Foreclosure Frustrations

Many homeowners facing foreclosure who are frustrated with their loan servicers turn to for-profit  foreclosure consultants whose advertisements often promise any home can be saved from foreclosure and their services are 100% guaranteed. On October 21, 2010, the OAG filed ten lawsuits against companies making such claims, calling these assertions false and illegal.

The lawsuits were filed in nine different Indiana counties including Shelby, Marion, Lake, Knox, Johnson, Elkhart, Clinton, Clay and Allen. The coordinated filing was done in an effort to raise awareness of the pitfalls of hiring for-profit foreclosure rescue companies.  

The Federal Trade Commission announced a new rule on October 20, 2010, prohibiting debt relief organizations from collecting up-front or advance fees for services yet to be rendered. The rule took effect on October 27, 2010, and will be an additional enforcement measure the OAG may use to stop unlawful foreclosure consultants.

To date in 2010, the Indiana Attorney General’s Office has filed lawsuits against or reached settlements with
27 foreclosure consultants located in states around the nation. 

Anyone with knowledge of an individual or entity engaging in illegal foreclosure consulting activities is encouraged to file a Consumer Complaint Form, available on http://www.indianaconsumer.com/, with www.IndianaConsumer.com, with the OAG.
Indianapolis Real Estate

REAL Trends Housing Market Report – October 2010

Housing slumps in year over year comparison to tax credit fueled October 2009 home sales rate. Seasonally adjusted annualized rate of new and existing home sales falls to 4.327 million from 4.650 million in September

New and existing housing sales in October 2010 declined 25.4 percent from October 2009 while the
average price increased 8.2 percent from the same month a year ago.

The REAL Trends Housing Market Report for October 2010 showed that the seasonally adjusted annualized rate of the combination of new and existing housing sales decreased to 4.327 million from the 4.650 million recorded in September 2010. Overall housing sales fell for the fourth month in a row when compared to the same months in 2009. October 2010 unit sales fell 25.4 percent from October 2009. The average price of all sales increased 8.2 percent from October 2009, a positive point in otherwise disappointing results.

Housing unit sales for all regions fell in the last twelve months with the Midwest showing the greatest decline of 32.7 percent followed by the Northeast which saw unit sales fall 27.8 percent from October 2009. The West had the smallest decline at 19.6 percent.

Average prices of homes sold in October 2010 increased 8.2 percent compared to October of 2009 on a national basis. Every region showed increases in the average price with the Northeast showing the greatest improvement with a 12.3 percent increase in the average price of homes sold. The South showed the smallest increase at 1.9 percent improvement.

“These results were somewhat expected as October was the first month a year ago when a surge of home sales was fueled by the first round of tax credits. The annualized rate fell less than 5 percent from last month which is actually less of a decline than many expected. The average price of a combination of new and existing homes rose stronger than at any time in the last four months indicating that the mix of homes being sold is moving up,” said Steve Murray, editor of the REAL Trends Housing Market Report.

“The downside is that on a year over year basis housing sales continue to fall. We expect that the unit sales rate will continue to show year over year declines for the remainder of the year and into the first half of 2011 as the 2010-2011 results will be compared against sales that took place during the first wave of tax credit fueled housing sales in the fourth quarter of 2009 and the first two quarters of 2010. The declines will be partially offset by improvement conditions in the overall economy.”
Indianapolis Real Estate

Mortgage Update

As reported in last week’s Indianapolis Business Journal, on a seasonally adjusted basis, the pace of mortgage loan activity increased 5.8 percent for the week ending Nov. 5. This is a finding of the Mortgage Bankers Association. The rate for 30-year mortgages was unchanged at 4.28 percent. The rate for 15-year mortgages remained at 3.64 percent.

Indianapolis Real Estate

Housing Remains Highly Affordable For Seventh Consecutive Quarter

Housing affordability remained near its highest level nationwide for the seventh consecutive quarter as interest rates dipped below 5 percent for the first time since the series was first compiled nearly two decades ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released today.

The HOI indicated that 72.1 percent of all new and existing homes sold in the third quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the third quarter almost equaled the record-high 72.5 percent set during the first quarter of 2009 and marked the seventh consecutive quarter that the index rose above 70 percent. Until 2009, the HOI rarely topped 65 percent and never reached 70 percent.

"With interest rates remaining at historically low levels, and house prices starting to stabilize, homeownership is within reach of more households than it has been for almost 20 years,," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "While these favorable conditions are beginning to draw home buyers back into the market, builders continue to have major problems in obtaining credit for new-home construction, and this obstacle must be overcome if builders are to respond to improving demand moving forward."

Indianapolis-Carmel, Ind., was the most affordable major housing market in the country, regaining the top ranking it held for nearly five years after being edged out by Syracuse, N.Y., last quarter. In Indianapolis, 93.3 percent of all homes sold were affordable to households earning the area's median family income of $68,700.

Also near the top of the list of the most affordable major metro housing markets were Youngstown-Warren-Boardman, Ohio-Pa.; Grand Rapids-Wyoming, Mich.; and Dayton, Ohio, and Wichita, Kan.

Among smaller housing markets, the most affordable was Kokomo, Ind., where 96.1 percent of homes sold during the third quarter of 2010 were affordable to families earning a median-income of $61,400. Other smaller housing markets near the top of the index included Mansfield, Ohio; Lima, Ohio; Monroe, Mich.; and Bay City, Mich., respectively.

New York-White Plains-Wayne, N.Y.-N.J., continued to lead the nation as the least affordable major housing market during the third quarter of 2010. In New York, 22.6 percent of all homes sold during the quarter were affordable to those earning the area's median income of $65,600. This was the 10th consecutive quarter that the New York metropolitan division has occupied this position.

The other major metro areas near the bottom of the affordability scale included San Francisco; Bridgeport-Stamford-Norwalk, Conn.; Los Angeles-Long Beach-Glendale, Calif.; and Santa Ana-Anaheim-Irvine, Calif., respectively.

Santa Cruz-Watsonville, Calif. was the least affordable of the smaller metro housing markets in the country during the third quarter. Other small metro areas ranking near the bottom included San Luis Obispo-Paso Robles, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; Ocean City, N.J; and Napa, Calif.
Please visit www.nahb.org/hoi for tables, historic data and details.
Indianapolis Real Estate

Doors and Windows: Architecture Coach: REALTOR® Magazine

From restoration projects to energy efficient upgrades, improvements to a home's doors and windows can create a more comfortable living environment and eye candy curb appeal.

Doors and Windows: Architecture Coach: REALTOR® Magazine

Indianapolis Real Estate

How Rising Interest Rates Will Impact Affordability

In a recent Forbes blog post, multimillionaire hedge fund manager John Paulson declared that today’s record-low interest rates made this the best time to buy homes in fifty years. “If you don’t own a home, buy one,” Paulson said. “If you own one home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home.” Why should we care what Paulson thinks? Well, he was among the few to accurately predict the subprime collapse and, while no one has a crystal ball, a closer look at the numbers supports his call to action.

Historically low interest rates are the key…and they aren’t likely to hang around for long.

As we wrote in SHIFT, buyers who “choose to wait until prices come down more” are gambling that interest rates will hold steady or drop. The truth is even a 10 percent drop in home prices is nullified by a 1 percent increase in interest rates. The figure below illustrates how this works for a $250,000 home purchase and the relative likelihood of each scenario.



To figure out which was a smarter bet–counting on home prices to fall further or interest rates to rise–our research department took the last ten years of monthly home price and mortgage interest rate data and ran the numbers to see which was more likely: an increase in mortgage rates or a further drop in home prices. Here’s what we found:

1. A one percent increase in mortgage rates is ten times more likely to happen than a ten percent drop in home prices.

2. A one percent rate increase more than offsets a ten percent reduction in home prices.

3. When interest rates fall by one percent, the total interest paid is almost three times more than the interest savings from a ten percent drop in home prices.

4. The probability of both happening at the same time is ridiculously small, and homeowners would still pay 15 percent more in interest over the life of the loan.

Interest rates have dominated the news in recent months as we’ve shattered record low after record low. Potential home buyers need to understand the positive financial impact low interest rates have on the cost of home ownership and the thousands of dollars that can be saved over the life of a typical mortgage loan. For those who can afford to buy, trade up, or invest, our current market presents a lifetime opportunity.
Original artical available at: http://blog.kw.com/2010/11/11/how-rising-interest-rates-will-impact-affordability/
Indianapolis Real Estate

Add Some Holiday Charm to Your Listings: Home & Design: REALTOR Magazine

Add Some Holiday Charm to Your Listings: Home & Design: REALTOR Magazine

Indianapolis Real Estate

Carmel Clay School Redistricting

Carmel Clay Schools is in the process of redistricting. New school boundaries are being drawn to become effective for the 2010-11 school year. The first proposal for the new elementary boundaries can be viewed at http://www1.ccs.k12.in.us/district/student-services/redistricting. The Elementary School Parent Advisory Committee (PAC) is currently evaluating the proposal.

The mission for the Middle School PAC is somewhat different. We have been asked to look at the current “feeder system” which sends each of our 11 elementary schools to a designated middle school. The possible outcomes of our committee meetings would be a recommendation to the School Board to a.) keep the current feeder system in place, b.) modify the current system, c.) eliminate the feeder system entirely and move to an alternate system of placing students in a middle school.

We need your feedback to help us decide which option best serves our students and families. Please visit the CCS website (http://www1.ccs.k12.in.us/district/student-services/Clay-Middle) to view minutes from the first meeting and click the Clay Middle School link on the far left column under Redistricting to send your e-comments to us. Although we will not be able to respond to each of you personally, we will be compiling a spread sheet which will allow us to share your input at our next meeting on November 2nd. Your comments are critically important because we are very committed to accurately conveying to the Middle School PAC the thoughts and opinions of our Clay Family, both present and future. You are welcome to attend the bimonthly PAC meetings, however be aware that there is no opportunity for public comment.

The Carmel Clay Administration shared 2 pieces of information which may be of interest in formulating your feedback. 1.) If the current elementary proposal is adopted and the current feeder system remains in place, the overcrowding at the west side middle schools will be alleviated. 2.) If Mohawk were to be united at either Clay or Carmel Middle School, the population of one school would be about 1600 and the other school 1000.

Indianapolis Real Estate

Marion County Tax Appeals Notice

The 2010 Form 11 (Notice of Assessment) was mailed on October 13, 2010. The Form 11 was only mailed for those properties that experienced a change in assessment from 2009 to 2010.

The deadline to appeal the 2010 Assessment depends on whether you received a Form 11 notice. If you received a Form 11 notice, the deadline to appeal is November 30, 2010. If you did not receive a Form 11 notice, you will have 45 days from the date tax bills are mailed in the spring of 2011.

PLEASE NOTE: When the Form 11 notices were sent, the cover letter incorrectly stated the deadline. IF YOU RECEIVED A FORM 11 NOTICE OF ASSESSMENT, YOUR DEADLINE TO APPEAL IS NOVEMBER 30, 2010.

For more information about appealing assessments in all counties click on http://www.in.gov/dlgf or contact the county assessor.
Indianapolis Real Estate

If you don’t own a home buy one...

It could be time to sell your low-yielding bonds and replace them with higher-yielding common stocks.

Multibillionaire hedge fund operator John Paulson, the investment genius who made a killing going short subprime mortgages a few years ago, told a standing room only crowd at New York’s University Club that double-digit inflation is about to rear its ugly head by 2012, killing the bond market, and restoring strength to equities and gold.

Paulson’s warning to sell U.S. government bonds is one of the latest signs that the most successful investors of this generation believe the run up in bonds is over. Paulson especially underscored the attraction of equities with earnings yields of 7%-8% compared to the 2.6% pittance available on 10-year Treasuries.
Paulson listed his favorite blue-chip stocks; JNJ (Johnson& Johnson) at a 3.8% yield; KO(Coca Cola);PFE, 4% yield., as well as C (Citigroup), BAC (BankofAmerica) and STI (Suntrust Banks) and RF (Regions Financial).

Paulson is a pro at buying the distressed bonds of bankrupt companies, and then converting the debt to equity in reorganization and benefiting from the potential run up. He mentioned one of his greatest plays — K-Mart, which emerged from bankruptcy at $10 a share and then skyrocketed to $190 a share.

His crystal ball is for 2% GDP growth for 2011 and 2012 and he warns that the Fed’s promise of quantitative easing should contribute to double-digit inflation over the next few years.
As this is the best time in 50 years to buy homes, Paulson advised his listeners, crowded into 3 separate dining rooms, to issue 30 year mortgages to buy a home as “your debt and interest payments get locked in at record lows, while the price of your home will rise.”

“If you don’t own a home buy one,” Paulson recommended; ” if you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”

Indianapolis Real Estate

Bring Out the Best in Basements

Basements can adopt a split personality. On the one hand, it’s a sweet storage space with minimal décor and a high tolerance for accumulating dust. Yet when it’s time to sell — especially in a competitive real estate market — or expand the home’s livable square footage, the basement needs a little dressing up. That’s when home owners and real estate pros can work together.

One approach is to think big and transform this below-ground level into higher-end living space, whether that's a family room, children’s play area, or guest bedroom. “I have seen people take a basement and turn it into a family room, put in nice carpeting, and even build a little room around the utilities,” says Chobee Hoy of Chobee Hoy Associates in Brookline, Mass. “Hanging pictures … anything that looks pretty.”

It might encourage a sale. Yet it might not up the asking price, says Hoy. Many times a basement is not included in a home’s total square footage of livable space. “The square-foot value is not as high as the second or third floors. Don't put in the fanciest bathroom you can, because you might not get your money back,” she says. “You might have trouble selling the house for what you think it will sell for.”

Still, buyers want more room for the asking price, and a basement provides that option.

“Sometimes if a buyer needs extra space, and that’s the only space that’s available, that’s attractive,” says Hoy. She’s seen photographers gravitate towards homes with sizeable basements simply because they make great darkrooms and studios.

A listing for a home that Steve St. Arnault, an associate with Newbury Properties in Quincy, Mass., is attempting to sell has a basement that could be a model for all the dark, damp basements out there. In fact, he says, “it’s a bright and sunny spot.” The home owners painted the exposed pipes a brilliant shade of copper. Travertine flooring is a step above concrete or cheap carpet. “They wanted to encourage resale,” he says. “They also added a master bedroom suite on the top floor and granite countertops in the kitchen.”

But for basements that need just a little decorating rescue, there's a lot of hope.

“Make the basement a place that you want to go to,” suggests Peter Jeswald, author of Basement Ideas That Work: Creative Design Solutions for Your Home (Taunton Press, 2007). “So often, basements are associated with low-quality, cheap hung ceilings, wood paneling, and inexpensive carpet on the floor. Treat it no differently than you would the first floor of your house.”

Home owners should start by upgrading the basement's entryway and gradually work their way through the space, with the end goal a lighter, brighter, and cleaner basement. If it’s down a dark, narrow stairwell, open up that stairwell or — at the very least — install brighter lighting. In lieu of opening up the staircase, which can be quite expensive, Jeswald suggests add a half wall or creating an open railing. “Make it so that you’re no longer traveling through a narrow door to this narrow, dim-lit stairway,” he says. “Long, narrow spaces accentuate the feeling of being depressed.”

But if the end goal isn't more square footage but simply a cleaner basement, there are many inexpensive approaches to consider, starting with a broom and dustpan.

“The best thing you can do is clean it up,” Hoy says. “Get rid of the cobwebs. Whitewash the walls. Do whatever you can to make sure it has a good smell.”

Eliminating moisture may require the installation of gutters or a French drain. “Vapor can migrate through the walls and come up through the floor,” says Jeswald. Installing a dehumidifier should eliminate this problem.

The No. 1 problem with basements is a lack of adequate lighting. While the natural-lighting flow can't be altered because the space is underground, plenty of lights will create a sense of open, airy space on a par with the rest of the house.

“You want to get light into the basement and then you want to spread it around, to penetrate the space,” Jeswald says. Adding a table lamp here and there is probably not going to be sufficient. Adding larger windows is the best bet.

Creating larger window wells adds light — and offers an additional safety feature. “Nowadays most window wells have a ladder,” Jeswald explains, “so not only are you adding light but you’re adding an element of safety, especially if it’s a bedroom or recreation space.”

If either or both of these fall outside of the budget — but increasing light remains a priority —there are other options that are more about cosmetic fix-ups. These include installing French doors, which help divide the space, or putting up opaque walls that allow sunlight to bounce around.

Artificial lighting should be a last resort, Jeswald says.

Even more inexpensive are these two tips he offers on how to deal with the infrastructure of piping and columns by integrating them into the design. Create a bookshelf by installing flat boards between two columns. Turn an awkward pole into a bistro table by featuring a flat surface that juts out from it.

“If your budget is limited,” says Jeswald, “integrate these two into the design.”

And don’t forget about any exterior entryway to the basement. Even if it's rarely used, it's still going to be examined by potential buyers. It also could discourage people from coming into the basement if it’s not attractive. “Sometimes the door leaving the basement isn’t very attractive and people don’t put a lot of thought into it, but they should,” says Hoy.

Indianapolis Real Estate

3 Solutions for the Foreclosure Crisis

Analysts say that despite all the fuss over foreclosures, there are really only three solutions. None of them will please everyone.

1. Refinance everybody at today’s ultra-low rates. The result would put money in people’s pockets and that would boost consumer spending. The downside is that some people would still be underwater, plus taxpayers aren’t in the mood to spend any more money.

2. Lean on lenders to forgive principal. Lenders have been opposed to this even when the government stepped in and shared the losses. Also, this solution makes many investors very unhappy.

3. Do nothing and let the market heal itself. Supporters say an improving job market should erase part of the problem. The big downside to this strategy is the possibility that the market will slide back into recession.

Indianapolis Real Estate

Time Is Right to Buy a Retirement Home

Money Magazine is urging people a few years from retirement who plan to move when they quit work to consider buying now while home prices and mortgage rates are low.

Buyers who intend to use the place as a second home will pay the same rate as they would pay for a primary residence. If they intend to rent the property out until they retire and they need the rental income to qualify for the mortgage, lenders will consider that an investment property and charge a half to a full percentage point more.

Still, the idea remains are "pretty compelling," says Justin Krane, a certified financial planner in Los Angeles.
Indianapolis Real Estate

September Existing-Home Sales Show Another Strong Gain

Existing-home sales rose again in September, affirming that a sales recovery has begun, according to the National Association of Realtors®.

Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, jumped 10.0 percent to a seasonally adjusted annual rate of 4.53 million in September from a downwardly revised 4.12 million in August, but remain 19.1 percent below the 5.60 million-unit pace in September 2009 when first-time buyers were ramping up in advance of the initial deadline for the tax credit last November.

Lawrence Yun, NAR chief economist, said the housing market is in the early stages of recovery. “A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions,” he said.



According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.35 percent in September from 4.43 percent in August; the rate was 5.06 percent in September 2009.

The national median existing-home price2 for all housing types was $171,700 in September, which is 2.4 percent below a year ago. Distressed homes3 accounted for 35 percent of sales in September compared with 34 percent in August; they were 29 percent in September 2009.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said opportunities abound in the current market. “A decade ago, mortgage rates were almost double what they are today, and they’re about one-and-a-half percentage points lower than the peak of the housing boom in 2005,” she said. “In addition, home prices are running about 22 percent less than five years ago when they were bid up by the biggest housing rush on record.”
To illustrate the jump in housing affordability, the median monthly mortgage payment for a recently purchased home is several hundred dollars less than it was five years ago. “In fact, the median monthly mortgage payment in many areas is less than people are paying for rent,” Golder said.

Housing affordability conditions today are 60 percentage points higher than during the housing boom, so it has become a very strong buyers’ market, especially for families with long-term plans. “The savings today’s buyers are receiving are not a one-time benefit. Buyers with fixed-rate mortgages will save money every year they are living in their home – this is truly an example of how homeownership builds wealth over the long term,” Golder added.

Total housing inventory at the end of September fell 1.9 percent to 4.04 million existing homes available for sale, which represents a 10.7-month supply4 at the current sales pace, down from a 12.0-month supply in August. Raw unsold inventory is 11.7 percent below the record of 4.58 million in July 2008.

“Vacant homes and homes where mortgages have not been paid for an extended number of months need to be cleared from the market as quickly as possible, with a new set of buyers helping the recovery along a healthy path,” Yun said. “Inventory remains elevated and continues to favor buyers over sellers. A normal seasonal decline in inventory is expected through the upcoming months.”

A parallel NAR practitioner survey shows first-time buyers purchased 32 percent of homes in September, almost unchanged from 31 percent in August. Investors were at an 18 percent market share in September, down from 21 percent in August; the balance of purchases were by repeat buyers. All-cash sales were at 29 percent in September compared with 28 percent in August.

Single-family home sales increased 10.0 percent to a seasonally adjusted annual rate of 3.97 million in September from a pace of 3.61 million in August, but are 19.5 percent below the 4.93 million level in September 2009. The median existing single-family home price was $172,600 in September, down 1.9 percent from a year ago.

Existing condominium and co-op sales rose 9.8 percent to a seasonally adjusted annual rate of 560,000 in September from 510,000 in August, but are 16.2 percent lower than the 668,000-unit level one year ago. The median existing condo price5 was $165,400 in September, down 6.2 percent from September 2009.

Regionally, existing-home sales in the Northeast increased 10.1 percent to an annual pace of 760,000 in September but are 20.8 percent below September 2009. The median price in the Northeast was $239,200, which is 1.4 percent below a year ago.
Existing-home sales in the Midwest jumped 14.5 percent in September to a level of 950,000 but are 26.4 percent below a year ago. The median price in the Midwest was $139,700, down 5.2 percent from September 2009.

In the South, existing-home sales rose 10.6 percent to an annual pace of 1.77 million in September but are 14.9 percent lower than September 2009. The median price in the South was $149,500, down 2.6 percent from a year ago.

Existing-home sales in the West increased 5.0 percent to an annual level of 1.05 million in September but are 16.7 percent below a year ago. The median price in the West was $213,600, which is 4.9 percent lower than September 2009.
Full article available at: http://www.realtor.org/press_room/news_releases/2010/10/sept_strong
Indianapolis Real Estate