In addition to generating one million new home sales that would not have happened otherwise, the tax credit also pushed home prices up in 20 of the largest cities (the biggest boosts were in cities hurt most during the downturn). The increase represents 3.8 percent growth year-over-year, the biggest rise since 2006.  But the news was overshadowed by reports that foreclosures accounted for 31 percent of all home sales in the first quarter of 2010. To put that in perspective, in a “normal” market, foreclosures account for less that 2 percent of sales.  The silver lining is this represents a 14 percent decrease from the prior quarter.

A sign that another government based assistance program is helping, borrowers with home loans modified under the federal government’s foreclosure prevention effort are less likely to miss a payment. In other mortgage news, the multi-decade low rates are encouraging more people to refinance rather than encouraging people to buy homes. I’m glad to hear people are taking steps to make their homes more affordable, now it is a matter of encouraging potential buyers to take advantage.

In a bit of sobering news, an estimated quarter of all residences with mortgages owe more than their home is worth.  According to CoreLogic, borrowers in the hardest hit areas may not be able to break even in a home sale until at least 2020.   I think I speak for most people in real estate when I say I hope that is a very conservative estimate.

If the season’s green grass is inspiring you (or your consumers) to green-ify your home, check out these tips!

Have a safe Fourth of July!  Check here to see if there are any celebrations happening in your area.

NAR estimates that as many of 180,000 buyers along with the thousands of agents who worked with them may not see the keys to their new home or a commission check. These buyers had an accepted offer in place prior to the April 30th deadline of the HomeBuyer Tax Credit but may not be able to close that transaction by the June 30th deadline. Despite the efforts of many people, lawmakers failed last week to vote for the bill that would extend the closing from June 30th to Sept 30th.

This combined with the discouraging economic news on new construction and mortgage applications have been a frank reminder that although the first part 2010 gave us hope, we still have a long road ahead. There is still a slim chance that an extension on the closing date for the tax credit may happen. We’ll know more as this week plays out.

My first broker used to tell all his agents “Don’t spend your commission checks until you have them in hand.” This latest turn of events has certainly reinforced that advice.

While there was much to celebrate this week, a large number of foreclosed homes are expected to hit later this year: another sobering forecast which indicates that a major recovery is not necessarily imminent. We need to keep motivating homebuyers, especially first-time home buyers, because our industry may be the first indication of how the economy does without government “life support.”

Trying to get the market back on track, the five hardest hit states submitted proposals this week on how they plan to use the $1.5 billion in TARP funds given in housing aid by President Obama. The next five hardest hit states will present similar proposals for $600 million in funds in June. And still other states are perhaps enjoying the downturn, with lower-than-average loan rates. Stay tuned for the economy’s regional comeback stories…

In other good news, remodeling is back! Homeowners who are staying put and those who put remodeling plans on hold due to the recession are now investing in the upkeep of their homes. In fact, the Joint Center for Housing Studies at Harvard University is predicting nearly 5 percent growth in such projects over 2009. This may also be a great investment for homeowners considering that even renting prices are now on the rise.

Lastly, in the coming months, home prices may drop even further. So go take advantage of the increased consumer confidence (which is at its highest level since the financial crisis struck in September 2008!) and let us know your success stories!

The nice spring weather, unfortunately, will not help those borrowers having difficulty getting mortgagers, as there are several potential stumbling blocks even for those with good credit, including a limit on loans that are too big and small missteps in simple payments like cable or electric bills, among others. The talk on mortgages, however, is not all gloomy: mortgage fraud is declining, according to First American CoreLogic, and the Federal Reserve is keeping interest rates at record lows. In other good news, home sales will rise about 6 percent this year thanks to increases in jobs, credit and affordable homes. Now that’s what I like to hear!

Arguably the most talked about news this week centered on the Federal Reserve’s plans to halt its mortgage-backed securities purchase program, in the midst of a much-discussed countdown to the looming end of the home-buyer tax credit. Bank of America responded to all the change by adding nearly 8,000 customers to the ranks of borrowers modifying mortgages under the government’s Home Affordable Modification Program. We are anxious to see how the market will respond!

On the foreclosure front… government lenders are making great strides to make short-sales simpler and quicker. These actions should help people in states with the biggest backlogs, namely Florida, Illinois and California. The efforts are also important as distressed homes are still accounting for more than a third of all sales nationwide. There of course are always opportunists who take advantage of these situations, like The Fama Group which made a $200,000 profit in twenty minutes (wow!) and those buyers looking for a nice vacation home in areas that are 40 percent discounted. On the other side of the coin are the Hagars, a Colorado couple who have an innovative “trash home” – a home literally made of old tires, cans, bottles and plastic plates – who can’t find a lender to refinance their home loan. Best of luck to you!

Of all the numbers reported recently, the most important for agents came from a study that found only 22 percent of consumers would use the same real estate agent again. For comparison, the number was 79 percent in 2004. Why the dramatic decrease? Sellers cited that houses took too long to sell and that they didn’t get the price they wanted. There are a couple of things we can do to increase consumer satisfaction, including spending more time educating buyers and sellers on the marketplace; increasing our responsiveness, especially via email; and going back to the basics by providing homeowners what they need most. Although there is value with virtual communication and in developing smart marketing and advertising campaigns, at the end of the day our job is to help consumers buy and sell a home. As an industry, we need to work together and share secrets to get us past even the 2004 numbers. I challenge us to make this happen by 2013. Think we can do it?

Now I want to talk about my exciting weekend and one of my new favorite conferences: South by Southwest. One presentation that stuck out was from Peter Shankman, founder and CEO of Help A Reporter Out (HARO), who spoke about self promotion. I learned that self promotion is getting what you want by giving everyone else what they want; the secret of self promotion is not promoting yourself, it’s having others want to do it for you; and transparency, relevance and brevity should be top of mind. Very interesting stuff! Anyone who has not been to the conference should consider attending next year and, for those of you who made it, share your favorite anecdotes below!

Now on to social media. More than three-fourths of small-business owners reported they either made a profit or broke even after promoting themselves or their products and services on social media platforms. This tells me that, if you do it well, social media either can’t hurt or has the potential to be very valuable. In related news, for those of you who still doubt the value of Facebook, keep in mind that this week the social networking site surpassed Google in terms of overall traffic. Looks like we need to continue to take advantage of Facebook.

On a related note, a new study by analytics firm Flurry found an estimated 60,000 apps were developed for Facebook in an 18-month period, compared to 140,000 apps developed for the App Store. To put this in perspective, 10.7 million U.S. consumers have an iPhone versus Facebook’s 120 million American users. Interesting where we’re placing our focus.

Lastly, anyone planning to create a sweepstakes in the coming months should check out Publishers Clearing House’s new service that lets any company launch a social media sweepstakes marketing campaign on its Web site, Facebook fan page, Twitter account or other social networking sites within minutes. The service, however, will not come with a giant check and balloons. At least, I don’t think…

There are basically three ways to find a home that fits your needs and negotiate terms with the Seller or Landlord of the property. Execute a contract that is a lease with an option to buy the home at some point in the future. Work within your budget to create a lease option contract that works best for you, or negotiate a lease-purchase.

Rent to Own

Rent-to-own homes provide buyers-tenants and sellers-landlords additional options during questionable times for the market or the individual parties. The general agreement allows for a potential buyer, who may not have the capital to buy the house out-right or the credit to get a loan, to pay a deposit up-front, traditional rent and a rent premium and live in the desired home immediately.

The deposit on a rent-to-own is usually between one and five percent of the property price. The traditional rent goes straight to the seller-landlord, as in any other rental agreement. The rent premium acts as a further deposit toward the purchase of the house. Most rent-to-own contracts are fairly short term – one to three years is the usual length – and the price of the property is usually determined by a professional appraisal at the time of contract signing.

Lease Option

A lease option allows the buyer-tenant to work towards the purchase of the house without an obligation to buy. This arrangement provides the buyer-tenant 12 to 36 months to save money or raise a credit score that is slightly below the needed one. A lease option also reduces the potential buyer’s anxiety about making the long-term commitment of purchasing a home and provides them time to further consider the pros, cons and responsibilities of home ownership. At the same time, a lease option agreement gives the seller-landlord more security than with a traditional renter. The tenant can ultimately decide not to by the home, but he or she usually forfeits the original deposit and the rent premiums paid every month.

Example Lease-Option transaction:

• Purchase price of the home is determined to be $215,000
• Monthly rent payments will be $1,500
• You will receive a 50% rent credit ($750 per month).
• You need between 2.5% and 7% in up front Option Consideration. Let’s say your budget allows for $6,000 for Option Consideration. This equates to approximately 2.8% ($6,000/215,000). You will also need $1,500 for the first months rent for a total initial payment of $7,500.

[Please note: Option consideration is not a security deposit. It is a non refundable payment toward the purchase price and is 100% credited toward reducing the price of the home.]

Suppose you paid all your monthly rent payments on or before the due date and you choose to buy the rent to own home at the end of the 12 month lease purchase contract. You will have $15,000 in equity before you even own the home! Here’s the math:

You started with $6,000 and by paying your rent on time your equity position grew 150% (another $9,000) for a total of $15,000 with 12 months. Not a bad deal! Many people find it nearly impossible to save $9,000 in a year with all the costs of living constantly on the rise.

And yet, while these numbers are optimistic, the caution comes as we realize about one in seven American households are behind on mortgage payments or in foreclosure, many of which are middle class workers which are the very backbone of the American economy, and that home construction slowed 10.6 percent unexpectedly in October – its lowest level in six months. This data is far more indicative of economic health, especially because construction feeds directly into the calculation of U.S. gross domestic product.

But foreclosures and slow down do breed creativity, as vacant homes across the country are being used to hold parties and events. In fact, one rented empty mansion in a Georgia town was used by more than 1,000 costume-clad partygoers to celebrate Halloween. With so many homes left untouched, it is no wonder Fannie Mae unveiled the “Deed for Lease” program, which gives borrowers on the verge of foreclosure an option to rent their home. The jury is still out on the long-term affects this move could have on the real estate industry. Stay tuned…

Although there is plenty of blame to go around for this crisis, the National Association of Realtors this week said that Realtors are not to be blamed because we – as a whole – don’t put people in a home they cannot afford.

In social media news, a growing group of celebrities, bloggers and regular Internet users are allowing advertisers to send commercial messages to their personal contacts on social networks. The idea behind the trend is that people trust recommendations from those they know and respect, while they increasingly ignore nearly ever other kind of ad message in print, on television and online. As we in the real estate industry constantly seek new ways to use (and sometimes abuse) social networking, I wonder what role – if any – this trend could play.

On the mobile front, the question asked this week is will quality matter more than quantity for iPhone applications? For the more than 250,000 active applications on Facebook, only 250 have more than a million monthly active users. The apps that provide value are experiencing tremendous success, while the others get lost in the noise. It is a quality over quantity environment. Will we see the same happen with the more than 100,000 iPhone apps?