I recently found a great article and wanted to share it with you.  As always we are here to help you with all your real estate needs in Atlanta and surrounding areas.  You can always search for homes at www.AtlantaGAHomes.com.

RISMEDIA, Oct. 29, 2008-With mortgage meltdowns, plummeting home prices and soaring foreclosure rates constantly in the news, it's no wonder people are wary of the housing market these days. But contrary to popular belief, things are not as dismal as they seem, according to Lawrence Yun, chief economist of the National Association of Realtors. Yun debunks 10 commonly held beliefs about the current housing market, and FrontDoor.com offers 10 related tips.

1. Peak-to-trough home price declines to date have been about 20%. Wrong. Measurements of home price declines can be skewed depending on which homes in which markets are being measured. For instance, the Case-Shiller Index, which indicates that home prices are down 20%, is heavily skewed towards homes with subprime loans and other distressed home sales. These troubled homes have experienced a steeper decline than home prices in general, says Yun, adding that both government data based on loans backed by Fannie Mae and Freddie Mac and data from the National Association of Realtors suggest much more modest price declines. TIP: If you're selling your home, the best thing to do is price your home right.

2. The much smaller number of new homes now under construction indicates the dismal outlook for the housing market. Wrong. The inventory of homes on the market is very high, so the last thing we need now is more new homes being built. Home builders have cut back sharply on production, which will help lower inventories and stabilize prices. The builders have done exactly what market forces are dictating under current conditions, Yun says. TIP: With many new homes completed but not sold, you can find great opportunities.

3. Even when the housing market recovers, home price growth will be only 4 to 6% per year — much less than historical average returns for the stock market. Most buyers put less than 20% of their own money into a home purchase; this borrowing power can translate to a greater rate of return. This is how Yun explains it: Home price appreciation historically has been about 1 to 2 percentage points higher than consumer price inflation, which translates into about 4 to 6% per year. But this growth rate cannot be viewed as a rate of return like the stock market. The reason is that most people do not buy a home for all cash, instead making a cash down payment and borrowing the rest. The leverage this borrowing creates can magnify returns — and losses. If price growth returns to historic norm, the price growth of 4% can easily turn into 20 to 30% rate of return if the home buyer makes a down payment of 10 or 20%. TIP: Get the fundamentals right when investing in real estate.

4. Impending baby boomer retirements and moves to small homes will cause a glut of homes on the market. Wrong. The first edge of the baby boomers has reached 60 years of age and the massive bulk of that generation will soon go into retirement, but far from trading down, many of these older homeowners are keeping their homes or moving to ones of comparable size. And even if more boomers do sell their larger homes in the years ahead, Yun points out, the rapidly growing ..:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />U.S. population should absorb the inventory of existing homes on the market. TIP: Active seniors can find a retirement community that caters to their needs and interests.

5. The federal government takeover of secondary mortgage companies Fannie Mae and Freddie Mac is a bailout that will cost taxpayers bundles. Too soon to tell, says Yun. It's conceivable that taxpayers may have to cover some losses. It's also possible that the government takeover will result in no loss of taxpayer dollars. Even if taxpayer funds are used, the bailout would be preferable to the global economic problems that would have occurred if Fannie and Freddie had gone belly up. TIP: Uncle Sam is "bailing out" homeowners facing foreclosure. Find out more about the Hope for Homeowners plan.

6. The Federal Reserve controls mortgage rates. Wrong. Yun explains: The Fed's activities influence mortgage rates but don't directly control them. What the Fed sets is a very short-term interest rate called the Federal Funds Rate. Mortgage rates are determined by global savings as well as credit spreads and inflationary pressures. Over the past two years, the Fed has raised the Fed Funds Rate to 5.5%, and then cut it deeply to around 2%. All the while, the 30-year mortgage rate has averaged in the 6 to 6.5% range. TIP: Today's rates don't look bad compared to the 10% we saw in the early '90s and 17% in the '80s.

7. It's the wrong time to buy. Wrong. All real estate is local. For those who are financially and mentally ready to buy, there has never been a better time to be a buyer in many markets. An abundant selection of homes and historically low interest rates give buyers an edge over sellers. The recently passed $7,500 federal tax credit for first-time home buyers creates an added incentive. For someone with a long-time horizon, Yun says, there is very little worry about home values since homes have historically provided a solid foundation for wealth accumulation. TIP: Compare the pros and cons of renting vs. buying to see what makes sense for you.

8. It's the right time for everyone to buy. No. All real estate is local, and everyone is unique. Someone who is not emotionally or financially ready should not be forced or induced to join the rank of homeowners, even when a market presents good buying opportunities. Potential homeowners clearly need to understand that the decision to move up to ownership requires sacrifices, like saving up for down payment and elevating their credit scores. Homeowners who lose their home to foreclosure serve no one's interest, Yun adds. TIP: Take a good hard look at your financial status and create a homeowner's budget to see if you're ready to buy a home.

9. It's a terrible time to sell. Wrong. In markets where home sales are picking up strongly, a seller can easily get an offer if the property is priced correctly. Also, Yun says, for those looking to trade-up, selling low on an existing home is more than offset by buying the new move-up home at a lower price. When the market recovers, home price appreciation on the traded-up home will bring bigger bang for the buck. TIP: Homebuyers want bargains in this market. If you price your home much lower than your competition, you might end up with a bidding war.

10. With the advent of the Internet, more and more homes are being sold by owners (FSBOs), and real estate practitioners are becoming obsolete. Nope. According to Yun, the share of home sellers who choose to go it alone when selling their home has actually decreased from about 20% in the late 1980s to about 12% today. Even after these sellers successfully complete a transaction, only 4 in 10 say they would sell their next home without the assistance of a real estate professional. TIP: You don't have to sign a listing contract to talk to a Realtor. Ask family and friends for referrals and interview a few. You might even get some free advice.

Just a reminder from your friends here at RE/MAX Executives, that your vote counts.  We won't tell you who to vote for, but we will ask to become your real estate company in Atlanta, Georgia.

You can always search for homes and see the value of your home on our website at www.AtlantaGAHomes.com.

Need additional help, let one of our top agents help you.  We do have the best agents and a great company. 

We are a Top 10 real estate company here in Atlanta.  We are Big Enough to Matter and Small Enough to Care!

America is in one of the worst housing crisis in history, yet 49% of U.S. homeowners believe their home's value has increased or stayed the same over the past year.  In reality, 74% percent of homes have lost value in the past 12 months.

The results — kind of baffling. While the perception gap did narrow, still half of U.S. homeowners do not think their home's value has declined over the past year. Specifically:

• 32% think their home's value increased in the past 12 months
• 17% think their home's value held steady
• 51% think their home's value declined

Why the difference?  Could it be that the value of our home has not changed in our mind?  It has the same value to us as it did before this recession.

I still am not a big fan of facts and figures on this type of scale, since each area of the country is different.  But it did make me think about the perception of value.  It is what we believe the value is and not what someone else tells us it is, when we own our home.  The only time this view may need to change is when it comes time to sell your home, when it then becomes the perceived value of the new purchaser.

(Stats and figures thanks to Zillow.com)

Purchasing a home in the next six months might be the smartest thing you've done all year!

 

Bottoms of real estate markets never announce themselves with fanfare. Economists generally only determine the exact bottom long after the market has sharply rebounded.  My prediction is that when the dust finally settles, the experts will look back on the time period between now and the presidential election as the best time to have purchased a home.

Why is this the case? There are several interrelated reasons. The first is that the housing market in the metropolitan Atlanta area is far healthier than most housing markets in the United States. We've seen some price reductions in housing but nothing comparable to other parts of the country. With our region's population increasing by 150,000 people per year, prices can only go so low because demand is constant. It's a nice cushion to have.

Second, for the moment, the Federal Reserve (Fed) is more concerned about encouraging growth than controlling inflation. Don't expect this to last. If inflation remains high, look for the Fed to start raising rates right after the presidential election. This, along with the turmoil in the secondary mortgage market, is likely to drive up mortgage interest rates. This will make the effective cost of housing much higher than it is now even if prices continue to fall somewhat or remain flat. Let's look at the following example to understand why this is the case.

Let's say that a buyer gets a good deal on a property at $320,000 with a 30-year mortgage for 90 percent of the purchase price at an interest rate of 6.25 percent.  The buyer's monthly mortgage payment will be $1,773.27.   Now let's say that the buyer gets a great deal on the same house at $300,000 but the interest rates on the same 90-percent loan are now 7.25 percent.  Even though the buyer is borrowing less, the monthly mortgage payment is $1,841.88.  In other words, the buyer who waited for the great price actually ended up paying more for the property than the buyer who paid a little more but got a better mortgage interest rate.

Rising mortgage interest rates could drive housing prices even lower. My bet, based on the above example, is that the effective increase in housing costs resulting from rising mortgage interest rates will not be offset by further decreases in property values.

What does this all mean? The answer is that there is likely a short-term window of opportunity to get the best deal in this down cycle of the housing market.

Where are the best deals? Well, remember that the entire housing market is on sale right now. The houses that are most deeply discounted are foreclosed homes presently owned by various lending institutions. These are sometimes referred to as "REO" properties or real estate owned. It's not a bad place to start your search for a home. However, there is one major caveat to this suggestion: There is a big difference between price and value. The house that is the most deeply discounted from a price perspective is not always the best long-term housing value.

If a house is functionally obsolete, in a less than ideal location and/or in a mediocre school district, the long-term value of the house may not be as good as a higher priced home where these things are not an issue. For buyers interested in value, focus on the following four factors:

1. Location

Buyers want to be close to work, shopping centers, healthcare and recreation. This is even truer with the rising cost of gas.

2. School district

Quality public schools always have been a huge factor for most buyers.

3. Quality

Buyers want a well-built house.

4. Design and functionality

Many houses become functionally obsolete because of a lack of closets, size of bathrooms, layout of kitchens, height of ceilings or architectural design.

If the house is being bought for investment purposes, the price point of the house is far more important than when the house is being purchased to live in. Look for lower priced homes that will appeal to a broad rental market.

If you have been sitting on the fence, it is finally time to move!

By Seth Weissman

Of course, there aren't many people who believe that the government has the best solution to our problems, even if the problem is as significant as our current housing situation. No, the government should never be the first choice, but at this point we may need all the help we can get.

 

However, I really don't believe that the recent Housing Stimulus Bill is going to be the silver bullet that so many are hoping for. There are some aspects of the bill that certainly take steps in the right direction, but in the end, it will only be one of several factors that will eventually help turn this market around.

 

Now, I'd like to comment on some of the bill's highlights:

 

Tax credits for first time home buyers

This may help bring more buyers into the market, even though the definition of a first-time buyer is a bit loose.  These tax credits are more like interest free loans and they have to be paid back.

 

Conversion to 30 year fixed loans for financially strapped homeowners

Who could be against this, except for the lenders get to decide who is "financially strapped."

 

Better management and oversight of Fannie and Freddie

Sounds good, but this may not translate directly or immediately to practical help for homeowners.

 

I think you get the idea. It's an election year mixed bag that really doesn't go far enough to have the type of impact to turn this market around. This Housing Stimulus package may help some, but in the end, it will be the marketplace that decides.

 

Although it may take several more months to turn around, we are already seeing signs of a rebound in some locations.

And the bad news just keeps coming- Home prices keep falling, foreclosures keep rising, a gallon of gas keeps getting more expensive, food costs keep increasing, the stock market keeps falling, and we all keep wondering when will it end?

I would like to talk to you about Short Sales. Many lenders are realizing that they'll save money the sooner they can get a property off the books. So, when they fear a homeowner may be headed for foreclosure they may fix a sales price lower than the mortgage balance, and put the property on the market for a quick sale.

Short Sale opportunities are on the rise and if you are fearful of foreclosure, I encourage you to talk to your lender. Did you know that two thirds of homeowners in default never even contact their lender?

If the lender does agree to a Short Sale, it can work to everyone's advantage. The homeowner avoids foreclosure, the lender avoids the carrying costs, the neighborhood avoids another abandoned property on the block and a professional real estate agent can provide a beneficial service to a grateful consumer.

As a purchaser, here is a great opportunity to get a great deal on a home, without waiting for a foreclosure.  Also you get the property faster than if you had to negotiate with the overworked foreclosure department of the lender.

Most short sales are now being stated in the description of the property on mush website.  Your real estate agent can also search for these types of listings.  Just contact one of our agents here at RE/MAX Executives, and we will help you find the deal.

RE/MAX Executives – N Druid Hills, Atlanta, GA  -  404-325-5900

RE/MAX Executives – Northlake Parkway, Atlanta, GA  -  770-496-9600

RE/MAX Executives – Church Street, Decatur, GA  -  404-378-9300

Lawrence Yun, chief economist for the National Association of Realtors, expects a "soft" first half of this year for housing and the economy and then "notable improvement" in the second half of the year. But U.S. Treasury Secretary Henry M. Paulson Jr. notes in a recent speech that "most forecasters expect a prolonged period of adjustment" in housing.

Who's right? In the long run, both comments may prove prescient because the national housing market is more than large enough to encompass a wide variety of trends in different places and on different timelines. And that means, at the end of the day, you'll need to rely on your own best judgment to make decisions for yourself and your family.

So how can you figure out when home prices and sales hit bottom and begin to recover in your neighborhood? You may need to do your own research to find the answer. Dig up facts and figures about your own city or town and then combine that data with information about national trends to formulate your own conclusions.

Plenty of data are as close as your keyboard, though the process of sifting through it may take quite a lot of time and thoughtful analysis.  You can instead contact a good real estate agent and ask a few questions about the market.  There are a few other key facts to know:

1.  Local information and stats are the key.  Learn your area, not just Georgia or Atlanta, but your community.

2.  One of the single most important factors is the supply or inventory of homes on the market. If you are selling, found out about your competition.  How are they priced?  What do they offer?

3.  Remember in housing markets you will be using years of data and not just a few months.

First time home buyers have a lot to think about when they make that decision to start looking. But the process can be made much easier if they use a licensed real estate agent. The biggest challenge is finding one that will guide you through the process while working for you.

Don't just use the agent that is a relative or the one the neighbor recommends. You get to interview them to make sure you will work together well, but you need to do that before they start taking you around and showing you homes. An agent only gets paid if the deal is completed and they are spending their money, in gas and time, trying to help you find the right house.

There are some down payment assistance programs out there like Nehemiah, so if you qualify this could really help you. You can find out more about this program at http://www.getdownpayment.com/.

Another think to start with is getting pre-qualified for the loan. This is especially true if you are trying to get a foreclosure property. The banks only want to deal with people that have or can get the money. So pick a mortgage lender and get the pre-qualification. It doesn't hurt your credit to be run by the same type of business, so don't stress about how many times it will be pulled by the bank. Another important thing to realize is that your pre-qualified offer on a home carries a lot more weight, in case the sellers get multiple offers.

If you want more information or tips, feel free to contact one of our agents at www.AtlantaGAHomes.com. They work the entire Atlanta area with special knowledge of Midtown, Buckhead, Toco Hills, Decatur, Avondale Estates, Tucker, Stone Mountain, and a lot more. Also, since they are RE/MAX agents and REALTORS® you know you will be working with a real professional.

I have been writing about news articles I have read and will continue to do so when I spot them, but I would also like to give out some tips on how to find a great home.  So be on the lookout for my next blog, but for right now look at this one:

Home sales unexpectedly rise in April

By MARTIN CRUTSINGER, AP Economics Writer

 

"Sales of new homes rose in April for the first time in six months although the unexpected increase still left activity near the lowest level in 17 years.

The Commerce Department reported Tuesday that sales of new homes rose 3.3 percent in April to a seasonally adjusted annual rate of 526,000 units.

 

The Commerce report on new home sales showed the April rebound was led by a huge 41.7 percent surge in sales in the Northeast. Sales were up 8.3 percent in the West and 5.8 percent in the Midwest. The only region which saw a decline in sales in April was the South, where sales fell by 2.4 percent."

 

Looks like we are already starting to see signs of the housing market working itself back to a normal level, which is great!  And since there are still lots of homes out there and some you can get for less than a car, I think I will be looking at some for investment oppurtunities.

I just read a great article about the data we have been getting about real estate.   It was written by Chris Pummer who writes for Los Angeles Times and the San Jose Mercury News.  It is titled "Home-price data has its flaws.  You can read the entire article at http://www.marketwatch.com, but here is just a few paragraphs I that were very interesting.

 

"Commonly cited measures of U.S. home prices are overstating the degree to which the vast majority of Americans' home values have declined in the last year, producers of two of the most widely tracked indexes acknowledged this week.

 

Top officials with the National Association of Realtors and Standard & Poor's, which issues the S&P/Case-Shiller Home Price Index, agreed this week their monthly reports are giving imprecise readings of price changes at all levels -- national, state and regional -- due to rare market conditions that are skewing survey results.

 

The S&P/Case-Shiller index, which Tuesday posted a 12.7% decline for February, is skewed for two reasons of its own -- it tracks just 20 major markets, many among the hardest hit, and its "repeat sales" survey by design pulls in individual homes both bought and sold in the last few years. Many of those are now being dumped by distressed homeowners and investors who bought at peak market prices and face higher mortgage-rate adjustments.

 

"Just like saying the average nationwide temperature today is 57 degrees doesn't tell you anything, the same is true for real estate prices, NAR Chief Economist Lawrence Yun said. "The only way to tell what your own home is really worth is to look at local-market conditions, do Internet research and utilize professionals (such as licensed appraisers) to help determine the value of your home."

 

If you would like a professional opinion of the value of your home in the Atlanta market, please feel free to contact one of our Realtors.  You can reach them at any of our three offices.  Just visit our website at www.AtlantaGAHomes.com for phone numbers or to send us an email message.