Real Estate News & Commentary by Chris McLaughlin, July 2, 2009
http://www.shortsalesriches.com
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Pending home sales rise for the fourth straight month
According to the National Association of Realtors, its Pending Home Sales Index, a forward-looking indicator based on contracts signed in May, rose 0.1% to 90.7 from a reading of 90.6 in April, and is 6.7% higher than May 2008 when it was 85.0. This incidentally is the fourth straight monthly gain; the last time there were 4 consecutive monthly gains was in October 2004. Lawrence Yun, NAR chief economist, cautions that there could be delays in closure of home contracts. “Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions,” said Yun. “The pronounced increase in April and the fact that May sustained this rise does indicate that actual existing home sales are poised to rise in the coming month or two,” said Joshua Shapiro, chief U.S. economist for MFR. On a regional basis, the pending home sales index rose 3.1% to 80.9 in the Northeast, increased 2.2% to 96.9 in the West, dropped 1.3% to 89.2 in the Midwest, and dropped 1.7% to 92.6 in the South.
Government widens the scope of mortgage refinancing program
Housing and Urban Development Secretary Shaun Donovan has announced that the scope of the Home Affordable Program will be widened to include refinancing of mortgages with loan-to-value ratio of 125% from the current 105%. As home values keep falling, more homeowners are slipping into delinquency. The government’s move clearly acknowledges the worsening situation in the housing sector. “The president’s Making Home Affordable plan is already helping far more than any previous foreclosure initiative and with today’s announcement we will extend its reach still further,” said Donovan. The program is limited to loans by Fannie Mae and Freddie Mac. Rick Sharga, a senior vice president of RealtyTrac, said: “The bulk of loans that are significantly upside-down probably aren’t the Fannie and Freddie products, they’re probably the other loans.” Analysts believe the impact of the move will be limited. Paul Miller, an analyst with FBR Capital Markets, said: “I don’t think it’s going to have much of an impact because you still don’t have enough qualified borrowers.”
Unemployment rises in June
The jobless rate jumped from 9.4% in May to 9.5% in June; the highest since August 1983. The Labor Department said employers cut 467,000 jobs in June. The total number of jobless people was 14.7 million in June. On a sectoral basis, professional and business services cut 118,000 jobs in June; manufacturers cut 136,000, and construction companies eliminated 79,000 jobs. Retailers eliminated 21,000 jobs, financial sector cut 27,000, and the government cut 52,000 jobs in June. Education and health services were among the few sectors which added jobs. Economists expect the unemployment rate to rise further, particularly in sectors such as automobiles. “Payrolls will be going down the rest of the year and the unemployment rate will be rising,” said John Silvia, chief economist at Wachovia. “The challenge for the Obama administration is that we’ll have positive economic growth but still no job growth. It’s going to be tough on them.”
Beazer Homes admits to mortgage and accounting fraud
According to court documents, Beazer Homes, a homebuilder, has admitted to wrongdoings in its mortgage origination and accounting practices and agreed to a $50 million settlement. The company will pay $10 million immediately to home-buyers who were impacted by the company’s practices. Over a period of time, the company will pay up to $50 million to a national restitution fund. The Securities and Exchange Commission (SEC) has accused Michael Rand, the former chief accounting officer of the company, of recording improper reserves in order to “smooth” the company’s earnings between 2000 and 2005. In 2006, Rand started decreasing the reserves in order to report a better than actual performance. The SEC says that meeting analyst expectations was critical to keeping the stock price high and maximizing the annual bonus of senior company executives. “We deeply regret these matters and have used what we learned to strengthen our control and compliance culture,” said Ian McCarthy, Beazer’s president and chief executive.
GM plans “garage” sale
General Motors (GM) proposes to sell its “worst” assets by way of auction in the bankruptcy court. The assets for sale include polluted factory sites, parking lots in Michigan, and a nine-hole golf course in New Jersey. GM has been criticized for its polluting factories. In a court filing, the state of New York has listed 11 GM sites that are contaminated or have “ongoing environmental compliance obligations.” New York Attorney General Andrew Cuomo has said that the carmaker should meet all its environmental obligations during its asset sale. A golf course is anything but strategic to a carmaker. “The new GM hardly needs to be in the golf course business,” said Tom Wilkinson, GM’s director of news relations. “The old GM will be selling a lot of potentially valuable but peripheral property the company accumulated over 100 years, kind of like a big garage sale. You will see some really good real estate deals come out of this for investors and communities.”
Now on to our real estate investor education section…
Rich or Wealthy – What’s Your Motivation?
“Being rich is having money; being wealthy is having time.”
Margaret Bonnano
There is a lot of hidden insight into the quote above; being rich is about having money whereas true wealth affords the luxury of time. Because time is the only true commodity on earth – it is also the most elusive. It is also one of the reasons short sales will remain one of the most popular ways to build both riches and wealth remaining to the average individual.
While most people think the only thing they really need is a bit more money, research shows few are able to enjoy it or obtain the quality of life anticipated. In most instances the progressive nature of income taxes combined with the heavy time requirement of high income jobs steals the wealth right out from under all your hard work. On the other hand, short sales afford the opportunity to structure your time and taxes into the most favorable – and affordable – methods possible to generate real wealth including the time you desire to actually live your life.
So, are you brave enough to tally up the total riches and wealth generated by your life-energy? After all, you only have one life to live so you should make it count. To date, what has it done for you in terms of money and time? Find out by taking this quick assessment:
- Calculate your lifetime income. Create a list estimating how much you have made over your entire work-life to date.
- Make a list of all major items you own free and clear. It could be real estate, cars, boats, television or anything you consider valuable.
- Make another list of all your most precious moments in life.
- Make a final list of all the moments you missed out on in life or all the things you wanted to do, learn or experience but haven’t been able to do so yet.
- Be Honest…how much do you have to show for all your years of hard work as of this very day? Many people work 20, 30 or even 50 years and literally have nothing to show for it. No security from having a house paid in full during old age, no car they love to take out for a spin just for the fun of it, no boat or other items to occupy their golden years…nothing.
If you aren’t satisfied with the results of your hard work to date, it’s time to do something new before even more time is stolen away from you. Time is the one thing you can never get back; time to spend with your family and friends, time to enjoy the simple pleasures in life that make living worthwhile. Time to become the person you always wanted to be and learn or experience what life has to offer. At the very least, you should have a decent list of items like homes, cars or fun toys to show for all your years of effort….if not an actual list of memories and experiences that make life complete.
If not – find out how short sale investments are allowing people just like you to obtain both riches and true wealth.
See you at the top!
Chris McLaughlin
http://www.shortsalesriches.com
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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
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
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