January 17, 2020

While Amazon hunted for its second headquarters in 2017, senior executives at the company also wanted to secure an extra $1 billion for other real estate projects, The Wall Street Journal reports. That was a separate goal from the economic incentives Amazon was seeking for its HQ2 project, according to the report. The online retail giant has sparked a debate over whether incentives are a smart way for cities and states to attract jobs and development.

Amazon ultimately decided to put its second headquarters in Virginia, which offered $1 billion in incentives, including infrastructure improvements. Amazon abandoned plans to split its second headquarters between Virginia and New York after a public uproar in New York over $3 billion in incentives that the state was offering for the company to relocate there. “Like many other companies, we are eligible to access incentive programs created and regulated by cities and states to attract new investors, as they know that these investments pay a long-term dividend in the form of jobs, new economic opportunity, and incremental tax revenue,” Amazon told the Journal. “The vast majority of these incentives are statutory and post-performance; Amazon is eligible only after having created and maintained a certain number of jobs within the community.”

Amazon reportedly has been trying to focus less on tax breaks and more on transportation and workforce-related incentives. Real estate is also becoming a big source of its growth. “Amazon’s real estate footprint has grown sharply to accommodate campuses for its 750,000 global employees, a network of fulfillment centers, data centers for its cloud-computing arm, and physical stores,” the article notes. “Amazon leased or owned 288 million square feet of property globally, according to its 2018 annual report.”

State and local governments often use incentives to attract new companies. They spend at least $30 billion a year to attract and keep companies. Yet, the deals don’t always translate into economic benefits and wider job growth, a new study reported by the Journal suggests.

Still, Amazon is unique, researchers say. “The Amazon phenomenon is not very common,” says Didi Caldwell, president of Global Location Strategies, a site-selection firm. “You don’t see companies building that much bricks and mortar on an annual basis.”

Source:
Amazon Sought $1 Billion in Incentives on Top of Lures for HQ2,” The Wall Street Journal (Jan. 16, 2020)

December 31, 2019

A U.S. District Court has ordered a handful of mortgage relief companies accused of running a mortgage fraud scheme to pay up millions in relief to those they scammed.

The U.S. District Court for the District of Nevada ruled in favor of the Federal Trade Commission in a case involving a scheme where scammers promised homeowners they would lessen their mortgage payments. The companies charged consumers advance fees and instructed them to stop paying their mortgages to or communicating with their lenders, the FTC had argued in the case.

Consumers were charged $3,900 in advance fees and $650 in monthly installments to access the mortgage aid services. The companies, in return, vowed to cut the homeowners’ mortgage rate in half and reduce their monthly mortgage payments by several hundred dollars.

The FTC accused Jonathan Hanley and Sandra Hanley of leading the scam, and several companies were also named as being part of it by the FTC, including Preferred Law; Consumer Defense; Consumer Link; American Home Loan Counselors; American Home Loans; Consumer Defense Group, formerly known as Modification Review Board; Brown Legal; AM Property Management; FMG Partners; and Zinly.

The U.S. District Court has ruled that the companies violated the FTC Act and the Mortgage Assistance Relief Services Rule. They are permanently banned from taking part in the debt relief business. The court also ordered the companies to pay $18.5 million.

More single-family and multifamily homes are coming onto the market soon as new-home construction posts its biggest gains in 13 years. Total housing starts rose nearly 17% in December to a seasonally adjusted annual rate of 1.61 million units, the U.S. Commerce Department reports.

Broken out, starts for single-family homes rose 11.2% to a seasonally adjusted annual rate of 1.06 million in December. The multifamily sector, which includes apartment buildings and condos, climbed nearly 30% to a 553,000 unit pace.

“The year ended on a high note with solid gains in single-family and multifamily production,” says Danushka Nanayakkara-Skillington, assistant vice president of forecasting and analysis at the National Association of Home Builders. “And while the December estimates will likely be revised down, the trend moving forward is still positive.”

Facing a lingering housing shortage across the country, the National Association of REALTORS® has long advocated for more new-home construction to accommodate growing demand.

“The solid housing production numbers are in line with strong builder sentiment, supported by a low supply of existing homes, low mortgage rates, and a strong labor market,” says Greg Ugalde, chairman of the NAHB.

Regionally, combined single-family and multifamily housing starts saw the largest uptick in December in the South, up 8.6% annually, and in the Northeast, up 3% annually. Meanwhile, housing starts fell by 4.7% in the West and by 0.8% in the Midwest.

January 21, 2020

Older Americans may not realize that they can still qualify for a mortgage, even though the Equal Credit Opportunity Act forbids discrimination in the mortgage market on the basis of age.

Yet, Mary Babinski, a senior loan officer with Motto Mortgage Champions in Trinity, Fla., told The Wall Street Journal that when a 97-year-old applicant came to inquire about a mortgage, he was even surprised he could still qualify for a 30-year mortgage. Older borrowers are eligible to get loans that will expire even up to their 130th birthdays.

More lenders are trying to promote to retirees that they can still qualify with special lending programs geared to them.

Borrowers over the age of 65 comprise about 10% of all mortgages that are originated each year, according to the Federal Housing Finance Agency.

But without a full-time job any longer, some retirees may wonder how they’ll qualify with limited monthly earnings. Lenders are qualifying older adults for a mortgage based on their pensions, Social Security, dividends, and interest they have available. They’re also showing more willingness to work with retirees to help qualify them based on either their income, distributions, or assets.

Jumbo mortgages aren’t off the table either. Richard Barenblatt, a mortgage specialist with GuardHill Financial in New York, told WSJ that he was able to get an 83-year-old retired Manhattan co-op owner a $1 million, 10-year, interest-only adjustable-rate mortgage for a refinance at a “highly competitive rate.”

Source:
You’re Never Too Old to Apply for a Mortgage,” The Wall Street Journal (Jan. 16, 2020)

January 21, 2020

New couples starting out in married life may find some locales have better chances for making it financially and offer more affordable housing. Destify, a destination wedding planning company, ranked the top cities in the country for newlyweds. They analyzed data from more than 300 cities and compared them across five metrics: median household income, median home value, number of newlyweds, cost of raising a child, and the number of restaurants and dining options available.

Pittsburgh and St. Louis took the top spots on the list. “Coupled with a reasonable median home value as well as overall affordability, both of these cities make for great places to settle for those who have just tied the knot,” Destify notes in its study.

newlyweds table. Visit source link at the end of this article for more information.
Source: Realtor.com

January 13, 2020

Child care costs have jumped 49% over the last 25 years. The cost of housing has increased by 14% in comparison, according to a new analysis from Freddie Mac.

“The list of expenses for a family can be never-ending … and presents challenges for many looking to buy or rent,” says Sam Khater, Freddie Mac’s chief economist. “One of the major challenges, when it comes to affording a home, is the high cost of child care. Our analysis finds that those families paying for child care generally are left with less money for housing. Specifically, we find they, on average, pay about half of the median mortgage payment and nearly 80% of the median rent.”

Freddie Mac’s research found that families spend, on average, $715 a month on child care. That rises to $758 per month if the main parent with child care responsibilities is employed (the mother in most cases). Families with younger children (to age 4) face even higher costs, averaging $948 per month.

Childcare map. Visit source link at the end of this article for more information.

© Freddie Mac

Not surprising, families who make lower incomes face higher burdens from child care expenses. For instance, a family making less than $1,500 a month spent an average of 40% of their income on childcare. Families making more than $4,500 a month spent about 6.7% of their income on child care.

Childcare table. Visit source link at the end of this article for more information.

© Freddie Mac

 

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Lease applicant identity fraud is significantly growing, warns a new report from CoreLogic, a real estate data firm. Many apartment property managers are reporting some form of identity-related fraud, which is costing them thousands of dollars in losses from renters, the report says.

The two most common frauds landlords are reporting are renter applicants who are using fraudulent identities or who are misrepresenting their intentions.

The report shows the typical reasons that applicants are likely committing fraud are an attempt to live rent-free until evicted or to hide their true identity or history because of their possible immigration status, criminal history, poor credit history, or no job history.

Many of these applicants—except the ones desiring to live rent-free until eviction—are paying their rent on time. “They feel justified in committing fraud because they know you wouldn’t rent to them—for good reason—if you knew the truth,” the report notes. “The fact they pay rent on time, however, does not lessen the risk they present.”

The report calls out four main types of identity fraud that property managers need to beware:

First-person fraud (also called “muling”): The applicant (or mule) acts for another person in renting the apartment, using their identity and information. Another person—different from the listed applicant—then moves in. The applicant may be a family member or friend, or it may be a scam to rent out the apartment on their own and charge above-market fees to the person living there.

Synthetic identity fraud (fictitious identity): A scammer creates a fake identity—likely one that is taken from multiple stolen sources, often from children, elderly, or deceased people—to apply on a rental application. This is the fastest growing type of identity-related fraud. It accounts for 85% of all identity fraud, the report notes.

Third-party fraud: A person’s identity is unknowingly stolen. Their Social Security number, date of birth, or other forms of identification may be used by another person to fraudulently apply for an apartment lease in someone else’s name.

Identity manipulation fraud: A scammer slightly alters some of their information in a way that may look like a typo or spelling error. For example, a Social Security number may be off by one number or a slightly different name or an altered birth date may be noted. “The goal of identity manipulation is to confuse the system so that the application doesn’t connect to the fraudster’s true identity,” the study notes.

Millennials tend to have higher expectations than older homeowners did about their ideal starter home, according to a new survey by Clovered, a home insurance resource. Millennials tend to want larger homes with modern designs.

More millennials are entering the housing market for the first time. Clovered recently surveyed more than 1,000 consumers about their first home to learn which features and amenities mattered to them the most.

Clovered dream home chart. Visit source link at the end of this article for more information.

© Clovered

The top factors first-time buyers tended to place the most weight on when considering where to buy their starter home include:

  1. Affordability of the area
  2. Low crime rates
  3. Proximity to workplace
  4. Climate
  5. Geography of the area
  6. Friendly neighbors
  7. Proximity to a variety of stores/shopping options
  8. Move-in ready
  9. Proximity to friends and family
  10. Tax rates

“It’s hard to deny the emotional aspect of buying a home,” Clovered researchers note in the study. “When you’re touring potential listings and trying to decide where you want to raise your family or put down roots, you’re fantasizing about what life in that home could be like. Instead of thinking about where the house is located or how much you’ll have to pay in property taxes, it’s the tangible features of a home that really help sell it for most people.”

The most important home features first-time buyers surveyed said they were looking for:

  1. Central air conditioning: 62.7%
  2. Private backyard: 61.9%
  3. Storage: 53.5%
  4. Plenty of natural light: 50.4%
  5. A separate laundry room: 40.3%
  6. Hardwood floors: 39.5%
  7. Walk-in closet in master bedroom: 34.8%
  8. Open floor plan: 32.7%
  9. Quality kitchen cabinets: 29.2%
  10. Backyard deck: 26.4%
Source:

Lower mortgage rates may be getting offset by higher home prices. Single-family homes and condos sold for a median price of $270,000 in the third quarter—up 8.3% from a year ago and a new high, a newly released report from ATTOM Data Solutions shows.

Homeowners who sold in the third quarter earned a median profit of 34.5%—a postrecession high. They saw an average home price gain since purchase of $68,686, according to the report.

The National Association of REALTORS® also reported earlier this week that median existing-home prices are rising. In September, they reached a median of $272,100, up 5.9% from a year ago. All four major regions of the U.S. saw home prices rise last month, NAR reports.

“The seven-year U.S. housing boom is back in high gear,” says Todd Teta, chief product officer at ATTOM Data Solutions. “After a series of relatively small price increase quarters, home prices saw quite the uptick, seller profits rose and the problem of distressed sales continued to fade, helping to make the third quarter the strongest in four years. That’s all happened as mortgage rates sank back to near-historic lows, which clearly powered the market upward along with stock market surges and a continued strong economy. There had been signs before the latest surge of a cooling market, but they seem to have diminished, at least for now.”

Median home prices rose year over year in 148 of the 155 metro areas ATTOM researchers analyzed in the third quarter. The largest spikes were in Lansing, Mich. (up 25.1%); Green Bay, Wis. (up 18.1%); Johnson City, Tenn. (up 16.7%); Hickory-Lenoir-Morganton, N.C. (up 13.7%); and Spokane, Wash. (up 13.5%).

Median home prices in 79% of the 155 metros tracked also reached prerecession peaks last quarter. They were led by Kennewick, Wash. (99% above); Greeley, Colo. (89% above); Shreveport, La. (84% above); Denver (79% above); and Nashville, Tenn. (75% above).

Only three major metros saw an annual price drop in the third quarter: Kansas City, Mo.-Kan. (down 9.4%); San Jose, Calif. (down 3.3%), and Hartford, Conn. (down 0.3%).

Nationally, the average savings for homeowners with solar panels providing power is $1,075 annually. That can offset 67% of the homes’ electric bills, according to a new analysis of solar-powered home data from 1,800 homes nationwide conducted by Sense, a home energy firm.

But how much homeowners actually see in savings largely depends on where they live.

Sunny areas of the U.S. stand to benefit, as expected. For example, homeowners in Utah and California tend to gain the most from their solar investment, the study finds. Utah residents are able to offset 84% of their utility bill with solar power, while California residents offset nearly 75% of their bill.

But homeowners in Northeast also tend to see big gain, the study found. The following Northeast states found some of the highest offsets to their utility bills: New Hampshire (76%); Vermont (70%); Massachusetts, New York, and Pennsylvania (67%). These Northeast states even beat out sunny Arizona, where owners were able to offset 66% of their average utility bill by using solar power.

“State regulations that impact the payback on solar energy by utilities are another big factor in calculating your pay-off,” Sense notes in its study. “Many states pay residents for the solar power they generate at the same rate as what they charge. This approach is called net metering. The rest of the states use a variety of pricing methods that effectively reduce the payback on solar for their customers.”

Homeowners considering solar will want to find out how much their utility will payback to them for the solar power they don’t use that ends up returning into the grid. In states with net metering, residents won’t need to worry as much about timing their usable. But states without net metering, residents will receive a lower payback on their solar power from their utilities and researchers say those homeowners likely will want to explore ways to change their electricity use to peak solar production teams.

Researchers found that most homeowners use less than half of their solar power directly and then feed it back to the grid or invest in battery storage to use it later.

“Homes that use most of their energy during peak solar hours can maximize their solar investment,” the researchers note.

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