Short Sales Riches Blog » consumer confidence

Housing market turnaround is critical to economic recovery

Chris McLaughlin — Wed, 29 Jul 2009 17:24:40 +0000

Housing market turnaround is critical to economic recovery

Real Estate News & Commentary by Chris McLaughlin, July 28, 2009

http://www.shortsalesriches.com

* Follow me on Twitter: http://www.twitter.com/mclaughlinchris
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Housing market turnaround is critical to economic recovery

According to the latest monthly reading of the Standard & Poor’s/Case-Shiller index, home prices are showing signs of stability. Analysts say that this is encouraging, given that home values drive consumer confidence. “The key to everything is single-family housing because that’s where consumption comes from,” said Sam Zell, founder and chairman of Equity Group Investments. “If people don’t have confidence in their biggest asset, they won’t have the confidence to spend.” Analysts expect the extent of housing recovery to be different across the country.

For example, in cities such as Miami, where is there is a significant supply overhang, housing recovery will take longer, than in other areas. Zell is pessimistic about the near-term prospects for commercial real estate market. “The commercial real estate sector is definitely under water,” he said. Zell is critical of government programs introduced to revive the economy and believes that stimulus spending is likely to lead to higher taxes. “A lot of these wonderful, massive programs that they’re currently considering are interesting, and maybe at the top of the market we could afford to do them,” said Zell. “To do them at this stage of the game I think is very scary.”

Government sets targets for loan modification

The Obama administration wishes to see at least 500,000 loan modifications by November 1 of this year; currently about 200,000 loan modifications are in process. Administration officials held discussions this week with 25 loan servicers participating in the modification program and asked them to do expedite the program. Borrowers have been complaining about administrative delays in processing their loan modification application. “[T]oo many homeowners are at risk of foreclosure right now,” Treasury Secretary Tim Geithner said in a statement after the meeting. “Today’s meeting was an opportunity to identify ways to accelerate the program and bring relief faster.” President Obama has acknowledged that the modification program, which was announced in February this year, has so far not been effective. “Our mortgage program has actually helped to modify mortgages for a lot of our people, but it hasn’t been keeping pace with all the foreclosures that are taking place,” Obama said last month.

Servicers who participated in the meeting made a number of suggestions on streamlining the paperwork and creating a website to enable borrowers to make applications online. Sanjiv Das, chief executive of CitiMortgage, said: “Today’s meeting was an important step toward the administration’s and our shared objective of improving the effectiveness and efficiency of the Make Home Affordable mortgage modification program.”

Mortgage-backed bonds worth $3 billion in TALF pipeline

The Obama administration introduced the Term Asset-Backed Securities Loan Facility (TALF) last March in order to revive asset-backed securities market. The next TALF window which will open in September this year is likely to see deals worth $3 billion involving Commercial Mortgage Backed Securities (CMBS). More than a dozen real estate investment trusts are expected to participate. The Federal Reserve is likely to lend CMBS buyers up to 85% of the purchase price for TALF securities.

“If the first deals are successful, we think we can get $10 to $25 billion done in the next six months,” said Kenneth Rosen, who manages a hedge fund. The program accepts securities that have the highest rating, and borrowings under the program must be repaid within 5 years. Analysts are divided on the extent to which the program will revive the CMBS market which collapsed in 2008 due to credit crisis. David Twardock, president of Prudential Mortgage Capital, said TALF will help revive the CMBS market “in a very modest way.” TALF is set to expire by the end of 2009 and some analysts are seeking an extension of the program.

Consumer confidence drops for the second straight month

According to The Conference Board, its confidence index dropped to a reading of 46.6 in July, a second consecutive decline, following a reading of 49.3 in June. The Conference Board’s measure of present conditions dropped to 23.4 from 25 the prior month. The gauge of expectations for the next six months declined to 62 from 65.5. The drop in consumer sentiment reflects the unemployment situation. “Folks are still concerned about their jobs,” said Mark Vitner, a senior economist at Wells Fargo Securities. The survey is based on a representative sample of 5,000 U.S. households.

About 46% of survey respondents said that the business conditions are “bad,” and 48.1% said jobs are “hard to get.” Just about 18% said they expect an improvement in business conditions over the next 6 months. Lynn Franco, Director of The Conference Board Consumer Research Center, said: “Consumers are pessimistic about their income expectations, which does not bode well for spending in the months ahead.” Consumer spending accounts for about 70% of the economy and any decline in consumer confidence would adversely impact economic recovery.

Orders for durable goods rise in June

According to data from the Commerce Department, orders for durable goods excluding transportation equipment, orders for goods meant to last several years rose 1.1% in June, the most in four months. Total orders for durable goods fell 2.5% in June for the first time in 3 months. This reflects shutdowns by auto-plants in companies such as General Motors and Chrysler. “Orders have stabilized,” said Harm Bandholz, an economist at UniCredit Global Research in New York. “This fits in with the bottoming in the economy. We will see a rebound in production in the second half” of 2009.

Inventory fell at an $87 billion annual rate in the first quarter. The drop in inventory is likely to set the stage for economic recovery. The economy was projected to decline by 1.5% in the second quarter of 2009. “The pace of decline appears to have slowed significantly, and final demand and production have shown tentative signs of stabilization,” Federal Reserve Chairman Ben Bernanke told Congress last week. Caterpillar, which is among large manufacturing companies, posted second quarter results which exceeded analyst expectations. “We are seeing signs of stabilization that we hope will set the foundation for an eventual recovery,” said Chief Executive Officer Jim Owens.

Now on to our real estate investor education section…

GeoDemographics 101 for Short Sales Success

Never heard of geodemographics? Don’t worry, you probably aren’t alone. However, despite the rather convoluted label, the essential information contained in this incredibly powerful tool is able to take your short sale investments to the next level. Think of it like direct marketing on steroids. Geodemograpics allow you to locate your target population with near surgical precision then tailor a custom-made marketing message designed to elicit top results. Before we get into the tools of the trade on how to get started using geodemographics, it’s important to understand a few facts:

Locating the right clients is the first step in success. Negotiation, sales and closing the deal all come later but will never matter as much as the ability to locate the “hot targets” before the competition.
There are over 250,000 neighborhoods in this nation with an average of approx 280 households per neighborhood. Locating your niche allows you to concentrate a message that appeals to your target market with the highest possible “conversion” rate.
Geo = location + Demographics = Population Data. Learn how to use data about the given population of each neighborhood in order to design and refine your message.

So, what are the basic steps to performing geodemographic research? It’s actually fairly simple once you know how. Begin by estimating the size and composition of your target area. Age, gender, marital status and life-status (retired, single, family etc) all provide important insight into what is important to them and what they will likely be searching for in terms of real estate. Excellent sources of neighborhood data are available for free at www.census.gov or by calling your local HUD office. Commercial resources include www.claritas.com, www.maponics.com or http://bp.mlsli.com/neighborhood.htm.

Next, design and refine a message created specifically for your target market. It should be engaging and effective. Start with several versions to determine which garner the most response – once you find out what works, stick with it!

Property designed geodemographic research can tell you all about your target audience including where to meet them, where they most often eat out (McD’s or true gourmet), where they shop and even other influential networking opportunities with service providers such as accountants or tire shops. Imagine how nice it would be to grab the best clients simply by printing up placemats for a local diner or handing out business cards at a local dry cleaner. Believe it or not, these were exactly the types of networking and marketing activities that tend to yield the best results when combined with highly targeted and effective data.

Finally, use a feedback loop to further refine and clarify both needs and opportunities as you collect more data. Remember, whether you sign or not, all information is important. Eventually you will develop a clear picture of the personality profile of those most likely to seal a deal, walk away or refer others.

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches (Watch out latest video!)
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
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About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

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
* Follow me on Twitter: http://twitter.com/mclaughlinchris
* Add me on Facebook: http://www.facebook.com/mclaughlinchris

REITs have a fantastic second quarter

Chris McLaughlin — Wed, 01 Jul 2009 20:51:16 +0000

Real Estate News & Commentary by Chris McLaughlin, July 1, 2009

http://www.shortsalesriches.com

* Follow me on Twitter: http://www.twitter.com/mclaughlinhris

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REITs have a fantastic second quarter

Real estate investment trusts (REITs), which were written off by analysts not so long ago, had a blockbuster second quarter this year. The Dow Jones Equity All REIT Total Return Index, which tracks 114 publicly traded REIT stocks, rose 28.9% in the April-June quarter, the biggest quarterly gain since the index debuted in 1989. Just 5 REITs posted losses while 7 firms posted returns in excess of 100%. The spectacular performance signals a change in investor sentiment. “The fear of REITs going to zero is clearly far less today,” said Alexander Goldfarb, an associate director at Sandler O’Neill + Partners LP. Since March this year, REITs have raised over $13 billion from investors. Jon Bortz, chief executive of LaSalle Hotel Properties, said, “We’d been through a pretty challenging period over the last 12 months. The recovery had to do with belief that the world was not going to come to an end.” REITs have restructured their capital structure by reducing debt in their balance sheet. Some analysts believe REITs have to reduce their debt further if they have to be viable in the long-term. Sectorally, hotel REITs rose 73.8% in the second quarter, regional mall REITs rose 59.3%, retail REITs rose 43.2%, and manufactured homes rose 4.9%.

Construction defects hit the housing sector

A large number of homeowners across the country are confronting defects in their homes largely on account of construction faults. As the housing sector expanded aggressively in the last couple of decades, the industry has been besieged with a shortage of skilled manpower and quality construction materials. In addition, tardiness of municipalities in inspecting and certifying homes contributed to the problem. Criterium Engineers, a building-inspection firm, has estimated that 17% of newly built houses in 2006 had at least two significant defects, up from 15% in 2003. Paul Amirata, vice president of claims at Axa Insurance, says construction-defect claims being filed are “pretty severe in terms of the total damage alleged.” The drop in real-estate values has exacerbated the problem. Those with faulty houses find that repairs often cost more than the value of the home. In addition, many do not have the equity to leverage in order to pay for repairs. In case of house defects what is the remedy for homeowners? The National Association of Home builders believes litigation is an inefficient way of resolving issue related to construction defects and says homebuyers should consider using “alternative dispute resolution including mandatory, binding arbitration in consumer contracts.”

Home loan modifications rise in the first quarter

According to a report released by the Office of the Comptroller of the Currency and the Office of Thrift Supervision, the number of loan modifications rose in the first quarter of this year. The report also said there was an increase in mortgage delinquencies and foreclosures in the first quarter. John Dugan, Comptroller of the Currency, said: “While I’m very concerned about the rise in delinquent mortgages and foreclosure actions, the shift in emphasis by servicers to more sustainable, payment-reducing modifications is a positive step that should show significant benefits in the coming months.” Servicers carried out 185,156 loan modifications in the first quarter; this is a rise of 55% from the previous quarter. Seriously delinquent mortgages – loans that are 60 days or more past due – rose 9% from the previous quarter. Delinquencies in prime loans increased by over 20% from the previous quarter and foreclosures stood at 2.5% of all serviced loans. Despite the bad news, analysts believe the loan modification program introduced by the Obama administration is gaining traction and will benefit a large number of homeowners in the coming months.

Consumer confidence drops in June

The Conference Board (TCB), an industry group, said consumer confidence dropped in June after rising in May. TCB’s index of consumer attitudes declined to 49.3 in June from a reading of 54.8 in May. The Present Situation Index, which measures overall consumer sentiments toward the present economic situation, dropped from 29.7 in May to 25.8 in June. Millan Mulraine, economics strategist with TD Securities, said: “On balance, this was a disappointing report as it has clearly bucked the trend of improving consumer sentiments in the past few months. Moreover, with the details of the report uniformly weak, we are left with the impression that this was an outright slump in consumer confidence.” Among the consumers who participated in the survey conducted to gather information on consumer sentiment in the current quarter, 4.6% said they had plans to buy an automobile within 6 months; in contrast to 5.7% in the previous quarter. Those with plans of buying a home dropped from 2.8% to 2.7% while those planning to buy a major appliance dropped to 26.5% from 29.2%. Inflation rate expectations for 12 months rose to 5.9% from 5.6% in May. “Consumers are making a more somber and accurate assessment of the economy and their own financial position,” said Mark Vitner, senior economist at Wachovia. “Consumers may be thinking less bad is not good enough.”

Wall Street firms looking to sublet office space

During boom time, financial firms took office space as though there was no tomorrow. In the current slowdown many firms are giving up or looking at subletting excess space. According to real-estate brokerage Jones Lang LaSalle, 8.9 million square feet of high-quality, class “A” office space is available in midtown Manhattan for sublet. John Goodkind, a broker with Newmark Knight Frank, says about 10% of the high-end commercial space, amounting to 380,000 square feet, have been given up by financial firms in Greenwich. Analysts say it is a classic buy-high, sell-low situation.

New York private-equity firm Quadrangle Group has offered a three-year sublease for 10,000 square feet at $85 a square foot, a discount of 32% to the 2006 rate. Taconic Capital Advisors has offered 50,000 square feet near Central Park at $80 a square foot, denoting a 22% discount to the rate being paid by Taconic. Hedge funds and other firms, when they sublet space, are likely to lose millions of dollars over the life of the building lease. Buyers looking for space are getting great bargains. Brian Rance, U.S. managing partner of law firm Freshfields Bruckhaus Deringer, says, “It’s a complete buyer’s market.”

Now on to our real estate investor education section…

Sellers – Learn how to Sell Your Home Fast

Whether you are a short sale investor, broker or homeowner these tips for making your home sell fast are sure to streamline the process. Professionals in the field can create a checklist for potential sellers or homeowners can use the following steps to take matter into their own hands and attract legitimate short sale offers with quick closing times.

Begin preparing the paperwork as soon as possible. Your agent or short sale investor is often able to help. Typically you will need the following items:

Hardship letter

Tax Returns

Bank Records

HOA, Property Taxes and other pertinent outlays associated with the property.

Copy of Mortgage, liens or other monies owned on the property.

Put out the word. Let everyone know you need to sell the home – fast. Use works like ‘motivated seller’ or “distressed homeowner” to indicate a willingness to work with buyers able to provide a fast closing.

Contact the lender to let them know your situation.

Perform maintenance and upkeep as you are able. If finances are an issue, try to make the property appear as attractive and well maintained as possible.

Create a list of what you need the most from this deal. For example, if you need a fast closing avoid bankruptcy then say-so when speaking with the agent or potential short sale buyers. If you need a new place to live or rent after closing then mention that as well. Often these items can become part of the negotiation process to help make the deal work.

Identify personal property prior to accepting a final offer. If you intend to take the appliances be sure to specify this in advance. Likewise, it’s important to bring all items that will remain with the home (good and bad) as well as be removed from the home prior to entertaining offers.

Make a folder of all contact information and paperwork. Keep it accessible when speaking with real estate agents or potential buyers. Remember, everything must be in writing and never sign something you don’t fully understand.

Avoid entertaining multiple offers all at once. While this might seem like a good way to increase the odds of a successful sale, it often creates unnecessary delays that could result in your losing the home or growing farther into debt. Instead, ask to see proof of financing or other indication of a quick closing.

Keep it realistic. Even the most reputable short sale offer is likely to be somewhat slow given the large number of sales currently going through the system. A lot of sellers are searching for solid short sale offers so increase your odds by responding quickly to all inquiries and remaining patient throughout the process.

Start Early. The sooner you start the better the odds of selling your property before it becomes critical or urgent.

See you at the top!

Chris McLaughlin

http://www.shortsalesriches.com

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Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog

About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

running 4 different offices, supporting nearly

450 agents, uniquely positioning him to help

thousands of investors make money in the

KB Home new-home orders rise; cancellation rate improves

Chris McLaughlin — Mon, 29 Jun 2009 15:48:30 +0000

Real Estate News & Commentary by Chris McLaughlin, June 29, 2009
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KB Home new-home orders rise; cancellation rate improves

KB Home, a large homebuilder, has reported a lower loss for the quarter ended May 31 as compared to the earlier quarter. Analysts say this could be yet another sign of housing sector recovery. The company said new home orders, which totaled 2,910 units in the quarter, were up from the beginning of the year. In addition, the company’s cancellation rate improved. Net loss for the quarter was $78.4 million, or $1.03 a share, compared with a loss of $255.9 million, or $3.30, a year earlier, KB Home said in a statement. Michael Rehaut, an analyst at JP Morgan, said the result was worse than expected, and was “in sharp contrast” to the prior quarter’s order growth. Builders such as KB Home are competing with foreclosed homes up for sale. According to RealtyTrac, foreclosure filings, including default and auction notices as well as property seizures, rose 18% in May from a year earlier. Jeffrey Mezger, chief executive of KB Home, was cautiously optimistic. “Although key economic indicators remain mixed, we are beginning to see signs that some negative housing market trends may be moderating at both the local and national levels,” said Mezger.

McMansions lose their sheen

Homebuyers are losing interest in McMansions – oversized homes with 3,000 to 5,000 square feet of living space – amid the recession, and are moving towards smaller sized homes. Smaller homes are cheaper to buy, furnish, and maintain, say homebuyers; particularly those buying a home for the first time. “Entry-level buyers are coming out of rentals and coming out of apartments, and they are not looking for 3,000 or 4,000 (square) feet,” said Steve Hilton, chief executive of Meritage Homes. Homebuilders, in order to cater to the change in customer preference, are going along with the trend. The median new-home size, which grew from less than 1,000 square feet in the 1950s to over 2400 square feet in 2004, has been falling in the last couple of years. In 2008, the median home size was 2,200 square feet. The current recession is bringing it down further. According to a survey conducted by the American Institute of Architects (AIA), Americans are increasingly looking at smaller homes and lower ceilings, in part because of energy costs. “Home sizes have been trending down recently,” said AIA chief economist Kermit Baker. “The era of the ‘McMansion’ could well be over.”

Big banks renew interest in “jumbo” mortgage lending

Jumbo mortgages, which are loans for purchase of expensive, high-end homes, are not bought or guaranteed by Fannie Mae and Freddie Mac, the government-controlled mortgage companies. Jumbo loans, including refinancing as well as debt for home buyers, dropped to $98 billion in 2008 from $348 billion in 2007, according to Inside Mortgage Finance, an industry publication. Jumbo loans amounted to $11 billion in the fourth quarter of last year; the lowest quarterly amount since 1990. Now it looks as though things are looking up. Banks such as JPMorgan and Citigroup have started showing interest in jumbo loans once again. JPMorgan, which had halted purchasing jumbo loans in March this year, resumed buying new jumbo loans made by other lenders this month. Citigroup too is offering jumbo loans through independent mortgage brokers. “I’m actually starting to see a lot of community banks asking for jumbo loans,” said Grant Stern, owner of Morningside Mortgage.

Consumer confidence rises to its highest level in over a year

The Reuters/University of Michigan Surveys of Consumers are monthly surveys which provide a gauge of consumer anticipation of changes in the economic environment. According to the latest survey results, the Index of Consumer Sentiment (ICS) rose from a reading of 68.7 in May to a 70.8 in June; this equals the reading in February 2008. The Index of Consumer Expectations, which is a sub-index of ICS, moved lower to 69.2 in June from 69.4 in May. “Over the past four months, sentiment has improved moderately, suggesting that consumers’ attitudes about the economy are improving,” said Steven Wood, chief economist at Insight Economics. “However, they remain very cautious. Nevertheless, these data do suggest consumers are no longer shell shocked.” ICS has gained 15.5 points since a low of 55.3 last November. “Such a sizable gain has usually indicated that an end to the economic downturn is on the horizon, as consumers begin to increase their spending on houses, vehicles, and large household durables,” the Reuters/University of Michigan Surveys of Consumers said in a statement.

Swiss banks losing interest in American customers

According to new regulations, Swiss banks must register with the Securities and Exchange Commission (SEC) in order to provide banking services to Americans. The largest of Swiss banks, UBS and Credit Suisse Group, have asked their American customers to move their money to the banks’ newly created units in the U.S. or close their accounts. Many small Swiss banks are closing accounts held by Americans. “My bank doesn’t want to do that, so we wouldn’t accept an investment account for a U.S. person,” said Pierre Mirabaud, chairman of Mirabaud & Cie., a Swiss bank, while commenting on the requirement to register with the SEC.

Analysts believe over 5 million Americans living abroad are likely to be impacted by the new requirement. Registration with the SEC means clients don’t enjoy the protection of Swiss banking secrecy laws, which disallow money managers to disclose the names of clients without their consent. The Internal Revenue Service, in its efforts to recoup an estimated $50 billion in unpaid taxes, is seeking information on offshore bank accounts. Charles Adams, managing partner at the law firm Hogan & Hartson LLP in Geneva, said: “American citizens are starting to feel like they’re Typhoid Mary. The Swiss simply don’t want American customers because it requires so much infrastructure and hassle that they don’t make any money.”

Now on to our real estate investor education section…

How to Get the SBA to Finance Your Short Sales Empire

In yet another display of support for the short sales concept, the Small Business Administration recently announced breakthrough changes to the 504 Loan Program in conjunction with the American Recovery and Reinvestment Act of 2009. Small business owners (defined as those that do less than $5 million in business each year) will be eligible to refinance existing loans that were used to buy real estate or other assets. Even better, the 504 program also provides funding to allow small business owners to purchase real estate as well as fixed assets…including short sale real estate.

This is no small boon for those short sale investors searching for a way to obtain financing in a tough market or wishing to expand their short sale empire through the acquisition of additional types of properties. Keep in mind, small business loans may be interested in acquiring many different types of properties including residential real estate, commercial real estate, retail, storage or many other forms of distressed property.

The enhancement of the 504 Loan program to include refinancing and funding for new acquisitions is especially timely for those short sale investors who have taken steps to incorporate their business or who would like to purchase short sale properties as part of their existing small business. Forming a subsidiary or acting like a holding company is one way to allow your small business to cash in on short sale profits and broaden your bottom line holdings with the bank.

In addition to expanding the scope of new and existing financing options, the program has also increased the guarantee level to 90 percent while correspondingly reducing fees and transactions costs. ARC loans have also been made available to companies facing immediate financial hardship.

Eligibility Requirements:

“Expansion” includes any project that involves the acquisition, construction or improvement of land, building or equipment for use by the small business. The following are some of the conditions under which borrowers will be eligible for refinancing:

• The debt being refinanced was incurred to acquire land, to construct a building or to purchase equipment. The assets acquired must be eligible for financing under the 504 program.

• The existing debt is collateralized by fixed assets.

• The existing debt was incurred for the benefit of the small business.

• The new financing provides a substantial benefit to the borrower when prepayment penalties, financing fees, and other financing costs are taken into account.

• The borrower has been current on all payments of existing debt for one year prior to the date of refinancing.

——-

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

PS:

“Strange New Automation Strategy Closes Short Sales

Fast and Easy!”

Think of it! Our new automatic system for finding and

closing short sales is letting people cut their

work-week in half… and triple their income!

If you’re ready to say good-bye to endless hours of

labor, and far too few dollars in return, find out

more for fr-ee – no cost, no obligation. Just click

the link below..

https://www2.gotomeeting.com/register/309228778

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog

About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

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
* Add me on Twitter: http://twitter.com/mclaughlinchris
* Add me on Facebook: http://www.facebook.com/mclaughlinchris

—

New home subsidy unlikely to get through Congress

Chris McLaughlin — Mon, 15 Jun 2009 17:22:17 +0000

New home subsidy unlikely to get through Congress

Real Estate News & Commentary by Chris McLaughlin, June 15, 2009

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New home subsidy unlikely to get through Congress

The Obama administration introduced an $8000 tax credit for first-time homebuyers in February in order to stimulate the housing market. Some believe the government should do more and offer incentives to all homebuyers. Johnny Isakson, a Republican Senator, has submitted a proposal to offer all buyers a $15,000 tax credit for home purchases. Isakson said the rising number of foreclosures “is continuing to precipitate a downward spiral in values, loss of equity by the American people and a protracted, difficult economic time.” Analysts believe that the proposal may not find favor with Congress.

“There is bailout burnout across the country,” said Brian Gardner, senior vice president at Keefe, Bruyette & Woods. “There’s an argument for the stimulus, but the possibility of the bill passing is unclear,” said Gardner. The proposal will cost the government $30 billion. Jaret Seiberg, a policy analyst for Concept Capital’s Washington Research Group, said that “in an era of record deficits, it will be hard for lawmakers to accept that cost.” The National Association of Realtors and National Association of Homebuilders have welcomed the bill since they expect the proposal to eliminate oversupply of homes and stabilize the property market.

Consumer optimism rises to a 9-month high

The Reuters/University of Michigan Surveys of Consumers are monthly surveys of consumer attitudes and expectations about the U.S. economy. They provide a gauge of consumer anticipation of changes in the economic environment. According to the latest survey results, the index of consumer confidence rose to 69 in June from a reading of 68.7 in May. The consumer sentiment, measured by the survey, is at its highest since last September when the Lehman Brothers collapse happened. “Job and income uncertainty, however, remained high and constitute a significant barrier for completing planned purchases,” said the Surveys of Consumers in its report. The economic recovery was thought to be weaker than originally anticipated, leading consumers to expect a longer period of time before the recovery gets underway.” Survey participants, however, expressed concern about inflation, and consequently their one-year inflation expectations rose to 3.1% in June, the highest since October 2008.

Obama administration to roll out financial reforms

In order to prevent the economic crisis from happening again, the Obama administration, this week, is set to unveil financial reforms which are likely to have a far-reaching impact on the markets. The plan shall see a shifting of power among the different regulatory authorities. According to an article published in The Washington Post, U.S. Treasury Secretary Timothy Geithner and National Economic Council Chairman Lawrence Summers said the reforms would offer “a stronger framework for consumer and investor protection.”

Experts believe that the current regulatory structure is not suited to regulating a market full of complex instruments such as derivatives the value of which runs into trillions of dollars. The proposal is expected to raise “capital and liquidity requirements for all institutions, with more stringent requirements for the largest and most interconnected firms.” The proposal will also call for a reduced reliance on credit-rating agencies. The article said the United States “will lead the effort to improve regulation and supervision around the world.”

Proposal to cut federal health spending

Fixing the health care system is among the biggest aims of President Obama. The federal medical programs, Medicare and Medicaid, which cover millions of elderly and low-income Americans are in danger of going broke and Obama is keen on reducing costs to keep the programs afloat. Last week Obama proposed cutting $313 billion from the programs in addition to the $635 billion “down payment” by way of tax increases and spending cuts he announced earlier. The proposal is aimed at slowing the rising cost of healthcare. “The status quo is unacceptable,” said Obama. “America spends nearly 50 percent more per person on health care than any other country.” Obama’s budget director, Peter Orszag, justified the reductions because “health care delivery is becoming more efficient.”

Experts believe that the government may evaluate introducing price controls for drugs in order to reduce the cost of health care, but will face resistance from drug makers. Billy Tauzin, president of the Pharmaceutical Research and Manufacturers of America, said, “We remain committed to working with the administration and Congress to help enact comprehensive health care reform this year. A lot of work remains to be done, but we will continue to share ideas and seek solutions.”

Pricing TARP warrants

As part of receiving funding under the Troubled Asset Relief Program (TARP), banks issued warrants to the government. With many of the banks wanting to repay TARP funds, the pricing of warrants has become a point of debate. Lawmakers say that Treasury should aim to give taxpayers a fair return on the bailout funds and the warrants should be priced accordingly. “We are in the process of going through a judgment about what fair market value for those warrants is likely to be,” Treasury Secretary Timothy Geithner said last week. “Some of the estimates now are in the several billion dollar range for those initial banks that are repaying.” Banks are arguing for a discount on the warrants after having paid billions of dollars in dividends to the government. “We will be working with the government on the timing and valuation of all payments,” said Ron Gruendl, a spokesman for Bank of New York Mellon.

Now on to our real estate investor education section…

Basic Blind Spots Every Investor Needs to Know

When it comes to investing in short sales or stocks, every investor needs to know and understand how these basic blind spots impact their own though process. Fail to recognize this tendency and you are likely to find yourself justifying foolish mistakes while simultaneously discounting tremendous opportunities. Learn how to eradicate blind spots in your own investment portfolio and take advantage of great short sale opportunities by recognizing these six basic blind spots:

Allow Stories Rather Than Statistics to Chart Your Course. Case studies and individual accounts of success are one thing but inspiration doesn’t take the place of firm facts. Learn to love statistics and get a grip on the numbers to know where you stand before, during and after every deal. Remember, you make money in real estate (and every other investment) by buying right – not just during the sale. Leave the stories for a bit of inspiration and motivation but perform your own due diligence. When it comes to the numbers, every situation is different. Some short sale buyers have plenty of wiggle room that can carry them to safety should a marginal deal go bad while others need a sure-fire success the first few times out. Don’t buy into the hype – instead, stick to the statistics and allow the numbers to be your friend.

Seek to Confirm Rather than Challenge Ideas. It’s one of the most elusive tendencies known to mankind yet a tough one to battle; most people unknowingly surround themselves with people that tend to see the world in much the same way that we do. Likewise, even when it comes to business, the threat is the same; surrounding yourself with investors that confirm rather than challenge your ideas and strategy. This is one reason it’s important to have mentors or professional expert advice; the sheer volume of exposure to various situations allows a fresh perspective that you may not have arrived to on your own. In any investment, seek out those that are able to challenge the status quo rather than simply confirm what you already know; while the one may be comfortable, it’s unlikely to lead to the growth required to reach new investment heights.

Misunderstanding Chance or Fate. Do you make your own future or simply wait for it to happen? Most investors believe fate is what you make out of although a little luck certainly doesn’t hurt now and then. Of course, despite a lot of feel good approaches that claim to teach people how to take control of their own destiny and manipulate the outcome of “fate” itself, the fact is much more simple; sometimes little things can lead to big change if you allow it to do so. Train yourself to keep your eyes and ears open to possibilities in life and you will often notice a willingness and ability by others to help.

Personal Bias. Baggage – everyone has some of their own but when you allow it to interfere with investment decisions it can lead to big misperceptions and bad outcomes. Misperceiving the world around us is something everyone does now and then; whether you encounter a communication problem with a broker or potential seller or simply allow your own like or dislike to cloud your judgment about a particular property, chances are your own personal bias has influenced how you perceive the world and the opportunity. Minimize this risk by implementing a system that you follow each and every time. A system provides a standard measure of evaluating a given opportunity with a set response to get the job done.

See you at the top!

Chris McLaughlin

http://www.shortsalesriches.com

PS:

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Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog

About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

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
* On twitter: http://twitter.com/mclaughlinchris
* On facebook:
http://www.facebook.com/addfriend.php?id=709199143

Home Resales Up 2% in April

Chris McLaughlin — Wed, 27 May 2009 19:38:46 +0000

Real Estate News & Commentary by Chris McLaughlin, May 27, 2009

http://www.shortsalesrichesturbocharged.com

It’s LIVE! The Launch of the Year has begun .. find

out tonight what all the fuss is about at 8:30 PM ET, 5:30

PM PST:

https://www2.gotomeeting.com/register/501676394

Home Resales Up 2% in April

According to a survey conducted by Bloomberg News, resales of home rose by 2% in April from March. Falling prices, tax credits, and low mortgage rates may be contributing to an increase in home resales. The rise in foreclosures also helped home resales. Foreclosed properties accounted for 50% of home resales in March. “Home sales are being boosted by foreclosure sales and that’s helping to keep activity stable,” says Celia Chen, an economist at Economy.com, a provider of economic analysis. Many analysts believe that the market is stabilizing. “Home sales and construction activity are probably at the bottom,” said Chen. Robert Niblock, Chief Executive Officer of Lowe’s Companies, a large retailer of home-improvement products, said in a conference call that “there have been some encouraging signs in recent weeks that suggest perhaps the worst is behind us. Consumer confidence has ticked up. Housing turnover, especially in certain markets, is showing signs of a bottom.”

Mortgage applications drop

According to the Mortgage Bankers Association, its index which tracks applications to purchase a home or refinance a loan dropped 14.2% in the week ended May 22, as compared to the earlier week. Requests for home loan refinance dropped 18.9%. While some believe the market is about to stabilize, housing analysts rule out the possibility of a sustained recovery unless unemployment goes down. Pete Flint, chief executive of Trulia, a real estate website, says, “The housing market is not going to recover until foreclosures stabilize and reduce, which is unlikely in the short run. I would feel a lot more hopeful for the housing market when I see some positive signs in the employment statistics.” The unemployment rate in the U.S. is currently 8.9% and is expected to climb in future.

Irrational exuberance

The Standard and Poor index is up more than 30% since early March. With the economy not showing any signs of sustained recovery, the enthusiasm of the market could well be misplaced. In its latest budget projections, the U.S. government estimated that the economy will grow by 3.2% next year and by the year 2012, the growth will be 4.6%. Many analysts expect the economic growth to be lot lower. The economy has been bolstered by government spending. The question is what would happen if there is a reduction in government spending. Jeffrey Rosenberg, head of global credit strategy at Bank of America Securities Merrill Lynch, says, “When you remove the government stimulus, what the private sector can generate in terms of growth feels like a recession.” According to Rosenberg it would take another 3 years before banks recover from credit crisis and during that period economic growth could be as low as 0.5 to 1%. When the economy grows at a rate as low as 1%, it is susceptible to external shocks such as rise in the price of oil. History suggests that when recession is caused by financial crisis, it takes a lot of time for the economy to recover.

Consumer confidence grows

Data released by The Conference Board, an agency which carries out economic research, suggests that consumer confidence is on the rise. The index of consumer attitudes, published by The Conference Board, jumped to 54.9 in May from 40.8 in April. This is the biggest one-month jump since April 2003. Analysts believe that the jump in the index is an indication of “less of bad news.” Lynn Franco, director of The Conference Board’s Consumer Research Center, says, “Consumers are considerably less pessimistic than they were earlier this year.” Less of pessimism doesn’t exactly denote optimism. The consumers covered in the survey for collecting index data offered mixed response with regard to their purchase plans. The proportion of consumers planning to buy a car in the next 6 months rose to 5.5%, the highest in the last one year. But only 2.3% said they intended buy homes.

General Motors inches closer to bankruptcy

The large majority of bondholders of General Motors (GM) have rejected the company’s offer to trade their $27 billion bonds for a 10% stake in the company’s stock. This effectively negates the possibility of GM’s debt restructuring plan, and pushes the company closer to bankruptcy. Some believe that GM’s bondholders are likely to get a worse deal if the company files for bankruptcy. It looks highly likely that the U.S. government will increase its planned stake from 50 to 70% in GM, in order to reduce the company’s debt burden. The bankruptcy, if and when it happens, will be among the largest and the most complex in the history of American industry.

Now on to our real estate investor education tips section …

Is Your Body Language a Barrier to Short Sale Success?

Let’s face it – everyone is prone to the occasional sigh or less than enthusiastic response especially when dealing with complex or challenging people. Unfortunately, short sale investors must learn how to successfully negotiate with sellers, lenders and others in order to put together the best deals – no matter how positive or negative you feeling are – it’s important to keep your body language under control. Learn how to identify – and correct – the most common body language barriers holding back your success:

Off the Top of Your Head…did you realize that most people tend to look upward in a diagonal position when trying to think of an answer? It’s true – and others are able to pick up on that almost immediately. Stay prepared to avoid negotiating by the seat of your pants.

X-Marks the Spot…crossing your arms is often associated with a defensive posture. Rather than attempting to fix it (which is likely to only make you appear even more uptight), simply learn how to calmly communicate what you don’t like about the current conversation. Practice using a relaxed voice and your body language will follow suite naturally.

Ahead of the Crowd…overt enthusiasm and gestures that display a sense of urgency can be a dead give-away. Learn how to demonstrate a calm demeanor even when excessively excited. If you are absolutely unable to curb your enthusiasm, put it into writing instead. Think of it like a poker game – and keep your cards to yourself.

I Can’t Believe my Eyes…rubbing eyes or constantly turning your face away or indicates doubt and disbelief. Stop and allow the information to sink in slowly or ask questions rather than showing serious doubt or disbelief. It keeps the lines of communication open rather than putting the other party on the defensive.

Nervous Habits…biting nails, tugging at the corner of something, fidgeting with a pen and other time consuming habits either indicate boredom (if they are performed slowly) or impatience. Either one sends the wrong message. Keep track of what nervous habits you tend to display and rather than trying to eradicate them – replace them with something positive instead.

Ask a friend or family member to point out your most common body language pitfalls then make a point of developing successful forms of physical communication. For example, a brisk erect walking manner that portrays confidence or an open palm resting in a relaxed manner when speaking (sincerity, openness). Use “steeple fingers” when negotiating (authority) and a tilted head when listening to others (interest). Film yourself and practice until it becomes second nature. …but most of all, learn how to feel comfortable in your own skin.

See you at the top!

Chris McLaughlin

http://www.shortsalesrichesturbocharged.com

PS:

It’s LIVE! The Launch of the Year has begun .. find

out tonight what all the fuss is about at 8:30 PM ET, 5:30

PM PST:

https://www2.gotomeeting.com/register/501676394

*************************************************
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog

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 and Supervising Broker 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
* On twitter: http://twitter.com/mclaughlinchris
* On facebook:
http://www.facebook.com/addfriend.php?id=709199143

Where is the outrage? My perspective…

Chris McLaughlin — Tue, 25 Nov 2008 21:00:49 +0000

Where is the outrage? My perspective …

Mid-Day Market News & Commentary by Chris McLaughlin, November 25, 2008
http://www.shortsalesriches.com/welcome.html

——
Sorry there was a glitch that brought our webinar down for a few hours … so we’re reposting it for today only:

http://www.shortsalesricheswebinar.com

Don’t miss it – everyone that has watched it says it is perhaps the most useful tool in understanding what’s going on in the real estate market, and how to make money in today’s environment!
—–

Where is the outrage?

The jets arrived in Washington. Corporate jets, that is. Usually cost about $20,000 per trip within the U.S. And they had all the nice amenities. Perhaps a sip of champagne while thinking of how many billions to ask Congress for? Perhaps a bon bon here or there, to help cleanse the palate.

And when they touched down, they were met with gas guzzler SUVs to help bring their big wig corporate honchos to Capitol Hill.

Three CEOs from the 3 big US automakers prepared to tell Congress who they are cutting costs left and right … and they’d like $25 billion from the taxpayers.

Yeah, let’s spend $20,000 on a trip to Washington while asking for $10 – $12 billion.

Did you know that General Motors leased seven corporate jets before everyone starting crying foul?

They’re going to get out of a few leases now.

Where is the outrage?

Here on Main Street. That’s where. No one else seems to care.

The same place it has always been. By the people that actually pay the taxes. The folks that aren’t participating in the “bailout.”

Citigroup gets bailed out by the government, with Uncle Sam backing over $300 billion in loans and providing another cash infusion of $20+ billion … and what do we learn that Citigroup has done?

They freakin’ spent $400,000,000 for the naming rights for the New York Mets stadium. That’s $400 million! And what does the CFO Gary Crittendon say about the waste? “That was a decision made in a different time.”

Well, actually Gary, Citigroup’s financials were pathetic last year as well. And I really doubt you’re going to see a $400 million influx of new business by naming a stadium after your company. Can you imagine how many new online banking relationships you could have if you spent $400,000,000 in online advertising with google and other pay for performance mediums? No, you clowns will go waste $400 million on a stadium.

Where is the outrage?

Here on Main Street. That’s where. No one else seems to care.

Here’s another idea on blowing money… Tiger Woods just lost his $7 million dollar endorsement deal with General Motors . That actually brought Buick back from the dead, and made it cool again (if it ever was cool). Citigroup should bail out on the dumb stadium idea, and then have Tiger Woods as their celebrity endorser.

The only problem is that Woods has an image to protect. He probably won’t want to get caught up in this bailout mess. But hey, I think we all know he pays a lot in taxes, so if they wanted to blow some money on him I’d be OK with it. Sure beats a stadium for the Mets.

And while we’re talking about idiotic ideas, let’s not forget about the clowns working at AIG. These folks actually spent $100 million to sponsor Manchester United, the UK soccer team. And when word got out about the $150 billion bailout from Uncle Sam, some folks wondered whether AIG would try to unwind out of the deal, perhaps sell its new found marketing concept to another company that’s not essentially broke?

Nope, and AIG spokesperson confirmed it was still business as usual.

Where is the outrage?

Here on Main Street. That’s where. No one else seems to care.

But I bet you do!

Now on to our real estate investor education section…

The Top Trends to Watch in 2009

As the Thanksgiving holiday approaches in the midst of one of the most volatile financial markets in decades, it might seem there is little for short sale investors to feel thankful about. As the old adage goes, there is a silver lining in every cloud and despite the downturn in the real estate market, it could turn out that investing in short sales is the best decision you ever made. Not only does it diversify your earnings potential but if these top trends for 2009 hold true, it may turn out to be one of the few ways to hold your own during the next year. I’m about to tell you some brutal facts…but keep your head about you when you read them—remember that if you know what you’re facing you’ll be able to figure out how to benefit from it!

1. Lowered Retail Sales. During what is typically the most robust period of retail sales, stores are showing more than sluggish results; they are showing downright discouraging spending patterns as the seasonally adjusted retails sales experienced their largest decline ever for October 2008. Experts expect the trend to continue well into 2009 and only worsen after this holiday season.

2. Reduced Motor Vehicle Sales. As the Big Three auto makers line up for their turn at federal funds just to make it to 2009 it should come as no surprise that motor vehicle sales have experienced their worst performance since WWII. Experts agree this is a long term trend for 2009 and perhaps beyond.

3. Housing Starts = Housing Stops. The 2009 forecast for housing starts is so bad it actually resembles a stop instead. Not only is there a 1 to 2 year existing inventory for homes but housing starts for single family homes have recently posted a low of .54 in September 2008 with no end in sight.

4. Negative New Home Sales. While existing home sales recently experienced a slight upturn, new home sales are still falling and expected to lag throughout 2009.

5. Stagnating Treasury Yields. The world is seeking safety over substance in any form they can obtain it so don’t expect Treasury bonds or securities to do more than the bare minimum throughout 2009. After adding taxes and the impact of inflation, actual yields are zero or actually negative…which still beats the stock market!

6. Dropping Consumer Confidence. Rising unemployment, reduced access to credit and diluted retirement accounts have finally taken their toll on typically optimistic Americans; in fact, the perpetual optimism has given rise to abject fear as they scramble to reduce living expenses and cut back to the basics. Short sale owners holding affordable housing will find their properties in high demand in the coming year.

7. Rising Unemployment. Outside of the government (not exactly known for its high paying illustrious positions), most industries are cutting back or planning to cut back during 2009. Expect to see more demand for homes located near convenient locations and short commute times combined with Escalating Consumer Debt. As the cost of food, insurance and other necessities merges with unemployment and other costs consumers are turning to credit cards and other debts to make up the difference. Meanwhile, banks are increasing lending standards and raising interest rates. The result is a toxic combination sure to take a toll during the next year.

Now hold on! I know you’re thinking, I’m tired of reading all this negative stuff! Folks, the reason I’m telling you this is so that you’ll get excited about the opportunities that distressed properties will bring. You need to know facts about what’s really going to happen. There won’t be a “bailout” of everyone … so there is going to be plenty of opportunity for those in the know to make money!

See you at the top!

Chris McLaughlin

P.S.:

Sorry there was a glitch that brought our webinar down for a few hours … so we’re reposting it for today only:

http://www.shortsalesricheswebinar.com

Don’t miss it – everyone that has watched it says it is perhaps the most useful tool in understanding what’s going on in the real estate market, and how to make money in today’s environment!