Second of three podcasts presenting an overview of the material presented at an in-person buyer seminar. In this episode: searching for the right home and writing the offer to purchase.
For a transcript of this podcast, please email me at .
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Last of three podcasts presenting an overview of the material presented at an in-person buyer seminar. In this episode: the period between contract signing and settlement day.
For a transcript of this podcast, please email me at .
Second in the Mortgage Financing series of podcasts. In this edition, guest podcaster Tom Latta of Prosperity Mortgage talks about the choice of loan product, downpayment options, and other sources for financial assistance.
For a transcript of this podcast, please email me at .
First in an ongoing series of podcasts, containing an overview of market conditions as we enter the Fall 2009 market.
For a transcript of this podcast, please email me at .
The stakes have gotten higher in the last few weeks. We’ve had a series of positive news releases; statistics are showing a strong turnaround in the housing market. Here are a few more… sales volume in my one real estate office nearly doubled in July ’09 over July ’08. We’re now at the point where in a few weeks the traditional Autumn selling season will begin, and the questions start to rise: will buyers come back after their summer vacations? Will we see continued support and recovery in the housing market on a sustained basis, or was the spring surge in sales simply a function of long pent-up demand bursting out briefly because of the $8,000 tax credit?
Economist Robert Shiller, he of the Case-Shiller Index, is a gloomster at this point. In a recent interview with CNN Business Correspondent Poppy Harlow, Dr. Shiller gave all sorts of reasons why the current uptrends in housing might be a mirage that will melt away in the desert heat of August. This interview, given before last week’s unexpected good news on slowing GDP losses and slight drop in unemployment, was based in part on the common wisdom of what these reports were supposed to be, not on the surprising results they actually gave. Which, in my opinion, only goes to show that economists have a tendency to trust their own predictions much more than anyone else does.
Certainly there are tough times ahead. But, there is a growing sense that the worst is behind us, and that is something that I believe is true. Now is the time for renewed investment in real estate, and for first time homebuyers to get in there and grab that $8,000 credit. Like “Cash for Clunkers,” its a government rebate that is working to give short-term and immediate stimulus to a devastated segment of our economy. It should be renewed to last into next year.
This is the time of year when people just sit inside during the dog days of a southern summer. High humidity, hot temperatures, and a city where not everything is air-conditioned all combine to slow down real estate activity. Even in good years, beach vacations and summer camps tend to slow down every business, and ours is no exception.
But this year is not so bad. That’s an incredibly good sign, given the market slump we’re coming out of. Federal homebuyer incentives are encouraging traffic through listings, and a wary sense of confidence that things are slowly getting better are having an overdue good effect. Cross your fingers that the fall market, which usually starts about Labor Day, will come roaring back.
I’d write more, but its just too hot. 
I don’t usually lift large sections from local media, but this article in the Baltimore Business Journal by Rachel Bernstein, caught my eye:
Baltimore was named one of the top cities for young professionals to work in, based on cost of living, educational opportunities and the city’s nightlife.
The survey was conducted by Madison, Wisc.-based Next Generation Consulting. The report broke down cities into three population categories — Baltimore in the largest city category for those with more than 500,000 people — and evaluated them based on assets the report deemed as important to 20 to 40 year olds.
Among the other cities in Baltimore’s category, San Francisco was named No. 1. Baltimore was named No. 7, beating out Portland, Ore., New York City, Chicago and Los Angeles.
The seven indexes of a top city, or “Next City,” are average earnings, dedication to education, cleanliness of the city, around town, nightlife, cost of lifestyle and safety and diversity of the
population, according to Next Generation Consulting.
Baltimore residents have historically had an inferiority complex about their city compared to their more cosmopolitan neighbors in Philadelphia and Washington. But in the last ten years, the city skyline has grown and spread across acres of what once were parking lots and hinterlands. Neighborhoods have revitalized, and a burgeoning arts and entertainment scene has developed — whether its theatre in Mt. Vernon, fine arts and art galleries in Fells Point and downtown, or live music in Fells Point. Baltimore now has one of the most heavily populated downtown areas among cities its size, with the re-development of old office buildings into modern apartments and condos and the return of grocery stores and even big box retail to the Inner Harbor. And never forget about the added life that the tens of millions of Inner Harbor visitors, sports fans, half-dozen new hotels, and an expanded convention center bring to the city.
Baltimore’s affordable housing certainly provides one of the most important boosts to this type of favorable publicity. People can afford to live here, and live well. That’s a message that really needs to be told, and its studies like this that will tell it better than an ad campaign or promotional gimmicks that the public doesn’t always trust to be accurate. Young, first-time homebuyers have been the rock on which the budding recovery of our housing market is being built — the very buyers that are covered in this survey. The timing couldn’t be better for this type of news.
Baltimore is moving from the classification of “big small city” to “small big city” and its about time.
The recent statistics published by the National Association of Realtors — that pending sales of existing homes rose 6.7% in April over the previous year — was the first time in the last several months that highly publicized statistics actually agreed with the experience I was having, out in the trenches. Finally the stats publicly confirmed that people *were* returning to the marketplace and putting homes under contract. Throughout April and May I’ve been busier than I have been in years, and put in five contracts worth about $1.4 million total … one of which has now settled. And as I look around my office, I’m hearing tales of similar activity. My colleagues and I were running crazy, but none of the national statistics were showing it.
So this is real *good* news, but its also *real* good news. Statistics don’t always show what’s going on beneath. And the media — for whatever reason — prefers to trumpet bad news over encouraging developments. If this manages to keep going through the hot months, we will have a genuine recovery under way, with declining inventory and stabilizing home prices. I just hope that if that happens, the people who decide what news *is* will decide to let everyone else know. I’ll certainly be broadcasting it to anyone who will listen.
Its been awhile, but in many markets in the United States it is once again a no-brainer to own a home. According to a recent article in the Wall Street Journal, the financial advantages of owning had been dwindling over the last few decades. Evaluated nationally, after tax mortgage payments have been averaging over 25% more than rental payments for nearly 26 years, according to a California real estate consultant firm. In 2006 some metro areas saw that grow to as much as 66% more. But, after the last few years of housing meltdown, average montly rent for the largest fifty metro areas was $1,045 while the after tax mortgage payment was $1,300, the narrowest gap (24%) since 2001. Some mortgage professionals have estimated that if mortgage interest rates fall to 4.5%, a number often seen as possible in the next few months, the gap will narrow even further to a 1998-era 14%.
A study by Moody’s Economy.com gives even better news. They have found eight markets around the country where home prices relative to rents are within 5% of historic levels, leading one of their economists to predict, “The bottom is coming into view.”
While we’ve heard that phrase before over the last few years, its nice to have a fresh reason to believe it might be true this time.
I don’t know of many people who really loved the idea of new home developers putting bigger homes on smaller lots, but certainly many people over the last decade bought them. Personally, if I had a choice between two huge houses sitting so close to one another that I could see into my neighbor’s window, and a two similarly sized townhouses … I’d pick the option with the solid wall separating us from the nuts next door. (And, in fact, I did.)
Still, the “McMansion” craze was a national development, and as the square footage of these hulks increased and the size of the lots decreased, you had to wonder if living shoulder to shoulder in the suburbs with little underlying sense of community wasn’t the cause of many of our society’s problems. Media rooms and “man caves” taking what used to be times of communal experience and building camaraderie and putting them in windowless basement rooms where we were cut off from those around us.
Now, in the middle of our dark winter, comes news from the National Association of Homebuilders. The average size of new homes is shrinking — from the 2,629 sq. ft. average in the third quarter of 2008 to 2,438 sq. ft. in the fourth quarter of the year. Fully 88% of their members surveyed in January said they will be building a larger share of smaller homes in their new developments, although they make no mention on whether they will try to downsize the lots as well. And from that venerable source of information on how Americans design, build and decorate homes — Better Homes and Gardens — come survey results involving 733 potential new-home buyers that find 32% of them expect their new home to be “either somewhat smaller or much smaller then the one they already live in.”
I wish that the reason for this change in attitude was a sense that things had gotten out of hand instead of the devastating impact of the current economic crisis. Not a week goes by that I don’t go into a home built two generations ago, where mom, dad and a brood of four children were raised to hard-working adulthood in half of the square footage of our current median home size of 2,090 sq. ft. These were real communities, where people got to know their neighbors, where much of the activity of life took place on front stoops in warm weather, and people looked out for one another.
And when adults had to get away from the little darlings, there was also a bar on every corner. Dark, windowless “man caves” where…
Oh, never mind.
