The Signs of The Times – In Real Estate


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The Signs of The Times – In Real Estate

Below are two charts showing the new home sales before the housing bust to the present day and the inventory levels on a national level. It comes as no surprise to anyone that the housing market crashed in 2005 and continues to struggle to this day; but as I have reported many times in this blog, there are signs of stability and an eventual turn around.

You will notice from the first chart that it appears that the crash has bottomed out and, as slight as it may be, there is a slight upward tick in the sale of homes. To add to this scenario the inventory of existing homes on the market has dropped to a six year low. A lot of people may be waiting in the wings to sell their homes once the market picks up, but for right now the inventory is lower than it has been in quite some time.

The other good news is that interest rates remain low – 4.04% on November 29, 2011. The combination of low interest rates, low home prices and lower inventory, may indicate that this is a good time to buy your next home before the market heats up too much.

Don’t get me wrong, the market is not robust as of now, but it certainly shows signs of stability and improvement in many areas. As you know, real estate is a very local matter. I always encourage everyone to talk to a REALTOR who can give you the facts you need to make a sound decision.

As always, if I can help you with any of your real estate needs, or to answer any questions you may have, please don’t hesitate to contact me by text or phone call at 615 417-8182 or email me at RolandLow1@gmail.com.

Roland www.GreaterNashvilleRealEstate.info

Spring Hill Tennessee Plant to Reopen


Spring Hill, Tennessee Plant to Reopen!

Anyone who has followed this blog for any length of time knows that I have been very optimistic about the real estate market and continue to be so.   Although the real estate market is still deeply troubled in many parts of the country, there are positive signs of turn around, especially in middle Tennessee.   It is important to remember that real estate is a very local issue.  A relocation of a plant from one part of the county to another has a detrimental effect in one location but a jubilant effect in another.

In the last few months in Williamson County Tennessee, where I live and sell real estate, there have been several factors that are indicating a rebound in the real estate market.  The inventory of homes on the market has decreased, which will eventually result in increased home prices; the number of homes selling has increased over the last few years, and the price of homes has at least appeared to have bottomed out and in some cases may have even increased in some instances.

To add to the good news, General Motors has just announced that it will reopen its idled plant in Spring Hill, Tennessee.  They will be building the Chevrolet Equinox at this plant and will be hiring 700 people.  This is very good news to the economy of middle Tennessee and should be welcome news to anyone looking to buy or sell real estate.

If you are thinking of buying or selling real estate, talk to a REALTOR who can give you professional service and provide you with information you will need to make informed decisions.

As always, if I can help you with any of your real estate needs or to answer any questions you may have, please don’t hesitate to contact me by text or phone call at 615 417-8182 or email me at RolandLow1@gmail.com.

Roland                                                                                     www.GreaterNashvilleRealEstate.info

 

The Real Estate Blame Game


The Real Estate Blame Game

Have you ever been around young kids who are in the midst of a squabble and each of them are blaming the others for some play time that went awry?  By the time you try to figure out what the raucous is all about everyone is so involved with telling you what the other person did wrong, that the only steps you can take to calm the issue is have them go to their room.  It may not completely solve the issue, but the quiet certainly is welcome.

I have come to the conclusion that the real estate bust that has been hanging on to this country for the last few years is the same type of problem.  I recently attended a seminar on Leadership in Real Estate, and although the information was very perceptive , there was too  much chatter in the room about what caused the real estate crash and trying to decide who or what institution was to blame.

Let me tell you the facts, as I see them, about the real estate market:

First of all, I do not know everything  about “the reason” why the real estate market crashed.  As a loss prevention professional before getting into real estate, I do know that when you have a disaster there is always – and I repeat always – more than one thing that went awry. Before we can fix the problem we need to fix each and everyone of those things that went wrong.  We are still like little kids screaming what the other person did wrong.

Second, there is enough blame to go around to everyone involved.  Lets accept that, roll up our sleeves and say “Where do we go from here?”  All to often, I hear people talking about the problem as though they know what “the” reason is.  There is no “the” reason, there is a multitude of reasons – accept it, get over it and move on.

Let me list some of the reasons that I believe are responsible for the housing collapse.  These are listed in no particular order and I am sure there are many more:

First, getting a mortgage became too easy.  I am not talking about conventional mortgages, but I am talking about these no-doc loans, interest-only loans; loans for 125% the value of the property, these types of loans.  Mortgages were given to people who did not have to supply any evidence of income.  To correct this some elected officials now want to require 20% down in order to buy a house.  That is not the solution to this problem – it is exacerbating the problem and is going from one extreme to the other.

Second, equity loans were used extensively for everyday living, and not to increase the value of the property.   Having a second mortgage, or home equity loan, became the norm instead of the exception.  All to often, the equity was cashed out for items such as vacations, a new car, or to pay off high interest credit cards.  Unfortunately, many people reused the credit cards and now had the equity loan and the credit card payments.  Unfortunately, many people had little to no choice but to do so.

Financial institutions issuing mortgages sold the mortgages and did not have any “skin in the game.”   Years ago when you wanted to buy a house, you went to the local bank who determined the risk involved in giving you a mortgage.  If the bank did, they held that paper until it was paid.  Now when a mortgage company gives you a mortgage they “securitize” the mortgage by grouping or bundling many mortgages together and selling them to a third party.  The idea is that by doing so, if a few of the mortgages went bad, there were enough in the securitized instrument, that the value would not decrease significantly.  Unfortunately this lead to mortgage companies giving mortgages to people who had little to no chance of paying it.  These securitized instruments were then sold and resold on the open market.  The securitized instruments were sold as secure mortgages, when in fact there were not.  This was the time bomb that was waiting to explode and take everyone along with it.  Who ever was left holding the instrument when the market went down was the company that got hurt.

Financial institutions are allowed to hold assets on the books as cost rather than value.   This has been, and will continue to be, a serious problem for the real estate market and the economy as a whole.  Mortgage companies that foreclosed on a property in which the mortgage was $250,000 can hold that amount on their books, even though the true market value of the property may have dropped 50% as is the case in some areas.  Therefore, the property is being held on the books as a $250,000 asset, when in reality its worth is only $125,000.  There is no incentive for the banks holding that property to sell it because it will diminish the banks worth.  The inflated amount they have on the books is a smoke screen to the value of the bank.

The point that I am trying to make is that if we want to talk about blame, there is plenty to go around., but we need to talk about how to fix the problem.  More often than not, recessions have been pulled out of the downward trend with the help of the real estate market.  Until we get behind programs and legislation to support that endeavor, we will more than likely continue to sputter in our recovery.

Fortunately, Williamson County, Tennessee, where I live and work has not been hit as hard by the recession as many other parts of the country.  There are clear indications of upward trend in both number of homes sold, especially new construction, and to a lesser degree, the price of homes.  Williamson County actually had a 16.9% increase in the sale of homes in September of this year.

If you are thinking of buying or selling real estate, anywhere in the country, talk to a REALTOR.  They have the facts for your local area to help you decide what is right for you.

As always, if I can help with any of your real estate needs, or to answer any questions you may have, please don’t hesitate to contact me by text or phone call at 615 417-8182 or email me at RolandLow1@gmail.com.

Roland                                                                                    www.GreaterNashvilleRealEstate.info

Economist Predicts Housing Market to Improve in 2012


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Economist Predicts Housing Market to Improve in 2012

The U.S. housing market has endured several years of tumultuous sales, but that may be coming to an end in 2012.  Chief economist Lawrence Yun, of the National REALTORS Association reported that the economy is expected to show improvement – gradual, but steady gains – in 2012.  Existing home sales will be edging up 4% – 5% and new home sales will get getting an even bigger boost.

This trend has been steadily growing during the past year, with tight mortgage credit conditions being the main factor of the weak economic growth,  Never the less, there is sizeable pent-up demand, and historically low interest rates, coupled with a decline, albeit slight, reduction in unemployment.  Yun predicted that 2011 would end with gross domestic product growth rate of 1.8% and 2012 with a 2.2% GDP.  The prediction was also made that mortgage interest rates would remain low, but will climb to the 4.5% range by the second half of 2012.

These indicators will be critical to home buyers and sellers in the next year.  For example: If you are currently looking at buying a home for $250,000 with the current interest rate of 4.0%, you would be looking at a mortgage payment for principal and interest of $1,193.54 (not including taxes, insurance or HOA).  Buyers who wait, run the risk of the interest rates climbing and the price of the home increasing as the inventory decreases. If the home price increases 5% from $250,000 to $262,500 and the interest rate increases a modest half of one percent to 4.5%, which it is predicted to do, your monthly payments for principal and interest will increase to $1,330.05.

That increase of $136.51 a month may not sound like a lot, but it may be enough to knock some buyers out of the market for the home they may want.  It also amounts to an extra $49,143.60 paid out over the term of the loan.

Real estate is a local business.  If you are thinking of buying or selling real estate, talk to a REALTOR in your area who can give you the facts you need to make an informed decision.

As always, if I can help you with any of your real estate needs in the Greater Nashville market, please don’t hesitate to contact me by text or phone at 615 417-8182 or email me at RolandLow1@gmail.com

Roland                                                                                       ww.GreaterNashvilleRealEstate.info

What You Need to Know About Mortgages When Buying A Home


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What you need to know about mortgages when buying a home

Buying a home is a great way to start building your net worth – if it is done wisely.   Having the right mortgage for your home and your circumstances is critically important.

Several years ago mortgages were handed out like candy on Halloween.  It did not matter if you had a secure job, there was a mortgage company that would give you a mortgage.  And for somewhat good reason; home prices were rising dramatically and so it seemed there was little chance that the price would go down.  If the home owners lost their job or had other financial set backs the home would sell in a relatively short period of time for more than the mortgage.  It was a win-win – so it seemed.

As every one now knows the real estate market collapsed sending mortgage companies, banks and homeowners into a tail spin.  Home prices tumbled.  Homes that would sell in a matter of days, if not hours, a few years ago, now sat empty, unable to sell.

But the market is picking up and there are positive signs of a rebound.  Home prices in many of the markets are stabilizing, and some are rising; mortgage interest rates are historically low, and there is a pent up demand for home ownership.  Now it is a question of sellers pricing their home to what the market will pay, and buyers finding the right mortgage for their situation and finding a home to buy.

It is important to comparison shop and understand the loan terms and associated benefits and risks prior to choosing a mortgage. Some mortgage lenders may advertise products that appear to carry substantially lower interest rates than others. These rates, however, may simply be introductory or “teaser” rates to attract customers. Typically, the introductory rate will adjust to a higher rate at some point in the loan term. Many times the “teaser” rate is for people with extremely high credit scores.

Don’t be afraid to ask questions, and, as I have said in the past, if the mortgage person does not like to take the time to answer your questions, find a new mortgage company.

Federal law requires the lender to provide you with specific written disclosures during the application process. Federal Reserve Regulation Z, which implements the Truth in Lending Act, and the Real Estate Settlement Procedures Act (RESPA) mandate that the lender provide you with specific documents such as The Good Faith Estimate and the initial Truth in Lending Disclosures. These documents contain the terms of your loan: review them carefully before closing on your loan. They should accurately reflect the terms promised by your lender.  Do not be surprised if you are overwhelmed by the information provided.  The law is fulfilled if the lender provides you with the documents, but it is important that you ask questions and understand.

Many times the “teaser” rate you will see advertised is for an adjustable rate mortgage.  An ARM (adjustable rate mortgage) may be a good option, depending on your situation, however, it is important to know that most likely, your monthly payments will go up at some time in the future, and quite possibly, it may rise dramatically.  Knowing how much the increase can be is critical to understanding whether this is the right mortgage for you.  There is usually a limit to how much the rate can increase for any given increase and usually a cap of how much it can increase over the life of the loan.  Those increases can be substantial and need to be understood.

If you have an adjustable-rate mortgage, it may be costly to refinance as interest rates start rising: Prepayment penalties (fees charged for paying the loan off early) could limit your ability to get out of an unfavorable loan without substantial penalties; or if your credit rating deteriorates, you may no longer qualify for the best rates. Be cautious of lenders who want to steer you toward a particular product and make predictions about the future direction of interest rates. Telling you that you can always refinance at a later date is, in effect, making such a prediction and may not be the case.

Having a professional mortgage person on your team when buying a home is critical to a successful purchase.  There is nothing wrong with shopping for the right mortgage and mortgage company.  If you need help in finding a mortgage person, talk to a REALTOR in your area who can provide you with the information you need, but keep in mind, who you decide to have for your mortgage is your decision.  Learn the facts, and ask questions.

If you are thinking of buying or selling real estate, talk to a REALTOR in your area and get the facts on the market conditions. A REALTOR is a professional who can help you with all your real estate needs.

As always, if I can help you with any of your real estate needs in the Greater Nashville market, please don’t hesitate to contact me by text or phone at 615 417-8182 or email me at RolandLow1@gmail.com

Roland                                                                                    www.GreaterNashvilleRealEstate.info

Home Ownership vs. Rental


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Home Ownership vs. Rental

The U.S. will not become a nation of renters, as some people predict; there are just too many benefits, both financial and otherwise, to own versus rent. That’s according to the combined findings of several recent studies and presented at the National REALTORS Convention this year.

“We knew that homeowners, on average, accumulate more wealth than renters,” said Ken Johnson, editor, Journal of Housing Research at Florida International University. Johnson spoke at the session and conducted the analysis with Eli Beracha. “These findings indicate that homeownership is a self-imposed savings plan. Not everyone should own a home, but from a financial perspective, people who  can benefit from buying.”

According to the most recent data from the Federal Reserve Board, a homeowner’s net worth is 45.9 times that of a renter’s.  Another analysis conducted by Johnson, Beracha, Hilla Skiba and Mark Hirschey determined that housing affordability is at record levels. Twenty-three states are at 30-year record levels of affordability based on price-to-income ratios, and all 50 states are at 30-year record affordability levels based on mortgage payment-to-income ratios.  “Homeownership is more affordable today than at anytime over the last 30 years,” said Johnson.

Beyond the financial advantages of homeownership, there are  several studies that have demonstrated how homeownership enhances civic pride, improves voter turnout, increases personal happiness, and reduces crime.

If you are thinking of buying or selling real estate, talk to a REALTOR in your area and get the facts on the market conditions. A REALTOR is a professional who can help you with all your real estate needs.

As always, if I can help you with any of your real estate needs in the Greater Nashville market, please don’t hesitate to contact me by text or phone at 615 417-8182 or email me at RolandLow1@gmail.com

Roland                                                                                     www.GreaterNashvilleRealEstate.info

The Real Estate Market, Today


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The Real Estate Market, Today

As I have been reporting in several of my posts on this blog, the real estate market is showing a come back.  Although there are many obstacles to getting back to where we would like it, there are many reasons to buy or sell real estate today.  Of course, this is determined by each individual’s needs, and I always suggest you obtain the help of a professional REALTOR®.

The objections that I hear on a regular basis includes that the economy needs to improve before they feel comfortable making that large of a commitment; it is very difficult to obtain a mortgage; and they are worried about losing their job.  All of these concerns are real, but there are also many, many positive factors out there that should be considered before opting out of the real estate market.

The first thing I would advise folks to do is to get a clear perspective of what is happening in the market – their local market, real estate is local.  Be mindful that the media tends to report that which is sensationalism.  For example: The Real Estate Confidence Level of REALTORS nationwide, dropped from 30.9% in August, 2011 to 28.6% in September, 2011.  That is a drop (slight as it may be) and the media jumped on it.  What they failed to report is that the index has risen from 21.3% a year earlier, and has been generally climbing – that does not sell newspapers, bad news does.

Many of the reports that you see tend to report that the perception is that home prices will continue to drop.  The report was that 47% of those surveyed believed home prices would drop in the coming year.  That means that 53% believed they would increase or remain the same in the next year, but home ownership should be considered a long term investment.  To be sure, it is not the real estate boom of a few years ago, but it isn’t dead either, and it will increase.

If you listen to the news reports every home you see for sale is a distressed property; either short sale or foreclosure, and in some markets, that is truly the case.  Yet statistically, on a national level, 70% of the homes sold recently were regular transactions; 12% were short sales, and 18% were foreclosures.  Again, it all depends on where you are looking to buy or sell.

Another reason I hear from potential buyers why they are not going to buy at this time is that they do not have enough down payment.  The media has reported that mortgage companies want 20% down in order to buy a home.  Some mortgage companies might, but 46% of the transactions in the HUD Region 4, which includes Tennessee, were done for 6% down payment or less!  As you can see from the graph, only 5% of the transactions had 20% for a down payment.  These figures represent transactions for October, 2011.

I am an optimist.  I always see, or at least try to see, the positive.  But in the real estate market there are a lot of reasons to be optimistic.  If you are looking to sell in order to move up, you may take a hit on the home you are selling, but you will most likely make up for it on the home you are buying.

If you are looking to buy a home, this is truly a buyers market.  Couple that with very low interest rates and you may find that buying a home now can be a smart move.

I have mentioned it many times, and will mention it again.  If you are thinking of buying or selling real estate talk to a REALTOR in your area and get the facts on the market conditions.  A REALTOR is a professional who can help you with all your real estate needs.

As always, if I can help you with any of your real estate needs in the Greater Nashville market, please don’t hesitate to contact me by text or phone at 615 417-8182 or email me at RolandLow1@gmail.com

Roland                                                                                             www.GreaterNashvilleRealEstate.info