Posts Tagged ‘ neighborhood ’

Will Mortgage Underwriters Be Using Mapquest Soon?

commute-transportation-costsTransportation costs may soon become a recognized expense for mortgage applications if the Natural Resources Defense Council study holds up.

The San Francisco Chronicle reported that the study showed that higher transportation costs resulted in a higher foreclosure rate:

The draft report looked at trends associated with 40,000 mortgages in San Francisco, Chicago and Jacksonville, Fla.

The release date for the final study has not been announced. The research included borrowers’ income and expenses, credit scores and loan-to-home value ratio.

It focused on the average number of vehicles owned per household in a neighborhood, and through a complex formula, found that the likelihood of mortgage foreclosure increased as neighborhood vehicle ownership rates rose.

If transportation costs were as much as 17% of a household budget, as the study suggests, a $5/gallon price for gasoline could negatively impact a family’s budget. Recent years’ foreclosure activity suggests that compunction towards making mortgage payments has given way to liquidity concerns. Moreover, a legal scholar suggests that any moral consideration associated with a strategic default is passe.

Let’s consider the hypothetical case of a family, with jobs in Los Angeles County, who purchased a $400,000 Riverside, CA home in 2007. The home price has withered to $300,000 and the family has “lost” their $80,000 down payment; they are $20,000 “in the hole”. This has them feeling despondent about the future of the property as an “investment”. Continue reading this post

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Posted by: Brian Brady on February 3rd, 2010 under Financing, Mortgage and Home Loans

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Apartment Vacancy Rate Hits Two-Decade Record

The economy’s decline leveled off significantly from April through June, confirming  that the worst is behind us.

gdpGDP declined at an annualized rate of 1 percent in the second quarter, after shrinking an amazing 6.4 percent earlier this year. But consumer spending, 70 percent of economic activity,  continues to fall as Americans continue to save and  reduce debt. Economists express concern that our basic spending habits have been permanently altered by this great recession. This is also having an effect on rentals as renters downsize or insist on rent reductions.

With this as a backdrop we looked at rental rates which a are a prime factor in evaluating a property. We clearly have a long way to go. The Dept of Commerce chart indicates we are at a fragile beginning of a recovery. The key to successful property ownership now will be to keep it occupied and ride this out. Continue reading this post

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Posted by: Howard Sobel on August 6th, 2009 under Market Trends

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National and Local Real Estate Markets Are Intertwined More Now Than Ever

We’ve all heard it; “real estate is local”. I’m not so sure.

I believe that all of the different “local” real estate markets are in fact intertwined with one another. While there is not much value in a national average or median real estate price, there is value in national sales volume, national inventory levels and other national housing statistics.real-estate-market-interwined-local-national1

Think of them as a barometer – a measure by which you can assess your local market. Perhaps your market is selling more homes on average at a higher price point than the national average. Perhaps it’s less. Either way, national market statistics matter. You can use this information as part of a general wellness test of your local market. Not to mention that what actually is happening in other local real estate markets can directly affect what happens in your local market.

We in fact just ran into a scenario where a client of ours could only buy a home at a certain price here because the home he owns in Michigan cannot sell for a reasonable price there. They wanted to spend about $600,000, but, bought for $250,000 until the home in Michigan can sell. This is an example of exactly how these markets are intertwined and why in fact real estate is not all local.

To truly understand your local market, you must stay abreast of and understand more than just your neighborhood, town and city market statistics lest someone else who does understand will be the “local expert” instead of you. Continue reading this post

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Posted by: Ryan Ward on June 23rd, 2009 under Market Trends

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