TPIN magazine November-December 2014

November - December 2014 Vol. 01 | Issue 8

IN THIS ISSUE: Alex Perriello CEO of Realogy Us Banking Regulators Adopt New Rules Housing in 2015: Will Millennials, Gen Xers or Boomers Lead the Way? Slow Housing Market Recovery: Is Student Loan Debt Really to Blame?

We proudly welcome ZipRealty™ and its innovative technology platform to our family of real estate brands!

facebook.com/realogy

CONTENTS the PIN magazine THE POWER IS NOW INC.

Page 6

Page 8

Page 20

Mission and Vision of the PIN Magazine .........................................(page 5)

Vol. 01 | Issue 6 Eric Lawrence Frazier, MBA President and CEO Office: (800) 401-8994 Ext. 703 Direct: (714) 361-2105 Eric.Frazier@ThePowerIsNow.com www.thepowerisnow.com www.blogtalkradio.com/thepowerisnow

EDITORIAL TEAM Eric Lawrence Frazier Editor in Chief (800) 401-8994 Ext. 703

THE CEO’S CORNER Alex Perriello Talks About Realogy and the Current Housing Market ....................................................................(page 6)

REAL ESTATE Understanding the Homebuyer Mentality.......................................(page 8)

by Aaron Zapata

Making a Sweet Deal Out of a Foreclosed Property in Salt Lake City ...................................................................................(page 12) Real Estate in New Mexico: Setting the Record Straight Based on Trends .................................................................(page 14) The Nuevos Latinos and Their Influcence

Erica L. Frazier, MBA Assistant Editor (800) 401-8994 ext. 710 erica.frazier@thepowerisnow.com

On Big Business.................................................................................(page 20)

Goldy Ponce Arratia Graphic Artist and Design Manager (800) 401-8994 ext. 711 goldy.ponce@thepowerisnow.com

Florida, South Carolina.....................................................................(page 30)

Eric Egana Staff Writer (800) 401-8994 ext. 701 eric.egana@thepowerisnow.com

US Banking Regulators Adopt New Rules to Make Banks Safer..(page 42)

CONTRIBUTORS

Great Deals at your Fingertips, Literally.........................................(page 48)

Aaron Zapata, The Power is Now Research Team

Austin Texas, En Masse Transit ........................................................(page 22) Analyzing the Real Estate Market in Colorado.............................(page 26) Legal Matters Pertaining to Post-Floreclosure in Consumer Sentiment Report, September 2014.............................(page 34) Corporate Profits for September 2014............................................(page 36) New Home Sales, August 2014.......................................................(page 39) California’s Ongoing Property Sales Withdrawal as Distressed Market Continues Refinement.....................................................................(page 44) Investing in Arizona Real Estate: Mortgage Purchase Applications...................................................(page 50) Housing in 2015: Will Millenials, Gen Xers or Boomrers Lead the Way? ...............................................................(page 52) Slow Housing Market Recovery: Is Student Loan Debt Really to Blame? .......................................(page 54) The Power Is Now, for all Things Real Estate .................................(page 58) The PIN MAGAZINE | 3

www.thepowerisnow.com

Mission and Vision of the power is now MAGazine Mission

Vision

The Power Is Now e-Magazine is a national real estate and lifestyle magazine that aims to bring together consumers and the real estate, banking, insurance and investment professionals who serve them. Through smart, fun, and timely editorial content, mixed with compelling photographs and quality advertising, TPIN e-Magazine is a surefire way to stay current on all things real estate.

The Power Is Now Online and e-Magazine will be the premier Real Estate Magazine serving consumers, real estate and business professionals nationwide in all metropolitan markets. The Power Is Now Online and e-Magazine will be viewed as the most effective medium for real estate and business professionals to get exposure to consumers and to share their knowledge and information that will empower them to take action.

Each issue will feature a blend of articles from business and industry professional leaders, on topics ranging from residential and commercial real estate to default services, REO and short sales, finance, banking, insurance, dining, fashion, home design, travel, health/fitness, Book/ Movie reviews and more. The Power Is Now eMagazine will be a free subscription magazine available on www.thepowerisnow.com. The Online version will be a paid subscription with more content, video, radio interviews and commentary from news makers and the writers.

Cover and Feature story profiles: The cover of each issue will feature our visionary Eric Lawrence Frazier, MBA, publisher of The Power Is Now Magazine and founder and executive producer of The Power Is Now Radio. Each issue will also feature a Power Player Centerfold of an extraordinary business professional who is an exceptional leader in the business, insurance, banking, real estate or related industries.

The Online and e-Magazine will have 21 sections for various articles under The Power Is Now theme: The Power Is Now Real Estate, Real Estate Resource, Real Estate Agent Spotlight, Headline News, Technology, Politics, Community, Literacy, Education, Entertainment, Social Media, Research & Reports, Business, Energy, Economics, Life Coaching, Publisher’s Note, Power Player Centerfold, and Art. The writers for each department will all be industry professionals who are practitioners in their field of expertise. We are bringing the best practitioners in the industry together to share their knowledge and experience in their field of expertise. They are industry professionals who can provide advice, and information to make decisions that will enable consumers to navigate through the challenges and opportunities of life.

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©

Administrative Assistant Rachel Bacol CEO & Publisher Eric Lawrence Frazier, MBA 3739 6th Street, Riverside, CA 921506 Ph: (800) 401-8994 ext. 703

SALES National Sales Manager Christina Kimble National Relationship Manager Success Money

EDITORIAL Editor in Chief Eric L. Frazier, MBA Associate Editor & Staff Writer Eric Egana, MA Associate Editor Erica L. Frazier, MBA Staff Writer Dadrea Davie Transcription Gail Valeski

HEADQUATERS The Power Is Now Inc. 3739 6th Street Riverside, CA 92506 Ph: (800) 401-8994 Fax: (800) 401-8994 Email: info@thepowerisnow.com www.thepowerisnow.com www.magazine.thepowerisnow.com

ONLINE Web Designer & Manager Diane Ting DESIGN Art Director & Design Manager Goldy Ponce Graphic Artist Jaime Daniel Costico

ADMINISTRATIVE

PUBLICATION AND SERVICES The PIN Magazine The Power Is Now Radio The Power Is Now Publications The Power Is Now Radio Guide The Power Is Now VIP Agent Program The Power IS Now Power Consulting/Coaching The Power Is Now Association Management The Power Is Now Event Management

STATEMENT OF COPYRIGHT: The PIN Magazine™ is owned and published electronically by The Power Is Now Inc. Copyright 2013-2014 The Power Is Now Inc. All rights reserved.

“The PIN Magazine and distinctive logo are trademarks owned by The Power Is Now Inc. “ThePINMagazine.com” is a trademark of The Power Is Now Inc. “Magazine.thepowerisnow.com “ is a trademark of The Power Is Now Inc. “Thepowerisnow.com” is a trademark of The Power Is Now Inc. “The Power Is Now Event Management” is a trademark of The Power Is Now Inc. “The Power Is Now Radio” is a trademark of The Power Is Now Inc. “The Power Is Now Publications” is a trademark of The Power Is Now Inc. “The Power Is Now Radio Guide” is a trademark of The Power Is Now Inc. “The Power Is Now VIP Agent Program” is a trademark of The Power Is Now Inc. “The Power IS Now Power Consulting/Coaching” is a trademark of The Power Is Now Inc. “The Power Is Now Association Management” is a trademark of The Power Is Now Inc. No part of this electronic magazine or website may be reproduced without the written consent of The Power Is Now Inc. Requests for permission should be directed to: info@thepowerisnow.com

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THE CEO’S CORNER

The Power Is Now Guest Speaker

Alex Perriello Talks About Realogy and The Current Housing Market

In a special edition of The Power Is Now online radio show, host Eric Lawrence Frazier interviews Alex Perriello, President and CEO of Realogy Franchise Group about their Forward Innovation Summits held every spring, Reology’s multibrand strategy, their commitment to diversity in the real estate sector and where the housing market is today and where it is heading in the future.

The Reology franchise Group is responsible for franchising seven of the world’s most recognized brands within the real estate industry. The company franchises these leading brands to residential and commercial real estate brokerages in the U.S. and internationally. The seven brands include: • • • • • • •

Better Homes and Garden real+estate Century 21 Coldwell Banker Coldwell Banker Commercial ERA Sotheby’s International Realty Zip Realty

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Mr. Periello oversees all of the brands under the Reology Franchise group and also holds the primary responsibility for the Franchise Group’s shared support services that includes domestic and international franchise sales, administration, finance, business development, information technology, learning and human resource tools and systems that are provided to its franchisees.

Perriello began his career as a sales associate and has more than 35 years working in virtually every area of the real estate business. He is a distinguished industry leader and a frequent speaker at many industry events such as AREAA, NAREP, NAREB, Inman connect, RISMedia and Real Trend’s Gathering of Eagles.

Periello was selected as the AREAA 2014 Person of the Year, an honor he is proud to accept because he strongly believes in their mission to encourage and support diversity.

Periello believes that diversity is very important for any organization. IN the real estate sector he refers to diversity as “alignment” and by that he means brokers and agents need to know the demographics of their market and their community in order to optimize every business opportunity.

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THE CEO’S CORNER

Asked by the host of the show what the phrase “The Power is Now” means to him, Periello said the most important word in the phrase is “now” and what it means to him is to be on purpose, to live in the moment and not regrett what you did yesterday or think too much about what you might do tomorrow. The power is now because you come with the focus to get things done. When you focus on the moment and put your energy into the moment great things happen.

Periello goes on to talk about leadership and the importance of surrounding yourself with very, very, very good people-solid people that you can trust because when you are in a leadership position you cannot do it all by yourself. Your role is to provide vision. You paint the picture of where the company is heading and you let your people figure out how to execute the vision. When you have the right people and provide the vision, and get out of their way, your people will buy in and execute beyond your greatest expectations or wildest dreams.

Periello talks about the Reaology Franchise Group’s acquisition strategy noting that it is a growth company and acquisitions will continue to happen on a regular basis. Concerning the group’s most recent acquisition Zip Realty, Periello explains that what this company developed over the past several years was a very impressive package at a local level that included a suite of tools for a local broker that included a world class IDX website, a CRM product that fully integrates with that website, mobile apps for the consumers and mobile apps for the agents. Periello said it was clear this was a technology suite the Reology Franchise Group needed to buy. It was a strategic to buy Zip realty because so much business comes from the web. We needed a

world-class system in place at the local level that could be customized for our brands in order for an agent to stay competitive.

The Forward Innovation Summit is the brain child of Alex Periello. An innovation fair, the reaology group invites early-stage startup companies to come and present what they are doing to the group. Presenters are selected from the application pool. Each company has five minutes to present their product, followed by 5 minutes of Q & A and then winners were picked from the audience. There is a new breed on innovator no longer focused on putting realtors out of business but providing tools to help the real estate industry do their jobs better and more efficiently.

The Current Market and the Future Commenting on the current housing market Periello said he believes we are in the third year of a long-term housing recovery. The market is heading in the right direction. Regarding 2014 sales volume will be lower perentage-wise than the previous two years. According to the forecast for 2015 the NAR predicts an increase of 11%-12% in sales volume while Fannie Mae predicts a more conservative 9% but regardless, the market is still moving in the right direction.

He goes on to say that when credit begins to ease up he expects more people to enter the housing market with the focus being on the next wave of first time home-buyers.

Closing out the interview Periello recounted the importance of focusing on the present or now moment by recalling an interaction with an old mentor who said “Alex, it’s not about what happens that matters. It is what you do about what happens that matters.” Stay focused on the moment and take action.

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www.thepowerisnow.com

REAL ESTATE

BY AARON ZAPATA

Understanding the

HOMEBUYER MENTALITY A husband and wife walked into my open house today and I had a brief discussion with them about home prices. I wanted to know if they thought prices were going up or going down. Right now, most buyers believe that home prices will remain flat for a while. This is a huge change from what the feedback I received by the end of 2013, when most buyers believed prices would soar indefinitely.

Buyers who believe home prices are going to remain flat make decisions based on a november/december issue

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different set of criteria than those who believe prices are going to climb.

I’ve compiled a list of questions today’s homebuyers constantly ask when surveying a house for purchase. When you as a seller understand these, you’ll better comprehend how buyers view your home and whether or not buyers are going to buy your home.

1 – Is this house priced the same as the last sale?

A wide selection of smartphone applications are available for buyers to check the most recent sales within specific neighborhoods. Given the recent events in the financial market, most buyers tend to inform themselves and effectuate comparisons before approaching a buyer.

If your house is priced the same as the last selling price, they will be more inclined to come see it and make an offer. Houses that are priced higher than previous sales have lesser chances to sell.

“Why would I pay more for a house when the market is not going up?” they always tend to ask themselves.

Overpricing a house may reduce the turn up at showings to a negative. If the showings are negative, you don’t get any offers, and you don’t sell your house. Section 5 deals with this in more depth.

2 – Is this house in ‘movein’ condition?

A majority of buyers are using most, if not all, of their available cash for down payments. By the time they have covered that expense, they are left with minimal cash and financial resources. That means that they would prefer a house that doesn’t require any immediate work (including various reparations, fixes and upgrades). More importantly, houses that are not well kept by homeowners and are not presentable are showings will probably not sell very well.

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Most people find it impossible to see past clutter, dirty dishes, conflicting paint colors, messy rooms, etc.

3 – How much will these repairs and upgrades cost?

I’ve also found that most buyers don’t anticipate doing work on the house themselves.

They plan to hire someone to do the work for them. As a result, they keep a mental tab on what they think it will cost to repair or upgrade the house.

A broken faucet may cost a homeowner $100 to fix, but a buyer will put a price tag of $500 on it because they plan to hire a plumber who will come and do the work for them. A buyer’s estimate is almost always higher than a homeowner’s actual repair cost.

4 – What’s wrong with the house?

Some houses take longer to sell. The longer a house takes to sell, the more concern buyers have about the actual value of the property.

Today’s buyers have access to information that shows them how long a house has been The PIN MAGAZINE | 10

on the market. If a house is on the market for 30 or more days, homebuyers begin to ask themselves, “What is wrong with the house?”

When that happens, they decide to go and view the house, not necessarily to sample it for further purchase, but rather to find the problem.

They are not looking at a home to see if it will work for them, they are searching for the reason it won’t work for them. And guess what? They are likely to find a reason (or reasons) and move on to the next home.

As we approach the end of the year, buyers typically taper off in their searches.

Successfully selling a home then becomes a game involving careful planning and a strategy. If you are considering selling, take these items to heart and price your home correctly. Ensure that the necessary repairs are made before putting it on the market. Above all, make sure to show it well. First impressions always count, especially when it comes to one choosing the place he’ll spend the next 15+ years of his life.

REAL ESTATE

Making a Sweet Deal out of a Foreclosed Property in

Salt Lake City

Investing in real estate and property usually starts with buying a home in Salt Lake City or other cities in Utah that you see yourself moving into.

However, getting acquainted with the rules of the real estate game in this city is not that easy. Still, there are subtle methods employable to get the best property deal and avoid buying a property worth less than its price.

There are 2 primary types of real estate investment in Utah: the fix-and-flip model and the actual income producing properties in the state.

The fix-and-flip model is deceptively easy since you have the foreclosure auctions that can show you the properties worth investing into.

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Deceptively easy because you need to remember that these are foreclosed properties, meaning that banks are in a hurry to liquidate them. This type of investment requires a great deal of experience as well as certain precautionary measures to get the best out of that low-priced home that you spotted.

Much is to be taken into consideration when it comes to foreclosed properties: the buyer, i.e. you, need to adjust your expectations about houses that are left for what they are to the foreclosure auctions with no refurbishing whatsoever. It is very possible that the houses were left unkempt by the previous owners. Technically, the

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only addition to the house is the “For Sale” sign hanging outside.

I know the story of a buyer who ended up with a house that had wires sticking out of the outlet like tangled vines.

It’s a serious safety issue that calls for professionals for repair.

The truth is that foreclosed houses come with a great deal of additional investment in cleaning, repainting and repairing, just to name a few. If a buyer doesn’t plan an extra budget for these tasks, a good investment easily becomes a burden.

Connections still spell the difference when it comes to buying foreclosed property.

REAL ESTATE Getting yourself a good agent with a sound knowledge of the paperwork and the legalities involved in buying property should be included among the priorities.

Otherwise, you would end up with a property that has titling issues. It has happened to some buyers that the title they ended up with is from a second mortgage.

Others have ended up with a title with unpaid taxes and compliance issues. While the initial price of the property is low, the accumulation of additional expenses quickly drains the buyer’ savings.

One good thing in Utah though is that there are remodeled ‘ready-to-movein’ houses waiting for the right buyer. A sharp agent would lead you to these remodeled homes with little to no hassle involved when it comes to the paperwork. Don’t view them as the middle man with the extra cost. The extra cost that they get from the deal is smaller than the costs incurred from the aforementioned expenses that you didn’t see coming.

Payments are often expected

in cash. So have at least 20% to 25% of the total property price ready for the down payment. Paying in cash still makes the difference when it comes to investing in property.

Most of them are singlefamily properties that used to house the owners, renters and, in some cases, squatters.

Incidents like these make it harder for buyers to secure bank loans since it takes major effort to prove to them your paying capacity as a debtor.

If the bank knows that you can pay in cash and can dispose of the refurbished property in no time for easy liquidation, it is probable that they give you some leeway regarding the bank loan that you applied for.

Another aspect you need to remember, apart from finding yourself a reliable agent, is knowing what else to purchase apart from the foreclosed property. There are apartment buildings in Utah that are available for sale. Focusing on Salt Lake City alone for these buildings will help you narrow down the choices to a handful of properties that fit your parameters.

Make sure that you get to

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view a list. Getting word about certain properties around the area would be fine. But checking on the county stats at your local agencies would be better so you immediately see the lot size, the measurements and the rest of the parameters that might match the criteria you have written down. The info posted on the bulletin board might not even be more than half of the information released. You only discover the information withheld from you the moment you get into the property itself, as explained in the previous paragraphs.

Get in touch with a local real estate agent. The lists they may have could be slightly similar to the list posted on your local county except that the leads are clearer. The insider information they provide is crucial to getting the most value out of your money.

It’s okay to scrimp but learn how to weigh the savings as opposed to the additional costs that come with buying new property, whether for personal use or for resale.

www.thepowerisnow.com

REAL ESTATE

REAL ESTATE IN NEW MEXICO:

Setting the Record Straight Based on Trends Even though most spots in New Mexico are still under development, opportunities for real estate investments abound here. This is a nice option to explore for future business creation, expansion as well as family retreat.

Large homes and vast lawns make a good start out of investing in real estate here in New Mexico.

One good advice, since the underdeveloped lands have been mentioned, is don’t limit your options in the cities. Albuquerque and Ruidoso will always show up among the list of cities with available properties to snap up but they can only be available for so long until all that is left for you would be the counties. This is why you don’t downplay them as lots worth buying especially if you see yourself building a house or factory from scratch on these underdeveloped

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lands. You might even see yourself putting up a livestock farm since it’s one of those relatively pristine areas that looked untouched by civilization.

Figures show that these lands can go as vast as 33,000 acres with a price range marked within $12 million dollars. It’s the kind of deal you end up getting the moment you think big and long-term regarding your stay at New Mexico.

They are not located in the city and it can work to your advantage if the kind of retirement haven that you see is a ranch. Build your dream home within the same property and you’re set.

In case your concern is meeting your needs in comparison to what is available on New Mexico, it can easily be addressed.

Whether you’re single or a family man/woman, there are spots in New Mexico fit for you to live in.

Who is Intercap?

Here is a company snap shot . . .

• Intercap Lending is a dba of Suburban Mortgage Company of New Mexico, with over one billion dollars in loans currently in servicing • Direct lender since 1978 • Direct seller/servicer and issuer of Fannie Mae, Freddie Mac and Ginnie Mae Securities (less than 1% of ALL lenders have these three approvals!)

• FHA Full Eagle / VA LAPP • No bank overlays • Direct secondary marketing access • Unique and proprietary products along with a proprietary down payment assistance program (1/2% down) • In-house central processing, loan docs, underwriting, funding and securitization • Purchase-oriented company • Average processing time to funding is 26 days • 10 branches and growing, in 20 states • Our loan committee meets daily to review exception files • Exceptional customer service from all departments of the company • Experienced loan officers with management support that pushes pipelines for on-time closings CALL TODAY OR VISIT OUR SITE: INTERCAPLENDING.COM Eric L. Frazier MBA NATIONAL SALES MANAGER DIRECT: 949.600.4134 CELL: 714.361.2105 TOLL FREE: 866.644.1046, EXT. 1211 efrazier@intercaplending.com thepowerisnow.com/intercaplending

Corporate Office: 26880 Aliso Viejo Parkway, Suite 100, Aliso Viejo, California 92656

NMLS# 461807 Applicant must meet credit and income requirements. Minimum FICO score of 640 required. Certain restrictions apply and not all applicants will be approved. Licensed by the Department of Corporations under the California Residential Mortgage Lending Act #4131105. Intercap Lending is a dba of Suburban Mortgage Company of New Mexico. NMLS #190465. Models do not reflect racial preference.

REAL ESTATE

Moving puts the children as a deciding factor too as you need to live in a place where the school is just close by, where the grocery should at least be within driving distance and the family-friendly activities that are available in the area. Low crime rate also chimes in as a factor for the state to measure a city or town’s viability for individuals that plan to take their families into the homes or properties that they bought in this state.

As for the cities suitable for solo riders, it usually boils down to one thing - nightlife. Or at least, places where singles can mingle with their fellow singles after a long hard day of work.

Are you trying to stay within budget in terms of finding your next best investment? No need to fret on that concern since there are areas in New Mexico real estate that can accommodate your budget. From cities to laid-back towns, you’d be surprised that some of these properties whose price tags dropped are located in cities like Albuquerque and Angel Fire. There goes the option mentioned in this article. As much as there are trends in this state that can easily be predicted due to the presence of statistics, there are unpredictable features in this state that can fit the budget you have at the moment.

If the sky is the limit, budget-wise, then that’s even better. The next step then is finding value for the money you’re willing to plop into your investment. It will not always be easy when you have the money but you don’t have a clear idea yet of what you wanted to buy or which part of New Mexico would you like to invest in.

It happens when you don’t spend time, not just money, in exploring your options. Information about New Mexico real estate is easy to verify on your own with the help of Google, reliable contacts and your instinct, especially, when you take time to conduct an ocular inspection of the property you are interested in. It happens that before you even think about investing, you want to see for yourself of what exactly is the piece of

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land that you’re trying to buy in this state.

Planning for your real estate investment deals in New Mexico gets easier once you get right on the spot itself and see if it’s a good spot to build your house, your factory building, your satellite office or all properties, if possible. Getting all of your golden eggs in a single basket might work after all if you believe in applying exceptions to the rule.

Rates fluctuate when it comes to properties sold here. The safe estimated time table to use when measuring the rise and fall of property prices here would be 3 months as the average house takes more or less 200 days to get sold hence the state’s decision to pitch the landscaping possibilities that New Mexico offers as well. The vast lots here are not as remote as they may seem anyway.

But that’s the beauty of investing in real estate that is not limited to residential homes. Imagine finding industrial and commercial opportunities in real estate too. Variety usually makes the difference in case you have difficulty deciding whether to invest in the local real estate or not.

Exploring the options based on what agents and contacts present to you via available brochures certainly means well. But going there by yourself and seeing the vast lots just waiting for new owners would be highly advisable too.

You need to see for yourself the kind of property you will own later on. It might even speed up the decision-making process since you’d end up liking the view upon arrival. Have fun investing in New Mexico real estate and see you on your next ranch.

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publisher’s note

November 2014 | Vol. 01 Issue 8

Dear esteem readers, We are in the 4th quarter and I can’t believe the year is almost over. Can you believe it? It hard to accept it especially when you feel you have so much to get done before the year is over. Not to mention, we all need to spend time now working on our goals and objectives for next year. We should be just about done with the planning and working on implementation for 2015. So again I ask where has the time gone? Daylight saving time is in full swing and it seems like time has stepped up the pace and we are moving very fast to the end of the year. Our Novembers issue is the last issue for The PIN Magazine for 2014 and the first issue of our 2014/2015 season. Thank you for reading and sharing The PIN Magazine and please write to me or call me what you think about The PIN Magazine.

Secondly, I want to wish everyone a happy Thanksgiving, Merry Christmas, and a Happy New year. I love the holiday season. It is truly “the most beautiful time of the year”.

The PIN Magazine celebrates one year of publications this month and I am indebted to many people who have helped to make it possible. First, I want to thank my team for their tireless commitment to The Power Is Now. They are listed in the magazine and go beyond the call of duty for the company and in putting up with me. I do not know what I would do without them; probably not very much. You are only as good as your team and that axiom applies across the board in all industries.

2014 has been an incredible year and there is so much going on in the world that it all becomes just noise because there is so much of it. Don’t worry; I am only going to mention the Midterm elections.

How our President is able to move from Crisis to Crisis and still deal with Domestic issues our economy and a dysfunctional congress is amazing to me. The Midterm elections were a victorious landslide for the Republican’s and a devastating defeat for the Democrats.

The President is responsible for the defeat because he is the President and head of the Democratic Party. The real question is can the President manage to get anything done in his last two years with the House and Senate controlled by Republicans?

Republican’s should not gloat too quickly. We have rising interest rates, inflation coming back strong, excess supply of real estate inventory coming back on the market, dropping property values, corrections on Wall Street and Main street, and it will all happen

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under a Republican controlled congress and possibly a Republican President.

President Obama and the Democrats had an opportunity to go nowhere but up when he took over a country on verge of a complete economic collapse; yYou can only go up from there. It will not be the same for the Republicans. And oh did I forgot to mention the deficit of 3 trillion and a budget crisis that will continue to dog the Obama administration and administration to come because we keep kicking the can the down the street.

Obama will have left office just in time before all of these issues rise to a new state of emergency.

Enough politics! This month’s magazine is full of great articles and information about real estate all over the country. Inventory is improving and interest rates are still low but It will not last forever.

This is really a great time to buy and sell and buy again. Please read these articles and get a feel for what is happening in many states in this great Union. Finally, I want to thank Alex Perrillo for a great interview on Blogtalkradio. Mr. Perrillo is inspiring leader and always does a great job on The Power Is Now Radio inspiring us all. Please read the article about our interview and listen to the interview on blogtalkradio.com/thepowerisnow. I also want to congratulate Mr. Perrilio for receiving the AREAA Person of the Year award at the 2014 AREAA convention. This was a tremendous accomplishment for him and his family. I am very proud to have Alex Perrillo on the cover of the magazine. He is a great man, and leader. His support of our magazine from the beginning of our first publication has been invaluable and his reputation in our industry is highly regarded. So it is only fitting that Alex is on cover of our anniversary issue. We salute you Alex for being great leader and example for us all.

Eric Lawrence Frazier, MBA.

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www.thepowerisnow.com

REAL ESTATE

The Nuevo Latinos

and Their Influence

on Big Business

An important and interesting project forced me to put my blog on hold for a few months.

The project was the creation of a 40-page script entitled 53 Million and One - a one-man stage show that premiered at the NAHREP’s national convention in October. While script writing is not something I have done before, after watching Mike Tyson’s “The Undisputed Truth” on HBO I became inspired to follow a similar format to tell a story that embodies the Latino experience in America. For years I have been invited to share my views about the Latino market opportunity at conferences and corporate meetings. This fresh approach offered the opportunity to present the message in a dramatic and memorable way.

My presentations typically discuss the unique Latino nuances with which we have become familiar, such as, “Latinos are family driven, hard working and need to trust the people they do business with.” Rather than pontificating on these axioms, the stage production of 53 Million to One is designed to provide audiences with a look inside the mind of one Latino (NAHREP past-president Jerry Ascencio) whose personal story captures the essence of the Latino experience. My hope is that the show will help audiences acquire a more complete

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understanding of the Latino community and will help reduce some of the remaining barriers between Latinos and mainstream America.

The show is called 53 Million and One because there are 53 million Latinos in America today with 53 million Latino stories and the show represents only one of them. Based on the emotional and enthusiastic response of our attendees, “53/1” was definitely one of the coolest things we’ve ever done at NAHREP. This leads me to the next chapter of my blog, the Nuevo Latinos and their influence on big business in America. By 2015, Hispanics will have annual purchasing power of $1.5 trillion dollars, roughly the same size of all of Canada.

Equally compelling is the fact that the Hispanic segment is growing at four times the rate of the general population, so the opportunity will only get larger. The business case is clear. Billions are at stake and companies large and small are contemplating plans to increase their Hispanic market share. Most won’t know what to do especially businesses looking to reach the more progressive and affluent segment, the Nuevo Latinos.

Read the rest of this entry by visiting the blog.

The PIN MAGAZINE | 20

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REAL ESTATE

En Masse Transit Austin is currently the 2nd fastest growing city in the United States, and with good reason. The entertainment industry has shifted the local music scene from the private coffeehouse shows of the late 70’s to the blockbuster stages of Austin City Limits and One World Theater. Several nationally-recognized music festivals take place throughout the year, including Fun Fun Fun Fest, Austin City Limits Music Festival, and SXSW (South-by-Southwest) Music Festival, keeping the city in a constant state of festival hype, tourist traffic and food truck megalomania.

W

hile this influx of interest in the city creates a boon of opportunity for current homeowners, especially in neighborhoods like Tarrytown, Clarksville, South Congress and Zilker, the seller’s market is the predominant market. Homes that cost $80,000 a couple of decades ago are selling for well over $250,000. These transactions often take place regardless of repair and design considerations. Home owners can ask for reasonable prices without worrying about months of personal investment in the home they are about to leave. This has encouraged many long-term residents to capitalize on the current state of affairs and sell homes closer to downtown, in order to buy new, somewhat less expensive properties on the outskirts of town, moving to neighborhoods like Manchaca, Onion Creek, and Shady Hollow.

However, there are certain economical and geographical concerns that should be taken november/december issue

into account before considering following this trend towards expansion. A recent increase in flash floods and major storm damage has caused water damage and issues with debris and contamination in the southern portion of the city. The economy has been so over stimulated with prospective buyers that many developers have pushed out beyond the natural water flow boundaries and increased the risk for these types of dangers. The homes in these areas are 20 percent to 30 percent cheaper, but other factors should be taken into account regarding overall stability and maintenance fees, as caused by the behavior of water flow and debris deposits along the local creek beds, before settling on a development in a new complex or subdivision.

The effects of gentrification and re-stabilization are visible in every section of the city, and the skyline is dotted with cranes. The more the downtown area is torn down and new

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REAL ESTATE

hotels and apartments are put in to meet the demands of the buyer’s market, the more long term residents desire to move away from all the noise, both of construction and of the music and nightlife these new residents create. Unfortunately, a large portion of long term residents on the east side of the city are being pushed farther out not from desire to move in order to satisfy preference, but because the increase in entertainment focused establishments is raising the collective rent of neighborhoods like Riverside, Cherrywood and East Austin by 30 to 50 percent. As one portion of the citizenry seeks to relocate to these neighborhoods, those residents unfortunate enough to have not paid off their mortgages are being asked to pay increasingly high rates and, in many instances, are encouraged to move to farther neighborhoods like Montopolis, Windsor Park, Windsor Hills and Copperfield.

Small changes in atmosphere and ambiance are making a huge difference in the local housing economy as well. A simple refurbishment can raise prices by as much as 40 percent. Yard work, tree trimming, gardening and landscaping are also making considerable impacts on home pricing. Depending on the degree of work put into the exterior of a house, the price can be adjusted between 10 percent and 15 percent. Home owners currently looking to sell have been taking advantage of recent rain fall and cooler weather to tidy up their overall presentation, which makes prospective homes more attractive to buyers moving from northeastern states like New Hampshire, Connecticut and Virginia, as well as to those from the northwestern states of Oregon, Washington and California, as they are used to an easy green thumb and lush lawns. Average rainfall can fluctuate by as much as 60 percent from one summer to the next, so fair weather for outdoor growth can be a rare commodity in Austin. Even though the recent rainfall (up 17

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percent from the average for this time of year) and overcast storm conditions have brightened the local flora, and exterior presentation is important, especially in neighborhoods like Tarrytown, Clarksville and Zilker, be mindful of the fact that conditions are usually dry and careful lawn maintenance is attended by a lot of water and a watchful eye.

By and large the majority of these newly renovated Austin neighborhoods are being inhabited by baby boomers and Generation Xers. Austin has experienced a 5 percent increase in baby boomer population in recent years, and of the 100 people moving to Austin each day, a good portion of those are Generation Xers. Those seeking the fast paced, music oriented lifestyle should consider houses in markets like West Campus, Travis Heights, South Congress or Barton Hills. These areas put many home owners within walking distance of Austin City Limits Live, Zilker park (home of SXSW and Austin City Limits), the Long Center for Performing Arts, and many other large arena like venues that host nationally attractive music events. But residents of a certain age, both current and new, seeking a quieter, more laid back approach to living in Austin, should look south to Manchaca, Montopolis, Sunset Valley, and Slaughter, east to Windsor Park, Baythorne and Onion Creek, and north to Rosedale, Brentwood, Crestview and Allandale, and west to Far West, Northwest Hills, Westlake Hills and Rollingwood.

Austin is home to many kinds of entertainment and affordable housing, but while the music and entertainment industry find increasingly complex ways to enhance and enliven the downtown district, future home owners in the region should focus their energies on neighborhoods adjacent to the tumultuous downtown area. Regardless of your decision, each suburb of Austin has unique attractions to offer to residents of all ages.

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REAL ESTATE

Analyzing the Real Estate Market in COLORADO

The usual misconception about the real estate market is that it is all about housing. While the bulk of the sales and marketing involved in pitching the real estate products lean towards offering you a new home, rising demand for office space is catching up as the next real estate product worth investing into.

The recession is starting to recede, pun intended. It is a good sign that the industrial side of the Colorado real estate market is picking up steam. Variety in Colorado helped brokers and agents to pitch products, apart from the foreclosed homes especially when the latter’s demand is starting to decline.

Adjustments made when pitching these industrial properties did not seem very hard for the agents to do as some of them ended up having facts and figures to back up their sales pitch. Enumerating a few examples would be a good start.

High density areas in Colorado make for attractive office space opportunities. The online ads and leaflets explicitly state the incoming traffic found in areas like Denver and Colorado november/december issue

Springs. Location is essential in finding a good place for your business - a need that real estate agents have acknowledged being business people themselves. But when you have office building spots that cater to as many as 20,420 cars per day, then you are rest assured to get a slice of the pie that would meet the bulk of the market in Colorado.

Why the need to be explicit in these features when there is risk of “too much information”?

There is no such thing as too much information when you have business needs to be met and specifications that need to be accommodated. But knowing how in-demand these business properties can get, you can only let it pass you by for so long as until that property gets sold to someone who beats you to it. After all, the only facts that matter most of the time are land size and number of storey in a building if ever it’s a whole building that you need to buy. Colorado has those options available for you as well.

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REAL ESTATE

Some of the properties sold don’t have storey provisions.

But whatever they lack for availability of a second floor, they make up for more space.

Some office spaces go from 8000 sq ft to 15000 sq ft. Space is crucial in business when you have several employees to house in your planned satellite office along with the equipment. What more if you needed a showroom for your products? That’s when buildings with 7 storeys become an attractive option for you.

Business expansion as a suitable reason to invest in Colorado real estate gets better when you have personal business parks.

Business parks come handy in 2 ways: if you don’t have a building yet and would prefer having one but incentives for early birds, some spots in these business parks would be amenable for you; of if you would prefer buying a parcel of land instead and engaging in the construction of a building from scratch consistent to how the rest of your satellite offices look like in other cities or states, which would be fine as well.

An interesting feature in some real estate ads in Colorado is that they post information about properties sold alongside properties that are still up for grabs. It is a good comparative tool to use

when trying to demonstrate what properties are available for sale by showing how the other properties got sold in the little time they got posted online. To put it succinctly, these properties can only be available until someone beats you to snapping it up for yourself. In other words, agents would display properties that they already disposed of that are similar to the properties that they can still offer to you.

Alternatives are aplenty here in Colorado not only in terms of foreclosed homes worth buying in the limited time that they are out there for you to include in your options.

Partnership deals with developers also work to your advantage here in Colorado.

Remember when it was mentioned here how some lots don’t have buildings in them? If you want to put up the satellite office and secure nice construction deals along the way, it is also possible here from the moment you check out the properties developed in partnership with critically-acclaimed builders.

Information regarding who bought what and in which part of Colorado is published in real estate journals within the area.

Leasing is an option available in Colorado. There are office buildings with slots available for lease first and with opportunities for purchase later. Not all buildings have The PIN MAGAZINE | 27

these options but it would be helpful to ‘try it out’ before making the final step that is the purchase. It is a sound business environment that you can dip into for the meantime if ever you are skeptical about investing in real estate here.

When residential homes are available for lease and office space is just as available as the former, you realize how both aspects of Colorado’s best selling real estate products are covered. It’s basically the leasing option that helps you decide better if this state is the best place for your long-term business deals. It would only be logical to take advantage of them.

Get in touch with your favorite agent in Colorado while the great deals still exist.

You would not want to see the properties that you’re interested into posted on the sold section of the ads, right?

Finding time to discuss in-depth your business and personal needs with an agent you can trust and leasing options available give you better insights into the environment worth living into here in Colorado. Giving specifications is highly recommended. Rightfitting your needs into the space available would open more possibilities on your end.

The next thing that is left for you to do is to choose. Grab some while supplies last!

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REAL ESTATE

LEGAL MATTERS PERTAINING TO POST-FORECLOSURE IN FLORIDA SOUTH CAROLINA

D

espite the recent filings indicating foreclosure plunges, Florida still tops as No. 1 in foreclosures. The foreclosure activities have risen for the second successive month in August due to the commenced banks processes on additional properties as well as the planned housing actions.

In total, about 120,000 properties are undergoing the foreclosure process such as bank repossessions, planned auctions and default foreclosure notices.

In return, the general activity rose to 7 percent in July. The previous year, foreclosure activity had dropped a whopping 9 percent.

The foreclosure process was begun on about 55,000 properties by the lenders in August, which was up 12 percent compared to July, but similar to the data collected a year ago. That was the second successive month that saw foreclosure starts up month after month.

Last month, an overall 51,192 properties were scheduled for foreclosure, a drop of 1 percent from July but a 1percent increase from last year, drastically ending a 44-month annual decreases streak.

So instead of panicking due to the rising percentage of foreclosures, nearing what we experienced in 2008-2010, we should all wake up and recognize the fact that the housing recovery experienced over the past two years was not as powerful as perceived to be.

What helped diminish foreclosures is the court rulings that urged new requirements on lenders and november/december issue

the state legislation focused on safeguarding homeowners. “The growth in auctions stipulated mortgage servicers were transforming to the new regulations,� said Blomquist, vice president of RealtyTrac.

The internal drive of foreclosure cases via the system and Florida Legislature urged all the judges across the state to try and shorten the time consumes by banks in foreclosing and repossessing properties.

However, some homeowners, consumer activists and attorneys claim judges have been overly hostile and are short-changing the rights of homeowners for convenience sake.

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26,343 properties were reclaimed by lenders in August which is a rise in 2 percent from the previous month but a drop of 33 percent, the prior year.

So what are the laws relating to post-foreclosure in South Carolina?

The term deficiency judgment refers to a judgment passed against a borrower specifically for the difference between the due remainder amount under the mortgage loan of the borrower and the amount recovered by the lender in a foreclosure sale. For instance, if the borrower has a mortgage debt of 200,000 USD, but the

REAL ESTATE

house is sold at a foreclosure auction for only 150,000 USD, the lender is allowed to acquire a deficiency judgment of the 50,000 USD difference against the borrower.

The law in South Carolina authorizes lenders to sue borrowers in order to retrieve the deficiency as part of a foreclosure. A deficiency judgment can also incur grave consequences which include bank accounts freezing and wage garnishment. Hence, if you are faced with foreclosure in South Carolina, it is crucial to comprehend the protections and procedures available in South Carolina to all borrowers.

All foreclosures in South Carolina are judicial; therefore a lender must impeach a lawbreaking borrower in court to foreclose. If you are a lender purposing to follow up a deficiency judgment, you have to do so as part of foreclosure lawsuit. The borrower is usually served with a document from court, filed by the lender to begin the foreclosure lawsuit.

The complaint usually contains language which designates the lender is either reserving or waiving the right to a deficiency judgment. The lender cannot later charge the borrower to reclaim the deficiency if he/she initially waived the right to a deficiency.

november/december issue

The court will enter judgment against the borrower for the stipulated amount unless the borrower bids the court for an appraisal according to S.C. Code Ann. § 29-3-660.

In case the borrower is unpleased with the high bidding of the property, the borrower may seek for the property appraisal in court S.C. Code Ann. § 29-3-680.

The appraisers will allocate a fair market value of the property and the court will minus the attained value in lieu of the high amount from the formidable mortgage loan balance to establish the deficiency, S.C. Code Ann. §§ 29-3-720, 29-3-740.

A short sale transpires when the borrower acquires permission from the lender to auction the property for a lesser amount than the loan amount due. And since the borrower is auctioning the property for a lesser amount, there is a definition deficiency.

There is no foreclosure law in South Carolina that prohibits a lender from taking legal action against a borrower for a deficiency after the conclusion if a short sale. A borrower undertaking a short sale must negotiate with the lender to incorporate language in the short sale accord freeing the borrower from answerability for any deficiency that is remainder after the short sale

The PIN MAGAZINE | 32

conclusion.

In a lieu of foreclosure deed, the borrower offers up all the property rights and signs over the deed the lender; in return, the lender frees the borrower from all commitment under the mortgage. In simple terms, the borrower walks away free after offering the property title to the lender.

Previously, lieu of foreclosure transaction deeds ideally incorporated liberation of the borrower from all obligations stipulated in the mortgage.

Presently in South Carolina, no foreclosure law prevents a lender from charging a borrower for a deficiency following a deed in lieu of foreclosure.

It is right to speculate that Florida’s housing tribulations are far from over despite laws set in place to safeguard both the lenders and the borrowers. In August alone, the foreclosure starts upped 24 percent statewide as stated by the figures being issued presently by RealtyTrac, industry data tracker.

Between July and August, all manner of foreclosure filings increased 7 percent nationally, which is down 9 percent from the previous year. This only signals that something needs to be done in order to decrease the foreclosures if we do not wish a repeat of the 2008 – 2010 foreclosure

REAL ESTATE

crises. The only way this can be achieved is by erasing the convoluted distress business in several markets that still lingers from the housing bust.

With this realization that there is no end in sight to the foreclosure crisis taking place in Florida, South Carolina, several people are left to believe that no Wall Street or Washington is able or willing to put an end to this issue.

However, some experts such as the National Commonwealth Group have come up with various solutions that can be employed locally without any outside assistance.

These set of solutions largely

represent mitigation efforts that can drastically minimize he negative effect foreclosures have on banks, the community, and home owners.

Some experts believe that Eminent Domain is the perfect solution to help homeowners seize mortgages. With the power of Eminent Domain, the government may seize private property forcibly as long as it is utilized in a way that benefits the people of the public.

Even though most home owners are against eminent domain, maybe this is the answer to foreclosure crises, not just in South Carolina but all over the world as well.

Dive deeper and discover a complete list of solutions at PEMCO-Limited.com

Sample Services Premarket Services Compliance Oversight Due Diligence Vendor Management Closing Facilitation and Management Program and Inventory Marketing Services Sales and Homebuyer Education Property Preservation Property Management Real Estate Sales Facilities Maintenance

REAL ESTATE

SEPTEMBER 2014

CONSUMER SENTIMENT

REPORT

Every month the Reuters/University of Michigan Consumer Survey Center interviews 500 households about their attitudes towards the economy and current financial conditions. When talking about consumer attitudes, consumer confidence and consumer sentiment are the two primary components that are measured and considered. In terms of national economic reports, consumer sentiment refers to the Michigan survey while consumer confidence is reported through the Conference Board’s survey.

Preliminary reports on these indicators are released mid-month and final estimates for a month are released near the end of the month.

These indicators are important to investors because consumer attitudes and consumer spending are the primary influence on both the stock market and the bond market. Strong economic growth and spending indicates healthy corporate profits and higher stock prices. In terms of bonds, economic expansion is watched because rapid, intense economic growth leads to inflation. Consumer sentiment and

november/december issue

consumer spending reports provide vital information about what consumers are doing and how they are currently behaving as well as how they may act in the future. The more confident a consumer is about the economy and their own personal financial situation, the greater the chance is that he or she will spend more money. Keep in mind that consumer spending alone constitutes more than two thirds of the economy. The index of consumer attitudes provides real insight into the current health and the direction the economy is moving in.

For September 2014, consumer sentiment ended the month at 84.6, showing an increase of 4.1 points compared to August’s 80.5. The August gain is attributed primarily to an increase in the expectations component.

Meanwhile, the current conditions component actually fell slightly by 0.9.

This drop indicates a lack of strength in current consumer activity and the job market for September. Inflation was not a factor behind the dip in the current conditions number. The one year expectations fell 2 tenths from August to 3.0 and the 5 year expectation is down 1 tenth to 2.8 percent in declines and that reflects in the price decreases occurring at the gas pumps.

U.S. consumer confidence fell in September after reaching its highest level in seven years during August.

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Florida

Economists argue that the drop is but a temporary slip that should not decrease consumer spending in the coming months.

The Conference Board reported the index decreased to 86.0, the lowest number since a May reading of 82.2. It is the first decline after four months of steep gains. Economists expected to see a small decline during September but most have been taken aback by the actual size of the drop and attribute the fall to the rising global tensions related to the widening of the Middle East conflicts.

Theoretically, analysts purpose consumers should have been more confident during the month, given the number of positive economic indicators and sizable drops in gas prices. Joel Naroff, Chief Economist at Naroff Economic Advisors had the following to say: “I think this was more political than economic because the economic news has been generally good.” He went on to say that he would only begin to be concerned if reports start indicating the economy is weakening. Most economists believe confidence will rebound.

Both the components that track consumers’ perceptions about current conditions and future expectations fell in September.

In Florida, consumer sentiment approximated 83 during the month of September. The last time consumer sentiment reached 83 in Florida was back in April of 2007, prior to the beginning of the recession. The current rise in consumer confidence was broad based across all age groups and income levels. Out of the five components that make up the index, two rose, two declined and one remained the same. Perceptions of personal finances rose a point to 75 while expectations for personal finances for a year from now fell one point to 84. Consumer expectations about U.S. economic conditions over the next year dropped by two points to 78 while perceptions for U.S economic conditions over the next five years remained the same at 80. There is a perception by Floridians that it is a good time to buy more expensive items like cars and appliances. This figure gained four points and rose to 98. According to survey director Chris McCarty, “While we are still about ten points behind where we would like to be at this point in a recovery, confidence among Floridians is heading in the right direction. Consumer sentiment nationally, as measured by the University of Michigan, was also up in September. We would like to see a bigger pick up in this index, but it is certainly moving in the right direction.”

No September 2014 consumer confidence or consumer sentiment reports are available at this time for Louisiana, North Carolina, or South Carolina but the trends across the country seem to be largely the same for southern states.

Housing supply is beginning to loosen up in these southern states and consumers are spending money on big ticket items like cars and appliances based on earlier month’s reports. There is some concern about perceptions regarding the economic conditions in the future-especially for southern states that rely heavily on agriculture. Bad summer weather is negatively affecting confidence in future economic stability but these states are feeling confident about current conditions with improving job markets and housing markets. Prices are stabilizing in most areas and increasing as well as housing supply and new building. All of which contributes to economic stability in the southern states.

Overall, the September consumer indexes indicate the economy is doing well and consumers are likely to continue spending for the foreseeable future but not at levels that will trigger inflationary concerns.

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REAL ESTATE

Corporate Profits for

SEPTEMBER 2014 T

he Bureau of Economic Analysis reports on corporate profits every month. Corporate profits are the income earned by a corporation. Corporate profits are critical for investment spending. When profits are strong then companies are able to increase their capital spending which allows for corporate growth and increases to a company’s underlying value. When corporate profits fall, then capital spending declines and puts a company at a disadvantage because they cannot grow and in some cases corporations have to tighten or reduce their size to remain competitive.

Another important aspect to corporate profits is that they provide a snapshot of the health of an organization. Poor, or low company profits during an economic expansion indicate a company that is not performing efficiently. A company’s value is reflected in its stock price.

When profits are weak stock prices move lower.

If a company has strong profits even when there is a downturn in the economy stock prices for that company are likely to move higher.

The Bureau of Economic Analysis reports on corporate profits quarterly and these are defined as the income of organizations that are treated as corporations in national income and product accounts. The Bureau reports several different measures of profits including profits from current production. This represents corporate profits with inventory valuation and capital consumption adjustment and they are often referred to as operating or economic november/december issue

profits. Capital consumption adjustment addresses the differences in depreciation allowances corporations use for accounting and income tax purposes. Inventory valuation adjustment addresses the differences in measuring and accounting for the cost of replacing inventory. Book profits are the operating profits minus inventory and capital consumption adjustments. After tax profits are the book profits minus taxes. The most relevant corporate profit figures for economists and investors are the after tax profit figures. It is important to note that corporate profit figures derived from the national income and product accounts depend on GDP growth. They do not always move in the same direction nor at the same magnitude of profits that individual companies report or profits reported by the S&P 500.

Increases in investments and household spending increased the Gross Domestic Product or GDP. According to the Bureau of Economic Analysis exports of nondurable industrial supplies and materials and nonfarm inventory investment by motor vehicle dealers was responsible for most of the increase and upturn in the GDP. Corporate profits increased 27.1 percent (annualized) over the first quarter when profits dropped 11.0 percent. The actual second quarter figure was revised from an estimate of $1.840 trillion to $1.842 trillion. The first quarter figure was $1.735 trillion. The profit figures here are after tax profits but without any inventory valuation or capital

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REAL ESTATE

consumption adjustments. n a yearly basis corporate profits are up 4.5 percent when compared to 2.4 percent for the prior quarter.

According to the BEA “Corporate profits increased 8.4 percent at a quarterly rate in the second quarter after decreasing 9.4 percent in the first quarter. The second quarter increase was the largest since the third quarter of 2010.�

The revised figures reflect larger gains in corporate spending and investment in equipment and property. Economists are predicting that growth for July-September quarter will be as high as 3.6 percent based on economic data for manufacturing, housing and trade that indicate this second quarter momentum is likely to continue and spill over into the third quarter. Strong growth, increased domestic demand and a sharp drop in the unemployment rate are credited with job gains and increased corporate profits.

Increases in corporate profits during Q2 are creating demand for more industrial and commercial real estate throughout the country and driving increased availability with new construction seeing gains. Many southeastern states are benefiting from increasing investments in property, especially Atlanta, Georgia and Charlotte, North Carolina. These areas in particular are experiencing strong Industrial real estate markets due to increased availability rates.

Growth in this sector is expected to continue and accelerate throughout the last quarter of the year. In general, the industrial markets

in the southeast are in a good position to take advantage of expanding e-commerce, industrial production and global trade. The Panama canal expansion is also expected to have some effect on shipping routes and corporate profits. Dredging work is in progress in Charleston, South Carolina, Miami, Florida and Savannah, Georgia to enable these port cities to accommodate larger ships. Florida is also a top performing real estate market for office and retail space due to increases in property availability.

Homeowners are a little less optimistic about their finances but despite this home prices continue to rise and availability is beginning to ease in most markets including the southeastern states. Even with rising interest rates properties are being snatched up. This trend is expected to slow somewhat because property speculators and investors are already beginning to leave the home real estate property market and focus on commercial and industrial investments instead as shopping centers, retail space and multi-family housing markets are becoming more available and growing in demand.

Overall, corporate profits are driving a continued economic recovery within the real estate sector. Although forecasts predict a slowing of single-family home sales, sales in southeastern city industrial, commercial and retail space is expected to continue driven by increased property investments by companies.

The PIN MAGAZINE | 37

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REAL ESTATE

New Home Sales

AUGUST 2014

T

he new homes sales indicator measures the national number of new construction homes that have a binding commit to purchase the home. The number of new home sales is a good indicator of housing trends, economic momentum and consumer purchases of furniture and appliances. It is an important economic indicator because people must feel relatively comfortable and secure with their financial situation to buy a house. This data, though a narrow measure, has a multiplying effect throughout the economy, across different markets and investments. Every time a new home is built it means more construction jobs and income that will get put back into the economy. When a home is sold it generates

revenues for homebuilders and realtors as well as for many retail stores that benefit from consumer consumption of items like furniture, appliances, textiles, electronics and more.

If you consider how many new homes are sold every month it is easy to understand that the economic “ripple effect” is substantial. This indicator provides clues to trends for the stocks of homebuilders, mortgage lenders and furniture manufacturers and retailers.

In August new home sales jumped a whopping 18 percent to a much higher than anticipated annual rate of 504,000. Low housing supplies have been an ongoing issue keeping the sales of new homes and existing homes down. The increase of new home sales in August just

FLORIDA According to August data

provided by Florida Realtors® median home prices rose as well as housing inventory. The number of single-family homes that closed statewide was 21,594 which is 4.2 percent higher than August a year ago.

The number of closed sales for condo/ townhomes statewide was 8,848 slipping 8.8 percent from August a year ago. Realtors attribute this slip to fewer short sale properties being available. Condo/townhouse short sales dropped 60.4 percent while short sales for single-family homes dropped 49.1 percent.

added additional pressure to bring more new homes onto the market. The supply of new homes at the current sales level fell in August to 4.6 months from 5.6 months in July. Economists expect builders to take advantage of the demand, scrambling to bring as many new homes as possible onto the market as quickly as possible. Because this report is subject to high volatility it is likely that August’s gains may be revised downward. There is concern as to whether or not the strength in new home sales will be sustainable.

New home sales rose the most in the West followed by East coast states and then the Southern region of the country.

According to economist Dr. Brad O’Connor “In August, the annual growth rate of Florida homes prices continued to converge toward a level typical of what we observed back in the housing market’s stable, pre-boom days.

The fact that we continue to see price growth is an encouraging sign that more and more traditional owner-occupant homebuyers are emerging to keep demand strong in the face of a diminished investor presence in the market.”

Generally, Florida’s real estate market has been stable and consistent for several months.

Realtors attribute this to an improved job outlook and the growing economy.

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REAL ESTATE The statewide inventory for single-family homes was up 13 percent from last year and the townhouse/condo inventory rose 8.9 percent.

Median homes prices also continued to rise for both single family and townhouse/ condo properties. The median sales price for a single-family home was $181,000. That is 3.4 percent increase over last year according to data provided by the Florida Realtors Industry Data and Analysis department. The statewide median price for townhouse/condo properties was $135,000. This is a 3.8 percent jump from last year’s figures.

builders are finding it hard to build them fast enough.

August saw Georgia rise to fifth place nationally for foreclosure activity up from twelfth place in July. Foreclosure activity increased 196 percent over July and was up 146 percent from a year ago. During August one in every 582 Georgia homes had a foreclosure filing. This is the highest level of foreclosure activity in Georgia since August of 2012.

Average home prices are continuing the trend of moving higher in Georgia. South Georgian Bay properties continued to see brisk sales throughout August and September. The areas of Clearview, Collingswood, Grey Highlands, Meaford, Town of the Blue Mountains and Wasaga Beach saw an increase in single family homes for the month coming in at 135 as compared to 129 in August. Condo sales also rose to 47 from 39 the previous month. Sales are remaining strong in all price bands including the top 10% of the market. Housing inventories of chalets, houses and condos under $350,000 is getting more limited and this is in turn driving up housing prices even more.

SOUTH CAROLINA

GEORGIA

METRO ATLANTA saw a

decrease of 14.4% for home closings due to the withdrawal of large investors pulling out of the residential single-family home market. Investor purchases have slowed considerably. The under $100,000 price band homes are down 33%. However, if you remove investor purchases from this market segment sales were actually up 7.5%. Listed inventories grew by 1.4% from the previous month but limited housing availability in some of the most select market areas are continuing to drive multiple offers and quick sales. New homes sales are up by 16% and november/december issue

NORTH CAROLINA

4,925 new residential permits were issued in August which is up 5.2 percent from July and 14.6 percent from August a year ago. New housing starts totaled 52,700 which was a drop of 2 percent from July but still an increase of 5.7 percent over August 2013. Metro area median home prices rose across the state during August except in Durham, Fayettesville and Jacksonville. Inventory is loosening and home sales are following national trends.

South Carolina’s housing market reports are mixed but there are positive signs. 2,151 new residential housing permits were issued in August and although that is 8.6 percent fewer than in July it was still 18.6 percent greater than the number of permits issued in August of 2013.

There were a total of 23,000 new home starts and median home prices continued to rise along with appreciation which is up 7.9 percent over the last 12 months. As in most other states inventory is growing but higher interest rates are dampening sales a bit.

LOUISIANA

Louisiana, like many other states is seeing strong home price gains during 2014. Average sales prices increase 10.8% and the median home price increased by 11.5%. Home sales on the other hand have declined by 2.5% and new home sales by 32%. The number of homes sales is predicted to decrease slightly as we head into the final months of 2014 with higher interest rates and lower foreclosure availability in the state overall. New Orleans has had limited housing supplies and high demand but that situation is beginning to ease and despite rising interest rates and housing prices New Orleans is still seeing good demand for new home sales.

Overall, the housing market is continuing the positive trends of previous months. Analysts do expect slowing in home sales over then next several months as interest rates begin to climb, and housing prices continue rising due to constraints on housing availability in the most desirable areas across the country.

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REAL ESTATE

US Banking Regulators Adopt New Rules to MAKE BANKS SAFER The 2008 global financial crisis generated a spiraling scheme of government involvement in financial matters, to the strong distraught of both the people and liberal thinkers. In an attempt not only to avert future financial stress but also a deeper involvement of national governments into the free market, regulators around the world decided to take regulatory actions to strengthen banks and make them safer for the future. Basel III is a global regulatory standard established and agreed upon by the Basel Committee On Banking Supervision during 2010 and 2011 and introduced in 2013. Implementation of this new standard is now being extended to 31 March 2019.

The new standard was developed to counteract deficiencies in financial regulation that became apparent during the 2008 financial crisis. The goal of the tightened regulatory requirements is to strengthen bank capital requirements by requiring greater bank liquidity and decreasing bank leverage.

Leverage, or “gearing” as it is referred to in some countries, is a technique used to multiply gains and losses. Normally, it is the process of buying more of an asset using borrowed funds. Banks using this technique trust that the income from the purchased asset will be greater than the cost of the borrowed money.

Such practices however incur higher risks. When

november/december issue

banks leverage funds, they risk incurring large financial losses if the cost of the borrowed money is greater than the income generated by the asset the bank purchased with the borrowed money. Basel III regulators (including US regulators) aim at limiting a bank’s balance sheet as well as encouraging banks to take initiatives to reduce their balance sheets. They suggest to do so by developing a leverage ratio to limit the size of the activities a bank can develop in relationship to its own capital.

In December 2011. the US Federal Reserve made a public announced that it would be implementing almost all of the Basel III rules and that the new standard and rules would apply to both banks and all institutions with more than $50 billion dollars (US) in assets.

The US version of the liquidity coverage ratio requirements is stricter than that of Basel III, especially for large bank holding companies.

The US proposal will make it mandatory for banks to keep enough liquid assets readily available to cover its total cash outflows for a period of 30 days. Essentially, this requirement is designed to ensure the banks can survive a minimal period of 30 days of financial “stress” or cash outflows without full income.

Banks that have assets of $250 billion dollars or more will be required to calculate their liquidity requirements every day. Smaller institutions will be able to calculate their liquidity needs

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REAL ESTATE

monthly. According to the Federal Reserve, the biggest US banks will have to have approximately $2.5 trillion dollars in highly liquid assets by 2017. Moreover, global regulators are working to add an additional requirement to make banks calculate their liquidity requirements over the course of a full year.

This is being referred to as the Net Stable Funding Ratio. These tighter regulations are aimed at providing stronger and larger cash buffers to help during times of extended financial and economic stress.

Another area targeted for stricter regulation is that of systemic risk management. Systemic risk is the term being used to describe the elements of risk within the global financial community that could lead to another global financial crisis. The rules being implemented to help manage systemic risk help to build the resiliency and financial soundness of the individual financial institutions as well as maintain economic stability.

The Dodd-Frank Wall Street Reform and Consumer Protection Act passed in 2010 includes many safeguards and enhancements to the risk management of financial institutions including the Voicker rule which forbids banking entities from engaging in short-term proprietary trading of certain securities and derivatives for their own gain. This rule also limits a bank’s investment in hedge and private equity funds.

In terms of governance and risk management banks will be required to implement clear risk appetite statements, assess the collective skills and experience of their boards, conduct more frequent and thorough board effectiveness reviews, establish and define the responsibilities of a risk committee and its relationship and interaction with the auditing committee and strengthen risk management functions such as IT infrastructures and the ability to aggregate risk data efficiently and effectively.

All of the new rules are being put into place

to protect against future global economic and financial crises. It is a challenging time for banks and other financial and trading institutions. The new rules are forcing a transformation in the ways banks do business but what do these changes mean for consumers and the economy?

The Organization for Economic Co-Operation and Development released a study in 2011 in which they estimate the Basel III regulatory implementation will decrease annual GDP growth by 0.05% to 0.15%. The impact to consumers will likely be an increase in bank fees to help offset the higher capital requirements.

To meet the capital requirements for 2019 bank lending spreads could increase by 50 basis points.

Many have criticized the US regulatory requirements as causing harm to community banks. In response regulators have eased up the regulations on community banks while still holding to the main tenants of the agreement.

There is concern that one of the results of the new regulations will be a marked decrease in the availability of credit to both individuals and businesses as well as increased borrowing rates because banks will not have the same level of tax shield benefits with lesser debt.

All in all, the regulations should strengthen the resiliency of the big banks and provide a greater margin of comfort in terms of global financial security but it may come at an increased cost to consumers. We have already seen a tightening of credit and now we must wait to see the effect of the new regulations on the GDP and interest rates in the short term and over the long term before a final judgment can be made.

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REAL ESTATE

California’s ongoing property sales withdrawal as distressed market continues refinement.

C

alifornia’s ongoing property sales withdrawal as distressed market continues refinement.

Decreased housing affordability pursued to discontinue unresolved property sales for the fifth month in a row as growing property prices led to an additional depletion in the share of distressed property sales, reported the California Association of Realtors (C.A.R).

Last month California unresolved property sales dropped, with the PHSI (Pending Home Sales Index) registering a 4.5 percent drop- 99.8 in August from 104.5 in July based on signed contracts. The month-to-month decline was at odds with the seasonal trend which ideally conveys a marginal growth from July to August.

The unresolved sales had dropped 8.7 percent from the 109.3 mark noted in August 2013.

The year-over-year decline was consistent with the six-month average of -8.9 percent noted between February and July 2014. The unresolved property sales are progressive future indicators of property sales activity, offering information on the future course of the market.

In August, there was a further improvement on non-distressed house sales, rising 91 percent in August from 90.3 percent in July. Equity sales have been escalating gradually since this year begun. Equity sales have totaled 80 percent sales for over a year and have increased to more than 90 percent for two continuous months. In August 2013, equity sales totaled 84.6 percent of sales. november/december issue

The affiliate share of the entire distressed home sales continued to decrease in August, decreasing from 9.7 percent in July to 9 percent in August. Distressed sales maintained a drop roughly 50 percent from last year when the percentage was 15.4.

22 of the 41 total reporting counties exhibited a month-to-month decline in the distressed sales’ share with 19 of those counties documenting in the single-digits, including Sonoma, Santa Clara, San Mateo, Orange, Napa, Marin, Contra Costa and Alameda counties- all who registered a 5 percent and below share.

The share short sales for distressed properties dropped to its least level since February 2008, dropping from 5.3 percent in July to 4.6 percent in August. The figure recorded in August was way less than half the 10.2 percent recorded in August last year.

The REO share sales also declined in August from 4.1 percent in July to 4 percent in August.

It was also a drop from 4.8 percent recorded in August last year.

On the other hand, August witnessed a growth in active listings across all various properties specifically in short sale properties which helped enhance housing supply conditions. The equity sales’ Unsold Inventory Index pushed up 4.1 months in August from 3.9 percent in July and to 2.8 months in August from 2.5 percent months in July for REO sales.

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REAL ESTATE

The short sales supply increased to 6 months in August from 5 months in July.

Q2 housing affordability decreases statewide as well as 19 California counties.

The lesser interest rates in Q2 2014 was unsuccessful in nullify progressed home price expansion, decreasing housing affordability in 19 out of 26 counties in California as well as statewide as reported by C.A.R (California Association of Realtors).

According to C.A.R.’s Traditional Housing Affordability Index (HAI), the percentage of home buyers who could manage to buy a median-priced existing single-family home in California dropped to 30 percent in Q2 from 33 percent in Q1 2014, and was down from 36 percent in Q2 2013.

The percentage of all households that can manage to buy a median-priced, singlefamily house in California is usually calculated

by C.A.R’s HAI. They also report affordability indices for selected counties and regions within the state. The index is usually viewed as the most essential well-being housing measure for home buyers in the state.

In order for a homebuyer to qualify for the procurement of a 457,140 USD statewide median-priced, existing single-family home in Q2 2014, he or she is required to earn a minimum 93,590 USD annual income. The monthly pay inclusive if tax and insurance on a fixed loan rate of 30 years would be 2,340 USD, with the assumption that a down payment of 20 percent and a productive compound interest rate of 4.32 percent. The productive compound interest rate was 4.46 percent in Q1 and 3.64 percent in Q2 of 2012. The median home was priced at 416,720 USD in Q1 and an annual 86,420 USD income was required to buy a home at that price.

During Q2 2014, the three most purchasable counties in California were Merced- 57 percent, San Bernardino- 58 percent and Kings- 64 percent. The least purchasable counties were

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Marin San Mateo and San Francisco, all at 14 percent.

The only county that experienced an improvement in housing affordability from the past quarter was Monterey County because of a lower median home price. As for Kings, Fresno, Santa Barbara, San Luis Obispo, Sonoma and San Mate counties, housing affordability remained unaltered quarter-to-quarter.

Housing affordability has reduced 26 percent since Q1 2012 when housing topped as the most obtainable in California. With home prices elevating at double-digit rates all round 2013 and interest rates at its peak compared to levels noted early 2013, both minimal income needed to buy a home and monthly payment including insurance (PITI) and taxes drastically increased by over 66 percent at statewide level.

The minimum income needed to purchase a home and the monthly PITI in comparison with the affordability summit escalated the most in Santa Barbara, preceded by San Mateo and Alameda counties. The minimum income required and monthly PITI extended the least in Santa Cruz, San Luis Obispo and Kings Counties when set side by side with the top.

Affordability in Sacramento, Solano, Alameda, Santa Barbara and Monterey counties has decreased the most. All the five counties that have decreased the least since the highest are Marin, San Luis Obispo, Contra Costa, San Francisco and Kings.

Statistics indicate that the number of houses for sale has increased to 4.5 percent in July 2014.

When distress sales are excluded, home prices automatically increase as noted from previous happenings. Therefore, in the coming future, home prices are expected to rise even further due to the exclusion of distress sales.

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REAL ESTATE

Investing in Arizona Real Estate: Great Deals at your Fingertips, Literally

Going online in your pursuit for a nice property investment is often a challenge. You get enough information to know where the deals are and what features do these properties offer without getting much of a hint as to the specifics. It’s like gaining an opportunity to buy something nice without knowing what exactly made it nice or if it even existed. At the end of the day, all you just need is data. Properties sold in Arizona could provide you with that.

There are individuals that need to sell homes so much that it sometimes come across as a hard sell. You may have encountered some agents that would do anything to sell just so they could get rid of properties that risk further depreciation. You need to steer clear of those.

If an agent does not mind sharing the details of the house or property sold, then you have the choice to use your discretion.

Most homes up for grabs are located in Phoenix and Mesa. They even have a website november/december issue

that you can subscribe into for RSS feeds. That last feature is important since some Arizonabased real estate ads are still showing up in search engine results even if the house is already sold. You even find some of them on YouTube and unless you ask the folks who posted the ads if the home featured in a clip is still available, you will not know that it is already sold.

How latest are the ads posted? Some go as recent as the last 48 hours since posted. Some of them might have been just reposted for the sake of informing the website guests that these homes are still available for sale. And some of them are honest enough to say that homes were built way back in 1944, restored for the sake of getting it resold.

The community where these homes are commonly found are pleasant-looking subdivisions where homes have enough space beside each other. It does not look cramped.

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REAL ESTATE

Sometimes the only barriers between these homes are strip roads, meadows or trees.

Fencing is viewed as optional or so the pictures show. Most pictures show the front lawn making the home of property being sold visible enough for you to see. The interiors are described like the number of bedrooms and bathrooms found inside and the total square footage of the property. The subdivision in which these homes available for sale are located is mentioned too. If you are planning to move to Phoenix because you have relatives there and you see yourself living in a community with relatives just within reach, at least you get to know if properties are available where they are just close by.

Sometimes the parking space in the property sold is shown on the main photo instead of it mentioned on the description box. The selling point in these homes is in the space. It may not be evident on the main photo used but additional photos are clickable upon request.

Questions are welcome too if ever some parts of the description are not that clear to you.

The Phoenix area is an interesting venue of research in a sense that data is as recent as September 2014. Law of supply and demand is explored as well because it compared the homes that are available to the homes that are in demand. And as of August 2014, according to Phoenix Real Estate Market Report, “Less listings means less competition among sellers for buyers”. Properties are priced per square foot with the price stabilizing at $126 per square foot. Price per square foot is dropping due to less demand.

For buyers looking for foreclosures and short sales, not much is to be expected. With the inventory of property available for sale quite low, not much is found in short sales either. From August 2013 to August 2014, foreclosure sales only comprised of 10% of local sales. The rest being classified as normal sales.

What made it harder for some buyers to snap

these Phoenix properties is that some would rather ask the sellers to shoulder the other costs.

It’s a minor issue for sellers that wanted to clean up the paperwork involved with selling the property but they can only shoulder so much.

The fact that value is offered for your money can only be assessed the moment you take time to assess the property yourself.

Have you taken the time to check out the titles involved in these properties? It may not be often mentioned in the home sale ads since it’s more about showing you the goods and analyzing the paperwork later. But this helps you buy time on whether you’d like to buy the property or not because as much as some homes look good to go, you need to ensure that you get to cover your rear well the moment the legalities ensue. You don’t want to lose all that hard-earned cash to a property that you would only end up not owning.

There is less housing inventory and there is less housing demand here in Phoenix. Compared to the housing demand though, it’s the housing inventory that’s decreasing faster. So the burden of proof about the marketability and value of the homes up for grabs is mostly reliant on how the agents pitch these properties. On the other hand, you need to work double-time for a better deal here since you can’t expect these homes to be available before the year ends. It’s quite a shame knowing that most homes are located in subdivisions where the community is nice and friendly to go with the warm, cozy and laid back designs that these homes possess.

Get in touch with a reliable agent in Arizona specializing in the Phoenix/Mesa area. Chances are you get directed to deals that are exclusive to serious buyers with metrics that match homes that are available in the market. There are stats that can prove the decreasing inventory for these properties so you better act fast before the best deals are gone.

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REAL ESTATE

Mortgage Purchase Applications The Mortgage Banking Associations indexes are an important leading indicator for single-family home sales and housing construction starts. By tracking the number of new mortgage requests and refinancing requests the MBA mortgage applications survey acts as a current indicator for the US housing market. When there is an increase in mortgage applications it indicates a healthy housing market. Because housing also has a multiplying effect on other parts of the economy, increased mortgage activity also points to increasing household incomes and expansion in the economy. The figure that turns up in the newspaper headlines each week is the weekly percentage change in the MBA Mortgage application numbers although because of the high volatility in this sector analysts and markets follow and focus on the four week moving average.

As of the third week in September mortgage rates are rising. This is causing a jump in mortgage application activity but the long-term effect of higher rates is likely to mean a slowdown in the number of mortgage applications moving forward. This is seen as a potential threat to the housing market.

The Mortgage Bankers Association reported that the seasonally adjusted index of mortgage application activity rose 7.9 percent for the week that ended September 12. But for the week ending Sept. 19th the MBA saw a drop occurring in the number of mortgage applications as mortgage rates continued to climb higher. New home loans and refinancing requests sank by 4.1 percent giving some early credence to concerns about impending threats to the housing market.

The rate for a fixed 30-year mortgages averaged 4.36 percent for the most current week for mortgages with a conforming loan balance of $417,000 or less. That is an increase from the previous week’s rate of 4.27 percent after a 9 basis point increase.

For 30-year fixed rate mortgages for jumbo loan balances greater than $417,000 the rate increased to 4.30 from 4.24.

FHA backed 30-year fixed rate mortgages increased to 4.08 percent from 4.03 for 80 percent LTV loans and the average interest rate for 15-year fixed rate mortgages remained the same at 3.56 percent although points increased from 0.25 to 0.26.

5/1 adjustable rate mortgages increased to 3.20 percent from 3.19 percent with a rise in november/december issue

points from 0.29 to 0.40.

According to Fannie Mae’s chief economist Doug Duncan in his monthly economic outlook the trending down of mortgage applications “suggests a residual conservatism on the part of consumers that supports our view that the pace of growth in the housing sector will be subdued during the remainder of 2014, with modest improvement in 2015.

Despite the rising interest rates and the current drop in mortgage applications, a loosening of the mortgage credit conditions, an improving job market and expected wage growth home sales are expected to continue to rise conservatively over the next 12 months. One of the impacts of improving selling conditions and prices is also creating an expansion in homebuilding. GDP growth has also increased and that increased activity is sending the message that growth will remain strong with the easing of credit conditions and the improving economy.

Even though there is a slowing of mortgage applications due to the rising mortgage rates the fact remains that the sale of existing homes has been climbing back to a normal level as well as the sale of new homes. The growth of housing prices is beginning to slow again as housing is approaching, or in some areas, even exceeding fair value.

Home builders are enjoying an expanding new building market. August saw housing starts climb to an 8 month high indicating some momentum for new homes. One low maintenance, lower cost townhome builder is aggressively building

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REAL ESTATE

new townhome communities across the country with a special focus on meeting higher housing demands for Pennsylvania, New Jersey and Delaware markets. New York has long struggled with high demand for affordable housing units, not just in Manhattan but throughout the state and especially in counties bordering metro New York City and with the currently lower but rising mortgage rates bidding wars are breaking out for homes on the market and demand is driving new construction of affordable units throughout the New York Metro area.

August provided a month of mixed signals in the Michigan housing market. Both sales and new listing dropped off a bit but for those homes on the market sales prices continued to rise at a rate of between 6 and 9 percent. With the rise in mortgage rates there is an expectation that demand will continue to slow up and the number of available homes for sale will begin to rise. There is also an expectation that home values may also drop throughout the winter months as the market rebalances.

The Ohio housing market began feeling the effects of the rise in mortgage rates during August when pending home sales began dropping off as investors began leaving the housing market.

With fewer short sale and foreclosure properties available on the market cash buyers and investors began to pull back resulting in a 1 percent drop in sales for August. There is still good news though for Ohio because home sales are still performing

at above average levels.

August numbers for New Jersey revealed a 10 percent drop from August of 2013 although the prices for single-family homes have increased.

Although mortgage rates are still relatively low at around 4 percent realtors cite many reasons for the drop in sales from last year including rising mortgage interest rates and tighter credit standards, lower housing inventories, rising home values, flat incomes and a harsh winter. Lawrence Yun, chief economist for the National Association of Realtors said “Median family incomes are still lagging behind price gains.� Snowstorms kept sellers and buyers out of the market and the spring market was very short. With many homeowners still owing more on their mortgages than the current value of the property many New Jersey homeowners are waiting to list their homes. With the market entering the fall season and mortgage rates on the rise the downward trend is predicted to continue throughout the remainder of 2014.

Clearly MBA purchase applications are a reasonably good predictor of what to expect in the coming housing market but they should be taken in context and in concert with other leading economic indicators to gain a fuller understanding of the economic dynamics in play. The index is also a good tool for homebuyers to follow so they can stay on top of changes in mortgage rates and credit requirements.

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REAL ESTATE

Housing in 2015: Will Millennials, Gen Xers or Boomers

?

Lead the Way

T

he housing market could very well become “normal” in 2015; according to online real estate company Trulia. Foreclosures and delinquency rates are decreasing; home sales, construction and real estate are on their way up, and distressed sales are the lowest since 2007 at 11.4%, states market data company, CoreLogic.

However the housing market is still far from pre-recession levels, and many are looking to Millennials, baby boomers and generation Xrs to lead housing recovery in 2015.

A lot has been written recently on the reticence of Millennials (those born between 1980 and 1995) to purchase their first homes because of rising student costs, high unemployment rates and stagnant incomes. In fact, a survey by the National Association of Realtors found that 54 % of respondents delayed buying their first home because of rising student loan debt.

“The main culprit is that the age cohort of firsttime buyers, who are normally 25 to 35, was hit the hardest by the recession. Unemployment is still high among that age group and the jobs they do have are often at low wages or are even part time,” according to Rick Sharga of Auction.com.

But not is all doom and gloom, according to a study by the Demand Institute, 79% of respondents between 18 to 29 stated that they expected their financial situation to improve in the next five years, 74% plan to move in that same period and 50% of those want to move to establish their own households. What could november/december issue

spell good news for the housing market is that 60% of respondents expected to purchase a home in the next five years, and 75% find that homeownership is an important long-term goal.

But will Millennials be enough to boost the housing market? Increasing evidence shows

that baby boomers (ages 50-64) might be the most potent force in the housing market as they increasingly choose to stay put and purchase new homes in their surrounding areas to be closer to friends and family.

People aged 50 and plus also want to live in more urban areas that are closer to commodities and public transportation. According to Metrostudy, new home purchases made by boomers 55 and older in the next 5-10 years will constitute 52 percent of all new home sales.

How about Generation Xers? According to data, this generation aged between 35 and 58 were hit the most with the housing and economic crisis and are the most likely to be underwater with their mortgage. Around 42.6 % of homeowners of Gen X homeowners have negative equity compared to 15.3 % of Millennials and 31.1 % of Baby Boomers.

“On the surface, the housing recession did not overtly impact millennials’ housing wealth to the degree it did Generation X and the Baby Boomers, as most millennials were likely too young to have purchased a home during the bubble years,” stated Zillow Chief Economist Dr. Stan Humphries. “But as this huge generation begins to consider buying homes, they’re entering a market still very much in recovery and far from anyone’s definition of normal. Because so many homes are stuck in negative equity

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REAL ESTATE or are effectively underwater, the inventory of homes for sale is severely constrained, leading to more competition for those that are available. And millennials likely don’t have the resources to compete with cash offers or engage in bidding wars. The reality is, negative equity is part of the new normal, and finding creative solutions to keeping homes affordable, available and accessible to this generation will be critical going forward,” he added.

It is safe to state that generation X homebuyers are less likely to be seen as driving housing market recovery during 2015.

As for general housing market recovery for 2015, analysts predict a general upturn in home values, but at a slower rate than in 2014.

This will also vary by state and city, with cities in California and the Southwest expected to experience double digit growth.

According to Wells Fargo economists and the California Association of Realtors, an increase of 5.8% in home sales is expected next year in stark contrast with the 8.2% decline of 2014.

“Stringent underwriting guidelines and doubledigit home price increases over the past two years have significantly impacted housing affordability in California, forcing some buyers to delay their home purchase,” said Kevin Brown, president of the California Association of Realtors to CBS. “However, next year, home

price gains will slow, allowing would-be buyers who have been saving for a down payment to be in a better financial position to make a home purchase.”

Other signs that the housing market in California is returning to normal are that building permits increased for places like Los Angeles and Orange County by 44% in the past year and one in eight new jobs created is in construction. Also, there is a marked decrease in home sales of foreclosed homes and properties.

Regarding the national housing market, data predicts that the mortgages will decline to below 5% and remain there for most of 2015, according to Freddie Mac, and mortgage lenders are also expected to relax their lending standards so that mortgages are more accessible.

Foreclosures will also continue to decline.

RealtyTrac’s Darin Blomquist states, “We’re in the homestretch of getting through the foreclosure crisis. But we won’t cross the finish line, with filings back to pre-crisis level, until early 2015.”

So who will lead the housing market recovery in 2015? All numbers point to baby boomers and millennials, while Generation Xers are still struggling to keep their heads above water.

REAL ESTATE

Slow Housing Market Recovery: Is student Loan Debt Really to Blame?

Student loan debt has become a major impediment to housing market recovery according to many sources.

While there is significant evidence to support this, is it more hype or is there substantial reason for concern? Would the housing market fare better without student loan debt?

Student loan debt has always been around, but it has never been this high. It has now reached a record level of $1.1 trillion in 2014, more than auto and credit card loans, and is increasingly being blamed for everything from decreased housing market recovery, denting overall economic recovery and plaguing student loans borrowers with economic and social woes.

In the past few years, many have spoken out about rising student loan debt and its negative impact on the housing market recovery.

In 2012, the Consumer

november/december issue

Financial Protection Bureau’s Rahit Chopra stated that student loan debt was one of the “painful aftershocks” of the Great Recession and could adversely affect the housing market because borrowers find it more difficult to save enough money for a down payment.

Chopra added that, for the first time in over a decade, 30-year-olds with no student debt are more likely to have mortgage loans than their counterparts with student loan debt.

The US Treasury is also concerned, and stated in its 2013 annual report, “High student debt burdens may impact demand for housing, as young borrowers may be less able to access mortgage credit. Student debt levels may also lead to dampened consumption.”

It is not only the government officials who are worried; even mortgage bankers are sounding the alarm.

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“This is a huge issue for us,” said David H. Stevens of the Mortgage Bankers Association in the Washington Post.

“Student debt trumps all other consumer debt. It’s going to have an extraordinary dampening effect on young peoples’ ability to borrow for a home, and that’s going to impact the housing market and the economy at large,” he added.

On its end, the National Association of Realtors conducted a survey and found that 54% of would-be first-time buyers are having difficulty saving money for a down payment because of student loan debt, and most recently, John Burn Real Estate Consulting established that the housing market would lose about 8% of sales and $83 Billion in “lost activity” this year because first-time buyers will be too burdened with student loan debt.

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REAL ESTATE

While the numbers seem to support correlating rising student loan debt with delayed housing market recovery, it is difficult to isolate student loan debt as the cause and separate slow housing recovery from the overall economic crisis.

According to analysts, within the 25-35 year old age band, student loan debt might not be the only reason that borrowers are delaying purchasing their first homes.

Unemployment which hit this age group the hardest during the recession is still the highest compared to other age groups at 9 % which may have contributed to a more volatile financial situation. There is also the possibility that young people are waiting longer to start families and buy their first homes for social reasons.

Finally, tougher standards in getting loans that are supported by the federal government may also play a major part.

“The primary reason that first-time buyers aren’t participating in the housing recovery is tight underwriting standards for home loans,” said Lawrence Yun, chief economist for NAR to the

november/december issue

Washington Post, “FHA loans were traditionally available to help renters buy homes, but the FHA has drastically raised the mortgage insurance premiums on these loans so they’re less affordable,” he added.

Student loan debt is said to affect not just first-time home purchases and the housing market recovery, but also other aspects of economic recovery such as the financial and physical wellbeing of borrowers.

A recent Gallup poll studied the effect of student loan debt on jobs and the quality of life of graduates, and found that those with no student loan debt had higher levels of wellbeing than their indebted counterparts. For example, 40% of respondents with no student loan debt said they were “thriving financially” compared to 31% with student loans under $25,000. Similarly, 34% of those with no student loan debt said they were thriving physically, compared to 24 % of those with over $50,000 in student loan debt.

Another study showed

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that student loan debt is also linked to lower auto purchases.

These results showcase that student loan debt does not merely affect home ownership but the general wellbeing of borrowers and the general economic recovery.

Another useful aspect to consider is who exactly is impacted by student loan debt? Just who are these borrowers and can this help understand the relationship between rising student debt and slow housing market recovery?

REAL ESTATE

With tuition costs rising even faster than inflation, students are increasingly looking towards majors that will lead to professions to gain back their college financial investment.

Students who get into nursing professions for example make more money than language majors and this makes them more likely to pay off their debt faster and have additional income to support a home purchase.

Therefore lower incomes in certain industries may also play in part in Millennials not being able to purchase their first homes, with or without student loan debt.

Race and ethnicity might also

help to illuminate the situation even better. According to recent research, over 52 percent of African American students had student loans in 2012, compared to a third of Latinos and Asian Americans and 42 percent of whites. Also, African Americans are more likely to use student loans to pay for post-secondary education than whites and they are also more likely to default on payment. Some of the reasons cited for this discrepancy are that African American families usually have less financial resources to begin with, and after graduating, African American graduates have a harder time finding a job that remunerates enough to pay off their student loan debt.

So if student loan debt mostly affects minorities, how is it possible to be sure that the housing market recovery is not a broader issue of economic wellbeing, especially postrecession?

According to a recent study, African Americans and Latinos have not benefited from the housing market recovery as much as whites, and

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have lost the most amount of wealth. For example, home value loss was 32.6% for Latinos, 23.2% for African Americans and only 10.3% for whites. Also only 43.1% of African Americans and 47.6% of Hispanics now own a home compared to 73.3% of whites; and 25.4% of African Americans and 21% of Latinos are denied a mortgage compared to only 10.3% of whites. This suggests that housing economic recovery might also have roots in minorities not being able to fully benefit from economic recovery after the recession.

While there is evidence to suggest that student loan debt is negatively impacting the housing market recovery, there is no direct causation.

The sluggish housing market recovery might also be tied to the aftermath of the recession from which many of the hardest-hit have yet to recover; young people because of factors such as unemployment and low incomes and minorities because of decreased home value and loss of wealth.

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REAL ESTATE

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november/december issue

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The PIN MAGAZINE | 58

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REAL ESTATE

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The PIN MAGAZINE | 59

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Real Estate Agent VIP Benefit Program™

Aka: VIP Agent Program TM

A G E N T S AARON ZAPATA

JUSTIN POTIER

http://aaronzapata.com

http://www.boardwalkluxuryhomes.com/

Aaron@aaronzapata.com (562)903-0088x112

justin@boardwalkreo.com (562)424-0333 (562) 480-0684

(714)904-7877 Zapata Realty, Inc P.O box 624

(562) 513-1006 3948 Atlantic Avenue,

Yorbalinda, CA 92885

Long Beach, CA 90807

KIBY PEARSON

JONATHAN ANOZIE

www.pearsonrealtygroup.com

janozie@realtyexchangefirm.com

kirby@pearsonreo.com

(310)216-9077

(773)325-2800 x 101

(310)678-8138

(312)805-0005

1620 Centinela Avenue, Suite 203,

1000 N Milwaukee Ave

Inglewood, California 90302

Chicago, Illinois 60642, United States

LYNETTA CORNELIUS

JONATHAN BURGESS

lynettacornelius@earthlink.net

http://www.code3realty.com/

(925)759-8606

jonburg@code3realty.com

(714)904-7877

(916)455-5225 Ext. 6

111 Deerwood Road, Suite #200,

(916)296-3645

San Ramon, CA 94583

11801 Pierce St. Ste. 200 Riverside, CA 92505

IVERY SUMMERS

BOB IRISH

http://www.thereodiva.com

http://www.lakehillsrealty.com/index.shtml

ivery.sells@verizon.net

bobirishrealtor@gmail.com (951)343-3606

(310)649-2711

(951)313-6080

(310)920-3455 8939 S. Sepulveda Blvd. Ste. 261

3410 La Sierra Ave. F-519 Riverside, CA 92503

Los Angeles, CA 90045-3944 , USA

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www.thepowerisnow.com

A G E N T S NANCY BRAUN

AMEER J. ELAHEE

nancy@showcaserealty.net

www.101WaysHome.com

704-997-3794

www.GreatMonroviaHomes.com

1430 S. Mint Street, Suite 106

ajelahee@msn.com

Charlotte, NC 28203

909-944-4757 626-625-0099

HELEN MOAVENI

MARGUERITE CRESPILLO

REO / Shortsale Director

916-580-0808

Paragon Saol Realty Group

714-904-7877

oc.realtist.wc@gmail.com

535 Menlo Dr., Ste. A

helenmov@gmail.com

Rocklin, CA 95765

ocrealtistwc@gmail.com 818-789-5986

KENNEDY AKINLOSOTU

DIANNE LANGSTON

Real Estate Broker

http://aaronzapata.com

Nations Realty kennedy@nationsrealtyllc.com akinlosotu4@gmail.com 206-423-9999

reo2448@gmail.com, dianne@diannelangston.com 707-580-1585

24860 Pacific Hwy South Ste.

714-904-7877

102, Kent WA 98032

432 Jackson St. Fairfield, CA 94533

MICKELIN BURNES-BROWNE

ANITA JONES-CAYENNE

MICKELIN@soldbymickelin.com 408-272-7645

President, CAREB carebpresident@gmail.com 209-952-8861

408-569-0978

510-681-4147

408-273-6470

California Association Real Estate Brokers

2894 Mabury Court

Broker/Owner, Embarcadero Investment

San Jose, CA 95133

REO Specialist 6777 Embarcadero Dr., Suite 1 Stockton, CA 95219

november/december issue

The PIN MAGAZINE | 62

A G E N T S REGGIE WOODGETT

ARNOLD VER

http://aaronzapata.com

www.housevaluemax.com

RWOODGETT@realtracs.com (614) 400-4173

homes@housevaluemax.com reoteam247@yahoo.com 626-905-0919

(615) 562-1766

626-810-7620 1221 S. Hacienda Bl. Hacienda Heights, CA 91745 17843 Colima Road, Rowland Heighs, CA 91748

RAUL VILLACIS http://www.argct.com/

ZORITHA THOMPSON

raul@argct.com

http://aaronzapata.com

(203) 964-3000

zorithasellsreo@gmail.com

(203)249-1248

916-870-4765

482 Summer Street,

714-904-7877

Stamford, CT 06901

8211 Bruceville Rd. Suite 145, Sacramento, CA 95822

JILL RAND www.JLMPropertiesInc.com

ANGELICA SUAREZ

Jill.Rand@JLMPropertiesInc.com

http://www.angelicasuarez.com/

661-510-2112

ANGELICA@angelicasuarez.com

661-284-7544

310) 802-2444

27201 Tourney Road, Suite 200E

(310) 261-7700

Valencia, CA 91355

RE/MAX Estate Properties 23740 Hawthorne Blvd Torrance, CA 90505

WAYNE WYATT wayne@wyattrealtygroup.com

GLENDA BRASS, MBA

909-945-0679

www.ExitWithDignity.com

323-445-6993

glendabrass@glendabrass.com

909-945-0600

(310) 590-1235

8250 White Oak Ave. No.102

714-904-7877

Rancho Cucamonga, CA 91730

(310) 590-1320

The PIN MAGAZINE | 63

www.thepowerisnow.com

A G E N T S TED BRASS

SERINA LOWDEN

Broker/Owner DRE # 00615106

Realtor, Serina Lowden Real Estate

Ted Brass Real Estate Solutions

serina@serinalowden.com

www.tedbrass.com

916-405-5739

tedbrass@tedbrass.com

9250 Laguna springs dr #100. Elk Grove.

310路590路1235 ext. 102 111 S. Oak St., Inglewood, CA 90301

BRIANA FRAZIER

RUBY FRAZIER

Broker, The Frazier Group Realty

Broker/Owner

brokerbree@fraziergrouprealty.com

The Frazier Group Realty

951-809-9077

downtownnavigator@gmail.com

13602 Cedar Creek Court La Mirada,

(951) 686-5261

CA 90638

ALISHA CHEN

PATRICIA DE SANTOS

Realtor, Presidential Real Estate

Owner Trainer, Real Estate Education

2013 President of Asian Real Estate

Services

Association of America-Orange

patricia@MY-REES.com

County

realestatepatty@gmail.com

www.alishachenhomes.com

(909) 450-9944

alisha.chen@cs-rei.com

R.E.E.S.

(949) 981-8520

2910 Inland Empire Blvd., Suite 107 Ontario, California 91764

november/december issue

The PIN MAGAZINE | 64

NMLS# 461807