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Foreclosures Skyrocketing for High-Priced Homes

While the numbers are small, less than 200 homes the incidence of foreclosure among ultra-high end homes has skyrocketed recently, even as the rate for average priced homes has plunged.  RealtyTrac said today that foreclosure activity on homes valued at $5 million or more has jumped by 61 percent since October 2012 while the overall rate of filings has dropped 23 percent so far this year.


The 200 or so very expensive homes that have received a foreclosure notice this year pales in comparison to the total of 1.2 million homes in less rarified price ranges that have also received notices, but as RealtyTrac points out, each of these homes represents a much bigger potential loss to the lender than do median priced homes.


The company said the uptick in activity may indicate that lenders are now financially stable enough to face the potential big-ticket losses on these homes or it may indicate that they are looking at an improved market for more expensive homes and seeing the possibility of better recoveries through foreclosure.


“A home selling for $5 million or above represents the ultra-luxury end of the market, and so far in 2013 we’ve had 34 properties close over that price with the average sale being $7.7 million,” said Emmett Laffey, CEO of Laffey Fine Home International, covering the five boroughs of New York.  “Any foreclosure properties in this type of ultra-luxury market usually get purchased very quickly since there is one thing all super rich buyers want – an outstanding deal on a real estate transaction, and in most cases foreclosures of this magnitude come with several million more dollars of built-in value.”


RealtyTrac said that the delayed rise in foreclosure activity on these high-end properties may not all be the doing of the lenders.  Some of the homeowners may have had the means to hold out against foreclosure longer than most homeowners.


More than 60 percent of the high-end foreclosure activity was not surprisingly in Florida and California.  Both states had notable real estate booms and busts and their coastal cities in particular have larger shares of expensive homes than in most of the U.S.


Modest Growth Seen in Commercial Real Estate Markets

Commercial real estate leasing patterns are showing steady but modest growth, according to the National Association of Realtors® quarterly commercial real estate forecast.

Lawrence Yun, NAR chief economist, projects only modest changes in the coming year. “Jobs are the key driver for commercial real estate, and the accumulation of 7 million net new jobs from the low point a few years ago is steadily showing up as demand for leasing and purchases of properties,” he said. “But the difficulty of accessing loans remains a hindrance to a faster recovery.”

The gross domestic product rose from 2.5 percent in the second quarter to 2.9 percent in the third quarter. NAR’s recent Commercial Real Estate Quarterly Market Survey shows leasing activity rose 2 percent in the third quarter from the second quarter, and higher sales levels than a year ago.

Yun said there have been some shifts in commercial purchases. “Investors have been looking for better yields, and have found good potential in smaller commercial properties, notably in secondary and tertiary markets,” he said. “Sales of commercial properties costing less than $2.5 million in the third quarter were 11 percent above a year ago, while prices for smaller properties were 4 percent above the third quarter of 2012.”

Commercial investment in properties costing more than $2.5 million1 rose 26 percent from a year ago, while prices for large properties were 9 percent above the third quarter of 2012.

National vacancy rates over the coming year are forecast to decline 0.2 percentage point in the office market, 0.6 point in industrial, and 0.5 point for retail real estate. The average multifamily vacancy rate will edge up 0.1 percent, but that sector continues to see the tightest availability and biggest rent increases.

NAR’s latest Commercial Real Estate Outlook offers overall projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc., a source of commercial real estate performance information.

New York Home Price’s Rise As Well As Equity At A Record Pace

The number of Americans who owe more on their mortgages than their homes are worth fell at the fastest pace on record in the third quarter as prices rose, a sign supply shortages may ease as more owners are able to sell.

The percentage of homes with mortgages that had negative equity dropped to 21 percent from 23.8 percent in the second quarter, according to a report today from Seattle-based Zillow Inc. The share of owners with at least 20 percent equity climbed to 60.8 percent from 58.1 percent, making it easier for them to list properties and buy a new place.

“Home sales will pick up very nicely when people gain the equity they need to sell their house and have a down payment for the next one,” said Neal Soss, chief economist at Credit Suisse Group AG in New York. “There’s a magnifying effect on sales — people are able to list their home and sell it, and odds are they’re going to go on and buy another one.”

A shortage of inventory has forced homebuyers to compete, driving up prices and leaving some shoppers out of the market, said Thomas Lawler, a former Fannie Mae economist who now is a housing consultant. The number of homes for sale reached a low of 1.8 million in early 2013, the fewest in more than a decade, according to data from the National Association of Realtors.

“The pent-up demand from people who now have enough equity to sell their homes will help next year,” said Lawler, president of Lawler Economic & Housing Consulting LLC in Leesburg, Virginia. “We’ll see the effect during the spring selling season. Not a lot of people put their homes on the market during the holidays.”

While the supply of homes limited sales, it boosted price growth, said Michelle Meyer, a senior U.S. economist at Bank of America Corp. in New York. Shortages have caused buyers to compete for properties by raising the price they offer, she said. The median price of an existing home rose 12.8 percent last month, the Realtors’ group reported yesterday. In August, it jumped 13.4 percent, the fastest rate since the height of the real estate boom in 2005.

“We’ll see the pace of price growth moderate next year,” said Meyer. She estimates prices will gain 8 percent in 2014, compared with 10 percent in 2013.

The real estate recovery has supported economic growth for almost two years as buyers make ancillary purchases such as home decor and appliances, Meyers said. Consumer spending accounts for about 70 percent of the economy. Gross domestic product grew at a 2.8 percent pace in the third quarter, up from 2.5 percent in the prior period.

Why you should use a local mortgage compan

As the financial crisis lead to the demise of many mortgage companies and banks, what remained has dramatically changed the landscape of our home mortgage market. The too big to fail large banks consolidated their position in the National markets, but their legacy mortgage portfolios and far flung customer service continue to tarnish their image. The large mortgage banks and independent servicers haven’t fared much better and the American consumer longs for simpler more personal mortgage process. The boutique mortgage banking firm can offer the real estate community and their borrowers innovation and creativity that the mega banks cannot. Staten Island, New York based Mortgage Banker Financial Equities, has been serving their local markets with distinction since 1989. While so many other companies have come and gone, Financial Equities has remained a constant presence on Staten Island and throughout the New York metropolitan area. “When our clients want something, we like to react quickly” says company President Walter Stashin. “We don’t have to wait to hear back from some committee somewhere else. We are the committee. We don’t outsource our service. We are part of the communities we serve and we provide jobs in our communities.”  History has shown that as banks and larger mortgage banks have grown bigger they create layers of bureaucracy, which in turn become inefficient. This tends to lead to a political and hierarchal environment, which take s the focus away from the customer experience.  “We never want to lose sight of what is important and that is our client” says Stashin. “We live in the communities we do business and can adapt quickly to the changing needs of our communities”. “We not listening to some hierarchy, we are listening  to those we serve” added Stashin. Bigger is not better. The Boutique Mortgage Banker delivers quality over quantity. Financial Equities is also looking to hire young people that are looking for a career in Mortgage Banking. Stashin says “We see great opportunities for young people with our company, and we are looking to build the next generation of Mortgage Bankers”. Another reason boutique is better. While the large banks slash jobs in the Mortgage business, Financial Equities is hiring. Written by Michael J. Wallace

Salvatore Criscuolo “The Mortgage Expert”

Financial Equities Mortgage Bankers, 1110 South avenue, Staten Island, N.Y. 10314

Housing markets about to get squeezed

Some communities will likely be hit harder by mortgage loan limits


A plan to lower the cap on federally backed mortgages may hit home buyers particularly hard in several pockets of the country, new data shows.


The Federal Housing Finance Agency plans to reduce the maximum size of mortgages backed by Fannie Mae and Freddie Mac this January. The current limits are $417,000 in most parts of the country and up to $625,500 in more expensive markets. The agency hasn’t announced how much it will lower loan caps, but data compiled for MarketWatch by Lender Processing Services, a mortgage-data tracking firm, shows that a decline of just $25,000 from the current caps would impact hundreds of thousands of home buyers in middle-priced and upper-middle-priced housing markets — areas that are relatively upscale but far from the most expensive. “You are really talking about communities that are comfortably well-to-do; you’re not talking about communities with large numbers of hedge fund managers and the like,” says Robert Hockett, a professor of law at Cornell Law School with expertise in real estate finance.




In total, more than 214,000 of the agency-backed mortgages originated last year were within $25,000 of the current caps, according to LPS. For the first six months of this year, the number was just over 95,000. By one measure, they’re most in demand in Cook County, Ill., where 10,510 mortgages originated in 2012 and 4,137 during the first six months of this year were within $25,000 of current cap levels — the highest number in any county nationwide, according to LPS. In contrast, Manhattan, which has some of the most expensive real estate in the country, had just 1,187 and 460 of such large loans, respectively, for each time frame.


Nationally, these loans have accounted for less than 3% of all Fannie Mae and Freddie Mac mortgages given to borrowers during this time, though the share is much higher in some regions. In Colorado, North Carolina and South Carolina as well as in the District of Columbia, they account for more than 5% of agency mortgages that borrowers signed up for last year. They had over a 10% share in three Colorado counties, Boulder, Denver and Gunnison, during the first half of this year.


A greater number of borrowers could be impacted if mortgage caps drop by a larger amount. Housing experts say a $25,000 drop is likely conservative, and if the real cut is bigger, more borrowers will be left with fewer mortgage options going forward.


Fannie Mae and Freddie Mac mortgages weren’t always so generous. They were mostly capped at $417,000 until 2008, when legislation increased their loan limits in more expensive markets, and by late 2011 they settled at the levels currently still in place. The moves were meant to stimulate home buying and lending in the wake of the housing downturn. As private investors fled the mortgage market, Fannie Mae and Freddie Mac took their place and have since been buying most of the mortgages that lenders have been providing to borrowers. Higher caps on federally backed mortgages allowed more buyers, who might have otherwise been unable to buy a home, to qualify for those loans.


Now that the housing recovery is gaining steam, the government is trying to reduce its role in the mortgage market. A spokesperson for the FHFA says that the agency “shares the administration’s view that a gradual reduction in loan limits is an appropriate and effective approach to reducing taxpayers’ mortgage risk exposure, shrinking the footprint of Fannie Mae and Freddie Mac in the marketplace, and expanding the role of private capital in mortgage finance.”


But analysts caution that lowering their caps could have a domino effect on home sales. Many borrowers who use the maximum dollar amount of Fannie Mae and Freddie Mac loans tend to live in high-cost areas and rely on these mortgages to buy homes. If they’re unable to get financing, given that the private mortgage market is more selective, sales could stall and prices as a result may drop, says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla. “This will be a real eye-opener,” he says.


In some areas, it would take just a small number of buyers to shake up home sales: In Cape May County, N.J., just 313 mortgages within $25,000 of the agency caps were given out during the first six months of the year, and they accounted for nearly 11% of all agency mortgages given in that time in the county. In Garrett County, Md., it was just 26 mortgages, which accounted for almost 8%.


The change would also come at an inopportune time for buyers: With home prices rising in many markets, experts say, it’s likely that a growing number of buyers will need larger-size mortgages.


To get a mortgage, most of these buyers will have to turn to private lenders, which include banks, credit unions, and independent mortgage lenders, who originate mortgages to borrowers on their own terms and either hold them on their books or sell them to a small number of private investors. But private lenders have been very selective over the past few years, lending mostly to affluent borrowers with large down payments who are buying multi-million-dollar homes. In many cases, these borrowers have the cash to buy their home outright.


It remains to be seen whether these lenders will open up to more borrowers. “If the private market doesn’t step in to take borrowers who are less than perfect, then those are the people who are going to be on the losing end of this,” says Georgette Chapman Phillips, professor of real estate at the University of Pennsylvania’s Wharton School.

Staten Island Real Estate

Staten Island homes for sale are at an all time low as far as inventory goes right now. This leads to values increasing through bidding wars and supply and demand. With rates inching up houses for sale in Staten island are not staying on the market for very long. As a matter of fact homes for sale in Staten island have been selling within days of their listing coming up on MLS feeds. Staten island ny real estate is a different breed due to the location and the toll (Verrazano currently $15.00). The body of water separating Brooklyn and Staten island seems to decrease market values. A home worth $500,000.00 in Staten Island is easily worth $750,000.00 in Brooklyn. That being said, for some reason Staten island is still the most desired borough out of all 5 boro’s. Staten Island real estate has outgrown the streets and highways and is in the midst of a big makeover. Stay Tuned.

Sal Criscuolo “The Mortgage Expert”
Today’s Video Edition of this blog

Staten Island Real Estate Edition – 1111 South Avenue, Staten Island, NY 10314


Finding out the “True Value” of your Home

Finding out the value of your home on Staten Island, Brooklyn or the Tri-State area in general can be a daunting task. In my 15 years I have noticed (even with myself as a subject), that over 90% of homeowners in Staten Island and the tri-state area in general feel their home is worth more than it actually is. So when you are selling your home, how do you determine the value. Here are some common ways that people “TRY” to use to determine their value:

They go on sites like Zillow and Trulia (Big mistake) These sites are available as a profit center not a TRUE helpful tool to home buyers or seller. Yes it’s true they have some good information “BECAUSE THEY HAVE TO”. But buyer beware because truth is, they sell space to Realtors, Mortgage Professionals and other trade affiliates. The value you get from these sites is ONLY GOOD if outranked the information provided and conduct your own due diligence using them as a reference. Actually, if you click on a property, THEY LEAD YOU TO BELIEVE THE PICTURE OF THE REALTOR AND INFORMATION associated with the property is the actual listing agent WHEN TRUTH BE TOLD IT IS NOT. Okay enough bashing of the most used property value sites.
They call a realtor and the realtor does a market analysis. This is great and if you TRUST TRUST TRUST the Realtor, I suggests you sign up right there and give them your confidence. Again TRUST !!!!! If you do not trust the realtor 100% and believe in their capability then you will go crazy and drive them crazy and it probably will not end up well. (you can read my previous post on questions to ask a realtor).
******Get an individual appraiser to come and appraise your home. THIS IS THE BEST METHOD to really determine the actual value of your home. They use a method and have software that is only available to them and they can make exact upward and downward adjustments to the value of the home depending on the condition of each aspect. WHEN THE APPRAISER COMES, walk the home with them and point out the positives and negatives THIS WILL ONLY HELP. The cost of an appraisal is $300 to $600 depending on the property and worth every dime. Now you know the value NOW YOU KNOW THE BENCHMARK OF YOUR SALES PRICE. My suggestion is take the value, add the realtor’s commission plus 10% (because everyone is a negotiator) and put it on the market.

Written by Sal Criscuolo “The Mortgage Expert”

Finding a Great Realtor on Staten Island

Right now in Staten Island we are in a sellers market, Inventory is at a low and homes are selling swiftly. Add the fact that mortgage interest rates are rising and you have a great time to sell your home. Since i’m not a real estate agent my clients ask me about realtor’s agents etc. I pretty much tell them all the same thing. You MUST feel comfortable with the person you “hire” to sell your home. You have to trust their judgement, their honesty and most important their integrity. I suggest asking plenty of questions. Simple questions wwill lead to more questions and an opportunity to see how the agent works. A simple question like “How long have you been in the business?” may take alot of twists and turns depending on the length of time. Another great question is “What Are the Top Three Things That Separate You From Your Competition?”. Here is where you will see the honesty and the how this person has chosen their “Value Statement” and what differentiates them from the rest of the pack. I hope this helps you in your sales process.

Contact me for any additional information or to answer any questions you may have.

Staten Island Homes Selling at Fastest Pace Since Boom

Strong demand and still limited supply mean homes are now selling nearly three times as fast as they normally would.

The average number of days a listing stayed on the market in April was 46, down from 62 in March, and down from the normal pace of 90-120 days, according to the National Association of Realtors.

The sales pace is back to what it was during the housing boom in 2005 and 2006, but the circumstances are of course very different. Back then it was all about easy money, and now it’s about stiff competition for limited supply.

“We need to see home builders increase production,” said Lawrence Yun, chief economist for the NAR in a press conference. “We need a 50 percent increase in starts.”

Home builders are actually slowing production, trying to take advantage of home price gains that are nearing double digits. High-end home builder Toll Brothers, based in Horsham, PA, reported that it raised prices by $26,000 on average, or about five percent, during the second quarter. The average price of a contract signed in the quarter was up sixteen percent from a year ago.

While homes are certainly selling faster, double digit price gains are not considered healthy, especially when wage growth is nowhere near that. At some point buyers will hit the wall, unable to afford the homes they want.

First time home buyers are already dropping out of the market, representing just twenty-nine percent of home buyers in April, according to the NAR—the lowest in two years. Rising mortgage rates, now at their highest in two months, are playing a part, but there are also fewer low-end homes to buy. The number of homes in the foreclosure process is now down nearly twenty-five percent from a year ago, according to a new report from Lender Processing Services.

Just eighteen percent of home sales in April were of distressed properties, the lowest since the Realtors began tracking this number in 2008. Compare that to thirty-five percent about a year and a half ago. Sales of homes priced below $100,000 were down ten percent in April compared to a year ago, while every other price range saw sales gains. Those who can get credit are now competing for what little there is to buy, and pushing prices well beyond expectations.

“I don’t see it lasting,” added Fairweather. “I think the minute they increase interest rates, you’ll see people pull back.”

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