Sales of single-family homes increased by 2.8% last month to a seasonally adjusted annual rate of 870,000, the Commerce Department said Friday. June new-home sales fell 4.0% to an annual rate to 846,000; originally, the government said June sales dropped by 6.6% to 834,000.

The median estimate of 23 economists surveyed by Dow Jones Newswires was a 1.4% decline in July sales to an 822,000 annual rate.

Year over year, new-home sales were 10.2% lower than the level in July 2006.

The sickly housing sector has pulled down U.S. economic growth for six straight quarters. Groundbreakings by home builders in July fell to the lowest level in 10 years. Analysts expect the slump to continue. Lenders are tightening standards for borrowers, which sent up mortgage rates during the summer. Inventories of homes are running high.

Friday’s data showed the ratio of new houses for sale to houses sold slipped during July, falling to 7.5 from 7.7 in June. There were an estimated 533,000 homes for sale at the end of July, down from June’s 538,000.

The median price of a new home increased by 0.6% to $239,500 in July from $238,100 in July 2006. The average price decreased by 3.4% to $300,800 from $311,300 a year earlier. In June this year, the median price was $230,600 and the average was $304,900.

Regionally last month, new-home sales increased 22.4% in the West and 0.6% in the South. Demand plunged 24.3% in the Northeast and dropped 0.9% in the Midwest.

An estimated 74,000 homes were actually sold in July, down from 77,000 in June, based on figures not seasonally adjusted.

Copyright C2003, Dow Jones and Company, Inc. All Rights Reserved

Florida’s median sales price for existing single-family homes last month was $243,200; a year ago, it was $256,200 for a 5 percent decrease. The median is the midpoint; half the homes sold for more, half for less. In June 2002, the statewide median sales price for single-family homes was $142,400, for an increase of 70.8 percent over the five-year-period, according to FAR records.

In May 2007, the national median sales price for existing single-family homes was $223,000, down 2.4 percent from the previous year, according to the National Association of Realtors(R) (NAR). In California, the statewide median resales price was $591,180 in May; in Massachusetts, it was $355,000; in Maryland, it was $312,683; and in New York, it was $239,000.

Existing home sales are expected to recover in 2008 and pick up by the end of this year, according to NAR’s latest market outlook. “It appears some buyers are simply waiting for more signs of stability before they get serious about getting into the market,” says NAR Senior Economist Lawrence Yun. “The market is underperforming when you consider positive fundamentals such as the strength in job creation, economic growth, favorable mortgage interest rates and flat home prices.”

Sales of existing condominiums in Florida also decreased last month, with a total of 4,004 condos sold statewide compared to 5,532 in June 2006 for a 28 percent decline, according to FAR. The statewide median sales price for condos last month was $206,100, down 3 percent from June 2006’s condo median price of $213,200. NAR reported the national median existing condo price was $228,200 in May 2007.

Last month, interest rates for a 30-year fixed-rate mortgage averaged 6.66 percent, according to Freddie Mac, lower than the average rate of 6.68 percent in June 2006. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

How property taxes are used. Each locale uses the revenue earned from property taxes for different purposes. It can be anything from road repairs and utility upkeep to firefighter salaries and emergency response. Most areas, however, use the money received from property taxes for school districts. Taxes are levied and then distributed to schools in a district according to the amount of money received from property taxes. This often puts homeowners in a bind, as most of them want quality education for children, but are reluctant to vote to pass measures that will result in a property tax increase.

How property taxes are determined. Before buying a home, it is important for real estate beginners to understand how the amount you pay in property taxes is decided upon. Everyone pays a different amount, depending upon how much a home is worth. The tax rate for an area is the same throughout that area, but due to varying home values, the property tax you pay may be a little higher or lower than your neighbors.

If the property tax rate in your area is 9 percent, and your home is assessed at 250,000 dollars, your yearly property tax would be 22,500 dollars. If your neighbor’s home were only assessed at 235,000 dollars, he or she would pay 21,150 dollars in taxes per year. Many areas have specified periods of time required for a new assessment. Most places require a new assessment every five to seven years. This means that your taxes could go up or down as your property value changes.

What goes into a property assessment? There are some guidelines assessors use when determining the value of your home. By being acquainted with these, you will be more likely to understand why your home has been given a certain value. Here are the most common benchmarks taken into consideration when determining a home’s value.

Sale price of similar properties in the area: the assessor will know how much other homes in your immediate area are selling for, and will assess your house to reflect the value of the neighborhood.

Property’s historical value: records of the property’s value through the years will help the assessor determine whether the home’s value keeps with current trends, and whether the home increases in value over time as a general rule.

Cost of replacing the property: it is possible to determine how much the materials to replace the property, or to add improvements to increase value, would cost. This can figure into the value of the property.

Potential value of the property if it is used to make money: many people use their property as income through rental or sale, and this value can be used to help the assessor decide how much he or she should value your property for. Disputing an assessment. Because home values are subjective, it is possible to dispute a value. You can speak with neighbors and realtors to discover what homes in the area are valued at. Recent home buyers and sellers can give you a good idea of what others are paying in property taxes. Visit your tax board or the local tax assessment office to find out what the procedures are for dispute an assessment you feel is unfair.

Green building is sometimes known as sustainable building or environmental building. A similar concept is natural building, which is usually on a smaller scale and tends to focus on the use of natural materials that are available locally.[1] Other commonly used terms include sustainable design and green architecture; however, while good design is essential to green building, the actual operation, maintenance, and ultimate disposal or deconstruction of the building also have very significant effects on buildings’ overall environmental impact.

The related concepts of sustainable development and sustainability are integral to green building. Effective green building can lead to 1) reduced operating costs by increasing productivity and using less energy and water, 2) improved public and occupant health due to improved indoor air quality, and 3) reduced environmental impacts by, for example, lessening storm water runoff and the heat island effect. Practitioners of green building often seek to achieve not only ecological but aesthetic harmony between a structure and its surrounding natural and built environment. The appearance and style of sustainable homes and buildings can be nearly indistinguishable from their less sustainable counterparts.

Green building is increasingly governed and driven by standards, such as the Leadership in Energy and Environmental Design (LEED) rating system developed by the U.S. Green Building Council.

Green building practices

Green building brings together a vast array of practices and techniques to reduce and ultimately eliminate the impacts of buildings on the environment. On the aesthetic side of green architecture or sustainable design is the philosophy of designing a building that in harmony with the natural features and resources surrounding the site. There are several key steps in designing sustainable buildings: specify ‘green’ building materials from local sources, reduce loads, optimize systems, and generate on-site renewable energy.

Building materials typically considered to be ‘green’ include rapidly renewable plant materials like bamboo and straw, lumber from forests certified to be sustainably managed, stone, recycled metal, and other products that are non-toxic, reusable, renewable, and/or recyclable. Building materials should be extracted and manufactured locally to the building site to minimize the energy embedded in their transportation.

Low-impact building materials are used wherever feasible: for example, insulation may be made from low VOC (volatile organic compound)-emitting materials such as recycled denim, rather than the insulation materials that may contain carcinogenic or toxic materials such as formaldehyde. To discourage insect damage, these alternate insulation materials may be treated with boric acid. Organic or milk-based paints may be used.

Architectural salvage and reclaimed materials are used when appropriate as well. When older buildings are demolished, frequently any good wood is reclaimed, renewed, and sold as flooring. Many other parts are reused as well, such as doors, windows, mantels, and hardware, thus reducing the consumption of new goods. When new materials are employed, green designers look for materials that are rapidly replenished, such as bamboo, which can be harvested for commercial use after only 6 years of growth, or cork oak, in which only the outer bark is removed for use, thus preserving the tree. When possible, building materials may be gleaned from the site itself; for example, if a new structure is being constructed in a wooded area, wood from the trees which were cut to make room for the building would be re-used as part of the building itself.

To minimize the energy loads within and on the structure, it is critical to orient the building to take advantage of cooling breezes and sunlight. Daylighting with ample windows will eliminate the need to turn on electric lights during the day (and provide great views outside too). Passive Solar can warm a building in the winter - but care needs to be taken to provide shade in the summer time to prevent overheating. Prevailing breezes and convection currents can passively cool the building in the summer. Thermal mass stores heat gained during the day and releases it at night minimizing the swings in temperature. Thermal mass can both heat the building in winter and cool it during the summer. Insulation is the final step to optimizing the structure. Well-insulated windows, doors, and walls help reduce energy loss, thereby reducing energy usage. These design features don’t cost much money to construct and significantly reduce the energy needed to make the building comfortable.

Optimizing the heating and cooling systems through installing energy efficient machinery, commissioning, and heat recovery is the next step. Compared to optimizing the passive heating and cooling features through design, the gains made by engineering are relatively expensive and can add significantly to the projects cost. However, thoughtful integrated design can reduce costs — for example, once a building has been designed to be more energy-efficient, it may be possible to downsize heating, ventilation and air-conditioning (HVAC) equipment, leading to substantial savings. To further address energy loss hot water heat recycling is used to reduce energy usage for domestic water heating. Ground source heat pumps are more energy efficient then other forms of heating and cooling until you factor in the energy lost during generation and transmission if the project is on the grid.

Finally, onsite generation of renewable energy through solar power, wind power, hydro power, or biomass can significantly reduce the environmental impact of the building. Power generation is the most expensive feature to add to a building.

Good green architecture also reduces waste, of energy, water and materials. During the construction phase, one goal should be to reduce the amount of material going to landfills. Well-designed buildings also help reduce the amount of waste generated by the occupants as well, by providing onsite solutions such as compost bins to reduce matter going to landfills.

To reduce the impact on wells or water treatment plants, several options exist. “Greywater”, wastewater from sources such as dishwashing or washing machines, can be used for non-potable purposes, e.g., to flush toilets, water lawns, and wash cars. Rainwater collectors are used for similar purposes, and some homes use specially designed rainwater collectors to gather rainwater for all water use, including drinking water.

Green building often emphasizes taking advantage of renewable resources, e.g., using sunlight through passive solar, active solar, and photovoltaic techniques and using plants and trees through green roofs, rain gardens, and for reduction of rainwater run-off.[3] Many other techniques, such as using packed gravel for parking lots instead of concrete or asphalt to enhance replenishment of ground water, are used as well.

In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than other property (such as ships) and in some cases only land may be mortgaged. Arranging a mortgage is seen as the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full value immediately. See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property.

Participants and variant terminology

Legal systems tend to share certain concepts but vary in the terminology and jargon used.

In general terms the main participants in a mortgage are:

Creditor

The creditor has legal rights to the debt or other obligation secured by the mortgage. That debt is often the obligation to repay the loan by the creditor (or its predecessor lender) who provided the purchase money to acquire the property mortgaged. Typically, creditors are banks, insurers or other financial institutions who make loans available for the purpose of real estate purchase.

A creditor is sometimes referred to as the mortgagee or lender.

Debtor

The debtor is the person or entity who owes the obligation secured by the mortgage, and may be multiple parties. Generally, the debtor must meet the conditions of the underlying loan or other obligation and the conditions of the mortgage. Otherwise, the debtor usually runs the risk of foreclosure of the mortgage by the creditor to recover the debt. Typically the debtors will be the individual home-owners, landlords or businesses who are purchasing their property by way of a loan.

A debtor is sometimes referred to as the mortgagor, borrower, or obligor.

Other participants

Due to the complicated legal exchange, or conveyance, of the property, one or both of the main participants are likely to require legal representation. The terminology varies with legal jurisdiction; see lawyer, solicitor and conveyancer.

Because of the complex nature of many markets the debtor may approach a mortgage broker or financial adviser to help them source an appropriate creditor typically by finding the most competitive loan. Recently, many US consumers (particularly higher income borrowers) are choosing to work with Certified Mortgage Planners, industry experts that work closely with Certified Financial Planners to align the home finance position(s) of homeowners with their larger financial portfolio(s).

The debt is sometimes referred to as the hypothecation, which may make use of the services of a hypothecary to assist in the hypothecation.

In addition to borrowers, lenders, government sponsored agencies, private agencies; there is also a fifth class of participants who are the source of funds - the Life Insurers, Pension Funds, etc.

Other Terminologies

Like any other legal system, the mortgage business sometimes uses confusing jargon. Below are some terms explained in brief. If a term is not explained here it may be related to the mortgage loans rather than to the legal process.

Conveyance
The legal document that transfers ownership of unregistered land.

Disbursements

All the fees of the solicitors and governments, such as stamp duty, land registry, search fees, etc.

Freehold

The ownership of a property and the land.

Land Registration
A legal document that records the ownership of a property and land. This is also known as a Title.

Leasehold

The ownership of the property and land for a specified period, which may be sold separately from freehold, which may be owned by another person.

Legal Charge

A legal document that records the data of the rightful owner of a property or land.

Mortgage Deed

A legal document that stated that the lender has a legal charge over the property.

Sealing Fee

A fee made when the lender releases the legal charge over the property.

Seasoned mortgage

A mortgage which has been paid in a timely manner by the mortgagor for a period of typically no less than six months, and often for more than one year. The term is associated with the secondary market, where mortgages with similar characteristics are bought and sold in bulk.

There are essentially two types of legal mortgage.

Mortgage by demise

In a mortgage by demise, the creditor becomes the owner of the mortgaged property until the loan is repaid in full (known as “redemption”). This kind of mortgage takes the form of a conveyance of the property to the creditor, with a condition that the property will be returned on redemption.

This is an older form of legal mortgage and is less common than a mortgage by legal charge. It is no longer available in the UK, by virtue of the Land Registration Act 2002.

Mortgage by legal charge

In a mortgage by legal charge, the debtor remains the legal owner of the property, but the creditor gains sufficient rights over it to enable them to enforce their security, such as a right to take possession of the property or sell it.

To protect the lender, a mortgage by legal charge is usually recorded in a public register. Since mortgage debt is often the largest debt owed by the debtor, banks and other mortgage lenders run title searches of the real property to make certain that there are no mortgages already registered on the debtor’s property which might have higher priority. Tax liens, in some cases, will come ahead of mortgages. For this reason, if a borrower has delinquent property taxes, the bank will often pay them to prevent the lienholder from foreclosing and wiping out the mortgage.

This type of mortgage is common in the United States and, since 1925, it has been the usual form of mortgage in England and Wales (it is now the only form - see above).

and the loan secured by a first mortgage is paid off, the second mortgage lien will move up in priority and become the new first mortgage lien on the title. Documenting this new priority arrangement will require the release of the mortgage securing the paid off loan.

Manufactured Home: A manufactured home is built entirely in a factory under federal code administered by the Department of Housing and Urban Development (HUD), which went into effect June 15, 1976. These laws cover single-section or multi-section homes and include transport to the site and installation. Regulations include design & construction, strength & durability, transportability, fire resistance, energy efficiency, and quality.

Mobile Home: The term used for homes built prior to June 15, 1976, when HUD code went into effect. Voluntary standards were previously in effect.

Modular Home: These homes are built to state, local or regional codes where the home will be located. Multi-section units are transported to sites and installed.

Panelized Home: A home built in a factory, where panels, windows, doors, wiring & siding are transported to the site and assembled. Codes are set by state or locality where sited.

Pre-Cut Home: The materials are factory-cut to design specifications and then transported to the site and assembled. Examples are kit, log and dome homes. State and local governments set standards for these homes.

Most homes sold from a typical manufactured home dealer will be either manufactured or modular homes. These two types look almost identical; the only difference is that modular homes are built to local codes, while manufactured homes are built to national HUD codes.

Do I have a steady source of income (usually a job)? Have I been employed on a regular basis for the last 2-3 years?

• Is my current income reliable?  
• Do I have a good record of paying my bills?  
• Do I have few outstanding long-term debts, like car payments?   
• Do I have money saved for a down payment?   
• Do I have the ability to pay a mortgage every month, plus additional costs? 

If you can answer “yes” to these questions, you are probably ready to buy your own home.

A housing bubble is characterized by rapid increases in the valuations of real property such as housing until unsustainable levels are reached relative to incomes, price-to-rent ratios, and other economic indicators of affordability. This in turn is followed by decreases in home prices that can result in many owners holding negative equity, a mortgage debt higher than the value of the property.

Bubbles may be definitively identified only in hindsight, after a market correction. The impact of booming home valuations on the U.S. economy since the 2001–2002 recession was an important factor in the recovery because a large component of consumer spending came from the related refinancing boom, which simultaneously allowed people to reduce their monthly mortgage payments with lower interest rates and withdraw equity from their homes as values increased.

Low interest rates and lax lending standards

The recent use of subprime mortgages, adjustable rate mortgages, interest-only mortgages, and “stated income” loans (also known as “liar loans”—a subset of “Alt-A” loans) to finance home purchases described above have raised concerns about the quality of these loans should interest rates rise again or the borrower is unable to pay the mortgage. In March 2007, the United States’ subprime mortgage industry collapsed due to higher-than-expected home foreclosure rates, with more than 25 subprime lenders declaring bankruptcy, announcing significant losses, or putting themselves up for sale. Harper’s Magazine warned of the danger of rising interest rates for recent homebuyers holding such mortgages, as well as the U.S. economy as a whole: “The problem [is] that prices are falling even as the buyers’ total mortgage remains the same or even increases. … Rising debt-service payments will further divert income from new consumer spending. Taken together, these factors will further shrink the “real” economy, drive down those already declining real wages, and push our debt-ridden economy into Japan-style stagnation or worse.”Factors that could contribute to rising rates are the U.S. national debt, inflationary pressure caused by such factors as increased fuel and housing costs, and changes in foreign investments in the U.S. economy. The Fed raised rates 17 times, increasing them from 1% to 5.25%, between 2004 and 2006. BusinessWeek magazine called the option ARM “the riskiest and most complicated home loan product ever created” and warned that over one million borrowers took out $466 billion in option ARMs in 2004 through the second quarter of 2006, citing concerns that these financial products could hurt individual borrowers the most and “worsen the [housing] bust.” To address the problems arising from “liar loans”, the Internal Revenue Service updated an income verification tool used by lenders to make confirmation of borrower’s claimed income to be faster and easier. In April 2007, financial problems similar to the subprime mortgages began to appear with Alt-A loans made to homeowners who were thought to be less risky; the delinquency rate for Alt-A mortgages has been rising in 2007. The manager of the world’s largest bond fund PIMCO, warned in June 2007 that the subprime mortgage crisis was not an isolated event and will eventually take a toll on the economy and whose ultimate impact will be on the impaired prices of homes.

Approximate cost to own mortgaged property vs. renting

An approximate formula for the monthly cost of owning a home is obtained by computing the monthly mortgage, property tax, and maintenance costs, accounting for the U.S. tax deduction available for mortgage interest payments and property taxes. This formula does not include the cost of foregoing the standard deduction (required for taking the tax deduction). Assuming a home cost of P dollars, yearly interest rate r fixed over N years, marginal income tax rate rIT, property tax rate rPT (assumed to be ½–2% of P), and yearly maintenance cost rate rM (assumed to be ½–1% of P), the monthly cost of home ownership is approximately