Where have all the down payments gone?

Where have all the down payments gone?

By Lou Barnes - Inman News®

It is an election year. In addition to the distorted economic "analysis" offered by the ever-cheerful stock market channels, CNBC and Bloomberg, political interests will add their garbled gabble all year long.

Today's reports of 200,000 new jobs in December and unemployment down from 8.7 percent to 8.5 percent were greeted with happy bugles from the usual suspects. Ignore that, and watch the markets themselves.

Interest rates rise on legitimate good news; today's 10-year Treasury-note yield has fallen to 1.94 percent, and mortgages are near 4 percent again. The stock market rises on good news, and today it is flat to down.

The addition of 200,000 jobs is good news, but year-over-year earnings have risen only 2.1 percent. A few are back to work, but it's not the job that it was. And even if employment growth persists at that level, and new unemployment claims stay down as they were in December from 400,000 weekly, it's not enough to dent the job losses since 2007.

Part of the tepid response from markets today is derived from ongoing concern for Europe. Perhaps the best indicator for markets this winter will be the pace of recession onset in Europe. Genuine economic turn depends on housing. Many self-deceiving financial-market types in the last weeks have announced discovery of a housing turn; although there is none in the actual market, there is one in public policy.

The Federal Reserve is very reluctant to lecture politicians (because of its perpetual political peril), but has done so this week. Fed Chairman Ben Bernanke shot a very well-done paper at congressional committee leaders, laying out damage by insufficient credit, by pinched and self-destructive attitude at the regulators of Fannie Mae and Freddie Mac, and by exposing the total absence of administration policy.

Today, Bill Dudley, president of the New York Federal Reserve, fired off another:www.newyorkfed.org/newsevents/speeches/2012/dud120106.html.

President Obama and Treasury Secretary Timothy Geithner have been so completely detached from housing that even a blast from the Fed may not get their attention. But I can hope.

We have 4.2 million homes in terminal delinquency, not yet foreclosed, and another 600,000 REO (real estate owned or bank-owned properties). The annual rate of sale of existing homes is a little over 4 million -- one-third of that in distressed resales, barely moving the newly distressed, with no net gain.

That absorption conundrum is bad, but masks a tough and unusual phenomenon in the ordinary, nondistressed market: an odd freeze descending.

Here in my Denver backyard, the listed for-sale inventory dropped by one-third last year, ordinarily the precursor of rising prices. Maybe that will happen here -- we led the nation in foreclosures way back in 2004 -- but there is another force in play: down payments.

Where to get one? The most common source is rolling over the equity in a current home to buy a new one. Right. Roger that. Although we do not have the underwater inventory that Zillow "fantasizes," with local prices roughly the same as 2001 and price-appreciated equity a memory, there are fewer and fewer owners both wanting to move and with equity to roll. Thus, fewer and fewer listings.

Other than appreciating value, nothing but loan amortization builds equity. See entry for "glacial," and kids can Google Rip Van Winkle.

If you're not an owner, down payments come by saving money. Good, healthy discipline. However, in prior times your savings earned something. Even in a bank. In the 1990s the stock market might have doubled your savings every other year.

Another reliable source of down payment: bonuses. As I ask clients about that, today I get a lot more wry chuckles in response than happy answers. Same for stock options, proceeds of initial public offerings, or growing commission income. And there are sad answers to the prospect of help from tapped-out families.

If mortgage credit began to flow on reasonable terms, and somebody running for office told the American people that modestly rising home prices are in the national interest, and we got a 5 percent or 10 percent rise in prices, we would unlock the entire economy.

You might ask a nearby politician about that.

Rate of home sales:

Long way to go:

The most painful part: those forced to take part-time "survival" jobs:

CREDIT-
By Lou Barnes - Inman News®

Why Landlords Charge High Security Deposits

Why Landlords Charge High Security Deposits

DATE:JANUARY 3, 2012 | FROM-  www.Zillow.com 

If you’re renting an apartment and you wonder why the landlord charges a high security deposit, it could be because they’ve been burned by inconsiderate tenants who trashed rental units, moved out in the middle of the night or perhaps left an awful mess in what is considered an important investment by the owner.  Landlords don’t take too kindly to that, and often charge higher security deposits to cover the possibility of it happening again.  However, this is not the only reason landlords charge higher security deposits.

The main reason a landlord may charge more is if a tenant throws up red flags to the landlord or property management company during the application process.  These red flags may or may not be intentional, but can include:

·         Not properly filling out or completing all of the application fields.  Incomplete information on an application can come across to the landlord as the tenant might be hiding or avoiding something.

·         Details are sketchy.  If you’re not exactly sure of dates or how long you lived in your last rental property, don’t guess at it; be sure and accurate.

·         The previous landlord references won’t divulge any information… good or bad.

·         The tenant has already started off requesting renovations to the property or making demands for lower rents if they do the renovation work, when they haven’t even turned in their application yet. This is a sign that the tenant may not be able to afford the place.

This is all in addition to the obvious reasons of misrepresentation of facts, embellishments and other white lies, big and small.  To some, this might seem like an automatic denial of a tenant’s rental application.  However, when the market is tight, sometimes a landlord has to take a chance on a flawed application in order to get the property rented and get their vacancy rates down. To mitigate risks, the landlord will charge a high security deposit, in the chance that the red flags end up as real issues.

Whether or not a landlord has been burned or even if there are no red flag warnings coming from the tenant, there might be other reasons that a landlord will ask for a double security deposit.  They may include:

·         The landlord just remodeled the rental unit and they’d like to protect their investment.

·         The tenant might have pets.

·         Possibly the tenant hasn’t been on their job a long time, or they may be in a temporary status that is not secure employment.

·         The landlord may have been burned by the previous tenant.  This is a tough situation for the current/new tenant moving into the unit.  It may not seem “fair” but the landlord has a right to do so.

Ultimately, the reasons for a high security deposit could be for nearly anything and the landlord doesn’t necessarily have to tell the tenant why they are charging more in most states.  As a landlord, if you feel you have to explain, it can generally be summed up with reminding the tenant that the security deposit is fully refundable.  As the tenant, you need to remember that as well.  The deposit is refundable and all parties need to make sure that the lease states as such.

Both landlords and tenants should be familiar with their state’s landlord and tenant laws.  It is typical that there is a cap on how much security deposit a landlord can charge or hold, such as no more than two month’s rent.  There are also other important things to watch for in state or city laws, such as time frames that a landlord has in refunding a tenant’s security deposit or itemize damages withheld.

The bottom line is that with a security deposit, no matter how large or significant it may be, it is most likely refundable.  As a tenant, do your part, take care of the unit, pay your rent, fulfill the terms of the lease and chances are you’ll get your money back.

AUTHOR:JESSICA HICKOK

DATE:JANUARY 3, 2012 | FROM- ZILLOW.COM/BLOG