Mortgage defaults bring opportunities

Real estate flippers and other speculators have been flogged badly in recent months for being partly responsible for the quick run-up in prices during the boom years and now for the smoldering ruins they left behind. And deservedly so. They managed to do most of the damage in four states, namely Nevada, Arizona, California and Florida.

The Mortgage Bankers Association, or MBA, reports that Nevada sits on top of the list of most home loans defaults for investors in the prime and subprime mortgage segments. Please click on the link in this paragraph to read the entire article.

Real estate investment fluff

If you want to make money investing in real estate, you have to do it the old-fashioned way, you have to earn it. There really are no shortcuts. Unfortunately not.

Now, if you sit down and listen to late-night TV where fake real estate experts hawk their half-baked theories and believe that they are the answer, think again. These people can be very convincing, and persistent, too, but is there anything concrete behind what they are saying? Let's examine the story a little bit.

John T. Reed is a long-time investor and a newsletter writer who has followed the industry for many years, including watching the gurus who make a living peddling real estate seminars, books and tapes. He is totally dismayed at the practice. These operators aggressively market their products, yet the content you are supposed to get isn’t there. Time and again. And they claim that it’s really easy to become rich using their programs when in reality it’s nothing but. Reed nowadays calls them con men. He adds that the gurus of the ‘60s and ’70s were for real, admittedly some were better than others, but they were genuine.

For more on Reed and real estate, visit his website JohnTReed.

The latest scheme on late-night TV appears to be note buying. How it works is that a home seller takes back a note, in other words holds a second, to make the sale possible since the buyer couldn't finance the entire transaction with a first mortgage. In a soft market like today’s it’s being used quite a bit. The gurus are now pushing seminars, books and tapes on that and make it all look easy, again, with huge returns. And when you struggle to make one penny using their simple formulas, they try to sell you additional mentoring services because that’s what you are still missing in order to become wealthy. Yeah, right.

The bottom line is that when one of these smooth-talkers tells you from inside the box that you can get rich in a jiffy with no money and little effort, yawn and go to bed.

photo by sonjapollon

Mortgage interest write-off in some danger

While the mortgage and real estate industries are trying to find steady footing in this wobbly market, Capitol Hill in Washington is getting ready to unveil this fall wide-ranging legislation that would address climate change, more specifically the reduction of carbon emissions. The aim is a cutback of 60 to 80% by the year 2050, an ambitious endeavor. It is to be achieved by raising taxes on gasoline and eliminating the mortgage interest deduction on homes over 3,000 sq. ft. The so-called McMansions.

Everybody is aware of cars and the pollution they produce, but houses are also large greenhouse-gas emitters. It happens through cooling, heating, building materials and power usage, areas that quite a few of us don't consider all that harmful.

Soon after the legislative draft was circulated, the real estate and building sectors found all sorts of problems with it. Please, click on the link earlier in this paragraph to read the entire article.

CityCenter project has a new partner

The mixed-use development right on the Strip is coming steadily off the ground as we speak. The construction site is full of activity and some of the buildings have already reached up to about 20 stories. It will include several hotels, 2,650 high-rise condominiums, a casino and a huge retail, dining and entertainment venue. The cost of this massive undertaking is pegged at $7.9 billion and it's expected to open late in 2009.

MGM Mirage, the owner of the project, has decided at this stage to sell half of it to Dubai World, a holding company for the state of Dubai. This is another joint venture for MGM Mirage, something that has lately become its preferred investment strategy. Please click on the link in this paragraph to read the entire article.

Las Vegas market continues its soft ways

If anything, the Southern Nevada real estate market is staying on the same path from last month. It's on a slow and steady downward slide. Hopefully not too long, though.

Home Builders Research reports for July that sales at the resale sector declined over 40% from a year ago and for new homes the number is almost 40%. As you can see, the distress is pretty evenly divided. The news are a bit better on the price side. Existing home values gave up only 4.3% from last year to $276,500, while new homes held the drop to 2.6%, down to $327,790.

How far does the market have to go before the recovery starts? No one knows, of course, but when the inventory stops growing and prices level off, then we are about to turn the corner for a new day. Clearly, we are not there yet.

The present mortgage industry upheaval isn't helping any, either. Qualifying for a mortgage has become more burdensome, especially for borrowers at the lower end of the credit scale. That is effectively removing some hopeful buyers from the mix and adding to the market's weakness.

As I've said before, it sure smells like a buyer's market. And those with a lot of cash to put down are the real kings of the hill.

Photo by kadanwa.

Real estate contract negotiating tips

Even though it's a buyer's market, purchasing a new home can easily bring from moderate to severe heart palpitations. No, this isn't about the lender you were planning to use that could go under any day now. This is about the value of the house you are supposed to close on in one month. And the problem can be that while you're waiting for the big day, you also see new homes in the same subdivision with yours sitting empty and hear that price cut-backs are gaining steam around town. Did you pay too much for the new property? That's your question, and the reason to your anxiety.

What can you do? Can you renegotiate the real estate purchase contract? It's possible. To read the entire article, click on the link in this paragraph.

Subprime mortgage an innovation that will last

What might everybody be talking about in the office today? Or in the gym between sets? Or out on the golf course riding in the cart? They are likely talking about the health of the mortgage business. That's what they are doing. And how the subprime loan got it all started and what it spawned could do damage to other lending sectors as well. But let's leave our emotions aside and look at what has happened and what financial history tells us.

The subprime mortgage is actually an innovation that began taking shape only in the late 1990's, a new financial instrument to make money available to a borrower who hadn't had access to this kind of capital before. Please click subprime mortgage above to read the entire article.

Vegas housing affordability challenge

For the blue-collar home buyer the good old days here were the 80's and 90's when he could afford to purchase a nice house fronting a wide street and had a decent-sized backyard. Newspapers across the land were writing about that. But in the early 2000's things began to turn for the worse. Mortgage guidelines by then had become increasingly lenient, allowing home buyers to borrow money way more than they could actually afford, fueling artificial demand. Then real estate speculators got involved and fanned the flames even more. Prices soared and the market badly overheated. And then stalled. And that is where we are today.

During this run-up median resale and new home prices reached to a little over $300,000 and are now desperately trying to hold on. To read the entire article, click Vegas housing.

Micro real estate markets thrive

Many of the large metro areas around the nation are wallowing in stagnant or sliding housing markets. Home prices and sales are struggling big time to maintain any type of momentum. The industry is really facing a nice challenge.

Yet, according to national real estate connoisseurs, just about every major city has within its limits so called micro markets that are performing well above average. These neighborhoods and ZIP codes typically exhibit rather strong economic fundamentals that keep them in demand among homebuyers.

Please click here to read the entire article.

Vegas land prices dip

It was only a short while back when Southern Nevada land prices were galloping along nicely. Every quarterly report from those who keep tabs on these things showed another fresh record for an acre of this dusty dirt. When you have nearly 6,000 new residents moving in every month, they need housing and services. Demand was running high then.

The second quarter report for 2007, however, tells you that the median raw land price per acre was down to $718,500, which is $90,600 less than a year ago. This according to Applied Analysis, a local economic research shop. Bear in mind that this figure leaves out all the megaresort deals on and near the Strip. If they are included, then the math would look totally different, the curve would be heading north at a steep angle.

You guessed it, today's soft residential real estate market is one culprit. The turmoil around the mortgage industry is an impediment as well. Commercial inventory levels, too, appear to be on balance, so there is less demand now. And general development costs, including cement and glass, have risen steadily. That's an assortment of valid reasons.

For the short term, the road is going to be bumpy, no question about that. Yet, as about 40,000 more hotel rooms are scheduled to come online in the next few years, the demand for additional housing and services is assured. And the price of an acre of land will start climbing again.

More homes in MLS inventory

The Multiple Listing Service in Las Vegas is a popular place nowadays. More and more sellers are calling it up to put their houses on the list for sale. The inventory climbed to a record level in July, reaching 24,087 single-family houses. In percentage terms, that's up 1.9% from June and 18.8% from a year ago.

The one brighter side over the last several months has been the price, but even it saw a drop in July, by 4.8% to $295,000. Perhaps that is what's needed to move the inventory, to burn it up to a level that brings more balance to the overall marketplace.

When pricing your home for sale, the experts have sensible words of wisdom for you. It can be valued at the one-year price, the six-month price or the one-week price. You get the idea? The price is of paramount importance in a soft market like today's. Over half of all single-family houses sold within 60 days and 47% of all townhouses and condos did the same. In other words, there is still decent activity out in the field.

Jumbo mortgage rates shoot up

In a full-size surprise, non-conforming, of jumbo, home loan rates for a 30-year fixed took off just last week, climbing from about 6.875% to around 8%. Wells Fargo made the initial move and soon other lenders followed. Jumbos are loans over $417,000. Mortgages below that limit are called conforming and are routinely purchased by Fannie Mae and Freddie Mac, the two giant GSEs, or government sponsored enterprises.

Normally the spread between conforming and jumbo mortgage rates is from a half to three-quarters of a point, jumbo being the more expensive one. Please click here to read the entire article.

Subprime mortgage mess gets new scapegoats

It honestly looked like they had already found every potential participant in the subprime home loan segment who could be blamed for its current troubles. At various times fingers were pointed at the lenders, investors who bought mortgage-backed securities, homeowners themselves, Wall Street outfits that packaged and sold the loans to investors, federal regulators and hedge funds. There is, however, still another player to consider.

Now in the hot seat are the bond-rating agencies, two of the largest being Standard & Poor's and Moody's. Kindly click here to read the rest of the article.

Vegas downtown on the go

It appears that Vegas downtown hasn't received this much attention since they filmed segments of a James Bond movie over there 30 some years ago. The current buzz is not about any film, or high-stakes gaming, though. It's about residential real estate projects. More specifically mid- and high-rise condominium projects. And how they are going to attract more residents there and with them come more services and things for people to do. Pump fresh energy to the community.

Soho Lofts opened its doors last year and claimed the title of being the first high-rise there, a 17-story tower with 120 luxury units. More of them are going up as we speak, adding about 800 more condos to the inventory in the next twelve months or so. They include Streamline Tower, pictured, that will have 275 units, Juhl 341 and Newport Lofts 168.

Besides these, there are another 13,000 more condos either proposed or already on the drawing board. Once the first phase concludes successfully, as it so seems, then the next one gets a boost from the first and the momentum just builds from there.

City Hall has to be thrilled about the way things are moving ahead now. It has been working tirelessly for years on all sorts of drafts and plans that would help revitalize that part of town. It's offering tax breaks and zoning changes and what not to draw development dollars. As we can see, the effort seems to be paying off.

Downtown has always played the role of the second-class younger brother to the classy big brother of the Strip. Maybe the time has at last come for a nice turnaround. It's hardly going to challenge the Strip for supremacy, but it can firmly put itself back on the map and reclaim a measure of respectability.

Southern Nevada tightens screws on homeowners

It's no secret that Southern Nevada is in the tight grip of a worrying drought. Actually has been for several years now. As a result, several water use restrictions have been implemented. Homes built after 2003 are generally banned from having front lawn and turfs in the back have limits. Clark County is presently denying any new requests for new golf course developments. Yet, more needs to be done, agrees everyone you ask.

SNWA, or Southern Nevada Water Authority, is tasked with providing ample supply of the precious resource to the area and it's now increasing its efforts to do just that. Please click here to read the entire article.

Nevada tops Energy Star list

Energy Star is EPA's, or Environmental Protection Agency, energy efficiency program for the home building industry. To qualify for it homes have to pass an independent verification process to meet EPA's rather stringent guidelines. Houses that make the grade nowadays are a minimum 15% more energy efficient that those that were constructed to the 2004 International Residential Code. And they often consist extra features that generally make them 20 to 30% more efficient than regular homes. As you can see, it's a worthy program.

For 2006, there were 15 states where new single-family houses that received the Energy Star exceeded 12% of the total construction volume. Nevada was on top of the list. To read the entire article, please click here.