Lead poisoning is serious stuff, particularly for children under the age of 6. And sadly, children this age are more likely to come in contact with dust contaminated by lead simply by doing the things little kids do. HUD recommends a pretty rigorous cleaning regimen for older homes to minimize the risks of lead poisoning.

Lead abatement — the process of getting rid of the lead altogether and properly disposing of it — is an expensive proposition. However, yesterday HUD announced that they will award $13,000,000 in grants for 25 local projects including lead abatement, research, public education, and related activities.

Lead paint has not been put in American homes since 1978, but there are still a lot of homes that have lead paint contamination. The Department of Housing and Urban Development (HUD) estimates that number at roughly 24,000,000 homes. Under federal law, the buyer of any home built before 1978 has to be warned of the possibility of lead contamination, if the seller knows about lead based pain he must disclose it (even institutional sellers like banks must sign this disclosure), and all buyers must receive this pamphlet on the dangers of lead based paint (PDF).

Maybe you’ve heard “the other golden rule,” that “he who has the gold makes the rules”? Nowhere is that more true right now than the real estate market: investors with cash are crowding out first time buyers, who are often interested in the same bargain properties, but must use conventional or even FHA financing. Here in Las Vegas, cash transactions accounted for roughly 40% of December closings! Cash offers are very attractive, particularly to banks trying to unload foreclosed properties, because there is less to go wrong: no lender to demand repairs prior to closing; no potential for a bad appraisal to derail the transaction; no chance of the mortgage simply falling through.

Oddly enough, this phenomenon isn’t important enough to make the Wall Street Journal’s list of 5 real estate trends to watch in 2010. In the meantime, cash offers are still the most successful way to get a winning purchase offer signed.

We’ve got Case-Shiller figures for October, including the chart in this post. In short, prices were “flat but stable.” For the entire decade, however, there was no rise in property values once inflation was taken into consideration.

I do not have an intimate familiarity with how Professors Case and Shiller get these numbers, but I suspect that there is no accounting for the lower prices and worse condition of distressed properties. Theoretically, I should be seeing prices much lower than they actually are — and while I do see super-cheap properties, I see solid pricing in the mid range.

Please remember, in the Las Vegas Valley properties priced under about $60,000 should be considered cash only due to difficulties getting financed. It’s an opportunity for investors with lots of cash and even more patience, but not an opportunity for first time buyers who are thinking they can buy a place for the same monthly outlay as a crappy apartment. Between downpayment issues, appraisal issues, and repair issues, mortgaging such properties almost never works out. Seriously, save the downpayment for the pricier place, preferably without involving the FHA.

Once a buyer and seller agree on the terms of selling real estate, the “escrow period” begins. Usually a deposit is placed with a title company. While the buyer gets things like inspections and HOA documents to look over, the mortgage people start working on their paperwork, and a mysterious “escrow officer” begins a very important set of jobs.

Even though it could be handled separately, in Nevada the title company and the escrow company are usually the same place and one set of people does both tasks.

As the “escrow” staff, they act as a third party between the buyer and seller to make sure that all the money is impartially accounted for. They make sure that all the documents are in order, that everybody’s name is spelled right, that the numbers add up correctly. They arrange to have a notary on hand for signing documents. They make sure that everybody signed and initialed in all the right places. Once everybody has signed and the mortgage money has come in, they make sure the seller is paid and the new deed recorded at the county offices.

As the “title” staff, they have the very important job of making sure that the seller gives “clear” title to the buyer. Clear title means that the new owner really owns it, with no mysterious debts from the past attached to the property. In short, it means the new owner can sell the property. The title officer checks to see who owns the property, who used to own it, whether there are any restrictions on how the property can be used, what liens may be against it, if there is an outstanding mortgage and to what bank, whether there are fees owed to the homeowners association, whether the taxes are up to date, and a dozen other details.

They stand behind their findings with something called “title insurance.” The buyer and seller will each have their own title insurance policy. Because in some ways the buyer’s policy protects the buyer’s mortgage company, it is sometimes called the “lender’s” policy. Title insurance protects against a variety of problems from bad and forged deeds to property tax issues. However, just like most other kinds of insurance, there is more than one level of protection. While exact policy details may vary, there are 2 basic kinds of policy: CLTA and ALTA. The ALTA policy in turn has two basic forms: residential and extended. ALTA does cost a bit more, but it covers a lot more too. As a REALTOR, I generally recommend ALTA coverage. However, if you have questions about exactly what coverage you need, it is a good idea to ask your local title/escrow officer.

Some of the details I have mentioned are specific to Nevada. For questions about how things work in your state, call a local REALTOR. To learn more about real estate in the Las Vegas Valley, be sure to check in with BridgetMagnus.com every Friday for Friday Figures.

By now everyone has heard that existing home sales were up in October, which drove inventory down. Residential investment and the Case-Shiller are up too. Even sales of new homes are up.

Don’t get to thinking this is a trend.

The reason we had so many closings in October is that buyers were trying to get the deal completed before the first time homebuyer’s tax credit was supposed to have expired. Nobody knew when those contracts were signed that the credit would be continued and expanded. I don’t know how much impact that will have going forward, as most qualified first time buyers have already made their move, and one in 5 current homeowners can’t buy because they are underwater on their primary residence.

For a property to sell in October means there was most likely a signed contract in September, if not last August. It won’t be until mid December before we have accurate, national numbers for November property sales (I will continue to post local data every Friday).

So in short, we may still have a bubble problem in some areas of the country.

Hooters Las Vegas is currently in default, and is trying to restructure $147 million in debt.

More on the Cosmopolitan: Deutsche Bank has had to write down a half billion euros — about $748 million — and there is no clear opening date in sight.

I’ve said before that the housing crisis will not be over until the banking crisis is over as well. The two are just too intertwined. Well, banking reforms may be further away than we would like, and the TARP is looking more like a cover-up than a life-preserver every day. In fact, I am more certain than ever that as bad an idea as it is, it would have been a better use of taxpayer money to put up to $100,000 towards every American mortgage than to continue to prop up huge banks that aren’t accountable to anybody. At least paying off people’s mortgages would have changed the fact that we now have record high delinquency rates.

Housing starts — that’s beginning construction of new housing — is at a new low. Permits to build housing are down too. Surprisingly, that’s a good thing if you think we have an oversupply of housing. It of course isn’t very good news at all if you work in construction.

I do have to say that I am very concerned by the disconnect between the economy you and I see on the streets and the economy that Wall Street is apparently enjoying. I can’t see the Wall Street economy continuing forever, nor pulling the rest of the nation up. Let’s face it, most jobs are not created by huge publicly traded corporations, but rather by the small businesses that are having a hard time getting financing right now. And until we have enough jobs, the housing industry will have something less than smooth sailing.

And on a happy note, there is a movement to create a new national park in the Northwest part of town. An area called the Upper Las Vegas Wash is home to many fossils.

Two little news bits for you.

First, the Senate has attached an extension of the $8000 first time buyers tax credit to a bill extending unemployment aid and passed it unanimously (some restrictions apply, of course). The House of Representatives still has to vote on such a proposal, but a compromise is already in the works and it seems likely they will go along. Update: A bill has passed and will likely soon be signed into law. I know I should be really happy about this, but I have reservations. First, how many qualified first time buyers are left? Second, by continually extending the credit, urgency is lost. Buyers are left wondering if Congress won’t pass a better deal next year! Finally, assuming that urgency is not lost, it adds froth to the market. We have roughly 15,000 pending sales in the Las Vegas Valley; you can’t tell me that’s a normal level.

The second item is undeniably good news here. Clark County wants to raise the fines for not keeping property in good condition. Currently, the fine is $50-200 per day and a maximum of $10,000. They want to raise it to $1000 per day for a maximum of 2 years.  We aren’t talking about mowing the lawn and stuff like that. We’re talking about truly neglectful property owners who allow their properties to become dumping grounds or unsafe places. While some say this is likely to be used against the elderly and the infirm, it will most likely be used against banks who allow foreclosed property to fall into ruin. If you have an opinion that you want heard on this matter, a vote is scheduled for November 17, 2009.

Interesting side note on our County Commission: one of our commissioners won’t be seeking re-election because he is running for Governor next year. His name is Rory Reid. Yes, he’s Senator Harry Reid’s son.

Hope everyone is planning on dropping by again for Friday Figures! Those who do will be rewarded with knowing more about the Vegas real estate market than most people.

The Obama Administration is talking about renewing the tax credit for first time home buyers. However, they want to see how much it’s going to cost before getting behind an actual proposal going in Congress. A version of the extension is already circulating as an amendment to other legislation. I can’t blame the President and his people at all for caution.

Most of my colleagues really want that tax credit extended, or even expanded. They see a lot more potential sales. However, I have several concerns.

First, if the Feds keep extending the credit, potential buyers will lose the sense of urgency they have had this year. If the credit is improved, either by making it a bigger credit or my expanding who is eligible, the problem gets worse as potential buyers may hold off waiting for the Feds to offer an even better deal.

Second, all those first time buyers have created an artificial “mini-boom”, accounting for 42% of sales in September. They are particularly snapping up foreclosed homes (adding to the froth, and buying homes that may have serious problems that they don’t even know might be problems). On the surface, this sounds like an argument for extending the credit: can your market afford up to 42% of buyers going away? Surely prices are headed for a slump in December if the tax credit isn’t extended! The flip-side of this argument is this: how many qualified first time buyers are left?

This brings me to the final point. How many qualified buyers are there at all? Here in Nevada, we are dealing with an unemployment rate of 13.3%, and it’s up to 13.9% here in the Las Vegas Valley. The national numbers are only slightly better. People without jobs rarely qualify for mortgages. That means that well over 1 in 8 people in Nevada couldn’t buy a house if they wanted to, regardless of tax incentives. It also means that over 1 in 8 people is at risk of falling behind their current housing payment, regardless of whether it’s a mortgage or a rent payment.

Let’s work towards the long term health of the real estate market, not a short term fix.

Considering buying your first home? You wouldn’t be the only one.

Before you get too engrossed by those listings over at Realtor.com, go ahead and look at this Business Week piece on figuring how much house you can afford. Remember, those methods will only give you a rough calculation. To really get an exact figure, contact a mortgage broker and let him/her prepare a pre-qualification for you (I can put you in touch with some reliable people on request).

You will also want to look at this item on owning vs renting and the NYT article referenced in the first paragraph. When you own a home, you are in charge of all the things your landlord takes care of now. Don’t forget to figure that into your calculations.

Don’t forget that just because it’s cheap doesn’t mean you can afford it! This Business Week item talks about super-cheap homes, and showcases homes priced at $8000 and below, pointing out that the tax credit pays for the whole house. (Follow up: CNN also noticed super-cheap houses in Detroit aren’t necessarily bargains). That’s good, because you won’t be able to mortgage it. They do at least mention that “Such properties will likely need work.” No, they will absolutely need work. Just looking at the one in the picture, I can tell you it needs all new windows, trim paint, probably spray for carpenter ants, probably needs lead paint and/or asbestos remediation, may need roof and/or foundation work, and almost certainly needs all new floor coverings. And we haven’t even discussed location, or the fact that it’s in a city which requires all repairs be done before you can get a certificate of occupancy.

Also, remember that everyone else is rushing to get in on the tax credit too. That’s resulting in a frenzy, with multiple offers being the norm and cash offers taking precedence over all others — because there’s fewer things to go wrong. If you don’t need the tax credit, it might be worth your while to wait. And frankly, if you need the tax credit, maybe you should reconsider whether you can afford to buy right now.

I will leave you with one last unrelated item, America’s strangest listings. See everyone at Friday Figures!

Both the good news and the bad news comes complete with pictures. I’ll start with the good news.

Even the Case-Shiller figures indicate that housing prices nationally are stabilizing. Vegas is the two lines at the bottom. Part of this is generally thought to be due to the tax credit for first time buyers, which will be expiring soon. Frankly, if you don’t already have at least a counter-offer in hand, don’t count on closing on time. Will that tax break be extended? Nobody knows.

The bad news is that Fannie Mae reports that serious mortgage delinquencies are up. In fact they are up sharply. Note the “hockey stick” part of the chart: since January of 2008, the rate of homeowners with Fannie Mae loans went from 1% — which was alarmingly high at the time — to over 4%. This tells me that distressed sales will dominate real estate for at least another couple of years.

Frankly, that bodes ill for price appreciation for the next 5 years. Those seeking a home that costs about the same as their rent will still be fine, and savvy investors will always be able to find a good deal, but this is the wrong time to be a speculator.