Balanced Real Estate Information

Well it took awhile but finally we see an article on the front page of the real estate section of the LA times that says the nations real estate market is not all doom & gloom. The article "Some robust stats contradict the market-gone-bust reports" is written by Kenneth R Harney of the Washington Post Writers Group.

So let's get into how this is an article that, more than likely, will not get enough press because it is not about how the real estate market is going to come crashing to the ground. Here are some great points.

1. New mortgage applications are up - This is a leading indicator of people willing to purchase homes. Allen Greenspan, these bloggers, have mentioned this in the past as well.
2. Mortgage Rates are within a few percentage points of 40 year lows - It is a great time for buyers because rates are very low compared to history which makes things affordable for them on a monthly basis.
3. Unemployment - It is only at 4.6%. This is fantastic.
4. The economy is growing - When the economy is doing well people invest in assets like new or bigger homes.
5. Pending Home Sales are up - This is for homes that are currently in escrow. This number would be low on a national level if the market was falling apart.

Donald Kohn, the Federal Reserve Chairman, indicates in the article that he believes the real estate market is just "re-balancing". So sellers who want to sell will still be able to sell because there will be buyers who are out there looking. The article does point out how sellers will have to be more realistic about what they are asking for.

My favorite part of the article is the section that discusses how the financial press & the TV News media are over dramatizing the adjusting of the market. These bloggers have been saying for some time that nothing sells advertising like bad news.

So think about the fact that 1 writer had the courage to write what these bloggers believe is the truth. Things are great for buyers and sellers. Sellers have to be more realistic about their asking prices & buyers are not buying at the top of the market.

These bloggers would like to thank Kenneth Harvey for his article and hope that others get a chance to read it.

You be the judge of the real estate market!

Labels: buyers market, House market, Housing Market, market bust, mortgage rates, Real Estate Fall, real estate market, real estate prices

This blog will be written about the article on MSNBC.com that comes from business week. The author is Pallavi Gogoi and can be found at www.msnbc.msn.com/id/15223373.

Now this is a piece of work right here. Now there are people out there who can predict the future of the real estate market. Two different groups, the CME (Chicago Mercantile Exchange) & an economist, are predicting the falls of different real estate markets.

First, I would like to say that I am glad more people are focused on real estate. So let's get to the point of this article.

• Both the CME & the economist Zandi are predicting a decline in most major markets.

1. Fantastic! Did either of these groups predict the run up in the real estate market? That is not mentioned.
2. Real estate is slow to rise and slow to fall. This has been the stable of investment that real estate has been for decades.
3. The CME is predicting that the real estate market will fall as a result of option trading. These are the same groups of people who probably also owned World Com stock as well as Enron. Let's take that for what it is.
4. Zandi is predicting the fall as a result of job market data, mortgage applications, & new housing. No offense to Zandi but Alan Greenspan came out and said the worst is over for real estate just last week. Alan Greenspan has far more experience than Zandi.

• If home prices decline & interest rates rise properties will cost buyers more on a monthly basis then if they purchased now.

1. Without trying to sound like a car dealership forcing someone into a car they can't afford it is the monthly payment that affects buyers the most.
2. If buyers are paying more per month for a home that is what is going to affect their pocket book not the total price of the home. That is the great part about financing.
3. Buyers should take the opportunity now to take advantage of historically low rates and some willingness buy sellers to negotiate better deals.

• Supply of homes is not mentioned by either one

1. A leading indicator for the real estate market is the supply of homes. The article fails to mention how either group addresses this issue. If prices are too fall then there must be an excess of inventory and a buyers market must exist. This is defined as over 12 months of inventory. Some states, because of land and other economic factors, are almost always a buyers market yet real estate is still bought and sold every day.

• How much did these two predictors loose when the stock market crashed & Are they selling their homes?

1. We find it hilarious that all but 1 economist in Southern California have been predicting the fall for years but still owned. We say put your money where your mouth is. If you say a market is going to fall you better sell off any real estate you own. So let's see who sells what.

We can say this. If we honestly believed the housing market here would fall or anywhere wouldn't we just sell? Take that as food for thought.

You be the judge of the real estate market!

This blog will be written about the article on MSNBC.com that comes from business week. The author is Pallavi Gogoi and can be found at www.msnbc.msn.com/id/15223373.

Labels: buying a home, first home, home prices, House market, house values, values of homes

In a recent article on MSNBC.com entitled "First-time home buyers being left" out released by the associated press it points out how 80 percent think it is difficult despite the "cooling" market.

Let me be the first to say that I believe it has always been difficult to purchase one's first home. The polls quotes in the article quote how all over the country more than 50% of the people believe that it is more difficult for a first time home buyer than it was 5 years ago.

Nationwide there are first time home buyer programs available. In California, where we are located, there are programs that give buyers down payments, up to $12,500, because it is a high cost area along with interest rates of 5.75%. Rates that are below market, down payments that are silent, & the ability to negotiate make it a great time to purchase for first time home buyers.

The article mentions how people are spending in excess of 30% of their income on their housing. I agree that the old rule is one, that if possible, you should stick to. Often this is not possible. In fact I wouldn't own a home if I had stuck to that traditional bankers rule. The article makes no mention of what our parents, grandparents, & great grandparents did for their first homes, they sacrificed!

Back when the previous generation saved 20% for a down payment on their first homes there were only a few lending products to chose from. Buyers can now choose from thousands of different lending products. While I am certainly not saying buyers shouldn't save there are far more options today than ever before to help buyers with the rising costs of real estate.

Home ownership can be had but one may not have the car that their friends have, the vacations, or the location. These bloggers lived together with a buddy to buy their first home and were laughed at by many for the location, size, & the price. Years later it paid off.

First time home buyers need not worry about over paying. They should work with a buyer agent who is adept at negotiating & presenting his\her buyers case. In addition buyers need to understand as long as they stay in the home for more than 3 or 4 years it is going to be a great investment for them. Buyers also need to understand that their are sacrifices to home ownership. Sacrifices such as vacations, cars, TV's, and sometimes eating out. One has to know that it will pay off in great dividends.

First time home buyers can get closing costs financed and in some cases can own a home for less than the costs to change apartments. You just need to find the right buyer agent to work for you to assist you and work with them to help you. Real estate is an investment and these bloggers know that it has been one that has paid off for them, even if they were laughed at for where they first bought.


You be the judge of the real estate market!

The article that this blog was written on can be found at: www.msnbc.msn.com/id/15238121

Labels: buyers market, buying a home, first home, loans, Real Estate Fall, real estate market, real estate prices

In a recent article on MSNBC "Home buyers seen gaining more clout" by Gayle Ronan the author makes several points about the current state of real estate.

1. The real estate market is made up of many micro markets.

• This is a grea point for all buyers, sellers, & realtors to consider. Each market is different. In some areas of the country right now, such as Dallas, it is more of a sellers market.
• Information on real estate markets is not centralized like the stock market. Real estate professionals and real estate websites tend to have the most up to date information.
• Some statistics that are good for buyers & sellers to both look at are as follows:
• DOM - Days on Market - How long a property has been on the market
• Average DOM - You will want to know how long on average a home stays on the market prior to an offer being accepted.
• Average % of Sales price - What the average discount is on homes in a certain area. In some areas of the country buyers are not getting any discounts. If it is a market where both buyers and sellers are freely negotiating discounts average between 1 & 3% of the sales price.

2. Builders giving concessions is not the sign of a buyers market

• Builders do 1 thing, they build. In order not to drop the price of their properties and hurt the customers they just sold homes to they offer incentives. If buyers are in an area where there is new construction available they should take advantage of these.
• The author makes a point that not all real estate agents are going to disclose if they are receiving extra benefits from the builder. This is true and buyers should ask their buying agents if there are any additional incentives for the agent showing them the properties. The vast majority of agents will have no problem explaining what they receive from the builder.

3. Motivated & realistic Sellers are still selling things

• I want to thank the author for this point even if it is well into the article. This is very true. No matter what the real estate market is doing in your area there will always being someone willing to buy, it just depends on the price!
• Sellers & their agents need to price accurately so as to attract the largest pool of available buyers. Sellers can also offer incentives to help attract more buyers. In sellers who offer incentives can compete with the builders. The builders offer incentives because they work!

You can read the entire article at http://msnbc.msn.com/15116116

You be the judge of the real estate market!

Labels: buyers market, home prices, house values, Housing Market, real estate market, values of homes

Momentum now on the Up!
Reuters reported that at a recent conference in Calgary, Canada, former reserve Chairman Alan Greenspan was quoted as saying "I suspect that we are coming to the end of this downtrend, as applications for new mortgages, the most important series, have flattened out,". Greenspan sites that applications for new mortgages were up which is a key indicator to strength in the housing market.

Pending Sales are Up
In further support of Greenspan's view, the National Association of Realtors released their Pending Home Sales Index report and it showed an increase of 4.3 % nationally with some regional numbers substantially higher. This should lead to more inventory being pulled off the market further strengthening home sales.

Labels: home prices, House market, Housing Market, Real Estate Fall, real estate market

The media is fond of reporting how the real estate market is falling in 2006 in comparison to 2005 and how reduction in sales volume is the end of real estate as we have known it for the last several years.

The article that I hope people got a chance to read is on MSNBC at the following link: Existing home sales fall for fifth straight month.

The chief economist for Naroff Economic Advisors states that the housing bubble has now popped as a result of several months of home sale volume being in decline compared to last year. Let’s get this straight; the last several years have been absolute records in real estate. Prior to 2004 & 2005, the pace of real estate had never been sold at a sales volume of over 6 million homes and now they are stating that the housing market is doomed because we cannot continue at that phenomenal pace. 2004 was also a record year, so even if we have fallen to 2004 levels (the article makes no mention of this) we are still on pace for an excellent year.

The article mentions that we have a 7.5 month backlog of unsold homes. Let’s define inventory in real estate terms.

• Existing Home Inventory of 6 months or under à Sellers’ market
  
• Existing Home Inventory of 6-12 months à Equal market
  
• Existing Home Inventory of over 12 months à Buyers’ market
  
  Therefore, 7.5 months backlog of unsold homes is a market where both buyers and sellers have equal footing against each other. Real estate is like any other market. Properties are only worth what a buyer is willing to pay for it at that moment in time. What the neighbor sold for last month, last week, yesterday is irrelevant. Sellers may want more for their homes, but they can only get what someone is willing to pay for it.
  
  If you read to the end of the article you will notice that condo sales were down to 793,000 units. This would lead one to believe that this is not a great number. In fact, in 2004 condo sales were over 940,000 and in 2005 they were over 972,000. These numbers are courtesy of the National Association of Realtors. These numbers were absolute records and slowing sales from these are not, in this author’s opinion, a voice of concern. Many of the purchases in 2004 & 2005 – were from investors and individuals seeking vacation properties. While vacation property purchases may slow down, people who are looking for an affordable place to live can choose condos as a more affordable housing option in areas such as Southern California & the Northeast where homes are only affordable to less than 25% of the population.
  
  In conclusion, the prices for real estate are not falling and in fact the article mentions that on the west coast the median price actually rose .3 percent from a year ago. While some areas may see sellers not getting what they thought they are in effect getting fair market value for their properties.

You be the judge of the real estate market!

Labels: home prices, Real Estate Fall, real estate market