Around the Home: Heating Bills Predicted to Rise 2.5 Percent This Winter

By Ruth Mantell
RISMEDIA, October 30, 2010—(MCT)—U.S. households will spend 2.5% more on heating fuels this winter than last year, with fuel prices rising "moderately," even as slightly milder weather is expected, the Energy Information Administration (EIA) said recently. Average household spending for space-heating fuels from Oct. 1 to March 31 is expected to total $986, up $24 from last year. Households heating primarily with natural gas are expected to spend an average of $27 more this winter, up 4%. The gain in spending represents a 6% increase in prices, with a decline of 2% in consumption. Natural gas is the primary heating fuel for about half of U.S. households, the agency said. Meanwhile, households who heat their homes with electricity can expect to spend an average of $18 less, or 2%. The spending decline reflects a 4% dip in consumption, partially offset by 2% growth in prices. Electricity is the second most common heating source and is especially common in the South. Those consumers primarily using heating oil will spend $220 more, a 12% increase, the agency projects. Those heating with propane are expected to spend an average of $136 more, or 8%. Henry Margusity, senior meteorologist for AccuWeather.com, said overall temperatures are projected to be milder from about Dec. 1 to March 31. "It's going to add up more on the mild side, which is good news for consumers," Margusity said. "There won't be a big, deep freeze over the country for an extended period of time. We are probably not going to see weeks of brutally cold weather." On a regional basis, temperature projections vary widely, EIA noted. The Northeast is projected to be 5% colder than last year, but the South is expected to be 15% warmer. (c) 2010, MarketWatch.com Inc. Distributed by McClatchy-Tribune Information Services.  RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

6 Reasons Why It's Smart to Buy a Vacation Rental Home Now

RISMEDIA, October 23, 2010—Lately, you've been thinking a lot about investing strategies. You have a small nest egg that needs to grow, but frankly you don't trust the stock market. And while real estate has been somewhat of a rocky road in recent years, it's still a solid long-term investment strategy—and clearly we're in a buyer's market. But you aren't really interested in being a landlord. So what can you do?

Christine Karpinski has a suggestion: Purchase a vacation home and rent it out to travelers.

"Vacation homes are almost always a good investment," says Karpinski, director of Owner Community for HomeAway—one of the world's leading vacation rental marketplaces—and author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment.

"First, if you're looking for a good long-term investment, real estate tends to be a good bet," she adds. "Second, vacation properties have the ability to pay for themselves, and owners often earn a profit in rental income. Third, the investment comes with the desirable perk of having a place at the beach or in the mountains to call your own. And finally, there has never been a better time to buy a vacation home—it's like the planets have all lined up perfectly."

If you are interested in purchasing a vacation home, Karpinski describes why there's never been a better time to go vacation rental house hunting:

There have never been so many properties on the market. For potential home buyers, there is a silver lining to the slow economy and the housing crisis: Most vacation markets are chock-full of buying opportunities. Once you've pinpointed the vacation rental market that is right for you—The coast? The mountains? A ski resort area?—you will likely have a lot of properties to choose from.

Prices aren't going to get much better. In fact, they're the lowest they've been in five to ten years. If you're pretty sure you want to buy a vacation home "someday," you might want to quit procrastinating and pull the trigger, says Karpinski.

Interest rates are very favorable for purchasing. Today, mortgage interest rates are low. Bottom line: Take advantage of them while they last.

You have access to the best real estate professionals. Anyone connected to the housing market who managed to survive the housing crash had to be at the top of his or her game. That means the agents left standing today—including the ones you'll be working with in your search for the perfect vacation home—are possibly the best of the best.

It's never been easier to rent your vacation home. As mentioned earlier, vacation home rentals have never been more popular. More and more consumers are choosing to stay in cozy condos, cabins, and chalets instead of cramped, impersonal hotel rooms when they travel. And as market demand has surged, organizations have sprung up to help connect vacation homeowners with these potential renters.

If you buy now, you can be ready for the 2011 peak season. It's true that the longer you wait to buy, the likelier it is that interest rates could rise. But there's another reason not to procrastinate: If you buy now, you'll have time to get your property ready for peak rental season. Experienced vacation homeowners often find that the rental fees generated during the twelve weeks between Memorial Day and Labor Day pay their mortgages for an entire year—and most inquiries come in between January and March.

"Even turnkey properties aren't really turnkey," notes Karpinski. "To get your property up to your standards, there will very likely be things you will want to spruce up. Rooms might need repainting. Decorating will need to be done. And the yard might need some work. Buying now will provide you with a cushion of time to get the home ready for your guests, take great photos for your property listing, and start marketing it to potential renters."

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Single-Family Housing Starts Rise 4.4 Percent in September 2010

RISMEDIA, October 21, 2010—Nationwide housing starts edged up 0.3% to a seasonally adjusted annual rate of 610,000 units in September, due entirely to a 4.4% gain in the single-family sector, according to U.S. Commerce Department figures.

"Builders are cautiously responding to the small improvement they are seeing in interest among potential home buyers," noted Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. "However, as consumer demand for new homes rises, a major limiting factor for a housing recovery continues to be builders' inability to access credit for new construction."

"Today's numbers are in line with our latest builder surveys, which indicate that stability is slowly returning to the new-homes market following the declines we saw upon expiration of the home buyer tax credits and the slowing of economic growth this summer," added NAHB Chief Economist David Crowe. "Builders are receiving more inquiries from potential customers and are carefully responding to renewed consumer interest, although their limited access to credit for new housing production is definitely hampering this process."

All of the increase in housing production in September was due to improvement on the single-family side, which posted a 4.4% gain to a seasonally adjusted annual rate of 452,000 units—the strongest level since May of this year. Multifamily starts, which tend to exhibit greater volatility on a month-to-month basis, recorded a 9.7% decline to a 158,000-unit rate following a big increase in August.

On a regional basis, starts activity was mixed, with two regions posting gains and two posting declines for September. The Northeast and South registered gains of 2.9% and 4.8%, respectively, while the Midwest and West registered declines of 8.2% and 3.6%, respectively.

Permit issuance, which can be an indicator of future building activity, declined 5.5% to a seasonally adjusted annual rate of 539,000 units in September. This dip was due entirely to a 20.2% decline to a 134,000-unit rate on the more volatile multifamily side, while single-family permits remained virtually unchanged, edging up 0.5% to a 405,000-unit rate.

Regionally, permits fell across the board in September, with the Northeast posting a 1.5% decline, the Midwest a 4.3% decline, the South a 4.7% decline, and the West a 10.6% decline.

For more information, visit www.nahb.org.

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Alternative Earnest Money Deadline

In the Colorado Contract to Buy Sell, the Alternative Earnest Money Deadline is the time that you have to deliver Earnest Money, to the Seller, Seller's Agent, of Title Company.  In order to have a "contract", consideration has to be rendered.  Earnest Money is that consideration.  Allowing for a contingent delivery date of earnest money (the consideration), enables the buyers and sellers to deliver contracts via electronic deliver and still have an enforceable contract. 

October Economic Snapshot

Over the course of the past eighteen months, the Federal Government implemented the Homeowner Tax Credit Program. The Federal Reserve lowered the Federal Funds Rate for member banks to borrow funds to nearly zero percent. Home mortgage interest rates have fallen to the lowest level in more than fifty years. Now, members of the banking industry are taking a sabbatical by not foreclosing on homes. All of these factors were/are designed to stabilize and stimulate the housing industry. Despite all these efforts, the housing market continues to quietly drift along.


There have been spurts of activity. The Metro Denver real estate market was UP in sales activity at the end of June/2010 as compared to the end of June/2009 for attached units (+16%) and UP for single family homes (+8%). But those numbers have dropped since the Homeowner Tax Credit Program ended in late April/2010. Through September/2010, single family home sales are down about 5% Y.T.D. compared to Y.T.D. 2009; and down around 4% for attached units. Thus, the Metro Denver real estate market hasn’t sustained itself.

One of the best indicators of real estate market activity is the time it takes for the market to absorb itself. A healthy real estate market is thought to be around six months of available inventory. That time frame provides buyers with an adequate selection of homes and sellers with a reasonable amount of time to sell. The current “absorption rate” for the Metro Denver real estate market stands at approximately 198 days. The absorption rate in September/2009 was at 154 days. As we enter the fall and winter, the absorption rate should be around the same level as inventory levels and sales dwindle.

The question now becomes, “What’s next?” What magic elixir can the Federal Government and banking community pull from their proverbial hat? The answer isn’t putting more lipstick on the pig, because you still have a pig. The answer always comes back to one four-letter word; the word that drives the economy and fosters the housing industry. That word is “jobs”. Jobs are the Holy Grail; the path to redemption; the pot of gold at the end of the rainbow. Without them, you have a stagnant economy, which naturally leads to a declining housing market.

Bank of America Moratorium to End in State Soon

InsideRealEstateNews- October 18, 2010-Bank of America has begun processing foreclosures in 23 states, but Colorado is not one of them.

“Colorado is one the 27 states,” in which the foreclosure moratorium is still in effect, BofA spokeswoman Jumana Bauwens told InsideRealEstateNews today in an e-mail. However, the moratorium in Colorado likely will not be in effect much longer. ”We have no specific date yet, but likely (it will end) in the next few weeks,” Bauwens added, regarding resuming foreclosures in Colorado.

 BofA halted foreclosure actions in all 50 states on Oct. 8, in the wake of allegations that foreclosure applications by it and other banks were not handled properly. One problem was the wide-use of “robo signers,” that automatically signed documents, instead of properly reviewing them.

 BofA, in a press release released on Monday, said that that it has reviewed its process for resubmitting “foreclosure affidavits in the 23 judicial states with key stakeholders, including our largest investors. Accordingly, Bank of America today began the process of preparing foreclosure affidavits for submission in 102,000 foreclosure actions in which judgment is pending.”
 Colorado, unlike the majority of states, exclusively uses the public trustee system for processing foreclosures, as opposed to a court system.

 State by state review

 Next Monday, BofA anticipates “affidavits will be resubmitted to the courts. Upon judgment, foreclosure dates will be set and Bank of America will resume foreclosure sales in such proceedings in the 23 judicial states. We will continue to delay foreclosure sales in the remaining 27 states until our review is complete on a state by state basis. We anticipate over the course of this pause, less than 30,000 foreclosure sales will have been delayed. As was the case for our judicial state review, our initial assessment findings show the basis for our foreclosure decisions is accurate. Our decision to review our process and later, to extend our review to all 50 states, has been an important step to give customers confidence they are being treated fairly.”

 In the Denver area, there are only 415 homeowners with BofA loans facing foreclosure, according to an analysis by SKLD Information Systems. A poll on InsideRealEstateNews found that those who voted were about equally divided on whether BofA made the correct decision by temporarily halting foreclosure actions. Some experts feel that it only delayed the inevitable, threatens to worsen the foreclosure crisis, is is a slippery ethical slope, as it not fair to owners still making their mortgage payments, and it was a politically motivated decision. Others, however, believe that banks that helped to create the collapse of the housing market by making irresponsible loans, must follow the letter of the law when undertaking something as serious as foreclosing on a home. Also, some argue that a moratorium on foreclosures will give banks and borrowers more time to find an alternative to returning their home to the lender.

 Contact John Rebchook at JRCHOOK@gmail.com.

What Foreclosure Freeze Means for First-Time and Move-Up Buyers

RISMEDIA, October 14, 2010—Thousands of first-time and move-up buyers who hoped to make a foreclosed property their new home now face uncertainty, anxiety and possibly remorse as they worry that closing on their desired property could be in jeopardy. For many, the dream of homeownership could turn into agony if their home purchase is indefinitely delayed by a moratorium on foreclosures declared by some banks, the National Association of Realtors said. The moratoriums are needed, banks say, to review all of the foreclosures in their portfolios to make sure they’re in compliance with the law and that titles are clear.

NAR warned that a prolonged review process would have a damaging impact on many communities and hinder the nation’s economic recovery.

“As the leading advocate for homeownership issues, we understand that many lenders need a time-out to review their actions to ensure that homeowners are not improperly foreclosed on and that the lenders are following regulations and state laws. After that, the foreclosure process must resume quickly to return stability to families, the housing market and the economy,” said NAR President Vicki Cox Golder.

Over the past few months, NAR has met with officials of top banks to discuss market issues. NAR urged banking leaders to seek resolution quickly through loan modifications and the short sale process rather than through foreclosure. “We stand ready to help lenders develop better short sale procedures,” Golder said.

“There are valid foreclosures that should move ahead quickly, and we shouldn’t lump them in with mortgages that are suspect. That would cause deep problems in an already fragile market and throw many families into uncertainty,” Golder said.

Golder said that she is receiving reports from Realtors that the moratorium is already creating some anxiety among purchasers as transactions are being delayed and that some foreclosure listings are being removed from the market.

Compounding the problem is that the requirements for foreclosure vary by state, and practices to meet these requirements vary by firm. NAR is working with regulators, such as the Federal Housing Finance Agency; and encouraging them to identify and quickly address process problems.

In a letter to the U.S Treasury Department, the U.S. Department of Housing and Urban Development, and the Federal Housing Finance Agency, NAR stated the hope that banks would complete their foreclosure review expeditiously to assure that the rights of borrowers are protected and remove doubt that buyers will receive clear title to their purchase.

“NAR has long urged the lending industry to take every feasible action to keep families in their homes with a loan modification and, if that is not possible, to give them a ‘graceful exit’ through a short sale. These options are far better than a foreclosure, and nothing has driven this point home more clearly than the questions being raised about foreclosures. Lenders should place additional resources into processing loan modifications and short sales,” NAR wrote.

A year ago, NAR instituted a special short sale training program for its Realtor members to work more closely with banks in expediting mortgages at risk by resolving them through short sales and loan modifications. More than 51,000 Realtors have been certified in the program.

For more information, visit www.realtor.org.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Homeowners Insurance: Winter Prep to Keep Costs Down

RISMEDIA, October 11, 2010—Fall is the perfect time for homeowners to ensure their house is prepared for winter weather. A home should be winterized so it will be able to sustain damage severe weather may bring for those living in these climates. Additionally, if a house is winterized and damages do occur, the homeowners insurance policy will cover the house against the weather damage. HomeownersInsurance.net offers advice so people can prepare for winter weather and help avoid potential costly issues.

Homeowners must first inspect their house thoroughly so that possible issues can be avoided. The most important interior areas are the furnace and fireplace. HVAC professionals can inspect the furnace and clean out the ducts. Furnace filters should be replaced on a monthly basis to keep ducts clean.

Any flammable materials around the furnace should be removed.

If there is a hot-water radiator, the valves need to be opened slightly to bleed. When water is seen, they can be closed. If propane is used in the home, the tank will need to be filled. These should all be inspected to be sure they are working properly.

If there is a fireplace in the house, the screen or cap on the top of the chimney should be secure to keep out any birds, squirrels or rodents. The chimney should be cleaned by a professional occasionally because buildup of soot can cause fires. The damper should open and close properly and the mortar between the bricks should not be cracked. Any cracks should be fixed so heat does not seep into areas it should not be in, creating a fire hazard.

The next step in preparing for winter for safety and insurance purposes is to examine the exterior. Damage may not be evident immediately during winter months, and may only be noticed with the first spring rain. The doors and windows should be checked for cracks, and then fixed. If the homeowner has a basement, shields can be placed over the window wells for protection from snow melt. Any worn shingles or roof tiles should be replaced so melted snow does not seep into weak areas. Gutters and downspouts should also be unclogged and leaf guards should be installed.

Debris should then be cleared from the foundation to look for further cracks to repair.

For more information visit www.homeownersinsurance.net.

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Will Foreclosure Freezes Fix the Housing Market?

RISMEDIA, October 6, 2010—(CBS MoneyWatch)—On Friday, Bank of America announced that it would suspend foreclosures in 23 states while it amended filed paperwork. That makes B of A the third major bank in two weeks to put its foreclosure process in limbo. Two days earlier J.P. Morgan Chase announced it would freeze foreclosures on more than 50,000 homes currently in receipt of a foreclosure filing. Last week, Ally Financial Inc. (the former GMAC Mortgage) also froze foreclosures.
 All three banks have admitted to problems in the processing of foreclosures, including the use of so-called “robo-signatures,” employees who job it is to solely sign foreclosure docs without reviewing the paperwork.

Today, Ohio’s Secretary of State Jennifer Brunner asked federal prosecutors to investigate foreclosure irregularities in her state. Ohio has been pushing lenders to do better. On September 17, Ohio Attorney General Richard Cordray announced that the state court had affirmed its case and legal strategy of holding loan servicers accountable in the foreclosure crisis.
So will Chase’s and Ally’s foreclosure freeze ultimately fix the housing market? That’s one theory put forth in today’s New York Times. But, I’m not so sure. What will happen in the short run is that all of the banks will put a moratorium on the foreclosures. Law firms that have become foreclosures processing machines in places like Florida, will have a lot of extra time on their hands.
 I suppose, in the best of all worlds, slowing down or freezing foreclosures might actually force lenders to take a harder look at ways they might keep folks in their homes, like doing more loan modifications. That would reduce the so-called “shadow inventory” and keep housing values from crashing again.

Again, that’s the best possible scenario. I think it’s too soon to tell. And, there’s a lot that’s going wrong with the economy right now (jobs, anyone?) which could complicate the view in any rose-colored glasses.
 Right now, those who have Chase and GMAC on the top of their loans are getting a reprieve.
 Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and The Equifax Personal Finance Blog, and is Chief Content Strategist at RealtyJoin.com, a community for real estate investors.
 RISMedia welcomes your comments and questions. Email realestatemagazinefeedback@rismedia.com.

The Short Sales Pipeline: What’s Being Done to Get Them to the Table

RISMEDIA, October 2, 2010—(MCT)—Despite industry and government efforts to make short sales—transactions in which the lender agrees to accept less than the mortgage amount owed by the homeowner—easier and more quickly accomplished, improvements are coming up, well, short. In some cases, the difference between the two numbers is being forgiven by the mortgage lender. In others, the homeowner must arrange with the lender to settle the rest of the debt.

Theoretically, short sales are less costly to a lender than foreclosures. There are fewer legal costs involved, for example. But the chief attraction of a short sale is that there is a buyer for the house, while a foreclosed property can sit in a lender’s portfolio for months.

That’s why the Obama administration in March appended short sales to its efforts to reduce foreclosures for homeowners who fail to make the grade for the federal Home Affordable Modification Program.

The new program, known as Home Affordable Foreclosure Alternative, is set to end December 31, 2012. Under its terms, a lender must offer a short sale in writing to a borrower within 30 days after the borrower is either ruled ineligible for mortgage modification or has been deemed unable to sustain payments in a trial plan.

Lenders are offered incentives for each completed sale. So far, the results have been less than definitive.

“We haven’t heard of any noticeable shifts” in the process that would indicate an improvement, said National Association of Realtors spokesman Walt Molony.

Anecdotally, the association has received fewer complaints about delays, he said, but there are no data to back that up.

Twenty-three percent of residential property owners nationally are “underwater” on their mortgages—that is, they owe more than their homes are now worth, according to CoreLogic Inc., of Santa Ana, Calif., which tracks foreclosure information.

For such homeowners, a short sale can also be the best option, real estate experts say, because it may not hurt their credit history as much as a foreclosure would.
As a result, the homeowner may be able to qualify for another mortgage sooner once they get back on their feet financially.

Yet real estate agents continue to have problems getting short sales through the pipeline.

Carolyn Sabatelli, an agent in Media, Pa., with 37 years’ experience, said she had so much trouble bringing short sales to the settlement table, she thought she was doing something wrong. Then she attended a short-sale seminar sponsored by Wells Fargo & Co., “and after listening to the complaints of about 200 agents, I realized that it was not me, but the system.” Recently, Sabatelli said, she wrote a $299,000 offer from a qualified buyer for a $289,000 short sale. The lender rejected it.

Difficulties aside, short sales can be great opportunities, said real estate agent Cheryl Miller. “Listings have to be priced attractively in order to generate activity; otherwise, buyers pass over them,” said Miller.

Even as short sales continue to lag, the number of agents with special credentials for handling such transactions is building.

“There’s been a rapid growth in the number of Realtors with the ‘Short Sales and Foreclosures Resource’ certification,” Molony said.

Though the certification was launched at the Realtors association’s November convention, by the end of February, 20,000 members had received it, he said.

By August 31, he added, that number exceeded 50,000, making it the “fastest-growing and most popular NAR certification.”

(c) 2010, The Philadelphia Inquirer.

Distributed by McClatchy-Tribune Information Services.

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