Seawatch Happenings

Homeownership: Reports of Its Death are Exaggerated

2011-11-07T08:06:00.000-08:00

There have been a growing number of reports announcing the death of American homeownership over the last two years. Some have said we are evolving into a rental society and even challenge the long standing belief that homeownership should be a part of the American Dream. They look at the falling rate of homeownership as proof of their point. Others say that the younger generations no longer see the value in owning over renting.

However, this past week, two news items might refute these points. First, DSNews reported the homeownership rate actually increased in the last quarter; the first quarterly increase in two years.

“After falling to a 13-year low during the second quarter, the homeownership rate posted a highly unexpected rise in the third quarter, according to a Census Bureau report.”

Then, Fannie Mae released their 2011 3^rd Quarter National Housing Survey. We will cover this report in more detail on Wednesday. But we do want to mention a few findings the report highlighted. Both Generation Y (birth date mid-1970s to mid 1990s) and Generation X (birth date mid 1960s to mid 1970s) have stronger beliefs in the importance of homeownership than those of the general population.

Here are the numbers for the three major reasons to buy (as per the survey) with the percentage who believe in each reason:

1. It is a good place to raise children and provide them with a good education:

§ Generation Y: 84%

§ Generation X: 81%

§ General Population: 80%

2. You have a physical structure where you and your family feel safe:

§ Generation Y: 77%

§ Generation X: 79%

§ General Population: 76%

It allows you to have more space for your family:

§ Generation Y: 76%

§ Generation X: 77%

§ General Population: 73%

Both generations also believe in homeownership as an investment. 70% of Generation Y and 66% of Generation X see homeownership as a safe investment while 64% of the general population believes so.

Bottom Line

This country’s belief in homeownership is anything but dead. The younger generations have the same if not a higher level of belief than earlier generations. As the economy improves, more people will make the move into a home of their own.

Money to Purchase AND Renovate Your Home

2011-09-01T06:41:00.001-07:00

This is a great new product that I am actually using personally. It's a little more difficult than your standard loan, but it allows you to do so much more. Please read the blog and give me a call for more information.

Whether you’re looking at a foreclosed home, bank REO, a Short Sale or really any home, you need to be aware of the FHA 203K Program. The general condition of real estate has taken a dip over the past few years, as homeowners are not sprucing up their home as they have in the past.

(Pssst…there’s a recession going on…people are afraid of losing jobs…and they believe they won’t “get back” the money they spend by renovating upon sale).

The 203K loan can be used for small repairs (with a minimum of $5000 of work) such as a new roof or replacing the boiler. It can go all the way up to practically rebuilding the home and anything in between. Maybe you love a home, the neighborhood, etc., but you hate the kitchen cabinets. The 203K may be for you. As long as the existing foundation stays intact, we can talk about any type of repair, upgrade, modernization or expansion.

With one closing, we will give borrowers money to satisfy their contract with the seller AND establish a Rehab Escrow Account to fund the agreed renovations. The Rehab Escrow Account is managed like a Construction Loan. Money is released after work is completed, the property is inspected by the lender and the title is updated.

Like all FHA loans, the property must be owner occupied and loan approval requires full documentation of income, assets and credit worthiness. At the same time, underwriting guidelines have some flexibility built in. (In theory, we can lend up to 110% of the After-Improved Value of the home for example.)

Loans are processed in the same fashion as any other loan (in terms of income, asset and credit) with the exception of the appraisal. Appraisers work in conjunction with the home improvement contractor and a HUD Approved Pre-Planner to determine: “As-Is”Value, “After-Improved” Value, costs of construction and the draw schedule of the renovation portion of the loan. This work typically adds about a week to the approval process, largely because it should be done BEFORE contracts are signed.

SOME UNIQUE FEATURES OF THE 203K

§ Mixed-Use Properties may be eligible! As long as the commercial space is no more than the allowable square footage based on the number of floors in the building and none of the renovation monies are used for a commercial renovation, the 203K gives tremendous interest rates for Mixed-Use Properties.

§ The loan can be used to change property usage (when appropriate municipality approval)…..converting a 1 Family Home to a 2 Family or a 4 Family to a 3 Family or any variation that stays within the 1-4 Family boundaries works.

§ On major renovations we will finance up to six months payments into the loan. In these cases,the house will not be habitable until after the work is completed.

§ There is a Streamline 203K for projects that require less than $35,000 of repairs. Typically, we like to see only one or two items of work that can be done quickly (with one inspection).

It is recommended that you work with an experienced loan officer when exploring the 203K Program, as there are many details that need to be considered (from selecting a qualified contractor to the inner workings of the draw schedule and preparing for different contingencies). While the program is more intricate, with the right education ahead of time, it is extremely manageable.

What if You Could Buy Shoes...

2011-08-11T07:35:00.000-07:00

What if there was a shoe store that had:

§ An unparalleled selection of shoes of every size, color, and price range

§ The shoes were discounted 30% or more

§ You had a credit card that would finance the shoes for 30 years at 4.5%

How many shoes would you buy? My bet is there would be a line around the block. Well, today, real estate is like that shoe store (incredible selection, terrific bargains and excellent financing terms). But there’s more….

§ Shoes go in and out of style. Homeownership is still the American Dream.

§ Shoes are worth less once you wear them. Homes will appreciate in value over time.

§ Shoes get disposed of. Homes are lasting.

And while many can recount memories created in certain shoes, everyone can remember their first home, their first family gathering, the countless holidays shared. There is also the ability to decorate to your tastes, the stability (and lower crime rate) in homeownership neighborhoods and the higher level of education achieved by kids who grow up there.

If you’d stand in line to buy shoes, what’s stopping you from exploring a home? Despite some media perceptions, there is mortgage money available with reasonable down payment requirements at extremely low rates…talk to a loan officer. There are some great deals out there with short sales, foreclosures and regular transactions also!

Happy Shopping!

Housing Prices: Explaining the Recent Uptick

2011-08-10T06:27:00.000-07:00

Several pricing indices have reported that, on a month-over-

month basis, home values have ticked up slightly over the last quarter. This has caused some

to call the bottom to the housing market – at least from a price standpoint. We must realize

that prices are determined by supply and demand.

Demand has indeed shown improvement in many parts of the country. However, the supply side of the formula is being impacted by legal issues. The number of foreclosures coming to market has been slowed dramatically by the courts as the banks still struggle with improperly filed paperwork. This inventory will eventually find its way to the market and again put downward pressure on values.

Here is a chart showing the challenge:

Bottom Line

If you are selling, there currently is a window of opportunity to get your best price before the distressed properties are released.

Reprinted by Permission from KCM Blogsite

Thank God I Didn't Buy Gold at $400 an Ounce

2011-07-27T06:53:00.000-07:00

We hope that headline grabbed you. The reason we used it was to bring some perspective to the debate as to whether or not homeownership is a wise investment in today’s troubled market. A family should never look at the purchase of a home simply as a financial investment. It is so much more than that. But, even if we look at it as only an investment, we must look at it in the long term. Let’s use gold as an example.

Gold had dropped from over $400 an ounce to $250 an ounce (a 40% decline) from February 1996 to August 1999. People were so glad they hadn’t bought at $400 an ounce.

Lord William Rees-Mogg, the current Chairman of The Zurich Club, in 1997 said:

“No investment has been so thoroughly exploded as gold; most people think that there will no more be another gold boom than there will be another boom in tulip futures in The Netherlands.”

Everyone knows what happened next. The proclamation of gold’s death was rather premature. Gold rose from $250 an ounce to over $1,500 an ounce in the next twelve years.

If we look at real estate in the long term, we can see that it has been a great vehicle for building family wealth. The Federal Reserve’s Survey of Consumer Finances, conducted once every three years, provides a snapshot of family income and net worth. There survey has shown every time that homeowners’ net worth far exceeds that of renters. Here is the breakdown of the last several surveys:

§ 1998 – Homeowner net worth exceed renters by 31%

§ 2001 – Homeowner net worth exceed renters by 36%

§ 2004 – Homeowner net worth exceed renters by 41%

§ 2007 – Homeowner net worth exceed renters by 46%

The 2010 survey is not out yet but the National Association of Realtors’ has estimated that number to be approximately 41% in 2010. You may be thinking this is no longer the case based on the current fall in home values which have dropped back to 2000 – 2002 prices.

Harvard University just completed a study that showed:

“Even if homeowner wealth fell back to 1995 levels, it would still be 27.5 times the median for renters.”

Bottom Line

We are not predicting that real estate will see the same levels of appreciation that gold did. However, we do believe that the real estate market will rebound strongly.

Distressed Property Sales: Down…But Not Out

2011-07-26T06:23:00.000-07:00

There has been much written about the falling inventories of distressed properties in many market places. Some have looked at the decreasing percentage of distressed property sales reported by the National Association of Realtors over the last four months as a sign that we are finally cleaning out the last remnants of the foreclosures. If you look at the numbers, it could seem that way:

§ March: 40% of all sales were distressed properties

§ April: 37% of all sales were distressed properties

§ May: 31% of all sales were distressed properties

§ June: 30% of all sales were distressed properties

However, in reality the falling percentage of distressed property sales is not an accurate indicator. The reason the percentages are falling is because many homes are currently tied up in the process of foreclosure.

An article in HousingWire quoted James Zeldin, EVP Default Resource on the issue:

“I would absolutely expect an increase in inventory over the next 12 to 18 months. I’m personally expecting that a lot faster. I believe we’re going to see macro forces pushing these institutions to do more REO liquidation.”

Once these properties are cleared through the foreclosure process, the inventories of distressed homes will again increase and the percentage of sales will again begin to climb.

Bottom Line

We are working our way through large numbers of distressed properties every month. However, there are many more which will come to market in the next year to eighteen months.

Assets and Your Mortgage Application

2011-07-21T06:43:00.001-07:00

When lenders evaluate mortgage borrowers, they look at four things: income (the ability to repay), credit (the willingness to repay), collateral (appraised value and property condition) and assets (cash in the deal and cash reserves after closing, mostly). Of the “four legs of the table”, assets are the least discussed, and yet may be the most important.

What do we mean when we talk about assets?

§ Monies needed for the down payment (the difference between the purchase price and the loan amount which may or may not be the same as the money deposit at contract signing)

§ Monies needed for closing costs (fees to the lender and third parties for things like appraisals, title insurance, settlement services, and so on)

§ Monies needed for Pre-Paids (homeowners insurance, flood insurance, real estate taxes, etc.) and establishing escrow accounts for future payments

§ Monies for Reserves- the money you still have left after closing. Monies that would be available, if a problem were to arise

Why do we care about assets?

§ Assets may be the truest reflection of a borrower’s fiscal strength. Their ability to save and properly budget could be a significant indicator to their future paying habits

§ The source of the assets is important. Savings? Gift or inheritance? Lottery victory? Insurance settlement? Sale of a baseball card collection? Each reflects differently on the borrower.

§ Many people don’t show all their income on their tax returns (it’s just a fact). Undocumented income can’t be used to qualify; however, often assets become a truer representation of a borrower ability to pay than their 1040s.

§ Reserves are an issue. A client with $50 in the bank after closing is riskier than one with $50,000. Also, clients who have money in the bank but have some sporadic lates on their credit are looked at differently than those who didn’t have the money to make the payments.

Common Asset Issues in Mortgage Packages:

§ Large deposits (defined as those which are excessive for the income level) raise an underwriter’s eyebrows. Where did the money come from? Maybe the borrower took a loan that doesn’t yet show up on their credit report.

§ Cash deposits are another red flag. In this day and age, people keep their money in the bank, not under their mattress. Where did the cash come from?

§ Gift monies and seller’s concessions, while considered as borrowers assets when doing calculations, will give an underwriter pause when assessing the borrower’s real ability to replay.

Guidelines have tightened. When borrowers are paying off credit cards to get their ratios in line, lenders are asking where that money came from now. That act has nothing to do with the home purchase, but may be a sign of something fragile in the borrower’s financial make up.

The best advice is to consult a loan professional to discuss the proper way to position your assets and the timing of it that will put you in the most favorable light.

Selling Your House? Waiting May Not Make Sense

2011-07-18T06:56:00.000-07:00

There have been some bright spots in the residential real estate market over the last couple of months. Several price indices have reported a stabilization of prices and some regions have even shown small levels of appreciation. This has led some to believe that we may have reached a bottom for home values. We must realize that what we are actually experiencing is a ‘window of opportunity’ as the banks are delayed in bringing certain inventories of distressed properties to the market. Let’s look at what others are reporting:

Bloomberg Businessweek

“The crux of Simon’s analysis is that the loose lending practices seen during the housing bubble allowed 5 million renters to become homeowners, and that the market is in the protracted process of evicting this group. He believes housing prices will decline 6 percent to 8 percent nationally, with 6 million to 7 million more foreclosures yet to come.”

Yahoo Finance

“The problem with the real estate market remains excess inventory. Based on Shilling’s research, there are 2 million to 2.5 million excess homes in the country — a supply that will take 4-5 years to work-off. The result: Housing prices will fall another 20% and underwater mortgages will balloon from 23% to 40%, he says.”

Housing Wire

“Both warmer weather and the drop in distressed sales percentage have contributed to recent home price improvements. However, given the disappointing pace in housing demand recovery, both factors may turn against us in the coming winter and push home prices lower again…

This supply-demand imbalance affirmed JPMorgan analysts’ estimate of a further 4% drop in home prices from the first quarter of 2011 to a new bottom next year.”

DS News

“Home prices have gotten a little bit of a boost in recent months thanks to a seasonal uptick in market activity. Most analysts, however, expect further declines to characterize the later part of the year and possibly extend into next year, largely because of the huge supply of foreclosures on the market.”

Bottom Line

If you are thinking of selling in the next twelve months, you would probably do much better if you sold your house sooner rather than later.

Reprinted from KCM Blogsite

Let's Get Chicken Little

2011-07-07T06:39:00.001-07:00

You all know the story…young chicken, fearful of the worst, runs around declaring that “the sky is falling, the sky is falling”.

In today’s real estate market, there are many people (professionals and amateurs alike) with opinions that make buying real estate sound like throwing money away.

One thing I have learned in life is that opinions are like belly buttons, everyone has one. I certainly have my opinions which are not always universally shared. But, I wanted to share mine today by asking those of you Chicken Littles some questions:

§ If we all agree that homeownership has been the American Dream, what do you propose will replace it? Video games? iPads? A better social media vehicle? Without a dream, civilizations perish.

§ If people stop investing in real estate and values crumble much further, how do you propose stopping our economy from a complete and utter collapse? Moreover, how will it ever recover?

Let’s face it: The real estate frenzy got us into this mess, in the same way that the dot.com bubble overinflated the stock market and eventually popped. But, dot.com companies were only a part of the stock market; therefore, the market could take a hit and limp around for a while yet still fall back on the other industries to regain its footing. It has taken years, but the stock market is credible again.

Real estate is different. When it slides, there is no other sector of the economy that can bail it out. You could try and argue that commercial real estate or even real estate investors who buy and hold for rent can ease the pain. However, they can’t devour all the inventory. Real estate has to be salvaged and supported by the government or the whole economy slides into the ocean.

The government has tried many things from restructuring Fannie Mae and Freddie Mac to appraisal reform to tighter underwriting guideline to artificial manipulation of interest rates to licensing of loan officers and more. They understand the importance of real estate values to our nation’s net worth. They are committed to real estate.

My point, dear Chicken Little, is that if you believe that the United States of America is going to continue to lead the world, you know our economy has to lead the way. In order to do that, we need housing to recover its position of strength. That makes buying a home a safe, long term smart move. If you don’t believe it…..might be time to look for real estate in another country.

The problem with Chicken Little is nothing more than he doesn’t ever propose a solution. He just wants to predict and point out problems. Our faith in the American Dream is being tested. I believe in the Dream. And I think you should too. It may look like a leap of faith more than logic to some but there are few Chicken Littles who ever become wealthy until they change their perspective.

Just my opinion…from my belly button.

5 Real Estate Headlines You’ll See in the Next Six Months

2011-07-06T06:44:00.000-07:00

Making predictions can be the ‘kiss-of-death’ for a blog. Even if we get four out of five correct (80%), there are those in the industry who will kill us on the one we got wrong. We believe strongly that when making a real estate decision for you and your family you must look forward and take into consideration how the housing market may change.

For this reason, we are willing to take on the possible wrath of our counterparts by sticking out our necks and predicting these will be the major real estate news stories from now until the end of the year.

Interest Rates Rise

Many, including us, have been surprised that rates have not risen already. However, the next several months are going to see three distinct changes that will propel rates upward.

1.As the government starts to leave the mortgage market, private industry will step in. Private industry demands a higher rate of return on their investments. Mortgages will be no different. Studies have shown that 30 year mortgage rates could increase by 1 to 3% over the current rate.

2. In many higher priced markets, rolling back Conforming Loan Limits means that rates for the mortgages on these properties will resort back to the rates on private jumbo loans. The FHFA informed us that last year, the difference between mortgage rates for jumbo loans and jumbo-conforming mortgages has varied between about ½ and ¾ of a percentage point.

3. As the economy gets better (and we believe it will), the pressure to keep rates low to stimulate growth will abate.

Some Loan Requirements Tighten but More Can Now Get a Loan

Lending institutions have already started to introduce stricter mortgage guidelines. Whether the Quality Residential Mortgage (QRM) requirements are instituted as originally proposed or eased somewhat, there is no doubt that guidelines will continue to tighten as we work through the year. However, we believe the private sector will again start introducing alternative mortgage financing but at a greater expense to the consumer. You WILL be able to get a mortgage. It will just cost you more.

Housing Sales Increase

Contracted sales have shown consistent improvement over the last six months and we feel this will continue and actually begin gaining even greater momentum. We believe there is a ‘pent-up’ buying demand caused by the volatility of the market over the last several years. When interest rates start to move upward and alternative financing becomes more available, these buyers will start to jump off the fence. We believe there will be a major upswing in sales over the next six months.

Distressed Properties Increase Markedly

More people are paying their mortgage on time and that is great news for housing in the long term. However, the numbers of distressed properties currently in the foreclosure process is still very swollen. These properties will begin coming to the market in the second half of the year as short sales and foreclosures. The numbers will be staggering in some areas.

Prices Continue to Soften in Most Markets

The current housing inventory for sale and the distressed properties about to come on the market will vastly outnumber the increased supply of purchasers we will see over the next six months. There will be more houses for sale then there will be buyers purchasing them. That oversupply will continue to put downward pressure on prices through the rest of this year and into 2012.

You now know what we believe will take place in real estate between now and the end of the year.

Top 5 Real Estate Headlines of the First Half of 2011

2011-07-05T06:33:00.000-07:00

We have reached the midway point of the year. Today, we want to look back over the first six months and give you what we believe were the five items which have had the biggest impact on the real estate industry so far this year.

The Government Wants Out of the Mortgage Business

From the original outline of the Dodd-Frank regulations to the talk of closing Fannie Mae and Freddie Mac to the proposed Quality Residential Mortgage (QRM) guidelines, the government has made it very clear that they want to dramatically limit their involvement in the mortgage industry. What will come of this? Will private industry step up and fill the void created? What will be the increased cost to the consumer? Only time will tell.

Despite Early Headlines, Sales are Increasing

Headlines earlier in the year announced the total collapse of the housing market. To those in the know, it was obvious that comparing sales numbers in the first four months of this year to the same period last year made absolutely no sense. The largest tax credit ever given to home buyers expired on April 30, 2010. Large numbers of transactions were dragged forward last year so buyers could take advantage of the credit. Pending home sales (transactions going into contract) on the other hand have done quite nicely and many institutions (ex. Fannie Mae, Freddie Mac, NAR and Moody’s Analytics) are projecting good sales numbers throughout the rest of the year.

Amid Warnings of a ‘Double-Dip’, Prices Began to Stabilize

Prices continued to retreat for the first few months of the year and brought the bears out. Some called for another major fall in prices (15-20%) and almost all recalculated their projections to show continued depreciation. Just as these new projections were made available, some pricing indices announced that values actually increased (though by a rather minimal percentage). Again, those with the best understanding of the market were quick to explain…

Foreclosures Were Delayed Longer Than Originally Projected

Distressed properties (foreclosures and short sales) have a major impact on the values of all properties in an area. Because of paperwork challenges, the flow of these properties to the market was virtually shut off. At the beginning of the year, most experts believed the banks would correct these challenges by the end of the first quarter. That didn’t happen and therefore many of these properties were delayed coming to the market. This is a major reason why prices seemed to recover: there were fewer discounted properties available for sale. Most now believe that the banks are within 60-90 days of releasing this inventory and that prices will again begin to soften.

Main Stream Media Begins to Announce “Now Is the Time to Buy!”

With prices and interest rates at historic lows and the chance that mortgages will become more costly as the private sector steps in, many in the main stream media are announcing that buying a home now makes sense. In the last 45 days, the Wall Street Journal, Forbes Magazine, National Public Radio (NPR) and CBS Money Watch have all ran articles calling for the readership to consider buying now!

Reprinted from KCM Blog

House Prices Through 2015

2011-06-27T06:18:00.001-07:00

Everyone seems to have an opinion on where home prices are headed. Housing bulls are saying prices may start rebounding as early as later this year. Some housing bears are saying that prices may still drop another 10-15%. What actually is going to happen? No one knows for sure.

However, Macro Markets, a financial technology company, actually surveyed 108 economists, real estate experts, and investment and market strategists for their June 2011 Home Price Expectations Survey. They then averaged all 108 opinions. Here is what the report says about house prices over the next five years:

§ 2011: prices will depreciate 3.52%

§ 2012: prices will appreciate .46%

§ 2013: prices will appreciate 2.18%

§ 2014: prices will appreciate 2.92%

§ 2015: prices will appreciate 3.47%

Accumulative appreciation (including this year’s projected depreciation) will stand at 5.71% in 2015.

Bottom Line

The experts say home prices will begin to see appreciation next year and return to historic levels of annual appreciation by 2015.

Reprinted by Permission from KCM Blog

What's Going On This Weekend On Pleasure Island

2011-06-24T09:43:00.000-07:00

Pleasure Island Chamber Of Commerce

CHAMBER WEEKLY

Public Service Announcement

Support your Chamber Members

June 24, 2011

BLP - Clasic Rock & Dance

FREE SUMMER CONCERT - TONIGHT

June 24th - Ft. Fisher Military Rec Area

6:30 pm - 8:30 pm 910.458.8434

VOLUNTEERS NEEDED !!!

Thursday Night Fireworks & July 3rd

We are looking for a few good people. As you know, the events that are put on by the Chamber of Commerce are not possible without the dedication and hard work of our Volunteers. If you are interested in helping out with the Thursday Night Fireworks or July 3rd fireworks (We have to close the Beach at 3 pm that day), please give Greg a call at (910) 458-8434. Give us a couple hours and your community will thank you. If you have never volunteered before, give us a call and help make your community the 'piece of paradise' that we have grown accustomed to... You will be glad you did!

SHRIMP-A-ROO

Carolina Beach Lifeguard Association

Saturday, June 26th

11:00 am - 3:00 pm

Come early, it usually sells out...

At the Carolina Beach Boardwalk

Lifeguard Station

JIMMIE VAUGHN & the TILT-A-WHIRL BAND featuring LOU ANN BARTON

Seafood Blues & Jazz Festival

RIBBON CUTTING EVENT

Bodacious Boutique

RIBBON CUTTING AND GRAND OPENING

Please plan on joining your Chamber friends as we welcome Jan Cannada & Kim Foust and their new business BODACIOUS BOUTIQUE on Wednesday, June 29th at 5:30 pm. Light Hors d'ouvres and beverages will be served for your enjoyment.

915A North Lake Park Blvd. Carolina Beach 910.707.0404

NEW HOURS ANNOUNCED

Snow's Cut Cafe

BREAKFAST SERVED ALL DAY

Snow's Cut Cafe - Home of the BEST Breakfast on the Island has new houres of operation:

7:00 am - 2:00 pm

Drop in take a break and have a bite

1140 North Lake Park Blvd. Carolina Beach 910.707.0550

NEW INVASIVE JELLYFISH EXHIBIT

NC Aquarium at Fort Fisher

Visitors to the NC Aquarium at Fort Fisher this summer will find a new exhibit in the Exotic Aquatics Gallery. Aquarium staff has added white-spotted jellyfish (Phyllorhiza punctata) to its collection. The Exotic Aquatics Gallery traditionally features non-native marine species. Guests can learn more about the life cycle of a jellyfish while viewing these beautiful animals.

The white-spotted jellyfish species looks almost exactly as its name suggests; they appear blue-gray in color, and white spots adorn the top of their prominent bell. Although native to Australia, this particular species of jellyfish has become invasive in the Gulf of Mexico as well as the Atlantic Ocean near the Cape Fear coast. While they usually grow to between 17 and 19 inches in diameter, the largest white-spotted jellyfish on record, found on Sunset Beach, N.C., in 2007, measured 28 inches.

This exhibit furthers the Aquarium's objective to educate the public on the importance of well-balanced ecosystems. Invasive species can easily disrupt that balance by cutting off resources to other species, changing the chemical makeup of the water, and ultimately causing a shift in the entire food web. This affects every aspect of the way humans enjoy the ocean, from seafood cultivation to a simple day at the beach.

NC Aquarium at Fort Fisher is located just south of Kure Beach, near the mouth of the Cape Fear River, on US 421. The site is less than a mile from the Fort Fisher ferry terminal. Hours: 9:00 am to 5:00 pm daily (closed Thanksgiving, Christmas, and New Year's Day). Admission: $8 adults ages 13-61; $7 seniors 62+; $6 ages 3-12. Free admission for: children under 2; registered groups of N.C. school children, and NC Aquarium Society members. Generalinformation: www.ncaquariums.com

900 Loggerhead Road Kure Beach, NC 910.458.8257

NEW LIMITED HOURS

NC Department of Revenue

Local Surfer in World Surfing Games

Tony Silvagni representing the U.S.

Silvagni won a copper medal in 2009, which helped Team USA win the gold that year.

Growing up with our local waves, Tony said there's more to this competition than just a few big breaks.

"You're getting on a plane, you're flying a long distance, you're getting used to their culture and their food," explained Silvagni. "So, I guess it's just a balance that you have to have. You want to be that person that can do it all."

The World Surfing Games end July 3, so Tony said it would be great to come home and celebrate the July 4th holiday with a gold medal.

Area surf instructor Tony Silvagni will represent the United States this week at the World Surfing Games in Panama. Silvagni will join seven other surfers Thursday for the week-long event. He will compete in the long board competition against 31 other countries.

SUMMER DAY CAMPS BEGIN

NC Aquarium at Ft. Fishert

A young camper enjoys his first day of summer camp on Monday at the North Carolina Aquarium at Fort Fisher. The Aquarium offers four week-long sessions from now through August, with age-specific programs for kids 5-6, 7-9, 10-12, and 13-14. Campers tour the aquarium, explore nearby beaches and marshes, and learn about the beauty and importance of local aquatic environments.

900 Loggerhead Road Kure Beach, NC 910.458.8257

HURRICANE INFORMATION

Town of Kure Beach

WHY EVACUATE?

WHAT DOES THE TOWN DO?

WHAT IF I STAY?

The Town of Kure Beach is sponsoring Hurricane information sessions at Kure Beach Town Hall on the following dates. I encourage you to come and ask questions to support your personal planning.

· Sunday, June 26 from 2-3 pm

· Wednesday, June 29 from 6-7 pm

· Thursday, June 30 from 6-7 pm

· Saturday, July 2 from 10-11 am

For more information on personal planning, go to www.fema.gov . I encourage every citizen to create a Family Disaster Plan to be prepared.

and

www.weather.gov/os/hurricane/resources/TropicalCyclones11.pdf

If you have any questions or comments please contact Town Hall at 458-8216 and leave a message for me or email me at heglardw@corning.com. I will reply as soon as possible.

David W. Heglar

Emergency Response Coordinator

Town of Kure Beach

117 Settlers Lane Kure Beach, NC 910.458.8216

SOFTBALL LEAGUE SIGN-UPS

The Last Resort

THE SHIRTS ARE ORDERED NOW WE NEED SOME PLAYERS, FREE AGENTS OR JUST BODIES TO PLAY ON OUR BEER TEAM...

WE HAVE ALREADY SIGNED UP A COUPLE FAMOUS BALL PLAYERS FORMERLY FROM THE MEADVILLE, PA AREA NOW WE NEED TO PUT A TEAM AROUND THEM..

GUYS AND GIRLS CAN PLAY

IF YOU CAN WALK AND TALK AT THE SAME TIME COME ON DOWN AND SIGN UP

IF YOU LIKE TO DRINK BEER, LAUGH, RUN, WALK, SWING A BAT, CATCH FLYS OR JUST LIKE DIGGING IN THE DIRT AT FIRST BASE WE WANT YOU...

CALL BOB @ 910-599-2879 TO JOIN OR JUST DROP IN AND SIGN UP AT THE RESORT...

SEA TURTLE TALKS

Pleasure Island Sea Turtle Project

"LEGENDS IN CONCERT" Bus Trip

Kure Beach Parks & Rec

TICKETS ON SALE NOW!

Make your reservation at Kure Beach Town Hall for the upcoming bus trip to see "Legends in Concert" in Myrtle Beach, SC. The trip will take place on Tuesday, September 27 for the very low price of just $46 per person. The bus will leave from Town Hall at 9:00 am and will return at 6:00 pm. This show is internationally acclaimed and is known as the pioneer of live celebrity impersonator shows. You'll find the greatest collection of celebrity impersonators ever assembled showcasing music legends such as Elvis Presley, The Blues Brothers, Garth Brooks, Tim McGraw, Rod Stewart, Tina Turner, Cher, Madonna and many more. Space on the bus is limited, so reserve your spot today!

For additional information, call Kure Beach Town Hall at 458-8216.

BASKETBALL BY THE SEA

June 27th - July 1st Call 458-2977

The Carolina Beach Parks & Recreation Department will be hosting a youth basketball camp June 27th-July1st (from 9am-3:30pm each day). It is for all boys and girls ages 6-16 and the cost for the full week is $150.00. This camp will be run by Brian Williams and Tarvis Williams. I have attached the camp brochure and registration form. Please contact me at lani.thompson@carolinabeach.org if you have any further questions. We expect this camp to fill up so please register as soon as possible if you are interested.

DODGE BALL LEAGUE

Carolina Beach Recreation Department

The Town of Carolina Beach Recreation Center is trying to find new and interesting way to keep people active and healthy. We are trying to determine if there is interest in a summer dodge ball tournament to be held sometime in July. The team members must be at least 16 years of age. If you or you know someone interested in playing please respond to this e-mail with name, age, and e-mail address.

Greg Anthony, Recreation Leader

Carolina Beach Parks & Recreation Department

1121-B N. Lake Park Blvd.

Carolina Beach, N.C. 28428

910-458-2977 reccenter@carolinabeach.org

JULY 4th CELEBRATION

Step Up for Soldiers

There is no charge to attend; the event includes free food, drinks and great patriotic entertainment for veterans and active duty military families from all five branches as well as Step Up For Soldiers friends, volunteers and sponsors. Come out this Independence Day and reclaim your patriotism with Step Up For Soldiers.

Step Up For Soldiers invites you to its annual 4th of July celebration on Monday July 4, 2011 beginning at 5:30 PM. Location is the USO Building, 120 South 2nd; at the corner of Orange St. in downtown Wilmington. The party will end just in time for you to walk two blocks to the river front fireworks.

JULY 4th CRUISE

WINNER PARTY BOAT

Monday, July 4th, 2011

CRUISE TO SOUTHPORT TO VIEW FIREWORKS DISPLAY!

We are offering a Dinner Cruise departing from the Carolina Beach Marina to cruise to Southport, NC for the annual fireworks display.

Leave the driving to us! Get a spectacular view of the Fireworks show aboard the Royal Winner Princess II.

Boarding will begin at 6:30 pm.

Departure time is set for 7:00 pm and returning to the Carolina Beach Marina at 10:45 pm (approximate)

MENU FEATURING:

North Carolina Barbeque

Honey Baked Beans

Southern Potato Salad

Cole Slaw

Garlic Toast

Dessert

Iced Tea

Adult Fare is $57 and Child far is $37

Reservations can be mnade by calling 910.458.5356. Limited tickets available for purchase.

www.WINNERBOATS.com

hamber Events

Chamber Events Ribbon Cuttings

June 29, 2011

Bodacious Boutique

915A North Lake Park Blvd.

Carolina Beach, NC 28428

910.707-0404

5:30 PM

(910) 458-8434 for more information

The Pleasure Island Chamber Of Commerce offers a ribbon-cutting ceremony for any new business member or relocation of an existing member. If you are interested in having a ribbon cutting ceremony, please contact the Chamber for more details.

Please call

New Members

Jeff & Brinley Christner

Tasting History

Carolina Beach, NC

910.350.8901 Jeff

910.622.6046 Brinley

tastinghistorytours@gmail.com

www.tastinghistorytours.com

Guided Walking Food & HistoryTours. Tours are 2 1/2 hours and stops at five different restaurants in Carolina Beach while mixing the history of Pleasure Island along the way

Chris Oliver

Century 21 Sweyer

106 Ocean View Avenue

Carolina Beach, NC 28428

910-256-0021

coliver@century21sweyer.com

www.coastalcarolinahomesales.com

Jan Cannada &

Kim Foust

Bodacious Boutique

915A North Lake Park Blvd.

Carolina Beach, NC 28428

910-707-0404

bodaciouscb@aol.com

www.bodaciousboutique@vpweb.com

Women's consignment, purses, shoes, jewelry, retail & art

Tell your business acquaintances, friends and associates to join you at the Pleasure Island Chamber Of Commerce

click for more info

SAVE THESE DATES

BLP

Free Summer Concert

Classic Rock & Dance

Friday, June 24th

6:30-8:30 PM

Ft. Fisher Military

Recreation Area

(910) 458-8434

Despicable Me

Sunday, June 26th

8:45 pm

Carolina Beach Lake

(910) 458-8434

Kure Beach Double Sprint Triathlon
June 26, 2011

www.setupevents.com

Fireworks &

Hott Rod

Thursday, June 30

6:30-9:30 PM

Carolina Beach Boardwalk

Independence Day Fireworks Extravaganza
July 3, 2011
Carolina Beach Boardwalk
9:00 pm
www.pleasureislandnc.org

East Coast Got-Em-On Classic King Mackerel Tournamanet
July 8-10, 2011
www.got-em-on.com

South of K

Free Summer Concert

Classic Rock & Dance

Friday, July 8th

6:30-8:30 PM

Ft. Fisher Military

Recreation Area

(910) 458-8434

Free Fireworks and Boardwalk Music at the Beach
Every Thursday in June, July & August
Carolina Beach Boardwalk

Free Summer Movie Series
Every Sunday from May 29th - September 4th
Carolina Beach Lake

Free Summer Concerts at Ft. Fisher Recreation Area

2nd & 4th Fridays of June, July & August
(910) 458-8434
www.pleasureislandnc.org

18th Annual Seafood Blues & Jazz Festival with Jimmie Vaughn and the Tilt-a-Whirl Band featuring Lou Ann Barton

www.pleasureislandnc.org

October 8th & 9th
(910) 458-8434

Visit Our Sponsor

Carolina Beach 4th of July Weekend Farmer's Market and Art Show

Carolina Beach Lake

The Carolina Beach Farmer's Market and Arts and Crafts Show is a "must see" for your holiday weekend. There will be over 70 farmers, artists, bakers and crafters set up around the lake.

This "island-style" market is held every Saturday from 8:00am to 1:00pm and is located on the main street of Carolina Beach. Free parking is provided. On the summer holiday weekends, in addition to the usual 40 vendors the market livens up with an additional influx of artists and crafters of all types.

Come early to enjoy a leisurely morning strolling through the market. The produce is plentiful, there are baked items of all types from local bakers, everything you need for your pets and arts and crafts of many mediums await you. There is a lot to see and do so slip on your flip-flops, don't forget the sunscreen and come spend some time with your friends and neighbors.

For more information please visit the market's facebook page (Carolina Beach Farmers Market) or email Janet Knott at janetshere@earthlink.net

DESPICABLE ME

SUMMER MOVIE SERIES AT THE LAKE

8:45 PM at the Carolina Beach Lake

In a happy suburban neighborhood surrounded by white picket fences with flowering rose bushes, sits a black house with a dead lawn. Unbeknownst to the neighbors, hidden beneath this home is a vast secret hideout. Surrounded by a small army of minions, we discover Gru, planning the biggest heist in the history of the world. He is going to steal the moon. (Yes, the moon!) Gru delights in all things wicked. Armed with his arsenal of shrink rays, freeze rays, and battle-ready vehicles for land and air, he vanquishes all who stand in his way. Until the day he encounters the immense will of three little orphaned girls who look at him and see something that no one else has ever seen: a potential Dad. The world's greatest villain has just met his greatest challenge: three little girls named Margo, Edith and Agnes.

Admission is Free, however we do ask for a non-perishable food donation benefiting the Federal Point Help Center.

PICC CHAMBER WEEKLY PSA

If you are a member of the Pleasure Island Chamber of Commerce and would like to be featured in a future edition of the PICC CHAMBER WEEKLY PSA, please contact Greg Reynolds at (910) 458-8434 or at greg@pleasureislandnc.org. Deadlines are Wednesday at 5:00 PM for the Friday's PSA. Please submit via email including desired text, pictures and logos in a jpeg format. PDF's will be returned. We will run your announcement subject to space availability.

Carolina Beach - Kure Beach
Pleasure Island, North Carolina
"What's your pleasure?"

PICC CHAMBER
WEEKLY PSA

June 24, 2011

Are Short Sales Getting Easier?

2011-06-22T07:10:00.000-07:00

Short sales (where the lender agrees to accept less than the mortgage amount due on the sale of a property by a seller) have never been easy to complete. We are not suggesting that they now will be easy. However, there is mounting evidence that the banks are seriously favoring short sales over the option of foreclosure. Here is the evidence that has led us to this conclusion.

Banks Net More Money on a Short Sale

RealtyTrac’s latest data tells us that a short sale sells at approximately a 10% discount. A foreclosure sells at approximately a 35% discount. Obviously, the bank will net more by agreeing to short sale than they would by bringing the home to foreclosure.

Banks Are Beginning To Pay Short Sale ‘Bonuses’

In a recent article, HousingWire reported on a new program being instituted by CitiMortgage an affiliate of Citigroup:

CitiMortgage, is paying borrowers an average $12,000 after completing a short sale this year.

Justin Rand, the senior vice president of loss mitigation at the bank, said servicers are putting more of an emphasis on streamlining the process and pursuing a short sale ahead of foreclosure.

There is no better proof that some banks prefer a short sale than the fact that they are paying bonuses to homeowners who pick that option.

The Numbers Already Show an Increase in Short Sales

In the same article mentioned above, CitiMortgage said the percentage of troubled loans that now go to short sale route have quadrupled (4% to 16%) in the last two years.

And in a separate article, Bank of America reported they completed over 95,000 short sales in 2010 which more than doubles the number in 2009. BofA also reported that they completed more short sales than it sold previously foreclosed homes every month for the last year and a half. Last month (May), BofA completed roughly 9,000 short sales compared to 7,000 foreclosures sold.

Bottom Line

There are many advantages to a short sale over a foreclosure for the seller (they get to plan their move, there is less embarrassment with friends and neighbors, the negative impact on their future ability to purchase is much less severe). Luckily, it now seems that the banks also think it is in their best interest to pursue a short sale.

Reprinted by permission from KCM Blog

Are Short Sales Getting Easier?

2011-06-22T07:08:00.000-07:00

Banks Net More Money on a Short Sale

Banks Are Beginning To Pay Short Sale ‘Bonuses’

In a recent article, HousingWire reported on a new program being instituted by CitiMortgage an affiliate of Citigroup:

CitiMortgage, is paying borrowers an average $12,000 after completing a short sale this year.

Justin Rand, the senior vice president of loss mitigation at the bank, said servicers are putting more of an emphasis on streamlining the process and pursuing a short sale ahead of foreclosure.

There is no better proof that some banks prefer a short sale than the fact that they are paying bonuses to homeowners who pick that option.

The Numbers Already Show an Increase in Short Sales

In the same article mentioned above, CitiMortgage said the percentage of troubled loans that now go to short sale route have quadrupled (4% to 16%) in the last two years.

Bottom Line

A Window of Opportunity for House Sellers

2011-06-21T07:22:00.001-07:00

There has been much confusion as to where housing prices are headed. We have actually blogged on the issue recently. Today, we want to give our opinion on this subject for the short term. We believe sellers have a window of opportunity for the next 90-120 days in which to sell their homes for maximum price. We believe there will be increased downward pressure on home prices later this year and the first half of 2012.

Why renewed downward pressure?

Any item’s price is determined by ‘supply and demand’. In many parts of the country existing housing inventory is already high and actually increasing. In addition, an inventory of distressed properties (foreclosures and short sales) will be coming to market later this year. This inventory has been delayed for the last several months because of faulty paperwork by the banks when they originally attempted foreclosure proceedings on these homes.

Celia Chen, of Moody’s Analytics explains:

“Foreclosures are weighing on the outlook for U.S. house prices, and the slow resolution of issues surrounding the so-called robo-signing scandal is keeping distressed homes off the market”.

The New York Times also recently reported on this issue. They looked at the delays in certain states. As an example, this is what they found in New York:

“Last September, before the documentation crisis, nearly 1,500 New Yorkers lost their houses as a result of foreclosure, according to LPS. The average over the last six months: 286. That is far lower than at any point since the recession began.”

Banks are now correcting these errors.

There is evidence that the banks are getting their documentation in order and about to again increase their foreclosure repossessions. Housing Wire reported:

“Since major lenders delayed foreclosures to fix a broken process late last year, the amount of filings declined, but in May signs emerged the effect might be wearing off.”

They went on to quote RealtyTrac CEO James Saccacio:

“…lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures and as they determine that some local markets are able to absorb more foreclosure inventory… Foreclosure processing delays continue to mask the true face of the foreclosure situation, although there were some clues in the May numbers of what lies behind that mask.”

What will this mean to home prices?

As this inventory comes to market, it will impact prices in two ways:

1.It will provide discounted competition for buyers

2. It will impact the appraisal values of all homes in the area

Again, we quote Celia Chen:

“It is quite possible that house prices will pick up slightly in the second or third quarter of this year, as foreclosure sales remain depressed while nondistress sales pick up…By the fourth quarter of this year, however, the distress share will rise, sending the house price index back down…

House prices will founder until early next year and start rising in earnest at the end of 2012.”

Bottom Line

There is a window of opportunity currently which sellers should take advantage of. Waiting until later this year or until next year will not guarantee a higher sales price. If anything, it probably guarantees the exact opposite.

Consumer Confidence: Which Way Is It Headed?

2011-06-20T06:56:00.001-07:00

There is no doubt that the housing market and the economy are intertwined. The economy will get better as housing improves. Housing will regain strength as the economy improves. How is the economy actually doing? One measure is the Misery Index which combines the inflation and unemployment numbers. According to their site:

The misery index was initiated by economist Arthur Okun, an adviser to President Lyndon Johnson in the 1960′s. It is simply the unemployment rate added to the inflation rate. It is assumed that both a higher rate of unemployment and a worsening of inflation both create economic and social costs for a country. A combination of rising inflation and more people out of work implies a deterioration in economic performance and a rise in the misery index.

The higher the index, the weaker the economy. Here is a graph of the index over the last 18 months.

How does information like this impact Consumer Confidence?

Obviously, this index reflects on the factors that eat at consumer confidence. Bloomberg News reported on this saying:

Confidence among U.S. consumers dropped more than forecast in June as households contended with higher prices that are eating into incomes amid slowing job growth.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 71.8 from 74.3 in May.

Bottom Line

It will be difficult for housing to rebound while consumers are concerned about their financial futures.

Is The Economy Worse Than We Think?

2011-06-16T06:29:00.000-07:00

We are presented with conflicting data almost daily about the “health” of the economy. And I am no economist, but I believe that I do possess some common sense.

So, here’s what I have been thinking.

It is obvious that millions of people are NOT paying their mortgage, rightly or wrongly, for their own reasons:

1. They can’t because of a job loss, death, disability or something outside of their control.

2. They won’t because it makes poor financial sense as their house is underwater.

My question is that with so many people NOT paying their mortgage, how can there be an economic recovery of any fashion? And then it hits me, people who used to spend thousands of dollars every month on their housing are spending that money now on food, clothing, vacations, gasoline, cars and alike. With the lag time between the moment of not making a mortgage payment to eviction being as long as two years, it seems logical to me that the reported economic numbers have to be inflated.

As foreclosures and short sales continue and people transition from non-paying homeowners to renters, millions of consumers will start having a housing expense again which will leave them less cash every month to buy other things. The result will be a slowing economy.

If you are a home seller, I think it means continued lower sales prices for at least the next 18 months. Price aggressively and get top dollar now!

If you are a home buyer, most of the recent data points to higher prices of everyday goods (largely because of higher energy prices), and that leads to inflation. Inflation is combated by the Federal Reserve with higher interest rates. So buy now, while the monthly carrying COST of a home is at near all time lows. Lower home prices sound good, but higher interest rates will nullify that benefit.

I have learned that “Common Sense Is Not Common Practice”.

Financial News Icons Say Now Is the Time to BUY!

2011-06-09T06:23:00.001-07:00

We received some tough news on housing last week. Prices are still softening. There was a lot of negativity surrounding these reports. The news caused more consumers to be concerned. However, the real question is what this means to you and your family. This could actually be great news if you are buying (either as a move-up buyer or a first-time buyer).
We don’t want you to take our word for this. Instead, here are excerpts from articles published last week by two of the country’s iconic financial publications: The Wall Street Journal and Forbes Magazine.

The Wall Street Journal: Why It’s Time to Buy

“Despite all the gloom, there are growing indications that it is a good time to buy… The long-term benefits of homeownership remain very much intact. For now, at least, you can deduct the mortgage interest on your taxes—a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord. And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free. Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with.”

Forbes Magazine: 9 Reasons to Buy a House Now

“If you’re planning to buy a house right now, the next few months may be the best time to buy… With a convergence of the factors (mentioned in the article) all of which are favorable to the prospective home buyer, there may not be a better time to buy than right now. It’s a buyer’s market, but like everything else in life, the bargain deals won’t last.”

Bottom Line

When the Wall Street Journal and Forbes have articles saying now is the time to buy, maybe it’s time to buy.

2011-06-09T06:23:00.000-07:00

We received some tough news on housing last week. Prices are still softening. There was a lot of negativity surrounding these reports. The news caused more consumers to be concerned. However, the real question is what this means to you and your family. This could actually be great news if you are buying (either as a move-up buyer or a first-time buyer).

We don’t want you to take our word for this. Instead, here are excerpts from articles published last week by two of the country’s iconic financial publications: The Wall Street Journal and Forbes Magazine.

The Wall Street Journal: Why It’s Time to Buy

“Despite all the gloom, there are growing indications that it is a good time to buy… The long-term benefits of homeownership remain very much intact. For now, at least, you can deduct the mortgage interest on your taxes—a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord. And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free. Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with.”

Forbes Magazine: 9 Reasons to Buy a House Now

“If you’re planning to buy a house right now, the next few months may be the best time to buy… With a convergence of the factors (mentioned in the article) all of which are favorable to the prospective home buyer, there may not be a better time to buy than right now. It’s a buyer’s market, but like everything else in life, the bargain deals won’t last.”

Bottom Line

When the Wall Street Journal and Forbes have articles saying now is the time to buy, maybe it’s time to buy

Does Your Lender WANT To Say “Yes!”?

2011-06-09T06:21:00.000-07:00

As people go through the mortgage process today, I believe that they wonder if their lender has gone insane. Lenders ask for documentation repeatedly, constantly updating, asking for further clarification and explanation for everything. Income, credit, assets and appraisals are scrutinized at a level unseen in my 25+ years. It almost seems like they are trying to find reasons NOT to lend.

But, I assure you, that is not the case. The only way lenders can stay in business is to lend money. It is what funds the operation and pays for salaries, rent and paper clips. Lending is what creates the value of the company. No closings, no revenue, no company.

So why the perception of over-documentation and over analysis when we know the lenders have to make loans? This is the reality of a post-subprime world. Lenders got too liberal and under-documented files and forgot the primary role of underwriting (judging a borrower’s ABILITY and WILLINGNESS to repay the loan) as they approved files. And now, the pendulum has swung back to a very conservative stance. Common sense seems to have been replaced by a “Cover Your Butt Mentality”.

No one is immune. Appraisers error on the side of lower valuations and heightened criticism of a home’s condition. Underwriters labor over pay stubs, tax returns, bank statements and credit information. Closing agents meticulously examine title and closing documents. Each of them has learned that their mistakes, miscalculations, or errors in judgment (no matter how minor) can result in a loss of their job, a bad loan, and/or monetary damages to their companies
.
So, today I just wanted to counsel home buyers. Your lender WANTS to make your loan. However, understand that they have been burned by borrowers, burned by their bad judgment, burned by moronic industry trends of the past. Lenders are going to be a little gun shy. If you can prove that you are willing and able to repay the loan, lenders have lots of money available at incredible (once-in-a-lifetime) rates. When you think your lender is asking for too much, know it’s because they want to say “yes” AND know that their decision is both a good and defendable one.

Reprinted by permission from KCM Blog

Moving Up? Doing It Now May Make Sense

2011-05-16T06:47:00.000-07:00

An issue that may have a gigantic impact on the housing market later this year is the lowering of the conforming loan limits. Without an act of Congress, these limits will return to the lower limits that existed prior to 2008. Today, we want to shed light on this issue and what it means to someone thinking about buying either a first home or move-up home valued over $400,000 in certain markets in the country.

What is the ‘Conforming Loan Limit’?

The ‘conforming loan limit’ sets the maximum loan amount, which either Fannie Mae or Freddie Mac are allowed to purchase individual loans. If a loan is larger than this limit, it is considered a ‘jumbo’ loan and is automatically disqualified from being sponsored by Fannie and Freddie. It would have to be handled by the private market.

A Little History

Prior to 2008, the loan limit was $417,000. When prices started to rapidly escalate in certain regions of the country, the limit was increased. In some counties, that limit jumped to over $700,000. These new limits are scheduled to expire this October. If this happens, Fannie Mae and Freddie Mac may no longer be involved in these loans.

What impact will this have on a buyer?

It will cost more in mortgage payments if buyers are purchasing a home over the limit in a region where the limit changed. The Mortgage Market Note explains:

For the affected borrowers, because mortgage rates for jumbo mortgages tend to be higher than rates for conforming loans, financing costs may be higher… Over the latest year, the difference between mortgage rates for jumbo loans and jumbo-conforming mortgages has varied between about ½ and ¾ of a percentage point.

Just a ½ point increase in mortgage rate on a $500,000 mortgage means an additional $154.84 in your monthly mortgage payment; a difference greater than $55,000 over the life of a 30 year mortgage.

Which counties are impacted and to what degree?

Below is a map of the regions affected from the Mortgage Market Note. You can get a breakdown of each impacted county in this report also.

Bottom Line

If you are thinking about buying a home in the near future, you should know how this issue may impact you. Sit down with a real estate professional familiar with your area for further advice.

Homeownership: Building Family Wealth

2011-05-11T11:42:00.000-07:00

The question facing many families making a move today is whether it makes more sense to rent or buy. We have been very upfront in discussing our unwavering belief in homeownership. It is for that reason that today we want to quote from a study issued by an institution with no ties to the real estate business or mortgaging.

The Joint Center for Housing Studies at Harvard University just released a study, America’s Rental Housing: Meeting Challenges, Building on Opportunities. The study discusses the need for a greater supply of quality rental units in America. We agree. However, there were a few nuggets of information found in the study we want everyone to know.

American’s Belief in Homeownership Has NOT Fundamentally Changed

There seems to be some feeling that homeownership has lost it’s luster and perhaps is no longer a component of the American Dream. Harvard explains:

To date, attitudes about owning have become only slightly more negative while attitudes about whether now is a good time to buy are little different than before the housing boom. In the latest Fannie Mae housing survey from October–December 2010, the vast majority of respondents—including renters—continued to believe that homeownership makes more financial sense than renting. In addition, nearly two-thirds of all renters surveyed reported their intention to buy homes in the future.

Homeownership Creates Wealth

Because prices have fallen dramatically in many parts of the country in the last five years, some are too easily dismissing homeownership’s role in building family wealth over the last century. The study explains:

In addition, renters have only a fraction of the net wealth of owners. Near the peak of the housing bubble in 2007, the median net wealth of homeowners was $234,600—about 46 times the $5,100 median for renters. Even if homeowner wealth fell back to 1995 levels, it would still be 27.5 times the median for renters.

The recent fall in prices can’t wipe out the 100 year history housing has as a good long-term investment.

Bottom Line

The study was promoting the need for the construction of more rental housing for the average American family. However, when it came to a discusion on building wealth, Harvard offered:

“And for individuals as well as businesses, owning rental properties is an avenue for wealth creation.”

And how do these individuals and businesses create that wealth. Owning the real estate and collecting rent from their tenants to offset the mortgage payments. Build your family’s wealth – not your landlord’s. We believe OWNERSHIP almost always makes the most sense.

Reprinted from KCM Blogsite

5 Reasons You Should Consider Selling Now

2011-05-10T06:29:00.000-07:00

If you plan on moving anytime in 2011, you should strongly consider selling your house now rather than waiting. Here are five reasons why:

1.) This is when your house will get the most exposure

The spring, and particularly the month of May, is when most buyers enter the real estate market. This surge of buyers dramatically increases the exposure for your house . The best chance of getting quality offers (perhaps even multiple offers) is RIGHT NOW!

2.) Foreclosures and short sales will increase in about 90 days

The good news is that the number of people paying their mortgage on time is increasing. This will lead to less distressed property sales later this year and throughout 2012. The not-so-good news is that there is still a large inventory of existing foreclosures and short sales that will still be coming to market.

As an example, LPS reported in their latest Mortgage Monitor that:

There are still twice as many loans going 90+ days delinquent as are starting foreclosure

There are almost three times the number of foreclosure starts as there are foreclosure sales

Distressed property inventory levels are almost 45 times the rate of monthly foreclosure sales

This means that there is a backlog of properties which will start coming to the market in about 90 days as banks clear up their paperwork challenges. These properties sell at dramatic discounts. They will be your competition. Both Fannie Mae and Freddie Mac have recently discussed the magnitude of this challenge.

3.) Interest rates have risen over the last six months

Interest rates have stabilized recently. However, in the last six months, interest rates have climbed over 1/2%. Every time the rates increase 1/4%, approximately 250,000 buyers are eliminated from qualifying for a mortgage. In an environment of volatile rates, waiting could mean that there will be fewer buyers eligible to purchase your house. It also could mean that you will pay a higher rate on the next home you buy.

4.) Qualifying for a mortgage is about to get even more difficult

Besides increasing rates, there are other factors that will hinder a buyer’s ability to qualify for a mortgage as we move forward. Lending standards have been getting tighter over the last year. And as the government debates the new proposed guidelines (QRM), banks are gearing up for even more stringent standards.

Morgan Stanley recently stated:

“Recent developments in issues such as GSE reform, Dodd-Frank securitization rules, and foreclosure settlement issues suggest a tighter and more expensive environment for mortgage credit.”

This may impact any potential purchaser for your property and may also impact your next purchase.

5.) It’s time to get on with your life

Probably the most important reason to sell is so you can get on with your life. You placed your home on the market for a reason. Do not allow a less-than-stellar housing market prevent you from reaching your goals as an individual or as a family. Think about the reasons you decided to move in the first place. Are these reasons still important to you? If you have to take less than you were originally hoping to get for your house, your family has a question to ask each other: Is the dollar difference in sales price worth putting off our plans? Only you and your family know the answer to that question.

Bottom Line

If you plan to sell this year, the reasons above prove that selling now makes more sense than waiting to later in the year. Sit with a real estate professional in your area today to fully understand your best option.

Reprinted from KCM Blogsite

The Impact of Distressed Properties on Neighboring Values

2011-05-06T07:24:00.001-07:00

The banks are finally getting their foreclosure paperwork in order. They will start bringing larger numbers of distressed properties to market over the next six months. We must realize that this influx of discounted inventory will have an impact on the values of neighboring homes.

How large an impact?

According to RealtyTrac a foreclosure sells for 59% of the value of a similar non-distressed property. Therefore, this foreclosure inventory will affect values in two ways:

1.) As Discounted Competition

Obviously, a segment of purchasers will prefer the discounted property based on price alone. Even if the distressed property is in need of substantial repair, the buyer is getting the property at a 41% discount. Price is determined by supply and demand. Distressed properties will eat up a portion of the demand for housing and that will put downward pressure on all values.

2.) As Comparable Sales on Your Appraisal

Even after you put your house into contract, this distressed inventory can still impact your transaction. Unless your purchaser is paying all cash, there will be an appraisal of your property by the bank who is giving the mortgage to your buyer to complete the purchase. Because of the volume of distressed properties selling in almost every market, banks are instructing appraisers to use these discounted sales in determining values of non-distressed sales. We can argue the logic of this some other time. At this point, we must simply be aware that this is taking place.

Bottom Line

Over the next several months, banks will be moving substantial numbers of foreclosures onto the market. This will impact values of other homes in the region. If you are considering selling, now might be the best time. You want to be sold and closed before these properties come to market and impact your price.

Reprinted from KCM Blogsite

Almost 14,000 Houses Sold Yesterday

2011-05-03T06:56:00.000-07:00

One of the biggest misconceptions in today’s housing market is that homes are not selling. That is simply not true. Last month’s Existing Sales Report from the National Association of Realtors (NAR) showed that homes were selling at an “annual rate of 5.10 million”.

That’s an average of 13,973 every day – 365 days a year!

And the monthly Pending Sales Report, which measures the number of houses going into contract each month, has showed increases in six of the last nine months prompting Lawrence Yun, NAR’s chief economist to say:

“Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own. The index means modest near-term gains in existing-home sales are likely.”

We realize that 40% of the sales are distressed properties and that 22% of buyers are investors. Yet, that still doesn’t negate the fact that homes are in fact selling… and 60% of them are NOT foreclosures or short sales.
And Yun believes this uptick will continue:

“Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5 to 10 percent this year.”

Bottom Line

Homes are selling. You probably will need to offer a compelling price if you put your house on the market. But if you do, it will sell.

Reprinted by permission from KCM Blogsite

Is It Time to Diversify Your Investment Portfolio?

2011-04-26T08:36:00.001-07:00

Studies now show that over 20% of the houses with mortgages in the country are underwater (where the loan amount exceeds the value of the property). Some bought their house at the top of the market and saw prices come tumbling down over the last few years. Losing this value has caused challenges for many in this category.
Other homeowners are underwater because they refinanced their homes at the height of the market and cashed out some of their equity. Some did this several times as values continued to rise and interest rates continued to fall. When prices dropped, they too found themselves in a negative equity situation. But not everyone in this category is in a worse position financially. Let’s break down this category.

Some Used Their House as an ATM

Some homeowners took cash out of their home to finance a lifestyle they desired. They bought a new car or a new boat. Some used the cash for fabulous vacations to locations they had always dreamed about. This group didn’t lose their equity. They spent it. Maybe these purchases were worth the price that these homeowners are now paying. Only the individual person can answer that question.

Some Used Their House to Finance an Education or Start a Business

It has long been a tradition in this country that people tap the equity in their home to finance their children’s college education or to gather together the start-up capital necessary to open their own business. These people didn’t lose their equity. They invested it in their children or their business. Was it worth it? For the couple who refinanced their home for their son or daughter’s eduction in 2007, a good time to ask may be next month as they are attending their children’s college graduation. For those who started a business with the money, whether it was a good idea was determined by their business plan not the housing market.

Some Used Their Home to Diversify Their Investment Portfolio

Some savvy homeowners, upon seeing their home values skyrocketing, decided to pull cash out and invest in other asset classes. At the height of the market (2006), some took $100,000 out of their home and invested in the stock market or in precious metals. Instead of sitting on their equity, they decided to put it to work for them. How did this group do? If they invested in the Dow, that $100,000 is now worth approximately $115,000. If they invested in gold, that $100,000 is now worth $290,000. (We never read about these people in the thousands of stories on the housing bubble. Good news just doesn’t seem to sell papers.)

Bottom Line

In every challenge there is an opportunity. Perhaps the opportunity in housing today is to use some of the equity in other assets we currently own to purchase real estate while it is low and mortgage money remains cheap. The Wall Street Journal and Forbes Magazine both suggested this exact strategy to their readers in the last three months.

Why the Wealthy Are Buying

2011-04-13T06:33:00.001-07:00

We have taken the stance that real estate is currently a great investment. There have been MANY that have let us know that they think we are crazy. Today, let’s look at a few prominent people, media sources and one very important group that agree that now is the time to buy.

Fortune Magazine and The Wall Street Journal

John Paulson, billionaire investor.

Donald Trump, no introduction necessary.

Barbara Corcoran, real estate TV personality.

A pretty impressive list! The question: Is anyone listening to them? The answer: The wealthiest people in the country. According to the most recent Existing Sales Report from the National Association of Realtors, at a time when sales of all homes have decreased 2.8% compared to last year, homes over $1million dollars are selling at a rate 3.9% higher. Why are the wealthy purchasing real estate right now?

Money is cheap. The 5% interest rate will not be available forever.

The ability to lock in that interest rate for 30 years may soon disappear.

Getting a mortgage may get much more expensive soon.

They want to buy low and sell high. The price of real estate is low.

Bottom Line

We know many will disagree with us about now being the time to buy. But if the wealthiest people in the country are buying, shouldn’t we at least consider the possibility?

Why the Wealthy Are Buying

2011-04-13T06:30:00.000-07:00

Fortune Magazine and The Wall Street Journal

John Paulson, billionaire investor.

Donald Trump, no introduction necessary.

Barbara Corcoran, real estate TV personality.

Money is cheap. The 5% interest rate will not be available forever.

The ability to lock in that interest rate for 30 years may soon disappear.

Getting a mortgage may get much more expensive soon.

They want to buy low and sell high. The price of real estate is low.

Bottom Line

We know many will disagree with us about now being the time to buy. But if the wealthiest people in the country are buying, shouldn’t we at least consider the possibility?

4 Financial Reasons to Buy Now

2011-04-12T07:33:00.001-07:00

As Dean Hartman said last week, the purchase of a home is a personal decision. However, we want to give everyone four great financial reasons why you should not wait before taking the plunge into homeownership.

Interest Rates Are Increasing

Interest rates have increased almost 3/4 of a point in the last six months. Most experts expect rates to continue to increase through the year. Interest rates along with price determine the overall cost of a home. Even with prices softening, if interest rates rise, it may be less expensive to buy now rather than wait.

The 30-Year Mortgage May Disappear

There has been much debate regarding government’s role in providing support for homeownership. There are several experts who believe If Fannie Mae and Freddie Mac’s roles are eliminated, or even limited, it may be the end to the 30-year mortgage. This concern is addressed in MSN Real Estate’s Is it curtains for the 30-year mortgage?

QRM Requirements Could Be Much More Stringent Here are proposed changes to the requirements for a ‘qualified residential mortgage’:

Certain mortgage types would be eliminated

You would need to put a minimum of 20% down

You would need a minimum 690 FICO score

The ratios of income to both the mortgage payment and overall debt would become much more conservative (28% and 36%)

There would be loans available to purchasers who don’t qualify under the new rules. However, they will probably be more expensive to the buyer (both in rate and costs).

Rents Are Expected to Increase

The supply of available rentals is decreasing and the demand is increasing. That will lead to an increase in rental costs throughout the year. The Wall Street Journal this week quoted a report by Reis, Inc:

“Expect vacancies to continue declining, and rents rising through the rest of 2011 at an even faster pace.” Bottom Line

You may be waiting on the sidelines to see if prices will continue to depreciate before you purchase a home. The mortgage expense is a major piece in the overall financial picture of homeownership. Make sure you consider it when timing your decision.

Reprinted by permission from KCM Blog

2011-04-11T06:51:00.001-07:00

Real Estate and Financing Are PERSONAL

2011-04-07T06:33:00.001-07:00

Every day we are bombarded with statistics and data. Housing starts are up, housing starts are down; more job losses, unemployment is improving; foreclosures, short sales, housing inventory, interest rate movements and much more. It’s enough to make your head spin. There’s an old saying that claims: “All real estate is local”. It infers that national numbers are good reference points, but that individual communities (or even pockets within communities) can have strikingly different realities. When prices are falling nationally, there are some places where prices are holding steady or rising as an example.

I believe that even that old saying is too broad. Buying a home or structuring the financing of a home isn’t a local phenomenon….it is a personal one. It’s the same as the economy. Even though we have been suffering through a national downturn, many are having their best years ever. Unemployment, foreclosure, even homelessness are tragic statistics and things to be aware of. But, for those not in those situations, you need to make decisions that will best serve your PERSONAL goals.

To that end, it is a great time to buy a home, for the reasons touted in this space regularly:
 Low interest rates make more house more affordable
 Tremendous available inventory
 Home prices are in line with income levels once again

It is also a terrific time to sell. I heard an agent say just last week that there is NO INVENTORY available. He further explained that properly priced homes are selling almost immediately and the only homes on the market more than 30 days are ones that won’t sell because of unreasonable seller expectations (and agents who aren’t strong enough to deliver the truth to those sellers).

A strong statement, yes- but one worth taking into consideration as you ponder your PERSONAL situation. And remember, sellers become buyers. They get the advantages buyers are enjoying as well. My advice is don’t be a sheep following media hype which analyzes data that reflects the past (and not the present or future) or looks at national numbers or assumes that your job, credit standing or savings are in jeopardy. YOU need to look at your individual life and decide for yourself.

Mortgages: Is What You Believe Actually True?

2011-03-31T06:22:00.001-07:00

What if everything you believed to be true about mortgages, wasn’t actually true after all? Would you rather know now or later? In my experience, I have come to understand that many, if not most, clients come ‘pre-conditioned’ by what has long been termed “conventional wisdom”.

For generations, people have been told that when buying a home, they should:
 Make a big down payment
 Obtain a fixed-rate-mortgage; 15 years if you can afford it
 Make additional principal payments whenever possible
 Pay off your loan as quickly as you can

People see a mortgage as a “necessary evil”- one that they should be afraid of and try to eliminate as soon as they can. And while the concept of being mortgage-free may seem attractive on the surface (and may have been an acceptable strategy in the past), we no longer live in the same world that our parents and grandparents did.

Unlike previous generations:

 We will not have the same job for life. Most people will have five to six different careers. That simple fact will preclude most people from a company pension as part of a retirement strategy.
 We cannot realistically count on Social Security to exist in its current form. Either your benefits will have to be reduced or pushed off to later years to enable the fund to remain solvent.
 We won’t have “Mortgage Burning Parties”. People live in their homes on average just seven years now and, because of refinancing, their mortgages will only last 5 years.

Ultimately, we have to appreciate that we live in a very different world and that the tactics and solutions of the past no longer fit the challenges of the present or future. I believe we have an obligation to custom design our clients’ mortgage in a way to enhance cash flow, minimize income taxes and help implement alternative strategies to protect their assets and create wealth.

I know clients can make better choices if they are armed with the understanding that every dollar applied to the principal of their mortgage (through down payments, regular mortgage payments, and even pre-payment strategies) is NOT the strongest fiscal strategy. When you pay down your mortgage, the BANK is in a less risky position. Whose risk is increasing? YOURS! I have seen clients apply money towards their principal balance of their 5% tax-deductible mortgage, while carrying 18% non-deductible credit cards. Why not get rid of the revolving debt? I know you need discipline to actually save the money you would normally apply to lower your mortgage balance.

However, I promise you that good mortgage professionals can show you the power of separating the equity from the home; the increased liquidity, the phenomenon of compounding interest and why the actual rate of return on home equity is 0%.

I imagine many will dispute my contentions here, but they are mathematically proven. If you have discipline, there IS a better way to manage your finances. Explore them and decide for yourself.

Reprinted by permission from KCM Blog

Real Estate: GOLDen Opportunity of This Decade

2011-03-30T06:19:00.000-07:00

Everyone wants to comment on the current real estate market. They want to talk about how now is not the time to buy a home. Some even argue owning a house has never been a great investment. Most say it will be a long time before real estate again begins to appreciate. It all sounds so familiar to me. It was just a decade ago that many made the same arguments about gold as an investment. Gold had dropped from over $400 an ounce to $250 an ounce (a 40% decline) from February 1996 to August 1999. People ran from gold as though it was a plague. Lord William Rees-Mogg, the current Chairman of The Zurich Club, in 1997 said: “No investment has been so thoroughly exploded as gold; most people think that there will no more be another gold boom than there will be another boom in tulip futures in The Netherlands.” Two years later in 1999, Don Wolanchuk author of the Wolanchuk Report explained: “Everybody hates gold. You can’t have a bottom until everybody is out. And everybody is out of the gold sector.” Everyone knows what happened next. The proclamation of gold’s death was rather premature. Gold rose from $250 an ounce to over $1,400 an ounce in the next twelve years. I see the same situation with real estate today. I am not predicting that real estate will see the same levels of appreciation. I do believe however that the market will rebound strongly. Those who continued to believe in gold as an investment were rewarded. Those who continue to believe in real estate as a sound investment will also be rewarded. Here is what Adam Hamilton wrote in October 2000 in an essay titled Is Gold Dead? The road for gold investors has been long and parched in the last five years. They have wandered through a seemingly endless desert, occasionally tempted by what proves to be an illusory mirage. Many have fallen beside the sun-cracked path, their white bones picked clean by buzzards and gleaming in the sun. Nevertheless, a brave contrarian core continues to march forward. They have studied history, currency, gold, investments, economics, and finance. They understand the timeless value of gold, the cyclical nature of the markets, and the vagaries of human psychology. They realize it is darkest before the dawn, and the journey most difficult right before the homestretch is reached. Gold is in an INCREDIBLE position, and it will have its day. Nothing goes up in price forever, and nothing goes down in price forever. Investments are cyclical. Gold is NOT dead, it is simply biding its time, waiting for its next earth-shattering mega-rally. The spoils that go to the few remaining gold investors when that day inevitably arrives will be fantastic. The stunning victory will quickly blot out the painful memories of the long struggle… You could replace the word ‘gold’ with the words ‘real estate’ throughout this essay and it would apply today. Reprinted with permission from KCM Blog Site

Double Dip or Double Your Money? … or Both?

2011-03-28T07:48:00.000-07:00

Last week, MacroMarkets LLC announced the results of the March 2011 Home Price Expectations Survey, compiled from 111 responses of a diverse group of economists, real estate experts and investment and market strategists. Many media sources reported on the survey’s comment about a projected ‘double dip’ in prices. What the media didn’t aggressively cover was the other projection in this same report. Today we want to shed light on both portions. Double Dip There is no doubt the survey looked negatively on house prices through the rest of 2011. Robert Shiller, MacroMarkets co-founder and chief economist said: “Overall, the sentiment among our expert panel regarding the U.S. housing market outlook continues to deteriorate. Now they are expecting only a weak recovery, and even that is not until 2013. This uninspiring view must be influenced by the persistently weak market fundamentals – high unemployment, supply overhang, an unabated foreclosure crisis, and constrained mortgage credit.” Terry Loebs, MacroMarkets managing director commented on the dreaded ‘double dip’. “Many more experts are now projecting a double-dip after witnessing the double-dead cat bounce that came in the wake of expired government stimulus programs. In December, only 15% of our panelists were projecting that a new post-crash low would materialize for national home prices. Now, just three months later, almost 50% foresee a double-dip happening this year, and not a single panelist expects national home prices to recover to the pre-bubble trend in the coming 5 years.” However, the longer term view of home prices was much more optimistic. Double Your Money The experts projected that by the end of 2015 home prices would attain a cumulative level of appreciation of almost 10% . This means, if you purchased a house today with a 10% cash down payment, you could double your cash in five years; even taking the projected double dip into consideration. Shiller also noted that there continues to be significant dispersion among the panelists regarding their individual home price forecasts: “A few respondents do see a real recovery, predicting prices up 20% or so by 2015.” If that happens, you would have TRIPLED your cash. Bottom Line If you are thinking of selling in the next 12 months, you should do it before the projected ‘double dip’. If you are thinking of buying and you plan to live in the home for at least five years, your financial investment will be fine. Reprinted by permission from KCM Blogsite

Distressed Properties: Discounts and Difficulties

2011-03-25T06:49:00.000-07:00

Most buyers want to make sure they get a ‘good deal’ when they purchase something. Purchasers of real estate are no different. That is why many decide to buy a distressed property (a foreclosure or a short sale). The National Association of Realtors (NAR) last week reported foreclosures, on average, sell at a 22% discount and short sales at a 17% discount. It sounds like a pretty good decision to buy a property at those levels of discount.

However, the purchaser must realize that there are added obstacles in these type of transactions. Many foreclosures are left in less than pristine condition by the previous owner and some have title issues that must be corrected before they can change hands. Many short sales have multiple loans that must be negotiated before an offer is accepted by all parties to the transaction. This can take months in many cases. Purchasing a non-distressed property will probably have a lot fewer pitfalls.

Patience Equity

Does that mean that you shouldn’t consider a distressed property? Not necessarily. Just understand that there is an additional cost to purchasing a foreclosure or a short sale: the cost of time. For some, the 17 or 22 percent discount is well worth the extra time they must spend on the transaction. We like to call that savings your ‘patience equity’. Patience equity will require you to be patient however. Realize going into the deal that there will be obstacles to overcome and make sure you give your real estate professional time to overcome these challenges. Again, patience equity will require your patience.

Bottom Line
Buying a distressed property could make sense for you as long as you realize you will need to be VERY patient with your real estate agent throughout the process. If you are, you will own a home that has considerable equity the day you move in.

Once-in-a-Lifetime Opportunity for Buyers?

2011-03-18T07:04:00.000-07:00

Business Insider’s Money Game interviewed real estate expert Barbara Corcoran earlier this week. This is what she said about buying in this market:

“We have a regular real estate miracle happening right now. We not only have record low prices, but we also have cheap money.”

A second real estate icon, Donald Trump, just a few weeks ago said:

“This is a great time to go out and buy a house. And if you do, in 10 years you’re going to look back and say, ‘You know, I‘m glad I listened to Donald Trump’.”

Maybe it’s time to start listening to the people who have made fortunes buying and selling real estate. They may know best!!

Homeownership: What Americans Think

2011-03-08T11:49:00.000-08:00

There is a growing number of people debating whether the government should continue its level of support for homeownership. Mortgage assistance is being pulled back and even the mortgage-tax-deduction is now up for debate. We want to look at how the people of this country view owning a home and the reasons they buy. Last week, Fannie Mae released the National Housing Survey. Here are the survey’s more interesting findings.

Belief in Homeownership

 96% of all homeowners said homeownership has been a positive experience.
 84% of Americans still believe that owning a home makes more sense than renting. Even 68% of renters believe owning makes more sense.
 64% consider buying a home as a safe investment. Buying a home was considered safer than buying stocks by over three times the number of people (64% vs 17%).
 2 in 3 Americans believe that lifestyle benefits of homeownership (65%) are superior to the financial benefits (32%).

Top Non-Financial Reasons to Buy a Home

Lifestyle Benefits: The broader security and lifestyle benefits of homeownership, such as providing a good and secure place for your family and children, where you have the control to make renovations and updates if you want, and in a place that’s in a community and location that you prefer.
1. It means having a good place to raise children and provide a good education
2. You have a physical structure where you and your family feel safe
3. It allows you to have more space for your family
4. It gives you control over what you do with your living space (renovations & updates)
5. It allows you to live in a nicer home
6. It allows you to live in a location that is closer to work, family, or friends

Top Financial Reasons to Buy a Home

Financial Benefits: The financial benefits of homeownership: its value as an investment (especially compared to paying rent), its value as a way to build up wealth for retirement or to pass on to your family, and the tax benefit.
1. Paying rent is not a good investment
2. Buying a home provides a good financial opportunity
3. Owning a home is a good way to build up wealth and pass it along to my family
4. It is a good retirement investment
5. Owning a home provides tax benefits
6. Owning a home gives me something I can borrow against if I need it

Bottom Line

The people of this country have always seen great value in owning their own home. They still do. We believe we should never underestimate the importance of homeownership as a crucial piece of the American Dream.

Honesty Is the Best Policy

2011-03-04T07:37:00.000-08:00

For years, many buyers weren’t honest about their income and some loan officers didn’t care. The loans were bundled by Wall Street and sold to investors who were told anything but the truth about their value. For years, some real estate professionals prodded appraisers to move that appraisal up ‘just a bit’ and most sellers thanked them for it. The housing bubble was created on a bed of dishonesty. I’m not saying that any group was malicious in their intent. Everyone probably believed that it would all work out in the end. But, it didn’t. Instead, we were faced with the largest housing collapse since the Great Depression.

A market built on so many half-truths couldn’t continue to grow. Its foundation was rotten. Governmental regulation has forced most parties to rethink the way the housing industry can survive. A person given a mortgage must now prove they have the capability to repay it. An appraiser is held to a higher standard as they determine values. Has the pendulum swung too far? Perhaps. But, something needed to be done.

That brings us to today. Let’s make sure that we demand honesty from real estate professionals in everything we ask them to do. Buyers must insist that the loan officer determines the amount of mortgage they can actually afford. Sellers must make sure they are given an honest estimate of their home’s value in today’s market when listing. Remember to reward the person who has the courage to tell you what you need to know not the one who is telling you what you want to hear.

Honesty is the only thing that will bring back the housing market.

For Buyers:The Financial Opportunity of a Lifetime?

2011-03-02T06:30:00.000-08:00

We often point out that a buyer should be more concerned about the COST of a home rather than the PRICE. Price obviously is a component of cost. However, unless you buy all-cash, you must also be concerned about the financing of the purchase. The price and the financing together determine the cost of a home. Today, we want to look at only the financing piece.

An opportunity exists today because of recent government involvement; an opportunity that may never again be available in our lifetimes. There has been much discussion about what role the federal government should have in supporting homeownership. We will leave our opinions on the debate for another time. However, we want to alert you to two advantages available to a purchaser today that may disappear in the future:

 Historically low interest rates
 The ability to lock in these rates for thirty years

Interest Rates

Because of the financial crisis, the government stepped in and instituted a series of programs which pushed mortgage interest rates to historic lows. If we look at 30 year mortgage interest rates before and after government intervention we see the impact these programs had.

According to Freddie Mac, from 2006 to the start of the financial crisis (the fall of 2008), the average rate was 6.29%. Since then, the average rate has been 4.92%.

A purchaser can still get a 30 year-fixed-rate-mortgage at approximately 5%. However, interest rates this low may soon disappear. The government has questioned its role in supporting homeownership. In the administration’s REFORMING AMERICA’S HOUSING FINANCE MARKET: A REPORT TO CONGRESS, they are very strong in voicing their thoughts on this issue:

…our plan also dramatically transforms the role of government in the housing market. In the past, the government’s financial and tax policies encouraged housing purchases and real estate investment over other sectors of our economy, and ultimately left taxpayers responsible for much of the risk incurred by a poorly supervised housing finance market.
Going forward, the government’s primary role should be limited to robust oversight and consumer protection, targeted assistance for low- and moderate-income homeowners and renters, and carefully designed support for market stability and crisis response…

Under our plan, private markets … will be the primary source of mortgage credit and bear the burden for losses.
What are the probable results of this decision?

The Royal Bank of Scotland:

“The (government) currently provides 95% of housing finance in the U.S.; any reductions of their involvement in supporting mortgages mean interest rates will have to go up to induce private lending.”

AnnaMaria Andriotis, writer for Market Watch:

“In the proposals were changes that will mean more expensive mortgages, with higher fees and, probably, higher interest rates, larger down payments and, in the near term, fewer lenders to choose from.”

The day of a 5% rate seem to be coming to an end.

Locking in a rate for thirty years

We must also realize that having the ability to lock-in a rate for 30 years may soon be a thing of the past.
There are a growing number of people who think that our mortgage industry should imitate those of other industrial countries around the world. If we do start limiting government support for the mortgage process, the 30-year-fixed-rate mortgage may disappear. Other countries, like Canada, only allow a purchaser to lock in a rate for a five year term. After that, the borrower must renegotiate a new mortgage at current rates. Could that happen here?

Mark Zandi, Chief Economist of Moody’s Economics.com addressing the administration’s recent report:

“A private system would likely mean the end of the 30-year fixed-rate mortgage as a mainstay of U.S. housing finance. A privatized U.S. market would come to resemble overseas markets, primarily offering adjustable-rate mortgages. Based on the experience overseas, the fixed-rate share in the U.S. would decline to an average of between 10% and 20% of the mortgage market compared with a historical average of closer to 75%.”

Bottom Line

The COST of a home is dramatically impacted by the mortgage component. Today, we can get a 5% mortgage and lock it in at 5% for the next thirty years!! Both of these opportunities may disappear in the near future. You should take this into consideration if you’re looking to purchase a home.

Reprinted from KCM Blog

If Your Goal Is to Buy Low, Buy Now!

2011-03-01T07:36:00.000-08:00

There is a very famous saying which asserts “Sell High, Buy Low”. It is obviously great advice no matter what the investment. We want to sell high (point of maximum risk) and buy low (point of maximum opportunity).
The challenge is how to determine when we have hit bottom if you are a purchaser. The only time you can guarantee a bottom is after you pass it.

However, there is more and more evidence that the COST of a home has in fact hit bottom. Notice we have used the word COST. Unless you are an all cash buyer, you must take into consideration the expense of financing a property to determine the true cost of purchasing the home. Interest rates have increased over the last quarter; and the rise in rates has counteracted any fall in prices.

Let’s look at an example:

Let’s say you were going to take out a $200,000 30-year-fixed-rate mortgage in November of 2010. At that time, interest rates were 4.17% (as per Freddie Mac). Your principle and interest payment would have come to $974.54. According to the most recent report from Case Shiller house prices fell 3.9% in the 4th quarter of 2010. The most recent report from the Federal Housing Finance Agency shows a 0.8% fall in prices. Let’s use the larger percentage decrease: 3.9%.

For the sake of keeping the math simple, we will now say you can get the same house with a $192,000 mortgage (4% discount from November price). Interest rates are now 4.95% (as per Freddie Mac).

Your principle and interest payment would now be $1,067.54.

By waiting to pay less for the PRICE of the house, the COST increased $93 a month. That adds up to $1,116 a year and over $33,000 over the life of the loan.

We realize that there are other things to consider (ex. the mortgage tax deduction, etc.). This example is just a simple way to show that there is a difference between COST and PRICE.

Bottom Line

If you want to buy low, buy now. It appears COST has hit its lowest point.

Real Estate: Like a Phoenix Rising from the Ashes

2011-02-21T07:47:00.000-08:00

The real estate market has experienced difficulty over the last five years. From 2000-2006, house values climbed to unsustainable heights. Since then, we have seen much of this appreciation disappear. Now many look at the housing market as dead and lying in the ashes of its previous glory. However, there is growing evidence that, just like the Phoenix, there is a new market currently rising from those ashes.

Buyer activity is increasing

The first sign of an improving market is buyers again beginning to shop for a home for themselves and their family. That is taking place right now.

Pete Flint, CEO of Trulia said in a recent press release:

“We’re seeing a national resurgence of buyer and seller activity on Trulia.com. In January alone, we experienced an unprecedented level of site traffic including 11 million unique visitors – which is more than 70 percent year-over-year growth… (We) are now experiencing 100,000 property views per minute.”

The latest Credit Suisse Monthly Survey of Real Estate Agents reports:

Our Monthly Survey of Real Estate Agents pointed to another month of improved traffic – the third straight month, and the highest level for our traffic index since April 2010, the last month of the homebuyer tax credit. The improved economy and stronger consumer confidence has translated into an increase in homebuyer traffic.

But have they actually started purchasing?

The best news is that buyers are not just looking. The latest National Association of Realtors’ (NAR) Pending Sales Report, which quantifies the number of homes going into contract, shows continued improvement:
Pending home sales improved further in December, marking the fifth gain in the past six months.

Bottom Line

Buyers are back out looking at homes and the number that are actually purchasing is steadily increasing. It appears the housing market is on the verge of a rebirth. The Phoenix is beginning to flap its wings.

Reprinted from KCM Blog

“Own Thy Own Home”

2011-02-14T07:20:00.000-08:00

The title of this blog is the advice given in a book of financial wisdom, The Richest Man in Babylon, written by George S. Clason in 1930. The book has become a classic having sold over 2 million copies in 26 languages. The advice is just as important today as it was when written almost a century ago. And, it is comforting to know we still realize how important homeownership is.

Two different surveys released last week show that homeownership is still part of the American Dream.

Trulia’s American Dream Survey

The survey looked at how Americans feel about homeownership. They found:
 70% of Americans still view homeownership as being part of their American Dream.
 78% say their homes are the best investment they ever made.
 88% of 18-34 year old renters aspire to be homeowners.

The report went on to say:

“Contrary to popular belief, the American Dream of homeownership has not turned into an American nightmare. In fact, we’re seeing a national resurgence of buyer and seller activity on Trulia.com,” said Pete Flint, CEO of Trulia.

“During the housing bubble, the American Dream of homeownership was beyond reach for many young adults. Stuck with student loans and entry-level jobs, many had resigned themselves to being lifelong renters. But the tide is changing – Millennials are now today’s most serious homebuyers,” says Tara-Nicholle Nelson, Consumer Educator for Trulia.

Coldwell Banker Real Estate First-Time Homebuyers Survey

This reported concentrated on what first home buyers experienced in the purchase process. It was somewhat surprising to find that:
 67% said the market allowed them to buy a home sooner than expected
 50% said they found a home in a more desirable neighborhood than expected
 61% were able to get the home at a better price than expected
 40% got more space than expected
 43% locked in a lower interest rate than expected

It seems that the American public, even young adults still believe that owning your own home makes sense. And, it seems that those who have most recently purchased were pleasantly surprised with the results.

Bottom Line

It appears that the majority of the country thinks you would be doing the smart thing if you considered purchasing a home for you and your family. Give me a call today to discuss your real estate needs and wants.

The Cost of Waiting For Prices To Fall

2011-02-11T06:33:00.000-08:00

Many purchasers have been sitting on the sidelines waiting for home prices to hit bottom. They want to guarantee that they are purchasing at the best possible price. Like them, we also believe that prices still have some room to fall in most markets. However, we disagree that waiting is a good financial decision. The buyer should not be concerned about housing prices. They should be concerned about cost.

The cost of a house is made up of the price AND THE INTEREST RATE they will be paying. Two different pieces of news released yesterday highlight this point.

PRICES

The National Association of Realtors (NAR) released their 4th quarter housing research report. In the release, they reported that home sales rose 15.4% in the 4th quarter over the 3rd quarter. They also showed that prices remained stable during the year:

The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 percent from $170,300 in the fourth quarter of 2009.

A buyer who delayed a purchase might find solace in the fact that prices have not increased. However, the other news released yesterday paints a different picture.

INTEREST RATES

The Primary Mortgage Market Survey was released by Freddie Mac which showed that the 30 year fixed rate mortgage was at 5.05%. Frank Nothaft, vice president and chief economist of Freddie Mac said:

“Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week…As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010.”

So prices have remained stable but interest rates have risen dramatically in the last 90 days. What does that mean to a buyer looking to purchase a home this year?

The price is the same. It just costs more.

Let’s show you what the news means:

Date Loan Interest Monthly Payment
Amount Rate (P & I)
Today $170,000 5.05% $917.80
Nov. 2010 $170,000 4.17% $828.36
Difference in Mortgage payments $ 89.44

By sitting on the sidelines for the last 90 days a purchaser lost:
 $89.44 a month
 $1,073.28 a year
 $32,198.40 over the thirty year life of the mortgage
If you buy a $340,000 home, double all these numbers.

Bottom Line

Even if prices fall another 10% this year, the cost of a home will increase if interest rates go up more than 1%. Buyers should not worry where prices are going. They should be concerned where costs will be later in the year.

As We Were Saying…

2011-02-07T06:38:00.000-08:00

Several months ago, we explained that there would be an opportunity to sell your house at a higher price in the first quarter of this year than you could later in the year. Our believe was that the robo-signing mess would delay foreclosures coming to the market and that your home would sell at a higher price before these distressed properties became your competition (foreclosures sell at a 41% average discount). The numbers are now in and what we projected is in fact taking place.

Clear Capital released its monthly Home Data Index last week. In the report, they explained:
(Our) Home Data Index shows that U.S. home prices stopped declining in early January and have posted their first uptick since mid-August 2010.

“This recent national change in price direction is encouraging for the overall housing sector,” said Dr. Alex Villacorta, senior statistician at Clear Capital.

“This uptick is the first non-incentivized change in prices we’ve seen since the downturn began, and could provide great opportunity for buyers, sellers and investors alike. Although many markets still remain under significant downward pressure in light of increased distressed sale activities, it is clear that the severity of the downturns observed in October and November have subsided.”

It seems prices have stabilized and, in some markets, are perhaps even showing appreciation. However, before we get too excited let’s take a look at the reason this is taking place. According to Clear Capital:

…it is still too early to determine whether this current uptick in home prices is a temporary reprieve or the start of a sustained recovery…

Why? The number of distressed properties coming to market slowed dramatically in the last quarter of 2010.

…every spike in REO saturation (REO saturation calculates the percentage of real estate owned properties sold as compared to all properties sold in the last rolling quarter) has corresponded with a decline in home prices, and vice versa. The most recent rolling quarter for REO saturation has slowed considerably after gaining 3.2 percent during Q3 2010, with national REO rates only climbing 1.4 percent. A decrease in REO saturation indicates that an increasing proportion of fair market transactions are occurring, and as the level of distressed transactions decrease, prices tend to increase since the overall market value for an area is less affected by distressed comparable sales. If this observed negative correlation persists, a leveling off of the national REO saturation rate could indicate that home prices are poised for further gains well ahead of the seasonal spring lift.

As we explained months ago, there is a window of opportunity to sell before a large number of discounted properties go up for sale. This opportunity will last for the next 60-90 days. By then, banks will have fixed many of their paperwork challenges and again start releasing distressed properties to the market.

Bottom Line

If you wish to sell in the next twelve months, do it now. You will get a better price today than you will later in the year.

Reprinted from KCM Blog

Where Are Housing Prices Headed?

2011-01-28T07:29:00.000-08:00

The National Association of Realtors (NAR) has been reporting great news recently. Last week’s Existing Home Sales Report and yesterday’s Pending Sales Report both showed consecutive months of increases in the number of homes sold. Finally, buyers are jumping off the fence and taking advantage of one of the most opportune times to purchase a home in America’s real estate history. With an increase in demand, price appreciation can’t be far behind, can it?

Actually, the answer is NO! Prices are not determined by demand alone but in the relationship of demand to available supply. The inventory of homes for sale is still too high and about to surge higher. Along with the news of increased demand yesterday, RealtyTrac released their 2010 Year-End Metropolitan Foreclosure Market Report. The report showed that distressed properties across the country are on the rise:

… foreclosure levels remained five to 10 times higher than historic norms in most hard-hit markets, where deep fault lines of risk remain and could potentially trigger more waves of foreclosure activity in 2011 and beyond.

The report also explained that the foreclosure epidemic is spreading to more and more of our communities:

… foreclosures became more widespread in 2010 as high unemployment drove activity up in 72 percent of the nation’s metro areas — many of which were relatively insulated from the initial foreclosure tsunami.

What does this mean for prices?

Here are a few quotes from this week.

Washington Post:

The closely watched S&P/Case-Shiller report shows that housing prices, compared year-over-year, have declined nationally for six consecutive months. The downward path suggests that housing prices could, by spring, hit their lowest level since April 2009, said David Blitzer, the index committee’s chairman.

New York Times:

A new slide in housing prices has begun in earnest, with averages in major cities across the country falling to their lowest point in many years.

CNN Money:

Barclay’s Bank analyst Theresa Chen doesn’t expect a reversal in housing market trends any time soon, since there is no end in sight to the foreclosure crisis.
“We expect softness to persist,” she said, “as home prices continue to face headwinds from the large pipeline of foreclosures entering the market.”

Housing Wire:

“… we believe that home prices will continue to weaken on a month-over-month basis until spring, and a year-over-year basis through the end of 2011,” the Radar Logic said.

Bottom Line

Prices will continue to soften in the first half of 2011 in most regions of the country. This information should be taken into consideration if you plan on selling your house in the next twelve months.

Reprinted from KCM Blog

What The Crystal Ball Says About Rates

2011-01-27T06:58:00.000-08:00

Predicting what will happen with interest rates is risky for a person’s credibility. Last year at this time, I believed rates would climb after June and for very logical reasons: the end of the Fed’s purchase of mortgage-backed-securities (MBS) and the end of the Tax Credit. What we didn’t anticipate was the collapse of the Greek economy.

That being said, I firmly believe that my opinion on the topic has some value. So, here’s my opinion (which assumes the governments of Ireland, Spain and Portugal stay solvent and no other major geo-political event occurs- like a war or terrorist activity).

The Fed and the federal government have publically stated their desire to get the American Economy back on track. Their goals:
 Creating Jobs. They want to put Americans to work.
 Improving Production in the corporate and manufacturing sectors (which will create jobs and profits)
 Ratcheting Up Inflation in order to get prices moving upwards (really as a prevention of deflation)

Accomplishing these goals will likely improve the fortune of businesses (by creating higher sales, profits and stock prices). In turn, the expectation is that these businesses will expand (spending money and creating jobs). The money spent and jobs created will beget more spending in the private sector which will, in turn, create more sales, profits and jobs for the businesses. Logical? Yes. Simple to accomplish? No.

Rewind 18 months: the Fed decided to buy massive quantities of mortgage-backed-securities to keep rates low (which encourages businesses to borrow and invest….and to refinance their existing debt to help their bottom lines). Unfortunately, there was little confidence in the plan and many businesses instead of expanding, actually tightened their belts. You see, CONFIDENCE is a crucial component to any recovery. There wasn’t enough confidence (look at the November elections as proof).

But in the last few months, Americans seem to have to begun to feel that things can and will improve. QE2 has encouraged borrowing and expanding. Jobs are starting to come back slowly. The infusion of $600 billion into the economy from the Fed via their new MBS purchase program is both inflationary and helpful in devaluing the dollar abroad (which allows foreign money to buy more American goods and services for less). That helps improve sales, profits and jobs for businesses here. The wheel is beginning to grind its way in the right direction. At least, there is some confidence in that plan.

How is all this likely to affect mortgage interest rates?

 Inflation is always…bad for rates
 More jobs is inflationary…bad for rates
 A strong stock market…bad for rates
 A devalued dollar helps companies selling abroad and their stock value…bad for rates
 Consumer Confidence typically good for stock prices…bad for rates

Conventional wisdom is that, while rates have climbed from the low 4s to about 5% already, 2011 looks to be a volatile year with rates bouncing from 4.75% to 5.5% throughout the year. That’s a significant range and it behooves home buyers to pay attention and strongly consider locking in their rates when they are 5.125% or lower.

Additionally, home sellers need to recognize that a .75% hike in rates makes a home about 8% more expensive to afford monthly. As we know, buyers don’t buy on price but instead buy on monthly carrying costs. Sellers are going to have to lower their prices by 8% to achieve the same cost for their buyer.

That’s my prediction in an unpredictable world….Let the debates begin

Reprinted from KCM Blog

Distressed Inventory to Step Out of the Shadows

2011-01-24T06:21:00.000-08:00

We are beginning 2011 with much more positive news about real estate than we have had in several years. The pending sales numbers (houses going into contract) have been climbing for several months. Last month’s Existing Homes Sales Report from the National Association of Realtors showed an increase of over 12%. Demand definitely seems to be increasing. Does that mean prices will begin to appreciate? Probably not. Though buyers have finally come out of hiding and started to purchase homes again, an increased inventory of distressed properties is also emerging from the shadows. These houses will impact prices.

Prices are determined not by demand alone but instead by the relationship of demand to the supply of inventory available. We are talking about the ‘shadow inventory’ of homes that will come to market at discounted prices when they are sold as short sales or foreclosures. This inventory has swelled to several million units.

When will this begin and what impact will it have on prices?

Over the last year, banks have been slowly releasing this inventory to the market being careful not to release too great a number in fear of driving down house values even further. Over 25% of all sales in 2010 involved a distressed property. The numbers increased as the year went on with 33% of all sales in November being in this category. In December, that number jumped to 36%! It now seems that banks are preparing to increase the flow of such properties to the market.
Last month, CNBC reported on economist Nouriel Roubini’s predictions on this issue:

“There has been an effective moratorium on foreclosure,” said Roubini.
And the beginning of the end of that moratorium means more housing supply is about to become available on the market.
“The shadow inventory of not-yet-foreclosed homes—due to the moratorium—will surge in the next year,” Roubini says.

Bank of America said:

…it resumed foreclosure sales in most states that have a non-judicial process, but the bank won’t restart sales in judicial states until sometime in the first quarter.

And Housing Wire reported last week that Fannie Mae “directed its mortgage servicers to delay scheduled foreclosure sales 45 days” for borrowers trying to get assistance through certain government programs.
What impact will this have on prices? Wells Fargo projected that house prices will drop 8% by mid-year. Fannie Mae and Bank of America have also predicted price depreciation for the first half of 2011.

Should I wait to purchase?

Not necessarily. Remember, sellers should sell now before prices do begin to fall. However, as a purchaser, you should look at cost. With interest rates on the rise, waiting may result in a higher monthly mortgage payment even with a lower sales price.

As a good example, Mr. Roubini, who was mentioned above, just sold his home and upgraded to a more expensive residence. Get counsel from a mortgage professional before you consider delaying a purchase.

Bottom Line

If you are looking to sell, you probably want to do it before this ‘surge’ of discounted competition comes to market.

Reprinted from KCM Blogsite

Is the Housing Market Starting to Come Back?

2011-01-21T06:49:00.001-08:00

It seems that the housing market is finally showing signs of a recovery. We are not suggesting that it will come roaring back and we will see 2006 numbers again. However, the National Association of Realtors released their December Existing Home Sales Report yesterday. The report showed a 12.3% increase in closed transactions over the month before. Earlier in the week the Census Bureau reported that:

Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 635,000. This is 16.7 percent above the revised November rate of 544,000.

Should we believe that real estate is starting to make a comeback? To some degree, we think yes. Both of the above reports are promising.

However, not all the news in the reports was positive. Existing home sales were slightly down from the same month last year. Housing completions were down 22.2% from last year’s numbers. Yet, we must also factor in that the numbers from the end of last year were artificially inflated by the Homebuyer Tax Credit. Any correlation between these numbers is not an apple-to-apple comparison.

These reports, coupled with anecdotal information we are receiving from the agents we coach all across the country, seem to suggest that we may have bottomed out in regard to the number of transactions being completed. That can only be a positive for the industry.

Bottom Line

Even though there is a huge amount of visible and shadow inventory which will continue to put downward pressure on prices, it seems that buyers are beginning to realize that there are tremendous opportunities in the market.

Reprinted from KCM Blog

Most Americans Say It Is a Good Time to Buy a Home

2011-01-19T07:38:00.000-08:00

We have been making two major points for several months. If you are selling a house, you must do it now AND if you are buying one, you must also do it now. This sounds crazy – but it is true. PRICE is the most important thing to a seller. With prices projected to fall through the first half of 2011, if you want to sell, do it now. The alternative might be to wait over a year just for prices to recover to current values.

The second point revolves around the fact that buyers are more concerned about COST (price AND interest rate). Fannie Mae, the National Association of Realtors, the Mortgage Bankers Association and the PMI Company are all projecting interest rates to rise this year. If you want to buy, your best time to purchase could be right now.

We have had people question us on the second point. We truly believe it is a good time to buy however. And a new survey says that the majority of Americans agree with us. Gallup just released a poll showing that 67% of Americans think this is a good time to purchase a home. The interesting thing is that the same poll showed that more people believed that prices would decrease (27%) than increase (21%). Most people realize that this is a opportune time to purchase even if prices continue to soften.

Even the Gallup people weighed in on the subject:

Overall, there is good reason for most Americans to think now is a good time to buy a house. Interest rates remain near historic lows. Home prices are down sharply, providing many incredible buys.

Bottom Line

There may be people advising you to use caution before buying a home right now. That is probably good advice. However, there is a difference between caution and fear. Fear could paralyze you and prevent you from making a good decision. Caution will make sure you make the right decision. And remember: if you do think it makes sense to buy your home today, 2 out of 3 people agree with you.

Reprinted from KCM Blog

Why Prices Will Soften in the 1st Half of 2011

2011-01-13T07:41:00.000-08:00

The big question facing real estate in 2011 is which direction are home prices headed. We agree with most experts who believe prices will continue to soften for the first half of the year. Supply and demand will determine this. Let’s look at where real estate sits entering this year compared to the beginning of 2010.

Demand

1.) Last year, The Home Buyers Tax Credit was both extended to the end of April and expanded to include move-up buyers. This increased demand to some degree. However, most now believe that the tax credit simply dragged demand forward from later in the year. What took place was a surge in sales prior to the deadline and then a dramatic fall off after April.

This year, there is no such tax credit in place to drive demand. It also seems that there is no political will to revisit a homebuyers’ tax credit at this time.

2.) Last year, the Fed’s purchase of mortgage-backed-securities was extended to the end of March. That increased demand by guaranteeing low interest rates through the first quarter. And economic conditions forced interest rates to new lows even after the Fed backed off the purchases. There was a full six months of historically low rates to bolster demand.

This year, interest rates are rising as we enter January and are projected to continue their upward climb. The National Association of Realtors, the Mortgage Bankers’ Assoc and PMI are all calling for rates to continue to rise through the first half of 2011.

Supply

1.) Last year, the administration was taking the initial steps in implementing a comprehensive loan modification program. This program limited the number of foreclosures coming to the market at discounted prices. It also delayed the entrance to the market of many more distressed properties. According to the OCC and OTS Mortgage Metrics Report, we enter 2011 with “newly initiated home retention actions” down 32.4% from the same time last year.

This year, the administration is touting their new ‘short sale’ program. This will increase the number of distressed properties hitting the market.

2.) Last year, state and local governments were declaring foreclosure moratoriums thereby limiting the number of foreclosures entering their markets. There doesn’t seem to be the same political will to revisit moratoriums in 2011.
This year, though the robo-signing mess will initially delay the entrance of some distressed properties to the market, most believe there will be a wave of discounted properties coming in the first quarter.

CNBC reported on economist Nouriel Roubini’s predictions on this issue:
“There has been an effective moratorium on foreclosure,” said Roubini.
And the beginning of the end of that moratorium means more housing supply is about to become available on the market.

“The shadow inventory of not-yet-foreclosed homes—due to the moratorium—will surge in the next year,” Roubini says.

Bottom Line

Without the programs that encouraged buyers last year, we see a steady but slow growth in demand.
Without a strong commitment to limiting distressed properties, we believe that there will be a wave of discounted real estate entering the market in the form of ‘short sales’ and foreclosures.

A limited increase in demand and a surge in supply will equate to lower home prices as we move into the year.

Reprinted from KCM Blogsite

Are Short Sales the BIG Solution?

2011-01-11T07:21:00.000-08:00

Some courts are attempting to void the foreclosure if the bank did not properly transfer the mortgage from one bank to another. The courts are claiming that, if you didn’t ‘legally’ transfer ownership of the loan documents, then you don’t ‘legally’ own it. If you don’t own the debt instruments, you can’t foreclose on them. What does this mean to banks when they handle future foreclosures?

One possibility is that banks may start favoring ‘short sales’ over foreclosures in more cases. The ‘short sale’ option has already been gaining momentum. The OCC and OTS Mortgage Metrics Report shows foreclosures are up 57.5 % year over year; ‘short sales’ are up 82.9%.

Now, with courts scrutinizing the foreclosure process, it may make more sense for banks to work with the current homeowner to sell the home even if it is at a price less than the amount owed on the mortgage. Adding to this possibility is that banks could lose less in a ‘short sale’ than a foreclosure. A ‘short sale’ sells for 81% of what a similar, non-distressed property would sell. A foreclosure sells for 59% of full value.

In the past, banks weren’t concerned with the difference because mortgage insurance companies had the legal requirement to cover the majority of the additional loss. However, insurance companies are now fighting these payments claiming that the original mortgage application might have been fraduantly written. This all adds up to the liklihood that banks will look more favorably at the ‘short sale’ process.

To this point, an article in Housing Wire quoted John Vella, the chief operating officer at technology provider Equator:

“Investors usually see a 20% to 30% better execution on a short sale versus an REO sale when it comes to loss severity. With the foreclosure volume, current and pending REO inventories, servicers will be pressed to do more short sales in 2011…they could see an increase of at least 25% over 2010 in completed short sales.”

Bottom Line

For the reasons mentioned above, the banks will probably lean more toward ‘short sales’. If you are a homeowner not able to pay your mortgage, this may be a much better option then allowing the home to go to foreclosure.

Reprinted from KCM Blog

Vacation Homes Emerge as Hot Market

2011-01-10T12:02:00.000-08:00

Daily Real Estate News January 10, 2011

Vacation communities across the United States are showing big signs of a rebounding real estate market, reporting soaring sales at levels that have not been been seen since the days of the housing boom, The Wall Street Journal reports.

The increase has been driven by deep discounts and cash purchases, analysts say.

"We haven't felt energy like this in a long time. Buyers sense that they've been on the sidelines long enough," says

Ned Monell, a real estate professional with Sotheby’s International Realty in Palm Beach, Fla. Palm Beach posted a nearly 40 percent annual increase and a 54 percent increase in homes under contract.

The following is a sampling of vacation-home communities that saw an increase last year (percentage is the increase in home sales from 2009 to 2010):

▪ Barnstable County, Cape Cod, Mass.: 9 percent
▪ Hilton Head, S.C.: 13.6 percent
▪ Mercer Island, Wash. (waterfront): 181.8 percent
▪ Palm Beach, Fla.: 39.3 percent

National Association of REALTORS® Chief Economist Lawrence Yun attributes the increase to gains in the stock market and an overall improving economy. He says prices in these areas have come down so much that there’s been high demand for these properties among buyers, particularly in areas with stable labor markets.

Rent vs. Buy: Do the Math and Then Ask Mom

2011-01-07T08:06:00.000-08:00

We are starting to hear from real estate professionals that a growing number of purchasers are young adults being persuaded to buy now. Who are the people selling them on the American Dream? Their parents! It seems that parents of some adult children are strongly suggesting that their children take advantage of the low cost of homeownership available today. Some moms and dads are helping financially and are even co-signing for the mortgage.
At first, we found this to be rather surprising. However, after thinking about it, it made complete sense. Here are the reasons why.

Do the Math

Let’s look at the financial aspects of renting vs. buying. With house prices falling and rental prices rising in many markets, the possibility that owning a home could cost less than renting one is growing.
In an article from CNN Money earlier this week, they looked at this issue as we move into 2011:
Perhaps not surprisingly, it makes more financial sense to rent than buy today in many U.S. cities…
But that may finally be about to change. Moody’s chief economist Mark Zandi expects the trend to reverse this year in many major cities.

“By mid 2011 and certainly by end of 2011, buying will be superior to renting in most parts of the country,” Zandi says.
(See the ratio in certain markets here.)
As one person said to us recently: “Rents are like adjustable rate mortgages. They adjust often and most times they adjust upward!”

Talk to Mom

Middle age parents who have owned a home understand its true value. A home has always been a good long term financial investment. However, homeownership also has many other benefits.
As a matter of fact, Fannie Mae just came out with their National Housing Survey which asked the question directly: Is this a major reason to buy a home?

The study broke up the answers into financial and non-financial reasons. The top four reasons and six of the top ten reasons were NON-FINANCIAL. The top four are below:

1. It means having a good place to raise children and provide a good education.
2. You have a physical structure where you and your family feel safe.
3. It allows you to have more space for your family.
4. It gives you control over what you do with your living space (renovations & updates).
Should this surprise us? Aren’t these the same reasons our parents bought their home? Aren’t these the same reasons we purchased our home?

These are the same reasons parents have suggested their children buy a home. They want the same things for their grandchildren that they believed to be important for their children.

Bottom Line

Now that the craziness of this housing market is beginning to show signs of settling, people are getting back to the core values that families have always embraced. Homeownership is definitely high on the list.

Reprinted from KCM Blog