Wednesday, December 21, 2005

A look back at 2005's biggest real estate news

Ringing in the New Year by peeking at the past

The devastation of Hurricane Katrina clearly was the leader in more than the real estate category. Thousands of residents losing their loved ones, homes, jobs and dreams became reality for one of the more popular areas of the country. Scores of Gulf Coast people continue to live in hotel rooms and trailers. The uncertainty of how, when, and where to rebuild will continue for countless months for many families. May the spirit of the Christmas season bring renewed hope to all hurricane victims.

Certainly rising interest rates made news this year. The prospect of higher home-loan payments began to slow sales--and investor speculation--in many markets. When monthly mortgage costs leap to levels that cannot be countered by higher rents, low-down payment landlords would rather walk away than sell for a loss.

Despite what you might have heard, the Federal Reserve's 12 moves to lift rates did not cripple sales in many popular owner-occupied neighborhoods. That's because consumers, spoiled by a terrific borrowing environment for the past three years, often jump down off the fence and buy when rates rise in an effort to catch rates before they move even higher. Home-loan rates, expected to rise considerably by the fourth quarter of 2005, finally did so; yet they were bouncing lower at the end of November than they were at the end of October.

Read the entire Tom Kelly Inman News Article

Sunday, December 18, 2005

Appraisal Week in Review

Its slowing up for the season. This week was quiet, my first inspection took me to the village of Plainfield for a land appraisal. This former residential site is in the path of commercial development. Next I was in the Ashburn neighborhood of Chicago for a single family home and I finished my week in Wilmette with a much larger single family home.

The village of Wilmette shows very well in the Holiday Season with it's brick streets, mature trees and historic homes.

Sunday, December 11, 2005

747 Home in Santa Monica Mountains

There are always a few uses for an old aircraft!

Francine Rehwald is buying an old 747 from Mojove, chopping it up and hauling it to a building site in the mountains. The house will resemble a aircraft crash site. Plans call for six buildings including a "Meditation Temple" constructed out of the nose.

According to Francine "Its 100% post-consumer waste" " Isnt it the Coolest"

Reade the article in the Wall Street Journal

Appraisal Week in Review

With the holiday's approching you woul think that the appraisal business would start to slow down.

Monday I needed to complete the appraisal of a six flat apartment building in Mount Prospect. Then on to complete a single family home in Chicago's Austin neighborhood. Wendesday I was off to the South Shore neighborhood for a gut-rehabbed condominium. Thursday morning I had a sale of a new construction condo in Lincoln Park. As 6" of snow fell in the afternoon I was off the the Village of Berwyn for a single family home. My week ended Friday afternoon with the appraisal of a single family in the Village of Bensenville.

Even when its slow I get around.

Saturday, December 10, 2005

The F.R. Schock House Posted by Picasa

Today's Historical House

The F.R. Schock House 5804 W. Midway Park, Chicago, Illinois

Located in Chicago's Austin neighborhood this Queen Anne styled home was built by architect Frederick Schock as his personal residence in 1886. Schock lived in this house until 1931. Known as the "Empress of the Queen Annes" it was designated a Chicago Landmark on January 20, 1999.

Friday, December 09, 2005

Historic Pullman Candlelight Houswalk

Five Historic Pullman Homes will be open December 10th 2005

The Historic Pullman Foundation invites you to celebrate the holiday season in Pullman at our annual Candlelight House Walk.

The self-guided walk features historic Pullman homes decorated for the holidays, a buffet of hors'doeuvres and desserts at our Visitor Center. A silent auction will also be held.

Reservations are required by December 8. Tickets are $25 per person (includes tour, hors d'oeuvres and desserts). To make your reservation:By phone - call 773.785.8901 (between 11-3 Tues-Sun) or call the Visitor Center for questions and tickets at 773.785.8901 or email

Monday, December 05, 2005

Economy screams, real estate rates climb

Home-price slowdown could have strong impact

Long-term rates rose last week as healthy economic data undermined ghoulish bond-market hopes for an economic downturn.

The 10-year T-note could not hold its pre-Thanksgiving rally to 4.4 percent and is now back above 4.5 percent; that trade eliminated the chance for mortgage decline toward 6 percent. Fixed 30-year deals are now back at the 2005 high, 6.375 percent.

Despite these retracements, the "topping" pattern in long-term rates is still in place. The Treasury 2-to-10 spread is still .1 percent or less, and at one point last week the 5-year T-note yield was slightly under Treasury 2s and 3s. That brief and minor "inversion" (a long-term rate under a shorter-term one) is a precursor for a larger and more significant one likely to develop in the next 60 days.

The Fed will go to 4.25 percent on Dec. 13, and most observers expect 4.5 percent on Feb. 1 -- if the 10-year stays put, that would mean no spread at all from overnight money to 10 years. The Fed, of course, never wants to be caught as the cause of a slowdown of any kind, and so argues that the inversion developing now has external, different-this-time cause. Don't believe it.

Read the entire article at Inman News.

Friday, December 02, 2005

Victorian Housewalk in Hinsdale

Six victorian homes dating from 1874 to 2000 will be open for viewing this Sunday December 4th. Five of the homes were built during the 1880's and one was built in 2000. The Hinsdale Center for the Arts is the sponsor of this housewalk, the hours are from 1 to 5pm. Tickets are $35.00 at the door. The housewalk will begin at 8 E. Third Street in Hinsdale.

Guests are invited to walk through the main floors of six Hinsdale homes, all Victorian in style. Some are originals dating from the 1800s while others are skillful re-creations. Each will be richly decorated for the holidays, glittering with lights, echoing with carols and music. Homes on this year’s tour are all within walking distance of one another and each features a distinctive Yuletide theme:

Home for the Holidays at 210 South Lincoln Street

An English Accent at 219 East Third Street

Christmas in Provence at 122 East Fourth Street

Christmas at the Cottage at 104 East Fourth Street

A Touch of the Orient at 412 South Washington Street

An Equestrian Holiday at 513 South Garfield Street.

Monday, November 21, 2005

Plunging Confidence Levels!

National Association of Homebuilders Index Shows Plunging Confidence Levels

In yet another indication that the big house-building party may be coming to a close, the National Association of Home Builders released its November index of builders' confidence Wednesday.

The index was down 8 points in one month to 60, representing the largest one-month decline since Sept.2001, and the lowest level in more than two and a half years.

Of note is that the component in the index that measures traffic from prospective buyers was down 5 points to 46, adding more weight to the recent decline posted here.

Thursday morning, as this issue was in final edits, PBB noted that the Commerce Department reported new housing starts were down 5.6% in October. Analysts (those who make their money tracking this stuff) had been calling for a drop of 2.8% for the month.

Building permits were also down 6.7%-- the sharpest drop in six years.

Sunday, November 20, 2005

Appraisal Week in Review

I started the week Monday with an appraisal request for a historic Oak Park home. The Prairie style house was built in 1912 and designed by E.E. Roberts architect and contemporary of Frank Lloyd Wright.

Tuesday I was off to the Lakewood Falls subdivision in Plainfield, Il to appraise a modern two story home.

Thursday I appraised an new construction duplex condominium in Chicago's Lakeview neighborhood in the Columbia Place subdivision. Then on to a high rise condo in the Edgewater neighborhood along Sheridan Road.

Friday the job called for market value on a 1950's ranch home in Northbrook. This neighborhood is actively in the teardown phase, and all the old homes are being replaced by new two story mansions.

And I finished up back into the city Saturday morning to appraise a Loft condominium in the Near West Side neighborhood.

All in all a quiet week.

Saturday, November 19, 2005

Slowing housing market and the bond spread

Mortgage market commentary

Big doings this week. The tentative signs last week of a top in long-term mortgage rates this week turned into a brass band blaring the news.

The 10-year T-note fell as low as 4.45 percent yesterday, down from the scary top just short of 4.7 percent only 10 business days ago. Yes, mortgage rates are supposed to follow the 10-year bond, but this time for technical reasons involving hedging of rate risk, fixed-rate mortgages are stuck just north of 6.25 percent.

And, don't confuse a top with the prospects for a decline, the latter not being good.

The change at hand is the shift from fear that the Federal Reserve Board would continue to raise the cost of money from its current 4 percent up to 5 percent or more, open-ended into 2006, to the belief that the Fed is very close to being done. The bond market is telling the Fed that neutral is nigh.

The Fed meets next on Dec. 13, and all still expect 4.25 percent at that meeting, and most expect 4.5 percent at Fed nominee Ben Bernanke's first meeting on Feb. 1. This week's trading has removed thought of the Fed going beyond 4.5 percent, and has called into question the wisdom of going any further at all; the pattern of rates across all maturities suggests that if the Fed does go to 4.5 percent it will not be able to stay so high for long.

Read the entire Inman News article

Monday, November 14, 2005

Real estate rates 'may be nearing a top'

Bond market, Fed hikes paint picture of possible recession

Mortgage rates stayed at their 2005 highs, just below 6.5 percent for the lowest-fee 30-year loans, but trading in the all-important Treasury bond market suggests that long-term rates may be nearing a top.

There were no market-moving economic data last week, but the Treasury had $44 billion in new bonds to sell at auction and the behavior of the bidders tells a tale.

The Treasury borrows constantly to roll over old debt and to raise new cash, but it raises the big money in a few "refunding" weeks. Nobody gets a refund in this misnomer; the ancient term refers to the Treasury re-funding its empty coffers.

Reafe the entire Lou Barnes article at Inman News

Friday, November 04, 2005

Pending Home Sales Index Close to Record

Pending home sales, a leading indicator for the housing sector, eased slightly but is at the second highest level on record, according to the National Association of Realtors®.

The Pending Home Sales Index,* based on contracts signed in September, slipped 0.3 percent to a reading of 128.8 from a record of 129.2 in August, and is 3.3 percent higher than September 2004. The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed; pending home sales typically are finalized within one or two months of signing.

David Lereah, NAR’s chief economist, said the index shows a lot of momentum. “We’re still seeing a post-Katrina boost in home sales activity, where the needs of displaced residents are supplementing a fundamentally strong market,” he said. “Aside from this temporary lift, the market is entering a period of transition in which we will see a somewhat slower but more sustainable pace of home sales–a period that is expected to be historically healthy. This will help to create a better balance between home buyer and sellers, so price appreciation should be cooler as well.”

Read the entire article at RISMedia

Monday, October 31, 2005

Financial markets size up new Fed chief

Ben Bernanke

We may have Harriet Miers to thank for the Bernanke era. Only three weeks ago, the White House said that it was "broadening its search" for a new Fed Chairman, looking for someone in agreement with the administration's economic policies, and someone with whom the president would have "personal rapport." Then, suddenly, we got one of the four mainstream guys.

The bond market gave its highest praise: it did nothing – although the only nasty line about Bernanke came out of the bond market (of course). "Greenspan was a maestro; this guy is a music teacher." Stocks soared 160 Dow points, indicating relief of fear of a Bush crony, but temporarily forgetting that any non-crony is going to whack the economy.

Bernanke's first words as nominee were to emphasize the need for continuity, exactly the right thing to have said. Too bad he won't be able to deliver.

Read the entire Lou Barnes Inman News article

Sunday, October 30, 2005

Lake Michigan view in Rogers Park Posted by Picasa

Chicago's Rogers Park Neighborhood

I had a Friday morning appointment in Rogers Park for a condominium on Lake Michigan.

Rogers Park or East Rogers Park is the northernmost neighborhood of Chicago, bordering the City of Evanston and Howard Street to the north, Ridge Boulevard to the west, Lake Michigan to the east, and Devon Avenue to the south.

Rogers Park is the location of the lakeshore campus of Loyola University Chicago and its famous Madonna Della Strada, chapel church of Chicago's Jesuit community. The predominant homes in this neighborhood are vintage condominiums. There are a few large single family homes including Frank Lloyd Wright's Emil Bach House. For the neighborhood profile go to Citywide Services.

Thursday, October 27, 2005

Bloomingdale, Illinois Posted by Picasa

Bloomingdale, Illinois

Wednesday's appraisal request takes us to the Village of Bloomingdale, located 28 miles northwest of the Chicago "Loop" in suburban Dupage County.

I bought my first condominium in the Westlake subdivision in June of 1976. The price at that time was $29,000.00. Things have changed since then. Check out the community profile at Citywide Services.

Wednesday, October 26, 2005

Lake Zurich, Illinois Posted by Picasa

Lake Zurich, Illinois

Tuesday's appraisal request takes us to the Village of Lake Zurich, located 37 miles northwest of the Chicago "Loop" in suburban Lake County. Check out the community profile at Citywide Services.

Thursday, October 20, 2005

Lagging mortgage rates undermine Fed's fight

Monetary balancing act trickier than expected

A coulda-been-worse inflation report Friday gave us a morning-only breather, rates rising again now, as they will continue to do.

Bonds and mortgages on Wednesday broke through crucial levels: the 10-year T-note through 4.42 percent to 4.49 percent (higher Friday), lowest-fee mortgages through 6 percent to 6.125 percent (a move which Freddie Mac's survey won't "discover" until later this week).
The overall September Consumer Price Index rose 1.2 percent, the largest single-month gain in 14 years, now a 4.7 percent year-over-year increase. However, the "core" rate, excluding volatile food and energy prices, rose only .1 percent – just 2 percent YOY, down from 2.4 percent YOY in July.

Some have misunderstood the Fed, seeing it in a jawbone offensive against inflation, but not intending to raise its rate much farther because core inflation is under some control. Many others have mistakenly assumed that high energy prices would do the Fed's work, slowing the economy. Give that up: September retail sales rose 1.1 percent excluding the collapse in SUV sales, and despite Katrina/Rita. There is some word of accumulating inventory of homes for sale, but no decline in aggregate sales, nor a decline in purchase mortgage applications.

Bonds and mortgages have not adjusted to the very great likelihood that the Fed will go .25 percent at each of the next three months' meetings, putting Fed funds at 4.5 percent by Feb. 1. At that point, a lot of heavy lifting will have been done for the new Chairman (hope – pray – for Ben Bernanke or Donald Kohn), but any new Chairman faces market doubt about toughness, and the only way to demonstrate fortitude is to raise rates. Any flinch by the new Chairman will be interpreted as timidity, or execution of election-year instructions from the White House.

Read the entire Lou Barnes Inman News article

Monday, October 17, 2005

Not many can afford California home

Money Magazine reports a survey that only 14% of households can buy typical house with traditional down payment.

Home prices across California have more than doubled since late 2001, increasing pressure on home buyers, who needed a minimum household income of $133,800 to buy a home at the August median price of $568,890, the California Association of Realtors said in its report.

That meant that only 14 percent of households could afford the typical home, down from 18 percent a year earlier, and the lowest level since records began in 1989, the report said.

Read the entire article here

Sunday, October 16, 2005

Inflation puts Fed in the hot seat

Markets predict tighter monetary policy

Big week. Bottom line: the Fed has an inflation problem, and markets are beginning to adjust – beginning – to how high and tight the Fed may have to pitch. Mortgage rates have held 6 percent, but barely, and probably temporarily.

Bonds ignored the terror alert in New York, ignored the bird flu flap, but did react to economic data, for the most part a lot of pointless lurching at post-Katrina garble. Last Monday, the purchasing managers' manufacturing index for September soared to 59.4 from 52 in August, and the bond market fell apart in an instant. Bonds revived the next morning on news that the manager's service-sector index had crashed to 53.3 post-Katrina from 65 in August.

The durable and damaging residual from the purchasing managers' whipsaw: the prices-paid component of the surveys went off-chart in September: roughly 80 percent of purchasing managers paid higher prices for everything, not just energy products.

Friday morning's coulda-been-worse September job report blew up bonds until traders realized the data didn't include all the Katrina job losses. However, strong revisions in July and August jobs confirmed that the pre-Katrina economy was much stronger than thought, largely unharmed by energy prices and the Fed.

To understand inflation, make friends with somebody old. No one under 45 has a business memory of an energy-driven inflation episode. The central error that kids are making today is to believe that rising prices will slow the economy. The lesson of the '70s: early-stage inflation stimulates the economy. Widely rising prices make the economy run hot – until the Fed removes the money necessary to pay them.

The Fed probably has a long way to go from today's 3.75 percent to pre-empt inflation; on the low side of proper estimates, 4.5 percent by Fed Chairman Alan Greenspan's last meeting on Jan. 31. The crucial 2s-to-10s Treasury spread is still within .2 percent, indicating that the market expects/hopes that the Fed will be tough enough, soon enough.

Read the entire Lou Barnes Inman News article at Citywide Services

Tuesday, October 11, 2005

How to get an Accurate Appraisal

Bob Bruss offers his advice in Inman News

Savvy homeowners and realty agents can use the Internet to research home values within a specific area. As I recently discovered, computerized appraisals are becoming more and more accurate. But there are still a few basic rules to assure an accurate appraisal:

1. GET THE PROPERTY INTO TIP-TOP CONDITION. If you need a top-dollar appraisal of a house or condo, whether you are a buyer, seller or refinancing homeowner like me, the first step is to get it into its best "model home" condition. Experienced realty agents can provide excellent advice on how to do this, such as by cleaning, repairing and fixing up.

2. ALWAYS ACCOMPANY THE APPRAISER. Either the property owner or the realty agent involved in the property sale should always accompany the appraiser to answer any questions about the home's benefits and features.

As I was prepared to do when my home was recently appraised, it helps to be prepared with a list of nearby recent comparable home sales prices and a list of the home's features.

It is not unusual for a busy appraiser to inspect three or four homes per day and, after a while, even with the help of digital photos, those homes tend to blur in the appraiser's mind so any information the appraiser has when writing the appraisal can help.

3. BE SURE THE LENDER WILL PROMPTLY PROVIDE A COPY OF THE APPRAISAL. Although the home buyer or owner often pays for the appraisal, technically the appraisal belongs to the mortgage lender who ordered the appraisal. Borrowers should be certain the lender agrees to promptly supply a copy of that appraisal so the borrower can review it and correct any mistakes the appraiser might have made. My lender (Wells Fargo) even sent me a FedEx overnight copy of the appraisal.

If you feel the appraiser has made a serious error and he or she refuses to correct it, ask the mortgage lender for a prompt "review appraisal" by another appraiser to be paid by the lender. Should you discover a violation of appraisal standards, a complaint to the state appraisal license agency will usually produce an investigation and even discipline, if warranted.

Sunday, October 09, 2005


Bob Bruss shares this story of his recent appraisal in Inman News

In the past, I've written many times that real estate appraisal is an art rather than an exact science. But, thanks to computerized appraisals, I'm beginning to wonder.

After my refinanced mortgage was approved, subject to the appraisal, my lender's loan agent (who was located in Las Vegas) asked if I knew of any good local appraisers. Even after phoning some of my Realtor friends who sell homes in my town, there was no consensus of who is the best appraiser.

So the loan agent phoned a few nearby bankers and hired a highly recommended appraiser from a nearby community.

When she arrived at my house in her sports car, with her dog in the back seat, I wasn't sure what to think. Although my house is "average" for the area, the appraiser was neither critical nor praising. But she was very professional and extremely competent.

I was armed with some recent "comps" (sales prices of similar nearby homes) to hand to the appraiser, along with a list of my home's features. But when I mentioned what I thought my house is worth, she replied, "You might be a bit on the low side."

That's when I decided to keep that information to myself and see how the appraisal turned out. Two days later, the loan agent phoned from Las Vegas to tell me the appraised value. It was about $100,000 higher than I estimated.

When I received a copy of the appraisal from the lender, it turned out the appraiser knew of several very recent comparable home sales prices within a block or two of which I was not aware. I'm sure glad I kept my mouth shut.

Read the entire article at Citywide Services

Thursday, September 08, 2005

Resources to help Katrina survivors find housing

RISMEDIA, Sept. 8, 2005 — Various online resources are now stepping up to help find housing for survivors of Hurricane Katrina. Some of the newer Web sites are collecting and displaying shelter and housing information.

National Association of REALTORS®, Welcome Wagon Partner Welcome Wagon has announced the launch of Now, individuals and families in need of temporary or permanent housing may use a single online location to search for available housing in shelters, churches, apartment complexes, single-family homes and senior facilities throughout the Gulf Coast and neighboring communities.

At, users, including survivors of Hurricane Katrina and their friends and family, as well as relief agencies and other volunteers, can search a comprehensive database of available homes and sort by city/state, number of people and length of stay.

At, individuals also have the opportunity to post information about open beds, extra rooms, guest houses and other temporary housing that they may have available. E-mail if you would like to add your Web site to this free resource. Adds Itself to the Mix has launched the Hurricane Katrina Resource Center within its site to help the estimated 500,000 to upward of 1 million homeless and displaced citizens in the Southeastern United States.

The Resource Center provides valuable information to help individuals locate rental information or other Hurricane Katrina relief resources quickly and easily. Individuals can access the Hurricane Katrina Resource Center at

The Resource Center includes links to city pages in areas that have been identified as relief cities, including Houston, San Antonio, and Dallas, Texas; Memphis, Tennessee; Birmingham, Alabama; and Pensacola, Florida.

Web Designers Launch New Web site to Help Find Emergency Housing

Three young Web designers have launched a new Web site——to organize housing offers in one easy-to-find place.

On, people offering housing provide their zip codes, the number of people they can accommodate, how long space is available, and whether pets, smokers or children are allowed. Refugees can then zero in quickly on the factors that interest them. Like Craig's List, is dedicated to helping people connect with one another and does not verify the information posted.

‘Make A Home’ Matches Shelters with Those in Need Thousands of offers of shelter placement are being collected on the Web site of the Houston Association of REALTORS®, as project “Make A Home” accelerates. The partnership on the project is between HAR, KPRC-TV Channel 2, the Houston Area Urban League, the Houston Bar Association and the Houston Young Lawyers Association.

More than 1,250 properties have been donated so far and the numbers are increasing by the hour, with rooms, vacant houses, apartments, mobile homes and a variety of properties being offered for shelter. For more information, visit and click on the ‘Make a Home’ icon. The site links are: Apply for Shelter, Donate Shelter, Find Shelter, Short Term Lease and Volunteer Opportunities.

Thursday, September 01, 2005

Relief Response to Hurricane Katrina

In light of the devastation caused by Hurricane Katrina primarily in Louisiana, Mississippi and Alabama, the Appraisal Institute is extending its support to its members in the affected areas. “Recognizing the severity of the losses potentially suffered by many of our members and the time it may take for them to return to normal business operation, we will provide assistance to those members wherever we can,” stated president Bruce Kellogg, MAI. He indicated that the Appraisal Institute will work with chapters in the affected areas to offer assistance for members who suffer serious damage or loss of business due to Hurricane Katrina.

“We encourage members throughout the country to donate to such groups as the American Red Cross or other relief agencies,” Kellogg said. For more information on Red Cross, visit

Wednesday, August 31, 2005

Second-home purchase gets easier for veterans

But original VA loan must be paid off to qualify

The tremendous the growth of the housing market is being pushed along by the lower-than-expected long-term interest rates and the idea that real estate is a wise investment. In addition, consumers are more reluctant to plow their hard-earned cash into the inconsistent conventional financial markets and now are buying an additional piece of real estate sooner in their lives.

In fact, the second-home market is so huge and important to the United States' economy that the largest survey ever conducted by National Association of Realtors was dedicated to the second-home phenomenon that grew 40 percent in the number of homes sold from 1995-2000. NAR's definition of "second home" now includes single-family dwellings, including condominiums, other than a primary residence. Last year, the purchase of investment property and vacation homes accounted for more than one-third of residential transactions.

Some of these homes will eventually become retirement homes where seniors and aging baby boomers will spend most of their time. Why not purchase it with the help of a VA loan? While federal regulations require that all loans insured by the Department of Veterans' Affairs be used only to acquire a "primary residence," it is possible to purchase a second home using your VA loan guaranty. As in many cases involving the use of real estate, the definition of primary residence is the place you live "most of the year." So, if you use the home more than six months of the year, it can be defined as your primary residence.

"The law was not intended to help people enter the business of real estate and purchase lots of homes," said Chris Michel, a former naval reservist and founder and president of, an Internet site targeting present and former military personnel and their families. "The law was written to help people afford the home that they are going to occupy.

Read the entire Tom Kelly Inman News article at Citywide Services

Monday, August 29, 2005

Real estate rates ride energy-market roller coaster

Weak home sales, high gas prices cause distress

More than two weeks ago, in an apparently sustained and explosive rise, the 10-year T-note traded at 4.4 percent, and low-fee mortgages were 6 percent. Today, Treasurys reached 4.15 percent, and mortgages 5.75 percent.

There is no consensus explanation for the decline.

Yes, these are the quietest weeks of the year in the bond market (all the heavies are on Hampton beaches, kicking sand at lightweights), and weird stuff happens when nobody is home.
Nothing seems to have changed at the onward, upward Fed. Chicago Fed prez Moskow on Thursday delivered merciless remarks: "...Continue to reduce accommodation...core inflation higher..." and said 5 percent unemployment [where we are now] is "about as low as it can go on a sustained basis."

One predominant bond-market theory: high energy prices are more likely to slow the economy than produce inflation. So, new highs last week (oil $67/bbl, and all-time high natural gas at $9.50/mbtu) may be pressing down long-term rates. is it possible for these prices not to produce some inflation?

Trading on Tuesday and Wednesday gave a very clear picture of the markets' mind. First thing Tuesday, news of weakness in sales of existing homes took down the stock market and brought happiness to bonds, long-term rates down. Then on Wednesday, rapid-fire: news that orders for durable goods had crashed 4.9 percent in July brought a big bond rally; then strength in sales of new homes reversed the rally and got the stock market excited; then energy prices hit their new highs, collapsing stocks and re-igniting the bond rally.

Who is in charge? What is the predominant force?

Read the entire Lou Barnes Inman News article at Citywide Services

Saturday, August 27, 2005

Responsible Appraisals & Valuations Campaign

In his letter Jay Delich explains why he supports the National Community Reinvestment Coalition.

Throughout my career as a real estate appraiser I have devoted much of my energy in support of the objective of the American dream of home ownership. It is an act of faith that owning one's home is a worthy goal for everyone. Today, there are disturbing trends that compromise what is a literal foundation of our national prosperity and sense of well-being and compel me to share my thoughts.

Several assumptions supported the lending world of the past. Real estate will increase year by year over a long period of time. The lender held an asset to match a balance sheet liability. A good illustration of this is that lenders used to exact prepayment penalties to those who paid the loan off too soon -- an indirect assertion of confidence in ever-upward trends.

The property was usually local to the lender, and the banker knew the property or neighborhood, the customer and the local economic climate. It was all part of a simple process to help people buy a home that they were eager to pay off as soon as possible. The business model was based on loyalty and demanding an honest opinion of value to protect the consumer and the lender.

Today, of course, there is more mobility, and homes are bought and sold much more often. Rather than pay down a loan, borrowers rush to further encumber the property to extract cash for other purposes. Second mortgages are not new, but they were originally only given to improve the home -- a sort of self-securing increase in asset value.

Today borrowers are using creative lending products that they have no intention of paying off! ARM production accounts for over 50 percent of all the loans funded in the industry in the first quarter of 2005 and there are hundreds of lending options that range from the local mortgage broker to on-line lenders who garner several rate quotes for borrowers all waiting to sign people up for mortgages they might not really be able to afford.

More and more, unlawful pressure to inflate appraisals by lenders, brokers, and real estate firms, has compromised the housing and lending markets. While the impact of low rates, new lending products and demand for homes drove prices up for many years, the impact of this pressure has compromised the integrity of our housing market. The current pressure on appraisers to make value is unprecedented.

While there may be no national bursting of the bubble, local markets surely are already being affected. Where it hits, it will hurt, and the shock will be greatest on those borrowers that can least afford it.

I believe it is time for action by the private sector. We still support the American dream of home ownership, but voluntary action by appraisers, lenders and realtors to take action in serving the housing industry will have the most immediate positive impact.

I have read the report that the National Community Reinvestment Coalition released entitled, “Predatory Appraisals; Stealing the American Dream”, and I have had discussions with members of the NCRC. I applaud their desire to create a solution that is industry inclusive, allowing for all industry participants to adopt a Code of Conduct which, when followed and enforced, will interject a market solution.

Most importantly for appraisers, the NCRC solution provides a means of redress for unlawful retaliation against appraisers who have refused to submit to improper influence. It, as well, gives lenders similar redress against brokers or real estate firms who improperly influence valuations or retaliate against failure to give in to such influence.

Once established, the entire lending community should recognize those appraisers, lenders and management firms who agree to adhere to this code of conduct. We need positive solutions as proposed by NCRC to help prevent the overvaluation of homes that could compromise the American dream. I encourage all appraisers and industry participants to embrace the NCRC initiative and adhere to the NCRC Code of Conduct.


Jay K. Delich, SRA, SCRP, IFA

Friday, August 12, 2005

“The Housing Bubble Fact Sheet”

“The Housing Bubble Fact Sheet,” describes why the rise in housing prices constitutes a housing bubble and what can be expected when it inevitably collapses, the center says.

Over the last eight years, the United States has seen an unprecedented rise in housing prices that has created $5 trillion in bubble wealth. Like the late-1990s stock bubble, this run up in home prices cannot be explained by the fundamentals of supply and demand. It is a speculative bubble that will inevitably collapse and almost certainly throw the economy into a recession when it does, he says. The “Housing Bubble Fact Sheet” provides an overview of the housing market and its implications for the economy:

Check out the Housing Bubble Fact Sheet

Thursday, August 11, 2005

Federal Reserve Raises Target for the Federal Funds Rate

As expected, the Federal Reserve has raised the target for the Federal Funds Rate to 3.5 percent.

The increase represents a quarter of a percentage point. The Fed is likely to keep raising interest rates at its final three meetings of the year, in September, November and December, leaving the funds rate at 4.25 percent at year's end, key economists are predicting.

Thursday, July 21, 2005

Real estate booms not always followed by busts

Economists weigh in on debate

WASHINGTON, D.C. – How do you define a housing boom? Does a bust always follow a boom? What's the difference between a significant slowdown and an absolute bust?

With real home-growth prices (appreciation minus inflation) rising to their highest levels since the data was first collected in 1977, the Federal Deposit Insurance Corp. has brought some definition to the amazing national housing picture, announcing that there were 55 boom metro markets at the end of 2004, up from 32 a year earlier.

Boom markets, where real price-growth increases at least 30 percent over three years, were heavily concentrated in California (21), the Northeast (18) and Florida (11). And, according to the FDIC, boom does not necessarily lead to bust – only 17 percent of all housing booms ended in busts. Most busts were preceded by a significant stress in local economies, such as loss of jobs. A bust is defined as a nominal drop of 15 percent over five years.

Read the entire article at Inman News

Sunday, July 10, 2005

Prices top $1 Million for Mobile Homes in Malibu

So it has come down to this, you pay $1 Million for a home and you are still considered "Trailer Trash".

Malibu, California is a place where the average list price for a single family home is a whopping big $4.4 million smackers. There on the other side of the tracks is the eyesore Point Dume Club, the local trailer park.

In the park a 2 bedroom, 2 bathroom mobile home is selling for $1.4 million. Two others have sold recently for $1.3 million and $1.1 million and there is a listing for $2.7 million.

I think Warren Buffett was right. It is time to get out of ocean front property in California.

Friday, July 08, 2005

Port St. Lucie, Fla., is Fastest-Growing City Census Bureau Says

Port St. Lucie, Fla., had the nation’s fastest growth rate among large cities (100,000 or more population) between July 1, 2003, and July 1, 2004, according to new U.S. Census Bureau population estimates.

Located along the Atlantic coast between Cape Canaveral and West Palm Beach, and spring training home of the New York Mets, Port St. Lucie saw its population increase 12 percent during the period, to 118,396. It was joined on the list of the 10 fastest-growing cities by two others in the Sunshine State: Cape Coral (ranking fifth) and Miramar city (eighth).

California had four cities in the top 10: Elk Grove (second), Moreno Valley (sixth), Rancho Cucamonga (ninth) and Roseville (10th). Two cities in Arizona were in the top 10 — Gilbert (fourth) and Chandler (seventh) — and, relatively nearby, North Las Vegas, Nev., was third.

Elk Grove, Miramar and Roseville each became eligible for this list for the first time, as all three cities passed the 100,000 population threshold between 2003 and 2004.

New York City continued to be the nation’s most populous city, with 8.1 million residents. This was more than twice the population of Los Angeles, which ranked second at 3.8 million. The estimates show that among the 10 largest cities, only one change has occurred in the rankings: San Jose, Calif., has replaced Detroit, as the nation’s 10th most populous city.

Phoenix had the largest population increase between 2003 and 2004, adding 29,826 people. Los Angeles; San Antonio; Las Vegas; and Fort Worth, Texas, rounded out the list of the five biggest numerical gainers.

In addition to the estimates for the nation’s 19,465 incorporated places, the Census Bureau also released estimates for the nation’s general purpose minor civil divisions — those that have functioning governments. Incorporated places include cities, towns, villages and boroughs in most states.

For more information about the geographic areas for which the Census Bureau produces population estimates, see <>.

Thursday, July 07, 2005

What does Buffett think of the Bubble?

Warren Buffett, the second richest man in the world, recently had a few things to say about the Real Estate Bubble at a meeting of his shareholders.

"A lot of the psychological well being of the American public comes from how well they've done with their house over the years. If indeed there's been a bubble, and it's pricked at some point, the net effect on Berkshire might well be positive [because the company's financial strength would allow it to buy real-estate-related businesses at bargain prices]....

"Certainly at the high end of the real estate market in some areas, you've seen extraordinary movement.... People go crazy in economics periodically, in all kinds of ways. Residential housing has different behavioral characteristics, simply because people live there. But when you get prices increasing faster than the underlying costs, sometimes there can be pretty serious consequences."

"I recently sold a house in Laguna for $3.5 million. It was on about 2,000 square feet of land, maybe a twentieth of an acre, and the house might cost about $500,000 if you wanted to replace it. So the land sold for something like $60 million an acre."

There are some very extreme housing price bubbles going on.

Sunday, July 03, 2005


Mortgage rates fell this week, as they have 12 times in the previous 14 weeks. The average 30-year fixed rate mortgage dropped from 5.66 percent to 5.61 percent, according to's weekly national survey of large lenders.

The 30-year fixed rate mortgages in this week's survey had an average of 0.36 discount and origination points.

The 15-year fixed rate mortgage, popular for refinancing, declined from 5.28 percent to 5.23 percent. The average rate for the jumbo 30-year fixed rate mortgage dipped from 5.93 percent to 5.9 percent. Adjustable rate mortgages were no different, with the average 5/1 adjustable rate mortgage sliding from 5.2 percent to 5.16 percent, while the one-year ARM inched lower from 4.69 percent to 4.68 percent.

Mortgage rates have moved in a narrow range in the past month, with the average 30-year fixed rate ranging from 5.61 percent to 5.73 percent. This week was no exception, with rates fluctuating very little in response to gyrating oil prices and an upcoming announcement by the Federal Reserve on June 30. Oil prices first exceeded, then retreated from, the $60 per barrel mark. The Fed is expected to boost short-term interest rates for the ninth time in the past year, a series of events that have had no effect on fixed mortgage rates. In fact, fixed mortgage rates have fallen throughout the past year. One year ago, the 30-year fixed rate mortgage was 6.3 percent. The unprecedented decline in fixed mortgage rates amid successive Fed interest rate hikes has soothed the sting of rising home equity and credit card rates for many borrowers, as refinancing at low fixed rates locks in monthly payments.

Mortgage rates remain near the lowest point of 2005. As a result, monthly mortgage payments are very affordable. One year ago, the average 30-year fixed mortgage rate was 6.3 percent. At the time, the monthly payment on a $165,000 loan was $1,021.31. With the average rate now 5.61 percent, the monthly payment on the same $165,000 loan is $948.27. Refinancing now would save $73 each month or more than $26,000 over the loan term.

Friday, July 01, 2005

Federal Reserve Raises Interest Rates for a Ninth Time

The U.S. Federal Reserve raised an important interest rate by another quarter-point on Thursday.

The action pushed the federal funds rate up to 3.25 per cent. It marked the ninth increase in the interest that banks charge each other on overnight loans and left this benchmark rate at its highest level since August 2001.

In a carefully phrased document, the Fed says that, "even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity."

"Although energy prices have risen further, the expansion remains firm and labor market conditions continue to improve gradually. Pressures on inflation have stayed elevated, but longer-term inflation expectations remain well contained."

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Edward M. Gramlich; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.

Tuesday, June 28, 2005

Rates fall, home sales soar, bubble talk explodes

Mortgage market commentary: What's behind this?

Mortgages are back down to 5.5 percent, taken down by the 10-year T-note's return to 3.93 percent, that dive in turn caused by events overseas.

As of Friday, the mortgage market is in a pattern not seen since 1995: on a fee-equivalent basis (no points, no origination), 5/1, 7/1 and 10/1 hybrid ARM rates are about the same as fixed-Fannie. As the Fed pushed the cost of money from 1 percent to 3 percent in the last year (going to 3.25 percent this Thursday, 3.5 percent in August...), the ARM-to-fixed spread has narrowed and now closed. 3/1s can be had under 5.5 percent (for another month or two), and one-month COFI and MTA teasers are sub-3 percent, but both will index to the mid-fives, and then rise monthly as lagging indices catch up with the Fed. Figure a tenth a percent a month for a year or more. Cheers.

This ARM-to-fixed spread may go ARMs-on-top, and will persist until the Fed overshoots neutral and has to cut its rate; or the Fed turns out to be right about economic heat and inflation risk, and long-term rates blow out of a colossal mistake.

Domestic economic data were strong, but a European recession threatens to spread worldwide, except for the United States and non-Japan Asia. If the slowdown happens, even the exceptions will falter, and the prospect creates a lot of buyers for bonds.

Read the entire Lou Barnes article at Inman News

Sunday, June 26, 2005

Economic upswing to spark more interest-rate hikes

Job market not so weak after all

Mortgage rates have behaved very well, low-fee 30s staying about 5.625 percent as long Treasury rates completed a return to 4.1 percent, "V"-ing out of sub-4 percent ground for the umpteenth time since 2003. This latest excursion below 3.9 percent was the temporary artifact of end-stage short-covering by rate bears and equally last-ditch buying by economic bears. Both extremes paid the price for error.

The business media are so completely preoccupied with Housing Bubble coverage that it's hard to find straight stories on the economy.

(The bubble stories all say that people in and near housing sound like tech stock players circa 1999; maybe, but the media are in a perfect replay of their Y2K coverage. This week's bubble-booby prize to the New York Times: its huge, front-page biz-section blast on the surge in interest-only mortgages since 2001 failed to mention that there weren't any available before 2001 – quarter-century-old products like equity lines of credit and option ARMs excepted.)

The economy is behaving in ways different from the cyclical patterns 1945-1990, and some we do not yet understand (the trade deficit), but the differences should not be mistaken for weakness. The changing market for jobs tops that list.

A "weak job market" has been the mantra of this post-bubble (stocks, that is) era: soggy growth in "non-farm payrolls"; wage growth barely even with inflation; 65 percent of Americans saying jobs are hard to find; and domestic employment suffering from overseas competition and outsourcing.

Read the entire Lou Barnes Inman News Article

Friday, June 24, 2005

Signs the real estate market is changing

Economy, unsold inventory among things to watch

Hot real estate markets don't stay hot forever. In some areas around the country, the home sale market has already slowed after being robust for several years.

For years, the unsold inventory index has been used to predict which way the market and home prices were moving. The unsold inventory index reports how many months it would take to sell the existing inventory of homes for sale at the current sales pace.

Changes in the unsold inventory index are directly related to changes in supply and demand. When the demand for housing goes up, the pace at which homes sell accelerates and the existing inventory of homes for sale decreases. As inventories shrink, prices often go up as more buyers compete to buy a limited number of listings.

When demand for housing goes down, it takes longer for homes to sell. Inventories tend to rise, as does the unsold inventory index. In this sort of environment, prices may decline.

Read the entire Dian Hymer Inman News article

Tuesday, June 21, 2005

Major red flag of adjustable real estate loans

Adjustable-rate mortgages (ARMs) are becoming increasingly popular with borrowers, and the cost of borrower ignorance about ARMs is growing with it. Every day I encounter misperceptions that have led to bad decisions, or are about to.

To avoid getting trapped into a bad ARM, it is very useful to understand the difference between the interest rate and the fully indexed rate (FIR).

The ARM interest rate is the rate you see: it is the rate quoted by the loan provider, and the rate shown in the media. It is the same as the rate on a fixed-rate mortgage, with one difference. The ARM rate holds only for a specified initial period. That period can be as short as a month, and as long as 10 years. At the end of that period, the rate is adjusted.

The FIR is the rate you don't see. It is never quoted, never shown in the media, and is not a required disclosure. Yet it is the major indicator of what will happen to the rate at the end of the initial rate period.

If the initial rate period is long and the borrower expects confidently to be out of the house before it is over, the FIR is unimportant. But if the initial rate period is short, or if there is a reasonable probability the borrower will still have the mortgage when it ends, the FIR is critically important to the borrower.

The flexible-payment, or "option" ARM, which has been growing in popularity, has an initial rate period of one month. It is a favorite instrument of hucksters because they can advertise rates as low as 1 percent. They don't bother to mention that this rate holds only for the first month. The FIR, which provides the best clue as to what the rate may be in the 359 months that follow, is seldom volunteered.

Read the entire Inman News article by Jack Guttentag

Thursday, June 16, 2005

Harvard Study Reports Hot Housing Market Masks Eroding Affordability and Mounting Risks

Even though the U.S. housing market is continuing to break records, various risks are on the horizon that could pose serious problems for homeowners in the future, according to a new Harvard study.

This analysis comes as affordability continues to be a dilemma for many Americans, the Joint Center for Housing Studies reports.

In 2004, housing markets posted record growth. Homeownership reached an all time high of 69 percent, with households of all ages, incomes, races and ethnicities joining the home buying boom. Single-family starts hit a record 1.6 million units, while new and existing home sales grew to nearly 8 million. Mortgage product innovations helped markets stay hot. Subprime loans gave millions with blemished credit records, who would previously have been denied a loan, the chance to buy a home.

Meanwhile, interest-only and adjustable rate loans are helping blunt the impact of higher home prices. Indeed, adjustable rate mortgages accounted for more than a third of all mortgage loans last year and interest-only loans for nearly one-quarter.

Read the entire article at RIS Media

Monday, June 06, 2005

Real estate rates fall after Fed official drops 'bomb'

But more rate hikes expected

A peculiar confluence of weak data and goofy Fedology suddenly knocked the 10-year T-note below 4 percent, which in turn took mortgages under 5.5 percent.

The rate slide started on Tuesday with the newest drop in the purchasing managers' index, down in a straight line for a year from healthy-pink 60s to 51.4, perilously close to the economic stall marker at 50. Weekly filings for unemployment insurance have popped to 350,000; the Challenger layoff forecast has sharply deteriorated, especially in IT; and this morning's payroll gain for May was an anemic 78,000, less than half the forecast.

The lousy payroll number "should" have taken rates even lower, but by Friday rates had fallen so far that lousy wasn't enough; we needed awful.

Enter the peculiar parts. The economy does not appear to be all that weak – feeling the effect of global competition, but not in a stall. Example: U.S. auto sales slumped 8 percent in May – "U.S." as in GM, Ford, and DaimlerChrysler. Foreign-made cars, or cars made here under foreign management, did fine. Ford takes 37 hours to build a car; Toyota less than 28.

Foreign competition hurts wages and employment, but it has also slammed the lid on the inflation that $55/bbl should have brought. Should the Fed tighten more, into a low-inflation, sluggish-employment, and slowing economy?

Managing the economy is serious business, but last week's Fed follies were full-on black comedy. Wednesday morning, wearing a big grin on CNBC, the rookie president of the Dallas Fed, Richard Fisher: "We've gone through eight innings here, 25 basis points an inning. The next meeting in June is the ninth inning."

Read the entire Lou Barnes Inman News article at Citywide Services

Friday, June 03, 2005

Greenspan uses F-word to describe real estate

But Fed chair does not see significant price declines

Long Treasury rates stayed in a 4 percent-4.09 percent band, and mortgage rates grudgingly acknowledged the improvement, dipping just below 5.625 percent.

Economic data played no role. First-quarter GDP was revised upward to 3.5 percent, as anticipated, confirming that an apparent early-spring slowdown was a mirage.

All week long, the financial markets were dominated not by data, but by chatter. The loudest: housing, housing, housing, bubble, bubble, toil and TROUBLE!

Federal Reserve Chairman Alan Greenspan turned up the eye-of-newt volume: "We don't perceive that there is a national bubble, but it's hard not to see...that there are a lot of local bubbles."

Oh, really. This from the man who as late as 2000 refused to use the words "bubble" and "stock market" in the same sentence, except to say that a bubble could only be detected in retrospect? That markets must be trusted? That the Fed should not attempt to intervene, and instead should wait, repairing any damage from a blown bubble after detonation? That same guy, who wouldn't snip margin loans?

Yeah, that guy. He has aged visibly; his exceedingly precise use of language departing. Perhaps he didn't quite mean what he said. In all this housing shouting, there is a terrible problem with terminology. A real bubble is price-bloat followed by a crash; not a mere "correction" (a 10 percent drop in price is the limit for that euphemism), not a "retracement" (a one-third decline), but an honest-to-Pete crash. Authentic bubbles: the Nasdaq is still 60 percent below its bubble top; the Nikkei fell 80 percent from its 1989 peak at 38,134, and today still languishes 70 percent below.

Are several local housing markets over-extended? Sure. Are some current rates of appreciation "unsustainable?" Of course. No market for anything can compound at 20 percent per year for long. But, are home prices poised for the 33 percent-plus decline required to classify as a bubble? Not even the Chairman thinks so, pointing to losses ahead only for latecomers to the party. Housing is NOT in a bubble; in places it is overdone and due to correct, painfully for some, but not free-fall.

Read the entire Inman News article by Lou Barnes

Tuesday, May 31, 2005

Is there a Housing Bubble? When will it Burst?

Real estate prices have gone through the roof, and they are still climbing. Many say the end is near and the "Sky is about to fall". Peter Pike noted the following in the Pike Net Dispatch

Hot, Hot, Hot... "Real Estate Gold Rush," Fortune's recent cover blares out. "Riding the Boom," its feature story, is sub-headlined,"They snap up real estate, flip it, then chase the next hot market. They're the new day traders -- and they're dancing on the edge of a volcano." (May 30, 2005)

Housing prices are up an average of 50% over the past five years. "Economists say today's debt-fueled investment binge in real estate is fanning the flames of an already overheated housing market..." (Wall Street Journal, May 23, 2005)

Whoa. Do you hear echoes of the dot-com bubble bursting? Last year interest-only loans accounted for 31% of all U.S. mortgages (up from 1.6% in 2001). In some markets it's even higher, accounting for two-thirds of all loans in the San Francisco Bay Area, warns Thomas Sowell. (Wall Street Journal, May 26, 2005)

"The value of a house, like the value of any other asset, depends on its prospects -- and those prospects obviously look better before a bubble bursts. ... How much of a decline and how far the repercussions extend, if and when the bubble bursts, is the big question."

Meanwhile the chief economist of the Mortgage Bankers Association, Douglas Duncan, expecting "significant reversals" in strong regional housing markets, prepares to sell his Washington D.C. home, saying, "I'm going to rent for a while." (Los Angeles Times, May 29, 2005)

Remember Alan Greenspan warning about "irrational exuberance" in the stock market in 1996? Here's Greenspan now speaking in a similar code about the housing market, "Without calling the overall national issue a bubble, it's pretty clear that it's an unsustainable underlying pattern.'' (New York Times, May 21, 2005)

So if current levels of price appreciation are "unsustainable" and the bubble bursts, will it affect commercial real estate? How are you preparing for it?

Tuesday, May 24, 2005


The Fed chairman argued that while there isn't a national housing bubble,many regional high-priced pockets exist.

The nation's housing market contains "a lot of local bubbles" with "unsustainable" price gains, but significant price declines are unlikely, Federal Reserve Chairman Alan Greenspan said Friday.

Even if housing prices do fall, the drop won't hit most homeowners hard because of the huge amount of equity already in their homes, Greenspan told more than 1,000 onlookers at a meeting of the New York Economic Club.

"There are a number of things which I think suggest, at minimum, that there's a little froth in this market," Greenspan said, to laughs from those thinking that might be an understatement.

The Fed chairman argued that while there isn't a national housing bubble, many regional high-priced pockets exist. "It's pretty clear that it's an unsustainable, underlying pattern," he said.

Read the entire Newsday article

Monday, May 23, 2005

Agency Sounds Warning On Stated-Income And Interest-Only Mortgages

by Kenneth R. Harney

An important mortgage market player has sounded an alarm about limited-doc and interest-only features in a growing percentage of home loans, especially those made to purchasers with subprime credit.

In an advisory issued last week, Wall Street's Dominion Bond Rating Service, which assigns risk ratings to mortgage-backed securities pools, expressed "concern" about lenders' potential "easing of credit standards" to boost origination volumes in the post-refi boom climate of 2005.
The rating agency cited interest-only and "stated documentation" loans in new subprime mortgage pools as especially worrisome. "Stated" doc mortgages generally do not require homebuyers to provide hard evidence of income and assets to support their applications. Interest-only loans allow home buyers reduced monthly payments -- there is no principal reduction for an agreed-upon initial period -- but then convert to full amortization for the balance of the term.

Dominion said "mortgages underwritten (with) minimal documentation sometimes account for as much as 50 percent of mortgage pools" in the subprime arena. Yet the no-doc/stated-income concept was originally designed to assist self-employed, business-owning homebuyers with solid credit histories who preferred not to divulge their full financial details. The idea was not designed for buyers with marginal incomes and credit.

No-doc "has since been expanded to include salaried borrowers who cannot or will not show proof of income," said Dominion in its advisory. Some analysts have called such mortgages "liar loans" because the income or assets claimed by the applicant may be illusory or fraudulent. That potential, in turn, raises the chance of future delinquencies and foreclosures.

Dominion is hardly alone in its opinions. Last spring, two major mortgage insurance companies blew the whistle on "NINAs" -- no income, no asset verification loans -- and curtailed issuance of new insurance to no-doc borrowers with low downpayments.

"It may be stating the obvious," said Curt Culver, president and CEO of Mortgage Guaranty Insurance Corp. (MGIC), the largest underwriter in the industry, "but you can't document what you don't have. In many instances (NINAs) are allowing borrowers to do just that. Why wouldn't a borrower choose to fully document their income to assure that they get the lowest possible rate?"

Another insurer, United Guaranty, stopped underwriting non-docs after investigators found that in 90 percent of NINAs that defaulted, mortgage or realty professionals working with the home buyers knew in advance they really didn't have the income or assets necessary to afford the house.

Dominion's concerns about interest-only subprime loans centered around the fact that the industry has "only a limited performance history" on this breed of mortgage. Other analysts have pointed out that interest-only mortgages have a heightened propensity to default because of possible "payment shocks" after the initial low-payment period expired.

For example, say a home buyer takes out a 30-year $333,700 hybrid ARM with an interest-only period of five years. The lender sets the initial fixed payment rate at 5.25 percent -- or $1,460 a month. But in the 61st month, the loan morphs into a one-year LIBOR-indexed adjustable with a standard 2.25 percent margin. With the onset of principal reduction, plus a compressed 25-year remaining amortization term, the monthly payment due from the homeowner would shoot up by 30 percent overnight -- to $1,895 -- if market rates remained flat. But if rates in the economy overall rose by just 1.5 points during the five-year period -- a scenario not unlike what could happen under current Federal Reserve monetary policies -- the payment due in the 61st month would jump by 50 percent to nearly $2,200 a month. That might well be too great a jolt for the homeowners to handle.

The bottom line for realty and loan professionals: Tempting though it may be to "make the deal go through" with the help of short-term payment reduction techniques such stated-income and interest-only, the long-term result for home buyers with subprime credit could prove disastrous -- loss of their home to foreclosure.

Read more at Citywide Services

Sunday, May 22, 2005

New book helps avoid home renovation mistakes

Bob Bruss reviews this book and says, if it doesn't boost property value, don't do it

If you are considering remodeling your home, but you are a little intimidated by the process, reading "What No One Ever Tells You About Renovating Your Home" by Alan J. Heavens will explain the "dos" and "don'ts" for a successful project.

This is not a "how to" book explaining specific tasks, such as installing dry wall. There are lots of other books explaining home remodeling components. Instead, this book takes an overall view of home renovation, explaining when it is wise and when it shouldn't be undertaken.

In a likeable, self-deprecating way, home remodeling expert Heavens shares many of his personal home renovation experiences, mostly to illustrate what not to do. For example, he explains his misplaced obsession with finishing his basement remodel before he completed his more visible and partially completed upstairs fix-up projects.

The book is filled with lots of real-world examples from homeowners who undertook home renovation work, mostly successful, but a few with unplanned results. The story I liked best is about Alex and Beth Cerrato from San Diego who added a 1,500-square-foot addition while continuing to live in their home with their 18-month-old son. That must have been fun. They explain how they hired a recommended remodeling contractor who actually completed the project on budget and delivered top quality work.

Read the entire Inman News article

Saturday, May 21, 2005

Harry C. Goodrich House
 Posted by Hello

Wright Plus Housewalk today in Oak Park

Wright Plus 2005 will be held today from 9am to 5pm in Oak Park, Illinois. On the house tour will be nine private homes, four of these were designed by Wright. Also included will be public buildings, the Frank Lloyd Wright Home & Studio, Unity Temple and the Robie House in Chicago. Tickets cost $70.00 for a Preservation Trust member and $85.00 for non-members. You can purchase tickets on-line at or at the Ginkgo Tree Bookshop at 951 Chicago Avenue in Oak Park.

View all the homes at Citywide Services

Real estate rates stay low as economy improves

New data show GDP growth approaching 4%

The recent rise in rates has reversed, and then some. The 10-year T-note was sub-4.15 percent Friday, flirting with a break below 4 percent, and 30-year fixed-rate mortgages can be found as low as 5.625 percent without fees.

Nobody with good sense knows for sure why long-term rates have broken down (of course, that "good sense" qualifier dismisses a majority of those trading bonds).

For sure, long-term rates have decoupled from economic fundamentals. Rates have been falling for six weeks on the theory that the economy is slowing down, but the newest data says no, not hardly. April retail sales doubled the forecast, and first-quarter GDP growth will soon be revised from 3.1 percent and shaky to close to 4 percent.

In another decoupling, bonds used to improve when oil prices rose, on the theory that high prices would slow the economy, or resulting inflation would force the Fed to slow it down. Oil is down to $48/bbl today, and accumulating inventory and reduced consumption in the United States and China portend a further price decline.

The consensus Fed forecast is still the same: another .25 percent on June 30 and Aug. 9, and a stop at 3.5 percent. Doesn't make good sense to me: the long-rate rally is adding stimulus that the Fed is trying to remove. Why would the Fed stop short?

Read the entire Lou Barnes article at Inman News

Monday, May 16, 2005

Builder confidence rises in May

Strong buyer demand, low rates boost outlook

Builder confidence rose slightly this month, up three points to 70 on a seasonally adjusted annual basis, according to the National Association of Home Builders/Wells Fargo Housing Market Index released today.

Builders have maintained a confidence range between 67-71 for over a year, aided by buyer demand for new single-family homes, continued low mortgage rates and an improving job market, the association reported.

The index is derived from a monthly survey of builders that NAHB has been conducting for about 20 years. Each month, builders report current sales of single-family homes and prospects for sales in the next six months as either “good,” “fair” or “poor.” They also rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

Builders rated the present state of single-family sales at 76 in May, the next six months in single-family sales as 77, and the traffic of prospective buyers at 53.

The component index gauging current single-family sales rose three points to 76 while the component index gauging sales expectations for the next six months and the component gauging traffic of prospective buyers were 77 and 53, respectively.

“Builders have seen an up-tick in traffic and sales brought on by improving economic conditions and mortgage rates that continue to remain at affordable levels. They have confidence in the overall housing market and expect sales to stay strong for the next six months,” said NAHB President Dave Wilson, a custom homebuilder from Ketchum, Idaho.

“Builders obviously continue to see strong buyer demand for single-family homes,” said NAHB Chief Economist David Seiders. “With unsold inventories in good shape, housing starts should be solid in coming months.”

The NAHB/Wells Fargo Housing Market Index is solely the product of the home builders' association and is not influenced by any other party. HMI historical information and tables are available online at:

Read more Inman News at Citywide Services

Wednesday, May 04, 2005

Fed raises target rate to 3%

Long-term mortgage rates still low

The Federal Reserve today decided to raise its target for the federal funds rate by 25 basis points to 3 percent, saying pressures on inflation have picked up in recent months.

In a statement from the Federal Open Market Committee, the Fed said its stance of monetary policy remains accommodative, and "coupled with robust underlying growth in productivity, is providing ongoing support to economic activity."

Rates on long-term mortgages so far have not followed suit. Most economists, however, predict a gradual rise in rates over the course of the year.

The Fed also said today that "recent data suggest that the solid pace of spending growth has slowed somewhat, partly in response to the earlier increases in energy prices. Labor market conditions, however, apparently continue to improve gradually. Pressures on inflation have picked up in recent months and pricing power is more evident. Longer-term inflation expectations remain well contained."

Read the entire Inman News story at Citywide Services

Monday, May 02, 2005

Faltering economy not hurting real estate

Fed likely to continue hiking cost of money

All long-term rates fell again late last week. The benchmark 10-year T-note has broken below 4.2 percent, and an "origination fee" will buy a 5.5 percent 30-year fixed-rate mortgage.

Bond traders are placing recession bets. Not (yet) in expectation of a classic recession in which GDP growth would decline, but a "growth recession" in which GDP growth might slip to 1 percent or 2 percent annual, and the unemployment rate begins to increase. The rationale for a recession bet is this win-win equation: either high energy prices and a tightening Fed have already tipped over the economy, or a worsening inflation problem will force a tighter Fed and tip-over at a later date.

Evidence. Last week's breakthrough bond rally started with news of a steep drop in March orders for durable goods, and gained steam on Thursday's news that first-quarter GDP had grown only 3.1 percent. That's fabulous by European or Japanese standards, but not enough to support U.S. job growth. Internal aspects of the report were worse: "final demand" (purchases by business, government, and individuals) rose only 1.9 percent. The excess of 3.1 percent production over 1.9 percent demand is sitting on shelves and floors as unsold inventory, a disincentive to production in this quarter.

Second, the personal consumption expenditure deflator ("PCE"), used to convert nominal GDP to after-inflation, jumped to an annual 2.2 percent gain. The PCE is Federal Reserve Chairman Alan Greenspan's favorite, and the acceptable band for its movement is 1.5 percent-2 percent; if PCE is in a jailbreak, the Fed is coming no matter what collateral damage its inflation-fighting may (will) do to the rest of the economy.

Read the entire Lou Barnes article at Inman News

Saturday, April 30, 2005

Wright Plus 2005 Saturday May 21st

Michaels Guide to attending the housewalk.

The Wright Plus Housewalk is the main fundraising event for the Frank Lloyd Wright Preservation Trust. In the past 30 years some 60,000 people have attended the event.

Its a good idea to purchase your tickets in advance. Tickets cost $70.00 for a Preservation Trust member and $85.00 for non-members. You can purchase tickets on-line at or at the Ginkgo Tree Bookshop at 951 Chicago Avenue next to the FLW home and studio in Oak Park.

This will be a very busy day so start early. Parking is free in the Holley Court Parking Garage. You can walk from there or take the complimentary shuttle. The tour buildings will be open from 9am to 5pm. Wear comfortable shoes and be prepared for a lot of standing. The lines will be the longest at the FLW houses and I always plan at being at the most popular house waiting before 9am.

Three public buildings by Wright are part of the walk. These include the Frank Lloyd Wright Home and Studio, the Unity Temple and the Frederick C. Robie House in Chicago. With you Wright Plus ticket you can visit these any time during 2005 so its not a good idea to fight the lines and see them on Saturday.

There are four private residences by FLW that are open. These include the George W. Furbeck House, the Rollin Furbeck House, the Harry C. Goodrich House and the William G. Fricke House.Another four houses are included in the walk by architects Henry Fiddelke, Tallmadge & Watson, and George Maher.

Check out photographs of the tour homes at Citywide Services and enjoy the housewalk

Friday, April 29, 2005

HomeServices company launches flat-fee brokerage

EquiSave offers limited service for $3,295

If you can't beat 'em, join 'em. That seems to be the strategy behind a HomeServices company's move to open a new flat-fee real estate brokerage in Iowa late last week.

HomeServices of Iowa has opened EquiSave, which offers to help homeowners sell their houses for a flat fee of $3,295, sources confirmed. HomeServices of Iowa is a newly formed holding company under the HomeServices of America umbrella.

The move marks a significant departure from the usual HomeServices full-service brokerage company models, which typically charge homeowners a percentage of the home sale. HomeServices' operating companies offer brokerage services, mortgage originations, title and closing services, home warranties, property and casualty insurance, and other related services.

Read the entire Inman News story by Jessica Swesey.

Thursday, April 28, 2005

Falling interest rates boost real estate purchases

Refi activity at highest level since March

Overall mortgage applications increased last week, going up 5.9 percent on a seasonally adjusted basis from the week before, according to the Mortgage Bankers Association's weekly survey.

The MBA seasonally adjusted purchase index increased by 3.3 percent to 482 from 466.7 percent the previous week. The seasonally adjusted refinance index increased by 9.8 percent to 2,052.5 from 1,870 one week earlier.

The refinance share of mortgage activity increased to 39.3 percent of total applications, from 38 percent the previous week. The adjustable-rate-mortgage share of activity decreased to 34.7 percent of total applications, from 35.4 percent the previous week.

"With a 9.8 percent increase in applications, refinance activity is at its highest level since March 11," said Michael Cevarr, director of member surveys at MBA, in a statement. "However, refinance applications volume is down 14.6 percent from one year ago."

The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.75 percent from 5.83 percent one week earlier. Points including the origination fee remained at 1.28 for 80 percent loan-to-value loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.33 percent from 5.4 percent one week earlier. Points including the origination fee increased to 1.26 from 1.2 for 80 percent loan-to-value loans.

The average contract interest rate for one-year adjustable-rate mortgages decreased to 4.15 percent from 4.22 percent one week earlier. Points including the origination fee decreased to 0.97 from 1.01 for 80 percent loan-to-value loans.

Read more Inman News at Citywide Services

Tuesday, April 26, 2005

Midwest real estate markets post mixed results

Home prices continue to climb

Housing markets in Illinois and Ohio posted mixed results in March, but maintained near-record sales levels, according to the Realtor associations in both states.

In Ohio, home sales reached 11,929 in March, a 5.9 percent increase from the 11,261 sales recorded during the month last year, according to the Ohio Association of Realtors. The month's average sales price of $148,517 is a 3.6 percent increase over the March 2004 average sales price of $143,411.

Ohio's first-quarter sales of new and existing homes totaled 27,488, a 6 percent increase from the prior record of 25,940 sales posted during the period in 2004.

The state's average sale price (January-March) of $147,172 marks a 4.5 percent increase from the $140,830 average posted during the period a year ago.

In Illinois, March single-family home sales totaled 9,657, down 1.6 percent from 9,817 sales in March 2004 (a historic high for March Illinois home sales). The median price of a single-family home in March 2005 was $184,500, up 10.5 percent from $167,000 in 2004, the Illinois Association of Realtors reported. The median is a typical market price where half the homes sold for more, half sold for less.

Year-to-date, Illinois home sales are off a scant 0.4 percent, from 22,696 homes sold in the first three months of 2004 to 22,602 sales for the same period in 2005.

"Illinois Realtors typically see signs of the spring housing market early in March but the nudge up in mortgage interest rates and higher oil and gas prices factored in to this late start," said John Veneris, president of the Illinois Association of Realtors. "Housing inventories are improving, however, which also will ease prices and help rebalance the market. Buyers should have more choices in the coming months."

A total of 4,502 condominium sales were sold in Illinois in March, up 8.3 percent from 4,156 sales in the same month last year. The statewide condominium median price for March was $200,700, up 8.5 percent from $185,000 one year ago.

In the Chicagoland Primary Metropolitan Statistical Area (PMSA), single-family home sales totaled 5,874, down 2.1 percent from 5,998 home sales in March 2004. The median single-family home price for the Chicagoland PMSA was $249,000, up 9 percent from $228,500 in March 2004.

Condominium sales in the Chicagoland PMSA rose 8.2 percent in March to 4,373 units sold, while the condominium median sales price increased 9.6 percent to $205,000. In March 2004 condo sales for the Chicagoland PMSA totaled 4,040 and the median price was $187,000.

Read more Inman News at Citywide Services

Monday, April 25, 2005

Real estate rates escape forecasts, head south

Fed struggles with 'real recession' possibility

Mortgage rates fell again this week, now the lowest since February. The 10-year T-note has held a 4.2 percent-4.3 percent range, taking even the lowest-fee 30-year mortgages to 5.75 percent, but I can hardly over-emphasize the instability in the markets. The prevailing theory causing stocks to sink and bonds to do well is unproven, unprecedented, improbable – and might be correct anyway.

One lesser theory died quickly this week, the notion that the huge, two-week bond rally taking rates down almost a half-percent was a mechanical mirror of a straight-down stock market. Last week was stocks-straight-down, Wall Streeters offering clients the traditional euphemism, "unexpected volatility," bonds improving at each stock slide. This week stocks entered true volatility, down 100-Dow points Wednesday, up 200 on Thursday, sinking again today, but bonds held steady.

The real bond trade has not been tied just to stocks, but to energy prices, inflation, and expectations of the Fed and the economy. For anyone who lived through the 1970s, or studied them – let alone worked in financial markets then – the theory behind this vigorous return to very low long-term rates is wishful.

Read more Lou Barnes Imnan News at Citywide Services

Sunday, April 24, 2005

Real estate: The week ahead

Urban planners head to Texas; 'Living Green' kicks off in Minnesota

The Urban Land Institute's 2005 Spring Council Forum is slated for April 27-29, in San Antonio, Texas. Council members of ULI will gather for two days of workshops, meetings and tours. Author and New York Times columnist David Brooks will be the featured speaker.

The Seaside Institute, Looney Ricks Kiss Architects will host "Uptown, Downtown and Around Town: Building Value in a Community," April 27-29, in Memphis, Tenn. The program is designed to be a candid discussion of the pitfalls and successes of Memphis' revitalization through a series of case studies and tours.

The Living Green Expo, hosted by the Minnesota Office of Environmental Assistance, will take place April 30-May 1, in St. Paul, Minn. The expo features 72 concurrent workshops on a variety of sustainability and "living green" topics throughout both days. Topics include transportation, energy, home building and remodeling, recreation and leisure, and household practices and products.

The 2005 Western Regional Mutual Self-Help Housing Conference is slated for April 26-28, in Salt Lake City. The event, hosted by the Rural Community Assistance Corp. and USDA-Rural Development, includes sessions for board members, construction supervisors, group coordinators, program directors, bookkeepers, grant managers, housing counseling staff, and USDA-Rural Development staff. There will be job-related and regional networking sessions. The workshop tracks are management, real estate development, design and construction, marketing and recruitment, fiscal management, loan underwriting, and Self-Help 101

Read more Inman News at Citywide Services

Friday, April 22, 2005

Chicago Bungalow's Posted by Hello

2005 Chicago Bungalow Expo

Chicago is home to more bungalows than any other single building type. Estimates hover at around 80,000 bungalows just within city limits, representing nearly one-third of the single-family homes

To help preserve these significant homes, Mayor Daley announced the beginning of the Historic Chicago Bungalow Initiative in September of 2000. The initiative offered incentives to buy and rehab bungalows and for present owners to improve them. The grants do not depend on income, but solely on the purchase or ownership of a Chicago bungalow.

The Historic Chicago Bungalow Expo' 05 will be held April 30, 2005 from 10am to 4pm at the Illinois Institute of Technology, Herman Union Building -3241 S. Federal Street.

About 9,000 are expected to attend the expo, where bungalow owners can find over 100 exhibitors that provide goods and services to preserve and modernize their Chicago bungalow.

There will be approximately 50 workshops covering everything from the building permit process, financing and kitchen design. You can apply to certify your bungalow at the Expo. Staff will be on hand for same day certification.

For more information go to

Wednesday, April 20, 2005

Reverse mortgage ignorance a growing trend

Many seniors unaware of home's long-term-care-financing potential

The National Council on the Aging (NCOA) has published a report showing that reverse mortgages can help an estimated 13.2 million elderly homeowners pay for long-term care, allowing many to remain independent in their homes longer.

Of the 13.2 million eligible households, an estimated 9.8 million currently have an impairment that can make it hard to live at home, according to the study, "Use Your Home to Stay at Home: Expanding the Use of Reverse Mortgages to Pay for Long-Term Care."

A reverse mortgage is a loan that enables homeowners 62 years or older to borrow against the equity in their home, without having to sell their home, give up title, or take on a new monthly mortgage payment. The loan proceeds, which can be used for any purpose, may be taken out as a lump sum payment, fixed monthly payment, line of credit, or a combination. The loan amount depends on the borrower's age, current interest rates, and the value and location of the home.

Read the entire articla at Inman News

Tuesday, April 19, 2005

Real estate rates on a tight leash

Falling bond yields hint at possible recession

Three events last week took mortgage rates back down into the fives: release of the minutes of the Fed's March meeting, news that March retail sales caved-in to energy prices, and a painful and continuing slide in the stock market.

Many loud voices in the bond market had insisted that inflation was in the process of running out of control, and the Fed would begin to jack rates up a half-percent at a time, going to 4.5 percent or more by year-end. Whether this insistence was honest forecasting or phony herd-driving no longer matters: it was mistaken. The Fed's minutes contained this sentence: "Although the required amount of cumulative tightening may have increased, members noted that an accelerated pace of policy tightening did not appear necessary at this time...." Rates fell an instant later.

Read more Inman News at Citywide Services

Thursday, April 14, 2005

Home Sales to Soften with Firm Price Appreciation

Home sales are expected to soften to a better balance this year, with price gains slowing but remaining above historic norms, according to the National Association of Realtors.

Sales of existing-homes, including single-family and condo, should ease 2.4 percent to a total of 6.62 million this year, second only to 6.78 million in 2004. New-home sales are forecast at 1.14 million in 2005, also the second highest, 5.0 percent less than the record of 1.20 million last year. Housing starts are expected to rise 1.4 percent to 1.98 million units in 2005, the highest level of housing construction since 1978.

David Lereah, NAR’s chief economist, said the supply of homes remains tight. “The simple fact is we still have more buyers than sellers in most of the country,” he said. “This supply-demand imbalance is continuing to put pressure on home prices, but we should get closer to equilibrium by the end of the year.”

Read the entire article at RISMEDIA

Wednesday, April 13, 2005

Treasury Secretary urges limits on Fannie Mae, Freddie Mac growth

Snow advocates curbs on GSE portfolio expansion

U.S. Treasury Secretary John Snow advocated curbs on growth for Fannie Mae and Freddie Mac in testimony before Congress today.
Snow said the mortgage giants and other government-sponsored enterprises could destabilize financial markets if allowed to grow unchecked. He was testifying before the U.S. House Financial Services Committee in a hearing on housing GSE reform.

Snow pointed out that Fannie Mae's mortgage investments grew from $114 billion to $902 billion between 1990 and 2003, while Freddie Mac's grew from $22 billion to $660 billion. Such rapid growth creates risks for the U.S. housing market, he said.

The government official's comments were in line with sentiments expressed by Alan Greenspan, chairman of the Federal Reserve, in numerous instances including Congressional testimony last week.

"The sheer size of the mortgage-based investment portfolios of the GSEs (government-sponsored enterprises) has grown well beyond anything needed in carrying out their housing mission," Snow said in comments prepared for delivery to the House Financial Services Committee panel.

For some time, U.S. lawmakers have been calling for tougher regulation for Fannie Mae and Freddie Mac.

Read the entire INMAN News article.

Tuesday, April 12, 2005

Residential real estate sales expected to reach near-record highs in 2005

Sales, price increases forecast to slow from 2004 pace

The median price of existing homes is expected to grow 6.3 percent this year, reaching $196,900, according to the latest forecast by the National Association of Realtors. The median price for new homes, meanwhile, is projected to rise 5.6 percent this year, reaching $232,800.

Sales of existing-homes, including single-family and condo, should ease 2.4 percent to a total of 6.62 million this year, second to the record 6.78 million sales in 2004, the association announced. New-home sales are forecast at 1.14 million sales in 2005, or 5 percent less than the record of 1.2 million last year. Housing starts are expected to rise 1.4 percent to 1.98 million units in 2005, the highest level of housing construction since 1978.

Read more Inman News.

Thursday, April 07, 2005

Real estate foreclosures surge 50%

Rising interest rates to blame

The number of new foreclosed residential properties soared 50 percent nationwide in March from the previous month, according to, which tracks residential foreclosures and for-sale-by-owner properties.

According to data released today, 28,190 new foreclosed residential properties were listed for sale in the U.S. during March 2005, up from 18,824 in February 2005. The total number of U.S. residential foreclosure properties available for sale in the U.S. during the month of March was 80,757, an increase of 10 percent from February.

"New foreclosure inventory rose in 47 states in March. This signifies a national trend in foreclosure inventory and can likely be attributed to the rise in interest rates during the latter half of 2004, and a slowdown in the trend of rising home values in the fourth quarter of 2004," said Brad Geisen, president and CEO, "Foreclosures are most prevalent in areas of the country where home values are not rising, such as Ohio, Texas, South Carolina and Michigan. However, if the combination of rising interest rates and dropping home values continues, foreclosure inventory will likely continue to rise across the country."

Read more Inman News at Citywide Services