News for Lake Oconee-Reynolds Plantation, GA - Tuesday September 29th, 2009
By CYRIL MOULLE-BERTEAUX
The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.

How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.

Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.

Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.

The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.

Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.

Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.

The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.

In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.

The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high - but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.

Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000 - 100,000 annually.

Inventories will drop even faster to 400,000 - or seven months of supply - by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.

Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.

Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.

This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.

When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.

More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.

A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.

We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.

Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York

News for Lake Oconee-Reynolds Plantation, GA - Saturday September 26th, 2009
Historically Low Interest Rates
Interest rates are at historical lows - lower rates equal lower payments, or a larger home - you choose. Contrary to perceptions, conventional mortgages are available at favorable interest rates for homebuyers. Buyers with good credit, a steady income and a realistic view of what they can afford are excellent candidates for a mortgage, even in this market.

News for Lake Oconee-Reynolds Plantation, GA - Saturday September 26th, 2009
Unprecedented Incentives for New Homes
Builders are offering unprecedented incentives for new homes such as flooring upgrades, new appliances, and discounted financing.Don't just dream about purchasing a home; make your dreams a reality. Right now is the right time to "Get Off the Fence!"

News for Lake Oconee-Reynolds Plantation, GA - Saturday September 26th, 2009
It's a Buyer's Market
Buyers who are pre-approved have incredible negotiating power. Financing options are available for those with a steady income and good credit. Sellers are pricing their homes more competitively. Lower prices also mean a wider range of options from which to choose in a variety of locations.

News for Lake Oconee-Reynolds Plantation, GA - Tuesday September 22nd, 2009
Prices are right, rates are low and the current selection of homes are great!

As the economy improves and more people look for homes, prices will rise.

If you're playing the waiting game, remember that the market will come back around - it always does - and you could miss your opportunity for a wonderful deal.

Take advantage of today's market. You will not be disappointed.

News for Lake Oconee-Reynolds Plantation, GA - Monday September 21st, 2009
If World Class Golf is your passion, wonderful amenites to include tennis, walking trails, pools, numerous restaurants, check out the wonderful gated golf communities at Lake Oconee! Reynolds Plantation, Reynolds Landing, Cuscowilla and Harbor Club. You will not be disappointed! Call Pat Rogers at 404-242-9894 or Tim Rogers at 404-307-6633 for details!

News for Lake Oconee-Reynolds Plantation, GA - Sunday September 20th, 2009
Cuscowilla is a wonderful gated golf community here at Lake Oconee! We have 11 new units available with wonderful main lake views in this great community. 2 and 3 bedrooms starting at $290,000 to $490,000. Greatly reduced and getting lots of attention. Reduced golf membership for these 11 units. Call Pat at 404-242-9894 or Tim at 404-307-6633 for details. You will not be disappointed.

News for Lake Oconee-Reynolds Plantation, GA - Thursday September 10th, 2009
Why it's time to invest in real estate
It's scary to jump into the housing market when prices have been plunging. But waiting could end up costing you.

[Related content: homes, home buying, home prices, foreclosure, interest rates]
By James B. Stewart, SmartMoney
Passing through the Fort Myers, Fla., airport a few weeks ago, I noticed people eagerly signing up for a free bus tour of foreclosed real estate -- with all properties offering water views. During the ride to my hotel, the young driver volunteered that he'd just bought his first house, paying $65,000 for a foreclosed property in nearby Cape Coral that had last sold for more than $250,000. He said he'd never expected to be able to buy anything on a driver's salary, let alone something that nice.


Learn more about the homebuyer credit

Late last month, Standard & Poor's reported that its S&P/Case-Shiller U.S. National Home Price index of real-estate values increased this past quarter over the first quarter of 2009, the first quarter-on-quarter increase in three years. Its index of 20 major cities also rose for the three months ended June 30 over the three months ended May 31, with only hard-hit Detroit and Las Vegas experiencing declines. The week before that, the National Association of Realtors reported that sales volume of existing homes was up 7.2% in July from June.

In short, the data suggest that real-estate prices hit a bottom some time during the second quarter and have now begun to rise. There's no way to be certain that this marks the end of the long, painful correction that followed the real-estate bubble, but clearly prices are no longer in free fall.

That means if you've been sitting on the fence, it's time to act.

Trying to buy at a bottom
Ordinarily I'd never try to time the real-estate market, but I can understand why buyers have been cautious. Few want to buy in down markets, just as stock buyers avoid bear markets. And for most people, of course, buying a house is a much bigger decision than buying a stock. More from MSN Money and SmartMoney
6 money lessons of the Great Recession
5 strategies to lower your rent now
New bull, new bubble, new meltdown?
Return of the first-time homebuyers
Tax credit lifts housing market
Is an FHA-insured mortgage right for you?
But with real-estate prices nationally now down about 30% from their 2006 peak and showing signs of turning up, the prices aren't likely to go much lower. Every real-estate market is local, and so there may be a few exceptions. Overall, though, I can't imagine a better time to buy than right now.

Video: Housing's magic number

In addition to bargain prices, buyers should find plenty of homes to choose from. The inventory of unsold homes was 4.09 million units in July, up 7.3% from June, according to the National Association of Realtors. And mortgage rates this week were at a two-month low of close to 5%.

Even the stricter appraisal process is working to the advantage of buyers. Appraisals are coming in far lower than most sellers have been expecting, forcing them to face the new reality of sharply lower prices. And with stricter standards, lenders aren't going to let buyers borrow more than they can afford, which protects buyers and helps to keep prices down.

The flipping days are over
Unless you're really prepared to accept the demands (and headaches) of being a landlord, I don't recommend direct ownership of real estate as an investment. The days of buyers lining up to buy and flip Miami Beach and Las Vegas condos are mercifully gone. There are much easier ways to make money in real estate, such as buying into real-estate investment trusts or buying shares in homebuilders and other housing-related businesses, such as Home Depot (HD, news, msgs).

Historically, the mean rate of return on real estate has been around 3%, according to research from Yale economist Robert Shiller, who co-developed the Case-Shiller index. Shares in REITs and other stocks have often done much better.


But there's a good reason homeownership has been such a central part of the American dream. It delivers security, pride of ownership, a sense of community and decent investment returns as a bonus.

I felt glad for my driver in Florida. He represents the other side of the foreclosure crisis. For every hardship story, and no doubt there are many, others are realizing their dreams of homeownership and getting what may well turn out to be the deals of their lives.

News for Lake Oconee-Reynolds Plantation, GA - Wednesday September 9th, 2009
30-year fixed-rate near 5 percent
30-year fixed-rate near 5 percent



As mentioned in a recent article on inmannews.com, Freddie Mac announced that prime borrowers, able to put down 20 percent were offered a 30-year fixed rate mortgage just above 5 percent. Borrowers making smaller down payments can expect to pay slightly higher rate. These unbelievable low interest rates coupled with low home prices and a $8000 tax credit for first time home buyers make this the perfect time to buy.

News for Lake Oconee-Reynolds Plantation, GA - Wednesday September 9th, 2009
The media is full of distressing information about homes for sale, loan problems, housing starts, etc. But this may be the best time to consider buying because sellers are offering very attractive deals to get their homes sold and interest rates are low. Just call me and I'll clue you in to some of these great bargains.

News for Lake Oconee-Reynolds Plantation, GA - Thursday September 3rd, 2009
Why Buy?
Published on Tuesday, August 11, 2009, 9:27 PM Last Update: 3 day(s) ago by David Curry
Category: All Articles » Trends
I think I could write a successful blog just on what I read in the Chicago Tribune each day.

Why I even read the Tribune is a quandary to me, given that the paper reads more like the Huffington Post these days. From time to time I enjoy real estate writer Mary Umberger, although I think she's a little pessimistic on the market, and do think she ignores the real reasons that people buy houses for. And she ignores me when I write to her with article ideas.

Recently she wrote a little pros/cons section on whether or not it's the time to buy a house. Reasons to buy? High inventory, low prices, low interest rates, etc. Reasons not to buy? Prices still in decline, renting isn't a crime, financing is more complicated, etc.

Good reasons Mary, but what about addressing the real reasons that people buy and don't buy? What if, instead of providing biased opinions from those on each side of the argument, we broke it down and really made it easy to figure out if it's a good idea to buy or not to buy? What if some people don't really buy because of interest rates after all, and what's all this garbage about a market bottom?

What if people buy because they're confident and don't buy because they're scared and the rest of the reasons are just fluff? If people buy because of interest rates, why did anyone buy a home from 1980 to 1983? Interest rates aren't the key, market indicators aren't the key, lifestyle accomplishment is the key. The sooner we understand that as agents, the more effective we'll be.

First, let's get this "market bottom' theory out of our way. I've said it before, and I'll say it again, market bottoms are only easy to identify once they've happened. Look at the stock market. By most accounts, we've been to the market bottom of this recession cycle.

Take a look at a stock chart, or individual stock hi/lows, and you'll see that most stocks hit their 52 week lows on March 5th of this year. Did you buy a a hundred thousand dollars worth of stocks on March 5th? If you did, you probably would have turned $100k into $300k pretty easily. What's that? You didn't buy on March 5th? But that was the market bottom! Why on earth didn't you buy? What's wrong with you? I really can't believe you were sitting there, at your computer screen, with Etrade account open, and you didn't pull the trigger on CAR at 33 cents. You could have turned $100k into $3,630,303 in 5 short months. Shame on you.

See why market bottoms aren't too cool? Because when they happen, there's usually too much fear in the market to encourage buying. What is true for the stock market is also true of the housing market. Market bottoms sound great in theory, but they're just too darn hard to identify while they're happening. Instead of an identifiable bottom, why don't we just focus on a bottom trough, a trough that we're certainly in right now.

Movements to either side of this current point are going to be prevalent, which is why we'll see positive housing numbers one quarter, and negative housing numbers the next. We're in a sideways market, and I'd suggest we're in a market bottom that we'll stay in for another year or so. As long as REO property dominate the sales statistics, we won't see a true recovery towards a "normal" market.

Jon Stewart fans, mock Jim Cramer all you like, but he had been saying that the time to buy a house is before June 30th, 2009, and he's probably going to prove to be right on the mad money with that recommendation.

So if we're in the market, why buy? Do you believe the market bulls or bears? Do you focus on Mary's 5 positive signs, or are you negative and you prefer to side with the cons? Go right ahead and rent for the rest of your life, and maybe, just maybe your landlord will let you paint a white wall tan. If you ask nicely.

What if you just let the 5 reasons to buy and the 5 reasons to wait cancel each other out, and buy for lifestyle. Housing bull? No thanks. Call me a lifestyle bull. A lifestyle bull in a confidence sapped china shop. Buy because that house you grew up admiring just came on the market. Buy because you're confident in your job status, and that new development just slashed their prices 35%. Buy because your neighbor cuts his grass at 7 am on Saturday mornings.

Buy because the city heat is just about to make your head explode, and cool lake breezes are better than warm alley breezes any day of the week. Buy because you'll walk a little taller if you live on that street where the Maples high overhead reach across the street and shake hands with each other Above all, buy because you want a better lifestyle for you, for your friends, and for your family, and the purchase you're contemplating allows you to more easily obtain that lifestyle.

If you need fundamentals to buy, realize that interest rates are unbelievably low and inventory is monumentally high. Realize that whether or not the market creates an identifiable bottom, you're not going to know when it does. If you're hoarding cash hoping for market bottom balloons to be released from the pink unicorns soaring in the sky, I hope you have fun swimming and boating in your money vat like a decidedly uncartoonish Scrooge McDuck. Just buy because of the 320 months of summer we're all hoping for out of life, way too many of them have already been wasted worrying about 5% market swings, and 5% interest rates.

News for Lake Oconee-Reynolds Plantation, GA - Wednesday September 2nd, 2009
Q. I want to buy a home using the FHA 203k program. Is this a good idea?

A. Most people are familiar with FHA loans to buy a home. If your home and income qualify, it is one of the most competitive financing products out there.

However, what if you find a beautiful piece of coal that just needs some polishing to become a diamond? It takes cash to mine diamonds and you probably don't want to plunk down everything out of pocket. That's where the FHA 203k loan program comes in handy!

There are other rehab loans on the market but generally they require two loans with relatively high interest rates that can eventually be refinanced at a lower rate when the property is brought back to good condition. For many buyers, this financing is prohibitive because it has very stringent borrower requirements.

Like other FHA loans, HUD requires the property to be single family which in the government's eyes actually means 1-4 units. Generally speaking, average homes and many condos will qualify for the 203k program -- even moving a home to a new lot is sometimes eligible!

Here are three common ways to use a 203k loan:

To demolish a home or move a home to a new lot.
To purchase a home and roll rehab costs into the loan.
To refinance an existing loan and get more money out to finance repairs.
You can finance all costs of necessary improvements, including but not limited to additions, painting and trim work, decks, and energy related improvements.

Overall, the FHA's 203k loan program is a great way to buy a fixer upper, with minimum cash out of pocket, and earn some sweet equity by doing repairs on your own. I highly recommend looking into it if you're considering purchasing a home that needs more than a few repairs.

I welcome all your real estate questions and will do my best to answer them. Just call me.

News for Lake Oconee-Reynolds Plantation, GA - Wednesday September 2, 2009
Pending Home Sales on a Roll, Up for Sixth Straight Month

RISMEDIA, September 2, 2009—Contract activity for pending home sales has risen for six straight months, a pattern not seen in the history of the index since it began in 2001, according to the National Association of Realtors^®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2% to 97.6 from a reading of 94.6 in June, and is 12.0% higher than July 2008 when it was 87.1.The index is at the highest level since June 2007 when it was 100.7.

Lawrence Yun, NAR chief economist, said the housing market momentum has clearly turned for the better. "The recovery is broad-based across many parts of the country. Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit," he said. "Other buyers are taking advantage of low home values before prices turn higher. Nationally, the typical mortgage payment now takes less than 25% of a middle-income family's monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as home buyers stay within their budget, mortgage payments will be very manageable," Yun said.

NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit. Buyers have little time to act because they must complete the transaction by November 30, 2009 to qualify for the credit. Unless extended, contracts signed but not completed by that date will not be eligible- it is taking approximately two months to complete home sales in the current market.

The Pending Home Sales Index in the Northeast declined 3.0% to 78.8 in July but is 4.7% higher than July 2008. In the Midwest the index slipped 2.0% to 88.1 but is 8.1% above a year ago. In the South, pending home sales activity rose 3.1% to an index of 103.8 in July and is 12.0% above July 2008. In the West the index jumped 12.1% to 112.5 and is 20.0% above a year ago.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said Congress needs to keep the momentum going. "Even with a good recovery taking place, the market is not yet back to normal. With a gradual absorption of inventory, we are on the cusp of a general stabilization in home prices," he said. "To ensure that housing has a broad stimulus to the overall economy and stays on sound footing, we're encouraging Congress to extend the tax credit into 2010, and to expand it to all buyers of primary residences. The faster we stabilize home prices, the fewer families will face foreclosure and the quicker credit can be extended to other sectors of the economy," McMillan said.

NAR's Housing Affordability Index (HAI) stood at 158.5 in July, below the peak set in April but is still 36.0 percentage points higher than a year ago. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.

Yun expects existing-home sales to rise through the fourth quarter. "Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year," he said. "However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010. The buyer psychology may be shifting from, 'Why buy now when I can purchase later,' to 'I don't want to miss out on a recovery.'"



Read more: http://rismedia.com/2009-09-01/pending-home-sales-on-a-roll-up-for-sixth-straight-month/#ixzz0PxEnrmCs