Some cities, mostly in places where the market has slowed significantly in the last year, are offering incentives in the form of tax abatements to help developers unload slow-selling condominiums.

The neighborhoods tend to be pre-gentrification, but the savings can be significant. For instance, the buyer of a two-bedroom condo in a 180-unit development in a former school in Grand Rapids, Mich., will save about $5,300 a year in taxes until 2018. The savings is transferable to a buyer.

Kansas City, Des Moines, Brooklyn, Harrisburg, Columbus, Tacoma, Wash. and Richmond, Va. have dangled similar tax holidays in front of buyers.

Anyone who is buying a condo for investment should read the fine print. In many new projects, developers limit the number of investors to as little as 10 percent of total available units. And that’s despite more lenient standards set by Fannie Mae, which buys many condo mortgages from lenders. Fannie Mae permits an investor-owned level as high as 30 percent.

Source: Forbes, Matthew Swibel (06/04/07)

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Once more there was little movement in the mortgage markets during the week ended May 10, especially for fixed rate mortgages (FRM).

The 30-year FRM averaged 6.15 percent with 0.5 point compared to 6.16 percent and 0.5 point the previous week while the 15-year FRM was unchanged at 5.87 percent and 0.5 points. 

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs averaged 5.89 percent, an increase of two basis points. Fees and points were unchanged at 0.6.

One-year Treasury indexed ARM’s averaged 5.48 percent with 0.7 points. During the week ended May 13 the average was 5.42 percent with 0.7 point.

“Low employment growth in April - the slowest pace since November 2004 - and downward revisions to both February and March job growth tempered market concerns of future increases in the rate of inflation,” said Frank Nothaft, Freddie Mac vice president and chief economist. “As a result, mortgage rates were little changed this week.” Read more

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This is the second installment in a several part series about Second Life, a fantasy web site that is attracting much attention from role players and in the media. Click here to read part one of this series on virtual real estate.

Second Life is an interesting concept if viewed solely as entertainment. Losing one’s Avatar’s ears and clothing is amusing; flying headlong into a Gothic column is painless and pretty funny, and reading the blogs and coming to grips with some Second Life residents’ total commitment to their secondary reality is, well it is massively creepy. But Second Life is also a living, breathing economic system and, for that reason, it is fascinating.

Some of the figures coming out of that economy are startling and the numbers are increasing quickly. In November, 2006 13,788 Second Life business owners earned one dollar or more. These were U.S. dollars (USD) not the Second Life Linden Dollar (L$). Last month that number had grown to 34,474. Granted most had a Positive Monthly Linden Dollar Flow (PMLF) of less than $10 USD but 810 business owners had a PMLF of over $1,000 and 129 made more than $5,000. Read more

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Builders pulled residential construction permits at a seasonally adjusted annual rate of 1,429,000 units in April. This was an 8.9 percent decline from the seasonally adjusted March rate of 1,569,000 and is down 28.1 percent from the revised April 2006 rate of 1,987,000 according to the monthly report on new residential construction released last week by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. The April figure represents the slowest pace for permitting since June, 1997.

Housing starts, however, bumped up a bit to a seasonally adjusted annual rate of 1,528,000, 2.5 percent higher than the revised March figure of 1,491,000. Starts, however, were still 16.1 percent below the 1,821,000 pace of one year ago.

As is only logical with starts up and permitting down, the number of outstanding permits under which construction has not yet started dropped from 214,100 units to 200,900 units from March to April, a decrease of 6.1 percent and 14.7 percent lower than the 235,600 permits outstanding in April, 2006.

The President of the National Association of Home Builders (NAHB), California-based builder Brian Catalde remarked on the association’s website that “Builders are adjusting to the adverse impacts of tighter lending standards on home sales and cancellations by cutting back on the number of new permits and working down their backlog of unused permits. NAHB’s single-family Housing Market Index has been declining since February and builders are bracing for the challenges ahead.” Read more

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Sales in southern California neighborhoods that offer affordable housing and cater to first-time buyers are in freefall because of tougher mortgage loan standards, which is shrinking the pool of buyers.

Meanwhile, sales of houses in neighborhoods where prices are higher than $600,000 continue to be relatively brisk, according to an analysis of sales data by DataQuick Information Systems.
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Bank of America on Tuesday will begin offering nationally a no-fee mortgage, which will eliminate most of the charges that add a few thousand dollars to every closing.

Bank of America, which is the nation’s second largest lender by assets, has been offering this mortgage in Washington state since September. In February, it expanded the program to eight additional states. Tomorrow, it will begin advertising the “No Fee Mortgage Plus” nationally.

The loan also eliminates private mortgage insurance and the bank is guaranteeing its customers the best deal on interest rates and an on-time closing. Borrowers must put down at least 5 percent. The loans aren’t available to sub-prime customers. Read more

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Major home mortgage lenders have agreed to adopt a set of principles for dealing with home owners in trouble with high-priced loans, says Sen. Christopher Dodd (D-Conn.), chairman of the Senate Banking Committee.
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It seems impossible to get a clear look at the housing situation these days. Where there is hope there is despair, if good news there is bad, existing home sales plummet while new home sales climb toward recovery, ying begets yang. And in that spirit, The National Association of Realtors (NAR) just released its annual report on the sales of what we will call “additional homes,” that is vacation residences and residential investment properties.

According to NAR’s Investment and Vacation Home Buyers Survey, the sale of vacation homes rose 4.7 percent to a record 1.07 million units last year. In 2005 1.02 million vacation homes were sold. However, the sale of investment homes fell a stiff 28.9 percent to 1.65 million units from 2.32 million in 2005. The latter figure is even starker when compared to the sales of primary residences which were down 4.1 percent from 5.02 million in 2005 to 4.82 million last year. Read more

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The U.S. House Financial Services Committee on Thursday passed legislation allowing the Federal Housing Administration to offer borrowers a safer alternative to risky mortgage products and to help many home owners facing foreclosure.

The NATIONAL ASSOCIATION OF REALTORS®, a strong advocate of FHA modernization legislation, says the bill will bring about more stability to local real estate markets and economies.

“FHA can once again be a leader in providing safe loan products and preventing foreclosures by authorizing lenders to assist borrowers who are in default,” says NAR President Pat V. Combs. “This ability will make a substantial difference for many families that may otherwise face foreclosure.”

The legislation — titled the Expanding American Homeownership Act of 2007 — would increase loan limits, eliminate the statutory 3 percent minimum cash down payment, and give FHA flexibility to provide risk-based pricing. The bill will next go before the full House of Representatives for a vote. Read more

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To use the word “drift” in conjunction with the mortgage market the past week would be suggesting too much energy in mortgage rates and in the market.

According to Freddie Mac’s Primary Mortgage Market Survey for last week, fixed rate mortgages (FRM) inched down a maximum of two basis points and ARMs a maximum of four.

To be specific, the 30-year FRM averaged 6.16 percent with 0.5 point compared to 6.17 with 0.5 point the previous week while the 15-year FRM had an average contract interest rate of 5.87 percent, down two basis points from last week’s average of 5.89 percent. Fees and points both weeks averaged 0.5. Read more

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