Housing Predictor, which provides housing forecasts in 250 markets, has identified 10 markets where the regional economies are healthy and have strong potential for increasing prosperity.

These housing markets have bucked the national trend in 2008 and avoided the subprime crisis, the consultancy says.

Whatever the future holds for the housing market as a whole, Housing Predictor forecasts that these cities will continue to see steady, dependable growth.

Top cities and the percentage sales prices have increased so far in 2008.
Biloxi, Miss., 4.9 percent
Salem, Ore., 4.7 percent
Bismarck, N.D., 4.6 percent
Spokane, Wash., 4.4 percent
Yakima, Wash., 4.1 percent
Austin, Texas, 4.0 percent
Grand Junction, Colo., 4.0 percent
Fargo, N.D., 4.0 percent
Mobile, Ala., 3.9 percent
Albuquerque, N.M., 3.5 percent

Source: Housing Predictor (11/15/08)

Last week I wrote about how my sump pump failed and flooded my basement. And how my insurance agent broke the news to me that I was “not covered” for the damage. I also shared with you how to avoid this predicament with a little $10 fix. If you’d like to read the first part of this column, just visit www.codreamhouse.com and click on “News.”

This week I want to talk about what went wrong on the insurance end of this ordeal. It’s simply this: The insurance industry has strayed too far from their mission, which is to help people. The list of exceptions, exclusions, riders and additional coverage gets longer every day, while the list of what they actually cover keeps getting shorter. I’m not sure when this trend started, but clearly over the last 10 to 15 years insurance companies have lost their way in their primary responsibility—instilling confidence and peace of mind in the people that buy their policies.

I know plenty of people along the Gulf Coast that have story after story of how their insurance company let them down following the hurricanes. I know a local builder who said he signed up for a new business liability policy, but the exclusion pages were almost as long as the policy. By the time he finished reading the exclusions he realized there was no need for a liability policy because it didn’t cover anything he would normally be sued for.

The insurance industry needs a shake-up akin to what’s going on with Wall Street. How about getting back to the business of taking care of people and tending less to the business of creating exclusions? We, as consumers, can do something about this injustice by making our voices heard with leaders in the insurance industry as well as with our elected officials. We can also choose to do business with only those insurance companies carrying the fewest exclusions, exceptions, riders and additional coverage.

Especially these days, consumers need more bang for their hard-earned buck. And I, for one, believe that a good place to start is with the insurance industry.

Fannie Mae and Freddie Mac conservator James Lockhart got an earful about short sales from REALTORS® last week at NAR’s Conference & Expo.

Practitioners complained about lenders’ slow and inconsistent handling of loan modifications and short sales, but Lockhart made it clear there are no quick fixes in the works. “Servicers are stressed,” he told a packed room.

Lenders were unprepared for the drop in housing values and the subsequent rise in foreclosures and short sales and, among other things, the lack the staff or structure to manage the volume of processing they face, he said.

As a result, households are needlessly losing their homes to foreclosure, while real estate professionals are seeing transactions collapse because buyers have too much inventory to choose from to wait around for months while lenders decide whether to accept their short-sale offer.

The problem is on the radar screen of lawmakers in Congress. NAR First Vice President Ron Phipps testified about the scope of the problem before the U.S. House Financial Services Committee this fall, and NAR has made the problem part of the four-point legislative plan that it wants Congress to take up as part of a lame-duck session of Congress before the end of the year.

Lockhart, who heads up the Federal Housing Finance Agency and took over as the conservator of Fannie and Freddie in September, said positive signs are on the horizon.

Foreclosure Prevention

The two secondary-mortgage-market companies are well aware of the market pain and are taking a number of steps to provide relief, particularly to prevent foreclosures.

Among other things, Freddie Mac is allowing lenders to modify their at-risk loans into 40-year, lower interest-rate mortgages and to reduce borrowers’ burdens by permitting them to roll up to six months of missed payments into what amounts to an unsecured second loan. The two companies are also ramping up their staff and adjusting compensation so their internal structure better matches the size and complexity of the processing demand they face.

What’s more, to help facilitate short sales, Lockhart’s agency will be releasing a large-scale, streamlined, standardized process for expediting short sales, which he said will give lenders flexibility and tools like principal forbearance that they can’t easily use right now.

But Lockhart made it clear that the bulk of the problem isn’t with Fannie and Freddie loans, but debt in what the financial services industry calls private-label securities, the Wall Street loans, many of them subprime, that are held by investors all over the world.

The streamlined short sale process his agency will be announcing soon—he didn’t give a time line—could go a long way to focusing the minds of lenders on the problem. But ultimately the problem won’t go way until interest rates come down, buyers start streaming back into the market again, and prices firm up, he suggested.

—Robert Freedman
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The Board of Directors of the National Association of REALTORS® in its Monday meeting in Orlando, took actions to keep its members positioned for success in today’s challenging real estate markets.

Economic Stimulus

The Board affirmed a four-point legislative plan that NAR is presenting to Congress as necessary to stimulate housing:
- Make the $7,500 first-time home buyer tax credit, created as part of the housing stimulus bill enacted earlier this year, available to all buyers and eliminate the repayment requirement.
- Make 2008 Fannie Mae and Freddie Mac loan limits of $729,750 permanent. Without additional legislation as part of a lame-duck Congress in the next several weeks, the high-cost loan limits will drop to $625,000 starting Jan. 1, 2009.
- Get the U.S. Treasury to target funds from the $700 billion rescue of Wall Street financial institutions to mortgage relief and create a mortgage interest-rate buydown program.
- Permanently bar banks from entering real estate brokerage or management, a long-time priority of NAR that has taken on a new urgency with the meltdown among some national banks.

The Board rejected expanding the NAR-backed stimulus plan to incorporate language about commercial real estate but encouraged an effort by NAR leaders to start a process for creating a stimulus plan focused on commercial real estate.

Courtesy of Robert Freedman

Naturally, it was about 3:00 a.m. on a Saturday when I discovered our basement was flooding. Can someone please explain to me why floods never happen between 8:00 a.m. and 5:00 p.m., Monday through Friday?

The float on our sump pump decided to go on strike, so the pump failed to kick on after two days of heavy rain. The result? Water backed up into our finished basement. As my wife and I began cleaning things up, I uttered those famous words, “Don’t worry honey, our insurance will cover it!”

Boy was I wrong. My agent with Country Insurance told us we did not have “sump pump coverage.” I’ve never even heard of it. In fact, I quickly called 10 people, including builders and other real estate agents, and they’d never heard of it either. Turns out sump pump coverage is an additional option I needed to purchase. I later learned that many insurance companies will not cover damage from water coming into your home from the outside. They’ll only foot the bill for pipes bursting inside the house. So if a heavy rain brings water in through a sump pit or window well, most likely you’re out of luck.

What’s my point? I strongly recommend you assess your liability on this front first thing Monday morning.  First, call your insurance agent and find out if you’re covered in the event your sump pump fails. If you’re not, add sump pump coverage. Or it may be necessary to add flood insurance. Another option: Go to Home Depot Lowes Or ACE and buy a $10 moisture alarm. Set it next to your sump pump. If it detects even 1/32nd of an inch of moisture, a 110-decibel alarm will sound that can be heard four floors away, can ring for three days and all on a 9-volt battery that lasts five years. Believe me, it’s worth the effort. Knowing about these options could have saved us thousands.

Next week we’ll take a look at the other problem in this story – the insurance industry.

Speaking to a mortgage-finance symposium in Berkeley, Calif., by videoconference Friday, Federal Reserve Chairman Ben Bernanke described a plan for managing the mortgage-securitization crisis.

He suggested creating a government bond insurer for mortgage funding.

“Government likely has a role to play in supporting mortgage securitization, at least during periods of high financial stress,” Bernanke said.

Bernanke urged continued government support for Fannie Mae and Freddie Mac.

“Their ability to continue to securitize when private firms could not, did not appear to result from superior business models or management,” Bernanke said. “Instead, investors remained willing to accept GSE mortgage-backed securities because they continued to believe that the government stood behind them.”

He suggested that making Fannie and Freddie government-owned cooperatives or public utilities might be the best answer.

“A public-utility model might allow the enterprise to retain some of the flexibility and innovation associated with private-sector enterprises in which management is accountable to its shareholders,” Bernanke said.

Source: The Wall Street Journal, Sudeep Reddy (11/01/08)

Richard Davis, broker-owner of Trademark Properties Real Estate Inc., goes to court today in his home city of Charleston, S.C., where he is fighting A&E Television Networks.

His suit claims A&E owes him as much as $30 million for creating the popular show, “Flip This House.”

Five years ago at the height of the real estate boom, Davis, who had no TV experience, spent $85,000 to make a TV pilot, called “Worst to First.” A&E bought it from him, renamed it and within its first season, it was a hit.

Davis claims in his lawsuit that A&E had verbally agreed to share half of the show’s revenues with him. A&E denies making such a promise.

A 50-50 split is unheard of in the television business, experts say. Generally, program creators earn a small portion of a show’s profits.

According to court documents, Davis spent $6 million buying and renovating houses in Charleston that were featured in the show’s first season. He says he was never paid for his appearances or reimbursed for his expenses.

A&E says Davis got a “powerful form of advertising” for Trademark Properties Inc.

For the last year, Google has featured a cool little tool called Street View. It’s an add-on to Google Maps, and here’s how it works. Look up a city or a specific address on Google Maps and if the streets are highlighted in blue it means those areas have been pictured by Google for Street View. Type in an address, click Street View and you’ll virtually be standing in the street in front of the property. From there you can walk down the street in both directions and see pictures of other homes. You can also turn 360 degrees in any direction by just moving your mouse. This technology enables you to see the front of any home you’re interested in and even make sure the neighbors are neat and tidy.

This spring Google released this technology to techno geeks like me so we can use it as a third-party application on our own personal Web sites. And you can bet I didn’t waste any time making sure my Web site got plugged in. Want to check it out? Just visit me at www.codreamhouse.com and follow the Featured button. You’ll be shopping for a home and even getting the feel of the neighborhood without ever leaving your computer.

I’ve been using Google Street View since April, and so far the response has been phenomenal. No doubt the technology is a hit, but I’m still trying to figure out if folks are using it to look at homes for sale or if they’re just cruising by their own homes and those of their friends. Just one disclaimer on Street View: Google took pictures of homes in the Denver area during the summer of 2007. So all homes featured, including yours, will appear as it did then. 

How’d they do it, you wonder? It was a feat accomplished by mounting cameras on top of trucks and painstakingly driving Denver streets one by one taking panoramic pictures of all the properties. To date, Google has shot about 40 cities restricted to the metro areas only.

Pilots and their planes now call more than 600 fly-in communities across the country home, says Dave Sclair, retired publisher of General Aviation News.

“It’s a very popular trend,” he says.

John Travolta keep his Boeing 707 parked at his estate in the air park Jumbolair near Ocala, Fla.

But celebrities aren’t the only people who choose this lifestyle. Lots of serious pilots want to be close to their planes for convenience and security, says Sclair.

In Santa Paula, Calif., developers are breaking ground for what they believe is a first – two-story condos with hangars for planes downstairs and living space for pilots and their families upstairs. The units will sell for about $800,000 each and buyers will actually own a piece of airport property.

Pilot Bill Lindsay, one of the people behind the project, says many of the condos are already sold and developers aren’t concerned about selling the rest. “I think it is enough of a supply-and-demand type of thing, enough of a niche, that we’ll be fine,” Lindsay says.

Source: The Associated Press, John Rogers

Municipalities with high rates of foreclosure are struggling to figure out how to deal with falling tax revenues.

For instance, Stockton, Calif., draws 43 percent of its revenues from property and sales taxes. Home prices in the community have been cut in half since the end of 2006, says real estate research firm MDA DataQuick. The city faces an 11 percent budget shortfall, forcing it to consider what city budget analyst Joe Maestretti calls “draconian” cuts.

In Cape Coral, Fla., the police and fire departments anticipate staff cuts of 9 percent and 11 percent, respectively, due largely to lowered property tax revenue, spokesman Michael Jackson says.

Democrats in the California Assembly sent a letter Friday to Gov. Arnold Schwarzenegger, urging him to address California’s high rate of foreclosures as it affects the state budget.

“Four billion dollars of last year’s budget deficit is attributable to the foreclosure crisis and billions more will be lost this year if nothing is done to address this crisis,” the letter said.

Source: USA Today, Julie Schmit, and KVTU.com