The Best & Worst Housing Markets - Case-Shiller

The latest S&P/Case-Shiller 20-city home price index shows a record 18.5% drop from the previous year. Is your city in the pits or relatively stable?

By Forbes

Wishing you’d left the game earlier is a time-honored Las Vegas tradition. Today, that’s true not only for gamblers but for homeowners there. The last time Las Vegas properties were worth more than the average mortgage? August 2003.

Blame overbuilding and risky loans, a gambling mentality or even the desert sun, but based on today’s results from the S&P/Case-Shiller home price index, which measures metro home prices in 20 cities through December 2008, Las Vegas is the weakest market in the country. Prices are dropping quickly (down 4.81% since last month and 33% in the last year); the pace of decline is accelerating at the third-fastest rate in the nation; and based on lost equity, homeowners are out 65 months of mortgage payments.

All signals that things aren’t likely getting better any time soon.

"Vegas is a market unto its own," says Steve Cesinger, chief financial officer at Dewberry Capital, an Atlanta-based real-estate investment firm. "I don’t know what those guys were drinking when they thought all this building made sense. If it does work out soon, then there’s some force out there in the universe that I’m not aware of."

What’s your home worth?

The S&P/Case-Shiller home price index, released monthly, examines repeat home sales in 20 metro markets, including the city core and surrounding suburbs. This means that while prices in the tony San Francisco neighborhood of Pacific Heights might be holding up, the net effect of including a bankrupt suburb like Vallejo brings down the metro area’s score. Each city’s score is assigned based on the price difference from 2000, which is scored as 100. So San Francisco’s score of 130.12 means prices are up 30.12% from 2000. It still has the potential for a further fall, given the 31% year-over-year drop.

Forbes also analyzed monthly declines and year-over-year declines in home prices to determine where prices were falling fastest and where those drops were picking up momentum. It’s not a good thing for San Diego that prices from November 2008 to December 2008 fell 2.13%, but as prices declined by 2.29%from October to November, and 2.44% from September to October, the speed with which prices are falling is slowing.

That slowing rate of decline — also seen in places such as Denver, Washington, D.C. and Boston — helped rank those cities as some of the stronger markets in the country.

Home-price indices fall like a rock

Contrast that with Minneapolis, where prices fell just 0.96% from September to October, but by December, the rate of month-to-month declines had jumped to 4.6%, an unwelcome acceleration.

Next, to rule out places in complete depression, we looked at how many months of equity homeowners have lost. Places like Detroit (-2.98%) and Cleveland (-2.07%) haven’t declined as quickly over the last month as Seattle (-3.63%) or Charlotte, N.C. (-2.55%), but that’s because prices in those two Rust Belt cities are so depressed it’s difficult for them to fall any further. Detroit and Cleveland homeowners have lost 141 and 92 months of equity, respectively, whereas Seattle and Charlotte prices have declined only for the last 39 and 33 months, respectively.

One other factor to consider with the Case-Shiller numbers is that the index tracks repeat home sales. That means cities like Tampa and Miami — which are notorious for overbuilt new inventory and high numbers of foreclosures — perform better on the index than they ought to, as those two factors are not tracked.

"Case-Shiller doesn’t take into account new construction or foreclosure sales," says Jonathan Miller, president of Miller Samuel, a Manhattan residential appraisal firm. "In some of these markets, I’m not sure how you can ignore new construction or foreclosures."

Another city with foreclosure and new construction problems is Phoenix, where bad loans have mounted and mortgage delinquencies, a forebear of foreclosures, have risen.

"It’s pretty gruesome," says Anthony Sanders, a finance professor at Arizona State University. He points to delinquencies as a major problem and a sign that the Valley of the Sun won’t be bouncing back any time soon. In Phoenix, seriously delinquent loans — those that haven’t been paid in 90 days — have increased from 3.5% to 27.3% for subprime loans since this time in 2005. Adjustable-rate mortgages that are seriously delinquent have gone from less than 1% to 20.2% in the same period.

With those problems looming on the horizon in many cities across the country, President Barack Obama might need more ammunition than his proposed $75 billion foreclosure prevention package offers.

Then again, even in a boom-bust capital like Los Angeles, if you bought in 2000, paid your mortgage on time and are still in your home, you’ve seen a 71.5% price appreciation. There’s something to be said for that kind of responsible, long-term investor.

Worst, No. 1: Las Vegas, Nev.

Index score: 131.4%

Prices were last this low: August 2003

Month-to-month drop: -4.81%

Year-over-year drop: -32.98%

Deceleration rank: No. 18

Worst, No. 2: Phoenix, Ariz.

Index score: 123.93

Prices were last this low: September 2003

Month-to-month drop: -5.06%

Year-over-year drop: -33.96%

Deceleration rank: No. 15

Worst, No. 3: Detroit, Mich.

Index score: 80.93

Prices were last this low: April 1997

Month-to-month drop: -2.98%

Year-over-year drop: -21.66%

Deceleration rank: No. 8

Worst, No. 4: Minneapolis, Minn.

Index score: 127

Prices were last this low: April 2002

Month-to-month drop: -4.6%

Year-over-year drop: -18.45%

Deceleration rank: No. 20

Worst, No. 5: San Francisco, Calif.

Index score: 130.12

Prices were last this low: April 2002

Month-to-month drop: -3.81%

Year-over-year drop: -31.24%

Deceleration rank: No. 2

Worst, No. 6: Chicago, Ill.

Index score: 137.16

Prices were last this low: December 2003

Month-to-month drop: -2.99%

Year-over-year drop: -7.22%

Deceleration rank: No. 17

Worst, No. 7: Cleveland, Ohio

Index score: 105.21

Prices were last this low: May 2001

Month-to-month drop: -2.07%

Year-over-year drop: -6.12%

Deceleration rank: No. 14

Worst, No. 8: Atlanta, Ga.

Index score: 113.87

Prices were last this low: June 2002

Worst: Month-to-month drop: -2.31%

Year-over-year drop: -12.14%

Deceleration rank: No. 10

Worst, No. 9: Tampa, Fla.

Index score: 156.04

Prices were last this low: June 2004

Month-to-month drop: -3%

Year-over-year drop: -22.03%

Deceleration rank: No. 12

Worst, No. 10: Miami, Fla.

Index score: 165.01

Prices were last this low: February 2004

Month-to-month drop: -2.72%

Year-over-year drop: -28.79%

Deceleration rank: No. 5

Best, No. 1: New York, N.Y.

Index score: 183.5

Prices were last this low: November 2004

Month-to-month drop: -1.72%

Year-over-year drop: -9.19%

Deceleration rank: No. 9

Best, No. 2: Washington, D.C.

Index score: 176.34

Prices were last this low: April 2004

Month-to-month drop:-2.18%

Year-over-year drop: -19.24%

Deceleration rank: No. 3

Best, No. 3: Charlotte, N.C.

Index score: 122.41

Prices were last this low: April 2006

Month-to-month drop: -2.55

Year-over-year drop: -7.19

Deceleration rank: No. 13

Best, No. 4: Portland, Ore.

Index score: 158.5

Prices were last this low: September 2005

Month-to-month drop: -2.53%

Year-over-year drop: -13.14%

Deceleration rank: No. 11

Best, No. 5: San Diego, Calif.

Index score: 152.16

Prices were last this low: October 2003

Month-to-month drop: -2.13%

Year-over-year drop: -24.84%

Deceleration rank: No. 1

Best, No. 6: Denver, Colo.

Index score: 125.74

Prices were last this low: June 2003

Month-to-month drop: -1.5%

Year-over-year drop: -4%

Deceleration rank: No. 7

Best, No. 7: Boston, Mass.

Index score: 153.05

Prices were last this low: June 2003

Month-to-month drop: -1.28%

Year-over-year drop: -7.01%

Deceleration rank: No. 6

Best, No. 8: Dallas, Texas

Index score: 115.63

Prices were last this low: May 2004

Month-to-month drop: -2.33%

Year-over-year drop: -4.27%

Deceleration rank: No. 16

Best, No. 9: Los Angeles, Calif.

Index score: 171.46

Prices were last this low: November 2003

Month-to-month drop: -2.5%

Year-over-year drop: -26.4%

Deceleration rank: No. 4

Best, No. 10: Seattle, Wash.

Index score: 160.19

Prices were last this low: October 2005

Month-to-month drop: -3.63%

Year-over-year drop: -13.35%

Deceleration rank: No. 19

America’s top 5 best – and worst – housing markets - MSN Real Estate

Private Lending Mastermind and Group Coaching Program

This is Mike Lautensack and I as mentioned last week we are starting a new Private Lending Mastermind and Group Coaching Program on June 9, 2009.

We are going to have a Free teleconference call on Tuesday evening to lay out why Private Lending is the key to your real estate investing success.

This FREE Teleseminar will be a step-by-step overview of the private lending process and tell you how to fund your real estate deals without banks or PERSONAL GUARANTEES!

Teleseminar Series: Tuesday, May 26, at 8:00 PM Eastern

To sign up for this FREE tele-seminar simple click here ===> http://www.realestatewealthtoday.com/Private-Lending-Group-Coaching-Signup.html

On this call you'll get insider secrets on:

• A complete system for achieving success using Private Lenders...
• The advantages of using Private Lenders compared to traditional mortgages or hard money lenders!
• Discover the 6 keys steps to setting up a Private Lending program...
• Where to find Private Lenders and what "NOT" to do in marketing for Private Lenders
• FREE Bonus for everyone that registers and attends!
• And of course, a whole lot more!

The Private Lending Mastermind and Group Coaching Program will be a 16-week step-by-step teaching and coaching program for setting up your own private lending program and how to find and attract private lenders into your real estate investing business

It will be this Tuesday night (May 26)!

To sign up for this FREE tele-seminar simple click here ===> http://www.realestatewealthtoday.com/Private-Lending-Group-Coaching-Signup.html

Check for the time in your area...

• 5:00pm Pacific Time
• 6:00pm Mountain Time
• 7:00pm Central Time
• 8:00pm Eastern Time

Seating is limited and you DON'T want to miss the educational, information packed call! We look forward to having you on the call!

To sign up for this FREE tele-seminar simple click here ===> http://www.realestatewealthtoday.com/Private-Lending-Group-Coaching-Signup.html

Thank You,

Mike Lautensack

Real Estate Wealth Today
http://www.realestatewealthtoday.com/

P. S. I only have 90 lines available for this call, so please get on 5 minutes early so you don't miss the call.

To sign up for this FREE tele-seminar simple click here ===> http://www.realestatewealthtoday.com/Private-Lending-Group-Coaching-Signup.html

Real Estate Investors - Learn Why You Need a Niche to Make Yourself Stand Out

One of the things you want to remember as a real estate investor is the importance of establishing a expert niche. Having a expert status makes you stand out in the crowd as an expert in a specific area of real estate investment and will help you to gain more potential private lenders in your area of specialization.

Advantages of Creating a Niche

• Make Your Services Stand Out: Specializing in a real estate investment niche allows you to market your services as unique and distinguishes you from other run-of-the-mill real estate investors who tend to dabble in everything.
• Become the Expert: Having a specific niche in real estate investment allows you to focus on one or two areas and establish yourself as an expert. If you tend to dabble in everything you never really become an expert at anything. It is kind of like the old saying "jack of all trades and master of none." With a niche, people will begin to see you as the "go to" person for your particular specialization in real estate investment.
• Target Your Audience: Specializing in a particular niche allows you to focus on a targeted audience. For instance, if you specialize in housing for the elderly, you will most likely be referred to repeatedly as the expert in investing in housing for the elderly.

It also allows you to focus your marketing plan for that particular targeted audience. Once you become known for helping people in this specific area, you will be more likely to build steady clientele for this particular niche in real estate investment.

How to Create a Real Estate Investment Program

• Self-Assessment: You have to do some self-assessment to find out where your interests are with regard to real estate investment. Perhaps you are interested in helping others find low income housing or maybe you want to deal with vacation second homes. Whatever it is, make sure you like it because you will be dealing with it on a daily basis once your business begins to grow.
• Who You Enjoy Working With: Figure out who you enjoy working with and then discover what types of properties interest this sector of clientele. For instance, if you like working with the elderly, then find out what types of properties are involved with the elderly.
• Geographical Area: Consider the geographic location you wish to work with and the types of properties in that location that interest you. Again, the properties should correlate with the clientele that you are interested in dealing with.
• Decide on Property Type: Find out if you are interested in working with rentals, one-family homes, commercial properties, or something else. Choose one property type and specialize in it. The property type that you work with is one component of many in developing a niche in real estate investment.

Keep in mind that by developing a real estate investment program you are not limiting yourself. Some investors are under this impression and then make the mistake of getting involved in too much with no focus. In reality a program opens up a world of possibilities and establishes you as an expert with a particular focus in the real estate investment market.

I invite you to learn more about Private Lending and get FREE instant access to a 60 minute audio and 20-page eBook titled "Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!" by going to http://realestatewealthtoday.com/FREE-eBook.html.

Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Private Lender Money Kit.

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Real Estate Investors - Where to Find Private Lenders and How to Get Their Undivided Attention

If you are starting out in real estate investment your initial challenge is gaining credibility with potential private lenders. The other challenge is how and where to find private lenders and how to get their undivided attention, especially if you are new to real estate investment.

Who Are Potential Private Lenders?

If you look around you, potential private lenders are everywhere. They could be your family, friends, and relatives or they could include business associates, employees, contractors, vendors, or anyone you do business with.

Private lenders could potentially be people that you would never suspect would be willing and able to invest in your real estate deal. Sometimes they are simply people from all walks of life, who are financially able to invest and are looking to get a higher rate of return on their investment. They do not even necessarily have to specialize as private lenders.

How to Connect with Private Lenders

• Networking Events: Attend seminars, conventions, and professional networking group gatherings. Develop a great 60-second elevator speech and talk to everyone at these events. Ask them questions about themselves to get to know them. If they do not seem to be interested, ask them if they know of anyone who is interested and give them your business card.
• Real Estate Entrepreneurs and Landlords: Try obtaining a list of real estate entrepreneurs, investors, and landlords and start networking with them. Perhaps they can also be part of your two-step direct response marketing plan. Send them a postcard or letter offering some free advice or information and encourage them to contact you. If possible call them up and speak to them directly.
• Church Contacts and Neighbors: Sometimes the people you would least likely expect to be interested in your real estate deal are the people you see in your everyday life. This includes people you see at church, your neighbors, and friends of neighbors.

Many of these people have IRAs and other investments that are currently suffering during the economic downturn. Most likely these people would welcome a higher rate of return on investment and especially with someone they know.

• Retirees: This is a great area to investigate because many retirees are looking to make more money in their retirement, especially during the current economic crisis. Many of the retirement plans for these people have suffered due to the current economic conditions.
• Casual Contacts: Make an effort to talk to contacts while conducting your business or running weekend errands, going to the store, or waiting in line at the coffee shop. Have your elevator speech handy and casually strike up a conversation.

A Few Things to Remember

Once you have started connecting with potential private lenders here are a few tips to remember.

• Show Concern for the Lender: When striking up a conversation, show concern for the person and tune in to their needs.
• Be Concise and Stay on Topic: When talking about yourself be concise when explaining what you do and stay on the topic. Do not bore the other person with details about yourself they could care less about. Offer enough information that shows your expertise and show that you may have a solution to the other person's problem.
• Keep a List: Maintain a list of everyone that contacts you for further information. In the beginning it will start with only a handful but, over time if you are consistent in trying to connect with private lenders, that list will grow and you will be able to cultivate it over and over again.

I invite you to learn more about Private Lending and get FREE instant access to a 60 minute audio and 20-page eBook titled "Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!" by going to http://realestatewealthtoday.com/FREE-eBook.html .

Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Private Lender Money Kit.

Private Lending For Real Estate Investors - Training Vidoe - Volume 1

Real Estate Investing and Marketing: How to Use Two-Step Marketing to Attract Private Lenders

When it comes to your real estate investment business and attracting private lenders, two-step marketing is much more effective than one-step marketing because it reflects the needs of your potential clients and demonstrates concern for finding solutions to problems. One-step marketing is more self-directed and many of the marketing practices for this technique are focused on self concern instead of the needs of the client.

Two-step marketing allows your prospects to select themselves as your client. Two-step marketing is based on giving information away for free with the hope of getting something back in return.

Steps to Using Two-Step Marketing

• Send Out Marketing Piece: Two-step marketing begins with you sending out a marketing piece such as a letter, postcard, email, or other type of marketing tool. The initial marketing piece offers something for free and encourages the prospects to contact you for more information. Essentially you are initiating a conversation with your prospect through this marketing method.

• Provide Additional Information: Once your prospect contacts you, you would then provide them with additional information. This information could include a free report, free e-book, letter, or something else that provides the prospect with high quality information and advice on real estate investment.

It is especially important to provide the prospect with high quality information they can use to build your credibility. The information should be presented in a manner that provides just enough information and encourages the prospect to return for more. At this point they would have a second contact with you.

• Set Up Contact: When the prospects contacts you for the second time, set up a one-on-one meeting or invite them to a free seminar or presentation that you are providing on real estate investment. Invite them to learn more about your program and your expertise in your real estate investment niche.

Relationship Type of Business

Private lending is a relationship type of business so you must remember this when setting up your two-step marketing plan. You must establish a relationship with potential private lenders and remember not to sell them. No one likes to be sold so; you have to present yourself as a welcome guest that offers high quality knowledge and expertise.

This is the nice part of two-step marketing because the client is contacting you, which permits you to go a little further into what it is that you do and why you are the solution to their problem. In the long run, this is an easier method of marketing because you are developing relationships with future private lenders and offering them something in return for their business.

If you opt to go the one-step marketing process you will most likely fail to attract private money. This is because with one-step marketing you risk coming across as serving yourself without concern for the needs of your clients which is a real turn-off to people who are considering doing business with you.

Instead, present yourself as knowledgeable in your field, give away things for free, help others, and you will attract a lot of people that are eligible to invest in your real estate investment deal.

I invite you to learn more about Private Lending and get FREE instant access to a 60 minute audio and 20-page eBook titled "Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!" by going to http://realestatewealthtoday.com/FREE-eBook.html .

Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Private Lender Money Kit.

Bank Stress Tests are Now a Joke

The Treasury’s stress tests are now, officially, a joke…

First, the outcome looked as if all banks would need to raise capital. Then it was reduced to just three. Now it “might” be “about 10″ of the 16 banks subjected to the Treasury’s toothless stress tests that may need to raise additional capital to withstand further weakness in the economy.

And the report isn’t even supposed to be out until Thursday. The Obama administration is doing its level best to make sure the market is perfectly prepared for the results of the stress tests.

While it’s probably wise to consider the impact of the stress tests on the financial markets, I can’t say I approve of rigging the tests to achieve a preferred outcome.

The New Bailout

Bloomberg reports that financial stocks made their biggest gains in a month yesterday on “optimism about the tests.”

That “optimism” is better described as the realization that the stress tests are fundamentally flawed and the government is prepared to handle the capital issue by letting the banks convert the preferred stock the government owns from TARP loans into common stock.

So basically, the government is saying that banks don’t have to repay TARP loans. The banks can just issue more stock. It’s appropriate that shareholders should bear the risk here. It’s completely inappropriate that taxpayers have to accept bank stock in lieu of cash.

This is really just another bailout.

Converting preferred shares to common stock gives the banks a convenient way top boost “tangible common equity.” It’s basically an accounting trick. But since there’s only $110 billion left in TARP, and Congress almost certainly won’t approve any more funds, it’s a convenient solution.

The stress tests are supposed to establish a bank’s viability if the economy gets worse. But apparently the worst-case scenarios that underpin the stress test are nowhere near worst-case.

For instance, for the current period, regulators reportedly used 7.9% unemployment. Current unemployment is 8.1%. For 2010, the stress tests use 10.3% unemployment. But at current rates, unemployment will hit 10.3% this year, not next year.

Of course, it could be a moot point if the economy improves. But what if things do get worse? Geithner is playing a dangerous game here.

Private Money Lending: Do I need an Appraisal or CMA

I am often asked the questions that if I am buying an investment real estate property and using a private lender to fund the deal - do I need an appraisal or is "Comparative Market Analysis" (CMA) good enough?

What is a Comparative Market Analysis? A CMA can vary in length from two pages to 50 pages depending on complexity of the property and number of comparable properties. A CMA is an evaluation of a home's value based on available local market data including:

• How much homes similar to yours have sold for recently.
• How long these homes were on the market before they sold.
• How fast you can expect to sell your home at your desired asking price.
• What your "competition" would be should you decide to put your home on the market right away.

But the answer to this questions is to use whatever you have available to use at each point in the process. Before you make an offer and need to have a good, but not expensive, indication of what the property is worth a CMA will serve this propose very nicely without spending any money. Most realtors will be happy to run a CMA assuming they are part of the deal and will get paid at closing. But keep in mind a CMA is just a "quick and dirty" analysis is worth and not to be related on without your review and analysis of the report. In other words, do not accept any computer generated report without doing your homework.

Once you have made an offer and it has been accepted, you may want to spend the typical $300 to $400 for an official appraisal. Even when dealing with private lenders you need to be able to show them that their loan will be secured by a property that is greater than the amount they are loaning to you. Typically private lenders do not want to go over 75% loan to value. An appraisal will also help you in determining how much money you may borrow from a first mortgage lender and how much you may borrow from a second mortgage lender.

To learn more about private lending please go see my eBook title "Private Lending Secrets for Real Estate Investors by going here ==> http://www.private-lending-secrets.com/