City Planning Gets Feminine Touch

What do women want? Urban planners are starting to take gender-specific needs into account when revising building codes, zoning rules, and growth plans.
By: Haya El Nasser: REALTOR® Magazine
Urban planners increasingly are taking gender into consideration when they revise building codes, zoning rules, and growth plans, considering that women account for more than 50 percent of the urban population nationwide. Additionally, women account for 60 percent of seniors living in urban locales; and many of them live alone.

The University of Pennsylvania recently held a forum where planners, health officials, researchers, and lawmakers to discuss gender-specific needs in growth planning.

For example, women who want to leave their homes to exercise sometimes find sidewalks that are in disrepair and high crime rates that pose a challenge. Many women also report difficulty in navigating stairs with groceries and, if they have small children, strollers.

In response, planners are considering sidewalk repairs, longer pedestrian crosswalk signals, and homes without stairs. Safe walking and biking trails, as well as enhanced security near public transportation, also have been deemed important.
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How Green Remodeling Pays Off

Find out six ways home owners can make their homes more green-friendly to lower utility bills and attract buyers.
By: Susan Thurston: REALTOR® Magazine
Green remodeling can pay off — not only in lowered utility bills, but also in buyer appeal when the property is sold.

Here are some green things to consider.

    • Site selection. Prefer infill development instead of a new subdivision in a
      far-flung new suburb that gobbles wetlands and displaces animals.
    • Energy-efficient products. Choose Energy Star appliances, double-paned
      windows, low-flush toilets, and compact fluorescent light bulbs.
    • Spray foam insulation. Seal the home with insulation that doesn’t let the heat
      or cooled air leak out.
    • Sustainable wood flooring. Select flooring certified by Forest Stewardship
      Council, which protects forests by managing the amount of wood harvested
      annually.
    • Locally made products. Buy products made less than 250 miles away to reduce
      transportation costs. Granite, for instance, is generally imported from afar.
    • Nontoxic paint. Use paint that is low in volatile organic compounds (VOCs) —
      chemicals that evaporate into the atmosphere. Look for Green Seal certified
      brands.

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Why Buying Now Can Be a Smart Move

Although much of the housing market is in a slump, this is still a good time for most to buy a home.
RISMEDIA
Even though many economists are predicting further drops in home values in most areas, today is still an excellent time for most of us to buy a home. The direction of area home values won’t make much difference to homeowners who will both buy and sell in the same area, and other important factors very much favor buying a home now.

Most move up buyers buy their next home in the same area. Whether overall home values in that area are going down, up, or holding their own, other homes in the area will be similarly impacted. Current local home values and any future changes in those home values, whether negative or positive, will therefore have the same effect on a home they might buy as they will have on their current home when they sell it. For that reason the direction of housing values in any given area is of small consequence relative to other factors for those homeowners, who should not let declining values get in the way of buying their next home.

If you are a prospective first time buyer in one of the few appreciating markets, buying sooner rather than later certainly makes sense. Similarly, if you live in an area where home values are falling and plan to relocate to another area where prices are rising, that is a good reason to buy and sell (or sell and buy) as soon as you can, before the gap widens further.

Holding off on a home purchase due to current market conditions may make sense in some cases only for a much smaller group - prospective first time buyers who live in an area where further home price declines are likely. The same is true for those living in the relatively few areas where homes are appreciating and who plan to relocate to other parts of the country where home prices are still falling. Unfortunately some homeowners now owe more money on their mortgage than their home is worth because of dropping home values. They may be unable to afford to sell at this time regardless of local market conditions unless they have sufficient savings to make up the difference.

There are several reasons that today is a particularly good time to buy a home for most of us. The selection is as great as it will ever be, mortgage rates are still relatively low by historical standards, and costs of any desired remodeling/upgrades are a lot less because of the downturn in new home construction and the resulting glut of building supplies.

With inventories of homes for sale at all time highs in many places, there’s a much greater chance that you’ll be able to find a home that’s ideally suited for your needs. That’s a very big plus because homeowners spend an average of nearly a decade in their home before they sell it. The shortage of inventory and high home prices that existed up until 2005 forced many buyers to make many compromises on home features at that time. No doubt many of them wish that some of the nicer homes for sale in their neighborhood today had been available at that time. Today’s home buyers will have to make far fewer, if any compromises, and many will be able to pay less for a home that’s much better suited to their needs.

If today’s home buyers decide to make some upgrades and improvements to their next home they can usually do it for substantially less than it would have cost several years ago. The rate of new home construction has dropped precipitously, and prices of many building materials have dropped substantially as a result. Prices for oriented strand board, which is used for exterior wall sheathing, roof sheathing and subfloors, is down 40% from late 2005, according to the National Association of Home Builders. Lumber used for framing floor and roof joints retreated 24%, in cost according to NAHB. Drywall prices are down 35% from late last year, according to United States Gypsum Company.

Construction labor costs are down as well, as many home builders have decided to become remodeling contractors until the market for new homes improves. The remodeling market has also slowed down somewhat. With many home builders recently reinventing themselves as remodeling contractors, price competition in that market is very intense today. Only a few years ago you were lucky if half the contractors returned your call, and a few actually showed up and subsequently gave you a proposal. That has changed dramatically.

“When we remodeled our kitchen and bathrooms several months ago every contractor we called showed up, and their bids were very competitive,” said American Homeowners Foundation President Bruce Hahn. “Many of them were ready to start immediately, and none of them balked when we told them we wanted them to sign a comprehensive contract specifying all of the details of the project,” he added. (Note: Judging from the continuing number of complaints regarding remodeling contractors, the competition has yet to drive incompetent and/or dishonest contractors out of the business.

Lastly, mortgage rates are still competitive by historical standards. Although lenders have become more particular about who they will lend to, and the gap between mortgage interest rates for those with excellent credit and those with marginal credit histories has widened, mortgages with 30 year fixed rates are still affordable for a majority of home buyers. If you are looking down the reset barrel of an adjustable rate mortgage on your current home, you will also be able to resolve that problem and avoid the higher mortgage reset interest rate with a fixed rate loan on your next home.

The bottom line: Trying to employ market timing in real estate entails many of the same risks as attempting market timing in the stock market, as many real estate flippers who flocked to the market in the middle of this decade learned the hard way. Despite all the current doom and gloom in the housing market, it’s still a great time for most of us to buy a home!

Courtesy of the American Homeowners Foundation and the American Homeowners Grassroots Alliance, www.AmericanHomeowners.org “
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Four Reasons the Holidays are a Prime Time to Sell a Home

Serious home buyers are always ready to make a purchase when they find the right home at a good price.
RISMEDIA
That’s why the holiday season is just as a good a time as any to sell a home-in fact, it can be a great time.

“Timing is everything when it comes to selling a home,” said Diane Turton, broker of record at Diane Turton, Realtors. “We explain to our customers that the process is simple - the right home buyer comes along, sees your house, says ‘I love the home’ and makes an immediate offer.”

Home sellers need to seize the opportunity by preparing their home, so that it is ready to show a buyer at anytime. Here are four good reasons to either put a home on the market right now during the holiday or keep it on the market if it already is listed with a real estate firm.

1. Homes look their best during the holidays - Right now, many homes look more inviting than at any other time of the year. Holiday decorations and the clean look of homes, without clutter, make properties look more inviting inside and out. Live evergreens and scents of the season remind buyers of the warmth they are looking for in their new home.

2. Less competition - Most home sellers believe the holidays are too distracting to sell or buy or home so they take their house off the market. Less competition, in fact, makes it a good idea to do just the opposite because your home is more likely to be seen.

3. More serious buyers - Buyers shopping for a new home at this time of year are ready to act, and these are the kinds of buyers a seller truly wants to attract. Like everyone else, homebuyers have a long list of things to do during the holidays. If they are making time to visit homes in December and early January, it is quite clear they are ready to make an offer.

4. Strong connection between home and holidays - There’s no better time for buyers to see themselves in a new home. It’s the holidays and for many homebuyers the season inspires images of friends, family and home. According to Turton, the reality is that people buy homes in December and even during the week between Christmas and New Year’s Day.
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Fed to Unveil Mortgage Protection Plan

The Fed is expected today to propose new subprime mortgage lending rules, including one that could prevent lenders from penalizing borrowers who pay their loans off early.
By: Jeannine Aversa: REALTOR® Magazine Online
The Federal Reserve is introducing its new mortgage protection plan today to help bailout struggling borrowers.

The rules it’s proposing are particularly aimed at protecting those who might find subprime loans their only alternative because of low income or poor credit.

The Fed proposes these regulations:

    • Barring or restricting lenders from penalizing subprime borrowers who pay
      their loans off early.

    • Forcing lenders to make sure that borrowers, especially subprime ones, set
      aside money to pay for taxes and insurance.

    • Barring or limiting loans that do not require proof of a borrower's income.

    • Setting new standards for how lenders determine a borrower's ability to repay
      a home loan.

The plan, if ultimately adopted, offers Federal Reserve Chairman Ben Bernanke, who took over the helm in February 2006, an important opportunity to put his imprint on the Fed's regulatory powers.
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Senate Passes FHA Reform Bill

The U.S. Senate voted Friday to approve a bill that would give borrowers a safer alternative to riskier mortgage products and provide some relief to home owners facing foreclosure.
REALTOR® Magazine Online
The FHA Modernization Act of 2007, passed Friday by the U.S. Senate, would give borrowers a safer alternative to riskier mortgage products while also helping many home owners who may be facing foreclosure, according to the NATIONAL ASSOCIATION OF REALTORS®.

“A reformed FHA is positioned to help home owners who face unaffordable mortgage payments as a result of resetting adjustable subprime loans and help bring stability to local markets and economies,” says NAR President Richard (Dick) Gaylord.

NAR has long supported FHA modernization legislation that would increase loan limits, reduce or eliminate the statutory 3 percent minimum cash down payment, and give FHA increased flexibility and the ability to streamline certain programs, in addition to strengthening the loss mitigation program.

In addition, the increase in FHA mortgage loan limits would help first-time home buyers, minority buyers, and people who do not qualify for conventional mortgages, according to NAR. Increased loan limits would also help people living in high-cost areas; current FHA limits make the program unusable in these areas, Gaylord says.

Gaylord says that FHA has made mortgage insurance widely available to individuals regardless of race, ethnicity or social status during periods of prosperity and economic depression. The FHA program makes it possible for higher risk yet creditworthy borrowers to obtain prime financing.

The House had passed its own FHA bill Sept. 18. House leaders now will have to decide whether to clear the more limited Senate legislation or insist on a conference to reconcile the competing versions.
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Agents want a little loyalty

Some agents say the free rides are over. They're embracing the idea of a buyer's pledge of allegiance.
By: Ann Brenoff: Los Angeles Times
VETERAN home sellers usually don't flinch when a realty agent pushes a sheath of papers in front of them to sign when they list their houses. The agent, after all, will be bearing the upfront expense of advertising, printing up mailers, holding open houses and arranging showings - and who would do all that without a signed listing contract guaranteeing a commission if they sell the house?

But what about buyers? They get a free ride.

Buyers can drop in unannounced to virtually any realty office, and an agent working that day will drive them around, showing them what's for sale. There's nothing to stop those buyers from turning around and making an offer on one of those houses through, say, their sister-in-law who just got her real estate license. The agent who spent half a day with them likely won't get so much as a thank-you note.

That, gradually, is changing.

Twenty-one years ago, John Rygiol, owner of Seal Beach-based John J. Rygiol & Associates, turned the tables: He stopped representing sellers altogether and began asking would-be buyers to sign loyalty agreements, documents stating that in exchange for his time and services in finding them a home, they will make all offers through him or pay him a commission anyway. Today, 10% of California Assn. of Realtors members use buyer loyalty contracts.

The effect on buyers is twofold: They are represented by an agent who won't try to steer them toward his or her listings, and they've signed a contract wedding them to one agent for a fixed period of time.

Agents with listings have a financial incentive to push those listings, Rygiol says. If the client buys a home the agent has listed, the agent would pocket the full commission.

"I have no listings. I'll show you everything that is out there and I will only be working with you," Rygiol said. His business now has six offices and eight agents in Southern California. Statewide, there are 17 exclusive buyer brokerages and 54 exclusive buyer's agents.

California has a strong dual-agency disclosure policy, which requires agents to tell their buyer clients if they or another agent in the same firm represent the seller. The problem is, it is often disclosed only at the point when a buyer is making a written offer.

Rygiol client Ed Novitsky, a first-time home buyer, likes knowing that "John just works for me." Novitsky, his wife and daughter, 2, are renting in Torrance while looking for a home to buy in the South Bay. He is shopping in the mid-$600,000s range.

Novitsky, who calls himself a skeptic, may seem an unlikely type to sign a loyalty agreement. He said he is someone who needed to understand the home-buying and financing process himself and was unwilling to blindly trust someone else to protect his interests in what he called "the biggest purchase" of his life.

He personally called about 15 mortgage lenders directly and got pre-qualified. He then interviewed about a dozen realty agents and, frankly, he recalled, wasn't always impressed.

But when he came upon Rygiol, the idea of having an exclusive buyer's agent "just made sense." "When I called John, right away I liked what he said to me: 'Let's meet and see if we think we can work together.' "

He wasn't bothered by Rygiol's request that he sign an exclusive six-month contract. "It's fair," Novitsky said. "If he puts in the time and does his job, why wouldn't he be entitled to compensation?"

Novitsky is part of a small but growing minority in this regard. For many California buyers, the idea of being asked to sign a loyalty agreement before an agent opens his car door is a novel concept.

Buyer loyalty contracts are commonplace in other states - and are most prevalent along the East Coast and in the Midwest - but Colleen Badagliacco, president of the California Assn. of Realtors, acknowledges they haven't caught on as widely in the Golden State. CAR offers its members sample contracts, and Badagliacco encourages their use. The contract that Rygiol uses states that if the buyer winds up making an offer within six months on a house that he showed them (not just drove by but toured the interior), he is entitled to the commission.

Most contracts are for a fixed period of time - a weekend if an out-of-state buyer is coming in to look or two weeks if it's someone local. But the obligation to pay the agent a commission extends for six months if the home being bought is one seen during the initial showing period.

In other states, exclusive buyer agents may take it one step further: Before they agree to spend their weekends driving buyers around, they not only want it in writing that the buyers will make their offer through them, but they also charge a retainer of $250 to $500. In almost all cases, the retainer is deducted from an eventual commission when and if a deal is finalized, but even if it isn't, the agent keeps the fee.

Buyer's agents in California don't charge a retainer (or advance fee, as the state Department of Real Estate calls it) because of the stringent and cumbersome rules governing how this money must be handled. CAR guidelines also discourage it. Many agents mistakenly believe the practice is illegal; although it isn't, failure to comply with the state regulations can carry criminal penalties.

To some extent, said Paul L. Campbell of Dream Drafters Real Estate in Everett, Wash., the retainer is proof of sincerity and a measure of a buyer's seriousness. He charges a $250 retainer, refundable at closing.

And there appears to be wiggle room. In some cases, repeat clients aren't charged a retainer nor are the buyers whom those clients recommend. If a buyer is unhappy, some agents say they just cut him or her loose.

But, for Rygiol anyway, "it's never come to that."
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Fed Cuts Key Rate a Quarter Point to 4.25 Percent

Federal funds and prime rates are now at their lowest levels in nearly two years.
By: Jeannine Aversa: REALTOR® Magazine Online
The Federal Reserve dropped the federal funds rate by one-quarter point Tuesday to 4.25 percent. The rate reduction is the third this year.

The Fed also lowered its lending rates to banks by one-quarter-percentage point to 4.75 percent. That was the fourth cut to the discount rate since mid-August.

Both the funds rate and the prime rate are now at their lowest levels in nearly two years. The Fed hopes the cuts will stimulate economic growth, but Wall Street investors had hoped for more and the market responded by falling 300 points on Tuesday.

"Economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks," the Fed said in a statement explaining its decision to cut rates again.
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Report: lenders agree to five-year freeze on ARM loans

Official announcement expected Thursday
Inman News
A coalition of lenders, loan servicers and investors have reportedly agreed to a plan that would freeze interest rates on some subprime mortgage loans for five years.

Borrowers with loans made between Jan. 1, 2005, through July 30 of this year who face interest rate resets between Jan. 1, 2008, and July 31, 2010, would be eligible for interest rate freeze, the Associated Press reported, citing unnamed sources including Congressional aides.

An official announcement of the plan's details is scheduled for Thursday, AP reported.

Treasury Secretary Henry Paulson said Monday the plan would help homeowners who are current on their payments but cannot afford a higher adjusted rate (see Inman News story).

Debate over the plan has centered around the length of any interest rate freeze, AP reported, with federal regulators pushing for a seven-year freeze, and the industry holding out for a one- to two-year reprieve.
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Bill Would Help Home Owners at Brink of Foreclosure

U.S. Sen. Dick Durbin (D-Ill.) is pushing for a bill that would allow bankruptcy judges to change the terms of a mortgage for owners at risk of losing their home.
By: Dennis Conrad: REALTOR® Magazine Online
U.S. Sen. Dick Durbin (D-Ill.) is pushing for a bill that would allow bankruptcy judges to change the terms of a mortgage on the primary residence of owners at risk of foreclosure or bankruptcy.

Judges would be able to lower an adjustable interest rate to a lower, fixed rate. They already have the power to do this for car loans and a number of other debts.

Durbin says his bill could help an estimated 600,000 families at risk of losing their homes because of rising adjustable mortgage rates.

"A strategic change in the bankruptcy code will provide home owners facing foreclosure a degree of financial stability – even when the market cannot," Durbin said.

Supporters of Durbin's bill include senior citizens, bankruptcy attorneys, the AFL-CIO, and the NAACP. The American Bankers Association and home builders are among opponents.

Floyd Stoner, a leading lobbyist for bankers, says bankruptcy judges lack expertise to predetermine a loan's size, value, and length.
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Rate Freeze Proposal to Offer Borrower Bailout

The Bush administration and banking industry are nearing an agreement on a proposal that would temporarily lock in the teaser rates of subprime borrowers at risk for default.
By: Robert Schroeder: REALTOR® Magazine Online
The Bush administration, mortgage service companies, and investors are nearing an agreement on a strategy to help offer relief to borrowers with subprime mortgages, says Treasury Secretary Henry Paulson.

Speaking at a housing conference organized by the Office of Thrift Supervision, Paulson said he wanted to “develop a set of standards” for modifying subprime loans that the industry could use to speed up decisions on the hundreds of thousands of borrowers at risk of losing their homes. The proposal, he says, would temporarily freeze the teaser rates for certain qualified borrowers.

In an interview late Monday on Bloomberg TV, Paulson said that the downturn in the housing market is "the biggest challenge to our economy," but the Treasury's plan to help out subprime borrowers doesn't include spending taxpayer money on funding or subsidies for either the industry or home owners.

Supporters of a congressional mortgage reform bill criticized the Bush administration’s plan, saying it will remove the incentive to enact their bill, which would provide lasting reform.

Meanwhile, earlier Monday, Boston Fed Bank President Eric Rosengren said research at the Boston Fed suggests that the foreclosure crisis in subprime mortgages will get worse before it gets better.

He urged community banks and states to focus on the 87 percent of subprime loans that are not seriously delinquent and where action may avoid future problems.
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