|
|
|
Three Ideas to Help Solve Consumer Confidence in Real Estate Market - 2009-03-29 |
In trying to solve today’s economic woes, we hear the word “confidence” thrown around a lot. Americans today simply lack confidence, and thus are unwilling to make major purchases, especially real estate.
And if home values could just turn around, much of the economic confidence the nation needs so desperately might be restored, or so the thinking goes. I guess that is why I am constantly bombarded today by the following questions. I have included my best guess at answers.
Q: Where are we today in the housing market? Are there any indications that the housing stimulus plan working?
A: It's extremely difficult to say where we are until we get somewhere down the road and can look back.
We know that residential real estate probably has lost between 10 and 15% of its value on average, but that is a national figure and this is a very local problem.
We know that the sand states (CA FL AZ NV) have suffered the worst, due to rampant speculation. At the same time, home values in the rust belt have been hit hard by the changing economy. Other areas have seen less of a drop in sales and value, including Georgia.
According to the most recent “all transactions” data from the Office of Federal Housing Enterprise Oversight, the average home in metro Atlanta dropped in value during 2008 approximately 3.82 percent.
Of course, some areas have been hit much harder, some neighborhoods seem to have suffered less. The full report is at ofheo.gov under “Home Price Index,” and it makes for heavy reading.
We know that buyers are being extremely cautions about buying anything right now, and that there is a crisis in confidence as much as anything else.
We know that interest rates are as low as they have been in 30 years, and yet buyers are still sitting on the fence, waiting for both "the bottom" and some good economic news.
Q: So, is the plan working?
A: It's too soon to tell.
Only just now are we seeing mortgage companies begin to set up the apparatus to accept applications for the refinancings and modifications called for in the stimulus plan. Trying to get a large mortgage company to change direction is like trying to stop a cruise ship - it just takes time.
The next 60 days will be important. As we see past-due borrowers start having new and more pleasant alternatives, there should be a corresponding drop in new actual foreclosures. Likewise, as lenders begin offering qualified borrowers new lower refinancing rates, there should be a slip in foreclosure volume.
Yes, that is a measurable number, but it will take time for the result of the stimulus programs to trickle down to the courthouse steps. If we eventually see a dramatic drop in foreclosure filings, that will be a very encouraging sign.
Q: We recently saw an unexpected jump in new home starts of 22
percent. Is that a good sign?
A: Prior sales were so low that a jump of 22 percent was almost meaningless. It may have represented simply an increase of funds that banks were willing to loan to builders rather than an actual increase in residential purchases.
Q: What about existing home sales?
A: Existing home sales are still extremely sluggish, due to confidence issues and "fence sitting." Lets face it, the demand market is in the tank. People are taking a wait and see attitude.
Q: Have we seen home prices bottom out?
A: We won't know until 3 to 6 months from now, but my guess is that we are bumping along the bottom right now.
Prices are getting low enough for some investors to snap up bargains, and that is providing some support for a price floor.
A friend of mine bought an ugly bank-owned house in Clayton County last week for $20,001 cash. Within 30 days, it will shine like a new penny. Every purchase and rehab like that is significant, because it removes an obstacle to recovery for that particular neighborhood.
Q: So, what would help jump-start the housing market?
A: Two of the keys to recovery are stemming the flow of foreclosures and mopping up the excess inventory of bank owned homes. Once that occurs, the market can begin to recover, but not before.
First, offer a $15,000 federal tax credit to anyone who purchases a foreclosed house from a bank and quickly fixes it up to minimum community standards. And do not limit this to owner-occupants. Owner occupants won't buy awful houses like these, but investors can and will.
Second, the president should direct FANNIE MAE to make more loans available to well-qualified investors and owner occupants who buy foreclosed properties in targeted areas and make specific improvements. Current FNMA limits make it almost impossible for investors to obtain long term financing. Instead, we should be encouraging the purchase of these houses.
Finally, offer a $25,000 tax exclusion for anyone who buys a foreclosed house, rehabs it to community standards, then sells it to an owner-occupant in the next 24 months. People would be fighting to make offers to banks, and prices would rise almost immediately.
These proposals would generate immediate activity in the part of the real estate market no one has addressed - the bank owned homes that are poisoning our well. Please feel free to share your thoughts and ideas with me at the address below.
Questions or comments?
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
|
|
Upcoming Events
"EPA CERTIFIED RENOVATOR" TRAINING
Do You Work with Real Estate? You Must Be LEAD SAFE CERTIFIED as of April 22nd.
To all owners, realtors, investors, property managers, contractors, electricians, plumbers and painters. Do you ever engage in any level of renovation? If so, read this:
Any renovator, from owners to contractors, from plumbers to electricians to painters, who disturbs lead paint while working in a pre-1978 home, school or day care center, now must be Lead-Safe Certified. If you’re not, you can face tens of thousands of dollars in fines. Plus, you put the health of yourself, your workers and your customers at risk, which could result in lawsuits. One simple 8 hour class certifies you for five years. It’s that easy.
Since April 22, 2010, there are new Federal rules regarding how you perform any work that disturbs lead-based paint in homes, child-care facilities and schools built before 1978. You now must be EPA certified and follow specific work practices to prevent lead contamination.
Failure to follow the new rules can result in federal fines of up to $32,500 per day or up to 5 years in federal prison, or both. Don’t take a chance - it’s not worth it.
How To Become an EPA Certified Renovator:
In just one day, John Adams will teach you how to meet all EPA requirements and become an “EPA Certified Renovator.”
Don’t wait - register now! Click on “Seminars” and choose your day!
- Friday, July 30th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 06th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 13th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 20th at Suburban Plaza, 2643 North Decatur Road
and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 27th at Suburban Plaza, 2643 North Decatur Road
and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
Total Course Cost: $295, includes exam and EPA-HUD 400 page manual
Space is limited to 20 participants.
Training services provided by Seagull Environmental Management Co, Inc.
Courses are approved for purposed of certification under Section 402 of TSCA for the Certified Renovator.
This course has been approved by the Georgia Real Estate Commission for 7 hours of Real Estate Continuing Education
For more information, call toll-free 888-373-0029
Click above on the "Seminars" button to register
*************
John Adams Presents
“The MetroVestAtlanta.com REO Bus Tour”
Get on the bus for a tour of South DeKalb County’s “Real Estate Owned”
homes. Each house you visit will be available that day for purchase at
a giveaway price, regardless of current condition. Financing is
available!
Throughout the day, we will hear from mortgage providers, people in the
construction business and property managers all discussing today’s
situation with Bank Owned REO properties.
Who Should Attend: Investors, Realtors, Lenders, Prospective Buyers, and
anyone who might want to buy a super-bargain house and either do the
rehab themselves or have all the work performed by the pros.
You will see abandoned dumps and finished products, and everything
in between. And Snap will be there to answer all your questions and
explain the rehab and rental strategies.
Saturday, August 21st, 9:30 AM to 4:00 PM
Your $49 fee includes the bus tour and lunch. You must make reservations. No walk-ups.
There is limited seating and the seats are filling fast. ACT NOW before you miss the bus.
We will be meeting at Suburban Plaza, 2643 N. Decatur Road and Church Street, Lower Level, Decatur 30033 (beneath Hancock Fabrics, in the arcade.)
|
Resources