Real Estate Ramblings

This is a re-post of an article that supports my theory that we are coming off the bottom of this real estate cycle.  

What does that mean to you?  

Some price points actually have a "normal" market time for listed homes of approximately 2 1/2 to 3 months of inventory.    If you're house had been on  the market but expired without selling you may want to revisit your decision now.    If you are a first time buyer or a move UP buyer the time is ripe to buy low and ride the next wave.   If you are considering a career in real estate NOW is the time to get in...get trained...get experience and ride the next wave as well.   Go to http://www.MoveToRealEstate.com

Fed Report: Real Estate Stabilizing in Key Cities
While real estate and other industries remained weak in all 12 of the Federal Reserve districts, there is reason for optimism in several areas, according to the Federal Reserve, which released its periodic “Beige Book” report of economic activity on Wednesday.

In Boston, Fed contacts reported “early signs of improvement” in the residential real estate sector, and the news was equally good in New York where the book said banks are reporting “the most widespread rise in demand for residential mortgages in more than seven years.”

In Richmond, Va., commercial real estate is reporting moderate increases in activity and residential lending is rising because of strong demand for refinancing, the report said. Demand for refinancing is "hard to keep up with," one of the Fed's contacts said.

Meanwhile, commercial real estate weakened in Kansas City while residential real estate is holding steady, the report concluded.

Source: The Wall Street Journal, Meena Thiruvengadam (04/15/2009)

The Federal Government has released the guidelines for restructuring the mortgages of millions of Americans struggling to save their homes from foreclosure.   For all the good it will do...read on! 

(Follow this link for details. http://www.treas.gov/press/releases/reports/guidelines_summary.pdf )

The problem, I see, is SO many of these mortgages were not backed by Fannie Mae and Freddie Mac leaving many to struggle on their own to negotiate new terms. 

My personal experience is most lenders are holding borrower's feet to the fire.  For example I know a single father who is HARD working and current with all his debt obligations.  He has one of those "sub prime" loans that has adjusted to the point of being unaffordable.   He has low 700 credit scores, steady employment, and lives within his means but finds himself with a mortgage payment approaching $2000 per month on a condo that is worth $140,000. 

He can't refinance because this phase of the condo construction is not complete so no lender will touch it!

He has been asking his lender to re-adjust his note rate back to the 6% rate but to no avail.  The lender is holding steady at the current rate.  WHY?  Because they know he pays his bills!   If he were 90 days behind THEN they'd do something.

If you consider the 30 year fixed rate mortgage interest rates right now and you were a lender would you be so greedy as to expect this guy to pay 8%!?

He called is Representative for assistance and was told that it's unfortunate but there isn't anything that can be done because this loan is not a Freddie or Fannie backed loan.

What's wrong with this picture?  Another hardworking nice guy is getting stiffed by the system.  He will most likely be forced to ruin his credit and his financial future because too many in government just don't get it!

The government needs to look at ALL notes & mortgages and bring some pressure on these lenders and servicing companies to negotiate in good faith.

The people that need the help simply aren't getting it.  So what else is new?

Now IS the time to buy especially if you're a first time buyer or you're moving up to a larger more valuable house!  Here's an excerpt from the latest article from the National Association of REALTORS.     Enjoy! -- Bill

Buying Power Rises Significantly

NAR President Charles McMillan says it’s ironic with the weak housing market that affordability conditions have improved dramatically.

“Housing affordability is at a record high – the buying power of a typical family has risen significantly,” McMillan says. “With the drop in interest rates, a median-income family can afford a home costing $20,000 more than a year ago for the same monthly mortgage payment. With the strong housing stimulus, we are hopeful inventory will get trimmed and help prices to stabilize in many areas by the end of this year.”

Indeed, NAR’s Housing Affordability Index rose 13.6 percentage points in January to 166.8, a new record high. The HAI, a broad index of affordability using consistent values and assumptions over time, shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.

The HAI indicates a median-income family, earning $59,800, could afford a home costing $283,400 in January with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest; affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. A year ago, the typical family could afford a home costing $263,300.

Yun: Hopeful for Spring Turnaround

“Conditions have been aligning very favorably for home buyers with the exception of consumer confidence," Yun says. "But I am hopeful that sales will turn around by late spring and early summer because history suggests that home sales can rise even in times of job losses when housing affordability rises.”