It uses all these evaluations in order to come up with predictions on how real estate industry is expected to fare in the next few years. So, this real estate school of thought tries to determine the buying power of people in order to determine the course of real estate prices. When it comes to evaluating the real estate trend with regards to a particular place (i.e. locally), this real estate school of thought takes into account various local factors like the unemployment rate, the industrial development in the region, the change in tax policies and any events that might affect the real estate prices in the area. It also takes into consideration the surrounding areas and the real estate trend in those areas.

So, this real estate school of thought is really followed by arch real estate consultants/investors who know a lot about finance and put all that knowledge to use in determining the trends for real estate industry. However, that is just one real estate school of thought.

The other real estate school of thought doesn’t consider those factors at all. According to this real estate school of thought, real estate is always lucrative at all times and at all places. This real estate school of thought advocates looking for great deals. It’s this real estate school of thought that asks you to go to public auctions, look for distress sales and foreclosures, find motivated seller, rehab and sell, etc. So, this real estate school of thought focuses on getting the information about the best deals in town and taking advantage of them to make good profits.

So, those are the two real estate schools of thought and following either or both calls for time and effort (if you are to make any profits out of real estate investments).

The US House of Representatives passed the Transportation, Housing and Urban Development (THUD) appropriations bill for FY 2011 by a vote of 251 to 167 on Thursday.

When the debate began, the Federal Housing Administration’s reverse mortgage program had a $150 million appropriation but passed with $140 million.  While the number may be lower, debate among members of the House proved that representatives in Washington, DC, are getting behind the program.

Rep. E.B. Johnson, D-Texas, introduced an amendment to increase funding for HUD’s Community Development Grant program by $10 million and reduce funding for the Mutual Mortgage Insurance Program by the same amount.  The money would be taken from the reverse mortgage program.

“This program is not without controversy, many do not understand that the proceeds may impact medicaid eligibility,” she said.  ”At a time when property values remain low, a reverse mortgage might not be the best route for individuals”.

Johnson’s amendment was approved but not without opposition from ranking Republican and Democratic leaders in the House.

Interestingly enough, ranking minority member of the THUD Subcommittee, Tom Latham, R-Iowa, opposed reducing the amount of money available for the program.  He introduced an amendment last year to take away the $798 million appropriation needed and lead to a 10% principal limit reduction for the HECM product.  His views of the program have clearly changed.

“My concern is that this is taking money out of reverse mortgages for seniors,” he said on the House floor.  ”The problem is that if there is an increase in demand, it simply can not happen without the funding.”

Chairman of the THUD Subcommittee, John Olver, D-Maryland stepped in and voiced his opposition as well.  However, Olver said he was assured that after looking at the HECM situation and the needs of the program, it could yield the $10 million dollar offset.  According to sources in Washington, HUD assured Olver the $10 million wouldn’t have any impact on the program for the next fiscal year.

Having both ranking Republican and Democratic members of the THUD Subcommittee step up to support the HECM program is a big change from last year.

“It’s a great reflection of the kind of support we have in Washington today,” said Jeff Lewis, Chairman of Generation Mortgage and the leader behind the Coalition for Independent Seniors.  ”People need to recognize that there will be a lot of incidents along the way, but we are in a much better place on Capitol Hill than we were a year ago.”

The Senate has yet to bring its THUD appropriations bill to the floor and it’s not clear when that will happen, but support for the program in the Capital is clearly improving.

The Obama Administration has announced a conference on Housing Finance Reform to happen in the upcoming month. On August 17, the “Conference on the Future of Housing Finance” will take place in Washington, D.C. at the Treasury Department. Yet again, the Administration invites the public to get involved in the future of the country’s housing finance system, expanding opportunities for public opinion on the matter.

An important topic of discussion will focus on Fannie Mae and Freddie Mac, the mortgage-finance powerhouses seized by the U.S. Treasury in September 2008. The government is still managing the ongoing consequences of poor credit choices from bad loans made by Fannie Mae and Freddie Mac during the housing bubble from 2005 to 2007.

Last week, when President Obama signed the Dodd-Frank reform act but reform of the GSEs was not included. However, the legislation requires the Obama Administration to purpose a housing market reform method, including the GSEs, by the beginning of next year.

The Administration hopes to gain critical public input so it can continue to develop an complete housing finance reform proposal, set to be presented to Congress this upcoming January. The conference will engage “open discussion” about housing finance reform amongst leading academic experts, consumer and community organizations, industry groups, market participants, and other stakeholders.

“The Obama Administration is committed to delivering a comprehensive reform proposal that protects tax payers, institutes tough oversight, restores the long-term health of our housing market, and strengthens our nation’s economic recovery,” said Treasury Secretary Tim Geithner.

This is not the first time the Obama Administration has attempted to develop reform proposals and engaged the public for help in doing so. In early 2010, Secretary Geithner and U.S. Housing and Urban Development Secretary Shaun Donovan delivered testimony before Congress detailing the Administration’s continuing efforts on the topic and general ideas to lead this work forward.

In April, the Treasury and HUD issued a set of questions regarding the housing finance system’s future, asking for public response on a range of topics including opinions on what role the government should play in housing finance and thoughts on the future of Fannie Mae and Freddie Mac. The departments received over 300 responses via consumer groups, industry groups, think tanks, and members of the public.

Written by Kelly Mellott

Contractors say they will comply with the new regulations but will pass the cost of compliance onto customers.

“Any government regulation such as this inevitably costs the customer or end user more money,” said John Kiernan, owner of Kiernan Remodeling & Design Inc. in Bradenton, Fla. “If you’re a pre-’78, you’re going to pay more.”

But how much is unknown and hotly debated.

Kiernan estimated $500-$2,000 per job, depending on the size and scope. The National Association of Home Builders said its members’ estimates average about $2,400, including an extra $60-$170 for a window replacement. But the Environmental Protection Agency counters that it might be as low as $8-$167 because some required equipment can be used in multiple jobs.

The agency issued the rules in 2008 because more than 1 million American children a year are at risk of being poisoned by lead-based paint. Exposure can lead to learning disorders, behavioral and reproductive problems and, in extreme cases, brain damage or death. The government estimates 38 million U.S. homes built before 1978 contain some lead-based paint.

Under the rules, contractors and their employees must take an eight-hour training course and become EPA-certified as lead-safe. In buildings with lead paint, workers will have to wear special outfits with air filters, goggles and hoods, protect work sites with heavy plastic, clean work areas thoroughly with special vacuums and post warning signs.

Violations carry potential fines of up to $37,500 a day, EPA said. The requirements don’t apply to homeowners doing their own renovation work.

The new requirements took effect April 22, 2010. But the agency since has twice postponed enforcement of them after contractors complained that the government had not provided enough trainers to help them meet the April deadline.

The EPA and health advocates questioned that, noting that 160,000 people had been trained by that date.

“I think it’s a change, and whenever you have a big change like this you are going to have pushback from the industry,” said Rebecca Morley, executive director of the nonprofit National Center for Healthy Housing.

Copyright (c) 2010, The Bradenton Herald, Fla.

Distributed by McClatchy-Tribune Information Services.

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

Copyright© 2010 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

According to Kitchen Tune-Up, homeowners should pay attention the following five factors before they begin a renovation.

1. Wood species or cabinet covering material. The material that covers the cabinet will effect the overall pricing of a kitchen renovation, but not as much as you might think. A stainless steel clad cabinet will be the most expensive and a melamine (thin plastic laminate) surface will be the least costly. Cherry is usually about 7-10% more than oak, while hickory, oak and pine usually run very close in price. Unusual cabinet woods like alder, mahogany, fir, rift cut woods, redwood, teak, etc. will usually cost more than common oak or pine.

2. Kitchen layout. The layout of the kitchen and the cabinet configuration will largely affect the price of a remodel as well. For example, a lazy susan will cost more than a sink cabinet, a stack of drawers will be higher priced than a one drawer/two door base cabinet, a U-shaped kitchen costs more than an L-shape with an island and a wall oven/cooktop combination makes the kitchen cost about $1,000 more than a free standing range. Setting a budget to design within can often save homeowners many hours of re-design.

3. Cabinet door style. A door with many details will usually cost more than a simple door. If an arch is added to a square panel, homeowners can expect to pay more. A door with lots of grooves or molding generally cost more than a simple door and a full overlay door (door that covers almost the entire cabinet face) costs more than a traditional overlay door. Doors set inside the cabinet frame (called inset) cost more than doors that are mounted over the cabinet frame.

4. Type of cabinet finish. The type of cabinet finish you choose will vary the pricing of a kitchen remodel as well. Painted cabinets will run 10-15% more than a standard stain finish and glazes or layered finishes will run 7-15% more than a standard stain due to the extra labor.

5. Cabinet construction methods and materials. Don’t skimp in the area of cabinet construction in order to save money on your kitchen renovation as better construction methods make a kitchen durable. In fact, cabinet construction may be 60% of the entire cabinet cost.

For more information, visit www.kitchentuneup.com.

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

Copyright© 2010 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Nearly half of older boomers—those now aged 56-62—and some 44% of younger boomers—aged 46-55 now—are at risk of not having sufficient income to pay for basic retirement expenses and uninsured medical expenses, according to the study.

The study, which assumed that boomers would retire at age 65, also found that lower-income retirees are most likely to run out of money after 10 and certainly 20 years of retirement, while higher-income retirees are least likely to run out of money.

To wit: 41% of those in the lowest income quartile are likely to run short of money after 10 years of retirement, and 57% after 20 years. Meanwhile, just 5% of those in the highest income quartile will run out of money after 10 years, and 13% after 20 years.

So, what to make of this study?

In reality, most Americans don’t run out of money; they run out of lifestyle. As they age and spend down their assets, they typically reduce their living standard.

“For the most part, people do not completely run out of money when our software says they will,” said Stephen L. Deschenes, senior vice president and general manager for the annuities division of Sun Life Financial’s U.S. operation.

“They do not run full-speed like Wile E. Coyote off the cliff and only then realize that they are out of terra firma. Rather, they take action either to spend less or work more or some combination to forestall running out,” he said.

Other research finds a high likelihood that Americans will be forced to spend less. After factoring in healthcare and long-term-care costs, the National Retirement Risk Index, produced by Boston College’s Center for Retirement Research, finds that some 65% of American households are at risk of not having enough money to maintain their living standard in retirement, according to the index.

A point to consider about the retirement readiness study: It assumes boomers will retire at age 65. That’s not likely to happen. Most boomers, assuming good health, likely will work past age 65, according to Sun Life Financial’s Unretirement Index.

According to that index, the portion of Americans who plan to work past age 67 is higher than ever: a record 55% plan to work full- or part-time, up from 52% one year ago. And the percentage planning to work full-time past age 67 reached a new high of 28%, up from 19% one year ago.

There was also a sharp rise in workers who said they will need to work longer than planned because of the economic crisis, according to Sun Life. Sixty-five percent said they will have to work more than one year longer, compared to 54% in the last index. And 27% said they will have to work more than five years longer, compared to 24% in the last index.

But the bottom line from all these studies: Saving more and perhaps reducing your standard of living now might be the only way to be reasonably certain you’ll enjoy any standard of living later on.

According to the Employee Benefit Research Institute, to improve the chances of being one of the nine in 10 households that maintains its standard of living in retirement, younger boomers in the lowest income quartiles will have to save, on top of what they already save, an additional 25% of compensation every year, while those in the third income quartile will have to save an additional 15% per year. Those in the highest income quartile catch a break and don’t have to save any more than they already do.

The story is a little better for older boomers though. Those in the lowest income quartile have to save an additional 25% per year, while those in the second income quartile need only save 15% more and those in the third income quartile need save just under 5% more. As with early boomers, late boomers in the highest income quartile catch a break again. They don’t have to up their savings to have a 90% probability of maintaining their standard of living in retirement.

(c) 2010, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services.

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

Copyright© 2010 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Dan Steward
President
Pillar To Post
www.pillartopost.com

Enthusiastic new home buyers often stretch financially to cover a home’s initial deposit, closing costs and any cosmetic touchups.

However, buyers frequently focus only on those first costs, overlooking the financial requirements of maintaining the home over time. Providing some guidance to your clients regarding realistic maintenance costs will help them transition smoothly into ownership of that house.

According to industry standards, homeowners should have 1% of the purchase price of their home in savings for improvements and surprise expenses. While this minimum will help ease through maintenance costs, a 2-3% cushion is far more prudent.

A home inspection will help prospective buyers better understand the condition of the house, gaining insights and recommendations from the inspector during the inspection. At Pillar To Post, we also deliver a detailed, computerized inspection report onsite, so buyers have a printed guide available for future planning.

A home inspector will estimate the age of major structural components and systems, providing the buyer an indication of each item’s anticipated lifespan. A furnace, for example, often lasts between 12 and 15 years and a water heater lasts from ten to 12 years. Understanding the current age of any particular system will allow buyers to calculate approximately when they’ll be due for major repairs or replacement.

LivingWithMyHome.com offers a list of approximate life expectancies of home components as well as cost estimates, useful as a tool for financial planning of homeownership. Our company, Pillar To Post, sponsors this site in response to questions from prospective home buyers across North America regarding how much they should plan to spend on ongoing maintenance costs.

Once the buyer has completed the home inspection, negotiated the price according to information gained in the inspection and possibly had the sellers repair or pay for needed upgrades, it’s time to plan the maintenance budget for the future.

Home buyers should plan for big-ticket costs across a five-year timeline, budgeting for major expenses, such as roof repairs, new air conditioners or plumbing upgrades. The best plan is to sock away those funds, rather than relying on borrowing from banks. As the credit crunch has deepened, banks have nearly stopped offering home equity lines of credit, so counting on a loan for needed repairs is a risky strategy.

This brings us to timing of repairs—when small problems pop up, it’s important to address them before they become large-scale projects. A minor leak on a window frame can seem innocuous, but with repeated rains that leak can turn into window rot and even mold.

Again, this is where preparedness in budgeting can make all the difference—the ability to correct a minor problem immediately will likely mean a lower-cost repair and a less-demanding repair job.

Buying a home is one of the largest investments most people ever make. Helping your clients plan successfully to have a strong, positive home-buying experience will create the most beneficial outcome possible for them and for you.

Now, back to the monthly expenses. Estimating these regular costs often trip up new home buyers as well. Many people, particularly former renters, are accustomed to paying rent and likely utilities, phone, Internet service and cable.

As a homeowner, however, there will be other utility costs such as water, sewer and trash collection. Then there are property taxes, homeowner’s insurance and possible homeowner’s association dues.

Home buyers can also have seasonal, recurrent expenses such as snow removal and lawn service that should also go into that five-year budget. Helping your customers understand not only how to find and purchase their ideal home, but maintain it as well is the value-add service you can provide that will benefit them for the future.

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

Copyright© 2010 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Vornado Realty Trust has benefited from LNR Property Group’s recapitalization process by grabbing a 26.2 percent interest in the company through a cash infusion of $116 million and an agreement to convert a $15 million mezzanine loan into equity. With the participation of Paramus, N.J.-based Vornado and others, Miami Beach-headquartered LNR, a diversified real estate company and special servicer of commercial mortgage loans and CMBS, has achieved a comprehensive recapitalization of its balance sheet.

Vornado represents just one piece of LNR’s recapitalization endeavor. LNR managed to raise an aggregate $417 million in equity from a list of participants, including affiliated funds and managed accounts of iStar Financial Inc., Cerberus Capital Management L.P. and Oaktree Capital Management L.P. With the new equity, along with the assistance of a little cash on hand and the elimination of an outstanding $450 million of Senior Notes issued by Riley HoldCo Corp, LNR’s parent company, LNR has whittled its debt down from $1.3 billion to about $425 million.

The $116 million that Vornado plunked down for a sizeable stake in LNR was not the only financial commitment the REIT made this week. Vornado joined forces with Geyser Holdings in an agreement to acquire four long-term ground leases and the corresponding underlying real property parcels at Atlantic City’s Boragata Hotel Casino and Spa from MGM Resorts for $73 million.

Plans for a $900 million mixed-use project at Denver International Airport (DIA), the 10th busiest airport in the world, take on a greater sense of reality as officials unveil renowned architect Santiago Calatrava’s conceptual design for the South Terminal Redevelopment Program.

The project will be constructed in phases, with the first stage carrying a development price tag of $650 million. Phase I will consist of a 500-room hotel to be designed by architectural firm Gensler, approximately 40,000 square feet of meeting space. “We think there will be great demand for the hotel,” John Ackerman, Acting Deputy Manager of Revenue and Business Development,” told CPE. “The nearest hotel to the terminal is about five to six miles away and the next nearest hotel is about 10 miles away, so we will have the only hotel situated directly on the airport property. And, with a strategic location in the middle of the country there will be robust demand from companies planning to fly people in and out for day-long meetings.”

In addition to the hotel, there will be a plaza featuring approximately 38,000 square feet of retail and concession offerings. “We want a blend of restaurants and amenities for our customers,” Ackerman said. “We’re in the early stages of looking at a mix of offerings to complement what we already have in the terminal. The project’s mixture of uses will be a regional draw to people to experience the plaza retail offerings and the hotel.” The first phase will also produce a rail bridge and a terminal train station that will ultimately be incorporated into commuter rail service between the airport and Union Station in downtown Denver.

No date has been set for the commencement of Phase II of the South Terminal Redevelopment Program; however, should plans proceed to the second stage, the cost of the entire redevelopment endeavor will increase by $250 million for a final development cost of $900 million.

Financing for the program will be provided predominantly through General Airport Revenue Bonds to be repaid by airport revenues. Airport officials will forego usage of taxpayer dollars altogether.

Mortenson, Co. is on board as construction manager and contractor for DIA’s South Terminal Redevelopment Program. Completion of Phase I, which will result in the creation of over 6,000 jobs, is on schedule for 2016.