INVESTMENT PROPERTY: Tips For First-Time Landlords

You can't or don't want to sell your existing home.

If those two statements ring true for you, becoming a landlord might not be a bad idea.You can move to another home for less than the income you could get for renting your home.

The housing recovery is underway, but it could still take years for many homeowners to surface from their underwater status. Selling now would beselling at a loss.

Other homeowners aren't underwater, but don't have enough equity to sell at a decent profit. Selling now could be only a break-even proposition.

Homeowners stuck with a mortgage larger than the value of their home, are cashing in on rising rents by renting out their existing home and moving to a home that costs less - if only temporarily.

The deal can even work if the home you move to costs the same as or even more than your current housing costs, provided your new housing costs are sufficiently offset by the rental income from your existing home.

Do the math

In the best of all worlds, the rent should cover not only your existing home's mortgage, but property taxes, insurance, upkeep and other costs of owning a home. If not, you'll have to make up the difference.

In today's skyrocketing rents market, you likely can swing the rental income you need.

However, you face a greater obstacle than making the deal pencil.

Hiring a property manager could cut into your rental income, but landlording, especially for first-timers, is not a piece of cake.

Take some cues from T.J. Rubin, broker owner of Fulton Grace Realty in Chicago.

He offers some tips to help you make the transition to a new job as a landlord.

FINANCE & MORTGAGE: To Givers of Down Payments

HOME buyers trying to scrape together enough money to cover the typical 20 percent down payment frequently look to relatives for help.

In a National Association of Realtorssurvey of people who bought homes from July 2011 to June 2012, about a quarter of first-time buyers relied in part on gifts from relatives. “Typically, that’s the Bank of Mom and Dad,” said Walter Molony, a spokesman for the association.

But mortgage lenders closely scrutinize cash gifts. That critical check from the parents may not count toward your home purchase if you can’t thoroughly document its source and intention.

“Basically, the banks want to make sure that you’re not getting a second loan,” said Ray Mignone of the New York financial planning firm Ray Mignone & Associates. “If all of a sudden $50,000 pops into your account, they want to make sure it’s not a loan against the property that they’re going to put a mortgage on.”

How to pass muster with the lender? First, it’s best if the gift comes from a close relative.

“It can’t be a friend or colleague, “ said Ace Watanasuparp, the president of DE Capital Mortgage, in New York. “And it can’t be your second cousin or something like that.”

Next, make sure that the gift comes in the form of a check or wire transfer — something traceable. Lenders are typically wary of gifts made in cash, Mr. Watanasuparp said.

The donor will also have to provide the lender with what is known as a gift letter.

Melissa L. Cohn, the chief executive of Manhattan Mortgage, said the gift letter should affirm that the money involved is indeed a gift from the donor and, more important, that repayment is not required. The donor should also specify the precise amount of the gift, and state his or her relationship to the borrower.

For good measure, Ms. Cohn added, donors should provide proof of their ability to give the gift — for instance, evidence of a stock sale, or a statement showing the withdrawal. Once the money is in the borrower’s account, the lender may also want to see proof of a deposit in the exact amount stated in the gift letter.

Just how heavily a borrower may rely on family largess to cover a down payment depends on the type of mortgage involved and the size of the gift. With a conventional loan, lenders require

MORTGAGE: Paying Extra on Your Mortgage Can Go a Long Way

Mortgages can be viewed very differently.

Some see them as a positive financial instrument, a way to free up their money so it can be invested elsewhere, ideally for a better return.

Then there are those who view mortgages as the root of all evil, as a debt overhang that must be terminated as quickly as possible.

Whatever your stance, you've probably entertained the idea of making "extra mortgage payments," though you may not know the exact impact, due to the complexity of mortgage amortization.

Fortunately, there are calculators available -- like AOL Real Estate's mortgage calculator -- that take the guesswork out of the process and make it easy to see how much you can save in a number of different scenarios.

Adding $10 a Month

Let's start with a simple scenario where you add just $10 a month in extra payment to principal.

Assuming you've got a $100,000 loan amount set at 4 percent on a 30-year fixed mortgage, that extra $10 payment would save you $3,191.78 over the full loan term.

It would also shorten your mortgage by 13 months, meaning your 30-year mortgage would be a 28-year-ish mortgage.

So that's good news, right? You save thousands and you only have to pay a measly $10 extra per month. You probably wouldn't even notice the difference.

What if you bumped up that extra payment to $25? Well, you would shave 32 months off your mortgage, nearly three years, and reduce total interest by $7,450.01.

Feeling ambitious? Add $100 a month and you reduce your term by 101 months, or nearly 8.5 years, while saving $22,463.76 in interest.

Extra Payments More Valuable Early On

As you can see, it's not that hard to save a ton of money via extra payments, but it also matters when you start making those additional payments.

Using our $100 example, if you started making extra payments in year six of your 30-year

INVESTMENT PROPERTY: Rents to Keep Rising

Rents are forecasted to rise nationally 4.6 percent next year, and that’s following a 4.1 percent increase this year, according to the National Association of REALTORS®.

What’s more, rents are expected to continue to climb for the foreseeable future, rising more than 4 percent a year for 2014 and 2015, forecasts Reis, a market research firm. 

“The pendulum has definitely swung back in favor of landlords, not renters,” Ryan Severino, senior economist for Reis, told USA Today.

Rents are rising even more rapidly in some areas. For example, rents in San Jose, Calif., and San Francisco have been climbing at a 13 percent to 15 percent annual rate as of late last year, according to MPF Research. Other metro area seeing rent increases of more than 5 percent by the end of September include Oakland, Calif.; New York; Denver; Houston; Nashville; and Columbus, Ohio, MPF reports. 

The rise in rental costs are causing more renters to consider home ownerships, says Greg Willett, MPF vice president. Mortgage rates are at historical lows and home prices are up, but still way below their 2006 peak. 

http://realtormag.realtor.org/daily-news/2012/11/28/rents-keep-rising?om_rid=AAEL-v&om_mid=_BQtk4LB8vbKE6m&om_ntype=RMODaily

NEWS: Fleeing Taxes, France's Rich Are Putting Their Homes on the Market

PARIS — The tax changes slated for the 2013 budget by President François Hollande’s Socialist government are having an effect on the Paris luxury property market before they have even passed into law.

Quite a few of France’s most wealthy already have moved abroad to avoid the country’s stiff inheritance and wealth taxes. Now, real estate agents say, the younger, working wealthy also are on the move, unhappy at the prospect of being taxed at 75 percent on income of more than €1 million, or $1.27 million, and a capital gains tax of more than 60 percent on stocks, bonds and company sales, although protests have produced exceptions for investors and new business start ups.

“In the last eight months since the measures were revealed, over 400 new residences, each worth above €1 million, have come on the market as French entrepreneurs and investors leave France,” said Charles-Marie Gottras, president of Daniel Féau, a high-end French real estate broker.

“We are seeing the kind of luxurious, high-quality properties that one used to see once a year or every six months now arrive on the market every week,” he said.

The increased selection has altered the dynamics in a market that has long been characterized by high demand but little supply. Buyers now know they can negotiate, Mr. Gottras said, adding: “Prices have stabilized and even gone down a little.” Some agents say there has been a 3 to 5 percent decline in top-end values.

As Alexander Kraft, chairman and chief executive of Sotheby’s International Realty France, pointed out, “The fiscal changes are geared toward the seriously wealthy. The increase in numbers of residences for sale is not that significant, about 10 percent up, but in value it is very big. We are talking about exceptional properties starting at €10 million to more than 20 to €25 million.”

“To give you an example, in the past six weeks alone, we have sold three properties for €20 million each,” Mr. Kraft said. “Even we don’t usually sell those in a matter of weeks.”

Some of these trophy holdings normally would not even appear on the open market, he said: “They would instead be carefully sold to friends or family members.”

In the Sotheby’s portfolio, a Haussmann-style, 19th-century mansion in the 16th arrondissement reflects the kind of rarefied home now on the market. “The 1,000-square-meter living space has been completely restored in exquisite taste with beautiful

HOME INSURANCE: What's Covered, What Isn't

Looking to know more about home insurance in the wake of Hurricane Sandy? Republished here is one of AOL Real Estate's best guides to understanding a homeowners policy. 
Many homeowners are baffled by trying to figure out the maze that is home insurance. Take Stephanie and Eric Jones, who for 15 years paid too much because they weren't clear on which coverage they needed and which they didn't.

Their local insurance company wasn't very responsive to the Jones' inquiries about how they could lower their rates. When the couple decided to change agencies, inspectors were sent to their property, and they uncovered roof issues. One agency was adamant that a new, $10,000 roof was needed, while another said that a simple $400 repair would be enough. It was then that they learned how different home insurance agencies could be.

"The Jones' would have definitely benefited from doing some research into the types of policies available to consumers," says Eric Sharfstein, claims director with National Underwriters Insurance. "It's easy to just say yes to everything, thinking that's the best course of action and, sadly, that leads to wasted money." Having too little coverage isn't ideal either, he says, because you may end up paying out of pocket for damage to your home.

To help, here's a comprehensive list of what homeowner's insurance covers and what it doesn't:


Differences Between Home insurance and Fire Insurance:

Dwelling fire policies are less expensive, but coverages are more limited. The more-comprehensive dwelling form is the DP-3. Dwelling fire policies are most often used by

INVESTING: Rental Market's Big Buyers

Private-Equity Giant Blackstone's $1 Billion Bet on Foreclosed Family Homes

Blackstone Group LP BX +1.77% has become the biggest U.S. investor in single-family rental homes by spending more than $1 billion since the start of 2012 to acquire more than 6,500 foreclosed houses in eight metropolitan areas, according to people briefed by Blackstone.

The firm also is finalizing a loan for at least $300 million from Deutsche Bank to support this business, these people said.

Numerous private-equity firms have crowded into the business, some as early as last year, looking for a way to bet on the recovery of the housing market. Blackstone's growing commitment to this strategy offers fresh evidence that the purchases of foreclosed homes, which began as a mom-and-pop pursuit, is gaining legitimacy among the biggest private-equity firms.

The demand from these firms and other investors could help strengthen the housing recovery, analysts say. Earlier this year, the Federal Reserve expressed support for the strategy as a way to clear the backlog of foreclosures that has weighed down the market.

Video From the Archive

What does Warren Buffett see that no one else does? He just made an outsize bid on ResCap loans, the latest example of his bet that the housing market represents a great

INVESTMENTS: The income property: Your late-in-life retirement plan

"Income property can be an important bridge to retirement for those without quite enough to retire in the traditional sense," says J. Camarda, a real estate investor, Certified Financial Planner, and Chief Investment Officer of Jacksonville, Fla.-based Camarda Wealth Advisors. Because real estate is such an inefficient market, it's possible to find awesome bargains with a very high return on investment, Camarda says. And if you can manage the property yourself, you can collect more income.

If you purchase the right property at the right price and on the right terms, he says, a rental property can produce significantly more income than traditional passive investments.

This article will describe how much you can expect to invest and earn, how to choose a location for your rental property, and problems that might derail your plans if you aren't careful.

How Much Money Do You Need?

If you plan to finance your purchase with a mortgage, you'll need to take action before you retire, says associate broker Janice Leis, who serves the premier residential areas of Philadelphia and South Florida.

Mortgage lending guidelines typically require applicants to be employed and have at least two years of steady employment history in the same occupation.

Lenders also require a substantial down payment, typically 30% or more, if you won't be occupying the property, says John Walters of LeWalt Consulting Groupe in St. Petersburg, Fla.

If you don't have the cash to make such a large down payment, consider using your IRA funds. All equity growth and income from rental receipts will grow inside your IRA tax-free, Walters says. Purchasing the property with funds inside a Roth IRA, on which you've already paid taxes, means all your earnings and equity can grow tax-free forever, he says.

After you've tackled the hurdle of affording the purchase, you need to think about ongoing expenses. Owning residential income property is like owning a principal residence in that there are variable expenses outside the mortgage, says Rob Albertson, a multi-million dollar residential real estate agent with Austin Fine Properties/PLR in Austin, Texas. There are maintenance costs for minor items (like leaky faucets) and major items (like a new roof).

Don't forget about marketing expenses and periods of vacancy and tenant change-over when you won't be earning income. Albertson recommends factoring no higher than a 92% occupancy rate into your calculations, even in a hot rental market. Be conservative in your estimates of expenses and income.

Tax considerations will also play into what you can afford.

"One of the chief benefits associated with rental property is the ability to claim a depreciation deduction on your federal income tax return," Walters says. Depreciation reduces the value of your property each year to approximate wear and tear. It lowers your tax basis so that you pay less tax on the property when you sell it.

First and foremost, discuss the financial feasibility of your plans with a CPA, a real estate attorney and an insurance agent to see how much everything will cost, recommends Leis.

Get valuable interest rate discounts on select new home equity loans from Wells Fargo.

Choose a Location

Purchasing the least expensive property you can find won't help you earn a return on your

LANDLORD ISSUES:Boston rental unit inspection plan debated

A proposed ordinance that would require most rental properties in Boston to be inspected once every three years was met with mixed reactions Thursday as city councilors, landlords, and tenants butted heads on whether more inspection requirements would place an unfair burden on responsible landlords.

Discussion of the proposal by the City Council was prompted by Mayor Thomas M. Menino, who earlier this month called for a change to the city’s current law after a slew of high-profile citations were issued against apartments around the city.

In a meeting at City Hall that lasted nearly three hours, city councilors and representatives of tenant and landlord associations bandied ideas on how to target absentee landlords, many of whom live out of state.

Menino’s proposal would require landlords to obtain an inspection once every three years, though property owners with a good track record could apply to opt out. Owner-occupied properties with one to three units would automatically be exempt from the more frequent inspections.


Under current law, rental properties need to be inspected only when units are turned over to new tenants, but landlords rarely notify the city when new tenants move in.

The proposal would also create a database of contact information for all rental property owners, so landlords are easily accessible when problems are identified.

“We’re really going to be able to go after some of these midsized investors that don’t care about Boston, don’t care about the neighborhood, but are now buying a lot of properties,” said Sheila Dillon, director of Boston’s Department of Neighborhood Development.

But many were wary of establishing new rules, saying that they would create undue hardship for responsible property owners. Fees for inspections are $50 per unit for buildings with one to three units, and $75 per unit for buildings with four or more apartments.

Michael Ferguson, facilities director for Peabody Properties, a real estate firm, argued that the ordinance would not be fair to companies like his, which have 24-hour maintenance staff and conduct their own inspections each year.

“We are transparent, compliant, and accountable on a daily basis to our tenants,” Ferguson said.

Councilor Mark Ciommo pushed for the exemption to be extended to properties with up to six units.

Councilor Michael P. Ross said he recognized the need for more accountability but hoped for something “very liberal, very exempting.”

“I don’t think we need a system that punishes the entire real estate industry for the bad apples,” Ross said. “I think we need a system that goes after the bad apples.”

Ninety-eight percent of inspections performed by the Inspectional Services Department on rental properties are prompted by complaints, usually from tenants or neighbors, according to the department.

Brian Swett, chief of the Office of Environmental and Energy Services, said the city needs a more proactive system that identifies small code violations before they become larger health and safety hazards.

Several councilors were skeptical that the Inspectional Services Department would be able to handle the increased workload. Inspection officials projected that they would have to conduct 50 percent more inspections per year, requiring 12 additional employees.

Bryan Glascock, acting commissioner of the Inspectional Services Department, said the fees would just about exactly cover the costs of the additional inspectors. Councilor Tito Jackson was not convinced.

“It’s a big deal when you come before the council and you’re asking for 50 percent more

MARKET TRENDS: Real Estate Outlook: Will Recovery Continue?

The economy has been making strides towards recovery, but are these steps enough to ramp up both the housing and labor market?  

According to Bernanke, economic activity slowed during the first half of this year. This came after a 2.5 percent annual rate of GDP growth for 2011. Additionally, while the unemployment rate has fallen over the last year. "after running at nearly 200,000 per month during the fourth and first quarters, the average increase in payroll employment shrank to 75,000 per month during the second quarter."  Federal Reserve Chairman Ben Bernanke reports there are two risk factors that could cripple a recovery. The first is the euro-area fiscal and banking crisis; the second is the U.S. fiscal situation.  

Housing has seen modest improvement, including rising pending and existing home sales in some regions. This growth is thanks in part to historically low interest rates. Buyers are always returning to the market to take advantage of low prices.


Bernanke says, "Construction has increased, especially in the multifamily sector. Still, a number of factors continue to impede progress in the housing market."


Builder confidence has responded and for the market of newly built, single-family homes, it has risen by the largest one-month gain in nearly a decade. 

The National Association of Home Builders (NAHB) reported on this trend in the their latest HMI survey. "Combined with the upward movement we’ve seen in other key housing indicators over

THE ECONOMY: Sunny Forecast For The Real Estate Market, Optimism Growing Among Some

The real estate market has had an ominous cloud looming for a long while with sunshine trying to break through. Now, according to a recently released second quarter survey by HomeGain, optimism is growing and a sunnier forecast is anticipated by some. 

The survey results are taken from a pool of more than 400 agents and brokers and 1,700 homeowners. Perhaps not surprisingly the optimism is a bit unequal. Regarding the general direction of home values, about 48 percent of industry professionals expect home values to increase compared to only 27 percent of homeowners. However both percentage figures are up from first quarter 2012. 

The outlook for the next two years? The forecast, according to the belief of those surveyed, gets even better. Real estate professionals (82 percent) and homeowners (59 percent), both believe home values will increase in the next couple of years. However, a small percentage group, 6 percent of real estate professionals and 15 percent of homeowners, think the exact opposite. 

Meanwhile, 14 percent of industry professionals are warning to prepare for yet another decrease in home values. The percentage shoots up to 24 percent of homeowners who agree with this prediction. 

Forecasting no change: 38 percent of real estate professionals and 49 percent of homeowners expect home values to remain the same over the next six months. 

In a press statement, Louis Cammarosano, General Manager of HomeGain said, “Optimism among real estate professionals spiked in the second quarter. Real estate professionals are optimistic about home prices in the short term and especially optimistic in the coming two years with 82 percent of real estate professionals and 59 percent of homeowners expecting

RENTALS: 48% of property managers say rents rose over past 12 months: TransUnion

Roughly 48% of property managers surveyed by TransUnion said rental prices increased over the last 12 months on the majority of their properties.

The credit firm surveyed more than 1,200 large and small managers. Last year, less than 40% of respondents said rents were rising.

Roughly 70% of large managers, those handling more than 200 properties, said rents increased from last year.

"The rise in rental prices, coupled with a decrease in vacancy rates and the ability to attract new residents with less effort are all positive signs for the market and rental property managers," said Steve Roe, vice president of TransUnion rental screening solutions.

Even though rents are rising, demand remains high and managers are not having a problem locating new residents, according to the survey.

Nearly 73% of the managers said it was not difficult to find new occupants, compared to 67% last year.

The survey showed 83% of managers said vacancy rates were less than 5%, and more than 70% reported no vacancies.

Investors and would-be property managers flooded the Federal Housing Finance Agency with applications to take advantage of the rental boom. The agency continues to work on a pilot program to rent out previously foreclosed homes owned by Fannie Mae.

It will closely monitor how these property managers handle the homes in still fragile markets.

More than half of small property managers said they had a renter "skip out" on a unit and left

INV PROPERTIES: Vacation Home Market

Are you in the market to buy a vacation home? If so, you're not alone. There is a ripe and ready segment of today's market that is geared up for taking advantage of today's favorable buying conditions.

In comparison to the total sales, vacation-homes were 11 percent of all transactions for 2011, up a healthy 10 percent in 2010.According to the latest National Association of Realtors Investment and Vacation Home Buyers Survey, vacation-home sales rose 7.0 percent in 2011. Investment property purchases were up a staggering 64.5 percent. Many of these were distressed properties being sold at steep discounts.


NAR Chief Economist Lawrence Yun said investors with cash took advantage of market conditions in 2011. "During the past year investors have been swooping into the market to take advantage of bargain home prices," he said. "Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property."


These investment buyers are pulling out the cash as they look into buying these rental properties. Forty-nine percent of investment buyers paid cash in 2011. Forty-two percent of vacation-home buyers did the same.


"Clearly we're looking at investors with financial resources who see real estate as a good investment and who aren't hesitant to use cash," Yun said. "Of buyers who financed their

BUYING AND SELLING: 4 traits of unhappy homeowners

Here are some pitfalls to avoid if you want to be a happy homeowner.

1. Move a lot. Moving house is stressful, in and of itself. Mention the prospect of moving to any cocktail party crowd, and you'll undoubtedly hear a chorus of moans and groans of "I hate to move!" Studies actually rank moving right up there with getting a divorce or being widowed in terms of stressfulness -- no joke! And that's just the moving part -- there's also the stress multiplier of selling your home, which includes such unhappy-making activities as:

• Deciding when to sell.
• Studying market data on recent sales in your area.
• Interviewing listing agents.
• Giving your home the deepest clean ever.
• Opening your home to strangers.
• Waiting for, fielding and responding to offers.
• Holding your breath, anxiously awaiting the appraisal and closing.

Homeowners who move a lot not only have to deal with the inherent stresses of moving, but also with each of these other attendant stresses of selling.

2. Make mortgage moves a lot. In a landmark study by Thomas Holmes and Richard Rahe ranking various life events in terms of their relative stress, taking out a mortgage was given a score of 30. And here's some context, having your home foreclosed was given a score of 31! For smart homeowners, taking out a mortgage can be a tense series of decisions that they don't always feel well-equipped to make, from selecting a mortgage broker to selecting a loan type and term to trying to ascertain whether they're getting the best deal on rates and fees. And there are also the uncertainties involved -- the feeling that an appraiser and an underwriter who you'll never meet are in control of your financial fate doesn't feel good. 

Beyond that, it's highly worrisome to have to scurry around and meet seemingly nonsensical documentation requirements or show up to sign stacks of papers at weird times in weird places at the whim of the mortgage lender, which you must do on the principle my Dad leveraged so frequently during my childhood: "he/she who holds the cash makes the rules." And the biggest stresses around frequent mortgage moves come when they are being made because the current mortgage obligations are simply too burdensome or overwhelming, which just puts an even greater level of pressure on the unhappy homeowner to close the loan -- something that is not 100 percent within their control.

3. Try to time the market. Those who try to time the market, whether trying to lock in an interest rate at the precise bottom or trying to sell at the tippy-top of the market, rarely do. By the time you can register that a bottom is in the wind, it has usually passed -- and if

MARKET TRENDS: Aging Baby and Echo Boomer to Impact Housing

The demographic shift of the aging baby boomer generation will soon have an impact on the nation's housing market.

It's not all aging baby boomers either. Their echo boomer children will also significantly impact trends.According to the National Association of Realtors researchers and the new report "Demographic Challenges and Opportunities for U.S. Housing Markets," the next two decades will see a surge in our nation's senior population by 30 million. We are an aging nation.

The echo boom generation includes nearly 65 million people born between 1981 and 1995. NAR's analysis illustrates the potential impact of economic and housing policy on this generation's demand for housing as they come of age.

How this will affect housing is simple. The report indicates that as adults enter their sixties, the pace of household dissolution begins to exceed that of creation. This mean more homes saturating the market. "It will also swell the number of dwellings released into the housing market over the next four decades, creating new challenges and opportunities for housing policy."

Two regions are predicted to feel this pressure more acutely. "The Northeast and Midwest are most likely to see a large number of older homeowners selling their homes to younger homeowners as the baby boomers age," said NAR Chief Economist Lawrence Yun. "This increased supply could mean additional buying opportunities for echo boomers. That generation will absorb 75-80 percent of the available inventory of owner-occupied housing by 2020."

While this may be the case, the report also indicated that echo boomers have suffered setbacks due to the recent economic downturn. They have been hit "hard by the recession as

THE ECONOMY: Recovery News: U.S. Home Sales Up 3.4% in April

RISMEDIA, Thursday, May 24, 2012— Existing-home sales rose in April and remain above a year ago, while home prices continued to rise, according to the National Association of Realtors®. The improvements in sales and prices were broad based across all regions.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.4 percent to a seasonally adjusted annual rate of 4.62 million in April from a downwardly revised 4.47 million in March, and are 10.0 percent higher than the 4.20 million-unit level in April 2011.

Lawrence Yun, NAR chief economist, says the housing recovery is underway. “It is no longer just the investors who are taking advantage of high affordability conditions. A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices,” he says. “The general downtrend in both listed and shadow inventory has shifted from a buyers’ market to one that is much more balanced, but in some areas it has become a seller’s market.”

Total housing inventory at the end of April rose 9.5 percent to 2.54 million existing homes available for sale, a seasonal increase which represents a 6.6-month supply at the current sales pace, up from a 6.2-month supply in March. Listed inventory is 20.6 percent below a year ago when there was a 9.1-month supply; the record for unsold inventory was 4.04 million in July 2007.

“A diminishing share of foreclosed property sales is helping home values. Moreover, an acute shortage of inventory in certain markets is leading to multiple biddings and escalating price conditions,” Yun says. He notes some areas with tight supply include the Washington, D.C., area; Miami; Naples, Fla.; North Dakota; Phoenix; Orange County, Calif.; and Seattle. “We expect stronger price increases in most of these areas.”

The national median existing-home prices for all housing types jumped 10.1 percent to $177,400 in April from a year ago; the March price showed an upwardly revised 3.1 percent annual improvement. “This is the first time we’ve had back-to-back price increases from a year earlier since June and July of 2010 when the gains were less than one percent,” Yun says. “For the year we’re looking for a modest overall price gain of 1.0 to 2.0 percent, with stronger

MARKET TRENDS: Ranieri Says Housing Market in U.S. Is Reaching Bottom

The U.S. housing market is reaching a bottom, according to Lewis Ranieri, the mortgage-bond pioneer.

While “broad” concern that home prices have further to fall is restraining sales, “many, myself included, think we are at a bottom,” Ranieri said today at a conference hosted by the Mortgage Bankers Association in New York.

Ranieri, chairman of Uniondale, New York-based Ranieri Partners, helped expand the mortgage-securities market in the 1980s at Salomon Brothers Inc., where he was vice chairman. His firm’s investments include Selene Finance LP, which targets soured debt, and home lender Shellpoint Partners LLC.The second or third quarter will prove the nadir, said Ranieri, who added that in his distressed mortgage business “we can’t buy loans fast enough anymore.” Home prices have slumped35 percent since a 2006 peak, S&P/Case-Shiller index data show.

Ranieri is concerned that policy makers won’t undertake many sales of foreclosed homes in so-called rent-to-own initiatives that give tenants the option of later purchasing properties, he said in a speech at the conference.

He and L. William Seidman, the former chairman of the Federal Deposit Insurance Corp., used the approach in Texas during the 1980s, Ranieri said. It works well since “the person acts like a homeowner because he truly believes that he is,” Ranieri said.

Rental Test

Fannie Mae and Freddie Mac, the government-supported mortgage financiers, are exploring

INVESTING: Boosting returns in your retirement plan

Tired of watching your portfolio poke along and want to nudge it forward?

While the last few years of investing have hardly been uneventful, the wild lurches in the stock market have left many investors barely ahead of where they were in 2006 or 2007 - if that. Many people approaching retirement age are now short of their savings goals and anxious to make up for lost time.

And if you’re counting on the bond market to bail you out, think again: After a tremendous sustained rally, bonds are in for a cooling off; and investors who fail to position themselves for the eventual rise in interest rates may end up getting badly The trick then, as many investment professionals know all too well, is to find ways to boost returns here and there without taking on too much risk, while protecting against another epic downturn. This is hard stuff, and is best done in consultation with a professional, such as a certified financial planner or investment adviser.

The first consideration is a big picture kind of question: Is your overall allocation between stocks and bonds correct given these two assumptions: the bond market is in for tough times and investors need higher returns to cover lost ground? The conventional wisdom has been investors should move into bonds as they get closer to retiring and deeper into retirement.

But now some advisers suggest those investors need to remain well invested in stocks, if for no other reason than people are living longer and the old, conservative models may not produce enough money to last people deep into old age.

So what’s the right mix? Maybe instead of, say 80 percent bonds, 20 percent stocks, you peel back to 75/25, or someone who was targeting a 60/40 split stays even between the two for the foreseeable future. The best answer though, won’t come from just moving numbers up and down a scale, but after working out your retirement goals, spending plans, and savings targets with a professional. Only then can an investor intelligently consider how much more risk to shoulder.

And keep this cardinal point in mind: Don’t think you will make your retirement easier simply by trying to earn more money in your investment accounts. “You’re not going to be able to invest your way out of this problem without taking on an obscene amount of risk,’’ cautioned David

MARKET TRENDS: Real Estate Outlook: Pending Home Sales Trend Upward

The latest Pending Home Sales Index from the National Association of Realtors showed promising results this month, with pending sales in upward movement.

Lawrence Yun, NAR chief economist, said this is a hopeful indicator going into the spring home-buying season. "Given more favorable housing market conditions, the trend in contract activity implies we are on track for a more meaningful sales gain this year. With a sustained downtrend in unsold inventory, this would bring about a broad price stabilization or even modest national price growth, of course with local variations."This is the highest point seen since April of 2010, when buyers took advantage of the first time home-buyer tax credit.

Regionally, the South led the way increasing 7.7 percent in January. The Northeast also saw a 7.6 percent rise for the month. The Midwest and West both fell, however, falling 3.8 and 4.4 percent respectively.

"Movements in the index have been uneven, reflecting the headwinds of tight credit, but job gains, high affordability and rising rents are hopefully pushing the market into what appears to be a sustained housing recovery," Yun said. "If and when credit availability conditions return to normal, home sales will likely get a 15 percent boost, speed up the home-price recovery, and

REAL ESTATE BOOM AND BUST: The Complete History Of US Real Estate Bubbles Since 1800

The most recent economic crash should come as no surprise to history buffs.

Reader and financial blogger Philip J. Anderson sent us an illuminating analysis of real estate bubbles through U.S. history.

"For the first 144 years of real estate enclosure in the U.S., land sales and/or real estate construction peaked almost consistently, every 18 years," Anderson writes. "The world’s worst downturns are always preceded by land speculation (the chasing of the economic rent) fueled by misguided credit creation courtesy of the banks."

Click here to explore the cyclical nature of the real estate busts >

Read more: http://www.businessinsider.com/the-economic-crash-repeated-every-generation-1800-2012-1#ixzz1krS4pNTe