April 2011

4 Tips for Working With the Pros on Curb Appeal

Landscaping can be pricey, but it can make a big
difference in creating curb appeal that attract buyers to the door.

“The condition of your lawn has a big
effect on the look and value of your home, whether you have a complicated
landscaping plan with water features and/or an expanse of grass and flowers,”
Angie Hicks, founder of service-ratings site Angie’s List, told the Chicago

If working with a landscaping
pro to boost your seller’s curb appeal, here are some tips to getting more for
your money.

Schedule consultations.
Contact several landscaping pros to arrange
appointments for them to visit the property and recommend what needs to be done
and your options. (For people to contact, check sites such as Yelp.com or
Kudzu.com.) Use them as consultants about what the property needs. Also for
smaller tasks, such as mowing, raking or weeding, you might try to find a
teenager who might offer a good deal, suggests Robert Krughoff, president of
Consumers’ Checkbook.

Get several price bids.
Request estimates on what you want done from at least three companies because
you may find big price differences among each. Krughoff cites an example of how
a tree-removal job could cost from $1,935 to $6,300 depending on the company. As
for lawn care, Consumers’ Checkbook found companies quoting ranges from $229 to

And just because a company is
pricier don’t assume you’ll get better results. Krughoff says the Consumers’
Checkbook has found no correlation between price and quality in lawn care and
tree services.

Watch for add-ons. Krughoff says
don’t be quick to say “yes” whenever a landscaper or lawn service recommends
various fertilizers, sprayings, and treatment. Make sure there’s a compelling
case on why it’s necessary, Krughoff says.

Don’t pay until the job is done.
If possible, pay nothing until the job is
completed so that you have more leverage in ensuring the job is done to your
satisfaction. Some companies may require a deposit. If so, pay with a credit
card, experts suggest. By using a credit card, you’ll be able to dispute the
charge with the credit card company if the service was incomplete or not done

Source: “Trimming Landscaping Costs,” Chicago Tribune (April 24, 2011)

Read More

3 Free Ideas for Instant Curb Appeal
6 Landscaping Tricks That Wow

10 Cities With the Highest-Priced Listings

Last month, the national median list price was
$199,500, down 0.25 percent for the year, according to
Realtor.com housing data of 146
. But in San Francisco, the median
list price is more than three times that amount.

The following is a list of the cities that had the highest median
list prices in March, based on Realtor.com housing data.

1. San Francisco
list price: $639,000

Down 8.45 percent for the

Median days on the market:

2. Santa Barbara-Santa Maria-Lompoc,

Median list price:

Down 19.57 percent

Median days on the market:

3. San Jose,

Median list price:

Down 5.05 percent

Median days on the market:

4. Orange County,

Median list price:

Down 5.05 percent

Median days on the market:

5. Honolulu
Median list price: $444,000
Down 1.11 percent year-over-year
Median days on the market: 112

6. Santa Fe, New Mexico
list price: $435,000

Up 4.82 percent

Median days on the market:

7. Ventura,

Median list price:

Down 6.67 percent

Median days on the market: 93

8. New York
Median list price: $389,000
2.51 percent year-over-year

Median days on the
market: 146

9. Naples,

Median list price:

Up 2.40 percent

Median days on the market:

10. Boulder-Longmont,

Median list price:

Up 2.73 percent

Median days on the market:

Source: REALTOR® Magazine online
(April 28, 2011)


11 Cities Where Homes Sell the

Is This Really a Buyer’s Market?

With falling home prices and higher inventories, most of the
public views real estate as a “buyer’s market,” in which buyers hold more of the
control and sellers will more eagerly accept lower offers just to sell.

Not so fast, say buyers and sellers. More
buyers are finding the sellers in the driver’s seat.

Buyer Young Hammack gave up looking for homes for a while after being
outbid on three properties in California. “It’s a false buyer’s market,” Hammack
says. “If you think prices are cheap, wait until you start putting offers

Many sellers may be unable or
unwilling to lower their home prices
mostly because they may be underwater on their mortgage so buyers are increasingly finding lower offers than list price
denied. Buyers, on the other hand, may be reluctant to agree to a deal if they
don’t feel like they are getting it at a deep discount, industry insiders say.

Traditional buyers also are finding even
buying a foreclosure can be difficult as they’re increasingly outbid by
investors who are willing to pay cash.

“There’s a shortage of attractive inventory,” says Glenn Kelman,
chief executive of Redfin Corp. “Customers just keep getting outbid on the
houses that they want.”

Real estate
professional Steve Capen with Keller Williams Realty in St. Petersburg, Fla.,
says that the homes most in demand among buyers often don’t require much repair
work and are located in good school districts and choice neighborhoods near
transit hubs.

“What’s selling is the cream
of the crop, and they sell fast,” Capen says. “If it’s not cream of the crop,
it’s getting hammered.”

“Buyers’ Market? Stressed Sellers Say Not So
The Wall Street Journal online
(April 25, 2011)


Customer Handout: Tips for Buying in a Tight

Analysts Say Housing Is on the Way Up

Analysts at both Standard & Poor’s and Barclays Capital
agree that the uptick in home resales last month is a favorable sign of things
to come. Because pending home sales — an indicator of future activity — were up
in February, S&P believes transaction volume will rise for April.

Barclays, meanwhile, says March’s 3.7
percent gain in existing-home sales merely reinforces its position that the
housing market actually hit bottom in late 2010.

Source: “Monday Morning Cup of Coffee,” Housing Wire, Jon Prior (04/25/11)

Banks Get Failing Grade in Foreclosure Handling

Banks continue to receive backlash for their
handling of a flood of foreclosures across the country. A new report released
this week by federal regulators finds that banks failed to do a good job in
handling foreclosures and sometimes evicted home owners when they clearly should
not have.

The problems were “significant
and pervasive” and added up to “a pattern of misconduct and negligence,”
according to the Federal Reserve. The Fed says it soon plans to announce
monetary penalties against mortgage servicers.

The report revealed several cases “in which foreclosures should not
have proceeded due to an intervening event or condition,” such as families in
bankruptcy or home owners who were eligible for a loan modification or even in
the process of doing a loan modification.

The report also noted that banks had inadequate and poorly-trained
staffs and improperly submitted paperwork to the courts.

In response to the report, several mortgage servicers signed a
consent agreement this week, agreeing to changes that include new oversight
procedures of foreclosures and reimbursing home owners who were wrongly
foreclosed upon. One of the servicers signing the agreement, JPMorgan Chase,
says it would add up to 3,000 employees to meet the new regulatory procedures.

“The banks are going to have to do
substantial work, bear substantial expense, to fix the problem,” says John
Walsh, the acting comptroller of the currency.

About two million households are in foreclosure, and several million
home owners have already lost their home to foreclosure.

More Penalties Coming

The banks still face punishment and settlement talks with other
agencies. The state attorneys general are conducting their own probe into shoddy
foreclosure procedures and working with the Obama administration to overhaul the
foreclosure process to prevent future abuses.

Source: “Report Criticizes Banks for Handling of
The New York Times

House Flippers Return, Still Finding Profits

More investors are taking on the risk of flipping
homes, despite falling home prices and sluggish real estate markets across the
country. But investors say there are still profits to be made in the house
flipping business.

Nearly 1 million homes
were bought as investment properties in 2010, according to the National
Association of REALTORS®, and a record number of buyers purchasing properties
with cash currently are flooding the market.

Flipping homes for profit is easier in rising markets, but not many
markets are reporting increases in home prices, analysts say. In Washington,
D.C., Justin Konz of RestorationCapital says his clients are going through four
of five properties a month and are making gross profit margins of 35 percent or

Where to Find the

Flippers mostly are finding their homes through foreclosures
auctions, REOs, and short sales. They seek homes at rock-bottom prices that will
have low fix-up costs, no more than about 5 percent or 10 percent of the
purchase price.

In Florida, where
investors are finding it more difficult to flip homes because of the drastic
drop in prices and high inventories, flippers are targeting inner-city
properties that are being sold at steep discounts. For example, some of houses
are selling for $30,000 when they once sold for $200,000.

Perry Henderson, a real estate agent and investor in Austin,
Texas, says the biggest opportunities in flipping are the “ugly” houses that
have lingered on the market or “old houses that somebody’s grandma lived in for
40 years and didn’t do anything to. Now, she’s passed away and her family wants
to sell quickly.”

Real estate investor
Brian Fuller, who with partners buys and sells more than 200 properties a year
in the San Diego area, says he’s drawn to the “biggest eyesore on the block.” He
says they then “ turn it into the best looking house there. We’re helping pull
up values in the neighborhood.”

“Vulture Investors Flipping Their Ways to
Big Profits,”
CNNMoney.com (April 13,


Investors, Foreign Buyers Cashing In on

NAR: March Existing-Home Sales Rise 3.7%

Sales of existing-home sales rose in March,
continuing an uneven recovery that began after sales bottomed last July,

Existing-home sales, which are
completed transactions that include single-family, townhomes, condominiums and
co-ops, increased 3.7 percent to a seasonally adjusted annual rate of 5.10
million in March from an upwardly revised 4.92 million in February, but are 6.3
percent below the 5.44 million pace in March 2010. Sales were at elevated levels
from March through June of 2010 in response to the home buyer tax

Lawrence Yun, NAR chief
economist, expects the improving sales pattern to continue. “Existing-home sales
have risen in six of the past eight months, so we’re clearly on a recovery
path,” he said. “With rising jobs and excellent affordability conditions, we
project moderate improvements into 2012, but not every month will show a gain –
primarily because some buyers are finding it too difficult to obtain a mortgage.
For those fortunate enough to qualify for financing, monthly mortgage payments
as a percent of income have been at record lows.”

NAR’s housing affordability index shows the typical monthly mortgage
principal and interest payment for the purchase of a median-priced existing home
is only 13 percent of gross household income, the lowest since records began in

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84 percent in
March, down from 4.95 percent in February; the rate was 4.97 percent in March

Data from Freddie Mac and Fannie Mae
show requirements to obtain conventional mortgages have been tightened, with the
average credit score rising to about 760 in the current market from nearly 720
in 2007; for FHA loans the average credit score is around 700, up from just over
630 in 2007.

“Although home sales are coming
back without a federal stimulus, sales would be notably stronger if mortgage
lending would return to the normal, safe standards that were in place a decade
ago – before the loose lending practices that created the unprecedented boom and
bust cycle,” Yun explained.

“Given that
FHA and VA government-backed loan programs turned a modest profit over to the
U.S. Treasury last year, and have never required a taxpayer bailout, we believe
low-downpayment loans should continue to be available for those consumers who
have demonstrated financial responsibility and are willing to stay well within
their budget. Raising the downpayment requirement would unnecessarily deny
credit to many worthy middle-class families and veterans,” Yun

A parallel NAR practitioner survey
shows first-time buyers purchased 33 percent of homes in March, compared with 34
percent of homes in February; they were 44 percent in March

Record Share of All-Cash

All-cash sales were at a record
market share of 35 percent in March, up from 33 percent in February; they were
27 percent in March 2010. Investors accounted for 22 percent of sales activity
in March, up from 19 percent in February; they were 19 percent in March 2010.
The balance of sales were to repeat buyers.

The national median existing-home price for all housing types was
$159,600 in March, down 5.9 percent from March 2010. Distressed homes –
typically sold at discounts in the vicinity of 20 percent – accounted for a 40
percent market share in March, up from 39 percent in February and 35 percent in
March 2010.

NAR President Ron Phipps said some renters
are looking to home ownership as a hedge against inflation. “The typical buyer
today plans to stay in a home for 10 years, while rents are projected to rise at
faster rates over the next few years,” he said. “As buyers gain more financial
security, the advantages of home ownership become more obvious. Rents will
continue to trend up, especially in comparison with a fixed-rate loan which
provides financial stability and gradual accumulation of equity over

Total housing inventory at the end
of March rose 1.5 percent to 3.55 million existing homes available for sale,
which represents an 8.4-month supply
at the
current sales pace, compared with a 8.5-month supply in

Single-family home sales rose
4.0 percent to a seasonally adjusted annual rate of 4.45 million in March from
4.28 million in February, but are 6.5 percent below the 4.76 million level in
March 2010. The median existing single-family home price was $160,500 in March,
down 5.3 percent from a year ago.

condominium and co-op sales increased 1.6 percent to a seasonally adjusted
annual rate of 650,000 in March from 640,000 in February, but are 4.1 percent
below the 678,000-unit pace one year ago. The median existing condo
was $153,100 in March, which is 10.1
percent below March 2010.


Regionally, existing-home sales
in the Northeast rose 3.9 percent to an annual level of 800,000 in March but are
12.1 percent below March 2010. The median price in the Northeast was $232,900,
down 3.0 percent from a year ago.

Existing-home sales in
the Midwest increased 1.0 percent in March to a pace of 1.06 million but are
13.1 percent lower than a year ago. The median price in the Midwest was
$126,100, which is 7.1 percent below March 2010.

In the South,
existing-home sales rose 8.2 percent to an annual level of 1.99 million in March
but are 1.0 percent below March 2010. The median price in the South was
$138,200, down 6.6 percent from a year ago.

Existing-home sales in the
West slipped 0.8 percent to an annual pace of 1.25 million in March and are 3.1
percent below a year ago. The median price in the West was $192,100, which is
11.2 percent lower than March 2010.


Top 10 Real Estate Web Sites
Which real estate web sites are fielding the most traffic on the
Web? Experian Hitwise recently released data
showing which real estate web sites are garnering the biggest market share in

Here are the top 10 most
visited real estate web sites for March 2011:

1. Realtor.com
2. Yahoo! Real

3. Zillow
4. Trulia.com

6. Homes.com
7. MSN Real Estate
8. AOL Real

9. ZipRealty
10. Apartment Guide

“Top 10 Real Estate Web Sites for March
Marketing Charts (April 20,

American banks

Where’s the growth?

The worst is over for American banks. Shame about the recovery

Apr 20th 2011

IN THE second world war America’s army developed a reputation for unsentimentally sacking divisional commanders who lost battles. The effect was to clear out the incompetents but also remove those who were merely unlucky. The policy may sound strangely familiar to the chief financial officers of America’s banks.

The door has revolved fastest at Bank of America (BofA). It is now on its sixth finance chief in seven years, having announced the appointment of Bruce Thompson when it released lacklustre first-quarter earnings on April 15th. The bank typifies many of the problems facing the industry. Almost all are still reporting steep falls in revenue from investment banking, and commercial banking is proving to be a lot less profitable than it was.

A casual observer could be forgiven for thinking it was a decent quarter, with many banks posting higher year-on-year operating profits. Yet the numbers have been flattered by a steep fall in the provisions that banks have to set aside for loans that may not be repaid, continuing a trend set in 2010 (see chart). Pre-provision revenues look a lot less healthy.

The sharpest falls in income were in investment banking. At Goldman Sachs, BofA and Citigroup, revenues from fixed income, currency and commodity trading, the main contributors to investment-banking profits over the past decade, were up to a third lower than a year ago. JPMorgan Chase stood out by containing its decline to 4%.

Last year may have been one to forget for these businesses but analysts at Nomura believe that banks will be lucky if income from them scrapes the same level in 2011. Nervy clients have cut back on trading, and banks are under regulatory pressure to reduce their proprietary-trading activities. New rules on capital and liquidity are also likely to make these businesses less profitable. Reform of derivatives markets will probably push a lot of the trading of bespoke contracts out into the open, where standardised contracts will offer thinner margins. Legal risks have not gone away, either: the Securities and Exchange Commission is continuing to parlay with Wall Street banks to settle fraud allegations related to the sale of dodgy mortgage-backed securities.

The quarter also points to worrying trends in retail banking. Earnings are being flattered by falling non-performing loans: in credit cards, early delinquencies are the lowest for a decade, according to Nomura. But demand for loans from consumers is weak, especially in areas such as credit cards and mortgages, although banks hope that these will soon start to rebound. Ultra-low interest rates also squeeze the profits that banks can usually make by paying below-market returns to retail depositors.

Here, too, regulatory and legal risks remain. Mortgage lenders and banking regulators reached a settlement this month to review loans where homes were seized and for banks to pay back losses if they were in the wrong. The agreement gives banks two months to draft plans to fix weaknesses in their systems. Negotiations on a separate settlement over foreclosures with attorneys-general from all 50 states continue and could yet result in big financial penalties.

Regulators are also trying to write the final rules that will limit how much banks may charge when retailers swipe debit cards, as well as restricting banks’ ability to levy overdraft and other fees on current accounts. Banks are already responding by trying to charge for services that previously appeared to customers to be free: several, including JPMorgan Chase, have proposed monthly fees for accounts. All this adds up to a very uncertain environment, and not just for finance chiefs.

from the print edition | Finance and Economics

House prices

Unfinished bust

The froth in the ritzier parts of London conceals a fragile national market

Apr 20th 2011

Billionaires’ bolthole

EARLIER this month a London flat was sold to Rinat Akhmetov, a Ukrainian businessman, for £136.4m. It was a British record. Mr Akhmetov’s new home takes up the top three floors of One Hyde Park, a block of luxury flats in Knightsbridge designed by Richard Rogers, a celebrated British architect. Sales at the development are expected to top £1 billion. Buyers from Asia and the Middle East are said to be keen to secure an investment (or a bolthole) in west London. The prices paid are staggering: it is as if the rich world’s devastating housing bust hadn’t happened.

Some hope the buoyancy at the top end of the London market will lead to a broader recovery. British house prices have proved more resilient than America’s, which adds to the case for optimism. Prices at their lowest point were down by only a fifth from their level at the start of the credit crunch in August 2007. They have since recovered, and are now around 15% below their peak. Home prices in 20 big American cities, by contrast, fell farther and have struggled to make up ground (see chart).

The braver sort of investor might sense an opportunity. But beyond the fancier bits of London, the national market still looks rather frail. House prices have barely risen in the past six months. Would-be buyers are finding it hard to raise finance, because banks are worried that prices will fall and are demanding heftier deposits. The number of mortgages approved for house purchase is around half the long-run average. Far fewer homes are changing hands than at the market’s peak.

Nor is housing cheap. Homes are 30% overvalued against the long-run ratio of prices to rents, the gauge used in The Economist’s quarterly round-up of global house prices. On that basis, America’s housing market is close to fair value, but a handful of other markets (including China and Hong Kong) are starting to look pricey. London’s hotspots are in part an outgrowth of this emerging-market demand.

Compare global housing data and rents with our interactive house-price tool

The varying fortunes of Britain and America reflect the peculiarities of each market. There have been fewer forced sellers in Britain. That is in part because unemployment rose less sharply. It is also because mortgages in many American states are “non-recourse”: when a loan turns sour, a lender can seize the property but has no rights over the borrower’s other assets or income. So if house prices fall below the value of the mortgage, a householder can walk away from his debt. Many have done so: fire sales of seized homes have weighed heavily on prices. Fewer homes have been dumped onto the market in Britain, where borrowers cannot escape debt so easily.

Other financial quirks proved critical too. America’s housing boom was fuelled by subprime borrowers, more likely than others to struggle with mortgage payments. Britain had fewer of those. And because most British mortgages are at variable interest rates, or are fixed for only a few years, sharp cuts in rates in Britain eased the burden on debtors more than rate cuts did in America, where many more mortgages are at fixed rates. Total interest payments on household debt in Britain fell to 7% of disposable income at the end of last year, the lowest level since 2003. Banks have been lenient, and repossessions have been far rarer than feared.

But interest rates will not always be so low. The Bank of England’s monetary-policy committee has been agonising for months over whether to raise them. Rate increases and a weak jobs market will uncover the “latent distress” in the housing market, says Paul Diggle, of Capital Economics, a consultancy. He expects a second round of price declines: a further 20% fall would bring prices back to their long-run average against earnings. London is Britain’s most overvalued region, says Mr Diggle. It cannot defy gravity forever.

What would such a prospect imply for a still-fragile economic recovery? Purists say that a further drop in house prices would merely shuffle wealth around. Homeowners would suffer, but those saving to buy a home would benefit. Reality is messier. Many householders have onerous debts, and would cut spending abruptly should prices plunge. For this reason, the housing market is likely to determine interest-rate decisions, not the other way round. If rate-setters prove cautious, house prices will take longer to reach bottom, but they are likely to fall all the same.

from the print edition | Britain

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