Be a Real Estate Expert…on the Economy

Commentary by Margaret Kelly

RISMEDIA, April 8, 2008-It wasn’t that long ago that being experts on local real estate was enough to propel many great agents to the head of the pack. But these days, that simply isn’t enough. You also have to understand-and be able to explain-broader economic realities.

In the current buyers’ market, you are likely encountering prospective homeowners who won’t budge from their spot on the sidelines. The decline in the U.S. homeownership rate to 67.8%, as recorded in the fourth quarter of 2007, represents the largest annual decline ever seen, according to the U.S. Census Bureau. The homeownership rate, which peaked at 69.2% in the second quarter of 2004, has been edging down ever since.

But the desire to own a home is as strong as ever. The problem is that many would-be buyers want to wait until the market hits bottom. They are waiting for the lowest interest rates to intersect with the lowest home prices. Unfortunately, many will wait too long and jump into the game after the market begins to rebound. The reality is that there are bargains out there for buyers right now.

Your job is to convince them of that-which you can do with the right facts. By keeping pace with analysis and statistics for the nation, your region and local market, you can form a realistic strategy for helping buyers understand today’s market.

Unlike the early 1980s buyers’ market, which was caused primarily by high mortgage rates and crippling unemployment, today’s market is the result of several converging events. Marginal economic growth, questionable lending practices, subprime mortgage shenanigans and tight credit have combined to create the market conditions through which you currently navigate.

But people are still buying homes. According to the National Association of Realtors, existing-home sales are projected to reach 5.4 million in 2008 and around 5.6 million in 2009.

To better understand today’s potential buyers, you might try finding a homeowner or investor-not a flipper-who purchased a house during the early 1980s. See what his or her perspective is looking back on that choice today, and share that viewpoint with your current buyers.

Explain to your clients the risk of trying to time when prices or interest rates will hit rock bottom. With your understanding of market conditions from a long-term perspective-looking forward and back-you can share pertinent knowledge with hesitant buyers. Take charge of your business and see the results quickly.

Margaret Kelly, CRB, is chief executive officer of RE/MAX International.

For more information, visit remax.com.

Home improvement on the cheap

To save: Try house-parts recycling centers
You pocket: 50% to 75%

Look for house-parts recycling centers in well-heeled zip codes. A growing number of them now stock gently used high-end appliances from the likes of Viking and Sub-Zero.

"When a multimillionaire buys a house, he or she redoes the kitchen, and that usually means replacing the perfectly good appliances that the previous owner installed just a few years earlier," says Steve Feldman, president of the nonprofit salvager Green Demolitions.

He has hundreds of ranges, cooktops, wine fridges, vent hoods, and warming drawers that have been donated by homeowners or dealers. Donors get a tax write-off, and you get a deep discount on the resale.

Just keep in mind that these appliances come without warranties, so have them checked out--and possibly tuned up--by a repair pro. Still, if you're getting a nearly new Viking range for thousands less than retail, you'll come out way ahead.

By Josh Garskof, This Old House Magazine

100 best places to live and launch

1. Bellevue, Wash.

1 of 100
Population: 111,608
Pros: Talented workforce, growing downtown
Cons: Pricey homes, high cost of living

Like many of the places on our list, Bellevue is a city in transition: no longer a bedroom community, but not yet a crowded, expensive metropolitan hub. Bellevue has grown with unusual grace in recent years. Huge corporations exist symbiotically with startups, a booming downtown abuts healthy residential neighborhoods, and the rising skyline is tempered by an abundance of parks, as well as lakeside and mountain views. Flash retailers such as Neiman Marcus draw regional shoppers, but Bellevue's excellent healthcare and schools are key attractions for relocating families.

While local businesses must pay the statewide Business and Occupations tax on their gross receipts, there's no corporate income tax. Businesses with less than $135,000 in taxable revenues (the highest threshold in the area) don't have to pay the B&O tax. Easy airport access and a highly skilled workforce make Bellevue an attractive option for startups looking to break big. -Mina Kimes

Source:

Foreclosure crisis fix faces murky future

By Jeanne Sahadi, CNNMoney.com senior writer
April 8, 2008:

NEW YORK (CNNMoney.com) -- The Senate on Tuesday is expected to pass a package of housing measures intended to stabilize the housing market.

But that bill - crafted in 24 hours of bipartisan negotiation last week - faces an uncertain fate as the House gets ready to have its say on how best to address the nation's foreclosure crisis.

The House is expected to craft its own bill and not simply follow the Senate's lead. In addition, House leaders have indicated they might also pursue proposals to address other problems in the economy - a move that could complicate speedy approval of any foreclosure provisions.

"This is not a quick, easy conversation to have," said Clint Stretch, managing principal of tax policy at Deloitte Tax.

But the pressure is on for lawmakers to act swiftly to prevent a substantial number of foreclosures. Nationwide, 1.5 million subprime adjustable-rate mortgages will reset to higher interest rates this year, putting many of those homeowners at risk of falling behind on their payments and losing their homes.

Critics of the Senate package say the measures do more for businesses and lenders than they do for homeowners at risk of foreclosure. If House leaders have their way, the House bill will contain measures more targeted to keep troubled borrowers in their homes.

The House's efforts on housing have so far been led by Financial Services Chairman Barney Frank, D-Mass. Frank is scheduled to start two days of hearings on Wednesday to debate his proposal to let the Federal Housing Administration (FHA) insure $300 billion in troubled loans if lenders voluntarily write them down to at least 85% of the homes' appraised value.

Some political observers say that the FHA proposal may be the centerpiece of the House bill. But the Senate chose to exclude in its housing package a similar proposal from Senate Banking Chairman Chris Dodd, D-Conn.

Meanwhile, Charles Rangel, D-N.Y., the chairman of the powerful House Ways and Means Committee, will on Tuesday propose the Housing Assistance Tax Act. That bill is expected to offer measures that directly benefit homebuyers and homeowners and may also include an expansion of the low-income housing tax credit.

Stimulus 2.0 on tap?

Looking beyond the mortgage crisis, House Speaker Nancy Pelosi, D-Calif., and other House leaders will seek to put together an economic stimulus bill that is expected to contain measures that were cut from the first stimulus bill passed in February.

They are likely to call for an extension of unemployment benefits, an increase in food stamp payments and more funding for infrastructure repair. Whether such measures would be included in a housing package or passed separately isn't clear yet.

Congressional leaders are scheduled to meet with President Bush on Wednesday.

"We will urge him to focus on the economy and work in a bipartisan manner on a new stimulus package to help America's working families. We must work together to restore consumer, market, and worker confidence," Pelosi and Rangel said in a joint statement Monday.

The president, meanwhile, will likely urge Congress to let the first stimulus package take effect before deciding what to do next. Taxpayer rebates, the centerpiece of that legislation, will start going out in May.

"My only advice to [Congress] is, one, make sure you give the pro-growth package that was passed overwhelmingly a chance to work, see what the effects are," Bush said Monday.

Source:

Market Conditions: Phoenix, Arizona

April 8, 2008

Bob Stahl reports that the sales volume in the Greater Phoenix area resale market improved in February, with 3,700 recorded sales compared to 3,300 in January.
FREE 2008 Agent Business Plan

January and February are traditionally slower months for home buying, he says, but these early signs of improvement in the market could portend strong sales numbers in March and April.

The number of homes sold has increased in every major city in the valley, and Stahl says that as this market sheds excess inventory it could be moving towards a strong turnaround.

And in addition to that, the median home price for the Greater Phoenix area is still 10 percent higher than it was just three years ago, making this area a great place for investment.

Mesa remains a particularly good place for homebuyers, as median home values for the area continue to stay flat.

How To Finance Property Development The Easy Way

Author: Sean Horton

The easiest way to learn how to finance property development is to go online with a specialist website. A website such as this will offer all the information needed for you to understand what you are taking on and how to get the best deal. By choosing to go with a broker when it comes to taking out borrowing you can save time and money even with the fees that you will have to pay.

Property development finance can be taken out as commercial or residential loans depending on the project. Each will be based on the individual's circumstances which will determine how much you will pay when it comes to the interest rates. Interest rates will usually fall between 1.5% and 2.5% above the base rate which is set out by the Bank of England. Factors which are taken into account when setting the rate will include the experience one has when it comes to property development. They will also be based on the industry sector at the time and the proposal you are putting forward for the loan.

A broker will be able to explain and work out a proposal with you which includes the valuation of the property you are interested in. Lenders will be able to work quicker if a broker has helped to set out the proposal and it has been validated. This will also get the project off to the best start possible and make things go more smoothly. Learning how to finance property development is not the easiest of things to understand and it is essential you take all the advice you possibly can.

When it comes to amount a lender will allow you to borrow then this will be based on the loan to project costs. These are influenced by the gross property development values which are projected. However you can expect around 70% to 75% of the price of purchase and the costs of building. Some lenders are prepared to give 100% funding but you will have to meet certain criteria and have an excellent track record in property development.

Usually the amount you will need to borrow will be in the region of hundreds of thousands of pounds and due to this lenders offer an interest only loan. What this means is that you will borrow the amount and then pay only the interest which this accumulates over the term of the loan. However the capitol will have to be repaid in full once the loan had come to full term. The lender will usually ask for proof that you have the means of paying this before signing off the loan. You can take a repayment loan but the repayments will be significantly higher than those of an interest only loan. However the advantage to this is that you will pay off the total of the loan over the term you take it out for. Each repayment will take a little off the interest and the capital.

These are just some of the reasons why it imperative to get all the help you possibly can when it comes to learning how to finance property development the easy way. Other factors which you have to consider include choosing between a fixed and variable rate of interest and making sure additional costs have not been included in the cost of the borrowing.

Article Tags: Mortgage Advice

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