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America’s Top Places to Live for 2010

RISMEDIA, May 5, 2010 The three most important things to remember when moving and buying a new home are: location, location, location. As potential home buyers start looking for new homes, RelocateAmerica.com, a leading website in providing relocating consumers access to resources for their upcoming relocation, has released its 13th annual list of America’s Top Places to Live for 2010.

The Top Places to Live list features several breakout categories such as the Top 10 Recovery Cities, Retirement Cities, Earth Friendly Cities, Recreation Cities and Small Towns.

New for this year, the Top 10 Recovery Cities focused on areas poised for swift economic recovery. Many of these communities did not see the massive real estate bubble that formed in other areas and have a more diverse economy.

To be considered for the list, a community is nominated at RelocateAmerica.com. From the thousands of submissions, RelocateAmerica.com’s editorial team reviews the nominations and selects the top places to live, as well as the Top 10 for each smaller category, based on interviews with local leaders; feedback from residents; and economic, environmental, education, crime, employment and housing data for the past year.

Given the tough economic times our nation is facing, home buyers have re-evaluated their priorities and are looking to relocate to communities that offer plenty of perks, but minimal hassle and cost, said Peter Meyers, Vice President, Research and Content Development, at RelocateAmerica.com. While some cities are facing a road to recovery that could take years, others are poised for a quick rebound and already have seen growth. We wanted to highlight those cities that are on the road back to economic health.

Top 10 Overall Cities:

1. Huntsville, AL
2. Washington, DC
3. Austin, TX
4. San Diego, CA
5. San Antonio, TX
6. Tulsa, OK
7. Charlotte, NC
8. Raleigh, NC
9. Boulder, CO
10. Minneapolis, MN

Top 10 Recovery Cities:

1. Huntsville, AL
2. Austin, TX
3. Las Cruces, NM
4. Washington, DC
5. San Antonio, TX
6. McAllen, TX
7. Billings, MT
8. Albuquerque, NM
9. Everett, WA
10. Boulder, CO

Top 10 Retirement Cities:

1. Ashville, NC
2. Bella Vista, AR
3. Green Valley, AZ
4. Sarasota, FL
5. Prescott, AZ
6. Tampa, FL
7. Greenville, SC
8. San Antonio, TX
9. Hot Springs Village, AR
10. Colorado Springs, CO

Top 10 Earth Friendly Cities:

1. Portland, OR
2. Boston, MA
3. Madison, WI
4. Boulder, CO
5. Austin, TX
6. Chicago, IL
7. Minneapolis, MN
8. Fort Worth, TX
9. Ann Arbor, MI
10. Huntsville, AL

Top 10 Recreation Cities:

1. Boulder, CO
2. Santa Cruz, CA
3. Flagstaff, AZ
4. St. George, UT
5. Ithaca, NY
6. Corvallis, OR
7. Salt Lake City, UT
8. Stevens Point, WI
9. Wilmington, NC
10. Portland, OR

Top 10 Small Towns (<40K pop.):

1. Grinnell, IA
2. St. Augustine, FL
3. Fairhope, AL
4. Stillwater, MN
5. Summit, NJ
6. Ashland, OR
7. Batavia, IL
8. Ithaca, NY
9. Peachtree City, GA
10. Trumbull, CT

For more information, visit www.RelocateAmerica.com.

Filed under: Blog by Kim Bregman
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Tips On Buying a Foreclosure Property

The current market conditions make it a perfect time for an investor to purchase one or more foreclosure properties for their private residence, rental or resale. First, you have to decide at what stage of foreclosure you want to buy; pre-foreclosure , also known as a short sale, sheriff’s auction, or repossession, called REO (for real estate owned by the bank).

For most consumers, however, the foreclosure process can prove daunting, Reed says. Good buys are available, but they require research, preparation, patience and persistence.

Pre-foreclosure(Short Sales): These homes are in the foreclosure process, but they have yet to be sent to auction. Owners are typically trying to unload them because they are “underwater,” owing more on the homes than they are worth.

As a result, potential buyers must negotiate a deal with the lender as well as the owner. That makes buying at this stage of foreclosure complicated and slow. But, you have the advantage of being able to inspect the home before purchase — which isn’t the case in other types of foreclosure sales. More often than not, these properties sell for a higher price than if the bank were to take it through the foreclosure process and sell it as an REO.

Sheriff’s auction: These sales yield the lowest prices, but they are the riskiest investments. The foreclosure process starts when a property owner falls behind on mortgage payments. Many owners of homes that go into foreclosure have been struggling financially for almost a year before they give up, which usually means that the house has not received needed repairs or general maintenance for a while. Often the house is unavailable for inspection, leaving buyers with a long list of expensive repairs — and much larger bill than they intended. The buyer gets the property as is , caveat emptor (let the buyer beware) and that may include any liens or taxes due on the property.

There is no guarantee of clear title when you purchase a home through a Sheriff’s auction and you may need to clear the liens on the property to sell if in the future. Make sure you have a thorough understanding of the condition of the property, the liens, and the cost for repairs. These are all out-of-pocket expenses and will need to be added to the purchase price of the property to get a true assessment of what you are paying for the property.

Repossession ( REO): This occurs after the home has gone through a sheriff’s auction but does not sell and the bank gains possession of the property. Homebuyers may not get the best bargains during this stage, but they can nearly always perform a thorough inspection before closing, minimizing costly surprises. Plus, the property comes with a clear title.

An REO is the least risky way to buy a foreclosed home. Before a bank hangs a “For Sale” sign, it pays off all the existing debts and taxes, and in many cases, repairs the home to bring it up to the standards of the neighborhood. Best of all, you should be able to buy a bank-owned property with a traditional mortgage. In addition, the banks selling these places may extend preferential financing terms to the buyers.

“You can buy foreclosures for as cheap as 30% or 40% below market, but most foreclosures sell for 5% below market,” said John T. Reed, editor of Real Estate Investor’s Monthly, a newsletter based in Alamo, Calif. Banks order appraisals on the properties once they agree to a short sale or take the property back as an REO. The banks are fully aware of the market value of the property and tend not to discount too far off the appraised value.

Even in this safer stage, though, homes are still usually sold in “as is” condition. “That means the bank won’t pay for cosmetic issues,” said Adam Wiener, a spokesman for the Redfin, the online real estate marketer. “Although, they will often pay for some or all of repairs that are health and safety issues. That makes the home inspection even more critical.”

Making an Offer…….
Usually the offer amount is somewhere below the market value but above the total outstanding liens and estimated repair costs. If the property is a pre-foreclosure or bank-owned, you could prepare an offer similar to a typical purchase offer, contingent on a full inspection and title search ( paid for by the buyer).

If the property is selling at auction, you will need to make your offer, or bid, at the auction. In many states, bidders are required to pay in cash in the form of a cashier’s check at the auction. You probably won’t be able to conduct a full inspection and title search when you buy at an auction, so it’s important to do careful research beforehand.

Once you’ve decided which type of home to buy, there are several common mistakes foreclosure buyers should take care to avoid. These include:

Getting caught up in a bidding frenzy: The banks often under-price repossessions, hoping to generate excitement, attract multiple bids and sell them quickly. The problem is, as in any auction-type sale, bidders get excited and pay too much.

Underestimating repair costs: Take full advantage of the home inspection and don’t delude yourself about much the repairs will cost.

Not knowing what comparable properties cost: This is important in any market but especially in this endeavor. In high foreclosure areas, prices can be eroding very quickly. You want to have the latest homes sale prices on repossessed properties and try to keep your bid comparable or lower.

Buying in a neighborhood flooded with foreclosures: This is most important for people buying for the short-term. Any neighborhood saturated with REOs and foreclosures may be headed for further price falls. If you’re planning to relocate within a few years or buying a bigger house, that could mean selling at a loss. A better bet, if you can find it, is to buy the only foreclosed home in an otherwise stable community. That’s more likely to hold its value.

Banks want to know that you have already secured the financing to purchase the home or that you are paying cash. Offers contingent on financing or selling your existing home are often summarily rejected by the bank. Individuals with a large amount of equity in another home may get a line of credit from their bank to purchase a foreclosure. When they convert the line of credit to a mortgage, no down payment may be required.

Whether you use cash, a home equity line of credit, resources from other investors or mortgage products, secure the money for your purchase in advance. Sellers only want to work with serious buyers who are ready to buy quickly. You could miss an opportunity if you don’t have your financing in place.

Foreclosure homes bought in good areas at below market values that appreciate annually can be a sound investment strategy for many investors. The appreciation of the homes is tax-exempt until the home is sold. If the home is a primary residence, the appreciation may be tax-free.

Homes used as rental properties give most investors valuable tax deductions while the house increases in value and builds equity. Real Estate investment is a good way to diversify your portfolio.

Filed under: Blog by Kim Bregman
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Spring Cleaning and Home Maintenance Guide

SPRING CLEANING & HOME MAINTENANCE GUIDE

As current homeowners you need to keep your property in good condition so that the small maintenance issues do not become major and expensive repair items. Here are some annual maintenance items that you should make on your calendar to keep your home in good repair and maintain its value.Â

Do not read this list and become overwhelmed, it is an extensive list meant to cover maintenance items you should do once a year….schedule these tasks for weekends and as the season dictates.Â You will enjoy your home more knowing that these items have been addressed.

Clean the vents behind your dryer. This will help your machine dry clothes more quickly, last longer and you will lower your risk of a fire. Hardware stores carry kits that can help and there are service providers that will do this for you as well.

Check your furnace filter once a month while in use for excess dust; you will want to change it once or twice a year so the unit operates more efficiently.

Replace or wash out your Air Conditioner filters every three months while in use. This will help lower your electric bill and improve the air quality in your home.

Make sure your sump pump is clean and operating property before spring rains arrive. Left the lever on the sump to make the float go up and wait for the motor to click on. If you have a battery backup, unplug the unit and test the pump again.

Now is the time to remove your storm windows and store them properly.

Vacuum the refrigerator condenser coils. Remember to unplug the unit first and use your vacuum’s brush attachment.

Check your fire extinguishers to ensure they have not passed their expiration date. At a minimum you need one in the kitchen.

Test all your GFIs (Ground Fault Outlet Circuit Interrupters) to see if they are working properly ( hit the “Test” button and the “Reset” button should pop out. Replace those that are not working. GFIs should be found in kitchens and bathroom or anywhere there is an electrical outlet near a water source. If your home is older, you may not have them installed. It is a good idea to have the old outlets replaced for your own safety. They will show up as a deficiency in an inspection report when you go to sell your home as well.

Change the batteries in your smoke detectors and carbon-monoxide alarms twice a year. The best way to remember is the change them when you switch your clocks for to and from daylight savings time. If you did not do this in March, then make sure you do it soon.

Test your smoke detectors by blowing out a candle underneath them.

If you have a home alarm system that is tied to a central HUB, call them and tell them you are running a test to ensure that they are receiving the notice of the alarm activation.

If you have a wood burning fireplace, schedule an inspection and cleaning of your chimney once a year. Many sweeps offer a discount in the Spring and Summer. Also make sure to remove and ashes from your fireplace to prevent moisture buildup, which can damage your masonry.

Inspect your home’s exterior for loose siding or trim, cracks, and crumbling mortar. Examine the attic for any signs of leaks.

Clean and repair gutters

Wash and treat ( or paint) wood decks to prevent cracking

Make an appointment to have your air-conditioning system professionally inspected and adjusted before the temperatures start to get into the 80s.

Run a zone check of your underground sprinkler system. Check for leaks around the hub and make sure that all your pop-ups are working and that none have grown over. Check on the direction of the spray to ensure that you are getting full coverage of your foliage and limited watering of sidewalks, driveways, and streets.

In preparation for the winter…If you are in an area that freezes, have your sprinkler system professionally blown out since water in the pipes can freeze and cause damage. Take down garden hoses, drain and store, and put insulation around spouts.

Look for signs of leaks and moisture in your basement which can cause mold, fungus and rust. Water on the wall usually indicates a bad downspout or grading that is sloping toward the house. Standing water usually requires a professional.

Inspect your roof and look for loose shingles, mold, mildew or cracked mortar. Fix problems early to avoid extensive and expensive repairs in the future.

Check all the fascia and trim for deterioration

Test your garage door beam sensor by waving a broom across the beach while the door is in motion. The door should not close and raise back up if everything is working properly.

Check the caulk around tubs, showers, sinks, shower fixtures, and toilets to Faucets make sure moisture cannot penetrate. If the caulking is black or discolored that means that mildew has gotten below it. This needs to be removed and re caulked to prevent further water damage to flooring or drywall.
Drain and refill your hot-water heater to remove sediment. Also test the heater’s pressure valve according to the manufacturer’s instructions.

Check your attic for holes or thin spots in the insulation and make sure that the caulking around doors and windows does not leak.

Empty kitchen cabinets, pantries and drawers and clean out all crumbs, etc. This will significantly reduce the chance of attracting ants and roaches. Throw our anything that has expired.

Wash windows, wipe down sills, and clean screens to allow the great light into your home.

Dust your home thoroughly. Take everything off shelves, tabletops and home cleaning dressers to dust. Now is also the time to get to all the places you’ve been neglecting throughout the year, including ceiling fans, above kitchen cabinets and baseboards and doorways.

De-clutter your garage. Sort your things into different areas of the garage; one pile to keep, one sale, and a bunch of trash bags for the rest.

Wash out trash cans. To really clean garbage cans, spray them with a hose and dump out the water. Next, spray the inside with a disinfectant spray, scrub with a handled brush and rinse. Leave them upside down to dry.

Deep clean your flooring. Have your carpets professionally cleaned and wax wooden floors.

While you are cleaning the floors look for cracked or missing grout and repair quickly. A small crack in the grout or caulk can lead to an expensive repair later. If necessary, re-seal as soon as possible

Clean upholstered furniture. Vacuum pillows, as well as underneath the cushions. Look for stains and clean according to the care label.

Investigate all doors and windows for leaks and drafts, particularly near the corners. Look for peeling and chipping paint, which can signal water intrusion. Seal any open areas between the frame and the wall to keep out water, which can deteriorate building materials.

Set your oven to self-clean. Be sure to wipe up major spills before setting it to self-clean.

Clean out refrigerator and wipe all surfaces clean of stains or spills. Check all your bottles of dressings, etc. for expiration dates.

Vacuum inside closets and watch for signs of insects. Be sure that the closet or area is also clean and free of anything that bugs might find delicious. Dust, other insects, crumbs or food and beverage stains are all attractive to pests. Now is a good time to donate items to local charities.

Sweep porch and deck, as well as around doors and windows to get rid of cobwebs and debris.

Clean the kitchen exhaust hood and filter

Repair all cracked, broken or uneven driveways and walks to help provide a level walking surface

Check the shutoff valve at each plumbing fixture to make sure they function

Replace all extension cords that have become brittle, worn or damaged

Look for burn marks at the main electrical panel; they can be a sign of arcing electrical panel inside the panel, which can easily lead to a fire. Loose connections or damaged insulation can cause the arcing. Note: Only a qualified electrician should remove the front panel cover.

Check all electrical outlets for loose-fitting plugs they are an indication of a worn out receptacle. Worn receptacles should be replaced as they cause overheating and fires. Also check electrical outlets and switches to be sure they work properly. If any switches, outlets or receptacles do not work, have a qualified electrician determine the problem and fix it to avoid fires inside the walls of your home.

Filed under: Blog by Kim Bregman
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The Economics Of Why Short Sales Take So Long

Nothing is more frustrating in today’s real estate scene than short sales. No one can-fully explain why it remains such a difficult task to complete one short sale — the process by which a lender agrees to accept less than is owed on a home — while another sails through. The only certainty as to why lenders do what they do: their bottom line.

Understanding a bank’s financial motivations will help buyer’s grasp why short sales seem to take so LONG and why often the banks seem to be operating contrary to market conditions. Just because a property is a short sale does not always mean it will sell at or below market value.

Sometimes short sales bring more cash than foreclosures, and vice-versa. Which one it is depends on a host of factors, not the least of which is whether a lender has an agreement with the Federal Deposit Insurance Corporation for reimbursement of most losses on a bad loan like those sold short.

Multiple liens on a house and fat home-equity lines of credit that must be dealt with first are easy explanations for why a short sale languishes. Another is that lenders cases each year are now overwhelmed with hundreds or more short sale offers in a month and are significantly understaffed to handle the demand.

Then there are the complexities of the post-boom world: loans that have been bundled with hundreds of others, then securitized and sold to an investor, and scores of banks on the verge of insolvency that do not want to account for losses on a short sale. Even with those hurdles, there are short sales that can take 90 days or less from offer to consummation; but not many.

Simply put, the decision an individual lender or investor group makes — even if that is not to make a decision — is laden with a convoluted mix of what-ifs, if-then, no-ways and sure things.

The real estate community is keenly focused on short sales because distressed properties are the new normal. Mortgage lenders and services were caught unequipped to deal with the crush.Â In the worst straits are those borrowers, usually through sub-prime loans, who have had their mortgage wrapped into an investment pool like those held by Citigroup and Bank of America; about 25 percent of boom-time mortgages are contained in such securities.Â The process of bundling notes and selling them to investors as a security was a boom-time staple, said Irv DeGraw, a banking professor at St. Petersburg College. AIG, Citigroup, Lehman Bros. and others backed, or insured, these so-called “credit-default swaps.” When the housing market began tanking in 2006 and foreclosures began piling up, pay-outs to the investors skyrocketed. Eventually the federal government stepped in with the multibillion-dollar bailout.

“It was an absolutely maniacal problem,” DeGraw said. “Nobody understood exactly what we were dealing with and then it exploded. Those taking the risk did not understand the amount of risk they were exposed to.” In a counter-intuitive move, many investment groups preferred a complete collapse of the security rather than agreeing to short sales. “When the mortgages start to get into trouble an insurance policy kicks in and they are made whole,” DeGraw said. “If they grant a short sale they are not made whole. It’s one of these bizarre nightmare scenarios where people got too sophisticated.”

Some banks are urging federal regulators not to come in and force them to admit all of their problem loans, he said.

“Most banks are trying to buy time. It is called the ‘delay and pray strategy,'” Thomas said. “You delay valuating the house at market and pray the value will come back. If you mark it down for short sale and do that deal you have to take a hit to your capital.”

Others employ what Thomas calls the “extend and pretend” strategy to keep regulators from noticing a delinquent mortgage, whether that be lengthening the term, lowering the interest rate or allowing a distressed homeowner to skip a few payments. “Banks will say there is nothing wrong with that because we have one on the books for a million dollars and the market will come back in a year, so why we should we hurt our shareholders,” Thomas said.

Banks are hoarding assets to avoid the fate that Thomas described, said Matt Augustyniak of Bradenton’s Horizon Realty, Horizon Title and Horizon Financial. “They have to show as much assets as possible to balance the books,” Augustyniak said. “That is why these banks are dragging their feet on short sales.”

When Bank A takes over failed Banks B’s assets, usually laden with risky mortgages, the FDIC often agrees to a “loss-share” agreement to minimize the acquiring bank’s risk. The agreements cover anywhere from 80 percent to 95 percent of any losses on the bad loan portfolio. In some cases, that prods lenders to agree to a short sale, especially if they can make more with the FDIC cash than the banks would if the house fell into foreclosure. But the opposite can be true as well, with the lender actually making more from a foreclosure if the loan has a private mortgage insurance payout and can be resold at a good price.

The Committee for a Responsible Federal Budget, a Washington, D.C.-based think-tank, reports that the FDIC has taken over 203 failed banks since 2008, many with a loss-share agreement. Total deposits so far this year equaled $18 billion. In 2008, it was $389 billion, and at an estimated cost to the FDIC of $64.4 billion. Seventy-eight percent of the existing loss-share agreements have no deductible, so the FDIC starts paying banks for their losses immediately.

For single-family mortgages, the loss-share agreement stays in effect for 10 years and covers losses when the loan is modified, foreclosed upon, when a second mortgage is charged off, or when the property is sold short. “It has helped us sell a considerable amount of assets that we normally would have had to keep,” said FDIC spokesman David Barr. “We audit the loss-share agreements to look that they are modifying the loans in a timely manner and not just opting for foreclosure or short sale. They have to choose the option that makes the most economic sense to the FDIC.”

Despite the efforts of the Obama administration to speed and streamline the short-sale process, experts say banks do whatever will provide the best outcome for their bottom lines. Buyers cannot understand why they do not hear back from the bank when they put in an offer on a short sale. Oftentimes the banks are delaying until they can take the proper y through the foreclosure process. A bank can sell the property for significantly less in a foreclosure sale that it would have if they had accepted the short sale process, BUT from the bank’s financial perspective they look to the interest payments they received from the Seller before they defaulted, the payout from the private mortgage insurer, and the proceeds of the foreclosure sale. Often the bank is not really losing much and sometimes can actually make money on these deals so they have little incentive to take a short sale offer.

A Buyer can wait an long time anticipating the acceptance of their offer only to find that they will never actually hear back from the bank, much less receive a counter offer.

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Baby Boomers Changing the Face of Retirement

Baby Boomers, those born between 1946 and 1964, represent one-quarter of the U.S. population. Because of their numbers, Boomers have a huge influence on societal trends, and now that Boomers are starting to retire, they are changing how and where Americans are spending their post-career years.

Many Baby Boomers are expressing a greater desire to relocate for their retirement, unlike generations before them that wanted to stay in their current homes as they age. The later in the 20th century that a member of the population is born, the more likely they are to move their primary residence in retirement, includes a recent AARP study. Among younger Boomers, over 40% want to relocate in retirement, and half of those plan to move out of state. Unlike their parents and generations before them, Boomers are increasingly willing to relocate upon retirement, and their choices of locations are becoming more active, youthful, and far-removed from the stereotypical retirement spots, according to CNBC. In fact, retiring Boomers are moving back into cities in record numbers to take advantage of cheaper real estate prices, public transportation and abundant cultural options, observes real estate site Trulia.com.

Nonetheless, relocation has slowed, at least temporarily with the recession. Many retirees have put their relocation plans on hold until they can get the price they want. Many are investing in their desire retirement home at current rock bottom prices with plans to move once the real estate market improves.

Those who choose to relocate do so for several reasons. While in the past, a key motivation was to seek a warmer climate, the primary reasons now are to obtain greater access to health care and secure a lower cost of living including lower state taxes. That makes North and South Carolina the top two destinations, although traditional retirement locales like Florida and Arizona still figure on the top of the list. Another popular reason to relocate is to be nearer to family. According to a Boston Collage survey, 28% of older Americans who relocate after age 51 did so primarily to be near children r relatives, and more than half of those interviewed said they want to stay within three hours of family.

Baby boomers, more than 70 million strong, are credited with the current rise in the second home and relocation sector. Many of these boomers, possessing stronger financial security than any previous generation are buying or building second homes in the mountains of North Carolina.

While 55+ communities are still popular among retirees, almost 75% of Boomers say they want to move to an age-diverse community with residents of all ages. Many relocating buyers are looking for an easy-living lifestyle, with access to services that will free up their time from maintenance both inside and outside their homes, said the chairman of the National Association of Home Builders 50-Plus Housing Council. Interestingly, many floor plans for retirees are being modified to make room for a home office. Almost three-quarters of Boomers surveyed say that, even though they may be retiring and relocating to a new community, they intend to keep working for many more years.

Baby Boomer Retirement Facts

The Boomer Market

76.4 million baby boomers
Leading-edge boomers turn 62 in 2008
Another baby boomer turns 60 every eight seconds
In 2000, 35 million Americans were 65+
By 2030, 70 million Americans will be 65+, and will comprise 20-25% of the US population

Boomer Finances:

Average annual household earnings of boomers = $53,000
Average boomer predicted to retire with $500,000-$1,000,000 in assets
Mature consumers possess $7 trillion in wealth 70% of the total wealth in the United States
66% of all US stockholders and 60% of annuity owners are boomers

Employment After Retirement:

83% of baby boomers intend to keep working after retirement
By 2010, 33% of labor force will be mature workers (age 45+)
In 2004, only 5% of retiree income came from employment
56% of working retirees want to work in a new profession
44% of retirees worked for pay at some point after retirement
89% returned to work to stay active, not because of financial need
14% of those currently working say theyâ’ll never retire
28% of current working retirees will continue working as long as their health permits
By 2010, it’s estimated that US corporations will experience a 10 million shortage in talent (76.4 million Boomers replaced by 66.4 million replacement workers)
Workforce has increased only 1.5-2.0% over the past 20 years
45% of US companies have special positions for mature workers
50% of US companies are willing to negotiate special arrangements for older workers

Filed under: Blog by Kim Bregman
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Vacation Home Sales Up In 2009

Vacation-home sales recovered in 2009 according to the National Association of Realtors.

NAR’s 2010 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2009, shows vacation-home sales rose 7.9 percent to 553,000 last year from 513,000 in 2008. Primary residence sales rose 7.1 percent to 4.04 million in 2009 from 3.77 million in 2008.

NAR Chief Economist Lawrence Yun said, The typical vacation-home buyer is making a lifestyle choice, with nine out of 10 saying they intend to use the property for vacations or as a family retreat, he said. Investment buyers primarily seek rental income, with six in 10 planning to rent to others, although one in five wants a family member, friend or relative to use the home.

Only one in four vacation-home buyers plan to rent their properties to others, while one in five investment buyers plan to use their homes for vacations or as a family retreat. However, 26 percent of vacation-home buyers and 8 percent of investment buyers intend to use the property as a primary residence in the future.Â The market share of homes purchased vacation-homes rose a percentage point to 10 percent. .

The median transaction price of a vacation home was $169,000 in 2009, compared with $150,000 in 2008. â€œThe higher vacation home price may reflect increased sales in higher priced markets, particularly in areas of Florida and California where prices became highly attractive for buyers over the past year,Yun said.

Half of vacation homes purchased last year were in the South, 21 percent in the West, 17 percent in the Midwest and 12 percent in the Northeast. Seven out of 10 were detached single-family homes.

Similar to 2008, cash factored strongly in the second-home market: three out of 10 vacation-home buyers in 2009 paid cash for their properties. Fairly similar ratios for each group indicated portfolio diversification or good investment opportunities were factors in the purchase decision.
The typical vacation-home buyer in 2009 was 46 years old, had a median household income of $87,500, and purchased a property that was a median distance of 348 miles from their primary residence; 34 percent were within 100 miles and 40 percent were more than 500 miles.

Three out of four second-home buyers were married couples.
Demographically, the long-term demand for second homes looks favorable because large numbers of people are in the prime years for buying a second home. Historically, people become interested in buying a second home in their mid 40s,Yun said.The large number of people who are now in their 30s and 40s will dominate the second-home market in the coming decade with a strong underlying demand, although sales in a given year will vary depending on the economy. Mortgage lending for second homes was extraordinarily tight in 2009 but it is likely to ease a bit in 2010.

Currently, 40.1 million people in the U.S. are ages 50-59 a group that dominated sales in the first part of the past decade and established records for second-home sales. An additional 44.4 million people are now in the primary buying demographic of 40-49 years old, and another 40.6 million are 30-39. Vacation-home buyers plan to keep their property for a median of 16 years while investment buyers plan to hold their property for a median of 12 years.

NAR’s 2010 Investment and Vacation Home Buyers Survey, conducted in March 2009, includes answers from 1,930 usable responses. The survey controlled for age and income, based on information from the larger 2009 NAR Profile of Home Buyers and Sellers, to limit any biases in the characteristics of respondents.

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Investors Are Back and Buying with Cash!

More home buyers are snapping up properties with cash, a trend driven in large part by investors returning to the market after four years of falling prices around the country.

The share of home sales involving all-cash transactions was 26 percent in January, up from 18 percent a year earlier, according to the National Association of Realtors. The figures come from a survey of members about their most recent transactions.

Many home buyers and investors also are paying cash, but investors are largely using cash so they can avoid paying interest charges on loans and get a larger return on their investment. Home purchases made by buyers identified as investors climbed to 17 percent in January, up from 15 percent in December and 12 percent in November. Many investors say they’re financing their purchases with cash on hand, rather than borrowing; according to NAR data.

Some Realtors also say they’re seeing increased investor activity. “Flippers, rehabbers, investors … are, in fact, buying,” All-cash purchases also reflect a growing number of investors buying higher-end properties without credit, says NAR spokesman Walter Molony. That’s a sign that some investors see real estate prices as having nowhere to go but up. All-cash offers give buyers a competitive edge on rival offers -even higher ones – that are dependent on financing. Cash deals can close faster and are less likely to fall through.

“You have to have cash to be able to close quickly and have negotiating power. Cash is king,” says Tanya Marchiol, president of Phoenix-based Team Investments, which buys about 70 properties a month with cash it raises from investors. “We do want to flip it or generate cash flow (through renting it out). Now is the time to buy for cash flow. We know the market is going to rebound.”

The wholesale real estate market has changed dramatically over the last few years. Originally, wholesaling simply meant buying from homeowners who were in distressed situations and flipping them to other investors who would rehab and resell them to the retail market. However, it was not uncommon to find and “flip” a commercial property or high-end homes.

Some of the past real estate cycles we have seen are the wholesaling of commercial properties and single family homes by the Federal Government when the Savings and Loan Crisis took place in the 1980’s.Another common Federal Government wholesale that lasted a few years were the HUD properties that initially were sold to anyone, later to just homeowners who would live in these properties and even later, both to homeowners and investors.

Conventional lenders, mostly banks, started holding foreclosures in the rising markets in the Southeast and Southwest and literally played the market for a few years and even financed investors with short-term, usually one-year loans at 7% – 9% while these properties were rehabbed and resold. Throughout this history of lending institutions and governmental agencies “wholesaling” properties to investors and homeowners, investors have made a substantial part of their profits from buying low and selling only slightly higher, averaging profits in the range of a few thousand to tens of thousands of dollars.

In the wild days of the early 2000’s, these wholesale profit spreads expanded with the result the homeowner or end buyer had to pay more and more for a single family home. Investors shifted their sights to condos which lagged the market’s move for years. As investors bought and sold condos higher and higher, it caught the attention of developers who jumped on the “free” money financing for buyers.Â We are now living the results of the failed speculators; Â other than those that got out very early had been net losers.

The last two months in the tri-county area of South Florida, over 9,000 properties were sold and almost 25% were REO’s (Real Estate Owned) properties that lenders had foreclosed and were resold mostly to investors. This represents the beginning of a change in the cycle of the wholesale market because no longer does an investor have to approach a homeowner to get a good to great deal, now he can just wait for a lender to foreclose and put the property on the market. Ironically, the sale price of the REO is almost always less than what a lender could have made by doing a short sale!

In summary, the real estate market is constantly changing and will always be a gold mine for investors who have the fortitude and understanding of the trends and do deals with as little money at risk as possible.

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Financing Challenges for Home Buyers

Challenge for Borrowers

Tighter lending standards imposed by banks are thwarting even low-risk home loans.

By Anne Kates Smith

From Kiplinger’s Personal Finance magazine, April 2010

Mortgage rates are bumping along at near-historic lows, and home prices range from bargain levels to outright steals. Uncle Sam has been tossing money at almost anyone who buys a house before the end of April.

So why is the mortgage market so frustrating for so many would-be borrowers? Because nearly three years into the credit crisis, and despite Herculean government efforts to get the housing market rolling, it can still be maddeningly difficult to land a loan — even for folks normally thought of as low-risk, slam-dunk borrowers. “Well-qualified borrowers are unable to get a loan because lenders are really nitpicking — I mean really nitpicking — everything,” says Kevin Iverson, a mortgage broker who owns Reed Mortgage, in Denver.

A January survey of senior loan officers by the Federal Reserve Board showed that 13.2% of respondents had toughened mortgage-loan terms in the previous quarter. Of course, lenders have a right — and an obligation — to be pickier. After all, loose lending standards contributed mightily to the housing market’s collapse. And high-end, supposedly low-risk borrowers are struggling as much as anyone. American CoreLogic, a research firm, reports that nearly 13% of home-owners with jumbo prime mortgages — loans of more than $417,000 taken out by creditworthy borrowers — were 90 days or more behind on payments as of November. That’s double the percentage in November ’08.

But brokers say the pendulum has swung out of the range of common sense. Steve Sugarman, a retired publisher and a real estate investor in Agoura Hills, Cal., is trying to refinance a $400,000 loan on an oceanfront Malibu town home worth $1.2 million. Sugarman’s financial planner, Dennis DeYoung, says his client’s income is solid, his credit pristine and his assets substantial. Yet Sugarman, who estimates he has taken out or refinanced at least ten loans since the mid 1970s, has spent nearly four months trying to close on the Malibu place. He’s on his second lender and must meet 23 remaining conditions before the loan can go through. “I don’t see how the housing market can move forward when someone like me is held up,” says Sugarman. The self-employed and those with complicated finances or variable income face particularly close scrutiny. They may be asked for down payments of 40% or 50%, says Iverson.

It’s not just stingier lending standards hanging up borrowers. The mortgage market is laboring under recent controversial changes in appraisal guidelines as well as new fee-disclosure rules, which some borrowers find confusing.

The mortgage market will soon face a new challenge. The Fed has been buying mortgage-backed securities since November 2008 to keep interest rates low and money flowing into the mortgage market. When the Fed exits that business in April, borrowers could see mortgage rates rise by a half point, says Keith Gumbinger, of mortgage-research firm HSH Associates.

But he also sees good news ahead. That 13.2% increase in lenders reporting tighter lending standards was the smallest quarterly increase since the third quarter of 2007 — a sign that the home-loan pendulum may soon swing back to rational.

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10 Best Cities for a Second Homes by Barrons

Prices for primary residences, which plunged at least 20% from the peak in 2007, appear to have bottomed. In some of the snappiest locations, scattered bidding wars are breaking out and prices are turning upward.
In Greenwich, Conn., realty brokers say, the final months of 2009 were almost record-setters for sales volume, as two years of pent-up demand was unleashed. Even the mega deal is back. In Beverly Hills, film producer Jeffrey Katzenberg just plunked down $35 million for an 8,700-square-foot home on six acres.
There’s nothing like a stabilized economy and a huge rebound in stocks to send folks looking for the perfect manse. The return of hefty Wall Street bonuses hasn’t hurt, either.

With all that in mind, and with summer just around the corner, Barron’s sized up the market for upscale second homes, one of the greatest luxuries of all. We scoped out dozens of deluxe enclaves across the country, speaking with brokers, homeowners and others. Our conclusion: Now could be an excellent time to buy.

Prices are way down — 40% off the peak in some locations. Seemingly at or near bottom, they are starting to attract the first wave of bargain hunters — and not just families in need of R&R. Hard-nosed investors also are on the prowl, says Jan Reuter, head of residential real estate at U.S. Trust Bank of America Private Wealth Management: “We’ve seen an uptick in buying in just the last couple of months.”

To help you in the hunt, Barron’s has selected the 10 best places in America for second homes. These alluring locales have it all: gorgeous houses, spectacular views, world-class golf, fishing and skiing, fine dining and great shopping. You’ll find the complete range of lifestyles, from peaceful and easy to vigorously social.

Some warnings: 1) Our selections are every bit as subjective as tastes in homes themselves. 2) The prices cited are based mainly on conversations with locals, because hard data isn’t available. 3) Your plush new retreat may take some time to rise in value. Serious appreciation will require a better economy and, quite possibly, another big rally in stocks.

But hey, you could do worse than marking time in paradise.

1. Maui Consistently rated the “Best Island in the World” by travel experts, this Hawaiian beauty underwent a growth spurt during the past decade that some critics bemoaned as excessive. But the southern coast, anchored by the hamlet of Wailea, has weathered it all well. One of the first master-planned resort communities in the nation, it’s a balanced blend of understated gated communities, luxury resort hotels, three excellent golf courses, a tennis center and, of course, several crescent sandy beaches. Wailea has 500 single-family homes, and their views are stunning: lush, verdant hills, brilliantly blue ocean and, after the steamy sun showers, rainbows over the horizon.

Median Price: $1.5 million
Drop From Peak: 27%
Neighbor: Oprah Winfrey

2. Kiawah Island, S.C. Languid elegance defines South Carolina’s coast, and Kiawah, just off Charleston, may be its ideal expression. The island has one developer, Kiawah Development Partners, and an architectural review board that protects the 4,500 or so properties from the excesses often seen when wealth meets water. It has 10 miles of hard-sand beaches and abundant wildlife: bobcats, gray foxes, loggerhead turtles and more. Its Ocean Course has long been favorite of golfers; it hosted the 2007 Senior PGA Championship. Want to tee up some culture? Charleston is just 45 minutes away.

Median Price: $1.4 million
Drop From Peak: 21%
Neighbor: Dan Marino

3. The Hamptons Long the favored retreat of high-powered New Yorkers, the Hamptons are a just now experiencing a fresh jump in home sales, realty brokers say. Credit the revival in Wall Street bonuses. Southampton, bastion of old money, is known for its grand estates, but lovely homes can be found in what not long ago were potato fields. In chic East Hampton, the choicest real estate is on Georgica Pond. Alas, most of the area’s finest properties never come to market. Once you own a home in the Hamptons, you own it forever.

Median Price: $1.5 million
Drop from Peak: 30%
Neighbor: Steven Spielberg

4. Park City, Utah Skiers love Park City for its powdery winters, but homeowners relish the summers, too. The crowds thin out, life slows down and the tall aspens lining the nearby Wasatch range shimmer in the breeze. The one-street Old West downtown is dotted with classic Victorian houses, while Deer Valley, an understated year-round resort community, sits on the eastern edge. Its namesake ski hill has been crowned by readers of Ski Magazine as North America’s top ski resort for three years running. For $100,000, you can join the nearby Talisker Club, with links designed by PGA Tour Champion Mark O’Meara. Bonus: Salt Lake City International Airport, a Delta Air Lines hub, has direct flights to the East and West Coasts.

Median Price: $1 million
Drop From Peak: 45%
Neighbor: Robert Redford

5. Aspen, Colo. Aspen isn’t just a year-round playground; it’s also a cultural oasis, the home to the Aspen Institute think tank, a world-class symphony, and dance and art festivals. The four major ski hills speak for the themselves. The Maroon Creek Club includes a challenging golf course designed by Tom Fazio. The city’s West End has a mix of 19th-century Victorians and modern abodes not far from the “beachfront” — downtown neighborhoods within walking distance of the lift. The posh shopping is so good that some folks never find their way up to the trails.

Median Price: $5.6 million
Drop From Peak: 6%
Neighbor: Jack Nicholson

6. Pebble Beach, Calif. Golfer Jack Nicklaus once said that if he had one last round to play before he died, it would be at Pebble Beach. The site of four U.S. Opens, The Links are rated the No. 1 public course in America by Golf Digest for 2009-10. There are several other public and private golf courses within the guarded gates of the verdant Del Monte Forest, which surrounds the community of Pebble Beach. Stunning estates not far from the first tee offer sweeping views of Monterey Bay. Duffers who buy in can play the Golden Bear’s dream course every day.

Median Price: $1.1 million
Drop Since Peak: 20%
Neighbor: Clint Eastwood.

7. Palm Beach This Florida island hovers above reality, and at $30 million-plus, so do its finest pads. Oodles of socialites and tycoons wouldn’t have it any other way. Neither would Jimmy Buffett, Rush Limbaugh and too many other boldface names to mention. In addition to the never-ending social whirl, residents like the shopping on Worth Avenue and the beauty of Addison Mizner’s Mediterranean-style architecture. Mortals can enjoy the town by buying “over the moat” — in Jupiter, North Palm Beach, Palm Beach Gardens and Delray Beach.

Median Price: $3.5 million
Drop From Peak: 11%
Neighbor: Henry Kravis

8. Captiva/Sanibel Island, Fla. Sitting off the coast of Fort Myers, a nerve center of America’s foreclosure crisis, the barrier islands of Captiva and Sanibel are the very picture of laid-back living. Linked by a bridge at Sanibel’s northern point, the islands are renowned for their pristine beaches and abundant seashells. Then there are the hiking trails; half the island is a nature preserve. The late Robert Rauschenberg is, even in death, one of the largest landowners. His 35-acre spread, complete with studio, is intact on Captiva’s northern end.

Barron’s Penta inaugural list of second-home communities from the Hamptons to Hawaii.
Median Price: $3.5 million
Drop From Peak: 40%
Neighbor: Ted Koppel

9. Asheville, N.C. Nestled in the mountains of North Carolina, Asheville offers a four-seasons lifestyle with just enough culture and good restaurants to keep urban-withdrawal pangs at bay. Some homebuyers come from the Northeast, and many come from Florida to beat the heat. The locals call them “halfbacks,” since Asheville is halfway up the East Coast. The town has a university and a thriving art scene. We like the 1920s-vintage Tudor homes in the Biltmore Forest district, once part of the adjacent Biltmore Estate. The funky Grove Park neighborhood is also worth a look.

Median Price: $700,000
Drop From Peak: 38%
Neighbor: Andie McDowell

10. Gasparilla Island, Fla. Katherine Hepburn used to rent a beach house here, and it’s easy to see why. The small island off Florida’s southwest coast has been lovingly preserved: The Gasparilla Act, a state law passed in 1980, put a tight lid on population density, building heights and commercial development. Golf carts — some customized to resemble ’57 Chevys — are the favored mode of transportation. The historic downtown has gracious homes, and the waters around the island are renowned for tarpon fishing. To check it out, check into the plush Gasparilla Inn.

Median Price: $1.8 million.
Drop From Peak: 18%
Neighbor: Harrison Ford, frequent visitor.

Kim Bregman
Optima Properties
Lic. Real Estate Broker, Florida and North Carolina
REALTOR, MBA

North Carolina Office:Â Â 581 Tsalagi Trail, Maggie Valley, NC 28751

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