Mortgage rates fall amid signs of upturn

U.S. mortgages rates fell for the first time in five weeks, lowering borrowing costs for home buyers amid signs of a real estate recovery.

The average rate for a 30-year fixed mortgage fell to 3.59 percent in the week ended Thursday from 3.66 percent, Freddie Mac. The average 15-year rate was 2.86 percent, down from 2.89 percent.

Interest rates close to record lows are helping spur demand as buyers compete for a dwindling supply of properties. Pending U.S. home resales climbed 2.4 percent in July, more than double the forecast in a Bloomberg News survey of economists, data from the National Association of Realtors showed Wednesday. The SP/Case-Shiller index of prices in 20 cities climbed in June from a year earlier, the first such gain since September 2010.

“We are on the road to recovery,” said Nicolas Retsinas, a senior lecturer in real estate at Harvard Business School. “But the road is likely to have some potholes.”

The average rate for a 30-year loan reached a record-low 3.49 percent in the week ended July 26.

The housing market has been restrained by an overhang of foreclosures and tight credit. The Mortgage Bankers Association’s home loan applications index fell 4.3 percent in the period ended Aug. 24 from the previous week, the group reported Wednesday. The refinance gauge dropped 5.7 percent, while the purchase index rose 1.4 percent.

Prashant Gopal is a Bloomberg writer. E-mail:

End mortgage deduction? No better time …

Side with us, or lose a house. That’s essentially what Gary Thomas, president-elect of the National Association of Realtors, was saying this week at the Republican convention when he warned against the elimination of the mortgage-interest deduction.

Thomas was provoked by talk from the Republican Party’s presidential nominee, Mitt Romney, and his advisers of “limiting” the homeowners’ tax break. So provoked, in fact, that Thomas didn’t just criticize. He went apocalyptic: “It’s going to reduce prices again, which would drive that many more people underwater, which could throw us back into a deeper recession than we’re already coming out of.”

He is far from the first housing lobbyist to flip out in defense of the homeowners’ tax break during a presidential campaign. But this time the deduction is more vulnerable than it was in, say, 1996, when flat-tax plans — such as that of Steve Forbes — were ruffling lobbyists’ feathers. You can even argue that now is the perfect moment to close the favored loophole of the upper middle class forever. And that a President Mitt Romney would be the one to do it.

To understand why, consider the situation in 1996, the year of that flat-tax talk. Forbes, for his part, argued that a flat-tax regime with no deduction “will help housing, not hurt it.” He and others argued that the house tax break distorted the investment process. The deduction raised prices and made houses look as if they were worth more than they were.

The Realtors naturally didn’t like this argument. Their president back then, Art Godi, even trotted out a study his group commissioned that suggested the housing market would crash if the home deduction was abolished. Godi and the report warned that the effect of ending the deduction on the housing market would be “devastating,” with houses losing 15 percent in value. Those flat-taxers were wrecking an otherwise safe investment.

In those days, the Realtors’ case that nothing was “as safe as houses” was pretty easy to accept. After all, the prices had been rising reliably as long as most adults could remember. Those increases were deemed proof of the value of residential real estate.

Over the years, as the gains continued, more and more people took it as an article of faith that American housing was a good deal. Fannie Mae and Freddie Mac believed it, and sold the idea that home purchases were essential to the American dream.

By 2006, after 10 straight years of increases in the SP/Case-Shiller index, the idea that houses had been overpriced in 1996 looked idiotic. Americans did such a good job of selling property that they convinced not only themselves but also Europeans, banks, towns and investors, who bought in as well. American housing couldn’t go too high.

Today, the argument that house prices can go too high, or that something was wrong about them, doesn’t sound so silly. The distortion of the housing market, we now know, stemmed not only from the tax deduction but also from the subsidies of government-sponsored entities such as Fannie Mae and Freddie Mac and from inappropriately loose monetary policy promulgated by the Federal Reserve.

Opponents of deduction abolition today argue that abolition will make the market crash some more. One could argue this the other way. Now Americans see houses for what they really are: boxes that depreciate. This is therefore the least expensive time to abolish the deduction. We have already taken the hit — and 2012 is also the time when we most need the $100 billion or so from the elimination.

From time to time, economists and politicians have advocated narrowing the deduction in the name of economic redistribution. One of them was Mitt Romney’s father, George Romney, who in 1969 proposed the partial repeal of the mortgage-interest break to “meet the problems of the slums.”

To many today, however, the chief appeal of repeal is the reduction of price distortion. You are more likely to lose a house if you paid too much, because its true value was muddied by politics. You are more likely to keep a house whose price at the time of purchase was transparent and derived from the relative quality of the investment.

In tandem with the removal of other tax distortions, including excessively high income tax rates, a reform could finally rationalize our irrational investment landscape. Steve Forbes was right in 1996. People might well invest more in houses than we imagine if, for once, they know what those houses are really worth.

New real estate tax may not affect many Nevadans – Las Vegas Review

Q: I have been informed that as of Jan. 1, as a part of the Affordable Health Care Act (commonly referred to as Obamacare), a 3.8 percent tax will be assessed on all home sales.

What is your estimate of the impact of this new law on the local real estate market, and what, if anything, is the Greater Las Vegas Association of Realtors attempting to do to mitigate the effects of this new law?

– Nelson O., Las Vegas

 A: This has been a persistent rumor and a source of considerable misinformation for many months.

To get to the bottom of this, I enlisted the help of Deanne M. Rymarowicz, the legal counsel for the GLVAR. After hearing such statements for some time, she recently wrote an article to better inform local real estate professionals and the public. I’ve included an excerpt here:

“True or false: The federal health care reform legislation includes a 3.8 percent real property transfer tax. False.

Although rumors are swirling throughout the real estate industry that there’s a new federal tax on property transfers, there is no such animal.

“The health care reform law did include a last-minute addition aimed at helping to pay for some of the costs of the reform. The 3.8 percent is a new tax (effective Jan. 1, 2013) on certain investment income of high-income individuals (earning more than $200,000 a year) and married couples (earning more than $250,000).

“Importantly, the capital gains exclusion of $250,000 for an individual selling his or her home and $500,000 for a married couple remains intact.

“Like all tax issues, this one is complex, and the 3.8 percent only applies in certain situations after complex calculations. The National Association of Realtors has put together an informative brochure (see and an article and online video (http://speakingofreal with more details.”

So, to answer your question, this is not an across-the-board tax on all home sales as some have suggested.

As Realtors, we are not in favor of any new taxes that would discourage the sale of a home. But this is not a simple case, in part because stock portfolios and any investment income homeowners may have play a part in the adjusted gross income criteria in this tax.

I don’t expect this tax to affect many local homeowners. Unfortunately, most local homes being sold here today do not have the equity in them that they once did, if any at all, so this issue may not play a major role here in Nevada.

In any case, it would not be a charge at sale, but rather when you file your annual tax return. If your adjusted gross income is above those levels, you may be subject to such taxes.

As with all such financial matters, it’s best to check with your tax adviser.

Kolleen Kelley is the 2012 president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for more than 30 years. GLVAR has nearly 11,000 members. To ask her a question, email her at For more information, visit

Property is always a good investment: Farook Mahmood, Founder President …

Dollar rises on better US economic growth

NEW YORK (AP) — Better-than-expected economic growth and strong home sales in the United States pushed the dollar higher against most major currencies Wednesday.

The euro fell to $1.2528 in late trading from $1.2564 late Tuesday.

The Commerce Department said the economy grew at a 1.7 percent annual rate in the April-June quarter. That’s better than its initial estimate of 1.5 percent.

Separately, the Federal Reserve released the Beige Book, its report on business conditions around the country. It found that the economy expanded at a moderate pace in July and early August as consumer spending rose.

The National Association of Realtors said that its index of sales agreements for previously occupied homes jumped to 101.7 in July from 99.3 in June. That was the highest reading since April 2010.

The dollar rose to 78.70 Japanese yen from 78.53 yen, to 0.9587 Swiss franc from 0.9559 Swiss franc and to 98.86 Canadian cents from 98.81 Canadian cents.

The British pound rose to $1.5836 from $1.5822.

Real estate agents say Cape rental ordinance presents ‘access issue’

Members of the Cape Girardeau County Board of Realtors will return to Cape Girardeau’s city council meeting Tuesday night to make a second attempt at convincing the city to change a proposed rental licensing ordinance.

Ken Kiefer, chairman of the board’s governmental affairs committee, said the board supports an ordinance that would promote safety for tenants through inspections, but the way the ordinance is currently written could allow unauthorized property inspections and creates liability risks for real estate agents.

“We are not saying at all that safety is not an issue. This is an access issue,” Kiefer said.

Assistant city manager Kelly Green revised a section of the ordinance since Aug. 20, when the council heard the first reading and gave its approval. Board members appeared at that meeting with opinions from National Association of Realtors attorneys that were based on a prior draft of the ordinance. The association’s attorneys have since reviewed the version presented to the council and found that two issues the board raised had been addressed, but several others remained. Green’s changes since Aug. 20 were based on suggestions made by council member Mark Lanzotti.

Green said Friday that she was unsure if all the board’s concerns could be addressed by the changes made so far and. if that were the case, that the council could still make revisions before the ordinance’s final adoption.

Lanzotti suggested including language saying that all parties involved with a property should be notified of an ordinance violation.

The ordinance would require landlords to obtain annual licenses, with the cost of the license based on how many units they own, and mandates maintenance of properties. Some provisions for maintenance and cleanliness would be the responsibility of tenants. City staff worked with the Cape Area Landlord Association to write the ordinance.

The draft ordinance from Aug. 20, according to National Association of Realtors attorneys, addresses two issues raised by the board — what happens to occupants if a residential rental license is suspended or revoked and who must receive notice of a violation and will ultimately be held liable for any violations.

Other issues, according to the attorneys, include the lack of a process for contesting penalty fines, vagueness of certain maintenance standards are vague and the financial burden an ordinance would impose on rental property owners.

Kiefer said one of the board’s primary concerns is city inspectors could be granted the right that to enter rental housing without a property owner’s permission. He said the board thinks that the city may again be in the position to say the attorneys’ comments do not apply to the current draft, as was told to Kiefer and board president David Soto by city staff at the Aug. 20 meeting, but he said what the board is contesting in the ordinance hasn’t changed at all from the original draft.

“If a person is going to enter a property on an official matter, it doesn’t matter if they are a doctor, a lawyer or an Indian chief,” Kiefer said. “They don’t have permission unless the owner gives it to them.”

Kiefer said a property manager does not have the authority to let an inspector on a property unless one has an agreement with an owner that permission may be granted. He said the ordinance would allow a tenant to grant access.

“They are wanting property managers held just as responsible as an owner. With that, you’re going to have people getting out of the rental business,” Kiefer said. “There’s too much risk for property managers, and they aren’t going to put up with that.”

Two council members, Kathy Swan and Trent Summers, said at the Aug. 20 meeting that they were giving the ordinance conditional support based off the possibility that changes could be made as the ordinance made its way toward passage. The ordinance passed the first reading unanimously.

Council is set to hear the two final readings and vote on the ordinance at its next meeting at 7 p.m. Tuesday.


Pertinent address:

401 Independence St., Cape Girardeau, MO

Pending home sales rose in July

The National Association of Realtors reported Wednesday that pending home sales, a forward-looking indicator based on contract signings, rose to its highest level in more than two years.

A day after a report showed housing prices nationally posting an annual gain came news that the number of contracts on single-family homes, condos and co-ops increased 2.4 percent from the previous month. The index rose to 101.7 in July, up from 99.3 in June and 12.4 percent above July 2011 when it was 90.5.

The last time the index was this high was April 2010, which was shortly before the deadline for the first-time homebuyer tax credit.

“While the month-to-month movement has been uneven, more importantly we now have 15 consecutive months of year-over-year gains in contract activity,” NAR chief economist Lawrence Yun said in a statement.

In the Washington region, the pending sales data was mixed. Alexandria was the only area to show an increase from June to July. According to RBIntel, there were 188 pending sales in Alexandria in July, up 2.17 percent from June.

Arlington showed one of the biggest drops in pending sales, down 21.15 percent from June, but up 10 percent from July 2011. Prince George’s County was down 11.37 percent from June. Montgomery County was down 14.02 percent. The District was down 12.55 percent.

Realtors cautiously optimistic about housing market recovery

More contracts to buy American homes received a John Hancock in July than at any time in the past two years, up 12.4 percent from this time last year, according to the National Association of Realtors, indicating the housing market may have hit bottom and recovery could be on the horizon.

Looking at contract signings data generally indicates where the housing market is going with a lag time of a month or two between signing and a done deal.

Some evidence of this positive nationwide trend can be seen in Calaveras County, according to area real estate agents who take the good news with a grain of salt.

“I would say optimistically countywide things are looking better,” said Leanne Smith, a real estate agent at Century 21 Tri-Dam Realty in Angels Camp. “Overall, we’re seeing a healthy increase in home sales. As for prices, I don’t feel comfortable saying we’re done. We’re not out of the woods yet.”

Teri Slankard, owner of T. Slankard Real Estate in Dorrington, shares Smith’s cautious approach.

“I tell my sellers that we hit bottom in 2012,” she said. “I can’t pinpoint that actual day or month. We are now in a leveling period. Values are not going to go shooting up for six to eight years.”

“In every textbook every Realtor reads and studies, there are six-year cycles and 18-year rounds,” she continued. “There are six years of prices going up, then they hit a wall and prices drop for six years, then it levels out for six years, she said.”

Slankard emphasized she doesn’t have a “crystal ball,” and a volatile market could upset the apple cart.

“We’re definitely in transition right now,” Smith said. “Right now, it’s really interesting. Things are selling, but I would still say there are areas of our county that are still decreasing in value.”

Smith said on average the greater Valley Springs area was the hardest hit by the housing crisis and has yet to see home values rise, with some values continuing to decrease in value.

According to the Calaveras County Multiple Listing Service, since the first of the year, Copperopolis had 92 properties sell, ranging from about $25,000 all the way up to $1.1 million; Rancho Calaveras had 63 properties sell, ranging from about $39,000 to $247,000; Murphys had 50 properties sell, ranging from about $42,000 to $1.4 million, Angels Camp had 36 properties sell, ranging from about $60,000 to $575,000.

Good news has been hard to come by since the housing bubble burst about five years ago, and the market has a long way to go before making a meaningful recovery.

Some economists forecast that sales of previously occupied homes will rise 8 percent this year to about 4.6 million. That’s still well below the 5.5 million annual sales considered healthy.

One factor retarding home sales is low home inventories. In July, there were 2.4 million homes for sale, down 24 percent in the past year.

“We’re suffering low inventories in all areas of the county, and short sales are on the rise,” Slankard said. “It means a lot of people aren’t listing. This happens statewide this time of year. Sellers don’t want to put their house on the market unless they absolutely have to and most want to get more than fair market value.”

Another somewhat hidden factor affecting home values are reverse mortgages.

“There are a lot of reverse-mortgage homes on the market that are not considered bank owned, but are affecting the pricing,” Smith said.

In some cases, a homeowner got a reverse mortgage on their home when the value was very high. Since then, the value has dropped dramatically and Fannie Mae is now on the hook for that difference.

The presidential election can also greatly influence the housing market.

“Elections will affect buyers,” Slankard said. “Sometimes they hold off until they know who their leader is.”

Last year, many bank-owned homes were going for well below market value and in turn bringing the value of entire neighborhoods down. That’s no longer as common, Smith said.

“It really comes down to which bank it is, and whether it’s a government owned home,” she noted. “Bank-owned homes are holding a lot closer to list price. I’m not seeing a lot of dive bombing.”

That being said, in the third quarter of every year, banks tend to become motivated to get properties off their books before year’s end.

“Buyers can bargain maybe a little bit more if a property has been sitting a little bit longer this time of year,” Smith said.

“People are always looking for deals. We’re Americans. We love the deals,” Smith said. “For better properties, we’re getting multiple offers. Six months to a year ago, multiples weren’t as common.”

A year ago, multiple offers weren’t very common, unless the home had an incredible location and was unique, Smith said, but that’s beginning to change.

Many banks are no longer comfortable allowing properties to sit on the market for long periods, Smith said, and public and bulk auctions are becoming increasingly common. Many properties are only on the market for three months maximum before they get sold at public auction or grouped into a bulk auction that could contain 100 or more properties.

“If it gets to an auction where the public is involved, it could go for 20 percent below list price,” Smith said. “If it goes to a bulk auction, investors from all over the country buy up the homes.”

When analyzing Calaveras County, Smith said she’s pleased to see a steady flow of first-time home buyers making that first big purchase. A United States Department of Agriculture loan that requires as little as $500 down paired with interest rates below 4 percent creates a great environment for getting into a home.

In many cases, Calaveras County residents can look to the Bay Area housing market to see what will eventually happen here.

“Right now the Bay Area is experiencing low inventory,” Slankard said. “They are seeing multiple offers and prices have gone up. That has not happened here yet. It takes a while for what’s in the Bay Area to reach our county. When we came to a screeching halt, it didn’t trickle into Calaveras County for 12-to-18 months. So our recovery may be the same.”

Contracts to buy homes hits 2-year high in July

(AP) WASHINGTON – Americans signed the most contracts to buy homes in July than at any other point in the last two years, further evidence of a housing recovery.

The National Association of Realtors said Wednesday that its index of sales agreements for previously occupied homes jumped 2.4 percent in July to 101.7. That’s higher than June’s reading of 99.3. It’s also the highest reading since April 2010, the last month that buyers could qualify for a federal home-buying tax credit.

A reading of 100 is considered healthy. The index is 12.4 percent higher than July 2011. It bottomed at 75.88 in June 2010 after the tax credit expired.

Contract signings typically indicate where the housing market is headed. There’s generally a one- to two-month lag between a signed contract and a completed deal.

The Realtors’ group said contract signings increased in July in all regions of the U.S. except for the West, which it said has a severe shortage of available homes for sale.

The increase is the latest sign that the home sales are finally rebounding five years after the housing bubble burst.

Last week, the National Association of Realtors said completed sales of previously occupied homes jumped 10 percent in July compared with the same month last year. Sales of newly built homes were up 25 percent in that same 12-month period.

Builder confidence rose this month to its highest level in five years. And the average rate on a 30-year fixed mortgage has been below 4 percent all year.

Home prices have also started to rise consistently, which could boost sales further in the months to come. The Standard Poor’s/Case Shiller index released Tuesday showed the first year-over-year increase in home prices since September 2010.

Still, the housing market has a long way to go to reach a full recovery. Some economists forecast that sales of previously occupied homes will rise 8 percent this year to about 4.6 million. That’s still well below the 5.5 million annual sales pace that is considered healthy.

One trend holding back sales is that inventories of homes are low.

Overall, there were 2.4 million homes for sale in July, down 24 percent in the past year. It would take about 6.4 months to exhaust that supply at the current sales pace. That’s just above the six months’ inventory that typically exists in a healthy economy.

Florida Realtors honors award winners at convention

Florida Realtors recognized Todd Dantzler, 2000 president of the state Realtor association, as its 2012 Realtor of the Year. The award, one of several, was presented during Florida Realtors’ recent annual Convention Trade Expo at the Marriott World Center in Orlando.

Florida Realtors has presented both the Realtor of the Year and Associate Realtor of the Year awards for more than 50 years. Winners are honored as the greatest individual lifetime contributors to their local Realtor board, community, state association and the National Association of Realtors.

A local winner was Dale Peterson who was honored with the 2012 Achievement Award, which recognizes a Realtor who serves as manager, broker of record, or officer in his or her company. The award acknowledges the winner’s previous three years’ contributions to the community, local, state and national Realtor associations.

A member of the Emerald Coast Association of Realtors, Peterson is the current treasurer for his local association, while also serving on its Budget and Finance Committee.

At the state level, Peterson has long been a fixture at Florida Realtors, but increased his participation in recent years. Last year, he chaired the Property Management Council. He’s an active member of the Resort and Second Specialist Forum and the current District 9 Vice President. Nationally, he was an NAR director in 2010 and 2011, and also served on NAR’s Resort and Second Home Real Estate Committee.

Within the community, Peterson’s commitment to the local economy includes founding a local fishing fleet. He’s also a trustee of the Okaloosa County Economic Development Council, which he chaired in 2011.


This article was contributed to The Log by Florida Realtors.