Evelyn Doane - William Raveis Real Estate - Cape Cod


This post first appeared on Raveis agent, Veronica Iseppi’s blog.  As a Home Staging Specialist, there are certain projects I recommend to add more curb appeal and increase the value of your home.  Here are my 8 Tips:

1. Paint.
Hands down, the best advice I can give to any client is having the exterior and interior of your home painted.  Buyers will instantly notice it and appraisers will note it on the valuation.
If you don’t normally enter your house through the front door, be sure to evaluate how the outside entry area appears.  Does the porch, railings and front door need a fresh coat of paint?
As far as choosing an exterior color, be sure to stay within the range of accepted colors for your neighborhood and market.  A house that’s painted a wildly different color from its competition will be marked down in value by appraisers.  A soft, warm and soothing color palette work best for the interior.

2. Clean.
Sounds like a given, but take a good look.  Try and see your house from an objective eye – as if you were seeing it for the first time. A thorough cleaning of the house will make a world of difference.  Before I list a house, I will look at it from the buyer’s perspective and advise on areas that need attention.
For the interior, in addition to the kitchen and baths, the key areas to look at are windows, window sills, walls, door jams and baseboards.  (Tip: The Mr. Clean ‘Magic Eraser’ can work wonders for stubborn areas.)  Also be on the look-out for cobwebs.
As far as the exterior, hire someone to pressure wash it.  Pressure washing makes the house look bright and clean in addition to getting rid of unsightly things like cobwebs and mildew, which may not be seen from the street but will detract from the home’s cleanliness when seen up close.  The cost to have a professional cleaning should be a few hundred dollars – a fraction of the cost of having the house painted.
Also, don’t underestimate the value of having the windows washed – both inside and out.  You would be surprised as to how much more light comes in, and brighter the rooms will appear.

3. Landscape and hardscape.
Again, if you don’t use your front walkway, go ahead and take a stroll.  If you have a walkway, does it need attention – loose stones, concrete, etc.?  Are the bushes encumbering onto the walkway?
Sometimes less is more.  A trick in making an older home appear newer is by removing and replacing overgrown bushes (that tend to hide the house) with smaller ones.  If this is out of your budget, then trim the bushes back and add a few annuals and mulch will help.
No gnomes please. Again, less is more.  Too many lawn and yard ornaments are not only distracting but can also make a property appear junky.  You’ll also want to discard of any empty pots and piled up yard waste.

4. Add a splash of color.
Planting annuals, painting the front door or adding a colored bench or pair of Adirondack chairs will add a touch of visual interest and make your home appear cheerful.  These won’t be noted by an appraiser but it will certainly help sell a house more quickly.

5. Add a nice mailbox and house numbers.
If needed, replace the small, faded or missing numbers on the mailbox.  Since your mailbox is the first thing a buyer looks for in finding your house, you’ll want to make a good first impression.
Just like your front door, the look and condition of the mailbox can set the tone for what the buyer will note as they view your house.  If your mailbox is rusty and has seen better days, the buyer may think “what else hasn’t been kept-up or neglected. “  A more upscale mailbox and architectural house numbers or address plaque will not only give your house a distinctive look, but will show that you have pride in your home.

6. Repair or clean the roof.
The roof is one of the first things inspectors look at in assessing the condition of a home.  They will determine its life expectancy by approximating its age and seeing if any shingles are curled or missing.  You can pay for roof repairs now, or pay for them later in a lower appraisal; appraisers will mark down the value by the cost of the repair.  That could knock thousands of dollars off your appraisal.
Stains and plant matter, such as moss, can be handled with cleaning.  It’s a job that can often be done in a day for a few hundred dollars, and makes the roof look like new.  However this is not a DIY project; call a professional with the right tools to clean it without damaging it.

7. Fence.
A picket fence with a garden gate to frame the yard is an asset.  A fence has more impact in a family-oriented neighborhood than an upscale retirement community, but in most instances, appraisers will give extra value for one, as long as it’s in good condition
8. Perform routine maintenance and cleaning.
To reiterate what was noted above, nothing sets off subconscious alarms like hanging gutters, missing bricks from the front steps, discarded pots or lawn tools rusting in the bushes.  It makes even the professionals question what else hasn’t been taken care of.
Bottom line is a house is worth less if the maintenance isn’t done.  Those little things can add up and be a very big detractor.  When buyers say to me, ‘I’d buy it if it weren’t for all the deferred maintenance,’ what they’re really saying is, ‘I’d consider putting in an offer if the price is reduced.’
Real estate agents, appraisers, home stagers, landscape designers, and home inspectors all agree that taking care of these projects before a house is listed will offer the most value when your house is on the market, both in terms of its marketability and dollars.

7 Easy Ways to Trim Your Mortgage Costs \

As with most homeowners, your mortgage payment is probably your largest monthly expense. Wouldn’t it be nice to trim this huge cost and perhaps shorten the life of your loan? We have listed seven tips below to help save you money on your mortgage.

The tips below are based on this hypothetical mortgage example (savings will vary based on your actual loan facts and timing of the change):

  • $200,000 mortgage
  • 30-year fixed rate mortgage
  • 6 percent interest rate
  • $1,199 monthly principal and interest payment

1. Add One Extra Payment Each Year

Perhaps the easiest way to save money on your mortgage is to make an extra mortgage payment each year. These extra payments are automatically applied on your principal, not interest. Not only does your remaining balance drop, but you will not have to pay interest each month on that principal for the remainder of the loan term.

Savings: $47,000. By making one extra payment of $1,199 each year and applying it to your principal, you could save over $47,000 in interest and cut 5 years off the life of the loan.

2. Set up Bi-Weekly Payments

Another trick to pay off your loan early is by creating a bi-weekly payment plan. Put half of your monthly mortgage payment in a savings account every other Friday (or, on your pay day). Each month, pay your mortgage from the account. At the end of the year, you will have made 26 half payments, which is 13 full payments. This will leave with you an extra payment that you can put toward your principal. Most people manage the separate accounts themselves, but there are companies that you can hire to act as an escrow service and manage the payments for you. Beware that they could charge you for this service.

Savings: $47,000. Same as extra payment.

3. Get Rid of Your PMI

If your down payment was less than 20 percent, you were probably required to pay private mortgage insurance (PMI). However, you can petition your lender to cancel the insurance as soon as your mortgage balance falls below 80 percent of the home’s appraised value. This can happen if your home’s value has gone up or you have repaid some of the principal. This may require a new appraisal but could shave hundreds of dollars off your monthly payment.

Savings: $130 per month. If you only put down 5 percent and had a PMI rate of .78 percent, you could save $130 per month.

4. Reduce Your Assessment

Property taxes can cost thousands of dollars a year. If you think your home’s value has decreased in the last year and it was not properly accounted for in your tax assessment, you can petition your assessor and fight your assessment. Lowering your tax assessment will lower your yearly taxes.

Savings: Varies. Depends on your local tax rate and home adjustment, but could be hundreds of dollars a year.

5. Reset Your Mortgage

This is not commonly known, but some lenders will reset (recast) your monthly payment if you make a large payment towards the principal of your mortgage. Your monthly payment stays the same, but the term of your loan shortens. When the loan is recast, your monthly principal and interest is recalculated so you end up with a lower monthly payment over the existing term of the loan.

Savings: $120 per month. Putting $20,000 into the loan would reset the payment to $1,079, saving you $120 per month.

[See 10 Smart Ways to Improve Your Budget.]

6. Modify Your Loan

If you are late on your payments and are going through a financial hardship, you may be eligible to modify terms of your loan (such as rate, term, or principal balance) to make it more affordable. The goal of these programs is to allow borrowers to stay in their homes and continue making their monthly payments. Not everyone qualifies for these types of programs, but if you do, they can save you a lot of money. To find out if you qualify, contact the servicer of your mortgage or visit the Making Home Affordable eligibility site.

Savings: Varies. It can reduce your interest rate to as low as 2 percent, extend your term to 40 years, or reduce your principal.

7. Refinance

Lastly, the most common way to save money on your mortgage is by refinancing to a lower interest rate. Reducing your rate can lower your monthly payment and help you save on interest payments. However, there are costs associated with refinancing so you want to be sure you are going to save enough to cover the refinancing fees. With rates at historic lows, if you can refinance, and you haven’t already, you should consider it.

Savings: $126 per month. By lowering your interest rate to 5 percent, you would have a payment of $1,073 which would save you $126 per month. If the refinance costs $5,000, you would recoup the fees after 40 months.

Nate Moch is a mortgage correspondent for Zillow Blog, a resource for real estate and mortgage news.


• From an article in the Wall Street Journal: "Memo to sellers: you've got more competition this spring. Price those homes accordingly".

• Inman Newscites the NAR report showing that nationwide, sales of homes over $1 million rose 3.9% in February. They represent 2% of all sales. Sales of homes between $100,000 and $250,000 fell 7% and represent 42% of all sales.

• RealTrends reports that second home purchases declined at the same rate (5.6%) as primary home purchases in 2010. Investment properties dropped 7.8%. They represent 17% of overall purchases and 59% paid cash. Vacation homes dropped 1.8%. They represent 10% of overall purchases and 36% paid cash.

• In the Wall Street Journal: "Federal regulators proposed far-reaching changes to lending rules that eventually could raise the cost of borrowing for most homeowners, kicking off what is likely to be a furious effort by the housing and banking industries to soften the proposal."
o A prime mortgage would be one where a borrower has a down-payment of at least 20%
o At the end of 2010, approximately 46% of all homeowners with mortgages had less than 20% equity.

• Inman News noted that Android-equipped smart phones outranked both the BlackBerry and the iPhone for the three month period ending in February. 33% of smart phone users over age 13 owned the Android-equipped phone, making it the most powerful platform.


While average sales prices increased or were stable in March 2011 compared to March 2010, unit sales of single family homes were down across much of the northeast for the first quarter.  Mortgage rates are continuing to creep upward-the 30 year FRM was at 4.87 % last week and the 15 year FRM was at 4.10 percent.  Late last year, 30 years could be attained at 4 percent and 15’s at a mere 3.5 percent.  However, rates are still at incredible lows compared to this time last year (which were approximately 5.21 percent for 30 year FRM and 4.52 percent for 15 year FRM).

Perhaps the greatest silver lining for the real estate industry is encouraging employment reports.  According to Frank Nothaft, Vice President and Chief Economist at Freddie Mac, “The economy added 216,000 jobs in March and the unemployment rate fell for the fifth consecutive month to 8.8 percent marking the lowest rate in two years. Additionally, the private sector has gained 560,000 workers in the first quarter of this year, which represents the largest quarterly increase since the first quarter of 2006.”
To put all of this into perspective, below is a breakdown of key market figures in the northeast for first quarter, 2011:

When reflecting on the first quarter of this year, it is also important to remember the northeast was a victim of some pretty violent domestic abuse by the hands of this past winter season.  As a result, many sellers opted out of putting their homes on the market and buyers postponed any house hunting.  This likely put a huge damper on unit sales for the first Q.
With one of the worst winters in the Northeast's history behind us, buyers and sellers can once again participate in, buying and selling.  Now is a great time to list your home, as there is demand out there!   And, of course, rates are still extremely low (great for buyers and sellers alike).

A quick tip for sellers, however.  There is an increasing trend in buyers looking for move-in-ready homes.  If you show your home and it has signs of dilapidation, or disarray, this can be a huge turnoff for buyers.  You should think about putting in some extra cash towards overall presentation of your home prior to placing it on the market.  Some extra dollars could go a long way in the final sale.

Opportunity Time?

If you read my October Market Report I sent to you recently, you know interest rates are at an all time low and this is a terrific time to “get your toe in the water” and start enjoying our wonderful Cape Cod lifestyle.

There is a significant difference between what one can afford with a 6% mortgage compared to the current 4.1% mortgage rate our bankers and mortgage brokers sent out last week.

Here are the figures for the monthly payment on a $200,000 30 year fixed rate mortgage:

6%.....$1199.10 per month
5%.....$1073.64 per month
4.1%....$966.39 per month

Another factor to consider is that the interest from that mortgage can be deducted on your income tax, making a home on the Cape even more affordable.  Please discuss this possibility with your accountant as various factors impact just what the deduction could be.

As I have mentioned in the past, using your home as a summer rental is another way to help pay the expenses and there is always a huge demand for homes…especially with amenities like being near the water.

We all want to be optimistic about the economy and there seem to be promising indications on the horizon.  The chief economist for the National Association of Realtors has said home prices will be rising in late 2012 and who knows how long our current low interest rates will be available?

I hope this information is helpful and will encourage you to think about what fun you can have with a home on the Cape as well as making a good investment which should only rise in value.


Good news from a Mass. Association of Realtors article!

In a May 4, 2010 article, MAR states that the amount of single family homes under agreement in April, 2010 was 25% higher than April, 2009!  This is the tenth straight month of increases in sales.  While the Association was not surprised with this news considering that the tax credit incentive expired April 30, the increases have been steady.  They say that pending sales during the next few months will give an indication of how stable the market is after that.

There were 5580 single family homes under agreement last month compared to 4480 last April…and also 16.1% increase from March 2010.

Pending sales mean homes that are under agreement…the buyer and seller have agreed on a price and the purchase and sales agreement has been signed although the sale has not been closed.

Just like all politics are local…so is real estate!  We have been fortunate here on the “Elbow of the Cape” in that we have not had dramatic drops in prices that have been seen in other parts of our state and the nation.  There is a fine inventory of homes in Chatham and some very motivated sellers.  On average, homes are selling for less than 95% of current list price, with reductions possibly having been taken previously.

My monthly market reports are available on the side of my home page and go into considerably more detail on what is happening in Chatham.     

Nine Consecutive Gains for Pending Home Sales

Washington, December 01, 2009

Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in October, increased 3.7 percent to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.

Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing. “Keep in mind that housing had been underperforming over most of the past year. Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually, but we were well below the 5-million mark before the home buyer tax credit stimulus,” he said. “This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future.

Home Staging Yesterday and Today


By Maureen Reddy

As the owner of a full service design firm, I have enjoyed staging properties throughout New England for over a decade and have keenly observed the transition of the home staging industry.
When my design firm first introduced staging, it was a hard sell. Most REALTORS® had never heard of staging. As the idea of home staging made its way to the East coast from the West, the concept was more readily accepted. There was still, however, a tinge of skepticism associated with staging up until the early 2000’s, as buyers were afraid that sellers were somehow “fooling” them with staging.

After this time and up until late 2006 staging constituted 50% of my business. The properties that I had staged were flying off the market in a matter of weeks, sometimes days. Over 40% of my staged properties sold for asking price or above. Sellers were eager to schedule their staging appointments and gushed over the “designer show house” results. Many clients received multiple offers and easily tripled their staging costs when the property sold. The market had substantial movement, sellers undoubtedly cashed in on their staging investment and REALTORS®’ sales numbers rose sharply.

In the fourth quarter of 2006, I noticed a decline in staging projects which was not unusual for the time of year, however, the slowing trend continued as the market suffered, housing prices dropped, and foreclosures made daily headlines.

Now we are looking at an uncertain future in the real estate industry but one thing is for sure…today’s seller is in need of staging now more than ever. Stiff competition, hundreds of days on market and savvy buyers make it necessary that a property show its absolute best. The well-informed and sophisticated seller and agent know that the statistics speak for themselves:

1) Homes that are staged sell quicker and for more money than those that are not.
2) A buyer decides if the home will be a consideration within the first 8 seconds upon entering the property.
3) Staging, in most cases, costs less than the property’s first price reduction ($10,000 average reduction).

Home staging has become a necessary tool in the business of selling property and its positive results ensures a win-win situation for all the parties involved in the home buying process.

Maureen Reddy is the owner of DaVinci Designer Gallery , a full service design firm that has been staging homes for over a decade, for more information visit ddg-re.com.

January Sales Down but Tax Credit Creates Opportunity


The Association reported on Tuesday that single-family home sales were down 12.5 percent in January compared to the same time last year. Despite the drop in sales activity, January is only the second month in the past five that sales have been down. Condominium sales were down 26 percent in January compared to the same time last year. The median price for a single-family home in January was $263,500 while the median price for a condominium was $204,000.
“With historically-low mortgage interest rates, average home prices at their lowest level in years, and the new Federal $8,000 tax credit, the housing market just hit a ‘triple’ for first-time homebuyers in the Commonwealth,” said MAR President Gary Rogers, a broker at RE/MAX First Realty in Waltham. “Meanwhile, the December 1 deadline for that tax credit and shrinking supply of homes for sale really makes this a good time to get into the market to buy a home. Starter home sales really get the market moving for everyone else who already owns a home.”

There were 1,737 detached single-family homes sold this January, a 12.5 percent decrease from the 1,986 homes sold the same time last year. On a month-to-month basis, home sales were down 33.8 percent from 2,623 homes sold this past December. While the month-to-month decrease in sales is significant, it is not unprecedented for this time of the year as January sales typically go down from December.

“Affordability has improved in Massachusetts, so even when sellers accept a more modest price for their homes, they find their next home to be much more affordable,” said Rogers.

The median selling price for single-family homes in January was $263,500, a decrease of 17.9 percent compared to $321,000 in January 2008. On a month-to-month basis, the January median selling price was down 4.2 percent from $275,000 in December 2008. The January median selling price is back to 2002 levels.

The condominium market experienced a 26 percent decrease in the number of units sold this January, compared to the same time last year (from 850 units sold in 2008 to 629 units sold in 2009). On a month-to-month basis, condominium sales were down 33.3 percent compared to the 943 units sold this past December. Similar to the single-family market, it is not unprecedented for condominium sales to go down significantly from December to January. The January median selling price for condominiums is back to 2003 levels.

Condominium median selling prices in January were down 26.1 percent from $276,000 in 2008 to $204,000 in 2009. On a month-to-month basis, the median selling price of a condominium was down 11.3 percent from a December median of $230,000.

Inventory and Days on Market:
The inventory of residential properties on the market as of January 31, 2009 decreased 20 percent compared to the same time last year (from 44,540 listings in 2008 to 35,459 listings in 2009). At the current sales pace, this represents approximately 15.0 months of supply, a decrease from 15.7 months of supply in January 2008. On a month-to-month basis, the average months of supply is up from 10.0 months in December 2008. It is considered a balanced market when there are between 7.5 and 8.5 months of supply.

The inventory of single-family homes decreased 19.0 percent from January 2008 (30,559 listings in 2008 to 24,822 listings in 2009) which translates into 14.3 months of supply in January 2009. This is down from 15.4 months of supply last year and up from 9.6 months of supply in December 2008. This is the 10th straight month that inventory has gone down compared to the year before and is at its lowest level since February 2005.

The condominium market saw January inventory decrease by 24 percent from last year (13,981 listings in 2008 to 10,637 listings in 2009), which translates into 16.9 months of supply, up from 16.4 months in 2008 and up from 11.3 months this past December. This is also the 10th straight month that inventory has gone down compared to the year before and it is the second lowest level since December 2004.

Detached single-family homes stayed on the market an average of 146 days in January 2009 compared to an average of 143 days in January 2008, while condos stayed on the market an average of 179 days, up from an average of 165 days in January 2008. On a month-to-month basis, days on market for single-family homes were up from 140 days and condos were up from 142 days in December.

Mortgage Deals Abound, For Some Borrowers

Now’s the time to get a great deal on a mortgage, but borrowers should shop around.

Rates are changing constantly and they differ widely among lenders. Borrowers typically need a FICO score of at least 720 for the best interest rates, although for a fee Fannie Mae and Freddie Mac will guarantee loans with FICO scores as low as the mid-600s. Having enough cash for a 20 percent down payment is also important. But borrowers can get loans with lower downpayment requirements. FHA, for instance, makes loans available for a minimum 3.5 percent down.

For a conforming loan, monthly mortgage payments can’t exceed 28 percent of gross income, while all debt payments, including student loans, can’t exceed 36 percent of gross income.

Source: Business Week, Peter Coy (12/31/2008)

Signs of Letup in Home Price Slide

The decline in residential property prices appears to be slowing, according to preliminary data from First American CoreLogic.

A preview of its November report shows that home prices fell 9.6 percent last month, compared with 10.4 percent in October and 11.2 percent in September.

"The consistent deceleration over the past two months with November indicating the same trend in price declines is encouraging because it could portend the trough in price declines," says Mark Fleming, chief economist for First American CoreLogic.

Still, layoffs and the swollen supply of unsold homes remain a concern, he notes.

Source: American Banker (12/29/08)

Ten real estate predictions for 2009

NEW YORK – Dec. 18, 2008 – 2009 is likely to be a year of continuing adjustment to a changing real estate marketplace. Prepare yourself and your business with these predictions from HGTV’s FrontDoor.com Web site.

• Sellers will continue to face falling home values in the new year because they’ll be competing with banks and builders who are slashing prices to sell off the still-huge inventory of foreclosures and new homes.

• The Obama administration will act on its plan to crack down on abusive lending practices.

• Mortgage holders in danger of losing their homes will receive more assistance from a variety of program s since the Senate’s Joint Economic Committee has predicted two million foreclosures in 2009.

• Banks’ restructuring should bring increasing calm, making loan modifications and short sales easier to obtain. Eventually this will lead to a decrease in the number of bank-owned properties on the market.

• Mortgage applications will continue to receive a comprehensive review, requiring borrowers to provide extensive income and debt documentation. Those with the best credit will get the best rates.

• The foreclosure crisis has created wiser consumers, with a deeper understanding of real estate, mortgages and credit, enabling better decision-making going forward.

• Green is good with increasing numbers of buyers opting for smaller homes that are within walking distance of school and work.

• Buyers and sellers will be more and more tech savvy, relying on tools like video, webcasts, and mobile search. Consumers and practitioners will benefit from being a head of the curve.

• Prices will be low as will interest rates, creating great buying opportunities, and likely, inspiring reluctant buyers to make their move.

• The recession will end and buyers will regain confidence in the market.

Source: Frontdoor.com (12/03/2008)

Sam Zell Predicts Spring 2009 Housing Recovery

Financial mogul Sam Zell, beleaguered owner of the Tribune Co., which declared Chapter 11 bankruptcy last week, told an Israeli business conference Sunday that the U.S. real estate market will be in recovery by spring 2009.

Zell pointed out that the U.S. population is growing and with fewer than 600,000 building starts in 2008, a million fewer than any of the last 10 years, demand for housing will rise.

Zell blamed the current crisis ? at least in part ? on ill-considered decisions.

"We are living through our first Blackberry recession where, literally, information is instantly disseminated around the world and people, in effect, respond to it, perhaps, often without any particular caution or attention," he said.

Source: Reuters News, Ori Lewis (12/14/2008)


Sales are picking up in markets where prices are deflated, but the business is different than it was before the bubble burst, observers say. The housing market in deflated states - like Arizona, California, Florida and Nebraska - show signs of a rebound. Analysts say that prices have fallen to the point that those with average salaries can afford to buy once again. "The buyers are returning," says Lawrence Yun, Na tional Association of Realtors (NAR) chief economist. "And in such a strong way that, now, we are hearing in some cases there is multiple bidding, which hints that maybe pricing is reaching a bottom point. But inventory remains high."

Source: The Christian Science Monitor, Ben Arnoldy (12/16/08)

Where Will Housing Prices Go Next?

How long will it take for home values to zoom back up. Some prognosticators predict decades. Others say there is a brighter picture.

"We will never see these prices again in our lifetime, when you adjust for inflation," says Peter Schiff, president of investment firm Euro Pacific Capital of Darien, Conn. "These were lifetime peaks."

But Wachovia economist Adam York expects home values to recover fairly quickly, beginning in 2010. "The one saving grace is the population is growing by 3 million people a year," he says. "They need to live somewhere. That means more roofs."

You be the judge, Here are some historic measures:

  • Rent. In the last half century, homes have on average sold for 20 times what it costs to rent them for a year. In 2006, at least in some places, they were selling for 32 times annual rent.
  • Income. From 1950 to 2000, home values sold for three times average household income. In 2006, average household income was $66,500, which should have put median home prices at $200,000. Instead the median was $301,000.
  • Appreciation. Existing home values rose 0.5 percent annually, adjusted for inflation, from 1950 to 2000. From 2000 to 2006, they rose at the annual rate of 8.2 percent above inflation and peaked with a 12.3 percent rise in 2005.

Source: USA Today, Dennis Cauchon (12/12/2008)

Buyers Lured to Bargain Luxury Properties

Prices for luxury second-home markets are falling out of the stratosphere–and attracting buyers who were previously priced out of the market.

Prices in the Caribbean have dropped by $500,000 and European retreats in Spain, Malta, and Portugal are down 30 percent, says Lucy Russell, managing director of Quintessentially Estates.

"The second-home market has suffered considerably," says Marc Cohen, director of Ledbury Research, the London-based luxury consultancy.

He says active buyers have changed from the typical 65-year-old retiree who has sold his business or retired from a high-salaried job to a younger person who sees opportunity in declining markets.

"Those who need to sell will do so for substantially less than they would have six months ago," says Charles Weston-Baker, managing director of Savills, U-K real estate services provider.

Source: Newsweek International, Ginanne Brownell (01/12/09)

Economic Slump Dampens Pending Home Sales
After holding fairly stable for a year, pending home sales declined in the face of job losses and an eroding economy, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in November, fell 4 percent to 82.3 from a downwardly revised reading of 85.7 in October. It is 5.3 percent below November 2007 when it was 86.9. The current index is the lowest since the series began in 2001.

Lawrence Yun, NAR chief economist, says a weakening was inevitable. "Mounting job losses and very weak consumer confidence deterred home buyers from signing contracts in November," he says. "December’s housing market activity could be comparably lower due to ongoing problems in the economy, so a real estate-focused stimulus plan is urgently needed."

A Look By Region

Here's a closer look at how Pending Home Sales Index fared regionally.

  • Northeast: dropped 7.2 percent to 63.2 in November and is 14.6 percent below a year ago.
  • Midwest: fell 6.7 percent to 74.2 and is 10.1 percent below November 2007.
  • South: declined 2.2 percent to 85.3 in November and is 12.7 percent below a year ago.
  • West: down 2.4 percent to 101.2 but remains 19.3 percent higher than November 2007.

NAR: Stimulus Package Needed

Yun says the outlook will depend heavily on the stimulus package. "With a proper real-estate focused stimulus measure, home sales could rise more than expected, by more than 10 percent to 5.5 million in 2009, and easily begin to stabilize home prices in many parts of the country," Yun says.

In turn, stable home prices will lessen foreclosure pressures and lay the foundations for a solid economic recovery so that the nation’s 75 million home owners regain confidence, he adds.

NAR President Charles McMillan says there can’t be an economic recovery without a focus on housing.

"It’s crucial for Congress and the new administration to move quickly to remove impediments and offer home buyers the incentives they need to tap into today’s historic low mortgage interest rates," he says.

NAR advocates expanding a $7,500 tax credit to all home buyers and eliminating the repayment feature, and permanently raising loan limits to bring down interest rates for many buyers in high-cost areas.

"We also need to expedite short sales and unclog the mortgage pipeline," McMillan says.

The 30-year fixed-rate mortgage should hold fairly steady through the first half of the year and rise slightly in the second half, according to NAR's forecast. NAR’s housing affordability index, which looks at the relationship between home prices, mortgage interest rates and family income, is on track to match a record high set in 1972.

The impact of mortgage interest rates declining to near 50-year lows in December is not reflected in current PHSI data.

"The unique housing affordability conditions in today’s market underscore the opportunity in giving consumers the necessary incentives to stimulate our economy through a housing recovery," Yun says.
Source: NAR


Mortgage rates fall to third straight record low

WASHINGTON – Jan. 5, 2009 – Rates on 30-year mortgages fell to a record low for the third straight week and borrowers took advantage of the drop, sending new applications soaring.

With the Federal Reserve on the verge of pouring hundreds of billions of dollars into the devastated U.S. housing market, mortgage rates have plunged to the lowest level since Freddie Mac started tracking the data in April 1971.

Low rates are a great opportunity for borrowers with solid credit and plenty of equity in their homes. But those in danger of foreclosure are still sidelined, and defaults are expected to keep rising in the coming months.

Freddie Mac reported Wednesday that average rates on 30-year fixed mortgages dropped to 5.1 percent this week, down from the previous record of 5.14 percent set last week. It was the ninth straight weekly drop. The survey was released a day early due to the New Year’s holiday.

Mortgage rates have plunged by about 1.3 percentage points since late October, Freddie Mac said. For a borrower taking out a $200,000 loan, that means a savings of more than $170 in monthly payments, according to Frank Nothaft, the mortgage finance company’s chief economist.

Meanwhile, mortgage applications last week remained at the highest level in more than five years, the Mortgage Bankers Association said.

The trade group’s weekly application index was essentially unchanged for the week ending Dec. 26. Applications surged earlier this month to the highest level since July 2003, when refinancing activity boomed at the peak of the housing market.

More than 80 percent of applications came from borrowers looking to refinance at more affordable rates, the trade group said.

Interest rates have plunged since the Federal Reserve pledged last month to buy up mortgage-backed securities in an effort to bolster the long-suffering housing market. The Fed, starting early next month, will buy up to $500 billion in securities guaranteed by the government-controlled home loan giants Fannie Mae, Freddie Mac and Ginnie Mae, a federal agency.

"It’s a huge number," said Derek Chen, an analyst at Barclays Capital, who noted that mortgage rates are still high when compared with yields on long-term Treasury debt.

With the Fed and Treasury Department buying up a significant portion of the new mortgage securities issued by Fannie and Freddie next year, that gap, or spread, could narrow.

If that happens, mortgage rates could fall further, possibly as low as 4.5 percent, Chen said.

The average rate on a 15-year fixed-rate mortgage dropped to 4.83 percent, the lowest point since March 2004. That rate was 4.91 percent last week, Freddie Mac said.

Rates on five-year, adjustable-rate mortgages rose to 5.57 percent, compared with 5.49 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.85 percent, from 4.95 percent last week.

The rates do not include add-on fees known as points. The nationwide fee for 30-year, 15-year mortgages and five-year adjustable rate mortgages averaged 0.7 point last week, compared with 0.5 point for one-year adjustable-rate mortgages.

Meanwhile, home prices dropped by the sharpest annual rate on record in October and there are no signs the housing pain is over.

The Standard & Poor’s/Case-Shiller 20-city housing index, released Tuesday, fell by a record 18 percent from October last year, the largest drop since its inception in 2000. The 10-city index tumbled 19.1 percent, its biggest decline in its 21-year history. Prices are at levels not seen since March 2004.

Copyright 2008 The Associated Press, Alan Zibel (AP Real Estate Writer).


Mortgage Deals Abound, For Some Borrowers

Now’s the time to get a great deal on a mortgage, but borrowers should shop around.

Rates are changing constantly and they differ widely among lenders. Borrowers typically need a FICO score of at least 720 for the best interest rates, although for a fee Fannie Mae and Freddie Mac will guarantee loans with FICO scores as low as the mid-600s. Having enough cash for a 20 percent down payment is also important. But borrowers can get loans with lower downpayment requirements. FHA, for instance, makes loans available for a minimum 3.5 percent down.

For a conforming loan, monthly mortgage payments can’t exceed 28 percent of gross income, while all debt payments, including student loans, can’t exceed 36 percent of gross income.

Source: Business Week, Peter Coy (12/31/2008)


Federal Reserve Drives Rates Even Lower

The Federal Reserve announced a plan last week to spend a half-trillion dollar buying up mortgage-backed securities.

As the new year dawns, the Fed's action has driven down interest rates on new mortgages and rates are expected to fall further.

The Fed said that it would start buying mortgage bonds early this month.

"The program stands to drive mortgage rates even lower, possibly to 4.5 percent," said Derek Chan and Nicholas Strand, strategists at Barclays Capital in a note.

"That's a huge deal for this mortgage market," said Kevin Cavin, a mortgage strategist with FTN Financial.

Source: The Wall Street Journal, Prabha Nataraian (01/02/2009)


Signs of Letup in Home Price Slide

The decline in residential property prices appears to be slowing, according to preliminary data from First American CoreLogic.

A preview of its November report shows that home prices fell 9.6 percent last month, compared with 10.4 percent in October and 11.2 percent in September.

"The consistent deceleration over the past two months with November indicating the same trend in price declines is encouraging because it could portend the trough in price declines," says Mark Fleming, chief economist for First American CoreLogic.

Still, layoffs and the swollen supply of unsold homes remain a concern, he notes.

Source: American Banker (12/29/08)


Ten real estate predictions for 2009

NEW YORK – Dec. 18, 2008 – 2009 is likely to be a year of continuing adjustment to a changing real estate marketplace. Prepare yourself and your business with these predictions from HGTV’s FrontDoor.com Web site.

• Sellers will continue to face falling home values in the new year because they’ll be competing with banks and builders who are slashing prices to sell off the still-huge inventory of foreclosures and new homes.

• The Obama administration will act on its plan to crack down on abusive lending practices.

• Mortgage holders in danger of losing their homes will receive more assistance from a variety of programs since the Senate’s Joint Economic Committee has predicted two million foreclosures in 2009.

• Banks’ restructuring should bring increasing calm, making loan modifications and short sales easier to obtain. Eventually this will lead to a decrease in the number of bank-owned properties on the market.

• Mortgage applications will continue to receive a comprehensive review, requiring borrowers to provide extensive income and debt documentation. Those with the best credit will get the best rates.

• The foreclosure crisis has created wiser consumers, with a deeper understanding of real estate, mortgages and credit, enabling better decision-making going forward.

• Green is good with increasing numbers of buyers opting for smaller homes that are within walking distance of school and work.

• Buyers and sellers will be more and more tech savvy, relying on tools like video, webcasts, and mobile search. Consumers and practitioners will benefit from being ahead of the curve.

• Prices will be low as will interest rates, creating great buying opportunities, and likely, inspiring reluctant buyers to make their move.

• The recession will end and buyers will regain confidence in the market.

Source: Frontdoor.com (12/03/2008)

No economic recovery without housing stabilization, say Realtors

WASHINGTON - Nov. 3, 2008 - The National Association of Realtors (NAR) has stepped up its challenge to lawmakers, encouraging them to take new, decisive actions to address the continuing problems in the housing industry, as well as the ongoing economic crisis.

"Our members see firsthand the impact an unstable housing market is having on communities all across this great country," says Richard F. Gaylord, NAR president. "The U.S. Treasury and Congress need to work together to ensure that the American people – not Wall Street and large banks – benefit from the economic recovery plan."

NAR sent a letter last week to U.S. Treasury Secretary Henry Paulson calling on him to refocus the Federal Housing Finance Agency’s efforts on restoring strength to the mortgage-backed securities market, which would help lower mortgage rates for all home buyers and for those who need to refinance.

On Friday, NAR provided an economic analysis demonstrating that a reduction, or a buydown, of interest rates by just 1 percentage point could result in up to 840,000 additional home sales and reduce the inventory of homes by as much as 20 percent. Inventories currently at 9.9 months’ supply would decrease to approximately a 7.5-month supply.

"These changes would help stabilize home values and the housing industry," Gaylord says. "The Treasury Department has gotten off track by focusing too much attention and stimulus money on Wall Street and banks that are, in turn, using the money for mergers and acquisitions. The administration needs to get back to the original intent of the plan – stabilizing the mortgage and housing markets – to help families avoid foreclosure. Home price stabilization would bring clarity to the valuations of mortgage-backed securities, removing uncertainty in the financial markets and positively affecting the overall U.S. economy."

A recent consumer survey conducted by NAR member Realogy Corp. reinforces the importance of housing in a broader economic turnaround. The survey found that nine out of 10 homeowners believe that owning a home is still the best long-term investment they can make, but nearly one-third of those surveyed said they were putting plans to buy a new or existing home on hold because of the current economic environment. In a related survey, nearly half of all brokers surveyed said that they would expect sales to increase 10-25 percent if 4.5 percent mortgage rates were available today.

Realogy President and CEO Richard A. Smith says that substantially lower mortgage rates would stimulate both existing- and new-home sales. "When home sales increase, housing-related consumer purchasing follows, and we would expect this to help lead our economy to a recovery," he says. Both NAR and Realogy have called on the federal government to take corrective actions that will result in lower mortgage rates.

Federal Deposit Insurance Corp. Chairman Sheila Bair has presented some ideas aimed at helping millions of homeowners by guaranteeing their mortgages. "NAR would support this effort," says Gaylord. "The government must focus on protecting homeowners and making the dream of homeownership once again attainable. This would help stabilize the housing market and strengthen the national economy."

Toward this end, NAR submitted a stimulus plan to Congress and the administration earlier this month, calling on Congress to enact a new housing stimulus package that would help boost the economy. The plan includes consumer-driven provisions that would eliminate repayment of the first-time home buyer tax credit and expand the credit to all home buyers, make the increased mortgage loan limits permanent, and focus the economic stabilization efforts on supporting the housing and mortgage markets instead of providing capital to banks with no strings attached.

Reducing the interest rate, combined with removing the home buyer tax credit repayment, would result in an additional 10 percent reduction in inventory, down to a 6.5-month supply, and would produce modest home price gains of 2 to 4 percent. Such price gains would provide up to $760 billion in housing equity recovery for the nation’s 75 million homeowners.

"There is no question – there cannot be an economic recovery without a stabilized housing market. Congress and the new administration need to act immediately to help America’s families protect their homes, savings and futures," Gaylord says.

Yun: Housing Can Save the Economy

The depth of the current recession depends on the housing market’s recovery.

"And housing’s recovery will depend on stabilizing prices and inventory absorptions," NAR Chief Economist Lawrence Yun told a packed theater here Friday.

If housing prices stabilize, the current recession could be mild and recovery could come in the second half of 2009. Without stabilization, the recession could drag on until 2010, he said."Economic conditions are worst than in the last two recessions, so the current downturn could be deep and prolonged, said Yun.

The good news, said Yun, is that even if the recession is prolonged " housing doesn’t necessarily follow the economy."

Housing demand is driven more by affordability and mortgage rates than economic performance, he said. "Even with the 6 percent current unemployment or the 9 or 10 percent that could come with a severe recession, most people will have jobs and will buy homes if the pricing incentives are there," said Yun.

More positive news is that home sales-although not prices-showed their first uptick in three years during the last quarter. "We are beginning to come back, but recovery won’t happen until inventories are reduced from their current 10-month levels back to a more normal six months.

Fannie and Freddie also need to continue to fulfill their public mission of lending in difficult markets to keep mortgage rates low, Yun said.

But even more critical to a housing recovery are stabilizing home prices. Only then will new buyers get back into the marketplace and underwater buyers be able to consider moving up, he added.

A federal housing stimulus package for home buyers and the promised federal actions of buying troubled loans are also need to support home markets, he said. He urged members to make their congressional representatives aware of the need to help housing.

-Mariwyn Evans

Buyers With Great Credit Scores in Driver's Seat

Potential home buyers with great credit scores, enough cash for a 20 percent down payment, and some determination can get a very good deal right now.

"There are a lot of hungry mortgage originators, so great credit-quality borrowers are in the driver's seat," says Keith T. Gumbinger, vice-president of HSH, a mortgage market analyst.

Borrowers need a credit score of at least 750 to get the best deals. Keeping credit-card balances below 35 percent of their credit line is very important, but 20 percent is the maximum allowed for a top score.

Buyers in a strong-enough position can ask sellers to agree to a contingency clause that gives them an out if they can´t get the best interest rate on a mortgage.

NAR: Latest Housing Report on Sales, Prices

Four out of five metropolitan areas recorded lower home prices in the third quarter from a year earlier, while existing-home sales fell in 32 states from the second quarter, according to the latest quarterly survey by the NATIONAL ASSOCIATION OF REALTORS®.

In the third quarter, 28 out of 152 metropolitan statistical areas showed increases in median existing single-family home prices from the same quarter in 2007; four were unchanged and 120 metros experienced declines. NAR’s track of metro area home prices dates back to 1979.

NAR President Charles McMillan said price comparisons in many areas are like apples and oranges.

"A very large proportion of distressed home sales are taking place at discounted prices compared to more normal conditions a year ago," McMillan says. "It’s very challenging to understand proper valuation, given the differences between distressed sales and a larger share of traditional homes in sound condition."

Foreclosure Impact

Distressed sales - foreclosures and short sales - accounted for 35 to 40 percent of transactions in the third quarter, pulling down the national median existing single-family price to $200,500, which is 9 percent lower than the third quarter of 2007.

A year ago, when there were significantly fewer distressed transactions, the median price was $220,300. The median price is where half of the homes sold for more and half sold for less.

Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate of 5.04 million units in the third quarter, up 2.6 percent from 4.91 million units in the second quarter, but remain 7.7 percent below the 5.46 million-unit pace in the third quarter of 2007.

Lawrence Yun, NAR chief economist, says conditions continue to range widely.

"A pattern of sharply higher sales in areas with large price declines is well established," Yun says. "Affordability conditions have consistently been a major factor in driving sales. Historically during recessions, buyers have responded to incentives and it’s important for government to keep that in the forefront of stimulus decisions."

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage rose to 6.32 percent in the third quarter from 6.09 percent in the second quarter; the rate was 6.55 percent in the third quarter of 2007. Last week, Freddie Mac reported the 30-year fixed fell to 6.14 percent.

Strongest Sales Gains

The largest sales gain during the third quarter was in Arizona, up 28.3 percent from the second quarter, followed by California which rose 28.1 percent and Nevada, up 26.2 percent.

The steepest declines in single-family home prices in the third quarter were in three California markets: the Riverside-San Bernardino-Ontario area, where the median price of $227,200 dropped 39.4 percent from a year ago, followed by Sacramento-Arden-Arcade-Roseville at $212,000, down 36.8 percent from the third quarter of 2007, and San Diego-Carlsbad-San Marcos, where the price dropped 36 percent to $377,300.

"These areas have seen some of the strongest sales gains with some reports of multiple bidding," Yun says.

The largest single-family home price increase in the third quarter was in the Elmira, N.Y., area, where the median price of $105,000 rose 12.5 percent from a year ago. Next was Decatur, Ill., at $93,400, up 8.7 percent from the third quarter of 2007, followed by the Bloomington-Normal, Ill., area, where the third-quarter median price increased 8.1 percent to $168,400.

The typical seller purchased their home six years ago and is experiencing net equity gains. The national increase in value since the third quarter of 2002 is 18.3 percent, which is a median gain of $31,000. Even with the current downward price distortion, 90 percent of metro areas are showing six-year price gains.

Median third-quarter metro area single-family home prices ranged from an affordable $65,800 in the Saginaw-Saginaw Township North area of Michigan to $650,000 in the San Jose-Sunnyvale-Santa Clara area of California. The second most expensive area was San Francisco-Oakland-Fremont, at $615,700, followed by Honolulu at $615,000.

Affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $74,300, and South Bend-Mishawaka, Ind., at $88,000.

The Condo Market

In the condo sector, metro area condominium and cooperative prices – covering changes in 57 metro areas – showed the national median existing-condo price was $210,800 in the third quarter, down 7.1 percent from $227,000 in the third quarter of 2007. Sixteen metros showed annual increases in the median condo price and 41 areas had price declines.

The strongest condo price increases were in the Dallas-Fort Worth-Arlington area, where the third quarter price of $149,900 rose 11.1 percent from a year earlier, followed by Bismarck, N.D., at $148,000, up 11 percent, and the Houston-Baytown-Sugar Land area, where the median condo price of $134,100 rose 8.1 percent from the third quarter of 2007.

Metro area median existing-condo prices in the third quarter ranged from $112,600 in the Greensboro-High Point, N.C., area to $456,300 in the San Francisco-Oakland-Fremont area. The second most expensive condo market reported was the New York-Wayne-White Plains area of New York and New Jersey at $324,000, followed by Honolulu at $322,000.

Other affordable condo markets include the Indianapolis area at $113,500 and the Cincinnati-Middletown area of Ohio, Kentucky and Indiana, at $117,300 in the third quarter.

Market Snapshot by Region

Here's how existing-home sales fared across the country:

  • West: rose 13.1 percent in the third quarter to an annual rate of 1.15 million and are 12.4 percent above a year ago. The median existing single-family home price in the West was $266,300 in the third quarter, which is 21.4 percent below the third quarter of 2007. The only reported metro price increase in the West was in Farmington, N.M., at $193,600, up 1.7 percent from a year ago.
  • Midwest:existing-home sales rose 2.7 percent in the third quarter to a pace of 1.15 million but remain 10.6 percent below a year ago. The median existing single-family home price in the Midwest declined 5.5 percent to $159,900 in the third quarter from the same period in 2007. After Decatur and Bloomington-Normal, the next strongest metro price increase in the Midwest was in the Wichita, Kan., area, where the median price of $125,300 was 5.5 percent higher than a year ago, followed by Champaign-Urbana, Ill., at $146,400, up 2.7 percent.
  • South: sales slipped 1.4 percent in the third quarter to an annual rate of 1.87 million and are 13.8 percent lower than the same period in 2007. The median existing single-family home price in the South was $174,200 in the third quarter, down 3.7 percent from a year earlier. The strongest price increase in the South was in the Tulsa, Okla., area, at $139,800, up 5.1 percent from a year ago, followed by Amarillo, Texas, with a 4.2 percent gain to $128,300, and the New Orleans-Metairie-Kenner area of Louisiana at $166,800, up 4.1 percent.
Northeast: sales declined 1.6 percent in the third quarter to a level of 863,000 units and are 11.7 percent below a year ago. The median existing single-family home price in the Northeast fell 6.5 percent to $267,700 in the third quarter from the same period in 2007. After Elmira, the strongest price increase in the Northeast was in the Trenton-Ewing, N.J., area, at $342,500, up 4.2 percent from the third quarter of 2007, followed by Buffalo-Niagara Falls, N.Y., with a median price of $114,200, up 3.0 percent.

Sharp Decline in Mortgage Rates This Week

Mortgage rates declined Tuesday after the Federal Reserve said it would spend $600 billion to support the mortgage securities market.

Rates fell to 4 7/8 percent, a 1 1/8 percentage point decline. David Beadle, president of BestInfo, said it was the sharpest one-day decline since 1988.

"I hope that the effect is that it brings more investors home to investing in housing," said Alfred DelliBovi, president of the Federal Home Loan Bank of New York. "[Investors] have had a sense in the markets that anything connected with a mortgage is bad" even though most people pay their home loans, he said.

Source: Reuters News, Al Yoon and Lynn Adler (11/25/2008)

Fed, Treasury Announce Plan to Jumpstart Lending

Daily Real Estate News  -  November 25, 2008  - The Federal Reserve and Treasury Department on Tuesday unveiled hundreds of billions more in money they are pumping into the struggling U.S. economy, trying to jumpstart lending by the nation's banks for mortgages and consumer debt.

Together, the programs from the Federal Reserve and the New York Fed aim to dump $800 billion in additional funds into the struggling U.S. economy, more than Congress approved in October for a bailout of the nation's banks and Wall Street firms.
Under the plan, the Federal Reserve announced it will purchase up to $500 billion in mortgage-backed securities that have been backed by Fannie Mae , Freddie Mac, and closely held Ginnie Mae, the three government-sponsored mortgage finance firms set up to promote homeownership. It will also buy another $100 billion in direct debt issued by those firms.
"This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally," said the statement from the Fed.
By putting money in the hands of holders of consumer and mortgage loan securities, the government hopes more money will flow to consumers than has occurred so far in previous bailout plans.
The moves came as the Commerce Department announced that gross domestic product, the broad measure of the nation's economy, fell at an annual rate of 0.5% in the third quarter, the biggest drop in economic activity in seven years. Economists believe that the economy is likely to continue to contract in the current quarter and into early next year.

Source: Chris Isidore, CNNMoney.com (11/25/08)

Inventory Shrinks of Homes for Sale

Bargain hunters and home owners who pulled their properties off the market hoping for better days down the road helped shrink the inventory of available homes in September, according to a Wall Street Journal survey.

The largest year-over-year declines in inventory were 32.1 percent in Sacramento, 27.1 percent in Orange County, Calif., 21.6 percent in Los Angeles, 21.5 percent in Boston, 21.1 percent in Denver, and 20.6 percent in San Diego.

Demand for housing has slowed even as the population has increased, according to Census Bureau figures. Mortgage Bankers Association chief economist Jay Brinkmann blames lack of jobs, noting that young people don´t go out on their own nearly as frequently during tough times.

Source: The Wall Street Journal, James R. Hagerty (10/28/08) Five Reasons the Foreclosure Crisis Is Hard to Fix

The government has thrown billions at the foreclosure crisis, but as Sheila Bair, head of the Federal Deposit Insurance Corp., told the Senate last week, "There has been some progress, but it’s not enough."

Until the sweeping foreclosure problem is resolved, mortgage system woes will persist.

Here are five reasons why the foreclosure crisis has proved hard to fix:

Falling home prices: More than 23 percent of home owners with a mortgage owe more on their loans than their homes are worth. Lenders won’t give new loans to people with negative equity and that leads to owners walking away, causing the lender to foreclose.

Too many investors: More than 30 percent of properties in the foreclosure process are owned by someone who doesn’t live in the property, according to RealtyTrac Inc. Programs that help home owners in trouble are not designed to aid investors.

Complex investments: Nearly all mortgages in the last decade have been packaged into securities and sold. Investors in these securities are hesitant to agree to loan modifications because it will mean a significant loss. U.S. Rep. Barney Frank, D-Mass., has accused hedge fund investors of blocking loan modifications. In a letter summoning hedge fund investors to a hearing, he wrote: "For the hedge fund industry, which has flourished for much of the past decade, to take steps so actively in opposition to what is currently in the national economic interest is deeply troubling."

Job losses: Unemployment is the main reason people can’t pay their mortgages. As the unemployment rate has risen above 6 percent, the percentage of mortgage delinquencies caused by job loss has risen to 45 percent.

Small modifications don’t work: One third of all subprime loans modified in the third quarter of 2007 were delinquent again within 10 months, according to a Credit Suisse report.

Source: The Associated Press, Alan Zibel (10/27/2008)/28/08)

Fed Drops Key Rate to 1 Percent

The Federal Reserve trimmed a half point off the key federal funds interest rate Wednesday, dropping it to 1 percent.

In a statement, the Fed acknowledged that the economy has few bright spots. "The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures," the central bank said.

It left open the possibility of further cuts, saying it would "act as needed" to stabilize prices and encourage growth.

Unemployment has risen to 6.1 percent from 5 percent in January as a result of the loss of 700,000 jobs. Analysts say this news is particularly alarming since job losses usually come early in a recession.

Source: The New York Times, Edmund L. Andrews (10/29/08)

Owners Still Optimistic About Their Home Values

Home owners remain doubtful that their homes have lost value in the current financial downturn, according to a survey of home owners conducted by Harris Interactive for Zillow.com.

About 49 percent of those surveyed, down from 62 percent at the end of the second quarter, believe that their own home’s value has increased or stayed the same over the past year.

Home owners in the Northeast were the most optimistic with 56 percent believing the value of their homes had stayed the same or risen. Slightly fewer-53 percent-in the South had similar attitudes. Westerners and Midwesterners were more pessimistic with 48 percent and 35 percent respectively having that perception.

Other key results from the survey include:
  • 50 percent of those who say they support John McCain and 56 percent of Barack Obama supporters believe their home values decreased over the past year.
  • 3 percent say they plan to sell their home in the next six months, down from 5 percent last quarter. Another 3 percent say they plan to buy a home, down from 4 percent in the second quarter.
  • 53 percent are planning either major (such as replacing the roof or remodeling the kitchen) or minor (like installing a new garbage disposal or painting) home improvements next year. Of those, 47 percent plan minor improvements and 15 percent plan major improvements.

Source: Zillow.com (10/29/2008)

Economists Suggest Bottom Is in Sight

Economists at the National Association of Home Builders semi-annual forecast conference predict home prices will hit bottom in the middle of 2009.

As evidence, builders point to increasingly affordable prices, new home incentives, fewer housing starts, declining interest rates, and pent-up demand.

"I'm hopeful that the markets will come to their senses soon," said Michael Moran, chief economist for Daiwa Securities America.

Source: The Wall Street Journal, June Fletcher (10/29/2008

NAR: Home Sales Rise as Affordability Improves

Existing-home sales increased last month as buyers responded to improved housing affordability conditions, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August. Home sales are 1.4 percent higher than the 5.11 million-unit pace in September 2007.

Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains.

"The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri, and Rhode Island," he says. "The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike."

NAR President Richard F. Gaylord says low home prices and low interest rates have helped attract buyers.

"This is the first time since November 2005 that home sales have been above year-ago levels," Gaylord says. "Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.04 percent in September from 6.48 percent in August; the rate was 6.38 percent in September 2007.

Yun says there may still be market disruptions.

"The credit markets are not settled yet, although the mortgage market stabilized with the government takeover of Fannie Mae and Freddie Mac," Yun says. "Inventory remains high, and price declines are pressuring owners."

Yun says that an additional housing stimulus would stabilize prices more quickly and help bring faster stability to Wall Street.

"Removing the repayment feature on the [$7,500] first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory," Yun says.

A Closer Look at the Numbers
  • Total housing inventory: at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, which represents a 9.9-month supply at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly declines since inventories peaked in July.
  • National median existing-home price: $191,600 in September, for all housing types. That's down 9 percent from a year ago when the median was $210,500.

"Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions," Yun says. "These are pulling the median price down because many are being sold at discounted prices. The current market is not being dominated by speculative investors. Rather, 80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms."

  • Single-family home sales: increased 6.2 percent to a seasonally adjusted annual rate of 4.62 million in September from a pace of 4.35 million in August, and are 3.8 percent above the 4.45 million-unit level a year ago. The median existing single-family home price was $190,600 in September, which is 8.6 percent below September 2007.
  • Existing condominium and co-op sales: were unchanged at a seasonally adjusted annual rate of 560,000 units in September, but are 15.7 percent below the 664,000-unit pace in September 2007. The median existing condo price was $199,400 in September, down 10.2 percent from a year ago.

By Region

Here's a breakdown across the country of existing-home in September:

  • West: sting-home sales in the West jumped 16.8 percent to an annual rate of 1.25 million in September, and are 34.4 percent higher than September 2007. Median price: $253,600, down 18.5 percent from a year ago.
  • Midwest: sales increased 4.4 percent to an annual pace of 1.19 million in September, but are 2.5 percent below a year ago. Median price: $152,500, which is 7.9 percent lower than September 2007.
  • South: sales rose 2.2 percent in September to a pace of 1.9 million but remain 7.8 percent below September 2007. Median price:$167,200, down 4.1 percent from a year ago.
  • Northeast: sales slipped 1.2 percent to an annual pace of 840,000 in September, and are 7.7 percent lower than a year ago. Median price: $246,800, down 5.4 percent from September 2007.

Source: NAR


McCain would buy bad homeowner mortgages

WASHINGTON – Oct. 8, 2008 – Republican presidential candidate John McCain is proposing a $300 billion program for the federal government to buy up bad home mortgages and allow homeowners to keep their houses.

McCain said: "Until we stabilize home values in America, we’re never going to start turning around and creating jobs and fixing our economy and we’ve got to get some trust and confidence back to America."

In an unusual step, McCain announced the plan during Tuesday’s debate. He said t hat as president he would direct the federal government to purchase mortgages directly from homeowners and mortgage providers. The loans would be replaced with fixed-rate mortgages, ostensibly at a loss to the government.

"Is it expensive? Yes," McCain said.

Credit markets see more gradual improvements

NEW YORK (AP) - Oct. 15, 2008 - The government´s efforts to crank open the cr edit markets have led to some mild improvements in lending rates and Treasury bill yields. But it will probably take months, and perhaps a few years, before lending returns to healthier levels.

It was clear Tuesday that there is still plenty of fear in the lending business ? one indicator, the difference between the rate at which banks lend to other banks and the rate at which they buy U.S. government debt remains near a 25-year high.

But analysts believe that as long as conditions keep improving, the economy should be able to grow.

"I don´t think we need to have credit conditions come back to normal before we see signs that the economy is recovering," said Bernard Baumohl, chief global economist at the Economic Outlook Group. He said he believes the financial system won´t be fully restored until at least 2010, but that he expects the economy to turn around in the second half of 2009 after the housing market bottoms.

The problem is that the health of the economy and the credit markets is intertwined: The health of the economy relies on credit, and the willingness to lend depends on the economic outlook. As a result, the economy´s recovery might be jagged and gradual, as lenders incrementally loosen up as they grow more confident that borrowers are on steadier ground.

And, like an economic recovery, there´s no specific piece of data that will signal that things are significantly better in the credit markets. Rather, investors will need to see prolonged, steady improvement on various fronts ? bank-to-bank lending, lending to businesses and consumers, and investment in corporate debt such as commercial paper ? to get a sense that credit has returned to a healthier state.

Confidence in the lending business grew a bit Tuesday as the U.S. government said it would spend $250 billion of its $700 bailout plan on buying stock in nine major banks, after European governments announced a similar move Monday to recapitalize their own banks. The actions helped bank-to-bank lending rates tick lower, and bring some optimism back to the stock market.

"We are seeing an improvement. It´s still frayed, but not as dark as it looked last Friday," said Mark Zandi, chief economist at Moody´s Economy.com. "I do think we´re making some progress here, and hopefully this is just the beginning."

To be sure, the clogged credit markets are still squeezing businesses, municipalities and individuals.

Domino´s Pizza Inc. Chief Executive David Brandon said during the company´s quarterly earnings call that although things appear better now than they did last week, borrowing directly from banks has "been very tough, and that´s gotten exceedingly worse during the third quarter, and I would say right now it´s fundamentally shut down." The seize-up is forcing Domino´s to "be creative," Brandon said, and consider offering short-term financial support to its stronger franchisees.

Meanwhile, two corporate dea ls this week have fallen through. French outdoor advertising firm JCDecaux SA said Tuesday that negotiations to buy Russian rival News Outdoor Group from News Corp. have ended because financing the deal would be too difficult. And on Monday, Waste Management Inc., the nation´s largest garbage hauler, withdrew its $6.73 billion bid to acquire smaller rival Republic Services Inc.

In another sign of tight credit, a Tuesday report by the New York Building Congress said New York City will see its construction boom peak this year and construction jobs plunge. Metropolitan Transportation Authority spokesman Jeremy Soffin said capital projects like the Second Avenue subway line are highly dependent on access to the credit markets, while Steven Spinola, president of the Real Estate Board of New York, said fewer projects will be financed because it will be harder for developers to get funding.

And it´s not going to get any easier for consumers with shaky credit to get loans for homes, cars, and other big-ticket items. GMAC Financial Services, the financing arm of General Motors Corp., said Monday that it tightened its criteria for consumer auto financing ? one of the changes was limiting purchases to car buyers with a credit score of 700 or above.

Still, it´s a good sign that bank-to-bank lending rates are slowly coming down ? a trend that a still-nervous Wall Street hopes will continue.

The London interbank rate, the key-lending rate known as Libor, has been inching lower. Libor for three-month dollar loans fell to 4.64 percent from 4.75 percent, after a 0.07 percentage point dip on Monday; last Wednesday, when the financial markets were in turmoil, Libor rose to 5.38 percent, and a month ago, it was below 3 percent. And investors were betting Tuesday that Libor would fall again on Wednesday, according to Miller Tabak & Co. analyst Tony Crescenzi.

Libor is important because many consumer loans, including about half of all adjust able-rate mortgages, are tied to it.

It remains well above the three-month Treasury bill yield of 0.34 percent, up only modestly from 0.21 percent late Friday. It´s also much higher than the target Fed funds rate of 1.5 percent. The fed funds rate is the overnight rate at which banks lend funds that are held at the Federal Reserve to other banks; Libor is the average bank-to-bank lending rate on the wholesale market.

But another good sign is that the two-year swap spread ? the difference between two-year swap rates and two-year Treasury notes ? dropped to the lowest point since Sept. 19, noted Crescenzi. Swap rates measure the rate that a speculator pays to switch from a floating-rate obligation into a fixed-rate obligation; a drop in the spread means the market is betting that credit spreads will narrow. That means cheaper borrowing.

And spreads on credit-default swaps ? the insurance policies bought to protect against bond defaults ? also narrowed on Tuesday, according to Phoenix Partners Group. That suggests a let-up in the fear of corporate failures. And rates on commercial paper fell, as did rates on high-yield junk bonds. Commercial paper is the short-term debt that companies sell for their financing needs; the Fed says it will start buying commercial paper within days.

Copyright © 2008 The Associated Press, Mad

Stocks Surge to One-Day Record Gain

NEW YORK (Oct. 13) - Wall Street stormed back from last week's devastating losses Monday, sending the Dow Jones industrials soaring a nearly inconceivable 936 points after major governments' plans to support the global banking system reassured distraught investors. All the major indexes rose more than 11 percent.

The market was expected to rebound after eight days of precipitous losses that took the Dow down nearly 2,400 points, but few expected this kind of advance, which saw the Dow by far outstrip its previous record one-day point gain, 499.19, set during the waning days of the dot-com boom. The Standard & Poor's 500 index also set a record for a one-day point gains.
Following eight punishing trading sessions that sank the Dow Jones Industrial Average by 22 percent, the benchmark index jumps by more than 900 points, an unprecedented gain nearly doubling the previous one-day record.

There were cheers and applause on the floor of the New York Stock Exchange at the closing bell, and trading was so active that prices were still being computed several minutes after the closing bell, longer than it would take on a quieter day.

Still, while the magnitude of Monday's gains stunned investors and analysts, few were ready to say Wall Street had reached a bottom. The market is likely to have back-and-forth trading in the coming days and weeks - and may well see a pullback when trading resumes Tuesday - as investors work through their concerns about the banking sector, the stagnant credit markets and the overall economy.

John Lynch, chief market analyst for Evergreen Investments in Charlotte , N.C., said Monday's rally was encouraging but he doubted it signaled the worst has passed.

"My screen is completely green and I love that, but I'm not doing any backflips yet. We still have many challenges up ahead," Lynch said, noting the ongoing strains in credit markets and forecasts for poor corporate earnings for 2009.

Denis Amato, chief investment officer at Ancora Advisors, said it's too soon to say whether the market has started to carve out a bottom and that the credit markets where many companies turn for day-to-day loans will need to loosen for stocks to hold their gains. With the U.S. bond markets and banks closed Monday for Columbus Day, it was difficult for investors to gauge the reaction of the credit markets to actions by major governments.

He said the severity of the selling last week was one possible signal that the market might be nearing a bottom and that the stepped up intervention of the government is a welcome sign for the markets.
< BR>"I think we had enough negatives last week that if the government steps in we could have a pretty nice run. Is it off to the races? No, I don't think so. We have a lot of stuff to work through."

The market did appear to take heart when the Bush administration said it is moving quickly to implement its $700 billion rescue program, including consulting with law firms about the mechanics of buying ownership shares in a broad number of banks to help revive the stagnant credit markets and in turn get the economy moving again. Neel Kashkari, the assistant Treasury secretary who is interim head of the program, said in a speech Monday officials were also developing guidelines to govern the purchase of soured mortgage-related assets. However, he gave few details about how the program will actually buy bad assets and bank stock.

A relatively tame finish to Friday's session and a weekend off gave analysts an d investors some time to reassess last week's tumultuous trading. And stock prices that were decimated by frenetic selling are now looking attractive.

Jim King, chief investment officer at National Penn Investors Trust Co., said the fear that took hold of the markets last week was overwrought and could signal that a bottom is near. When selling turns so frenetic that it hits a broad swath of stocks indiscriminately, as it did last week, many market watchers say a market low is at hand. That creates opporunity, King noted.

"We have exceptional companies at fire sale prices," he said.

Still, King cautioned that any market rebound likely will be choppy.

"Even if this is the beginning of a recovery we're not just going to have up markets from here on in," he said. "We're not through the woods. We think there is collateral damage from this debacle." King pointed to an increase in unemployment and nervousness among consumers that could, for example, hurt retai lers and in turn, take stocks lower.

According to preliminary calculations, the Dow rose 936.42, or 11.08 percent, to 9,387.61. The Dow's previous record for a one-day point gain was 499.19, or 4.93 percent, on March 16, 2000.

Broader stock indicators also jumped Monday. The S&P 500 index advanced 104.13, or 11.58 percent, to 1,003.35; it was the biggest point gain ever for the S&P 500, eclipsing the 66.33, or 4.76 percent, jump it had on March 16, 2000. It was the biggest percentage gain for the index since March 15, 1933, when it surged 16.6 percent.

The Nasdaq rose 194.74, or 11.81 percent, to 1,844.25, its 10th biggest point gain; during the dot-com boom, the index soared as much as 324.83 in one day. Its percentage gain Monday was second to the 14.2 percent logged Jan. 3, 2001, the same day that the Nasdaq set its record for a one-day point gain.

About 3,030 stocks advanced on the New York Stock Exchange, while only about 160 declined - a re versal from last week, when declining stocks overwhelmed the gainers. But the trading volume of 1.82 billion shares was lighter than it had been last week, suggesting there was less conviction in the buying than during last week's selling.

Lynch described the mood among investors as "relaxed" compared to the hysteria of last week's crushing losses.

Wall Street was cheered by word from the Bank of England that it would use up to $63 billion to help the three largest British banks strengthen their balance sheets.

The Bank of England, the European Central Bank and the Swiss National Bank also jointly announced plans to work together to provide as much short-term funding as necessary to help revive lending.

After a series of weekend meetings in Washington of heads of the Group of Seven nations, the gains in global markets signaled that investors found comfort from the actions and pledges coming from government officials.

The surge in stocks comes afte r a dismal week on Wall Street that erased an estimated $2.4 trillion in shareholder wealth. The Dow, after eight consecutive daily losses that totaled just under 2,400, or 22.1 percent, finished at its lowest level since April 2003, and also suffered its worst weekly percentage loss ever, a fall of 18.2 percent.

Meanwhile, the S&P 500 and the Nasdaq each lost 15.3 percent last week.

Recoveries from past crashes have taken considerable time. When the market crashed Oct. 19, 1987, sending the Dow down 508 points to 1,738.34, the blue chips had lost 938 points, or 36.1 percent, since reaching a then-record close of 2,722.42 on Aug. 25, 1987. It took just over 15 months for the Dow to get back to its pre-crash level, and almost two years to the day - Aug. 24, 1989 - to reach a new closing high, 2,734.64.

The Dow has an even larger percentage drop to regain this time. By Friday's close, the average had fallen 5,713 points, or 40.3 percent, from its record finis h of 14,165.43 a year earlier, on Oct. 9, 2007. More recently, it has had fallen 2,970, or 26 percent, from its close before the Sept. 15 collapse of Lehman Brothers Holdings Inc., the event that triggered the freeze-up in the credit markets and that sent stocks plunging.

Investors have worried that banks' reluctance to lend to one another would imperil economic activity by making it harder and more expensive for businesses and consumers to get a loan. The mid-September bankruptcy of Lehman Brothers Holdings Inc. exposed major fault lines in the credit market as investors lost money on bad debt. That triggered a tightening of lending conditions.

"Everybody is basically waiting on the decision on where they're going to inject cash," Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams in New York, said of Bush administration officials. He said with the bond markets closed, U.S. government officials are likely holding off on announcement of details about where it might invest money until all major global markets are open.

Rovelli said that a sustainable advance on Wall Street could prove elusive.

"Everybody knew that we were going to have an up day eventually," he said, warning that the rally doesn't necessarily signal an end of the market's troubles.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude rose $3.49 to $81.19 on the New York Mercantile Exchange after oil fell to its lowest level in 13 months last week.

The Russell 2000 index of smaller companies rose 48.41, or 9.27 percent, to 570.89.

Investors in Asia and Europe also grabbed stocks after last week's rout and the weekend moves by governments to bolster investor confidence.

In Asia, Hong Kong's Hang Seng index surged 10.2 percent. Markets in Japan were closed for a holiday. In Europe, Britain's FTSE 100 jumped 8.26 percent, Germany's DAX index rose 11.4 percent, and Franc e's CAC-40 surged 11.2 percent.

Copyright 2008 The Associated Press.

Home Sizes Shrink to Lure Buyers

Daily Real Estate News  -  October 13, 2008 - Home builders are reducing the size and options available to appeal to buyers with less money to spend and who are facing a harder time getting financing.

Los Angeles-based KB Homes had shrunk its homes from 3,400 square feet, selling for $450,000, to 2,400 square feet selling for $300,000 to appeal to buyers. Now, it's shrinking its homes yet again--1,230 square feet priced at about $200,000

Other builders, including Warmington Homes and John Laing Homes, have taken similar approaches.

"We're getting back to more the way things were historically, kind of undoing the excesses, not just from a price perspective but home size and (fewer amenities)," says Nishu Sood, a Deutsche Bank analyst.

The new KB Homes aren’t just smaller, they are more efficiently designed, says Steve Ruffner, president of KB Home's Southern California Coastal Division.

"You could have a three-bedroom, 2,500 square-foot single-story home and all you had was wide hallways and bigger ro oms. It wasn't really giving [buyers] the utility," Ruffner says.

Source: The Associated Press, Alex Veiga (10/10/08)

Housing Inventory Tightens in September

Daily Real Estate News  -  October 9, 2008 - The number of homes for sale in the 28 markets tracked by online real estate company ZipRealty fell 1.6 percent in September.

Overall, the September inventory is down 7 percent from a year ago in the Zip Realty-tracked metro markets. Zip's accounting includes only homes listed in multiple-listing services and many foreclosed homes aren’t included in those databases.

Barclays Capital estimates there are 811,000 bank-owned homes in the U.S., up from 129,000 two years ago, and predicts that the total will rise 60 percent before peaking late next year.

Source: The Wall Street Journal, James R. Hagerty (10/09/2008)

Unstable Markets Leave Buyers Confused

The defeat of the bailout bill likely isn’t good news for the housing market.

In the wake of Monday’s legislative defeat of the housing bailout, housing economist Thomas Lawler asked, "How many people are going to sit down and say: 'You know honey, it's a good time to buy a house?' The government really needs to get its act together."

Home prices have fallen about 20 percent since their peak in early 2006 and are expected to sink another 10 percent over the next year, according to Mark Zandi, chief economist with Moody’s Economy.com. But this new affordability isn’t driving buyers to the settlement table.

For one thing, loans are very hard to get. Lenders hurt by record defaults and foreclosures, are only giving loans to borrowers with the best credit. At the same time, rising unemployment is making it more likely that workers will be laid off.

"The predominant feeling is confusion," Jeff Casimir, a 27-year-old teacher in Washington, D.C., who is considering buying a home with his wife, wrote in an e-mail message last week. "I really have no idea what impact all these buyouts, takeovers, and proposals will have for me."

Greater Oversight Likely to Accompany Bailout

Daily Real Estate News  |  September 30, 2008  Once a financial rescue plan is executed, legal and political observers expect Capitol Hill legislators to turn their attention to tightening the regulation of mortgage lending-an especially obvious target due to the fact that so much of the troubled debt handcuffing the nation's banks originated with the lax practices of mortgage brokers and lenders.

In addition, lawmakers may try to overhaul the patchwork of government authority over the nation's banks, which are currently regulated by four agencies with overlapping jurisdictions: the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Office of Thrift Supervision, and the Federal Reserve.

Finally, legislators may try to bring unregulated markets, such as those for credit default swaps, under control. The market for credit default swaps alone has mushroomed to $44 trillion in face value, so vast that a problem at any one of the major participants poses a global risk.

Why NAR Supports Government Intervention

Daily Real Estate News  |  September 30, 2008
The NATIONAL ASSOCIATION OF REALTORS® is urging members to call on national lawmakers to pass the financial rescue bill that was defeated by the House of Representatives Monday.

NAR President Dick Gaylord also asked members to educate themselves and their customers on how the rescue bill can help the housing market and the economy, in general.

"This is a critical time for our nation, and REALTORS® everywhere need to call on Congress to enact a recovery plan that will end the economic crisis we are facing," NAR President Dick Gaylord said.

Despite what's been reported in some news outlets, the laws and policies that Congress is considering will directly benefit Main Street, by making financing more available and helping to stabilize home sales and prices, Gaylord said.

"Like it or not, the housing market can’t rebound until we resolve the problems in the financial markets," he said.

Fate of Economy Depends on Bill

Gaylord has received messages from some members who want to know why NAR is supporting unprecedented government investment in financial institutions and the housing market.

In response, he said that the fate of the economy depends on it. "Many buyers can no longer find financing they need to buy a home, contracts are being pulled off the table, and sellers are cancelling their listings," he said.

Without "swift and substantial intervention," real estate practitioners and consumers will be faced with a market where:

  • Getting a mortgage, small business, or short-term loan becomes extremely difficult, even for good credit consumers and businesses.
  • Consumer and business bankruptcies rise significantly, as refinancing options are shut down.
  • Lines of credit are reduced and interest rates on personal and business credit cards rise, adding to the burden on families.
  • Consumer and business spending declines, further depressing the economy.
  • Unemployment increases significantly.
  • Budget deficits increases noticeably due to declining revenue collection at all levels of government.

Cost of Plan Could Be Lower

Additionally, the cost of such a plan is likely to be below the figures that have been widely reported, Gaylord said.

As NAR Chief Economist Lawrence Yun has explained, there is a very good chance that taxpayers will reap a positive return on this investment over the long term.

"Today, I ask all of you to help us resolve this crisis," Gaylord said.

Educate Yourself: Issue Summary

NAR has created a summary of the major provisions being discussed in Congress (PDF), and said it will continue to keep members informed of developments in Washington, D.C.

"I believe we can get beyond debate over who is responsible for the current situation and move toward a solution that will benefit REALTORS® and all of the consumers we serve," Gaylord said.

Growing Optimism on Revived Rescue Plan

Congressional leaders from both parties say they're hopeful that a $700 billion financial industry bailout that derailed in the House is back on track for quick passage, thanks partly to a provision increasing insurance for people's deposits, according to the Associated Press.

President Bush planned to call lawmakers asking for their support ahead of a crucial Senate vote Wednesday night, said the AP.

"I think the Senate thinks it has the votes and I think it probably will pass," said House Majority Leader Steny Hoyer, D-Md. House Republican Whip Roy Blunt of Missouri agreed that prospects for passage have improved, and he said he was particularly heartened by indications the legislation has become more appealing to constituents back home.

Vote Set for Wednesday Night

The plan for Wednesday night's vote was set after leaders there agreed to add tax breaks for businesses and the middle class and increase deposit insurance in an attempt to revive the legislation rejected by the House.

The House may reconsider the plan on Friday.

"No one is glad we have reached this critical point. . .Now is our time to work not as Democrats, not as Republicans, but as guardians of the public trust," said Sen. Harry Reid, D-Nev. He said he was hopeful the measure could clear Congress within days "so that by this weekend rolling around, we will have done what we need to do for the American people."

Republican Sen. Mitch McConnell of Kentucky, the minority leader, said: "We believe that we have crafted a way to go forward and to get us back on track."

White House Warns of the Risk of Failure

The White House tried to build support by warning of the consequences of failure. "This morning we're seeing increased evidence of the credit squeeze on small businesses and municipalities all across the country, so it's critically important that we approve legislation this week and limit further damage to our economy," White House spokesman Tony Fratto said.

Democratic presidential nominee Barack Obama and his GOP rival, John McCain, planned to fly to Washington for the Senate vote, as did Democratic vice presidential nominee Joe Biden.

Reid and McConnell appeared likely to win a big vote in the Senate that would put pressure on the House to go along and send the measure to the White House.

Scrambling to revive a package that met with bitter derision among constituents who viewed it as a giveaway to Wall Street, the Senate added a number of sweeteners designed to please rural lawmakers, including disaster aid for hurricane-battered states and money for rural schools.

The package was hitching a ride on a popular measure to require health plans for 51 or more employees to give equal treatment to mental health or addiction if they cover such illnesses.

New program allows subprime mortgages to become a fixed-rate FHA

WASHINGTON – Oct. 2, 2008 – A new program rolled out by HUD yesterday could help more homeowners avoid foreclosure. Under the program, the lender of an existing subprime mortgage forgives part of the debt as if it’s a short sale, and the balance of the mortgage is rolled into a fixed-rate FHA mortgage. Unlike earlier programs, however, the HOPE for Homeowners program is aimed more at lenders than homeowners.

"For families struggling to keep up with their mortgage payments, this program will be another resource to refinance into a loan they can afford," says HUD Secretary Steve Preston. "FHA remains a safe and affordable alternative to the high-priced mortgage loans that threaten homeowners’ ability to retain their homes. We strongly encourage borrowers to work with their lenders to determine if HOPE for Homeowners is the right program for them."

The Economic and Housing Recovery Act of 2008 authorized the HOPE for Homeowners program. The HOPE for Homeowners Board of Directors was charged with establishing underwriting standards to ensure borrowers, after any write-down in principal, have a reasonable ability to repay their new FHA-insured mortgage.

The program began yesterday and ends Sept. 30, 2011. It’s available only to owner- occupants. In many cases, banks will have to write down the existing mortgage to 90 percent of the new appraised value of the home.

Borrower eligibility

Borrowers should contact their lender to determine eligibility. General requirements include:

• The home is their primary residence, and they have no ownership interest in any other residential property, such as second homes.
• Their existing mortgage was originated on or before Jan. 1, 2008, and they have made at least six payments.
• They are not able to pay their existing mortgage without help.
• As of March 2008, their total monthly mortgage payments due were more than 31 percent of their gross monthly income.
• They certify they have not been convicted of fraud in the past 10 years, intentionally defaulted on debts, and did not knowingly or willingly provide material false information to obtain their existing mortgage(s).

How the program works

The Board expects homeowners will participate in the program primarily through their current lender. HOPE for Homeowners includes the following provisions:

• The loan amount may not exceed a maximum of $550,440.
• The new mortgage will be no more than 90 percent of the new appraised value including any financed upfront mortgage insurance premium.
• The upfront mortgage insurance premium is 3 percent and the annual mortgage insurance premium is 1.5 percent.
• The holders of existing mortgage liens must waive all prepayment penalties and late payment fees.
• The existing first mortgage must accept the proceeds of the HOPE for Homeowners loan as full settlement of all outstanding indebtedness.
• Existing subordinate lenders must release their outstanding mortgage liens.
• Standard FHA policy regarding closing costs applies.
• The borrower must agree to share with FHA both the equity created at the beginning of this new mortgage and any future appreciation in the value of the home.
• The borrower cannot take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.

The costs to the homeowner include the upfront and annual insurance premiums, as well as a share of the equity created by the write-down associated with the HOPE for Homeowners mortgage and any future appreciation in the value of the home. If the home is sold or refinanced, the homeowner will share the equity with FHA on a sliding scale ranging from a 100 percent FHA share after the first year to a minimum of 50 percent after five years.

The lien holder that previously held the highest priority will receive payment up to a proportion of its original interest, not to exceed the amount of available appreciation. This type of delayed payoff will take place until all prior lien holders are satisfied or the amount of available appreciation is exhausted. All remaining appreciation is remitted to FHA.

Fannie and Freddie: Getting to know the powerful pair

CHICAGO – July 25, 2008 – Behind their down-home names, Fannie Mae and Freddie Mac are so vital to the economy that the government scrambled to offer them a lifeline. But what exactly are they, and what do they do?

They are the engines behind a complex process of buying, bundling, slicing and selling mortgages that remains a mystery even to millions of Americans whose home debt passes through their hands.

They were set up by the federal government - Fannie in 1938, Freddie in 1970 - to help more Americans buy and keep their homes. Today both are public companies, their stock traded on the open market.

But Fannie and Freddie don't deal directly with homeowners. Instead, they buy mortgages away from the banks that already hold them, providing cash that allows banks to make more home loans and take on more debt.

Then Fannie and Freddie bundle the loans together and sell pieces of the whole to investors as what are called mortgage-backed securities. They pay a guaranteed rate of return - like Treasury bonds, but more lucrative for investors.

While they have not carried the explicit backing of the federal government for decades (Fannie became private in 1968, while Freddie was set up that way), each has a $2.25 billion line of credit with the government.

And the implicit presence of Uncle Sam helped the pair grow fast.

As more and more Americans sought to buy homes, Fannie and Freddie's portfolios grew more than 10 times from 1991 to 2003. Today they hold or guarantee about $5 trillion in mortgage debt, nearly half of what's outstanding in the United States.

The two were immensely profitable even as the explosive growth in home values slowed, then home prices began to fall. Borrowers were stuck with payments they couldn't afford. Thus began a wave of foreclosures.

Fannie and Freddie were mostly unaffected by the subprime lending crisis that has grabbed so many headlines. But even foreclosures on more desirable mortgages took their toll.

Stock in each company has plummeted more than 80 percent in the past year as investors worried about the fallout. And the actual holdings of Fannie and Freddie dwindled.

Compounding the danger, the two companies, helped by high-powered lobbying, are allowed by the government to keep much smaller cushions of capital to fall back on than other companies.

Banks are required to hold a reserve of cash and other investments equal to about 10 percent of the dollar amount of loans they make. The cushion is intended to keep them solvent in case some of the loans go bad.

But because of special regulatory rules passed by Congress, Fannie and Freddie were able to grow their combined liabilities to more than $5 trillion that are now backed by only $81 billion in capital.

Seems like a lot of money until you realize that Fannie and Freddie have lost a combined $11 billion in just the past year - and that analysts are forecasting billions more in losses in the quarters to come.

"When house prices fall very dramatically ... Fannie and Freddie have very little capital to protect themselves from those losses," said Deborah Lucas, a professor of finance at Northwestern University's Kellogg School of Management.

Enter the federal government and its rescue package - additional, unlimited lines of credit, plus the option for the federal government to invest directly in the two companies.

The top budget analyst for Congress said Tuesday the rescue package could cost taxpayers as much as $25 billion.

But the analyst told lawmakers in a letter that the odds were better than even that the government would not have to step in to prop up Fannie and Freddie by lending them money or buying stock.

Treasury Secretary Henry M. Paulson said keeping the pair in business is "central to the speed with which we emerge from this housing correction."

He really had little choice in offering the lifeline: A collapse of Fannie and Freddie and big write-downs in the value of the debt they sold could cripple the U.S. banking system because almost all banks have some Fannie and Freddie securities as part of their core holdings.

Fannie and Freddie like to portray themselves as successors to the tradition of George Bailey's savings and loan in the classic film "It's A Wonderful Life," enabling more Americans to own homes by stabilizing the mortgage market.

If they failed, the result might less resemble Bedford Falls than the movie's envisioned slum of Pottersville.

"It's sort of the cataclysmic question," said mortgage banker Ken Niemann, executive vice president of Stifel Bank and Trust outside St. Louis. "The answer is we'd rather all not find out."

Experts say it would become much harder for people to borrow money to buy homes. Mortgage rates would shoot up. Home sales would be stifled, and that could wreak additional havoc on the economy.

That's much less likely now that the government has offered a lifeline. But it's still possible Fannie and Freddie's troubles could make home loans more expensive and tougher to get, at least for the short run.

"I believe that we will still have mortgages with low down payments, but only for people with very strong credit," predicted John Vogel, professor of real estate at Dartmouth College's Tuck School of Business.

No one disputes Fannie and Freddie have been essential to the functioning of the U.S. housing market and helped homeowners by pumping enough transactions through the market to lower interest rates. But critics say they are too dominant for the economy's good.

"But they're so big that when they run into difficulty like they have right now, it can create a lot of problems for the economy," said economist Patrick Newport of Global Insight.

And critics say they strayed from their original mission as they pushed to expand the scope of their mortgage businesses to churn out ever-higher earnings for their shareholders.

"They're not supposed to be trying to squeeze out the last penny of profit from every deal," said James Gaines, a real estate economist at Texas A&M University.

On the Net:

Fannie Mae: http://www.fanniemae.com

Freddie Mac: http://www.freddiemac.com

Copyright 2008 The Associated Press, Dave Carpenter


Mortgage insurers raise bar

NEW YORK – July 16, 2008 – Mortgage insurers have been dramatically tightening their standards throughout the U.S., further squeezing potential home buyers.

Stung by growing defaults, lenders are offering borrowers fewer ways to avoid purchasing private mortgage insurance. Mortgage insurance, required for buyers who are unable to make a full down payment or who have insufficient credit histories, reimburses lenders in the event of a borrower default. But over the past few months, mortgage insurers have been declaring more and more of the U.S. a "declining market," raising the requirements and making such insurance harder to obtain. The result: another hurdle for home buyers, and yet another wrenching change for the struggling housing market.

While it’s difficult to gauge the severity of the impact, industry executives concede insurers’ tighter standards are affecting the market. At ShoreBank Corp., a community-development bank with branches in Chicago, Cleveland and other cities, the insurers’ tighter standards are "wreaking havoc," says Michelle Collins, director of mortgage lending. For a popular conventional loan package, "easily 70 percent of the previous set of borrowers will not be able to buy," she adds.

The spreading restrictions are a symptom not only of the housing and credit crisis but of the mortgage-insurance industry’s own huge losses. The insurers face massive borrower defaults on loans that were approved when securing a mortgage was far easier.

Punished with continual downgrades by credit-rating agencies, mortgage insurers have been trying to shore up their stricken balance sheets. One large player, Triad Guaranty Inc., said last month that it would stop writing new insurance and gradually wind down its business. Radian Group Inc. announced management changes last week aimed at restoring investor confidence.

Insurers add that they are pursuing the kind of more disciplined behavior that may have helped avert the housing crisis. "Clearly, the pendulum had swung a little too far in terms of flexibility in underwriting," says Len Sweeney, chief risk officer for AIG United Guaranty, the mortgage-insurance unit of American International Group Inc. "Some of the movement we’ve made of late is back to a more prudent approach."

Michael Zimmerman, a spokesman for industry leader MGIC Investment Corp., says, "So far, we’re only losing the business that we no longer want to write. The long-term objective of anybody in the housing industry should not be just affordability but sustainability. I think for the last few years, the drive and the focus have been solely on affordability."

For a time, it seemed mortgage insurers were going the way of the dinosaur. During the housing boom, when lending standards loosened drastically, borrowers often avoided mortgage insurance by taking out two loans, one that covered 80 percent of the purchase price and a second, "piggyback" loan to cover the once-traditional down payment.

But with piggyback loans all but vanished, prospective home buyers are facing more pressure to purchase mortgage insurance. The so-called "penetration rate," which compares the balance of all loans covered by mortgage insurance with the balance of all mortgage loans underwritten during the same period, jumped from about 8.5 percent in early 2006 to about 20 percent in the fourth quarter of 2007, according to several insurers’ filings with the Securities and Exchange Commission. (The rate dropped to 13 percent in the first quarter as insurers increasingly focused on more credit-worthy borrowers.)

This year, mortgage insurers have benefited from the growing number of loans being funded by Fannie Mae and Freddie Mac, the government-sponsored mortgage companies that require mortgage insurance on loans that don’t have a substantial down payment.

But the crisis of confidence facing Fannie and Freddie raises major concerns about the pipeline of business flowing to mortgage insurers. "The U.S. housing market and the industry are very closely linked" with Fannie and Freddie, says AIG’s Mr. Sweeney. "The plan announced by the U.S. Treasury and the Federal Reserve should go a long way to reassure the credit markets and allow (Fannie and Freddie) to maintain their critical role in the nation’s economy."

If the insurers can’t keep up with the pace of failing loans they’ve promised to make whole, that would turn up the pressure on mortgage lenders, who could get stuck without insurance payments to offset their losses. "There were obviously a lot of products in the market that weren’t supportive of sustainable homeownership," says Joanne Berkowitz, executive vice president of risk management and operations for mortgage insurer PMI Group Inc. The insurers say they will be able to pay the claims.

To diminish their exposure, mortgage insurers have been defining an increasing number of markets as declining, based on housing starts, home sales and prices, unemployment and other factors. In areas where home prices are dropping, insurers bear greater risks, because a home now is more likely to bring too little at a foreclosure sale to pay off the loan.

Nowadays, insurers are frequently requiring at least a 10 percent down payment, compared with previous standards that might have included a 3 percent to 5 percent down payment. Prices also are rising. Next month, for example, MGIC plans to charge an annualized premium of up to 0.75 percent of the loan balance for fixed-rate, 30-year mortgages with a 10 percent down payment, up from 0.67 percent this month. The company doesn’t plan to change course anytime soon. "Housing cycles don’t correct quickly," says MGIC’s Mr. Zimmerman.

Mortgage lenders and real-estate agents complain that insurers are painting the country with too broad a brush. For instance, the metropolitan area that includes Chicago, home to nearly eight million people, is designated a declining market by four of the top five insurers, even though home sales vary widely within the area.

"To put this blanket overlay on my marketplace and say it’s all a declining market, it’s not true," says David Hanna, managing partner of Prudential SourceOne Realty in Chicago. City neighborhoods such as Lincoln Park and Hyde Park, as well as affluent suburbs such as Hinsdale, still are seeing home prices appreciate, he says.

Mr. Hanna points out that the declining-market tag has hit such unlikely transactions as a $1.1 million sale of a home in Wilmette, a well-to-do suburb. The buyer had to come up with an extra 5 percent down payment.

In another case, a two-unit building in Chicago was ready to be sold to an investor for $449,000, when the required down payment again was boosted. The buyer still is trying to come up with the funds. It turned out that a different investor in that neighborhood had defaulted on seven properties, driving down comparable prices.

Mr. Hanna says such circumstances should be taken into account. "Maybe one project, because of past history, you have issues, but you’re impacting literally thousands of other people," he says.

Mortgage insurers say the data they receive on home sales aren’t conclusive enough to be more precise in designating declining markets.

Some mortgage brokers are turning instead to the Federal Housing Administration, whose more-lenient loan program requires only a 3 percent down payment. The government agency’s share of the mortgage market has grown to about 10 percent to 12 percent recently, compared with about 3 percent when private-sector loans were easiest to obtain.

Yamila Ayad, president of Mission Home Loans in San Marcos, Calif., says business is growing for FHA loans on properties below $350,000. But some prospective buyers need bigger loans than the FHA offers or fail to qualify. "It’s either an FHA loan or a conventional buyer with 20 percent down," she says. "There’s no in-between."

Meanwhile, government officials are growing concerned about the FHA taking on many loans that the private sector would refuse. On July 1, the FHA began charging higher premiums for riskier borrowers for the first time in its 74-year history.

Copyright 2008 The Associated Press

Decorating by design can help speed deals in a slow market

ANCHORAGE, Alaska – July 24, 2008 – Niel Thomas once tried to sell a house that looked like a taxidermy gallery, full of glassy-eyed dead animal heads hanging on walls.

Prospective buyers couldn't take their eyes off the bear-skin rug, he said. But once they left, they recalled little about the house itself.

"They remembered the animals all over the place and the hair everywhere," said Thomas, a longtime Anchorage real estate agent. "It was a nice house, but it was off-putting. It was such a distraction. ... They would say, 'Was that the room with the bear or the fox?'"

The house, Thomas and a growing number of others in the real estate business would agree, was in desperate need of "staging" - the quick de-cluttering, de-personalizing and redecorating of a home so it appeals to a wide variety of house hunters.

Right now in Anchorage, it takes longer to sell a house than it has anytime in the last eight years, according to Multiple Listing Service statistics.

Through the first five months of the year, houses spent roughly 25 percent longer on the market than they did during the first five months of last year. In May alone, the 217 houses sold spent an average of 73 days on the market; in May of last year, the 260 houses sold averaged 54 days on the market.

Staging a home so the house, not the seller's life and tastes, is on display can be the difference between selling quickly or paying the mortgage for another month or two, Thomas and other real estate agents say.

The decision to stage a house often pays off, said Thomas and Clair Ramsey, a longtime Anchorage real estate agent. The house either sells more quickly or for a higher price.

Not counting what's in their own homes, Marilyn Carpenter and Jan Pennington own 200 pillows, nine air beds and seven couches.

Right now the items are scattered all across Anchorage, temporarily occupying six homes the women, owners of Home Staging Alaska, have recently staged. When a home sells, the furnishings return to a barn at Carpenter's home and wait for their next assignment.

"We have enough inventory now for about six houses," Pennington said.

Pennington retired last year after working 26 years in the real estate business, where she learned firsthand that staging can bring quicker sales and higher prices.

"Marilyn and I started staging my listings, and they sold so fast," she said. "When I decided to retire, we decided to go forward with it as a business."

Carpenter and Pennington get much of their furniture at garage sales and thrift stores, and sometimes they raid their own homes.

The women quickly learned to use air beds instead of real beds. Real beds take too much time and muscle to move. They add a comforter to give the bouncy beds some bulk and put a bedspread and pillows on top of that. You'd never guess they aren't real.

"People sit on them, and that has created some problems. We saw one woman sit on one and she got catapulted off," Pennington said.

"That's when we got insurance," Carpenter said.

Home staging is about redecorating and rearranging, not remodeling.

"We don't go in and knock down walls," said Julia Martin of ReFeathering, the staging company she owns with Tracey Wood.

Usually stagers don't even paint walls, although Pennington and Carpenter made an exception last week when they took on a home for a weekend open house.

Two walls of the master bedroom were purple - not lavender or lilac, but Crayola purple. Barney purple.

Carpenter covered the walls with two coats of white paint.

"You try to make it generic so it appeals to the largest number of people," she said.

That applies to everything in a house, not just the paint on the walls. The seller may be a photographer who proudly displays nude photos, but it's probably better to replace the photos with a simple print of a farmhouse or seascape.

Carpenter likes to leave an open book on a bed or stack a few on shelves or tables. "To me, books say the person who lives in this house has the time to read a good book," the retired English professor said.

But even the books should be neutral. "No Bible," she said.

The owners of ReFeathering are military wives with extensive experience moving in and out of homes. Martin and Wood have been in Anchorage the last few years and they see interest growing here in home staging.

In Anchorage, as in many other areas, it's a buyer's market right now. Housing prices have dropped only marginally, Thomas said, but there are plenty of houses for sale and it's taking longer to sell them.

That means it's a stager's market too.

"With the market time somewhat longer, what you look at as a seller is how many houses of your type are getting bought per month," Thomas said. "If there's 10 houses I'm competing with and two a month are selling, then if I want a reasonable chance of being the next sale I have to be as good as the No. 1 and No. 2 houses."

Staging's not for everybody, Ramsey said. Some people can't afford it. Others don't need it.

"Some homes you go into and they look like a model home, they're so beautiful," he said.

Staging a house can cost a couple of hundred dollars for a list of recommended do-it-yourself changes, to a couple of thousand dollars for an actual home makeover.

Myrna Brown, owner of Transformed By Design, continues to work as a Realtor for Prudential Jack White Vista. Sometimes, she said, real estate agents pay for staging as part of their service. Other times, sellers spring for the service in order to get an edge on the competition.

Most staging businesses charge by the square foot or the hour. At Home Staging Alaska, it costs $1,050 to stage a 1,600-square-foot house and $1,850 to stage a 3,000-square-foot home.

Carpenter loves the work because it suits her nature: "I can't go to sleep in a hotel room without rearranging the furniture mentally," she said.

But no one's getting rich, at least not yet.

"This is our second job," Pennington said. "My first job is Social Security."

The split-level house that Pennington and Carpenter staged recently was practically empty when the women showed up on a Monday morning.

The sellers had already left the state, leaving behind a giant entertainment center that doubled as a room divider in the master bedroom. In an adjoining sunroom sat a hot tub with a drab cover that made it look like a big, dark cube.

The first order of business was to get rid of the purple in the master bedroom. They moved the entertainment center against a wall, which made the room look much more spacious.

A queen-sized air bed was next, fluffed up with an oversized comforter and covered with a bedspread made from a $6 pair of drapes Carpenter found at Burlington Coat Factory.

Items foraged from garage sales and Pennington's private stash - an old hat that belonged to her grandmother, a pedestal-style face mirror, a comb and brush - were arranged artfully on a built-in desk. A few books, some baskets and vases on the entertainment center, a chair nearby with a small table next to it, and the scene was set.

Next door in the sunroom, the pair brightened things simply by taking the dark cover off the hot tub. They hung towels on hooks and replaced a shelf of cleaning products with artificial flowers. They brought in a fake palm tree and put it behind a wicker chair decorated with pillows.

Other rooms got similar treatment. Furnishings and accessories were spare but strategically placed to provide hints of what the house could be. Pennington and Carpenter paid special attention to a small landing atop the stairs leading to the living room. "Most people decided within five to 15 seconds if they're going to walk through a house," Carpenter said. Because of that, entryways need special attention.

The women will spend 18 to 20 hours on the project - one or two hours bringing things over, then eight hours one day and six the next decorating the house. Ninety days later, or after the house sells, it will take two or three hours to remove their props.

"It's backbreaking work, but I love it," Carpenter said. "It's like playing house."


Trying to sell your house? Try some of these tips from Anchorage home-staging experts and real estate agents:

- "Clean, clean, clean - windows, baseboards, bathtub and tile," says Myrna Brown of Transformed By Design. Ditto, says Julia Martin of ReFeathering: "Make it Q-Tip clean, because if people see or smell something, they'll start being more critical from the get-go."

- Don't let the back of your couch be the first thing people see when they enter either the house or the living room.

- Remove magnets, photos, notes and other things from the front of the refrigerator. Remove most items from kitchen and bathroom countertops.

- Hid of E.T. memorabilia, stash the softball trophies, take down the family photos. You want people to look at the house, not your personal stuff. (Real estate agent Clair Ramsey, however, doesn't always agree with the rule regarding family photos: "It's in the Real Estate 101 manual, but I personally don't subscribe to it. Some people might see them and think, 'Cute kids. I feel good about this home.'")

- Things go better in threes: Group three candles on a mantle, arrange three baskets on a shelf, place three pillows on the couch.

- When showing the houe the collectionse, keep curtains and shades open. The more light, the better.

- Get rid of clutter everywhere. Minimize furniture; don't let it dominate a room. Take leaves out of the dining-room table. "The strategy in staging is not to show off your furnishings but to show off the house," real estate agent Niel Thomas said.

- Don't forget the outside. Mow the lawn, trim the bushes, maybe put in some flowers. Some people dismiss houses without ever leaving the car.

Copyright © 2008, Anchorage Daily News (Anchorage, Alaska), Beth Bragg, Knight Ridder/Tribune Business News. Distributed by Mclatchy-Tribune News Service.