Signaling growing confidence in housing, new home equity revolving lines of credit totaled more than $44 billion year-to-date through July 2012, a three-year high — according to Equifax's October National Consumer Credit Trends Report. Revolving home equity credit experienced a 9 percent increase from the recession low for the same period set in 2010 of $40.6 billion.

In addition, write-off rates among home equity revolving lines fell 1.3 percent in September to 2.15 percent, the lowest level since April 2009. 

Other highlights from the most recent data include:

Home Equity Revolving

The number of new revolving home equity lines of credit year-to-date through July 2012 stood at 495,000, a three-year high, though more than 76 percent lower than the seven-year high of more than 2 million through July 2006.

Home equity revolving lines of credit fell 20 percent to $537 billion in September 2012 after peaking at $680 billion in May 2009.

Since November 2007, the total number of home equity revolving accounts has declined more than 34 percent, from 14.7 million to 11 million in September 2012.

First Mortgage

The total balances of severely delinquent mortgages through September 2012 ($419 billion) have decreased 41 percent since peaking in March 2010 ($714 billion). Of note is that more than 76 percent of severely delinquent balances among home equity revolving credit balances are sourced from originations between 2005-2007.

First mortgage balances of $7.85 trillion in September 2012 decreased 3.4 percent from the same month a year ago.

Severely delinquent balances among agency sourced first mortgages (FHA, Fannie Mae and Freddie Mac) have fallen more than 13 percent to $125 since peaking in March 2010 ($145 billion). In that same time, however, non-agency sourced (private investors and banks) first mortgage balances showed a 48 percent decrease.

First mortgages opened between 2005-2007 comprise 68 percent of severely delinquent mortgage balances yet they represent just less than 27 percent of all first mortgages outstanding.

"Increasing new home equity revolving credit indicates homeowner confidence and momentum towards an improved market," said Craig Crabtree, senior vice president and general manager, Equifax Mortgage Services. "While the levels are significantly lower when compared to pre-recession peaks, the recent stability has given way to consistent growth. Total first mortgages are still contracting, however the decreasing debt and delinquencies are positive signs of a stable foundation towards recovery."

Source: Equifax

A: Plan ahead. Since your home will become a worksite once the remodeling begins, inconveniences will arise that can be minimized with a little planning. Begin by having a frank discussion with the contractor to set guidelines and develop a clear understanding upfront about the various project stages and the processes involved. Talk, for example, about where building materials will be stored, how to best protect your belongings from dust and debris, areas of your home that will be off limits to workers and whether you will need to vacate the home for any reason over the duration of the work. If a kitchen or bath will be out of commission, plan accordingly. It’s okay to move the refrigerator, microwave and toaster oven to the basement or another designated area where you can prepare meals to avoid eating out.

Equally important are the rules that dictate how workers can conduct themselves in your home. Will they be able to use your bathroom and the telephone? Will they be prohibited from smoking, playing their radios or using profanity? Finally, remember to preserve a safe haven in your home where you can flee the chaos and dust and attempt to maintain your sanity.

As the U.S. housing market reports a cautious rebound, genuine clay brick manufacturers continue to invest in progressive technology for sustainable exteriors in more textures and colors at a wider price range. Historically a provider of steady jobs, brick manufacturers continue to increase environmental efficiency with environmentally-friendly plants to offer Made-in-America quality and endless green building design options.

Over the course of 100 years, the American brick industry has provided good-paying jobs with employees working 15, 20 or even 30-plus years — often in small and rural communities where the plants are based. Genuine clay brick is made from local resources with at least two brick plants located within 500 miles of 49 of the country's top 50 metropolitan areas.

While some other exterior options may cost less initially, genuine clay brick offers a superior value through benefits including low- to no maintenance, superior durability, enduring beauty, superior moisture control, design flexibility with many color choices, patterns, textures and custom blends. Genuine clay brick is also free of volatile organic compounds with virtually no waste and is inherently fire resistant.

Source: Brick Industry Association

Freddie Mac recently released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates edging slightly lower with the 30-year fixed averaging 3.37 percent, just above its all-time record low of 3.36 percent, and the average 15-year fixed dipping to a new all-time record low at 2.66 percent.

The 30-year fixed-rate mortgage (FRM) averaged 3.37 percent with an average 0.7 point for the week ending October 18, 2012, down from last week when it averaged 3.39 percent. Last year at this time, the 30-year FRM averaged 4.11 percent.

Additionally, the 15-year FRM this week averaged 2.66 percent with an average 0.6 point, down from last week when it averaged 2.70 percent. A year ago at this time, the 15-year FRM averaged 3.38 percent.

Survey results showed that 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.75 percent this week with an average 0.6 point, up from last week when it averaged 2.73 percent. A year ago, the 5-year ARM averaged 3.01 percent.

The 1-year Treasury-indexed ARM averaged 2.60 percent this week with an average 0.4 point, up from last week when it averaged 2.59 percent. last week. At this time last year, the 1-year ARM averaged 2.94 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following links for Regional and National Mortgage Rate Details and Definitions. Borrowers may still pay closing costs which are not included in the survey.

"Mortgage rates remained more or less unchanged this week as home construction builds up steam,” says Frank Nothaft, vice president and chief economist, Freddie Mac. “Construction on single-family homes jumped to an annualized rate of 11 percent in August, the strongest pace since August 2008. Over the first nine months of the year, single-family starts were 23 percent higher than the same period last year. Moreover, homebuilder confidence rose for the sixth consecutive month in October to the highest level since June 2006, according to the NAHB/Wells Fargo Housing Market Index."

For more information, visit www.FreddieMac.com.

Recent economic reports indicate activity ticked up in the third quarter, but overall economic growth is expected to remain at a sluggish sub-2 percent rate this year, according to Fannie Mae’s Economic & Strategic Research Group. A positive September jobs report, continued resilience in the housing market, and the Federal Reserve’s latest quantitative easing measures appear to have bolstered consumer confidence, with September retail sales posting relatively good results. However, uncertainty surrounding ongoing financial and policy issues both domestically and abroad may restrain meaningful economic growth in 2012.

"The U.S. fiscal cliff and debt ceiling debate as well as the weakened global economic environment are likely to create the strongest headwinds facing any real improvement this year," says Fannie Mae Chief Economist Doug Duncan. “With these issues hanging in the balance, we believe risks remain tilted to the downside. News from the housing sector is more positive, with various indicators showing continued momentum toward a sustainable, long-term recovery. Notably, home prices are inching back into positive territory on a year-over-year basis. Results from our September National Housing Survey also show consumers’ home price change expectations have remained positive for nearly a year."

Although home prices are likely to dip somewhat in the winter season following typically stronger spring and summer months, the Group’s expectation that home prices hit bottom earlier this year remains. Combined with record-low mortgage rates, aided by the Federal Reserve’s latest round of mortgage-backed security purchases, more consumers are likely to enter the housing market. The Group expects total home sales to rise approximately 9 percent this year from last year’s depressed levels. However, the biggest impact from declining mortgage rates will be to extend the ongoing refinance boom, helping to improve household cash flows, thereby allowing homeowners to spend more, save more, or pay down their debt. As a result of renewed declines in mortgage rates, the Group revised higher their projected refinance originations, bringing their forecast of overall originations to $1.8 trillion in 2012, a gain of 20 percent from last year.

For more information, visit www.fanniemae.com.

The real estate recovery is set to advance in 2013 as modest gains in leasing, rents, and pricing will extend across U.S. markets from coast-to-coast and improve prospects for all property sectors, according to the findings of the Emerging Trends in Real Estate® 2013 report, released recently by PwC US and the Urban Land Institute (ULI).

According to survey participants, despite a slower-than-normal real estate recovery track, U.S. property sectors and markets will register noticeably better prospects as compared with last year. Recent job creation should be enough to increase absorption and push down vacancy rates in the office, industrial, and retail sectors, helped by the limited new supply in commercial markets. Robust demand for apartments should hold up, survey respondents indicate, even as new construction ramps up – and even the housing sector makes progress in most regions. Additionally, improving fundamentals should help with rents and net operating incomes, building confidence about sustained growth and strengthening recent appreciation.

"With the outlook for commercial real estate continuing to improve in 2013, investors are expected to allocate substantial sums of capital to the real estate asset class, according to our survey respondents," saysMitch Roschelle, partner, U.S. real estate advisory practice leader, PwC. “As yield in bonds and other financial instruments tighten in a still volatile market, commercial real estate's income producing and total return attributes offer investors potentially attractive risk-adjusted returns."

Stephen Blank, ULI’s senior resident fellow for real estate finance, noted that investors must keep in mind recent progress made in the industry as they prepare for a slow but steady recovery. “What these findings suggest is that, in general, the industry is moving forward bit by bit. Nothing indicates a quick turnaround for commercial real estate, but it is improving. Those who are patient and willing to rethink their expectations and adapt to market realities are expected to come out ahead this year.”

Capital Chases Yields
Despite macro-economic concerns, the 2013 Emerging Trends forecasts that investors will return to greater risk-taking in their portfolios in an attempt to gain more yield. Even as riskier secondary markets show up on investors’ radars, many believe the move cannot be made without concentration on leasing to high-quality tenants within growth industries that are sustainable. However, as property prices meet or exceed pre-recession levels in the cities of– San Francisco, New York City, Boston, Washington, D.C., Los Angeles, and Chicago, the focus of property investors has shifted more to the lessee’s value, various market demographics, a city’s economic production, diversification, job growth, and where people want to live.

According to the report, investment capital’s interest in commercial real estate is expected to increase as other asset classes continue to offer minimal returns or too much volatility. In fact, Emerging Trends found that only six of the 51 markets covered exhibited a decline in investment prospects.

Transaction volume is expected to tick up with more action in 2013, according to Emerging Trends. Pricing is predicted to strengthen, but increases will be muted until credit markets return to more normal states. Commercial mortgage–backed securities (CMBS) may return to the financing spotlight once transaction activity increases. Interviewees expect that CMBS issuance can return to a $75 billion to $90 billion level over the next several years.

Respondents to Emerging Trends cite a number of best investor bets for 2013, which include:

• Concentrate acquisitions on budding infill locations: Top urban markets outperform the average, bolstered by move-back-in trends and gen-Y appeal. Top core districts in these cities have become too pricey, so look in districts where "hip" residential neighborhoods meet commercial areas.
• Construct new-wave office and build to core in primary coastal markets: Major tenants willingly pay high rents in return for more efficient design layouts and lower operating costs in LEED-rated, green projects.
• Develop select industrial facilities in major hub distribution centers near ports, rail corridors and international airports: In these markets, the industrial sector is driven by tremendous demand by large-scale users looking for specialized space and build-to-suit activity.
• Use caution investing in secondary and tertiary cities: Focus on income-generating properties and partner with local operators who understand tenant trends and can leverage their relationships. Markets grounded in energy and high-tech industries show the most near-term promise, while places anchored by major education and medical institutions should perform better over time.
• Begin to back off apartment development in low-barrier-to-entry markets: These places tend to overbuild quickly, softening rent growth potentially and occupancy levels probably by 2014 or 2015.
• Consider single-family housing funds: Housing markets finally get off bottom and major private capital investors make a move into the sector. Concentrate investments with local players who know their markets and can manage day-to-day property and leasing issues.
• Repurpose the oversupply of obsolescent properties: Whether abandoned malls, vacant strip centers, past-their-prime office parks, or low-ceilinged warehouses, an overabundance of properties requires a rethink, a teardown, and, in many cases, a new use.

Investors Follow Job-Producing Markets and Echo Boomers
During recessionary times, some investors have sought more economically diverse markets to weather job losses and declines. However, now, in a time of slight economic uptick, Emerging Trends results indicate that investor sentiment is focused on job-producing industries and those markets that contain them, regardless of how diverse the businesses are that are producing those jobs.

The best housing markets, according to the report, will provide better commercial real estate options because a housing sector recovery generates more jobs, and demand for vacant commercial real estate. At the same time, banks will free up funding and a multiplier effect ensues. Even though the housing market is starting to improve, demand and interest in apartments in “American infill” locations remain attractive, leading to a boom in apartment development. Leading this cycle move is the echo boomer generation, which is delaying plans of home ownership.

Markets to Watch
A snapshot of the top five markets ranked by survey respondents and their outlook for each of the markets:

San Francisco (1). In 2013, San Francisco steals the Triple Crown from Washington, D.C., receiving top billing in the Emerging Trends investment, development, and housing categories. The market is driven by growth and a strong jobs outlook, led by technology and a structural change away from suburban and toward downtown. Continued infill interest is supported by providing one of the best transit systems in the country and a city center with walkability that is number two only to New York City.

New York City (2). New York City makes a small move this year, stepping up two spots to second best investment prospect. However, investors still seem concerned about the run-up in prices. Demographics for the city prevail, with 20 percent of jobs being in the growing education and health care sectors and an important echo boomer population. Service-type jobs continue to develop, but a lag in goods-producing jobs is a concern.

San Jose (3). The San Jose technology corridor continues to be a market to watch. In 2013, San Jose and the broader Silicon Valley are largely expected to generate jobs in a variety of fields, but most will revolve around the high technology firms. Industrial diversity is limited in San Jose and could be a concern for investors; however, the more than 6,600 technology companies based here employing over 225,000 people make it an area of interest.

Austin (4). In 2013, Austin looks set to extend its trend of attracting individual and institutional investors alike. Expansion of commercial real estate in Austin looks likely with a population increase of 2.3 percent anticipated next year, pushed by the echo boomer demographic.

Houston (5). Energy-related employment is one of the driving forces behind the Houston market and the investment prospect rank jumped from eighth to fifth. Survey participants believe the main buying opportunities are in the industrial sector – fifty percent believe that space in Houston is worth taking a chance on.

Rounding out the top ten markets to watch:

Boston (6) has an increase in high-technology and biomedical research and development employment that continues to take the lead, increasing investor interest.

Seattle (7) is the global center for the software industry and continues to be the focus of many domestic and global investors.

Washington, D.C. (8) commercial real estate prices have risen since the recession, with investors regarding D.C. investments as “recession-proof;” however, concerns about overbuilding and costs continue to lead discussions about interest in D.C.

Dallas/Fort Worth (9) ranks behind only Houston as a job provider, and the Dallas/Fort Worth job base is one of the most diversified of the 51 markets covered.

Orange County, CA (10) shows increases in rating value and ranking as an investment prospect.

Property Types
Among property sectors for 2013, the survey finds that commercial and multifamily regain generally solid Emerging Trends investment ratings. Categories hold their relative rankings from 2012 in the survey, with persistent leader apartments still on top, though noticeably leveling off, and retail continuing to lag, but recovering. Industrial/warehouse and hotels show the biggest survey improvements, trailed closely by downtown office. Power centers and suburban offices remain investors’ least-favored subcategories. Except for apartments and industrial space, development prospects remain challenging. Interviewees show mixed concerns about apartment construction on a market-by-market basis, but generally concur that overdevelopment will happen, just not in 2013. They also anticipate more big-box industrial development.

Now in its 34th year, Emerging Trends is one of the oldest, most highly regarded annual industry outlook for the real estate and land use industry and includes interviews and survey responses from more than 900 leading real estate experts, including investors, fund managers, developers, property companies, lenders, brokers, advisers, and consultants.

For more information, visit www.uli.org/emergingtrends or www.pwc.com/us/realestate.

Hilton Head Island Area Market Stats (MLS)*

• Median Price - Hilton Head Island Detached Homes YTD: -2.3%
• Median Price - Hilton Head Island Villas/Condos YTD: +10.7%
• Median Price - Mainland Detached & Villas/Condos YTD: +6.7%
• Median Price - Area wide Detached & Villas/Condos YTD: unchanged
• Housing Inventory: 2,583 Homes for Sale - 9.1 Months Supply (-34.1%, trending down)
• Closed Sales YTD: 2,468 (+21.4%)
• Pending Sales YTD: 2,701 (+19.1%)

     *Current as of September 2012. Next update for October to be released mid- to late-November

To see both reports in full, complete with graphs, click on

• Monthly Indicators
• Housing Supply Overview

Monthly Indicators

Most housing metrics should follow their usual, autumnal movements – higher inventory and days on market, fewer sales, lower prices. That applies only to month to-month seasonal trends; most indicators should still show improvement on a year over-year basis. As you already know, all real estate is local – down to the city neighborhood, suburban development and exurban lot. Let's dive into some local figures.

New Listings in the Hilton Head region decreased 11.6 percent to 375. Pending Sales were up 21.8 percent to 240. Inventory levels shrank 21.0 percent to 2,583 units.

Prices gazed skyward. The Median Sales Price increased 5.5 percent to $230,000. Days on Market was down 11.3 percent to 121 days. The supply-demand balance stabilized as Months Supply of Inventory was down 34.1 percent to 9.1 months.

Not to get negative like a political TV ad, but sluggish job growth, persistently high gas prices, drought-induced spikes in food prices and other global events could threaten consumer confidence. The Fed's mortgage purchases drove Freddie Mac's average 30-year fixed-rate mortgage survey to an all-time low of 3.40 percent. Employment growth remains critical, providing the very jobs that will stimulate housing demand and higher prices as well as alleviate beleaguered homeowners.

House Supply Overview

The foliage isn't the only thing changing this time of year. For the 12-month period spanning October 2011 through September 2012, Pending Sales in the Hilton Head region were up 19.9 percent overall. The price range with the largest gain in sales was the $100,001 to $225,000 range, where they increased 31.7 percent.

The overall Median Sales Price was down 3.0 percent to $225,000. The property type with the largest price gain was the Condo segment, where prices increased 3.3 percent to $155,000. The price range that tended to sell the quickest was the $100,000 and Below range at 84 days; the price range that tended to sell the slowest was the $650,001 and Above range at 199 days.

Market-wide, inventory levels were down 21.0 percent. The property type that lost the least inventory was the Single-Family segment, where it decreased 19.6 percent. That amounts to 8.9 months supply for SingleFamily homes and 9.6 months supply for Condos.

To see both reports in full, complete with graphs, click on

• Monthly Indicators
• Housing Supply Overview

(All data provided by Multiple Listing Service of Hilton Head Island - powered by 10K Research and Marketing and sponsored by the South Carolina Association of REALTORS.)

Rental properties have four primary factors that contribute to a return on investment. Based on market conditions and investor strategies, the individual motivating factor can change for property owners.

There was a time when the benefit of tax savings to offset income from other sources was considered important to some investors. However, in today's environment, they are more likely valued as incidental benefits.

Some investors expect appreciation to deliver the satisfactory results which can be reasonable over time if a reliable appreciation rate is used. Savvy investors today are using conservative estimates for long-term holding periods.

Leverage occurs when borrowed funds are used to control a larger asset. Positive leverage can actually increase the yield on an investment.

The fourth component that contributes to a property's yield is the cash flow. When the rents are greater than the expenses of operating the property and servicing the debt, there is a positive cash flow. A property with a good cash flow doesn't have to go up in value to justify the investment.

The combination of lower prices, incredibly low mortgage rates and rising rents are attracting investors to rental properties that include single-family homes in predominantly owner-occupied neighborhoods.

Even if you were to ignore the benefits of tax savings, potential appreciation and leverage, the attractive cash flows make rental property a very smart investment alternative. If you're curious, contact me for more information.

CoreLogic, a leading provider of information, analytics and business services, released its October MarketPulse report this past Friday. The monthly publication provides insight into the health of the U.S. economy with emphasis on housing and mortgage metrics. CoreLogic Chief Economist Mark Fleming and Senior Economist Sam Khater, along with colleagues from the CoreLogic Mortgage Analytics and Economics group, authored the articles.

Key findings in the October MarketPulse Report include:

• The 2012 housing recovery is expected to be more durable than in prior years because of an improved balance between supply and demand. Given the solid performance of home prices in the spring of 2012, even a stronger-than-projected decline in the fourth quarter of this year is unlikely to diminish the gains made.
• According to CoreLogic estimates, new home sales are up 24 percent over a year ago and existing home sales are up 11 percent over a year ago. This demand is fundamentally driven by institutional investor interest in single-family residential properties as an asset class, pent up demand returning to the market, and increasing consumer confidence in housing.
• About a million borrowers are still unable to access refinancing programs. This is due in part to the inability of a large number of borrowers to take advantage of lower interest rate refinancing on loans originated after May 2009, despite efforts by the Federal Reserve and Federal Housing Administration to implement policies aimed at lessening mortgage debt for struggling borrowers since the start of the U.S. housing recession.

For a full copy of the October CoreLogic MarketPulse report, including a complete set of data and charts, visit http://www.corelogic.com/downloadable-docs/MarketPulse_2012-October.pdf.

A: Sometimes. But it is a complicated process and a lot will depend on the lender.
This process is called a “short sale,” which occurs when a lender agrees to write off the portion of a mortgage that's higher than the value of a home. But, usually, a buyer must be willing to purchase the property first.

A short sale may be more complicated if the loan has been sold in the secondary market. Then the lender will need permission from Freddie Mac or Fannie Mae, the two major secondary-market players.
If the loan was a low down payment mortgage with private mortgage insurance, the lender also will need to involve the mortgage insurance company that insured the low down payment loan.

The short sale can keep the homeowner from landing in bankruptcy or foreclosure. But it is not an easy procedure to approve, and it involves as much, if not more, paperwork than an original mortgage application.

Instead of proving your credit worthiness and financial stability, you must prove you are broke. And any remaining difference between your home's value and the balance on your mortgage is considered a forgiveness of debt, which usually means it is taxable income.