The Jobless Recovery is Complete

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 It has been several years of watching millions of people chase the few jobs out there but that is changing in a hurry and permanently. Early November numbers indicate that 321,000 jobs were added to the U.S. economy. Revisions for September and October show that 44,000 more jobs than had been estimated were actually added. 2014 is turning out to be the biggest employment growth year since 1999. Unemployment Will Remain Low Within the next couple of years, the concern will shift from unemployment to labor shortages. Baby boomers continue retiring at an unprecedented rate. More than a quarter million Americans turn 65 every month. Many remained in the workforce during the recession because they saw their Wall Street invested retirement accounts shrink. Wall Street has recovered and these seniors are now feeling more confident about leaving the workforce. Only about 17% of baby boomers have retired to date, meaning a lot of jobs will become available in the near term future. The peak hiring of the millennial generation has passed meaning fewer people will be entering the workforce. As soon as next year, those born between 1981 and the early 2000s will become the majority of the workforce. They will soon be earning more money and have increased purchasing power across the entire economic spectrum, including homes. What This Means for Real Estate The shrinking workforce and millennials becoming dominate in the economy creates two significant changes in the residential real estate market. First, wages for these first time homebuyers are going up. Although the millennial generation has shown a preference for inner city apartment renting, this should change as their wages increase and they become more family orientated. In the early 2020s, many more first time buyers are expected to enter the market. However, not in the numbers that baby boomers once bought at. In addition, as baby boomer age, many will move out of the family home and into some type of senior housing. This will create an abundant market of existing houses. The second major change coming is that interest rates are going to start going up. The Federal Reserve has been artificially holding interest rates down to stimulate the economy. With unemployment down and wages heading up this artificial stimulation is about to end. Most experts now expect the Federal Reserve to raise interest rates beginning the summer of 2015. Exactly how this will affect real estate isn’t completely clear. While the raising income of millenials will absorb some of this increase in interest rates the increase will certainly lock some of the younger generation out of the marketplace. The banks have also been easing access to mortgages lately. If this continues, it’s likely to add more fuel to the real estate market. 2015 very likely will be a year of strong growth. The Real Estate Future With optimism comes a tendency for many to over react. A building and investing cycle is on the horizon. If investors and builders are overly optimistic, this could lead to another cycle of boom and bust. Real estate is always a market of supply and demand. Hopefully, we’ve learned from the past and will keep supply and demand in balance to create a stable market going forward. The real estate market also has several moving influences pushing it in several different directions. Currently there are some major forces at work. While another major event like another recession could change everything, right now the future of real estate is promising.

Thoughts on Real Estate Investing

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Whether you’re a seasoned professional or a novice investor there are fundamentals that you should always be paying attention to when investing in real estate. The fundamentals for beginners may be second nature to experienced investors but they aren’t to the beginner. The beginner needs to keep these in mind every step in the process of making his or her first purchase and sale.

Money can be made in any type of real estate market but it takes different strategies that change on a regular basis. There are two basic investment strategies. One is to buy and hold as rentals and the other buy and flip as quickly as possible. Within those two basic strategies are many other options. Today, one of the better buy and hold strategies is the lease option where you hold for a few years but have a plan to sell to the renter at a future date. For those wanting to flip houses, being able to owner finance them (even using other people’s money) is a great strategy. Both of these strategies are working well today because of the tough lending qualifications and because so many people have damaged credit scores coming out of the recession.

Real Estate Investing for Beginners

First and foremost, have an exist strategy. Never buy a house just because you can get it at a good discount. Know exactly what you are going to do with it once you own it. It’s also preferable to have a plan “B” and a plan “C”. Once you have an exit strategy, join an investment club if you haven’t already. Decide on a couple of experienced members that you trust and possibly use the exit strategy you’ve decided on. Invite them to lunch. Explain your strategy to them and ask them to punch as many holes in it as they can. Use the information you learn to improve your plan.

Expert advice for beginners is invaluable. An example of a big mistake one beginner was advised not to make involved a double lot. The beginner had found a double lot at a deep discount in a lower to middle income subdivision. He saw a huge opportunity to buy the lot and then go through the permit process to subdivide it with the intention of more than doubling his investment by selling two individual lots at retail. When he discussed his plan with an expert, the expert suggested that before making the purchase he first look into his ability to subdivide the property. When the beginner did, he learned that it could not be subdivided because of a wildlife habitat issue. The only use the property was suitable for was building a small mansion in the middle of low-end neighborhood. Obviously not a good investment strategy.

Real Estate Investing for the Experienced

If you’re at the top of your game, the best thing you can do to stay there is remain humble. Lack of humility is the biggest problem any businessperson can cause for them self. People simply don’t like doing business with someone that is arrogant. The best deals won’t be made available to you. When you do find a decent deal, negotiations won’t go in your favor when you portray yourself as always coming out on top. Stay humble and you’ll do much better.

Being humble includes offering your experience and knowledge to beginners and others less experienced than yourself. Don’t think of them as competitors and blow off their requests for help. There are plenty of deals for everyone. Occasionally, taking the time to thoroughly think through the strategic basics will also help keep you at the top of your game.

GTA resale market to be strong in 2015

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Opportunities for investors in the GTA will abound in 2015, as more homeowners in the area will list their houses for sale, creating a more balanced market, according to experts. Speaking at CMHC’s Toronto Housing Outlook Conference yesterday, senior market analyst Dana Senagama said the GTA’s sales-to-listings ratio will be 55 per cent, though some markets will deviate. For instance, the Durham region, which includes Ajax, Oshawa and Whitby, will see a sales-to-listings ratio of around 75 per cent. Senagama also highlighted more good news for investors: a strong demand for rental units. She pointed particularly to growing long-term investor activity around rental condominiums. “If you’re making the decision to invest, you need to look at the rate of return,” she said. “Thus, look at cap rate, which has between four and 4.5 per cent in the last five years.” It may be that investors are more motivated by capital gains, she added, since there is a stronger price appreciation (around 20 per cent) for new condos. “We’re seeing around a quarter of the total condo universe rented out by investors.” Looking more widely across Ontario, Ted Tsiakopoulos, regional economist at CMHC, said the province’s rental market will continue to tighten – great news if you’re an investor. “Nothing here suggests to me that prices are going to fall, that you should be rushing out to sell your real estate,” he said. Residential real estate assets in the province have been historically stable, he added. Bob Dugan, CMHC’s chief economist shared a Canada-wide outlook during the conference, forecasting slower growth in housing prices in 2015 and 2016. He added: “Price growth will drop below 2% in 2015 and 2016. Where we end up in that range depends on what happens with the economy.”

Minimizing Real Estate Investing Risk

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There are many real estate investing business models. Deciding on the one that is right for you determines the level risk you are willing to take with your investment money. Most investors decide between becoming a landlord or rehabbing and flipping middle-income houses. What few people consider is owner financing lower income houses. There’s more money to be made and lower risk with this real estate investing model.

Valuing Owner Financed Houses

Here’s where the big difference begins with owner-financed houses. The selling value of the house is NOT determined by comparables or assessed vale or an appraisal. The sales value of an owner financed home is closely associated with the dominate rents of the neighborhood. What’s important is that you find the right neighborhood to invest in. These are working class neighborhoods where people mostly live paycheck to paycheck but some manage to save a little for emergencies or towards a down payment on a house. These people might have $4,000 in the bank.

Let’s say it’s a typical family with two parents and two children and the parents are in their early 30s. They are renting a two or three bedroom apartment that is costing them $1,050 each month. They have noisy neighbors above them and below them and they have to fight for a decent parking spot when they come home from work every evening. They have the good old American dream of buying a home with a yard, a garage, and a white picket fence. However, in today’s real estate marketplace, these people can’t qualify for a traditional mortgage. Maybe they have a few blemishes on their credit score or more likely they don’t have the 20% to 25% down payment that the banks are requiring. The fact is these peopl

e don’t value the purchase cost of a home according to the appraised value nor comparable sales in the neighborhood. They value the purchase cost compared to what they are getting for their rent money. When you owner finance, you don’t need an appraisal nor do you have to show comparables. All you need is to come to an agreement on the sales price. When you can put these people in their own home for the same cost or less than they are paying in rent, most will jump at the chance.

How a Decent Deal Plays Out Financially

In most cities (especially mid-west cities and towns), there is an abundance of low cost houses that are ideal for owner financing to lower middle class and lower working class homebuyers. How a deal might work is you find a distressed seller needing to close a sale very fast. These are typically all cash sales. You need to have your financing in place before making the offer so that you can close in three days. Your financing is often a private lending source that you have built a relationship with and doesn’t require an appraisal. Today’s market is full of these private lenders.

The reason you don’t need an appraisal is because you’re going to buy the house for less than $25,000 and sell it for $45,000. You need to borrow the $25,000 but it’s secured by the $45,000 note and brings in an interest rate of between 8% and 10%. Why would a buyer pay $45,000 for a house you just bought for $25,000 and pay a high interest rate? It’s all about the cost to rent. Rent is costing the buyer $1,050 each month but buying the house with a whit picket fence is going to cost him or her about $500 per month. That’s based on a $4,000 (9%) down payment, a $41,000 mortgage at 10% and includes the cost of homeowners insurance and property taxes on a 20-year loan. Once you understand the numbers, it becomes clear this is a very lucrative way of investing in real estate. It’s a win-win-win for you as an investor, for the buyer, and for the private lender.

As the investor, you place yourself between the buyer and the lender. You pocket the $4,000 down payment for an instant payday and take 2% of the interest to leave 8% for the lender. Put 10 or 15 of these deals together and you have a passive income stream for the next 20 years without the headaches that come with being a landlord. Once you build up your own capital, you can buy and sell houses without first finding a lender. After you sell the house, you collect the monthly mortgage payment. After the loan is seasoned six months or a year, you can sell these notes on the secondary market (without discounting it) for a payday in the $20,000 range. It takes a different investing mindset but this is a huge opportunity in today’s market.

Rents Are Up, So Are Evictions

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On average, nationally rents have increased 7 percent year on year while income has only gone up 1.5 percent. Over the long haul, renting has appealed to people because it was less expensive than buying. Renting has traditionally cost about 25 percent of average income compared to ownership costing 30 percent or slightly higher (according to Zillow). Today, renting is costing the same percentage of income as buying does. For many, it would more sense to buy if they could come up with the down payment and qualify for a mortgage. Unfortunately, they can’t qualify and landlords are taking advantage.

One small financial emergency and a month’s rent is missed. That becomes grounds for the landlord to start the eviction process if the tenant doesn’t voluntarily move out. Some greedy and vicious landlords are looking for any minor violation of a lease agreement to send renters to the street so that they can bring in new renters at a higher rent. It can be as minor as a single noise complaint or a claim that the renter is hoarding unwanted materials in the rental unit.

Evictions Are a Legal Process

The eviction process varies from state to state. However, the U.S. Department of Consumer Affairs describes it this way. When a tenant doesn’t voluntarily move out of a rental unit after legally being given notice to vacate, the landlord can file an unlawful detainer lawsuit in superior court. The eviction process is a legal process that will almost always result in the tenant having it added to his or her legal/criminal record.

The tenant is given legal notice that a lawsuit has been filed. These lawsuits move through the courts very fast. The tenant often has no more than five days to file a response if he or she wants to contest the suit. A judge will typically then make a formal decision within 20 days. If the tenant hasn’t made a response and appeared for trial, the judgment will almost always favor the landlord.

The landlord cannot use “self-help” measures to remove the tenant from the rental unit. For instance, the landlord cannot change the door locks or cut off utilities. The landlord must use the court-approved process to evict the tenant. If the landlord does use unlawful methods to remove the tenant, the landlord typically becomes financially responsible for any damages or hardships the tenant incurs.

The Court Eviction Process

The court process does vary from state to state. Generally however, if the tenant presents a case that shows there is no reason for the eviction (perhaps the rent has been brought current), the court will not evict the tenant. Instead, the court might award the tenant damages for filing fees and attorney costs depending on the language contained in the lease.

When the court finds in favor of the landlord, a writ of possession is issued.  The writ of possession is an order for the sheriff to remove the tenant from the unit. Typically, the renter has about five days to voluntarily move before the sheriff physically removes the tenant from the rental unit. The court will likely award damages in favor of the landlord in the form of back rent, court filing fess, and attorney fees. In some states, the court can also order the tenant to pay a fine to the landlord for not leaving the unit when originally and legally told to do so.

All traditional court proceedings apply to evictions. A tenant being evicted can require “discovery of evidence” and/or subpoena witnesses and other legal proceedings. This includes the right to appeal a judgment that goes against the tenant. However, even on appeal, the tenant will typically be required to move before the appeal is heard.

5 Reasons You Should Give Home Automation Some Thought

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Whether you have just recently moved into a new home or if you have been considering upgrades for safety and for property value purposes, consider the option of home automation. There are a few reasons to consider home automation regardless of the size of your home, how much you travel as well as where you are located.

Safety and Protection

With a home automation system installed, you have the ability to lock down doors, windows and any other access points to your home, whether you are inside or out. Home automation systems detect break-ins and alert authorities as well as homeowners as quickly as an incident occurs, regardless of the severity of the incident itself. Getting peace of mind with a home automation system is another benefit of having one installed.

Accessibility

Many home security systems today allow for the ease of accessibility. It is now possible to view installed security cameras with the use of your television, desktop computer and in some cases, even your smartphone. Using your smartphone or another computer is a way to monitor any cameras you have set up throughout your home or even any outdoor property you are protecting at all times.

Having the ability to check on your home from just about any location is a way to ensure nothing is out of place or that you are not at risk of a potential intruder or danger. Using an automation system with security and smartphones allows you to alert authorities immediately if you spot something that is out of the ordinary while away from your home.

Features and Options

Depending on the type of home automation system you have installed, it is also possible to use a temperature gauge and monitor. Monitoring the temperature in your home is an ideal way to ensure your heating or air conditioning unit is working properly when you are unable to check on it yourself. Be sure to review all of the features and options available provided from individual home automation systems to ensure you are getting the most for your investment. Comparing features and prices is a way to find a home automation that is ideal for your property, regardless of your own needs and its location or size.

Another feature that is available with many home automation systems today includes timed lighting. Timed lighting helps to ensure you are not keeping the same lights on when you are not in the home. By having a timed automated system set up for lighting, it is much easier to leave the home or travel without looking conspicuous or becoming a target to potential thieves who have been looking into your neighborhood.

Home Warranty

Opportunities Working together with home warranty companies is another way to ensure that your home security system is always covered and can be repaired or inspected at any times. A home warranty company is capable of offering long-term warranties to ensure your household is entirely protected for years to come. Having a home warranty for your automation system is a way for you to feel protected whether you are out of state or even traveling globally.

Less Hassle

When Traveling and Out of Town Although it is still advisable to inform close family friends, and even neighbors when you are going tout of town for vacation or business, there is less need to do so with a proper home automation system installed. With features such a timed lighting and the ability to check on your home and all of its rooms at any times, leaving your home unattended has never been easier.

The more you know about what home automation systems have to offer, the easier it becomes to find a security option that is right for you and your household.Whether you require home automation for your main home, a vacation home or even your place of business, there are plenty of packages and options available for you.

Earning Wealth in Real Estate

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The real estate market is frequently at the center of national economic news. Mostly it’s about whether or not homeowner values are increasing or decreasing but there is plenty written about real estate investing. When it comes to taking the step up from personal residence investing to more diversified real estate investing, it can be a frightening proposition for many. It can also be more responsibility than many people want to take on. Before any beginner invests in real estate, he or she needs to first understand the many options available. Especially the low risk options without direct ownership responsibilities.

Low Risk, No Ownership Real Estate Investing

Earn wealth in real estate without owning anything. This is something many beginning (and experienced) investors don’t understand how to accomplish. There are multiple ways you can create wealth in real estate without the hassles of ownership. A few ways of building wealth in real estate include:

• Lease options
• Assigning contracts
• Government tax liens
• Buying deeply discounted mortgages

The goal here is controlling valuable contracts without the liabilities and hassles of ownership. No plugged toilets in the middle of the night or broken hot water tanks on Christmas Day.

Think Low Risk Wealth in Real Estate Producing wealth in real estate is much lower risk when you control the paperwork without out right owning it. A lease option can be walked away from for very little cost if the deal falls through. Assigning contracts is a form of wholesaling. You put the house under contract with the provision that you can walk away if you don’t find an end buyer. If you don’t execute the contract, you never have ownership of the property.

Tax liens pay a high interest rate if the owner redeems the home. Or you may become the owner for dimes on the dollar if the owner fails to bring the property taxes or other government lien current. Private investors buying mortgages has recently become a popular way of earning wealth in real estate. You finance someone else’s real estate purchase with the property as security for the loan. You don’t have any of the hassles of a landlord. The buyer is fully responsible for the property while you collect interest on the loan of 12% or more.

Earn Wealth in Real Estate by Investing Other People’s Money

Another great strategy to wealth in real estate is using other people’s money to control properties. In this scenario, you are more likely to become a landlord and have more hassles but for that trouble, you eventually own the real estate, creating long term wealth in real estate.

Despite the drop in home prices during the past recession, historically real estate prices have always gone up. When you factor in government subsidies, expense deductions, and cash flow, real estate is one of the fastest roads to wealth. There are many investors out there that will loan you the money to buy property. You put your credit rating at risk but their money, not yours. You’ll pay interest for the loan but over time, you take full ownership of the property.

Helping Your Parents Purchase a Home

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You often hear of cases where parents have helped their child to buy a home, but it is rarer for it to happen the other way round.

This could be the case if the children are very successful and want to help their parents buy a nicer home, or perhaps when their current house no longer meets their needs. Often the children will have moved away from home to a more expensive area, and would like their parents to live nearby. Another possibility is where parents need a retirement home, but cannot afford it on a fixed income.

Children have several options when it comes to helping parents move home. They can purchase a home outright and allow their parents to live there, or they can charge them a reasonable rent. Alternatively they can help them get a loan to buy a home on their own. These options raise various questions as to the title of the property, the taxes, and sorting out the eventual sale or inheritance of the home.

If you intend to purchase the home yourself then you’ll probably need access to considerable assets. If the financing will be in your name, the lender will view it as being a second property or investment home and this could incur higher interest rates and closing costs compared to a primary residence. Experts in these matters suggests that if a buyer has a lot of equity in their home then another alternative would be to refinance which would likely be on a lower interest rate than could be obtained with a second home or investment property.

Another option is to get a regular mortgage on the property for your parents and to make the payments yourself. On the plus side it’s possible to deduct the mortgage interest on both homes up to a total of $1 million for the combined balances on both, and to deduct the property taxes on both as well but this won’t work if you already have a second home. One of the problems with trying to obtain a mortgage for a second home is that lenders may require it to be located at least 50 miles away from your primary home which may not be so successful if the intention is to move your parents closer to you. The Family Opportunity Mortgage authorized by Fannie Mae and Freddie Mac waves this requirement but it can be harder to find a lender who offers this mortgage.

Are Home Prices About to Dip?

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The spike expected in homes prices during the traditionally busy spring and summer buying season never really developed. Prices in much of the nation remain higher than a year ago but didn’t go up as much as expected. Last year the gain from the second quarter to the third was three percent. This year it looks to be a meager one percent based on early data. That’s despite of a lower inventory of houses available for sale.

Could it be that the small gain during what should have been a busy buying season is a forewarning that prices may go negative as we enter the slow seasons of fall and winter? The western market may be a leading indicator.

Distressed Western Market Shrinks

According to Clear Capital, the West, which has some of the largest metropolitan markets in the nation, has seen a dramatic drop in the sales of distressed houses. In 2009, at the peak of distressed home sales, a full half of all sales were distressed houses. Today that number has dropped to about 12 percent.

For major investors, this means looking to the South and Midwest for better investment opportunities where distressed properties are still selling at bargain prices. Fewer buyers in the West mean less price appreciation and the possibility of prices actually declining for the first time since the bottom of the Great Recession. Regarding home values, the West has been the trendsetter. It could be an indication that as the market finally absorbs the remaining distressed properties, national homes prices could again retreat.

Other Statistics

You don’t want to only look at the statistics of one group. Although different numbers are tossed out, the trend is the same from CoreLogic. Their numbers say that national average house prices increased by 6.4 percent in August, year-on-year. But that is half of the increase that occurred in the same season from 2012 to 2013.

According to Credit Suisse analysts, “The combination of higher mortgage insurance costs, higher interest rates, and higher home prices have already brought affordability back to the long-term averages for first-time home buyers.” What this implies is that first time housing costs are approaching previous highs and will further shrink the number of buyers in the market. Of course, fewer buyers in the market reduce pressures for higher prices.

Time will tell what direction housing prices will go in the near and not too distant future. Consumer confidence is generally negative towards the housing market. There could well be a drop in average prices over the next couple of years. Or there could be modest appreciation in the range of 2 to 3 percent during 2015 and 2016. What is almost certain is there will not be a major run up in prices as many analysts had previously predicted.

The improving economy and lower unemployment numbers should be driving a higher performing real estate market. However, continuing tight mortgage markets and low consumer confidence are working in the other direction. As a result, new homebuilders will remain conservative when it comes to starting new projects. The housing market is a primary driver of the national economy. Fewer new home projects likely means fewer jobs in the construction industry, which in turn will put further downward pressure on the already slow economic recovery.

Survey Shows Current Attitudes to Smart Homes

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Lowes recently released a survey on smart homes, and discovered that more than 70% of Americans who have smartphones would like to be able to control some feature within their home, without having to move. According to the article in RisMedia, the survey looked at people’s attitudes towards home automation as well as their experiences.

It also examined the most important features for home automation, and people’s reasons for owning or wanting to own particular smart home products. Overall, the study found Americans are generally open towards the idea of smart homes, and 62% thought a smart home would be a beneficial way of being able to monitor security and home safety. The Smart Home Survey was an online poll of more than 2,000 adults aged over 18, and it found that just over half of those surveyed feel that having a smart home is somewhat important. When it comes to purchasing the equipment required for smart home automation, some 26% say the overall cost of equipment is important, while 31% feel this way about the monthly fees. Some 13% feel the ease of use is important and just 11% think this about security.

The survey found that Americans generally feel positive towards products that could make their homes easier to manage, more energy efficient and more secure. When it comes to actually purchasing smart home products, Americans more than twice as likely to prefer a solution they can fit themselves and which doesn’t have a monthly fee associated with monitoring the system, or an installation fee. Around 40% feel the benefit of owning a smart home would be to make the home more energy-efficient, and to cut down on energy bills. Out of those polled, 62% felt home monitoring and security was the most beneficial reason for choosing a smart home. Americans aged 65 or older were more than twice as likely as those aged between 18 and 64 to rank ease of use as being the most important factor when considering a smart home purchase.

Most Americans aim is to be able to control something in their home without having to get out of bed. Nearly half would like to control the temperature of the property, so it is perfect when they get home. Other wishes includes being able to control lights and door locks. Not surprisingly, these wishes are the top three things most of us forget to do before leaving home, as 18% forget to turn off the lights, while 15% don’t adjust the thermostat and a worrying 5% fail to lock the door. Over half of those surveyed admitted to forgetting to do something when they went out.

Pending Home Sales Fell Slightly in August

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Even though pending homes sales fell slightly in August, contract signings were at their second highest level over the past twelve months, according to an article in Propertywire. These figures were based on data from the National Association of Realtors. Just one region bucked the trend which was at the West, where pending home sales increased for the fourth consecutive month. With the exception of the West, all major regions saw pending home sales figures decline. The index dropped from 105.8 in July to 104.7 in August, and was 2.2% to the below figures seen in August 2013 when the index was 107.1. In spite of the decline, the index is still above 100 and has been for four consecutive months. Anything above 100 is considered to be an average level of contract activity.

Real estate experts point out that even though figures did drop slightly, the number of contract signings is holding steady. The reason the figures declined is likely to be due to less investor activity and fewer distressed sales. Fewer distressed homes are available at knockdown prices, and this factor combined with the likelihood of rising interest rates may be causing investors to hesitate over purchases. The declining numbers of investors means the market is returning towards more normal conditions, relying on first-time buyers and traditional buyers who need a mortgage to purchase a home.

The National Association of Realtors Profile of Home Buyers and Sellers shows that 81% of first-time buyers who purchased the home last year used an FHA or conventional loan. During the housing market recovery first-time buyers have accounted for less than a third of all buyers every month over the last couple of years.

It’s expected that the numbers of first-time buyers should gradually rise, in spite of increasing interest rates and tight credit conditions. This is because employment prospects for young adults are beginning to improve and their incomes are increasing. More disposable cash will help them repay student loans and should lead to higher sales growth in this area during the next two years.

Levels of pending home sales in the North East fell by 3% to an index of 86.5 in August, but this figure is still 1.6% higher than a year earlier. In the Midwest levels fell by 2.1% to an index of 102.4, 7.6% lower than in August last year. In the South pending home sales fell 1.4% giving an index of 117 which is unchanged from a year earlier. In the West, figures rose for the fourth consecutive month by 2.6% to reach 102.1, but this is still 2.6% lower than August last year.

Mortgages for the Self Employed

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There are benefits to being self-employed. Not having to answer to a boss is a big one, as is being able to set your own work hours. However, when it comes to qualifying for a mortgage, being self-employed has drawbacks. The “stated income” loan application was originally intended to help the self-employed qualify for a traditional loan. However, leading up to the height of the real estate bubble, so many people abused this method that it has been discontinued by all traditional lenders and some private lenders. Here’s How the Self Employed Qualify for a Mortgage You need to prove your income using your tax returns. There are two typical problems this causes the self-employed. First, most self-employed maximize their expenses on their income tax returns to minimize the taxes they pay. That means they show the lowest amount of income possible. Second, the process requires that the two most recent tax years be averaged to determine your stable income. Due to the slow recovery of the economy, previous year incomes were likely low and will bring your income average down compared to what you are currently earning. Stated income loans are making a small come back on the secondary private lending market but only for the most qualified borrowers. Those with a credit rating of 720 or higher. You’ll also likely need a 30% down payment and have to have six months of financial reserves available to cover all monthly obligations. Showing Income From Your Tax Return Your more likely option is showing income from your tax returns. Self employed loan applicants have to complete and submit Form 4506-T to the IRS. This form authorizes lenders to access your tax records. The lenders must receive the tax records directly from the IRS rather than a copy from you. It’s not unusual for the self-employed to report $90,000 in income but have $80,000 in expenses (or something similar). Of course, at the bottom line, this means only $10,000 of adjusted income is being shown. You’re not at all likely to be given a mortgage if that’s what your tax return is showing. However, all is not lost if you can show an unusual expense such as a one time purchase of equipment or something else that will help you earn more income going forward. You might also still qualify if you can show a one time loss that is unlikely to happen again. Other Options The bottom line is that in today’s economy, the self-employed need to decide if avoiding taxes is more important than qualifying for a larger mortgage. You also need to plan at least two years in advance so that you can qualify under the two year averaging requirement. Your best first step is speaking with a qualified loan officer who can help you understand your options based on your personal financial situation. You may also want to contact a community lender that holds their loans in their own portfolio instead of selling them to Fannie Mae or Freddie Mac. These lenders have more flexibility in how they qualify borrowers. The last option is searching the internet for private lenders. There are more out there than you are probably aware of. Individuals that have given up making a decent return from the stock markets are using retirement accounts to make personal loans. However, these private lenders charge interest rates north of 10% to compensate for the perceived increased risk.

Study: Green Neighborhoods linked to healthier babies

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Pregnant women living in “green” neighborhoods are more likely to deliver healthier babies, suggests a new study from researchers at Oregon State University and the University of British Columbia.

What makes a neighborhood green: the presence of trees, leaves, grass, and other greenery. Mothers who live in such greener spaces are more likely to deliver at full-term and have babies born at higher weights compared to mothers who live in urban areas that aren’t as green, according to the study recently published in Environmental Health Perspectives. “This was a surprise,” says lead author Petty Hystad, an environmental epidemiologist at the College of Public Health and Human Services at Oregon State. “We expected the association between greenness and birth outcomes to disappear once we accounted for other environmental exposures, such as air pollution and noise. The research really suggests that greenness affects birth outcomes in other ways, such as psychologically or socially.” Researchers controlled for factors such as neighborhood income, exposure to air pollution, noise, and neighborhood walkability. Between 1999 and 2002, researchers tracked more than 64,000 births in Vancouver, British Columbia. They found that when mothers lived in greener neighborhoods, pre-term births were 20 percent lower, and moderate pre-term births were 13 percent lower for infants. The study also found that infants from greener neighborhoods tended to be of a healthier weight: They weighed 45 grams more at birth than infants from less-green neighborhoods. Why the link to healthier pregnancies and green neighborhoods? More research needs to be done to determine if green space opens the door to more social opportunities and enhances a woman’s sense of belonging in the community, or if it has a psychological effect in reducing stress and depression, Hystad says. The study also was not clear on what type of green space is most beneficial to pregnant women, but Hystad says that adding a planter to a patio or a tree to a sidewalk wouldn’t make a large difference in birth outcomes. The study is one of several recently that shows the health benefits of green space, Hystad says. “We know a lot about the negative influences, such as living closer to major roads, but demonstrating that a design choice can have benefits is really uplifting,” says the study’s senior author Michael Brauer of the University of British Columbia. “With the high cost of health care, modifying urban design features, such as increasing green space, may turn out to be extremely cost-effective strategies to prevent disease, while at the same time also providing ecological benefits.”

Using the WOW Factor to Sell Flipped Houses

News Source: http://firstmortgagerates.ca/

“WOW” Factor

When a potential buyer views a property, you want them to experience the “wow factor.” What is the wow factor? This is what your potential buyers should be saying, “this is the nicest house I’ve looked at so far!” First impressions are very important. When a buyer walks into your home for the first time, you want to leave an impression that they will remember.

Each time you sell a property, you should ask the buyer why they bought your house. Inevitably, many will have looked at 20, 25, 35 homes before buying yours.

Remember, you’re looking to sell to the perfect-condition homebuyer and you want to make your property seem very appealing to that type of buyer.

Creating the Wow Factor: Aside from a completely renovated home with modern amenities such as granite, re-finished hardwood floors, and everything new from top to bottom, here are a few more things to increase the wow factor:

• Stainless Steel Appliances: In almost all cases, you want a matching stainless steel stove, dishwasher, and microwave. Not only does it give more perceived value, it also makes the kitchen look more complete. Rather then dead space, the kitchen now has brand-new appliances. Occasionally, you might include a matching refrigerator.
• Free Home Warranty: Although a free home warranty is not a physical feature, it provides a great deal of comfort and confidence in the buyer’s mind. It costs $300-375 but is a huge selling feature.
• Free TV: You might want to try offering a free 46” flat screen TV. You can hang a plastic imitation flat screen TVs on the wall with a small sign that says, “With an accepted offer, you get this free TV.” The cost is $680 for the actual TV. By having a replica of the TV in the home, it provides an additional wow factor.
• 100% Ready: Never show the house to potential buyers until it is 100% ready. 100% ready means vacuumed, deep cleaned, spotless, and ready to go. The perfect-condition homebuyer is turned off if it’s not 100% and you want to have an amazing first impression.
• Mats/Sign: To give potential buyers the image that your homes are “high-quality,” you should put mats at the door entrances with a sign reading, “Please take off your shoes.” The image this gives the buyer is that this home is a first-class property.

Listing Agent

Once a property is 100% complete, you want it listed on the MLS. Your image is very important as part of the “wow factor”. The goal is to attract a buyer’s agent. The process of buying a home has changed from the traditional real estate model. In the past, a person would hire a realtor (buyer’s agent), the realtor would give them a list of houses to look at and then show them the properties.

Today, in almost all cases, a buyer searches on the internet for homes for sale in the areas they are interested in living in. After they find a home they are interested in, they call up a realtor to request the realtor schedule a showing. Either way, in most cases, it’s a buyer’s agent who has the buyer so the listing must be designed in a way to attract buyer’s agents to show your homes.

Hiring the Right Listing Agent: It’s important to choose the right listing agent. You want the top-selling agent in the area to list your properties. The benefits are:

• Image: The top selling agent in the area has a well-known name, image, and branding. You want to be associated with that image. Only go with agents having an image of listing the best houses in the neighborhood.
• Buyers: The top selling agent has a large buyer base. Often, the listing agent or someone from his/her office will sell the home.
• Work Ethic: He/she became the best selling agent from working hard. You want an agent who is totally dedicated to selling your property.
• Repeat Business: The top selling agent is motivated by repeat business. One of the indicators used to measure an agent’s success is the total number of homes sold. Unlike a one-time homebuyer, or home-seller, as an investor, you represent repeat business, which helps him/her reach or maintain his/her status.

Responsibilities of the Listing Agent: The job requirements for the listing agent are very clear and specific and include the following:

• Yard Sign – Your agent should put up a professional (no scratches/dents) yard sign that is very visible from the street.
• Brochures – Each property needs a 2-page color brochure explaining the features, neighborhood stats, school/shopping info, updates, etc. It has numerous pictures and showcases all the benefits of the home. Copies of the brochure are placed in an info box attached to the yard sign. Brochures must be refilled weekly. A stack of brochures is also placed on the counter inside. You want each potential buyer to take a brochure with them when they leave. Often, buyers will look at several properties at a time and you want them to remember your home above all others.
• MLS Pictures: High quality pictures are essential. You’d be amazed at how often you see MLS listings with no pictures, only a few pictures and/or poor quality pictures. How detrimental to the listing! A buyer often decides if they will even look at the property solely based on these pictures. Upload the maximum number of pictures allowed on the MLS. Special attention is given to the lighting, order, quality, angles, etc. of each picture.
• Comments: There is a lot of psychology that goes into the comments. Like the pictures, well-crafted comments will draw the buyer in to set up a showing to view the house. The key is to focus on features. Here is an example of comments for a high end house:

“New cabinetry, granite countertops, and stainless steel appliances in a spectacular new kitchen, home is completely remodeled, it’s like a new house. Bathroom is completely stylish and completely new. Lots of gorgeous refinished hardwood floors, new carpeting, and new travertine-look ceramic tile. Neutral paint and crisp white trim throughout. This won’t last long, acclaimed Lake Orion schools.”

Notice some of the key words used – “granite”, “completely remodeled,” “gorgeous,” “refinish,” and “neutral paint.” You want to create urgency with all your write-ups (“hurry this won’t last long”). The MLS comments section limits the number of words so you’ve got to be concise. A top selling agent should be able to create a top-notch comments section.

Feedback: You want to require personal feedback on each showing. Not an automatic email that says, “Please give us your feedback.” You want the listing agent (a real person) to call the buyer’s agent that showed the property and get personal feedback. Here are some of the questions to ask:

• How well did the property show?
• What is your opinion of the price?
• What did the buyer like most about the house?
• What did the buyer like least about the house?
• In a rating from 1-5, one being bad and five being excellent, how would you rate this property?

Some agents can’t be bothered to give feedback and don’t want to talk. Your listing agent needs to be personable on the phone. He or she also needs to be persistent about getting feedback because it’s crucial that you receive that feedback. A recent investor had a property listed for 60 days and was getting 5-6 showings consistently each week but wasn’t receiving any offers. He wasn’t getting any feedback so he had no idea why buyers weren’t making offers. Without feedback, there is no way to know what the market thinks about the house. If you’re having showings but not getting offers, there is a reason and the feedback will let you know why you aren’t getting offers.

Six Signs Your Clients Are Ready To Take The Plunge

News Source: http://bestmortgagebrokers.net/

Are your clients looking to build their portfolio with investment properties? Help potential investors decide if now is the right time jump into the real estate market. Here are six signs, according to the international property website Lamudi.com, that they’re ready to make the investment plunge.

1. They are financially secure: Your investors will need enough for a downpayment and an emergency fund for maintenance expenses. Make sure their credit history is good and they’ve met all their financial obligations.

2. They have long-term goals: Your clients should have a clear picture of the purpose of their investment. Is it to live in part of the year? Is it for long-term portfolio growth? Ask them what they hope to accomplish so you can best serve them.

3. They’ve done their research: You clients should know the community of their future property well enough to foresee the coming trends and the possible changes. Is it a budding resort hotspot? Is the commercial sector booming? Is there a need for residential growth? If they aren’t familiar, it’s up to you as a real estate practitioner to educate them.

4. They’ve chosen a stable economy: Make sure the economic trends are promising in the area where your clients are looking to invest.

5. Going international? Investors should understand the country’s real estate policies: Make sure your clients understand home ownership regulations and laws, as well as tax policy in the country where they’re looking to invest. They should also be aware of all cultural differences that might come up during the transaction. Read more: “Go Global: 5 Tips to Get Started.”

6. Property values are expected to increase: Are your clients considering an investment in a developing area? Make sure infrastructure projects are underway that will likely to lead to an increase in property values, such as transport, energy, solid waste, water management, and commercial developments.

10 tips for first time real estate investors

News Source: http://www.consolidatemydebts.ca/

Many people consider investing in real estate as a way to build a nest egg and have tenants help you pay the mortgage. There are pros and cons to taking that leap, but if you do, here are 10 things to know.

1.Visit with a mortgage broker or your bank to determine how much money you can afford to borrow responsibly for your investment.

2.Look for properties that generate a positive cash flow. What this means is that the rent that you receive from tenants should be enough to pay your mortgage payment, property taxes, utilities and insurance bills. Budget an additional ten percent on your overall payments to pay for minor repairs that will invariably arise. Currently this is very difficult to find in the Toronto area. Do not be afraid to expand your search to smaller communities, where you will be able to find more properties that match your search criteria.

3.Use an experienced local real estate agent who also invests in real estate themselves. Investors learn about the pitfalls only through first-hand experience, both good and bad, and you want that experience working for you as well.

4.Have any property inspected by a professional home inspector. In addition, find a contractor who you can trust to give you the right advice for any minor repairs or renovations that may be required, especially for older properties, in order to add the most value to your investment.

5.Consult with your accountant and lawyer as to how you will take ownership of the property. There are some benefits in taking title in the name of a limited company, in order to protect yourself against personal liability should someone get hurt on the property and for other tax planning purposes. However, on the other hand, you will also have to pay about $1,000 in incorporation fees and have to file a separate tax return each year for your company.

6.Keep proper records of income and expenses for your investment property. Do not mingle these with your personal bank account as it will become difficult to properly trace this when you have to file a tax return at the end of the year, regardless whether you own the investment in your personal name or in a company name.

7.If you are buying with a partner, make sure you have a proper partnership or joint venture agreement to protect both of you should things not work out as planned. In particular, provisions should be made if one of the partners wants to sell and the other one doesn’t, one partner is not paying their share of expenses or what happens if one of the partners dies.

8.Hire an experienced property manager to assist you in finding suitable tenants and dealing with any ongoing maintenance, repairs or other complaints by tenants. You do not wish to be woken up in the middle of the night to handle emergency repairs. Budget an additional $100 per month for this service.

9.Be careful not to buy and sell properties quickly. The Canada Revenue Agency may view this activity as business income. This means that you will have to pay tax on any profit you make on your investment. It is preferable to buy properties for the long term, rent them out and use your positive cash flow to reduce the amount of your mortgage owing, building equity in your property. If you then sell years later for a profit, it will likely be classified as a capital gain and thus one half of your gain will be tax free.

10.Don’t be afraid to walk away if the deal does not work for you, no matter how much time you may have invested in the property.

The Purpose of Commercial Real Estate is to Service Society

News Source: http://www.consolidatemydebts.ca/

When you consider the future of commercial real estate, what is your number one consideration? It should be the direction that society is going in. From manufacturing to warehousing to retail to apartment buildings, commercial real estate is all about servicing society.

Manufacturers that don’t keep up with technology won’t be able to produce customized products in mere days. The automotive industry has been moving in this direction for years. Manufacturers that master technology that quickly delivers customized products will thrive. Those that don’t will go bust.

Commercial Sectors Behind the Power Curve

Full service malls are already on the decline. Mall anchors such as Sears and J.C. Penny’s are going dark all over the country and causing the smaller stores to shutdown with them. These once major chains might survive in a much smaller online version but the mall format is doomed on two fronts. Both from the continuing growth of internet sales and from the proliferation of discount sellers like Wal-Mart and Target. Mall properties may soon be worth no more that the land they stand on. Warehouses are another sector of commercial real estate in dire trouble. While the high tech distribution centers like Amazon and FedEx have heavily modernized and automated their facilities, most warehouses have not and are way behind the power curve. Most warehouses are nowhere near having the ability to make one day or same day deliveries. This is analogous to car manufacturers that can quickly deliver customized products. The highly automated warehouse will thrive in the future and the antiquated ones will go the way of the large malls. Our population insists on instant gratification and only distributers that can deliver will survive.

The Country Will Urbanize

One sliver of hope for malls is they could be repurposed into the town centers that Baby Boomers, Gen X, and Gen Y are demanding. These massive sections of the population want the charms of city living where they can to live, work and play in a compact area. But just any old building on any old block in the city won’t do. The commercial properties that will thrive are those that reinvent themselves for old technology into modern mixed-use properties. The younger generations work to live instead of living to work as the Baby Boomers did. The younger generations want to take frequent breaks from work and demand amenities in or near the work place. This could lead to a repurposing of malls and older office buildings.

Suburbs Need to be Modernized As Well

The transition into city life doesn’t mean that suburbs will be abandoned. Millennials still like this life style. But as is true for much of our aging infrastructure, suburbs need a major facelift. Millennials want the same compact lifestyle as the other generations except they want it outside of the hustle and bustle of the city. They too want a work-play environment. Suburbs will become more walk able communities with high-speed public transportation into the cities. Besides technology, the other big change to commercial real estate will be the green movement. Society will demand a small carbon footprint that is more ecologically friendly. While “going green” is happening across Europe, it’s still mostly a buzzword here. Still, commercial properties that want to thrive will need to greatly improve technology and go green in the years to come.

Living in an Older City is “Healthier”, claims new study

News Source: http://www.consolidatemydebts.ca//

Older cities are generally healthier than many newer cities because compact street networks promote more walking and biking, according to researchers at the University of Colorado Denver and the University of Connecticut.

The study’s co-authors looked at 24 medium-sized California cities with populations between 30,000 and just over 100,000, examining street network density, connectivity, and configuration. They studied how street design correlates with obesity, diabetes, high blood pressure, heart disease, and asthma rates collected by the California Health Interview Survey since 2003.

The report concluded that more intersections in a city leads to a reduction in obesity at the neighborhood level, as well as a reduction of obesity, diabetes, high blood pressure, and heart disease at the city level. The study also found a correlation between wider streets with more lanes and increased obesity and diabetes rates.

“Over the course of the 20th century, we did a great job of engineering utilitarian active transportation out of our daily lives,” said Wesley Marshall, study co-author and assistant professor of engineering at CU Denver.

“While they were well-intentioned design decisions, they effectively forced people to make an effort to seek out exercise and we are now seeing the health implications of these designs.” Researchers also looked at each city’s “food environment,” and found that more fast food restaurants were associated with higher diabetes rates and more convenience-type stores correlated with higher obesity and diabetes rates. “While it is possible to lead an active, healthy lifestyle in most any type of neighborhood,” Marshall said. “Our findings suggest that people living in more compact cities do tend to have better health outcomes.

” Additionally, the study found that the presence of a “big box” store tends to be indicative of poor walkability in a neighborhood, and was associated with a 13.7 percent rise in obesity rates and a 24.9 percent increase in diabetes rates.

“Taken together, these findings suggest a need to radically re-think how we design and build the streets and street networks that form the backbone of our cities, towns, and villages,” said Norman Garrick, co-author and associate professor of engineering at the University of Connecticut. “This research is one more in a long line that demonstrates the myriad advantages of fostering walkable places.”

That Flipped Home Might Be Far From Perfect

                                               News source: http://www.consolidatemydebts.ca/

It is easy to look at a flipped home through rose-tinted spectacles, and to assume it is ready to move into and that there won’t be any major pitfalls. Unfortunately this might not be the case, as most property flippers or contractors will be anxious to shift the house as quickly as possible so they can move onto their next project. As a result, work can often be rushed and below standards you’d typically like to see in your own home.  An article in aol.com has highlighted the major things to look out for when buying a flipped property, to help avoid any nasty surprises once you move in.

One thing many of us are guilty of is getting caught up in the excitement of buying somewhere new. It can be very easy to focus on nice shiny new appliances, or marble or granite countertops, and to not pay attention to the overall quality of the work. A properly refurbished home will be nicely finished. Signs that this  isn’t the case can  include moldings that aren’t properly lined up, gaps in between the wall and countertops, poorly finished tiling and light switch plates that don’t quite fit properly. Often the cabinets in the kitchen won’t quite shut properly. Even though these seem like minor cosmetic issues, they could indicate more important jobs haven’t been carried out properly, and it is well worth paying closer attention to other areas that could be more expensive to rectify. This might include water heaters gas lines or the electrics panel. It is easy for potential buyers to assume a home that has been newly renovated is new enough not to require an inspection, but this could be a costly assumption to make. An inspector can make sure all work was up to code and can check the general standard of the work.

It is worth getting an inspection even if the work has already been signed off by the city as they will only have been interested in the health and safety aspect. A home inspector will check every part of the house, ensuring it is perfect. It is even more important to make sure the contractor obtained all the relevant permits, and that they were all signed off. You should receive copies of all the final permits, or otherwise you should be able to find them online. Failing to check these details could mean you end up being liable for illegal or poor quality work.

Although work on flipped homes is often carried out to a good standard, it is worth carrying out your due diligence to make sure you don’t get caught out.

Fast Paced Rehabbing You Need to Know

News Source: http://bestmortgagebrokers.net/ 

When it comes to managing a rehab, the number one thing to always remember is “time is money.” Not only do you have the cost of capital but the sooner you complete the rehab, list it for sale, get a buyer under contract, and close on the sale, the sooner you can find another deal and do the process all over again. The goal is to be as efficient as possible.

Before Closing

Once the offer is accepted to purchase a property, you usually have a couple of weeks to a month until you actually close on the purchase of the property. During that time, the following steps should be taken:

• Budget Created: Once the offer is accepted, go back to each item of the rehab and solidify the numbers. Using a detailed rehab checklist, confirm your numbers by getting quotes from contractors. For example, this is when your roofing contractor physically measures the roof and gives you a quote for the exact cost to replace.

• Create the Rehab Plan. Once you’ve finalized the costs, you create the rehab plan. The rehab plan is an outline and tentative schedule of the work being done. This is when contractors are tentatively awarded the job and given a tentative date of when they will perform their scope of work. The goal is that when the property closes, everybody is on board. The dates are tentative because everything is subject to the timeline going as planned but throughout the project, all contractors are aware of the timeline so that when their turn comes, they are available and ready.

Day of Closing

On the day of closing, the rehab plan is implemented immediately. The dumpster arrives at the property and the demo crew starts.

The key to a successful rehab is constant oversight!

Not a day goes by when progress isn’t being made. Everyday counts and so everyone needs to keep to the schedule. Because of the fast-pace, contractors must work well together (play nice). In many cases, their work will overlap with two or more contractors working in the same tight quarters. One of the requirements to work on your rehabs should be a team player. A team player looks out for the good of the entire project, not only their small part. A team player sees the bigger picture.

Issues Addressed Immediately

If you’ve got a contractor that’s not being a team player it’s addressed immediately and if it’s not corrected then they’re no longer on your team. For example, recently an electrician wasn’t cleaning up after himself. He was leaving his scrap wire, empty boxes, drywall debris, etc., scattered around the work site. This was affecting the other contractors. Fortunately, he is a team player and after addressing the issue, it was resolved quickly. On the other hand, a drywall contractor was terminated for not showing up on time and delaying the project, which affected everyone else.

Over-Committed Contractors

It’s not uncommon for contractors to over-commit and pick up more jobs then they can handle. When you inform your contractors ahead of time of the rehab timeline, there is no excuse for not being at your job when expected. But realistically, it happens. If a contractor flakes out or they’re not there when they’re supposed to be or they’re not keeping to the schedule like they’re supposed to, you need to address it immediately. The old saying, “The show must go on” holds true with rehabs and a new contractor will be brought in to keep on schedule. Let your contractors know that “You’re not running a day care, you’re running a business.” In all honesty, if expectations are explained up front, problems are greatly minimized.

Recent Report Thinks Housing Will ‘Soar’ in 2015

News Source: http://bestmortgagebrokers.net/

Just recently there have been quite a few rumors that the housing market is about to take a turn for the worse, but an article in Housingwire is predicting the opposite. This is based on a report released by Altos Research which says the market will begin to soar next year. Although the report does concede that demand will ease, it is still quite bullish about the outlook for the housing market. Based on its models, the company is forecasting another year where home values will rise. It is predicting a 7% increase for next year. This is quite remarkable as some experts are anticipating that house prices will depreciate next year.

Apparently this negative view is largely due to the media, according to the report from Altos Research. They think this outlook is short-sighted, and even though they concede the concerns are valid they feel the variables affecting home prices are proven to be driven by new household formation and low supply in the market, constrained by low new construction. The main reason Altus Research feels prices will increase by 7% is that it expects inventory levels to increase by another 10%. It’s anticipated that as inventory levels and the number of transactions continues to increase, alongside house prices, then participants in the real estate market will broadly benefit.

In addition they point out that the number of days houses remain on the market before attracting a buyer is still low compared to figures seen before the housing crisis. This shows it’s still very much a sellers’ market. During a sellers’ market, sellers are able to list their homes at a higher value in the hope that a buyer will be tempted to pay the price. If this fails to attract a buyer, then the seller always has the choice of reducing the price closer to market values which also gives the buyer the impression of a compromise. According to Altos, just over a third of properties will see the price is reduced in this way, something the company sees as an indication of weaker overall demand combined with strong competition.

The report points out that the housing market recovery will soon enter its fifth year. The market is still dealing with low inventory levels and demand, but is boosted by an expanding economy and overall remains healthy. As a result supply and demand are becoming more balanced.

Five-year mortgages holding firm, but just wait

Article Source: http://bestmortgagebrokers.net/

Five-year fixed mortgage rates tend to roughly track the yields on five-year government of Canada bonds, because those influence the cost of the funds that the banks obtain to lend out. Yields on five-year government of Canada bonds have fallen. They ended last year at 1.95 per cent, and this week were below 1.50 per cent.

“If you went back to the start of the year, there was an absolute consensus that bond yields were going to head higher,” explains Toronto-Dominion Bank chief economist Craig Alexander. “Not dramatically, but there was an absolute consensus that bond yields would be increasing through the course of 2014. So, one of the big surprises this year has been the drop in bond yields.”

Canadian bond yields tend to mirror those in the U.S. because the market views the securities as alternatives to one another.

“One of the things that happened at the start of this year was, initially, there were some concerns about emerging markets and the angst over the slowdown in China,” Mr. Alexander adds. “But then we started to get very weak economic data out of the United States, and there was news that the U.S. economy outright contracted, and you saw broad-based scaling back of expectations about global growth. So, while some of the fears about emerging markets diminished, it happened at the same time that people found something new to worry about.”

So, a more negative outlook for economic growth in the U.S. and elsewhere turned into good news for Canadian home buyers.

But Mr. Alexander thinks the U.S. economy is on pace to grow faster than most other advanced countries in the second half of this year. “As a consequence, I think that the rally in bonds that we’ve had since the start of the year is likely to be reversed, from an economic fundamentals point of view it’s only a matter of time. The thing that economists are notoriously bad at is timing.”

In other words, economists are still expecting five-year fixed mortgage rates to creep up, they just don’t know exactly when. Mr. Alexander now expects five-year bond yields to creep back up to about 1.95 – where they were at the end of 2013 – by the end of this year. He then sees them rising by about 90 basis points next year, largely during the second half of the year.

Altos: Ignore the Critics, Housing is Ready to Boom in 2015

News Source: http://bestmortgagebrokers.net/

The housing market is going to surge in 2015, despite the bearish predictions from many critics in the housing industry recently, according to a report to be released today by Altos Research, a housing data provider.

“While we see signs of demand easing, we are significantly more bullish on housing than many of the recent headlines seem to suggest,” says Michael Simonsen, Altos CEO. “Based on our models, we’re forecasting another year of home price appreciation, with a 7 percent home price increase for the year of 2015.” Altos is also projecting for-sale inventories to rise another 10 percent. Researchers point out that the number of days on the market remains low compared to prior to the housing crisis, an indicator of a seller’s market. Some other housing experts in recent weeks have projected that a depreciation in the nation’s housing market is coming. But Altos researchers are blaming it on recent negative headlines throughout the media:

“In our view, these attitudes reflect a myopic view of actual market conditions and conflate concerns over the mortgage industry, the otherwise-constrained new construction market, and more broadly, the long-term financial stability of the U.S. consumer with specific current housing market supply and demand dynamics. While these are valid long-run concerns, the variables impacting home prices have proven to be driven by low available supply and growing household formation.” Altos researchers say that home prices across the country are poised for a fifth consecutive year of recovery.

“The market is still faced with low inventory and demand, buoyed by an expanding economy, which, among other factors, remains healthy,” according to the report. “Both supply and demand conditions are moving from extreme bullish conditions to healthy condition.”

Can’t get a Mortgage? Try a Bigger Lender

News Source: https://caleastnewhomes.wordpress.com/

Demand for mortgages rose during the second quarter, but a strong divergence between larger and smaller lenders in underwriting credit standards is appearing, according to Fannie Mae’s Mortgage Lender Sentiment Survey, which tracks current lending activities and market expectations among senior mortgage executives.

Mortgage executives say it’s difficult for consumers to get a mortgage today, but some lenders are tightening their standards more than others. The Fannie Mae survey found that smaller and mid-size lenders are more likely than larger lenders to say their credit standards tightened over the prior three months. These lenders also report that they’re more likely to tighten them even more during the next three months. On the other hand, larger lenders were more likely to report that they have eased their credit standards over the prior three months and that they expect to ease standards more during the next three months.

The most common reason cited for tightening credit standards among all the lenders surveyed was the “changing regulatory requirements,” according to the survey. “Lenders have been trying to find ways to manage their operational costs and meet new regulatory rules,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “They appear to feel cost constrained and, thus, may be applying more conservative standards in their lending practices.” Still, overall, lenders reported positive expectations for mortgage demand throughout the remainder of the year, although they expect growth to remain modest. “These results are broadly in line with other major indicators released recently, including the pickup in home sales in May, and also support our expectations of a steady but unspectacular rebound for housing during the second half of this year,” says Duncan.

New Home Sales Plummet by 8.1 Percent

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Sales of newly built, single-family homes dropped 8.1 percent in June, the largest decline since July 2013, the Commerce Department reported Thursday. New-home sales were at a seasonally adjusted annual rate of 406,000 units in June. May’s sales pace was also revised from a previously reported 504,000 units to 442,000 units.

“The numbers are a little disappointing, but May was unusually high and some pull back isn’t completely unexpected,” says Kevin Kelly, chairman of the National Association of Home Builders. “Our surveys show that builders are confident about the future and we are still seeing a gradual upward trajectory in housing demand.” Across the country, new-home sales were down, falling by the largest amount – 20 percent – in the Northeast. New-home sales were also down by 9.5 percent in the South; by 8.2 percent in the Midwest; and by 1.9 percent in the West. Inventories of new homes for-sale rose 3.1 percent in June to the highest number since October 2010, reaching a 5.8-month supply at the current pace.

Builders are still optimistic that the new-home sector will see improvement later this year. “With continued job creation and economic growth, we are cautiously optimistic about the home building industry in the second half of 2014,” says David Crowe, NAHB chief economist. “The increase in existing home sales also bodes well for builders, as it is a signal that trade-up buyers can move up to new construction.”