Boomer’s Blog

For investors who want to track trends in real estate numbers as they emerge, the RealtyTrac Monthly U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing reported monthly; it is then broken out by filing type at the state and national levels. Below are some fast facts on state foreclosure numbers:

Five Highest State Foreclosure Rates
These figures chart the ups and downs of foreclosure rates reported in states across the nation.

1. Nevada: One in every 139 Nevada households received a foreclosure filing during March, 3.9 times the national average and the highest state foreclosure rate for five consecutive quarters. Foreclosure filings were reported on a total of 7,659 properties during March, up 24 percent from February and up nearly 62 percent from March 2007.
2. California: Foreclosure rates in California came in second place among the states for the fourth month in a row. One in every 204 California households received a foreclosure filing in March — at a rate nearly three times the national average.
3. Florida: This state takes third place in the foreclosure rate rankings. There, one in every 282 Florida households received a foreclosure filing in March, establishing a foreclosure rate that’s nearly 2 times the national average.
4. Arizona: Despite a nearly 5 percent monthly drop in foreclosure activity, Arizona posted the fourth highest state foreclosure rate for the third consecutive month, with one in every 283 households receiving a foreclosure filing in March. Overall foreclosure filings were reported on 9,199 properties during March, up nearly 106 percent from the same month in 2007.
5. Colorado: Colorado foreclosure activity declined 8 percent from February, and 1 percent from March 2007. Still, the state’s foreclosure rate continues to rank fifth-highest among the states. Foreclosure filings were reported on 6,180 Colorado properties in March — that’s one foreclosure for every 339 households.

Other states with foreclosure rates making the cut for the top 10 foreclosure rates include Georgia, Ohio, Michigan, Massachusetts and Maryland.

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Can’t sell that flip? Consider becoming a landlord to generate cash flow while you hold on for better prices.

The Wall Street Journal reports that 2.2 million vacant homes were for sale in Q1, up from 2.1 million in Q4, and about one million more than was considered “normal” before economic crises permeated the market.

The U.S. homeowner vacancy rate, which tracks the number of vacant homes for sale, jumped to 2.9 percent in Q1, up from 2.8 percent in Q4 2007. According to recent U.S. Census Bureau housing data, the vacancy rate has risen significantly since the housing bubble morphed into the mortgage meltdown. Between 1995 and 2005, the rate sat between 1.5 percent and 2 percent.

Families today are no more likely to own their homes now than they were in 2002, despite widespread opportunities, such as subprime mortgages, that were purported to boost home ownership among borrowers with poor credit scores. Related Census data show that the seasonally adjusted share of homes occupied by owners rose to 67.9 percent Q1, up from 67.7 percent in Q4 – this level peaked at 69.3 percent in 2004. These numbers and the credit crunch fuel more speculation that home prices will continue to drop well into Q4 2008.

While the dream of home ownership has become an Ambien-fueled nightmare for many Americans, data show that droves of families who’ve managed to claw their way out of bad mortgage deals are looking for places to live.

There currently are 4.1 million vacant homes for rent, and the rental vacancy rate edged up to to 10.1 percent in Q1. The rental vacancy rate clearly is on the rise since Q4’s rate of 9.6 percent was recorded by the Census. Analysts say however, that the growing inventory of vacant rentals should keep rent prices relatively stable, and help to temper inflation.

For those looking into becoming a landlord, the Boston Globe offers six rules from the trenches that could save you from financial — and emotional ruin.

Bank of America Corp. expects to re-negotiate at least $40 billion in at-risk mortgages after it completes its long-anticipated acquisition of Countrywide Financial Corp. this quarter.

In March, BofA announced renewed plans to buy the slice of Countrywide it didn’t already have in an all-stock transaction worth about $4 billion. Soon afterwards, Countrywide announced that 34 percent of its subprime mortgages were delinquent by Q4, 2007, representing a steady rise from 21 percent in Q4 2006.

In August, BofA invested $2 billion in Countrywide, and earned a non-voting preferred security which yields 7.25 percent annually. The security can be converted into 16 percent of Countrywide’s common stock. Countrywide is slated to announce its Q1 earnings April 29.

BofA estimates that its efforts to re-work Countrywide’s troubled mortgages likely will enable 265,000 mortgage customers to keep their homes and promises it will let distressed property dwellers inhabit their locations for 60 days after foreclosure completion. After foreclosure, those who vacate within 30 days will get $2,000 for moving expenses.

Of the acquisition, the Motley Fool muses that, since the onset of the mortgage meltdown, Countrywide — the nation’s largest mortgage lender — has become synonymous with the subprime mortgage debacle, irresponsible lending practices and unscrupulous executives who miraculously manage to stay employed, despite their roles in decimating the housing market and the economy. Fool reporter Morgan Housel predicts that dropping Countrywide’s tainted moniker will be BofA’s first course of action when the acquisition deal is complete.

Countrywide Financial offers Internet visitors a free database search of its real estate-owned (REO) properties throughout the United States. Addresses and property types are provided, but users have to request more information from Countrywide for details or photos.

RealtyTrac offers a similar service with broader search capacity. Users can instantly search their massive database for REO, Government Owned, Foreclosure Auction, Pre-foreclosure, For Sale by Owner (FSBO), Resale MLS and New properties across the United States. Here, you can access photos and property details. Although a subscription is required for some of the enhanced search features, basic searches are free and a free trial offer is currently available.

These can be an indispensable tools for finding great leads distressed and other types of properties. Enjoy!

Economists addressing the National Association of Home Builders predict that beleaguered housing and home construction markets will continue to take a beating well into 2009. CNNMoney.com reports that the turmoil will cost Americans $400 billion in lost home value. Economists say that the decline of the housing markets, rising oil prices and the ongoing credit crisis wall will continue to raise materials costs for builders and complicate home financing for buyers. These factors likely will continue to inhibit a speedy market recovery. Builders may take longer to recuperate than the real estate market, economists say, because when the housing market crashed, new housing permits dwindled, and the market experienced a glut of unoccupied new homes with few qualified buyers in sight. These high inventories compete directly with builders, who are forced to limit new projects until supply and demand levels level out.

I’ll be heading south on Saturday to check out the Los Angeles Real Estate Investors Club’s (LAREIC) Investor Essentials Seminar. I’ll be teaching entrepreneurs how to Make Tons of Cash in Creative Real Estate and explaining how their success hinges on effective marketing. There is a lot more to this than just a catchy lesson title. Clearly, greenbacks don’t raise the dead or cure cancer, but tons of cash — especially in creative real estate — is the lubricant for success.

It has been statistically proven that seven out of 10 millionaires in the United States have made their fortunes in real estate. In the meantime, the other three have kept their millions by investing in real estate. This is all true even in California, where RealtyTrac reports bank repossessions are up 557 percent over this time last year. While these figures represent devastation for many, real estate investors are beginning to see new opportunities emerge on the market’s horizon.

There is no disputing the credit crunch and the market downturns in the Golden State have taken their toll. As a California real estate investor, I know what the conditions are, just as I understand their cyclical nature. I’ve bought and sold hundreds of properties, and have seen Bay Area markets rise and fall like the tides.

But despite the market’s persistent downturn, if you’re buying right and getting the good deals, you’ve got great potential to succeed. In my business, SalesTeamLive, I see this happening every day. We have more than 800 people using our Done-For-You marketing service and we’ve sent out more than 8 million mailers for folks across the country. In the past six months alone, we’ve generated over 40,000 inbound calls. This business gives me a bird’s eye view of what’s happening in markets throughout the nation.

I see viable real estate investment opportunities in many markets, but especially in California. People are picking up properties for 50 to 60 cents on the dollar. And if they’re buying right, there are plenty of motivated and qualified buyers out there who will take them off their hands.

However, I’ve also noticed that, especially with the gloomy headlines, the credit crunch and the market’s woes, a lot of us tend to be fearful, become overwhelmed and procrastinate. This Saturday in L.A., I’m going to teach entrepreneurs how they can overcome the negativity and show them exactly what their time is really worth. Using the right tools, real estate investors can still write their own tickets to the destinations of their choice.

In California specifically we’re coming into one of the best buying opportunities of all time. If you’re using the right model and you already know what works, you don’t have to invent it. It’s easy to make money right now in this market if you have the success formula.

If you can’t be in L.A on Saturday, please remember that you don’t have to innovate to make it in this business:

• If you want success, it comes down to marketing;
• If you want survival, it comes down to automation and delegation;
• If you want wealth, it is waiting for your call.

If you would like to hear an audio preview of my presentation, recorded during a phone conversation with LAREIC President Phyllis Rockower, it is freely available on her Investor Essentials registration site.

The National Association of Realtors (NAR) has issued more startling data regarding the U.S. housing market that may serve as a spoiler alert for sellers hoping the season will blossom in Spring. Here are selected highlights of NAR’s most recent report:

National Market Overview
Overall, February homes sales slid nearly 24.0 percent from the same period last year. Sales of existing homes fell nearly 13.0 percent in 2007, to 5.65 million, the largest decline in 25 years.

• The median sales price for single-family homes and condominiums dropped 8.2 percent in February from last year, to $195,900.
• The median price for single-family homes dropped nearly 9 percent from a year ago: the worst decline in 40 years.
• Total housing inventory rose 1.0 percent at the end of March to 4.06 million existing homes available for sale. This represents a 9.9-month supply at the current pace, up from a 9.6-month supply reported in February.
• Single-family home sales fell 2.7 percent to a seasonally adjusted annual rate of 4.35 million in March from 4.47 million in February, and are 18.4 percent below the 5.33 million-unit pace reported in March 2007. The median existing single-family home price was $198,200 in March, down 8.3 percent from last year.
• Existing condominium and co-op sales rose 3.6 percent to a seasonally adjusted annual rate of 580,000 units in March, up from 560,000 reported in February, but still 25.5 percent below the 779,000-unit level reported for last year. The median existing condo price was $219,400 in March, which is 2.8 percent lower than March 2007.

Regional Snapshots
Data indicate a that a mix of market conditions prevails throughout the U.S., but areas showing healthy price gains include Des Moines, Iowa; Austin, Texas; and Durham, N.C. Because the slowdown in sales from last year’s rate is more pronounced in expensive areas than in low-cost markets, the national median price is suffering. Regionally, home sales rose in the Northeast and West but fell in the Midwest and South.

• Regionally, existing-home sales in the Northeast rose 2.2 percent to an annual pace of 910,000 in March, but are 18.8 percent below figures for March 2007. The median price in the Northeast was $284,300, up 4.6 percent from a year ago.
• Existing-home sales in the West rose 2.2 percent in March to a level of 940,000 but are still 22.3 percent below a year ago. The median price in the West was $285,100, which is 14.7 percent lower than it was in March 2007.
• In the South, existing-home sales fell 3.5 percent to an annual rate of 1.92 million in March and are 20.0 percent below sales closed in March 2007. The median price in the South was $167,200, down 7.1 percent from last year.
• Existing-home sales in the Midwest dropped 6.5 percent to an annual rate of 1.16 million in March, and are 15.9 percent below last year’s rate. The median price in the Midwest was $152,600, down 5.3 percent from March 2007.

As home sales and prices drop across much of the United States, many sellers are resorting to fire-sale pricing and bargain hunters are seizing the hot real estate investment opportunities.

The national median home price dropped to $195,900 in February, down from $213,500 for the same period in 2007, acording to RealtyTrac. In the meantime, cities in three of the five states with the nation’s highest total foreclosure rates top CNNMoney.com’s rankings of the best places to invest in housing.

Georgia’s Atlanta Area

• Georgia’s total of 11,047 foreclosures fuels the nation’s fourth-highest overall foreclosure rate, says RealtyTrac. One in every 351 Georgia households received a foreclosure filing in March — ranking its foreclosure rate No. 6 in the nation.
• According to CNNMoney.com, rampant home building in the Atlanta area has stalled, which should start to reduce the area’s large supply of vacant housing and propel prices upward.

Ohio’s Cincinnati and Cleveland Areas

• RealtyTrac’s most recent report says that Ohio’s total of 11,273 foreclosures give the state the third highest foreclosure rate in the U.S.
• One in every 448 Ohio households received a foreclosure filing in March — earning a seventh place spot in total foreclosures rankings by state.

CNNMoney.com ranks these cities as the third and fourth best places to buy houses in today’s market, forecasting that:

• Cincinnatti’s manufacturing-heavy economy should rise as the dollar falls: Commercial construction and high-end developments are on the rise.
• Cleveland’s foreclosure boom seems to be slowing, thanks to programs to help troubled borrowers. Prices have stabilized and appear poised to rise.

Michigan’s Detroit Area

• In February, RealtyTrac reported that Detroit had nearly 5 percent of the city’s households were entering some stage of foreclosure, at a rate 4.8 times the national average.
• With an average price-to-rent (P/R) ratio of 15, a buyer theoretically annually gains almost 7 percent of the purchase, CNNMoney.com reports. The average P/R ratio for Detroit’s 30 biggest markets: 23.

Texas’ Houston Area

• Texas’ foreclosure filings were reported on 10,700 properties in March, marking a 13 percent decrease from the previous month and a 16 percent drop from foreclosures reported for the same period in 2007, RealtyTrac reports. In February, a decline in the state’s foreclosures dropped Texas to the fifth place spot for total foreclosures among the states.
• In Houston, soaring oil prices will support and help to stabilize real estate prices. In Q4 2007, prices here were up 1.4 percent — the fastest of all the metro areas CNNMoney.com analyzed.

Federal housing authorities have reached a $31.4 million settlement with ousted Fannie Mae CEO and Harvard-educated Rhodes Scholar Franklin Raines and some of his former staff. The agreement follows allegations that Raines and his deputies inflated earnings reports while at the helm of largest mortgage-finance company in the nation. The deal settles $215 million lawsuit filed by Office of Federal Housing Enterprise Oversight (OFHEO) against the crew in late 2006 over an assessed $6.3 billion in misstatements issued by Fannie Mae, a government-chartered company.

Bloomberg reports that as part of the settlement deal, Raines has agreed to pay $24.7 million in fines and penalties and will forfeit stock options. But the buck doesn’t stop there. Former Fannie Mae CFO Timothy Howard will fork over $6.4 million, and former controller Leanne Spencer was fined $275,000. The penalties however, won’t be paid in full by Raines, Howard or Spencer. Fannie Mae’s insurance carrier will cover the $3 million cash portion of the settlement.

Raines himself will pay a $2 million fine to the federal government; relinquish claims on stock options valued at $15.6 million when they were issued; donate $1.8 million in proceeds from the sale of Fannie Mae stock to charitable programs that help struggling homeowners; and forfeit about $5.3 million in other benefits so far unspecified by OFHEO. He received the stock options in 2000-2003 for 932,000 shares at exercise prices ranging from $69.43 to $80.95 a share. After he was booted, the shares never rose above $72 and now trade at less than $30, rendering his relinquished options worthless on the market.

Insurance will cover Howard’s $750,000 fine, but he’ll give up $5.2 million in stock options, contribute $200,000 in proceeds from stock sales to charity and loose unspecified benefits valued at $240,000, OFHEO said.

Fannie Mae and Freddie Mac were created to boost homeownership. Their profits stem from holding mortgages and mortgage bonds as investments and by charging fees to guarantee and package the loans as securities. The government requires them to reserve capital to cover losses on those mortgages. The companies came under greater regulatory scrutiny in 2003, when accounting blunders first became painfully evident.

In a similar settlement deal, OFHEO documents show that former Freddie Mac CEO Leland Brendsel agreed in November to pay $16.4 million in penalties for his role in that company’s bogus accounting statements. Brendsel resigned under pressure from Freddie Mac in 2003, and on his way out agreed to pay a $2.5 million penalty, return $10.5 million in compensation and drop a claim to $3.4 million in additional earnings.

In the wake of the announcement, Fannie Mae climbed 30 cents to $28.55 Friday in NYSE composite trading, while Freddie Mac jumped 25 cents to $27.06. The two companies own or guarantee more than 40 percent of the $11.5 trillion in outstanding U.S. home loans.

“The day of the go-getter has passed. He has been supplanted by the go-giver. There will never be the need to put the lid back on, because, in the future, business will be conducted by methods that will require no pressure,” said Napoleon Hill. “The business depression marked the death of one age, and the birth of another. This changed world requires practical dreamers who can, and will put their dreams into action. The practical dreamers have always been, and always will be the pattern-makers of civilization.”

Hill, perhaps the original guru of North American capitalism, wrote the above words in Think and Grow Rich, a self-help book penned in the wake of the Great Depression. And they’ve certainly aced the test of time. Much of this book was inspired by the words and works of downtrodden Scottish immigrant cum billionaire steel magnate and global philanthropist Andrew Carnegie.

Think and Grow Rich is considered by many to be the gospel of 20th century American Capitalism: work hard, have a firm handshake, get ahead by doing quality work, treat your customers with respect, find success by conquering personal weaknesses. These are some of the basic tenants of Hill’s Philosophy of Achievement.

At the foundation of much of his writing, is Hill’s belief that the source of all great accomplishment can be traced to — and controlled by — the integration of desire with the inner workings of the conscious and subconscious minds. The concept is much more simple than it sounds: Seize control of your own destiny.

Many real estate entrepreneurs are so focused on their businesses that they may find there’s little time left at the end of the day to devote to developing the mind set that will attract wealth. But by clearly defining goals, successfully implementing time-management techniques, and using tools such as SalesTeamLive’s Done-For-You Marketing Campaigns, even the most beleaguered entrepreneur can turn his or her real estate investment business into treasure.

Though the final few chapters of the book explore the “sixth sense,” using the sex drive (”transmuted sex energy”) as a motivational tool and achieving greater physical and mental power with telepathy, this should not distract readers from the overall usefulness of Hill’s work. Most of the material in this book is highly relevant to real estate entrepreneurs navigating the cusp of the 21st century business landscape.

What was true in 1937 when Hill wrote Think and Grow Rich remains a reality in 2008: “Ideas are the seedlings from which great fortunes have grown. One sound idea is all that one needs to achieve success.”