My New Blog

 By Hui-yong Yu

Oct. 6 (Bloomberg) -- U.S. apartment vacancies rose to 7.8 percent in the third quarter, the highest since 1986, as rising unemployment reduced rental demand, Reis Inc. said.

Actual rents paid by tenants, known as effective rents, declined 2.7 percent from a year earlier, the New York-based property research firm said in a report today. Asking rents, or what landlords sought, fell 1.8 percent from a year earlier.

Job losses and falling wages are shrinking the pool of potential tenants. The U.S. unemployment rate rose to 9.8 percent in September, the highest since 1983, the Labor Department said Oct. 2.

Vacancies “continued to rise despite what has traditionally been a strong leasing period for apartment properties,” Victor Calanog, director of research at Reis, said in a statement. “Given the inherent seasonality of rental and lease-up patterns we expect fourth-quarter figures to be even weaker, implying that we may break historic vacancy levels by year-end 2009.”

The apartment vacancy rate was 7.7 percent in the second quarter and 6.2 percent in 2008’s third quarter, Reis said. Compared with the second quarter, asking rents fell 0.5 percent and effective rents fell 0.3 percent.

New York’s Rate Falls

New York’s vacancy rate fell to 2.9 percent in the third quarter from 3 percent in the second, as the end of summer brought an influx of tenants signing leases, Reis said. Effective rents dropped 0.9 percent from the prior quarter and were down 6.8 percent from a year earlier.

“With New York being relatively more dependent on the still-embattled financial services sector, it may take a few more quarters before we see rents bottoming out” there, Calanog said. “We are on track for 2009 to register as the worst year in rent drops on record, far exceeding the historic 3.8 percent decline recorded in 2002.”

Manhattan apartment rents fell as much as 8.9 percent in the third quarter from a year earlier, broker Citi-Habitats Inc. said yesterday in a report. Average rents declined for all apartment sizes as landlords offered concessions to tenants, the company said.

New Haven, Connecticut, replaced New York as the city with the lowest vacancy rate, at 2.5 percent, partly due to the start of the academic year, said Reis. Yale University is located in New Haven.

The Bloomberg REIT Apartment Index fell 17 percent including dividends during the past year, compared with a gain of 1 percent for the Standard & Poor’s 500 Index. The apartment REIT index has 13 members, including Equity Residential and AvalonBay Communities Inc.

To contact the reporter on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net

Today's blog is an article from Reuters News Service. This is worth reading.  The link is http://tinyurl.com/yj45lnr

November 30th is the last chance for the First Time Homebuyers Credit! 

Apply Now at www.loansbyallied.com/pre_approve

The purchase of a house that needs repair is often a catch-22 situation, because the bank won't lend the money to buy the house until the repairs are complete, and the repairs can't be done until the house has been purchased.

HUD's 203(k) program can help you with this quagmire and allow you to purchase or refinance a property plus include in the loan the cost of making the repairs and improvements. The FHA insured 203(k) loan is provided through approved mortgage lenders nationwide. It is available to persons wanting to occupy the home.

The downpayment requirement for an owner-occupant (or a nonprofit organization or government agency) is approximately 3.5% of the acquisition and repair costs of the property.

The 203(k) loan includes the following steps:

	A potential homebuyer locates a fixer-upper and executes a sales contract after doing a feasibility analysis of the property with their real estate professional. The contract should state that the buyer is seeking a 203(k) loan and that the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.
	The homebuyer then selects an FHA-approved 203(k) lender and arranges for a detailed proposal showing the scope of work to be done, including a detailed cost estimate on each repair or improvement of the project.
	The appraisal is performed to determine the value of the property after renovation.
	If the borrower passes the lender's credit-worthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs. The amount of the loan will also include a contingency reserve of 10% to 20% of the total remodeling costs and is used to cover any extra work not included in the original proposal.
	At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.
	The mortgage payments and remodeling begin after the loan closes. The borrower can decide to have up to six mortgage payments (PITI) put into the cost of rehabilitation if the property is not going to be occupied during construction, but it cannot exceed the length of time it is estimated to complete the rehab.
	Escrowed funds are released to the contractor during construction through a series of draw requests for completed work. To ensure completion of the job, 10% of each draw is held back; this money is paid after the lender determines their will be no liens on the property.

Provided by HUD.gov (2009)

Trusting a Contractor with your home renovation can be daunting. To help screen candidates for the job, ask the following questions about their business and your project.

• How long have you been a contractor?

          -Your contractor should have a well established history in your area;five year is a good benchmark.

• Are you licensed?

       -Depending on where you live, contractors may be legally required to be licensed. Your area's licensing board or building department can tell you what the requirements are, if any.  In the state of PA contractors are required to advertise their licensing permit numbers. 

• What insurance do you have?

       -Contractors should be able to provide you with current copies of insurance certificates, including coverage for personal liability, workers compensation, and property damage. Hiring an uninsured contractor puts you at risk of liability for injuries or damages. 

• Can you provide references?

        -Contractors should be able to provide you with references from at least three past clients. Ideally, their projects were similar to yours and were completed in the least year. 

• How do I approach projects of this size?

        -The answer will reveal a lot about how they do business.  This is the time to ask about specifics: completion dates, noise levels, when work will begin and end each day, etc.

• Will my project require a permit? 

        -Prior starting your project, contractors should obtain any necessary permits.  A contractor who asks you to obtain them may not be properly licensed or insured.

• Will subcontractors be used?

         - If so, are they licensed and insured as required?  Interview them as well; ask if the contractor pays them on time. If not, a lien could be placed on your house.

Reference: Mortgage Matters Newsletter