Housing Markets; One Bright Spot

Apartment Demand Holding Up But Capital is Hard to Find

Overall, apartment demand is holding up fairly well. Sales volume is down and credit is tight, but Fannie and Freddie have been increasing their exposure in this one relatively bright sector of the housing markets.

Better Renter Profiles

The housing crises has actually helped the apartment sector since less renters have been leaving to buy homes. This is raising the credit quality of rental applicants and helping buoy the apartment sector. You now see people with six figure incomes renting one and two bedroom apts and waiting out the storm. No doubt, hoping to catch the bottom.

Good Market Demographics

The demographics are in favor of rentals as we experience a new generation of renters coupled by the fact that this sector didnt over build the way homes and condos did. High oil prices will continue to drive people to cities and that will also keep demand high.

Fannie and Freddie Agree

Fannie and Freddie have noticed and are trying to repair their balance sheets by adding properties from the apartment sector. They have been looking to finance more multi family properties and re-balance their portfolios in favor of rentals. They don't actually lend to borrowers but buy pools of loans from lenders that follow their guidelines.

Tight Capital

The main problem for rental property investors is that the two govt agencies are one of the few capital pools left. With so many lenders out of the game, lending activity for multifamily property loans fell 42% year over year, according to the Mortgage Bankers Association's (MBA) latest Quarterly Survey.

According to Multi "Housing News: For now, there is no major disruption to the stream of Fannie Mae and Freddie Mac permanent, acquisition and rehab financing supplied to the multi-housing sector, although in general underwriting is tighter, loan dollar ratios may be lower, and pricing is higher".

Tight times, no doubt. But not the rout we see in other sectors.

Thanks for Reading
Howard Bell

www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

Your Property Path Amazon Store
http://astore.amazon.com/yourpropertypath20-20
super deals on mobile office today
We hand picked Amazon for the tools you need

You can add this page to your favorite Social Bookmark site:

Rate of Decline ofU.S. Home Prices Slows This Quarter

OFHEO: This index is looking at Freddie Mac and Fannie Mae data. It is measuring only the loans that fit into the parameters of those two institutions loan programs. They do not include mortgages too large or risky to be purchased or guaranteed by Fannie Mae and Freddie Mac. It is a national purchase-only house-price index. Still, it is giving us some good news. The index showed prices falling a seasonally adjusted 1.4 percent during the second quarter, compared with 1.7 percent in the first quarter. The all-transactions index shows the five states with the steepest declines were California (-15.8 percent), Nevada (-14.1 percent), Florida (-12.4 percent), Arizona (-9.2 percent), and Rhode Island (-4.8 percent).

Case Schiller Index: S&P/Case-Shiller Home Price Indices use the “repeat sales method” of measuring homes. The index shows real price changes by tracking the same homes as they sell. This methodology is recognized as the most reliable means to measure housing price movements , its even used by the OFHEO. According to Case-Schiller, US house prices were down a record 15.4% in the April to June quarter compared with a year ago. By adding back jumbo loans mostly in the higher priced markets and risky loans we get a very different picture. There may have been a slight decline in segments with less risk, but the whole picture still is dismal. The amount of risk this industry took on is more clearly shown by looking at these two methodologies.

Thanks for Reading
Howard Bell

www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

Your Property Path Amazon Store
http://astore.amazon.com/yourpropertypath20-20
super deals on mobile office today
We hand picked Amazon for the tools you need

You can add this page to your favorite Social Bookmark site:

Rates Lower This Week: Housing Shows Weakness

30-year fixed-rate mortgage: Averaged 6.47 percent with an average 0.7 point for the week ending August 21, 2008, down from last week when it averaged 6.52 percent. Last year at this time, the 30-year FRM averaged 6.52 percent.

The 15-year fixed-rate mortgage: Averaged 6.00 percent with an average 0.7 point, down from last week when it averaged 6.07 percent. A year ago at this time, the 15-year FRM averaged 6.18 percent.

Five-year Treasury-indexed ARMs: Averaged 5.99 percent this week, with an average 0.6 point, down from last week when it averaged 6.02 percent. A year ago, the 5-year ARM averaged 6.34 percent.
One-year Treasury-indexed ARMs: Averaged 5.29 percent this week with an average 0.5 point, up from last week when it averaged 5.18 percent. At this time last year, the 1-year ARM averaged 5.60 percent.

Commentary: Mixed Economic and Housing News

Long-term mortgage rates drifted down following another volatile week stocks. The volitility of stocks and particulary the still dangerous situation banks are in, led investors to buy the relative safety of Treasuries. A lot of buying bids prices up and that lowers the yeild. The yield on 10-year constant-maturity Treasuries, which are roughly correlated with long-term fixed mortgage rates, dropped 11 basis points over the past 5 days.

Thanks for Reading

Howard Bell

www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

Your Property Path Amazon Store
http://astore.amazon.com/yourpropertypath20-20
super deals on mobile office today
We hand picked Amazon for the tools you need

You can add this page to your favorite Social Bookmark site:

Fannie and Freddie: Whats Next

Investors are selling off Fannie and Freddie's common stock fearing more losses if there is a government bailout. So far, Fannie and Freddie’s shares have lost more than 90 percent of their value this year.

Fannie Mae has more than 600 million shares of preferred stock outstanding. Freddie Mac have about 460 million shares outstanding. Preferred stocks pay a high dividend and companies buy them for the relatively safe, consistent cash payouts they offer.

There is much concern now because the preferred shareholders are basically the banks and insurance companies. And no one is clear whether they would see their dividends if the tax payer was forced to step in such a massive way.

The financial industry takes another big hit because of all of these institutions are part of the same fabric. If it begins to sound like a house of cards...it is.

Congress estimates a government rescue of Fannie and Freddie could cost taxpayers $25 billion, with the exact amount based on how far the U.S. housing market falls.

Its becoming clear that some parts of the American financial system have ceased to function. The Japanese real estate crises in the 1980's was a huge implosion much like this one. Although great amounts of wealth were lost and markets never completely recovered, they still remained the #2 economy. And so we will weather this too. Amen

Thanks for Reading

Howard Bell

www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

Your Property Path Amazon Store
http://astore.amazon.com/yourpropertypath20-20
super deals on mobile office today
We hand picked Amazon for the tools you need

You can add this page to your favorite Social Bookmark site:

Freddie Mac Update: Rates Lower This Week

Housing Continues to Show Signs of Weakness

30-year fixed-rate mortgage: Averaged 6.47 percent with an average 0.7 point for the week ending August 21, 2008, down from last week when it averaged 6.52 percent. Last year at this time, the 30-year FRM averaged 6.52 percent.

The 15-year fixed-rate mortgage: Averaged 6.00 percent with an average 0.7 point, down from last week when it averaged 6.07 percent. A year ago at this time, the 15-year FRM averaged 6.18 percent.

Five-year Treasury-indexed ARMs: Averaged 5.99 percent this week, with an average 0.6 point, down from last week when it averaged 6.02 percent. A year ago, the 5-year ARM averaged 6.34 percent.

One-year Treasury-indexed ARMs: Averaged 5.29 percent this week with an average 0.5 point, up from last week when it averaged 5.18 percent. At this time last year, the 1-year ARM averaged 5.60 percent.

Frank Nothaft, Freddie Mac vice president and chief economist: "Even with the current historically affordable mortgage rates, news continues to show signs of weakening in the housing sector,"
Next week will be telling when house price indices from S&P/Case-Shiller, OFHEO and Freddie Mac will be released. especially interesting will be whether the descent of home prices will begin to slow or not.

I like to watch the the S&P/Case-Shiller index, because it will track homes sold and then resold. This index measures price change by tracking a home that has sold and then sold again. most of the indexes do not track price change from one sale to the next, making this one valuable index.

Thanks for Reading

Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

http://yourpropertypath.blogspot.com/

Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

Your Property Path Amazon Store

super deals on mobile office today

We hand picked Amazon for the tools you need

You can add this page to your favorite Social Bookmark site:

US Foreclosures: Skewing Market Data

US home foreclosures increase 55%

More than 272,000 people in the US received a foreclosure notice in July, a rise of 55% on a year earlier, according to analysts Realtytrac. This amounts to something like 17% of all homes listed for sale are repossessed properties.

Via sfgate.com: "Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley, said he thinks the foreclosure flood makes the market appear much worse than it really is.

"The headline will read, 'House prices plunge,' " he said. "Actually, what it should read is, 'Foreclosed house prices plunge.' The data show a much smaller (price) decline, between 5 percent and 10 percent in the core Bay Area of Silicon Valley, Oakland, Berkeley, San Francisco and Marin (if foreclosure sales are omitted)."

This is an interesting view
1. Amazingly bad market management on the part of the lenders....driving their own prices down and creating a sef fulfilling market decline

2. Ken Fischer may be right, but the fact that we have almost 1 of 5 homes foreclosing is a devastating loss and yes, not all homes are effected. He would be more correct in saying that if you remove four states from the United States, our housing markets would look like a normal downturn. But its not.

Thanks for Reading

Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

http://yourpropertypath.blogspot.com/

Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

You can add this page to your favorite Social Bookmark site:

Bank Strategy Clips Home Prices

Realtytrac reports that foreclosures have put an alarming blanket on prices of existing homes.

Realtytrac.com reports: “Bank repossessions, or REOs, continued to be the fastest growing segment of foreclosure activity in July, posting a 184 percent year-over-year increase — compared to a 53 percent year-over-year increase in default notices and an 11 percent year-over-year increase in auction notices,” said James J. Saccacio, chief executive officer of RealtyTrac." They go on to report that this is now 17% of all inventory in their data base, which is really quite comprehensive.

If you look at the map (source: realtytrac.com), its easy to see that removing California, Nevada and Florida from the map, eliminates most of the problem. These huge out sized numbers do not reflect what is happening to the country as a whole. In California alone bank repo's are up 427%, year over year. Mind blowing....

I've read that the IMF figures this to be a trillion dollar problem, when all is said and done. Other recent reports say that the banks have written off almost 500 billion. Could we only be half way there?

Thanks for Reading

Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

http://yourpropertypath.blogspot.com/

Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

You can add this page to your favorite Social Bookmark site:

Mission Bay Just Gets Better & Better

Mission bay is going to be one hot part of town. Its located on 303 acres of land between the San
Francisco Bay and Interstate-280.

Here's the Plan

1. 6,000 housing units, with 1,700 (28%) affordable to moderate, low, and very low-income
households.
2. Redevelopment Agency sponsored non-profit developers will build 1,445 of the
affordable units on 16 acres of land contributed by the master developer.
3. 255 affordable units will be included in privately developed projects.
4. 6 million sq. ft. of office/life science/technology commercial space,
5. A new UCSF research campus containing 2.65 million sq. ft. of building space on 43 acres of
land donated by the master developer and the City,
6. 500,000 sq. ft. of city and neighborhood-serving retail space,
7. A 500-room hotel with up to 50,000 sq. ft. of retail entertainment uses,
8. 41 acres of public open space, including parks along Mission Creek and along the bay, plus 8
9. A new 500-student public school, a new public library and new fire and police stations.

This will bring what many consider to be the next internet internet like boom to San Francisco. If anything will hold up housing and keep San Francisco out of the downward spiral that Mr. Greenspan is now calling a hundred year event. For me that means it may equal or surpass the great depression for housing markets. Gotta keep those good jobs coming.

Thanks for Reading

Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

http://yourpropertypath.blogspot.com/

Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

Freddie Mac Update: Rates Remain Unchanged

30-year fixed-rate mortgage: Averaged 6.52 percent with an average 0.7 point for the week ending August 14, 2008, unchanged from last week when it averaged 6.52 percent. Last year at this time, the 30-year FRM averaged 6.62 percent. The

15-year fixed-rate mortgage: Averaged 6.07 percent with an average 0.7 point, down from last week when it averaged 6.10 percent. A year ago at this time, the 15-year FRM averaged 6.30 percent. Five-year Treasury-indexed ARM: Averaged 6.02 percent this week, with an average 0.6 point, down from last week when it averaged 6.05 percent. A year ago, the 5-year ARM averaged 6.35 percent.

One-year Treasury-indexed ARMs: Averaged 5.18 percent this week with an average 0.5 point, down from last week when it averaged 5.22 percent. At this time last year, the 1-year ARM averaged 5.67 percent.

Commentary: Mixed Economic and Housing News

Rates hardly moved because of conflicting economic data. Although the housing markets looked a little better, it became clear that lending standards had tightened again. On the inflation front things fared less evenly. Inflation reached a 17-year high in the United States last month. Consumer prices were 5.6 percent higher last month than they were in July 2007.

All in all, the housing crises is at it was. Other than the recently passed bill to provide some tax credit relief for new buyers, we continue to suffer an unfoldig crises. Merril and JP Morgon have reported more losses and the beat goes on. Until the lenders have completely purged their balance sheets of bad debt the housing markets cannot begin to recoover....the lenders must be the first to become whole.

Thanks for Reading

Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

http://yourpropertypath.blogspot.com/

Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

You can add this page to your favorite Social Bookmark site:

New Home Buyer Tax Credit:: There is a Great Site

A newly launched Web site, has attracted more than 100,000 visitors, indicating strong interest among consumers. There are 4 million homes going into foreclose but this is a small but uplifting piece of news.

The recently passed bill will offer a $7500 tax credit to new home buyers. Here is some of what the site has to say.
At a Glance

1. The tax credit is available for first-time home buyers only.
2. The maximum credit amount is $7,500.
3. The credit is available for homes purchased on or after April 9, 2008 and before July 1, 2009.
4. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
5. The tax credit works like an interest-free loan and must be repaid over a 15-year period.

If you read the fine print this credit has to be repaid over time and is only forgiven of the house is sold at a loss, then the govt would write off the balance. This is hardly a dramatic incentive but the rules defining "new" home buyer as a buyer who hasnt owned in the last three years is not restrictive.

This bill provides for a loan rather than a credit and that its good for little more than a year and only targeting the middle income buyer. Its hardly a Roman candle and not likely to have more than a marginal impact on the housing markets.


Thanks for Reading

Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

You can add this page to your favorite Social Bookmark site:

Freddie Mac: Inflation Concerns Ease and Rates Drop

McLean, VA Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® in which the 30-year fixed-rate mortgage averaged 6.52 percent with an average 0.7 point for the week ending July 31, 2008, down from last week when it averaged 6.63 percent. Last year at this time, the 30-year FRM averaged 6.68 percent.

30-year fixed-rate mortgage: Averaged 6.52 percent with an average 0.7 point for the week ending July 31, 2008, down from last week when it averaged 6.63 percent. Last year at this time, the 30-year FRM averaged 6.68 percent.

The 15-year fixed-rate mortgage : Averaged 6.07 percent with an average 0.6 point, down from last week when it averaged 6.18 percent. A year ago at this time, the 15-year FRM averaged 6.32 percent.

Five-year Treasury-indexed ARMs: Averaged 6.07 percent this week, with an average 0.6 point, down from last week when it averaged 6.16 percent. A year ago, the 5-year ARM averaged 6.29 percent.

One-year Treasury-indexed ARMs: Averaged 5.27 percent this week with an average 0.6 point, down from last week when it averaged 5.49 percent. At this time last year, the 1-year ARM averaged 5.59 percent.

Commentary

Look at the price declines of oil and gold as well as building materials and you see the kind of inflationary pressures easing necessary for rates to ease. During the recent Fed meeting, rates were held steady and the markets rallied by more than 300 points.

Much of the price built into commodities was speculative and if the slowdown is real we will all see inflationary pressures drop. Oppenheimer's oil analyst thinks that oil could drop below $75 a barrel, the Saudis think that oil should be priced at $80. If we can see an economic slowdown, then the Fed can reduce rates and hopefully get back to the housing crises as the number one priority.

Thanks for Reading

Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

You can add this page to your favorite Social Bookmark site:

Freddie Mac:Tried to Fulfill the American Dream

Freddie Mac felt it had a mission to help all Americans into a home.....unfortunately, that created so much demand from people who didnt qualify. As a result Freddie Mac built a shipo that sailed only in sunny weather.

In 2004, reports the International Herald Tribune, Cheil Excec Richard Syron received a memo from the Chief Risk Officer warning of a threat to the financial health of Freddie Mac if it kept on taking such questionable and high risk loans. When you are a company that owns or has insured a protfolio of debt equal to the national debt, you are so big that a serious misstep can tip the boat. And that is exactly what is happening....the firms held mortgages worth more than $1.4 trillion combined, and guaranteed payments on loans worth $3.5 trillion more.

The Size of the Problem

Bloomberg reports that Freddie has 22,000 properties in foreclosure, the most since the company was created in 1970 during the Vietnam War, and now anticipates losing 26 percent on each loan, up from 22 percent.
Freddie has plunged 76 percent this year on concern the company may not have enough capital to overcome delinquencies on the $2.2 trillion of mortgages it owns and guarantees. Freddie doubled its reserves for future home-loan losses to $2.8 billion, signaling Chief Executive Officer Richard Syron sees no end in sight to the worst housing slump since the Great Depression.

This is such a huge problem that it will change the way the rest of the world perceives us. Will the dollar still be the currency of choice or will the world decide that a basket of stable currencies is a better and more stable approach to world finances.
Further, if we were heading to a multipolar world, this disaster will push us to that much faster. I do think this will cost us our solo spot on the world stage. Its really that big. Much of the world realizes that they will have to pay for the excesses of one American industry and that is not the safe.

Thanks for Reading

Howard Bell

www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

You can add this page to your favorite Social Bookmark site:

Section 8 Housing: Making it Mandatory

Cities and States Face Affordable Housing Look to Section 8

Seventeen cities: Los Angeles, New York, Philadelphia, Seattle, St. Louis and Washington, D.C. have “source of income” anti-discrimination rules. Thirteen states also have such laws: California; Connecticut; Maine; Maryland; Massachusetts; Minnesota; New Jersey; North Dakota; Oklahoma; Oregon; Utah; Vermont; and Wisconsin.

The national Multi Housing Council, a non profit that represents multi family owners has filed a brief with the Supreme court to clarify whether Section 8 housing is mandatory or not.

Source of Income Non-Discrimination Laws

Congress created section 8 created a voluntary because it has special requirements of owners. However, because of a housing crisis, many states and cities have passed new non discrimination laws to circumvent the original voluntary nature of section 8 programs. These states contend that the sources of income, namely federal vouchers, when used as a reason to reject a tenant are discriminatory.

What is Section 8

It is a Federal housing program which provides housing assistance to low-income renters and homeowners. This assistance comes in the form of rental subsidies or vouchers. These vouchers are good only for what the government calls fair market rent housing. If your unit is higher than fair market you would have to pay the difference yourself.

The Landords Extra Burden

1. There must be an annual inspection to insure that the unit is safe and sanitary.

2. There is a contract with the government in addition to the lease that the landlord or manager must comply with.

3. The rental must remain within the parameters of what HUD calls fair market rent. This can be good for owners, if the rental market is flat, but a limit if the rental market is having good times

Effectively, the states are trying to alter the voluntary nature of the program by passing “source of income” non-discrimination laws to solve their affordable housing crises. The MFHC brief contends the states are over riding federal law.

Thanks for Reading

Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

You can add this page to your favorite Social Bookmark site:

Freddie Mac Update: Inflation Concerns Ease Mortgage Rates Down

30-year fixed-rate mortgage: Averaged 6.52 percent with an average 0.7 point for the week ending July 31, 2008, down from last week when it averaged 6.63 percent. Last year at this time, the 30-year FRM averaged 6.68 percent.

The 15-year fixed-rate mortgage: Averaged 6.07 percent with an average 0.6 point, down from last week when it averaged 6.18 percent. A year ago at this time, the 15-year FRM averaged 6.32 percent.

Five-year Treasury-indexed ARMs: Averaged 6.07 percent this week, with an average 0.6 point, down from last week when it averaged 6.16 percent. A year ago, the 5-year ARM averaged 6.29 percent.

One-year Treasury-indexed ARMs: Averaged 5.27 percent this week with an average 0.6 point, down from last week when it averaged 5.49 percent. At this time last year, the 1-year ARM averaged 5.59 percent.

Commentary

"Mortgage rates moved lower this week as a drop in commodity prices eased market concerns over inflation pressures," said Frank Nothaft, Freddie Mac vice president and chief economist. "For instance, the Department of Energy reported that gasoline prices were the lowest since the end of May, and oil prices were at levels not seen since early May.

Its not surprising that interest rates and economic activity will fluctuate with the price of oil. What better shape we would all be in if we would all seriously go green.

Thanks for Reading

Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

You can add this page to your favorite Social Bookmark site: