Smart Real Estate Investing

Long-term mortgage rates rose slightly last week in anticipation of another interest rate hike from the Federal Reserve.

The average rate for 30-year fixed-rate mortgages crept up to 6.12 percent from 6.10 percent in the prior week.

In the year-ago period, the 30-year mortgage averaged 5.66 percent.

The average rate on 15-year fixed-rate mortgages rose to 5.70 percent from last week's average of 5.67 percent. A year ago, the loan averaged 5.02 percent.

Five-year adjustable-rate mortgages averaged 5.75 percent, unchanged from the previous week. In the year-ago period, the five-year averaged 5.02 percent.

One-year adjustable-rate mortgages averaged 5.20 percent, compared to 5.18 percent from the week before. At this time last year, the one-year loan averaged 4.18 percent.

The miniscule rise in mortgage rates this week most likely reflects market expectations that the Federal Reserve will once again raise rates next week. Last week, mortgage applications for home purchases were stronger than last December's average."

Everybody wants something for nothing, and as housing markets slows, homebuyers are starting to get just that. Sellers, reluctant to drop home prices, have been finding creative ways to move product. The trend is especially evident among developers and homebuilders who have to act much more decisively than individual homeowners who have the option of sitting tight.

Some recent freebies include trips to Las Vegas, home-entertainment and security packages, furniture store gift certificates, golf club passes for a year -- even swimming pools.

But it's the non-price incentives that attract the public's fancy and 40 percent of the builder's NAHB surveyed are offering optional items at no extra charge to help close deals. A year ago, only 28 percent were doing it.

Bamboo? A standard option?
The offers can be anything from hardwood floors to upgraded lighting, but the most popular incentives seem to revolve around the kitchen, according to Melman. Granite countertops, commercial quality appliances, and wine storage all appeal to buyers. A relatively new option, bamboo floors, has recently emerged as a deal maker.

One builder, is giving away a two-year lease on a Volkswagen Beetle with a home purchase. That's right, these houses come with their own Bugs.

A Michigan-based homebuilder, is paying the heating bills for six months to anyone who buys a home in one of its Maryland developments. He also will throw in a free-gas fireplace, hardwood floors, upgraded cabinets, and a washer/dryer -- and a 42" plasma TV.

Apparently, though, the deal may sound better than it actually is and all but the plasma TV were already standard in the houses.

The incentive ideas keep, shall we say, flowing. A show where many homebuilders showcased their free upgrades was conducted. The incentive item that caused the biggest, splash, was an upgraded Kohler bathroom that included a toilet that had number-one and number-two buttons.

The average U.S. home price rose 12.2 percent for the 12 months through Sept. 30 from a year earlier.

While that was a solid gain, it was slower than the 14.2 percent increase for the 12 months ended June 30.

Average prices in the third quarter rose about 2.9 percent compared with the second quarter, versus a gain of 3.4 percent in the comparable periods last year, the group said.

The numbers come as some other recent reports have pointed to a slowdown in the nation's red-hot real estate market. Some economists are forecasting a further slowing in 2006, which could have broad implications for the economy and the job market.

Every state showed increased housing prices. Home prices in the state with the slowest growth, Michigan, were up 4 percent.

Over the past five years, the District of Columbia beat all 50 states, with growth of overall growth of 119 percent. In the third quarter, the gain was 20.5 percent.

Nevada price growth slowed appreciably, down more than 10 percentage points to 17.6 percent from 28.6 percent.

Among metro areas, Phoenix continues red hot; prices there climbed 34.4 percent. Cape Coral/Fort Myers prices jumped 33.2 percent, good enough for second place.

For the first time since 2003, Nevada has no metro areas in the top 20. Las Vegas home prices grew 13.8 percent during the past four quarters, which placed it 77th.

Mansfield, Ohio, was ranked last among cities, with growth of just 0.8 percent. The next closest city, Greeley Colorado, was at 2.2 percent.

Although many overheated U.S. housing markets lost steam during the third quarter of 2005, most still grew less affordable.

Overall, 37 markets were found to be severely overpriced, which meant that they were at least 15 percent more expensive than they should be, and only 6 were underpriced by 15 percent or more. Fifty-seven were deemed to be farily priced.

While the slowdown in price increases seem to indicate the market has peaked, some regions, especially in the red-hot Sunshine State, continue to experience accelerating home prices.

These included Naples, Fla. where prices increased 32 percent in the 12 months through the end of the third quarter.

Nearly half of all first-time U.S. homebuyers took title to their properties without putting a cent down, an industry group says.

The National Association of Realtors said Wednesday that 43 percent of first-time homebuyers purchased their homes with no-money-down loans, USA Today said.

The NAR hinted that the trend is worrisome. As the real estate market cools in some areas and adjustable-rate loans increase, some buyers in that 43 percent group could end up owing more than their houses are worth.

According to Dean Baker of the Center for Economic and Policy Research if housing prices fall at least 10 percent, it could result in an economic crash. Lenders have pushed a series of creative but potentially dangerous loans to help more people afford a home.

Was that House a Good Investment? The Answer may not be so obvious
By Gary Beasley

I get asked all the time about housing as an investment, and as I talk with people it is amazing how differently people look at it. Forget investment property for the moment and consider how we should evaluate the investment performance of our own homes. I am surprised how many people don’t know the difference between “enterprise value”, which is the sales price of a home (debt plus equity), and “equity value”, which is what is left at the end of the day when you sell your home and pay off the mortgage. In determining whether this was a good investment for you, it is only the latter calculation that matters.

Most people simply look at how much the value of their home has appreciated since they bought it, and compare it to what they paid. Let’s say someone bought a home for $500,000 a year earlier and their neighbor’s identical home just sold for $550,000. Simple math would suggest a potential 10% return in one year (a $50,000 profit on a $500,000 purchase). This, while straightforward, is not an accurate calculation for several reasons.

First, it is critical to factor in transaction costs on the sale of your home and deduct them from the gross sales price to see how much of the sales price you have left. These include what it might cost you to prepare the house for sale (painting, landscaping, staging in some cases, etc.), as well as real estate commissions and other transaction related costs. Let’s say in our hypothetical example our seller would invest $10,000 in sprucing the place up for sale, and the real estate commission plus other closing costs on the hypothetical $550,000 sale might be another $33,000 (say 6% of the sales price). Thus that $550,000 sales price results in only $507,000 after these transaction-related costs, implying a mere 1.4% return ($7,000 profit on a $500,000 purchase price), right? Wrong again.

To calculate your investment return you need to compare your profit (or loss) to the equity you have invested, not the entire home price. Let’s say you put 5% down to buy the home, which equated to $25,000. Your $7,000 profit in this case actually represents a very attractive 28% return on your investment in only one year. One way smart homeowners can increase their returns is to appreciate how much the return on their invested equity can be enhanced by saving say 1% in the agent’s listing commission. In the example above, a 5% sales commission vs. 6% would have increased our hypothetical seller’s return on their $25,000 of equity investment from the 28% we just calculated to an astonishing 50% ($12,500 profit on the $25,000 investment).

A couple of basic takeaways from this: First, make sure to factor in all costs of a transaction. Second, understand the difference between the aggregate home value and the equity you have invested in the home, which is what impacts your true economic return. Third, appreciate the impact sales-related costs can have on your return. While a $5,000 commission difference seems relatively insignificant in the context of a $550,000 home sale, it is VERY significant in relation to the equity investment in your home, which is the basis of determining your return on your investment.

Gary Beasley writes for ZipRealty (http://www.ziprealty.com)

Cecelia G. Taylor (Product Strategy Manager)
Tel : 510-735-2631 Fax: 510-735-2854
Email: ctaylor@ZipRealty.com

Rural Modoc County has California's cheapest real estate. But its remoteness and lack of jobs make 'affordability' a relative concept. In California's most remote corner, the air is crisp, the sweeping plains and towering peaks inspire awe, and the median home price just crested $100,000 for the first time.

Modoc is California's only county where the median price of a home has stayed so low for so long. It is the least expensive nook in one of America's priciest states, a place where home buyers live out the pluses — and many of the minuses — of that elusive concept, "affordability."

In rural Modoc, a snug blue house on downtown's Court Street — complete with two bedrooms and a bath — was recently listed at $84,000.

But even in Modoc County, the self-proclaimed "last best place" — closer to Boise than San Francisco, with more slogans (four) than people per square mile (two) — the median home price is rising fast.

In 2000, the U.S. Census Bureau ranked the Modoc median price at $69,100. By the third quarter of 2005, the median — the price at which half of all homes sell for more and half for less — had jumped 40% to $96,500, according to DataQuick Information Systems, a research firm that tracks property transactions. Preliminary figures indicate that the median home price was about $116,000 for the last three months of the year.

Statewide, the median is estimated at $458,000 for the same period.

Affordability used to be a tangible concept that allowed the real estate industry to predict what buyers would do. That was back when mortgage companies required big down payments and wouldn't allow households to spend more than 35% of buyers' take-home pay to cover monthly housing costs. It was before low interest rates, soaring home prices and creative financing. But these days — and especially in this place — affordability has become a slippery concept.

Mortgage rates fell last week, in part due to signs of easing inflation pressures.

The average rate on 30-year fixed-rate mortgages dropped to 6.15 percent, from 6.21 percent last week. In the year-ago period, the 30-year mortgage averaged 5.74 percent.

The average rate on 15-year fixed-rate mortgages fell to 5.71 percent from last week's average of 5.76 percent. A year ago, the loan averaged 5.19 percent.

Five-year adjustable-rate mortgages averaged 5.76 percent, down slightly from 5.78 percent the previous week. In the year-ago period, the five-year averaged 5.05 percent.

One-year adjustable-rate mortgages averaged 5.15 percent, compared to 5.16 percent from the week before. At this time last year, the one-year loan averaged 4.10 percent.

Interest rates for long-term mortgages slipped lower this week due to some economic data releases that pointed towards more subdued inflation in the near term. However, shorter-term rates, such as those for adjustable-rate mortgages, were basically unchanged due to market expectations of another rate hike by the Federal Reserve Board at the end of January.

The January forecast calls for a gradual rise in long-term rates throughout 2006, ending the year at about 6.5 percent for the 30-year fixed-rate mortgage, while relative rate differences with adjustable-rate mortgages will narrow.

There are three different ways that a homeowner can build equity: 1) paying down mortgage principal, 2) making home improvements, and 3) through home appreciation.

Building Equity by Paying Principal on Your Mortgage
When you think of building equity, many people think that the only way to do so is to pay principal on their mortgage. There are two basic elements that make up your mortgage payment: principal and interest. Interest is the fee a lender charges for permitting the borrower to use their money for a specific length of time. Principal is the amount borrowed from the lender, excluding interest.

And while you do build equity by paying down your principal, there are additional ways to build equity.

Building Equity by Making Home Improvements
A second way to build equity is to make home improvements. This can be anything from making repairs (re-shingling the roof, repairing or replacing a faulty water heater, etc.) to upgrading your home (kitchen renovations, room additions, etc.).

By improving the condition of your home, you increase the value of the home, thereby increasing your equity. Let's say you have a home that's currently worth $100,000. You still owe $50,000 on that mortgage; therefore you have 50 percent equity. Now, let's say you add on a new room that brings the value of the home to $125,000. You've just increased your home's equity by 50 percent.

Keep in mind that the increase in home value depends upon the type of improvement you make to your home. You shouldn't get too fancy as this can have a negative effect on the resale value. Plus, once you make the improvement, it takes a little while for the value to appreciate.

Building Equity by Home Appreciation
A third way of building equity which some people might overlook is by home appreciation, or the increase in market value of real estate. When the rate of home appreciation goes up, the value of homes goes up. If your home is worth $100,000 and the rate of appreciation rose five percent, your home is now worth five percent more and you've just increased your equity.

In recent years, interest-only loans have become quite popular. However, there is still concern among homeowners that by paying only the interest on an interest-only mortgage, you're not building equity. This is not necessarily so since you can also build equity through home appreciation.

Homeowners are becoming more educated about their mortgage options. While an interest-only home loan is not for everyone, it is good for those who know how to manage their money and may be less interested in building equity and more interested in funneling their finances elsewhere. Homeowners in an interest-only mortgage don't have to pay only the interest. An interest-only mortgage just gives them the option to pay only the interest or as much principal as they like on top of the interest.

As a homeowner, it's good to remember that there are alternative ways to build equity besides just paying down your mortgage principal. But even if you feel the best way to do this is by paying down principal, it can't hurt to talk to a mortgage banker. They can give you more information and help you figure out if your current mortgage is really the right one for your current situation.

A housing-price drop would not be bad for everyone. In fact, many canny real-estate investors have been hoping for just such a hit.

It is said you do it by buying low. Investors can build up rental property portfolios more easily in down markets -- if their initial pay out is smaller, they can more likely turn a profit on rents. You always want an investment property to make money from the get-go.

That means that rents must exceed expenses every month. It's even more important when prices are falling than when they're going up.

If you don't buy a rental right by the time you pay the maintenance, insurance, taxes, and everything else, you won't have any money.

Many investors who bought in at the top may not have the resources to ride out a bust and they'll be forced to sell out or even give their properties back to the banks.

In falling markets, people need to sell their homes more quickly.

Foreclosures become more common because there's little benefit to the property owner to cash out before it reaches the foreclosure stage; they may owe more than the property is worth. And foreclosures can pile up in local markets causing a spiraling down of prices and providing opportunities for bold investors.

The question becomes: How do you know when the price is right?

Investors must familiarize themselves with statistics and crunch numbers before they buy. They have to know what a home can command in rent and how long it takes to rent a property. A key stat is the "cap rate," which is a percentage based on the annual rents you can collect, minus expenses, versus the property value.

The lower the price the greater is the margin of safety. Falling markets can even sometimes have a positive effect on how much landlords can charge for rents by increasing the demand for rental units.

Investors should watch markets carefully for the next six months. Mortgage rate increases could lead to a market slowdown or turnaround. Advice for anyone looking to invest in rental properties is to be "in cash." That way, they can act quickly to snap up some bargains.

If the trend is toward bubble burst, those smart investors may be gearing up for a shopping spree.

Overall, house prices are still rising, but at a slower pace.

China's recent signal that it may diversify its foreign investments in 2006 has mortgage industry watchers concerned that if China buys fewer U.S. Treasury securities this year, it may drive interest rates higher and pour more cold water on the real estate market.

Last week, China's foreign currency regulator said its plans for 2006 include "actively exploring more efficient use of our FX (foreign-exchange) reserve assets" and "widening the foreign exchange reserves investment scope." While China's central bank said Tuesday it has no plans to sell dollars from its $800 billion-plus foreign reserves, some analysts predict China may buy less U.S. government debt at Treasury auctions this year.

Like Japan, China is a large buyer of U.S. Treasuries and other U.S. debt such as securities issued by housing agencies Freddie Mac and Fannie Mae. China sees the U.S. debt market as stable and liquid versus other countries' debt and its purchases have helped keep U.S. interest rates relatively low in recent years.

While it is not certain exactly how a drop in China's demand for U.S. government debt would show up, it is believed there could fewer purchases of five- and 10-year U.S. government notes at regular U.S. Treasury auctions.

As a result, there may be somewhat higher yields ... over time. He added that China likely won't completely exit the U.S. government debt market, but merely pare back its buying.

While China has signaled a shift in its buying patterns, it likely won't completely abandon U.S. dollar denominated assets like debt issued by Fannie Mae and Freddie Mac.

China's central bankers have a choice of investing the U.S. currency in dollar denominated assets like U.S. Treasury bonds or they can trade the dollars for other currencies.

If they diversify from the U.S. dollar denominated assets, it would lower the value of the U.S. dollar relative to China's currency, the yuan, and make it more expensive for American companies to buy goods made in China.

While mortgage rates today are up from their record lows, they are still much lower than the double digit rates seen in the 1980s. But there are signs that higher borrowing costs already are weighing on sales.

The change in China's buying of Treasuries should result in a marginal increase in mortgage rates, David Olson of Wholesale Access, a firm that tracks the mortgage banking industry, believes mortgage rates could be as much as half a percentage point higher.

It is reported that the risk of a housing bubble in the U.S. market is highly localized as supply is still catching up with demand in most of the country.

It is also reported that there will be a softer real estate market in some areas as a result, but there is no bubble. The fact remains that even with the gains of the past five years, American residential real estate prices in relative terms are among the cheapest in the world. A few areas in the U.S. market are suffering from oversupply.

It appears that investments are still not being made in China due to the risk of involved and investors have mostly pulled out of eastern Europe -- in particular Russia -- because the "risk to reward ratio is too high."

"The best ratio is still to be found in Mexico and the South," he said, reiterating criticism of Mexican legislation for real estate investment trusts (REITs).

Mortgage rates have been on the rise for the past month, but they're still at fairly low levels historically speaking.

If you're in the market for a new home, you figure it must be less expensive to buy now than when rates go up even further, assuming housing prices stay strong in the near term, something economists expect will happen. That may be the only thing you can be sure about.

But finding the best type of mortgage for your situation can feel a little like finding the perfect ecru in a sea of beige.

Ask yourself the right questions, so you at least can narrow your search to the best category of mortgage for which you need to comparison shop.

The first question you should ask is, "How much can I afford to pay on a monthly basis?"

Keep in mind, your mortgage payment is only part of what you'll pay to live in your home. You also should budget for furniture, your house's upkeep and the general expenses of life (like, say, food).

A 30-year mortgage will have a lower monthly payment and a higher interest rate than a 15-year mortgage. So you'll have a smaller monthly obligation but you'll pay more for your house over time because you're paying it off with interest for a longer period. Conversely, a 15-year mortgage will have a higher monthly payment and a lower interest rate so you'll pay less for your house because you're paying it off in a shorter period.

"For most home buyers, especially first-time buyers, taking a 15-year (or 20-year) mortgage is amost impossible. The higher monthly payments are often too much to handle for these types of buyers. But for home buyers with sufficient income and a desire to be mortgage-free in a short time, a 15-year loan might be a good bet.

The second question you should ask is, "How long will you be in the house?" You probably can't answer with absolute certainty, but you can play the odds.

Say, for example, you're single and buying a small condo but you can easily envision yourself married; or you've just started a family and plan to expand it at some point. Chances are good you'll want to trade up to a new home in five to seven years. On the other hand, maybe you've had your family and want to settle into a place with a good school system, which your kids will be using for the next 12 years. Whatever the answer, it will help you decide whether it makes sense to get a fixed-rate or an adjustable-rate mortgage (ARM).

A fixed-rate mortgage locks in a rate for the length of your loan.

ARMs, meanwhile, are short-term fixed-rate loans: After the fixed rate term is up, the rate adjusts at regular intervals in accordance with current interest rate conditions at that time. A 5/1 ARM, for example, has a fixed rate for five years and then adjusts every year for the next 25 years. (ARMs typically run on a 30-year schedule.)

The length of the fixed-rate term on an ARM typically can range anywhere from one month to 10 years. The longer the rate is fixed, the higher the interest rate you'll get. But generally speaking -- and there have been exceptions in the past -- ARMs will cost you less in the short-term. With the ARM, both your monthly payments and interest rates should be lower than either a fixed rate 15-year or 30-year mortgage.

The risk with an ARM is that when interest rates rise, you could end up paying much more than you bargained for. That's why in today's low-rate environment one should maximize the fixed-rate picture to match your time frame."

If you know you'll be in a home for 12 years or more, a 30-year fixed rate mortgage might work better for you than, say, a 5/1 ARM, where you fix a rate for five years and then it adjusts every year after that. But if you think you won't be in the home longer than five or six years, a 5/1 ARM might make more sense.

With a 5/1 ARM at 4.20 percent, your monthly payment would be $978 for the first five years. The total interest you pay over the life of the loan if you stayed in your home past five years is anyone's guess because your rate would then adjust annually. But if you move after five years, that won't be an issue.

A report surveying U.S. homebuilders suggests that a "moderate slowdown in certain regions of the U.S. housing market" appears more probable than a "deep-seated recession," the survey's conductors said Jan. 11.

The report also found several "fundamental shifts" that will lead to change in the homebuilding industry, including continued consolidation among homebuilders.

According to the study, land is increasingly scarce in desirable markets. As it is a critical commodity, land has the potential to cause the largest delays and create the most significant cost in development.

The study also found that children of baby boomers and immigrants are expected to lead overall growth in households over the next decade.

Mortgage rates started the new year without much of a bang, mostly edging lower in the latest week.

The average rate on 30-year fixed-rate mortgages dropped to 6.21 percent, a hint lower from last week's 6.22 percent as per a recent survey.

In the year-ago period, the 30-year mortgage averaged 5.77 percent.

The average rate on 15-year fixed-rate mortgages was unchanged from last week's average at 5.76 percent. A year ago, the loan averaged 5.21 percent.

Five-year adjustable-rate mortgages averaged 5.78 percent, down slightly from 5.79 percent the previous week. In the year-ago period, the five-year averaged 5.03 percent.

One-year adjustable-rate mortgages averaged 5.16 percent, compared to 5.15 percent from the week before. At this time last year, the one-year loan averaged 4.10 percent.

Financial markets paused this week, trying to decipher the December minutes of the Federal Reserve's monetary policy committee, which seemed to hint that the Fed might slow the pace of rate hikes in 2006.

The interest rate savings between 30-year fixed-rate mortgages and 1-year adjustable-rate mortgages fell about 0.6 percentage points to around one percentage point since the same time last year. This will likely slow ARM lending activity in 2006.

Sales of new condominiums reached record levels in the Washington area in 2005, according to a new report, but the supply of new condos has begun to outstrip demand.

That means that would-be condo buyers have many more choices than they had only months ago, according to local real estate agents. Shoppers are touring as many as 40 units now before choosing, enjoying the luxury of time to consider their options. That's a big change from when there were only a handful of properties available and buyers had to snap them up with little time for reflection, she said.

In 2005, 13,698 new condo units were sold in the area, up from 9,108 in 2004, according to the new report from Delta Associates, an Alexandria-based real estate information firm. Sales were particularly brisk in the fourth quarter of 2005, when 3,541 new condos were sold -- a record, according to the report -- up from 2,394 in the comparable quarter in 2004.

But far more units are being readied for the market, either in new projects or conversions from rental apartments. About 51,400 units were being planned or marketed for delivery within the next three years, Delta Associates found, up from 39,000 three months earlier. It appears some builders are proceeding with projects they have spent years developing, even as the supply of new units rises, in hopes their projects will be more successful than the competition.

Even with sales at record highs, there is so much product being delivered that the market has a different feel to it.

The condo market will continue to soften," according to the director for MetroStudy, a Houston-based real estate research firm that specializes in the new-home market. There are five times as many condo units for sale as there were a year ago.

During the housing boom of the past five years, the Washington area market has been among the nation's hottest, with the market for condos particularly superheated.

Condominiums, a form of dense, multi-family housing in which you own your own unit and a share of common areas, generally represent a lower-priced housing option. As single-family dwellings became very expensive during the boom, condos were especially attractive, even in suburban areas. And they were particularly popular with investors.

While the inventory of all housing for sale in the Washington area has risen over the past few months, the change in the formerly hot condo sector has been the most marked.

When the condo market was at its peak a year or so ago, investors flocked to buy units before construction with the intention of flipping them for a profit. Wenhold said he has heard that some of those investors are deciding not to go through with their purchases, giving up their down payments, to avoid being left holding units they cannot sell.

Some builders are likely to be unable to sell out their projects, and he speculated that some will end up in foreclosure. To help sales, condo developers are offering incentives, such as waiving condo fees for a time or helping with closing costs, Delta Associates found. Some builders are cutting prices as much as $30,000.

Much of the growth is coming in suburban Maryland, where several new projects are underway in Prince George's County. In the next three years, about 17,400 units will be built in suburban Maryland or converted from rentals into condominiums.

The pace of new condominium development is slowing somewhat in Northern Virginia, although it makes up the biggest share of the region's condo market, with about 24,000 units being readied for sale within the next three years.

Foreclosure.com announced Phillip Clark a 27-year financial and operational management veteran. He has joined the company as chief financial officer (CFO). Clark will oversee the financial management of Foreclosure.com, helping guide the company through its continuing efforts to expand its presence in the online real estate market.

"Today, the Internet and real estate are closely linked, creating enormous opportunities for us in the consumer, mortgage lender and mortgage servicing markets," said Brad Geisen, president, Foreclosure.com. "In 2005, we significantly expanded the company's staff -- 46 percent -- to improve the information and data on our Web site for our customers. Heading into 2006, we expect to continue our rapid growth by introducing even more advanced services to the lender and mortgage servicing markets."

Clark joins Foreclosure.com from Alliance Care, a multi-state healthcare company, at which he served as CFO for the past six years. Prior to Alliance Care, Clark held senior positions at healthcare consultancy, BDO Seidman, LLP, and was the founder and CFO of FirstChoice Health Care Services.

"Foreclosure.com, with its reputation and knowledge of the real estate and technology industries, as well as aggressive approach to penetrating new markets, is poised to continue its track record of year-over-year growth," said Clark. "I look forward to helping Foreclosure.com capitalize on exciting market opportunities through a strategic growth strategy."

The Indianapolis area ranks as the most affordable housing market among big metro areas, according to the third-quarter 2005 National Association of Home Builders Wells Fargo Housing Opportunity Index.

The index charts housing costs in cities with populations of more than 500,000. In Indianapolis, 89.7 percent of the new and existing homes sold in third quarter 2005 were affordable to those earning the area median income of $64,000. The median home price was $125,000.

Land is within financial affordability. While the area is affordable, it has a wide price range of homes, including $1 million-plus properties. There have always been good, steady increases in property values.

The other top affordable markets also were in the Midwest. Youngstown-Warren-Boardman in Ohio and Pennsylvania ranked second and Detroit-Litonia-Dearborn in Michigan ranked third.

Los Angeles was the nation's least affordable housing market, where only 2.4 percent of all homes sold were affordable to those earning the median income of $54,500. The median sales price in Los Angeles was $495,000. Among small markets, Mansfield, Ohio, was the most affordable housing market.