Detroit is hoping to attract artists from around the country with an offer that allows them to trade their work for home ownership. The average price of a home in the program is just $25,000, and in many cases these homes are brick and were once beautiful, by doing 1 work of art + paying just $250 a month, the homes will be mortgage free in less than 5 years!

This is made possible with the new $8,000 tax credit program, as the buyer would put this money down as a ‘down payment’ and to cover closing costs.

Some of the art work will be auctioned to promote culture in the City of Detroit. There is no restriction on the type of artwork that may be submitted for the home ownership program, what is art to some, may be a collection of brightly painted hub caps to others - in both cases they can help an artist buy a home of their own.

25-50 artists are expected to take advantage of the program before September 1. To find out more contact James Riley 248-258-9898

More about the tax credit program:

  When do I need to purchase to qualify?
If you buy a home between Jan. 1 and Dec. 1 this year and close escrow during these  dates, you will qualify for an $8,000 tax credit - as long as it is your primary residence  and you meet the simple requirements.
How does the law define “first-time homebuyer”?
The law defines “first-time homebuyer” as a buyer who has not owned a principal  residence during the three-year period prior to the purchase.

What are other requirements to qualify?
All U.S. citizens who file taxes are eligible to participate. An income limit of $75,000 a  year for individuals and $150,000 a year for joint filers also applies.

How do I apply for the credit?
Taxpayers should use IRS Tax Form 5450 to claim the first-time homebuyer tax credit. Does the credit have to be repaid?  No. Unlike a similar tax credit passed in 2008, this $8,000 tax credit does not have to be  repaid to the IRS.

We were about to make a multi-million dollar mortgage to him. The lender “googled” him, which has become standard practice for savvy lenders. We got only the ‘bad stuff’ that others had to say about him. Nothing about the tens of thousands he gave to charities. Nothing about the civic boards he chaired. Nothing about the great family man or father he was. Nothing about the employees who respected him. Nothing about the business achievements he had. Only a few bloggers who had an ax to grind.

This bad publicity, true or not, I believe colored the lender’s decision not to make the loan. The few nasty bloggers could have been easily been pushed to the rank of page 16 with just a little cyber transparency by this super citizen, instead the causal observed might google him and think he’s a jerk who didn’t pay the light bill at a rental property he once owned and evicted a dead beat tenant from? The blogger did a better job of making his case, but this was the case.

From that point on, I decided to live as cyber-transparent of a life as possible. My views, although not radical are published in local ‘letters to the editor’ (maybe too many). My achievements and failures are widely internet ready. It’s all a part of the public record. Some friends think this is crazy, but if someone wants to know about me, I want them to find out all the ‘good’ and any bad or ugly is out there any way whether I like it or not.

Too many people’s google-results simply turn up campaign donations. It is always confusing to me when I find they gave equal dollars to both candidates, what does this say?

Here’s a new one I found on me: http://www.avenuemagazine-digital.com/avenuemagazine/200904/?pg=91 I had actually forgotten this speech. Having a cyber record of it is kind of like a scrapbook of my ideas that someone else is keeping for me.

PS - If you want to know something about me, call me, I will tell you.

Fractional is - 1/4 to 1/12 shares - of a home or condo, typically upscale second home or resort housing with a price point of $50,000+ per share. Fractional is a very good idea to move standing inventory at lower and more affordable price points. If you want a $500,000 home, would you buy it for $50,000?

If you are a resort condo developer with say 20 condo units left in your project. The whole ownership was a price point of $500,000, and you are having trouble attracting a buyer for a half million second residence, fractional seems like the perfect solution. Eat the elephant in smaller bites? Sell a 1/10 share product for $59,900 per 1/10th and Wham! You sell your entire project out, and make an extra $99,000 per unit or an extra $2 million to cover your marketing expenses. Plus you have raised the value of the other whole ownership units to $599,000??? Everybody wins!

Easy success formula right?

Here’s the challenges. First, once you sell just one 1/10th share in your condo project, your existing owners will likely have trouble getting financing because the whole condo project will be considered ’shared ownership’ and traditional lenders redline this product type. Your existing owners and their HOA may fight you on the timeshare strategy. The condo docs will need to be changed to allow ‘timeshare’. You may have legal restrictions from your municipality regarding ‘timeshare’. There may be ‘registration requirements’ to sell ‘timeshare’. Undoubtedly, the extra $2MM in profit from the sales will cover this legal and hassle expense?

Here’s the bigger challenges. You would need to sell 20 - 1/10 shares, or find 200 buyers who want specific time at your condo project. Okay, maybe overcome able. There are great marketing firms that can help you.

The challenge we find to be the greatest, once you have found 200 people willing to split time and buy at a $59,900 price point, is getting them to write a $59,900 check today. Not likely. In the past two-thirds of fractional buyers would ‘pay cash’, but most of these people were borrowing the $59,900+ on home equity lines or other refinances. 1 year ago, most of the home equity lines in America were beginning to be frozen. If you have an open HELOC today, you are one of very few.

The financing problem is killing the fractional business. Would-be fractional developers have but one logical choice. Hold their own paper, season it, and then sell it later when the market wakes back up or hold it to term and collect the interest that bank would have.

This seems like an impossible endeavour for a cash strapped condo developer in this market? It is not impossible, but it is not simple either. Doing it right is even harder. We know how to structure seller financing, and help fractional developers create a ‘note portfolio’ that works and will help move product.

Any would-be fractional developer who is not prepared or willing to hold their own paper in 2009 is doomed. Consumers require financing, banks are not willing (or able) to extend fractional financing. They have too many other loan requests, that are simpler and more ‘conforming’, to deviate funds into a ‘new’ arena called fractional. Too many lenders look at fractional as pure timeshare and expect a double digit default rate and will demand a mid-teens interest rate yield to even consider lending to fractional in 2009.

Fractional real estate offerings could help save the resort real estate industry, allow consumers to have their second home at an affordable cost, and fix broken condo projects where sales have stalled - but none of this will happen if the lending challenge is not solved.

The consumer finance solution for 2009 is seller financing, creative structures that divide risk between developers, lenders, consumers and third party investors.  Everyone will need to be at the table and get flexible and creative to resolve the challenges.

We can help you get to the table - info@vacation-finance.com

The glut in timeshare inventory has owners and operators re-evaluating their business models, but they may find themselves benefiting from an economy in which people turn to timeshares when they cannot afford a second home.

“The aspirational-type buyer has been hammered,” said Johann Murray, senior vice president of financial services for Hilton Grand Vacations. “Their retirement horizons have been lengthened. They might have dreamed of a condo on the beach. They can’t do that anymore. Timeshare is a different alternative. The traditional snowbird is a thing of the past.”

Murray and other timeshare executives discussed the impact of the economy on their industry during a panel at the 31st Annual New York University International Hospitality Industry Investment Conference at the Waldorf-Astoria hotel. In addition to tapping new pools of buyers, timeshare companies should make maintaining their properties a priority — even if it means raising fees. But they advised cutting costs in other areas, including the mammoth marketing and advertising budgets.

This was the first year timeshare sales contracted in their roughly 35 year history, according to Gordon Gurnik, president, North America, for Group RCI, a subsidiary of Wyndham Worldwide Corp. He agreed that a new pool of buyers would be exploring timeshares as an alternative to a second home. Potential buyers will face more scrutiny, though, compared to recent years. Now, they will need down payments of between 25 and 30 percent.

“We’re getting back to the fundamentals of the industry,” he said.

Even in a difficult economic time, timeshare customers have continued to pay their HOA fees and assessments, the panel reported.

“People are paying their mortgage and HOA fees,” said Christian Hempell, vice president of Holiday Inn Club Vacations. “People love this product and they’re protecting it.”

Stephen Cloobeck, chairman and CEO of Diamond Resorts International, said his company even went so far as to raise fees. He acknowledged “it’s the year of the customer,” but felt the hike was necessary to still provide the amenities and service that guests expect. Low fees could lead to lots of deferred maintenance and customer unrest.

“Will the consumer not pay the $800 and give up the $24,000 they have already spent?” he asked. “That’s the issue in a nutshell.”

Murray’s advice is to get rid of some frills, such as daily linen service. But overall, time share companies should “insulate your owners. You don’t want them to experience cold swimming pools. You don’t want them to experience long check-in lines,” he said. “To harm your owner, potentially your best buyer, would be a bad idea.”

But he also expects new building — when it restarts — to feature smaller units with fewer frills such as granite-swathed kitchens and stainless-steel espresso machines that have driven up construction and repair costs. He compared the luxury build-up in timeshares to the suburban McMansion trend and said timeshares should not be trying to get on the cover of Architectural Digest.
“Every project was about being nicer than the past. Soon you find out what is just enough,” he said. “You go back to a low-maintenance product that’s a good investment over time.”

Another option for new investment could be converting condo-hotels or condominium buildings into timeshares.

“I’ve had a lot of phone calls on this,” Gurnik said. “It’s a great alternative.”

The first step in investigating this possibility is finding out what you are enabled to do. He advised looking at the condominium documents, because some properties have built-in windows that allow for timeshare conversion. Timeshare companies also would have to see how far along the building was sold.

Hempell was still bullish on mixed-use developments such as a hotel timeshare because of the cost efficiencies. Both entities would be supporting amenities such as golf courses and restaurants. It especially makes sense in resort communities where real estate is high, he said. Moderator John Melicharek  Jr, a partner with Baker and Hostetler LLP asked panelists about the near and long-term future of the industry.

Hempell, of Holiday Inn, said the exorbitant costs of marketing timeshares — usually about 40 percent of costs — need to be reined in. Those costs are out of control, and he predicted that “marketing will get a laser focus on efficiency.”

Murray said Hilton’s focus is trying to sell what it already has, not running out to get capital. But he sees the industry bouncing back.

“We’ll be out of this downturn in five to six months. We’re already seeing signs of bottoming,” he said. “There’s just too much money to be made in this industry.”

Only taxpayers should have right to vote

I never thought I’d advocate higher taxes, but I read an alarming statistic that less than 50 percent of our population pays any income taxes.

Here’s an idea to consider as deficits swell in our nation: “No Representation without Taxation” implemented this way, if you file a tax return, and pay even just $1 in tax, this entitles you to vote. No tax, no vote.

Our country was founded on the idea that there is linkage between productive participation and having a say.

Taxation without representation would have been far less compelling if the colonialists weren’t paying taxes?

This might seem harsh, but everyone would be given the choice, file a tax return and send in at least one buck. Being a contributor to our society should come with privileges.

Don’t mistake my suggestion for “selling votes.” It’s just the opposite, we just won’t give them away as charity.

The right to vote is too freely entitled today, and for those who have it only a small percentage use it. Marketers know, what is given for free is valued less than those things we pay for.

Plus, with 350 million U.S. citizens, $1 each would raise hundreds of millions in needed tax revenue from newly committed voters.

Bob Waun

Birmingham

As Chrysler, LLC exits bankruptcy, and GM enters it, Detroit is calmer than you might expect. There is actually a sense of optimism around here - that things are starting to get better. Odd to think, but I have heard numerous local business people state “it’s always darkest before dawn!” I beleive they are encouraged by the capitulation of the auto companies to the power of the markets.

Here in Detroit there is a strong community of Capitalists (Large C), who beleive that better or worse, hard work and good ideas trump bad economic times. It’s amazing. I spoke with a friend who is losing his home, you would think he just got let out on bail. He was positive and optimist about the future, sad for the present, but sure that things were about to turn up and get better for his family.

I would trade optimism for just about any other human emotion…

Hi Bob

Thought you might be interested for your blog. Today we released the first quarterly HomeAway Vacation Rental Marketplace Report. In the report, we compiled many interesting behavioral habits of travelers that would be informative and possibly surprising for vacation rental owners.

For consumers who believe the real estate market has hit bottom, now may be the ideal time to consider the purchase of a vacation home to rent out as a source of extra income.  According to research recently released by HomeAway, the world’s leading online vacation rental marketplace, certain markets show greater potential for rental income, based on the ratio of demand to available homes.  The top 10 markets where consumer demand exceeds current inventory levels are:

1.       South Miami Beach, Fla.

2.       Seaside Heights, N.J.

3.       Dauphin Island, Ala.

4.       Mount Pocono, Pa.

5.       New York, N.Y.

6.       Hampton Beach, N.H.

7.       Ocean City, Md.

8.       Hollywood Beach, Fla.

9.       Holmes Beach, Fla.

10.   Sunny Isle, Fla

To see the complete release please visit: http://www.homeaway.com/travel/site/ha/Q2VRMR and if you have any questions or want additional info, please let me know.

Best,

Victor Wang
Public Relations Manager

Immigrants from around the world are flocking to Miami, yes they are! America’s greatest export is our lifestyle and nothing could help our economy more than attracting foreign buyers to the Miami condo market. Consider the economic impact to the economy of a foreigner choosing to invest in a home in the USA.

- Another vacant condo is purchased, often with primarily cash. These condos are often not inexpensive, but luxury properties. This is a large investment in our country that can not be repatriated on a whim. Real estate is not mobile like other investments.

- The buyer will pay US taxes in numerous forms. On visits they will pay even more US taxes. Taxes that support school districts, build roads and infrastructure and provide US jobs that can’t be exported.

- A purchase of a second home in the USA means that they intend to reside, at least for some period of time here, which equals more revenue for local businesses.

State governments should be courting Foreign buyers of second homes with marketing campaigns. Don’t ask them to be tourists, ask them to be condo buyers.

I live in a Detroit, Michigan suburb. We loose 10,000 people a month to migration. Miami gains 10,000 people a month. Michigan is loosing jobs, Miami is holding steady. It is easy to understand why home values in Michigan can continue to fall. Miami is a different story. The spark that stalled the Miami housing market was over building and fear of hurricanes (global warming).

New construction has all but stopped in Miami 18 months ago. Hurricanes and Global Warming may continue to be concerns, but 1/3 of the world’s population now lives in the path of Hurricanes and coastal global warming threats, yet more people every year move that direction.

More people are moving to Miami.  Prices are headed north.

If I fall behind on my payments, take a little break from being on time and prompt with my mortgage, I will get the banker’s attention and they will call me offering a lower balance, a lower rate and lower monthly payments - all which will help me keep my home for the long term.

So by the thousands, consumers are making the rational (not the banker’s expected) move, of simply not paying the mortgage for 1-3 months. They get a loan mod, and get back on the wagon again at lower payment.

We economists call this a ‘moral  hazard’ and it’s real - it shouldn’t be shocking…

NEW YORK (CNNMoney.com) — Foreclosures in April exceeded even March’s blistering pace with a record 342,000 homes receiving notices of default, auction notices or undergoing bank repossessions, according to a regular industry report.

One of every 374 U.S. homes received a filing during the month, the highest monthly rate that RealtyTrac, an online marketer of foreclosed properties, has recorded in four-plus years of record keeping.

“April was a shocker,” said Rick Sharga, a spokesman for RealtyTrac. “I would have bet on a dip because March foreclosures were so high.

Instead, filings inched up 1% from March and rose 32% compared with April 2008.

There were 63,900 bank repossessions, the last stop in the foreclosure process. More than 1.3 million homes have now been lost to foreclosure since the market meltdown began in August 2007.

The increasing foreclosures will force RealtyTrac to rethink its forecasts, according to Sharga. “We had been predicting 3.4 million filings for the year,” he said, “but we’ll blow those numbers out of the water.”

The lion’s share of April’s filings were ones in the early stages of the process, such as notices of default, according to James Saccacio, RealtyTrac’s CEO.

Bank repossessions actually fell 11% for the month, compared with March. That’s due, according to Saccacio, to the many legislative and company moratoriums that have prevented the foreclosure process from starting on delinquent loans.

Because fewer loans entered the process in past months, there had been fewer getting all the way to repossession. But now that those moratoriums are over, the volume of foreclosure filings is increasing.

“It’s likely that we’ll see a corresponding spike in [repossessed properties] as these loans move through the foreclosure process over the next few months,” Saccacio said in a prepared statement.

Ten states accounted for 75% of all foreclosure activity, and they fell generally into two categories: one-time bubble markets and the rust belt.

California, which easily outpaced every other state with with 96,560 filings. Other hard-hit former boom towns were Florida, Nevada and Arizona.

Those rust belts towns with the most filings were Illinois, Ohio and Michigan. Georgia, Texas and Virginia filled out the rest of the top 10 list.

Nevada, with one filing for every 68 households, had the highest foreclosure rate in the land. Florida, with one for every 135 households, ranked second; and California, with one for every 138, was third.

Las Vegas continued to be the worst-hit metro area. It had more than 14,000 filings in April, one for every 56 households and 20% more than in March.

The Cape Coral-Fort Myers, Fla., area was second with one in 57, a 31% month-over-month rise. Merced, Calif., where home prices have plunged almost two-thirds from their peak, had the third-highest rate.

Five other California metro areas ranked in the top 10: Modesto was fourth, Riverside-San Bernardino fifth, Bakersfield sixth, Vallejo seventh and Stockton eighth. Miami and Orlando rounded out the list.

“here is a growing belief among financial experts that the recession is over.

New housing inventory data seem to show improvement in the housing market.

Barry Knapp, a strategist at Barclays Capital, wrote recently that the economy appears “to be in the sweet spot of a recovery” and that the recession may have ended last month, according to Bloomberg News.

Liz Ann Sonders, chief investment strategist at Charles Schwab, said on “Good Morning America” today that she agrees with that conclusion.

“It isn’t any brilliant prescience on mine or anybody else’s part,” Sonders said. “There’s certain indicators we can look at to set the turn, and I think we have seen that turn.”

Sonders warned that unemployment is a lagging indicator and, historically, employment figures don’t begin to recover until six months after the end of a recession. That means that this time around, unemployment likely won’t peak until the end of this year”

Ok. I saw it on TV, it must be true?