The Top Markets for Rental-Home Investors

By Nick Timiraos July 11, 2011, 11:53 AM ET

Associated Press

Housing markets that have seen the biggest plunges on home values have topped a new ranking of the best markets for rental-property investors.

Las Vegas, where home prices are down by more than 50% from their market peak, offers the best returns on homes maintained as rental properties, according to the report from HomeVestors of America, a property-investment firm, and Local Market Monitor, a real-estate data firm.

The ranking takes into account the potential home-price appreciation and gross rents to forecast the performance of rental properties, specifically single-family homes that are rented out.

Rounding out the top five markets are perennial economic trouble-spots Detroit and Warren, Mich. along with housing boom-to-bust cities Orlando, Fla., and Bakersfield, Calif. Home prices in those markets have fallen below their 2000 levels, creating opportunities for investors to compete with existing housing stock.

But those markets also carry sizeable risks for investors, including the prospect of continued home price weakness. Vacancies are also high—rental vacancies are at 12% in Las Vegas at 19% in Detroit—underscoring the need for job growth to pick up.

The survey comes amid fresh signs that the rental investor is increasingly dominating hard-hit markets. Home price declines first began attracting big investor activity two years ago. Many buyers looked to buy distressed homes at a discount in foreclosure auctions from banks before fixing them up and reselling them quickly.

But faced with increased competition from other home flippers, investors have increasingly turned to buying homes that they can rent out for a few years. Those sales are far more sensitive to price, requiring deeper discounts to ensure that the rental income can cover the cost of property upkeep.

Total Las Vegas home sales hit a five-year high in May, according to DataQuick, a real-estate data firm, with the market fueled by low-priced homes that can most easily be converted to rentals. Around four in 10 sales went for less than $100,000, up from three in 10 sales last year.

According to DataQuick, home re-sales activity hit a six-year high for the month of May in Phoenix, which ranked as the seventh best rental-return market in the HomeVestors analysis. Like Las Vegas, nearly 40% of sales went for less than $100,000, and absentee buyers accounted for around 45% of all purchases.

Other top rental markets, according to the survey, included Tampa, Fla.; Ft. Lauderdale, Fla.; Rochester, N.Y.; and Stockton, Calif.

Top 10 markets for rental-property investors

1. Las Vegas

2. Detroit, Mich.

3. Warren, Mich.

4. Orlando

5. Bakersfield, Calif.

6. Tampa-St. Petersburg

7. Phoenix

8. Ft. Lauderdale, Fla.

9. Rochester, N.Y.

10. Stockton, Calif.

(Source: HomeVestors/Local Market Monitor)

• HomeVestors of America,
• Local Market Monitor

Seinfeld Lists Telluride Home for $18M

Jerry Seinfeld's Telluride, Colo. home has hit the market for $18.25 million. Plus, a Montana ranch for $12.7 million and a New Jersey home designed by the architect of the Lincoln Memorial lists for $4.3 million. Candace Jackson has details.

Mortgage Aid for Unemployed Expanded

By Nick Timiraos July 7, 2011, 1:34 PM ET

Getty Images

Housing and Urban Development Secretary Shaun Donovan

The Obama administration will require mortgage companies to extend more generous mortgage relief to help certain unemployed borrowers from losing their homes to foreclosure.

Under policy changes announced Thursday, mortgage companies that collect payments on loans backed by the Federal Housing Administration will be required to offer 12 months of forbearance for qualified unemployed borrowers. Currently, out-of-work borrowers with these loans can receive a minimum of four months without mortgage payments.

Firms that participate in the Obama administration’s Home Affordable Modification Program will also be pressed to offer up to 12 months of forbearance for unemployed borrowers, though that effort could be stymied by regulatory or contractual rules.

Housing officials said the changes could help tens of thousands of borrowers. Housing Secretary Shaun Donovan said he hoped it would “push the mortgage industry” to amend their offerings.

The foreclosure crisis was initially driven by adjustable-rate mortgages that were resetting to sharply higher payments, but over the past three years, far more homeowners have faced foreclosure because they have lost their jobs or seen their income fall. Many of those borrowers can’t easily sell their homes if they get in trouble because they owe more than the properties are now worth.

Officials said the change was prompted by a slow economic recovery that has seen longer stretches of unemployment than in past downturns. “We’ve been looking for ways we can go farther to help borrowers,” said Mr. Donovan.

Around 3,500 borrowers with FHA-backed mortgages fall behind on their payments every month due to unemployment, housing officials said, and around 17,000 borrowers last year had been offered some type of forbearance. HAMP offers a three-month break in loan payments for unemployed borrowers and has helped around 10,000 homeowners since the program began last August.

Borrowers who receive loan forbearance, where principal and interest payments are temporarily suspended, will ultimately have to pay back the past-due balance after the forbearance period ends.

At a White House town hall event on Wednesday, President Barack Obama conceded that housing has become the “most stubborn” economic problem facing policy makers. “We’ve had to revamp our housing program several times to try to help people stay in their homes and try to start lifting home values up,” he said.

The program won’t apply to loans backed by housing-finance giants Fannie Mae and Freddie Mac, which are under government control but answer to a separate, independent regulator. The firms offer their own forbearance programs and own or guarantee nearly half of all U.S. home loans. The FHA, by contrast, backs less than 10% of all outstanding mortgages.

The Obama administration has separately committed $7.6 billion in funds from the $700 billion Troubled Asset Relief Program to target housing relief in 18 of the “hardest hit” states. Most states have used some of that money to provide bridge loans so that unemployed borrowers can make mortgage payments.

A separate program, funded with $1 billion through the Dodd-Frank financial-overhaul law, allows unemployed borrowers in 27 other states to receive interest-free loans to help make mortgage payments worth up to $50,000 for up to two years. Applications for that program are due July 22.

• Federal Housing Administration

June's Most Popular Houses

Each week readers vote on their favorite of the homes featured as the House of the day. Tour June's winners, located in Ketchum, Idaho; New Zealand; Naples, Fla.; Winnetka, Ill.; and Belize.

Are McMansions Coming Back in Style?

Original Post: http://blogs.wsj.com/developments/2011/06/29/are-mcmansions-coming-back-in-style/

By Wesley Lowery June 29, 2011, 7:00 AM ET

Getty Images

For a while now, new-home buyers have spurned oversize homes with lavish features in favor of smaller, energy-efficient dwellings. It made sense: With the housing market collapsing, homeowners dropped dreams of big plots with celebrity-caliber amenities in lieu of more functionality. Home theaters were out, replaced by home offices.

But the Home Design Trend Survey, released today by the American Institute of Architects, shows a slight change from previous years on home size and buyer sentiment.

The survey, which has been conducted quarterly since 2005, asks a panel of 500 architectural firms that focus on residential properties what customers are asking for in new developments. The percentage reporting that customers wanted smaller houses has seemingly started to drop.

This year, about 52% of firms surveyed reported a decrease in the square footage of the houses they’re designing this year, down from 57% last year. Today’s numbers also show fewer firms reporting decreases in lot size (down to 22 percent from 32 percent) and lot volume (down to 18 percent from 21 percent).

“Overall, home-and-lot sizes showing signs of increasing slightly indicates that the housing market is stabilizing after being in a downward spiral since 2007,” says Kermit Baker, AIA’s chief economist.

Outdoor space is also more sought after: About 60 percent of firms surveyed reported increases in the number of homes with outdoor living space, up from 56 percent last year. “The features that households are looking for are accessibility, a single-floor design and open space – both indoors and outdoors,” Mr. Baker says.

Even if the trend towards smaller homes is slowing, the McMansion isn’t back just yet.

In January, we reported that the average size of a new single-family home shrunk to 2,377 square feet last year, down 3 percent from 2009, according to the National Association of Home Builders.

And it’s not clear that younger buyers will embrace the McMansion in the same way their parents did. Presenters at the annual NAHB convention in Orlando told Developments in January that large, cookie-cutter suburban homes wouldn’t appeal to the younger generation of home buyers.

“It’s not that we’re going to move back to McMansions anytime soon,” Mr. Baker says. “But I think we’ll start to see house sizes start to edge up a bit.”

• American Institute of Architects,
• National Association of Home Builders

From Schoolhouse Rock to Luxury Home

Once used as a school, this home in the Kalorama neighborhood of Washington, D.C., has been returned to a single-family home. The property includes a 7,000-square-foot main house and a carriage house that is now a guest house

Has Your Home Value Recovered?

The national numbers aren't good, but in some places, the news is better.

By DAVID CROOK

At first glance, you're not likely to see a lot of similarities between stately Cambridge, Mass., and sprawling Denton, Texas.

Cambridge (population about 105,000) was already more than 200 years old when Denton (120,000) was founded in 1857. From the center of Cambridge, it's an easy stroll across the Charles River into Boston. Denton, in contrast, sits where Interstate Highway 35 divides to the west, it's 41 miles to Fort Worth; to the east, 39 miles to Dallas.

But both are college towns. Cambridge is well known as the home of Harvard University and the Massachusetts Institute of Technology. Denton has North Texas State University and Texas Woman's University.

They have something else in common, too. Both have pretty much recovered from the five-year-and-counting housing recession. And both provide invaluable clues for those looking to decipher whether their own markets have seen the worst of the crisis.

Amid the continuing gloom in the U.S. housing market, you can find small pockets of home-price stability -- communities that are actually recovering from the housing bust. WSJ's David Crook talks with Kelsey Hubbard about what those communities can teach today's home buyers and sellers.

According to a statistical analysis performed for The Wall Street Journal by the online real-estate information and search firm Zillow, home values in a handful of communities are where they were just before the most frenzied days of the real-estate bubble. Focusing on communities with sufficient sales activity to produce statistically valid value estimates, Zillow spotted 25 places that are within single-digit percentage points of their home-value peaks. (Zillow found no communities where values have surpassed their high-water marks.) Not bad considering that home values in some major metropolitan areas are at half their bubble-era peaks.

As a result, spotting the factors that have helped those communities get by may allow all homeowners to better gauge what's going on where they live and what the future may hold for their home's value.

Some words of caution.

First: Don't look at these as housing-market "winners," and don't go looking for new places where you can score a killing. That's the thinking that got much of the country in trouble in the first place. Housing isn't an investment like stocks or bonds and shouldn't be approached that way.

Second: Although many of the areas have certain traits in common, most are just nice places to live, places where anyone might want to work and raise a family. Each is special in its own right.

Finally, the biggest reason that most are surviving the downturn is because they never experienced the huge price runups that Florida, Nevada or California did in the first place.

In Denton, Zillow estimates values are down 7.4% from their peak, while values are down about 8.6% in Cambridge. That's about where prices stood in 2004 in both towns. In contrast, the latest Case-Shiller Home Price Index indicates national prices are at 2002 levels.

So what should you look for if you are thinking of selling your home or buying a new one? What does a healthy real-estate market look like today?

Here are three big factors to look for. If your community shares any of these traits, you may already be on the rebound.

Employment

It's the oldest joke in real estate, but with a new punch line:

Q: What are the three most important things to consider when buying a house?

A: Jobs. Jobs. Jobs.

Clearly, the No. 1 factor in determining whether a community has passed through the worst of the housing debacle is its current state of employment. There has always been a connection between the local jobs picture and the local real-estate market, but it's even greater today.

The official U.S. unemployment rate was still a very high 9.2% as the prime home-shopping season began in March. Denton County's unemployment rate was 7.4% in March way up from before the financial crisis but lower than the rate for all of Texas and nearly two points below the national rate. Unemployment in Cambridge's Middlesex County is 2 percentage points below the U.S. average.

Indeed, many of the communities that turned up in the Zillow analysis have big recession-insulated employers like Cambridge's and Denton's universities.

Look at North Carolina, where three communities appear on the Zillow list. Although North Carolina's unemployment rate is higher than the national average, all three communities are lower than the state rate. Jacksonville, where values are just 0.1% below their peak, is the home of the Marine Corps' Camp Lejeune and New River Air Station. Fayetteville has the Army's Fort Bragg and Pope Air Force Base. And Durham is one of the vertices of the Research Triangle conglomeration of universities, state and federal government offices, and government, nonprofit and corporate research facilities.

Rents

Local rents are very strong indicators of real-estate values. Home prices in most communities that have best weathered the downturn tend toward the low-rent end. That is, they have lower price-to-rent multiples, and house hunters will often find it cheaper to buy properties than to rent them.

Look at a typical "rent vs. buy" calculator available on many real-estate or personal-finance websites. Most calculators figure that if prices are more than 15 times annual rents, then a market favors renters; under 15 times, buyers.

Earlier this month, there was a $525-a-month rental two-bedroom, one bath house in Conway, Ark., near the state capital, Little Rock, where home values are down just 5.1% from their peak. But asking prices for comparable houses in the same neighborhood are in the high $60,000s so, using the typical rent-vs.-buy formula, prices are about 11 times rent, a bargain.

That's the same price-to-rent multiple as in college town Champaign, Ill., where a three-bedroom, one-bath house was on the rental market for $850 a month. Albany, N.Y., another state capital, also falls within the affordability range. You can buy a four-bedroom, 1 -bath house for around $200,000, only about eight times the annual rent.

Caveat: Beware the outliers. Extremely low price-to-rent multiples can be warning flags for seriously depressed markets that are glutted with unsold properties. Trulia, another real-estate information site, regularly publishes a rent-to-buy analysis of large metropolitan areas, and the most "affordable" markets are a Where's Where of the real-estate bust: Las Vegas (prices 6 times rents), Phoenix (7), Miami (8). At the opposite end, Trulia's survey says the "least affordable" market is New York City (39), where home values are down just 9.1% from their peak.

Foreclosures

Healthier communities have fewer foreclosed properties pulling down values of other homes.

Just as jobs fuel the local housing engine, foreclosures put on the brakes. Even in good times, one foreclosed property in a neighborhood can bring down the values of every other house around it. And, in bad times, entire metropolitan areas can be swamped by abandoned, foreclosed houses.

In 2010, the worst year so far, about 2.23% of all the homes received a foreclosure filing, according to RealtyTrac, an Irvine, Calif., firm that monitors foreclosed properties. In Las Vegas, the poster child of the Sun Belt's real-estate bust, the foreclosure rate was 12%, more than 80% of homes are worth less than their mortgages and values are down more than 50% from their peak.

And what was the foreclosure rate in Utica, the buckle of upstate New York's merciless Snow Belt? Barely a flurry, just 0.04%. And home values are down just 4.2%, helped along by a growing population.

For home owners, the snow looks a lot more inviting than it used to.

Mr. Crook is editor of The Wall Street Journal Sunday and author of The Wall Street Journal Complete Real-Estate Investing Guidebook and The Wall Street Journal Complete Home Owner's Guidebook. He can be reached at
david.crook@wsj.com.

Heiress to Buy 57,000-Sq Foot Spelling Home

Candy Spelling's 57,000-square foot Los Angeles home, which had a $150 million asking price, is in contract to be sold to 22-year-old heiress Petra Ecclestone, daughter of billionaire Formula One racing boss Bernard Ecclestone. WSJ's Juliet Chung and Candace Jackson report.

Why investing in rentals could be a good move - Plus, the top 10 markets for real-estate investors

Original Post: http://www.marketwatch.com/story/why-investing-in-rentals-could-be-a-good-move-2011-06-13

By Amy Hoak, MarketWatch June 13, 2011, 12:01 a.m. EDT

CHICAGO (MarketWatch) — As home prices fall and rents rise, some investors are plunking their money into real estate, chasing the cash flow that comes along with becoming a landlord.

“For the first time in a long time, you can buy that home and can get a cash-on-cash return immediately,” said William King, director of valuation services for Veros Real Estate Solutions, a supplier of housing data to the country’s largest banks, as well as government organizations. “There are a lot of places in the country where an investor can buy a single-family home, rent it, and get a positive cash flow.”

In fact, investors bought 20% of all the homes sold in April, according to the National Association of Realtors. Some of them are buying with cash.

But even if they do finance part of the purchase, they’re able to turn around a profit much quicker than they would have been able to in the past, King said. And the return on rentals can be much better than returns on other investments these days, he added.

In the past, investors would subsidize their monthly payments on a property with the rent they were able to collect, and the big payoff was the price appreciation he or she would accumulate, he said. Now, investors can come in with a 25% or 30% down payment, finance the rest, and the rent they collect often can cover the mortgage payment, taxes and insurance — with additional cash left over, he said.

“Investors are looking at these properties on a monthly income generating basis,” said Alex Villacorta, director of research & analytics at Clear Capital, a firm that provides data for real-estate asset valuation and risk assessment to financial services companies. “They can start to realize instant profit margins, even as the market goes down more.”

“There’s a turning point where the cost of owning a home is less than the cost of renting,” he said. “When that disparity grows … we will see a push from investors to pick up investment properties.”

In general, that investors are beginning to snap up rental properties is a good thing for the stabilization of housing markets, King said. It’s also one of the ways that a floor on real-estate prices can be established; as more investors spot opportunities in residential markets, prices could bottom.

“Once investors come into a community, you’re seeing the beginning of the end of the decline,” King said.

What to look for

Before investing in a rental, make sure you’ve considered the harsh realities of becoming a landlord, said Mike Litzner, broker and owner of Century 21 American Homes, which has locations in Long Island, Queens, Nassau and Suffolk Counties. He’s also a landlord.

“There are some people who think it’s glamorous, but when you get the wrong tenants, it can be a nightmare,” he said. That said, when you get the right tenants and the properties perform as expected, it can be a “tremendous” way to make a buck — and he believes the “smart money” is now working its way into the marketplace.

Before considering any purchase, decide if you have it in you to be a landlord. You have to be willing to set expectations and consequences to ensure rents are paid on time, and you have to ready for the possibility of evicting non-paying tenants, he said. Plus, you’re responsible for the upkeep of the property, no matter how your tenants treat it.

From there, it’s a numbers game. Get a sense of what rents are in the area you’re considering, the vacancy rate, and consider your costs of financing, Villacorta said. Don’t forget the other costs of owning a property, including taxes and upkeep. Some investors may want to enlist the help of a real-estate agent to assist with analyzing the market.

Remember, often the best investment is a home you wouldn’t necessarily buy to live in yourself, Litzner said. These days, foreclosures can be snapped up at bargain prices, and as long as you have the means to make required repairs, they can represent good opportunities.

“Don’t buy the most expensive house in the neighborhood,” King said, “and look at the broader community. Where are the renters going to come from, and what do they do?” Areas near colleges and military installations can be good places to invest; and think about what renters typically look for, including access to public transportation, he said.

Some of the houses bought in the worst conditions ended up being the best investments for Litzner, who was able to put some sweat equity into the homes before renting them out. It’s also important that investors have multiyear plans for the properties they buy, planning the financials at least 5 years into the future, he said.

Best markets

Many investors sink their money into properties not far from where they live. Those are likely the communities they’re most familiar with, and from a management perspective, you’re never far from the tenants you’re dealing with.

But some markets are better than others to invest in right now.

A recent report from Inman News, an online real-estate industry publication, named the 10 best markets for home investors. These are markets with traits including high affordability, low prices, high share of foreclosure sales, high population growth, improving unemployment rate, and high return on investment in the next 10 years.

The following are their top 10 markets:

1. Indianapolis-Carmel, Ind.
2. Winchester, Va.-W.Va.
3. Gainesville, Fla.
4. Tucson, Ariz.
5. Tallahassee, Fla.
6. Hagerstown-Martinsburg, Md.-W.Va.
7. Salt Lake City
8. Richmond, Va.
9. Gainesville, Ga.
10. Winston-Salem, N.C.

Amy Hoak is a MarketWatch reporter based in Chicago.

Where Real Estate Listings Fail

Original Post: http://www.smartmoney.com/spend/real-estate/where-real-estate-listings-fail-1307483593158/

By ANNAMARIA ANDRIOTIS SMARTMONEY  JUNE 8, 2011, 11:27 A.M. ET

Getty Images

As buyers wade back into the market, there's plenty of information to be found online. And that may be more trouble than it's worth.

Earlier this year, a client asked Troy Deierling, a realtor in Sedona, Ariz., to set up appointments for three homes he'd seen online. Those viewings never happened: In spite of their supposedly current listings, Deierling discovered the properties had already sold. One had been off the market for three months.

As home buyers cautiously re-enter the market, they're arming themselves with information found online far more than existed pre-housing crash. A record nine out of 10 house-hunters searched online last year, according to the National Association of Realtors; around 15 million people now visit 6-year-old listings site Trulia.com each month. But with this great migration online has come a new set of obstacles, including errors, out-of-date information, and properties that are listed on the web but aren't actually for sale all of which can add up to a handicap for buyers. "You're probably going to get exposed to inaccurate information," says H. Pike Oliver, executive director for industry outreach at Cornell University's Program in Real Estate. "There's no real assurance."

The most common problems are simply errors -- listings that advertise gas heating when in fact the house runs on electric heat or a price cut that hasn't been updated online. But in some cases, "mistakes" may be intentionally misleading, such as touting a partly-finished basement as fully redone, or describing a kitchen as "eat-in" but only "if you were standing [up] with your plate," says New Jersey real estate broker Paul Howard. These discrepancies often appear on the listings that are posted on the Multiple Listing Service, an online database that listing agents are expected to keep current, he says. Separately, around 21% of the data realtors individually submit for posting on real estate web sites is not updated when changes are made to the price or when the property is sold, according to a report released last month by Trulia.

Of course, online misinformation is hardly unique to real estate listings. But because many of the online services are relatively new, and people buy houses so infrequently, home buyers may be less attuned to misinformation than, say, online daters. In general, it requires much more skepticism and diligence by buyers, experts say. For example, some real estate agents keep listings on their personal web sites long after they've sold; when home buyers contact the agent inquiring about the property, they're instead pitched new properties that might not meet their criteria, says Leonard Baron, principal of real estate consulting firm LPB Services and a lecturer at San Diego State University. Such lagging information is more common with smaller firms' web sites and could be a function of real estate agents simply forgetting to update those listings, says a spokesman for the National Association of Realtors. Either way, for buyers, it's a waste of time.

Online listings also seem to level the playing field when it comes time to make an offer, by including sales history and the number of days on the market information most buyers could previously get only from an agent. But "there are a lot of games that are played with 'days on the market'," says Mark Weiss, director of business development at Trulia.com. Properties that are listed for months can get removed from listing sites only to reappear as a new property for sale a few weeks later. That could be because a new listing agent has taken it over, says Baron; in some cases, a realtor can make a listing look new by taking the house off the market for a few weeks.

Popular real estate listing web sites say they try to update information often and they're on constant lookout for errors, but many sites rely on a feed from the MLS, which means it's largely the responsibility of individual realtors to update their listings. On Realtor.com, listings are revised daily as properties' status change, says the NAR spokesman. Trulia.com, which is where Deierling says his client found outdated listings, says it receives seven to eight million listings every day and it prioritizes information that arrives directly from franchises, brokers or MLS feeds. And like Trulia, Zillow says its goal is to give buyers easy access to a lot of information about nearby home values and market trends that can better inform buyer decisions.

For their faults, these web sites still offer home buyers more information than what was available even a few years ago. And that can help them make a more informed decision and eventually, an offer on a property. The point, consumer advocates say, is not to put too much faith in the information contained in a listing. The old shoe-leather tactics like talking to neighbors, getting crime reports from the local police, and asking a real estate agent to pull recent sales prices of similar homes nearby will trump most of the data in an online listing. "It's a reasonable way to start the search but not to finish it," says Barry Zigas, director of housing policy at the Consumer Federation of America, a consumer advocacy organization.

Billy Joel Cuts Price of Hamptons Home

Billy Joel's Sagaponack, N.Y. home has had another price cut and can now be your for just $16.75 million. Plus, a California mansion at less than half price and what $8 million will buy you in Patagonia. Candace Jackson and Juliet Chung have details.

Martha Stewart Posts ‘For Sale’ Sign

Original Post: http://blogs.forbes.com/marketshare/2011/06/01/martha-stewart-posts-for-sale-sign/

Posted by Robert Passikoff for Forbes.com

No matter how tastefully they tried to do it, Martha Stewart Living Omnimedia hired the Blackstone Group last week to try and sell the company. Oh, and “explore other opportunities.” That’s a good thing, because even talk of a sale doubled the current share price. That brought it up to $10, or a valuation at around $550 million. Which is less than a third of the $1.9 billion at which the company was valued before Martha ended up serving 5 months in prison, 6 months of house arrest, and the stock plummeted 88%. So not such a good thing.

Back then, when Martha the Human Brand was found guilty on all counts, the brand lost a good deal of trust among her then-loyal customer base. At that time, according to our Brand Loyalty Index, the brand rated lower than Enron, although to be fair, it’s easier to “hate” a Human Brand than just some faceless corporation, no matter how dreadfully it behaved. It took nearly half a decade for the brand just to edge back to break-even loyalty levels, and it’s hovered at there ever since. The brand has not managed to return to the early-21st century levels, when the brand was rated the highest of every brand we tracked. Definitely not a good thing.

Martha’s company and brand has since failed to migrate the brand to a new generation of consumers. The namesake magazines only generated $2.7 million in operating income. NBC dropped all her shows, relegating them to the void that is the Hallmark Channel, and broadcast lost $1.6 million. Not a good thing.

“Martha Stewart” has turned into a default brand – well-known and a lot easier for retailers to add to their product mix than trying to create a new brand on their own, but not much more. So successful merchandising efforts – even in the face of the Kmart non-renewal – with the likes of Macy’s and Home Depot, selling paint, pillows, and plates have provided $25 million in profit. And that’s a very good thing.

Stewart turns 70 this year, gets to rejoin to her Board after her five-year banishment, and has hired Lisa Gersh to fill the long-vacant CEO spot. Martha owns all of the Class B shares and controls 90% of the total voting rights and it’s been reported that while an offer for the entire company has not been proffered, Stewart does not regard an outright sale as such good thing.

Attracting more consumers and being more profitable requires more than just being known or even well known. It requires being seen as better meeting – even exceeding – expectations consumer hold for the category in which the brand competes. If you can do that you end up with more highly engaged customers, more sales, and a better bottom line. Oh, and far more attractive to prospective acquisition or investment partners.

And those are very good things.

5 Mistakes Home Sellers Should Never Make

By Ann Brenoff | Posted May 31st 2011 9:00AM ∨

Trying to sell a home in today's market requires courage, smarts and a fair amount of humble pie-eating. It's a buyers' market, which means sellers are expected to roll over and grovel appreciatively over each showing their agent landed.

Sometimes, whether through ignorance or a last gasp of pride, sellers make one of these critical mistakes that actually worsens their situation. So if you are trying to sell a home, make sure you:

1. Don't move out with your furniture.

Let's say you're no longer dancing to the unemployment blues and finally landed a job that happens to be in another city. You need to sell your house fast and relocate because there's a paycheck with your name on it, but it's 3,000 miles away. By all means, you can move post haste. Just don't take your furniture with you. Nothing sells worse (and by worse, we mean for less money and takes much longer) than an empty house.

Think about all those new developments you have toured. Which of the identical units looked the best? The ones with the furniture in them. Empty houses are cold and depressing. The rooms may look bigger without furniture but they also look soulless. Plus a house recently stripped of wall hangings often screams "paint me" at the top of its lungs.

2. Don't assume home-staging is just for the wealthy.

Getting back to point No. 1, you want the house to look good and maybe your old La-Z-Boy lounger has passed its prime. Professional home-stagers are the magicians of the modern-day decorating world. They move things around, bring in a few pieces, stash away some of your junk and -- voila! -- your house looks like it's worth $100,000 more than you're asking and suddenly you have a buyer drooling. In fact, you might like the new look so much you don't want to sell anymore.

A study by Stagedhomes.com found that 94.6 percent of homes that were professionally staged sold within 33 days, compared to an average of 196 days for homes that are not staged. Staged homes stay on the market 83 percent less time than a home that has not been staged.

Staging is something you should consider if you do need to move out your furniture.

3. Don't think your dog doesn't smell.

We here at AOL are pet-lovers. We even are allowed to bring our dogs to work with us. But we also know that not everyone shares our affection for our four-legged friends. In fact, it's been estimated that 15 percent of the population is allergic to dogs and even more are allergic to cats.

Pets need to be removed for showings. Crate them and leave the crate in the garage.

But to focus on the odor issue. We often grow immune to smells that we live with. Many an ex-cigarette smoker has commented how he never smelled the cigarettes while he smoked them but now that he's stopped, he can smell someone smoking in the next car on the highway. Same principle applies to dogs. Admit it: Can your pooch really roll around in the dog park and come home not a little odoriferous?

Steam clean the carpets and upholstered furniture; launder the bedspreads if Fido has been known to sneak up on the bed; and ask a pet-less friend to give your house the sniff test.

4. Don't think that buyers will understand that you have kids and tolerate a little mess and clutter.

It's just not so, my friends. The perfect house showing, says just about every agent bearing a Realtor's membership card, is one where the personal affects are missing. You want prospective buyers to be able to envision themselves living in this house. Your son's Little League trophy belongs in the garage, packed in a box ready to be moved. Having clean bathrooms and kitchens are most critical. Nothing turns a buyer's nose up more than dishes in the sink or a bathroom in need of a good cleaning.

The declutter and cleanup advice applies to the outside of the house as well as the inside, said Jim Hamilton, regional vice president of National Association of Realtors. He says that 70 percent of the decision about whether to buy a home is made as the buyers drive up to it.

5. Don't price the house based on what you need to get out of it or what you think it is worth.

Price it based on what it will sell for. Otherwise, what's the point of chasing the dog around with a can of Lysol and making your kids pick up their clothes: You won't be moving anyway

One of the Smartest Hedge Funds Around is Calling a Bottom in Housing

Original Post: http://www.streetinsider.com/Hedge+Funds/One+of+the+Smartest+Hedge+Funds+Around+Is+Calling+a+Bottom+in+Housing/6518619.html

Despite unprecedented efforts by the U.S. government to support the housing market, recent data has led some to call an official "double dip" in housing. Amid the dismal headlines, one smart hedge fund manager is loading up on home-building stocks on the view that the bottom is in.

David Tepper of Appaloosa Management, the man who's "buy everything" trade in 2010 made him a Wall Street legend, is now buying homebuilder stocks hand-over-fist. In the first quarter, Tepper opened new positions in five homebuilders and one building product company.

According to his latest filing with the SEC, Tepper disclosed that he now owns 1,367,679 shares of Beazer Homes (NYSE: BZH), 1,119,740 shares of D.R. Horton (NYSE: DHI), 1,388,900 shares of KB Home (NYSE: KBH), 1,637,112 shares of PulteGroup (NYSE: PHM), and 198,100 shares Ryland Group, Inc. (NYSE: RYL). He also now owns 394,614 shares of cabinet maker Masco Corp. (NYSE: MAS).

The positions are small on an individual basis, with KB Home ranking the highest in portfolio among the group with a value of just $15.8 million. However, taken together the stakes add up to approximately $55 million - not a huge bet for a man of Tepper's stature, but respectable.

If you would have followed Tepper with his "buy everything" trade in September 2010 you would be sitting pretty right now. Another great example of his trading acumen is his contrarian purchase of Dean Foods (NYSE: DF), which he saw a 50% gain on since disclosing the purchase to the public in January of this year.

Tepper’s track record speaks for itself and therefore it may be time to start looking at these homebuilders for your own portfolio. Investors could also diversify amongst the group by buying ETF SPDR S&P Homebuilders (NYSE: XHB).

News Hub: Foreign Homebuyers Back in Droves

WSJ's Candace Jackson visits the News Hub to detail some very glamorous homes being scooped up by foreign buyers. Homebuyers from Russia and Brazil are leading the way back into the luxury home market. Photo: REUTERS/Rebecca Cook.

How the $8,000 Tax Credit Cost Home Buyers $15,000

Original Post: http://blogs.wsj.com/developments/2011/05/11/the-8000-credit-cost-some-home-buyers-much-more/
By Jack Hough

Getty Images

The government's recent $8,000 cash incentive for first-time home buyers has proved even more costly for recipients than for taxpayers, according to data released Monday. Typical buyers have lost twice as much to price declines as they received from the program.

The median home value fell to about $170,000 in March from $185,000 a year earlier, according to Zillow.com. That means a buyer who closed on a house just before the tax-credit program expired in April 2010 collected $8,000 but has since lost $15,000 in value. Those who bought earlier in the program have done worse; the median price is down $20,000 from March 2009.

"The $8,000 first-time home buyers tax credit . . . has brought many new families into the housing market," the White House boasted in November 2009 upon announcing an extension and expansion of the program. Judging by sales declines since, that seems beyond doubt. Over the past year, the pace of existing home sales has fallen more than 6% and that of new home sales has fallen 22%.

The credit wasn't great for taxpayers, either. IRS says it paid $26 billion in home buyer credits in 2009 and 2010, enough to cover the maximum $8,000 credit for more than 3 million buyers. (It says at least $513 million went for fraudulent claims. Some claimants hadn't bought houses. Some filed twice. Some were under age 18 or incarcerated.)

In October 2009, when the extension of the $8,000 credit for homebuyers was under consideration, I outlined five reasons the U.S. didn't need more housing perks. These included already-high prices and an abundance of benefits, the questionable stimulus value of home subsidies and a gaping budget deficit. In January 2010, with the extension passed, I recommended that eager buyers wait at least nine months and purposely miss the $8,000 tax credit deadline to take advantage of price declines after. The median price fell about $8,000 over the next nine months and another $8,000 since.

I realize that writing an apology for this program's failure probably isn't high on Congress's or the President's list of priorities right now. But just in case someone's conscience is bothering them, let me offer a simple draft:

"We thought the $8,000 tax credits would raise house prices and spur the economy. We were wrong. For starters, it makes no sense for a housing affordability program to have the stated goal of raising prices, because higher prices mean less affordability, not more. Another thing: The program didn't work. We squandered taxpayer cash, increased the debt and lured many Americans into losses. We're deeply sorry. We'll try not to repeat the mistake. If anything, in light of America's daunting fiscal challenges, we're going to consider sun-setting costly, existing programs that lure house buyers, like the mortgage interest deduction and capital gains exemption, which together are more than 10 times as expensive as the expired tax credit program, costing about $1,200 per household last year alone."

For homeowners who are wondering if prices are done falling, and for renters who want to know if now is the time to buy, here's my best guess. In April 2007, when I first wrote that renting had come to make more financial sense than home-ownership, I calculated that prices would have to decline by half to restore the historic relationship between prices and rents. Since then, they've fallen 30% nationwide. Inflation has eaten another 8% of their value. So the worst of the plunge seems done, but prices might drift lower or lose ground to inflation in coming years. In some hard-hit markets, of course, houses are a good deal. For a very rough gauge of value in a specific area, divide recent sale prices by the yearly amount charged to renters for comparable properties. If the result is over 20, prices are probably too high. If it's less than 10, houses might be a steal. If it's in between, well, it's in between.

For another take on prices, consider something I and others have argued about the natural rate of price increase for houses. It's exactly the rate of inflation. Houses, after all, are sticks and stones and other ordinary things, and inflation by definition is the gradual rise in the price of ordinary things. If house prices forever rose faster than the rate of inflation, they'd become infinitely expensive relative to rents, incomes and the cost of building materials.

House prices indeed tracked the rate of inflation during the 1970s, 1980s and 1990s, straying only slightly and briefly and returning each time. In 2000, house prices began to detach from the inflation rate and race ahead of it. Therefore, normalcy might be restored once the house price rise since 2000 matches the rate of inflation since then.

Houses are up 41% since 2000. Inflation has increased other costs by 32%. By this measure, too, prices on a national level seem nearly back to normal but not quite there yet.

Is That a Listing in Your Pocket or Are You Just Happy to See Me?

Original Post: http://realestate.aol.com/blog/2011/05/09/is-that-a-listing-in-your-pocket-or-are-you-just-happy-to-see-me/

By Ann Brenoff  for real estate at aol.com Posted May 9th 2011 1:55PM

A real estate practice that continues to cling to life support despite the recession -- and some say common sense -- is the pocket listing, which presumes that it's somehow a good idea to list your house for sale but keep it a secret.

In a pocket listing, a homeowner tips off an agent -- or six -- that they would consider selling their home if the price was right. They don't want the home publicly marketed or put in the MLS, they don't want open houses held and they certainly don't want a "for sale" sign decorating the front lawn.

While it's a marketing stance that may make sense for Brad and Angelina, it really doesn't for anyone else seriously hoping to sell their house.

Pocket listings serve the interests of a select few homeowners who, for various reasons, would prefer to not let their neighbors, business colleagues or the world-at-large know they intend to sell their houses and move. Why would they feel that way? Bravo "Million Dollar Listing" star Josh Altman offers this theory on the pocket listing: He says that in the places where he sells -- Beverly Hills and the other high-end markets in greater Los Angeles -- image is everything. "People like to paint a picture of themselves as successful and wealthy," Altman says. Listing your house for sale might suggest that you need to sell, that your job is on the line, or that you have an adjustable rate mortgage that is about to reset into the stratosphere and you can't pay the piper.

Altman says that he's actually seen an uptick in the number of pocket listings. During down economic times, he says, people want to test the market before listing, so they offer their home as a pocket listing for two or three months before deciding to let it go into the MLS. It also helps get them used to the idea that their home is for sale, emotionally speaking.

If a seller has a well-connected agent who knows the high-end community, a pocket listing can work. For for those in the mid-market range, this is neither the time nor the market, says Paul Ferra, a Coldwell Banker agent who sells in Topanga Canyon, Calif., where the homes are more modestly priced and the inventory flush.

Agents privately admit they dislike pocket listings but accept that they are a part of the business landscape. Jeffrey Hyland, a principal of the boutique Beverly Hills firm of Hilton & Hyland, calls the practice a bad deal all around.

"If the house sells quickly or to the first person who looked at it," Hyland says, "the seller always winds up feeling that he gave the house away." Full exposure to the market gives the buyer the most comfort that he got market value.

Hyland also says that buyers who jump into something because they are afraid it will soon be listed often suffer buyer's remorse and back out of the deal.

Plus, unless there is a contract signed, the agent who brings in a buyer may be relying on a handshake to get his commission. "There are no protections with pockets and this creates problems for the agent," Hyland says. "There may be several agents working with the buyer at the same time." It's a recipe for messiness, if not outright disaster.

Manhattan brokers also report that these deals have become more prevalent these days. In New York, where desirable inventory is said to be low -- having shrunk in last spring's buying flurry -- sellers perceive the market to have recovered and thus think they can command higher prices than may be the actual case.

Pamela Liebman, president of The Corcoran Group, frowns on the pocket listing practice as well. Quoted in The New York Times, Liebman said that people who declare their interest in selling an apartment without listing it may not be serious about selling it. Plus, she added, "ultimately the sellers hurt themselves."

The California Association of Realtors has a form for single-party compensation, and smart agents ask the seller to sign it before they bring a potential buyer over to see the house. But pocket listings have this implicit trust about them, making it hard sometimes for an agent to even broach the notion that the seller's word may not be good enough.

Agent Altman notes that because real estate is so competitive, agents with pocket listings may call around to other agents to see if they have potential buyers for the property, but are careful not to give away the address until they set up a specific showing for a prequalified buyer. His agency has an intranet system where pocket listings are posted just for Hilton & Hyland agents.

But how secret can a listing really be kept if there is to be a prayer of selling the property?

Not very. There's even a website where, for a $4.95 registration fee, real estate agents from around the country can post their pockets.

Anna Kournikova Lists Miami Beach Home at $9.4 Million

Original Post: http://realestate.aol.com/blog/2011/05/09/anna-kournikova-lists-miami-beach-home-at-9-4-million/
By Ann Brenoff  Posted May 9th 2011 11:05AM

Tennis star Anna Kournikova's 6,600-square-foot house in Miami Beach has volleyed onto the market with a price tag of $9.4 million.

The waterfront home on high-end Sunset Island has seven bedrooms. Typical of Sunset Island homes, great emphasis is placed on what's outside, which in this case is a heated pool and spa surrounded by a coral rock pool deck, a covered entertainment area, and an outdoor kitchen including barbecue. There is also a large dock on 156 feet of waterfront on Sunset Lake and a lush landscaping plan built around the large Royal Palms that surround the property.

(See photos after the jump.) The ivy-covered Mediterranean was built in 2000 and has French doors that lead out, hardwood floors throughout, high ceilings, arched windows, formal dining room and living room with a fireplace and a kitchen island with granite countertops. The property has a two-story guest house with a separate living space and kitchen on the first floor, and spacious suite on the second floor.

Kournikova, with Martina Hingis as her partner -- the Spice Girls of tennis -- won Grand Slam titles in 1999 and 2002.

The Russian-born tennis star has garnered attention for not just her play, but her stunning good looks and personal life as well. For years after her curtailment from the professional circuit, her name remained one of Google's most popular search terms.

The property is listed by Jill Eber and Jill Hertzberg, who partner under the name "The Jills" for Coldwell Banker Miami Beach.

Filed under: News, Celebrity Homes

Tags: Anna Kournikova, anna kournikova house for sale, anna kournikova miami home, athlete real estate, celebrity real estate, Martina Hingis, miami real estate, Sunset Island, tennis star, the jills

News Hub: Don King's Mansion, 'Home Alone' House

Don King cuts the price of his Palm Beach mansion to under $20 million and the house made famous by the movies "Home Alone" and "Home Alone 2" is up for sale for the first time in more than 20 years. Candace Jackson has details on both.

10 Tips for Surviving the Housing Market

Original Post: http://www.cnbc.com/id/42806429
By: Cindy Perman CNBC.com Staff Writer

The economy is starting to improve but the housing market has yet to show any significant signs of recovery, which has homeowners nervous.

Yellow Dog Productions Getty Images

The skies are starting to brighten up in the housing market.

 

Home prices are hovering near their recession lows, hit in April 2009, according to the latest Case-Shiller home-price report. It’s a buyer's market and by many projections, it won’t shift to a seller’s market for a good year or more.

So, how do homeowners, who have most of their equity in depressed real estate, slog through until it becomes a seller’s market?

Here are 10 tips from real-estate moguls who have survived several housing-market downturns.

1. Homeowners should be very encouraged by the fact that home buyer sentiment has improved.

“The mood has definitely changed … Buyers are feeling more positive,” said Barbara Corcoran, the founder and former president of the Corcoran Group and a real-estate pro who has survived four housing-market slumps. “The activity level has jumped considerably in the last 60 days … over and above the typical spring market,” she said.

Rents have been soaring and it’s now cheaper to buy than rent pretty much anywhere you go, Corcoran pointed out, which will only add fuel to home-buyer desire.

2. Builders aren’t building many new homes, which means less competition.

Housing starts have been flat for the past year, according to data from the Commerce Department, which means that homeowners won’t really have to worry about competing with new construction when they go to sell their homes.

“You’re seeing a lot less inventory on the market while at the same time, there are more buyers in the market,” said R. Donahue Peebles, chairman and CEO of the Peebles Corporation, which has a $4 billion portfolio that includes properties in Miami, Las Vegas and Washington, D.C.

3. In about 40 percent of major metropolitan cities, home prices are going up, according to the National Association of Realtors.

Low interest rates have been tough on savers, since saved money isn’t making as much interest, but they help drive up housing prices, Corcoran noted.

4. Remember: Your house may be worth less on paper, but you won’t lose any money unless you sell.

This is one thing homeowners often forget when they get caught up in the latest headlines about home prices or checking on the value of their own home: If you don’t need to sell right now — don’t.

Corcoran said she owns a country house that she’s not living in, but she plans to hang onto it until the market recovers. “I can’t bear to let it go for 50 percent of what I could have five years ago.”

5. Slumps feel like they go on forever, but the recoveries can happen quickly.

“Prices are always slow to unwind. And the time feels much longer than it actually is,” Corcoran said. “But when they recover, they recover like gangbusters — and you can make up a lot of appreciation in a short amount of time,” she said.

No one is suggesting this will be a "gangbusters" recovery, Corcoran clarified, but it will probably happen more quickly than most people think.

“I think people are grossly overestimating how long it’s going to take,” Corcoran said. Previous price recoveries have happened in quadruple- or triple-time, she said. “Maybe now it’s double,” she added.

6. While you’re waiting, do some renovations.

There are two big financial benefits to home improvements such as upgrading a kitchen or adding "curb appeal" (visual appeal for potential buyers before they even enter the house) during a housing-market slump: First, you’ll get a better bang for your buck when the market recovers and you sell your house. Second, you’ll save money on the labor. It’s basic supply-and-demand: When times are good and the work is flowing, contractors can charge more, and when the work is slow, they’re more willing to bargain on the price.

“Contractors are much more hungry for work right now,” Peebles said. “Architects and consultants are also hungry for work,” he added.

Not only will renovations help you command a better price when you go to sell the house but upgrades will help you sell the house more quickly in a competitive market.

Given how many homes are on the market, “buyers don’t have to tolerate things they don’t want,” Corcoran said. For example: hardwood floors. “I don’t care how pretty you think your carpet is, you rip it up and refinish the floors,” Corcoran said. “Nobody wants to move into your carpet.”

And, she said, it’s more important now than ever to have curb appeal. “Home buyers shop online nowadays and if the façade of the house doesn’t grab them in the first few seconds, they’ll click onto the next one,” Corcoran said.

However, she cautions, you have to be smart with your renovations and make sure you spend the least for the biggest payoff. So, maybe you don’t replace all of the kitchen cabinets, but you put on new doors or new hardware. Or, you replace the countertop. Change out the kitchen floor. Fix the doorbell. Repoint the driveway. Formica and and broken doorbells may have been acceptable during the boom, but in this market, they can kill the deal.

Plus, as an added bonus, you’ll get to enjoy the upgrades until the market recovers!

7. Don’t date yourself.

There are certain things that will date a home as soon as you walk into it. Would you believe that one of the things that can date a home in today’s market is a granite countertop?

“Granite is out, I hate to tell you!” Corcoran said.

That’s right — it used to be that formica and linoleum dated a house, but in this market, high-end materials like granite can date a house. The new thing is man-made materials such as Caesarstone (which is 93 percent quartz) or DuPont’s [DD 56.772 -0.018 (-0.03%) ] Corian, which are cheaper, more durable and come in hundreds of colors.

Stainless steel sinks are also on the way out — ceramic is back, Corcoran said. Farmhouse sinks are still safe, though: they've withstood the test of time, she said.

Her advice is to go shopping in a new, high-end development to see what all the latest materials and gadgets are, and then choose your renovations wisely to stay competitive.

8. Don’t let yourself get stuck. If you want to trade up — trade up.

“If you wish you had a better street, a nicer town, a better school district or a better backyard view — whatever you’re dreaming about, there’s no better time to trade up,” Corcoran said. “Even if you have to take 30-percent less on your house, you’ll get a better home and save 30 percent [on the trade-up], so you’re ahead of the game,” she said.

So even though it may seem counterintuitive to buy more real estate when you're feeling trapped in the home you already own, real estate pros say a downturn like this is the best time to buy.

“The biggest mistake I ever made in any downturn was not buying my first apartment during a downturn … I was too scared,” she said. “I still regret it.” After missing that opportunity in her first downturn, she said, it took her five years to get up enough money to get into the market.

9. Consider buying a vacation home.

Not only is now a great time to trade up, it's an even better time to buy a vacation home, given that some of the most depressed real estate in America is in sunny destinations such as Florida, California and Las Vegas.

It's not just because of the depressed home values, but also for the super-low interest rates. When Peebles started in real estate in 1979, he said, interest rates were at nearly 20 percent. Today, they remain under 5 percent.

It's not easy to go against the tide but that's how you make money in real estate.

“I saw great fortunes that were made in the early '90s. I saw great fortunes made back in the early '80s,” Peebles said. “I’m a big believer in the fact that you buy when fewer people are buying … It’s stressful, but you get rewarded for it. It’s called risk-taking.”

10. Be a smart seller.

When you are ready to sell, resist the urge to go with the real-estate agent who gives you the highest value on your house.

“Always go with the lowest — that guy is truthful!” Corcoran said. “The best broker is the one who will tell you what your house is really worth.”

It can be nauseating to watch the value of your home drop but the bottom line, the pros say, is not to get bogged down in the slump — but focus on the recovery.

Corcoran recommends ignoring all the negative housing news, and kicking back and toasting some marshmallows or firing up the grill.

“All that time you’d spend being worried, you could be enjoying your house!” Corcoran said.

“I believe that people who hold on will be rewarded,” Peebles said. “I think we will look back at this time period as one of the best buying opportunities in the nation’s history.”

“The biggest lesson I’ve learned is that it always comes back,” he said. “And if you believe in the USA, then you have to believe in the housing market of the USA.”