Opportunity of a Lifetime
February 26, 2009
Warren Buffet says, “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.”
While Mr. Buffet was writing about buying stocks, the same can be said for housing today. Housing issues have permeated the economy both locally and nationally. This week, one index that tracks housing prices, S&P/Case-Shiller Home Price Indices, indicated home values fell the most since 1968, declining 18.5% in December from the year before. Looked at from a different perspective, this means home prices have fallen to levels not seen in six to twelve years, depending on individual markets.
Following the Case-Schiller report was the report from the National Association of Realtors (NAR) recently. The NAR reported that home prices for the month of January fell by 14.8%. The bright spot though in contrast was that the number of homes sold in December increased.
Home buyers from coast-to-coast have been buying distressed properties at the rate of 45% of total sales. Recognizing that now is the time to buy, everyone – from those looking to purchase their first home to seasoned real estate investors – is buying homes today.
Bruce Norris, the head of an investment group in Southern California, expects to buy at least 100 homes this year as, “This is the buying opportunity of our lifetime.”
Fundamentals Point to Strength
The basic fundamentals of the housing market point to higher prices ahead. Almost half of the properties being sold today are existing homes that are either owned by banks or homes on which banks are accepting short sales, allowing them to be sold for less than what is owed. New homes or homes under construction are near all-time lows. The country’s demographics point to more potential buyers coming into the housing market than projected inventory in coming years. This all points to higher prices on the horizon as demand will be greater than supply. This is supported by the fact that the inventory of unsold homes fell 2.7% in January.
Why Buy Now?
Three very important reasons to buy now are:
- Interest rates are near all time lows;
- Home prices have declined to levels not seen in years; and
- Qualified first-time home buyers are now eligible for up to an $8,000 tax credit.
Lower Prices Don’t Always Equate to Lower Payments
One final point to consider. Even if you believe that home prices will continue to decline, it’s very difficult to believe that interest rates will remain at these low levels. Did you know that even if home prices were to decline 10% but also during that time, interest rates available for home loans were to increase by 1.00%, your monthly principal and interest payment would actually be higher? It’s true. So, if you or your clients are thinking of buying, get busy and get in the game. To quote Mr. Buffet again, “If you wait for the robins, spring will be over.”
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The Crisis of Credit Visualized – Part 2
February 25, 2009
Jonathan Jarvis continues to quickly supply the essence of the complex credit crisis to those unfamiliar and uninitiated in “The Crisis of Credit Visualized -- Part 2.
Sellers, Do You Know Who Is Knocking At Your Door?
February 24, 2009
Who’s knocking at your door? Do you know who is standing outside?
Are they a buyer? Or, are they looking for a way into your home?
It’s a tough real estate market. I know Atlanta sellers are anxious to find a buyer. But…
Please, don’t open your door to an unrepresented buyer.
Insist buyers make an appointment to view the property with your real estate agent, or theirs.
If you are not represented by an agent, schedule an appointment for a later time.
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The Short and Simple Story of the Credit Crisis-Part 1
February 24, 2009
Jonathan Jarvis has given form to a complex situation like the credit crisis as part of his thesis work in the Media Design Program, a graduate studio at the Art Center College of Design in Pasadena, California.
What Home Sellers Want
February 18, 2009
Home buyers ask, “What do sellers want?”
Sellers want to know, “What do home buyers want?”
Every transaction requires a home buyer and a home seller, so it’s only fair to ask both sides the same question.
Using the same research tool from yesterday, we discovered what home sellers want to know.
What Do Home Sellers Want?
I don’t see a meeting of the minds. Do you?
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What Home Buyers Want
February 17, 2009
What do home buyers want? Sellers want to know, so do real estate and mortgage professionals.
Today, I used an online tool to discover the answer to that question.
What Do Home Buyers Want?
Tomorrow, we answer the question, “What do home sellers want?”
Stimulus Bill Preserves Real Estate Mandates
February 14, 2009
Here’s our take on the Stimulus Bill and Treasury announcements made this week. We look at the Stimulis package AND the Treasury’s package holistically, in compliment with each other – mostly because that’s how the Obama team is looking at it. Your representatives, the NAR Board of Directors, asked us in November to do 4 things (with an unspoken but clearly understood mandate to PRESERVE what we already have):
- get loan limits raised for high cost areas
- make the $7,500 tax credit NOT a loan
- try to find ways to push interest rates down (which are higher
than they should be due to systemic risk right now) by 200 basis points - help provide solutions to the foreclosure/short sale problem.
So here’s what we have achieved:
- the loan limits will be raised to $727,000 in high cost areas
- the tax credit will be raised to $8,000 with NO payback [a true credit]
- interest rates have come down 125-150 basis points
- the bill has over $50 billion in it for foreclosure mitigation, with Geitners
Treasury plan signaling that the second half of TARP and TALF will be used
to mitigate foreclosures through a government guarantee, drive down
interest rates by buying another $200-300 billion of mortgage paper from
the GSES’s thereby freeing them up to do the same with new mortgages, - Fannie has just agreed to lift the cap of 4 investment properties eligible for
loans and raise it to 10.
In addition, we preserved what we have — which some tend to forget is always on the table when these negotiations start up again — an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects).
- mortgage interest deductability
- real estate tax deductability
- the $250,000/$500,000 cap gains exclusion.
We did make a run at the $15,000 credit — and we would have loved to have gotten that or the Homebuilders $22,000 credit idea as well as their 5 year loss carryback deal, but they were considered too rich for this program. What it did do though is totally take the debate off of whether a tax credit should be reinstated at all (it expired last year) and whether it was a true credit or a repayable loan, and kept the conversation on how much it should be. It also kept the debate off of ‘what we are willing to give up to get a $15,000 tax credit’ and kept the debate again, on how much it should be.
It’s pretty hard to complain when they give you what you ask for and you lose something you never had.
While we study the Treasury specifics on their major role in providing the rest of the housing solution — there is much more to come and we are working diligently with the Administration to help ‘unclog the pipeline’ and get capital flowing into housing again.
Sincerely,
Charles McMillan, CIPS, GRI
2009 NAR President
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What’s To Say?
February 3, 2009
Sure hasn’t been much to say about Atlanta real estate – or any real estate – these days unless you wanna talk about steals and deals.
So, I’ve written 25 Things About Me over here. And built a site for real estate agents over here.
Thought I should write today to let you know we are still in the real estate business.
Red Hot Deal Days
February 3, 2009
Here is a quick tip and a “down and dirty secret” for any real estate investor looking for deals on Atlanta foreclosures.
There are over 1000 new foreclosed listings on the market right now.
Moreover working with an Atlanta area agent who specializes in real estate investments and foreclosed homes can save you hundreds of hours and thousands of dollars by helping you avoid bad decisions.
There are many websites which sell lists of Atlanta foreclosures. While their pricing may sound like a deal and you may have the impression they are an actual real estate company that may not be the truth. In fact you want to make certain the foreclosure list is accurate and up to date. Even if you find a deal on a foreclosed property what looks good on paper may not really be such a steal of a deal.
Make sure you are working with an Atlanta area agent who is experienced in identifying foreclosure deals for real estate investors. None of that transaction is the same as when someone goes to buy a home to live in. There are real estate agents in Atlanta, like Kathy Drewien, who know how to locate foreclosures for real estate investors.
Image by Leo Reynolds via Flickr
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