It looks like Harvard University has cleared a major hurdle in its bid to expand its campus in Allston.  CSX, the transportation giant whose base of operations are based in Allston, has agreed with the City of Boston to move its headquarters to Worcester.  By 2012, CSX’s should be vacated from the 80-acre plot of land.  Prepare for changes in Allston.

From this article in the Boston Globe:

A long-awaited, $100 million deal between the state and railroad giant CSX will move operations from the company’s sprawling rail yard in Allston to Central and Western Massachusetts and add at least seven train trips to the Worcester-Framingham commuter rail line in 2012…

CSX and state and local officials say the agreement could end years of frustration among commuters from Boston’s western suburbs who use the often-late rail line, open a large parcel in Boston for development by Harvard University, and even reroute some commuting pat terns to North Station…

CSX spokesman Robert Sullivan said Allston train operations would be shifted west by 2012. That clears the way for Harvard University to finally assume control of the site. Since 2001, the university has purchased around 140 acres in the area, said spokeswoman Lauren Marshall. After CSX leaves, the university will probably seek to remove easement restrictions, making construction of new university buildings possible….

What do you think?  Is this a good thing for Allston?

The Federal Housing Authority is providing life support to the housing market in Boston and across the country.  Yet at the same time, it is enforcing new regulations that will make it far more difficult for working class condo owners to sell their properties to new clients.  So, while the deals are out there, be prepared for lots of paperwork and delays:

THE FEDERAL Housing Administration has been busy lately, propping up the housing market. The FHA’s out-sized role in real estate has earned it intense scrutiny on Capitol Hill, where legislators are already choking on the staggering tab Fannie Mae and Freddie Mac are sticking them with. To its credit, the agency is moving decisively to repair its balance sheet and avoid a government bailout…

…But in Boston, one recent FHA move is sowing some unintended consequences: It’s threatening to wall off entire neighborhoods in the city and close-in suburbs from the working-class homebuyers the FHA serves. These buyers are running into trouble because of a quirk in Boston’s development history that has left a permanent imprint on the city’s geography….

…Scores of double- and triple-deckers have been chopped up into condos over the past decade. In large tracts of Dorchester, Hyde Park, Jamaica Plain, Cambridge, Somerville, and Everett, there are few single-family homes, and even fewer buildings with condo associations that have cared to submit themselves to FHA scrutiny. People would rather not wade through a thicket of red tape, if it can be avoided.  So, essentially, huge portions of Greater Boston are off limits to homebuyers. That’s because, for working-class home buyers, an FHA loan is all there is…

…Boston’s future as a vital and diverse organism lies with post-grads and young families – groups that would gladly take the city over the suburbs, if only someone would give them a mortgage. The longer urban neighborhoods remain closed to them, the more we invite a lifeless fractured split along class lines, with the rich on one side, the poor on another, and everybody else stuck waiting on the commuter rail.

Article by Paul Mcmorrow, from the Boston Globe, June 18, 2010.

For Questions about FHA Financing and Special FHA Offers, Please call Jason Schuster at 617-756-3029.

Eating away at the American Dream

To Rent or to Buy?  That is the question.

Here is a look at that timeless question from a different perspective, from this article in today’s Wall Street Journal, written by author and scholar Richard Florida:

Several generations of Americans have seen homeownership as a birthright and a necessity. We take it for granted that owning your home is a good thing. It goes along with higher incomes; it causes people to be more diligent, hard-working and productive; it leads to stable families, stable communities, and higher levels of happiness and well-being.

Homeownership certainly contributed significantly to the golden era of American prosperity that began after World War II and continued into the 1990s, fueling demand for the cars and appliances that were rolling off assembly lines. But the foundation of our economy no longer lies in manufacturing, which created stable populations of workers committed to their jobs and communities for life. Today’s idea-driven economy requires a more mobile work force that can seize opportunities wherever and whenever they arise.

Owning a home may actually be a drawback given the economic flexibility required to power long-lasting recovery. My colleagues and I tracked homeownership levels across U.S. cities and regions to see how they correlate to other measurable demographic and economic factors. As we expected, the rates of homeownership are greatest where housing prices are lowest. But cities with high levels of homeownership—in the range of 75%, like Detroit, St. Louis and Pittsburgh—had on average considerably lower levels of economic activity and much lower wages and incomes. Far too many people in economically distressed communities are trapped in homes they can’t sell, unable to move on to new centers of opportunity…

The rate of homeownership in America is already starting to fall back on its own. From a high of almost 70% during the bubble years, homeownership has fallen to roughly 67%; slightly less than 39% of Americans between ages 18 and 35 own their own home, down from 43% in 2005. The Urban Land Institute projects that homeownership may fall to 62% over the next decade or two.

I’m not saying that Americans should give up on homeownership. Those who plan to stay in one place, who have secure jobs, and who can afford to should still buy homes. We need only tilt the balance, reducing the current homeownership rate from our current rate of just over two-thirds to perhaps 55% or 60%, comparable to that of the most economically vibrant regions. It’s in our economic interest to help make that happen.

What do you think?  To Rent or to Buy?  For a complimentary professional real estate consultation, please contact Proper Realty Group 7 days a week.

If you are looking for for a housing deal, it may be a good idea to wait.  Not too long, not past the April 30th Tax Credit expiration date, but just a few more days and you could find the annoyances of short sales begin to disappear.

Starting on April 5th, 2010 the federal government will start providing financial incentives to banks , and other lending institutions, to complete more short sales.

Currently for a buyer to negotiate a price with a lender the process could last several months.  The buyer would submit an offer, if that offer is less than what is owed the lending institution would then order a Broker Price Opinion or an appraisal.  The lender would then receive this appraisal, compare it with the amount currently owed with the price offered.  The lending institution would then either accept, make a counter offer, or do nothing.  The whole process could last several months, in the mean time leave the potential buyer waiting for something that may or may not come.

On April the 5th things will change.  Lending institution will see financial incentives for short sales.  Under the new rules lending institutions will have Broker Price Opinions and or appraisals done before the distressed property is put up for sale, and share all relevant information about the minimum amount they are willing to accept.  They are also required to accept bids that are equal to or greater than the minimum amount shared within 10 days.

Will this help stimulate the housing market?  If so, how much?

I think this is the question for every piece of legislation, mortgage rate decrease, or tax credit.  We really will not know until after the fact.  The bottom line is this should help lending institutions cut loses, free up credit, and speed up a process that has some buyers weary of approaching.  I know there are some brokerages and agents that have stayed away from short sales as they more often than not lead no where.

Is now the right time to buy?  Believed the be the question without an answer.  We’ve written about home prices raising artificially due to increases in demand because of the Home Buyer Tax Credit.  Is that a nationwide issue, or only in certain communities?  If it is significant, how much exactly?

Interest rates on 30 year mortgages are going to steadily increase from now until the end of the year.  Exactly how much?  No one really knows.  That increase, I believe, is much more important as far as keeping money in your pocket is.  If decide to wait until after the expiration of the Tax Credit you will miss out on either $8,000 or $6,500 in tax credits as well as increases in interest rates.

How much does interest rate cost me?  Well, that really depends on how much you borrow and for how long.  With residential homes, most loans are 30 year and to get a good interest rate you are expected to put 20% down.  So for a residential home, on a $250,000 loan a one percent variance in interest rate could mean an additional $70,000 over 30 years.  That is quite a bit.

Does this mean I should buy now?  Yes, and no.  If you’ve found the home that is right for you, it may be beneficial to roll up your sleeves and make sure you’re able to go under contract before April 30th, and secure the best possible interest rate.  If you haven’t done so, it could be a mistake as finding the right home for you is the most important part of home buying.  This is a 30 year major financial commitment.  It would be wise not to take the decision lightly.

Aerosmith Drummer and founding member Joey Kramer has sold his coastal compound.  The property sold for $2.7 million, 27% less than the property’s most recent asking price and almost half of the original $5 million asking price when it first went on the market in July of 2008.

The property over looks the Atlantic and is rested on 17 acres.  It includes a 6,200 square foot home, a recording studio, a carriage home, as well as 3 garages.

With mortgage rates near a 50 year low why are there not more borrowers taking advantage of the low rates and refinancing?  With many borrowers able to drop their rate by a full percentage point, and more than half able to drop their rates by three-quarters of a point it would seem the time is right.  It seems with house values plummeting and incomes falling equally as fast that a full percentage point (or even three-quarters) would be the thing to turn things around for many home owners in need.

Tightening credit restrictions, sky rocketing fees, and lacking equity, that’s not going to happen.

In 2008 Fannie Mae and Freddie Mac began instituting fees that, even for borrowers with good credit could face fees equal to 1% of the loan amount, or more.

On Monday the Obama Administration extended a year long program started in April to help borrowers who owe between 80% and 105% of the value of their home to refinance.  In September that program grew to include borrowers who owe up to 125% of the value of their homes.  The plan was thought to save millions when first launch, but less than 2,000 home buyers have taken advantage.

The Administration is looking into creating additional help for home owners in need.

Have you had a similar experience with securing refinancing?  Do  you know someone who has?  If you have any questions about any of the information feel free to contact us or feel free to discuss!

An article on The Wall Street Journal Online is discussing Harvard plan to sell up to $500 million in real estate assets.  Although Harvard’s endowment has approximately $5 Billion in real estate and future commitments to the properties.

Here’s an excerpt from the article about the losses posted and a little on the plan to sell:

Harvard’s own real-estate portfolio “suffered a loss of over 50%” for the fiscal year ended in June, according to a September report from Jane Mendillo, head of the company that manages the endowment, the nation’s largest. Harvard’s endowment posted miserable overall returns last year, declining 27.3% for the year that ended in June.

In November, Harvard began marketing a portfolio of stakes in more than 30 real-estate funds, ranging in size from $50 million to $500 million through Credit Suisse Group, according to several secondary-market buyers and intermediary firms familiar with the offering.

Some of the largest commitments are with real-estate-investment companies such as Beacon Capital Partners, Lubert Adler, Lone Star Funds and Westbrook Partners, according to documents reviewed by The Wall Street Journal. Close to 60% of the funds are in North America, but there are also a number of commitments with real-estate companies in Europe, Asia and South America, according to the documents. A spokesman for Credit Suisse declined to comment.

I really do not see this as a surprise at all.  Last year was not a great year for many investments at all, and really to see a 50% loss on real estate values isn’t as bad as some have seen.  Losing 27% of the total endowment is a strong blow, but when you have an endowment the size of Harvard’s (currently $26 billion) you generally have some room for ups and downs.

The Article states Harvard Yard is not for sale, but I am very interested in the price it would fetch.  I would also be interested in knowing if it’s true that everything is for sale, for the right price.

Taking a look over at Bloomberg.com we see Fannie Mae will be seeking 15.3 billion in aid after their 10th straight quarterly loss.  This is coming shortly after the Treasury lifted a $200 billion dollar bail out limit on Christmas Eve and has decided to back them unlimited until 2012.  Smaller rival to Fannie Mae, Freddie Mac saw a much smaller negative last quarter and will not be seeking additional aid from the government.  Fannie Mae’s net worth is currently at around negative $15 Billion.

Both sides of the political spectrum have been arguing about how to fix the housing crisis.  Should we continue to fund a company with 10 consecutive quarters of huge losses with tax payer money?  Should the system be totally overhauled?  Should Fannie Mae, Freddie Mac and other similar institutions be shut down and become a thing of the past?  If so, what will replace them?  How can we bring the same security of home loans and still have funds available for potential home buyers?

Another interesting blog find over at The Wall Street Journal debating on whether on not home buyers should wait until after the April 30th deadline.  I know you’re probably thinking, “Why is that even a question?”  The article mentions some evidence that in the last weeks of the tax credit an increase in demand has been created with home buyers looking to take advantage of the “deal” that is the Tax Credit.  In certain markets this can create inflated home prices as well as bidding wars for certain properties driving the prices up higher than the $8,000 credit you’ll receive.

What do the readers think?  Have you noticed any spikes in prices in certain areas?  Do you think it’s a good idea to wait?