Permanent vacation

By Elizabeth Gehrman

Vacationers, beware: It’s that time of year when you’re most susceptible. You spend a week at a rustic camp in Maine or a few days in a cozy Cape Cod cottage, and – intoxicated by the sound of kids splashing at the dock, the heady scent of saltwater, the luscious taste of lobster rolls and soft-serve ice cream from the corner clam shack – the next thing you know you’re putting a down payment on the place next door. But what do you need to consider when purchasing a vacation home, and where are the top bargains right now?

Know When and Where to Buy

If you’re lucky enough to be able to purchase a second home, the generally depressed real estate market and historically low interest rates beckon. According to the National Association of Realtors’ Investment and Vacation Home Buyers Survey, released in March, the peak of vacation home buying occurred in 2006, with about 1.5 million properties sold nationwide. By 2008, the number of vacation homes transferred was less than half that. And when demand decreases, prices typically follow. The market does appear to be on the upswing: Last year, the number of vacation homes sold nationwide increased by almost 8 percent, to 553,000 from 513,000 in 2008, and the median sale price rose from $150,000 in 2008 to $169,000 in 2009. But that’s still down almost 17 percent from a high median sale price of $204,100 in 2004, and some very desirableNew Englandlocations have excellent news for buyers right now.

In Maine, for example, statewide prices for all homes have declined almost 16 percent, from a median of $194,000 in 2007 to $164,000 in 2009. InNew Hampshire, the drop was about 22 percent, withBelknapCounty– which encompasses Lakes Region cities and towns likeLaconia, Gilford, andBelmont– declining by 27 percent.

In Newport,Rhode Island, according to realtor Paul Leys of Gustave White Sotheby’s International Realty, a modest wharf-area condo might now go for as low as the upper $300,000s. “That wouldn’t be waterfront,” he says, “but it might be water view.”

And on Cape Cod, prices are down about 20 percent since 2005 – slightly more than the state as a whole, but that number depends in part on where you’re looking to buy. Mid-Cape seems to be the best bargain. “We are selling condos for prices that have not existed since 2000,” says Joyce Bearse, a realtor with Kinlin Grover inYarmouthPort.That’s because the condo market has taken a bigger hit than the single-family market and inventory is high across the board. “Right now, there are 224 listings in Dennis andYarmouthfor under $300,000. If I had done that search six years ago, it would have been two or three.” Bearse points out that prices may dip even lower now that the federal tax credit has expired, reducing demand, and as homes in foreclosure continue to come on to the market. “Even people at the high end can now afford a property they never could afford before,” she adds. “Now, instead of $1.5 million, that same property might be $1.2.” Even prices inProvincetown, with its easy access by fast ferry toBostonand its cosmopolitan feel, may surprise you. Century 21 Shoreland broker Rick Tourgee, for example, says he has a 1,300-square-foot two-bedroom-plus-den listed in a condo development called Seashore Park for $329,000.

“We don’t know when the bottom is until it starts going back up,” says Tom Kelly, the Seattle-based author of How a Second Home Can Be Your Best Investment, “but this appears to be close to the bottom.”

Analyze Your Needs

According to the National Association of Realtors survey, almost a third of buyers begin their vacation-home hunt by searching Internet sites like findashorehome.com, lakehouse.com, escapehomes.com, and homeawayrealestate.com. While 20 percent of buyers find their primary home through a friend, relative, or neighbor, or by driving by and seeing a sign in the yard, 28 percent of those looking for a vacation home get their most productive leads this way, suggesting that the idea of buying first enters people’s minds while they’re actually on vacation.

As you weigh the notion of taking on a second home, be sure you’d rather spend time in the same location every year than visit different destinations. “If you buy,” says Tony Giacalone of Tony’s Realty in East Boston, who owns a second home inPalm Springs,California, “you’re not just going on vacation. It gives you a chance to build up community someplace else. It gives you a new set of neighbors and a new set of activities, and gives your kids a whole new group of summer friends.” If you decide that’s for you, consider these points:

> Get to know your desired location before you buy. “If you’ve never been toMainebut you want to buy a place here,” says Tom Ferent of Mr. Lakefront Keller Williams Realty in South Casco,Maine, “well, we’ve got a big state. I always say come spend some time, because it’s a big investment.”

> Determine how you plan to use the property and how long you’ll hold on to it. “Families with kids buy a ski home and think they will come up every weekend to ski,” says Peter Tucker of Tucker Real Estate inStowe,Vermont. “But when the kids become teenagers, they may have different interests. Hockey is a good example. If you’ve got to be on the rink at 6 a.m. on Saturdays, it’s tough to come up for the weekend.”

> Decide whether you’ll want your vacation home to eventually become your full-time retirement home. It could help determine the features you look for, such as a first-floor master bedroom.

> Finally, consider whether you might want or need to rent out your place to help with costs. If so, study the rental market, going rates, and issues such as advertising options and cleaning services available in the area.

Compromise to Save Money

The best way to save money on a vacation property inNew Englandis by giving up one or two items on your wish list, starting, perhaps, with location. The mid-Cape, for example, has better deals than the lower, or outer,Cape, in part because it contains a broader range of properties. Bearse says a heated 900-square-foot two-bedroom ranch within a mile of the beach might go for less than $300,000. “And you can buy those small places, 450 or 500 square feet, for under $200,000,” she says. “Or if it’s half of a duplex, you could get 500 or 600 square feet for maybe $150,000. Just a place to hang your hat.” It won’t be a sprawling family compound, but with the right layout, 450 square feet can comfortably sleep four or five people.

In the Berkshires, Lenox, Stockbridge, Great Barrington, and Egremont are more expensive than, say, Lee or Becket. “Becket’s still an easy commute” fromBoston, says Beth VanNess, broker/owner of Gile Real Estate in Becket, “and it’s close to Tanglewood and all the other cultural amenities of the Berkshires.”

InNew Hampshire, Whitefield, for example, is less expensive than towns likeLincoln, whereLoonMountainis located, andLaconia. Whitefield is farther north but still just a short drive to the slopes, and it offers beautiful views, cute shops, decent restaurants, and fewer crowds. Even a small distance from your first choice can make a price difference. A recent Craigslist search on “Winnipesaukee cottage,” for example, yielded a 450-square-foot place with stunning water views about 2½ miles from hot spotWeirsBeachfor just $169,900. True, if you paid $80,000 or $100,000 more, you could probably just fall out of bed and onto Weirs – but what’s a short bike ride when you’re on vacation?

Scrutinize the Property

Once you’ve pinpointed a community you can afford, it’s time to fine-tune that wish list. Yes, you’ll likely have to compromise, but Ferent recommends looking for these criteria in a vacation home:

> A knockout view. “As you get older, you’re not as active on the water,” Ferent points out. “If an older person can get in anAdirondackchair and look at the sunset over the mountains, that’s really important.”

> A level lot. This kind of property – or, for lakeside homes, a sandy beach with gradual entry – appeals to a broader market than one with a steep slope.

> Proximity to the water. This can be a two-edged sword. In Maine, for example, all new construction has to be 100 feet back from the water – but, as Ferent points out, “you can’t watch the kids from the deck if you’re 100 feet back,” which might make an older home more appealing. Then again, in certain areas – near the open ocean and on river-fed (as opposed to spring-fed) lakes – being closer to the water may present flood hazards, so you need to inquire about special insurance before making your move.

> Privacy. Ferent contends that for a single-family home, about 100 feet of water frontage is needed for real privacy. “It really kills the atmosphere when you’re sitting on your deck and your next-door neighbor flushes his toilet,” he says. “If it’s 50 feet and the neighbors are on top of you, you’re going to have to really like people.” For some buyers, of course, living closer to neighbors is part of the fun; if you’re one of them, you might want to consider a cottage community or condo rather than a stand-alone house.

Ferent recommends that all the buyers involved – usually a committed couple, but sometimes two or three friends or relatives – take separate notes as they visit properties, ranking each of, say, five attributes on a 10-point scale. “I say, ‘Don’t share, but each of you come up with your top three,’ ” he says. “Often the husband and wife don’t agree on what they like,” but will have enough pluses in common to come to a decision.

Consider the Finances Carefully

By now everyone knows it’s tougher to get a mortgage than it was a few years ago, and for vacation homes it’s even worse. “You can buy a primary house for as little as 3 percent down,” says David Brennan, senior vice president for residential and consumer lending at Cape Cod Five Cents Savings Bank inOrleans. “But for an owner-occupied vacation home – that is, one you’re not planning to rent out – you’d need at least 15 percent down.” And you’ll need at least 20 percent down if you think you’ll get any income from rentals or if you need a jumbo loan, which in Barnstable County, for example, is $462,500 or greater and on Nantucket and the Vineyard, $729,750.

“What I’m hearing, at least here inCape Cod, is that more people are paying cash simply because there are no investment opportunities,” Brennan says. “Money market funds are paying nothing; the stock market’s up and down. I’m hearing from realtors that people are saying, ‘I might as well take the money out of my portfolio and pay cash or put down a very large down payment.’ ”

If you don’t have a sizable amount to put down, you might find a seller who is willing to carry part of your mortgage for a fixed period, allowing you to ask a smaller amount from the bank. “There are a lot of older people who’ve held these properties for a long time and are looking for consistent income in their retirement,” says Kelly. “You can make a lower down payment, and their qualifying standards won’t be as stringent as the bank’s.”

When figuring out how much you can afford, remember that your carrying cost, or the amount you’ll pay monthly, includes not only your mortgage, taxes, and insurance, but also maintenance, which can include unexpected surprises during the seasons you’re not watching over the place, and any extra insurance you may need because of the location – that flood insurance, for example, or additional homeowner’s insurance because your place is in a remote location far from a fire station or hydrant.

Go With Your Gut

While some realtors recommend taking your time to buy – after all, this is a discretionary purchase – just as many say you should grab the place you want when you see it. “I can’t tell you how many people say, ‘That first house was perfect for our needs, but we felt like we shouldn’t make an offer because we hadn’t done our due diligence,’ ” says Ferent. “And then they regret not making an offer because someone else buys it.”

To avoid longing for the one that got away, Ferent recommends being ready to take the leap once you do know what it is you’re looking for. “If it’s in your gut that you like the place and it’s in your price range, take it,” he says. “If you don’t, and someone else does, you’ll feel awful, and then on the rebound you might buy too quick. I’ll tell you how you know: If I call you in a week and tell you it’s sold, will you be sick?”

By DEREK KRAVITZ and ALEX VEIGA - AP Real Estate Writers

WASHINGTON — Five years after the U.S. housing bust sent sales and prices plunging, the spring home-buying season is pointing to a long-awaited recovery.

Reduced prices, record-low mortgage rates, higher rents and an improving job market appear to be emboldening many would-be buyers. Open houses are drawing crowds. A wave of foreclosures is leading investors to grab bargain-priced homes.

In this photo taken Friday, April 13, 2012, in Chicago, John and Megan Henshel pack belongings in the condo they were renting to move to a home they just purchased. M. SPENCER GREEN / AP PHOTO

And many people seem to have concluded that prices won’t drop much further. In some areas, prices have begun to tick up.

Interviews with more than two dozen potential buyers, sellers, brokers, Realtors and economists suggest that confidence is up and that sales will move slowly but steadily higher.

“The biggest challenge that we’ve had over the past four years is fear – fear that the economy is collapsing, that property values are collapsing, that the world is coming to an end,” says Mark Prather, a broker at ERA Buy America Real Estate in La Palma, Calif. “The fear factor is all but gone.”

Prather says the number of prospective buyers who contacted his company last month was about 35 percent more than a year ago.

The spring buying season got an early lift-off from an uncommonly warm January and February – a winter that was the best for sales of previously occupied homes in five years. Permits to build houses and apartments rose in February to their highest level since 2008.

“People feel much more confident,” said Steve Brown, co-owner of real estate company Irongate Inc. of Dayton, Ohio, who says sales jumped more than 16 percent for the first two months of 2012 over the same period last year. “There’s no question there’s a good feeling in the marketplace.”

Some analysts detected a slight uptick in prices for February and March. CoreLogic, a real estate data firm, says prices for homes not at risk of foreclosure – about two thirds of the market – rose 0.7 percent in February. It was the first increase in four years. Price gains occurred both in some hard-hit areas, such as Phoenix, and some still-thriving areas like New York and Washington.

In Miami, the average sales price has surged 14 percent in the past year, according to Trulia, a real estate data firm. In Phoenix, the average is up 13 percent, in Pittsburgh 9 percent.

Earnings reports Friday from two big banks suggested that more people are taking out mortgages. JPMorgan Chase issued 6 percent more mortgages from January through March than it did a year ago and got 33 percent more applications. Wells Fargo issued 54 percent more mortgages and received 84 percent more applications.

Still, few think the housing industry is nearing a return to full health. For that to happen, a robust job market would be needed. More hiring would give more people the money and job security to buy. That would help boost sales and prices.

Such areas as Atlanta, suburban Las Vegas and central California show few signs of recovery. And in some others – from Seattle to Cleveland – home prices have continued to slip. The average has dropped 9 percent in Seattle over the past 12 months and 7 percent in Cleveland.

But in many parts of the country, including thriving areas of Boston, Dallas and Seattle, confidence is rising along with prices. Among the reasons:

- Hiring has strengthened. Each month from January through March generated a solid average of 212,000 jobs. Unemployment has sunk from 9.1 percent in August to 8.2 percent. More job security tends to embolden more people to invest in a home. In Dayton, for example, the University of Dayton is hiring for a new engineering research center, General Electric is hiring hundreds of contractors and the nearby Wright-Patterson Air Force Base are expanding.

This piece originally appeared on NJ Spotlight.

A massive white sphere resembling a golf ball sits atop the newly built Revel casino, arousing the curiosity of anyone who sees it. When asked, company officials were coy, saying only that it would be used to represent their brand and that it would not roll off the top of the building. But people may have to wait for Revel’s grand opening Memorial Day weekend to see just what the ball will do.

The Atlantic City Boardwalk. Credit: Chris Connelly on Flickr

They aren’t the only ones watching Revel. Investors are anxiously waiting to see how the casino, will fare—because most say as goes Revel, so goes Atlantic City. The gambling mecca is trying to reinvent itself as a seaside resort, and developer Revel Entertainment Group LLC’s $2.4-billion project, Atlantic City’s first new casino in nine years, is widely viewed as the barometer of whether that concept will work.

Aside from 150,000 square feet of casino space, Revel has 1,800 hotel rooms, three theaters, including a 5,500-seat concert hall, 14 restaurants, six pools and two acres of landscaped outdoor decks. Investors want to see whether Revel attracts a new breed of tourist to Atlantic City or whether it simply siphons off business from the existing casinos. With gambling now available throughout the Northeast, Atlantic City needs to attract people other than gamblers if it is going to survive.

The roadmap for the city’s makeover is the Casino Reinvestment Development Authority’s master plan, unveiled Feb. 1, a year to the day Gov. Chris Christie signed landmark legislation designed to revitalize the city.

With help from Chicago-based Jones Lang LaSalle, the urban planning firm Jerde Partnership, the engineering firm Birdsall Services Group, and the law firm Hill Wallack, the state-run CRDA put together a 300-page plan that spelled out redevelopment options for the so-called Tourism District—a 1,700-acre area encompassing the casinos, the boardwalk, shopping and dining districts, and Bader Field. Christie is giving the resort five years to gain its feet before reconsidering whether to expand casino gambling to the Meadowlands and other parts of New Jersey.

The plan contained short- , medium-  and long-term goals. Among the short-term: To have light and sound attractions along the two-and-a-half mile Boardwalk. The designers envision up to 10 “Innovation Pavilions” sponsored by private companies that would have entertainment and educational components. Interactive wind sculptures will run along the beach.

If the planners have their way, even the casino parking garages will be revamped to include some open space—for cafes and stores. The sky bridges leading to the casinos will offer more sky, and the bandshell will be expanded and art and music festivals will be held year round.

Atlantic and Pacific Avenues, which run parallel to the Boardwalk, will be given a make-over; the blighted facades addressed by a variety of means, some legal, some by asking the owners to get involved in the reclamation. Street furniture will be installed, as well as hexagonal pavers. Fountains will be added, along with other “water features.”

Pacific, one street over from the Boardwalk, will be more pedestrian-friendly, while Atlantic Avenue, the next street, will be turned into a Main Street of sorts for tourists. Atlantic will also have a “small business incubator” to support local business.

Lighthouse Park will be expanded to encompass the South Inlet. A Gardner’s Basin development will have a wildlife research facility and marine technology center, as well as a working “Fisherman’s Village.” And Bader Field, the 143-acre site of the former municipal airport, will be turned into a mixed-use commercial and residential area.

Screenshot from the master plan.

The plan received unanimous support from the CRDA’s 15-member board, including Atlantic City Mayor Lorenzo Langford, who in the past has been critical of the state’s takeover of Atlantic City’s tourism district.

Some questioned the master plan process. Typically, a draft of the plan is put out to stakeholders and the public, who can then make comments. Those comments are considered in the final draft. In Atlantic City, the plan was adopted first and then put out for comment. Copies weren’t even available until after it was adopted.

Critics also question how some of the proposals will be implemented. The city has had five or six master plans since gambling was legalized in 1976, and much of what was suggested was never done. They fear this plan will be more of the same if money isn’t put behind some of the goals, such as improving the casino parking lots and cleaning up blighted facades.

“I would liked to have seen immediate plans to throw money behind demolition and removal of blight, and maybe some incentive programs, to actually get people in here to start building,” said Damon Tyner, an attorney in Atlantic City who recently ran unsuccessfully as a Democrat for state assembly.

While New Jersey already offers tax incentives to developers on $50 million projects that create at least 200 jobs, Sen. Jim Whelan (D-Atlantic) has sponsored a bill that would extend those incentives to non-gaming projects within Atlantic City’s tourism zone. The bill would give developers of such projects a $20-million credit against their state income taxes over 10 years if the project costs at least $20 million and creates at least 100 jobs.

“You’ve got to get [investors] in there immediately. Unfortunately, all the buzz I’m hearing from folks on Wall Street is that they’re just not really interested,” Tyner said. “It’s always disappointing, living here and understanding the potential, and then seeing that the folks that write the checks are just not coming.”

It doesn’t help that not one non-gaming project, since the city adopted gaming—from residential projects to the shopping outlet district in the center of town known as the Walk—has been profitable without hefty government subsidies, sources said.

One of the primary issues, for non-gaming projects like real estate, is the city’s high property taxes. With its proximity to the ocean and its great restaurants and entertainment, Atlantic City would be an ideal place for tri-state area residents to have a second home, but high property taxes make it cost prohibitive, said Tom Scannapieco, president of Scannapieco Development Corp., based in New Hope, PA.

Scannapieco, whose company built the Sheraton Atlantic City Convention Center Hotel, as well as the Bella Condomiums next to Revel and townhouses on the Northeast Inlet, said the current economic climate has investors skittish everywhere. But casino revenues falling 6 percent to 8 percent a year give the impression that Atlantic City is a city on the decline. That’s unfortunate, because it has a ton of potential, he says. But property taxes are the No. 1 hurdle.

“I will tell you flat out that nothing will be done in the city non-casino wise. No development will go forward in the city unless they are able to put in a very significant tax abatement program like they have in Philadelphia,” he said.

Philadelphia has a tax abatement program that gives hefty tax holidays over a 10-year period. Scannapieco said he currently has a condo project in Center City, Philadelphia, where the property taxes on a $7 million condo would be about $1,800 a year for the first 10 years. A similar condo in Atlantic City would have an annual tax bill of $140,000, he said.

“Atlantic City is not a market that can command that kind of tax payment today, for a second home, and because of that, it has been passed over as an opportunity for second home development.”

Proponents of the plan say this time may be different because there’s finally a consensus to turn Atlantic City around. The plan has the backing of the governor’s office, the city, and there is now an agency whose clear mission it is to implement the goals in the plan, said Cory Morowitz, a gaming industry analyst. That said, economics will ultimately dictate whether the plan succeeds, he said.

“Investor money is drawn in by the market opportunity. So if Revel is successful, and the gaming industry stabilizes in Atlantic City, and if the general economic conditions get better, then investor money will flow,” Morowitz said.

Consensus, tax incentives, and leadership are all good tools to help facilitate investment, but investors are driven mostly – or entirely—by returns on investment.

“I don’t think things like tax incentives are a major driver of investment decisions,” Morowitz said. “Ultimately, it’s going to depend on a few things: The market has to evolve beyond gaming, which it is, and the economy has to get better. And the leadership has to be consistent and maintain the course it’s on.”

Tom Ballance, senior vice president of administration for the Borgata Hotel, contests the notion that the master plan is good on paper but difficult to implement. The plan spells out short-term goals like boardwalk and façade improvements, which are easy to do and don’t require a lot of capital, and yet they increase the appeal of the city, thereby attracting the tourists and investors needed to achieve the longer-term goals.

“As with any urban redevelopment, you need to get momentum,” said Ballance. “Those early projects are designed to build that momentum.”

Ballance is also a trustee on the Atlantic City Alliance, an agency whose goal it is to build that momentum by marketing the city. The ACA has a budget of $30 million a year, money the casino industry used to pay to the ailing horse-racing industry so that it could offer more lucrative purses. For the next five years, that money will remain in Atlantic City.

If you make Atlantic City attractive, people will definitely come, said Jack Plackter, a real estate lawyer with Fox Rothschild in Atlantic City. Borgata has shown that, and Revel, when it opens, will show that, he said.

“Atlantic City is only 48 blocks long. You can fix this place one block at a time,” Plackter said. “The issue is can it be done quickly enough. We don’t have a huge window. We don’t have 20 years.”

Sea Isle City Real Estate for Sale

The clock has been reset on property values across the board, particularly at the Jersey Shore (especially in the Wildwoods). Homes and condominiums at the shore are widely available today at prices similar to what you would have paid in the early 2000’s. There are a number of factors that contribute to this situation. The primary factor is the influence of “distressed sales” on the market place.

A distressed sale is generally considered to be a sale offering of a property whose owner is unable to continue to pay the mortgage and other related expenses pertaining to the property commonly known as a pre-foreclosure. In addition it may also be a property offered for sale by the bank or entity that owns the mortgage in most cases post foreclosure.

There are many factors that contribute to the creation of a short sale situation. The primary factor is that the property no longer brings a price in the present day market place that will equal or exceed what is owed to the lender. In order to sell the property “short” the lender must agree to allow the property to sell for less than is owed to them. Therefore the sale is contingent on the lender and or third party’s approval (in some cases there may be a second mortgage and or additional creditors.

In general the properties that are currently offered as short sales in the beach communities of Cape May County are newer condominiums and townhouses, many in locations that offer direct ocean, beach and or bay views!

Considering that current real estate market conditions offer up to 50% discounts from previous high values in the area; together with mortgage interest rates lower than we have seen in decades, add to these sellers who are motivated to sell and must reduce debt obligations the result is the “perfect storm buyers market”!

Knowing the current market helps potential buyers to maneuver the terrain of the different shore towns. Over the past 12 months we have been bouncing off the muddy bottom. I coined it that because there are many circumstances that define the very different price points. Pricing should be stable for the next six to nine months as the distressed inventory is evaporating.

This is the reason you want to speak with an experienced full time agent that is working in the marketplace that will tell you like it is. The market had been steadily drifting for a seven year period and this is now the turning point. Don’t take my word let’s make some offers and see that the sellers are content to sell their properties at a reduced price but have seem to hit a barrier.

This folks is the best news you can hear, prices have stabilized and will now be steady for the foreseeable future.  Its time to get off the sidelines before the buyers market will be over. At least you can say you bought a shore home near the bottom, approximately 25% below the manic market top.

We have often advised buyers to look at the COST of purchasing a house more than the PRICE of the home. Obviously, price is part of the cost equation. The other piece, assuming you are not an all cash buyer, is the mortgage rate. The mortgage rate to finance a purchase can have a dramatic impact on the overall cost. Recently, there are more people talking about the possibility that mortgage rates could begin to increase.

HSH.com studies trends in mortgage rates. They explain:

“A better economic climate almost always brings higher rates, and a lessening of the troubles in Europe from massive central bank assistance adds to the movement of money from safe havens to more risky assets, driving rates upward.”

Dan Green of The Daily Market Reports recently stated:

“The Fed sees growth coming faster than originally expected. There’s suddenly less chance that the Federal Reserve will intervene to help keep mortgage rates low. Absent Fed intervention, mortgage rates are apt to rise and Wall Street is now betting that the Fed has bowed out. With no stimulus, mortgage rates rise.”

Lawrence Yun, chief economist for the National Assoc of Realtors, recently wrote:

“Mortgage rates will be starting to rise. From the 3.9 to 4.0 percent average rate in the past five months on a 30-year fixed mortgage, the new rates will soon be in the range of 4.3 to 4.6 percent.”

Yun explains his logic here.

We do not attempt to predict future interest rates. We leave that up to the experts in the field. However, we want our readers to understand the potential impact on the cost of purchasing a home if they do rise. Here is a simple table that shows, even if the PRICE of a home softens, the COST of a home could increase.

Bottom Line

Many purchasers think they should wait until they are sure that prices have hit bottom. Deciding whether or not to wait should be determined by where the COST of a home is headed.

Contact the Lazarus Team for more information about Atlantic City real estate.

Ian Lazarus

The Landis Co., Realtors

LazarusTeam@mygo2realtor.com

609-457-0258 mobile

www.SJbeachhomes.com

Much has been made recently of the government’s renewed efforts to spark the housing market from its dismal slide, however we fear there are yet more unintended consequences lurking just around the corner. The various ideas being posited for a broad REO-to-rental program is one of these steps as BofA points out in accommodating the dramatic shift from ownership to renting (with 4.2mm new renters and 1.2mm fewer homeowners since the end of 2006). Of course removing foreclosures from the for-sale market reduces competition for voluntary sellers – which should help to support prices for non-distressed homes but here is where the crux of the unintended consequence lies.

We have a squatter epidemic. There are millions of ‘homeowners’ currently living mortgage-payment-free (by choice) who will soon be forced (as the foreclosure process ramps up post-settlement) to pay rent (since they will not qualify for a mortgage). This will have the double whammy effect of reducing overall discretionary consumption spending (as rent is greater than ‘free’ – unless the cardboard box is preferable) and driving inflationary forces into rental costs (something we are already seeing). Of course these are the much larger second-order effects and we will only be told of the primary benefits of clearing foreclosure inventory, but at the margin (along with gas prices) the household will have less discretionary iPad-buying ammunition as opposed to more.

Since the end of 2006 there are 4.2 million more renters and 1.2 million fewer homeowners…

Distressed property prices continue to turn down (and re-accelerate) as the foreclosure pipeline starts to unclog…

7% Jump in US Median List Price
For-sale housing inventory drops 22%, near a 2-year low

Data courtesy Inman News.

Median list prices jumped 1 percent or more on a year-over-year basis in February for about 73 percent of the 146 markets tracked in a report released this week by Realtor.com.

On a national basis, the median list price rose about 7 percent year over year in February.

Among the top 10 markets for the highest year-over-year hike in list prices in February, seven were in Florida — Miami topped the chart with a 26.2 percent increase, according to the report.

The median list price of homes tracked by Realtor.com rose $2,500 between January and February 2012, to $188,000, which is 6.82 percent higher than the median list price was a year ago when it was at a two-year low. February 2012′s median list price is on par to what it was in February 2010.

Only two markets showed a year-over-year increase in for-sale inventory, according to the data: Philadelphia and Springfield, Ill.

Cheryl
Huber a popular Ocean City, N.J., real estate agent

By BECKY BATCHA
Philadelphia
Daily News

batchab@phillynews.com215-854-5757

Cheryl Huber drives the top-of-the line BMW 750
(“the big one,” she says) that you’d expect from the empress of Ocean City
real estate. She carries the Versace Couture bag. Her cellphone is on the
ring-always setting that comes with the territory.

Her blond bob went on hiatus following chemo for
ovarian cancer. (The surgery put her out of commission for all of six days.)
But under a thick crop of survivor’s frizz, she’s still the same Hurricane
Cheryl that she’s always been, a force of nature in Jersey
shore real estate for 27 years now, with $15 million in sales this year.
“So far,” she noted.

Huber’s clients at Prudential Fox & Roach range
from O.C.’s most celebrated shorebirds – most recently Gay and Nan Talese – to
the scrapers-by who have been saving their pennies for a fixer-up shack on the
wrong side of the West Avenue thoroughfare.

“This weekend, I was out showing properties
under $200,000,” Huber said early this month. “I just listed one for
$1.2 million.”

Given the free-fall in real-estate values since the
beach bubble of 2005, could this finally be the summer for Philadelphia‘s non-zillionaires to
re-entertain their daydreams of owning a little place down the Shore?

Bottom line: Unless you’ve got millions, don’t
bother fantasizing about oceanfront property. But if you’re willing to settle
for the deed to a motel room, you can get into the Ocean City
real-estate market for under $100,000.

If you’re dreaming the typical Ocean City
shore-house dream, maybe a little cottage with a canvas awning out front or a
sunny floor-through condo a couple of blocks from the beach, you’re dreaming in
$400,000-plus land (down from $600,000-plus before the bubble popped).

Some of what’s now on the market at common OC price
points:

UNDER $250,000: You can pick from several former
hotels and motels that went condo during the bubble years, including the
Hampton-Inn-ish Biscayne Suites near the boardwalk (roughly $200,000 a unit)
and the Crossings Condo-Tel, a throwback motel near a power station (as low as
$65,000). Both have pools.

$400,000 to $600,000: Alas, even post-bubble, this
is the price range for the quintessential O.C. shore house: a floor-through
condo on a popular street like Asbury
Avenue that’s a block or two from the beach (the
better to attract renters when you’re not there).

On the bright side: “Those properties were
maybe 25 percent to 30 percent higher back in 2005,” Huber said.

PRICE IS NO OBJECT, BABY: Properties with a wall of
windows overlooking the ocean start about $1.5 million for an oceanfront
floor-through condo. It’s a view you could definitely get used to if you had
the cashola to burn.

The priciest oceanfront home in Ocean City
is listed at $4.9 million. To go with the view, you get a single-family manse
with 5 bedrooms, 3 baths, an attached 2-car garage, walk-in closets, a
fireplace and central air.

Actually, you probably won’t get it. But it’s nice
to dream.

By JOEL LANDAU Staff Writer Press of Atlantic City

GALLOWAY TOWNSHIP — Joe and Stephanie Tucci spent a year and a half looking for the right house.

And six months after submitting a bid, they’re still waiting and waiting and waiting to find out whether it will work out.

Stephanie and Joe Tucci, of Mays Landing, stand in front of a Galloway Township home that they hope to buy in a short sale. They submitted a bid six months ago and have been waiting for bank approval.

The township home that the couple bid on is a short sale, which means the owner of the house could no longer afford to pay its mortgage and is working out a deal with the lender to sell at a price lower than what the owner owes. When a potential buyer makes a deal with the seller, the lender’s approval is required for the sale to take place.

Local real estate agents say short sales are becoming a larger part of the local market and can often translate into a lower price for a buyer willing to be patient.

“People walk away from short sales because they get tired of waiting,” said Robert Shamberg, owner of Prudential Diversified Realty in Galloway Township. “Everyone wants a deal. Everyone knows short sales are a good deal. But they may not realize it takes a lot of time.”

The home could have several lenders that all need to be satisfied, Shamberg said. The bank could take longer than expected to give an answer or make a counteroffer, he said.

Shamberg counseled Joe and Stephanie Tucci through the process and said they could get a good deal if they were willing to wait. The couple placed a bid at $200,000, which Shamberg said is about $50,000 less than a realistic market value.

But sellers and banks are often willing to accept less rather than go through the long and costly foreclosure process.

That’s the hope of the Tuccis, who fell in love with the home that was recently renovated and features an open kitchen and cathedral ceilings. The couple placed the bid in April and hope to hear within the next few weeks.

“You can get a really good deal but you have to have time,”Stephanie Tucci said.

The couple has continued renting in Mays Landing and have looked at some other homes as a potential backup plan.

“It’s just a waiting game,” Joe Tucci said. “Hopefully they’ll take our bid or they’ll lose out and have a vacant property.”

Brenda Lawn, a real estate agent for Prudential Fox & Roach in Northfield, said short sales are an “absolute roller coaster”that can take an emotional toll on the buyers.

“The first thing I do is educate them. I tell them it’s a long process and there will be a certain degree of frustration,” she said. “It’s hard to do that. The buyers are so enthusiastic. But it really is difficult because it doesn’t always have a happy ending.”

Lawn said short sales and foreclosures have taken up as much of a third of the housing market in most of the region.

She said she’s had buyers wait between three months and a year for the bank to approve a deal, but Jeff Quintin, of Prudential Fox& Roach in Ocean City, said he has had some recently that took only a few months.

Conducting a short sale “is a skill providing you know how to manage the lenders and structure the deal properly,” he said. “If you know what you’re doing and get it structured the right way, a short sale can be like a typical sale.”

Quintin said larger banks may not open the file on the property until the bid is submitted, so it’s impossible to know what the bank would accept.

“In most cases there is not a predetermined (price) for the short sale unless you have already gone through the process,” he said.

But a short sale is often worth it to the bank considering it can take more than two years to foreclose on a property owner, Quintin said.

“You never know what a bank will approve,” he said.

Short sales also benefit the seller because they avoid foreclosure and leave the seller in a better position than if they waited to get more money on the sale, Quintin said.

“Their credit may go down 100 points but they can improve it faster than the market can improve itself,” he said, adding many sellers are finding it too difficult to redo their loans.

And the program has had its results.

Quintin said he recently had a home valued at $4 million approved for a $1.425 million short sale in Ocean City. Another Ocean City property valued at $2.765 million closed at $780,000, he said.

“The buyer is always getting a property under market value,” he said. “It’s worth it many times to go through it.”

Bucket #1: Transaction signals. Distressed properties –foreclosures and short sales – make up about a third of the homes currently on the market, and these transactions have their own unique flow, timelines and challenges compared with “regular” equity sales. So, it only makes sense that listing agents have developed a set of abbreviations to brief prospective buyers on what they can expect and should be prepared for if they make an effort to buy such a home, with just a glance at the listing:

1. REO: Real estate owned by the bank/mortgage servicer, this acronym refers to homes that were foreclosed and repossessed by the former owner’s bank. It also signals that buying this property will involve doing a deal with the bank; possibly dealing with a different escrow timeline, offer process or contract forms than a non-REO sale; and almost always taking the place in as-is condition, among other things. Oh, yeah –and it might also involve one more thing: a great deal.

2. S/S, Subject to bank approval: What once stood for stainless steel is now being used to describe a short sale – a property whose seller anticipates will net them less than they owe on the home. Short sales are often described as “subject to bank approval,” which simply points out the obvious truth about these transactions, that the seller has very little control over whether the bank will allow the transaction or what price and terms the bank will approve of, and that the transaction might very well take the better part of your natural life could take 6 months or longer to close. Talk to your agent for more details about short sales, and to determine how you can tell the success-prone short sales from those that are less likely to close.

3. Pre-approved short sale: Many knowledgeable agents say no short sale is truly “pre-approved” unless and until the bank looks at a specific buyer’s offer and the seller’s financials at the same time, but some listing agents designate a short sale as “pre-approved” when a previous short sale application was approved at a given price, but fell out of contract for some other reason.

4. Motivated seller: This is a perennial term in listing parlance, but against the backdrop of the current market, translates to something like, “Have mercy on me.” I kid – this phrase often signals a seller’s flexibility in pricing and/or urgency in timing.

5. Coveted: In a word, “expensive.” No, seriously, even on today’s market, many locales have a neighborhood (or a few) which have been relatively recession-proof, have been fairly immune to the foreclosure epidemic and have seen home values continue to rise. If you see the word ‘coveted’ in a listing, chances are you’re house hunting in that sort of neighborhood, or there’s something about the individual property the home’s seller is trying to position as unique and desirable, as compared to competing listings (i.e., the view, location of the lot, or floor plan).

6. BOM, often accompanied by “No fault of the house:” Homes go in and fall out of escrows on today’s market constantly, often due to things the seller has no control over. BOM indicates a home that was in contract to be sold, but is now “Back on the Market.” “No fault of the house”may describe a situation in which the buyer lost interest in the home after a long short sale process or failed to get final loan approval, as contrasted to a situation in which the home’s inspection turned up deal-killing problems or the property failed to appraise at the purchase price.

7. Not a short sale, not a foreclosure. Sellers on “regular” equity transactions are often more negotiable on items like price and repairs, and are certainly able to close the transaction (i.e., let the buyer move in) sooner than sellers of REOs and short sale properties. Some also pride themselves on having maintained their homes in better condition than the distressed homes on the market. For buyers that seek quick certainty and closure, non-distressed homes can be especially attractive.

Bucket #2: All about the Benjamins. The government’s role in financing homes has grown exponentially over the housing recession, so the alphabet soup of government housing and home financing agencies, their guidelines and programs is now more important to understand than ever.

8. OO/NOO: Owner-Occupied and Non-Owner Occupied – You’ll see this on listings in two different ways. First, the vast majority of home loans must comply with government loan insurance guidelines, including guidelines around how much of a condo complex must be owner-occupied (i.e., 75 percent, minimum, in most cases). Also, some bank-owned property sellers will consider offers from owners who plan to occupy the property if they buy it as much as a week or 10 days before they will look at NOO or investor offers.

9. FHA: Short for the Federal Housing Administration, which backs the popular 3.5 percent down home loan program. FHA guidelines also include somewhat strict condition and homeowners’ association dictates, so if a home’s seller notes that they are not taking FHA loans, they might be saying that the property has condition or other issues which disqualify it for FHA financing.

10. Fannie, Freddie: Fannie Mae and Freddie Mac, federally controlled company/agency hybrids that now back most non-FHA (conventional) home loans, and thus provide the guidelines most Conventional loans must meet, including guidelines around seller incentives like how much closing cost credit a buyer can receive.

11. DPA/DAP: Down-Payment Assistance or Down-Payment Assistance Program

12. FTH/FTB: First-time homebuyer/First-time buyer – cities, states and large employers like universities tend to be the last bastion of these programs which offer mortgage financing or down payment assistance, usually to people who have not owned a home in the relevant city or state anytime in the preceding 3 years.

13. HUD: The federal department of Housing and Urban Development, which governs the guidelines for FHA loans, acts as a seller of homes which were foreclosed on and repossessed for non-payment of FHA-backed loans, and publishes the Good Faith Estimate and settlement statement forms every buyer and borrower will be provided at the time they shop for a loan and close their home purchase, respectively.

14. HFA: Short for Housing Finance Administration, this acronym refers to a loose body of state and regional agencies which offer an array of financing and counseling programs that varies by state, from down payment assistance for first time buyers to the Hardest Hit Funds that offer foreclosure relief assistance and principal reducing loan modifications to unemployed and underwater homeowners in the states hardest hit by the foreclosure crisis.