Seniors flock online to find homes, survey says

Nearly half use Web in buying process
Inman News
Nearly half of all seniors use the Internet as part of the home-buying process, and most senior home buyers stay in their home state, according to a research report from the Senior Advantage Real Estate Council released today.

The "Moving Forward: 50 and Beyond" survey, conducted in September 2005, explores the buying trends of U.S. consumers 50 or more years of age who purchased a home within the last six months.

The survey discovered key differences in behaviors between "younger" seniors, those 50 to 64 years of age, and "older" seniors, those 65 or more years of age.

According to the study, nearly two-thirds (61 percent) of home buyers utilizing the Internet did so to locate a specific Realtor, 92 percent utilized the Internet to research comparable prices, and 19 percent went online to learn about specific neighborhoods.

"While the prospect of retirement is an exciting time for most seniors, many have not planned for the economic issues that arise as a result," said Dr. Nathan Booth, senior advisor to the council.

"For seniors choosing to remain in the workforce, or even retire early, help is needed in finding the best and most prudent use of the resources available to them in real estate. It has become increasingly important to understand the changing and emerging buying and selling habits of senior homeowners," Booth said.

The survey also revealed that not only did most senior home buyers stay within their home state (82 percent), they moved less than 100 miles from their previous home. Younger seniors tended to move farther away from their previous residences than did older seniors, according to the survey.

Of those senior home buyers who did move to a new state (18 percent), the most popular choices were: Florida, 26 percent; Texas, 11 percent; Arizona, 8 percent; Nevada, 7 percent; and Virginia, 6 percent.

The council is the organization that confers the Seniors Real Estate Specialist designation upon Realtors nationwide. The organization said its mission is to assist Realtors in meeting the unique real estate needs and concerns of maturing Americans.
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C.A.R.'s Housing Market Forecast for 2006

Moderate price increase, slight cooling in home sales next year.
C.A.R. California Association of REALTORS®
The rate of home price appreciation will moderate next year following four years of steep increases, while sales in 2006 will decline slightly from this year's record pace, according to the California Association of REALTORS® (C.A.R.) "2006 Housing Market Forecast" released today. The forecast was presented during the C.A.R. Centennial REALTOR® EXPO (http://www.realtorexpo.org), running from Sept. 20 - 22 at the San Diego Convention Center.

The median home price in California will increase 10 percent to $575,500 in 2006 compared with a projected median of $523,150 this year, while sales for 2006 are projected to reach 630,610 units, falling 2 percent compared with 2005. The double-digit gain in the median price of a home, which California has experienced for most of the past five years, will again be fueled by the continuing shortage of housing across much of the state, according to C.A.R. economists. California typically gains nearly 250,000 new households, yet only will build about 200,000 new housing units this year, creating a shortfall of about 50,000 units.

"Weexpect the fixed mortgage interest rate to rise to 6.4 percent next year, and the adjustable rate to hit 5.1 percent, which will make it more difficult for many families in California to be able to afford a home," said C.A.R. President Jim Hamilton. "While still near their historic lows, up-ticks in interest rates coupled with the continued increase in the median home price will push affordability in California to a new all-time annual low of 15 percent next year.”

"The economic fundamentals at both the state and national level continue to support a strong housing market in the Golden State for the foreseeable future,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “However, we also expect that the wave of new loan products that have flooded the market over the past several years have injected a higher level of risk into the market, while affordability barriers to homeownership will continue to push residents inland and even out of state.

“Declining affordability will constrain sales in 2006 at a greater rate than we’ve previously experienced, especially in markets where there are higher price points compared with the state as a whole,” she said. “Not all areas of the state will continue to experience the unprecedented double-digit median price increases of the past five years. Some high-cost areas, especially those in the more costly coastal regions, face a potential leveling off of median price gains compared with the 10 percent gain we expect for the state as a whole.”

Home sales for California in 2005 are expected to reach a record 643,480 units, surpassing the prior sales record of 624,740 set in 2004, according to C.A.R. economists.

Leading the Way...® in California real estate for 100 years,the California Association of REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 180,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
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Housing Market Shows Further Signs of Cooling

U.S. home sales seem to be slowing.
By: James R. Hagerty and Ruth Simon: The Wall Street Journal Online
Rising mortgage rates, higher energy costs, fear of a housing bubble and a surge in the number of houses for sale are among the factors.

The pace of U.S. home sales is showing further signs of slowing, amid a widening gap between sellers' asking prices and the amount skittish buyers are prepared to offer, according to an industry survey, real-estate brokerage firms and housing economists.

Rising mortgage rates, higher energy costs, widespread talk about the risk of a "bubble" in housing and a surge in the number of homes on the market are among the factors behind the apparent slowdown. They have combined to make home shoppers more cautious, economists and real-estate brokers say. Buyers are taking their time to look for bargains, while many sellers have put unrealistically high price tags on their homes. That leads to a standoff, causing the number of sales to drop -- a classic ending to a period of unusually rapid house-price increases.

In a survey conducted last week, real-estate consulting firm Real Trends found that the number of home-purchase contracts signed last month dropped 8% from a year earlier at 48 of the nation's large real-estate brokerage firms. Those brokers responded to an email poll sent to 80 brokerage firms.

To be sure, home sales remain strong by historical standards, and prices in most of the country are at or near records. But even some of the biggest boosters of housing agree that the market has finally moved out of the boom phase that has raised prices nationwide an average of more than 50% in the past five years and more than doubled home values in many cities. "The air is coming out of the balloons," says David Lereah, chief economist at the National Association of Realtors, the nation's leading real-estate trade group.

The $2 trillion housing market has been the primary driver of consumer spending in recent years and accounts for about one-third of households' net worth. There hasn't been a sustained drop in housing prices in any major part of the U.S. in a decade or more, and housing has become a vital barometer for the financial, retail and homebuilding industries.

"The [house-buying] frenzy is over," says Steve Murray, president of Real Trends, Littleton, Colo. Mr. Murray says it may take six to eight months before sellers accept that the market has softened and reduce their asking prices. He said some of the brokers surveyed were surprised at how rapidly the market seemed to be cooling in recent weeks.

"We believe the market has peaked," says Doug Duncan, chief economist of the Mortgage Bankers Association. Because of brisk sales earlier this year, he expects sales of new and previously occupied homes to reach a record 8.3 million in 2005, up 4% from 2004. But he believes sales will decline 3.5% next year, ending a four-year streak of record-setting totals.

A cooling of the market is likely to be welcomed by the Federal Reserve, which has worried that home prices have become frothy and banks' mortgage underwriting standards have slipped. For the past few years, fast-rising home prices have allowed people to borrow more against their home equity, fueling a spending boom. Last month, Fed governor Donald Kohn, citing "some indications that housing markets are cooling off," said this would force consumers, who are not saving any of their current income, to save more to build wealth, restoring balance to the U.S. economy.

A slowdown in home-price appreciation would probably restrain economic growth, and perhaps encourage the Fed to stop raising interest rates. However, absent a significant decline in prices, the Fed would be unlikely to cut rates to cushion housing. Ben Bernanke, chairman of President Bush's Council of Economic Advisers and nominee to succeed Fed Chairman Alan Greenspan in February, said last month that "a moderate cooling in the housing market, should one occur, would not be inconsistent with the economy continuing to grow at or near" its long-term trend next year.

Mr. Lereah of the National Association of Realtors still expects the housing market to have a soft landing. He predicts that median home prices will rise about 5% in 2006 after leaping 12% this year. In September, the national median stood at $212,000, according to the Realtors.

Others fear that the slowdown will be more painful, particularly in areas where prices have soared the most. In a report issued earlier this month, analysts at the New York office of Swiss bank UBS AG said the current upswing in home prices has now matched the unusual surge seen in the aftermath of World War II. Because price increases have been unusually swift and prolonged, the report said, "the odds of a soft landing seem smaller than if the cycle had peaked earlier."

In Westchester County, N.Y., just north of New York City, Greg Rand, managing partner of Prudential Rand Realty in White Plains, says he expects prices to fall by around 3% next year.

David P. D'Ausilio, operating partner of Keller Williams CT Realty in Monroe, Conn., points to a 14% rise from a year earlier in the number of homes put on the market in Fairfield County, Conn., also near New York, in the first 10 months of 2005. "There's a newfound sense of urgency among sellers to get out while the getting is good," Mr. D'Ausilio says. He expects prices to fall 5% to 10% in his area over the next 12 months.

Maxine Golden of Re/Max Real Estate Services in Newport Beach, Calif., says that in contrast to this spring buyers are shying away from bidding wars. "They don't want to get involved if someone else is interested," she says. "They are taking a wait-and-see attitude even if it's something they want. They think there will be other things on the market."

The survey by Real Trends found that last month's decline in home-purchase contracts was particularly sharp in the West Coast region, down 14%. It found declines of 7% in the Northeast and 8% in the Mid-Atlantic states, while the Southeast was down just 1.5% and the Southwest showed a 1% increase. Though the survey is far from definitive, the trend is clear, Mr. Murray says, particularly because the brokers polled have large local market shares.

A more comprehensive look at the market is due Dec. 6, when the National Association of Realtors plans to release its monthly index of pending home sales. The NAR reported earlier this month that the index based on contracts signed in September was up 3.3% from a year earlier. Sales are considered pending when a contract has been signed but the transaction isn't yet complete.

"There is a definite change" in supply and demand, says Jacelyn Botti, a senior vice president at Weichert Realtors, a big chain based in Morris Plains, N.J. Along much of the East Coast, she says, inventories of homes available for sale have bloated to a supply sufficient to last five to eight months at current sales rates, compared with three or four months a year ago.

With sales slowing, condominium developers in San Diego are appealing to buyers with an array of incentives, says Robert Griswold, owner of Griswold Real Estate Management. "The market has definitely turned," says Mr. Griswold, noting that fliers offering condo buyers a car were being handed out at a recent Rolling Stones concert. "When you see that kind of advertising and promotion, they are clearly getting desperate."

While many sellers of single-family homes are stubborn in resisting price cuts, some are starting to compromise. Ken Baris, president of Jordan Baris Inc., a real-estate brokerage in West Orange, N.J., says he received an email on Friday from a client suggesting that the firm reduce the price on his five-bedroom home to $829,900 from $849,900. The house has been sitting on the market for 90 days. "It was an unsolicited price adjustment," says Mr. Baris. "I haven't seen that in a very long time."

Until recently, unusually low interest rates and flexible lending standards were helping Americans keep paying more for houses, despite slow growth in personal income. But that's changing. The average rate on a 30-year fixed-rate mortgage is about 6.5%, the highest level in more than two years, according to HSH Associates in Pompton Plains, N.J. That's up from about 5.2% in June 2003, which was the lowest in more than four decades.

The cost of adjustable-rate mortgages also has been rising, and some lenders have become more reluctant to grant loans that allow borrowers to minimize payments in the early years. The rising cost of credit makes it hard for people who already were stretched to buy homes. Mr. Duncan of the Mortgage Bankers expects mortgage rates to continue rising, reaching about 6.75% for a 30-year fixed-rate loan by the end of next year.

- Greg Ip contributed to this article.

Email your comments to rjeditor@dowjones.com.
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Financing the Luxury Purchase

By: Jennifer Martin: REALTOR® Magazine Online
There are several financing tools available to wealthy homebuyers, including interest-only loans that free up cash for their businesses or other investments.

They also can take advantage of ladder financing, which allows borrowers to obtain a variety of different loans tied to a certain amount of principal. For example, buyers of a $1 million property might link $600,000 of the principal to a one-year interest rate based on the London Interbank Offered Rate and the remaining $400,000 to a five-year fixed interest rate.

Luxury-home buyers additionally can pledge their stocks, bonds, CDs, mutual funds, and other assets as the downpayment, preventing them from having to liquidate and pay capital-gains taxes.

Finally, affluent borrowers can obtain option adjustable-rate mortgages, which benefit those who are self-employed or simply need the flexibility to choose the payment amount that best meets their needs on a month-to-month basis.
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Housing group to present study on real estate affordability

Study focuses on 20 large municipalities
Inman News
A coalition of organizations interested in housing issues has completed a survey on affordable home-ownership programs across the country and will present its findings Monday.

The Homeownership Alliance, a coalition of about 15 organizations, announced this week that the survey reveals effective practices that cities have enlisted to increase housing affordability. The survey, "Affordable Homes: Best Practices for America," focuses on the largest 20 municipalities in the country. Among the municipalities with programs highlighted in the report: Atlanta, Baltimore, Chicago, Minneapolis, New York, Philadelphia, Phoenix, Pittsburgh, Riverside (Calif.), San Diego, Seattle, and Washington, D.C.

Members of the alliance include: Consumer Federation of America, The Council of Insurance Agents & Brokers, The Enterprise Foundation, Fannie Mae, Freddie Mac, Habitat for Humanity International, Independent Community Bankers of America, Independent Insurance Agents & Brokers of America, Local Initiatives Support Corporation, National Association of Federal Credit Unions, National Association of Hispanic Real Estate Professionals, National Association of Home Builders, National Association of Mortgage Brokers, National Association of Real Estate Brokers, National Association of Realtors, World Floor Covering Association, National Bankers Association, National Council of La Raza, and National Urban League.

The chairman and president of the alliance will discuss the findings during a teleconference, and other housing officials will also be on-hand, among them: Shannon Carey, director of external affairs for the Atlanta Neighborhood Development Partnership Inc.; Michael Guye, acting director of the city of Baltimore Office of Homeownership; Candace Sheehan, home-ownership administrator for marketing and public relations, Washington State Housing Finance Commission; Gabe del Rio, home-ownership director for the San Diego Community Housing Works; Lisa DeBrock, home-ownership division manager for the Washington State Housing Finance Commission; Karen Carlson, home-ownership second mortgage administrator for the Washington State Housing Finance Commission; and Robert Mulderig, deputy director for residential and community services for the District of Columbia Department of Housing and Community Development.

According to The Homeownership Alliance's mission, the group "is dedicated to preserving; protecting and promoting expanded home-ownership opportunities for all Americans. We are dedicated to making home ownership a national priority by supporting those positive developments that expand and increase opportunities to open access to affordable housing."

The teleconference will be available on the alliance's Web site, http://www.homeownershipalliance.com/, for 90 days following the Monday event.
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New Program to Help Homeowners Refinance with FICO Scores between 350 and 499

Program geared toward saving their homes from future foreclosure.
RISMedia
Lauri Lampkin has been helping homeowners in the mortgage industry for more than 30 years. She will be conducting a workshop on Nov. 19th in Los Angeles to help homeowners get the funding they deserve.

When you pay your mortgage on time, if you have a low FICO score, you have not been able to re-finance your home ... until now.

Lampkin, CEO of Online Funding, did some research with Equifax, and the results were astounding. "There are more than 250,000 homeowners in Southern California who pay their mortgage on time, they have no foreclosures, no bankruptcy, they have 30% equity, or more, and they routinely get denied the opportunity to re-finance. Why? Because they have a low FICO scores. It's a shame, because these are good people, and they are treated poorly by the entire lending industry.

"Because of the equity, and the 'track record' of timely payments, we have been able to create an innovative way to re-finance homes. This program is called the Community Home Buyers/Home Savers Program (CHB).

"Once escrow closes, homeowners can consolidate all of their consumer debt, pay off their credit cards, and pay off their car. This gives homeowners financial peace of mind, and rapidly improves their FICO score. Once that happens, we can put them in a Fannie Mae 30 year, fixed rate, low interest loan."

For more information regarding the workshop, contact +1-877-649-0558.

For more information about The Community Home Savers Program, contact On Line Funding at 877-649-0558 or visit our Web site at www.olfunding.com.
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Real estate affordability sours Californians

But residents may be gaining ground in housing struggle
Inman News
Despite a drop in the percentage of California households in September able to afford a median-priced home compared to a year ago, affordability conditions made a slight improvement from the month before, according to a report released today by the California Association of Realtors.

The Housing Affordability Index, which measures the percentage of households that meet the minimum affordability requirements to purchase a median-priced home, dropped from 19 percent in September 2004 to 15 percent in September 2005, but gained 1 percentage point from August when it stood at 14 percent, the association reported.

The minimum household income needed to purchase a median-priced home at $543,980 in California in September was $128,270, based on an average effective mortgage interest rate of 5.9 percent and assuming a 20 percent down payment. This minimum income figure was up from $107,440 in September 2004, when the median price of a home was $463,630 and the prevailing interest rate was 5.7 percent.

By contrast, the minimum household income needed to purchase a median-priced home at $212,000 in the United States in September 2005 was $49,990.

Good news for Californians is that the minimum household income needed to buy a median-priced home actually fell by $5,530 between August and September, from $133,800 to $128,270.

At 26 percent, the High Desert region was the most affordable region in California, followed by the Sacramento region at 20 percent. The Northern Wine Country region was the least affordable in the state at 7 percent.

Los Angeles-based C.A.R. comprises more than 180,000 members.
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Remodelers Promote Aging-In-Place Features in Existing Homes

This week is the third annual Aging In Place Week.
RISMedia
As housing industry professionals celebrate the third annual National Aging In Place Week (Nov. 6-13), the National Association of Home Builders (NAHB) Remodelors™ Council encourages consumers to take proactive steps to modify their homes as they age. With careful remodeling, homeowners can remain in their residences throughout their maturing years.

“Aging-in-place means living in one’s home safely, independently and comfortably, regardless of age or ability level,” said Remodelors Council Chairman Don Novak. “As Americans get older, we know the vast majority would rather live in their own home than an assisted living facility.”

Basic alterations can make it easier and more affordable to carry out daily activities, such as bathing, cooking or climbing stairs, and can improve a home’s overall safety. Projects for aging-in-place remodeling vary from the installation of shower grab bars or adjustments of countertop heights, to private elevators and first-floor master suites. Since professional modifications are often barely noticeable to visitors, homeowners can enjoy their home safely and without any institutional feel.

To meet the demand of a changing population, the NAHB Remodelors Council created the Certified Aging-in-Place Specialist (CAPS) designation program – the only program that teaches remodelers how to modify homes for the aging-in-place market. CAPS designees are specifically trained how to evaluate a homeowner’s needs and implement a project in a professional, aesthetically pleasing way. More than 800 professional remodelers have completed the education requirements for CAPS since 2002. Consumers interested in finding a CAPS trained home remodeler can visit www.nahb.org/remodel.

For more information on aging-in-place or National Aging In Place Week activities, consumers can consult two Web sites developed by National Reverse Mortgage Lenders Association and the Aging In Place Council, www.seniorsafehome.com and www.ageinplace.org. The Web sites provide information on design ideas, useful products and how to find them, and professionals who can help homeowners plan and implement home modifications. An information booklet also can be downloaded.
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Real estate industry fights to preserve real estate tax deductions

Congressman, home builders take aim at tax reform
Inman News
A congressman, speaking during a National Association of Home Builders conference call Thursday, pledged that any effort to eliminate or reduce the mortgage interest deduction or eliminate property and sales tax deductions "would be dead on arrival" in Congress.

While the President's Advisory Panel on Federal Tax Reform has recommended changes to tax law, real estate industry groups are fighting to ensure those recommendations do not amount to major changes for homeowners that benefit from federal, state and local tax incentives.

"Since these recommendations have come out, I've certainly heard a real sense of alarm from my constituents. They are very concerned about a proposal to eliminate or greatly reduce the mortgage interest deduction, as well as the deduction for state and local taxes. They recognize that means they're going to pay higher taxes," said U.S. Rep. Jerry Weller, R-Ill., a member of the House Ways and Means Committee.

"Both of these proposals would be dead on arrival in the House Ways and Means Committee," he said. Weller added that he has reached out to a group of Republican lawmakers on the committee, and they have signed a letter to encourage President Bush to reject tax panel's recommendations.

Officials at the home builders' trade group and the National Association of Realtors, for example, have lashed out against the tax panel's recommendations, and vowed to fight against any proposals that would negatively impact homeowners and home ownership.

The home builders' group paid for a survey this month that found strong support among consumers for the mortgage interest tax deduction and deductions for state and local taxes, including property taxes. The group also prepared a study of how individual homeowners in different parts of the country might be impacted by adopting the tax panel's recommended reforms.

Jerry Howard, CEO and executive vice president for the builders' association, said the tax panel's recommendations appear "out of touch with the American people." Howard also said that current homeowners planned to benefit from tax incentives when they bought their homes, and they should not be punished for their purchase. "It just seems like you're changing the rules in the middle of the game and that's patently unfair," he said.

David Wilson, president of the home builders' association, said the tax proposals, if adopted, "Would reduce housing values and send a chill throughout the housing market," adding that homeowners in high-cost areas like California and Florida "would bear the brunt" of the tax blow. "It would cripple markets that rely on second-home (buyers)."

U.S. homeowners save about $70 billion in taxes from deducting mortgage interest on their homes, said David Pressly, president-elect for the homebuilders' group. "Newest homeowners will probably be hit the hardest," he also said, as about 18 million people bought homes in the last three years and "most of these have significant mortgage interest payments and virtually all of them are counting on (deductions) to keep it at low levels."
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Should You Remodel or Move?

By: M. Anthony Carr: RealtyTimes
Unless you've taken a new job in a new location, the decision to move up may involve deciding on whether to remodel or move altogether. Homeowners nationwide will spend $192.8 billion this year to either remodel or repair their homes, according to the U.S. Census.

The Remodeling Index, provided by National Association of Home Builders' Remodeling Council, determines minor alterations at $25,000 or below and major alterations above that amount. Where do you stand? Is it worth $25,000-plus to remodel or should you move up?

There are reasons in favor of both. Let's deal with the remodeling first.

    1. Your community is great, why move? For some homeowners they already live in
       the best community for their family and lifestyle. The schools are great,
       it's near their worship center, shopping and they are plugged in with
       neighbors and the community. So instead of moving, it might be best to expand
       or remodel.

    2. Sometimes, it's just time to upgrade the house -- even if you're planning on
       selling in the future. If you bought a home with 15-year-old appliances and
       décor, it may be time to switch them out, now that they are 20 or 25 years
       old. I always get frustrated with homeowners who want to remodel right before
       they move - they've never had the opportunity to enjoy the house they've just
       remodeled. Upgrades may include flooring, bathrooms, kitchen, exterior
       facelift, paint, curtains, furniture -- not just the house itself.

    3. It might be cheaper than selling. If you're needing more space, the remodel
       may actually be cheaper than selling, especially if you're looking at
       finishing or remodeling the basement. The basement remodel is the easiest and
       most affordable remodel available to homeowners because the exterior walls,
       plumbing and most electric may have already been run throughout.

    4. You're a do-it-yourselfer. Okay, you love those Old House, Fix-It or Nix-It,
       Saturday morning programs. Living in a dust-ridden environment with tools and
       power cords strewn throughout is your vision of heaven on earth. Go for it.

    5. You'll have to remodel the new house anyway. Most new homeowners spend
       upwards to 30 percent of the value of the new house they just bought fixing
       it up the way they want - so why move? Just spend that money where you are.

Now, there are just as many reasons to move instead of remodeling.

    1. The move could take less time and hassle. Depending on the condition of your
       local market, you may be able to list, sell and move in a shorter period of
       time than it would take to actually remodel your current home. Time is a
       major factor in our busy lives, and many times it would be quicker to just
       move.

    2. Remodeling would disrupt your lifestyle more than you're willing to deal
       with. You have to hire a designer, then a contractor, move furniture from one
       area to another in your house, find storage for the rest, live with dust,
       workmen, etc., for several months and then HOPE you like what you get at the
       end of it. Better to buy the house that's already finished the way you want
       it than betting on a finished product you're not sure about.

    3. You don't want the hassle of dealing with contractors in case they don't get
       it right. The challenge for remodelers is that they are being told by a
       remodeling-challenged homeowner what they want and then try to create that
       environment. If the homeowner doesn't like it at the end - it's very
       expensive to change once it's done.

    4. Remodeling could cost more than moving. For some people, to get what they
       really want, they would have to double their mortgage anyway - so it might
       be better to check out what's available in new construction or even in a move
       up in the community. Plus, builders in some markets are starting to offer
       free upgrades - including rec rooms, decks, and other add-ons that usually
       are the subject of a remodel job.

    5. Finally, you're family has enlarged. You just may need a larger home because
       you have more children or your parents/au pair/adult children have moved in
       with you.

When it's time to remodel, look over the local real estate market before making your final decision, it might be in your best interest to make that move instead of knocking down a wall.

Mr. Carr has covered real estate since 1989. He is the author of "Real Estate Investing Made Simple." Got a personal real estate issue? Questions can be posted at Anthony's blog.
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The Weekend Guide! November 10 - November 13, 2005

The Weekend Guide for November 10 - November 13, 2005.
Full Article:
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Don't Let Housing's Seasons Scare You

By: Michael Englund: REALTOR® Magazine Online
Don't worry about a slowdown in home prices just yet, says Michael Englund of Action Economics. Significant price drops are recorded almost every fourth quarter, especially when substantial gains are reported during the second and third quarters.

According to Englund, spring is the busiest season for the housing market and is likely to post the largest transaction volume. Fourth-quarter price data and anecdotal evidence from industry professionals should not be weighed heavily until figures from the following spring are released, he says.
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The Ups and Downs of Flipping Condos for Fast Cash

The gains can be huge but so can the risks.
By: Terri Cullen: The Wall Street Journal Online
Low interest rates and a condo building boom have been fueling condo "flipping" - when investors buy and quickly sell condos to reap a profit. The gains can be huge: A First American Real Estate Solutions study of hot real-estate markets found that the annualized rate of return for three-to-six-month flips of residential homes was usually 20% to 40% or more above the market appreciation rate. Condos made up between 20% to 30% of the sales.

WHAT TO DO: With condo flipping, the risks can be as great as the rewards. Because the condo market is prone to speculation, condos typically lose value more rapidly than other homes during recessions. Investors buying into a cooling market may find it difficult to quickly sell, and may not make enough profit to cover the transaction costs, or could even sell at a loss. It's also getting harder to flip, as developers crack down on speculators. Amateurs need to tread carefully: flipping has attracted the attention of the IRS and investors could face an audit.

Email your comments to rjeditor@dowjones.com.
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Real estate purchases jump

Refinancings lose market share
Inman News
Overall mortgage applications increased 2.3 percent last week on a seasonally adjusted basis from the week before, according to the Mortgage Bankers Association's latest survey.

The seasonally adjusted purchase index increased by 6.4 percent to 465.7 from 437.6 the previous week, whereas the refinance index decreased by 3.4 percent to 1,798.8 from 1,862.8 one week earlier.

"Last week, home purchase applications dropped below their 2004 level for the first time in six months," said Jay Brinkmann, MBA's vice president of Research and Economics. "Despite a 6.4 percent increase over the previous week, home purchase applications remain 3.6 percent below their level in early November, 2004."

The refinance share of mortgage activity decreased to 41.7 percent of total applications from 43.6 percent the previous week. The adjustable-rate-mortgage share of activity increased to 31.6 percent of total applications from 29.4 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.31 percent from 6.21 percent one week earlier. Points including the origination fee increased to 1.37 from 1.27 for 80 percent loan-to-value ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 5.85 percent from 5.75 percent. Points including the origination fee increased to 1.36 from 1.27 for 80 percent loan-to-value ratio loans.

The average contract interest rate for one-year adjustable-rate mortgages increased to 5.45 percent from 5.39 percent one week earlier. Points including the origination fee decreased to 0.96 from 0.99 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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