Ted Ihde

What’s behind mortgage rates?

When there is an elevated level of demand for 10-year Treasury notes, investor bids for the notes would most likely come in at or above a bond’s face value. These higher offer prices for bonds drive bond yields down. This is so due to investors’ willingness to accept lower coupon rates for bonds in exchange for the de-facto loans they are making to the United States government by way of their purchase of 10-year Treasuries.

When investors determine that there is market volatility, investors may be inclined to accept lower yields on their “loans” to the United States government. An investor’s determination of a “volatile” market could lead the investor to arrive at their conclusion that government bonds are a safe place to park their money, as compared to other available investment vehicles they have available to select from (i.e.: the stock market).

10-year Treasury

Interest is paid on a 10-year Treasury note at six-month intervals. The 10-year Treasury has a ten-year maturity. When an investor purchases a 10-year Treasury note, the investor is making a de-facto “loan” to the United States government. The government will in turn use that “loan” it receives – through the purchaser of the Treasury note – to finance itself. So, in essence, when you purchase a home, and when you obtain a 30-year fixed rate mortgage to finance the acquisition of your home, you are financing not only your home. You are also contributing to the financing of the daily operations of the country in which you live, by way of the payments you make on your home loan.

New Jersey: Redevelopment

Utilizing “tools” made available to New Jersey municipalities through development and redevelopment “road maps” established in the state capital of Trenton, “Trenton redevelopment road maps” can serve as redevelopment catalysts. Municipalities are able to use these “tools” to designate special improvement districts within a municipality.

A special improvement district is a Business Improvement District. It’s an area within a municipality where businesses pay an additional tax which goes towards funding redevelopment projects undertaken in the designated district.

Real Estate and AI

One does not really sell a home. So then can one really, effectively push for a deal to close? Yes. And, no.

People really kinda’ buy homes. So pulling a buyer in, to a great experience offered to that buyer – an experience which “stars the home” so to speak – could be an effective approach to consider. Then engaging your buyer in an interactive way. Rather than selling a home to a buyer. Ideas and approaches. Aligned with the effective use of AI. In real estate.

By observing data, and in this form, “data” could be consumer behavior, then by thinking through responses to observed data, a real estate professional could craft their own foundational buyer-inquiry follow-up system. In this manner, AI could facilitate added value for the real estate professional. In their market. For buyers. And as such, for sellers too.

With an emphasis placed upon the buyer’s experience. Adding to a value-add the real estate professional delivers. By facilitating an interactive experience for the buyer. Less of a need to push deals. More so, the focus having been transitioned to, pulling buyers in through a great virtual experience. Delivered by the Realtor.

Data…Feedback…Response.

Inclusionary Zoning

The amending of local zoning regulations is one method states use to address housing shortages. Shortages which lead to a lack of affordable housing, within each respective state.

For example, Texas has a density bonus program. Texas’s density bonus program is carried out through the implementation of local ordinances. These ordinances in Texas amend city codes, affecting local zoning, in Texas. The intended result being, increased construction of mixed-income and affordable housing, in Texas neighborhoods.

New Jersey: land banks

In New Jersey, municipalities are able to enter into land banking agreements with redevelopment entities. At which time, the municipality could designate the redevelopment entity as a land bank entity, for the municipality. The land banking agreement entered into between the municipality and the land bank entity would enable the redevelopment entity to lease and/or to convey properties which are held by the municipality.

Within each land banking agreement in New Jersey, responsibilities would be specified for each party. And these responsibilities will be applicable to how the land banking entity may acquire properties on behalf of the municipality. And make improvements to these properties as well.

Redevelopment

In a designated Redevelopment Area, a municipality’s goals could be focused upon transitioning now non-performing residential, commercial and industrial properties to vibrant community assets. The pursuit of which could take on a community-centric theme. Renovations. Repurposing properties. And reconstruction too. Each of these being potential goals pursuant to redeveloping non-performing properties in designated Redevelopment Areas.

Steps taken by a municipality in their progression towards neighborhood revitalization in Redevelopment Areas – progression, coupled to a redevelopment plan emanating from city hall – often starts off with a city council passing a resolution. Following the resolution, the planning board then might construct a Redevelopment map. With a Redevelopment map formulated – and upon notification to the public of a scheduled hearing – a planning board could then potentially adopt a Redevelopment resolution.

A Redevelopment resolution could recommend the establishment of a Redevelopment Area within a municipality. There is quite a bit more technical minutiae to this process, needless to say. Yet, in summarily-simplified terms, this is one we can thus arrive at the designation of a Redevelopment Area within a municipality.

Mortgage Rates

Last year, higher interest rates established by the Fed set the benchmark on which altered credit spreads had to be determined by investors. As the Fed steadily raised its rate last year, the Fed’s direct actions – in relation to a tightening of the money supply – moved the country out of the low interest rate environment we had been in. That low-rate environment, having served as the “fuel” for elevated levels of home purchases, and corporate borrowing. As the Fed raised the Federal Funds Rate last year, mortgage rates followed accordingly.

Acquiring city-owned properties to rehab?

Years of back taxes owed. Clouded titles. Rehab budgets which oftentimes exceed market values of city-owned homes…even once the homes are fully-rehabbed. Few good “comps” for appraisals. Can owner-occupants get a home loan if they buy one of these homes for themselves? Small loan amounts. And oftentimes mortgage lenders don’t like those small loan amounts. Complexities associated with the FHA 203(k) loan. And so on, and so on, and so on…

Challenges, and lots of them. Challenges, yet one objective municipalities have is to transition these now non-performing properties into neighborhood assets. Because while non-performing properties do have these very real challenges, with high numbers of “single challenges” – i.e.: distressed, vacant homes – situated within neighborhoods, a municipality will have a larger scale collective challenge on their hands as well. A neighborhood challenge, so to speak. A social challenge. And that’s the real problem…

Thinking About Becoming A Real Estate Developer?

New home construction: land grading