Green Pointe Homes - NW Indiana Home Builder

After a long wait the following announcement this morning:

Announcement - Home building again

We are so excited to be making this announcement finally -

Julie and I had the opportunity for 10 years to build homes in Northwest Indiana, mainly for first time home buyers. We loved the business and were blessed to build for over 200 families.

In 2007, sadly the mortgage business went haywire and we were left standing with far too much inventory and almost zero home buyers. We won't go into all the gory details but our lives were turned upside down overnite and it has taken us until now, almost three years later, to make this announcement!

Green Pointe Homes, our forray back into home building, will be based in Valparaiso. For the time being we're going to go slow, working one on one with our customers. Since Steve is trained as a mortgage banker he will be working with first time buyers, buyers who need assistance with credit repair or saving for down payments. You can check out his daily post on Northwest Indiana Mortgages, for rates and ideas on how to prepare to buy your home.

Positive sign for home building

Although no one wants to see the prices go up for homes, at least those who are buying or building them, this is a positive indicator that home building and construction are looking up:

Via Marketwatch - After all, U.S. housing starts posted their lowest annual figure since 1945, slumping to 554,000 units in 2009 -- the same year in which some experts said lumber demand dropped to the lowest point in modern history. See story on December housing starts.

But there's a bigger story here that involves everything from actual and expected demand from China and Haiti, to the impact of global stimulus measures and production cutbacks in a market that has supposedly suffered along with the globe's major economies.

At first glance, the lumber market doesn't appear very miserable. Charts show that futures prices for lumber climbed to a high above $280 per 1,000 board feet

I will be one of the first to predict local home building will begin to recover in March of 2010 here in Northwest Indiana and we should have our best year since 2006.

If you are looking for a home builder in Northwest Indiana, let's talk financing and your options first. Then I'd be glad to give some pointers on choosing that home builder, I have more than a little experience there.

Steve
219-465-8352
Email me

Breaking - Builder Lennar invests in distressed loans

In a strong sign of confidence in a recovery housing market, home builder Lennar announced a major purchase: (From Marketwatch). I have often wondered when the remnants of the home building industry will start to invest again, this sure feels like the first big one! Way to go Lennar!

BOSTON (MarketWatch) -- Home builder Lennar Corp. has positioned itself to benefit further from a real estate recovery through a distressed-land deal with the Federal Deposit Insurance Corp. to purchase a 40% stake in bank loans with a combined unpaid balance of about $3 billion.

Late Wednesday, the Miami-based company said it closed transactions with the FDIC to buy two portfolios of loans for $243 million. Lennar subsidiary Rialto Capital Advisors will conduct the daily management and workout of the portfolios, the company said.

Lennar (LEN 16.91, +1.30, +8.33%) has purchased a 40% interest in the loan portfolios, while the FDIC is keeping the remaining 60% equity interest. The FDIC provided $627 million of financing at no interest for seven years.

With FDIC kicking in about $365 million in equity, Wall Street analysts pegged the portfolios' overall purchase price at $1.22 billion, or 40 cents on the dollar.

The portfolios include about 5,500 distressed residential and commercial real estate loans from 22 failed bank receiverships.

"Acquiring and working out distressed real estate loans was a large and extremely profitable part of our business during the last major real estate down cycle in the early 1990s," said Lennar Chief Executive Stuart Miller in a prepared statement. The builder has been preparing to invest in distressed loans for two years, and it takes "great pride in understanding market cycles and identifying the opportune point of entry," Miller said.

"Our strong cash position and proven track record in this area enables us to capitalize on this market cycle and create long-term value for our shareholders," said the CEO, adding the company expects the deal will be accretive to 2010 earnings.

Deutsche Bank analyst Nishu Sood said Lennar is the first builder to do a major distressed land deal in the housing downturn.

"Given Lennar's history of timely strategic decision making, we think investors will give management the benefit of the doubt," the analyst wrote in a note Thursday. "This is appropriate, but at the same time we think there are long-term risks given the unusually severe nature of this cycle."

Shares of Lennar, which in recent years has faced investor worries over its exposure to joint ventures, were up 7% in morning trade Thursday.

"Comparisons abound among both investors and builders between the current period of distress and the early 1990s," Sood said. "If the recovery path of the housing market is similar to the mid- to late-1990s current distressed deals like Lennar/FDIC will look brilliant in hindsight."

Northwest Indiana Home Mortgage Update

• Yes, the rumors you heard that mortgage rates went up over the last few days are true!

Now let's all take a deep breath and realize that rates could also settle back down near 5% in the short term ... over the long haul the rates will go up. If you are a consumer reading today, this means you and your real estate professional and mortgage consultant need to be talking quite a bit. If you're a real estate professional advising customers, keep a careful eye on the markets.

Some leading indicators:

• When unemployment drops, and it will eventually, rates will go up
• When the stock market drops or corrects we tend to get solid interest rate improvements
• When the economy grows, and it has started to do so, mortgage rates and all rates will go up as the market begins to worry about inflation

As always let me know if you need assistance today: 219-465-8352

Chesterton Mortgage Reader Question

I try to respond to questions that are sent in by email and in the comments here quickly, and in some cases i keep the questions to write posts that may apply to more consumers.

Today Mortgage Question submitted by a Chesterton Indiana home shopper -

Question: I have been watching rates bounce up and down near 5% for the last six months, and whenever I talk to my REALTOR they suggest home prices are at the bottom ... so it's a no brainer that things can't get any cheaper. But ... does this automatically mean I should buy? Are there other considerations before we run out and make an offer on a home?

Answer: You have summed up the market situation quite well, there is no better time to buy a home than now. And you are correct as well that there are unique considerations for each individual buyer. Some leading indicators:

• Do you feel your job or jobs are stable going forward? I would be remiss to suggest to someone who is worried they may have a period of unemployment ahead go out a buy a home.
• If you are renting, this is an easier bit of advice since your rent can only go up and you are getting "ZERO" benefit on taxes ... but if you own your home the possible resale of your home becomes a much bigger issue. Have you consulted a real estate professional about the possibility and viability of selling your home for a solid value? They know the villages and communities, they should know if your home is poised to sell or may take some time.

Beyond these two biggies, I can tell you that this is a terrific time to buy a home. I could even suggest, at the risk of sounding partially crazy after the 2007 implosion of the market, that this could be the single best time EVER to build a new home. Trust me, I know home building.

Let's talk!

Northwest Indiana Homes and Mortgages

Market News as the day begins - in general pressure for gold, commodities, and interest rates to go up on the horizon. In the short term some good opportunity to capitalize on 5% prime interest rates and buy a home now. Plus, the government will pay you a bonus for doing so.

RATES GOING UP? - There are now just 2 months remaining (i.e., February and March) in the Fed’s program to purchase $1.25 trillion of mortgage backed securities. The program, which originally began with Fed purchases in March 2009, will stop by the end of next month. Eric Rosengren, the President of the Federal Reserve Bank of Boston, predicted last month that mortgage interest rates will rise by as much as 0.75% when the purchase program ends (source: Federal Reserve).

Although Australia kept their rates steady, for now, there is intense pressure on all central banks globally to begin restricting interest rates ... translated raise rates.

What's up with gold? A steady increase, even accounting for corrections, in that each low is higher than the last one:

This is a distinct pattern of progressively higher lows.

Let me hasten to add that this analysis and discussion only applies to the short-term horizon -- the next couple of months. That's because contrarian analysis, to the extent it works, is only a short-term market timing tool; my econometric analysis of the HGNSI shows that it sheds little light on where the market will be in, say, one year's time, or even in six months.

So it may very well be that gold is headed to $5,000 per ounce, as some gold bugs currently are arguing.

Rates aren't happy with debt

>Let's shoot straight, mortgage rates go up when too much debt is being issued!

Posted To: Mortgage Rate Watch (full link here)

Despite a much better than expected advance read on fourth quarter GDP (consensus was 4.5%, actual 5.7%), the week ended on Friday with mortgage rates near the best levels of the month. Usually, better than expected economic data causes stocks to move higher and bond yields increase.

Even though the economy is beginning to grow, and inflation is pretty stagnant, the biggest problem on the horizon is the deficit and the debt it is creating. There's too much supply of debt and this is going to cause rates to go up.