Housing market recovery will not be uniform across the country
Real Estate News & Commentary by Chris McLaughlin, July 24, 2009
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Housing market recovery will not be uniform across the country
According to the latest quarterly survey of housing released by The Wall Street Journal, the housing market is recovering at different rates in different parts of the country. Data released by MDA DataQuick shows that home sales in Minneapolis, Southern California and the San Francisco Bay Area rose sharply in June while data from Miller Samuel Inc, shows that there was a drop in home sales in Manhattan, Long Island, N.Y., and Charlotte, N.C., among other areas. A number of factors including unemployment and extent of foreclosure are influencing housing market recovery. Parts of California and suburbs of Washington, D.C., which know to be centers of employment, are showing signs of stability or recovery. Jody Kahn, an analyst at John Burns Real Estate Consulting, says that metro areas in Detroit, Phoenix, Las Vegas, Miami-Fort Lauderdale, Chicago, New York, Seattle and Portland, “still have a long road to recovery”. Mark Zandi, chief economist at Moody’s Economy.com, emphasized on the importance of employment for housing market recovery. “If people don’t have jobs or fear losing their jobs, then buying homes is out of the question,” said Zandi.
Government watchdog criticizes mortgage modification program
The Government Accountability Office (GAO), in a report released this week, has exhorted the government to implement measures to remove glitches in the $75 billion mortgage modification program. The Obama administration has been criticized for the lack of effectiveness of the program so far. The GAO also said the administration’s estimate of 4 million people benefiting from the program could be an exaggeration. According to the GAO, the Treasury Department expects that servicers covering 90% of the distressed loans will be covered under the program and 65% of eligible borrowers would apply. However, servicers covering only 85% of loans have signed up so far.
The data on the ground suggests that “Treasury’s estimate of the participation rate may well be optimistic.” The GAO also said it is “critically important” to implement effective controls and emphasized the need for better oversight. Officials in the Treasury Department have defended program implementation. “We recognize that challenges remain in implementation and scaling of the program and are committed to working with the servicers to overcome those challenges to reach as many borrowers as possible,” said a Treasury spokeswoman.
“Green homes” growing in popularity
With energy prices going up, homeowners are increasingly seeking the assistance of real estate professionals who are specializing in environment friendly buildings. “Many of the consumers that come to me want to know more about energy efficiency, healthy building design, what to look for in a home,” says Michael Kiefer, a real estate broker, who is a specialist in environment friendly buildings. EcoBroker, a company which provides “green designation” for real estate professionals, has trained over 5000 real estate professionals in the U.S. and abroad. The National Association of Realtors (NAR), which launched its Green Designee program last year, says the response to its program has been overwhelming. “All across the country, almost every time the courses being offered have been full,” NAR spokesman Andy Norton said. “And by the end of this year, the National Association is predicting that close to 4,000 realtors will have gone through the course, which is way ahead of the expectation.” Experts say that environmentally friendly homes often cost more than traditional homes, but the additional cost be recovered over time by way of energy efficiency. With homeowners getting more aware of the importance of environmental friendliness, the demand for real estate professionals with green certification is likely to grow in future.
Jobless checks arrive late for millions of unemployed workers
The dismal state of finances in state governments is impacting jobless individuals seeking state assistance. Sixteen states are now paying jobless workers with borrowed cash and there are considerable delays in jobless workers receiving their benefit checks. Workers who wish to file an application for jobless claims are also seeing enormous delays. While the program makes over 80% of initial payments within 3 weeks, which is slightly below federal standard, individual cases which require review are prone to delays. Labor Secretary Hilda Solis said: “Obviously, some of our states were in a pickle. The system wasn’t prepared to deal with the enormity of the calls coming in.”
When unemployment was low, delays in distribution of benefits didn’t come under the spotlight. Now it is different. “Payments are later than they should be, and later than they used to be, but states have been overwhelmed,” said Rich Hobbie, director of the National Association of State Workforce Agencies. “Considering the significant problems in the program, unemployment is responding well.” Analysts say that states were ill-prepared to meet the rise in unemployment. When the recession began in late 2007, most of the states had just about 6 months of benefits in reserve, as against the recommended 12 months of reserve. “The attitude became, ‘We don’t need a firehouse — we can buy hoses when the fire starts,’” said Wayne Vroman of the Urban Institute, a research group.
Congress applauds Goldman warrants
Goldman Sachs has paid the government $1.1 billion as the redemption value of the stock-purchase warrants it issued Treasury under the Troubled Assets Relief Program (TARP). “The Goldman Sachs TARP warrant deal is the best deal that taxpayers have got to date,” said Linus Wilson, an assistant finance professor at the University of Louisiana. “Since at least April 2009, representatives from Goldman Sachs have said that taxpayers deserve a fair return for their investments. They lived up to their word.” The investment in Goldman yielded an annual return of 23% to taxpayers. Lawmakers were pleased with the return. “That sounds pretty good,” said Dennis Moore, Democratic member of the House of Representatives. “But is it good enough?” A recent report from the Congressional Oversight Panel headed by Elizabeth Warren estimated that the Treasury Department has recovered just 66% of the value of warrants in repurchase transactions with banks. Herb Allison, the assistant Treasury secretary for financial stability, said the Treasury Department will look into the matter and will “continue to refine our process with the aim of protecting the taxpayer’s investment.” Wilson said: “Goldman has done very well under the bailout, and they just wanted to end their involvement. Everyone isn’t going to be so eager to get out quickly.”
Now on to our real estate investor education section…
Hottest Trends for 2010
Want a head start on the competition? Learn how to catch the eyes of clients with the hottest trends for 2010. From colors to upgrades, these are the styles and statements coming soon to advertisements near you.
Colors
What’s Hot…
You know that paint can make or break the look of a home but exactly which color looks best remains a mystery. Clear up the confusion by going with these sure-fire hits. According to industry leader Pantone, interior designers are opting for rich, complex color styles with earth friendly coatings. As for colors, try yellow (Thanks to the Obama’s, yellow is the new white…even in the White House), green (the new neutral) and grey.
What’s Not…
Chili Pepper red, lavender and aqua simply scream “pain me – now!”.
Textures
Yes, textures are back and bigger than ever but forget shag rugs or faux rock walls, today’s textures are truly inspired by nature. Simple, clean lines with a functional foundation and simple form. Natural tile rather than carpeting, stainless steel rather than plastics and reclaimed wood or bamboo versus exotic hardwoods.
Appliances
European. Bigger isn’t better and American’s are finally catching on to what Europeans have known for a long time; simplicity makes sense. Kitchens are making a big comeback as people entertain at home and search for healthier – and less expensive – food options. Make it easy to prepare, clean and maintain the kitchen with quality appliances that emphasize the home rather than restaurant.
Outdoors
People are spending more time in the yard but don’t expect them to do yard work. The hottest trend is low maintenance yards that require little to no mowing, weeding and primping. With the average cost of lawn maintenance approaching $2,500 annually, people expect to derive a real benefit. Greenhouse & Gardens are making a major come-back as are outdoor entertaining centers. Fruit trees, workshops and outdoor living space is in – picture perfect lawns that require hours of unpaid work each week or high priced maintenance service are waaay out.
See you at the top!
Chris McLaughlin
http://www.shortsalesriches.com
Copyright Loss Mitigation Institute LLC 2009.
All Rights Reserved.
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About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting nearly
450 agents, uniquely positioning him to help
thousands of investors make money in the
biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
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