Sabbatical?

I haven't posted in a few weeks. Not that I don't have lots to talk about. I've been in transition to my new position on the real estate development team at Self-Help. The team works to build energy efficient and affordable homes in communities across North Carolina. Many of these communities are dealing with industry loss, dilapidated housing stock, and other issues. As we build, we want to attract homeowners and investment, and help to rebuild sustainable and prosperous communities.
That being said, I'm not sure where R.E.Market Durham goes from here. I'll still be working on homes in Durham (some very exciting projects), but will also be spending significant time in Goldsboro, Fuquay-Varina, Charlotte, and Greensboro. The purpose of this blog is to take the national real estate picture and distill it down to its Durham essence. I believe that I could do that even better with a first hand view of other North Carolina markets.
Posts here will be sporadic as I learn the five markets I'll now be working in. I hope to be able to bring an even better informed perspective once I'm back in the saddle.

Durham Event Calendar

This week, the American Dance Festival is in full swing as it celebrates its 75th anniversary. There are also several events for Father's Day, including an interesting looking luau at The Melting Pot.

See all of this week's events

Use the searchable event calendar

Letters From Vermont and America

I just ran across this while surfing the 'net. Senator Bernie Sanders from Vermont sent out an email to his constituents asking them what was going on in their lives economically. He had read all of the media reports about the unemployment rate, about how many people have lost health insurance, about how incomes have declined. But as many of us know, you can't always count on the media to get the story right. So he decided to go to the people and ask them. He says he expected a few responses; he got over 600.

He compiled some of the letters into a booklet and distributed a copy to every member of Congress. You can download the booklet by clicking the link:
The Collapse of the Middle Class: Letters from Vermont and America

Senator Sanders pulled a line from each letter as a title:
"We have at times had to choose between baby food and heating fuel."
"By February we ran out of wood and I burned my mother's dining room furniture."
"Not spending those ten hours at home with my husband and son makes a big difference."
"I want to drop everything I am doing and go visit him."
"We also only eat two meals a day to conserve."
"My husband and I are very nervous about what will happen to us when we are old."
"The pennies have all but dried up....Today I am sad, broken, and very discouraged."
"I don't go to church many Sundays, because the gasoline is too expensive to drive there."
"At the rate we are going we will be destitute in just a few years."
"I am just tired....I work 12 to 14 hours daily and it just doesn't help."
"Now we find that instead of a feeling of comfort, we have a feeling of dread."
"Some nights we eat cereal and toast for dinner because that's all I have."
"Insurance costs continue to rise causing some to forgo insurance to pay for groceries."
"Dentistry is expensive and people are opting not to come to the dentist."
"How devastating it has been for folks who travel great distances to get to their cancer treatment."
"I feel as though I am between a rock and a hard place no matter how hard I try."
"I have been forced to go back to work."
"We would like to not have to worry about where our next meal will come from."
"My husband and I followed all the rules.... Slowly, though, we have sunk back to the 'poor' days."
"It costs me so much money in gas that my wife and I live on $6 per day to eat."
"How much more of a hit can people take? The future looks extremely bleak to me."
"I am now living out of my car."
"Our life style has drastically changed in the past 12 months."
"My mortgage is behind, we are at risk for foreclosure, and I can't keep up with my car payments."
"We are barely staying afloat."
"I wonder some times if we should try to follow our dreams - decide to have children?"
"People say, ‘Cut back.' "
"Does anybody have a solution? Does anybody in Washington care?"

Reading these letters reminds me how fortunate I truly am. While we are more conscientious about gas consumption, and might eat out a little less than we used to, we do not have to make the decisions people talk about in these letters.
Here's hoping that our economy gets back to basics: jobs that pay a living wage, tight knit and supportive families and communities, and of course decent and affordable homes for all!

Barrington Village - Reuse, Recycle, Reinvent

The Wall Street Journal Online has a piece today about Raleigh's Barrington Village and its developer, Builders of Hope. This neighborhood is one of the smartest uses of human and social capital and environmental responsibility I've ever seen. The idea is beautiful in its simplicity:

1. Instead of knocking down old homes to make way for new ones, homeowners donate the homes to Builders of Hope.
2. Builders of Hope moves the house free of charge.
3. The owner keeps a demolished home out of the landfill, gets a tax deduction, and avoids the evil eye of neighbors for tearing down the home.
4. Builders of Hope relocates the house to its development, rehabs it, makes it energy efficient, and sells it to someone that needs affordable housing.
5. Along the way, they employ homeless workers in the construction, giving them experience and skills they can then use to find other jobs.

Everybody gives a little, everybody gets a little - a beautiful way to protect our environment, housing stock, and build human capital.

June Is National Homeownership Month

This month, we celebrate National Homeownership Month. The celebration is meaningful for what it says not only about our ambition in creating more access to the American dream of homeownership, but also for what it means when our ambitions fall short.

President Bush designated June as National Homeownership Month in 2002, with the goal of adding 5.5 million minority homeowners by the end of the decade. Achieving this goal would have a major effect on our nation. Historically, homeownership has been step one in the creation of wealth for Americans, leading to better economic prospects, access to more financial resources, and the ability to pass that wealth on to future generations.

This year, National Homeownership Month is especially poignant. 2008 marks the 40th anniversary of the 1968 Fair Housing Act. A centerpiece of the Act is the prevention of discrimination based on race, color, religion, sex, national origin, familial status (families with children), and disability. Over the past six years, opportunities for minorities to become homeowners have flourished. New loan programs meant greater access to financing for more people, which meant access to homes. This represented the best in our quest for fair housing and for the goal of increasing homeownership.

As we now know, it also represented the worst. Minorities are expected to make up a disproportionate percentage of the foreclosures sweeping the nation. Entire neighborhoods (and in some cases, entire cities) have lost a generation or more of wealth created through homeownership. In the push to create homeowners on paper, we neglected to provide the underpinnings that would have made them homeowners in fact – i.e., staying a home long enough to put down roots, build equity, and accumulate wealth.

Without proper financial education for all Americans, regulation of lenders, and an economic system built on something more stable than consumer spending, the promises of homeownership will not pay off as well as they should. A recent article in the News and Observer noted that customers often did not understand how to prioritize their bills. They faced disconnection of their electricity, believing that the cable bill had to be paid first, since the cable company’s grace period was shorter. Local utility companies have started programs to help customers understand how to pay bills in order of importance, explaining to them that if they don’t have electricity, they won’t have cable, whether they paid the cable bill or not.

As is fitting, the theme of National Homeownership Month 2008 is “Back to Basics”. From the HUD website:

“This year's theme - "Back to Basics" - is designed to underscore the importance of having strong, common-sense fundamentals as a way to maintain a sustainable housing market. Many of those basics (verification of income, ability to repay) were ignored in the lead-up to the housing bubble. The Department will focus on helping families learn what the federal government is doing to help struggling homeowners; how to protect themselves against predatory lending; to better understand what goes into owning a home; and how to own a home they can afford. “

Couldn’t have said it better myself. Let’s all live up to our potential and make homeownership the dream we know it can be.

FHA Loans Make A Comeback?

I started in the real estate business at the height of the creative financing boom. 100% (and more!) financing was all the rage, and homebuyers were signing up for adjustable rate mortgages with low monthly payments. Stories floated around my office about buyers that walked into the closing with no money and walked out with the keys to a new home. In this environment, the old-fashioned FHA mortgage was rarely mentioned – it just couldn’t compete with the less expensive, more exciting loans that were dominating the market.

Now that exotic mortgages have largely disappeared from the landscape, the federal government is doing what it should have done years ago – reforming FHA loans to better reflect today’s homebuying reality. If you’re considering purchasing a home, it may be time to consider an FHA backed loan.

We’ve seen more buyers that have been qualified for an FHA loan recently. This should come as no surprise. While many lenders are now requiring credit scores in the mid-600’s and up, FHA borrowers may be able to secure financing with credit scores as low as 580. Lenders are also requiring larger downpayments of 5% or more, while FHA borrowers still have the opportunity to make a 3% downpayment.

The federal government is doing its part to make FHA loans available to more people, at least in the short term. As a part of the recently passed Economic Stimulus Act of 2008, the government increased the amount buyers can borrow with an FHA loan. The increase will expire at the end of the year, although it can be extended. The U.S. Department of Housing and Urban Development (HUD) has also been working on permanent changes to the FHA program.

Higher loan limits, low downpayments, and flexible credit guidelines – if you are shopping for a mortgage, an FHA loan should be one item on your list.

May 2008 Durham Public Schools Video Newsletter

Durham Public Schools has just published the May edition of their Parents Video Newsletter. On tap this month - graduation schedules, Summer Reading Club and other summer camps, and score reporting for end of grade reading tests.

See the video here.

New Listing - Research Triangle Park Townhome

We just listed this great RTP townhome - if you work in RTP and want a short commute, definitely check this one out.

A few details:
Beautiful end unit home with plenty of upgrades. All appliances are included - all kitchen appliances, plus washer and dryer. Upgrades include kitchen island, luxury master bath with garden tub and dual sinks, vaulted master bedroom ceiling, trimmed windows, columns, railing at top of stairs, berber carpet, fireplace with marble surround. This home backs to a common area, offering extra privacy and less noise. Close to all freeways. Pool table and bar in fourth bedroom/bonus room negotiable.

See more details at http://www.302hiddensprings.com/ or contact the listing agent, Bruce Hill.

More photos:

Location, Location, Location….Again

Two articles at the Wall Street Journal Online illustrate, once again, why the three rules of real estate are location, location, location. Holman W. Jenkins, Jr. writes an interesting op-ed on why the proposed mortgage bailout working its way through Congress will not actually solve the foreclosure problem.

Mr. Jenkins theorizes that the foreclosure crisis was created by speculation on the “drive ‘til you qualify” method of home buying. Most of the foreclosures in this country are concentrated in just a few areas, with the biggest grouping running from Sacramento to Las Vegas and Phoenix. His idea is that speculators bought up homes in developments on current or planned major commuter routes. As prices closer to urban centers continued to rise, buyers would continue to move further from these centers in search of affordable real estate, thereby driving up prices in these exurbs and providing a tidy return on investment.

A lot of these developments are oceans of cookie cutter development, with little recreation, infrastructure, lifestyle, or sense of place. These days, even bargain hunters aren’t looking to buy something with no inherent value. An investor that knows their property has very little value isn’t going to jump through hoops to continue paying the lender, even if they get a better deal on the mortgage.

Should Mr. Jenkins’ prognostication hold true, we’ll have a bigger problem on our hands. What in the world do you do with thousands of deserted and deteriorating homes sitting out in the middle of nowhere?

On the other end of the spectrum, Jeff D. Opdyke reports that major downtowns are weathering the storm much better. He offers a quick dissection of markets in Chicago, New York, Boston, San Francisco, and Los Angeles. The overall assessment of the markets? Slower than a couple of years ago, sure, but not abandoned in a field. High end real estate continues to rise ($10 million for a San Francisco condo, anyone?). The very best downtown locations are strong, but if you’re on the wrong street, or worse yet, more than a few steps from downtown in a surrounding neighborhood, it’s touch and go. Again, not perfect, but not mired in foreclosures either.

Both of these articles got me thinking about how the market is playing out in Durham right now. While we don’t have anyone commuting for hours just to afford a home, Durham has become even more about location recently when it comes to home sales. Our city has morphed over the past couple of decades into a new geographic identity. Rather than having one central geographic point where commerce, entertainment, and community all mesh, we have several. The downtown/Duke corridor, the Southpoint area, and RTP all feed different parts of our collective soul, and each has developed a sense of place that has supported home values.

The neighborhoods around Duke and downtown (especially those providing equal access to both) are continuing to hold value. But I also draw a conclusion from Mr. Opdyke’s piece – there’s downtown, and then there’s downtown. The west side of downtown, encompassing West Village and Brightleaf, and extending to Duke’s East Campus, is our version of downtown Chicago’s Gold Coast. A great example of how the real estate market has developed is the Bullington Warehouse condominium on N. Duke Street. It was developed in the 1980’s, before construction prices went through the roof. It’s no frills construction has enjoyed gradual upfit over time by condo owners, meaning that a pretty nice condo can still be had for under $300,000 – and the seller can actually turn a profit. You can eat, drink, and be merry to your heart’s content just by crossing the street. Or marvel at an office of the largest advertising firm in the world. Or walk by the building holding one of the largest Porsche collections in the country. Bullington Warehouse condos are selling fast and for at or near asking price. West Village is almost always completely leased up at higher than market rents. In short, this is downtown Durham’s location.

A twin corridor is taking shape on the east side of downtown, traveling roughly along Mangum Street. As Kevin Davis reports on Bull City Rising, the area is taking shape, albeit at a slower pace than was expected a couple of years ago. It appears to have the makings of a location, with some great new restaurants, the opening of the Durham Performing Arts Center, and planned residential development. If the Wall Street Journal musings hold, it will it need to mature naturally over the years as the Brightleaf area has done, developing its roots and sense of place, and proving its value to the community. Forcing development to fill some ethereal “need” won’t do it (sure, we can sell you an affordable condo – you know, people in Manhattan would kill to get their hands on 600 square feet for $200,000!).

The second market driver in Durham is the Southpoint area. Since opening in the early part of the decade, The Streets at Southpoint mall has served as a hub for residential and commercial development in the southern part of the county. This year, this area has been one of the two most active real estate markets in Durham, according to the Triangle Multiple Listing Service. While downtown has grown and evolved over many years into its current incarnation, Southpoint was a seemingly overnight sensation based on a different theory of location. The mall was built in a prime but underutilized location – it sits just off a major Triangle thoroughfare, I-40. This highway and its offshoots will eventually connect you to almost everywhere in the Triangle and points beyond.

As a marketing assistant for Belk during Southpoint’s grand opening, I got the full tour and story. Apparently, the developers had looked at downtown Durham and its history. They knew that downtown had once been home to the best department stores and restaurants in town, with crowds filling the streets for holiday shopping and nights on the town. They wanted to bring that feeling to the Southpoint area, and designed a retail destination that incorporated some of the feel and look of Durham’s tobacco town heritage. Their idea created a location in southern Durham, one not quite matched by the more generic Triangle Town Center (music will ensue if you click this link) built around the same time in Raleigh. TTC has all the stores, but not the sense of place that Southpoint has.

The up and coming corridor is the Hwy 70/98 area leading into Research Triangle Park. RTP is a major driver of employment for the entire Triangle. Its zoning has always made residential development (and public transportation) there a non-starter. As commuting to RTP from Wake County becomes more onerous, people are looking at the Durham County side of the line, and developers have taken notice. Once Brier Creek settled in, bringing restaurants, entertainment, and grocery stores, the sense of place was developed for Durham to RTP commuters.

This corridor is the other most active real estate market in Durham this year. The east part of Durham bordering Wake County is anticipated to be the fastest growing Durham submarket over the next decade.

So here in Durham we have a truly diverse, multi-node city. One hub founded on history. One founded on history removed to a new location (and with The Cheesecake Factory!). One founded on the draw of jobs and shopping in another county – go figure.

Remodelling to Sell? Keep it Simple

In today’s real estate market, home sellers must be smart and economical when preparing their homes for sale. Since many buyers have visited new home communities during their home search, they will compare older homes to the perfect, beautifully staged model homes in new home communities. Sellers must put the best face on their homes to compare – but with home prices leveling off or declining nationwide, a smaller renovation budget may be necessary.

Here are some tips for making your home desirable to buyers without breaking the bank.

Curb Appeal Is a Must

Buyers form an instant impression of your home before they ever get out of the car. Expensive landscaping isn’t necessary to make a good first impression. Rather, make sure that your lawn and house appear neat and clean from the curb.

For the lawn, keep the grass cut and edged, especially around any walkways and driveways. Trim any shrubs. If you have flowerbeds, keep them filled with seasonal flowers and plantings, and use mulch to complete the look. Freshen up your driveway and walkways. For concrete, a good power washing works wonders. For gravel, put down a new layer. To complete the look, a new mailbox and freshly painted mailbox post at the curb is an added touch that shows buyers you have paid attention to the details.

For the house itself, newly painted trim will make your home stand out. Take a good look at the front door – if it needs a new coat of paint and a new lockset, do it. If buyers reach your door and find dust, dirt, and a sticky lock, it’s like saying to them, “We really don’t want you to come in.” If the home needs new siding, paint, or power washing, you will want to do these as well. If your windows are on their last legs, and you can afford it, you may even want to replace them. Buyers are now looking more closely at the basics in a home, and are willing to pay for items like new windows as opposed to cosmetic upgrades.

Keep the Interior Clean, Simple, and Modern

Kitchens and baths still sell homes. In older homes, these rooms may not be as big as in new construction. Older homes can compete by keeping these rooms as light and bright as possible. New cabinetry may not be necessary. If you are on a budget, you’ll have to sacrifice quality to get new ones, and buyers are likely to notice. It may make more sense to refinish and paint the existing cabinets in these rooms. Light colors are popular – white or a light yellow or green will work in most kitchens. If countertops and flooring are old and stained, you’ll need to refinish or replace them.

For the rest of the house, good floors and paint rule. Your carpet and hardwoods may only need to be cleaned and refinished. If they need to be replaced, it is probably worth the money. Fresh paint on the walls will also give your home an instant makeover. New switch plates and light fixtures can usually be found inexpensively, and will make the home look more modern and updated.

A white glove cleaning and thorough decluttering is the finishing touch to the inside of the home. Hire a professional cleaner to clean the home, including windows and light fixtures. Remove any items you do not use everyday, and anything you can do without for a few months. Rent a storage unit if you need space off-site for your belongings.

In the interior of the home, it may be necessary to hire professionals to do the work. Always think “model home”. Buyers will spot the signs of amateur work and will deduct from the price of the home. Painters are especially important. Make sure they do a thorough job and pay attention to detail; when they finish, you shouldn’t see paint dripped on doorknobs or floors, or poor trim work.

Follow these tips and you’ll be ready to take on the competition and sell your home.

Historic Cleveland-Holloway Neighborhood Home Tour

The Cleveland-Holloway neighborhood just east of downtown Durham is hosting a home tour this Saturday, May 17. The tour starts at 1pm at 406 Oakwood Avenue, a 1920's Craftsman bungalow currently being renovated.

The cost is free, although a $5 donation to the neighborhood is greatly appreciated. For more information about the tour and available home in the Cleveland-Holloway area, visit http://chhomes.blogspot.com.

The neighborhood also garnered a cover on this week's Independent Weekly. See the article here.

Directions: From downtown, go 1 block east on Holloway. Just past the library, take a left on Queen Street and then a right on Ottawa. Go one block to Oakwood Avenue.

First Quarter Market Trends

TMLS has released the market trends report for the first quarter of 2008. Here are the highlights for Durham County:

• Job growth continues, although it has slowed throughout the Triangle. From Feb. '06 through Feb. '07, job growth was 3.1%. From Feb. '07 through Feb. '08, the growth fell to 1.2%. This slowdown tells the tale of the Triangle housing market better than just about any other measure. Our real estate market has traditionally been fueled by people relocating to the area for work or school. When there are fewer jobs being created, there are fewer reasons for people to come here.
• Inventory is up, sale prices are down. Inventory has increased by 6%, and sale prices are down 5%. The average sale price in the first quarter was $194,400.
• Property is still appreciating. This is probably the biggest bright spot. While many areas of the country are seeing property values collapse, we are still seeing overall appreciation. The average appreciation for resale housing in Durham County was 4.22%. Appreciation can vary widely by neighborhood. Based on MLS data, Duke Park saw the best run, with an average per year appreciation of 13.72%. Duke Forest and Hope Valley rounded out the top three. At the bottom of the positive scale was Eno Trace, with .85% average appreciation. The MLS list was comprised of about 30 neighborhoods. There are obviously more neighborhoods than that in Durham, and I’m very curious about the rest of the list – are we looking at negative appreciation in some neighborhoods not listed in the report?
• Pending sales are off. There is now lots to choose from, but buyers are not taking the plunge. Pending sales are off 22%, and closed sales are down 21%. Durham County fared slightly better than the rest of the Triangle, where pending sales and closed sales were down 27% and 24%, respectively.
  The right homes are selling. Combined with the appreciation we’re seeing, the homes that sell are selling faster than they were last year – 87 days on the market compared with 94 days for the same period last year.

Top 10 Selling Developments

1. Woodcroft
2. Hope Valley Farms
3. Grove Park
4. Keystone Crossing
5. Parkwood
6. Duke Forest
7. Grandale
8. Hope Valley
9. Stratford Lakes
10. American Village

Top Appreciating Subdivisions

1. Duke Park
2. Duke Forest
3. Hope Valley
4. Finley Forest
5. Falconbridge
6. Downing Creek
7. Woodlake
8. Chancellors Ridge
9. Parkwood
10. Wyndcross

Construction Almost Complete at 907 Exum

Seed and sod are down at 907 Exum, a sure sign that construction is winding up. This is the newest home from the Durham Community Land Trustees, and continues their mission of building affordable, energy efficient homes that honor the architectural heritage of southwest central Durham. For more info about DCLT, check out my previous post. This bungalow is a spot built home in the Burch Avenue neighborhood. Three bedrooms, two baths, living room, dining room, and kitchen, and an easy walk to Duke and downtown.

With a list price of $104,000, this home is a great opportunity for first time homebuyers. Buyers will need to be first timers and owner occupants (sorry, no investors).

This home has energy efficient design, and was built to specific efficiency standards under the SystemVision initiative from Advanced Energy. SystemVision homes are built using rigorous quality standards; inspectors are active from the outset with input on the design of the home, and inspecting the construction site to ensure that standards are met every step of the way. Advanced Energy guarantees the results of their process - for the first two years of ownership, they guarantee that heating and cooling bills for the home won't exceed a certain amount.
For even more info, check out the home website at http://www.907exum.com/.

More pics:

Annual Preservation Durham Home Tour

The 12th Annual Preservation Durham Home Tour is happening this Saturday, May 3. There are 13 historic Watts Hospital-Hillandale homes on tap, as well as the NC School of Science & Math (the former Watts Hostpital). The tour runs from 10:00am until 6:00pm, ticket info is below. This year's tour is also the kick-off of the WHH Centennial Celebration, marking the ground-breaking of Watts Hospital in May 1908.
Maverick Partners' principal Reynolds Maxwell owns a stop on the tour, the Mansfield House (pictured above). The home has been beautifully restored, and in my humble opinion is a must see.
Tickets are $20. See more details about the tour or purchase tickets on line here.
If you would prefer to buy your tickets in person, here are the outlets:
§ Preservation Durham Office - 200 N. Mangum Street
§ Broad Street Cafe - 1106 Broad Street
§ Locopops - 2600 Hillsboro Road
§ Morgan Imports - 113 S. Gregson Street
§ Regulator Bookshop - 720 Ninth Street
§ Cameron’s - University Mall, Chapel Hill
§ Quail Ridge Books - Ridgewood Shopping Center, Wade Avenue, Raleigh

New Listing - North Raleigh Split Level

We just listed this home at 5708 Tully Court in Raleigh. It's a late 1960's split level - 1875 square feet, 4 bedrooms, 2.5 baths. Living room, dining room, and kitchen on the main level; 3 bedrooms on the upper level; and fourth bedroom and family room (with fireplace) on the lower level. It's just off Six Forks Road in north Raleigh, equidistant to I-440 and I-540 - the area has a good stock of this split level design in this age range, which makes for some nice, convenient neighborhoods with fairly affordable homes. This one is an REO, so it's being sold as-is and will need some work.

See more details and pics at 5708Tully.ISellDurhamHomes.com.

Durham Community Land Trustees

One of our favorite clients is the Durham Community Land Trustees (DCLT). For the past twenty years, they have been building homes that are affordable to the majority of Durham residents. That's no small feat, given that their target area is neighborhoods near Duke University, where real estate prices have increased faster than prices in other areas of Durham. I think it's worth it to revisit why the land trust model has a place in our market, especially given the number of first time home buyers that are now losing their homes in this tough real estate climate.

DCLT's goal is to provide permanently affordable home buying opportunities to first time home buyers. However, their approach encompasses more than just providing a home. They educate and support buyers, and eventually provide a path for buyers to move up to a market price home.

DCLT home buyers attend home buyer education courses before purchasing their home. These courses prepare buyers, letting them know what to expect from their real estate agent, lender, and others involved in the process. They also receive opportunities to work with counselors to create a monthly budget, handle credit issues, and understand how much they can afford to spend on a home.


Perhaps the most important part of the DCLT mission is protecting buyers from predatory loans. Over the past year, we have watched the dream of homeownership turn into a nightmare for many first time home buyers. Because they didn't have the education and support they needed when buying a home, they ended up with adjustable rate mortgages, and other loans with high interest rates and fees. DCLT works closely with a group of preferred lenders, and even has a loan pool offered through the state of North Carolina. These loans are low interest (and in some cases no interest), and are designed to ensure that buyers are getting a leg up with an affordable mortgage. Buyers have the peace of mind that comes with a quality home, and a chance to save money that might have otherwise gone to pay a larger mortgage.

DCLT has also committed to energy efficient and environmentally friendly building practices. Many buyers are never told about the hidden costs of homeownership, such as higher utility bills and home maintenance costs. These items can add hundreds of dollars to the cost of owning a home over the course of a year. DCLT uses low maintenance materials and energy efficient standards wherever possible and even offers an energy use guarantee - heating and cooling bills can be as low as $26 a month. Upgraded insulation, solar water heaters, and semi-permeable driveway designs are all examples of methods used by DCLT to create homes that are good for homeowners and good for the environment.

While DCLT provides opportunities for home buyers, it also wants to provide stability for the neighborhood. More homeowners means better looking and better maintained homes, more involvement in neighborhood associations, and more stable home values. Like many other community builders, DCLT asks buyers to give something back in return for the chance to buy a quality home at a low price. To keep their home affordable, buyers agree to pass along some of their equity to the next buyer, keeping the home affordable over time.

As we recover from the hangover of the easy money mortgage market, it's a good idea to get back to the basics. The dream of homeownership is founded on the security of having a place for family and a chance to improve your finances by saving money. Organizations like Durham Community Land Trustees offer buyers the chance to take part in this dream.

Take a look at current DCLT homes for sale:

http://www.907exum.com/

http://www.1513chapelhillroad.com/

Coming Soon - Cameron Place - a neighborhood of new, energy efficient homes near Duke University

Pick-A-Pay Part II

And the other shoe drops. Wachovia has just reported a $393 million first quarter loss, and plans to cut 500 jobs. Much of the loss is attributed to Wachovia's expansion into the mortgage industry, just as this sector was about to collapse. I reported on Wachovia's ill-timed acquisition of Golden West Financial and its flagship Pick-A-Payment loan product over the weekend.
The Pick-A-Pay loans were portfolio loans for Wachovia, meaning that the lender kept these loans in house instead of selling them to outside investors. Wachovia received the benefit of the higher interest rates on these loans, but also had all of the risk if borrowers defaulted. In their earnings report, Wachovia noted that the number of mortgage defaults on their loans nearly doubled in the first quarter. With the information I have, I can't say what percentage of these defaults were Pick-A-Pay loans. It is noteworthy, however, that Wachovia is experiencing defaults with their Golden West portfolio, which is heavily invested in hard hit West Coast markets. The losses are enough that Wachovia is curtailing or eliminating the Pick-A-Pay loan in several of these markets.

FairClosingCosts.com Launches in May

Inman News reports that a new website, FairClosingCosts.com, will launch in May. The site aims to allow home buyers to shop independently for providers of their closing services. The site won't sell your information to vendors; instead, it will act as an "online Rolodex" allowing visitors to research and find contact information for vendors.
Most buyers go as far as choosing a real estate agent, lender, home inspector, closing attorney, and insurance agent. They then allow those service providers to choose the rest of their service providers.
In a best case scenario, everyone is looking out for the buyer's interests, and selecting high quality service providers with fair and competitive pricing. In reality, buyers are often unaware of exactly who is doing what for them. This encourages vendors to form cozy business relationships of the "you scratch my back and I'll scratch yours " variety that serve the vendors more than their clients. There is a law that governs these "third party" vendor relationships - how vendors should disclose their relationships to clients, and whether vendors can pay each other for referrals (see RESPA).
It looks like FairClosingCosts.com wants to take it one step further, essentially allowing buyers to cut out the middle man, or at least check prices and keep them honest. I think most service providers are up front about these things anyway, but adding more transparency to the process can only help to avoid any miscommunication and cut down on abuse of the system.
Here's a quiz. When you bought your last home, which of these services did you shop for, price, and hire yourself?

• Real estate agent
• Lender
• Appraiser
• Insurance agent
• Home inspector
• Home warranty provider
• Notary public
• Surveyor
• Attorney/settlement company/ title examination
• Title insurance company
• Wood infestation (termite) inspector
• Septic inspection
• Well water inspection

Wachovia Reigns in Pick-A-Pay?

When I saw the television ad for Wachovia's Pick-a-Payment mortgage, my jaw hit the floor. I saw the commercial at least a month ago, but couldn't formulate a coherent blog entry until now - I was that irritated.
In the midst of the fallout over shoddy lending practices, Wachovia chose to push THIS? For those who have never encountered a pick-a-pay loan, let me explain. The real name for this loan is an option ARM. Each month, the borrower gets four payment options:

1) Pay the fully amortizing principal and interest payment (basically as if you were paying on a 30 year fixed mortgage).
2) Pay a set amount higher than the amount in 1), which pays off the loan in 15 years.
3) Make an interest only payment.
4) Make a minimum payment that doesn't cover principal or interest.

Numbers 1) and 2) are beautiful things. Numbers 3) and 4) can ruin your life. Get into the habit of not making a fully amortizing payment, and your loan balance will actually go up. Combine this with the fact that for the privilege of having a ballooning loan balance, Wachovia will actually charge you a HIGHER interest rate on the loan.
Now, for the right borrower, these loans can be a useful financial tool. By right borrower, I mean someone who gets the concept of negative amortization, and uses numbers 3) and 4) as a strategy in managing their investment portfolio. For example, if a borrower wants to pump some additional funds into their stock portfolio, or they have an investment property that has a vacancy and want to use the extra money for the mortgage payment on that property. Not that they can't get the money elsewhere - they make a CHOICE to get it from this source.
But that's not who Wachovia is aiming this product at. They are targeting people that need to rob Peter to pay Paul. People that need the extra money to pay the minimum balance on their credit card bill. People that need the extra money to buy gas or pay for groceries. People who are not consistently bringing in enough money to cover their expenses. People who could easily end up using the last two options every month, instead of once in a while.
Why would Wachovia do such an irresponsible thing? A nationwide ad campaign that glosses over the risks of the product. A cutesy name that makes it sound like a game on "The Price is Right". Forcing bank employees to push this product on customers or risk losing their jobs.
Let me answer my own question. Back in 2006, Wachovia bought a company called Golden West Financial. Golden West specialized in - you guessed it - Pick-A-Payment mortgages. Wachovia spent years cultivating a conservative, by the books image centered around customer service. But in the world of super-charged creative financing, the standard 30 year mortgage didn't fly. It didn't get you noticed, it didn't pump up your stock price, it didn't make enough MONEY. So Wachovia traded for a marquee player - an exciting, creative superstar that brought it instant fame, glory, and edge.
Wachovia is not offering you this loan because it cares that you can't pay your credit card bill, or that the price of gas keeps going up. Wachovia is offering you this loan because it paid $25 billion for Golden West on the eve of the mortgage market collapse and now needs to make MONEY.
Luckily, a lot of people think Pick-A-Payment is a bad idea. Wachovia seems to be coming to its senses. It has stopped making the loans in some places, and will institute new underwriting guidelines including minimum credit scores and verification of employment.
If you want to do your part, here's a suggestion. If you are ever offered an option ARM (or Pick-A-Pay, or whatever they call it) and you are not independently wealthy, or don't at least have a investment portfolio worth six figures or more - 401(k)s don't count - run away from said offeror like your hair is on fire and your a** is catching. Not to be too blunt, but I'll sleep better at night knowing I might have saved one person from this disaster in a box mortgage.

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