Vacant Lots Become HOT Property!

Vacant residential lots are looking better and better to real estate investors.

The cost of a finished, ready to build lot, can cost a developer about 25 percent of the finished home price. There are a number of these ready-to-go lots on the market at about half what they actually cost to prepare. Investor groups are snapping them up, figuring that the time will come soon when they will be in demand.

"The country needs 1.2 million new units for the next 10 years just because of population growth," says Scott Clark, president of American Development Partners, which has bought thousands of vacant lots all over the West. "[U.S. builders] built about 500,000 units in 2009 and 600,000 units in 2008, so there eventually will be pent-up demand. We want to get as many of those finished lots as we can because as demand begins to rise, the need for housing will become painfully obvious. The delta (ratio of change to value of underlying asset) in this investment will be significant."

Source: Inman News, Steve Bergsman (02/12/2010)

7 Reasons to Own Your Own Home

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.

2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.

3. Equity. Money paid for rent is money that you'll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your fixed-mortgage payments don't rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

Online resources: To calculate whether buying is the best financial option for you, use the "Buy vs. Rent" calculator at http://www.ginniemae.gov/.

5 Ways to Handle Stress

Managing stress doesn't mean simply avoiding or glossing over challenges. Here are five techniques you can use to deal with the pressures that come with a real estate career.

Remember the odds.

One of the truisms I always remind myself of is the fact that, normally, events work out in some fashion. Think about how many transactions you've had that looked like they would go sour. In most cases, those deals probably worked out, even if they didn't go as perfectly as you might have hoped.

Most transactions will hit a snag here and there, but generally deals do get done.
Constantly stressing out about problems and issues will get you nowhere, and if you ponder the situation too long, it will definitely result in major anxiety. Don't misunderstand-I'm not saying you should avoid problems, but you can remind yourself during rough times that you can still find compromises and solutions in almost any situation.

Eat your big fish first.

When faced with a mounting obstacle, don't blow it off until later. Confront it first thing that day. You might be tempted to put off the problem and tackle the easier, smaller stuff first. But this usually winds up prolonging and intensifying the stressful situation.
Instead, go ahead and "eat the bigger fish" on your plate so you can get it out of your way and stop worrying about it.

Be honest and take responsibility when it's your fault.

Stress can be caused by a wide variety of factors. Sometimes it can be created by our own foibles or when we just drop the ball. It's difficult to tell someone you forgot to put their papers in the mail or misplaced a key. But if you want to avoid further stress, be honest about the situation and take responsibility.

I've found that whenever I've made a mistake and explained to a customer what happened, admitted responsibility, and apologized, it almost always produces a positive outcome. Procrastinating or masking over a problem will not give you any peace of mind, and it certainly won't reassure your clients.

It can be difficult to admit "I made a mistake" or "I'm sorry." But being honest ultimately goes far in winning trust with all the parties involved.

Exercise.

When nothing else seems to be going right, try to squeeze in a workout. Going for a walk, run, bike ride, swim, or other exercise is an excellent way to feel better.
Exercise can improve your mood because it releases endorphins in your brain, a hormone that can even trigger feelings of euphoria. Physical exertion can add a wide variety of benefits to your life and is excellent for relieving stress. Be sure to consult your physician before starting any major new exercise program.

Remind yourself that this, too, shall pass.

Often you can be in a stressful situation and feel as though it will never end. For many real estate professionals, the current environment has been incredibly stressful and shows few signs of relief. But our country has always been able to rebound, and the real estate market will once again rise up from record lows.
Rather than thinking the situation will never get better, remind yourself that it eventually will improve. It may not be in the next few months, or even until the next year or two, but the real estate market will recuperate and make lasting progress. Understanding that better days are ahead allows you to keep going a little farther.

By John D. Mayfield February 2010

What Will the Market's New Normal Be??

In a new study, "Housing in America: The Next Decade," Urban Land Institute senior resident fellow John McIlwain says the housing market will not return to what it was prior to the downturn but rather that a "new normal" will take its place.

He expects another 10 percent decrease in residential prices this year, a jump in the number of borrowers abandoning "underwater" mortgages, and a change in consumer perceptions of homeownership.

"The emotional impact on the children and parents and disillusion about the 'joys' of homeownership will be intense; new attitudes to homeownership and the American dream will emerge," McIlwain writes.

He expects home price appreciation to hover around 1 percent or 2 percent per year after the market recovers and the national homeownership rate to drop from 67 percent currently to 62 percent by 2020.

In the coming decade, McIlwain expects the following:

1. Older baby boomers to move to urban, mixed-use, mixed-age centers near family instead of retiring to Sun Belt communities;
2. Immigrants to snub the suburbs in favor of more close-knit communities;
3. Younger boomers to face the challenges of lost home equity and a smaller pool of move-up buyers;
4. Generation Y to rent for long periods by choice or because they are paying off student loans or have stagnant incomes.

Home Sales Stabilize

Pending home sales have leveled from a market swing driven by response to the home buyer tax credit, according to the NATIONAL ASSOCIATION OF REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, increased 1 percent to 96.6 from 95.6 in November, and remains 10.9 percent above December 2008 when it was 87.1.

In November, the monthly index had fallen by 16.4 percent from surging activity in preceding months.

Lawrence Yun, NAR chief economist, says it's important to recognize how the tax credit is skewing market data.

"There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded," he says. "These swings are masking the underlying trend, which is a broad improvement over year-ago levels."

December activity was the fifth highest monthly tally in two years.

The Tax Credit Impact

Buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30, 2010, to finalize the transaction to qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.

Yun projects the extended and expanded tax credit will encourage 2.4 million households to take the credit in 2010.

"While new-home sales will remain low due to a lack of construction, existing-home sales are projected to rise to around 5.6 million in 2010," Yun says. Last year there were 5.16 million existing-home sales.

He added that one of the greatest benefits of rising sales will be firming home prices.

"For several months now we've been seeing stabilization in all of the home price measures as inventory is pulled down," Yun says. "As a result, the housing wealth for many middle class families has begun to stabilize."

Regional Data

Here's a breakdown by region for the PHSI:

Northeast: rose 2.3 percent to 76.1 in December and is 14.9 percent higher than December 2008.
Midwest: increased 5.2 percent to 86.9 and is 8.7 percent above a year ago.
South: rose 2.2 percent to an index of 98.4, and are 5.5 percent higher than December 2008.
West: fell 3.8 percent to 119.9 but is 18.6 percent above a year ago.

-NAR

Fannie Offers Closing Cost Aid on Foreclosures!

Fannie Mae, the largest provider of residential home funding in the United States, announced Friday that it would pay the closing costs on purchases of foreclosed homes in its inventory.

The government-controlled company said buyers of qualified properties will get up to 3.5 percent in closing costs, or an equivalent amount for the purchase of new appliances.

The goal of Fannie is to clear out the nearly 50,000 properties it has in inventory- listed on HomePath.com, the Web site created by Fannie Mae last year to sell the growing number of foreclosed homes.

"Attracting qualified buyers to the market and reducing inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover," said Terry Edwards, executive vice president for credit portfolio management, in a statement.

Source: Reuters News, Al Yoon (01/28//2010)

How to Save Money in February

2 - Think taxes: Your 1098, 1099 and W-2 statements should arrive by today. Finish gathering tax documents and put them in a folder for later.
4 - Your Money Bus stops in Charleston, S.C.
7 - Billions of dollars in bets will be riding on Super Bowl XLIV.
12 - Investors: Standard & Poor's 500-stock index has gone down 15 of the past 18 years on the day before Presidents Day weekend. You could pick up some cheap shares.
15 - Presidents Day. Before you hit the sales, take our quiz to find out what kind of spender you are.
22 - New credit-card rules go into effect.
22 - Your Money Bus stops in Palm Beach, Fla