Home prices just hit a 70-month high. Now for the bad news…

Home prices have soared over the past year, but the news isn’t all good on the home front.

According to data released Thursday by RealtyTrac, the median price of a residential property sold in the U.S. in July was $191,000, up 3% from June and 12% from a year ago. This is the highest level since September 2008. States like Michigan (24% increase), Ohio (20%) and Virginia (20%) saw especially high year-over-year increases in median sales prices, as did cities like Detroit (33%), Dayton, Ohio (31%), Stockton, Calif. (24%), Modesto, Calif. (22%), Cleveland (20%), and Miami (19%).

But behind those gleaming numbers lies an unsettling reality: Home price appreciation is slowing. In 65% of the markets measured by RealtyTrac, the rate of home price appreciation was less than it was a year ago--a trend that Daren Blomquist, vice president of RealtyTrac, says will likely continue. “The 20%-30% appreciation we were seeing last year is not sustainable,” he says. “We know that incomes are not rising that fast, and when we look at affordability, many markets are getting back to their historic normal levels for affordability, an indication that price appreciation will slow down.” In general, a 5% — 6% rate of price appreciation over the long term is what’s normal, he adds, though of course in some years home prices don’t appreciate at all.

What’s more, in some markets--including San Francisco and Phoenix--that home price appreciation has slowed far more than others, compared with a year prior, and now is already in single digits. Many times, this is because investors jumped into these markets early to buy up properties and now are pulling out or easing off on buying because prices are high, says Blomquist.

On the other hand, some markets are still seeing rapid appreciation. In Cleveland, for example, from July 2012 to July 2013, home price appreciation was just 3%, but from last year to this year, it was 20%. Sometimes, this is because buyers or investors didn’t take much interest in distressed properties in these markets until relatively recently, says Blomquist.

For buyers scouring the market for deals, the news isn’t that great, either. The median price of properties in the foreclosure process or bank-owned properties was $128,000 in July, up 3% from June and up 11% from a year ago. Blomquist says that there has been very strong demand for these kinds of properties for a while now, and now inventory is drying up, sending prices upward for the very cheapest properties. This too, is a trend that will likely continue.

Pending home sales climb 3.3% in July to reach 11-month high

WASHINGTON (MarketWatch) -- A gauge of pending home sales rose 3.3% in July to reach the highest level in 11 months, signaling that upcoming closings of existing homes are likely to speed up, the National Association of Realtors reported Thursday. 

The index of pending home sales hit a seasonally adjusted 105.9 in July, compared with 102.5 in June. Low mortgage rates, moderating home-price growth and more homes for sale are all supporting deals, NAR said. However, weakness earlier in the year could drag 2014's total sales of existing homes below last year's tally. In July the pending-sales gauge was down 2.1% from a year earlier. 

By region, July's gauge of pending home sales rose 6.2% in the Northeast, 4.2% in the South and 4% in the West. Meanwhile, the gauge declined 0.4% in the Midwest. Pending sales typically close within two months. An index reading of 100 equals 2001's average contract activity level.

Oh, Molly! Suspended Dallas Cornerback Orlando Scandrick Sells Hollywood Hills Home

Orlando Scandrick, the Dallas Cowboys cornerback and former collegiate All-American at Boise State, has sold his Hollywood Hills four-bedroom, four-bathroom showplace for $2.1 million.

That amount ought to cover his expenses while he sits out the first four games of the upcoming NFL season—his punishment for dabbling in the inhibition-lessening effects of the social drug “Molly” while vacationing in Mexico last spring.

Ahem.

(Just say, “No!”, kids.)

But back to the house, which Scandrick put on the market earlier this year.

Listed for sale by Partners Trust of Los Angeles, it’s really quite the chic place—verrrrrry tasteful for someone who, really, is just a kid at age 27.

With its streamlined, deliciously modern design featuring walls of glass at every turn, this is a place where the lines of indoor and outdoor living are delightfully blurred.

The home’s design—with its soaring high ceilings, open floor plan, and the ability to almost remove the outside walls by sliding open the panes of glass—makes it hard to discern where the inside stops and the outside begins.

The three-story house features scads of space and wide-open decks that offer endless views into the canyon below.

There’s a museum-like chef’s kitchen with ultra-modern cabinetry, sleek and slick appliances, and a cleverly-designed angled island topped with soapstone countertops—a pretty cool departure from ho-hum granite.

Orlando Scandrick was born in Torrance, CA, and he played for Los Alamitos High School. The seven-year veteran has recorded 267 tackles, 8.5 sacks, and five interceptions in his NFL career, and Scandrick is signed by the Cowboys through the 2018 season.

Beverly Hills Home Dies Hard: Bruce Willis Sells for $5.5M Below Asking Price

Let’s see if we can’t write an article about Bruce Willis without including 79 references to Die Hard.

C’mon. It’ll be fun.

(That one doesn’t count.)

So, yes, Bruce Willis, who’s got 98 other acting credits to his name, has finally—FINALLY!—sold his Beverly Hills hacienda … only fifteen months after he listed it for sale.

Oof.

The house, which he bought in 2004 for $9 million, was originally listed last spring for—get this—$22 million. That would have been a profit of $13 million in just ten years, but reports are the place finally sold for only about $16.5 million.

Moonrise Kingdom‘s favorite police officer has got his hands in real estate all over the country: he’s got two places in New York (one of which overlooks Central Park), another house in Los Angeles, and his sprawling Idaho compound—which has been on the market for almost three years.

Jinkies.

The star of Looper might—perhaps—want to rethink how he’s pricing his offerings.

Maybe.

Where were we? Oh, right!

Beverly Hills … the good folks at TMZ say the upscale digs were sold to the CEO of Restoration Hardware—who’s also the head of Lucky Brand Jeans—David DeMattei.

The home, which was listed and sold by Branden Williams of Hilton & Hyland, has 11—yes, ELEVEN—bedrooms and ten bathrooms, and the house is just over 10,000 square feet.

That’s a big piece of real estate, by any estimation—even for a guy with two Emmy Awards and a Golden Globe.

We’re glad Bruce Willis was finally able to cast off the shackles of at least one house he’d been looking to jettison. Poor guy: his Pulp Fiction street cred only goes so far 20 years later.

(And we didn’t make one reference. Not one. Yippee ki-yay!)

Dang it!

Boomerang buyers head back into the market

NEW YORK – Aug. 26, 2014 – People who lost a home through a foreclosure or short sale between 2007 and 2013 are projected to make about 10 percent of all U.S. home purchases this year, according to John Burns Real Estate Consulting. That percentage is expected to rise in 2015 and 2016 as more of these so-called "boomerang buyers" become eligible for new loans, the firm estimates.

Some former homeowners find they can buy again in as little as a year following a foreclosure or bankruptcy. For example, the FHA's Back to Work loan program, introduced in 2013, helps individuals who lost their home in a foreclosure or bankruptcy to apply for a new loan in as little as 12 months. Eligible borrowers must prove their foreclosure or bankruptcy was due to a hardship by showing an income drop of 20 percent or more due to a job loss or reduction in salary. They must also meet other requirements and agree to take housing counseling.

"The borrowers need to be able to document the reason for the foreclosure or short sale, and show that they've been responsible with their credit before and after they lost their home," says George Beylouny, branch manager of Silverton Mortgage Vinings in Atlanta. "A drop in credit score is okay as long as they can show they had good credit before the crisis."

Former homeowners will have to explore qualification options with a mortgage broker, but with rising rents across the country, the incentive to do so is increasing.

"FHA loans are easier to get after a short sale," says Steve Cohen, a senior mortgage banker with Talmer Bank and Trust in Rockville, Md. "In fact, some borrowers don't have to wait at all if they never had any late payments on their mortgage. Borrowers who were in default on their loan have to wait three years to qualify for an FHA loan."

Borrowers who underwent a foreclosure who are trying to qualify for a VA loan – which requires no downpayment – may only have a two-year waiting period to qualify for a new mortgage, says Hope Morgan, branch manager of Mortgage Network in Salisbury, Md.

Conventional loans often require a two-year wait for short sellers who can make a 20 percent downpayment, a four-year wait with a 10 percent downpayment, or a seven-year wait with 5 percent down, lenders say. Borrowers who lost a home in foreclosure and defaulted on their mortgage often have the longest waits – up to seven years – before they can qualify for a new conventional loan.

"All of these waiting periods can be shortened with extenuating circumstances, such as a job loss, a divorce, a serious illness or the death of the person who was the primary wage earner," Cohen says.

Source: "After Losing Their Homes in the Foreclosure Crisis, Boomerang Buyers Are Back," The Washington Post (Aug. 21, 2014)

U.S. consumer confidence hits seven-year high

NEW YORK – Aug. 26, 2014 – U.S. consumers continue to feel better about the economy as the Conference Board Consumer Confidence Index hits 92.4 – its fourth consecutive monthly increase and the highest level in almost seven years.

In July, the Index stood at 90.3. The Present Situation Index that gauges attitudes about today increased to 94.6 from 87.9. However, the Expectations Index, which gauges attitudes about the future, edged down slightly to 90.9 from July's 91.9.

"Consumer confidence increased for the fourth consecutive month as improving business conditions and robust job growth helped boost consumers' spirits," says Lynn Franco, director of economic indicators at The Conference Board.

"Looking ahead, consumers were marginally less optimistic about the short-term outlook compared to July, primarily due to concerns about their earnings," she adds. "Overall, however, they remain quite positive about the short-term outlooks for the economy and labor market."

Current conditions

Consumers saying business conditions are "good" edged up to 23.9 percent from 23.3 percent, while those claiming business conditions are "bad" declined to 21.5 percent from 22.8 percent.

Consumers' assessment of the job market was also more positive. Those stating jobs are "plentiful" increased to 18.2 percent from 15.6 percent, while those claiming jobs are "hard to get" declined marginally to 30.6 percent from 30.9 percent.

Short-term economic outlook

The percentage of consumers who expect business conditions to improve over the next six months held steady at 20.4 percent, while those expecting business conditions to worsen fell to 10.2 percent from 12.1 percent.

Consumers, however, were somewhat mixed about the outlook for the labor market. Those anticipating more jobs in the months ahead fell to 17.0 percent from 18.7 percent, although those anticipating fewer jobs also declined to 15.8 percent from 16.6 percent.

Fewer consumers expect their incomes to grow: 15.5 percent in August versus 17.7 percent in July. Those expecting a drop in their income rose marginally to 11.9 percent from 11.1 percent.

Consumer confidence hit a low of 25.3 in February 2009. In the 20 years before the recession, however, it averaged 102.

Nielsen conducts the monthly Consumer Confidence Survey, based on a probability-design random sample, for The Conference Board. The cutoff date for the preliminary results was Aug. 14.

Trading Bears for Bucs: NFL’s Lovie Smith Offers Lake Forest Georgian for $2M

We love to love ya, Lovie.

Lovie Smith, one of the NFL’s all-around good guys, has taken a new job as head coach of the Tampa Bay Buccaneers, so he’s put his five-bedroom, six-bathroom home in the Chicago suburb of Lake Forest, IL, on the market.

For anyone who might be interested in picking up some new digs near the Windy City, the home can be yours for just about $2 million.

Now that Lovie’s passing on—or punting, we’re not sure which—the property, what can the new owners of this big ol’ pile of bricks expect?

For starters, this joint actually is an all-brick Georgian-style behemoth of a place—something not all that easy to come by—situated on a 1.38-acre lot. There are lush, park-like grounds that look just perfect for fun activities like bocce or a rousing game of rugby.

Or even football—the yard is that big.

The home itself is filled with ornate details—mammoth crown mouldings, tray ceilings, and fanciful faux paint treatments. It’s quite fancy, actually.

There are marble and hardwood floors throughout, with ceilings that soar as far as the eye can see. There are grand fireplaces and draperies oozing “royalty” from every thread.

Toss in a library with glorious, floor-to-ceiling wood built-ins that’ll make you want to fill your world with books, and you might not bat an eyelash at the disturbingly-large wine cellar under the stairs in the fully-finished basement.

The master bath? OH! The master bath!

It looks like the kind of place Louis XIV would’ve hung out, had he lived in Chicago. It’s true: look at the pictures.

For the full scoop on these Super Bowl-level lodgings, give listing agent Joe Zimmerman a call; he’ll pass you all the good 4-1-1 on the house.

As for Lovie Smith, he’s busily working out his new team in Tampa and getting them ready for the kickoff of the NFL regular season next month. He spent nine seasons coaching the Chicago Bears, taking them to the Super Bowl after the 2006 season. Smith has a career coaching record of 84-66 in the NFL.

Realtors spend more money than ever on marketing

NEW YORK – Aug. 25, 2014 – Basic marketing for a residential property, at minimum, means posting it in the multiple listing system, placing a lockbox at the door and putting up signage on the front lawn.

Real estate agents dig deep into their own pockets, however, to take extra steps that help a for-sale home command the attention of prospective buyers. Depending on where the house is located and how marketable it is, it can mean $1,000 or more in marketing dollars – especially now that most buyers begin their property search on the web.

"To capture buyer leads, ads on homes.com, Zillow, Trulia and realtor.com must be purchased," according to broker Robert Taylor of Independence Realty in Alabama. "The expense for local Realtors who sell two houses a month has become thousands – even tens of thousands of dollars – of expense per year."

Paying for online advertisements does not even begin to cover the costs, adds Realtor Tabitha Kontur of Capstone Realty, pointing out that professional photography and staging services add to the marketing budget. How much an agent spends on a listing, she explains, depends on location, days on the market, and obstacles unique to the individual property.

"Obviously a home that stays on the market for six months is going to cost significantly more than one that is in a hot area and sells in five days," she notes. "A listing that is rural or hard to find will require more marketing dollars spent than one that is on a main road and signage is easily seen."

Fla. to get $1B from Bank of America settlement

TALLAHASSEE, Fla. – Aug. 22, 2014 – Nearly 17,000 Floridians will receive more than $1 billion in relief as part of a record-setting national settlement with Bank of America, the Florida Attorney General's Office announced Thursday.

Bank of America Corp. agreed to pay $16.65 billion to end federal, Florida and other state investigations into the sale of toxic mortgage securities during the subprime housing boom. The settlement includes $9.65 billion in fines and $7 billion in aid to communities and homeowners hit hard by the housing market crash that triggered the Great Recession.

"This historic resolution – the largest such settlement on record – goes far beyond 'the cost of doing business,'" Attorney General Eric H. Holder Jr. said in describing what he called "pervasive schemes to defraud financial institutions and other investors."

Details are still being worked out on who in Florida will receive the aid and how much, said Attorney General spokesman Whitney Ray. "Programs are being set up to inform eligible borrowers," he said.

The consumer relief will include principal reduction and forgiveness, loan modifications and new loans to credit-worthy borrowers struggling to get a loan, Ray said. There also will be financing for affordable rental housing and donations given to help communities still recovering from the financial crisis, he added.

Overall, Florida will receive about a seventh of the settlement's $7 billion in aid to communities and homeowners hit hard by the housing market crash, estimated Jana J. Litsey, Bank of America deputy general counsel, in a letter to Florida Attorney General Pam Bondi.

Most of the toxic loans that backed the securities came from firms BofA acquired in 2008, including Countrywide Financial Corp. of Calabasas and Wall Street investment bank Merrill Lynch & Co.

BofA already had incurred about $60 billion in losses and legal settlements from the purchase of Countrywide, which was one of the nation's biggest subprime mortgage lenders during the housing boom of the mid 2000s.

Paperback Princess Danielle Steel Pens $9M Price for ‘Small’ Stinson Home

EGADS.

Property prices in this country are just out of hand.

We know beach homes are more expensive than others. We know the San Francisco Bay Area is pricey. We get it.

But $9 million for a four-bedroom house?

We’ll say it again: EGADS.

Romance novelist Danielle Steel, who’s the best-selling author alive (yes, even above J.K. Rowling), has offered her Stinson Beach, CA, getaway for sale. The home is a hair shy of 3500 square feet, sits on a lot just more than a 1/2 acre, and has four bedrooms and four full bathrooms.

And it’s nine … million … dollars.

We’ll grant the writer—who’s penned 90 novels and 17 children’s books—this caveat: the place does have a killer view of the Pacific Ocean. It’s nice.

EGADS.

It’s a sweet little Cape Cod-style cottage with cozy fireplaces (we imagine those are lovely for warding off the seaside’s evening chill), skylights, an oceanside solarium for al fresco dining, and a beachy-feeling kitchen—and it does have a swell gas range that is likely great for prepping lobsters and such for dinner.

Like we said: it’s nice.

The house also comes fully furnished. That great if you’re into really, really bright colors—and lots and LOTS of stuff.

(Holy tag sale, Batman, is there ever a ton of stuff in this house!)

The lucky buyer gets all the furnishings, including the home’s art and all its bikes. So, maybe that’s what makes this place tip the scales at $5 million more than the closest comparable home in the area.

(We guess?)

Danielle Steel, who’s spent most of her career in California, also owns a 55-room home in San Francisco that was once the mansion of sugar king Adolph Spreckels. If you’ve got money to burn and are in the market for a nice little beach cottage, though, listing agent Sarah Kowalczyk is the lady to call for this Stinson slice of heaven.

Going, Going, Going … But Not Yet Gone: Jose Cruz, Jr. Lists Miami Manse for $4.45M

There’s a book we read once, a long time ago. It’s called Wide Sargasso Sea, a supposed prequel to the Emily Bronte classic Jane Eyre.

It all takes place in the Caribbean: crystalline blue waters and skies, powdery and sugar-white beaches, sultry temperatures, lazily swaying palms, and dark, rich woods that harkened to the characters’ very British—very upper class—backgrounds.

That’s exactly what we thought of when we saw this house: we actually swooned.

Jose Cruz, Jr., the retired MLB outfielder and Golden Glove winner, has offered his 7,500-square-foot, plantation-style mansion in Miami—a home that’s just dripping with charm and character—for $4.45 million.

Our friends, THIS is a house.

Did we mention the swooning? We digress.

Designed by Ramon Pacheco, the four-bedroom, 6.5-bathroom home is a refreshing departure from the typical “celebrity home”. Without an ounce of cliché, the home evokes a sense of style and grace without ever feeling pretentious.

In all directions, the home is classic Floridian white offset by the warmth of warm, dark wooden beams and floors.

Yum.

There are fabulous architectural details, like the tray ceiling in the master bedroom, which has been tastefully kissed by the palest hue of blue; it’s just enough to give a nod to the ocean without being all in-your-face with it.

There’s a cooler-than-cool coffered ceiling in one of the guest rooms that’s been accented with tones of red; it’s not gaudy or garish … it’s just right.

Did we mention how nice this house is? And we’re cynics; we don’t like anything (not really).

This place is delicious.

The lanai, though it doubtless gets plenty of Miami sunshine, looks cool and restful as the perfect place to gather with friends before washing of the cares of life in the sparkling in-ground pool.

Every details of this house is clean lines and understated elegance. The architect, designer, and listing agent—kudos to you, Judy & Nathan Zeder—did an outstanding job here.

We want. All we need is about $4.43 million more dollars.

Jose Cruz, Jr. played for nine teams in a nine-year baseball career, and he now works for the Major League Baseball Players Association. In 2001, Jose Cruz, Jr. joined the 30-30 club by hitting 34 home runs and stealing 32 bases during the regular season with the Toronto Blue Jays.

His father also was a major-league ballplayer.

Another Foreign Investor Mandate to Place $1 Billion in U.S. Real Estate

Given the stability and maturity of the U.S. commercial property market in 2014, global institutional money continues to flow into the United States.

The most recent example of foreign capital flowing into the U.S., LaSalle Investment Management, a leading global real estate investment manager announced today their firm has been awarded $1 billion of equity to invest in US real estate by a large European institutional investor.

The new mandate will seek direct real estate investment opportunities across all property types in primary and top secondary markets in the U.S.

"We are extremely pleased to be working with a global investor of this caliber to develop a customized investment program which fits their requirements," says Jason Kern, LaSalle Americas CEO. "We continue to see strong interest from sophisticated investors from around the globe in more customized strategies like this one targeting the US commercial real estate market.  We anticipate continued economic growth and improving real estate fundamentals over the next few years, and believe ongoing changes in demographics, technology and urbanization will provide attractive risk-adjusted investment returns across most major property types in the US."

This new mandate follows quickly on the heels of LaSalle's recent announcement that it has raised $1 billion in equity since the beginning of 2014 for Asia Pacific property investment strategies.

Miami's SLS Lux Brickell Signs $300 Million in New Condo Sales in Ten Days

August is proving to be a good month for Miami-based The Related Group. The company just announced this week that they have hit sales of over $300 million at SLS Lux Brickell, as reservations successfully convert to contracts throughout August at a record pace--150 in ten days.

The SLS Lux brand, established by hospitality group sbe this year, is drawing national attention with the anticipation of the first SLS Lux hotel in Las Vegas opening later this month, and SLS Lux at Baha Mar opening in the Bahamas early 2015.

The high-profile appeal and news surrounding the brand has fueled SLS Lux Brickell's successful sales, with over 150 contracts signed during the first ten days of conversions. But, developers also attribute the strong sales to heightened demand for such a strong, branded product. 

"We're seeing buyers, especially from Latin America, extremely receptive to the SLS residences and designer suites' model and style," says Carlos Rosso, President of Condominium Development at The Related Group. "Whether they are full-time residents or second home buyers, they want the ease of the hospitality services offered by a luxury hotel brand, within the privacy and comfort of their home. Additionally the beach club memberships in South Beach, the expansive pool deck with a tennis court, the private elevators, the proximity to Brickell City Centre and the museum quality art including Botero's masterpiece, make this property even more recognizable and desirable."

SLS Lux marks Related's third brand partnership with the Los Angeles based company. The partnership grew from the success of their first project SLS Brickell, blocks from SLS Lux on South Miami Avenue. SLS Brickell is currently under construction with only a few penthouses remaining.

SLS Lux is expected to break ground in the fourth quarter of 2014. The luxury condo will feature a mix of 450 residences and 85 suites, both with exclusive services managed by sbe, including upgraded amenities and products and an array of personalized VIP services.

Florida 1 of 4 states where insurers snub credit scores

NEW YORK – Aug. 20, 2014 – A lower credit score not only makes it hard to qualify for a loan: Some homeowners find that bad credit can also make the costs of homeowners insurance higher, CNBC reports.

However, the study also found that homeowners in four states, including Florida, aren't affected. Low-credit-score owners pay the same rate as high-credit-score owners, albeit higher in the Sunshine State than in most other parts of the nation. Only California, Maryland and Massachusetts homeowners don't feel any impact from a low credit score.

Nationally, homeowners who have poor credit pay an average 91 percent more for homeowners insurance than those who have stellar credit, according to a new report from Brankrate.com and insuranceQuotes.com.

Homeowners with a fair or median credit score may pay 29 percent more for homeowners insurance than someone with stellar credit, according to the report.

"This is another example of why credit is such an important part of your financial life," Laura Adams, senior analyst with insuranceQuotes.com, told CNBC. "Maintaining a good credit history suggests that you're a less risky customer and can lead to several hundred dollars in annual homeowner's insurance savings."

How insurance companies weigh a person's credit score can vary greatly from company to company and even state to state. There is no standard for how insurers figure credit into insurance costs, according to the report.

Yet, "there is an undeniable correlation between credit information and insurance risk," says Anna Bryant, a spokeswoman for State Farm Insurance, which uses credit scores to determine individual homeowners insurance rates. "It is a correlation in terms of the frequency a person could have a claim and the severity of their claim."

Indeed, insurers began using credit-based insurance scoring in the early 1990s, when FICO studies found a correlation between a person's credit and his or her likelihood of filing a claim.

Bryant says that State Farm does not look at the entire credit score, but only aspects of it, to determine a person's homeowners insurance rate, but she declined to elaborate.

Just how much impact a lower credit score can have on premiums can greatly depend on what state you're from, too. In the Bankrate.com report, the following five states showed the greatest average premium increase to homeowners insurance when an excellent credit score was downgraded to fair:

Montana: 65 percent increase

Washington, D.C.: 60 percent

Arizona: 55 percent

West Virginia: 53 percent

Virginia: 52 percent

"I'm pretty shocked that even with a so-called fair credit score, you could still wind up paying 50 percent more than someone in the excellent category," says Bob Hunter, former Texas insurance commissioner and current director of insurance at the Washington, D.C.-based Consumer Federation of America.

The difference between a poor versus excellent credit score is even more dramatic. In West Virginia, it can make property insurance cost 208 percent more. In 22 of the 50 states, the yearly cost increase is more than 100 percent. In Florida, the difference is 0 percent.

Flippers, landlords find new home-loan money

ORLANDO, Fla. – Aug. 20, 2014 – Orlando landlord Brian Lunsford needed $40,000 to renovate a house that a college student almost burned down, so he turned to an online crowdfunding site.

Within two days, more than a dozen investors had each agreed to loan him an average of $2,800 for up to 13 months.

"He left a candle burning and it did significant damage to the interior," Lunsford said. "I'm fighting it out with the insurance company, and I was going to front the money myself, but it was $40,000 to renovate. … that's not easily financeable."

Crowdfunding is just one new financing option that has emerged in a metro area where 56 percent of all home sales were paid for with cash in May, according to RealtyTrac. Recognizing that community banks and institutional lenders are reluctant to loan money to house flippers and landlords, several companies have started offering cash to real estate entrepreneurs in the Orlando area.

But the borrowed money doesn't come cheap.

Lima One Capital LLC, which offers loans to residential real estate investors and homebuilders, opened an Orlando office this month. Launched in 2010 in Atlanta, the company offers short-term, fast-approval loans with interest rates of 12 percent to 13 percent to residential real estate investors and homebuilders – about three times higher than normal mortgage rates. Last year, the company loaned $485 million in 12 states.

"Orlando has very depressed home prices that are 33 percent behind peak-level pricing, and it lags behind the rest of the nation," said Lima One founder John Warren, a former Marines infantryman. "And that means there is going to be a lot of investors because they think the growth is going to be there."

In Lunsford's case, the individuals who loaned the money will earn 9 percent interest. Lunsford has agreed to pay 11 percent interest on the short-term renovation loan, and the crowdfunding platform he used, RealtyShares.com, will keep the 2 percent difference for doing the marketing.

Cary Berman, executive vice president of Old Florida National Bank, said the type of loans being offered by Lima One Capital and RealtyShares are new to the Orlando area but not necessarily worrisome for a recovering housing market.

"I think they're on to something in an underserved market, but I don't believe it impacts or affects our market," he said.

Old Florida typically appeals to low-risk borrowers who have just a few residential properties rather than landlords and flippers who constantly buy and sell houses, Berman added.

Berman said he appreciated that nontraditional funding sources such RealtyShares and Lima One don't offer federal-backed loans, so only private equity – not taxpayer dollars – is at risk.

Typically, investors used their own funds or that of friends and family members for short-term investment strategies including those involving home renovation and flipping.

Robert Luis Castillo, senior vice president for Synovus Bank in Orlando, said traditional lenders have typically shied away from spending their resources on loans for less than, say, $100,000.

"Additionally, there are numerous risks associated with rehabbing houses that the casual investor may not be fully aware," he said. "It only takes a few miscues to create the proverbial money pit."

A more traditional source of funds for these buyers is equity loans, which have interest rates of about 4 to 5 percent.

Based in San Francisco, RealtyShares launched in 2013. It is exempt from Securities and Exchange Act regulations because it connects borrowers only with "accredited" investors.

Those lenders have affirmed that they have income levels of at least $200,000 or have at least $1 million of assets. RealtyShares runs credit and background checks on the borrowers and checks on the property being purchased.

"We're never the sponsor of the loan, and we're only the marketplace," founder Nav Athwal said. "We're trying to provide an alternative to banks."

If Lunsford can't repay the loan, his fleet of lenders has the legal footing to file a lien against the house and get their money back when it sells.

Lunsford said he said he first began buying houses after the housing market crashed starting in 2007.

At the time, he had just sold a gourmet-coffee business in Atlanta and had cash for properties. But he was keeping most of the homes he purchased and renting them. With few sales to help pay for more houses, his funds began to run short in 2011 and he went from buying two or three houses a month to purchasing one every two months.

"It was really frustrating because there were so many deals and the reason there were so many deals was because no one could get the money to buy," said Lunsford, who had turned to community banks and national lenders with no success.

He said the RealtyShares option helped him get the cash on about a dozen of the 50-plus rentals he now owns in Orlando, Jacksonville and the east coast of Florida.

Investors Snap Up $515 Million of South Florida Apartments in H1 of 2014

According to a report by the CBRE South Florida Multifamily Investment Properties team, South Florida's multifamily market commanded a record number of sales in the first half of 2014.

The report tracks sales in the $1 to $20 million range and shows 172 multifamily sales totaling more than $515 million, the strongest sales activity for the first half of a year since 2006.

"The relatively low cost basis that we experienced in 2010 and 2011 is now a thing of the past," said Calum Weaver, CBRE First Vice President. "However, interest in multifamily properties is unabated. Investors recognize the strong market fundamentals for apartment buildings which has contributed to the uptick in sale activity." 

Added Ken Krasnow, CBRE South Florida Managing Director, "Above-average population growth in South Florida is driving the demand for multifamily product. According to the Florida Bureau of Economic and Business Research, South Florida's population is expected to increase by 2.4 million people, or 29%, between 2013 and 2040." 

Other CBRE highlights of the report include:

Cap rates will remain in line with current levels although they may increase with any sudden uptick in interest rates.

In 2013, there were 9,558 net units absorbed in South Florida. In the previous four years, the region averaged around 4,500 net absorbed units per year. The positive net absorption of units has helped drive down vacancies to record lows and rents to record highs. In 2014, we anticipate over 14,000 units to be completed in the region which is forecasted to be greater than the forecasted net absorption of 8,640 units.

Value-add opportunities are still desirable; foreign investors, who are more prevalent than at any previous time in South Florida, are increasingly willing to invest in older product with upside potential.

More than half of CBRE multifamily investment properties transactions in South Florida over the last year involved foreign buyers.

You Can Find the Biggest Homes Here

Builder recently ranked the top five markets for metro new-home buyers who are seeking space but not at a hefty price. To determine its top five, Builder considered only metros with populations of 500,000 or more and factored in new-home closings, to identify where supply meets demand, and the average price per square foot.

If you want to buy a big home, you’ll need to move to the following places, according to the study.

1. Oklahoma City

The city has the lowest average cost per square foot of the top five at $203 and the largest average lot size at 18,453 square feet.

2. Dallas-Fort Worth-Arlington, Texas

Home buyers can find homes near 3,000 square feet for an average cost of $255 per square foot. Of the top five, Dallas-Fort Worth also has the highest average number of bedrooms per home at 3.9.

3. Jacksonville, Fla.

Jacksonville homes average $233 per square foot, while also offering short drives to the beach and handfuls of “new subdivisions along the way offering spacious single-family homes,” Builder notes.

4. Las Vegas

Las Vegas has an average cost per square foot of $237, with an average home size of more than 2,000 square feet, though it has the smallest lot size of the top five.

5. Nashville

It boasts an average price per square foot of $252 with homes that average more than 2,500 living square feet.

Miami: Big investors reap whirlwind rental profits

Wall Street and other big investors are reaping the benefits of Miami-Dade County’s robust housing rental market, but to the chagrin of renters paying top dollar, market watchers say.

Those renters, they say, are often the same people who lost or gave up their homes during South Florida’s foreclosure crisis, among the nation’s worst.

Institutional investors that have been buying up all those distressed properties are now renting them out at premium rates to a vast pool of tenants, swelled by residents displaced by the region’s avalanche of foreclosures and short sales, says Peter Zalewski, a principal at CraneSpotters.com, a website that tracks South Florida’s condominium and apartment markets.

“If you look at how rents have gone up steadily, constantly since 2009, it seems like rents could continue to go up,” Mr. Zalewski says.

Rents are just about peaking in Greater Miami, he says, and it remains to be seen how much more rates can be stretched.

East of Interstate 95 in Miami-Dade, rents have increased by 24.3% since 2010, while rents west of I-95 have increased 17.7%, according to data CraneSpotters.com compiled from the Southeast Florida Multiple Listing XChange.

East of the highway, the median rental rate has risen this year to $1.74 per square foot. That means rent for a 1,000-square-foot apartment would be $1,740 a month. The median means half rent for more and half rent for less.

West of the highway, the median rental rate has risen this year to $1.33 per square foot, making the rent $1,330 a month for a 1,000-square-foot apartment there.

Just as banks and other firms bundled mortgages together and sold them as mortgage-backed securities, the new trend is the purchasing of properties and bundling them into rental-backed securities, says Bruce Jacobs, a Miami foreclosure attorney and host of the “Debt Warriors” radio show.

Hedge funds, private equity firms and other institutional investors buying up those rental-backed securities account for a large majority of the all-cash purchases for which the Miami housing market is becoming known, Mr. Jacobs says.

The problem, he says, is those investors are beating out conventional buyers – those that need financing, which in itself is now harder to get – and pushing them out of the market, often turning them into renters.

“I’ve been saying we’re going back to the feudal land system where there’s a concentration of ownership,” Mr. Jacobs adds, “and everybody’s paying what the landlord wants.”

However, Mr. Zalewski says some relief appears to be on the way for renters, thanks to the laws of supply and demand, which lately seem to have been suspended.

In recent years, statistics show, the number of rental units in the market has swelled – some from previously foreclosed homes, especially in the suburban markets west of I-95, and some from new construction, especially in the urban coastal markets east of I-95.

East of the highway, the number of rental units has grown 26.9% over the past four years, while the number of units west of the highway has ballooned by a whopping 36.3% during that time, according to data from CraneSpotters.com.

Moreover, developers have started construction or are planning thousands of additional condos in Greater Downtown Miami, according to the website. Mr. Zalewski estimates that far more than 50% of those new units could end up as rentals.

Despite the growing number of rental units, rents in Greater Miami have risen almost as much, indicative of a market in hyper drive, partly fueled by foreign buyers, both institutional investors and wealthy individuals, Mr. Jacobs says.

Yet it can’t go on indefinitely, Mr. Zalewski says, as eventually the new supply of units – particularly from all the new and planned construction in the Brickell and Downtown Miami areas – will catch up and should start to outpace demand.

That’s when rent increases will slow or stall, he says, adding that Miami could start seeing the beginnings of that trend in the next 18 to 24 months.

And moderating rents, he predicts, should eventually trickle out to the suburbs west of I-95, although in less dramatic fashion.

In the meantime, Mr. Jacobs says, in addition to the burden of high rents, many tenants can expect less service from their institutional landlords, who might own 100 buildings and can’t or won’t pay attention to each one’s needs.

“What we’re seeing,” he says, “is the largest transfer to real estate from Floridians – taxpayers, homeowners and residents – to Wall Street investment firms and foreign investment firms.”

Add that to the fact that most homeowners who have become renters have downsized their living space. Often, Mr. Jacobs says, the only way families and others can afford to rent a house or apartment is to take in more roommates by renting out a bedroom or two.

“They’re not paying as much [in rent] as they once did on their mortgages,” he adds, “but it’s not far from it.”

First-time buyers stuck as entry-level homes dry up

NEW YORK – Aug. 15, 2014 – For-sale inventories may be at a two-year high, but first-time homebuyers still find themselves shut out of the housing market. There aren't enough homes in their price range and, when one shows up, they're usually outbid, Reuters reports.

A decline among inventories for entry-level housing has gotten worse over the past year as discount foreclosures have faded and investors have continued to buy up low-priced homes and turn them into rentals through all-cash deals. Also hampering the inventory picture: Lower-priced properties are more likely to have homeowners with underwater mortgages, preventing them from moving on by putting their homes on the market.

"It's bad news for people looking for a starter home that all the choices are disappearing," says Lawrence Yun, chief economist at the National Association of Realtors® (NAR). "People shouldn't expect inventory to show up on the low end. It's not available."

The number of homes for sale below $198,000, considered the bottom third of the market, dropped 17 percent in June compared to a year earlier, according to an analysis by the real estate brokerage Redfin, which tracked 31 of the largest U.S. metro markets. On the other hand, inventories rose 3 percent in the middle of the market and soared 15 percent at the top, according to the analysis.

The trend is even more evident in certain markets. For example, Denver entry-level listings in June fell 51 percent from a year earlier, while the supply of higher-priced listings was up 4 percent. In Austin, Texas, inventories at entry-level prices dropped 34 percent in June while soaring 14 percent in the top third of the market.

What's more, average list prices on the lower end are rising due to the high demand and limited choices, jumping 15 percent in June from a year earlier.

The limited supply has prompted more buyers at the lower-end price range to adjust their expectations, says Sharlene Hensrud, a real estate professional with RE/MAX Results in Plymouth, Minn. For example, she says her recent clients were touring homes in the $140,000 range and unhappy that the money would only buy them a one-bedroom, one-bathroom house with no garage. A few years earlier, that price would have gotten them a three-bedroom home.

A declining number of first-time homebuyers reflects some of the struggles in finding an affordable home. First-time homebuyers accounted for 28 percent of all sales of previously owned homes in June, down from a historical average of about 40 percent, according to NAR research.

Homebuilders say they hope to meet the demand of entry-level homes, but it's going to take some time until they can play catch-up.

After all, a supply of cheaper new homes "isn't there because young people are still up against these financial barriers," says David Crowe, chief economist for the National Association of Homebuilders. "The builders are responding to the customer that is active in the market. It will be at least two years before there is a measurable change in the share of sales going to first-time home buyers."

Earlier this year, representatives from the nation's largest homebuilder, D.R. Horton, said they were moving into capturing more of the entry-level market with a newly launched brand called Express Homes. The properties will be priced between $120,000 and $150,000 and will be concentrated in Texas, Georgia and Florida.

Average 30-year mortgage rate this week: 4.12%

WASHINGTON (AP) – Aug. 15, 2014 – Average long-term U.S. mortgage rates declined this week, approaching their lows for the year.

Mortgage company Freddie Mac said Thursday the nationwide average for a 30-year loan slipped to 4.12 percent from 4.14 percent last week. The average for a 15-year mortgage, a popular choice for people who are refinancing, fell to 3.24 percent from 3.27 percent last week.

Mortgage rates are below the levels of a year ago. They have fallen in recent weeks after climbing last summer when the Federal Reserve began talking about reducing the monthly bond purchases it was making to keep long-term borrowing rates low.

Mortgage rates often follow the yield on the 10-year Treasury note. The 10-year note traded at 2.42 percent Wednesday, brushing its low for the year of 2.41 percent and down from 2.47 percent a week earlier. It fell to 2.38 percent in trading Thursday morning.

At 4.12 percent, the rate on a 30-year mortgage is down from 4.53 percent at the start of the year. Rates have fallen even though the Fed has been trimming its monthly bond purchases, which are intended to keep long-term borrowing rates low. The purchases are set to end in October.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was 0.6 point, down from 0.7 point last week. The fee for a 15-year mortgage was unchanged at 0.6 point.

The average rate on a five-year adjustable-rate mortgage edged down to 2.97 percent from 2.98 percent. The fee remained at 0.5 point.

For a one-year ARM, the average rate rose to 2.36 percent from 2.35 percent. The fee was stable at 0.5 point.

The porch is making a comeback

NEW YORK – Aug. 14, 2014 – The porch is making a triumphant return decades after it began fading from the U.S. architectural landscape. The Census Bureau reports that 63 percent of new single-family homes completed last year had porches – an increase from 42 percent two decades earlier.

"The wealthier we feel, and the more feature-rich we desire our homes to be, the more likely they are to have a porch," says Ed Hudson, marketing research director of the National Association of Home Builders' Home Innovation Research Labs.

The return of the porch also indicates a desire for social connection, says Robert A.M. Stern, dean of the Yale School of Architecture. Stern made porches the hallmark of homes in Celebration, Fla., the master-planned community he helped design for the Walt Disney Company in the late 1990s. His contention is that a porch "friendlies up the house."

In the luxury-housing niche, meanwhile, porches are being designed as fully functional outdoor rooms that feature everything from built-in speakers to solar and wind-activated awnings. Cage-like screens have been replaced by fine mesh made of bronze or vinyl-coated aluminum.

Some homeowners are also installing radiant-heat panels in porch floors and ceilings to make them habitable even in the colder months. Even "decks" are being re-christened as "porches," particularly in high-end home design.