USA Today put the news very succinctly: “Home prices rise in 17 cities in June; gains not expected to last.” In fact, nationwide prices were up 3.6% over last year. It is important to point out that the rise was at least partly due to the home buyers tax credit.

There is no point in glossing over the fact that Vegas was not one of those 17 cities that showed gains. Our prices dropped 0.6% from May and 5.2% from last year. None of this is a surprise to Friday Figures readers.

One thing that might help communities long term is that banks are giving government and non-profit groups an opportunity to buy properties before they hit the open market, giving them the means to renovate and replenish the supply of decent, affordable housing. The complaint is that these properties get bid up by speculators. I’d just like to remind people that banks are in the business of making money — or in this case, minimizing their losses. I suspect that these groups will end up paying inflated prices or get stuck with the least desirable properties, perhaps both. It is in any event a clever way to hide what some consider “shadow inventory.”

I do have one more thing I would like to talk about: what the RJ considers “inefficiencies” in the short sale process. The example they cite is someone who has been trying to get a short sale approved for almost a year. Two appraisals were done shortly after they first got the purchase offer last October; now the bank wants a third. They promise to have an answer soon. Here’s what will probably happen: the bank will approve the sale, the buyer will tell their mortgage company, and a 4th appraisal will be ordered so they can finalize the new mortgage; this last appraisal will come in roughly 5% under the purchase price (remember, prices have dropped 5.2% over the last year?); the deal will die and the house will end up being foreclosed upon. The bank will end up losing even more money on the deal because they dragged their feet.

I’m not worried about the “plunge” in home sales in July. Let me go out on a limb to predict that August’s numbers will run low as well. It was predictable and should have been expected. All that happened is that many buyers who would have purchased a home now or in the Fall simply pushed up their plans to take advantage of the home buyer’s tax credit. By the end of the year, we should see a level of home sales somewhere in between the frenzied pace of the springtime, and the low levels of July. This will be close to whatever becomes “the new normal.”

Some people have said that with the reduced demand, prices must fall. Followers of Friday Figures know that they already have locally.

No, I am not worried about reduced home sales “sinking the economy into another recession.” With unemployment where it is, I think that the current recovery is little more than smoke and mirrors from government economists.

Unfortunately, some observers suspected that the conference — currently underway — might be biased against homeowners and advocates for affordable housing.

As a bit of background, remember that in addition to the ongoing foreclosure and real estate valuation crisis, homebuilder confidence is sinking and mortgage backed bonds are slumping. The latter means that there are fewer buyers for the mortgages written by your local banks and mortgage brokers and that in turn means there may be less money available for them to lend. But back to Washington D.C..

In one corner, Bill Gross, the man who runs one of the biggest bond funds out there — not just mortgage based bonds, but all kinds of bonds — says that the current housing finance system just can’t be maintained. The only hope, he says, is to nationalize the whole thing, making a single Fannie Mae/Freddie Mac hybrid the sole purchaser of mortgages and mortgage backed securities. He also pushed for automatic refinancing of all mortgages currently in Fannie and Freddie’s portfolios (presumably at today’s super low interest rates, with forgiveness of principal so those homes are no longer underwater, preventing thousands if not millions of foreclosures and short sales).

In the other corner, Treasury Secretary Tim Geithner says the government must reduce it’s role in Freddie, Fannie, and the whole mortgage system as soon as systems are in place to make sure another crisis doesn’t happen. Or, as CNN put it, “Geithner says stop crying over Fannie’s spilled milk.”

I’m no fan of Timmy Geithner, but I suspect that the real solution going forward must lie somewhere between Mr. Gross’s “nationalize and refinance it all” idea and Mr. Geithner’s “shore it up and leave it alone” strategy.

Cross-posted at The Moderate Voice.

The Washington Post isn’t the only place where people have noticed that despite the current economy, people are not in a position to just up and move to a new city in hopes of better opportunities:

Many economists believe that a significant number of workers will have to move before the employment picture substantially improves.

But workers have proved unwilling — or unable — to relocate. The biggest factor seems to be the large number of unemployed homeowners who have little or no home equity.

This graph should put things in perspective: just about anybody who bought in the last 10 years is underwater, and things may get worse — which some economists think will put us back in a recession (if you in fact believe we really ever got out of one). This is another argument in favor of allowing bankruptcy judges to “cramdown” mortgages.

But here’s a fellow who sees potential good in our underwater home trap:

Out of nothing more than self-preservation, those people will come up with something—maybe the next Zappos or something equally huge?—to get us out of this jam. More important, though, is the part that will come: recovery. And, yes, there will be one someday.

Finding a way out of this mess, he argues, is likely to form a greater sense of community.

Be sure to come back tomorrow afternoon for Friday Figures!

This post from the BondDad blog really says it all, with plenty of charts to support his position. I really recommend it. Don’t forget that we won’t really be done with the housing crisis until we have dealt with Fannie and Freddie, who together own more foreclosed properties than there are homes in Seattle. May home sales were down, which was no surprise.

The current options for delinquent homeowners to prevent a foreclosure are not working very well for the majority of borrowers, but lenders are increasingly finding themselves in hot water when trying to prove they have the right to foreclose in states where they must go before a judge. It does make me wonder how many Nevada foreclosures could have been prevented by simply making banks make their case in court.

All things considered, it looks like the housing market is barely treading water at the moment. For a better look at what’s happening here in Vegas, please don’t forget to come back here on Friday.

The good news is that property values (nationwide) are stable! The bad news is that mortgage debt is falling. Why is that bad news? It’s not that we are paying down our mortgages, but rather because banks are taking losses when they accept short sales, principal reductions, and when they foreclose.

Some experts say we may have a bottom (again, nationwide) this fall, but there won’t be a real recovery in housing until 2013, when demand is expected to finally catch up with supply. One thing to be careful of in this report: the expert in question says Zillow knows of 7,300,000 homes that are either delinquent or in foreclosure that aren’t on the market, and says that if these homes were counted there would be 45% more available homes. My experience leads me to believe that most “shadow inventory” estimates are over-stated.

An FHA “Reform” bill has passed the House of Representatives. If the Senate also passes it and it gets a Presidential signature, it will raise the premium on FHA mortgage insurance. If you are considering an FHA loan, please discuss this with your mortgage professional to see how it might effect you.

The average size of new homes is shrinking, down to 2438 square feet. There is also a trend towards single story homes. I’ve already noticed a sharp price per square foot premium on single story homes here in the Las Vegas Valley, and I expect the trend to remain in place as Baby Boomers get older and start to require homes that can be made disability friendly.

Finally, check out my ActiveRain (and ShortWoman) article on Senator Harry Reid’s proposal to extend the closing deadline on the home buyer’s tax credit. Don’t think this means you can still get in on the action — you had to have a signed contract by April 30! — but if your loan is slow to close or that short sale approval is taking too long, there is hope from Harry.

See you back here for Friday Figures!

Many thanks to Stanley Popovich for this insightful article for any home buyer or seller! I am so glad Stan approached me about putting it here. The biggest transaction most people are likely to have is their home — which means there’s an emotional investment to go along with the monetary investment.  This article will help you know what to expect and and how to deal with the inevitable hiccups in buying or selling not just real estate, but a home.

MANAGING THE STRESSES OF BUYING AND SELLING A HOME

By Stanley Popovich

Many people deal with the anxieties of buying or selling a home.  This process can be confusing to many people. As a result, here is a list of ways that a person can use to manage the anxiety of purchasing or selling a home.

The first step is to determine your goals in purchasing or selling a home. Determine what you want to accomplish.  It will save you a lot of time and money in the long run if you know what you are looking for.  Sit down and think about the overall goal of what you are looking for and convey this to your real estate agent. Some people like to write down their goals on a piece of paper so they have something to go back to when they get stressed.

Educate yourself on the steps of purchasing or buying a home. Go to your local bookstore and find some books that will explain the process of buying or selling a home. There are many books available that can inform you of the process and will help reduce the anxiety of the situation. Most importantly, you will be able to make smarter choices that will save you time and money.

Find a reputable real estate agent that can help you accomplish your goals. Ask some of your friends on who they recommend and get in touch with them. Referrals from people you know are a great way in finding a good real estate agent.

Get your finances organized. Make sure you have an idea on what you can afford and also make sure that your credit is good. The financial aspect of buying or selling a home does not have to be scary if you have a sound business plan and a realistic budget. Some people may buy a home that they can’t afford and this can cause problems down the road. Determine what you can afford and develop a budget where you will be able to keep up with your bills.

In addition to using the services of a good real estate agent, try to get a friend who is more experienced to help you. Chances are good that you know someone who has purchased or sold a home. You could ask them for their assistance and ask them questions on what to do and what not do. Having a friend who can assist you along the way can really help reduce the anxiety of the process.

Read the fine print on everything before signing and do not assume anything. Ask questions if you are uncertain on some aspects of buying or selling a home. A good real estate agent will not mind if you ask questions, however you should do your part and try to educate yourself on the entire process.

There will be times when everything happens all at once. When this happens, a person should take a deep breath and try to find something to do for a few minutes to get their mind off of the current situation. A person could take a walk, listen to some music, read the newspaper or do an activity that will give them a fresh perspective on things. Once you calm down, you will better able to make the right decisions.

Purchasing or selling a home does not have to be a bigger deal than it has to if you take the proper steps.  There is help out there if you get stuck or confused. The most important thing is to do your homework.  Determine your goals, educate yourself on the steps to reach your goals, ask questions, and take it one step at a time. If you follow this advice you will be better able to reduce the stresses of purchasing or selling a home.

BIOGRAPHY:

Stan Popovich is the author of “A Layman’s Guide to Managing Fear Using Psychology, Christianity and Non Resistant Methods” – an easy to read book that presents a general overview of techniques that are effective in managing persistent fears and anxieties. For additional information go to: http://www.managingfear.com/

Take a look through books, blogs, and magazines oriented towards Realtors and before long you will find something on pictures for listings. Usually it runs towards tips and tricks for taking really great pictures of listings to show a home in its best possible light. Sometimes it’s merely advice (or ads) to let a professional take those pictures, saving the busy Realtor much time and energy and producing a better end product too.

But today I want to defend some really bad pictures in a listing by a local Realtor. These were so bad, they were featured on a website that does nothing but bad and amusing real estate listing pictures. Commenters asked why on earth the listing agent actually put these pictures in the listing. One even emailed the agent to ask why she would do such a thing! Here’s the post, feel free to go see for yourself.

How and why can I defend those pictures? Because the listing agent did the right thing by posting them.

When you look at the pictures in the listing, you know this is not a turnkey condo. You know it’s going to take a lot of work before you can move in or rent it out. Before you and the buyer’s agent even drive over there you know that there’s either a broken window or a hole in the wall, you know it needs new carpet and pad, you know it needs to be scrubbed top to bottom, you know the kitchen is in need of updates, you know that to put it politely the bathroom is “in rough shape.” You will arrive with no delusions that FHA financing is possible, and in my experience it will be difficult to get any financing. You know it will take thousands of dollars and several weeks of diligent work after closing before it is habitable. What you see is truly what you get.

In short, she has saved everyone a lot of time by ensuring that only dedicated investors or truly handy individuals will even bother to look. If there were an “Honesty in Listings” award in our local MLS, I would nominate this one.

The Vegas real estate market has come a long way in the last couple of years. Inventory is way down, prices are stable, there are signs that short sales may actually get approved, and some experts expect prices to go up roughly 5% by February of next year. This situation creates both a potential opportunity and a potential problem.

Some years back, I started defining “Investing” as “spending money with the reasonable expectation of receiving more money back.” Real estate is something that people have invested in for centuries. Sometimes it has been a spectacular investment, and at times it has been a poor investment, but most of the time real estate has been a good investment.

There are 3 basic ways people can make money investing in real estate:

1. Buy property with the intent of selling it at a higher price at a later date, such as buying acreage near the edge of town in anticipation of future development
2. Buy property and improve the property to increase its value, such as painting, fixing problems, adding rooms, or modernizing existing areas
3. Rent out property that is owned or purchased by the investor

Most investors do a combination of these. For example, a developer can buy a property, build a shopping center, and rent out the stores to businesses. An investor can buy a house in desperate need of repair, renovate it, and either sell or rent it to a family. Real estate investment is necessary to a healthy economy because not every family and business can (or wants to) own real estate.

However, it is not a profession for the faint of heart. Many things can go wrong with a real estate investment: prices can drop; tenants can fail to pay the rent; roofs can develop leaks and water pipes can break; disasters can happen; laws can be passed that effect what you can and can’t do with your property or your tenants. Diligent investors can make a lot of money, sure, but it’s not foolproof.

Lately, I have heard ads on the radio for two different “make money investing in real estate” seminars. As much as we need investors, I am wary of this. I don’t think anybody can reasonably learn enough about real estate investing to avoid pitfalls in one day. I also am concerned that amateur investors armed with little more than a few hours training and maybe a couple of books could artificially raise prices. Since they would most likely be competing to purchase properties with buyers in the lower priced end of the market, not only would they be keeping cost-conscious buyers out of the market, they might end up purchasing properties that need a whole lot more work than it appears. I am concerned that these investors — like many investors who bought near the top — may find themselves in over their heads with no choice but to let the bank foreclose.

Real estate investing is a great way to make money, but you will need more than a copy of Rich Dad Poor Dad to make it work. You will need the advice of people who are experts in local real estate market conditions and the laws that apply to real estate transactions. You will need someone who is willing to point out the problems as well as the benefits of a particular property as it relates to your financial goals. And you will need to think for yourself about what those experts tell you, because many times those experts only get paid at the end of the transaction.

Serious about investing in Las Vegas? I can help find suitable properties and set you up with a quality property management team too. Lets talk!

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).