Sellers Offer Overnight Trial Stays
Luxury second-home communities are increasingly offering “try-before-you-buy” weekends to potential customers, including the opportunity to play a round of golf, use the dining facilities and other amenities – plus take a mandatory tour.

St. John Fisher College professor Kyle F. Reinson, a real estate specialist and consultant for residential developers, says these tours work in part because they require a certain level of commitment on the part of both the buyer and the seller. The buyer, he says, often gets a good price because the seller doesn’t want to let him get away.

At Encaterra in Queen Creek, Ariz., four-day, weekend tours that cost the potential buyer $299 for an all-inclusive package, results in 25 percent sales, the club reports.

More Losses Predicted for Commercial Market
Ranked among the biggest U.S. commercial real estate lenders by Moody’s Investors Service, Capmark Financial Group Inc. recorded a $1.6 billion quarterly loss and hinted at a possible Chapter 11 bankruptcy filing.

The Pennsylvania-based firm’s possible failure may signal a new wave of commercial property losses for banks.

Capmark has seen tough times, as the default rate on commercial mortgages held by U.S. banks has more than doubled to the highest level in 15 years.

Sam Chandan, chief economist at Real Estate Econometrics LLC, warns: “We haven’t really experienced the full extent of the distress. When you look at community banks and some smaller regional banks, they tend to have a far greater concentration in terms of their exposure to commercial real estate.”

Home Buyer Tax Credit Countdown Begins
The first-time home buyers tax credit ends in 60 days. Is it possible to buy in the next two weeks and still close in time to collect it?

Some professionals say yes. “It still can be done in six weeks,” says RE/MAX Town & Country associate Lynn Ayers in West Chester, Pa.

Economist Ken Gillen of Econsult predicts a mad rush to close as the deadline nears.

Bruce Hahn, president of the American Homeowners Grassroots Alliance in Arlington, Va., is pushing for an extension and an expansion of the credit.

Legislation to do that is critical, he says, because the recovery has so far been mostly jobless and people need more time to get their feet on the ground in order to buy.

This article came from Taos Lending Team.  Good information I think.

With all the hullabaloo about lower rates and bailout monies given to banks one would think there would be a higher percentage of closed and funded loans. Sadly the banks continue to hold on TIGHT to their money; as we have seen a higher increase in declined loans in the past 6 months than I have ever experienced in my 28 years in this business.

Borrowers are fitting all the tighter requirements but lenders are not relaxing their property requirement. In fact banks are using the stricter Fannie Mae and Freddie Mac guidelines to underwrite a property which doesn’t make any sense; where in the country are there 3 months comps? Taos is seeing areas of declining markets and this is now being reflected on appraisals. I am sure many of you have spoken to our local appraisers who are also getting frustrated with the extra work and the lending industry in general.

Declining markets move appraisals up the corporate chain to desk reviews and requests for secondary appraisals. These cost the borrower more money and there are no guarantees for lender approval after the extra funds have been spent.

I have received concerned and confused calls from many clients who have initiated their own refinances with their existing lenders only to be declined on a property which was approved last year. Some of these properties have been improved upon since the initial loan and have increased values! Why are they being declined? The good Comps are farther away than the required 5 mile radius because of the slow down in the real estate markets.

Using private investors for our really good loans is no longer an option as so many of their portfolios have shrunk. We continue to shop our loans and push hard to get them closed and funded.

As is evident, there is no more give or common sense in the system.

News

As you know the markets have been erratic since the declaration of the GM bankruptcy and Treasuries and Bonds are on the rise. Panic sets in and reactions are as expected around the globe and within our mortgage markets, hence the higher interest rates. Obama’s home affordability stimulus plan is predicated on lower interest rates to help homeowners keep their homes so patience and standing by is in order if you have not already been locked in with a lower interest rate.

Below is a terrific article on Bernanke and the housing markets from Bloomberg.com.

Bernanke Conundrum Threatens Housing on Mortgage Rate (Update3)

June 8 (Bloomberg) — The biggest price swings in Treasury bonds this year are undermining Federal Reserve Chairman Ben S. Bernanke’s efforts to cap consumer borrowing rates and pull the economy out of the worst recession in five decades.

The yield on the benchmark 10-year Treasury note rose to 3.90 percent last week as volatility in government bonds hit a six-month high, according to Merrill Lynch & Co.’s MOVE Index of options prices. Thirty-year fixed-rate mortgages jumped to 5.45 percent from as low as 4.85 percent in April, according to Bankrate.com in North Palm Beach, Florida. Costs for homebuyers are now higher than in December.

Government bond yields, consumer rates and price swings are increasing as the Fed fails to say if it will extend the $1.75 trillion policy of buying Treasuries and mortgage bonds through so-called quantitative easing, traders say. The daily range of the 10-year Treasury yield has averaged 12 basis points since March 18, when the plan was announced, up from 8.6 basis points since 2002, according to data compiled by Bloomberg.

“Volatility has increased dramatically and it seems to get more each day,” said Thomas Roth, head of U.S. government-bond trading in New York at Dresdner Kleinwort, one of the 16 primary dealers of U.S. government securities that trade with the Fed. “A lot of that has to do with uncertainty about whether the Fed will increase purchases of Treasuries. The market is looking for some change in the Fed’s plan.”

Greenspan’s Conundrum

The rise in borrowing costs in the face of record low interest rates, Fed purchases and a contracting economy is the opposite of the challenge Bernanke’s predecessor, Alan Greenspan, confronted when he led the Fed.

In February 2005, Greenspan said in the text of his testimony to the Senate Banking Committee that a decline in long-term bond yields after six rate increases was a “conundrum.” At the time, he was trying to keep the economy from overheating and sparking inflation. Now, Bernanke may be facing his own.

“The Fed is stuck in a very difficult place,” said Mark MacQueen, a partner at Austin, Texas-based Sage Advisory Services Ltd., which oversees $7.5 billion. “You can’t have it both ways. You can’t say I’m going to stimulate my way out of this problem with trillions of dollars in borrowing and keep rates low by buying through the other. I don’t think that is perceived by anyone as sound policy.”

The yield on the benchmark 3.125 percent 10-year Treasury due May 2019 ended last week at 3.83 percent, up from the low this year of 2.14 percent on Jan. 15, according to BGCantor Market Data. Last week’s 37-basis-point surge equaled the most since the increase of 37 basis points, or 0.37 percentage point, in the period ended July 17, 2003. The yield fell 3 basis points today to 3.8 percent at 8:22 a.m. in New York.

‘Don’t Do Anything’

Bernanke and other Fed officials say the improved economic outlook and rising federal budget deficit are the catalysts for higher borrowing rates, and see no need to increase purchases of bonds. Plus, the Fed has succeeded in shrinking the gap between 10-year Treasury yields and 30-year mortgage rates to 1.77 percentage points from 3.37 percentage points in December.

“To the extent yields are going up because the economic outlook is brighter, the answer would be, don’t do anything,” Federal Reserve Bank of New York President William Dudley said in a transcript of an interview with the Economist last week.

U.S. payrolls fell by 345,000 last month, the least in eight months, the Labor Department said June 5. The economy will likely expand 0.5 percent in the third quarter, according to the median forecast of 63 economists surveyed by Bloomberg.

Wider Deficit

The deficit should reach $1.85 trillion in the fiscal year ending Sept. 30 from last year’s $455 billion, according to the Congressional Budget Office. Goldman Sachs Group Inc., another primary dealer, estimates that the U.S. may borrow a record $3.25 trillion this fiscal year, almost four times the $892 billion in 2008.

While rising, 10-year yields are below the average of 6.49 percent over the past 25 years, and will likely remain below 4 percent through at least the third quarter of 2010, according to the median estimate of 50 economists surveyed by Bloomberg. The Fed’s holdings of Treasuries on behalf of central banks and institutions from China to Norway rose by $68.8 billion, or 3.3 percent, in May, the third most on record, data compiled by Bloomberg show.

Higher rates may deepen the two-year housing slump helped trigger the recession and sideline consumers planning to refinance or buy their first home. The median sale price for a U.S. home dropped in April to $170,000, down 26 percent from a record $230,000 in July 2006, according to the National Association of Realtors.

Refinancing Index

The number of Americans signing contracts to buy previously owned homes climbed 6.7 percent in April, largely on cheaper financing costs, according to the realtors group. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan fell 16 percent to 658.7 in the week ended May 29 as borrowing rates climbed.

“The more rates go up, the more we need home prices to go down to equalize consumers’ payments,” said Donald Rissmiller, chief economist at New York-based Strategas Research Partners. “It’s those payments that have brought about a level of stability” in home sales, he said.

Rising volatility, this exposes investors to bigger potential losses, risks pushing up rates on everything from mortgages to corporate bonds. Norfolk Southern Corp., the fourth-largest U.S. railroad, sold $500 million of 5.9 percent debt on May 27. The coupon was higher than on the $500 million of 5.75 percent notes due in 2016 that the Norfolk, Virginia- based issued in January.

‘The Big Question’

“When the Treasury market is moving around a lot more it becomes more risky to step in,” said James Caron, head of U.S. interest-rate strategy in New York at Morgan Stanley, another primary dealer.

Outside of Dudley’s remarks, the Fed has largely refrained from public statements about bond purchases. Traders find that confusing from Bernanke, a former economics professor at Princeton University who published research on central bank transparency and pushed for greater openness at the Fed.

“The big question is what the Fed does. Do they increase quantitative easing?” Caron said. “Do they buy more Treasuries or mortgages? That is why there is a lot more uncertainty.”

Investors are reining in the average maturity of their Treasury holdings to guard against higher yields. That may increase costs for the government, which intends to extend the average maturity of its debt after committing $12.8 trillion to thaw frozen credit markets and snap the longest economic slump since the 1930s. The Treasury will sell $65 billion in notes and bonds next week.

Shorter Durations

Over the past month, money managers overseeing about $100 billion shortened the durations of their portfolios, according to Stone & McCarthy Research Associates in Skillman, New Jersey.

Duration, a reflection of how long the debt will be outstanding, dropped to 100.9 percent of benchmark indexes in the week ended June 2, the lowest in almost four months and down from 102 percent in the week ended May 5. The ratio was as high as 103.7 percent in the period ended March 10.

Shorter-term Treasuries, whose lower duration means price swings are smaller relative to longer-maturity debt for the same change in yield, have performed better this year with the Fed keeping its target rate for overnight loans between banks at a range of zero to 0.25 percent.

Two-year notes have lost 0.4 percent, including reinvested interest, compared with losses of 11.5 percent on 10-year securities and 27.9 percent for 30-year bonds, according to Merrill Lynch index data.

‘Predictable Ways’

The Fed probably won’t make any adjustments to the size of the Treasury purchase program before its next policy meeting on June 23-24, in part to avoid reinforcing perceptions policy is reacting to swings in yields, according to Jim Bianco, president of Chicago-based Bianco Research LLC.

“The Fed wants to operate in predictable ways,” Bianco said. “They are also trying to not just look arbitrary, which makes people think ‘I can’t ever go to the bathroom because there could be a press release that the Fed changed the buybacks.’ That’s been a real concern: ‘Wow, I just went to the bathroom and lost $2 million dollars.’”

Summary

While we continue to be patient, it doesn’t appear that patience is really getting us any where. Being proactive and creative is how we continue to stay on top of this crazy and unpredictable industry.

Thank you for your time and consideration.

Sincerely,
Elisabeth Guillemin

These are some hints about preparing you home for sales and what buyers might like.

These days, tax credits and high housing inventory make it a buyers’ market. If you’re a seller, don’t despair. There are a variety of renovations that can help make your home stand out. Many buyers look at numerous homes when shopping for a house; so enhancing your home to make it more memorable is vital and increases the chances of a successful sale.
Clearing clutter, taking down personal photos, applying a fresh coat of paint, making minor repairs, and keeping a pleasant aroma are all basic techniques to make your home more appealing. But there are a few other creative enhancements that you can do to wow buyers without emptying your wallet. The results not only attract more attention, but also paint a picture of a well-cared-for home.

National pundits think that the Real Estate Market is near the bottom. It would be a great time to think about buying properties.

Housing Analysts Predict the Bottom Is Near
The bottom of the housing decline is near, predicted analysts and home builders attending the National Association of Home Builders’ semiannual Construction Forecast Conference last week.

Mark Zandi, chief economist of Moody’s Economy.com, facetiously picked a date when home prices would stop falling: Dec. 15, 2009. Other observers weren’t so precise, but they did generally agree that the federal government’s efforts to shore up the market would take effect by the end of 2009 or early in 2010.

Analysts also predicted that consumers will spend less on remodeling. Eric Belsky, executive director at Harvard University’s Joint Center for Housing Studies, predicted that spending on remodeling would fall 12.3 percent by the end of this year compared to last.

Analysts project that the credit crisis will loosen, although people with blemished credit records may continue to have trouble getting mortgage loans.

Article from Realtor Magazine:Tips for Buying and Selling Via E-Mail
Buying property electronically — no matter how complex the deal — is becoming increasingly common.

Legal and communication experts offer some advice to those who rely on e-communication to buy and sell:

1. Be careful what you put in writing. “[E-mail is] a different type of written negotiation that people in the industry have never been trained for,” says Diane Levine, a lawyer and manager for Sotheby’s International. “I think [associates] should be careful to have a plan in mind and not just let it be about spitting everything out in the next e-mail.”
2. Arguments via e-mail can go wrong. If things get heated, pick up the phone or meet face-to-face.
3. The truth isn’t necessarily the truth. Terri R. Kurtzberg, an associate professor of management and global business at Rutgers Business School, conducted a study of online communications. She found that people aren’t always as honest when they communicate via e-mail compared to other forms of communications. They don’t ask pointed questions well online and are sometimes reluctant to reveal their own interests, she said.
4. Sarcasm doesn’t translate. Flip remarks and off-the-cuff humor can kill a deal. It’s much smarter to write in formal language, advises Kathleen L. McGinn, a professor of business administration at the Harvard Business School, who is an expert is resolving conflict.

Source: The New York Times, Vivian S. Toy (04/24/2009)

Interesting, but not boggling.

NEW YORK – In another sign the housing crisis could be reaching the bottom, home prices dropped sharply in February but for the first time in 25 months the decline was not a record.

The Standard & Poor’s/Case-Shiller index released Tuesday showed home prices in 20 major cities tumbled by 18.6 percent from February 2008. That was slightly better than January’s 19 percent and the first time since January 2007 the index didn’t set a record.

But the good news was mixed. All 20 cities in the report showed monthly and annual price declines, but half recorded annual records. Prices fell by more than 10 percent in 15 cities, including Las Vegas, San Francisco and Phoenix. In fact, Phoenix home prices have lost more than half their value since peaking in July 2006.

The free parking is gone:  here is the article from the town.  get your quarters ready!

Parking Meter Program:  Now that the Town of Taos two-hour free metered parking pilot program has been determined to be complete, attached is the proposed, revised parking program for the downtown historic district. 

As of June 1, 2009, locals and visitors again need to “feed the meters”, with various scenarios about parking improvements to be part of the plan/revenues generated moving forward (see attachment). 

The attached map also highlights the all-day free parking that the Town provides in various lots such as Loretto, Town Hall/Taos Library, and the TCA.  The Town pays for these lots at an annual cost of $42,000.  The revenue ‘lost’ by the Town through the two-hour free parking program and its loss of parking ticket revenues has been approximately $300,000 per year. 

There are some additions to the plan out of today’s meeting that will potentially be part of the program – one of them being free parking to be allowed at the Town’s parking meters during lunchtime, from 12 to 1 p.m. (to specifically accommodate local shoppers).  These will be further detailed by the committee that developed the attached plan and presented to Council for consideration.  This plan was developed by a group comprised of the Town representatives, concerned citizens, Taos County Chamber of Commerce, representatives of the Central Business District Merchants, and others. 

I just read this and think it is worth reading especially with the up and down stock market.

Investing in Land with a Self Directed Retirement Account

Published on Wednesday, March 4, 2009, 2:52 PM by Lou Jewell ALC

No one wants to talk about it.  But did you know that you can invest in Land, improved and unimproved with a “Self Directed Retirement Plan”?

Traditional IRAs, SEP IRAs, Roth IRAs, 401(k)s, 403(b)s, Coverdell Education Savings (ESA) a.k.a. Educational IRAs, Qualified Annuities, Profit Sharing Plans, Money Purchase Plans, Government Eligible Deferred Compensation Plans, and Keoghs are ALL qualified plans that can be converted into “Self-Directed Retirement Plans”.

See the Internal Revenue Service’s website (www.IRS.gov), Publication 590. On pages 40-41 you will see what investments are not allowed through these plans.  Land is not included and therefore qualifies, as do other types of real estate investments.

The traditional investment community has control of more than 97 percent of all retirement accounts, and they have been making a great living off of your hard earned money by recommending investments in stocks and mutual funds. Most investment and financial magazines and TV and radio investment shows are filled with advertisements for brokerage firms and mutual funds.  I would bet that your stock broker or financial advisor has not advised you on how to invest in real estate through your IRA or 401K plan, or other qualified plan. 

It is my opinion that this option is “under the radar” because investment firms do not make money on Land transactions.  Why?  They are not licensed real estate agents.

As stated on the IRS website “…..because of “administrative burdens,” many IRA trustees do not allow IRA owners to invest IRA funds in Real Estate. IRA law does not prohibit investing in Real Estate but trustees are not required to offer Real Estate as an option.” No commissions for real estate sales may have a say here described as “administrative burdens”.

An Individual Retirement Account is a personal savings plan that allows you to set aside funds for your retirement. Investments made within these plans grow in either a tax-deferred or tax-free environment.

The IRS allows your IRA to earn tax-free or tax-deferred income with NO limitations on how much you receive—you can earn thousands of dollars with no tax consequences. A “Self-Directed IRA” will allow you to choose your own investment strategies to earn significantly more for your retirement.

The term ‘self-directed’ does not actually have any legal connotation. It does not imply a different type of IRA, or a separate set of IRS rules. ‘Self-directed’ is simply an accepted industry term indicating that the IRA custodian is allowing the IRA owner greater control over his or her investment decisions. When an IRA account is self-directed, the IRA owner makes all investment decisions and instructs the custodian to act. You must have a custodian as a third-party administrator.

Be careful who you choose as your custodian. Most of these “professionals” are part of the same old 97 percent controlling crowd previously mentioned. Our recommendation is that you find one that charges an administration fee and believes in Land Investments.

Our recommendation is to stay away from investing your IRA money into an S corporation. S corporations only allow individuals (not entities) and certain permitted trusts to be investors. So if your IRA (an entity) is the investor, the S Corp would lose its status and its tax rate would change to a potentially less favorable one. Roth accounts can be used but take time to accumulate larger funds portfolios.

When purchasing Land with funds coming from an IRA, remember that the IRA itself must purchase the Land and hold the grant deed. All property taxes for that Land must also be paid from the IRA. The self-directed IRA should be opened first with cash or funds rolled over from other IRAs, 401ks, retirement plans, and then the Land should be purchased. Large tax penalties can occur if these transactions are not done properly. Proper care in deciding when to sell or lease the Land is also important. Land, especially pre-developed Land, is a long-term investment and often needs to be held for a minimum of five to seven years to produce the highest returns.

You can leverage a Land purchase with as little at 15 percent down and amortize 20 years with the Farm Credit. We in the industry refer to Farm Credit as “The Land Bank”. Farm Credit offices are located throughout the United Sates with different names (www.farmcredit.com/index.html).  Farm Credit has the most consistent programs for Land Investors.  Because of your increased buying power when you use leverage, the profits you make from the ability to use leverage can greatly outweigh the tax associated.

In addition to IRS Publication 590, I would also recommend that you check out (www.iraaa.org/index.aspx).  The  IRAAA™ is a nonprofit, education-oriented alliance of financial planning, real estate, legal, banking, investment, and accounting professionals interested in further developing the niche industry of Self-Directed IRA & 401(k) investing. The organization’s promise is “to provide affordable, unbiased and comprehensive education on the topic of investing with a Self-Directed IRA or Solo 401(k)”.

Also, make sure that you Google “Self-Directed Retirement Accounts” and other associated words. And do your homework. This article’s mission is to stimulate your creative juices and is only part of this untold story. After all you be in control of your own destiny and have the benefits of being a Land Owner…and that offers you the greatest freedom that there is.

In closing I invite you to review the results that the traditional investment community has had control of over 97% percent of retirement accounts, and “they” have been making a great living off your money. Look at the mess we are in. Ask yourself why would “they” want to let you know about alternatives that “they” would not be able to charge for? 

As a result of my counsel, my Land Investors have not lost a single dime and will not in the future. Land is the oldest and most stable investment there is.

I am an Accredited Land Consultant (ALC) of the Realtors® Land Institute, and you can search for an “Accredited Land Consultant” in your region at (www.rliland.com). ALCs are the professionals you can trust to help you evaluate the investment potential and the “Highest and Best Use” for future development and utilization. They are ready to help you find that piece of dirt that will provide for you and your family for years to come.  Land has always provided, and it always will.

Lou Jewell ALC - Accredited Land Consultant