Real Estate News, Realty Guide

President Barack Obama used a campaign push for Senate Majority Leader Harry Reid on Friday to announce a new fund to support homeowners in five states hit hardest by the U.S. housing crisis.

Housing sector was at the center of the financial crisis that threw the U.S. economy into deep recession in late 2007. While signs of stabilization are appearing, home foreclosures are still rising in much of the country.

Obama said he was assigning $1.5 billion from the Troubled Asset Relief Program to fund programs at local housing finance agencies in California, Florida, Nevada, Arizona and Michigan, which have seen home prices decline more than 20 percent from their peaks.

“This fund’s going to help out-of-work homeowners avoid preventable foreclosures,” Obama told a town hall-style meeting near Las Vegas. “It will help homeowners who owe more than their homes are worth find a way to pay their mortgages that works for both the borrowers and the lenders alike.”

Nevada is still struggling from the housing market crash, and Obama’s choice to make the announcement there was no accident.

The president is trying to boost Reid, a Nevada Democrat who trails potential Republican opponents by double digits in opinion polls before November elections that could change the balance of power in Congress.

Reid has helped push Obama’s agenda to boost the economy, overhaul the U.S. healthcare system and fight climate change, but Republican critics say he has neglected his home state.

Trying to limit his party’s losses in November, Obama heaped praise on Reid, saying the former amateur boxer “knows what he believes in and he’s willing to fight for it.”

The end of the foreclosure crisis may be finally in sight. For the first time in almost three years, the number of homeowners falling behind on their loans is declining. The drop means the number of people losing their homes will start to fall. But some pain from the crisis is sure to continue. Because millions of people are already in foreclosure, deeply discounted houses will continue putting pressure on home prices for years.

Though housing is on a path to recovery, It’s going to be a very long, gradual process.”

In high-foreclosure cities like Las Vegas, Phoenix and Miami, homes have lost roughly half their values from their peaks. Experts say that the figures probably mark the beginning of the end of the crisis.

However, more than 15 percent of homeowners with a mortgage have missed at least one payment or are in foreclosure, a record. Worse, nearly half of all delinquent borrowers were at least three months behind on their payments, up from a typical level of less than 20 percent.

The percentage of borrowers who missed just one payment on their home loans also fell to 3.6 percent in the October-to-December quarter from 3.8 percent in the third quarter. That decline was even more surprising because delinquencies usually rise at that time of year due to higher heating bills and holiday spending.

In another positive sign, the number of borrowers who had missed at least one payment but were not yet in foreclosure also fell for the first time since the beginning of 2007.

Real Estate prices are falling, rents are tumbling, and apartment vacancies are on a rise. So why are thousands of small investors opting to become landlords?

The reason is real-estate prices have fallen much faster than rents. Money invested in an apartment complex today typically generates annual returns of 7% to 8%. If your homes’ value appreciates in value or rents rise, you could end up with double-digit returns when you decide to sell it. But higher returns usually come with higher risks. You should be careful enough not to overpay for a rental property or you buy in the wrong market at the wrong time.

In general, investors should pick areas where real-estate prices and rents appear to have nearly bottomed out, and jobs are stabilizing. Some of the best deals are in places like Fort Worth, Texas, or Columbus, Ohio, where prices never went wild. Markets like Las Vegas and Phoenix, which saw overbuilding, and Detroit, hurt by auto-industry woes, still look risky.

But San Francisco or Chicago can still be attractive for landlords. But, you need good credit and plenty of cash—as much as 50% of the purchase price—because banks are still wary about lending. You need extra cash for handling repairs and vacancies, and you must have the patience to deal with difficult renters.

If you buy an investment property, you should expect to hold it for 3-5 or more. Much of the big money from quickly buying and selling  properties already has been made, and conditions now favor long-term owners who want an investment that will throw off income and slowly gain value over time.

You may have thought that after losing your house to forclosure atleast you have put behind your financial liablity behind you. Right? WRONG!! Ex-homeowners may still not be completely out of financial mess because a difference between what they owed on theri mortgage and what bank sold it for at auction. And these deficiency judgements are somethign that may plague you in future.

It can even happen to folks who got their bank approvals for selling their home for less than it’s worth.

Because of falling home prices, borrowers who have run into unforeseen circumstances like like unemployment can no longer sell their homes for what they owe. As a result, they are being forced to short sell or foreclose and are getting caught up in deficiency judgments.

The foreclosures rocked McAllen, Texas, during the third quarter. In fact, it showed the fastest growth rate of any city compared to the second quarter.

Located in one of the poorest sections of the country - the Rio Grande Valley - it is a border town which depends heavily on trade with Mexico, with 35% of its retail market derived from Mexican nationals coming to shop and dine.

Plus, the unemployment is high. The area’s rate now stands at 11.4%, compared with Texas’ overall 8.2%.

Still, until this quarter, it had counted a low foreclosure rate among its assets. In fact, that helped propel the city to No. 26 on CNNMoney’s Best Places to Launch list in 2009.

Dick Henry, president of Greater McAllen Association of Realtors, said the area didn’t start to feel the housing crunch until late 2008. The wave crested the city slowly through the first part of 2009, with July actually being a strong month. “But boy, August and September went straight to hell,” Henry explained.

He worries, too, that things will get worse because most of the region’s loans are ARMs.

“People get sucked into the lower money down, and then they can’t afford their homes once rates are jacked up,” Henry said. “I now see 110 pages of foreclosure listings per month, compared to 45 pages in the first quarter. I don’t see that slowing down anytime soon.”