To Buy Or Not To Buy !

Hi ,
Here are some thoughts I wanted you to have about buying a home.
If you can afford to, and if you have the credit, money, income and desire, this is a good time to buy real estate. People have been waiting on the sidelines for the prices to stop dropping. Although they may not be totally done dropping, I think we are nearing the point where it will stabilize and if any more drops happen, they will be less painful than what we have experienced in the last year. In many parts of town prices are such that they are on par with 2004 prices. These were a good deal the first time around, and I feel they are still a good deal.
This is true of all groups, including 1st time homebuyers, investors and Ma and Pa looking to upgrade or even downsize at retirement. This is especially true if you plan to live in the property since you will be there from 3 to 5 years at least and will wait out any further problems. Just like all that goes up must come down, the alternate is true also. Once things have fallen enough, it’s likely to go up in following periods.
Most investors I know are already on the band wagon buying foreclosed homes and fixing them up for sale or more likely rentals. In this market we now have what is known as properties that cash flow. The way this happens is they bought it cheap enough to fix it and still have payments less than the rent they can charge. As long as this is true investors will buy. It is their purpose in real estate, not the flipping mentality which reigned in the last upswing.
For the first time homebuyer, my advice is to straighten out your credit, save a 5-15% down payment, of course a good job and work history is important, then get prequalified with a reputable lender, contact me and we’ll look at homes in the area desired in your affordable price range. I personally recommend finding several homes with these criteria(if possible), make offers somewhat lower than the asking price, and wait and see which sellers take the offers, or make reasonable counteroffers. The main purpose is to not be caught up with any one home to make this scenario work. If you are guided by your heart on these kinds of transactions, then maybe you should let your spouse or significant other do the negotiating. This way you can end up with a great home in a good location with at least some equity to buffer you from any downturn in the market. Of course if you are guided by your heart, there are still some great deals on the market, but you are less likely to get a bargain in this case.
Foreclosures as bank owned properties are the flavor of the year. They do provide an excellent opportunity to purchase a home at a below price of the comparable homes in an area. This is good news for the homebuyer, but not so good for the home seller. Every time the bank sells a property it establishes a new comparable for the neighborhood, which may lower the average sales price for all other sales on the market in that particular area. It is for this reason that the foreclosures are selling faster than regular home seller properties. Foreclosures have to keep pace with the local market economy in order to sell, and the banks must sell them.
In summary, it is a great time to buy real estate. Just as the market turned south before the regular buyers knew it, it will start to pick up before the regular homebuyers know it. I think this will happen in early 2009, but the best prices and negotiations may be from now to 6 months from now. Fear is what has kept people out of the market, and only fear can keep someone from making a great deal on a new home.
In closing, I think the next 6 months is a great time to buy real estate. The investors already are in the market. Don’t let them get all the good deals!

John Lough

Possible 4.5% Interest Rate To Get Things Moving!!!

Lower mortgage rates no silver bullet!
The government is weighing plans to drive rates as low as 4.5%. But experts say that won't be enough to stabilize the housing market.


NEW YORK (CNNMoney.com) -- Reducing mortgage rates to a historically low 4.5% may entice some home buyers out of the shadows, but it won't be enough to really spur housing sales, experts said.
Only a week after the Federal Reserve unveiled a $600 billion plan to reduce mortgage rates, the Treasury Department is considering adding to the effort to lower rates even more. Both moves are intended to get more buyers into the market in hopes of stabilizing home prices and reviving the economy.
While Treasury officials are keeping mum about the latest proposal, lobbyists said Thursday it is aimed at reducing rates to 4.5% only for people buying homes. Those looking to refinance would not qualify.
There's no doubt, experts say, that the government needs to provide incentives to home buyers.
Until now, all efforts were focused on addressing the record number of mortgage delinquencies. This should remain the priority, experts say, but it should be coupled with increasing demand for homes.
Adjusting mortgage rates, however, will only go so far in getting prospective home buyers into the market, experts said. Potential buyers remain spooked by falling home prices and rising unemployment. And even those who want to buy cannot find loans with reasonable downpayments and terms.
"The problem is not interest rates," said Kenneth Rosen, chair of the Fisher Center for Real Estate at University of California, Berkeley. "It's the availability of credit."
And, of course, there's still the issue of stemming foreclosures. The Bush administration has been loathe to mandate widespread loan modifications. Instead, it is opting to chip away at the problem by adjusting loans held by Fannie Mae and Freddie Mac and by asking banks to expand their programs.
But even federal officials acknowledge the economy won't recover until the tidal wave of foreclosures ends. Federal Reserve Chairman Ben Bernanke Thursday said the government must do more to help struggling homeowners, possibly by buying delinquent mortgages and refinancing them to more affordable terms.
Treasury plan in the works
Lobbyists are ratcheting up pressure on federal officials to do more to entice home buyers into the market. Various proposals have been floated, but lowering mortgage rates is among the more popular.
One of the more vocal industry groups, the National Association of Realtors, met with top Treasury officials last month to outline a plan to stabilize home prices through lower mortgage rates.
While details remain sketchy, its proposal calls for Treasury to subsidize rates so home buyers pay 4.5% for a 30-year fixed-rate mortgage. It would be similar to a homebuyer paying points -- a percentage of a home's value -- in return for a lower rate, but the government would foot the bill.
The plan would cost $50 billion, said Lawrence Yun, the group's chief economist.
Lowering rates to 4.5% -- about a percentage point below today's rate -- would spur 500,000 home sales over the next year, he said. That would put a big dent in the supply of 4.6 million homes on the market. Right now, there is a 10-month supply of homes for sale, three to four months more than in normal conditions.
A 4.5% mortgage rate would prompt many people to buy, even if they fear home prices will continue to fall and the economy to weaken, he said. Rates have not fallen below 5.37% for 45 years.
A wave of purchases should stabilize home values, which, in turn, will help the economy to turn around.
Last week's action by the Fed, which prompted a half-percentage point drop in rates, sent home buyers' mortgage applications up 37.4%, according to the Mortgage Bankers Association.
"We need to do something to counter that pessimism," Yun said. "Doing nothing will exacerbate the problem."
Lowering rates is among several options the Treasury Department is considering. An announcement could come as early as next week.
More needs to be done
Experts, however, questioned whether buyers would take advantage of lower rates. They criticized government officials for taking a piecemeal approach -- with narrow programs unveiled every week -- rather than coming up with a comprehensive plan to stabilize the housing market.
"I don't think they are thinking through what they are doing," Rosen said.
What's keeping many home buyers out of the market are stringent lending standards, not interest rates, experts said. As long as credit remains tight and banks require 20% downpayments, many buyers will remain on the sidelines.
Instead, banks should make mortgages available with a 5% or 10% downpayment, Rosen said. And while he doesn't advocate a return to the "mirror standard" (when borrowers could get money if they simply could fog a mirror), banks should allow more people to qualify for fixed-rate mortgages if they show sufficient income.
The government could also provide more incentives to home buyers. Instituting a federal tax credit at closing to help cover costs would appeal to many purchasers, said James Gaines, research economist with the Real Estate Center at Texas A&M University. A $7,500 credit approved by Congress this summer -- which is really a loan since it must be paid back -- isn't working.
"It hasn't done any good," Gaines said. "Make it a real credit for home purchases."
Another option is to provide incentives for investors to buy properties and turn them into rentals, he said. This could be done with various tax incentives, such as eliminating capital gains tax on homes owned for more than five years.
Other experts said a mortgage-rate reduction could work, but only if it were done on a temporary basis. That would prompt people to take advantage of the lower rates while they last, said Edward Leamer, director of the UCLA Anderson Forecast, a quarterly economic review.
As the economy continues to weaken, however, some economists say the answer to the housing crisis lies in stabilizing the job market. As more people lose their incomes, more fall behind in their mortgages and lose their homes. This trend will accelerate the number of foreclosures and keep prices in a downward spiral.
If people fear for their jobs, or even worse, have no job, they will not make big-ticket purchases like a home, said Christian Menegatti, lead analyst for economic research firm RGE Monitor. That's why the government should consider an economic stimulus package that will help keep both home values and employment from declining.
"Potential homebuyers may not be in the condition to buy a home no matter what because of a job loss or a drop in income," he said.

Your Personal Invitation To Win A $1,000 Home Depot Gift Card!!!

I'm connecting you with a unique opportunity!

I want to let you know how you can win a $1000 Home Depot Gift Card from Windermere!* We’ve just launched our renovated homepage at Windermere.com and are giving visitors a chance to win one $1000 Home Depot Gift Card for their next home project.

To enter, just visit http://www.windermere.com/, search for your favorite listing and email the listing to mailto:findhome@windermere.com. One entry is allowed per person per day! The sweepstakes ends on December 19, 2008.

This is my Holiday Home Depot drawing information to you.

Good Luck!!

John Lough

Open House Sunday

What does the Seattle Real Estate bubble look like to you?

Today is traditionally the day of "open houses" throughout the neighborhoods of your city.

Homes are open to the general public and usually hosted by one or more Real Estate agents. They are usually open from 1-4 pm and can be found a number of different ways. The Sunday Real Estate section of your major local newspaper has historically been the place to look. Now open house info can be found on all local Real Estate company websites as well. My personal favorite is the "have an adventure" method! I pick a neighborhood I like and go looking for open house signs on the corners and follow them to the house. This way is always fun and makes a Sunday outing of it!

Once you're there you can ask the agent for their ideas and opinions on the current market conditions as they see it. By the end of your tour of homes you may have an entirely different feeling than when you started! Should you buy or sell now or wait until later? Hmmm!

Please write in and let us know what you think.

Thanks for reading and Happy Hunting!

John Lough

Challenging Times For Local REALTORS

Slow housing market means more hours, more expenses for agents
The slowdown in the Seattle-area real-estate market means brokers and agents are putting in longer hours with clients, spending more money on marketing tools, and working with sellers to achieve the perfect price and presentation to keep homes from languishing on the market.
"This is the year of how creative can you be"
Real-estate agents to buyers: Can we talk?
Nation's Housing "Loan-modification" programs are gearing up to help strapped homeowners
New home-price reality hard to grasp
Tighter credit limits hamper mortgage chances
Many real-estate agents see bottom in early 2009, survey says
Home prices in California down 40 percent
Pros and cons of home-equity loans
Local mortgage rates
PDF Mortgage rate chart
Real estate calendar

When a house is more than a home!

From the time we’re young and purchasing property with Monopoly money, we’re taught that real estate is a valuable commodity. Yet, when it comes to buying a home, we usually have a long list of personal needs that come first—enough bedrooms and baths, a safe neighborhood, good schools, maybe a fenced yard.

It is important to make sure the home fits your family. But it’s also a good idea to keep in mind the fact that, while a home may not be your only investment, it’s probably your biggest asset, and one you should manage carefully for maximum future value.

Keep your eye on the prize.
Real estate has historically been a good long-term investment. While you may be able to get higher return on other investments over the short haul, few offer the same combination of generous returns and relatively low risk over the long term—five years or longer.

Real estate tends to appreciate ahead of inflation (typically 1 to 2 percent above) for a number of reasons, which include the old tenet of supply and demand as well as a universal need for housing and increasing costs to build new homes. But it takes time to recoup the large up-front costs of a home purchase, and it should never be considered a liquid asset.

So how is a home a good investment?
There are many financial rewards to home- ownership. As we’ve mentioned, real estate offers a decent return at moderate risk. While you can lose your shirt in the stock market, real estate almost always retains at least most of its value. Also, buying a home is kind of like having a forced savings plan—you have to make those mortgage payments every month, and as you pay down the principal, your equity continues to grow.

As many people have already discovered, you can leverage your investment in your home and borrow more against it than you could with stocks and most other investments. Most lenders allow a homeowner to borrow about 80 percent of the value of the home, but with a brokerage account, you’re limited to 50 percent of the fund’s value.

There are tax advantages to owning a home as well. When you first purchase a home, the settlement and closing costs may be tax-deductible, as are any points you pay. And the interest, property taxes, mortgage insurance and depreciation are also deductible.

How do you choose a home that’s a smart investment?
While “buy low, sell high” works in the stock market, it’s not always an appropriate strategy for real estate. Of course you want to sell for more than what you bought the property for, but the lowest price in the market isn’t necessarily a good investment.
If you can, it pays to choose the time to buy—ideally when there’s a good supply of homes on the market and when interest rates are favorable. Then sell when conditions are favorable to sell—when there’s a smaller supply of homes on the market.
There’s a lot of truth in the old adage, “location, location, location.” Look at how favorably the property is located. Is it in a good school district? Is it near businesses and major roadways? What are the property taxes like? Does the area have a low crime rate?


Home Pricing Guide
Also consider the future as well as the present. What are the plans for the neighborhood and local development? If there will soon be a glut of new homes going in, your existing structure might not be as competitive in a tight market.Even within a neighborhood, there are things to consider. The best homes for investment purposes are not the largest and most expensive in a neighborhood. In fact, often the smallest home in a good neighborhood is a smart buy, as long as it has the requisite number of bedrooms and baths. (In general, three-bedroom, two-bath homes are the most marketable, although, in more upscale areas, those numbers are often higher.) And if there are both older and newer homes in the area you’re looking in, keep in mind that while older homes may be less expensive to purchase, they also may require larger outlays for repairs and maintenance.

Take care of your investment and it will take care of you.
Once you’ve chosen your new home, be a smart investor and take care of it. Expect to make regular capital expenditures for repairs and maintenance, and if you’re going to invest in improvements, make sure they’re ones that will add value and yield a good return on investment when it comes time to sell. Again, make sure you’re thinking long-term—major home improvements rarely return 100 percent on your investment, especially in the short- term.

Profit potential shouldn’t be your only consideration when shopping for a family home, but it certainly is a nice fringe benefit to enjoy dividends when you sell. If you shop wisely and treat your home with an eye to increasing its value, you could enjoy significant appreciation over the course of your stay.

Tips
Building Equity
There are other ways to increase the equity in your home besides waiting for time and appreciation to work their magic. Here are a few:
Strategies at purchase. To start off with more equity, make a higher down payment and pay loan fees up front instead of rolling them into your mortgage.
Refinance to a shorter term. Consider refinancing with a shorter-term loan—for example, a 15-year instead of a 30-year term. If your loan balance is low, you might be able to do this without increasing your house payment.
Refinance but make the same payment. When interest rates dive, you can refinance to a lower rate but still make the same payments you were making at the higher rate.
Make extra lump-sum payments. Put down some extra chunks of cash during the year to pay down your principal. This is called mortgage cycling, and it’s not really as difficult as you might think. Consider using your tax refund, cash gifts, work bonuses, garage sale money—any kind of unexpected income.
John

Using the bottom to get up!

My name is John Lough and I'm a REALTOR here in Seattle.I decided to start a blog today as a way to try to help match people together in this down market we're experiencing. Everyone wants to know how our Real Estate market is. That information is available to us by published statistics every month. Right now the number of foreclosures is going up and home prices are going down so we are still in a declining market. This could be good for some and not so good for others. As I learn "how to blog" I'll put links to other sites with news and statistics. So, if you're a beginning investor or a seasoned veteran and want the inside info on pre foreclosures, short sales, distressed or any other type of good investment property right now, you're in the right place. On the other end of the scale, if you're in a property that you can't afford for any reason or you owe more than it's worth or you just need to sell now, you're in the right place! My hope is to create a forum where people can come together and help each other however possible with their Real Estate needs and wants. That is how the local market is going to change! There is a buyer for every piece of property out there and bringing the buyers and sellers together will help our market keep moving which is what needs to happen for this current trend to pass.

Thanks,

John Lough