REALTORS® RELEASE “INDIANA REAL ESTATE MARKETS REPORT” FOR SEPTEMBER

Average sale price of homes up; median sale price, number of closed and pending sales down
(INDIANAPOLIS, IN) – The Indiana Association of REALTORS® (IAR) today released its monthly “Indiana Real Estate Markets Report” as a continuation of its “Indiana is Home” project. Statewide, when comparing September 2010 to September 2009:

• The average sale price of homes increased 1.3 percent to $130,823;
• The median sale price of homes decreased 2.7 percent to $109,000;
• The number of closed sales decreased 17.6 percent to 4,685; and
• The number of pending sales decreased 21.3 percent to 4,740.

Karl Berron, Chief Executive Officer, reminded consumers and members of the media alike that activity was uniquely strong last year at this time due to the approaching deadline of the federal homebuyer tax credit, which was later extended to April 30, 2010.
“It bears repeating from last month that nationally, the real estate market is adjusting after the expiration of the federal tax credit,” said Berron. “Year-over-year comparisons are distorted, especially those of pending and closed sales. It will be months until we’re again comparing apples to apples, at which time we’ll be able to fully assess the impact of the tax credit.

“Reviewing housing data in the long-term is a more healthy way to study the market and when you consider the extraordinary circumstances of the last couple of years, we should widen the lens even more,” continued Berron. “The fact remains that the market we’re currently in – both statewide and in most localities – has many advantages, more supply, historic low interest rates and less buyer competition.”

Berron said that REALTORS® are watching two metrics carefully, that of months supply of inventory and the number of new listings.

“If homes aren’t selling, but listings remain fairly flat or increase, inventory will climb and prices may adjust downward,” warned Berron. “Balanced supply and demand, as always, is the ultimate goal.”

Full article available at:indianaishome.com

Indianapolis Real Estate

HUD: Banks Will Be Held Responsible

U.S. Secretary of Housing and Urban Development Shaun Donovan said Wednesday that the onus is on banks to fix whatever foreclosure-related problems are found.

Donovan, who made the statement during a White House briefing about the matter, said problems found thus far haven’t appeared to be very serious, but the full investigation won’t be finished until the end of the year. If more serious problems are found, possible penalties could include fines and a ban against writing mortgages for more serious violations, he added

Bank of America and GMAC Mortgage have ended their foreclosure freeze because they didn’t find significant problems. Donovan said the government wasn’t involved in those decisions.
Full article at: http://www.realtor.org/rmodaily.nsf/pages/News2010102201?OpenDocument
Indianapolis Real Estate

Create a Whole New Market for Yourself with Fix-and-Flips

Foreclosures are everywhere and the market is unsettled. Does this mean that we don’t have a good way to create business? Certainly not!

Consider the fix-and-flip market for a moment. Now many of you are probably thinking: "Fix-and-flips? In this market? You're insane!" And in most circumstances, this would be true. But let's approach this from a different perspective for a moment. There are always people who, due to their unique circumstances, can do something that everyone else would find prohibitive. And this is true for the fix-and-flip market, too.

Unique Circumstances

What if you had really cheap or free labor, reduced or nonexistent property taxes, a ready fund of cash so that you weren't paying a lot in mortgage payments, and the ability to have people live in houses that were completed but not sold on a short-term basis who were willing to vacate on a moment's notice? Would you still think that fix-and-flips were an “insane” prospect?

Religious Institutions Have an Edge

In fact, all of the above apply to federally certified religious institutions that perform regular fund-raising and have an active congregation. So why wouldn't they want to do fix-and-flips as a way to raise even more funds? If you can help them buy the property at the right price, they really have a great chance of building their nest egg for the future.

Here are the main advantages for working with religious institutions on fix-and-flips:

•They have cash to spend most of the time, which puts them ahead of the game for bidding on property.
•They can pay slightly more than most investors and still come out ahead, because they can get free or inexpensive labor from the congregation.
•The right seller might preferentially choose them over another buyer because they want to support their mission.
•You might be able to structure a deal as part donation and part sale price if the seller needs the tax break. (Check with the seller's accountant on this one.)
•Readymade buyers: If the institution has a member who is looking to buy property in the next few months, they can buy something and rehab it to that person's specifications. Buyers get exactly what they want, while the institution gets ready buyers.
•Institutions can take a longer view, so even if they need to sit on the property for a couple of years, they can do that without it being too much of a hardship — especially if they rent it out to a member of the group. This gives them the advantage of the rehab plus the benefit for the appreciation that is destined to come in the next few years.
•Timing: They don't have to buy right now, but they are ready when the right deal comes along. They don't have another property to sell, either.

Advantages for the Institution

There are many ways in which this project can create benefits for the institution, and they aren't just financial:

•Community building: The group gets a way to bond over a shared project, and the larger community of the town or city gets a vacant house off the books and improved property values in the neighborhood.
•Awareness building: The group is likely to be able to get coverage of their creative approach to fund-raising. Perhaps someone will see a news story or TV segment about it, and will donate their next property.
•Mission and fund building: With the publicity and the income from the project, the group will be able to further its mission and improve its ability to raise funds in the future.

What They Need From You

•They need the idea, first and foremost. They aren't likely to come up with this idea on their own.
•They need to find the right properties at the right price. Chances are, you know at least one property right now that would be great for a fix-and-flip.
•They need to know what improvements are worth making so that they don't make the mistake (like most first-time investors) of overimproving the property.
•They need a recommendation for a good licensed contractor to serve as the construction supervisor and oversee the project.
•They need someone to facilitate the sale. If they don't have an in-house buyer, then they’ll need help selling the property.

What You Get Out of the Process

You may be thinking that this seems like a lot of work for what will be a relatively small commission up front, but think a little broader. Let's say that several of the institutions you work with also have missions around getting the homeless off the streets or improving their community or helping out working families. You could work with several of those groups and create a regular source for affordable housing. This means that you could build a list of buyers looking for affordable housing and sell the houses to your buyers.

Now, we’re talking about three commissions on the sale of one property. Is it starting to look better? And then, you could even take this group of institutions and buyers to a bank with a lot of REO property and talk to them about listing it for sale to these groups. That could be four commissions on each property now — and the knowledge that you've done right by your community. What could be better than that?

Full article available at: http://www.realtor.org/rmosales_and_marketing/salescoach/columns/1011_salescoach_fixandflips

Indianapolis Real Estate

Home Ownership Matters: Home Ownership and Parenting

The impact of home ownership on children has been documented in numerous academic studies, many of which have found that home ownership has a wide range of positive effects. The positive outcomes include: better health; fewer behavioral problems; greater achievement in math and reading; lower high school dropout rates; fewer teen births; more years of schooling by age 25; and higher high school graduation rates1. Although it is has been debated whether home ownership itself, or the residential stability and positive neighborhood characteristics that accompany it are the main underlying factors contributing to better outcomes; some research has shown that home ownership has a significant effect on children’s success2. Those studies argue that it is the positive behavioral characteristics required of home owners that get passed onto their children which contribute to their success. Since a home purchase is one of the largest financial commitments most households will undertake, home owners are invested in minimizing bad behavior by their children and those of their neighbors that might negatively impact the value of homes in their neighborhood. Second, homeowners are required to take on a greater responsibility, including the duties associated with home maintenance and acquiring the necessary financial skills to handle mortgage payments. The life management skills they acquire through these responsibilities may get transferred to their children and may contribute to their success.

Others though argue that home ownership brings residential stability3, and it is the stability that impacts children positively. And, some suggest that it is neighborhood quality which enhances the positive outcomes. They show that access to economic and educational opportunities are more prevalent in neighborhoods with high rates of home ownership and community involvement4.

But in the last several years, with availability of better data and methods, researchers have begun questioning the existence of a home ownership effect. In other words, when they compared home owners and renters who had similar characteristics—income, education, length of time in the same residence, assets—they didn’t find a significant difference in the effects on children5. These researchers concluded that home ownership did not have an independent effect on improved life of children, but rather that the impact is made through other factors such as home environment and neighborhood quality6. The difficulty in analyzing this question is derived from the fact that home ownership is accompanied by a collection of characteristics, in addition to neighborhood characteristics and residential stability, that are difficult to disentangle. Additional characteristics that impact children are related to the home itself, including housing quality, crowding, the presence of subsidized assistance, and equity. It also includes characteristics of parents and/or caregivers, such as saving behavior, nurturing abilities, propensity to invest, and goal attainment7. Yet, these personality traits of home owner characteristics are most often not captured in the available data. As a result, it may be that the positive impact on children is not directly related to home ownership, but is influenced by parents who are more involved with their children and are also more inclined to purchase a home8.

A recent study by a group of researchers from the University of North Carolina at Chapel Hill and the University of Michigan approached this question from a different perspective. Instead of trying to account for unobserved characteristics of homeowners, they examined whether there is a relationship between home ownership and engaged parenting behaviors in the home, school, and wider community for low to moderate income households. The authors used survey data on families who purchased homes through the Community Advantage Program (CAP). CAP is a secondary mortgage market program developed though a partnership between the Ford Foundation, Fannie Mae, and Self-Help, a community development financial institution in North Carolina. The goal of this program was to underwrite 30-year fixed-rate mortgages for families who would have otherwise received a sub-prime mortgage or been unable to purchase a home at all.

Researchers focused on four variables: parental school involvement, frequency of reading to child, child's participation in organized activities, and child's screen time (television viewing and playing videogames). Altogether, these measures reveal parenting behaviors broadly believed to be associated with positive child outcomes. The authors propose that home ownership provides for engaged parenting practices in two ways: economic and psycho-social. The economic impact of home ownership refers to the positive impact of nurturing neighborhoods. While both home owners and renters may aspire to be engaged parents, home owners likely live in neighborhoods with more opportunities for school involvement or participation in neighborhood activities. The psycho-social component refers to the idea that being a home owner may limit the severity of economic hardships and the degree to which financial hardships result in psycho-social stress and disengaged parenting. This idea works through two channels. First, low- to moderate-income households that are able to buy a home have already found ways to manage their limited finances in order to become eligible for a mortgage. If such effective strategies are sustained, it could help reduce economic pressure. Second, they have greater access to formal credit to sustain the household during times of economic hardship, putting less strain on familial relationships and parenting. Home owners in this study have higher adjusted net worth and liquid assets than renters. The authors, therefore, assume that home ownership promotes parental engagement by giving parents more options for managing financial hardships and reducing the severity of financial hardships when they do occur, thereby reducing stress and disengagement from children. It is important to emphasize, especially considering the housing crisis, that all of the homeowners studied received prime fixed-rate 30-year mortgages with a 38% debt-to-income criteria. Therefore, these home owners have not experienced the financial shocks of interest rate adjustments or the stress of excessively high interest rates associated with many sub-prime mortgages.

The results of the study suggest that children of selected home owners are more likely to participate in organized activities and have less screen time when compared with renters. However, home owners were found less likely to read to their children than renters. There was no effect of home ownership on parental school involvement. On the whole, their findings suggest that home ownership and financial stability may create opportunities for parents to engage in some positive parenting behavior. As noted, the group of home owners surveyed in this study was less likely than renters to report financial hardships. The authors suspected that these financial stressors may reduce the ability of renters to afford organized activities for their child. Screen time, on the other hand, is relatively inexpensive for most families.

The findings of this research present more support for the idea that there are intangible benefits fostered through home ownership. And while these findings strengthen the policy case for encouraging sustainable and responsible home ownership, ultimately the question is how to arrive at sustainable and responsible home ownership. As the study reviewed here suggested, homeowners performed better financially because they were able to manage their limited resources. It appears that educating would-be homeowners in ways to effectively manage their resources may also help provide a positive environment for their children.

Read the full article at: http://tinyurl.com/2fu9dqq

Indianapolis Real Estate

Foreclosure Reviews: Navigating the Upheaval

Given the daily headlines on the foreclosure freeze it’s easy to lose sight of that fact that most lenders are not putting a halt to their foreclosure processing. Earlier this week I sat down with my colleagues Jeff LIscher, NAR’s managing director of regulatory policy, and Paul Bishop, NAR’s vice president of research, to get their take on what’s happening with the foreclosure freeze. (See the video.)



Jeff’s first point was that there are thousands of lenders and only a handful are freezing their foreclosures while they review whether their past foreclosures were handled correctly.

So far, only a few major banks are implementing a moratorium while they conduct their reviews. Bank of America is the biggest. It’s halting foreclosures in all 50 states. J.P. Morgan Chase is halting foreclosures in about half the states. Same thing with GMAC Mortgage. But Wells Fargo, another big lender, isn’t implementing a freeze.

This isn’t to say the problem isn’t big. It appears to be very big. But it’s not all-encompassing, and I think that was Jeff’s point.
Paul reinforced this point by making clear the bulk of foreclosures are concentrated in just a handful of states, with just two, California and Florida, accounting for a third of all foreclosures. And California isn’t a pure judicial foreclosure state. It’s a hybrid in its legal processes for foreclosures.

The fact that California isn’t a pure judicial foreclosure state doesn’t mean we can expect there to be fewer reviews there. Far from it. But it remimds us that this latest crimp in the housing market is as location-specific as the housing market itself. (In a judicial foreclosure state, foreclosures are processed through the courts. Here’s a chart for you to see what the procedures are in your state.)

One thing the conversation with Jeff and Paul made clear is that, if you’re working with a client that’s trying to buy a foreclosed property, your client would do well to talk to an attorney. You just want to make sure your client’s interests are protected if suddenly the bank says it’s taking the home off the market while it reviews the paperwork that was generated when the home was foreclosed upon.

Dorothy Buse, a sales associate in the Orlando area I spoke with two days ago, says she’s had about a quarter of her listings pulled off the market because of these reviews. When this happens, she says, she immediately removes the listing from the MLS. That way there’s no confusion over whether the property is available for sale or not. In about a quarter of these cases, she already has an offer on the property. In these cases, she gives buyers a choice: they can withdraw and get their earnest money deposit back, no questions asked, or they can hold on and wait for the property to come back on the market with the understanding that the timeframe is indefinite. She has no way of knowing how long the property will be off the market.

NAR has written the heads of the U.S. Treasury Department, HUD, and the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, saying the foreclosure problems give extra impetus to banks to redouble their efforts on loan modifications and short sales. Focusing on these options, NAR says, “will not only minimize losses to the owners of the mortgages, but also minimize harm to homeowners facing unprecedented financial challenges and avoid reversing gains being made towards the recovery of housing markets, especially in high foreclosure areas.”

With foreclosure problems mounting, emphasizing alternatives to foreclosure certainly seems like a win-win for banks and everyone else.

Access the article at: http://tinyurl.com/29du45q
Indianapolis Real Estate

The Fastest-Growing Cities In The U.S. - Indianapolis

Thanks to a business-friendly attitude, inexpensive housing and a strong cultural community, Indianopolis' population--now at 1.7 million--has increased at a rate that is 50% higher than the national average. That's faster than hot spots Washington, D.C., and Seattle, and nearly as fast as urban-planner darlings Portland or Denver. But while Portland and Denver may attract more young singles, Indianapolis boasts a growing population of educated, young married couples--many coming from cities like Chicago for the shorter commutes and lower cost of living--an arguably more attractive demographic since they will most likely stay, raise families and invest in the communities, boosting the area's growth even more.

Read the article at: http://www.forbes.com/
Indianapolis Real Estate

Now is the Time to Buy a New Home!

When supply exceeds demand, buyers have the upper hand–and that’s where we are now! The current supply of homes for sale now stands at 12.5 months, meaning that at today’s pace of home sales, it would take 12 and a half months for the existing inventory to sell.

 

For you as a buyer, this means lots of choices, lots of negotiating power and that smart sellers are fiercely competing for your business, both in terms of the price and the condition of their homes. 

Indianapolis Real Estate

Foreclosure Update

It has been widely reported in the news that several of the large national lenders have stopped foreclosure proceedings in a number of states, including Indiana. This has resulted in some listings being withdrawn from the market and closing delays. MIBOR has been in continued contact with the National Association of REALTORS® Washington Lobbying Office, communicating the concerns of MIBOR members.


Up to this point, the following is what we have learned from NAR who is closest to this situation.

• There’s no way of knowing what percentage of foreclosures that were processed, were inappropriately or wrongly taken. The assumption is that for the most of them, this may only be a technicality and that the property ultimately would have been repossessed.
• For owners who believe that their home was wrongly foreclosed, they may wish to contact a real estate attorney to investigate the possibility of a property claim. However, that could prove costly and time consuming – regulations vary by state.
• For banks, it may make sense to modify loans or agree to short sales to expedite disposal of inventory.
• For buyers, the assumption is that listing foreclosures come with clear property title, but they should discuss any necessary contract contingency with their real estate agent. Foreclosures in limbo are likely to be withdrawn from the market.
• It’s too early to tell if there is an impact on the market, but we will be monitoring the situation.

MIBOR will continue to monitor this situation closely, and will pass on information as it becomes available.
Indianapolis Real Estate

Interest Rates - September 2010

Mortgage rates once again set new record lows in early September and remained below 4.4% throughout the month. As economic activity gains momentum, rates will rise to keep inflation at an acceptable level.

Indianapolis Real Estate

Foreclosures Halted!

The foreclosure mess threatened to become full-blown chaos Friday as the nation's largest bank, Bank of America, halted all foreclosure procedures nationwide, raising the pressure on other lenders to do the same.

Bank of America is the first U.S. bank to institute a nationwide moratorium on foreclosures as anger grows at how lenders have prepared documents to support evictions. The halt on foreclosures will take effect on Saturday and also includes sales of foreclosed property.

Separately, PNC Financial Services Group Inc. is halting most foreclosures and evictions in 23 states for a month so it can review whether documents it submitted to courts complied with state laws.

An official at the Pittsburgh-based bank confirmed the PNC decision, which was reported earlier by the New York Times. The official requested anonymity because the decision hasn't been publicly announced.

The moves come amid mounting political pressure on big U.S. banks to examine foreclosure-documentation problems. Bank of America's decision comes amid revelations that the banking industry had used "robo-signers," people who sign hundreds of documents a day without reviewing their contents, when foreclosing on homes.

In a statement released Friday, Bank of America said it will stop foreclosure sales until “our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for foreclosure decisions is accurate. We continue to serve the interests of our customers, investors and communities. Providing solutions for distressed homeowners remains our primary focus.”

Indianapolis Real Estate

Foreclosure Proceedings Come Under Fire

Mortgage industry heavyweights slow pace of properties entering REO pipeline

In response to the recent “robo-signing scandal,” JP Morgan Chase and Co., put 56,000 foreclosure filings on hold last week, following similar actions by Ally Bank (formerly GMAC Mortgage) in 23 states, including Illinois, Florida, New York and Ohio.

This temporary crackdown on the part of various states attorney generals is due to allegations that tens of thousands of foreclosure documents were essentially “rubber stamped” or signed without adequate review or scrutiny. Among the state officials who have initiated investigations, IllinoisAttorney General Lisa Madigan has demanded a meeting with JPMorgan Chase to address her concerns that the company violated the state's Consumer Fraud Act.

Vowing to hold banks accountable, Madigan said in a recent statement: “With JP Morgan now acknowledging possible abuses in preparing court documents, the impact on homeowners in our state and across the country could be great.”

Despite recent findings “that in some cases employees in our mortgage foreclosure operations may have signed affidavits about loan documents on the basis of file reviews done by other personnel – without the signer personally having reviewed those loan files,” Chase spokesman Tom Kelley, contends, “We believe the accuracy of the factual loan information contained in the affidavits was not affected by whether or not the signer had personal knowledge of the precise details.” He added that Chase has “begun to systematically re-examine documents we have filed in current foreclosure proceedings to verify that the affidavits and other documents meet the standard of personal knowledge or review where that is required.”

Chase has requested that the courts hold off on entering judgments in pending matters for a few weeks until their review process is completed.
Indianapolis Real Estate