You may believe that selling your home is impossible in today’s market. You may feel powerless to the process. What could YOU possibly do to turn this housing market around?
There is no doubt that today’s real estate market is extremely difficult to navigate. However, we want you to know that thousands of homes sold yesterday, thousands will sell today and thousands will sell each and every day from now until the end of the year.
It is totally within your power to guarantee that your house will sell even in the current market.
How you ask? Let’s look at the simplicity of the famous Serenity Prayer and apply it to selling a home in today’s real estate market.
“Grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.”
Accept the things you cannot change
The two main reasons that the housing prices have softened:
+ The current economy
+ The inventory of distressed properties (foreclosures and short sales)
As an individual homeowner there is no way for you to impact either of those two situations. The best think-tanks in the country are struggling to discover solutions.
Have the courage to change the things you can
There is not a vacuum of buyers in the market. There is a vacuum of homes a buyer in today’s market will purchase. Let us explain: could you sell your home today for $1? … $1,000 … $10,000? Of course you could. There are plenty of buyers in the market for a home they consider priced correctly. You have to decide what the correct price is for your home if you truly want to sell. If you want your house sold, you must list it at a price a buyer will pay for it. Not a buyer from 2006 but today’s buyer who has plenty of homes from which to choose.
It will take courage to sit with a real estate professional and honestly decipher the true value of your home. If you want to sell, you must have that courage.
The wisdom to know the difference
We all realize that the economic situation will take some time to correct. If we want to wait for prices to return to 2006 levels, we will probably have to wait for 5-7 years.
Look at the reason you decided to sell in the first place and decide whether the extra money you would get from the sale is worth that wait. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?
This is where your wisdom must kick in. You already know the answers to the questions we just asked. You have the power to take back control of the situation by pricing your home to guarantee it sells. The time has come for you and your family to move on and start living the life you desire.
That is what is truly important.
Excerpted from Keeping Current Matters Blog, quoted with permission.
Showing posts with label trends. Show all posts
Showing posts with label trends. Show all posts
Wednesday, February 22, 2012
Wednesday, January 25, 2012
When the Prophet Says Buy – BUY!
Excerpted from Keeping Current Matters and reprinted with permission.
R. Talbott, previously a Goldman Sachs investment banker, is a bestselling author and economic consultant. When it comes to the housing market he is also a prophet. When housing prices started to skyrocket in 2003, he published The Coming Crash in the Housing Market correctly warning us that a real estate bubble was forming. Then in January 2006, he called the absolute peak of home prices in the US by releasing a new book, Sell Now! The End of the Housing Bubble.
Mr. Talbott, the person who accurately predicted the housing bubble and its bust, now has a new prediction – IT IS THE TIME TO BUY A HOME! In a recent article, Homes – Buy Now!, Talbott simply explains:
“I have been waiting for more than five years to offer this advice. It is now time in most cities across the country to buy a new home or refinance your existing home with thirty-year fixed rate mortgage debt.”
He goes on to explain that his conclusion is based on four different metrics, all of which favor buying today:
■ Home Prices Relative to Peak Prices During the Bubble
■ Home Prices Relative to Construction Costs or Replacement Costs
■ Home Prices Relative to Incomes and Rents
■ Home Prices in Real Terms, Not US Dollar Terms
Bottom Line, If the person who called the real estate bubble and its bust says now is the time to buy, we believe it is time to buy.
As I mentioned in another recent blog, our local market is starting to show some signs of recovery. Inventories of houses for sale in some selected parts of Delaware County are dipping back into Seller's Market territory (defined as 1-4 months of inventory).
That is not yet reflected in any county wide trends, but at the end of 2011, there were 3,320 single family houses for sale in Delaware county. That is down from over 4,000 in July so the trend is in the right direction.
R. Talbott, previously a Goldman Sachs investment banker, is a bestselling author and economic consultant. When it comes to the housing market he is also a prophet. When housing prices started to skyrocket in 2003, he published The Coming Crash in the Housing Market correctly warning us that a real estate bubble was forming. Then in January 2006, he called the absolute peak of home prices in the US by releasing a new book, Sell Now! The End of the Housing Bubble.
Mr. Talbott, the person who accurately predicted the housing bubble and its bust, now has a new prediction – IT IS THE TIME TO BUY A HOME! In a recent article, Homes – Buy Now!, Talbott simply explains:
“I have been waiting for more than five years to offer this advice. It is now time in most cities across the country to buy a new home or refinance your existing home with thirty-year fixed rate mortgage debt.”
He goes on to explain that his conclusion is based on four different metrics, all of which favor buying today:
■ Home Prices Relative to Peak Prices During the Bubble
■ Home Prices Relative to Construction Costs or Replacement Costs
■ Home Prices Relative to Incomes and Rents
■ Home Prices in Real Terms, Not US Dollar Terms
Bottom Line, If the person who called the real estate bubble and its bust says now is the time to buy, we believe it is time to buy.
As I mentioned in another recent blog, our local market is starting to show some signs of recovery. Inventories of houses for sale in some selected parts of Delaware County are dipping back into Seller's Market territory (defined as 1-4 months of inventory).
That is not yet reflected in any county wide trends, but at the end of 2011, there were 3,320 single family houses for sale in Delaware county. That is down from over 4,000 in July so the trend is in the right direction.
Tuesday, January 24, 2012
Real Estate 2012: Many Positive Outlooks
Excerpts reprinted with permission from "KeepingCurrentMatters.com"
There is a growing belief among many experts that 2012 will be the year housing turns the corner and starts heading in a more positive direction. Whenever we write a post like this, we unleash the hordes of critics who say we are again wearing rose colored glasses or are puppets being controlled by the National Association of Realtors (NAR) and other industry groups.
It is for that reason that we want to share the beliefs of other organizations in this post.
Washington Post:
“Housing Market and Economy Showing Encouraging Signs.” For the complete article please go to
The Wall Street Journal:
“From Bottom Up, Signs of Housing Recovery”
USA Today:
“Housing Outlook is More Upbeat”
CoreLogic:
“CoreLogic’s chief economist Mark Fleming says housing statistics and the duration of the downturn to date indicate 2012 may be the year the housing market begins to turn the corner.”
Freddie Mac:
“With the New Year comes a sense of cautious optimism. There are some positive signs in the job market and consumer confidence; housing is starting to raise hopes for continued gradual economic recovery.”
Fannie Mae:
“The housing sector will likely take incremental steps forward in 2012 …according to economists at Fannie Mae.”
What does it all mean? Well like any forecast, the only thing we know for sure is that it is WRONG. We do not know if it is wrong on the high side, wrong on the low side, wrong early or wrong late. But, the significant thing is probably that after years of Gloom and Doom, a lot of people who make their livings forecasting real estate trends are turning bullish.
Will it happen, time will tell. My read is that the consensus is that we will hit bottom sometime in the first half of 2012.
There are some signs that this is already happening in our immediate area. For example, inventory of houses in Broomall, zip code 19008, priced from $250,000 to $350,000 is about 3 months (10 houses selling each month and 32 for sale). In Springfield, zip code 19064, in the $175,000 to $250,000 price range, there is about a 4 month supply (30 houses for sale, selling 7-8 a month). That is getting back into seller market territory. (Under 5 months of inventory is defined aas a seller's market where there are more buyers than sellers and there is upward pressure on prices).
Will that continue or are we just seeing some statistical anomalies. Time will tell, but I think we are about to turn the corner.
There is a growing belief among many experts that 2012 will be the year housing turns the corner and starts heading in a more positive direction. Whenever we write a post like this, we unleash the hordes of critics who say we are again wearing rose colored glasses or are puppets being controlled by the National Association of Realtors (NAR) and other industry groups.
It is for that reason that we want to share the beliefs of other organizations in this post.
Washington Post:
“Housing Market and Economy Showing Encouraging Signs.” For the complete article please go to
The Wall Street Journal:
“From Bottom Up, Signs of Housing Recovery”
USA Today:
“Housing Outlook is More Upbeat”
CoreLogic:
“CoreLogic’s chief economist Mark Fleming says housing statistics and the duration of the downturn to date indicate 2012 may be the year the housing market begins to turn the corner.”
Freddie Mac:
“With the New Year comes a sense of cautious optimism. There are some positive signs in the job market and consumer confidence; housing is starting to raise hopes for continued gradual economic recovery.”
Fannie Mae:
“The housing sector will likely take incremental steps forward in 2012 …according to economists at Fannie Mae.”
What does it all mean? Well like any forecast, the only thing we know for sure is that it is WRONG. We do not know if it is wrong on the high side, wrong on the low side, wrong early or wrong late. But, the significant thing is probably that after years of Gloom and Doom, a lot of people who make their livings forecasting real estate trends are turning bullish.
Will it happen, time will tell. My read is that the consensus is that we will hit bottom sometime in the first half of 2012.
There are some signs that this is already happening in our immediate area. For example, inventory of houses in Broomall, zip code 19008, priced from $250,000 to $350,000 is about 3 months (10 houses selling each month and 32 for sale). In Springfield, zip code 19064, in the $175,000 to $250,000 price range, there is about a 4 month supply (30 houses for sale, selling 7-8 a month). That is getting back into seller market territory. (Under 5 months of inventory is defined aas a seller's market where there are more buyers than sellers and there is upward pressure on prices).
Will that continue or are we just seeing some statistical anomalies. Time will tell, but I think we are about to turn the corner.
Thursday, May 19, 2011
HOUSE PRICES IN OUR AREA, WHAT DO THE TEA LEAVES SAY NOW?
As new economic data become available, it is possible to try and read the tea leaves and divine what is going to happen to house prices over the next year or so. This is my shot to do just that. Thanks for reading and I hope that it makes sense.
First a little background. It is generally understood that house prices peaked in our area (and in most of the country) in mid to late 2006. That means we have been in a downturn going on five years now.
According to CNN Money, prices kept declining until April of 2009, at which point they began to recover. A few pundits felt this was the bottom. However, the national number dipped again and hit a new low in February of 2011.
Further, numbers of foreclosures are still accelerating. According to the OCC and OTS Mortgage Metrics Report of 3/20/11, forclosures in process nationwide were 1,290,253 in the fourth quarter of 2010. That is up by 19.6% from the same quarter a year earlier.
According to the same report, new short sales are up by 30.3% from a year earlier, although the pace is down a little from the third quarter of 2010.
One nice thing about history is that at least you know where you have been. With respect to forecasts, the only thing you know for sure is that you will be wrong. You never know if you will be wrong early, wrong late, wrong high or wrong low - just that you will be wrong. However, knowing about general directions in advance can be real helpful in making plans, so here goes.
One of the factors driving real estate price declines across the country has been the number of foreclosures and short sales. California, Nevada and Arizona have been cited as worst examples of the basket cases in real estate. However, the S&P Report of 4/20/11 shows that many areas in those three states are projected to be clearing up their backlogs in from 18 to 36 months. On the other hand, many areas in SE Pennsylvania are projected to need between 72 to as much as 120 months to clear the backlog. If true, that would say that we are in for a long spell of working off excess inventory which will keep prices low.
Reuters News Service in February stated, "...economists now expect home prices will fall 2.3 percent in 2011 and then begin a slight recovery in 2012..."
David Stiff, chief economist of Fsserv said this in February, 2011. "Large supplies of foreclosed properties will continue to be the biggest downside risk for home prices..."
Radar Logic reported in March, 2011, "The supply of homes for sale and potentially for sale is very large relative to demand, and it continues to be fed by high rates of mortgage defaults and foreclosures. At the same time, demand for houses is constrained by tight lending standards. Unfortunately, delcining home prices are likely to exacerbate these challenges to the housing market"
I could quote more of the same, but you get the idea. My bottom line and what I am advising people is this:
+ If you absolutely need to sell, sell now. This is as good a time as you will probably have in the next two years.
+ If you can afford to stay in your present house for two years or more, it may be best to do that.
+ However, you really need to consider what you will do if you sell. It could be that the low mortgage rates and prices will help you to make up more in your next purchase than you will lose in selling now.
Where is the bright side you ask? - it is a fantastic time to buy. Prices are soft and going lower; mortgage interest rates are at historic lows. If you have equity in your house and want to move up, now is a great time.
How can a seller make use of these current trends? Well if you need to sell, now is probably the best time that you will have in the next couple of years. If you can wait for more than two years to sell, my advice would be to do it. I certainly hope that prices will be better by then. Of course, if somebody had asked me two years ago if prices would still be going down, I would have said probably not.
Not an easy set of trade offs to manage, but it can be done. If anyone would like some help in that or has another related real estate question, please feel free to email me at delcorealestate@gmail.com or call me at 484-468-1306.
Would appreciate your thoughts and comments.
First a little background. It is generally understood that house prices peaked in our area (and in most of the country) in mid to late 2006. That means we have been in a downturn going on five years now.
According to CNN Money, prices kept declining until April of 2009, at which point they began to recover. A few pundits felt this was the bottom. However, the national number dipped again and hit a new low in February of 2011.
Further, numbers of foreclosures are still accelerating. According to the OCC and OTS Mortgage Metrics Report of 3/20/11, forclosures in process nationwide were 1,290,253 in the fourth quarter of 2010. That is up by 19.6% from the same quarter a year earlier.
According to the same report, new short sales are up by 30.3% from a year earlier, although the pace is down a little from the third quarter of 2010.
One nice thing about history is that at least you know where you have been. With respect to forecasts, the only thing you know for sure is that you will be wrong. You never know if you will be wrong early, wrong late, wrong high or wrong low - just that you will be wrong. However, knowing about general directions in advance can be real helpful in making plans, so here goes.
One of the factors driving real estate price declines across the country has been the number of foreclosures and short sales. California, Nevada and Arizona have been cited as worst examples of the basket cases in real estate. However, the S&P Report of 4/20/11 shows that many areas in those three states are projected to be clearing up their backlogs in from 18 to 36 months. On the other hand, many areas in SE Pennsylvania are projected to need between 72 to as much as 120 months to clear the backlog. If true, that would say that we are in for a long spell of working off excess inventory which will keep prices low.
Reuters News Service in February stated, "...economists now expect home prices will fall 2.3 percent in 2011 and then begin a slight recovery in 2012..."
David Stiff, chief economist of Fsserv said this in February, 2011. "Large supplies of foreclosed properties will continue to be the biggest downside risk for home prices..."
Radar Logic reported in March, 2011, "The supply of homes for sale and potentially for sale is very large relative to demand, and it continues to be fed by high rates of mortgage defaults and foreclosures. At the same time, demand for houses is constrained by tight lending standards. Unfortunately, delcining home prices are likely to exacerbate these challenges to the housing market"
I could quote more of the same, but you get the idea. My bottom line and what I am advising people is this:
+ If you absolutely need to sell, sell now. This is as good a time as you will probably have in the next two years.
+ If you can afford to stay in your present house for two years or more, it may be best to do that.
+ However, you really need to consider what you will do if you sell. It could be that the low mortgage rates and prices will help you to make up more in your next purchase than you will lose in selling now.
Where is the bright side you ask? - it is a fantastic time to buy. Prices are soft and going lower; mortgage interest rates are at historic lows. If you have equity in your house and want to move up, now is a great time.
How can a seller make use of these current trends? Well if you need to sell, now is probably the best time that you will have in the next couple of years. If you can wait for more than two years to sell, my advice would be to do it. I certainly hope that prices will be better by then. Of course, if somebody had asked me two years ago if prices would still be going down, I would have said probably not.
Not an easy set of trade offs to manage, but it can be done. If anyone would like some help in that or has another related real estate question, please feel free to email me at delcorealestate@gmail.com or call me at 484-468-1306.
Would appreciate your thoughts and comments.
Monday, April 11, 2011
MOVE UP NOW OR WAIT FOR RECOVERY? IT IS PROBABLY A DIFFERENT ANSWER FROM WHAT YOU MIGHT THINK
A common dilemma today is the homeowner wondering if it makes sense to sell in todays market and make that move up to a better house or wait until the market recovers.
Logical question, and the initial gut reaction is, "Man the value of my house is way down. I have to wait." However, when you look at the cash flows of making the move now and the estimated cash flows of waiting five years, the answer is a little bit surprising. Bottom line is that if you have enough equity in your house to cover the cost of moving up, you are smart to make that move right now. Of course if you are upside down and owe more than your house is worth, that is another story (and the subject for another blog which will be coming up shortly).
How in the world can that be you ask? Most of the answer lies in the extremely attractive interest rates for home mortgages, which are at historic lows right now. (4.5%, no points vs historical rates of 6.5% or more)
To explain further, please see below. Here are the planning assumptions that are behind the numbers.
Planning Assumptions
+ House prices decline for one more year, recover starting in 2012 and increase thereafter at the long term historical rate of 3% a year.
+ Home mortgage rates are at 4.5% in 2011.
+ Home mortgage rates increase to 6.5% by 2016.
+ Down payment of 20%
Under those conditions, if a house can be sold for $270,000 today and the sellers move up to a house that costs $450,000, their new Principal and Interest payment would be $1,824 a month.
If they wait until 2016, it is true that the selling price of their house will have increased up to $295,036. However, the price of the house to which they move up will also have increased, up to $491,727.
Their monthly payment after the 20% down payment will have increased to $2,486 a month. That is an increase of $662 a month or $7,948 a year.
Why is that so? Well, the increased mortgage amount accounts for about 25% of the increase, but the change in interest rates accounts for 75%.
What is the lesson? If you have enough equity in your present house to finance the move up, there will never be a better time to do it than today.
Another cash flow drawback of waiting for five years is that the amount of the 20% down payment will also have increased by, in this example, $8,345.
If you would like to explore these possiblities for your own situation, just give me a shout at 484-574-4088 or email to DelcoRealEstate@Gmail.com
Thanks for listening.
Logical question, and the initial gut reaction is, "Man the value of my house is way down. I have to wait." However, when you look at the cash flows of making the move now and the estimated cash flows of waiting five years, the answer is a little bit surprising. Bottom line is that if you have enough equity in your house to cover the cost of moving up, you are smart to make that move right now. Of course if you are upside down and owe more than your house is worth, that is another story (and the subject for another blog which will be coming up shortly).
How in the world can that be you ask? Most of the answer lies in the extremely attractive interest rates for home mortgages, which are at historic lows right now. (4.5%, no points vs historical rates of 6.5% or more)
To explain further, please see below. Here are the planning assumptions that are behind the numbers.
Planning Assumptions
+ House prices decline for one more year, recover starting in 2012 and increase thereafter at the long term historical rate of 3% a year.
+ Home mortgage rates are at 4.5% in 2011.
+ Home mortgage rates increase to 6.5% by 2016.
+ Down payment of 20%
Under those conditions, if a house can be sold for $270,000 today and the sellers move up to a house that costs $450,000, their new Principal and Interest payment would be $1,824 a month.
If they wait until 2016, it is true that the selling price of their house will have increased up to $295,036. However, the price of the house to which they move up will also have increased, up to $491,727.
Their monthly payment after the 20% down payment will have increased to $2,486 a month. That is an increase of $662 a month or $7,948 a year.
Why is that so? Well, the increased mortgage amount accounts for about 25% of the increase, but the change in interest rates accounts for 75%.
What is the lesson? If you have enough equity in your present house to finance the move up, there will never be a better time to do it than today.
Another cash flow drawback of waiting for five years is that the amount of the 20% down payment will also have increased by, in this example, $8,345.
If you would like to explore these possiblities for your own situation, just give me a shout at 484-574-4088 or email to DelcoRealEstate@Gmail.com
Thanks for listening.
Monday, March 21, 2011
What is Really Happening to Home Prices in Delaware County?
WHAT IS REALLY HAPPENING TO HOUSE PRICES IN DELAWARE COUNTY?
Periodically, I try to publish local real estate statistics that shed some light on what is really going on in the local real estate market.
I recently took a look at what has happened and is happening to the price of a single family house in Delaware County. Some of what I found may surprise you.
First of all, it is a common belief that home prices hit a peak in 2006 or 2007 and have declined since then.
That is generally true, but the magnitude of the change is kind of surprising. For example, just ten years ago in 2000, the average price of a single family house in the country was $160,000. By 2007, that climbed to and peaked at $273,000. That is an average annual increase of right at 8%, which is high and unsustainable in the long term. The average annual increase in house prices in the United States is about 3%.
The common belief is that that real estate prices have collapsed since then, but is that really true?
Please check out the below (Courtesy of Trend, MLS).
- Since prices peaked at $273,000 in 2007, they came in at $267,000 in 2008, $250,000 in 2009 and actually rebounded to $261,000 in 2010.
- That is a cumulative decline of only 4.5% since the peak. Not fun for a seller, but a long way from the 50% declines that are real in places like Florida and California.
- By way of comparison, a "normal" real estate price correction is in the area of 10-20%.
- Inventory of houses for sale in the county was at or below 1,800 units until May of 2005.
- Sales in 2005 were 7,129 houses
- In 2010, the average inventory was 3,542 units or more than double that of May, 2005.
- Sales in 2010 were 4,171 units.
- Stated differently, supply (inventory) is up by more than 100%.
- Demand (sales) is down by 41%.
- Prices are driven by supply and demand. When supply is up and demand is down, prices go down. Overall, that is what we have seen and probably will continue to see for the next year.
If you would like more specific information about what has happened to house prices in the immediate area around your house, just let me know and I will be glad to develop it for you.
Thanks and please let me know if there is anything else that I can do for you.
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