Does a desire for two-person showers, travertine floors and granite countertops push home prices up? Housing economist Tom Lawler, a Vienna, Va., consultant, argues that it does — and says these cravings are partly responsible for [tag]ballooning home prices[/tag] throughout much of this decade. In a subscription-only report, he notes that household spending for improvements for single-family homes increased to $1,900 last year from $1,100 in 1997, and that such spending will likely continue to rise, despite the slowdown in home sales and prices reported earlier this week by the [tag]National Association of Realtors[/tag].

Although the impact of these spruce ups is hard to gauge statistically — improvements often aren’t noted in public records — he estimates that overall, [tag]remodeling[/tag] is responsible for 1% to 1.5% of home-price appreciation each year. So, while prices overall may continue to decline due to overbuilding, speculation and risky mortgages, remodeling will continue to add real value to many homes. (more…)

Federal and state authorities are investigating allegations of an elaborate [tag]mortgage fraud[/tag] involving about 100 people living in or near this small factory town who say they unwittingly took out loans to buy houses at inflated prices in Indiana. The borrowers, who include truck drivers, factory workers, a pastor and a hair stylist, say they were duped by acquaintances into signing stacks of documents and didn’t know they were [tag]applying for loans[/tag]. Instead, they thought they were joining a risk-free “investment group.”

Mortgage fraud, involving loans obtained by providing false information, has mushroomed in recent years as lenders have pushed for speedier loan approvals in an effort to remain competitive and milk maximum profits from the now-fading housing boom. The Federal Bureau of Investigation reported that mortgage fraud led to losses of $1 billion in 2005, up from $429 million a year earlier. Some of the fraud that slipped through during the boom is only now starting to surface. Attracted by the ability to obtain large sums quickly, some criminal gangs involved in drug dealing and other street crimes have branched out into mortgage fraud, says Chip Burrus, assistant director of the [tag]FBI[/tag]’s criminal investigative division. “It’s more profitable and less risky,” he says. (more…)

They represent the future of [tag]real estate[/tag] in this time of uncertainty — 17 bright-eyed and eager students, median age 40, sitting for three hours in a classroom while I click slowly through a 50-slide Power Point presentation with embedded video and audio. These are small investors, a mixed group of young and old, Realtors and nonRealtors, and all ethnicities — a true mix of the modern-day urban market.

They want to know what I can tell them about renovating one-to-four unit properties cost-effectively, whether or not to hire an [tag]architect[/tag], what to look for in a [tag]contractor,[/tag] what will put their rentals a cut above the others without breaking their budgets. These are not [tag]flippers[/tag]. These folks are in for the long haul, agreeing with some expert who told me this week that this isn’t the time to experiment with real estate but to get serious about it. One of the experts whose video was embedded in the Power Point was Carl Dranoff, a developer who was one of the pioneers of the warehouse to loft conversion boom on the late ’70s to mid-’80s in many of our older cities. (more…)

With a minimum of 500 to 600 full-time employees, [tag]Laurelmor[/tag], a [tag]Ginn Clubs & Resorts[/tag] [tag]mountain-top[/tag] project under way in [tag]Wilkes[/tag] and [tag]Watauga[/tag] counties, is expected to add more than $2 billion in [tag]property value[/tag]s if it is built out according to a 10-year plan. One selling point is that the property is close to the [tag]Blue Ridge Parkway[/tag].

Laurelmor will be built in phases, with a master plan calling for about 1,500 homes, 1,000 condominium units or hotel rooms, two 1[tag]8-hole golf course[/tag]s, 50 miles of roads, a [tag]spa[/tag], [tag]water park[/tag], [tag]equestrian center[/tag], [tag]observatory[/tag] and other amenities. Ginn plans to hold a sale of lots in October and to open in 2009. Ginn expects to have a sales day in October for a first phase. A spokesperson said that the company hasn’t made completed lot prices for Laurelmor, but that the most inexpensive lot would likely be around $500,000. Developers have told local officials that the [tag]minimum home size[/tag] would be about 3,000 square feet, and some could be twice that big. (more…)

When I first picked up “[tag]Confessions of a Real Estate Entrepreneur[/tag]” by James A. Randel, I wasn’t enthused by its bland, noncreative cover, which makes the book look dull and boring. Wrong. Instead, it is one of the best [tag]real estate book[/tag]s of 2006 so far because it tells how a super-successful investor evaluates real estate opportunities. What makes this new book so unusual is the self-deprecating author emphasizes his real estate mistakes as much as the highlights of his successes. The book’s title could have been “Real Estate Mistakes I Made But How I Succeeded Anyway.”

James A. Randel started with an excellent educational background from Columbia University where he obtained his law degree. Then he wisely became a real estate broker so he could participate in [tag]real estate commission[/tag]s as well as practice law. When briefly mentioning his New York City residency during college years, Randel admits he didn’t spot the opportunities to buy run-down buildings near Columbia for upgrade profits by adding value. The book’s theme is “add value” whether you invest in raw land, houses, a fixer-upper factory building with potential for rezoning profits, or a run-down office building. What makes this book so special are the personal stories the author shares, emphasizing how he profited when he (and his investor partners) added value and how they lost money when their planning was faulty. (more…)

[tag]Mortgage applications[/tag] in the U.S. increased last week to the highest level since April as borrowing costs close to a five-month low spurred refinancing. The Mortgage Bankers Association’s index of applications to buy a home or [tag]refinance an existing loan[/tag] rose 2 percent during the week to 595.8. The group’s gauge of refinancing jumped 9.5 percent to 1748.7, the highest since February. Purchases declined for the first time in three weeks.

A half-percentage-point decline in [tag]30-year fixed mortgage rate[/tag]s since the end of June may be helping keep the slowdown in housing from becoming a rout. Federal Reserve policy makers today are forecast to keep interest rates unchanged for a second month as they wait to see how the rest of the economy is affected by the weaker real estate market. “It’s an orderly and gradual slowdown” in housing, said Zoltan Pozsar, an economist at Moody’s Economy.com in West Chester, Pennsylvania. “Housing is hurting the economy just enough to keep price pressures at bay. The Fed should stop here. If it went further in raising rates, it’d hurt the economy.” (more…)

You’ve upgraded your kitchen fridge and installed new copper pipes, all while saving your landscaping from the adult Japanese beetle. With all the [tag]credit-card reward points[/tag] you’ve racked up as a result, the itch to splurge is unbearable. Should you select that $350 Spa Finder gift certificate (35,000 points, Citibank ThankYou Network), or opt for the round-trip ticket to Europe (60,000 points, MBNA WorldPoints)?

Using your rewards as an escape from reality may make you feel fabulous temporarily, but at the end of the month, it’s done nothing to free you from the pile of bills that go hand in hand with owning a home. [tag]Mortgage[/tag], [tag]homeowners’ insurance[/tag], utilities — with that drain on your bank account, no wonder you needed that spa trip in the first place. But with the right card, you can put your reward points to good use, reducing your mortgage, slashing your homeowners’ premiums and financing that pricey remodel. Cards that specialize in home rewards are few and far between, but our experts liked all of ‘em, assuming you pay off your balance each month. We’ve collected three cards to consider, plus four tips to help you maximize your savings. (more…)

The [tag]Treasury-bond market[/tag] has had its best week in 18 months, the [tag]10-year T-note[/tag] today 4.61 percent, and that dragged low-fee [tag]mortgage rates[/tag] below 6.5 percent. The improvement in [tag]mortgage[/tag]s was not as big as the Treasury move, but catch-up trading should soon take us to 6.25 percent.

The unsettling backdrop to this decline: nobody has a good explanation for why. A drop in long-term rates at the end of a Fed tightening cycle is always associated with a slowdown in the economy, usually an abrupt one. Consistent with that thought, the bond market broke to six-month lows Thursday instantly after the Philadelphia Federal Reserve reported a surprise contraction in business activity. The Philly Fed’s index is a minor affair, covering manufacturing in Mid-Atlantic states; it is brand-new news of September conditions, and it could reflect a brand-new downtrend in the national economy. (more…)