South Carolina's insurance director faced angry coastal homeowners again Thursday, complaining about wind insurance rates, which they say are still going up.
After Hurricane Katrina, many homeowners along the coast saw their wind insurance rates skyrocket or get cancelled.
Last year, the state re-drew the lines for the wind pool, making more residents eligible for state wind coverage.
But homeowners at Thursday's public forum said their rates are still going up, if they can find coverage at all.
The homeowners say they want the state to require that the risk be more spread out, so that people in one part of the state don't subsidize rates for people in another area.
"Those insurance companies coming in are making gross profits and there's too much gross profits in the United States right now, and it's hurting us in the middle class people that really try to live comfortably down here in South Carolina," said Murrells Inlet homeowner Lou Morell.
But state insurance director Scott Richardson says the state is trying not to over-regulate like other states and allow the free market to solve the problem.
"We're allowing the market to dodge and weave and settle itself. Let me tell you, Florida is still a mess, Louisiana is still a mess, Mississippi is a mess and we're not," Richardson said.
But homeowners complained that the wind pool lines seem to be arbitrary, with insurance rates that are all over the place. One man said his neighbor pays $900 for insurance, while he pays $2300.
Richardson said it'll take about three years for enough companies to come into the market to be competitive and lower rates but we're only one year into that process.
State Senator Luke Rankin says he believes Thursday's forum, which began at 2:00 p.m., was purposely scheduled at a time when he and other senators couldn't attend. He says the public was given little advance notice of the meeting and that was also on purpose.
Saturday, April 12, 2008
Friday, April 11, 2008
real estate investments
Real estate, real estate, real estate, this phrase is on everyone’s lips, but not everyone has success in this line of business. Why is that? Well, when you want to become an investor and make plenty of profitable real estate investments, you need to be prepared.
When I say prepared, I don’t mean only from a research point of view, like taking courses and reading a few things about the market. Sure all these things can help you nab a great deal on investment property, but they are not the only things that guarantee success. Theory doesn’t always do the trick and in practice you should be careful not to make any mistakes.
There are some common mistakes done by a lot of people when it comes to real estate investments. In this article I will try to present some of them, so you can keep them in mind not to make them when the time will be for you to close a deal. Always be sure that if you make fewer mistakes, then you are doing a lot of things good, therefore you are on the right track.
When it comes to investment property, always keep in mind a budget. Establish a budget before you make an offer, and this will help you not to pay too much. If the owners do not appreciate your offer, do not be alarmed. If the property hits the auction block, you can rest assured that you may end up making an even better deal than you would have before.
Do not be afraid do make contacts. Think about every person that can help you with advice or tips in the real estate market and connect with them. You can also consider becoming a member of the Chamber of Commerce, because this is a great way to make new contacts.
Timing is crucial when it comes to real estate investments. Most of the courses you take or guide books that you buy won’t tell you that this game requires patience. Sure, everyone wants to make money and make them quickly. But what if another chance at something more profitable is waiting just around the corner? Do not move to fast when you want to buy a property.
The same rule applies to selling. An investment property deal is closed for the main purpose of generating profits. If an offer comes your way and if you are tempted to take it, take a step back and think about it. At least sleep on it for a night before accepting. If the market is down, you should always consider renting the place until things get better.
A key factor in real estate investments is keeping an eye on the property you have just purchased. It will be more convenient for you if there are some repairs that need to be done. Traveling to another city in order to keep the property in shape is not very pleasant and therefore you should do your best to find real estate to invest in close to home.
The estimation is also very important. As it was pointed out a
before, a budget is always a good thing to have. However, rest assured that the costs involved in repairs and shaping the investment property can exceed the original plan. Also the time spent working on them can surpass your expectations. You should double the time you had planned, triple your costs and you will be a little closer to the truth.
When I say prepared, I don’t mean only from a research point of view, like taking courses and reading a few things about the market. Sure all these things can help you nab a great deal on investment property, but they are not the only things that guarantee success. Theory doesn’t always do the trick and in practice you should be careful not to make any mistakes.
There are some common mistakes done by a lot of people when it comes to real estate investments. In this article I will try to present some of them, so you can keep them in mind not to make them when the time will be for you to close a deal. Always be sure that if you make fewer mistakes, then you are doing a lot of things good, therefore you are on the right track.
When it comes to investment property, always keep in mind a budget. Establish a budget before you make an offer, and this will help you not to pay too much. If the owners do not appreciate your offer, do not be alarmed. If the property hits the auction block, you can rest assured that you may end up making an even better deal than you would have before.
Do not be afraid do make contacts. Think about every person that can help you with advice or tips in the real estate market and connect with them. You can also consider becoming a member of the Chamber of Commerce, because this is a great way to make new contacts.
Timing is crucial when it comes to real estate investments. Most of the courses you take or guide books that you buy won’t tell you that this game requires patience. Sure, everyone wants to make money and make them quickly. But what if another chance at something more profitable is waiting just around the corner? Do not move to fast when you want to buy a property.
The same rule applies to selling. An investment property deal is closed for the main purpose of generating profits. If an offer comes your way and if you are tempted to take it, take a step back and think about it. At least sleep on it for a night before accepting. If the market is down, you should always consider renting the place until things get better.
A key factor in real estate investments is keeping an eye on the property you have just purchased. It will be more convenient for you if there are some repairs that need to be done. Traveling to another city in order to keep the property in shape is not very pleasant and therefore you should do your best to find real estate to invest in close to home.
The estimation is also very important. As it was pointed out a
before, a budget is always a good thing to have. However, rest assured that the costs involved in repairs and shaping the investment property can exceed the original plan. Also the time spent working on them can surpass your expectations. You should double the time you had planned, triple your costs and you will be a little closer to the truth.
Thursday, April 10, 2008
up 10.9% compared with the same week one year earlier
The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending April 4, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 725.6, an increase of 5.4% on a seasonally adjusted basis from 688.3 one week earlier. On an unadjusted basis, the Index increased 5.7% compared with the previous week and was up 10.9% compared with the same week one year earlier.
The Refinance Index increased 3.4% to 2724.7 from 2636.0 the previous week and the seasonally adjusted Purchase Index increased 8.1% to 384.7 from 356.0 one week earlier. The Conventional Purchase Index increased 6.1% while the Government Purchase Index (largely FHA) increased 15.2%. On an unadjusted basis, the Conventional Purchase Index increased 6.3% to 561.1 from 527.7 the previous week. The seasonally adjusted Conventional Index increased 3.8% to 935.8 from 901.8 the previous week, and the seasonally adjusted Government Index increased 12.9% to 375.2 from 332.4 the previous week.
The four week moving average for the seasonally adjusted Market Index is up 1.8% to 758.0 from 744.5. The four week moving average is up 1.1% to 377.4 from 373.4 for the Purchase Index, while this average is up 2.4% to 2987.8 from 2918.6 for the Refinance Index.
The refinance share of mortgage activity decreased to 52.2% of total applications from 53.4% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.5 from 5.4% of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages increased to 5.78% from 5.75%, with points decreasing to 1.11 from 1.19 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.39% from 5.27%, with points decreasing to 1.11 from 1.13 (including the origination fee) for 80% LTV loans.
The average contract interest rate for one-year ARMs increased to 7.06% from 7.00%, with points increasing to 1.46 from 1.39 (including the origination fee) for 80% LTV loans.
The survey covers approximately 50% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.
The Refinance Index increased 3.4% to 2724.7 from 2636.0 the previous week and the seasonally adjusted Purchase Index increased 8.1% to 384.7 from 356.0 one week earlier. The Conventional Purchase Index increased 6.1% while the Government Purchase Index (largely FHA) increased 15.2%. On an unadjusted basis, the Conventional Purchase Index increased 6.3% to 561.1 from 527.7 the previous week. The seasonally adjusted Conventional Index increased 3.8% to 935.8 from 901.8 the previous week, and the seasonally adjusted Government Index increased 12.9% to 375.2 from 332.4 the previous week.
The four week moving average for the seasonally adjusted Market Index is up 1.8% to 758.0 from 744.5. The four week moving average is up 1.1% to 377.4 from 373.4 for the Purchase Index, while this average is up 2.4% to 2987.8 from 2918.6 for the Refinance Index.
The refinance share of mortgage activity decreased to 52.2% of total applications from 53.4% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.5 from 5.4% of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages increased to 5.78% from 5.75%, with points decreasing to 1.11 from 1.19 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.39% from 5.27%, with points decreasing to 1.11 from 1.13 (including the origination fee) for 80% LTV loans.
The average contract interest rate for one-year ARMs increased to 7.06% from 7.00%, with points increasing to 1.46 from 1.39 (including the origination fee) for 80% LTV loans.
The survey covers approximately 50% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.
Wednesday, April 9, 2008
higher mortgage loan limits translate into more sales in high-cost markets
Little change is expected in existing-home sales over the next few months, before improving notably during the second half of the year, according to the latest forecast by the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said the market will come into clearer focus this summer. “Existing home sales could start to show a sustained increase within a few months, unless there are some additional economic problems or excessive inflationary pressure,” he said. “We’re looking for essentially stable sales in the near term, before higher mortgage loan limits translate into more sales in high-cost markets. The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met.”
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, slipped 1.9% to 84.6 from an upwardly revised reading of 86.2 in January, and was 21.4% lower than the February 2007 index of 107.6. “The slip in pending home sales implies we’re not out of the woods yet, though an era of successive deep sales declines appears to be over,” Yun said.
The PHSI in the Northeast rose 3.2% in February to 71.8 but remains 25.4% below a year ago. In the Midwest, the index declined 3.7% to 82.7 and is 17.4% lower than February 2007. The index in the South fell 5.5% in February to 85.0 and is 30.3% below a year ago. In the West, the index dropped 9.8% in February to 84.6 and is 17.1% below February 2007.
Existing-home sales are likely to rise from an annual pace of 4.9 million in the first quarter to 5.9 million in the fourth quarter. With relatively weak activity in the first part of the year, existing-home sales for all of 2008 are forecast at 5.39 million, increasing 6.6% to 5.74 million in 2009.
“Exceptionally weak home sales related to jumbo loans problems will depress home prices in the first half of the year, but steady liquidity improvements in the conforming jumbo-loan market will help prices recover in the second half of the year,” Yun said. The aggregate existing-home price will probably ease by 1.4% to a median of $215,800 for all of 2008 before rising 3.7% to $223,800 next year.
Yun noted that there will continue to be wide variations in regional housing market conditions. “Some parts of the country that can expect improvement include the Northeastern region and the oil-patch states of Texas, Oklahoma, Louisiana and Arkansas,” he said. With lower interest rates and flat home prices in many areas, NAR’s housing affordability index is forecast to rise 14 percentage points to 127.0 in 2008.
New-home sales are projected to fall 25.7% to 576,000 in 2008 before rising 4.6% to 602,000 next year. Housing starts, including multifamily units, are estimated to drop 26.3% to 999,000 this year, and slip another 0.5% to 994,000 in 2009. The median new-home price will probably fall 3.6% to $238,400 in 2008, and then rise 4.0% next year to $247,800.
The 30-year fixed-rate mortgage, which has fluctuated recently, should average 5.8% in the second and third quarters, but trend up to an average of 6.3% in 2009.
“The economy will not grow in first half of the year,” Yun said. “However, the combination of recent fiscal stimulus enactment and the lagged impact of monetary policy will help jump start the economy in the second half.” Growth in the U.S. gross domestic product (GDP) is expected to be 1.4% in 2008 and 2.4% next year. The unemployment rate is forecast to average 5.4% this year and 5.6% in 2009.
Inflation, as measured by the Consumer Price Index, is projected at 3.4% in 2008 and 2.2% next year. Inflation-adjusted disposable personal income is likely to grow 1.2% this year and 3.0% in 2009.
Lawrence Yun, NAR chief economist, said the market will come into clearer focus this summer. “Existing home sales could start to show a sustained increase within a few months, unless there are some additional economic problems or excessive inflationary pressure,” he said. “We’re looking for essentially stable sales in the near term, before higher mortgage loan limits translate into more sales in high-cost markets. The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met.”
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, slipped 1.9% to 84.6 from an upwardly revised reading of 86.2 in January, and was 21.4% lower than the February 2007 index of 107.6. “The slip in pending home sales implies we’re not out of the woods yet, though an era of successive deep sales declines appears to be over,” Yun said.
The PHSI in the Northeast rose 3.2% in February to 71.8 but remains 25.4% below a year ago. In the Midwest, the index declined 3.7% to 82.7 and is 17.4% lower than February 2007. The index in the South fell 5.5% in February to 85.0 and is 30.3% below a year ago. In the West, the index dropped 9.8% in February to 84.6 and is 17.1% below February 2007.
Existing-home sales are likely to rise from an annual pace of 4.9 million in the first quarter to 5.9 million in the fourth quarter. With relatively weak activity in the first part of the year, existing-home sales for all of 2008 are forecast at 5.39 million, increasing 6.6% to 5.74 million in 2009.
“Exceptionally weak home sales related to jumbo loans problems will depress home prices in the first half of the year, but steady liquidity improvements in the conforming jumbo-loan market will help prices recover in the second half of the year,” Yun said. The aggregate existing-home price will probably ease by 1.4% to a median of $215,800 for all of 2008 before rising 3.7% to $223,800 next year.
Yun noted that there will continue to be wide variations in regional housing market conditions. “Some parts of the country that can expect improvement include the Northeastern region and the oil-patch states of Texas, Oklahoma, Louisiana and Arkansas,” he said. With lower interest rates and flat home prices in many areas, NAR’s housing affordability index is forecast to rise 14 percentage points to 127.0 in 2008.
New-home sales are projected to fall 25.7% to 576,000 in 2008 before rising 4.6% to 602,000 next year. Housing starts, including multifamily units, are estimated to drop 26.3% to 999,000 this year, and slip another 0.5% to 994,000 in 2009. The median new-home price will probably fall 3.6% to $238,400 in 2008, and then rise 4.0% next year to $247,800.
The 30-year fixed-rate mortgage, which has fluctuated recently, should average 5.8% in the second and third quarters, but trend up to an average of 6.3% in 2009.
“The economy will not grow in first half of the year,” Yun said. “However, the combination of recent fiscal stimulus enactment and the lagged impact of monetary policy will help jump start the economy in the second half.” Growth in the U.S. gross domestic product (GDP) is expected to be 1.4% in 2008 and 2.4% next year. The unemployment rate is forecast to average 5.4% this year and 5.6% in 2009.
Inflation, as measured by the Consumer Price Index, is projected at 3.4% in 2008 and 2.2% next year. Inflation-adjusted disposable personal income is likely to grow 1.2% this year and 3.0% in 2009.
Tuesday, April 8, 2008
3 out of 4 consumers want to buy real estate in at least the next two years
Following more than two years in a real estate slump, a large majority of consumers surveyed say they want to buy real estate within the next two years, according to a new Housing Predictor poll.
Three out of four respondents to the online survey said they will be in the market to buy property in the coming two years. Some even want to make their purchases sooner. Congress is working on a plan to aid some victims of foreclosure, which are already at record levels. But the proposals lack the ingredients to help more than a third of those that are facing the possibility of foreclosure. Housing Predictor forecasts foreclosures will top 5.6 million units through 2011.
The real estate crisis has developed into the worst financial crisis for the nation since the Great Depression, which Housing Predictor analysts forecast last year. It has sent shock waves through the Wall Street community and other financial markets, sending the nation's economy on a downward cycle.
Many consumers are willing to take the leap back into the market in even shorter time frames. Find the break down on the survey's entire results on Housing Predictor. Visitors are regularly surveyed on a variety of real estate issues. Housing Predictor forecasts more than 250 local housing market futures in all 50 U.S. states.
Demand on the part of prospective real estate buyers has increased as a result of slumping home sales, lower prices and the Federal Reserve's series of interest rate cuts. The over-whelming majority of housing markets in the nation are forecast to deflate in 2008.
Housing Predictor online surveys are some of the most heavily monitored studies in the real estate industry, and the results are published in hundreds of newspapers and by many online news organizations.
All time record numbers of foreclosures are at least leading in part to the nation's thirst for investing in real estate. More than two million homes have already been foreclosed as a result of the real estate crisis, and higher adjustable rate mortgages many home owners have been unable to afford. Foreclosures are increasing and are forecast to worsen over the next three years unless widespread Federal intervention occurs.
Critics blame the White House and Congressional lawmakers at least partially for the nation's economic woes in their slow response to the crisis. A series of new creative financing products offered by lenders and easy to obtain subprime mortgages for many home buyers, who would not have other wise qualified for mortgages are also at fault.
Three out of four respondents to the online survey said they will be in the market to buy property in the coming two years. Some even want to make their purchases sooner. Congress is working on a plan to aid some victims of foreclosure, which are already at record levels. But the proposals lack the ingredients to help more than a third of those that are facing the possibility of foreclosure. Housing Predictor forecasts foreclosures will top 5.6 million units through 2011.
The real estate crisis has developed into the worst financial crisis for the nation since the Great Depression, which Housing Predictor analysts forecast last year. It has sent shock waves through the Wall Street community and other financial markets, sending the nation's economy on a downward cycle.
Many consumers are willing to take the leap back into the market in even shorter time frames. Find the break down on the survey's entire results on Housing Predictor. Visitors are regularly surveyed on a variety of real estate issues. Housing Predictor forecasts more than 250 local housing market futures in all 50 U.S. states.
Demand on the part of prospective real estate buyers has increased as a result of slumping home sales, lower prices and the Federal Reserve's series of interest rate cuts. The over-whelming majority of housing markets in the nation are forecast to deflate in 2008.
Housing Predictor online surveys are some of the most heavily monitored studies in the real estate industry, and the results are published in hundreds of newspapers and by many online news organizations.
All time record numbers of foreclosures are at least leading in part to the nation's thirst for investing in real estate. More than two million homes have already been foreclosed as a result of the real estate crisis, and higher adjustable rate mortgages many home owners have been unable to afford. Foreclosures are increasing and are forecast to worsen over the next three years unless widespread Federal intervention occurs.
Critics blame the White House and Congressional lawmakers at least partially for the nation's economic woes in their slow response to the crisis. A series of new creative financing products offered by lenders and easy to obtain subprime mortgages for many home buyers, who would not have other wise qualified for mortgages are also at fault.
worker shortage brought on by the debate over illegal immigration
The Grand Strand could be facing a labor crisis this tourist season. It's a worker shortage brought on by the debate over illegal immigration, though the people who want to work here are perfectly legal.
Over the past few years, local hotels and restaurants have relied heavily on seasonal foreign workers under the H-2B visa program.
But this year, Congress has clamped down on the number of H-2B visas it will allow.
The program has been caught up in the debate over cracking down on illegal immigration, though local hotel operators said H-2B workers have nothing to do with that.
"These are mostly, almost exclusively college students who come here for summer work programs to spend a couple of months in the United States to get to know our culture and then go back home," said Jim Eggen, general manager of the Avista Resort in North Myrtle Beach.
Eggen said he'd like to hire local people to clean rooms and do other tasks, but few locals even apply.
The labor problem has been difficult here for the past couple of years, but with Market Common, Hard Rock Park and other new properties opening up this year, 2008 could be the most difficult year yet for Grand Strand tourist businesses.
"We definitely don't have enough," Eggen said. "We barely made through last year. We were short some staff and many rooms were delayed in getting ready, so this year we expect many rooms not to be ready when guests arrive."
Eggen expects he and other managers will have to help clean rooms themselves this year.
He said if tourists have a bad experience, they may not come back and it won't hurt just his hotel, but any on the Grand Strand.
Congress has placed a limit of approving 66,000 H-2B visas for the entire country.
Over the past few years, local hotels and restaurants have relied heavily on seasonal foreign workers under the H-2B visa program.
But this year, Congress has clamped down on the number of H-2B visas it will allow.
The program has been caught up in the debate over cracking down on illegal immigration, though local hotel operators said H-2B workers have nothing to do with that.
"These are mostly, almost exclusively college students who come here for summer work programs to spend a couple of months in the United States to get to know our culture and then go back home," said Jim Eggen, general manager of the Avista Resort in North Myrtle Beach.
Eggen said he'd like to hire local people to clean rooms and do other tasks, but few locals even apply.
The labor problem has been difficult here for the past couple of years, but with Market Common, Hard Rock Park and other new properties opening up this year, 2008 could be the most difficult year yet for Grand Strand tourist businesses.
"We definitely don't have enough," Eggen said. "We barely made through last year. We were short some staff and many rooms were delayed in getting ready, so this year we expect many rooms not to be ready when guests arrive."
Eggen expects he and other managers will have to help clean rooms themselves this year.
He said if tourists have a bad experience, they may not come back and it won't hurt just his hotel, but any on the Grand Strand.
Congress has placed a limit of approving 66,000 H-2B visas for the entire country.
Monday, April 7, 2008
housing market has buyers in a great position
The housing market has buyers in a great position. Indications are that the time to finally make the move is here.
Sales numbers for many offices are up. The spring market has seen the ice thaw and also warmed up the buyers as well. Many brokerages have reported increases in sales numbers. We have actually seen a few homes sell within a couple of weeks and even a few sell in "dual bid" situations. While the overall numbers are not what they were two or three years ago, there are a few indications that the housing market is trying to stabilize. It looks like it's time for buyers to make their move.
The Illinois Association of Realtors' most recent report indicated that the total sales of Illinois homes was up 15.1 percent in February over January's sales. Overall, this number is still lower than the 2007 February ones. However, in February 2008 the median home sale price for the Chicago area was up ever so slightly over the February '07 numbers.
Locally, the Mainstreet Organization for Realtors indicates that average area sale prices are up, and in some cases, by double digits.
Overall interest rates are about 6 percent, and lenders have many programs available. In addition, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation offer affordable housing programs such as "my community" and "home possible," which allow people with less-than-perfect credit an opportunity to buy at an affordable rate.
There are more homes on the market now than at any time in the last several years. That means there are more homes for purchasers to view and compare. With less competition from other buyers and more and better inventory to choose, this is a great time to take a look at what's on the market.
Sellers have learned to price their properties more realistically right from the start. These sellers also have spent additional time and resources maintaining their property and making it more presentable to buyers. This includes everything from new paint and flooring to entire kitchen remodeling. As a result, there are great "values" in the market. The clean homes that are priced right sell fairly quickly.
Over time real estate always has been a good investment. Low interest rates, a good inventory of well-priced and well-maintained homes combined with an overall increase in value means the time has never been better for buyers to break the rental chains or trade up to their dream home.
Sales numbers for many offices are up. The spring market has seen the ice thaw and also warmed up the buyers as well. Many brokerages have reported increases in sales numbers. We have actually seen a few homes sell within a couple of weeks and even a few sell in "dual bid" situations. While the overall numbers are not what they were two or three years ago, there are a few indications that the housing market is trying to stabilize. It looks like it's time for buyers to make their move.
The Illinois Association of Realtors' most recent report indicated that the total sales of Illinois homes was up 15.1 percent in February over January's sales. Overall, this number is still lower than the 2007 February ones. However, in February 2008 the median home sale price for the Chicago area was up ever so slightly over the February '07 numbers.
Locally, the Mainstreet Organization for Realtors indicates that average area sale prices are up, and in some cases, by double digits.
Overall interest rates are about 6 percent, and lenders have many programs available. In addition, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation offer affordable housing programs such as "my community" and "home possible," which allow people with less-than-perfect credit an opportunity to buy at an affordable rate.
There are more homes on the market now than at any time in the last several years. That means there are more homes for purchasers to view and compare. With less competition from other buyers and more and better inventory to choose, this is a great time to take a look at what's on the market.
Sellers have learned to price their properties more realistically right from the start. These sellers also have spent additional time and resources maintaining their property and making it more presentable to buyers. This includes everything from new paint and flooring to entire kitchen remodeling. As a result, there are great "values" in the market. The clean homes that are priced right sell fairly quickly.
Over time real estate always has been a good investment. Low interest rates, a good inventory of well-priced and well-maintained homes combined with an overall increase in value means the time has never been better for buyers to break the rental chains or trade up to their dream home.
Real estate agents are buzzing: Homes are half-priced.
Real estate agents are buzzing: Homes are half-priced. There is a swarm of buyers. The housing market is starting to recover.As proof, agents point to a bevy of offers on several listings. The recovery is being driven by aggressive pricing on cheaper homes, with discounts up to 60 percent off previous sales prices.The best deals, according to listing data, appear to come from areas on the outskirts of San Diego in areas such as Valley Center and Ramona and in foreclosure clusters such as Oceanside.But not everyone is sold on the idea that this is a recovering housing market. In contrast to some real estate agents' positive assessments, some data suggest that home prices will continue to decline:-- It would take more than 12 months to sell all the homes listed for sale. Many housing analysts consider six months or less of inventory a healthy amount.-- Foreclosures skyrocketed in 2007, and some foreclosure trackers expect even more this year than last.-- Prices have dropped for 19 straight months, with the last four months showing some of the steepest declines.All those numbers fail to faze real estate agents' optimism because, they say, current activity will not show up in such data for another two or three months.And though spring perennially attracts more home buyers, real estate agents say they are seeing an extraordinary explosion of buyers.Kurt Kinsey, a real estate agent in Oceanside, listed a home at almost 40 percent below its last sales price in 2005. Soon, he had 31 offers from interested buyers."I've done this for 21 years and even in a hot market, I think the most I had was nine (offers)," he said. "I think we might have turned the corner as far as falling prices."Oceanside has seen some of the county's deepest price reductions. During the boom of the market, some neighborhoods with relatively higher crime rates saw home prices soar past $450,000. Now, some of those homes have entered, or are in danger of, foreclosure and are listed for less than $200,000.And the steepest discounts are on lower-end homes. Homes priced $420,873 and lower have fallen 25 percent in a year, compared with a 10 percent fall in prices for homes more than $629,470, according to data from Standard and Poor's Case-Shiller Home Price Index.Despite a price tag more befitting the Midwest than San Diego, many of the Oceanside homes struggle to sell because of the condition and location, real estate agents said.Maria Lopez, a Vista agent, listed a Libby Lake-area home for $199,000 to $212,000, at least 57 percent below the last time it sold in 2007 for $490,000.Foot-high weeds blanket the home's front and back yards. Bits of trash litter the deeply stained carpets inside. But there are no holes in the wall. This one is in good shape, Lopez said.Still, the five offers she has received are all from investors, not would-be homeowners."Even though there's people who want to buy a home at this price, they don't think it looks like this. They don't see the value," Lopez said. "In my experience, the paint and carpet to fix this property won't run you more than $3,500. But in the eyes of the buyer, this is three months of work and $3,500. They want something that is ready to move in."That philosophy has left many deals to investors. And they are pouncing on deals in high numbers, said Brian Crisp, a San Diego broker who structures loans for investors.Mostly, investors will look to fix up a home and sell it for a profit. But some homes are so deeply discounted, Crisp said, that investors can rent them for a profit."My business had doubled just in this month. And I'm seeing some cash-flow potential with a lot of deals lately," he said. "But those guys (investors) are running a lot of risk because there's so much volatility in the market. ... Your exit strategy has to be really bulletproof, or you're going to lose your shirt."Investors are finding their deals in the county's backcountry and in Escondido, where deals are plentiful because housing recessions tend to hit fringe metropolitan areas first, Crisp said.Not all deals are snatched up by investors. Bargains in foreclosure clusters such as parts of Oceanside have attracted home buyers as well, said Kinsey, the real estate agent. Of the 31 offers he received on a home listed for about $340,000, only one was an investor.Because pricing is one of the more effective incentives for buyers, the housing market could soon recover, said Edward Leamer, director of UCLA's Anderson Forecast."We tend to be optimistic because home prices have fallen so much that, sometime soon, it's really going to attract some buyers," he said.However, some real estate agents and housing analysts point to other measures. Christopher Thornberg, economist at Beacon Economics, thinks home prices need to fall another 20 percent so that the median home price is affordable for the median household income.That would take the median price, where half homes sell for more and half for less, down from $415,000 in February to $335,000, according to DataQuick Information Systems.At that level, the typical mortgage payment, assuming 6 percent interest, would be $1,600, or one-third of the median income, according to Claritas, a San Diego demographic tracking service.The last time typical mortgage payments in San Diego County matched the housing advocate-recommended one-third of incomes was 1999.During that time, the inflation-adjusted median price was about $265,000 and interest rates were 8 percent, according to data from the Federal Housing Finance Board and DataQuick.Thornberg cites history in thinking prices will continue to fall. Home prices exceeded median incomes immediately prior to the last housing recession during the early 1990s, according to DataQuick and Claritas data.And the majority of listings in today's market exceed the median income: 79 percent of the county's 12,000 active listings are higher than $335,000, according to data by Sandicor, San Diego's listing service.While there are listings such as the 60 percent-off Valley Center home listed for $169,000, or $103 per square foot, there are still others such as a one-bedroom home in Escondido listed for $640,000, or $800 per square foot. The median price in February was $256 per square foot, according to a real estate association report.Some analysts said that sellers are hesitant to reduce their asking price, meaning widespread affordability could take a long time."Those who are paying attention and realizing that they're not getting any offers, they're going to figure it out and lower their price," said Jim Klinge, a real estate agent in Carlsbad. "How many sellers are willing to keep lowering their price until it sells? Maybe one out of 50."
Sunday, April 6, 2008
"Has the market bottomed out?"
The question on everyone´s mind is, "Has the market bottomed out?" People want to know if now is the time to buy a home or if they should wait for further declines in home values. Many have heard the old adages, "Buy low and sell high." and "Buy when everyone else is selling and sell when everyone else is buying." It´s easy to forget this timeless advice, though, when every day there is another expert hyping the decline of the housing market. Remember: No one was able to predict the peak and no one can predict the bottom. Stop waiting for the media to predict the bottom of the market. By the time they do, it will be too late for the average person to take advantage of the situation. A sound and easy real estate investing strategy is to sell before the peak and buy before the bottom. This is easy to understand but harder to apply because the tendency is to get greedy. The desire to sell at the absolute peak and buy at the very bottom distracts most investors. Unfortunately, most people end up selling for much lower than the peak and buying much higher than the bottom.
So what happens if you buy now? You´ll take advantage of low interest rates and a lot of inventory, and since there is little competition, you will probably be able to negotiate a great bargain. What if the market goes lower? Chances are it won´t, but even if it does, it probably won´t go significantly lower. The bigger risk is in the market improving. Buyers who are sitting on the sidelines will jump in, and the increase in competition will mean less opportunity to negotiate a great deal.This is the best home buying opportunity of the past several years. Don´t get caught missing out. Take the deal!
So what happens if you buy now? You´ll take advantage of low interest rates and a lot of inventory, and since there is little competition, you will probably be able to negotiate a great bargain. What if the market goes lower? Chances are it won´t, but even if it does, it probably won´t go significantly lower. The bigger risk is in the market improving. Buyers who are sitting on the sidelines will jump in, and the increase in competition will mean less opportunity to negotiate a great deal.This is the best home buying opportunity of the past several years. Don´t get caught missing out. Take the deal!
rents are rocketing up in healthy
In most housing downturns, rental markets thrive. This time, a glut of properties has put the brakes on rent hikes in many cities.
For many Americans, as property values sink and mortgage interest payments rise, the dream of homeownership has turned into a nightmare. In the past, however, one group of people who have tended to ride out real estate downturns are landlords, who can raise rents while potential buyers sit on the sidelines waiting for conditions to settle. But not this year. Rent growth in 2007 actually went flat in some metro areas hardest hit by the housing meltdown.
"What we will see is more of a return to where we were before the huge boom in homeownership," says Rob Massey, vice-president of industry development for Rentals.com. "In cases where you don't see the rental market rebounding, it's because of an oversupply of properties."
Saturated Metro Markets
It's no surprise that rents are rocketing up in healthy urban job centers with limited room for new apartment construction such as San Francisco, San Jose, New York City, Seattle, and the District of Columbia. But other metro areas with slow job growth such as Denver, Boston, Dayton, Memphis, and Detroit experienced a continuing trend of weak rental growth, according to a ranking of effective rent increases in 2007 for large metro areas compiled for BusinessWeek.com by Manhattan-based real estate research firm Reis (REIS).
In many Florida metro areas, vacancies increased last year, and rents, following significant increases in 2005 and 2006, leveled off. That's good news for people who might have lost their homes in a foreclosure; there are plenty of places for them to rent. The state, which has one of the highest foreclosure rates in the nation, is also dealing with a ballooning inventory of rental properties. Investors who found they couldn't unload their condos after the housing bubble collapsed instead began scrambling to find tenants and started undercutting traditional apartment complex owners to fill units. Some landlords began offering one or two months of free rent to convince tenants to sign leases, says Robert Smith, president of Smith Equities Real Estate Investment Advisors in Orlando, Fla.
"It's all negotiable," Smith says. "A lot of people out there are trying to get your lease."
Condo Conversions Revert to Rentals
Many rental homes were taken off the market during the housing boom when they were converted into more profitable condos. Investors paid a premium of up to 50% to buy apartment buildings because they expected to make a big profit by selling them as condos, Smith says. When the housing market collapsed, investors who had started conversions tried to lure tenants back or simply were forced into foreclosure, he says.
"There's just more supply out there available for people to rent," says Avery Klann, senior vice-president for Apartment Realty Advisers in Boca Raton, Fla. "Over time those houses will be sold, and you'll start to see very strong rent growth in apartment communities as well."
Phoenix and Las Vegas, two other slumping real estate markets with a heavy concentration of investment properties, have been relatively flat for the past couple years. Rent growth in Miami also slowed in 2007 despite relatively tight apartment vacancies. The vacancy rate in Miami was 4% last year, and the average effective rent increased 2%, to $1,063, according to Reis.
Coastal Cities Command a Premium
Miami has stronger job growth than other South Florida communities and a larger proportion of new luxury condos, which don't compete with average apartment rentals, says Hessam Nadji, head of research for Marcus & Millichap Real Estate Investment Services.
In other coastal cities where the job market, housing market, and population growth have been robust, rent increases have accelerated. San Francisco was the top-ranked metro area for rent hikes last year. The effective rents jumped 10.3%, to $1,764, in 2007, compared with a 7.7% increase in 2006 and a 3.8% increase in 2005.
Art Swanson, chief operating officer for Lightner Property Group, which manages more than 300 apartments in San Francisco, says tenants in rent control apartments are unlikely to move out, so "a lot of people coming from out of town are paying the higher prices." Swanson says there's heavy demand for entry-level apartments, particularly studios, which are commanding higher rents.
"People are looking to take less to spend less," Swanson says. "They're being more budget-conscious."
Sam Chandan, chief economist for Reis, says he expects rents throughout the nation to begin moderating. "When people's pay is growing more slowly—like during an economic slowdown—renters become more price-sensitive," Chandan says. "Rent gains will remain healthy and stable, but it's unlikely that they will accelerate significantly."
For many Americans, as property values sink and mortgage interest payments rise, the dream of homeownership has turned into a nightmare. In the past, however, one group of people who have tended to ride out real estate downturns are landlords, who can raise rents while potential buyers sit on the sidelines waiting for conditions to settle. But not this year. Rent growth in 2007 actually went flat in some metro areas hardest hit by the housing meltdown.
"What we will see is more of a return to where we were before the huge boom in homeownership," says Rob Massey, vice-president of industry development for Rentals.com. "In cases where you don't see the rental market rebounding, it's because of an oversupply of properties."
Saturated Metro Markets
It's no surprise that rents are rocketing up in healthy urban job centers with limited room for new apartment construction such as San Francisco, San Jose, New York City, Seattle, and the District of Columbia. But other metro areas with slow job growth such as Denver, Boston, Dayton, Memphis, and Detroit experienced a continuing trend of weak rental growth, according to a ranking of effective rent increases in 2007 for large metro areas compiled for BusinessWeek.com by Manhattan-based real estate research firm Reis (REIS).
In many Florida metro areas, vacancies increased last year, and rents, following significant increases in 2005 and 2006, leveled off. That's good news for people who might have lost their homes in a foreclosure; there are plenty of places for them to rent. The state, which has one of the highest foreclosure rates in the nation, is also dealing with a ballooning inventory of rental properties. Investors who found they couldn't unload their condos after the housing bubble collapsed instead began scrambling to find tenants and started undercutting traditional apartment complex owners to fill units. Some landlords began offering one or two months of free rent to convince tenants to sign leases, says Robert Smith, president of Smith Equities Real Estate Investment Advisors in Orlando, Fla.
"It's all negotiable," Smith says. "A lot of people out there are trying to get your lease."
Condo Conversions Revert to Rentals
Many rental homes were taken off the market during the housing boom when they were converted into more profitable condos. Investors paid a premium of up to 50% to buy apartment buildings because they expected to make a big profit by selling them as condos, Smith says. When the housing market collapsed, investors who had started conversions tried to lure tenants back or simply were forced into foreclosure, he says.
"There's just more supply out there available for people to rent," says Avery Klann, senior vice-president for Apartment Realty Advisers in Boca Raton, Fla. "Over time those houses will be sold, and you'll start to see very strong rent growth in apartment communities as well."
Phoenix and Las Vegas, two other slumping real estate markets with a heavy concentration of investment properties, have been relatively flat for the past couple years. Rent growth in Miami also slowed in 2007 despite relatively tight apartment vacancies. The vacancy rate in Miami was 4% last year, and the average effective rent increased 2%, to $1,063, according to Reis.
Coastal Cities Command a Premium
Miami has stronger job growth than other South Florida communities and a larger proportion of new luxury condos, which don't compete with average apartment rentals, says Hessam Nadji, head of research for Marcus & Millichap Real Estate Investment Services.
In other coastal cities where the job market, housing market, and population growth have been robust, rent increases have accelerated. San Francisco was the top-ranked metro area for rent hikes last year. The effective rents jumped 10.3%, to $1,764, in 2007, compared with a 7.7% increase in 2006 and a 3.8% increase in 2005.
Art Swanson, chief operating officer for Lightner Property Group, which manages more than 300 apartments in San Francisco, says tenants in rent control apartments are unlikely to move out, so "a lot of people coming from out of town are paying the higher prices." Swanson says there's heavy demand for entry-level apartments, particularly studios, which are commanding higher rents.
"People are looking to take less to spend less," Swanson says. "They're being more budget-conscious."
Sam Chandan, chief economist for Reis, says he expects rents throughout the nation to begin moderating. "When people's pay is growing more slowly—like during an economic slowdown—renters become more price-sensitive," Chandan says. "Rent gains will remain healthy and stable, but it's unlikely that they will accelerate significantly."
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