In the Myrtle Beach, SC area, so many homes are for sale today. If you even remotely have thought about buying, now is the time.
If you've never considered a new home purchase, you might not know where to begin. The first thing you'll need to do is contact a professional lender. Contact one you can trust, one who will not load you up on fees and request a free prequalification.
Then you'll be ready to speak to a qualified real estate agent. Most of you probably think working with a real estate agent will cost you a great deal of money, but this is not the case at all.
Personally, I'll never understand why someone who is about to make the largest purchase in their life would not use the free services of a real estate agent. In a purchase transaction, the seller pays all the fees the real estate agents will receive. The buyer pays nothing.
As a lender, I have heard too many horror stories of those people who attempted to buy a home on their own. Consider the following and then decide if it's a good decision to use a professional real estate agent or not. Take my simple quiz, and the answer to you should be obvious.
1. Do you have the time, energy and contacts to do the home search, price negotiations, home inspection, contract preparation and contract review yourself?
2. Do you feel comfortable dealing with contracts and legal issues, and do you have access to all the contracts needed?
3. Can you honestly determine the true "fair market value" of any home?
4. Can you support your offer or price with facts of home sales in the neighborhood?
5. Do you have the negotiating skills to help negotiate your best price and terms?
6. Do you know what to look for when viewing a home? Do you know the tell-tale signs a home might have a problem?
7. Do you know if any future highway development, landfill or commercial development is planned for the area?
8. Do you know what you can request a seller to fix, what a seller is required to fix and what a seller does not have to fix during the process?
9. Do you know how to handle the situation if you have to sell your home before you can close on your next home?
10. Do you have any formal training or business background in real estate or real estate law?
You see, a real estate transaction is a complicated and time-consuming ordeal. Keep in mind professional real estate agents have done all of this before, and they do it every day of the week. On the other hand, most of us will buy only a few homes in our lifetime.
Even if you have undertaken this type of venture before, laws and regulations change all the time. Don't take the chance of becoming one of those horror stories I'll hear about in the future. To relieve a great deal of stress in your life, take my advice: Having an expert professional real estate agent on your side is critical.
As a leading lender in the area, I have contact with many professional real estate agents on a weekly basis. If you are at all hesitant or unsure about which real estate agent truly is a professional and will work in your best interest, contact me. I'll get you pre-qualified and put you in contact with real estate agents who always seem to go that extra step for each and every family they are involved with.
Saturday, May 17, 2008
Friday, May 16, 2008
New Homes posted biggest increase in more than two years
Construction of new homes posted the biggest increase in more than two years in April, a rare spot of good news amid the worst downturn in housing in more than two decades.
The Commerce Department reported Friday that housing construction rose by 8.2 percent in April to a seasonally adjusted annual rate of 1.03 million units. Building of single-family homes continued to weaken, however. The growth came from a big jump in apartment construction.
Still, the overall gain represented recovery after a steep slump in March building pushed activity to the slowest pace in 17 years.
The surprising rebound was expected to be temporary given the headwinds builders are confronting, from slumping sales to soaring home foreclosures.
The strength in April came entirely from a huge increase in apartment construction, which can be extremely volatile from month to month. Apartment building, defined as two or more units, jumped by 36 percent to a seasonally adjusted annual rate of 340,000 units.
The larger single-family sector dropped by 1.7 percent to an annual rate of 692,000 units.
Applications for building permits, considered a good sign of future activity, also recorded an increase in April, rising by 4.9 percent to 978,000 units. It was the first gain in permits in five months.
But economists believe that housing construction will remain under pressure until builders have more success in reducing a huge backlog of unsold homes.
That effort is being made more difficult by a record wave of foreclosures as millions of borrowers lose their homes because they cannot keep up with escalating payments, particularly on subprime mortgages, loans extended to people with weak credit histories.
By region of the country, construction posted the largest gain in the Midwest, an increase of 24.4 percent when compared to March. Construction rose 18.5 percent in the West and was up 3.6 percent in the South. However, construction fell by 12.7 percent in the Northeast.
Even with the improvement, housing construction nationwide was 30.6 percent below the level of activity a year ago.
The National Association of Home Builders reported Thursday that its monthly survey of builder sentiment edged down in May to a reading of 19, just above the all-time low of 18 set in December. The survey had held steady at the low level of 20 from February through April.
David Seiders, the group's chief economist, said that conditions in the industry have continued to deteriorate.
The Commerce Department reported Friday that housing construction rose by 8.2 percent in April to a seasonally adjusted annual rate of 1.03 million units. Building of single-family homes continued to weaken, however. The growth came from a big jump in apartment construction.
Still, the overall gain represented recovery after a steep slump in March building pushed activity to the slowest pace in 17 years.
The surprising rebound was expected to be temporary given the headwinds builders are confronting, from slumping sales to soaring home foreclosures.
The strength in April came entirely from a huge increase in apartment construction, which can be extremely volatile from month to month. Apartment building, defined as two or more units, jumped by 36 percent to a seasonally adjusted annual rate of 340,000 units.
The larger single-family sector dropped by 1.7 percent to an annual rate of 692,000 units.
Applications for building permits, considered a good sign of future activity, also recorded an increase in April, rising by 4.9 percent to 978,000 units. It was the first gain in permits in five months.
But economists believe that housing construction will remain under pressure until builders have more success in reducing a huge backlog of unsold homes.
That effort is being made more difficult by a record wave of foreclosures as millions of borrowers lose their homes because they cannot keep up with escalating payments, particularly on subprime mortgages, loans extended to people with weak credit histories.
By region of the country, construction posted the largest gain in the Midwest, an increase of 24.4 percent when compared to March. Construction rose 18.5 percent in the West and was up 3.6 percent in the South. However, construction fell by 12.7 percent in the Northeast.
Even with the improvement, housing construction nationwide was 30.6 percent below the level of activity a year ago.
The National Association of Home Builders reported Thursday that its monthly survey of builder sentiment edged down in May to a reading of 19, just above the all-time low of 18 set in December. The survey had held steady at the low level of 20 from February through April.
David Seiders, the group's chief economist, said that conditions in the industry have continued to deteriorate.
Thursday, May 15, 2008
Commercial real estate: Showing signs of life
Commercial broker Michael J. KeenanDespite a slow market for commercial and industrial properties, some real estate professionals say the first quarter of 2008 is an indicator this may be a good year after all.
"Things are picking up quite a bit," said Michael J. Keenan, owner of DeGroat Keenan Commercial in Saginaw. "The first quarter of '08 has been a significant upturn for us."
DeGroat said commercial properties are moving well in Kochville Township, north of Fashion Square Mall.
"There has been significant hotel activity and interest in Saginaw," he said, adding that he is closing deals on other commercial properties that have been vacant for several months, including one that was vacant for two years.
While the commercial market is still slow, industrial properties are moving well, said Larry Miller, president of The Miller Group in Saginaw Township.
"The interesting thing about our business is that there is always someone out there looking," he said. "We are affected by the economy, but not like residential real estate, which is affected by the economy and emotion."
His marketing strategies for commercial and industrial properties have not changed because of the slow economy, Miller said.
"The biggest change that we have seen in the past 10 years is high-speed Internet. We're marketing everything in a completely different way."
Moving a commercial property is very simple supply-and-demand economics, said Keenan, a licensed certified general appraiser. Quite often the stumbling block is a seller having unrealistic expectations of what the property is worth, he said.
More frequently, he is seeing a discount of 30 percent to 45 percent from what the seller is asking and what actually is being paid for property.
"It just depends on the motivation and urgency of the seller," he said.
There is no firm method to use when determining whether a vacant building should be torn down, he added.
"It really is a case-by-case basis," he said, but after a certain number of years the property gets what he calls "sick building syndrome." After being vacant for so long, it is more cost effective to just tear it down than pay for renovations, he said.
One example of that is the building on Gratiot Road in front of the Kroger/Kmart strip mall in Saginaw Township. That building has been vacant for about 10 years and if anyone does buy it, it is very likely they will have to tear it down, Keenan said.
Likewise the property at Green Acres Plaza on State Street in Saginaw Township, where Kroger is building a new store on the site of the former Farmer Jack grocery store. It was more cost effective to re-build than use the existing building, Miller said.
However, tearing down commercial properties is not all that common in the Tri-Cities, Miller said, pointing out that it happens more frequently in bigger cities.
"We don't have a lot of buildings so we try to protect them," he said, noting that demolition is more likely when a national company purchases a commercial site.
Other cities keep track of how much commercial property is vacant, but Saginaw does not, Miller said.
"There is probably more on the market than there was five years ago and there's not a lot of new people coming in," he said, "but the industrial market is starting to move, so that keeps us pretty busy."
Miller calls the current slack market a cyclical phenomenon.
"Everybody's hurting right now," he said. "This happens every 20 to 25 years, but it is starting to stabilize and this should be a pretty good year for us. There are a lot of positive signals."
"Things are picking up quite a bit," said Michael J. Keenan, owner of DeGroat Keenan Commercial in Saginaw. "The first quarter of '08 has been a significant upturn for us."
DeGroat said commercial properties are moving well in Kochville Township, north of Fashion Square Mall.
"There has been significant hotel activity and interest in Saginaw," he said, adding that he is closing deals on other commercial properties that have been vacant for several months, including one that was vacant for two years.
While the commercial market is still slow, industrial properties are moving well, said Larry Miller, president of The Miller Group in Saginaw Township.
"The interesting thing about our business is that there is always someone out there looking," he said. "We are affected by the economy, but not like residential real estate, which is affected by the economy and emotion."
His marketing strategies for commercial and industrial properties have not changed because of the slow economy, Miller said.
"The biggest change that we have seen in the past 10 years is high-speed Internet. We're marketing everything in a completely different way."
Moving a commercial property is very simple supply-and-demand economics, said Keenan, a licensed certified general appraiser. Quite often the stumbling block is a seller having unrealistic expectations of what the property is worth, he said.
More frequently, he is seeing a discount of 30 percent to 45 percent from what the seller is asking and what actually is being paid for property.
"It just depends on the motivation and urgency of the seller," he said.
There is no firm method to use when determining whether a vacant building should be torn down, he added.
"It really is a case-by-case basis," he said, but after a certain number of years the property gets what he calls "sick building syndrome." After being vacant for so long, it is more cost effective to just tear it down than pay for renovations, he said.
One example of that is the building on Gratiot Road in front of the Kroger/Kmart strip mall in Saginaw Township. That building has been vacant for about 10 years and if anyone does buy it, it is very likely they will have to tear it down, Keenan said.
Likewise the property at Green Acres Plaza on State Street in Saginaw Township, where Kroger is building a new store on the site of the former Farmer Jack grocery store. It was more cost effective to re-build than use the existing building, Miller said.
However, tearing down commercial properties is not all that common in the Tri-Cities, Miller said, pointing out that it happens more frequently in bigger cities.
"We don't have a lot of buildings so we try to protect them," he said, noting that demolition is more likely when a national company purchases a commercial site.
Other cities keep track of how much commercial property is vacant, but Saginaw does not, Miller said.
"There is probably more on the market than there was five years ago and there's not a lot of new people coming in," he said, "but the industrial market is starting to move, so that keeps us pretty busy."
Miller calls the current slack market a cyclical phenomenon.
"Everybody's hurting right now," he said. "This happens every 20 to 25 years, but it is starting to stabilize and this should be a pretty good year for us. There are a lot of positive signals."
The Housing Crisis Is Over
The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.
How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.
Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.
The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.
In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.
The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.
Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.
Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.
Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.
Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.
This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.
When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.
More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.
A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.
We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.
Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.
How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.
Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.
The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.
In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.
The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.
Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.
Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.
Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.
Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.
This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.
When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.
More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.
A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.
We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.
Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.
Wednesday, May 14, 2008
Fire crews find hydrant didn't work
Georgetown Water and Sewer is in the Debordieu community. They are trying to figure out why a fire hydrant wasn't working when a nearby house fire broke out Tuesday.
When crews arrived to the house they discovered the hydrant didn't work.
Georgetown Sewer and Water says that's because the lead valve was shut.
Instead firefighters had to run 3,000 feet of hoses.
The flames destroyed the home and sent burning embers into seven other nearby houses.
In February, crews responded to another house fire and found the hydrant there didn't work.
Georgetown Water and Sewer is in charge of hydrants..
When crews arrived to the house they discovered the hydrant didn't work.
Georgetown Sewer and Water says that's because the lead valve was shut.
Instead firefighters had to run 3,000 feet of hoses.
The flames destroyed the home and sent burning embers into seven other nearby houses.
In February, crews responded to another house fire and found the hydrant there didn't work.
Georgetown Water and Sewer is in charge of hydrants..
Tuesday, May 13, 2008
4 Must-Know Mortgage Guideline Changes
Fannie Mae recently announced four key initiatives that will have a huge positive impact for home owners and buyers. “When Fannie Mae changes their policies and procedures, it has a wide-spread impact on homeowners,” said Gibran Nicholas, Chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. “This is because over 60 percent of US home mortgages are securitized, meaning that they are owned by investors like Fannie Mae and Freddie Mac who issue bonds on the bond market using these mortgages as collateral.”
The four changes are:
1. Fannie Mae will allow borrowers to refinance up to 120% of their home value if they are currently paying their mortgages on time.
“This is a huge positive development for responsible homeowners who are faithfully making their payments, but simply find themselves in a negative equity situation due to declining real estate values,” said Nicholas.
2. Fannie Mae is renewing and expanding their partnership with the state Housing Finance Agencies to provide $10 billion in financing for qualified first-time home buyers.
“This is important because it gives first time home buyers access to more financing options, thereby increasing the amount of eligible buyers in the marketplace,” Nicholas said.
3. Fannie Mae is teaming up with the Self-Help Credit Union, one of their long-time partners, in order to help families in hard-hit real estate markets get into foreclosed properties through a rent-to-own program.
This will stabilize communities by enhancing the options available to renters.
4. Effective immediately, Fannie Mae will buy new jumbo-conforming loans at the same price that they buy other conforming loans throughout the remainder of 2008.
“This is an enormous benefit for mortgage borrowers in high cost areas who have been largely disappointed with the persistently high rates on jumbo loans,” said Nicholas. As part of the much touted Economic Stimulus Package of 2008, limits on jumbo mortgages were increased from $417,000 to up to $729,750 in high cost areas. “The reality of the situation is that these higher loan limits have not really been effective because Fannie Mae has charged higher interest rates and fees on these loans versus traditional conforming loans at or below the $417,000 limit,” said Nicholas. The new rules abolish this pricing difference, and allow jumbo-conforming loans to priced exactly the same as traditional conforming loans. “These low interest rates expire at the end of 2008, so now is a perfect time for borrowers in these higher-priced markets to buy homes,” said Nicholas.
The four changes are:
1. Fannie Mae will allow borrowers to refinance up to 120% of their home value if they are currently paying their mortgages on time.
“This is a huge positive development for responsible homeowners who are faithfully making their payments, but simply find themselves in a negative equity situation due to declining real estate values,” said Nicholas.
2. Fannie Mae is renewing and expanding their partnership with the state Housing Finance Agencies to provide $10 billion in financing for qualified first-time home buyers.
“This is important because it gives first time home buyers access to more financing options, thereby increasing the amount of eligible buyers in the marketplace,” Nicholas said.
3. Fannie Mae is teaming up with the Self-Help Credit Union, one of their long-time partners, in order to help families in hard-hit real estate markets get into foreclosed properties through a rent-to-own program.
This will stabilize communities by enhancing the options available to renters.
4. Effective immediately, Fannie Mae will buy new jumbo-conforming loans at the same price that they buy other conforming loans throughout the remainder of 2008.
“This is an enormous benefit for mortgage borrowers in high cost areas who have been largely disappointed with the persistently high rates on jumbo loans,” said Nicholas. As part of the much touted Economic Stimulus Package of 2008, limits on jumbo mortgages were increased from $417,000 to up to $729,750 in high cost areas. “The reality of the situation is that these higher loan limits have not really been effective because Fannie Mae has charged higher interest rates and fees on these loans versus traditional conforming loans at or below the $417,000 limit,” said Nicholas. The new rules abolish this pricing difference, and allow jumbo-conforming loans to priced exactly the same as traditional conforming loans. “These low interest rates expire at the end of 2008, so now is a perfect time for borrowers in these higher-priced markets to buy homes,” said Nicholas.
Monday, May 12, 2008
Mailing a letter rising to 42 cents today
An extra penny for your thoughts.
Mailing a letter costs a little more, with the price of a first-class stamp rising to 42 cents today.
People who planned ahead and bought Forever stamps for 41 cents each can still use them without extra postage.
Forever stamps also are going up to 42 cents.
But buyers may want to stock up anyway, looking ahead to next May when prices are expected to be adjusted again.
The cost to mail a post card also goes up a penny, to 27 cents.
Certified mail costs a nickel more, at $2.70. Priority and express mail also are getting more expensive.
Mailing a letter costs a little more, with the price of a first-class stamp rising to 42 cents today.
People who planned ahead and bought Forever stamps for 41 cents each can still use them without extra postage.
Forever stamps also are going up to 42 cents.
But buyers may want to stock up anyway, looking ahead to next May when prices are expected to be adjusted again.
The cost to mail a post card also goes up a penny, to 27 cents.
Certified mail costs a nickel more, at $2.70. Priority and express mail also are getting more expensive.
Sunday, May 11, 2008
making money in real estate
So then, can the average person make money in real estate? Of course, but how?
There is an unlimited variety of ways to make money in real estate, so let's just talk about one of the most common methods. It involves the use of leverage. Leverage is defined as "the use of a small initial investment, credit, or borrowed funds to gain a very high return in relation to one's investment, to control a much larger investment, or to reduce one's own liability for any loss."
Let's see how leverage works in real estate. By the way, this is a hypothetical example and is not representative of any specific situation. Your results, will vary:
Joe buys a house and makes a down payment of 20%. Joe rents the house out for enough to cover his payment. Joe is probably upside down some months because he is responsible for repairs and maintenance, and occasionally the house sits empty. But he is in it for the long haul, so he keeps it going like this for several years.
In 7 years, we’ll assume the house appraises for a larger value than his purchase price, so Joe refinances and pulls just enough equity out to purchase another home. He does the same routine with this second house, rents it out, hopefully for enough to cover his payment. Note that the rent on his first house has hopefully increased enough to cover his new higher payment. So, he is still just covering his cost.
After another 7 years, both houses have appreciated in value. Now he has considerable equity in each house and does the same thing again. He refinances both, and uses the money to invest in more property. Except this time, he might be able to afford a down payment on two houses.
So, in year 15, Joe owns 4 houses.
Note that the appreciation on the houses is not based on Joe's investment, but rather on the sales price of the house. This is where leverage becomes important. With the first house, Joe actually invested $50,000, but the house is appreciating based in its sales price.
Now, after 14 years, Joe has built a $50,000 investment into several homes, each of which has the potential to increase his net worth and contribute to his cash flow.
There are great risks associated with leverage such as potential adverse real estate market forces, regulatory changes, and potential real estate illiquidity, and there are no assurances the strategy’s objective will be attained.
So do your homework, investigate your options, and ask those more experienced than yourself for help.
There is an unlimited variety of ways to make money in real estate, so let's just talk about one of the most common methods. It involves the use of leverage. Leverage is defined as "the use of a small initial investment, credit, or borrowed funds to gain a very high return in relation to one's investment, to control a much larger investment, or to reduce one's own liability for any loss."
Let's see how leverage works in real estate. By the way, this is a hypothetical example and is not representative of any specific situation. Your results, will vary:
Joe buys a house and makes a down payment of 20%. Joe rents the house out for enough to cover his payment. Joe is probably upside down some months because he is responsible for repairs and maintenance, and occasionally the house sits empty. But he is in it for the long haul, so he keeps it going like this for several years.
In 7 years, we’ll assume the house appraises for a larger value than his purchase price, so Joe refinances and pulls just enough equity out to purchase another home. He does the same routine with this second house, rents it out, hopefully for enough to cover his payment. Note that the rent on his first house has hopefully increased enough to cover his new higher payment. So, he is still just covering his cost.
After another 7 years, both houses have appreciated in value. Now he has considerable equity in each house and does the same thing again. He refinances both, and uses the money to invest in more property. Except this time, he might be able to afford a down payment on two houses.
So, in year 15, Joe owns 4 houses.
Note that the appreciation on the houses is not based on Joe's investment, but rather on the sales price of the house. This is where leverage becomes important. With the first house, Joe actually invested $50,000, but the house is appreciating based in its sales price.
Now, after 14 years, Joe has built a $50,000 investment into several homes, each of which has the potential to increase his net worth and contribute to his cash flow.
There are great risks associated with leverage such as potential adverse real estate market forces, regulatory changes, and potential real estate illiquidity, and there are no assurances the strategy’s objective will be attained.
So do your homework, investigate your options, and ask those more experienced than yourself for help.
Media can send real estate into nose dive
A new study reveals that the media's influence on real estate trends is immediate and significant.
The website realestate.co.nz monitored seven websites over two years from January 2006 until the end of April this year to gauge buyer and seller behaviour. It found that a series of negative headlines can send interest in property buying into a nose dive.
Chief executive Alistair Helm says the most dramatic data shows the steep fall-off in traffic to websites in the middle of February this year which coincides with media stories predicting a 20 to 30 percent correction in property prices. Mr Helm says website traffic clearly shows that the market was spooked by headlines such as 'Property Market Set to Crash Says Expert' and 'House Sale Low is Sign the Tumble has Started.'
The study also revealed a significant drop off in the number of new houses being listed for sale from early March and the total number of listings remaining static during that month, which probably indicates a combination of property being withdrawn from sale and owners reluctant to enter a very slow market.
Mr Helm says buying a home is the most expensive purchase most people will ever make and it is one that is fraught with uncertainty and complexity. He says given the size of the industry, the extent of the media's influence is a wake-up call.
?Perhaps it is time the industry began to provide its own media and look at directly connecting with customers by way of blog and email alerts and being more open with the major media by providing regular and expert insight into the state of the market.?
Realestate.co.nz says the Real Estate Industry turned over $34 billion in the past 12 months, transacted by over 16,000 agents. The country's real estate asset base is valued at $420 billion.
The website realestate.co.nz monitored seven websites over two years from January 2006 until the end of April this year to gauge buyer and seller behaviour. It found that a series of negative headlines can send interest in property buying into a nose dive.
Chief executive Alistair Helm says the most dramatic data shows the steep fall-off in traffic to websites in the middle of February this year which coincides with media stories predicting a 20 to 30 percent correction in property prices. Mr Helm says website traffic clearly shows that the market was spooked by headlines such as 'Property Market Set to Crash Says Expert' and 'House Sale Low is Sign the Tumble has Started.'
The study also revealed a significant drop off in the number of new houses being listed for sale from early March and the total number of listings remaining static during that month, which probably indicates a combination of property being withdrawn from sale and owners reluctant to enter a very slow market.
Mr Helm says buying a home is the most expensive purchase most people will ever make and it is one that is fraught with uncertainty and complexity. He says given the size of the industry, the extent of the media's influence is a wake-up call.
?Perhaps it is time the industry began to provide its own media and look at directly connecting with customers by way of blog and email alerts and being more open with the major media by providing regular and expert insight into the state of the market.?
Realestate.co.nz says the Real Estate Industry turned over $34 billion in the past 12 months, transacted by over 16,000 agents. The country's real estate asset base is valued at $420 billion.
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