The purpose of this post is to summarize the key housing data discussed in a recent CNN Money article.  The link to the full article is at the end of this summary.  I would encourage you to read both.

With 2011 ending on a strong note for new home construction projects, the industry is sitting up and looking forward to the promise of 2012. The housing starts and building permit figures for December were slightly lower than industry projections, but year over year comparisons still saw a considerable upward swing, with starts increasing by 3.4% and permits going up by 1.2%. However, the actual number of home building projects took a hit with only 583,900 being completed in 2011 compared to 651,700 in 2010.

Real estate market watchers believe the recovery could have been moved faster but was limited by certain prevailing conditions. With credit being tight, there’s a shortage of funds for financing new home building projects. Builders’ hesitation to launch new projects in the face of competition from the sale of distressed and/or REO properties going for bargain prices has also curbed the recovery from gathering momentum.

Housing pundits are feeling optimistic though, as all key indicators seem to be pointing towards a revival in the market (both owner occupied homes as well as rental properties). Employment numbers and consumer confidence are both on an upward swing, predicting a healthier 2012 for the housing industry. To read more on this report, click here.

Following up on an investigation of reckless and cavalier handling of foreclosure procedures by several lenders, federal and state officials are negotiating a settlement package with five major banks. The deal is estimated to be to the tune of $25 million and is expected to provide some much needed relief to homeowners of distressed properties.

The Government has been in talks with big name lenders Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. for almost a year now. Some smaller banks have also been approached to participate in the settlement. The deal is not yet cemented but officials are hopeful of announcing a final figure by February 2012.

The settlement is expected to provide some reprieve to homeowners hard hit by the struggling real estate market and the downswing in the economy. However, critics are watchful of the exact terms of the deal. There are some concerns that no actual criminal action has been taken yet and the settlement may be viewed as a full pardon for all the negligence exhibited by the liable parties.

For a full report on this matter, click here.

An unplanned upshot of the current housing crisis is the total revitalization seen in the rental property market. With slumping prices, tightening in financing options and unprecedented foreclosure numbers, more and more people are turning to the rental market for alternatives.

Demand has shot up, resulting in vacancies in rented apartments dropping from 8% in 2009 to a mere 5% in 2011. Unsurprisingly, rents have followed suit, making affordable apartments hard to find.

In the current real estate market, only the well heeled can fork out enough for the perfect modern apartment with balconies, modular kitchens and spacious rooms. With even average apartments going for a premium, you would need to be really astute to find yourself a good and affordable apartment. Keeping a few rules in mind, like looking for properties in slightly older developments, focusing on the lower floors and looking away

from typical residential areas, you can fine tune your search for a more competitively priced apartment. Targeting a new landlord or home owners eventually looking to sell their properties is also a good way of finding yourself reasonably priced and well maintained properties.

For more tips to help you along on your rental hunt, continue reading here.

At a time when home sale numbers are dismal and foreclosures rule the day, the rental property market is faring much better than the real estate market in general. And herein, economists believe, lays the key to a recovery for the housing market. With rents going on an upswing while housing prices crash, residents in several markets may soon find that self-owned property presents a better deal than rentals.

Economists have suggested a three-pronged government strategy for stabilizing the market and for encouraging investors into showing interest in the housing market. They point out that attractive financing schemes made available to local investors would help revitalize a number of local economies by clearing up spare properties and righting the demand supply equilibrium upset by new foreclosures declared each day.

They also suggest moving quickly on impending decisions on policies regarding lending and handling of mortgage cases so lenders can give out loans with a free hand. They also warn that a principal write-down initiative is important to cut down the risk of the current debt situation persistently lingering in the worst hit regions of the economy.

Whether you're a landlord or a homeowner, continue reading here for more details on the economists’ suggestions for aiding a recovery in the market.

A recent CNN Money report on zip codes worst hit by foreclosures (primary residences, not rental properties) in 2011 presents an interesting departure from expected figures. In recent years, the list has been dominated by neighborhoods in auto industry victim cities like Detroit, Indianapolis and Cleveland, comprising 25 percent of the total 100 spots.

The recent real estate market collapse has claimed a whole different geography. Streets with affluent and modern homes spread across the Western cities have now taken top spots on the 100 hardest hit zip codes list. California, with 38 zip codes, and Nevada with 28, are the top runners, contributing largely to the total of 82 zip codes claimed by the Western states.

Repossessions were previously mostly attributed to older neighborhoods. As per the latest figures however, new age developments and housing communities in growing metro areas have suffered the worst in this foreclosure crisis. Experts believe that foreclosed properties are aggravating the market situation as the lower priced REO homes can further devastate already slumping prices. With REOs being priced at 25%-50% below conventional properties, and foreclosed properties flooding the market every day, the slump is expected to only get worse.

To read more about the worst hit zones and the foreclosure effect, click here.

With the real estate market and foreclosure property inventories taking center stage in the economy today, it comes as no surprise that President Obama has chosen to address the mortgage crisis in his 2012 agenda.

One of the key contributors to the current financial crisis is something that happened several years ago during the housing boom. At a time when the home and income property market was in an upswing and the current slump was beyond imagination, several banks and lenders are suspected of offering risky and irresponsible mortgage financing packages to homeowners that may well be responsible for the financial crisis today.

The Obama administration has requested that the Justice department put together a special unit that will investigate major players in the mortgage industry and bring law breakers to task. Several big names in the industry have already been accused of the mismanagement of foreclosure procedures in 2009 and 2010, and talks are underway for the lenders to provide compensation for losses to homeowners who became prey to these procedures. The subsequent investigation is expected to bring further assistance and relief to owners of distressed properties.

These actions could have a profound impact on the housing market for years to come.  A more detailed report on President Obama’s strategy is available for reading here.

In the third quarter of 2011, excluding rental properties, foreclosure home sales as a percentage of total residential sales stood at 20%. While this is admittedly a considerable drop from figures seen in 2010, real estate pundits are not ready to begin rejoicing yet.

The hard facts are that 20% is still a long way from the days when foreclosed homes comprised less than 5% of total residential sales. It is also believed that this figure was achieved, not because there are fewer foreclosed homes on the market, but because their movement in the foreclosure pipeline has slowed down considerably.

Late last year, the real estate market was shaken by the news that millions of foreclosure home sales in the period of 2009 -2010 were suspected of mismanagement. With the government offering reprieve to homeowners in the form of audit by an independent committee, followed by re-compensation should errors by found in the foreclosure processing, bankers and lenders are putting in much more due diligence before declaring foreclosures on new properties. Apart from this processing slowdown, bankers are also being careful not to swamp the market with bank-owned or REO properties that further crash property prices in an already suffering market.

Continue reading here for further information on foreclosure home sales.

With a population of 840,000, Indianapolis is one of the most densely populated capitals in the Midwest, and as such the Indianapolis housing market has historically been relatively vibrant. Offering up a strong and stable economy, some choice universities, a vibrant sporting culture, and a clean, safe and friendly environment, Indianapolis at the moment is an excellent destination for couples looking to raise a family or buy a rental property.

Considering its many attractions, the real estate market in the city hasn’t kept pace with its growth. In fact, growth has been negligent since way back in 2006. With homes selling for about 87 percent of the list price in 2011, dropping from 89 percent in 2010, the Indianapolis housing market is very much a buyers’ market as of now.

Locals were really counting on the February 6^th Super Bowl match to give the city some eyeballs. The Indianapolis housing market may not be in a complete recovery, but things are definitely beginning to look up, and with some timely publicity, Indianapolis may get just the boost it needs to get things moving again. Whether you're a landlord or a homeowner, to read a more detailed report with facts and figures on the Indianapolis housing market, click here.

Basically, the scam boils down to an unscrupulous tenant stealing someone else’s identity, and then using this information to file a bogus tax return.  The bogus tax return can then be used as income proof to rent a property.  Obviously, this is troublesome because people that do this usually have criminal intentions.  In other words, they might use the property for illegal activities, or they might fail to ever pay rent and then skip town when the landlord starts pressuring them.

In either case, the landlord could be held accountable by law enforcement officials, or could face financial hardship by virtue of the lost income, fines, or paying for damages to the property.  Plus, the landlord will never know the true identity of the scammer, and hence it would be impossible to track him or her down for compensation.

Therefore, it’s critical to always perform a complete background check on any prospective new tenant.  Never take tenant-provided documentation as proof of anything.  Always meet tenants in person and have them complete a rental application.  Also ask for a photo ID so you can verify the information.  As you check the ID, keep an eye on the tenant’s reaction; if he or she appears nervous, consider that a red flag.  Also, beware of out-of-state IDs and be prepared to apply extra due diligence in these situations.  Also, make sure you do a credit check, perform a criminal record check, and check references (previous landlords and current employers at a minimum).  Also ask for additional supporting documentation such as the last 3 paystubs, a utility bill reflecting his or her current address, and bank records.  Finally, ask a lot of questions and gauge the tenant’s response.

As you can see, despite the increasing trend of identity theft and tax return scams, cautious landlords need not worry.  Just remember to never take anything provided by the tenant at face value – always do your own level of background checking and due diligence, and apply a dash of common sense.  Do this without fail, every time. This is the only way you can be sure to avoid this type of scam.  Good luck!

When you’re an investment property landlord, there are times when it makes sense to work with a new tenant who is attempting to negotiate a lower rental rate.  That said, there are also times when you should not do this.  Here is an overview of the do’s and don’ts.

First, if a potential new tenant is attempting to negotiate with you before they even look at the property, run away!  This typically means that he or she is a tire kicker, or is trying to squeeze into an apartment that he or she cannot afford.  Either way, the most likely outcome of this is aggravation and wasted time.  The only time you should negotiate is after the potential tenant has viewed the property and has demonstrated a real interest in living there.

You also want to make sure that rental rate negotiations do not become slippery slopes.  For example, if you easily meet the tenant’s request on the rental rate, there’s not much stopping him or her from trying to squeeze you on other things like the security deposit,

utility expenses, or even the term of the lease.  So, if you do decide to negotiate with a tenant, negotiate hard and make the tenant work for any concession you offer.  Ask the tenant to justify his or her request, and bring some rental comps or other researched information into the conversation to justify your position.

Finally, even if you refuse to reduce your rental rate, if you want the tenant to move in you could offer substitute benefits to make him or her feel like they got a “win,” albeit less than what they had originally hoped for.  For example, instead of a reduced rental rate you could counter with a slightly reduced security deposit, an enhancement to the apartment itself to make it nicer, a reduced late fee, or even a free week upon move-in.  All of these are better options than outright rental rate reductions, because they are not ongoing.  Conversely, whenever the rental rate is reduced, you’re basically stuck with the reduced rate for 12 months (or longer, since this will become the new baseline rental rate for the renewal).

The bottom line is that it is definitely worthwhile to engage in tenant negotiations, as long as the tenant, timing, and nature of the negotiations are to your liking.  Never negotiate with a tire-kicker, always make the tenant work hard for any concession you ultimately agree to so that you can avoid a slippery slope scenario, and always try to offer something else of value to the tenant instead of a flat out rental rate reduction.  Good luck!