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Archives for April 2013

Great Price Drop – Ketchum Cabin – Waterfront Neighborhood – Now $412,200

This cozy cabin nestled among the aspens is just footsteps away from a lifetime of fishing in the desirable Ketchum waterfront pocket neighborhood.

Built from logs the home has vaulted beam ceilings, a river rock fireplace, large view decks, and is surrounded by common areas. The ideal get away retreat or a great place to call home.

US Home Prices Rise Most Since May 2006

U.S. single-family home prices rose more than expected in February, posting their best annual increase since May 2006 in a fresh sign the housing recovery remains on track, a closely watched survey showed on Tuesday.

The S&P/Case-Shiller composite index of 20 metropolitan areas gained 1.2 percent on a seasonally adjusted basis compared to January, topping forecasts for 0.9 percent.

“Despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy,” David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.

Prices in the 20 cities gained 9.3 percent year-over-year, also beating expectations for 9 percent and the biggest increase since May 2006.

On a non-adjusted basis, prices rose 0.3 percent.

“It is very strong, it’s a solid rebound, but I would not call it a bubble,” said Blitzer about housing on CNBC’s “Squawk on the Street.”

Still Blitzer said the overall economic picture does not look as strong as housing.

“This is not an all-time boom by any means, there is a lot of hesitancy and there are a lot of foreclosed houses out there so this is not 2006 all over again,” he added.

Adjusted prices have been rising since last February, the first year of gains since before the housing market’s collapse. The sector started to turn the corner in 2012, helped by tighter inventories and improved sales.

FICO To Begin Monitoring Consumer Behavior On Social Networks

Fair Isaac Corporation (NYSE: FICO) the company behind the credit reports of the same ticker name, is widening the lens through which it peers at consumer behavior by taking its consumer behavior monitoring platform to social networks including Facebook, Twitter, and others. The company on Monday announced the acquisition of social network analysis firm Infoglide Software.FICO now watching consumer information on social meda

Infoglide has created technology that searches social networks for “suspicious information in an insurance claim or financial transaction, then [makes] links with other transactions to expose otherwise invisible patterns.”

According to Infoglide CEO Will Lansing the software helps to “identify non-obvious relationships,” while eliminating false-positive results.

Fair Isaac will use its acquisition to “improve fraud detection, security and compliance” for its FICO score system.

FICO notes that Infoglide has “a strong foothold” in the governmental sector, allowing agencies to use Infoglide’s software to root out fraud by corporate insiders, uncover money laundering schemes, and potentially expose terrorist networks.

The full social network reach of FICO’s new system is not known.

How the Case-Shiller Home Price Index Works

The S&P/Case-Shiller Home Price Index is one of those terms you hear a lot because it’s used to measure the health of the U.S. housing market—which hasn’t actually been healthy since the bursting of an enormous national and global real estate bubble in 2008.

While various government measurements also measure the housing market, the Case-Shiller Index is widely considered the most authoritative. CNBC explains.

What is the S&P/Case-Shiller Home Price Index?

The Case-Shiller Index (as it is commonly known), tracks changes in the value of residential real estate, both nationally and in 20 metropolitan regions.

It is composed of these separate indexes:

  • The national home price index, covering nine major census divisions.
  • The 10-city composite index
  • The 20-city composite index
  • 20 individual metro area indexes for each of the cities in the indexes above

Which cities that make up the indexes?

The Composite 10 Index cover Boston, Chicago, Denver, Las Vegas, Los Angeles, South Florida, New York, San Diego, San Francisco and Washington.

The Composite 20 Index includes those cities, plus Phoenix, Tampa, Fla., Atlanta, Detroit, Minneapolis-St. Paul, Charlotte, N.C., Cleveland, Portland, Ore., Dallas/Fort Worth and Seattle.

Who are Case and Shiller?

Karl E. Case is an emeritus economics professor at Wellesley College. Robert J. Shiller is an economics professor at Yale University.

How did the index get started?

In the 1980s, Case developed a method for comparing repeat sales of the same homes in an effort to study home pricing trends, using data from house sales in Boston—which at the time was in the midst of a housing boom.

Case argued that the boom was unsustainable, but he didn’t consider it a bubble, a commonly used term to describe similar market trends. (The Dutch Tulip Bubble of the early 1600s is the most popular example of a bubble.)

Eventually, Case collaborated with Shiller, who was researching behavioral finance and economic bubbles. In the late 1980s they created a repeat-sales index using home sales price data from cities across the country.

Then in 1991, Allan Weiss, studying for a graduate degree under Shiller, persuaded Case and Shiller to form a company, Case Shiller Weiss, to produce the index with the intent of selling the information to the markets.

Fiserv, an information management company, bought Case Shiller Weiss in 2002 and, together with Standard & Poor’s, developed tradeable indexes based on the data for the markets—now called the Case–Shiller Index. (Weiss went on to found Market Shield Capital in 2006.)

When is it published?

The indexes are published on the last Tuesday of each month, with a two-month lag.

Many of these price indexes—including 20 cities, low- medium- and high- tier home price indexes, condominium indexes and a U.S. national index—are managed by Standard & Poor’, and are available to the public on Standard & Poor’s web site. Options and futures based on the Case–Shiller index are traded on the Chicago Mercantile Exchange.

How do they come up with the indexes?

They use what is called the “repeat sales method,” analyzing data on single-family properties with two or more recorded sales transactions. The data are accumulated in rolling three-month periods to offset any delays in sales data recording and to keep sample sizes large enough.

For each sales transaction, a search is conducted to gather information on any previous sale of the same property. If an earlier transaction is found, the two are paired and considered a “repeat sales transaction.”

Each sales pair is examined to eliminate factors that might distort the calculations, including:

  • Transfers between family members
  • Substantial physical changes to the property
  • Transactions in which the property type designation has changed
  • Suspect data

Sales pairs with approved data are combined with all other sales pairs found in a particular Metropolitan Statistical Area (MSA) to create the regional MSA-level index. The Metro Area Indexes are then combined to create the national composite.

SOURCE: CNBC

Earl Holding, Utah billionaire behind Sun Valley Resort dies at 86

This is a reprint from the Salt Lake Tribune

All of his work associates, even his son-in-law, invariably referred to him as “Mr. Holding,” most respectfully too.

Earl Holding Robert Earl Holding carried himself in a way that quietly demanded that respect. To some detractors, his bearing came off as aloof or arrogant. But to admirers, Holding earned the right to be treated with such magnanimity, having parlayed hard work and an incisive eye for a good deal into a personal fortune, which he used to change the face of Salt Lake City and to help bring the 2002 Winter Olympics to Utah.

The billionaire made the largest individual investment in the Games — estimated at close to $300 million. He built The Grand America Hotel to ensure that downtown Salt Lake City had a five-star hotel. He transformed Snowbasin Resort above Ogden from a small ski area into a world-class resort with ornate day lodges and a downhill race course that compares favorably to anything in Europe.

But Holding also became a pariah to many for going around usual U.S. Forest Service procedures to acquire Snowbasin’s base property through a congressional land exchange.

While it took him roughly four years to secure 11,757 acres around northern Utah to swap for 1,377 acres at the base, Holding was assailed by environmentalists as an example of the wealthy using the Olympics for their own aggrandizement — even if he never realized any of those returns during his lifetime.

And he didn’t.

Holding died Friday at the age of 86. His death was confirmed Saturday by Sinclair Oil. No cause of death was given. Holding’s activities had been restricted by the complications of a stroke in December 2002.

In a statement, Gov. Gary Herbert said that he and his wife Jeanette “offer [their] heartfelt condolences to the family of Earl Holding, a Utah icon of initiative, industry and hospitality. May they find peace and comfort at this difficult time, as well as reassurance that Earl’s profound contributions to the greater community will endure.”

At the time of his death, Forbes estimated Holding’s wealthat $3.2 billion and ranked him as the 423rd richest person in the world.

A 2010 report on BusinessInsider.com said Holding was the19th greatest land holder in the United States, owning 400,000 acres, about the size of Davis County.

“Earl was an incredible builder,” said former Salt Lake City Mayor Rocky Anderson, who had many dealings with Holding during his years in office. “He had huge dreams and seemed to turn them all into reality.

“I’ve never known anyone who would imagine, and carry through to reality, such enormous projects and be intimately familiar with every single aspect along the way,” Anderson added. “You could ask Earl how many stalls there were in a bathroom and how many different materials were utilized, and he could tell you in detail, including how and where he picked out all of the materials. It’s the way he lived his life.”

Holding was born in modest circumstances in 1926. His parents lost everything in the stock market crash three years later. Even as his wealth grew, Holding refused to invest in stocks.

Holding’s first big break came in the years after World War II when the Covey brothers hired him to run their Little America truck stop and hotel west of Green River, Wyo.

They knew Holding from his childhood, when he mowed the lawn at the Salt Lake City apartment that bore their family name. So Holding and his wife, Carol, went to southwestern Wyoming and made their mark, pumping gas and waiting on tables.

Eventually, Holding bought out the Coveys’ interests in the property. He opened another Little America in Cheyenne, Wyo., then others in Salt Lake City and Flagstaff, Ariz. In 1976, he added the foreclosed Westgate Hotel in San Diego to his collection.

He made perhaps his biggest move in 1967 when he borrowed heavily to purchase a closed refinery in Casper, Wyo. Holding got it operating again and expanded his oil-and-gas interests, making Sinclair Oil an energy empire that included three refineries, 1,000 miles of pipeline and 2,600 gas stations by 2010, when Forbes magazine listed him as the 232nd richest person in the world, estimated value $3.9 billion.

Along the way, Holding also purchased Sun Valley ski area in Idaho and thousands of acres of ranch lands in Wyoming and Montana.

This acquisitive approach epitomized Holding. An employee once gave him a plaque that read “All I want is the land next to mine.”

Unlike many members of the nouveau riche, however, Holding did not use his wealth to build a popular niche among the elite of Utah society. He did not become a trustee for other big Utah companies or buy memberships in some exclusive clubs.

“I’m really not a joiner,” Holding told Salt Lake Tribune reporter Guy Boulton in one of the few interviews he gave to the news media, in late fall of 1999.

His antipathy to the press was at a height then. The Olympic bribery scandal was a year old, and Holding had been pushed off the Salt Lake Organizing Committee board because of it.

This was partly because his private jets had been used to bring to Utah some of the International Olympic Committee members who took excessive gifts from Salt Lake’s bid committee before the Games were awarded in 1995.

But Holding’s ouster from the board stemmed primarily from the apparent conflict-of-interest that existed since he was both a trustee deciding how Olympic money would be spent, and a recipient of some of that SLOC funding as the operator of both Snowbasin and the Grand America and Little America hotels.

The Grand America had been scheduled to be the IOC’s headquarters hotel for the Games. But, to distance itself from the scandal-inspired image of being greedy socialites, the IOC moved its headquarters to Little America and the Grand America became NBC’s digs instead.

Holding was offended that his motives were questioned. “I don’t know of anything that I have ever done, in any way, shape or form, that I need to be ashamed of with the Olympics,” he told The Tribune.

This controversy was not the only one to surround Holding. He also got into a nasty fight with the owner of the Flower Patch retail store at the corner of 500 South and State Street. The owner refused to sell the property to Holding for The Grand America, forcing the magnate to build around it.

“There are many of us who had differences with Earl on certain issues, like [for me] the preservation of forest land near Snowbasin,” said Anderson, Salt Lake City’s mayor when the hotel was completed.

“But I don’t think anyone can have anything but the most profound respect for Earl Holding’s dedication to doing everything to the absolutely highest quality,” Anderson said. “He took incredible risks with some of these ventures, but wouldn’t settle for anything but world class.”

Survivors include Holding’s wife Carol, his brother Ralph and his three children, Stephen Holding, Anne Peterson and Kathleen Holding. The family is still deciding funeral plans, according to a press release from Sinclair.

Weekly national mortgage survey results

Results of Bankrate.com’s April 17, 2013, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:

  30-year fixed 15-year fixed 5-year ARM
This week’s rate: 3.61% 2.85% 2.66%
Change from last week: -0.03 -0.04 -0.04
Monthly payment: $751.09 $1,127.59 $665.76
Change from last week: -$2.79 -$3.16 -$3.48

Builders Step Up Construction Due to Rising Demand

Homebuilders broke ground on homes in March at the fastest pace since June 2008, mostly fueled by a surge in apartment construction, the Commerce Department reports. Housing starts rose 7 percent in March from February, reaching the seasonally adjusted rate of 1.04 million.

Homebuilders have ramped up production as buyers rush to take advantage of continued housing affordability due to low mortgage rates.

SoldThe pace of homebuilding in March was nearly 46 percent higher compared to the same time last year.

Apartment construction led housing starts in March, soaring 31.1 percent, while single-family home construction dropped 4.8 percent.

The recent data “is a reflection of the solid demand that many areas are seeing for rental apartments as young people take that first step into the housing market, which is a very positive development,” says Rick Judson, chairman of the National Association of Home Builders. “The numbers are also in keeping with our latest surveys that show single-family builders are experiencing some difficulties in keeping up with rising demand for new homes due to increasing construction costs and other factors.”

Regionally, housing starts dropped 5.8 percent in the Northeast. However, the rest of the country showed strong gains, including a 10.9 percent increase in the South, 9.6 percent gain in the Midwest, and a 2.7 percent rise in the West.

Building permits — a gauge for future home construction — fell 3.9 percent in March, after having reached a five-year high in February.

SOURCE: National Home Builder’s Association

HARP Refinancing Program Extended By 2 Years

Underwater homeowners with Fannie Mae- and Freddie Mac-backed mortgages will be able to try to refinance their mortgages for another two years.

The Federal Housing Finance Agency announced Thursday that Fannie and Freddie’s Home Affordable Refinance Program, which was set to expire Dec. 31, will be extended until the end of 2015.

“More than 2 million homeowners have refinanced through HARP, proving it a useful tool for reducing risk,” said FHFA acting director Edward DeMarco, in a statement.

According to the most recent data, in January alone, one in five refinancings of Fannie and Freddie-backed loans occurred under HARP. Of the loans refinanced under the program  that month, 25 percent had a loan-to-value ratio of greater than 125 percent.

Eligibility for the program, announced in early 2009, remain the same. The mortgage must be owned or guaranteed by Fannie or Freddie on or before May 31, 2009, and the current loan-to-value ratio must be greater than 80 percent.

In addition, borrowers must be current on their mortgage payments, with no late payments in the past six months and they cannot have made more than one late payment in the past 12 months.

To apply for the program, borrowers should contact their existing lender or another lender participating in the program. Consumers do not need to use outside companies that bill themselves as “mortgage experts” or “foreclosure specialists,” the agency said.

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Why Housing Affordability Is at Risk

Homes are more affordable now than they have been in decades, but that could turn more quickly than expected, because the affordability is based entirely on mortgage rates.

Home prices are actually rising faster than expected, but the gains are being masked for buyers by historically low rates. These rates allowed U.S. homeowners to pay almost 37 percent less in monthly mortgage payments at the end of last year than pre-housing–bubble norms, according to a new report from online real estate portal, Zillow. This as homes today cost 14.5 percent more compared to historic averages, relative to median incomes.

 HomeMortgageApplicationThe average rate on the 30-year fixed mortgage dropped to 3.68 percent last week, according to the Mortgage Bankers Association. From 1985 through 1999, rates ranged from 6 to 13 percent. Present low rates have allowed buyers to purchase more expensive homes, and the mortgage payment is taking less out of their monthly paychecks.

Back in the mid-eighties and nineties, Americans spent nearly 20 percent of their median monthly incomes on their home loans—compared to just 12.5 percent today, according to Zillow.

The days of historically high levels of housing affordability are numbered

The trouble is that wages have either stagnated or dropped at the same time that home values are rising. Pre-bubble, U.S. homebuyers spent 2.6 times their median annual incomes on the purchase price of a typical home, but now they are spending three times their incomes—meaning homes are 14.5 percent more expensive relative to income, according to Zillow. That is all made possible by government-subsidized, record low rates.

“The days of historically high levels of housing affordability are numbered,” said Zillow Chief Economist Stan Humphries. “Current affordability is almost entirely dependent on low interest rates, and there’s no doubt that rates will begin to rise in the next few years.”

Rates will rise because the Federal Reserve will inevitably have to get out of the business of buying agency mortgage-backed securities, which currently drives down rates. This won’t happen immediately, but it will in the next two to three years.

That will directly affect home buying demand, because without dramatic income growth, potential first-time buyers will see monthly payments as too big of a chunk to pay. Meanwhile potential move-up buyers will not want to let go of their fixed low rates, and that will be a disincentive to move.

Homeowners in 24 of the 30 largest metros covered by Zillow were paying more for homes at the end of 2012 relative to their region’s median income than they were from 1985 through 1999. That is a clear red flag that should rates rise, even a few percentage points, home purchases and purchasing power, will fall.

SOURCE: CNBC

Housing Shortage Will Dampen Spring Market

The housing recovery is progressing, but a shortage of homes on the market will limit the number of home sales this spring selling season, industry insiders say.

“If we don’t see more people listing their properties, I don’t think we will see the home sales volume increase that we are accustomed to seeing,” Glenn Kelman, chief executive officer of Redfin told Reuters. “There are far more buyers than there are sellers on the market. We would have a huge boom spurred by low interest rates if there were more inventory on the market.”

 it has become truly a seller’s market again

Still, the National Association of REALTORS® predicts existing-home sales will rise around 7 or 8 percent this spring compared to year ago levels.

In some areas where inventories are particularly constrained—like Washington, D.C., New York, and several California cities—homes are selling within hours of being placed on the market.

“The demand for properties is insane. The bidding wars that are going on, there is not enough inventory and it has become truly a seller’s market again,” says Neil Garfinkel, real estate attorney at Abrams Garfinkel Margolis Bergson in New York.

SOURCE: Realtor® Magazine