GOVERNMENT LOOKING INTO
AUTHORIZATION OF FORECLOSURE
RENTALS |
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 Members
of Congress and the Obama Administration are taking action
that could lead to Fannie Mae and Freddie Mac renting
foreclosed homes that they have repossessed. Rep. Gary
Miller has introduced a bill (H.R. 2636) that would allow
Fannie, Freddie and FDIC-member banks to rent foreclosed
homes rather than sell them at cut-rate prices.
“Something must be done to reduce the inventory of available
homes and stop the further decline in home prices,” said
Miller, a Republican from California. “The Neighborhood
Preservation Act will preserve the physical condition of
foreclosed properties, which will ultimately help stabilize
the aesthetic and economic values of homes and
neighborhoods.”
Senator Jack Reed of Rhode Island
sent a letter to Federal Housing Finance Agency (FHFA)
Acting Director Edward DeMarco, asking DeMarco to require
Fannie and Freddie, which operate under the direction of the
FHFA, to do essentially what Miller wants.
“The
number of vacant foreclosed homes waiting to be sold at
depressed prices is increasing at the same time that the
demand for rental properties is increasing,” Reed said in
his letter. “Rather than selling these vacant foreclosed
homes at fire sale prices, we should be seeking ways to
increase value for Fannie Mae and Freddie Mac.”
The
Obama administration has recently shown interest in these
proposals and reportedly is seeking opinions of market
participants concerning these ideas.
“Taking steps to
encourage private investment in REO properties and
transition them into productive use will help stabilize
neighborhoods and home values at a critical time for our
economy,” said HUD Secretary Shaun Donavan. |
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| RENTAL-HOUSING VACANCY
DROPS TO LOWEST SINCE ‘03 |
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The Census Bureau reported that vacancies for rental housing
had fallen to 9.2%, which is 1.4% lower than it was a year
ago and the lowest it has been since 2003. As vacancy rates
continue to fall, rent-to-buy arrangements are also on the
upswing.
In an article for RISMedia, Steve Cook
reported that the median asking rent on vacant units was
$684. He also noted that the only active segment for
builders was multifamily housing.
“With mortgage
rates falling, media home prices below last year’s levels in
most markets and tents taking off towards 4-6%,
homeownership will make renting look unbeatable in markets
where renting was always considered less expensive,” Cook
wrote in his article. |
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| OUR CRYSTAL BROWN GIVES
BIRTH TO A SON |
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 Here
at ELLIOTT® & Company Appraisers, we like to think that
Crystal Brown is proud of her title of Assistant Client
Services Director, but we are not unrealistic enough to
think that she is even prouder of her new title, Mother.
Her son, Isaac David Brown, was born on July 26,
weighing seven pounds and five ounces. Just shy of 20 inches
in length at birth, Isaac is a happy and healthy infant.
Charlie Elliott and the entire staff of the company
congratulate Crystal and her husband, Kevin, on the birth of
their first child and wish all the best for Isaac as he
begins his new life. |
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ECONOMY MORE OF A THREAT TO
HOUSING MARKET
THAN S&P DOWNGRADES |
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In the wake of the Standard & Poor’s lowering the debt
ratings of Fannie Mae and Freddie Mac, as well as that of
U.S. debt, from AAA to AA+ ratings questions arose on how
this would affect the already unstable housing market.
“Right now the downgrade is taking a backseat to broader
economic concerns,” said Greg McBride, a senior financial
analyst with Bankrate.
As stocks shifted in price
dramatically in the days following the historic downgrades,
the Federal Reserve announced that the prime rate would be
frozen at its low level until at least 2013. This may help
relieve concerns of higher mortgage rates, but with fears of
a double-dip recession, there are concerns of further
decline in housing prices.
“What the U.S. can ill
afford is the decline in equity prices in view of how home
prices have continued to fall,” said John Lonski, chief
economist at Moody’s Investors Service in New York. “It will
reduce household wealth.” |
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CENSUS REPORTS LOWEST HOME OWNERSHIP RATE IN 13
YEARS |
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According to the U.S. Census, the homeownership rate fell to
65.9% in the second quarter of this year, half a percentage
point less than it was in the previous quarter and a full
percentage point lower than it was in the second quarter of
2010.
The Census said the homeownership rate had not
been this low since more than 13 years ago, but economists
felt that it is higher than it is about to be.
“With
another 3 million foreclosures in the pipeline and no sign
of a major improvement in credit conditions or the labor
market, demand for owner-occupied housing is likely to
remain weak for some years yet,” said Paul Dales, senior
U.S. economist with Capital Economics.
Wayne Yamano,
director of research at John Burns Real Estate Consulting,
an Irvine, Calif. firm, told Bloomberg News that he expects
the home ownership rate to be as low as 62% by 2015.
“Tight underwriting standards and the lack of a down payment
are keeping a big chunk of buyers out of the market, and
other people are being displaced by foreclosures.” |
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CONDO MARKET STRUGGLES IN HOPE FOR COMEBACK |
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 Condominiums
were hit even harder than single-family homes during the
real-estate meltdown in recent years. Overbuilding in
certain areas and vacancies effects on the association made
their challenges more complicated.
“When the U.S.
market for single-family homes sneezed, the condominium
market caught the flu,” said Grant Stern, vice president of
Morningside Mortgage Corporation.
According to the
National Association of Realtors (NAR), however, the condo
market improved in 2010. Existing condo sales improved 1.5%,
while sales of single-family homes, last year, dropped by
5.7%. Still, problems remain.
“The condo market
remains more oversupplied than the single-family market,”
NAR spokesman Walt Malony said. “You would want to see it
down to a six-to-seven-month supply, but the condo sector at
the end of 2010, had an 11.9 month supply.” |
 ASK
MARTITIA
QUESTION:
Does an appraiser’s workfile need to include a transcript of court
testimony when an appraiser testifies about an appraisal he or she
performed?
MARTITIA:
No, but the Record Keeping section of the Ethics Rule of the Uniform
Standards of Professional Appraisal Practice requires a summary of
such testimony if a transcript of it is not included in the
workfile.
Martitia Mortimer, Elliott's
executive vice president, answers appraisal questions on a regular
basis in Elliott Evaluation News.
QUOTES
“America is a land of taxes that was founded to avoid taxation.”
– Laurence Peter
“A compromise is the art of dividing a
cake in such a way that everyone believes that he has got the
biggest piece.” – Ludwig Erhard
“The most important
persuasion tool you have in your entire arsenal is integrity.” –
Zig Ziglar
“Inflation is the crabgrass in your savings.”
– Robert Orben
“Depend on the rabbit’s foot if you
will, but remember it didn’t work for the rabbit.” – P.E. Shay
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| Newsletter Editor:
kevin@elliottco.com
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3316-A Battleground Avenue
Greensboro, NC 27410 |
Toll Free 800-854-5889
Fax
336-854-7734 |
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