Focus on Real Estate

REALTORS® love their jobs

A recent Harris Interactive poll found that real estate professionals are among the workers most likely to be enjoying their dream job. Real estate professionals ranked fourth highest in job satisfaction, after police, firefighters and teachers. According to respondents, two of the most important factors in a dream job were having fun at work (39 percent) and making a difference in society (17 percent).

Of course, real estate isn't easy, and it isn't for everyone. According to the 2006 NAR Profile of Real Estate Firms, 27 percent of companies surveyed reported that at least one in every 10 of their licensees left the firm in 2005. Some studies indicate that turnover in the real estate industry may average near 50 percent within two years.

Young with money: your prime prospects

Keep an eye on the young-with-money set -- 18-to-35-year-olds with household incomes of $100,000 or more. They'll be good prospects, particularly for upscale homes, says Bob Jordan, president of International Demographics. The demographic represents 26.6 percent (6.2 million) of the 23.2 million adults with household incomes over $100,000 in the 87 metros regularly surveyed by The Media Audit, part of International Demographics.

The number of young with money also eclipses the age 55 and over bracket. "There are more -- by both percent and actual number -- adults with six-figure incomes under the age of 35 than there are over the age of 54," says Jordan. An analysis of Federal Reserve data by the National Association of Home Builders bears this out: Median income for 55-plus households is somewhat lower than it is for younger households.

Younger women aren't only more likely to buy a house, but they're also more likely to own a larger or more expensive home compared with men in the same demographic.

• 46.5 percent of women age 18 to 35 have homes valued at $300,000 or more.
• 42.2 percent of men have homes valued at $300,000 or more.
• 80.7 percent of women in this group own their home, compared with 74.3 percent of men. (REALTOR® Magazine Online)

Freddie Mac toughens subprime standards

Government-sponsored mortgage marketer Freddie Mac is the latest company to weigh in on the growing concern over lending to unqualified homebuyers, saying this week it's tightening its standards for buying mortgages held by such borrowers. The McLean (VA)-based company said it would start enforcing the new standards after Sept. 1, 2007.

For its part, Freddie Mac said that it would stop buying those mortgages that have "a high likelihood of excessive payment shock and possible foreclosure." Instead, the company plans to buy only subprime adjustable-rate mortgages, and securities backed by such loans, that have been qualified at the fully indexed and fully amortizing rate.

Freddie Mac also said it would limit the use of loans that don't require income verification or other documentation, and will recommend that lenders collect adequate escrow for taxes and insurance payments. Moreover, the company said it's developing new fixedrate and hybrid adjustable-rate mortgages with the aim of giving lenders "more choices to offer subprime borrowers."

The firm said its new requirements cover mortgages known as 2/28 and 3/27 hybrid ARMs, which currently make up about three-quarters of the subprime market. Specifically, Freddie Mac said it will require that borrowers applying for these products be underwritten at the fully indexed and amortizing rate, as opposed to the initial "teaser" rate -- often several percentage points below the actual rate for most of the life of the loan.

The company also will limit use of low-documentation loans, socalled "no income verification" products in combination with the 2/28 and 3 27 hybrid ARMs. In addition, the company won't purchase "no income, no asset" documentation loans and will limit so-called "stated income, stated assets" products to borrowers whose incomes derive from hard-to-verify sources, such as selfemployed persons and those who participate in the cash economy, the firm said in a press release.