Restaurant Wednesday

McCabe Pub

McCabe has proudly been serving Nashville in the Sylvan Park neighborhood for 26 years. Open for lunch and dinner, McCabe caters to a variety of tastes with a well-rounded menu offering anything from a grilled cheese to a fresh salmon or pan-fried trout. Daily specials are also available. Almost everything is made in-house. Patio dining available.

location:
4410 Murphy Rd.
Nashville

615.269.9406
mccabepub.com

Lack of Credit Extension Would Dash Hopes of Home Buyers in All 50 States

Up to 180,000 home buyers will lose their tax credit through no fault of their own if Congress fails to pass an extension to the home buyer tax credit by June 30 when the closing deadline expires. Included in that number are thousands of home buyers in every state of the union, from 390 in Wyoming to 17,700 in California, according to estimates by the National Association of Realtors®.



“We are strongly urging the Senate and the House to act quickly to pass this legislation and ease the minds and pocketbooks of these home buyers,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz.



“These are not buyers who just entered into the market. These are buyers who previously met all the qualifications for the tax credit, but find themselves at the mercy of a workflow jam with lenders or other delays such as lapses in the National Flood Insurance Program, Rural Housing Service, and new home construction, and might not be able to complete the purchase of their homes by the current deadline,” said Golder. “It would be a tragedy for them not to be able to complete the purchase in time to claim the credit.”



NAR issued the following state-by-state estimate of the number of home sales that would be delayed beyond the June 30 deadline; numbers are rounded to the nearest 10:



Alabama, 2,590; Alaska, 830; Arizona, 5,440; Arkansas, 2,090; California, 17,700; Colorado, 3,390; Connecticut, 1,770; Delaware, 400; District of Columbia, 300; Florida, 14,830; Georgia, 6,270; Hawaii, 710; Idaho, 1,270; Illinois, 7,030; Indiana, 3,560; Iowa, 2, 030; Kansas, 1,840; Kentucky, 2,540; Louisiana,1,800; Maine, 840; Maryland, 2,630; Massachusetts, 3,930; Michigan, 6,470; Minnesota, 3,760; Mississippi, 1,530; Missouri, 3,600; Montana, 760; Nebraska, 1,110; Nevada, 3,800; New Hampshire, 690; New Jersey, 4,300;



New Mexico, 1,160; New York, 9,190; North Carolina, 4,890; North Dakota, 460; Ohio, 8,510; Oklahoma, 2,760; Oregon, 2,090; Pennsylvania, 5,830; Rhode Island, 500; South Carolina, 2,460; South Dakota, 500; Tennessee, 3,910; Texas, 15,340; Utah, 1,130; Vermont, 400; Virginia, 3,890; Washington, 3,190; West Virginia, 940; Wisconsin, 2,690; and Wyoming, 390.

Low Mortgage Rates Not Enough to Lure Potential Home Buyers

Mortgage rates have tumbled to record lows, but high unemployment and job jitters by still-working Americans mean the milestone is unlikely to attract enough borrowers to boost the unsteady housing market, economic and real estate professionals say.

Mortgage buyer Freddie Mac reported recently that the average interest rate on a 30-year fixed-rate mortgage in the U.S. slipped to 4.69%, down from 4.75% last week. A year ago the rate was 5.42%.

The 4.69% rate is an all-time low for Freddie Mac since it began tracking 30-year mortgages in 1971. Freddie Mac’s rate assumes an average point of 0.7, which would translate to a fee of about $1,400 on a $200,000 mortgage.

However, many consumers are taking a pass on the opportunity to purchase homes, which also have come down in cost during the real estate slump, regardless of low interest rates.

“We can talk about the lowest rates ever, but if there’s no one looking to buy a house, then it’s not of any great use,” said University of Wisconsin-Whitewater economics professor Russell Kashian. “Generally in the economy, this isn’t going to have a huge impact.”

Bank Mutual chief executive Michael T. Crowley Jr. put it this way: “If somebody had a good job and felt they were going to be spared anything bad happening to their work environment, it’s a great time to buy and lock in that price and interest rate as well. The trouble is, like everything else in life, when you can least afford it is when some of these opportunities present themselves.”

Interest rates have been trending down over the past couple of months as investors concerned about world affairs and the economy have sought the safety of Treasury bonds. That has pushed down yields on the bonds and mortgage rates tend to track with Treasury yields.

After getting a boost late last year and this spring from special economic stimulus tax credits, the housing market has begun to slow down, Freddie Mac and local real estate pros said. To be eligible for a tax credit of up to $8,000 for first-time buyers and $6,500 for move-up buyers, consumers had to have a signed contract to purchase a home by April 30 and then close before July 1.

“We’re kind of in a lull period that everyone knew was going to come after the tax credits ended, and now it’s just waiting until the market kicks back in and supply and demand are more in balance,” said Mike Ruzicka, president of the Greater Milwaukee Association of Realtors.

There could be more mortgage refinancing than home-buying prompted by the lower rates, but that appears to vary from lender to lender.

After sporadic surges in refinancing in 2005, 2006, 2007 and part of 2008, many people have already obtained mortgage rates lower than 5%, Crowley said. It might not be worth it to many people to pay closing and transaction costs to shave some dollars off the monthly payment, he said.

“And some of them have met hard times, and maybe their credit report doesn’t look as good as two or three years ago, or maybe they lost their job or there’s some other stress going on,” Crowley said. “So some of them are reluctant to expose themselves to another underwriting process.”

But Brian Wickert, president of Accunet Mortgage in Butler, said refinancing activity has been brisk as rates have ratcheted downward. Wickert said, however, that anyone thinking of refinancing needs to consider how closing costs, which normally are about $1,300 in Wisconsin, and paying points would change the ultimate expense. Some mortgage lenders hype the low rates in advertising but fail to mention their transaction costs, he said.

“When it comes to mortgages, the rate is the bait and the closing costs are the hook. A borrower really has to pay attention to both when judging whether it’s worthwhile to refinance,” Wickert said.

David Clark, a Marquette University economics professor who monitors home sales in Wisconsin, said he didn’t think the record low rates would trigger “a large movement into refinancing” because many people already had done so at rates that weren’t a lot higher. Improving the housing market will take more than low rates, he said.

“It really comes down to a confluence of factors that includes jobs, which ultimately affects consumer confidence in terms of their willingness to make big purchases,” Clark said.

Fannie Mae Getting Tough on Home ‘Walkaways’

Taking aim at homeowners who are able to pay their mortgage but decide it’s not worth it, Fannie Mae plans to go after them in court and to limit their access to home loans for seven years.

The government-controlled mortgage giant said that it would instruct the companies servicing its loans to recommend when it should pursue a so-called deficiency judgment—a court order requiring a defaulting borrower to pay any remaining unpaid portion of the loan after a seized home is sold.

Lenders rarely employ court proceedings to pursue foreclosures in California, nearly always opting instead for a streamlined procedure involving a trustee’s sale of the home. Under state law, lenders who opt for court proceedings can obtain a deficiency judgment if the mortgage was used to refinance a home, but not if it was used to finance a purchase.

“It’s not a hollow threat,” said Alex Creel, chief Sacramento lobbyist for the California Association of Realtors, which has called for legislation that would ban deficiency judgments in many cases of refinanced mortgages.

Fannie Mae also said it would make new mortgages harder to obtain for borrowers if it can be proved that they engaged in a “strategic default”—abandoning a home to foreclosure not because the required payments are unaffordable but because the mortgage is larger than the value of the residence. For such a borrower, Fannie said it would not buy or guarantee another home loan for seven years.

Borrowers who worked in good faith with their loan servicers to try to stay in their homes would be barred from Fannie loans for only two or three years, even if they eventually lost their homes after attempts at loan modifications failed.

The ban on getting a new Fannie loan is significant because home buyers have little choice these days for financing except for mortgages bought or backed by Fannie, its sister company Freddie Mac or the Federal Housing Administration. The three government-run entities financed 95% of new U.S. home loans last year.

Freddie Mac, which already blacklists strategic defaulters for five years, said it would study Fannie’s changes and “consider additional changes to our polices as needed to responsibly manage risks.”

Borrowers who default on FHA loans for any reason currently can’t get another loan insured by the agency for three years. Legislation pending in Congress would impose a lifetime ban on FHA loans to borrowers determined to have made a strategic default.

Fannie Mae’s get-tough policy on so-called walkaways is the latest fallout from the housing meltdown, which has eroded the once widely held belief in homeownership as the path to household wealth.

Foreclosures continue at a rate of 2.5 million a year, Federal Deposit Insurance Corp. Chairwoman Sheila Bair said, and some 11 million households owe more on their mortgage than their home is worth.

Fannie Mae’s new policies are designed to prod borrowers into pursuing alternatives to foreclosure, including short sales—transactions in which lenders allow a home to be sold and cancel the debt while accepting less than full payoff of the mortgage.

Borrowers who are slightly underwater—owing just a little more than their homes are worth—are unlikely to stop paying their mortgages if they have the resources, according to studies by research firm CoreLogic. But if the home’s value is at least 25% less than the loan amount, borrowers are far more likely to walk away.

Last March, 31% of foreclosures were described as strategic by the borrowers themselves, compared with 22% in March 2009, researchers at the University of Chicago and Northwestern University reported.

East Nashville draws new business, restaurants and more

There are several other newer or soon-to-open businesses in East Nashville:

-Bagel Face Bakery, 1404 D McGavock Pike, opening July 1, www.bagelfacebakery.com

-East Nashville Community Acupuncture, 604 Gallatin Ave., Suite 113, offers acupuncture from $15 to $35 per treatment. Hours are noon-7 p.m. Tuesday, Thursday,
9a.m.–3 p.m. Friday, Saturday. 615-457-1979, http://eastnashvilleacupuncture.com.

-Eastside Smiles, 7 N. 10th St., cosmetic dental office offering implant dentistry, sedation services and will soon add an orthodontist. 615-227-2400, www.eastsidesmiles.net.

-Goodbuy Girls, 307 N. 16th St., vintage fashion and contemporary resale.

-Holland House Bar and Refuge, 935 W. Eastland Ave., hours 5 p.m.-midnight, Monday, Wednesday, Thursday; 5 p.m. – 2 a.m. Friday, Saturday and 11 a.m. – midnight Sunday. 615-262-1490, http://hollandhousenashville.com.

-Nashville Aikikai, 1701 Fatherland St., offering Japanese martial art, opening later this month.
www.asu.org/NashAikikai.

-SnapShot Interactive, 1010 Fatherland St., produces video resumes, bios and company snapshots. Hours 7 a.m. – 6 p.m. by appointment only. 615-810-9855 www.snapshotinteractive.com.

-Steve’s Restaurant & Bar, 604 Gallatin, Suite 217, features classic American fare. Hours 11 a.m. – 10 p.m. Sunday – Thursday, 11 a.m. – 11 p.m. Friday, Saturday. 615-227-8383, www.steveseastnashville.com.

-Village Pub, 1308 McGavock Pike. Hours 4-midnight Monday- Thursday, 11:30 a.m. - 1 a.m. Friday- Saturday, 11:30 a.m. - midnight Sunday. 615-942-5880.

-Water Quality & Erosion Control of Tennessee, 211 S. 17th St., opening this summer.

Restaurant Wednesday

Mambu Restaurant & Bar

Two chefs in an old house doing what they love: making people happy. The fare is widely influenced from Caribbean to Far East, carefully crafted and all made fresh in house. Mambu offers four wildly imaginatively decorated dining spaces, awning-covered al fresco seating, a full bar and a unique wine list.

location
1806 Hayes Street
Nashville

615.329.1293
eatdrinkmambu.com

May Shows a Continued Strong Pace for Existing-Home Sales

Existing-home sales remained at elevated levels in May on buyer response to the tax credit, characterized by stabilizing home prices and historically low mortgage interest rates, according to the National Association of Realtors®. Gains in the West and South were offset by a decline in the Northeast; the Midwest was steady.



Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, were at a seasonally adjusted annual rate of 5.66 million units in May, down 2.2 percent from an upwardly revised surge of 5.79 million units in April. May closings are 19.2 percent above the 4.75 million-unit level in May 2009; April sales were revised to show an 8.0 percent monthly gain.



Lawrence Yun, NAR chief economist, said he expects one more month of elevated home sales. “We are witnessing the ongoing effects of the home buyer tax credit, which we’ll also see in June real estate closings,” he said. “However, approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June due to delays in the mortgage process, particularly for short sales.



“In addition, many potential sales are being delayed by an interruption in the National Flood Insurance Program. Florida and Louisiana, also impacted by the oil spill, have the highest percentage of homes that require flood insurance.”

As the leading advocate for homeownership issues, NAR is supporting Senate amendments to extend the home buyer tax credit closing deadline through September 30 for contracts written by April 30, and to renew the flood insurance program. “Sales and related local economic activity would have been higher without delays in the closing process or flood insurance issues,” Yun noted.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.89 percent in May from 5.10 percent in April; the rate was 4.86 percent in May 2009.

The national median existing-home price2 for all housing types was $179,600 in May, up 2.7 percent from May 2009. Distressed homes slipped to 31 percent of sales last month, compared with 33 percent in April; it was also 33 percent in May 2009.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said home prices have been stabilizing all year. “With distressed sales at roughly the same level as a year ago, the gain in home prices is a hopeful sign that the market is in a good position to stand on its own without further government stimulus,” she said.

“Very affordable mortgage interest rates and stabilizing home prices are encouraging home buyers who were on the sidelines during most of the boom and bust cycle,” Golder said.



Pending home sales are expected to decline notably in May and June from the spring surge, but Yun added that job growth and a manageable level of foreclosures are keys to sales and price performance during the second half of the year.



A parallel NAR practitioner survey3 shows first-time buyers purchased 46 percent of homes in May, down from 49 percent in April. Investors accounted for 14 percent of transactions in May compared with 15 percent in April; the remaining sales were to repeat buyers. All-cash sales were at 25 percent in May, edging down from a 26 percent share in April.



Total housing inventory at the end of May fell 3.4 percent to 3.89 million existing homes available for sale, which represents an 8.3-month supply4 at the current sales pace, compared with an 8.4-month supply in April. Raw unsold inventory is 1.1 percent above a year ago, but is still 14.9 percent below the record of 4.58 million in July 2008.



Single-family home sales declined 1.6 percent to a seasonally adjusted annual rate of 4.98 million in May from a pace of 5.06 million in April, but are 17.5 percent above the 4.24 million level in May 2009. The median existing single-family home price was $179,400 in May, which is 2.7 percent above a year ago.



Single-family median existing-home prices were higher in 16 out of 20 metropolitan statistical areas reported in May from a year ago. In addition, existing single-family home sales rose in 18 of the 20 areas from May 2009.



Existing condominium and co-op sales fell 6.8 percent to a seasonally adjusted annual rate of 680,000 in May from 730,000 in April, but are 32.6 percent above the 513,000-unit pace in May 2009. The median existing condo price5 was $181,300 in May, up 3.4 percent from a year ago.



Regionally, existing-home sales in the Northeast fell 18.3 percent to an annual level of 890,000 in May from a surge in April, but are 12.7 percent higher than a year ago. The median price in the Northeast was $240,200, down 2.2 percent from May 2009.



Existing-home sales in the Midwest were unchanged in May at a pace of 1.33 million and are 22.0 percent above May 2009. The median price in the Midwest was $150,700, up 2.2 percent from a year ago.

In the South, existing-home sales increased 0.5 percent to an annual level of 2.15 million in May and are 22.9 percent above a year ago. The median price in the South was $159,000, up 1.0 percent from May 2009.



Existing-home sales in the West rose 4.9 percent to an annual rate of 1.29 million in May and are 15.2 percent higher than May 2009. The median price in the West was $221,300, up 7.4 percent from a year ago.

First-Time Home Buyers: Tips to Make Your House a Home

After getting the keys to their new homes, many first-time home buyers are excited about finally having the opportunity to personalize and furnish their new house. From coffee tables to lamps to lawnmowers, many previous renters leap into homeownership quickly realizing they need to do a lot of shopping to truly make their house a home.

“Whether you’ve been living in an apartment with roommates or at your parents’ house, many first-time home buyers do not think about all the items they need – and want – when moving into a house,” said Janice Jones, national vice president of merchandising for Centex. “With a little advance planning and budgeting, you won’t break the bank to make your new home a reflection of your personal style and showcase your pride of homeownership.”

A typical home buyer spends $7,400 on average on their home, with more than half of that spent in the first year after purchase, according to the National Association of Home Builders.

While many first-time home buyers may not have accounted for this level of spending, Jones offers advice on what types of items to purchase to not only properly maintain and live in the home, but also more importantly, items that help new homeowners feel like their house is a place to call home.

Furnishings
Many first-time home buyers no longer want their parents’ hand-me downs or their childhood bedroom set. From sofas to dining room sets to mattresses, many first-time home buyers take the opportunity to upgrade their furniture when moving into their new home. According to an NAHB study, furnishings take the biggest chunk of the budget, with home buyers spending about $5,300 on furnishings during the first year after buying a home. The biggest ticket item for all households is bedroom furnishings, including mattresses, followed by sofas.

Window coverings and linens
The median square footage of homes bought by first-time buyers is 1,500. So, you can only imagine the number of windows that need to be covered to ensure privacy and security in a home. According to Jones, many home buyers don’t account for this in their budget. Additionally, with the ability to now paint and decorate each room, new homeowners find that they want to purchase new bedroom and bathroom linens.

Garden tools
Since a first-time home buyer is likely to move into their home from an apartment, unless you plan on hiring a gardener, you’ll need to purchase a few basic gardening tools, including a lawnmower, garden hose, sprinkler and a shovel (for winter weather).

Flat screen TV
Let’s face it: many home buyers shop for their new home while taking into a consideration how a new, large, flat-screen television set will be situated in their new living space. So, it’s not a surprise that a hot item on the list is purchasing an entertainment system.

However, you’ll also need the basic appliances in your new home: a refrigerator, stove, and a washer/dryer. While many existing homes usually come with appliances, a home buyer needs to take inventory as to whether or not they will need to purchase these big ticket items before they purchase their new bedroom set.

Basic tool kit
Every home needs a well-stocked tool box. Many home improvement stores have sets you can purchase, but make sure it includes a hammer, screw drivers, pliers, wrenches, a tape measure and a staple gun.

“My biggest piece of advice for new home buyers is to be creative and tackle this room by room,” said Jones. “For example, after outfitting your home with the necessary items—like appliances and window coverings—move on to the kitchen and family room spaces. This area is the heart of your home where everyone gathers.

“Look for great values on the items you need that will be utilized most. Take your time and get the feel of how you want to use each space for both function and enjoyment. This strategy allows homeowners to stage their purchases and add new furnishings as the budget allows. Decorating your new home should be fun and a reflection of your personal style.”

Price Reductions Unchanged as Sellers Wait to See How Aggressive Buyers are during Summer Season

Trulia.com, smart real estate search to help you make better decisions, recently announced that 22% of listings currently on the market in the United States as of June 1, 2010 experienced at least one price reduction, which is a slight decrease from 23.6% in June 2009. The total dollar amount slashed from home prices was $26.7 billion and the average discount for price-reduced homes continued to hold at 10% off of the original listing price.

“Sellers are optimistic heading into the summer season because of the strong sales figures from the spring. The spring sales were fueled by the expiration of the tax credit and my concern is that this heavy activity is providing sellers with a false state of optimism,” said Pete Flint, co-founder and CEO of Trulia. “We are already starting to see rising inventory levels and I believe this will be the story of the summer. For the unforeseen future, buyers will continue to have the negotiating power and I expect we will see sellers get aggressive via price cuts throughout the summer.”

Biggest Winners and Losers
Cities in the Western U.S. experienced the largest decreases in price reductions compared to the previous year. Las Vegas, NV led the way with a 67% decrease and six California cities saw a decrease in price reductions of 24% or more, including Oakland, San Jose, Los Angeles, Sacramento, San Francisco and San Diego.

On the other end of the spectrum, cities in the Midwest and South experienced some of the largest percentage increases in price reductions in year-over-year comparison. Kansas City, MO jumped 55% from June 2009 to June 2010, while other cities such as Arlington, TX, Cleveland, OH, Louisville, KY and Houston, TX all saw increases in price reductions of 30% or more.

A Class of Its Own
For the second month in a row, Minneapolis, MN saw 40% of its listings reduced in price. No other city has reached this mark since Trulia started tracking home price reductions in April 2009. With an average discount for price-reduced homes at 8%, the city’s total dollar amount slashed from home prices was $26.4 million.

Luxury Market Holds Steady Post Tax Credit Incentive
Price reduction levels for luxury homes (those listed at $2 million and above) continue to hold steady with 21% of homes seeing a price reduction and with an average reduction of 14%. Homes in this category account for the less than 2% of total inventory but account for almost 25% of total dollars slashed off all the homes for sale.

NAR Praises House Passage of FHA Reform Bill

The National Association of Realtors® applauded the House for overwhelming passage of FHA reform legislation that would allow the Federal Housing Administration to adjust monthly premiums on mortgage insurance.

This bill, H.R. 5072, FHA Reform Act of 2010, would strengthen the FHA loan insurance program while keeping it available and affordable to responsible home buyers. Allowing FHA to raise the monthly insurance premium would let FHA lower the up-front premium that places a burden on cash-strapped borrowers at closing.

“As the leading advocate for homeownership and housing issues, NAR is very pleased that FHA will be allowed to play its intended countercyclical role to provide qualified borrowers with access to prime credit. FHA is a critical part of our nation’s economic recovery,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz.

En route to passage, the House defeated an amendment that would have increased the FHA down payment from 3.5 percent to 5 percent, which would have disenfranchised more than 300,000 potential homeowners and would not have contributed significantly to FHA cash reserves.

“The current 3.5 percent down payment represents a significant financial commitment and sufficient investment to insure a borrower’s seriousness about homeownership,” said Golder. The proposed change could have an especially harsh impact on African American and Hispanic borrowers, who traditionally have much lower accumulated wealth and have benefited from the opportunities offered by fully documented, standard FHA loans with low down payments.

She also praised FHA’s aggressive efforts to protect taxpayers and manage credit risk.

Restaurant Wednesday

Fido

Fido straddles the line between upscale coffeehouse and casual restaurant. The all-day menu fetures everything from blueberry pancakes to fish tacos with daily specials ranging from pulled pork sandwiches to poached salmon. Fresh roasted organic and fair trade coffee comes from Fido's sister store, Bongo Java. Desserts made on premisis.

location
1812 21st Avenue South
Nashville

615.777.3436(FIDO)
fidocafe.com

NAR Commends Senators for Offering Homebuyer Tax Credit Extension, Urges Senate and House to Quickly Pass Legislation

Washington, June 11, 2010

The National Association of Realtors® today expressed thanks on behalf of America’s homebuyers to three Senators for introducing a measure to extend the present home-buyer tax credit closing deadline to Sept. 30. They are Senate Majority Leader Harry Reid, D-Nev., and Sens. Johnny Isakson, R-Ga., and Chris Dodd, D-Conn.

“As the leading advocate for homeownership and housing issues, NAR commends these Senators for their attentiveness and sensitivity to thousands of qualified home purchasers, who through no fault of their own, are not able to meet the closing deadline of June 30 for the homebuyer tax credit. Now we urge the Senate and the House to act quickly to pass this legislation and ease the minds and pocketbooks of these homebuyers,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz.

The measure was offered as an amendment to H.R. 4213, a tax extension bill now in the Senate.

NAR estimates the number of home buyers who have qualified for the tax credit and met the contract deadline of April 30, but who would not be able to close their transaction by the June 30 deadline, could go as high as 180,000. Realtors® have reported as many as one-third of qualified applicants have been notified by lenders that their mortgages will not close before June 30 due to the sheer volume of applications in the pipeline.

“These are not buyers who just entered into the market. These are buyers who previously met all the qualifications for the tax credit, but find themselves at the mercy of a work-flow jam with the lenders or other delays and might not be able to complete the purchase of their homes,” said Golder. “It would be a tragedy for them not to be able to complete the purchase in time to claim the credit.”

Golder said she also wanted to make this clear: “This amendment does not extend the deadline for home buyers to qualify for the tax credit; it extends the deadline for closing the transaction, from June 30 to Sept.30. Since these applications were already in the pipeline and figured into the program’s cost, the extension of the closing deadline should not incur any further government costs.”

Fed Chief Cautiously Optimistic about Economy

The U.S. economy is in a moderate recovery and should continue growing through next year, but the unemployment rate is expected to remain higher than usual, and it will take “a significant amount of time” to replace the jobs that have been lost in the recession, Federal Reserve Chairman Ben Bernanke said recently.

In testimony before the House Budget Committee, Bernanke offered a mix of optimism and reality check. He pointed to numerous signs of improvement in the economy, but cautioned that improvement in the vital housing sector has been shallow and remains vulnerable.

The Fed’s release of the Beige Book, a survey of economic conditions conducted by its district banks, later confirmed Bernanke’s views. The survey found all 12 Fed districts reporting economic growth, the first time that’s happened since a deep recession began in December 2007.

Private forecasters shared Bernanke’s growing optimism.

Mark Zandi, the chief economist for Moody’s Analytics, recently released a report on economic conditions in the nation’s largest metropolitan areas that was encouraging.

“The economic expansion is broadening out across the country, with nearly two-thirds of the nation’s metro areas now out of recession,” Zandi told McClatchy Newspapers. “The strongest areas are mostly in the South and Midwest, as the economy is benefiting from the strong turn in manufacturing activity, a solid farm economy and more stable housing markets.”

In another positive sign, the Labor Department reported that job openings leapt in April to their highest level in 16 months, signaling that the private sector is ripe for a return to hiring.

“We’re still expecting that the job machine gets cranked up and pushes the unemployment rate a few tenths of a percentage point lower by the end of the year,” said Chris Varvares, the president of Macroeconomic Advisers LLC, the influential St. Louis forecaster. The firm expects 3.7% growth this year and unemployment, now at 9.7%, to dip to the low 8% range next year.

The Fed expects the economy to grow in the range of 3.5% this year, Bernanke said, and faster next year as stimulus spending by the government gives way to business and consumer demand for goods and services.

“This pace of growth, were it to be realized, would probably be associated with only a slow reduction in the unemployment rate over time. In this environment, inflation is likely to remain subdued,” Bernanke said. He later added, “In all likelihood, however, a significant amount of time will be required to restore the nearly 8.5 million jobs that were lost over 2008 and 2009.”

The economy has been growing steadily, and the nation has added jobs in five of the last six months. There also have been less publicized improvements. “Real consumer spending has risen at an annual rate of nearly 3½% so far this year, with particular strength in the highly cyclical category of durable goods,” Bernanke testified. “Consumer spending is likely to increase at a moderate pace going forward, supported by a gradual pickup in employment and income, greater consumer confidence and some improvement in credit conditions.” That’s all likely to increase the demand for goods and services, fueling further economic growth in what economists call a virtuous cycle, he suggested.

“Looking forward, investment in new equipment and software is expected to be supported by healthy corporate balance sheets, relatively low costs of financing of new projects, increased confidence in the durability of the recovery, and the need of many businesses to replace aging equipment and expand capacity as sales prospects brighten,” Bernanke said. “More generally, U.S. manufacturing output, which has benefited from strong export demand, rose at an annual rate of 9% over the first four months of the year.”

For all the positive signs, however, a dark cloud remains over the real estate and construction industries. The temporary boost from a home buyer tax credit is likely to fade now that the April 15 deadline for the program has passed.

The Fed chairman said that “looking through these temporary movements, underlying housing activity appears to have firmed only a little since mid-2009, with activity being weighed down, in part, by a large inventory of distressed or vacant existing houses and by the difficulties of many builders in obtaining credit.”

As if to cement that point, the Mortgage Bankers Association reported that mortgage applications fell last week to their lowest level since 1997. It was a clear sign that the expiration of tax credits reduced incentives for home sales.

Things aren’t much better in commercial real estate, Bernanke suggested, as spending on nonresidential buildings has been curtailed because of high vacancy rates, low property prices and difficulty in obtaining loans.

“Meanwhile, pressures on state and local budgets, though tempered somewhat by ongoing federal support, have led these governments to make further cuts in employment and construction spending,” he said.

Bernanke expressed confidence that the growing debt crisis in Europe won’t slow growth in the United States and pitch the economy back into recession, suggesting that events in Europe will have only a modest impact so long as the U.S. economy continues to grow.

Mounting government and private-sector debt in Europe has led to concerns of default in several European Union countries, and, given the swelling U.S. federal budget deficit, Bernanke warned lawmakers to get U.S. borrowing under control.

Once economic conditions have returned to normal, Congress and the president must address the structural problems in the nation’s health and welfare programs as baby boomers, the 75 million Americans born from 1946 to 1964, enter retirement and strain government programs, Bernanke said.

The Fed chief also took a victory lap of sorts. When House Budget Committee Chairman John Spratt, D-S.C., asked him whether he thought that unpopular government spending and bailout programs helped speed a turnaround, Bernanke said, “Yes, Mr. Chairman, I do.”

6 Backyard Improvement Ideas to Add More Value to Your Home

If you’re like most homeowners, there is never a shortage of options when it comes to projects around the house. But studies have shown that some of the highest return on household improvements can come from those on the outside, not the inside.

A primary reason is that outside investments can produce curb appeal, which is especially important if you are planning to sell your home. Those same improvements can enhance the enjoyment factor if you and your family plan to stay in your home.

For example, one national industry resource—the National Association of Realtors, reported recently their experience shows a new wood deck produces the second highest return on home improvement investment of any common addition, remodel or replacement project.

However projects don’t have to be big to add value or enjoyment, according to Jimmy Rane, president of Great Southern Wood Preserving, a leading producer of pressure-treated lumber products and maker of YellaWood brand products.

The following popular outside improvement projects will increase the curb appeal or value of a home:

Adirondack chairs—Uniquely-American classic outdoor furniture is made entirely of wood and has a straight back and seat, which are set at a slant to sit comfortably on a hillside or mountain incline, but still be comfortable at any angle.

Gazebo—A gazebo can be freestanding or attached to a garden wall, roofed and open on all sizes to provide shade or shelter.

Planters and window boxes—Planters have become popular because they are both functional and ornamental. Additionally, some can be moved frequently to account for seasonal weather or just to create a change in scenery.

Picnic table—Picnic tables go well on a patio or a deck, but equally as well on the grass or under a tree in the yard. A traditional picnic table is all in one piece so that it wears well without a lot of maintenance.

Trellis—A trellis can function as a unique sun screen or it can be the framework for an outdoor hanging garden. Building it with pressure treated lumber can add life by minimizing rotting and other threats.

Trash can corral or compost bin—While many outdoor projects tend to be cosmetic in nature, here are two ideas that are both practical and pretty. With a trash can corral, you can hide unsightly trash cans and with a compost bin, you can reduce your own carbon footprint in a way that doesn’t take away from the visual appeal of the place.

MAY MARKS 8TH CONSECUTIVE MONTH OF INCREASE IN HOME SALES

Home sales continued to be strong in the Middle Tennessee region during May with 2,270 home closings, representing a 27.3% increase from the 1,783 closings reported during May of 2009. Year-to-date home sales are up 20.4% from this time last year. Pending sales also rose with 2,124 sales pending at the end of May compared to 2,000 in May of 2009.

Restaurant Wednesday

Allium

Located on the ground floor of the 5th and Main building on the resurgent east side, Allium is less than a mile from Downtown Nashville. Specializing in straightforward interpretations of classic bistro fare, Allium is the perfect spot to grab a sophisticated bite before the Symphony, after the theatre, or maybe on a plain old Tuesday night. It's about simple, fresh, value-focused dishes served in a stunning contemporary room overlooking the Nashville skyline.

location
501 Main Street
Nashville

615.242.3522
alliumnashville.com

Energy Concerns and Green Housing: What’s in It for Us?’

As the green movement continues to gain popularity across the real estate market, real estate professionals and consumers alike are curious as to what is in store for the population as we continue to focus on energy concerns and green housing. In this month’s Power Broker Roundtable, industry leaders Tom Wilkins, Bob Hamrick and Kurt Heater discuss whether we can use public awareness of green issues to boost our bottom lines.

Moderator:
Steve Brown, Special Liaison for Large Firm Relations, NAR

Participants:
Tom Wilkins, CEO, Better Homes & Gardens, The Poconos, Pennsylvania
Bob Hamrick, CEO, Coldwell Banker Premier, Las Vegas, Nevada
Kurt Heater, Pres., Prudential Sherm Heater, Grant’s Pass, Oregon

Steve Brown: These days, it seems the hottest topic at cocktail parties is global warming. Some say greenhouse gases are dooming our grandkids to a future of drought and flooding. Skeptics argue that climate change is inevitable and beyond the scope of anything we humans do. While the truth is likely somewhere in between, most people agree that sensible conservation and practical oversight is probably a healthy approach –and the efforts we make today will put energy-saving dollars in our pockets tomorrow. That’s one reason most of us practice some sort of conservation effort; recycling trash, reducing our use of paper, or heating our swimming pools with solar panels. It’s also the reason why NAR built the first LEED-certified* green building in Washington, DC. NAR believes REALTORS® need to be on the leading edge of social concerns—which is also why they developed NAR’s Green Designation for today’s real estate professionals—and why they closely monitor all legislation regarding environmental issues. I have earned the Green Designation myself because I believe it’s important to be at the forefront of this movement. As green issues take a more prominent place in social discourse, we take justifiable pride in our industry’s commitment to the environment. A visit to NAR’s Green Resource Council (www.greenresourcecouncil.org) will give you more information. But can we use public awareness of green issues to boost our bottom lines? For some answers, we’ve invited a panel of real estate pros from various parts of the country. Tom, what’s the situation in Pennsylvania?

Tom Wilkins: The economic climate has had an effect here—especially in the Poconos, where the inventory is heavily loaded with “as is” vacation properties rather than new construction. So today, most people are concerned with savings, like tax advantages on a second home. The key to getting their attention on green issues would be, “how much money will that solar heating system save me in the course of a year?”

Bob Hamrick: Yes, I think the idea of “going green” started to gain momentum before the housing downturn hit. Today, a lot of Las Vegas buyers—and most investors—are pretty focused on opportunistic purchases like REOs and short sales. As things start to improve, real estate consumers will turn their attention back toward “green.”

Kurt Heater: Personally, we built our own home to take advantage of solar energy. We knew it would take years for energy savings to offset the initial costs, but I’m a child of the original Earth Day movement, so I suppose it rubbed off on me. While I think that builders of new construction are tending toward energy conservation, I think the rush to buy cheap right now is diverting buyers’ attention a bit. We had a huge run-up in prices between 2001 and 2005, and short sales and foreclosures at this point are probably 50% of our business now.

Steve Brown: So if I’m hearing you right, as the market stabilizes, consumers are taking a broader interest in green issues?

Tom Wilkins: I think that’s definitely true. In our case, the Better Homes and Garden brand is committed to promoting good environmental practices. Almost all of our agents have NAR’s Green Designation. I think it’s safe to say as Realtors, we all got caught up in staying alive these past couple of years—but as the market improves the focus will shift back to some extent toward practical energy concerns. We need to be prepared for that.

Bob Hamrick: I agree. The effort to compete may have slowed down the green effort, but I expect today’s move toward green construction will become the standard for the future. The new CityCenter in Las Vegas, which is really an extraordinary resort destination, was designed and built to conserve energy and preserve natural resources. It’s just a more responsible approach to building, and I think that signals a growing trend. Getting our agents green-certified and knowledgeable is certainly a place to start.

Kurt Heater: Yes, I think most people respect the green concept. We need to up the appeal by balancing environmental sustainability with economic practicality.


Steve Brown: In other words, builders need to keep on building green, and Realtors need to be prepared to help customers understand the practical advantages.

Tom Wilkins: I would say so. The customer’s first question to himself will always be, do I like the house? If he doesn’t, the issue of energy conservation won’t be enough to change his mind. But if he does, then energy savings and conservation become an undeniable bonus.

Steve Brown: So we need to be prepared to help our customers understand exactly what “going green” means—both in terms of what we gain and what we save?

Kurt Heater: Right. Which, of course, is the purpose of NAR’s Green Designation. I suppose that’s what’s in it for us…another way to add value to services.

Bob Hamrick: Well said. Adding value is key. It’s how we outperform the competition.

*LEED (Leadership in Energy and Environmental Design) is a benchmark building standard set by the U.S. Green Building Council.

Banks bear weight of bad loans

Banks in Tennessee have nearly three times more foreclosed properties on their books than lenders nationwide, a stark reminder of potential economic development that came to a grinding halt in Middle Tennessee.

According to the first quarter 2010 tally, “other real estate owned” — properties foreclosed on by banks to recoup money from borrowers failing to pay back loans — made up 0.91 percent of the assets of institutions in Tennessee, according to the Federal Deposit Insurance Corp.

While that number itself may seem small, it dwarfs the national average of 0.35 percent for U.S. banks and is up from 0.53 percent one year ago.

Of the banks based in Middle Tennessee, these properties account for 0.89 percent of the local banks’ assets and $210 million in value on the banks’ balance sheets.

For a look at which local banks have the most bank-owned properties, and what kinds, click here.

Tennessee, which has not had a bank failure in the economic downturn, is still in better shape than floundering markets such as Georgia, where failed real estate was 1.23 percent of assets.

But local and national banking experts said Tennessee’s high amount of bank-owned real estate compared to the rest of the country shows how deeply Tennessee was affected as the housing market crumbled.

“[In many instances], the banks lent on the concept that you’ll always have real estate inflation,” said Tom Lawless, a Nashville attorney who helps banks recover money from borrowers.

The “other real estate owned” on banks’ books usually represents the worst of the loans they’ve worked through. Standards vary between banks for when borrowers require extra attention, how much leeway they get to restructure loans and when legal action such as foreclosure is necessary.

The number doesn’t necessarily reflect what shape a bank will be in to lend, experts said, but it does highlight a difficult challenge for many lenders.

For instance, FDIC data showed GreenBank holds nearly 2.7 percent of its assets in bank-owned properties, about three times the state average. Jim Adams, chief financial officer, said the institution has been more aggressive than other banks about processing bad loans and writing down the true value of property.

“A lot of banks are in the state of denial, and they’re not as aggressive, at least in my opinion,” said Adams, who credited the Greeneville bank’s tactics with improving earnings in the first quarter.

Mark Muth, a Nashville senior research analyst with Howe Barnes Hoefer and Arnett of Chicago, said individual banks can have higher numbers because they’re aggressive.

But that doesn’t account for the real estate “speculation” near Nashville, Memphis and parts of eastern Tennessee that he said exceeded other parts of the country and made for lending destined to go bad.

Banks look to sell the real estate on their books, sometimes at discounted prices to real estate agents or developers who think they can “flip” a house for profit, jump-start a housing project or turn around a failed retail center.

But in the meantime, each property is a drag on banks’ books and symbolizes a project that might have spurred economic development under different circumstances.

David Luecke can tell you about hundreds of them. His company, Capitol Homes Inc. of Franklin, emerged from Chapter 11 bankruptcy protection in April after the lagging real estate market brought down his sprawling home construction and land development operation.

Luecke, who now focuses on custom homes and repair in the wake of May’s historic flooding, estimates that he owned about 600 lots in various stages of development.

He was able to sell the majority, but lenders who bankrolled his projects seized about 200, he said. Now, much of the land will revert to agricultural use or sit unused with nobody able to develop it in a depressed market, he said.

“Clearly it would be better off raising goats than having a subdivision,” he said.

Going forward, experts say banks will feel continued pain if they don’t value their failed real estate properly — stringing out the losses they and their borrowers already have taken as they try to sell the property.

Q&A: Snagging failed properties can be a steal
Carl Storey is a principal with Baker Storey McDonald Properties of Nashville, which does some of its business by acquiring “distressed properties” mainly related to commercial real estate. That can include “other real estate owned,” or property that banks foreclose upon to recoup money from borrowers failing to pay back their loans. It’s a glimmer of opportunity amid an otherwise undesirable situation for banks, real estate professionals and those inhabiting the failed properties.


Q: How did you get started dealing in distressed properties?

My first experience with distressed properties was in (the) early ’90s during the savings and loan crisis. More recently, our focus on developing retail real estate has led us to opportunities that required us to navigate distressed situations. For example, we identified an opportunity in Murfreesboro we wanted to pursue that turned out to be a bankruptcy situation. We ended up acquiring the note and foreclosing on the property ourselves.


Q: How important is it to your business?

Absent a robust economy and commercial real estate market, having the expertise to deal with distressed properties has been crucial. It’s helped us navigate difficult waters and opened the door to opportunities we might not have seen otherwise.


Q: What are the most common reasons a project failed?

It’s hard to generalize about this, but I suppose the biggest issue we are all dealing with is retail rents and property values are 10 percent to 20 percent less than they were before the downturn. This results in a number of hardships including inability to service debt, refinance, source additional equity, and overall difficulty in securing the financial resources to weather the storm or breath new life back into troubled projects.


Q: What turns a failed project into a successful one?

Access to capital, patience and, probably most importantly, location will eventually determine a project’s survival. Great retail locations should eventually emerge as successful projects. Poorly chosen locations will struggle longer or may have to be recycled into a different use than retail.

Pending Home Sales Surge Continuing

Pending home sales have risen for three consecutive months, reflecting the broad impact of the home buyer tax credit and favorable housing affordability conditions, according to the National Association of Realtors®.



The Pending Home Sales Index,* a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February.



Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.





Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.” NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.



“The home buyer tax credit brought close to 1 million additional buyers into the market, which is now helping the trade-up market and has significantly improved the inventory situation. This stabilized home prices more quickly and has preserved about $900 billion in home equity; in turn, that is keeping additional households from going underwater and risking foreclosure,” Yun said.



The PHSI in the Northeast jumped 29.5 percent to 97.9 in April and is 24.5 percent above a year ago. In the Midwest the index rose 4.1 percent to 104.2 and is 17.9 percent above April 2009. Pending home sales in the South slipped 0.6 percent to an index of 123.9, but is 31.3 percent higher than a year ago. In the West the index rose 7.5 percent to 107.9 and is 12.0 percent higher than April 2009.



“A big concern surfacing recently is insufficient time to close the deal at the settlement table. Under normal circumstances, two months would be enough time from contract signing to settlement date,” Yun said. “However, the recent housing cycle has brought long delays related to the short sales approval process by banks, and from ongoing appraisal issues. There could be a sizable number of homebuyers who responded to tax credit incentives, but may encounter problems meeting the settlement deadline by June 30.” Because of these market challenges, NAR has asked Congress to provide flexibility on the deadline for closing.



The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Middle Tennessee foreclosure rate rises

Foreclosure rates again increased in the Nashville area, according to data released today by CoreLogic.

The foreclosure rate in the Nashville-Davidson-Murfreesboro-Franklin area stood at 1.49 percent in April, an increase over the 0.95 percent of April 2009. The Nashville-area foreclosure rate remains well below the national average of 3.2 percent, according to CoreLogic. It also remains below the overall state foreclosure rate of 1.59 percent.

The mortgage delinquency rate also increased in the Nashville area in April. According to CoreeLogic, 6.2 percent of area mortage loans were 90 days or more delinquent in April, compared to 4.1 percent in April 2009.



Read more: Middle Tennessee foreclosure rate rises - Nashville Business Journal

With offices changing, closing, here's how to find a post-flood help center

A month after the devastating flood that caused more than $2 billion in damage in Middle Tennessee, some of the offices that were set up to help people recover from the disaster have closed, and others are changing their missions.

The Tennessee Emergency Management Agency and the Federal Emergency Management Agency opened a total of 64 disaster recovery centers in the wake of the flooding. Sixteen of them remain open. Other disaster recovery centers — including those in Humphreys, Dickson and Perry counties — are preparing to refocus on Small Business Administration disaster loan outreach.

"The number of visits is declining, which is why we are closing several of them and transitioning others to loan outreach centers," federal coordinating officer Gracia Szczech said in a news release. "However, people from any county can continue to visit any of the recovery centers that remain open."

People also can get answers and apply for assistance by calling (800) 621-3362 or visiting disasterassistance.gov.

During a conversation with the Nashville Business Journal last week, FEMA official Jenefeness Clark said disaster recovery center locations are constantly re-evaluated based on community need. An updated list of help centers can be found here.



Read more: With offices changing, closing, here's how to find a post-flood help center - Nashville Business Journal