More news that points to the slowing housing market: new home sales hit their lowest levels in 13 years, according to an article on CNN Money. This is yet another indication of a housing glut, and a continuing correction in the housing market. The drop in sales was much more than predicted by analysts.

Unfortunately for sellers, where there is a surplus, there is also a drop in price. This will not help support consumer confidence — especially after a week like this, where we saw the biggest one day decline on the stock market since 9-11. While markets are showing some resilience, no one is quite sure that the fallout from the Chinese market sell-off is over yet.

The drop in new home sales hit every region of the US; there was an 8.1 percent drop in the Midwest, and a 37.4 percent dive in the West. The
South, which normally accounts for more than half of the nation’s new home
sales (probably thanks to snowbirds), saw January’s pace off nearly 10 percent from the month before.

Is this a housing meltdown? I’m still looking for signs that I feel I can rely on, rather than following the analyst who seem to blow with the wind, or are biased because of their connection to the housing industry. Bias is tricky: do they want a housing bubble to burts or do they want the house prices to stay artificially high? This is the murk that I’m trying to see through.

Frankly, I want to sell my current property and buy, but doing that in the midst of a housing price crash could leave us in a pickle.

I do think that the health of lenders is a good indicator of how the market is doing. If subprime lenders (those who give loans to people with lower credit scores) start to topple at a rapid rate, then the chance of a housing meltdown is higher. Lenders topple because of foreclosures; higher foreclosures mean more properties on the market; a flood of properties means prices drop like rocks.

My personal favourite lender health site is the Implode-O-Meter. In just the last couple of weeks, another 4 lenders have bit the dust. Since December, 27 lenders in total have either gone out of business or have ceased to operate independently.

Personally, I’ve checked the financial health of my lender, and I’ll stay put with them. If you are wondering about your lender, check out A.M. Best. They provide financial ratings of lenders. If your lender seems shaky, you might want to consider moving your mortgage if the costs are not too prohibitive.

You can read on our site how to evaluate the pros and cons of moving a mortgage. Normally, you’d only do it to refinance or when the mortgage is due, but if you are with a subprime lender and might just qualify for a prime loan, it could be a good time to move now.

Michael Chantrel

Popularity: 3% [?]

Have you been offered a home worth $2 million for a paltry $1.5 million? If so, you could have been targeted for a house-flipping scam that focuses on investors, according to an article on Realty Times.

We’ve been following house-flipping and its demise for some time. With the market how it is, house-flipping in its preferred form (where the investor gets double digit gains just for holding the property for a relatively short time) has generally stopped working. However, this particular scam approach makes it seem like you’ve found a once-in-a-lifetime good deal. Here’s how it’s done:

This scam usually starts with a free seminar, hosted by a real estate company. Participants are asked to register with name, address, phone and social security number. If you provide them with your social security number, they have all the information they need to pull a credit report on you! If you have a great credit report and could qualify for a large loan, you’ll be approached by someone at the seminar.

Well before the seminar happens, the scam artists have found a property worth around $1 million that’s on the market and hasn’t sold.  A company rep has approached the sellers and made a deal with them to buy the property at the full list price of $1 million, as long as they take it off the market and re-list three months later at $2 million. Once this deal is made, a crooked appraiser is brought in to appraise the home for $2 million.

Then, at the seminar, the mark is approached by the speaker or some other accomlice to the scam. The “investor” is told of the great deal and how to get in on it. If the investor likes the idea and agrees to invest, the company does all the “work”. They get a loan for $1.5 million, pay the seller of the home $1 million, and get away with $500,000 for themselves. The investor is left with a home that is only worth $1 million in reality, and has lost $500,000 in the transaction.

I have to say, it’s easy to avoid this problem by following a few simple tips:

1. NEVER give your social security number to anyone except the tax man and your bank.
2. Avoid “free” real estate or other investment seminars. They are usually designed to sell you something — and may be the fronts for one or more scams.
3. Always get your own mortgage. Make sure the mortgae is directly between you and the lender. This scam could not be completed without someone else getting in the middle of the loan process.
4. If something seems too good to be true — it likely is! Why would anyone sell you a home that is worth more than you are paying and not have done that themselves?
5. Research any home or property that you intend to buy. MLS listings can be accessed from the internet. You don’t have to be taken advantage of if you arm yourself with some information.

Investing in real estate is a great way to build financial wealth and security. Just do it the smart way.

Michael Chantrel

Popularity: 3% [?]

I’m not joking: the same thing that’s happening to North American farmland because of corn and canola is happening in Ghana because of the jatropha seedpod. According to an article in the Toronto Star, Norwegian, Indian and British companies are already swooping down on the African continent to buy up African farmland. They are betting that jatropha seedpods — the only crop that makes biodiesel and is not a food crop — will soon be big business.

Jatropha is an interesting crop. It’s poisonous. Africans use the oil from the seedpods to make soap and the organic waste for fertilizer cakes. But those seedpods will make a diesel fuel that burns cleaner than any fossil fuel.

On top of that, jatropha grows where other things don’t, in some of the worst conditions on the planet. With most plants, drought would be a problem. Not for jatropha — Africans have actually been using it to hold back the Sahara desert and the desertification process. It will continue to grow seedpods even when it’s dropped its leaves to cope with lack of moisture.

It’s also extremely long lived. Plant today and your grandchildren may still be harvesting: it will grow for 50 years.

The big news? Major oil distributors are paying attention to this crop. Jatropha could potentially replace crude oil, lift African populations from desperate poverty and even turn the African continent into a big player in oil.

How? Well, scientists have estimated that even if 1/4 of Africa’s arable land (and jatropha doesn’t really need “arable” land) was turned to the crop, output could be as much as 20 million barrels of jatropha oil a day. That could even meet America’s need for fuel oil.

There could be some hitches for the would-be investor. You get a tax deduction in the US for home mortgage interest. You won’t get that if you invest in African land. But you could get a good return. After all, the biodiesel and ethanol fuel push in North America has driven up the cost of farmland in Idaho by 35%.

So, want a hot tip on real estate? Buy African land.

Michael Chantrel

Popularity: 3% [?]