This is great news for a couple of reasons:  first, because it keeps the program operating for at least a year.  For the past year Congress has allowed the program to expire twice.  An expired NFIP throws real estate markets into turmoil, especially water-dependent Resort communities.  Without an NFIP, no new flood insurance policies or renewals can be written, which places property in a floodplain (such as coastal and lakeshore resorts) at a risk of flooding without insurance.   Private flood insurance is expensive and difficult to obtain.  Having flood insurance for at least a year eliminates one more obstacle to a resurgent housing market.

 Second, having the program operating for a year gives Congress more time to reform the program and place it on a more viable financial and actuarial foundation. House-passed legislation earlier this year would have made some reforms to the program; unfortunately the Senate did not have time to discuss the legislation.   NAR will continue to push for reasonable reforms, such as more accurate maps and higher coverage limits, while also making sure affordability is taken into account when premium rates are established.          

 The Senate held a hearing on reforming the NFIP on Sept. 22, at which NAR was ably represented by Nick D’Ambrosia, a Realtor from Maryland – witnesses discussed a variety of NFIP reform options, and I would encourage everyone to spend a few minutes viewing the attached hearing to hear all of the complexities of NFIP reform.   

http://www.realtor.org/fedistrk.nsf/files/testim_flood_ins_reauth_092210.pdf/$FILE/testim_flood_ins_reauth_092210.pdf

Russell Riggs

Senior Policy Representative and

Government Affairs Liaison to the Resort and 2^nd Home Committee

A growing segment of todays homebuyers are citizens of foreign countries. The international appeal of U.S. residential properties is driven by the strength ofthe dollar, the increasing value of properties in some regions ofthe country, the emerging economic recovery, and the rising worldwide popularity of owning a home in the United States.

This trend was documented in the recently released National Association of REALTORS’ 2010 Profile of International Home Buying Activity.

More than a quarter of REALTORS (28 percent) reported working with at least one international client in the past year. This is a significant increase from fhe 2009 report, when 23 percent of REALTORS worked with foreign clients. Eighteen percent of all REALTORS were estimated to have completed at least one sale, compared to 12 percent last year.

The NAR study and report showed that most International buyers came from 53 different countries around fhe world. The top four were Canada, Mexico, the United Kingdom and China/Hong Kong. With 23 percent of international buyers coming from Canada, the country has remained the largest buying group in the past three years. Foreign buyers from Mexico have been steadily increasing.

In 2010, Mexico replaced the U.K. as the second largest buying group with 10 percent of buyers. Buyers from fhe U.K. decreased from 10.5 percent in 2009 to 9 percent in 2010. Eight percent of recent buyers came from China/Hong Kong.

Two key factors important to international clients when purchasing U.S. properly are proximity to their home country and the convenience of air transportation. Florida typically attracts European, Canadian and South American buyers while the East Coast draws Europeans. The West Coast brings Asian buyers and the Southwest attracts Mexicans, NAR reported.

RISMEDIA, August 11, 2010—As the real estate market continues its bumpy road toward recovery, the vacation home market is heating up, causing homeowners around the country to seriously consider buying the vacation home they’ve been eyeing.

Margaret La Grange and Christine Van Tuyl, an award-winning mother-daughter team with Prudential California Realty in Coronado, CA, offer the top six reasons why now is the best time to buy a vacation home.

“Whether you’re looking for a charming beach bungalow or a high rise condo with spectacular views, a host of market conditions have come together to make buying a vacation home a smart move,” said Christine Van Tuyl. “The drop in home prices, incredibly low interest rates and the increase in demand for vacation rentals make it an optimal time to explore a second home purchase.”

1. Prices down 20-40%. In places like Coronado, CA and greater San Diego, you can pick up a beach cottage or high-rise condo at extremely low prices. That’s only the beginning. Lower prices and less competition are the tip of the iceberg-sized list of factors that make it a good time to consider a vacation home buy.

2. Interest rates. Rates, of course, are at historic lows. Lock in a good rate, buy a vacation home in a desirable location, and watch your asset appreciate over the long-term.

3. A relatively safe investment. Real estate has proven itself to be a safe place to park your money for the long-term. (Long-term is key). Stock market woes have always pushed people to look for alternate investments, and real estate is a consistent stronghold.

4. Make a profit. Or, better yet, make your vacation home pay for itself. Only planning on using your vacation home a few months out of the year? Rent it out short-term to vacationers looking for a great place to stay. Many homeowners make a killing listing their homes on VRBO.com. (Vacation Rental By Owner). When your monthly mortgage payment is less than or equal to one peak week rental, twelve weeks of rental will cover your mortgage payments for the entire year.

5. Vacation rental demand is heating up. Overall, vacation rentals are less expensive than hotel rooms, especially for longer visits and for families. Savvy travelers know this, and are heating up the demand for vacation rentals. In addition, the weaker dollar makes U.S. destinations attractive to travelers from countries with stronger currencies.

6. The pressure of bidding wars is off. Sure, you may not get bargain basement prices on a beachfront cottage—but you might if you’re willing to buy a few blocks away. Houses aren’t exactly flying off the shelves these days, but buyers now have less pressure to make a hasty decision. Buyers looking for deals on vacation homes can really do their homework.

About Christine Van Tuyl and Margaret La Grange
Christine Van Tuyl and Margaret La Grange are award-winning agents with Prudential California Realty in the Coronado Village office. A mother-daughter team with Coronado family roots going back 75 years, Christine and Margaret pride themselves on delivering impeccable service for home buyers and sellers alike.

For more information, visit www.CoronadoIslandHomes.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Please be aware that your REALTOR staff is “on the case” and sensitive to this issue. Look out for a webinar in September to update you on the latest news involving condo financing and the actions that NAR is taking.

 In the meantime, this article by Lew Sichelman offers some helpful hints on the value of the FHA backing and tools to see if a property is eligable for FHA Approval. 

Enjoy.

International home buyers are increasingly attracted to property in the U.S., according to NAR’s 2010 Profile of International Home Buying Activity. “While all real estate in the U.S. is local, the same is not true for property owners,” said NAR President Vicki Cox Golder. “The U.S. continues to be a top destination for international buyers from all over the world.”

VIEW TEXT: http://insight.vmsinfo.com/image_clipbook/show_article_specs.cfm?show=ocr&article_id=33163240&clip_site_id=2672&user_id=4727

I often write about, or use the phrase second home buyer characteristics, which makes sense. South Lake Tahoe is very much a second home resort real estate market.

Some 65 percent of area homeowners live elsewhere. This means that about a third of South Lake Tahoe homes are primary residences.

The National Association of REALTORS did a specific study on vacation or second home buyers. I thought it would be of interest to look at the most recent findings.

Before looking at the particulars, there are a few key characteristics of the vacation and second home buyer to always have in mind. These are important, especially as it relates to style and manner when representing a buyer:

• The vacation or second home buyer lacks urgency.
• The vacation or second home buyer is overqualified financially.
• The vacation or second home buyer is looking for a family retreat.

Of these, lack of urgency is really important to understand to best represent a buyer. What I like to do is “mirror” a buyers pace if I can. If a buyer seems to want to move quickly, I quicken my pace. If the buyer moves slowly, I respond in kind.

Sometimes, though, a particular house or situation does require urgency. An underpriced house, or one that is right priced and exceptionally attractive can require immediate action to get it.

In cases such as this, I do recommend that the vacation or second home buyer move as quickly as they possibly can.

If I ever quicken my pace, it is because I don’t want a buyer to miss out on something they obviously really like. I am never in a hurry just to make a sale. Buyer comfort to me is king.

This article offers a great summary of the new FHA lending rules for condos.  It  was printed on 20 June 2010, The Atlanta Journal – Constitution (Gary A. Poliakoff, Ryan Poliakoff).

New FHA lending rules for condos could stall the housing recovery: Restrictions open door to heavier weight being placed on owners. Commercial activity limits will add to crisis.

In February, the Federal Housing Administration passed a new set of lending guidelines that removes the long-standing “spot approval” process for FHA-insured condominium loans, and enacts stringent new requirements for projects to be approved on a propertywide basis.

While these new guidelines purport to make the loan approval process simpler, they will dramatically reduce the market for the glut of unsold and abandoned condominium units. And, while the new rules attempt to shield the FHA from the vagaries of the real estate crash, they are likely to have the opposite effect, restricting the overall U.S. recovery and preventing the FHA from building a stable inventory.

Before Feb. 1, 2010, condominium buyers looking for approval of an FHA-insured condominium loan were able to file paperwork for each unit individually, with a determination of suitability made on a per-unit basis. The new guidelines require preapproval of the entire building, ultimately removing the spot-approval process. The FHA has issued new rules that will determine whether a condominium project can be approved, and unless the property passes muster, FHA approved loans will not be available to buyers.

These regulations cast an extremely wide net. It is currently estimated that the FHA insures more than 20 percent of all loans. FHA-backed loans are attractive to buyers — they have lower down payment requirements and often better lending terms.

And in some areas of the country, especially in metropolitan and resort areas, condominiums account for a large percentage of the total home marketplace. It is believed that condominium speculation was a large contributing factor to the housing bubble and crash, and a huge backlog of units remains unsold (which continues to drag down the recovery).

In order to recover, our economy needs a correction in the supply and demand ratio for condominium properties. The federal government should therefore be easing lending requirements for the condominiums, which would allow well-qualified buyers and investors to clear the backlog and start the market flowing again.

Unfortunately, the authors of the new guidelines appear to be out of touch with the current realities in the marketplace, and especially the severity at which condominiums have been hit by the housing crisis, as some of the following new rules will be nearly impossible to achieve for the majority of condominiums.

1. Maintain a reserve equal to 10 percent of the annual budget.

Even completely healthy condominium properties often fail to maintain a reserve of this size, and in many states, condominium owners may chose to waive collection of reserves entirely. A truly distressed property, one that needs the government’s help, will never be able to budget for basic services (such as water and garbage) and still maintain appropriate reserves. Reserves are kept for emergencies — many communities have actually used their reserves to weather the current crisis.

2. Make sure that no more than 15 percent of owners are more than 30 days late on condominium fees.

Again, this is a guideline that seems ignorant of reality — in the current economic environment, even healthy properties can have delinquency rates over 15 percent, and the vast majority of distressed condominiums will never reach this threshold.

There are struggling-but-functional condominiums in the country today where over half of the units do not pay maintenance, but the solution to this problem is to get the abandoned units into the hands of new buyers—not to preclude the entire property from one of the country’s most popular loan programs. This single guideline realistically exempts every single property that the government desperately needs to assist.

3. Assure that no more than 10 percent of the units are held by a single investor.

Not only is this guideline misguided, but it conflicts with the current trend in state law, where states are actually making it easier for investors to buy large numbers of unsold units. Abandoned or empty, ownerless properties contribute nothing to a condominium, and force the other owners to foot the bill.

When investor-owners purchase large blocks of units in distressed condominiums, they have legal responsibilities to pay maintenance on those units and contribute to the upkeep of the property. That’s a good outcome for distressed communities — the FHA guideline, which would block this practice, is perplexing.

4. Have no more than 25 percent of the space used for commercial activity.

Many extremely successful condominiums, especially in large cities such as New York, are designed with large percentages of commercial space — the rents paid can reduce dramatically the maintenance load on owners. The commercial owners attract buyers to the condominium, particularly those who appreciate the convenience of having in-building amenities such as restaurants, shopping and entertainment. Again, this guideline appears to ignore marketplace realities and blocks help for distressed properties that could otherwise be quite successful.

There are other perfectly reasonable qualifications in the new FHA rules (allowing lenders to review association insurance policies and financials, requiring fidelity insurance, etc.), but the guidelines above may have significant unintended negative effects on the housing market, blocking the vast majority of distressed condominium units from federal assistance and leaving millions of owners to the whims of the marketplace.

Original Format: http://www.ajc.com/info/content/services/info/reprint2.html [http://www.ajc.com/info/content/services/info/reprint2.html]

http://rismedia.com/2010-06-03/second-homeownership-and-interest-in-vacation-rentals-continue-to-remain-strong-through-economic-recession/

http://www.usatoday.com/travel/destinations/secondhomes/2010-05-13-global-golf-getaways_N.htm