out recently in Santa Monica. It asked seductively, "Do you know what your neighbor at [address here] did last night?" Well, the neighbor listed his condo, and the agent was fishing among local homeowners to see whether they knew someone in the market to buy. Nobody ever said sex doesn't sell.

In fact, says Ely Dahan, assistant marketing professor at UCLA, all that has really changed is that marketing is now plucking at the heartstrings of buyers, rather than the emotions of sellers.

In this climate, where bidding wars are a distant memory, Dahan says, owners will have to sell more than just their homes: They will have to sell a way of life.

Buyers will have to be convinced they are signing on for romance, family harmony and/or a life filled with interesting friends who come over to be entertained. The house needs to convince buyers that all that is standing between them and holding A-list parties is the absence of an outdoor Viking kitchen.

Home stagers, Dahan says, should do a booming business in this market — but not those who just rearrange the furniture. Nothing that simple will make a home jump out of the chorus line.

"The smell of freshly baked cookies in the oven, the dining room table set with fine linens and china, fresh-cut flowers" will all be de rigueur, he says, along with de-cluttering, removing personal items and repairing anything that's broken.

"Lifestyle, think lifestyle," Dahan says.

To that end, a home stager may set up a bistro table in the garden with Champagne chilling in a bucket or pipe in music to set the scene. When it comes time for showings, there will be scented candles burning in the bedroom, a fire going in the fireplace. Those hoping to sell to a family may be advised to install a swing set in the backyard — even if the homeowner's own kids are grown and gone.

"It's all about appealing to the emotions of buyers, subtly suggesting things to help them envision themselves living in this house," Dahan says.

New-home developers aren't immune to the shifting tide. They are also pulling out the stops to suggest a lifestyle to prospective buyers.

Pushing the needle on the can't-you-just-imagine-yourself-living-here Richter scale is Centex Homes. For its Santa Clarita Milestone development, the builder hired actors to play house while prospective buyers toured the model home. The mom and dad, son and daughter celebrated a birthday with a party and interacted with one another, demonstrating what a wonderful life onlookers could have — if they just bought this house. Each actor wore a name tag identifying his or her role: "Hello, my name is Dad."

The program, dubbed "HomeLife," has already expanded to Centex's Westerly at Riverpark master-planned neighborhood in Oxnard.

"I think it's both entertaining and beneficial," says Amanda Larson, marketing director for Centex. One prospective buyer touring the model told Larson that she had about 30 people in her extended family and that she wouldn't have realized how large the home was if she hadn't seen so many people gathered around the "family's birthday cake."

And at least one builder is counting on the power of a nagging child. Pulte Homes, a national builder with Los Angeles-area developments, doesn't skimp when it decorates the kids' rooms in its models. The builder outfits the rooms with whatever movie character or fad is currently in vogue so that children will remember them, says Deborah Blake, a vice president of marketing for Pulte.

This thinking extends to common areas too. In one of its Arizona multi-generational projects, Pulte Homes installed a kid-size railroad, a water park with a "fun dunker" that dumps 300 gallons of water from a two-story-high bucket, an in-line skating rink and skateboard parks. Pulte also made sure these amenities were the first things buyers saw when they drove into the development.

Blake says that about 18 months ago, Pulte redesigned its sales offices, looking for ways to keep children occupied while parents had "more serious conversations" with sales agents. The builder installed big toy boxes and, in its multi-agent offices, there's now a separate toy-filled room with a nanny cam. The kids can watch videos using headsets, and Mom and Dad can check the nanny cam periodically for peace of mind.

Pulte also gives out coloring books that include games like "decorate your new room" and "find the path from your old house to your new house."

Suzanne Finne, marketing manager for Pulte Home's Orange County/South Riverside division, says the builder is putting in a "monster play set" in the yard of one model set to open in November.

"We realize that children are part of the discussion," Blake says, "and we want them to talk about what a great place that was on the way home from a model tour."

Bah humbug, says Jim Crawford, a columnist for RealtyTimes.com and a Keller Williams Realtor in the north Atlanta area. Crawford says flat out that gimmicks don't work.

"Having survived other changing markets," he says, "it is the basics that sell the homes…. Giving away Jaguar cars, BMWs, exotic vacations do not work. Proper pricing, determining who is most likely to buy the home and identifying their needs is what's important."

The bottom line remains that a home "speak" to a buyer.

"Homes need to make an emotional statement," says Gary Harryman, a Pritchett-Rapf agent based in Topanga. "It has to hit you as soon as you walk in the door."

He recalls a Topanga property, which, he says, left most would-be buyers swooning. It had four bedrooms and three baths in just 2,700 square feet and sold for $1,650,000. What made it so special?

"Everything about it said 'Old World charm,' " Harryman says. "Everything felt authentic, right down to the smallest detail — the kitchen cabinets, the sconces, the hardware.

"It was a joy to show because of how people reacted to it — they instantly got swept up in its presence."

And presence can be hard to stage.
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Home buyers gain clout in slowing market

Why more home listings are for sale
By: Dian Hymer: Inman News
Home buyers have more clout now than they've had for years. So, they are more discerning, and focus only on the best houses at the best prices. If the seller won't negotiate a satisfactory deal, buyers would rather walk away than overpay.

The incidence of failed transactions appears to be rising. Last year, buyers couldn't buy fast enough. Many paid over asking price, overlooked property defects and bought "as is."

Today's buyers are cautious going into a transaction and less likely to accept full responsibility for correcting defects found on inspections. When a resolution can't be reached on an inspection issue and the buyer decides to search for a better deal, the seller is left with two options: He can either put his property back on the market, or he can wait for a friendlier market.

The second approach is risky if you want or need to sell in the near future. Although the current market won't last forever, it may be some time before we see a market that's better for sellers than it is today.

HOME SELLER TIP: Before letting a deal fall apart, sellers should seriously consider their chances of negotiating a better deal with another buyer. Depending on state disclosure requirements, a seller might be required to disclose the inspection issues to future buyers.

For example, in California, sellers are required to disclose all material facts to prospective buyers. A material fact is one that affects a buyer's decision to buy or the price he'd be willing to pay.

Disclosing newly found defects to a subsequent buyer could affect how much he'd pay for the property. Also, remarketing a property is a hassle, it takes time and it might be no more lucrative than the first deal. In fact, it could be worse.

Putting a property back on the market in a rising inventory environment can be challenging. Rekindling enthusiasm is difficult because most buyers focus their attentions on the new listings coming on the market, not than those that are back on the market.

A listing comes back on the market because something went wrong. If there are plenty of new listings to choose from, there's less incentive to narrow in on a listing that someone else didn't buy, even the listing is back on the market for a reason other than the condition of the property. For instance, a certain number of transactions fail because the buyers were unable to secure financing.

Last year, buyers were less inclined to withdraw from a purchase over inspection issues. The listing inventory was so limited that they were afraid it would be difficult to find something else to buy. According to the National Association of Realtors, inventories nationally now represent a 6-month supply at the current sales pace. This puts inventory levels in balance for the first time in years. By comparison, in April 2005, inventories in California represented a little over a 2-month supply; it gave sellers a decided advantage over buyers.

The primary reason there are more listings back on the market is that some sellers are reluctant to accept that the market has changed. It has often been said that when the market changes, sellers are the last to know. This is understandable. No one likes to hear that a valuable asset is worth less than anticipated.

There are sellers who realize weeks after they let a deal fall apart that they made a mistake. If you find yourself in this situation, consider a price reduction to send a message to prospective buyers that you've changed your stance.

THE CLOSING: Sellers can keep further negotiations over inspection issues to a minimum by providing presale inspections reports and disclosure statements to buyers before they make an offer.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.
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How to get rid of a neighborhood nuisance

Lawsuit should be avoided whenever possible
By: Robert J. Bruss: Inman News
"Do I have to disclose to my buyer the real reason I am selling my house is the obnoxious noisy neighbors?"

That was the e-mail question I received a few days ago. Most states now have home-sale disclosure laws that require sellers to reveal serious problems that have a material affect on the market value or desirability of a residence.

My answer was, "Yes, you must disclose the next door neighbors are noisy." However, you don't have to reveal that is the primary reason for your home sale. I based my answer on the only court case of which I am aware, which said home sellers must disclose especially troublesome neighbors.

That case involved an IBM employee who had been transferred to Seattle. A corporate relocation firm took over the sale of the employee's former residence. The firm was not aware of the very troublesome neighbors and the police had been called many times.

After the buyers moved in, they immediately noticed the obnoxious neighbors and sought a rescission of the home sale. The California Court of Appeal granted rescission and refund of the buyer's money because of the seller's failure to disclose the neighborhood nuisance. The case is Shapiro v. Sutherland (1998) 60 Cal.App.4th 666.

YOUR NUISANCE MIGHT BE ENJOYABLE TO OTHERS. Several years ago, in the town adjacent to where I live, there was a very popular nightclub that featured loud rock music. Hundreds of people came every evening to dance and enjoy the music. But the nearby apartment building neighbors couldn't sleep because of the loud noise.

Although the nightclub was properly licensed, the city attorney received so many citizen complaints that he brought a lawsuit to abate the public nuisance that affected many neighbors. Before trial, a settlement was reached. The nightclub owners agreed to keep the doors and windows closed so the sound could not escape into the neighborhood.

However, that still didn't abate the nuisance from the loud band music. Before the neighbors could bring another lawsuit, the nightclub owners agreed to close their business. Today, there is a superb restaurant at the site and now all the neighbors complain about is the smell of great cooking. But I don't think that is an abateable nuisance.

TWO TYPES OF NUISANCES TO CONSIDER. Legally, there are two types of nuisances that might affect the enjoyment of your home or business property. When a disturbance affects only one or a small number of individuals, that is a private nuisance.

For example, recently I heard about a commercial tenant who leased office space. Sometime later, the landlord leased the adjacent space to a metal stamping plant, which installed heavy equipment to stamp metal. The vibrations drove the adjoining office tenant to vacate because of the "private nuisance" created by the next-door tenant.

The other type of nuisance is a public nuisance, which affects many people. Examples include a rat-infested dump, a noisy airport, a house of prostitution, a "drug house," and a noisy or smelly factory.

1. PRIVATE NUISANCE ABATEMENT IS A PRIVATE MATTER. Most private nuisances, which affect only one or a small number of people, involve neighbors. For example, if your neighbor's dog barks all day while the owner is at work, it is a private nuisance if you are the only person affected. However, if the barking dog disturbs many neighbors, then it is a public nuisance.

The legal remedy to abate a private nuisance, which affects only a few people, is to bring a nuisance abatement lawsuit against the offender. However, before resorting to a lawsuit, which might not be successful, try to politely talk with the offender.

For example, my neighbor's two old trees were leaning precariously toward my house. In the event of a strong windstorm, my house would probably be severely damaged if they fell. However, my neighbor was not aware of the danger. When my neighbors came over to my property and observed the lean of their dying trees, they promptly had them removed. I didn't even have to mention the words private nuisance or abatement lawsuit.

2. PUBLIC NUISANCE ABATEMENT CAN BE COMPLICATED. When a disturbance affects many individuals, that is a public nuisance, which can be very difficult to abate, especially if it has existed a long time.

A public nuisance is usually not "all bad." It often has benefits. Examples include a noisy airport, a smelly factory employing many individuals, an amphitheater providing loud entertainment to thousands, and a shopping center with traffic congestion, which provides employment and tax revenue.

The legal remedy to remove or mitigate a public nuisance is usually (a) an injunction to stop the nuisance activity, (b) a partial abatement court order, (c) a negotiated settlement, and/or (d) payment of monetary damages to allow the nuisance to continue.

The customary legal remedy to remove or abate a public nuisance is for a public official, such as the city or county attorney, to bring a nuisance abatement action against the offender. However, when such an official refuses to act, matters become complicated.

To illustrate, noisy airports are very important to the local economy. The success record abating airport noise has not been good. Because of the economic benefits, elected public officials are usually reluctant to bring public nuisance abatement actions.

WHEN PRIVATE LAWSUITS CAN ABATE PUBLIC NUISANCES. When public officials refuse to abate public nuisances, individuals can take action.

The most famous court decision on this issue is Lew v. Superior Court (25 Cal.Rptr.2d 42). In that case, 75 angry Berkeley, Calif., neighbors of the 36-unit apartment building owned by the Lew family sued to abate an alleged "drug house" that the police had been unable to close. The neighbors were very upset over the shootings and other crimes originating in the apartments.

Each of the 75 neighbors sued the apartment owners for the local Small Claims Court maximum $5,000. The judge ruled in favor of the 75 plaintiffs. The Lews appealed.

But the California Court of Appeal upheld the $218,325 damages against the apartment owners for allowing a public nuisance affecting many neighbors.

POSSIBLE DEFENSES TO A NUISANCE LAWSUIT. Just because a private or public nuisance disturbs you doesn't mean it can be successfully abated.

Possible defenses include (a) the plaintiff moved to the neighborhood knowing about the nuisance and (b) the nuisance was tolerated for many years.

Most courts now rule the statute of limitations is not a defense to a lawsuit to abate a longtime nuisance, and each new occurrence is a separate offence that can be abated.

Additional defenses, usually ineffective, include (a) there was no law violation, (b) there are other public and private nuisances in the neighborhood, and (c) local zoning and ordnances allow the offending activity.

TRY TO SETTLE BEFORE SUING. Because the results of a public or private nuisance abatement lawsuit are extremely difficult to predict, it is best to first attempt to reach a settlement with the offending party. A crafty defense attorney or a sympathetic judge or jury can often result in failure to abate a nuisance.

Plaintiffs in a nuisance abatement lawsuit should therefore be well prepared with evidence such as photos, witness testimony, and scientific evidence such as noise measurements. In other words, because public and private nuisance abatement can be very difficult, a lawsuit should be avoided whenever possible. For full details, please consult a local real state attorney.
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Real estate purchases pull out of 3-week slump

Interest rates plummet in latest MBA survey
Inman News
Overall mortgage applications increased 4.9 percent last week on a seasonally adjusted basis from the week before, fueled by a significant drop in interest rates, the Mortgage Bankers Association reported today.

The seasonally adjusted purchase index increased by 3.4 percent to 388.9 from 376.2 the previous week, and the refinance index increased by 7.1 percent to 1,518.1 from 1,417.2 one week earlier.

The refinance share of mortgage activity increased to 38 percent of total applications from 37 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 27.6 percent of total applications from 27.8 percent the previous week, and is now at its lowest since March 2004.

The average contract interest rate for 30-year fixed-rate mortgages dropped to 6.45 percent from 6.62 percent, with points including the origination fee increasing to 1.01 from 1 for 80 percent loan-to-value ratio loans.

Points, which are fees charged by lenders for loan processing, are expressed as a percent of the total loan amount.

The average contract interest rate for 15-year fixed-rate mortgages fell to 6.1 percent from 6.28 percent, Points including the origination fee increased to 1.09 from 1 for 80 percent loan-to-value ratio loans.

The average contract interest rate for one-year ARMs declined to 5.96 percent from 6.18 percent, with points including the origination fee decreasing to 0.80 from 0.81 for 80 percent loan-to-value ratio loans.

Washington, D.C.-based Mortgage Bankers Association is a national association representing the real estate finance industry. The survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.
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