Thursday, October 28, 2010

2010 3rd Quarter Home Sales Report & RECAP for the Greater Albuquerque Area

Latest Quarterly Market Report

•Homes sales for single-family detached homes in the Greater Albuquerque Market Areas are down 23.66 percent from 3rd Quarter 2009.

•When compared to 3rd Quarter 2009, 6 MLS areas in the City of Albuquerque and City of Rio Rancho saw positive increases in home sales while 7 areas saw increases in the median sales price.

Thursday, October 21, 2010

6 Reasons Why It's Smart to Buy a Vacation Rental Home

Lately, you've been thinking a lot about investing strategies. You have a small nest egg that needs to grow, but frankly you don't trust the stock market. (If you're like many investors, your 401(k) hasn't fared well in recent years.) And while real estate has been somewhat of a rocky road in recent years, it's still a solid long-term investment strategy—and clearly we're in a buyer's market. But you aren't really interested in being a landlord. What to do?

Christine Karpinski has a suggestion: Purchase a vacation home and rent it out to travelers.

"Vacation homes are almost always a good investment," says Karpinski, director of Owner Community for HomeAway—te the world's leading vacation rental marketplace—and author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment (Kinney Pollack Press, 2007, ISBN: 0-9748249-9-2, $26.00).

"First, if you're looking for a good long-term investment, real estate tends to be a good bet," she adds. "Second, vacation properties have the ability to pay for themselves, and owners often earn a profit in rental income. Third, the investment comes with the desirable perk of having a place at the beach or in the mountains to call your own. And finally, there has never been a better time to buy a vacation home—it's like the planets have all lined up perfectly."

Karpinski, who owns vacation homes in several parts of the country, says she herself is looking for new properties to invest in. Overall, she says, the vacation home rental market is a burgeoning segment of the economy.

Want to know more? Read on for a few reasons why there's never been a better time to go vacation rental house hunting: 

There have never been so many properties on the market. For potential home buyers, there is a silver lining to the slow economy and the housing crisis: Most vacation markets are chock-full of buying opportunities. Once you've pinpointed the vacation rental market that is right for you—The coast? The mountains? A ski resort area?—you will likely have a lot of properties to choose from.

"There are many properties available right now in many different areas," says Karpinski. "Once you start hunting, I think you'll be pleasantly surprised at what you find. But I must offer one caveat: Before you let yourself fall in love with a property, make sure it is legal to rent it out as a vacation home. Some areas and homeowners' associations do not allow short-term rentals."

Prices aren't going to get much better. In fact, they're the lowest they've been in five to ten years. If you're pretty sure you want to buy a vacation home "someday," you might want to quit procrastinating and pull the trigger, says Karpinski.

"Prices should increase eventually," she points out. "Now is the perfect opportunity to make a really sound investment. In fact, speaking from my own perspective, I'm afraid that if I don't take the plunge now, I'll look back ten years from now and say, 'Why the heck didn't I buy back in 2010?'"

Interest rates are very favorable for purchasing. Today, mortgage interest rates are low. Bottom line: Take advantage of them while they last. 

These days, you have access to the best real estate professionals
. Anyone connected to the housing market who managed to survive the housing crash had to be at the top of his or her game. That means the agents left standing today—including the ones you'll be working with in your search for the perfect vacation home—are possibly the best of the best.

"Quite simply, the real estate professionals still working today are the top in the business," says Karpinski. "And because vacation home renting has become so popular, they are more knowledgeable than ever. Use their knowledge to your advantage. They are at your service when it comes to helping you hunt down the best property for you."

It's never been easier to rent your vacation home. As mentioned earlier, vacation home rentals have never been more popular. More and more consumers are choosing to stay in cozy condos, cabins, and chalets instead of cramped, impersonal hotel rooms when they travel. And as market demand has surged, organizations have sprung up to help connect vacation homeowners with these potential renters.

If you buy now, you can be ready for the 2011 peak season
. It's true that the longer you wait to buy, the likelier it is that interest rates could rise. But there's another reason not to procrastinate: If you buy now, you'll have time to get your property ready for peak rental season. Experienced vacation homeowners often find that the rental fees generated during the twelve weeks between Memorial Day and Labor Day pay their mortgages for an entire year—and most inquiries come in between January and March.

"Even turnkey properties aren't really turnkey," notes Karpinski. "To get your property up to your standards, there will very likely be things that you will want to spruce up. Rooms might need repainting. Decorating will need to be done. And the yard might need some work. By buying now, you will have a cushion of time to get the home ready for your guests, take great photos for your property listing, and start marketing it to potential renters."

"Someone is going to be smart enough to take advantage of the great buying opportunities available today," says Karpinski. "That person might as well be you."


Monday, October 18, 2010

What You Should Know Before Buying a Home

There are so many things to understand as you embark on purchasing a home, especially if it's your first purchase. Learn the basics as you get started and understand everything you need to know as it relates to financing. 

Here are 10 tips about financing:

1. Before you start looking for a home, get pre-qualified for a loan.Banks, credit unions and mortgage bankers make home loans; mortgage brokers process them. The lenders will take an application, process the loan documents, and see the loan through to the funding stage.

2. If you have marginal or bad credit, consult your lender. You may be able to qualify for a loan depending on how long ago and what reason(s) caused the bad credit. A lender should be able to advise you on whether your credit history will prevent you from qualifying for a home loan.

3. You will need a down payment. 
Down payment requirements vary depending on the type of loan. Many down payment assistance programs exist. These programs may loan or grant you the funds necessary for the down payment. Consult with a lender about programs available in your area.

4. You will need funds for closing costs Closing costs are charges for services related to the closing of your real estate transaction. They include, but are not limited to:

* Escrow fees charged by the company handling the transaction
* Title policy issuance fees charged by the title insurance company
* Mortgage insurance fees
* Fire and homeowners insurance
* County Recorder fees for recording your deed
* Loan origination fees

Consult your lender for an actual estimate of these costs, as well as information about loan programs which can assist in financing your closing costs

5. Some loans have "points" and some do not. A point is a loan origination fee equivalent to 1% of the loan amount. Together with the interest rate they constitute the yield on your loan for the lender. Some lenders charge a higher interest rate to compensate for charging no points. It is important to comparison shop lenders to make sure your loan is at a competitive yield.

6. Should you select a mortgage with a fixed rate or an adjustable rate?The answer to this question depends on whether mortgage rates are at a high or a low point when you purchase, and on how long you plan to live in the home. If rates are high, an adjustable rate might be attractive since subsequent rate drops could reduce your monthly payments. Additionally, lenders may offer a low rate during the first few years of an adjustable mortgage to make it appealing to you. If interest rates are low you might want to take a fixed rate to protect yourself against the possibility of rising interest rates.

7. Be aware of the two main types of loan categories.
* Conventional Loans. Conventional mortgage loans are available with fixed or adjustable interest rates. Some loans may require mortgage insurance.
* Government Loans. These include Federal Housing Administration (FHA) fixed and adjustable rate mortgage loans, and Veterans Administration (VA) fixed rate mortgage loan

8. If you are a low or moderate income home buyer, there are special programs designed to help you. These loans are available through private lenders, as well as local and state housing agencies, like the California Housing Finance Agency (CalHFA). Most lenders specializing in real estate mortgage loans are aware of these types of loan programs.

9. Why might I have to pay mortgage insurance? Mortgage insurance protects the lender from potential loss if you should default on your mortgage loan payment. Generally, conventional loans that require larger down payments do not require mortgage insurance. Mortgage insurance is always required on FHA mortgage loans.

10. Many organizations offer home loan counseling to prospective home buyers. These organizations provide classes for homebuyers to cover the steps to homeownership. They will cover home selection, realtor services, lenders, loan programs, homeownership responsibilities, saving for a down payment, and other important pieces of information. Many first-time home buyer programs require homebuyers to attend this type of class to be eligible for selected programs.


Saturday, October 16, 2010

Top 100 U.S. Cities with the Highest Income Growth Rates, a national business news site for small and mid-sized business (SMB) executives, revealed its latest U.S. Uncovered study, ranking U.S. cities with the highest income growth. The study, which looked at the nation's top 100 metropolitan areas, analyzed 25 years of federal income data to calculate how income level growth compares across the nation. El Paso, Texas, ranks in first place, with a 147 percent increase in income levels over the past 20 years.

The study used a 25-part formula to analyze the consistency and strength of per capita income (PCI) growth in each market. The formula compared each area's growth rates against the U.S. averages for 25 different time spans, yielding an overall score for income growth. All 25 spans ended in 2009, ranging in length from 25 years (1984-2009) to a single year (2008-2009).

"It's refreshing to see that the cities with the best opportunities for income growth go beyond the major metros," said J. Jennings Moss, editor of "When you consider the current high rate of unemployment in this country, our study suggests that people may want to explore job opportunities or start businesses in smaller cities, like Baton Rouge and Oklahoma City, where income growth is higher and the economy has been relativity stable in comparison to other parts of the U.S."

El Paso, which ranks as the 99th lowest per capita income of $28,638, holds first place in 13 of the 25 time spans, including a 147 percent increase in income levels between 1989 and 2009, and two percent during the recessionary period of 2008 to 2009. Meanwhile, Bridgeport-Stamford, Connecticut, which had the highest PCI in 2009 ($73,720), ranks 33 in the income growth index.

Cities with the Highest Income Growth

El Paso, Texas
Baton Rouge, La.
Baltimore, Md.
Virginia Beach-Norfolk , Va.
New Orleans, La.
Pittsburgh, Pa.
Oklahoma City, Okla.
Little Rock, Ark.
Jackson, Miss. Honolulu, Hawaii

Most cities in the top 10 have around one million or fewer inhabitants, except for Baltimore, Md. (#3) and Pittsburgh, Pa. (#6), which both have populations of more than two million. Jackson, Miss. (#9) is the metro with the lowest population at 540,866 on the top 10 listing. Rounding out the top 10 are Baton Rouge, La. (#2); Virginia Beach-Norfolk, Va. (#4); New Orleans (#5); Oklahoma City, Okla. (#7); Little Rock, Ark. (#8); and Honolulu, Hawaii (#10).

"Most people are interested in knowing what cities have the highest per capita income, but that doesn't always reflect the areas with the most available opportunities," said G. Scott Thomas, a nationally-recognized demographer who participated in the analyses for "The highest income growth rankings are designed to give the people an alternative view on what constitutes a flourishing economy and maybe even the chance for a fresh start."

Larger metros were not ranked high on the list. New York City, the area with the nation's highest population, ranks at #35; Los Angeles at #54; and Chicago at #73. The bottom three cities, Raleigh, N.C. at #98, Detroit at #99 and Atlanta at #100, have been hurt badly by declining real estate prices and the erosion of the manufacturing industry, which has contributed to declining income growth rates.

Mortgages Cheap, But Hard to Get

With fixed mortgage-interest rates at an all-time low, it might seem as if real estate offices should have house hunters lining up, ready to sign on the dotted line. Last week, Freddie Mac announced that the average 30-year rate had fallen to 4.27 percent.

At that rate, a $200,000 mortgage — not including hazard insurance and taxes — would cost $986.22 a month. Add to that the decline in home prices, and it seems like a combination that's hard to resist.

But banks are extra-careful these days about whom they lend money, with the result that many looking to buy houses aren't able to qualify for the lowest interest rates — or for mortgages, period.

Real estate agents and mortgage brokers say they are trying to work with individual buyers to clear obstacles to borrowing created by cautious lenders, who are mindful of a several-year-long track record that, in August alone, produced 245,000 new foreclosures, 3.2 million loans that were more than 60 days delinquent, and 101,000 sales of repossessed houses nationally.

In some cases, the agents and brokers say, such efforts might include providing lenders more income documentation and clearing up borrowers' credit issues.

The situation is complicating a tough sales environment already battered by persistent high unemployment and prospective buyers' expectations that prices will go down even more. Moreover, many would-be sellers, especially those who bought during the 2005-2007 boom years, are dropping their prices only reluctantly. Some simply refuse, agents and brokers say.

To help buyers obtain mortgages, said Philadelphia agent Jeff Block, of Prudential Fox & Roach, he has "had to work closely with lenders ... but almost exclusively because of issues on the lender's end, and not with the buyer's financials."

"Needless to say, this is much more common with Internet and non-local lenders, but I can almost always find a way through it," Block said.

Weichert Financial Service president Steve Madonna said two prospective buyers in 10 cannot qualify for mortgages. "I am seeing people who qualify easily and people who don't qualify at all," he said.

Lenders look for four "tradelines," such as a car loan or credit card, that are at least 12 months old.

"I am finding many young people who are not using any credit cards at all," Madonna said. "They use their debit card 45 times a month, but it is the same as paying cash."

Philadelphia mortgage and real estate broker Fred Glick said that tighter requirements have cut the number qualifying for home loans about 50 percent from a few years ago.

"If they have equity, good credit, full income documentation, and the underwriter isn't taking acid that day, it's not bad," Glick said. Mortgages insured by the FHA and VA are available if buyers don't have sufficient down payments, "but you will have the mortgage-insurance payment or funding fee" that will add to the cost.

Marshal Granor, principal in Granor Price Homes in Horsham, Pa., said a lack of cash for closing costs also means some mortgage applicants won't make the cut.

And Jerome Scarpello, of Leo Mortgage in Ambler, Pa., said even qualified borrowers can be stymied by today's tighter lending rules — increased credit-score requirements, for example.

"If your score is under 700, some private mortgage insurers won't insure you," Scarpello said. "Under 620, you cannot get a competitive-rate loan."

The pendulum has swung so far to the other side, he said, that "good, quality, make-sense people are being told, 'No.' "

Broker Peter Buchsbaum, of Abington Mortgage in Horsham, said 95 percent of the people who contact him can qualify for the lowest interest rate and "the other 5 percent are capable of getting the rate, but maybe not for as much a loan as they are requesting."

He added, however, that the mortgage market is constricting each day, with some underwriting rules making sense and some not.

"My frustration is that the feds keep pushing interest rates as the answer to the real estate puzzle," Buchsbaum said. "Until prices stabilize and the public doesn't waste time trying to get loans from large banks, we'll stay in this rut."

To Narberth, Pa., Realtor John Duffy, it's looking like a return to the days when buyers needed stable employment, decent credit, and equity for a down payment.

"In the long run, that will help everyone," he said.

(c) 2010, The Philadelphia Inquirer.

Tuesday, October 12, 2010

... ever tried the #1 real estate website in the U.S.?® attracts over 37.4 million visits every month.2 and is where consumers spend more time searching than any other real estate website. The new release of® in September 2010 offers consumers a new national agent directory and improved search experience:

Monday, October 11, 2010

September 2010 Market Report for Albuquerque and Surrounding Areas

• Pending sales for detached single-family homes decreased 28.82 percent from the previous year and are down 14.45 percent from August 2010.
• The median sale price for single-family detached home sales saw an increase of 1.72 percent in September to $183,000, when compared to the previous year.
• Active listing inventory for single-family, detached homes is at 5,759 for the second consecutive month, up 11.70 percent from the previous year.

Steel Buildings Become More Popular for Residential Homes

Steel buildings are becoming more common in residential buildings as their versatility expands with greater consumer demand. They are sought after for their affordability, strength, durability and versatility in the building process. Once used primarily for warehouses, garages, sheds and additional storage facilities, today even residential homes are being built with steel buildings. offers further insight into the latest trend.

Once used for large industrial purposes, many smaller scale structures are using metal construction, such as churches, schools, retail stores and private residential homes. In the past, the affordability and durability of such buildings were over shined by the lack of curb appeal. Now the exterior of steel buildings can be finished in brick, siding, stucco and additional options. They are easy to maintain, well insulated and can be constructed much faster than using more traditional materials. They also cost much less than stick built homes of the same size and quality.

The versatility of the way these metal structures are framed is another attractive quality. They can be fully framed to look just like conventional home or they can have a completely open floor plan with minimal interior walls. The pole construction methods used during the construction process make the walls non-load bearing, so the poles support the weight of the walls. By having non-load bearing walls, a home can have dramatic, wide-open spaces for a living room or kitchen and yet have smaller rooms for
bedrooms and bathrooms. This option has lower framing costs as well.

As More Homeowners Walk Away, Experts Fear for Nation's Morals

Americans have taken a sharp slap in the face from the housing crisis, financial crisis and jobs crisis. Now, some wonder if the residue of those harsh realities is an ethical crisis.

For the first time in the nation's history, bankers say, people are walking away from mortgages they can otherwise afford to pay. The phenomenon known as strategic default was once unthinkable. It represents a calculated decision to hand over the keys to a home without making good on a loan, reasoning that it makes no sense to keep paying the monthly mortgage when the home is worth thousands of dollars less than the obligation.

Jeff Horton, a 33-year-old Orlando, Fla., technology manager, is among those who recently decided to take the step. He told his lender that he's done making payments on the condo he bought in 2005 and the home he bought in 2007, because he wants to move from Florida and can't sell or rent the properties at a price nearly high enough to cover his payments.

"Life is too short," said Horton, who has mortgages totaling about $400,000 with Bank of America — about twice as much as he thinks he would get if he could sell the property. He says he has little choice because the bank has refused to refinance the mortgages or adjust original terms.

Strategic default is a symptom of a housing market that suddenly turned from "American Dream" to financial trap. With the Norman Rockwell-like images of homeownership decimated by a 30 percent plunge in prices, some fear America is also losing its grip on another idyllic notion: that people will live by the slogan, "My word is my bond."

Morgan Stanley recently estimated that about 18 percent of defaults will be strategic. In a recent Pew Research Center survey, 36 percent of Americans said that walking away without paying a mortgage is acceptable, at least under certain circumstances. Fifty-nine percent said the practice is unacceptable.

The saying "My word is my bond" was first posted in the London Stock Exchange in the late 1920s to convey living up to promises. Now, after the worst financial disaster since that period, people such as Horton say they have no such image of Wall Street or large banks as trustworthy institutions, and that has allayed guilt about walking away from mortgages.

"I felt guilty at first," said Horton. "It all stopped when I saw them take $90 million in executive bonuses. They take bailout money and do nothing for the little guy. They wouldn't do anything for me."

Most people walking away from homes see little choice, says John Maddux, chief executive of UWalkAway, a Web site that provides advice on the strategic-default process. "They bought the house thinking of it as an investment in their future," he said. "For some, it was to be their retirement; for others, it was seen as forced savings, and now it's bleeding them dry."

Overburdened with mortgages, people conclude they won't be able to send their children to college, save anything for retirement or move to a place where they can find a job. But as they go through the soul-searching and guilt connected with walking away, Maddux noted they often point to a sense of betrayal.

He said he frequently hears: "I don't feel bad for the banks. They let this happen. Banks made the mistake of giving a loan to anyone if they had a pulse. Their loose lending standard led to a bubble, and the regulators should have controlled this."

Banking expert E. Philip Davis sympathizes with that point of view, but he also points out the implication of homeowners walking away from a commitment.

"It makes them as bad as the bankers," said Davis, a Baptist minister in the United Kingdom who teaches courses on fostering stability in the financial system.

The erosion of the ethic of keeping promises "will be a cancer for society," said Davis, who was with the Bank of England and is now a fellow at the U.K.'s National Institute of Economic and Social Research.

On the surface, one consequence is evident: If bankers don't trust that people will pay off their loans, banks will demand higher interest and other assurances before lending in the future.

In fact, there's research behind the concern, says Tom Donaldson, a University of Pennsylvania Wharton business ethics professor. And it shows that both bankers and borrowers are at risk if trust erodes.

"We've known for decades that trust is critical to successful business," said Donaldson. "Studies have shown that if one party cheats on one end, the other party feels more entitled to cheat. It's not the most noble way, but it is human nature, and it becomes a race to the bottom."

Research into strategic default by University of Chicago Booth School of Business professor Luigi Zingales shows what he calls "the contagion effect." "The stigma goes down once you see someone else do it," he said.

Donaldson adds, "I hope bankers are thinking about restoring trust. It's enormously in their interest."

Jim Wallis, the author of "Rediscovering Values: On Wall Street, Main Street and Your Street," is discouraged. He had hoped that the financial crisis would lead individuals and business leaders to seek what he calls "a moral recovery," and deal with issues such as "enough is enough" and "we're in it together."

But while he saw interest from businesses at the Davos World Economic Forum after the financial meltdown in 2008, he said the focus has shifted. Now he sees a lot of "anger and yelling" by individuals, and occasionally business people approach him to "voice frustration and yearning. There is no champion for a values discussion."

While Wallis tries to get individuals to question whether individual debt levels were a moral breach leading up to the financial crisis, others say people now have an ethical duty to their families to walk away from debts if paying mortgages would hurt their financial stability.

Brent White, a University of Arizona law professor, argued in a recent paper that people have a moral obligation to their families to move on from mortgages that will overburden them. He said mortgages are legal contracts written with the understanding that they might be breached.

Those agreements stipulate what will occur if a borrower does not make payments as required. The borrower must turn the collateral, or home, back to the bank, and when that is done the contract is fulfilled.

Historically, taking back homes was a satisfactory remedy for banks. But that is no longer true, because both individuals and banks find themselves in the abyss of the housing crisis. Some homeowners can't afford their mortgages, while banks are struggling to manage the record number of foreclosures.

(c) 2010, Chicago Tribune.

Friday, October 8, 2010

What is the Real Cost of Financing?

Annual Percentage Rate (APR) is a tool that consumers can use as a starting point to compare loan programs. However, it's important to keep in mind that APR is not a perfect system, and not all lenders calculate APR in the same way. While the Federal Truth-in-Lending Act does require any mortgage broker or lender to disclose APR to the consumer, there is no rule written in stone for calculating this number that each and every lender agrees upon.

The point of calculating APR is to let the consumer know what the actual cost of their financing is in the form of a yearly rate. APR factors in certain closing costs and fees associated with the loan, and spreads this total over the life of the loan along with the actual note rate. The objective is to give the consumer a clearer picture of what their actual costs are, and this inhibits lenders from hiding fees or upfront costs behind low interest rates in their advertising.

Fees that are generally included in the APR calculation are points, pre-paid interest, loan processing fees, underwriting fees, document preparation fees, and private mortgage insurance. On occasion, lenders will include a loan application fee and/or credit life insurance. Fees that are normally not included in the APR calculation are fees from Title, Escrow, attorney, notary, document preparation, home inspection, recording, transfer taxes, credit report and appraisal.

Remember, all lenders do not perform the calculation the same way. Moreover, APR does not consider the possibility of making pre-payments, moving or refinancing. Unless the interest rate is tied to a fixed instrument, APR is even more confusing. Calculating APRs on adjustable rate and balloon mortgages is more complex because we really have no way of knowing what future rates will be.

If all lenders calculated APR the same way, we could make easy comparisons when deciding on what loan program to go with. Since they don't, the consumer should know that APR is simply a starting point for comparison. They should rely on the skills of a well-versed loan professional to assist them in obtaining the loan that meets their specific needs. The more important things to consider are how long the loan is needed. What are the long-term goals of the borrower? If the home buyer only expects to stay in the home for five years, there's not a lot of sense in looking exclusively at 30-Year Fixed rates because the APR seems more reasonable. If a young couple is buying a home, knowing they will refinance in eight years to pay for their son's college education, then once again, APR is not a realistic factor to take into consideration.

The Loan Executive should be prepared to answer questions about APR once the lender provides the Truth-in-Lending Disclosure Statement (Reg Z), such as why the “amount financed” listed in Box C is not the same as the actual loan amount, and why the APR is higher than the interest rate on the loan in most cases. The consumer will get a clear definition about the fees associated with their loan in the good-faith estimate, but the Truth-in-Lending Disclosure is often an area that is confusing to the borrower.