Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.real From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: real Fri, May 29 1992 Date: Fri, 29 May 92 05:20:41 EDT Message-ID: 05-29 0000 DECISIONLINE: Real Estate USA TODAY Update May 29-31, 1992 Source: USA TODAY:Gannett National Information Network CONSOLIDATION SPURS LOAN TREND: Debt consolidation has replaced home improvements as the top reason for getting a home-equity loan, says a new survey by the Consumer Bankers Association. Last year, 43% of home-equity borrowers used the loans to repay debts, up from 34% in 1990, according to the survey of 106 lenders. Just 29% of borrowers used them for home improvements, compared to 38% in 1990. (For more, see special Debt package below.) AUCTION BECOMES BUILDERS' TOOL: California homebuilders, facing slumping markets and credit problems, are relying on auctions to begin the selling process. Some are building homes to sell at auctions or using auctions to pre-sell homes. With purchase agreements made, they then turn to lenders to get financing. "For me, it was a great approach," says Jeff Read, president of Northstar Estates in Modesto, Calif. AUCTIONS CATCHING ON: After investors pulled out of the 206-unit Alpine Meadows subdivision in Ceres, Calif., developer Jeff Read, Northstar Estates, turned to the Santa Monica, Calif.-based auctioneering firm Kennedy-Wilson. At the sale, "We went from point zero to sell-out in 45 minutes," he says. Since then, Kennedy-Wilson says, six other California builders have signed up to try the auction method. HOUSING BUDGET SHRINK: Housing budgets were smaller in 1991 than in 1987, according to a survey in Builder magazine. In 1991, the average single home shopper was willing to pay 24% of his or her income for housing, compared to 28% in 1987, says the survey, conducted by Fulton Research Inc., which questioned 1,4000 people nationwide who visited model homes last year and 2,7000 home shoppers in 1987. LESS DEMAND ON HOUSING BUDGETS: The average couple was willing to spend 20% of their income on housing in 1991, down from 21% in 1987, says a poll of 1,400 people in July's Builder magazine. The poll found that couples with children cut their housing budget from 22% to 20%. Low interest rates and stable prices have demanded less from housing budgets, says George Fulton, president of Fulton Research. LOAN PROBLEMS TO LINGER: The Wall Street ratings firm of Standard & Poor's expects banks outside Texas to suffer outright losses on 15% of their commercial loan portfolios, compared with losses of about 25% in Texas, where banks made large loans for raw land purchases. Olympia & York's bankruptcy filing confirms that "real estate markets have not begun to recover or stabilize," says S&P analyst Tanya Azarchs. SBA CHECKS REACH L.A. HANDS: Twelve Los Angeles business owners Thursday received the first disaster relief checks from the Small Business Administration. So far, the SBA has approved 42 loans, while more than 300 of 528 loan applications are in the final review process. Homeowners and renters who suffered property damage are also eligible for the loans but are not among the 42 approved. CANARY WHARF GIVEN PROTECTION: A High Court judge granted bankruptcy protection to Olympia & York, the world's largest developer, for the Canary Wharf project in London. The move scraps existing plans to restructure Olympia & York's $12.2 billion debt. The accounting firm of Ernst and Young was named as administrator of the 71-acre office development, said a company in London. FIXED-RATE MORTGAGES STABLE: The rates for 30-year fixed-rate mortgages from the Federal Home Loan Mortgage Corp. were listed at 8.53% Thursday, unchanged from Wednesday, but down from 8.64% from the week before. They were at 9.47% a year ago. For 30-year adjustable-rate mortgages, the rates were 5.93%, unchanged from Wednesday and down from 5.97% the week before. A year ago they were at 7.22%. ARM INDEXES UNCHANGED: The one-year Treasury ARM index rates were listed at 4.12% Thursday, unchanged from Wednesday and unchanged from the week before. A year ago they were at 6.15%. For the 11th District ARM index, rates were at 5.611%, unchanged from Wednesday and unchanged from the week before. A year ago they were at 7.654%. T-BONDS DECLINE: Treasury security rates for the 30-year bonds showed a decline Thursday, listing at 7.86%. That's down 0.04 from rates of 7.90% Wednesday and unchanged from the week before. A year ago T-bonds were at 8.28%. SPECIAL PACKAGE ON DEBT: TREND FUELED BY RATES, TAXES: Tax reform and interest rates have fueled the trend to use home-equity loans to consolidate debt. Interest on consumer loans was no longer tax-deductible as of 1991. And unlike credit card interest, up to $100,000 of interest on home-equity loans is deductible. Rates for home-equity loans are near 8.5%, compared to 18.6% for the credit card and 16.3% for the average unsecured personal-loan. STANDARDS GROW TIGHTER: It's getting more difficult to get home-equity loans, says a survey released Thursday by the American Bankers Association. Of the nation's largest banks, 62% said they tightened credit standards for home-equity loans last year. Most banks raised the amount of equity, the paid-up value of a house, needed by a borrower to get a loan to 25% from 20% a few years ago. (End of package.) Real Estate Editor: Christopher Goldthwaite. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM