Author Archives: Brad Horner

By: Brad Horner

Fannie Mae’s new lending guidelines go into effect next Monday, December 13.  It’s expected that the new guidelines will make securing a mortgage easier for some borrowers, but harder for others.

The new rules are summarized in a recent article in the New York Times, from which we’ve quoted for today’s Friday Five:

1. The rules will allow buyers to use gifts and grants from nonprofit groups for their minimum 5 percent down payment, which is the threshold set by Fannie Mae. Previously, borrowers had to contribute a minimum 5 percent down payment from their own funds, but additional down payment money could be from a gift (though never from a home seller). The exception was for borrowers who put 20 percent down: all that money could come as a gift.  The gift rules apply only to single-family principal residences, including town houses, co-ops and condominiums, and covers mortgage amounts in excess of 80 percent of the property’s value. Also, there is a limit on the loan balance — $729,000 in high-cost areas like New York City, and $417,000 in other areas.
2. Fannie Mae is getting tougher on debt-to-income ratios, or the amount of a borrower’s gross monthly income that goes toward paying off all debts. The maximum ratio for those seeking a conventional mortgage will drop to 45 percent from 55 percent under the new guidelines.
3. The agency is also taking a harder look at payment histories on revolving debt. In the past, if a borrower missed a monthly payment, Fannie Mae ignored it, or required that lenders add a few percentage points to the total balance when calculating the debt-to-income ratio. Now, buyers who have missed a payment will have 5 percent of the total balance added to their ratios.
4. In addition, Fannie Mae is scrutinizing people who are at the end of their mortgages, with 10 or fewer payments left. It will now count those remaining balances in the debt-to-income ratios — another departure. Mortgage experts say that older buyers near the end of their loans may now have a tougher time securing a loan for a second home.
5. But perhaps the toughest news from Fannie Mae concerns borrowers who have gone through foreclosure. They will be excluded from obtaining a Fannie-backed loan for seven years, up from five.

To read the full article about the new guidelines, click here.

By: Brad Horner

The last few years have changed the way we look at every aspect of real estate – from designing to marketing and selling to financing.  So it’s inevitable that the continually changing business and consumer mindset will also impact planned communities.

ULI recently published a very interesting article on the topic.  In the November issue, reporter John K. McIlwain said that the shift to more urban lifestyles, the high unemployment rate for those under 30 and the large number of boomers who are looking to age in place will change the way we look at planned communities during the next two decades, considering full buildout of such a community can take around ten years.

In the article, ULI suggested new approaches for future planned communities, including the five listed below.  If you are a ULI member, you can click here to read the full article.

1. Expand the town center. Clustering more homes, especially smaller ones, around the center of a community begins to create a real downtown feel and allows people to walk to stores and services. Here, also, is where that elusive but increasingly important idea of “community” can occur, facilitated by locally owned businesses, places for people to interact informally, a community center with a hall for community events, and an intriguing mix of stores and services. Consider creating an association of business owners, homeowners, and renters to advise on the management of the town center, and to create events, musical and otherwise, to bring the community together.
2. Consider forgoing expensive amenities like golf courses and clubs. Among the most popular amenities these days are project layouts promoting walking and bicycling. Tax breaks and other benefits are available for dedicating land to be held in open space permanently. (See ULI’s new book Conservation Communities: Creating Value with Homes, Open Space and Agriculture by Edward T. McMahon.)
3. Reconfigure floor plans to add one home office and eliminate one bedroom. Flexi-force households need space to work from home—with the accoutrements of communication, such as broadband, a computer workstation, a printer, and a quiet businesslike environment. To obtain that, residents must either share the living/dining area with the rest of the family, or convert a small bedroom into a true home office. The latter is the better option, especially with plummeting broadband costs and rising commuting costs, both personal and external. To maximize the use of such semidedicated home office rooms, they should be wired with extra electrical outlets, coaxial or broadband cables, and wi-fi nodes.
4. Encourage conversion of suitable new-entry ownership properties into permanent high-quality rental properties. With several million households downshifting to rental properties, several million dwellings constructed for occupant ownership should be converted to become permanent rental units. Aside from condos being converted into rentals, the market may see the return of the intermediate-term, furnished-flat lease or the American adaptation of London’s market in tradable leasehold interests. The U.S. market may reinvent the investor/landlord model through hybrid financing approaches, such as rent-to-buy or shared-appreciation hybrid ownership/rental finance vehicles.
5. Rethink leases and security deposits to allow greater flexibility. Leases and deposits can be modified to allow multiple signers who can add to or drop out of the housing configuration. No longer do multiperson tenancies merely mean students shacking up; they now reflect shifting consumption patterns by people attendant on being in the flexi-force. Landlords want all residents on the lease, but if those residents are making and unmaking household configurations, the landlord will want to ensure there are enough wallets among the tenants that their changing status does not change his or her creditworthiness.

By: Brad Horner

I’m sure we’re all inundated with information about how the U.S. real estate market is doing on a monthly, weekly and even daily basis.  But it’s also interesting to take a step back and see what overseas markets currently look like.

The Economist recently published a roundup of global house prices.  The publication’s 2009 roundup included a “sea of negative numbers,” but this year’s list only included four year-on-year declines.  Below are five findings from this year’s roundup:

1.     Singapore, Hong Kong and Australia boast the gaudiest year-on-year price increases, even if the rate of appreciation is down a bit from the summer.

2.     House prices in China rose by 9.1% in the year to September, compared with a 12.4% rise in May. That is still too fast for the government, which unexpectedly raised interest rates on October 19, 2010 and has outlined more measures to cool the market in recent weeks, including higher down-payment requirements and the introduction of a property tax in some cities.

3.     Europe shows a familiar split between core countries and peripheral ones. Ireland, Spain and Italy continue to suffer year-on-year price declines; German and French homes have shown big gains in value over the past year, a particular turnaround for France.

4.     Japanese housing fell by 4% in the year to the end of the first quarter, despite being stuck far below its long-run price-to-rents ratio.

5.     Only Ireland’s property catastrophe has worsened.

Click here to read the full article.

By: Brad Horner

On Monday, a few of NRT Development Advisors’ team members attended the GET MOTIVATED Seminar and there is no better word to describe how we felt after the event than “motivated!”  We received advice from celebrity speakers including Bill Cosby, Goldie Hawn, General Colin Powell, Lou Holtz, Zig Ziglar, Rudy Giuliani and others during the one-day seminar.

Below are our top five timeless motivational tips that were discussed during the event, which are just as applicable now during a challenging economy as they are during a booming economy:

1. Every day is a new day, so it’s important to stay positive.
2. Don’t play the blame game.  Instead, work through the process to create a positive outcome.
3. Attitude is everything in every situation.
4. Communication is essential, regardless if it’s positive or negative news.
5. Ask for feedback from your team.  And then listen to what they tell you.

By: Brad Horner

Today’s Friday Five is borrowed from a recent and very creative Zillow blog post that ranks their top 5 Atlanta neighborhoods in which to trick-or-treat.  The site calculated home values, population density, walk score and local crime data to determine the prime neighborhoods for this weekend’s festivities.

Below are Zillow’s top five Atlanta neighborhoods:

1. Virginia Highland
2. Morningside/Lenox Park
3. Inman Park
4. Brookhaven
5. Garden Hills

What neighborhoods will you target this weekend for trick-or-treating?

By: Brad Horner

Because a thriving business climate is vital to attracting and retaining residents (who will need housing!), we pay close attention to rankings such as Forbes Best States for Business and Careers.  The below list includes just five of the reasons that the Peach State ranked eighth on Forbes’ annual list.

1. Regularly environment: 1
2. Growth prospects: 7
3. Labor supply: 7
4. Economic climate: 30
5. Business costs: 31

For the list, Forbes measured costs, labor supply, regulatory environment, current economic climate, growth prospects and quality of life.  Click here to see the full list.

By: Brad Horner

Recently, Brett Arends of the Wall Street Journal published an article about “why owning a home is a good thing.” And, well, that is smart advice that I can’t argue with!

Below are Brett’s top five reasons, in his words:

1. You can get a good deal. Especially if you play hardball. This is a buyer’s market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We’re four to five years into the biggest housing bust in modern history. … Will prices fall further? Sure, they could. You’ll never catch the bottom. It doesn’t really matter so much in the long haul.

2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What’s not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won’t see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.

3. You’ll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you’ll get a tax break on capital gains–if any–when you sell. Sure, you’ll need to do your math. You’ll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.

4. It’ll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You’ll feel better about your own place if you own it than if you rent.

5. You’ll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. … Generally speaking, if you want the best home in the best neighborhood, you’re better off buying.

Want to read Brett’s other five reasons why it’s smart to buy a home?  Click here.

What other reasons would you add to the list?  Leave your thoughts in the below comments section.