Inman Blog

Investors to Congress: Let us have those ugly houses

Glenn_Roberts — Wed, 30 Apr 2008 16:28:36 -0700

HomeVestors of America, the company behind the infamous "We Buy Ugly Houses" campaign, announced that hundreds of real estate professionals converged on Washington, D.C., today to protest what they deem a "federal bailout of the housing industry."

"There is no doubt that the housing industry is in a crisis situation, but the problem will not be solved by throwing taxpayer money at the situation and putting more restrictions and regulations on those of us who are helping people out of their ugly situations," said John Hayes, president and CEO for HomeVestors, in a statement.

The HomeVestors franchise network has purchased about 35,000 homes nationwide.

Some investors have complained that lenders have severely restricted their ability to get financing to buy investment properties. Meanwhile, some cash-rich investors may thrive in troubled real estate markets even during this credit crunch by gobbling up cheap foreclosure properties in all-cash transactions and assembling a stock of homes to sell off as the market rebounds and prices recover.

HomeVestors says in its announcement that investors can assist in a down market through their efforts to "rehabilitate older neighborhoods, to provide affordable housing, to assist first-time homebuyers," among other aims.

Foreclosure problems soak all types of neighborhoods

Jessica_Swesey — Wed, 30 Apr 2008 07:58:53 -0700

Rampant mortgage fraud and overheated speculation are what sparked the first dominoes to fall in Atanta's foreclosure crisis, according to this video posted to YouTube from Ransom Enterprizes LLC.

Kyle Ransom takes a drive around Atlanta neighborhoods to show how the foreclosure problem is not contained within inner-city neighborhoods, but instead has huge new houses sitting vacant in high-end suburban developments. One house, he points out, was unfinished when the bank foreclosed on the builder. It's been sitting vacant for 18 months.

When the median is low

Glenn_Roberts — Tue, 29 Apr 2008 16:38:15 -0700

No, it wasn't a typo. The median price of single-family resale homes in California fell 29 percent in March compared to the same month last year, falling from $582,930 to $413,980, the California Association of Realtors reported this month. Sales, meanwhile, were down 24.5 percent year-over-year in March.

Robert Kleinhenz, deputy chief economist for the statewide Realtor trade group, provided some additional details about these statistics in an interview with Inman News.

The year-over-year decline in median price in March was a record -- actually it was the sixth consecutive monthly record for a year-over-year decline. "We've never seen such year-to-year declines before, (even in) the '80s or '90s," Kleinhenz said.

During the worst periods of the '90s housing slump, year-over-year price declines were typically in the 4 percent to 6 percent range, he said, and the previous record for an annual median price drop before this latest cycle of decline was 9.9 percent.

"But this clearly is a sign of an anomaly in the market in the sense of the credit crunch basically choking off demand," he said.

The median price in the state reached an all-time record in April 2007, and if the state's single-family median price continues to hover around the low $400,000 range then the median resale price in the state may be about one-third lower than it was last year.

The state has also experienced 30 consecutive months of year-over-year declines in sales of resale single-family homes.

The year-over-year sales drops are not record-setting, Kleinhenz said, as the state experienced "severe decreases in sales in the early 1980s." There was record year-over-year sales decline of 47.3 percent in October 1981, and dwindling sales in October 2007 came close -- dropping 42 percent compared to the same month in the previous year.

CAR's Unsold Inventory Index, which measures the supply of resale, single-family detached homes, was 11.6 months in March 2008. That means it would take nearly a full year at the March sales rate to exhaust the supply of for-sale resale homes in the state. Kleinhenz said that the level is reflective of a very slow sales environment -- not of a huge inventory of for-sale homes.

"Back in the 1990s the weak economy was really the main culprit" for housing doldrums, though these days the market problems have less to do with job losses and more to do with financing troubles and people who can't make their payments, he said.

Inman wants to know

Jessica_Swesey — Tue, 29 Apr 2008 10:23:29 -0700

Has anyone heard about foreclosure investors getting Section 8 certificates? Inman News publisher Bradley Inman brings this up in the comments of a story today from Dartmouth Professor John Vogel on solutions for current housing and foreclosure problems. (See Vogel's full perspective here.)

If investors are getting these certificates, we may be accidentally turning our vacant stock into affordable housing, Inman points out.

If you know anything about this, please drop us a line at press@inman.com and include "Section 8" in the subject line.

He's a fan

Matt_Carter — Mon, 28 Apr 2008 09:50:50 -0700

California Insurance Commissioner Steve Poizner has a busy day ahead of him today. He's holding a press conference down in San Diego to publicize a ruling that homeowners insurance companies can't reduce claims payments to policyholders who lose their homes in a disaster and decide they want to rebuild somewhere else. Wildfires destroyed more than 1,700 homes in San Diego County last year (see San Diego Union-Tribune for details on the ruling).

After the press conference, Poizner will address members of the California Land Title Association (CLTA) at their 101st annual convention. At last year's event, Poizner lauded a new Web site CLTA was planning to roll out to help consumers shop for title insurance. Poizner liked the site so much, in fact, that he ended up postponing his predecessor's plan to roll back title insurance rates by $1 billion, and put a link to the CLTA's TitleWizard Web site right on the California Department of Insurance's home page (he's pictured above with CLTA officials at an Oct. 9 press conference announcing the launch of the site).

Since TitleWizard went on line, CDI has stopped supporting its own title insurance rate survey. The department helps consumers shop for other lines of insurance by publishing rate surveys for auto, homeowners and long term care insurance. The CDI's own title insurance rate survey, however -- which in some ways looked more thorough than TitleWizard when I compared them last fall -- hasn't been updated since 2006, and is pretty much impossible to find. The Department has addressed one concern I had at the time: that consumers weren't being told that they were being taken away from the state's Web site and to the industry-sponsored TitleWizard when they clicked on "New! Compare title insurance rates!"

A disclaimer now informs consumers: "You are now leaving this site to link to another website location that is not maintained by the California Department of Insurance. The CDI takes no responsibility for and has no control over non-CDI sites."

With HUD proposing RESPA rule changes that could serve as incentives for consumers to shop for settlement services like title insurance, we will soon be seeing more sites like TitleWizard (see story) -- whether they are able to convince regulators to link to them or not. In its April newsletter, CLTA says TitleWizard has handled more than 9,000 visitors, "including individuals from both Canada and Mexico."

The new market reality

Glenn_Roberts — Mon, 28 Apr 2008 08:29:23 -0700

A sign of the times, in front of a sign-making shop in Calaveras County, Calif.

Take a look at the bright/dark side

Jessica_Swesey — Fri, 25 Apr 2008 15:52:36 -0700

Wondering how real estate news this week plays out in the housing recovery? Here's our take on the bright side versus dark side:

INVENTORY

Bright side: Foreclosures account for one in three California resales. Hey, at least somebody's buying up that inventory.

Dark side: In March, the months' supply of new-homes for sale rose about 32.5 percent compared to the same month last year. OK, so this inventory is not moving yet. Ouch.

EXISTING HOME SALES

Bright side: More than half of folks in a survey from AOL said they believe home ownership is still attainable. Surveys can't save the housing market, but at least some folks are still optimistic about conditions.

Dark side: The March sales rate for existing homes showed a 19.3 percent drop from a year ago. Median resale price fell 7.7 percent. No bottom here, folks.

PRICES

Bright side: Home prices rose 0.6 percent nationwide between January and February, according to OFHEO. Prices were up in seven of nine Census tracts, with prices falling in only the Mountain and South Atlantic tracts. The national scene seems less scary by this account.

Dark side: Home prices fell in 36 states during the three months ending in February, while 28 states saw year-over-year price declines, according to by First American CoreLogic. What we have here is a majority.

Soft selling "the Windermere"

Matt_Carter — Fri, 25 Apr 2008 14:53:48 -0700

Windermere Real Estate has launched a recruiting site that, according to a press release, allows agents to read about "the Windermere’s state of mind .. the company’s organic growth and ... Windermere’s 'secret formula' for being the leading real estate brand in the West."

It's a pretty slick site, that soft sells the company with pages like:

--Getting to Know Us: "Windermere is not for everyone ... salespeople need not apply."

--Our State of Mind: "...we never lose sight of what's important when it comes to this thing called real estate."

--Our Truths: "We understand that a house is more than a box where people do their living."

--Our History: The story starts in 1972, when John Jacobi "didn't set out to revolutionize the real estate industry."

--Our Growth: "Choosing to be better not bigger, has meant that we have grown more slowly than other real estate companies" (to 350 offices and 9,000 agents in 10 states).

--Our Secret Formula: "A great associate is the person who enjoys connecting with his or her customers and community."

And that's just the introduction -- there are three more "chapters" in the tour.

Windermere says it's also created an internal "recruiting and retention intranet site" that's accessible only to Windermere managers and owners, that provides resources for recruiting, evaluating and training agents.

Leave the brand, take the cannoli

Matt_Carter — Fri, 25 Apr 2008 10:42:04 -0700

Take a good look at this corporate logo, because it won't be around much longer. Bank of America says it won't keep the Countrywide brand alive after it closes its deal to acquire the company in the third quarter. Although BofA decided to let U.S. Trust keep its name after acquiring that company last year, it may be "eager to distance itself from the Countrywide brand, given the scrutiny its lending -- and collection -- practices are now receiving in the wake of the nation's housing bubble," the Nashville Business Journal reports.

It's true that Countrywide has become something of a poster child for the excesses of subprime lending, even though most of the loans it made during the housing boom weren't subprime. Countrywide got out of the subprime game when the credit crunch hit last August, but rising losses on its loan portfolio and difficulties borrowing money to make new loans forced the company to agree to be acquired by BofA in January (some view hearings on the merger as mostly a formality).

Company founder Angelo Mozilo's huge compensation package has rankled lawmakers, and the company's disclosure Thursday that Mozilo made more than $100 million in 2007 (through the exercise of stock options and other compensation) has set off another round of grousing.

Reuters reports that in a year Countrywide lost more than $700 million and the company's stock fell 79 percent, Mozilo made $121.5 million exercising stock options and was awarded another $22.1 million in compensation.

The SEC filing Reuters bases its estimate of Mozilo's earnings on also breaks down the compensation of board members like former HUD Secretary Henry Cisneros and ex-California Treasurer Kathleen Brown.

Cisneros -- who recently found himself in the awkward position of having to defended Countrywide in the press after the company came under fire from his favorite presidential candidate, Hillary Clinton -- received $190,596 in cash and stock awards in 2007.

Brown, whose brother Jerry is California's attorney general, resigned from Countrywide's board on March 29, 2007 -- just a few days before 6,035 shares of restricted Countrywide stock earmarked for her would have vested. But Brown's fellow board members and Countrywide's compensation committee cut her some slack, approving a $204,285 cash payment to her -- the value of the shares on the date they were forfeited.

Brown is head of West Coast Municipal Finance for Goldman, Sachs & Co., which Countrywide said "provides a significant amount of financing and provides advisory and other services to the company and the company’s subsidiaries under various arrangements."

Brown herself "did not provide any services to the company, the company’s subsidiaries or the company’s executives or receive any compensation related to any of these arrangements," Countrywide's SEC filing said.

Bloggers can Connect at Connect

jburslem — Thu, 24 Apr 2008 09:09:12 -0700

Got a real estate blog? Thinking about coming to Connect in San Francisco this summer?

We want to make sure you do and so we have created a special discount for you to attend the full Connect conference for only $579 ($479 if you are an Inman Member) - a savings of $150 off the current pricing. The best thing is, this includes your admission to Bloggers Connect too!

If you haven't done so already, check out the lineup we have started to assemble. It's going to be great!

What do I have to do to get this special blogger discount to Connect?

Easy, all we're asking is for you do 3 things:

Put a Real Estate Connect conference badge like the one on this post on your blog. You can get the HTML code here.
Write a post before July 23rd about why you're attending Real Estate Connect.
Write a post on what you thought of the conference once it's over. Tell us what you really thought of it - no hold's barred.

So what do I get for all this hard work?

$150 off the full conference package.
A special Blogger ribbon for your conference pass.
An exclusive invite to our Beer with Bloggers pre-conference party.
Kudos and accolades from your peers.

OK Joel, I'm sold. How do I register for this amazing deal?

Once you've placed the button on your site, please contact Katy Campana to register for Connect at this special rate. Please do not register using the register links on this site. Thanks!

Hurry up though - this offer is only good until June 8 and seating at Bloggers Connect is limited. First come, first served.

See you there!