1. Find out   what you really want from your investments.

Set goals.  Where do you want to be 5 years from now?  Do you want a much larger nicer house for your family?  How about waltzing into a car dealership and paying cash?  Picture what you want.

Your investing needs to provide a living -and a lifestyle.  You need to be able to look forward and enjoy your life and your family.

If you want to coach your children’s sports teams, your real estate needs to give you the time, not steal the time from  those precious events.

With proper planning you can learn how to out-source but you’ve got to know where you want to go before you can get there.

2. Start simple and keep it simple

Sometimes it’s too easy to lose focus because of information overload.  Our generation is being bombarded with more knowledge than any in history.  And it’s only going to get worse.

Real estate is basic investing.  Stick to the fundamentals.  Go to the old gurus such as Tyler Hicks and read the old books.  Markets come and go, but the basics never change.   

3. Do your investing one small step at a time

Don’t try to compete with Donald Trump with your first property.  Start small.

Get your first property  going.  Then move on to the second and the third.   Don’t worry about what the stars and experts  in online forums are doing.  They’ve been at it for a long time.  Naturally they can do more.  And you will too if you don’t allow your investing to get too complicated.   

4. Focus on one aspect of investing for six months

What are you really interested in?   Foreclosures, Buy and Hold, Short Sales?

How is the market doing in your area of interest?  Concentrate on one type of investment and soak up everything you can about it for six months.  Not only will you become an expert but it will be almost second nature to you.

5. Design your investing around your strengths and weaknesses.

Okay,  this is the challenging  one.

We’ve been taught all our lives  that winners do what they hate.  It’s a conditioning process.  In order to get it done, we’ve got to make ourselves do the dog work.

That’s okay for football or high school algebra, but  real estate investing is different.

You need to like it.  If there are parts of it you don’t like, don’t get bent out of shape about it.  Sub those  parts out.  Out sourcing is one of the most valuable lessons you can teach yourself.

Don’t get upset about landlording if it’s not your thing.  Out source that too.  The most important point is to invest.  That’s where the money is.

6.Stop analyzing and buy something

There are investors who paralyze themselves  to death with market analysis. Another way of putting it is they are fearful of doing it.  Jump in.  Get your feet wet.  Sure, you might make some mistakes but if you  read the right real estate materials and study the right courses, as well as networking, you can cut those mistakes down to miniscule small potatoes.

7. Set aside some properties for your lifetime profits.

This is your own personal bank.  Whether you’re a flipper, wholesaler, rehabber and you want to move those properties fast, this advice still applies to you.

It’s amazing to me how some investors let perfectly great properties get out of their hands because they want to make a quick profit.  Occasionally, keep a few of them.  Hold on and watch them appreciate.  They may truly pay for your old age.   

By Jane Hodges

With the housing-market slowdown, tightening mortgage-lending standards and rising home foreclosures, renters are more easily answering the question: “Why rent when you can own?”  Such a question was common during the housing boom, when homeowners, happy with the gains their homes were making — at least on paper — would urge non-property-owner friends to join the party.

The conventional real estate wisdom holds that owning a home is a better investment than renting. Real-estate values tend to appreciate over time (despite temporary negative blips in home prices) and homeowners who hold mortgages  – at least those who financed with fixed-rate loans — know exactly what their monthly housing payments will be for the length of their loan. Renters don’t have the same certainty.

But some renters say that the price hikes they may face when they renew a lease are manageable, especially in light of today’s housing-market troubles. Several areas across the U.S. that saw substantial home-price appreciation during the housing boom also experienced steep property-tax increases, and mortgage costs for adjustable-rate or subprime loan borrowers can be tough as rates push higher. What’s more, home buyers who bought at the top of the market can find themselves with high mortgage payments for an asset that has lost much of its value. With the housing market in flux, it makes sense to hold off on buying, renters say. Now, these renters are asking, “Why own when you can rent?”

Take Jim Kollross, vice president of finance at Telephia, a consumer research firm in San Francisco. In 2003, he and his wife bought a 2,000-square-foot house in the city’s Inner Sunset neighborhood for $825,000, but sold the three-bedroom, two-bathroom home two years later with plans of renting a home indefinitely. Their property went up in value approximately 60% during the two years they owned it, and they wanted to sell while its value was still high. Such steep appreciation signals an unstable market, Mr. Kollross says, and he’d rather rent than risk watching his home’s value balloon, only to stagnate, or even worse — fall.

Mr. Kollross, 37, told his mother that he planned to sell and rent an apartment instead. He recalls that her first question was, “Did you lose your job?”

He and his wife sold their place for just over $1.3 million in 2005 and currently lease a 1,700-square-foot flat in San Francisco’s prestigious Laurel Heights section. Their new neighborhood is nicer and affords him a faster commute, Mr. Kollross says. Plus, their two-bedroom, two-bathroom apartment has city and San Francisco Bay views and includes a garage parking spot and off-street parking. While the rent is a steep $3,000 a month, he says the price of owning a comparable home in his area — where home prices start at $2 million — is three times higher.

To put his cash to good use, he’s invested his profits from the home’s sale in the stock market, where assets are easier to transfer or sell during market fluctuations than in real-estate, he says.

Mr. Kollross isn’t alone in his bearish sentiments on homeownership. Housing-bubble blogs like Housing Panic  and Housing Doom  are full of anti-ownership sentiment from renters. Some renters are resentful they can’t afford to own in pricey cities, while others are bitter that speculators drove up housing values in their markets. Some are irked that naïve buyers who bit off too much mortgage are calling on lenders and government for bailouts when, all along, they could have held off on buying a place.

John Sternal, 33, learned the hard way about taking out more loan than he could handle. As a vice president at LeaseTrader.com, Mr. Sternal has a steady income and solid credit, yet in 2005 he purchased a Fort Lauderdale, Fla., condo with an interest-only loan (instead of a more conventional fixed-rate mortgage). He had rented for most of his life and was living in a $900 per month one-bedroom apartment at the time of his purchase. Now, as he watches his home loan’s interest rates balloon upward, he regrets his decision. His mortgage’s low teaser rates have begun a series of resets — first to 8.6%, pushing his $1,300 payment to $1,700. His rates will eventually rise to a maximum of 12% in October 2008, increasing his payments to $2,500, making his $900 rent look awfully nice in retrospect, he says.

If he were to try to sell now, he’d take a substantial loss on the property, Mr. Sternal says. Within his condo complex, a unit similar to his is now listed at $150,000 — about $47,000 below what he paid for his property. With 60,000 new condos expected to hit the market in South Florida over the next five years, selling his property could be difficult, he says.

Marc Savitt, president-elect of the National Association of Mortgage Brokers, says that many first-time buyers, at least those he encounters at The Mortgage Center in Martinsburg, W. Va, are choosing to remain renters over taking out unfavorable home loans. About 75% of prospective buyers decide to postpone buying when informed that waiting to do so could garner them lower rates, he says.

Not everyone who can afford to own needs to, some renters say. Ben Cheng, a 30-year old manager at an oil services firm in Houston, could have purchased his own place in 2000 — when he returned to Texas after college. But rather than buy, he’s using money saved by renting to pursue a masters of business administration program at The University of Chicago. He has a good deal on rent, he admits, paying $400 per month to a friend for an apartment worth $650 in rent monthly.

“If I was paying $800 to $1,000 in rent per month, I’d have definitely looked into buying by now,” he says.

Sheara Reich, 34, is another renter who’s glad she resisted the buying bug — until now, anyway. The Washington, D.C., freelance publicist has rented for more than a decade, and as housing heated up during the past four years, she says that her relatively low rent, coupled with the volatility of the housing market, made it a smart move. For eight years she paid $750 to $800 for a studio in a city building that’s close to public transit and has a rooftop pool. But since the sale of that building, she’s moved into a $1,300 a month unit in another building.

She’s watched from the sidelines as friends made hasty purchases without inspections or in fear of “losing out” on a home. “Everyone kept telling me, ‘You’re so stupid,’” she says. “‘You’ve got to get into the market.’”

Now, she says, some of her friends regret making those buys and are funding expensive home repairs a home inspection might have revealed.

Ms. Reich finally started looking for a place of her own in April — after 12 years of renting — when she noticed that prices in her market were cooling. She bought a condo in September in Washington D.C.’s Adams Morgan neighborhood. The 800-square foot unit, which has a bedroom and an office, was listed at $415,000 in April, but dropped to $375,000 by August. She bought the condo for its $375,000 asking price using a 10% down payment and a conventional, 30-year loan; the sellers paid her closing costs. She closed on October 5 and is in the process of moving in.

“I feel really great,” she says of her decision to stick to renting during what she says was a “feeding frenzy” in Washington D.C. “I got one over on the market.”

– Ms. Hodges is a a free-lance writer in Seattle.

By Lauren Baier Kim

Here’s a look at what’s new in real-estate markets across the U.S. from around the Web. (Some links may require registration or subscriptions.)

Sellers turn to home staging in sluggish market

As the housing market continues to slow, more home sellers are turning to home staging — the art of preparing and decorating a home for sale — to speed sales, according to recent news articles.

In Seattle, where the number of homes on the market was 50% higher in September than it was a year ago, staging used to be a tactic sellers would use to get a better price for a home, says the Seattle Post-Intelligencer. But today, as the housing market slows, if a home is not well presented and photographed, it may not sell at all, the newspaper says.

“The houses that are selling are the ones that are impeccable and priced right,” the Post-Intelligencer quotes a local real-estate agent as saying.

In Baltimore, more real-estate agents facing slow sales are “pinching pennies and staging the homes themselves,” says an agent in a Baltimore Sun story. When staging a home, she rents the items she needs, or uses furnishings and decor that she has purchased for that purpose, that agent says. Depending on the cost of the staging, she may or may not pass the costs along to the seller, she says.

When staging a home for sale, be sure to clean it thoroughly, remove clutter and get a second opinion about the appeal of your home’s furnishings, paint and wallpaper. Also consider renting new furniture if yours is too out of date or worn, and make sure the home is well-lit, the Baltimore Sun recommends.

Investors move in on foreclosed properties

Some real-estate investors are looking to profit from the housing market’s downturn.

In the Washington Post, columnist Kenneth R. Harney writes that investment groups are “searching for fire-sale prices on properties with good long-term prospects,” and will rent or resell the units when the market appears to be recovering. “Call them grave dancers, vulture funds, turnaround specialists or the more euphemistic ‘opportunity investors.’ However you identify them, the deal is the same: When hyperactive real-estate markets lose their sizzle, or property owners no longer can afford to hang on to their houses, well-capitalized investors smell blood and move in,” he writes.

Membership is up at one Minneapolis real-estate investment club, profiled in this story in the Minneapolis Star-Tribune. “Some members say that with 10.47 homes on the market for each active buyer, according to the Minneapolis Area Association of Realtors, and the median sale price in the Twin Cities metro area falling, now is a good time to be an investor,” the paper writes. The club offers classes on investing and networking meetings, and for many members it’s a place to go and learn from other investors’ mistakes, the Star-Tribune says.

Retirement hot spots at a discount

The housing downturn isn’t all negative. Thanks to the housing market slowdown, big discounts can be found in formerly pricey enclaves, says BusinessWeek.com. The Web site has picked four retirement locales whose prices have cooled enough to create real-estate deals for savvy buyers. (But the Web site’s picks should be tempered with the caveat that the smartest purchases in these markets would be ones for the long-term, since prices may fall some more in these locales before there’s a recovery.)

Among the Web site’s picks are Bend, Ore., which sports mountain views and a mild year-round climate. The town gained popularity in the 1990s and prices soared, but now, with a 15-month inventory of homes on the market, buyers have room to negotiate. For instance, one local home, first listed for $579,000 in February, has sunk to $439,000, BusinessWeek.com says.

In San Diego, foreclosures and excess inventory from home builders are forcing prices downward. Median home prices in the area hit $622,000 in May 2006 and are now down to $595,000, the Web site says.

A similar situation has developed in Miami. Speculation was the name of the game there during the housing boom, causing builders to build excess inventory, and investors to invest in local real estate. But with housing prices falling, many investors are walking away from their deposits, BusinessWeek.com says. As a result, area listings remain on the market for months — such as a beach-view condominium whose price has dropped from $899,000 to $765,000, furnished, the Web site says.

Also making BusinessWeek.com’s list is Sun City Carolina Lakes, a Del Webb Corp. retirement community that’s 18 miles south of Charlotte, S.C. To attract buyers, the developer has been offering incentives like free golf carts and upgraded landscaping.

Another plus for relocating retirees? People 65 or older do not have to pay taxes on the first $50,000 of their home’s assessed value, BusinessWeek.com says.

Rents on the rise

The housing market’s troubles has been a boon for landlords as an unstable housing market and tougher lending standards lead people to choose renting a home over buying one, according to several recent articles.

In the third quarter, larger apartment complexes in California have seen their average rental rate increase 5.6% from a year earlier to $1,413 a month, says the Los Angeles Times. The highest rent increases were seen in the San Francisco Bay Area, where rental rates rose 12.2% in Santa Clara County from a year earlier, the Times says. The most expensive rental areas in the state remain Los Angeles and Orange counties, where the average rent increased 5.2% from the year before to $1,630, according to the newspaper.

Meanwhile, the Seattle Times reports that monthly rents in Seattle jumped 10.7% in September from the year before to $1,057, and in Salt Lake City, rents rose 9.7% in September from the year before to $769, the Seattle Times says. The newspaper notes that Tucson, Ariz., which saw a rent increase of 3.1% for the same time period, had average rents of only $662 a month in September.

And Cincinnati’s Enquirer.com says that while there have been some rental rate increases in Greater Cincinnati and Northern Kentucky, they have been relatively small — with effective rents (the price actually paid by tenants) increasing 2.4% over the last year, reaching $645 a month in the third quarter.

– Lydia Serota contributed to the article.

By Carrick Mollenkamp and Ian McDonald
From The Wall Street Journal Online

Three years ago, Colorado truck driver Roger Rodriguez was in the market for a new mortgage loan. With radio and Internet ads trumpeting easy approvals, he picked up the phone.

That call set into motion Mr. Rodriguez’s descent into the subprime mortgage mess. Over the next several months, his adjustable-rate loan passed through many hands. These included a local Denver broker, Livingston, N.J., finance company CIT Group Inc. and a Greenwich, Conn., unit of Royal Bank of Scotland Group PLC. Eventually, a piece of Mr. Rodriguez’s loan landed in mutual funds run by a Tennessee investor named James C. Kelsoe Jr.

Little good has come to any party that touched the loan. Mr. Rodriguez, now 61 years old, has lost both his job and his home. All the middlemen, from the broker to CIT to RBS, have either shuttered their mortgage businesses or are struggling. Mr. Kelsoe, once a star mutual-fund manager, has hit a career low as defaults on subprime mortgages decreased the value of his investments.

The paper trail from Mr. Rodriguez to Mr. Kelsoe illustrates how the mortgage market meltdown scalded millions of homeowners and investors. It also foreshadows how the domino effect stands to continue.

Much of the mortgage lending of the past several years, as well as investments in mortgage-backed securities, was based on assumptions that left little room for error. As a result, even slight deviations from a perfect world — in which people act prudently, unemployment stays low, lenders keep lending and house prices rise — pose risks in the form of more defaults, foreclosures and other investment losses.

Behind the market turmoil of recent months: Lending standards were more lax than most people imagined, a fact that surfaced when house prices stalled.

The mortgage crisis is “a case study on the way that greed convinced everyone there wasn’t risk,” says Ivy Zelman, CEO of Zelman & Associates, an independent real-estate research firm.

Should house prices fall by 10% over the next two years — an outcome analysts see as entirely possible — losses stand to be staggering. Thomas Zimmerman, head of mortgage credit research at UBS in New York, estimates that in such a scenario losses due to defaults could wipe out as much as 16% of the nearly $600 billion in subprime-backed securities issued in 2006. In August, such losses were equivalent to less than 1% of the total.

The jobs market also plays a key role. If the unemployment rate ticks upward by a percentage point or more, Mr. Zimmerman believes losses due to defaults could easily exceed 20% — enough to hit even some of the most highly rated securities.

Back in 2004, Mr. Rodriguez didn’t realize he was meandering into trouble. Two decades earlier, he had moved from Powell, Wyo., to start a new life in Colorado after struggling as a sugar-beet farmer. He, his wife, Irene, and two grandchildren, now 4 and 12, took up residence in a modest development called Prospector’s Point in the town of Westminster, where their home boasted unobstructed Rocky Mountain views. Mr. Rodriguez held a steady job driving a recycling truck for Waste Management Inc.

Sometime in the fall of 2004, Mr. Rodriguez decided he could use some money for debt consolidation. He turned to a company called EquityRelief.com, which promoted itself on the radio and the Internet with slogans such as “Debt relief is stress relief at EquityRelief.com.”

The Denver company already had handled his $70,000 mortgage two years earlier, he says. Still suffering from marginal credit, he enlisted the mortgage broker once again.

Within a matter of weeks, Mr. Rodriguez had secured a new mortgage, for $88,000, from finance company CIT Group. That was enough to settle his outstanding home loan, as well as cover auto debts and a few home repairs. His income — about $4,000 a month before taxes — enabled him to pay the $544.70 initial monthly note, plus living expenses and installments on his credit-card debts. But with hardly any savings, he had little wiggle room in case something went wrong. Beyond that, the monthly payment was scheduled to reset after two years, most likely to a higher level — a common feature of so-called adjustable-rate mortgages, or ARMS.

Mr. Rodriguez’s low credit score meant it would have been difficult for him to obtain a prime loan. He says he chose an ARM, with an introductory rate of 6.3%, because that’s what the broker offered. “I just went along with it,” he says. “They made it so easy.” At the time, a prime, 30-year fixed-rate mortgage had an interest rate of 5.87%. But the introductory rate on Mr. Rodriguez’s ARM would apply for just two years before resetting — up to a maximum of 12.3%.

Bryon Veal, who ran the brokerage, says he typically warned customers to use adjustable-rate products only if they planned to be in a property for a short period of time. Mr. Veal also says his firm advised borrowers that rates would increase.

Around this time, hundreds of thousands of borrowers, and the lenders who served them, were beginning to make even more optimistic assumptions about their ability to handle subprime debt. Lenders frequently approved borrowers for loans based only on their credit score and often without verifying income and they effectively ignored the fact that monthly notes would later reset. The universal, hopeful assumption: With house prices rising, borrowers would be able to refinance before the rate increases hit.

Back in 2004, lenders in the subprime sphere had little reason to worry whether borrowers were getting in over their heads. That’s because they often quickly resold some of the loans at a profit. Wall Street banks snapped them up, packaged them into securities and sold them on to investors. CIT was no exception. In 2004, the company, which offers loans for everything from heavy equipment to college tuition, was building its business of originating and selling home mortgages.

Within five months, CIT had sold Mr. Rodriguez’s loan along with others to RBS Greenwich Capital, a unit of the Royal Bank of Scotland located in the tony financial hub of Greenwich. To obtain such loans, RBS had to outbid other investment banks active in the mortgage market, such as Lehman Brothers Holdings Inc., J.P. Morgan Chase & Co., Deutsche Bank AG and Bear Stearns Cos.

RBS was making an aggressive bet on the mortgage business, sharply boosting its capacity to buy and package loans. By 2005, it had risen to third place among investment banks by volume of U.S. residential mortgage-backed securitizations, according to Thomson Financial. That was up from sixth place in 2000.

RBS and CIT declined to say how much they profited at various points in the mortgage-securitization process. Generally speaking, as the loans progress through the chain, buyers and sellers skim a bit from each sale. Profits from the securities are usually determined by a complex set of factors, including cash flow — which is affected by timely payments from borrowers like Mr. Rodriguez.

In February 2005, RBS packaged Mr. Rodriguez’s loan — along with 4,853 others — into a trust called Soundview 2005-1. The trust slices the cash flows from the loans into notes with different levels of risk and return. Within five days, RBS’s sales team had sold $778 million in Soundview 2005-1 notes to investors around the world.

One buyer was Mr. Kelsoe, a senior portfolio manager at the asset-management unit of Morgan Keegan & Co., a Memphis, Tenn., investment firm and unit of Regions Financial Corp. At the time, Mr. Kelsoe was riding the housing boom by investing heavily in mortgage-backed securities. At the end of 2005, his RMK Select High Income Fund showed a five-year average annual gain of nearly 14%, according to Morningstar Inc. That performance beat all U.S. high-yield funds as well as the Dow Jones Industrial Average. His success brought him a bit of celebrity. He appeared on CNBC, was quoted in The Wall Street Journal and gave investing lectures at universities.

“He talked about the importance of identifying and assessing risk,” says Wilburn Lane, head of the business school at Lambuth University in Jackson, Tenn. Mr. Kelsoe spoke there in October 2006 to some 300 local businesspeople over a chicken-and-vegetables lunch. Mr. Lane, who says he was impressed with the 44-year-old’s track record, later invested in one of the seven funds managed by Mr. Kelsoe.

Mr. Kelsoe’s big returns, though, depended heavily on the good fortune of borrowers such as Mr. Rodriguez.

Through various of his funds, Mr. Kelsoe invested nearly $8 million in one of the Soundview 2005-1 trust’s riskiest pieces. The B-3 tranche, as it was called, offered a return of at least 3.25 percentage points above the London interbank offered rate — a key short-term rate at which banks lend to each other. But if borrowers like Mr. Rodriguez began to default on their loans, any losses exceeding 1.25% of the entire loan pool could eat into the value of the B-3 tranche.

In February 2006, at least one borrower in the Soundview 2005-1 trust had a big piece of bad luck. After pulling into a Waste Management repair facility in the Denver suburb of Commerce City, Mr. Rodriguez detached the trailer from his 18-wheel rig but forgot to set the brake on the tractor. The tractor rolled across a street and hit a parked pickup truck, causing about $2,000 in damage. Soon afterward, says Mr. Rodriguez, Waste Management fired him. “They considered that a critical rollaway,” he said. Waste Management confirmed that Mr. Rodriguez no longer works for the company, but declined to provide details.

“Ten seconds can change your whole life around,” Mr. Rodriguez says a friend remarked to him recently.

Mr. Rodriguez took on odd jobs, working on a paving crew and in a bakery. But his income fell to about $1,800 a month in 2006. To make matters worse, the monthly note on his mortgage reset to more than $700 in November. He fell behind on the higher payments.

On Feb. 15, 2007, a Denver law firm, acting on behalf of the Soundview trust, began foreclosure proceedings against Mr. Rodriguez and his wife. The firm cited “failure to pay monthly payments of principal and interest” on an outstanding balance of $85,976.48, Colorado real-estate documents show. Mr. Rodriguez filed for bankruptcy protection on July 23, a move that extended the time he could remain in his home by several months.

Other borrowers in the Soundview trust also began to default on their loans. By June 2007, defaults had afflicted 3.44% of the loan pool, more than triple the level of a year earlier, according to people familiar with the trust’s finances. About four in 10 loans were at least 30 days in arrears — all in a period during which the U.S. economy was growing at a healthy pace and unemployment was low.

Because Mr. Kelsoe’s investment in the B-3 tranche was so sensitive to losses, its market price plunged. In fact, as trading in subprime-backed securities dried up amid a broader panic, Mr. Kelsoe, like other investors with subprime holdings, had difficulty figuring out what the investments were worth.

At the end of June, the latest information available, Mr. Kelsoe’s funds reported an estimated market value of the Soundview investment that was 35% below what they had paid.

A Morgan Keegan spokeswoman said Mr. Kelsoe wasn’t available to comment because he was focused on managing his funds.

At the end of August, Mr. Kelsoe’s Select High Income Fund posted a loss of nearly 28% for the month — dead last among its peers for the year and for five years as well, according to Morningstar. The fund also postponed filing an annual report until earlier this month. When the fund filed the report with regulators on Oct. 4, Mr. Kelsoe said in a note to shareholders that the bond markets’ ”ocean of liquidity has quickly become a desert.”

In a letter to a Memphis newspaper, Charles Reaves, an attorney who had invested in one of Mr. Kelsoe’s funds, wrote that Mr. Kelsoe was “hiding under his desk” and “should have the fortitude to face the public and explain…what he intends to do.”

Things haven’t gone much better for the mortgage units at CIT and RBS — though they did profit handsomely during the good times. CIT, citing a “problematic outlook” for the business, in July announced plans to shut down its mortgage business and lay off about 550 employees. A CIT spokeswoman says its mortgage portfolio performed better than peers.

Morale at RBS Greenwich had suffered in recent weeks as employees braced for layoffs. RBS Greenwich recently eliminated 44 of its 1,760 jobs.

In the first half of the year, total income for the company’s U.S. asset-backed securities business, which includes mortgage-backed securities, fell 23% to $614 million. An RBS spokeswoman said, “In common with all players, our operations have been scaled back to reflect the lower volumes of business across the industry.”

Late this summer, Mr. Rodriguez sat on a courthouse bench after his bankruptcy hearing. “I’m under a lot of depression to tell you the truth,” he said a day earlier, tears brimming in his eyes. A worried Mrs. Rodriguez said she feared her husband was suicidal.

Soon afterwards, the couple had vacated their home of 22 years and moved into a low-income apartment in northwest Denver

By June Fletcher
From The Wall Street Journal Online

During the boom years, books about striking it rich in real estate, as well as designing and decorating our abodes, were stacked up in bookstores like bricks. Now that the party is long over, more sober assessments on our national obsession with shelter are hitting the shelves.

“Craving Community: The New American Dream” by Todd W. Mansfield, Ross P. Yockey and L. Beth Yockey (Abecedary Press, 2007). Suburbia has been satirized as sterile almost as long as it has existed, but now it has a new label: Community Deprivation Syndrome. Drawing from sociological studies and adding anecdotes from themselves and others, the authors replow well-worn ground: that people were not meant to live in isolation — and that car-driven suburban land planning, along with the Internet, keep us in isolated cocoons, watching videos in our home theaters rather than going to the movies and having wine in our cellars rather than bars, locked away from our neighbors, rather than fostering healthy relationships in more nurturing village settings.

No news here; everybody’s already aware that we’ve been bowling alone for years. Some of the examples that the authors give, however — like the lonely condo owner who died and dried up into a mummy before his neighbors noticed he was missing — are compelling.

So what’s the answer? For many community planners, it’s a return to village life known variously as Traditional New Developments, New Urbanism and Smart Growth, ideas which have been tried, though not widely adopted, since the early 1980s. The book comprehensively reviews these attempts, though not with a very critical eye (not surprising, since the lead author, Todd Mansfield, helped lead the movement as president of the Walt Disney Company development division that created Celebration, one of the hallmark communities in this genre).

Making a walkable community that integrates all the necessities of life –including shops, offices, homes and green space — is an admirable goal. Why, then, isn’t that sort of plan now the norm? One reason is that it’s a strategic nightmare and daunting to all but the deepest pockets, both facts that this book glosses over. Similarly, achieving a satisfying integration of housing and services may not be possible when a community is first developed, no matter how well-intentioned the planners. The villages that the planners turn to for their inspiration, in places like England’s Cotswolds or Italy’s Tuscany, took centuries to reach their current forms.

Mr. Mansfield is chairman of the Urban Land Institute, which wrestles with the big questions of how communities should be made. So it’s not surprising that much of this book seems directed to developers, zoning officials and land planners, rather than homeowners, who really don’t have much say about whether a coffee shop will be built within walking distance of their home or whether their porch will abut their neighbors’. Nevertheless, the book is a well-researched review of the roots of suburban loneliness and sends a message that bears repeating to those who create our communities: It takes a village to make a village.

“House Lust: American’s Obsession with Our Homes” by Daniel McGinn (Doubleday, 2007). Given our lack of community and our isolation, it’s not surprising that Americans are obsessed about our homes.

Author Daniel McGinn, a Newsweek writer, adopts the persona of a naïf as he travels through familiar tropes — the new home, the cramped apartment, the flip, the ratty rental, the vacation house and the timeshare — interviewing builders, brokers, sellers, buyers and looky-loos across the country.

His goal, he says, is to understand why we babble on about our abodes at cocktail parties, TiVo home and design shows, keep track of celebrity home sales, waste our weekends visiting neighbors’ open houses and ripping out our own drywall to install the latest shower spa, and sneak time looking at Internet listings of island homes at our office desks — in short, why we’ve become almost pathologically fixated on shelter.

Part of the reason is financial, of course, as homeowners increasingly see their homes as nest eggs rather than just nests, but as Mr. McGinn observes, it’s more than that: the renovators who show off their remodeling pictures as aggressively as some parents show baby pictures, McMansion owners who decide they can’t live without two dishwashers, middle-class workers who decorate their vacation homes to appeal to renters, then decide they can’t bear to have strangers staying in them.

Mr. McGinn’s  reporter’s eye is sharp and often touchingly funny, as when he recounts how a solemn kindergartner told his parents, wrangling over a botched home-theater installation, “Guys, you have to calm down.” But as entertaining as his Candide-like tour of the housing landscape is, the meaning of it all is missing. As Mr. McGinn writes in his final chapter: “For decades, owning a house has been marketed as the American Dream — and as anyone knows who’s woken up halfway through a surreal, incoherent narrative knows, dreams don’t always make sense.”

In that case, why write a book at all?

– June Fletcher is a staff reporter at The Wall Street Journal and the author of “House Poor” (Harper Collins, 2005). Her “House Talk” column appears most Mondays on RealEstateJournal.com. Email your questions about the residential real-estate market. Please include your name, city and state. If you don’t want your name used in our column, please indicate that. Due to volume of mail received, we regret that we cannot answer every question

By Amy Hoak
From MarketWatch

BOSTON (MarketWatch) — The Mortgage Bankers Association predicts the housing recession will last until the end of the third quarter next year. And if confidence isn’t restored in the credit markets, the wait could extend until 2009, the group’s chief economist said.

In the meantime, the slowdown in housing has become a primary cause in the slowing of the national economy, said Doug Duncan, chief economist of the group.

“Tough times,” he said, after sharing the group’s loan production estimates during a briefing with reporters on Tuesday. Tough times indeed

On Wednesday morning, Duncan is scheduled to deliver the MBA’s economic forecast to its members at the group’s annual convention. The forecast calls for home sales to bottom out in the third quarter of next year and for housing starts to hit their bottom slightly earlier, in the second quarter.

Existing-home sales for 2007 will total 5.72 million units, a 12% decline over 2006 sales, he said. Sales will decline another 10% in 2008, before picking up by 5% in 2009.

New-home sales will total 819,000 units in 2007, down by 22% compared with 2006. Sales will also decline an additional 10% next year. In 2009, sales should rise by 6%.

Home prices for new and existing homes will follow suit, with national median prices declining 2% this year and another 2% in 2008, before flattening in 2009, Duncan added.

“We have a ways to go in the housing recession. It is clearly a deep recession; at this point, we figure that will dissipate at the end of the third quarter,” he said.

Supply and demand

Local real-estate markets will vary, but overall there’s a great deal of housing inventory that needs to diminish before housing recovers, Duncan said.

“Anyway you look at it, there are massive supplies of homes that have to be worked off the marketplace before we return to an increase in activity, and certainly in terms of construction,” he said.

In fact, the publicly reported inventory numbers are likely underestimated, considering they don’t include contract cancellations for new homes or foreclosed properties that aren’t being marketed by a real estate agent, Duncan said.

On the demand side, there are also constraints, he added, as a restricted supply of credit and tightening lending standards curtail housing demand. Borrowers seeking nonconforming loans are especially facing tougher times getting a mortgage, including those who need jumbo loans, which exceed the conforming loan limit currently set at $417,000. Conforming loans are those that may be purchased by housing agencies Fannie Mae and Freddie Mac.

That said, borrowers of conforming loans shouldn’t see too many surprises in the near future: The last MBA estimate of mortgage rates clocked the interest rate on a 30-year fixed-rate mortgage at 6.4%, and the group predicts the rate will rise only slightly, to 6.6%, by early 2008.

Industry outlook

As for the mortgage industry, the market conditions naturally amount to sharp declines in the volume of loans that can be made.

The group predicts that total mortgage production, including both purchase and refinance loans, will be $2.31 trillion in 2007, down 15% compared with 2006. Originations should decline another 18% next year. In 2009, they will drop an additional 6%, as purchase loans pick up but loans to refinance an existing mortgage decline.

Already, the industry has seen between 60,000 and 70,000 layoffs since housing markets in many areas turned south; by early next year, the number could reach 100,000 or more, Duncan said.

Overall economic growth will continue to slow through the rest of 2007, then should return to normal in the second half of 2008 and into 2009, according to the forecast. Also in the forecast: a quarter-point rate cut by the Fed, due to the spiking of energy prices, increasing of food costs and other stresses on household budgets, in addition to the decline of housing prices, Duncan said.

“We have not yet seen fully the impact of the credit shock to the U.S. and world economies,” Duncan said in a news release announcing the forecast, “and the severity of that impact will depend on how long it takes for the markets to return to normal functioning and where credit spreads ultimately settle.”

By Kemba J. Dunham and Rachel EmmaSilverman
From The Wall Street Journal Online

During the height of Las Vegas’s real-estate boom two years ago, property investor Rob Rozzen bought 16 homes, hoping that skyrocketing prices would pump up his retirement nest egg.

Now, Mr. Rozzen says he is considering filing for bankruptcy protection. As the housing market slowed, the 40-year-old was unable to sell the homes, and his full-time job as a real-estate agent was no longer able to support mortgage payments totaling $45,000 a month. So one by one, over the past 14 months, Mr. Rozzen has stopped making payments on his investment properties, for which he paid between $226,000 and $390,000, and lenders have foreclosed.

As a result, Mr. Rozzen’s credit score plunged from 730 to the high 400s, he says. The Prada clothes, luxurious vacations, and full-time housekeeper and pool cleaner he once enjoyed are things of the past. Still, he says, walking away from his investment properties was his only option. “You get to a point where your hands are tied,” he says.

A growing number of investors like Mr. Rozzen are making the drastic decision to walk away from their properties and ultimately send their homes into foreclosure, lenders and real-estate agents say. Many investors who were hoping to quickly flip their investments are now left with homes that can no longer be sold for more than the mortgage debt. In many cases, these investors can’t even find tenants willing to pay enough rent to cover hefty mortgages.

Certain data point to the trend. According to an August study by the Mortgage Bankers Association, defaults on mortgages where the owner doesn’t live in the house are a major driver of the defaults in Florida, Nevada, California and Arizona — four of the states with the fastest rising rates of seriously delinquent loans. Defaulted mortgages are defined as those 90 days or more past due or in foreclosure, according to the study.

But walking away from a mortgage is almost always a bad idea. You can lose your ability to take out future loans, and you might find the lender coming after your personal assets, such as your principal residence, depending on your state’s laws and the terms of your loan.

“A lot of these people can’t think clearly because the level of financial distress is so great,” says David Dweck, president of the Boca Real Estate Investment Club in Boca Raton, Fla., who is also a Realtor. “They’re hoping [that by taking this step], it’s going to work itself out.”

Tom Crossett is one investor on the verge of walking away from his properties. At the height of Florida’s condominium boom two years ago, the 53-year-old air-conditioner contractor from Delray Beach, Fla., bought four units with the plan to flip them quickly. He paid between $143,000 and $173,000 for the units.

Mr. Crossett now says the developer of the complex that sold him the converted-from-apartment units reneged on many of the promises, including extensive renovations, making them a tough sell. To help make monthly mortgage payments totaling $4,000, he’s been stuck renting the units to tenants who make sporadic payments. He says that next month, he plans to cut his losses and stop paying the mortgages. “The only way I can see for me is to just get out, stop the bleeding and let them go,” Mr. Crossett sighs.

Before walking away from a mortgage, legal experts say, investors should approach a lender about a possible loan “workout,” in which the mortgage payments are reduced but the investor gets to keep the property. Some investors say they have tried this, but without success. Still, banks don’t typically want to act as property managers, nor do they want to have high foreclosure numbers on their books.

“There is a real incentive for both lenders and borrowers alike to do a workout and avoid foreclosure. Lenders are not good at being homeowners,” says Fred Witt, national director, real-estate tax services, at Deloitte Tax LLP, in Phoenix.

One of the first effects of walking away from a mortgage is an assault on one’s credit. The foreclosure could remain on your credit report for years and will sharply reduce your credit score, experts say. “This makes it more difficult or extremely costly, and in some cases impossible, to do more financing in the future,” says Jack Guttentag, a professor of finance emeritus at the Wharton School of the University of Pennsylvania who operates a mortgage-advice Web site.

In some cases, lenders can go after an investor’s other assets to satisfy a loan if the borrower defaults. But that often depends on the loan agreement, which sets out what recourse the lender has in the case of a default. In a nonrecourse loan, lenders can take only the property itself to satisfy the debt. Most loans, however, are recourse loans, which means that the borrower’s other assets may be at risk.

Individual investors may even be on the hook if they borrowed through a limited liability company or a partnership. Principals of LLCs, or general partners of partnerships, can be personally liable if they act as guarantors; lenders often require personal guarantees as part of the loan agreement.

“Banks want the individuals on the hook,” says New York lawyer Gideon Rothschild. Partnerships and LLCs are good to “protect you against slips and falls on your property,” adds Jay Adkisson, a Newport Beach, Calif., lawyer, but they offer little protection if a lender requires you to sign a personal guarantee.

What’s more, whether other assets, such as insurance policies and personal residences, are shielded from creditors varies widely by state. In Florida and Texas, for instance, your home, life-insurance policy, annuity or retirement plan are generally shielded from creditors. California, by contrast, offers much less protection for debtors. (More details about your state’s laws are available at www.assetprotectionbook.com/state_resources.htm.)

Of course, investors can take steps to shield their assets from creditors. But setting up fancy structures, such as offshore trusts designed to keep property off limits from creditors, typically only works if done before creditors appear on the horizon, says Beachwood, Ohio, lawyer John E. Sullivan III. Similarly, assets in a 401(k) are generally protected from creditors if the plan was already in existence. “If you plan when the coast is clear, you should be OK,” says Mr. Sullivan. “If you choose to wait, it could be too late.”

Mr. Adkisson, the Newport Beach, Calif., lawyer, says he has received about 30 calls a week in recent months from real-estate investors seeking to shield their assets, just as lenders are beginning to chase after them. “There’s just an absolute flood of people seeking asset protection, and it’s all after the fact. It’s like buying auto insurance after the car wreck.”

There are a few things you can do to protect your money even as creditors are moving in. One idea: Move to Florida and buy a big house. As long as you can stay out of bankruptcy and qualify for Florida residency, a creditor can’t force the sale of your home under Florida law, says Mr. Rothschild, the New York lawyer, who adds that the tactic won’t work under new bankruptcy rules if you’re forced to file for bankruptcy protection.

Investors who face foreclosure may be left with a big federal tax hit, says Mr. Witt, of Deloitte. That’s because, in a recourse loan, the amount of the loan forgiven by the lender, in excess of the property’s fair market value, is typically taxed as ordinary income to the taxpayer, he says.

The tax code does offer some relief, but only if the loan is forgiven during bankruptcy proceedings or if the borrower was insolvent immediately before the loan was discharged. However, it’s tough to prove insolvency, since the Internal Revenue Service considers many assets, such as 401(k) retirement plans, in determining whether a borrower is insolvent. “These assets are typically exempt from creditors, but not for tax purposes,” says Mr. Witt.

One option to avoid, if possible: filing for bankruptcy protection. Laws passed in 2005 make it much tougher in some cases to protect certain assets, such as your primary residence, from creditors during bankruptcy.