by Kenneth R. Harney
If you are refinancing this year, the odds are good that you are also tapping your home equity -- "cashing out" additional money for investment, large consumer purchases or for other purposes.
And you are probably paying at least a slightly higher interest rate on the new mortgage compared with the old -- a complete reversal of the traditional reason for refinancing, lowering the interest rate.
Those are some of the findings of the latest "Cash-Out Refi" study conducted by mortgage giant Freddie Mac. In the second quarter of 2007, according to the study, more than four out of five refinancers -- 83 percent -- took out replacement loans that were at least 5 percent larger than the original.
A cash-out works like this: Say you have a $200,000 first mortgage on a home appraised for $400,000. In order to pay for college tuition expenses and a major kitchen rehab, you decide to pull out $50,000 of your $200,000 net equity.
You refinance into a new $250,000 first mortgage. Although the new loan comes with a higher interest rate than the previous, and monthly payments are higher, the deal makes financial sense for you because (1) you've now got $50,000 cash to pay your bills, and (2) the interest rate on the new $50,000 of debt is lower than it would be if you took out a home equity credit line or loan.
According to Freddie Mac chief economist Frank Nothaft, $76.7 billion of equity withdrawals were pumped into the economy through cash out refis during the April-May-June period. The 83 percent rate for cash-outs is near the upper end of the historical scale: As recently as the second quarter of 2003, for example, just 33 percent of refinancings involved equity withdrawals.
By mid 2004, as the housing boom began raising equity holdings rapidly, the cash-out ratio jumped to 43 percent. It then rose steadily, quarter by quarter, into 2006, when it hit its all-time peak of 88 percent. The ratio has backed off slightly since then, according to Freddie Mac, as equity growth has slowed.
Equity withdrawals are likely to drop even further in the coming months, said Amy Crews Cutts, deputy chief economist. "Because the refinance share of mortgage originations is expected to decline by as many as 10 percentage points in the second half … we expect the volume of cash out activity to decline by roughly a third later this year."
However, she added, "Overall there remains a large amount of equity in homes that owners can tap if they wish"-at least as long as rates remain relatively favorable. The latest Federal Reserve estimates put homeowner net equity at around $11 trillion, giving Americans a giant asset to convert to spendable money should they need to.
The latest study also found that the median ratio of homeowners' new, post-refi interest rates on their new loans was higher than their previous loan rate by about one-eighth of a percentage point.
Friday, August 17, 2007
Realty Exchange News Summer 2007
Realty Exchange Corporation
"Your Nationwide Qualified Intermediary for Tax-Deferred Exchanges since 1990"
FEA Takes Lead in QI Regulation
The Federation of Exchange Accommodators (FEA) has submitted a petition to the Federal Trade Commission (FTC) asking them to adopt uniform nationwide rules that would apply accepted industry standards and conduct to protect property owners who use the services of a Qualified Intermediary (QI). The petition calls for the FTC to adopt rules to ensure QIs register with the FTC and pass background checks, safeguard exchange funds, and demonstrate competency to act as a QI. It is highly unusual for an industry to take the lead with a request for federal regulations and standards. The FEA is taking this action to ensure the continuing trust and confidence of investors in the QI industry.
Misappropriation of Escrow Funds
Recently there were reports of misappropriation of exchange escrow funds by two qualified intermediary holding companies. These two companies had recently become the new owners of a number of established qualified intermediaries. Such reports raise questions as to the security and safety of escrow funds within the entire exchange industry and motivated the FEA to take the action to propose federal regulation.
Assuring the security and safety of exchange escrow funds is the primary mission of Realty Exchange Corporation. We have in place the AlwaysSafe™ exchange escrow funds security system. This system includes separate bank accounts for each exchange, 24/7 on-line viewing of account status, and a $5 million fidelity bond, as well as additional security features. Our web site, www.1031.us/SSEF, provides a full explanation of the security procedures we follow to ensure the security and safety of the exchange escrow funds entrusted to us. It is apparent from the two current cases that the stable long-term ownership of a QI firm contributes in a positive manner to the security of the exchange escrow funds. Realty Exchange Corporation was established by Ed Horan in 1990, and is one of the oldest family-owned QIs in the country.
IRS Approves Related Party Transfer Within Two Years
The circumstances in Private Letter Ruling (PLR) 200712013 are that the related party wished to acquire the relinquished property from the taxpayer but did not plan to hold it for two years. The taxpayer had a contract on a more expensive replacement property that needed to go to settlement before the transfer of the relinquished property to the related party. The taxpayer entered into a reverse exchange agreement with an Exchange Accommodation Titleholder (EAT) in accordance with Revenue Procedure 2000-37. The EAT purchased the replacement property with funds loaned by the taxpayer. Subsequently, the taxpayer wrote a contract to transfer the relinquished property to the related party. The contract was assigned to the qualified intermediary (QI). At settlement the taxpayer transferred the relinquished property to the related party, who paid the purchase price to the QI. The EAT then transferred the replacement property interest to the taxpayer, and the QI paid down the loan from the taxpayer to the EAT.
Normally IRC Section 1031(f)(1) requires in a related party exchange that the relinquished property be held by the related party buyer for two years. However, in this PLR the IRS concluded that IRC Section 1031(f)(1) did not apply because the taxpayer and the related party did not engage in a like-kind exchange. The IRS stated that the related party’s disposal of the relinquished property within two years does not result in “cashing out” of an investment or shifting of basis between the taxpayer and the related party. Note that this PLR applies only to this taxpayer and may not be cited as a precedent.
Mississippi Law Now Conforms to Federal 1031 Exchange Rules
In March 2007 Mississippi law was changed so that its 1031 rules conform to IRC Section 1031. Prior to the change, the state only allowed deferral of the state capital gains tax if the replacement property was in Mississippi.
Presidentially Declared Disasters
If a taxpayer is doing an exchange and is impacted by a Presidentially declared disaster the taxpayer is granted relief to perform certain exchange time-sensitive acts. When there is a Presidentially declared disaster the IRS issues a News Release to advise the counties covered and the start and end of the extension period. To check a News Release go to www.irs.gov/newsroom/index.html. On the Newsroom page, click on the Tax Relief in Disaster Situations heading and then scroll down to the appropriate News Release. For exchanges that qualify, any reverse exchange, 45-day or 180-day deadlines falling within the extension period are extended for 120 days. An exchange may qualify if (1) the taxpayer is located in the disaster area, and (2) the relinquished property was transferred, or the EAT acquired title in a reverse exchange, before the start of the extension period. Other liberal 1031 exchange qualifying conditions, including the relinquished or replacement property being located in the disaster area, are listed in Section 17 of IRS Revenue Procedure 2005-27 (I.R.B. 2005-20, May 16, 2005).
A new development is that for reporting purposes the IRS computer systems now automatically identify taxpayers located in a covered disaster area. But other affected taxpayers who reside, or have a business or exchange property located outside the covered disaster area are required to call the IRS disaster hotline 1-866-562-5227 to self-identify for disaster relief.
In Memory
Jerry Long, a long-time friend and colleague, passed away on March 6, 2007. Prior to his passing Jerry was honored by the FEA with a lifetime achievement award. Jerry was the co-author of the text “Tax-Free Exchanges Under §1031,” which is considered the bible of the 1031 exchange industry. Jerry will be missed by all his friends in the exchange world to whom he so freely gave his valuable time and advice.
Realty Exchange Corporation Call Bill Horan, CES® or Cindy Dove, CES® at 800-795-0769 Trust your exchange to a Certified Exchange Specialist®14540 John Marshall Highway, Suite 207, Gainesville, VA 20155 office 703-754-9411 or 800-795-0769 fax 703-754-0754 Contact Bill Horan, CES® or Cindy Dove, CES® by Email www.1031.us Member of the Federation of Exchange Accommodators Bonded and Insured
This publication is designed to provide accurate information on tax-deferred exchanges.The publisher is not engaged in rendering legal or accounting services. If legal or tax advise is required the services of a competent professional should be sought.
"Your Nationwide Qualified Intermediary for Tax-Deferred Exchanges since 1990"
FEA Takes Lead in QI Regulation
The Federation of Exchange Accommodators (FEA) has submitted a petition to the Federal Trade Commission (FTC) asking them to adopt uniform nationwide rules that would apply accepted industry standards and conduct to protect property owners who use the services of a Qualified Intermediary (QI). The petition calls for the FTC to adopt rules to ensure QIs register with the FTC and pass background checks, safeguard exchange funds, and demonstrate competency to act as a QI. It is highly unusual for an industry to take the lead with a request for federal regulations and standards. The FEA is taking this action to ensure the continuing trust and confidence of investors in the QI industry.
Misappropriation of Escrow Funds
Recently there were reports of misappropriation of exchange escrow funds by two qualified intermediary holding companies. These two companies had recently become the new owners of a number of established qualified intermediaries. Such reports raise questions as to the security and safety of escrow funds within the entire exchange industry and motivated the FEA to take the action to propose federal regulation.
Assuring the security and safety of exchange escrow funds is the primary mission of Realty Exchange Corporation. We have in place the AlwaysSafe™ exchange escrow funds security system. This system includes separate bank accounts for each exchange, 24/7 on-line viewing of account status, and a $5 million fidelity bond, as well as additional security features. Our web site, www.1031.us/SSEF, provides a full explanation of the security procedures we follow to ensure the security and safety of the exchange escrow funds entrusted to us. It is apparent from the two current cases that the stable long-term ownership of a QI firm contributes in a positive manner to the security of the exchange escrow funds. Realty Exchange Corporation was established by Ed Horan in 1990, and is one of the oldest family-owned QIs in the country.
IRS Approves Related Party Transfer Within Two Years
The circumstances in Private Letter Ruling (PLR) 200712013 are that the related party wished to acquire the relinquished property from the taxpayer but did not plan to hold it for two years. The taxpayer had a contract on a more expensive replacement property that needed to go to settlement before the transfer of the relinquished property to the related party. The taxpayer entered into a reverse exchange agreement with an Exchange Accommodation Titleholder (EAT) in accordance with Revenue Procedure 2000-37. The EAT purchased the replacement property with funds loaned by the taxpayer. Subsequently, the taxpayer wrote a contract to transfer the relinquished property to the related party. The contract was assigned to the qualified intermediary (QI). At settlement the taxpayer transferred the relinquished property to the related party, who paid the purchase price to the QI. The EAT then transferred the replacement property interest to the taxpayer, and the QI paid down the loan from the taxpayer to the EAT.
Normally IRC Section 1031(f)(1) requires in a related party exchange that the relinquished property be held by the related party buyer for two years. However, in this PLR the IRS concluded that IRC Section 1031(f)(1) did not apply because the taxpayer and the related party did not engage in a like-kind exchange. The IRS stated that the related party’s disposal of the relinquished property within two years does not result in “cashing out” of an investment or shifting of basis between the taxpayer and the related party. Note that this PLR applies only to this taxpayer and may not be cited as a precedent.
Mississippi Law Now Conforms to Federal 1031 Exchange Rules
In March 2007 Mississippi law was changed so that its 1031 rules conform to IRC Section 1031. Prior to the change, the state only allowed deferral of the state capital gains tax if the replacement property was in Mississippi.
Presidentially Declared Disasters
If a taxpayer is doing an exchange and is impacted by a Presidentially declared disaster the taxpayer is granted relief to perform certain exchange time-sensitive acts. When there is a Presidentially declared disaster the IRS issues a News Release to advise the counties covered and the start and end of the extension period. To check a News Release go to www.irs.gov/newsroom/index.html. On the Newsroom page, click on the Tax Relief in Disaster Situations heading and then scroll down to the appropriate News Release. For exchanges that qualify, any reverse exchange, 45-day or 180-day deadlines falling within the extension period are extended for 120 days. An exchange may qualify if (1) the taxpayer is located in the disaster area, and (2) the relinquished property was transferred, or the EAT acquired title in a reverse exchange, before the start of the extension period. Other liberal 1031 exchange qualifying conditions, including the relinquished or replacement property being located in the disaster area, are listed in Section 17 of IRS Revenue Procedure 2005-27 (I.R.B. 2005-20, May 16, 2005).
A new development is that for reporting purposes the IRS computer systems now automatically identify taxpayers located in a covered disaster area. But other affected taxpayers who reside, or have a business or exchange property located outside the covered disaster area are required to call the IRS disaster hotline 1-866-562-5227 to self-identify for disaster relief.
In Memory
Jerry Long, a long-time friend and colleague, passed away on March 6, 2007. Prior to his passing Jerry was honored by the FEA with a lifetime achievement award. Jerry was the co-author of the text “Tax-Free Exchanges Under §1031,” which is considered the bible of the 1031 exchange industry. Jerry will be missed by all his friends in the exchange world to whom he so freely gave his valuable time and advice.
Realty Exchange Corporation Call Bill Horan, CES® or Cindy Dove, CES® at 800-795-0769 Trust your exchange to a Certified Exchange Specialist®14540 John Marshall Highway, Suite 207, Gainesville, VA 20155 office 703-754-9411 or 800-795-0769 fax 703-754-0754 Contact Bill Horan, CES® or Cindy Dove, CES® by Email www.1031.us Member of the Federation of Exchange Accommodators Bonded and Insured
This publication is designed to provide accurate information on tax-deferred exchanges.The publisher is not engaged in rendering legal or accounting services. If legal or tax advise is required the services of a competent professional should be sought.
Fed Cuts Discount Rate
Fed cuts discount rate The central bank, citing market conditions that have 'deteriorated,' cut the symbolic discount rate by a half of a percentage point.
August 17 2007: 8:41 AM EDT NEW YORK (CNNMoney.com) -- The Federal Reserve, reacting to concerns about the subprime lending crisis and the volatility in the financial markets that have resulted from it, announced Friday that it is cutting its so-called discount rate temporarily by a half percentage point, to 5.75 percent.
The discount rate is the rate the Federal Reserve banks across the country charge qualified lenders - mainly banks - for temporary loans. It is largely symbolic.
The central bank did not change its more closely watched federal funds rate, which affects rates that consumers pay on various types of loans. That rate remains at 5.25 percent.
The Fed last met Aug. 7 and decided to leave both the federal funds and discount rates unchanged. But since then, stocks have plunged further due to fears that some financial institutions and hedge funds were in serious trouble because of the mortgage meltdown.
In a statement, the Fed said that it took the move to "promote the restoration of orderly conditions in financial markets."
In another statement, the central bank indicated that "financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward."
The Fed added that "although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably" and that the Fed was prepared to take more action if necessary.
Stock futures, which were initially trading lower Friday following another wild day Thursday, surged higher following the Fed's announcement.
August 17 2007: 8:41 AM EDT NEW YORK (CNNMoney.com) -- The Federal Reserve, reacting to concerns about the subprime lending crisis and the volatility in the financial markets that have resulted from it, announced Friday that it is cutting its so-called discount rate temporarily by a half percentage point, to 5.75 percent.
The discount rate is the rate the Federal Reserve banks across the country charge qualified lenders - mainly banks - for temporary loans. It is largely symbolic.
The central bank did not change its more closely watched federal funds rate, which affects rates that consumers pay on various types of loans. That rate remains at 5.25 percent.
The Fed last met Aug. 7 and decided to leave both the federal funds and discount rates unchanged. But since then, stocks have plunged further due to fears that some financial institutions and hedge funds were in serious trouble because of the mortgage meltdown.
In a statement, the Fed said that it took the move to "promote the restoration of orderly conditions in financial markets."
In another statement, the central bank indicated that "financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward."
The Fed added that "although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably" and that the Fed was prepared to take more action if necessary.
Stock futures, which were initially trading lower Friday following another wild day Thursday, surged higher following the Fed's announcement.
Tuesday, August 14, 2007
172 Buckingham Drive, Rehoboth Beach Yacht and Country Club, Rehoboth Beach, DE 19971
Address:REHOBOTH BEACH, DE 19971MLS ID# 551962$629,9004 Bed, 3 Bath
var objContentHeader = $get('ctl00_ctl00_cphMain_cphContentHeader');
Single Family Property, Subdivision: REHOBOTH BEACH YACHT AND CC, County: SUSSEX, Year Built: 2000, Garage, Central air conditioning, Fireplace(s)
To access this page directly, use http://homes.realtor.com/prop/1087199653
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: REHOBOTH BEACH YACHT AND CC
Year Built: 2000
4 total bedroom(s)
3 total bath(s)
3 total full bath(s)
Style: Contemporary
Fireplace(s)
Garage
Central air conditioning
Interior features: Breakfast bar, Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Fireplace(s), Great rm, Microwave, Range and oven, Security feats, Tile flrs, Wood flrs
Exterior features: Clear lot, Deck, Fenced, Porch, Public sewer srvc
Approximate lot is 115X120
School District: Cape Henlopen
Up LeftRightDown Recenter
StreetCityStateCountry
ZoomIn
ZoomOut
1
Road
Aerial
Bird's eye
N
E
S
W
Show labels
See this location in bird's eye view.
600 yds
600 yds
© 2006 Microsoft Corporation © 2006 NAVTEQ© AND
© 2006 Microsoft Corporation © 2006 NAVTEQ© AND
L = new MV.RDC.Data.Listing("1087199653", "1","","38.699018","-75.102130","$629,900","0","","","REHOBOTH BEACH, DE 19971","4 Bed, 3 Bath","True","","","","","","");
MV.RDC.Data.mapMarkers.push(L);
var $oLatLon = MV.RDC.LDP.Map.oLatLon = new MV.Mapping.LatLong(38.699018, -75.102130);
Formatted for easy printing so you can take this with you. Remember to say you found it on REALTOR.com®.
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
var dBetaLM = document.getElementById('ctl00_ctl00_cphMain_pnlBetaLM');
Presented By! ANDREW STATON
Sold 40% in RBYCC last year - 302-841-2127Office: (302) 644-3133Mobile: (302) 841-2127
Brokered ByBEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex Countybroker: (302) 644-6880Fax: (302) 644-6881Toll Free: (866) 639-4287
var s_account ="homeglobal,homerealtor";
s.pageName = "FAH: Printable Brochure";
s.channel = "FAH";
s.prop13=s.pageName;
if(s.pageName){s.prop21="RDC: " + s.pageName};
if(s.channel){s.prop22="RDC: " + s.channel};
s.prop23="Realtor.com";
s.prop27="homes.realtor.com";
s.prop26="Not Registered";
/************* DO NOT ALTER ANYTHING BELOW THIS LINE ! **************/
var s_code=s.t();if(s_code)document.write(s_code);
_uacct = "UA-2250041-3"; urchinTracker();
var objContentHeader = $get('ctl00_ctl00_cphMain_cphContentHeader');
Single Family Property, Subdivision: REHOBOTH BEACH YACHT AND CC, County: SUSSEX, Year Built: 2000, Garage, Central air conditioning, Fireplace(s)
To access this page directly, use http://homes.realtor.com/prop/1087199653
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: REHOBOTH BEACH YACHT AND CC
Year Built: 2000
4 total bedroom(s)
3 total bath(s)
3 total full bath(s)
Style: Contemporary
Fireplace(s)
Garage
Central air conditioning
Interior features: Breakfast bar, Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Fireplace(s), Great rm, Microwave, Range and oven, Security feats, Tile flrs, Wood flrs
Exterior features: Clear lot, Deck, Fenced, Porch, Public sewer srvc
Approximate lot is 115X120
School District: Cape Henlopen
Up LeftRightDown Recenter
StreetCityStateCountry
ZoomIn
ZoomOut
1
Road
Aerial
Bird's eye
N
E
S
W
Show labels
See this location in bird's eye view.
600 yds
600 yds
© 2006 Microsoft Corporation © 2006 NAVTEQ© AND
© 2006 Microsoft Corporation © 2006 NAVTEQ© AND
L = new MV.RDC.Data.Listing("1087199653", "1","","38.699018","-75.102130","$629,900","0","","","REHOBOTH BEACH, DE 19971","4 Bed, 3 Bath","True","","","","","","");
MV.RDC.Data.mapMarkers.push(L);
var $oLatLon = MV.RDC.LDP.Map.oLatLon = new MV.Mapping.LatLong(38.699018, -75.102130);
Formatted for easy printing so you can take this with you. Remember to say you found it on REALTOR.com®.
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
var dBetaLM = document.getElementById('ctl00_ctl00_cphMain_pnlBetaLM');
Presented By! ANDREW STATON
Sold 40% in RBYCC last year - 302-841-2127Office: (302) 644-3133Mobile: (302) 841-2127
Brokered ByBEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex Countybroker: (302) 644-6880Fax: (302) 644-6881Toll Free: (866) 639-4287
var s_account ="homeglobal,homerealtor";
s.pageName = "FAH: Printable Brochure";
s.channel = "FAH";
s.prop13=s.pageName;
if(s.pageName){s.prop21="RDC: " + s.pageName};
if(s.channel){s.prop22="RDC: " + s.channel};
s.prop23="Realtor.com";
s.prop27="homes.realtor.com";
s.prop26="Not Registered";
/************* DO NOT ALTER ANYTHING BELOW THIS LINE ! **************/
var s_code=s.t();if(s_code)document.write(s_code);
_uacct = "UA-2250041-3"; urchinTracker();
Saturday, August 11, 2007
Mortgage Rates for Metrocities Mortgage August 10, 2007
Rates have been falling on the conforming market, but have gone through the roof on non-conforming loans. You may want to discuses with the seller paying points to drive down the rates on jumbo loans.
If you have any questions please call Ron at 858 2289
Loan Program
Loan Amount
Interest Rate
Points
30 Year Fixed
$417,000
6.500%
0
15 Year Fixed
$417,000
6.250%
0
7/1 ARM
$417,000
6.875%
0
5/1 ARM
$417,000
6.750%
0
3/1 ARM
$417,000
6.875%
0
6-Month Interest-Only ARM
$417,000
6.875%
0
1-Month Interest-Only ARM
$650,000
7.125%
0
30 Year Fixed
$650,000
7.500%
1
FOR MORE INFORMATION, CONTACT:
Ronald TennantSenior Mortgage ConsultantDirect Phone: 302.644.7964 Mobile Phone: 302.858.2289 Fax: 610.290.1937Email: rtennant@metrocitiesmtg.comWeb: www.ronaldtennant.com17316 Costal Highway Lewes, DE 19958
If you have any questions please call Ron at 858 2289
Loan Program
Loan Amount
Interest Rate
Points
30 Year Fixed
$417,000
6.500%
0
15 Year Fixed
$417,000
6.250%
0
7/1 ARM
$417,000
6.875%
0
5/1 ARM
$417,000
6.750%
0
3/1 ARM
$417,000
6.875%
0
6-Month Interest-Only ARM
$417,000
6.875%
0
1-Month Interest-Only ARM
$650,000
7.125%
0
30 Year Fixed
$650,000
7.500%
1
FOR MORE INFORMATION, CONTACT:
Ronald TennantSenior Mortgage ConsultantDirect Phone: 302.644.7964 Mobile Phone: 302.858.2289 Fax: 610.290.1937Email: rtennant@metrocitiesmtg.comWeb: www.ronaldtennant.com17316 Costal Highway Lewes, DE 19958
Thursday, August 9, 2007
Beach Real Estate Caught in an Undertow
Beach Real Estate Caught in an Undertow
Along Delmarva Coast, Buyers Are Scarce and Tourism Slows Slightly
By Anita HuslinWashington Post Staff WriterMonday, August 6, 2007; Page D01
REHOBOTH BEACH, Del. -- The "no vacancy" signs outside hotels, sunburned families packing boardwalk amusement rides and thousands of students working in surf shops and souvenir concessions along the avenues suggest that the beach economy is booming this summer.
But to a newly minted real estate agent, just six months into the job, the hottest and sunniest days are also the most frustrating signs of a different economic reality: one spent hours on end sitting in model homes and waiting for buyers, who are harder to find this year.
Bruce E. Plummer, left, of Coldwell Banker and Pat Campbell-White, right, with Re/Max Realty showed a Rehoboth Beach condo to Susan Gordon, center. With sales falling in the region, the developer is offering to pay Gordon's mortgage for six months, plus other incentives, if she buys. (Grant L. Gursky)
var technorati = new Technorati() ;
technorati.setProperty('url','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221_Technorati.html') ;
technorati.article = new item('Beach Real Estate Caught in an Undertow','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221.html','REHOBOTH BEACH, Del. -- The "no vacancy" signs outside hotels, sunburned families packing boardwalk amusement rides and thousands of students working in surf shops and souvenir concessions along the avenues suggest that the beach economy is booming this summer.','Anita Huslin') ;
document.write( technorati.getDisplaySidebar() );
Who's Blogging?
Read what bloggers are saying about this article.
DC Livin
DC Home and Condo Prices
tude dogs Views on News and Entertainment
#technorati_link a {color:#339900;}
Full List of Blogs (8 links) »
Most Blogged About Articles
#technorati_link a {color:#339900;}
On washingtonpost.com On the web
Save & Share Article
What's This?
Digg
Google
del.icio.us
Yahoo!
Reddit
Facebook
If 2006 was the year the boom market began to fade, 2007 is shaping up to be the year that beach communities along the Delaware, Maryland and Virginia shorelines see their economic engines -- largely driven by tourism and real estate -- downshift from overdrive, economic and tourism analysts say.
That means job and income growth is slowing, vacations are being scaled back, and real estate opportunities have shifted in favor of buyers.
For Steve Conlon, who graduated last year from the University of Delaware with a degree in criminal justice but then decided to join his mother in selling real estate, any notion of boom times might as well be a dusty historical reference. He's a sales representative for two new residential projects on the edges of this popular beach town. To lure buyers and ameliorate losses, developers have slowed their pace of construction, dropped prices, advertised upgrades as standard features and then offered discounts on land they haven't built on yet.
Between the four days a week he or another agent sits in the sales office of Heritage Village and the seven days a week they staff the Seasons, they've sold three units this summer.
On a slow afternoon last week, he checked out the competition -- a cement-clad bay-front hotel in nearby Dewey Beach that has been converted to condos. The developers are offering to pay the 3 percent real estate transfer tax, homeowner association fees for two years, a free boat slip for two years and then a 20 percent discount. Plus, they're guaranteeing owners will get at least $12,000 for the rental of their unit each year.
"The market got soft," the young saleswoman said with a shrug, pointing out the rooftop swimming pool. It was her first day on the job and she was sanguine about the market. "It was a choice between working here or in Milton," a nearby village of fewer than 2,000 people. "I thought, hmmm, I can sit in an office there, or be here and look at the bay all day."
Of the 17 condos sold in Dewey Beach the first five months of the year, seven were in this building, she said. A couple walked through and left with a price list. One person signed the guest book. It was the saleswoman.
This year, Sussex County, where Rehoboth and Dewey Beach are located, collected $13 million less in transfer taxes than last year, according to the recorder of deeds. At the same time, hotels, motels and bed-and-breakfasts sold 6.3 percent fewer rooms than during the first six months of last year, according to an analysis by Smith Travel Research, a firm in Hendersonville, Tenn., that tracks hospitality-industry statistics.
In the Hampton Roads-Virginia Beach area, the value of single-family homes for which building permits have been issued declined about 16 percent, according to an analysis by Old Dominion University. On the other hand, hotel revenue has increased about 12 percent, Smith Travel data show. In Ocean City, the pace of development has slowed considerably; the city has approved new construction worth $69.9 million for the first seven months of the year, down 32 percent from $102.6 million during the comparable period last year. And though the city's hotels reported a 4 percent increase in revenue, occupancy fell during the first seven months of the year.
"Some would say that business is great from looking at those numbers; however this is truly not the case," said Susan Jones, executive director of the Ocean City Hotel-Motel-Restaurant Association. "Several small properties were torn down and larger, newer facilities built in their place."
The trends, at least in the real estate market, are working in the favor of Susan Gordon, a former Bethesda resident in the market for a condominium or townhouse in Rehoboth. She is a sure buyer, within a field of lookers these days.
She's considering a property along the canal, Blue Point Villas, where the developer is offering to pay her mortgage for six months, plus six years of condo association fees, $5,000 toward closing and a 15 percent "developer closeout" discount on the sale price.
Bruce E. Plummer, left, of Coldwell Banker and Pat Campbell-White, right, with Re/Max Realty showed a Rehoboth Beach condo to Susan Gordon, center. With sales falling in the region, the developer is offering to pay Gordon's mortgage for six months, plus other incentives, if she buys. (Grant L. Gursky)
var technorati = new Technorati() ;
technorati.setProperty('url','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221_Technorati.html') ;
technorati.article = new item('Beach Real Estate Caught in an Undertow','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221.html','REHOBOTH BEACH, Del. -- The "no vacancy" signs outside hotels, sunburned families packing boardwalk amusement rides and thousands of students working in surf shops and souvenir concessions along the avenues suggest that the beach economy is booming this summer.','Anita Huslin') ;
document.write( technorati.getDisplaySidebar() );
Who's Blogging?
Read what bloggers are saying about this article.
DC Livin
DC Home and Condo Prices
tude dogs Views on News and Entertainment
#technorati_link a {color:#339900;}
Full List of Blogs (8 links) »
Most Blogged About Articles
#technorati_link a {color:#339900;}
On washingtonpost.com On the web
Save & Share Article
What's This?
Digg
Google
del.icio.us
Yahoo!
Reddit
Facebook
"Builders are getting so low on prices, it's getting down to materials," Conlon said. "They're already dropping prices 20 percent, then people come in and think they're going to get 25 percent off that."
Vinod Agarwal, an economics professor at Old Dominion University who studies the tourism economy in the Virginia Beach area, estimates that sellers are overvaluing their properties by at least 10 percent, presumably assuming that the market is what it was a year and a half ago.
As a result, properties are on the market longer and often going for less than what sellers are asking, echoing broader trends in the housing sector nationwide.
This disconnect will realign, said Anirban Basu, chief executive of Sage Policy Group, a Baltimore economic research firm, though it may take some time. It could take even longer in beach communities like Rehoboth, Ocean City and Virginia Beach, where tourism is fueled by real estate, and sales of second homes are generally luxury purchases, analysts and real estate agents said.
Tara Zaiser, a Realtor with Prudential Carruthers whose ex-husband owns an umbrella concession business in Ocean City, said the talk on the street is that crowds are down -- an impression borne out by the city's monthly population estimates. There's also a sense among locals that more tourists are renting condos, which have kitchens, suggesting that visitors eat out less often, she said.
"Talk to people who've owned businesses for years and years and years, and they will tell you that people are just holding onto their money a little more," Zaiser said. "So if real estate is down, then the hardware stores are down. And if hardware stores are down, those people are not going to the deli for lunch."
Since beach communities rely on outsiders to bring in money, their economies will continue to reflect what's happening in areas they draw from, Basu said.
Earlier this year, realizing that many of her clients were looking but not buying, Zaiser found work in another industry.
"When you don't sell houses, you've got to do something," she said. "I'm doing ad sales for a local newspaper. It's not something I like to tell people. It's just something I do to pay the bills."
Along Delmarva Coast, Buyers Are Scarce and Tourism Slows Slightly
By Anita HuslinWashington Post Staff WriterMonday, August 6, 2007; Page D01
REHOBOTH BEACH, Del. -- The "no vacancy" signs outside hotels, sunburned families packing boardwalk amusement rides and thousands of students working in surf shops and souvenir concessions along the avenues suggest that the beach economy is booming this summer.
But to a newly minted real estate agent, just six months into the job, the hottest and sunniest days are also the most frustrating signs of a different economic reality: one spent hours on end sitting in model homes and waiting for buyers, who are harder to find this year.
Bruce E. Plummer, left, of Coldwell Banker and Pat Campbell-White, right, with Re/Max Realty showed a Rehoboth Beach condo to Susan Gordon, center. With sales falling in the region, the developer is offering to pay Gordon's mortgage for six months, plus other incentives, if she buys. (Grant L. Gursky)
var technorati = new Technorati() ;
technorati.setProperty('url','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221_Technorati.html') ;
technorati.article = new item('Beach Real Estate Caught in an Undertow','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221.html','REHOBOTH BEACH, Del. -- The "no vacancy" signs outside hotels, sunburned families packing boardwalk amusement rides and thousands of students working in surf shops and souvenir concessions along the avenues suggest that the beach economy is booming this summer.','Anita Huslin') ;
document.write( technorati.getDisplaySidebar() );
Who's Blogging?
Read what bloggers are saying about this article.
DC Livin
DC Home and Condo Prices
tude dogs Views on News and Entertainment
#technorati_link a {color:#339900;}
Full List of Blogs (8 links) »
Most Blogged About Articles
#technorati_link a {color:#339900;}
On washingtonpost.com On the web
Save & Share Article
What's This?
Digg
del.icio.us
Yahoo!
If 2006 was the year the boom market began to fade, 2007 is shaping up to be the year that beach communities along the Delaware, Maryland and Virginia shorelines see their economic engines -- largely driven by tourism and real estate -- downshift from overdrive, economic and tourism analysts say.
That means job and income growth is slowing, vacations are being scaled back, and real estate opportunities have shifted in favor of buyers.
For Steve Conlon, who graduated last year from the University of Delaware with a degree in criminal justice but then decided to join his mother in selling real estate, any notion of boom times might as well be a dusty historical reference. He's a sales representative for two new residential projects on the edges of this popular beach town. To lure buyers and ameliorate losses, developers have slowed their pace of construction, dropped prices, advertised upgrades as standard features and then offered discounts on land they haven't built on yet.
Between the four days a week he or another agent sits in the sales office of Heritage Village and the seven days a week they staff the Seasons, they've sold three units this summer.
On a slow afternoon last week, he checked out the competition -- a cement-clad bay-front hotel in nearby Dewey Beach that has been converted to condos. The developers are offering to pay the 3 percent real estate transfer tax, homeowner association fees for two years, a free boat slip for two years and then a 20 percent discount. Plus, they're guaranteeing owners will get at least $12,000 for the rental of their unit each year.
"The market got soft," the young saleswoman said with a shrug, pointing out the rooftop swimming pool. It was her first day on the job and she was sanguine about the market. "It was a choice between working here or in Milton," a nearby village of fewer than 2,000 people. "I thought, hmmm, I can sit in an office there, or be here and look at the bay all day."
Of the 17 condos sold in Dewey Beach the first five months of the year, seven were in this building, she said. A couple walked through and left with a price list. One person signed the guest book. It was the saleswoman.
This year, Sussex County, where Rehoboth and Dewey Beach are located, collected $13 million less in transfer taxes than last year, according to the recorder of deeds. At the same time, hotels, motels and bed-and-breakfasts sold 6.3 percent fewer rooms than during the first six months of last year, according to an analysis by Smith Travel Research, a firm in Hendersonville, Tenn., that tracks hospitality-industry statistics.
In the Hampton Roads-Virginia Beach area, the value of single-family homes for which building permits have been issued declined about 16 percent, according to an analysis by Old Dominion University. On the other hand, hotel revenue has increased about 12 percent, Smith Travel data show. In Ocean City, the pace of development has slowed considerably; the city has approved new construction worth $69.9 million for the first seven months of the year, down 32 percent from $102.6 million during the comparable period last year. And though the city's hotels reported a 4 percent increase in revenue, occupancy fell during the first seven months of the year.
"Some would say that business is great from looking at those numbers; however this is truly not the case," said Susan Jones, executive director of the Ocean City Hotel-Motel-Restaurant Association. "Several small properties were torn down and larger, newer facilities built in their place."
The trends, at least in the real estate market, are working in the favor of Susan Gordon, a former Bethesda resident in the market for a condominium or townhouse in Rehoboth. She is a sure buyer, within a field of lookers these days.
She's considering a property along the canal, Blue Point Villas, where the developer is offering to pay her mortgage for six months, plus six years of condo association fees, $5,000 toward closing and a 15 percent "developer closeout" discount on the sale price.
Bruce E. Plummer, left, of Coldwell Banker and Pat Campbell-White, right, with Re/Max Realty showed a Rehoboth Beach condo to Susan Gordon, center. With sales falling in the region, the developer is offering to pay Gordon's mortgage for six months, plus other incentives, if she buys. (Grant L. Gursky)
var technorati = new Technorati() ;
technorati.setProperty('url','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221_Technorati.html') ;
technorati.article = new item('Beach Real Estate Caught in an Undertow','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221.html','REHOBOTH BEACH, Del. -- The "no vacancy" signs outside hotels, sunburned families packing boardwalk amusement rides and thousands of students working in surf shops and souvenir concessions along the avenues suggest that the beach economy is booming this summer.','Anita Huslin') ;
document.write( technorati.getDisplaySidebar() );
Who's Blogging?
Read what bloggers are saying about this article.
DC Livin
DC Home and Condo Prices
tude dogs Views on News and Entertainment
#technorati_link a {color:#339900;}
Full List of Blogs (8 links) »
Most Blogged About Articles
#technorati_link a {color:#339900;}
On washingtonpost.com On the web
Save & Share Article
What's This?
Digg
del.icio.us
Yahoo!
"Builders are getting so low on prices, it's getting down to materials," Conlon said. "They're already dropping prices 20 percent, then people come in and think they're going to get 25 percent off that."
Vinod Agarwal, an economics professor at Old Dominion University who studies the tourism economy in the Virginia Beach area, estimates that sellers are overvaluing their properties by at least 10 percent, presumably assuming that the market is what it was a year and a half ago.
As a result, properties are on the market longer and often going for less than what sellers are asking, echoing broader trends in the housing sector nationwide.
This disconnect will realign, said Anirban Basu, chief executive of Sage Policy Group, a Baltimore economic research firm, though it may take some time. It could take even longer in beach communities like Rehoboth, Ocean City and Virginia Beach, where tourism is fueled by real estate, and sales of second homes are generally luxury purchases, analysts and real estate agents said.
Tara Zaiser, a Realtor with Prudential Carruthers whose ex-husband owns an umbrella concession business in Ocean City, said the talk on the street is that crowds are down -- an impression borne out by the city's monthly population estimates. There's also a sense among locals that more tourists are renting condos, which have kitchens, suggesting that visitors eat out less often, she said.
"Talk to people who've owned businesses for years and years and years, and they will tell you that people are just holding onto their money a little more," Zaiser said. "So if real estate is down, then the hardware stores are down. And if hardware stores are down, those people are not going to the deli for lunch."
Since beach communities rely on outsiders to bring in money, their economies will continue to reflect what's happening in areas they draw from, Basu said.
Earlier this year, realizing that many of her clients were looking but not buying, Zaiser found work in another industry.
"When you don't sell houses, you've got to do something," she said. "I'm doing ad sales for a local newspaper. It's not something I like to tell people. It's just something I do to pay the bills."
Alternative Lending Group - Metrocities Mortgage
For your information; Metrocities Mortgage is still in the sub prime world with the credit-flex loan. These are the general guidelines. Please call if you have any questions.
M-14 is back with a new name: The Credit-Flex Loan
ALG presents the Credit-Flex Loan—the new version of the M-14. In a time of tightening guidelines, you again have the flexibility to give clients with less-than-perfect credit the opportunity to finance their dream home.
Highlights:
· Mortgage/Rental History:
Full Doc: Unlimited 30’s and 60’s – no 90’s – in
the last 12 months (cannot be 60 days down
from time of credit decision to funding).
Stated Doc: No more than 1X30 or 0X60
within the last 12 months
· Reserves:
< or = $550,000 none required with .25% add
to fee
>$550,000 2 months PITI seasoned for 30 days
· Cash-Out Refi:
<90% LTV (per credit matrix) Unlimited C/O
· Properties Recently Listed:
Must be removed from MLS for 90 days prior to
application date.
· DTI
55% for Fixed Rate Loans
50% for IO and ARM Products
· Loan Products:
40/40 Year Fixed
30/30 Year Fixed
IO available Minimum 620 Score (not available on 40 year amortized products)
Full Doc/Bank Statement Program (Purchase-Rate Term Refi)
95% LTV $450,000 590 Credit Score
90% LTV $450,000 560 Credit Score
85% LTV $450,000 530 Credit Score
100% LTV $650,000 620 Credit Score
100% LTV $750,000 660 Credit Score
80% LTV $1,000,000 640 Credit Score
70% LTV $1,500,000 640 Credit Score
Stated Income (Purchase-Rate Term Refi)
90% LTV $550,000 620 Credit Score
90% LTV $750,000 640 Credit Score
75% LTV $1,000,000 640 Credit Score
Call ALG today for program details at (877) 457-4707 or visit Member’s Only Button 41 for more product information.
M-14 is back with a new name: The Credit-Flex Loan
ALG presents the Credit-Flex Loan—the new version of the M-14. In a time of tightening guidelines, you again have the flexibility to give clients with less-than-perfect credit the opportunity to finance their dream home.
Highlights:
· Mortgage/Rental History:
Full Doc: Unlimited 30’s and 60’s – no 90’s – in
the last 12 months (cannot be 60 days down
from time of credit decision to funding).
Stated Doc: No more than 1X30 or 0X60
within the last 12 months
· Reserves:
< or = $550,000 none required with .25% add
to fee
>$550,000 2 months PITI seasoned for 30 days
· Cash-Out Refi:
<90% LTV (per credit matrix) Unlimited C/O
· Properties Recently Listed:
Must be removed from MLS for 90 days prior to
application date.
· DTI
55% for Fixed Rate Loans
50% for IO and ARM Products
· Loan Products:
40/40 Year Fixed
30/30 Year Fixed
IO available Minimum 620 Score (not available on 40 year amortized products)
Full Doc/Bank Statement Program (Purchase-Rate Term Refi)
95% LTV $450,000 590 Credit Score
90% LTV $450,000 560 Credit Score
85% LTV $450,000 530 Credit Score
100% LTV $650,000 620 Credit Score
100% LTV $750,000 660 Credit Score
80% LTV $1,000,000 640 Credit Score
70% LTV $1,500,000 640 Credit Score
Stated Income (Purchase-Rate Term Refi)
90% LTV $550,000 620 Credit Score
90% LTV $750,000 640 Credit Score
75% LTV $1,000,000 640 Credit Score
Call ALG today for program details at (877) 457-4707 or visit Member’s Only Button 41 for more product information.
Subscribe to:
Posts (Atom)