Tax Benefits Make Now a Great Time to Buy a Home
Lane Beattie, president and CEO of the Salt Lake Chamber of Commerce, calls the $7,500 tax credit to first-time home buyers in the new housing stimulus legislation an example of “trickle-up” economics. “As first-time home buyers enter the market, armed with an extra $7,500, they increase the demand for homes and in the process help stabilize the market value of homes,” he says. “As they purchase their first home, they free those who are selling their first homes to move up in the market to more expensive homes. Those who had $200,000 homes now buy houses in the $300,000 range. That allows more home owners to sell and move up in the market as well as allowing empty nesters and recent retirees an opportunity to downsize. Mortgage brokers, Realtors® and home builders receive critical new clients and the benefits don’t stop there. Sales of furniture, electronics, household items, landscaping supplies and home improvement items also increase. An escalation in sales also boosts manufacturing and shipping. The process profits the broader community because all these transactions infuse tax revenue into the system, benefiting the community in a variety of ways.” Beattie applauds Congress for providing this tax incentive for home buyers. “Now it is up to the American consumer to realize this is a great time to buy a home,” he says. “With interest rates between 6% and 7%, tax rebates and credits from the federal government and a buyer’s market, it’s a great time to make the American Dream a reality.” (www.sltrib.com)
Salt Lake Tribune (8/9/08); Lane Beattie
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‘Occupied to Sell’ Is Latest in Staging
Thom Scott, whose Nashville-based firm, Showhomes, fills vacant houses with furniture and people to live in them, says his business is booming. It’s generally accepted in real estate that vacant homes take longer to sell and fetch less than furnished ones. Showhomes stages and occupies pricier properties, and it, along with its clients, is changing with the times. “Upscale” homes depend on the locale, starting at $400,000 and going up from there, he says. The company, which is working with 20 to 25 properties in the Chicago market, finds “home managers” who move in and maintain the house for as long as it takes to get it sold. These days, that tends to be five to six months, Scott says. The resident manager pays a monthly fee to Showhomes, which Scott says averages $1,200 — a bargain, he says, for a grand home that might rent for $5,000 or $6,000. The furniture of the manager must pass muster and befit an upper-bracket home, although the company will buy additional pieces for those who don’t have enough. Also, the managers must pass a criminal background check and agree to keep the place immaculate so it’s ready to be shown at any time. “We’ve never had trouble finding managers — everybody wants to live in a $2 million or $3 million home,” he says. Home sellers pay the company one-quarter of 1% of the listing price for its services, and a “success fee” of one-quarter to three-quarters of 1% when the house sells. The company currently operates in 34 markets. (www.chicagotribune.com)
Chicago Tribune (8/10/08); Mary Umberger
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U.S. Realtors Use Tech to Weather Slowing Real Estate
Four speakers at the Bloggers Connect Program at the Real Estate Connect conference in San Francisco said they use their blogs to target the right real estate clients and close sales, finding that they sometimes perform better than a Web site. As David Gibbons, director of community relations for Zillow.com, explained, “Own your blog as home content. Participate in as many online communities as possible and link them back to your blog. If there is a consumer asking a question, answer it. Be proactive.” Helping those who are making the effort are a host of smaller sites and services that allow Realtors® to connect to more consumers and get better noticed. If you need information feeds for your blog related to Boston, for example, outside.in tracks news, views and conversations in 11,860 towns and neighborhoods. It also consolidates the most active blogs in the neighborhood. Friendfeed.com allows you to track what friends are posting. No Realtor® in the U.S. who has begun to use the Net to push business needs to work alone anymore. Their business is the business of at least a hundred online companies that are constantly evolving services to make their business function better. (www.economictimes.indiatimes.com)
Economic Times, India (8/10/08); E. Jayashree Kurup
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International Real Estate Investors Choose U.S. Properties
While discouraging for American home owners, the weakening U.S. dollar and declining home prices are presenting opportunities for international real estate investors. The National Association of Realtors® estimates that between 150,000 and 190,000 homes were sold to foreign nationals from May 2007 to May 2008. The most popular states were Florida, California and Texas, but Arizona, New York, Washington and Nevada were also popular. Nearly half of all properties purchased by foreign buyers were located in the South; 25.4% of the sales occurred in Florida alone. The typical foreign buyer bought a single-family home at $297,400, intended for use as a vacation home, where the buyer stays for two months of the year, according to survey findings from the Realtors®. Forty percent of foreign buyers made the purchase in cash, compared to just 7% of domestic home buyers who do so. This represented a 12% increase from the 28% of foreign buyers who paid in cash during the previous year. Foreigners buy more expensive properties than domestic real estate investors; 14% of the homes they buy cost more than $750,000. Investors from China were the most likely to purchase properties at $1 million and more, with 14% of them doing so. The median price paid by real estate investors from China was $450,000, the highest median of any location in the report. (www.nuwireinvestor.com)
NuWire Investor (8/11/-8); Trista Winnie
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Most Banks Have Cushion of Capital
Although U.S. banks probably will continue to face tough times because of the weak economy and housing losses, they are in much better shape overall today than they were during the savings and loan debacle of the late 1980s and early 1990s, industry experts say. That’s because most banks, which are coming off several strong-profit years, are sitting on a lot of capital — money that is available to provide a cushion against losses. “The core of the banking industry is fairly sound, and the reason is that it comes into this, buy and large, with a fairly large capital position,” said Bert Ely, a banking industry consultant based in Alexandria, Va. “We will see more bank failures, but they will be mostly small banks that got too concentrated in certain types of risk — home mortgages, home equity loans, lending to builders, that sort of thing.” The main problem for banks is that home prices continue to plunge in the wake of mounting foreclosures, said David Ely, a banking professor at San Diego State University. So it’s hard to say just when a bank’s mortgage losses will end. Even though they’re facing trouble with mortgages, big banks today are diversified with several lines of business outside of housing, Ely said. They also operate in many regions across the country, and they continue to be able to raise additional capital if they need to. (www.signonsandiego.com)
San Diego Union-Tribune (8/10/08); Mike Freeman
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Contractors Hit Roads After Housing Slump
The slowdown in the housing market has pushed Ground Zero Construction, a road building company in West Siloam Springs, Okla., to look elsewhere for its next job, and it’s helped cities get more competitive bids for road projects. Dozens of small companies like Ground Zero, which rode the highs of subdivision construction over the past several years, are increasingly looking for work provided by cities. “The subdivision builders have shifted over,” said John Suskie, executive director of the Arkansas Asphalt Pavement Association. “They are versatile and can do that, but you are seeing that all over the country where the housing market has suffered. It’s not just Northwest Arkansas.” (www.nwanews.com)
Northwest Arkansas News Source (8/11/08); Robert J. Smith
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