The PRICE is the same as 2003 prices, but the COST is even less. According to the most recent S&P Case Shiller price index, residential real estate values have returned to 2003 PRICEs. That, in itself, says something. However, when you factor in mortgage rates, the case for buying a home today becomes even more compelling. In 2003, 30 year mortgage rates stood at 5.88%. Today, they are 4%. How does that impact the actual COST of a home? Well, on a home purchased for $250,000 you save $285.30 a month, that equals over $3400 a year, and over $100,000 over the life of a 30 year mortgage! You buy the home for the same PRICE, but the COST is over $100,000 less. So this is why so many financial advisers are saying that this may be one of the greatest times in history to purchase a home.
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 I write a post like this, I 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 I will not be covering the projections of those groups. Instead, I want to share the beliefs of other organizations.
Home Sales Stabilize in 2011 as Median Prices Fall
Source: http://www.wra.org/hsrdecember2011/
Date: January 23, 2012
MADISON, WI – The Wisconsin real estate market improved in 2011 with home sales totaling slightly above 2010 levels, according to a year-end report released by the Wisconsin REALTORS® Association (WRA). Sales of existing homes for 2011 were 0.2 percent above 2010, and the median price of homes fell 6.4 percent to $132,000, according to the report. Monthly trends in home sales ran well above 2010 levels throughout the second half of the year.
MADISON, WI – For the fourth straight month, Wisconsin’s monthly home sales outpaced last year while median prices continued to fall, according to data released by the WRA. Existing home sales increased 13.5 percent in October compared to October 2010, and median prices fell 7.8 percent over the same period to $129,000. Visit the WRA website to read the full report and find monthly and quarterly housing data for your county.
“The millionaire says to a thousand people, ‘I read this book and it started me on the road to wealth.’ Guess how many go out and get the book? Very few. Isn’t that incredible? Why wouldn’t everyone get the book? A mystery of life.” – Jim Rohn
Mr. Rohn explains that if we want to make the right financial decisions in our lives, we should depend on the same sources the wealthy read. This past month four different iconic financial resources said the same thing:
We believe very strongly that now is the time to buy a home. Some will say we are just saying this to create real estate transactions and commissions. Because of that, today we will quote what those outside the real estate profession are saying to the people who look to them for financial advice.
“It’s an excellent time to buy a house, either to live in for the long term or for investment income…Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.”
In an article two weeks ago, MarketWatch.com (the on-line blog for WSJ) told their readers:
“Now could be the best time in history to buy a home.”
The National Association of Realtors (NAR) released their Existing Sales Report two weeks ago and in the report they discussed a troubling trend: cancelled contracts are increasing dramatically. NAR defined the issue:
“Contract failures – cancellations caused largely by declined mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price.”
NAR explained that 18% of all contracts were cancelled in August. This compares to 16% last month and 9% in August of 2011.
The percentage of cancelled contracts has doubled in the past year!!
It is extremely important that both buyers and sellers pick the right real estate professional to assist them with their real estate needs.
BUYERS
Make sure your agent can not only help you find the home of your dreams but also find you professional assistance with all aspects of the transaction (mortgaging, title, etc.)
SELLERS
Realize that your agent must sell the home twice:
to a qualified buyer
to the bank (through the appraiser).
The second sale may be more difficult in this market than the first.
Bottom Line
It is imperative in this housing market that both buyers and sellers use a true real estate professional to guarantee that the deal will actually reach the closing table.
The Office of the Comptroller of the Currency released their Second Quarter 2011 Mortgage Metrics Report last week. In the report, they covered the success the banking industry is having in each of several categories regarding the current housing crisis. Here is what they found:
To all those who have declared the real estate market dead, we want you to know that over 13,780 houses sold yesterday, 13,780 will sell today and 13,780 will sell tomorrow.
Today I turn to an email that I received entitled, “Fear or Trust.” The author is unknown. After reading the email I couldn’t help but to blog about it. I re-wrote it to add in my theory of Chicken Little and added my own flair. However, I want to give credit where credit is due and disclose that this is not all my own writing. If I knew the author I would love to say, “Man, you are right on with your thinking.” Here we go …
Fear or Trust
Let’s get Chicken Little.
You all know the story … young chicken, fearful of the worst, runs around declaring, “The sky is falling! The sky is falling!” I think we have too many Chicken Littles running around. No wonder the economy is still facing challenges! The 24/7 media is creating a frenzy of panic and fear that fills the collective psychology of the country with gloom and doom. Some people are more stressed and fearful than they have ever been in their life.
There has been much confusion as to where housing prices are headed. Today, I want to give my opinion on this subject for the short term based on what I learned at a recent real estate seminar I attended. I believe sellers have a window of opportunity for the next 90-120 days in which to sell their homes for maximum price. I believe there will be increased downward pressure on home prices later this year and the first half of 2012.
Families are trying to determine whether or not now is the time to buy a home. Some are advising these families to sit out the current real estate market and instead rent for the next year or two. We do not agree with this advice. Homeownership means a lot to a family. We also realize that the financial aspects of purchasing a home today can be a concern. The challenge is any advice given by someone in the real estate community is immediately dismissed as self-serving.
For this reason, we want to give you the advice of three entities not involved in real estate sales: (more…)
Business School professors Eli Beracha of East Carolina University and Ken H. Johnson of Florida International University have done extensive research on which makes more sense financially: to rent or own a home. They published, Lessons from Over 30 Years of Buy versus Rent Decisions: Is the American Dream Always Wise?In their paper, the professors do not dispute the social benefits of homeownership:
“Home ownership is touted as the “American Dream”. It is credited with enhancing wealth, increasing civic pride, improving self-esteem, crime prevention, child development, and better educational outcomes, among other benefits. This paper does not dispute any of these claims.”
What the professors were proposing is that homeownership is not a better investment strategy than renting. The first of the two major findings was:
There are those currently debating the financial advantages of owning a home. Some are looking at studies and reporting that homeownership has never really been a great investment.
One of these people is Jack C. Francis, a former Federal Reserve economist and professor at Baruch College. He said in a recent CNBC article:
“For generations, parents and grandparents have been telling us that the way to get ahead was to buy a house and keep making payments with a fixed interest rate and after 20 or 30 years it would be way up in value and that was your nest egg in old age. You could either live in it rent free or sell it and use the proceeds to rent an apartment.”
The article goes on to explain the rest of Mr. Francis’ comment: (more…)
A house in DeForest that we listed on Monday, received an accepted offer by Wednesday! With five showings the day after it listed we generated an offer, and a few hours after receiving the offer, our seller accepted. A few lessons here; 1) price it right and it sells fast. 2) plenty of buyers are in the market for a home. 3) when offer comes in, take it seriously, move swiftly, and diligently work to bring it together.
Congratulations to the buyer and seller of this transaction. The buyers are excited they found the house they were looking for. The sellers, of course, are elated their house took 2 days to sell.
The conventional wisdom when selling a home has always been to wait until the ‘Spring Buying Season’. Over the years, that has seemed to make sense and is now accepted as a good strategy for those who want to sell their house and receive the best possible price. This real estate market has shattered many previously held beliefs. The wisdom of waiting for a spring market is another belief that is about to fall. Here are five reasons why?
There are going to be some tough headlines written about the housing market over the next several months. They may create apprehension and in some cases outright fear. The good news is these headlines will not reflect what is actually taking place in real estate. Some in the industry say we should just ignore this media blitz of problematic stories. That would be similar to trying to ignore a growling creature lurking in the shadows in the corner of the room. Instead, we want to shine a bright light into that corner to honestly evaluate how dangerous the creature actually is.
THE FACTS: The National Association of Realtors’ Pending Sales Report is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed.
The pending sales reports covering September, October and November will be UGLY. The reason is that the houses going into contract in those months this year will be compared to the same months last year. In 2009, sales were skyrocketing as we headed toward the original termination of the Homebuyers’ Tax Credit on November 30. It will appear as though this year’s sales fell off a cliff in comparison. The headlines will be brutal.
Neil came out to our home and went through a complete run down of everything he does to sell a home. We walked through the home and he gave us ... more
5.0/5.0
by AHarr
67947
Neil is a rare combination ... integrity, likeability, professionalism. He really cares about his clients; he isn't in it just to make a buck. He ... more
Families are trying to determine whether or not now is the time to buy a home. Some are advising these families to sit out the current real estate market and instead rent for the next year or two. We do not agree with this advice. Homeownership means a lot to a family. We also realize that the financial aspects of purchasing a home today can be a concern. The challenge is any advice given by someone in the real estate community is immediately dismissed as self-serving.
Business School professors Eli Beracha of East Carolina University and Ken H. Johnson of Florida International University have done extensive research on which makes more sense financially: to rent or own a home. They published, Lessons from Over 30 Years of Buy versus Rent Decisions: Is the American Dream Always Wise?In their paper, the professors do not dispute the social benefits of homeownership:
Recent Comments