It appears to be a positive outlook for our 2012 housing condition. Luckily, snow has not paved heavy enough to cause major delays in our travel. As cold as it was this past Sunday, we continue to receive a good amount of foot traffic indicating serious buyers in search of their new home, even in the midst of winter. And as most sellers would agree, those contracts they receive in the winter compared to summer are taken much more seriously and with a higher chance of settlement.

We are also seeing more and more contracts from a trickle effect of decrease in debts. More and more homeowners are able to pay off their debts and seeing credit as becoming easier and easier to achieve. Some banks are finally reaching a point of stability where they are able to get back to business and help push our housing market forward. This is a positive indication that our economy is on the path to recovery.

Another positive sign of strength in our economy is when we see buyers creating access to liquidity, by adding a home equity line of credit. Having liquid cash readily available is a very important first step when buying a home and using that cash towards your good faith shows sellers seriousness and strong motivation. And with interest rates continuing to stay at an all-time low, it’s a perfect combination for making a purchase.

Banks are now in a position where they are capable and permitting homeowners to refinance what was once a very large debt. Homeowners are now able to consolidate their multiple debts into one, taking a huge burden off of families, thereby, encouraging stability in repayment of loans and creating a sense of security.

Buyer’s affordability to purchase a home is soaring for a couple of good reasons. With discounted homes, such as short sales and foreclosure, many are finding these homes in surprisingly great condition. And what better time to purchase with financing when it’s costing just under 4% to do so right now? Not to mention the Home Loan Purchase Grant Programs available from specific lending institutions, which are not just for first time homebuyers, but repeat buyers as well.

Lastly, bravo to our private sector for creating more jobs in the latter half of 2011! As more opportunities arise for those seeking jobs, it is only another positive sign that our economy is moving on the path of recovery.

Baron Rothschild, an 18th century British nobleman and member of the Rothschild banking family, is credited with saying that  “The time to buy is when there’s blood in the streets.”  I might take that same analogy and update it a bit to the NE in 2011 and say “The time to buy is when there is snow on the ground.”  Right now, February 2011, the market is fairly sluggish with opportunities sitting longer than they should and sellers reducing lower than they’d like.  Timing the market is never a good strategy, but making good “timed” decisions can be.  If you’re thinking of getting into the market in the spring, do so now.  Get a jump start on your competition, and take advantage of interest rates that have nowhere to go but up (eventually).  Remember, the time frame from start to finish is usually 4-6 months for motivated buyers so watch your time horizon carefully and put on your snow boots and let’s move forward!

If you’d like to speak about your particular situation, reach out to me directly. Brandon@BrandonGreen.com

P.S. Are you in the market for a Pyramid? I’d be willing to bet there are some seriously good properties headed to the market for dirt cheap in Egypt here shortly…  Iraq has seen triple digit real estate price increases from the fall of Saddam to today.  I’m just saying…

Everyday I meet with people getting ready to jump into the housing market and the first thing I tell them is they need to know their credit score.  This way we have a sense of how a lender is going to view them.  Just last weekend, I had a woman tell me she was afraid to look at her credit report for fear of what is on it.

Fear?!!! Who would have thought a number could cause fear?  But that is what happens all too often.  It’s like you think you have a tumor but don’t go to the doctor to get a diagnosis because you’re afraid he’s going to tell you that you’re dying.  Worst part is that sometimes it’s just a boil he can lance off.  The situation is not helped because the credit reporting bureaus have held onto the secret of what affect credit scores like they were state secrets.  Oliver Stone should write a movie about it.

Well, FICO (Fair Isaacs Corporation) has recently released the secret and it’s like the Shroud of Turin was found all over again.  If you want to know how maxing out your credit cards for the holidays affect your numbers then go to the article posted below.  Want to know what that low credit score does to a mortgage payment get at it. 

The best part of this release is that you can now make informed decisions on how to repair past mistakes.  So lance that boil and get to work.  Homeownership may not be as far away as you think.

http://finance.yahoo.com/banking-budgeting/article/108239/fICO-reveals-how-common-credit-mistakes-affect-scores?mod=bb-creditreports

Well, honestly, who knows.  But I can offer some insight into four new trends that might give us all an indication of where things are headed. 
 
Multiple offers on bank owned properties and some traditional sales:
We are now seeing multiple offers on many bank owned properties and even some very well priced traditional sales.  This could be an indication that the buyer feels the floor has been established.  In a correcting market it is often the bank owned properties that set the new floor for the market. Buyers bidding up prices on some of these amazing deals leads me to believe that the value has returned to the marketplace and the prices can’t go much lower.  The affordability matrix is back in line in most places (income vs price of housing) which is a solid indication of coming stability.
 
Incredibly low interests rates:
No matter how you slice it, 5% is an amazing rate - especially on a 30 year fixed loan.  Current homeowners know this, thus the huge rush to refinance; yet, the buyers in the market have yet to understand how incredibly powerful a 5% rate is versus even 6%.  We are seeing some indications that it has become cheaper to buy than rent and that balance needs to tip before the buyers flood back in.
 
Fewer unrealistic sellers:
Indeed there are a lot of houses on the market, yet most of them are way over priced with sellers who don’t understand the market, or hope it to be different than it is.  However, we are seeing fewer sellers trying to “see what they can get” than last year at this time.  More realistic pricing will mean more transactions in the marketplace.  Prices are generally back to late ‘04 to early ‘05 pricing.
 
Real Estate recovery first:
It seems most people in the Obama administration understand that the path to economic recovery begins with a solid real estate market.  That premise of understanding should lead to some important government programs to incentivize buyers into the market place.  We have to be careful, however, not to create a false environment that is not sustainable.  4% interest rates, for example, may be nice, yet are unlikely sustainable - which would be damaging to the market when the rates return to “normal”.

On July 26 the Senate passed the housing bill aimed at reviving the nation’s housing market.  President Bush is expected to sign it soon. The two primary objectives of the bill are to ensure the smooth functioning of Fannie Mae and Freddie Mac, and to assist homeowners at risk of foreclosure. Here is a simple breakdown of the elements of the bill that will impact most folks who are not facing foreclosure:

The Fannie Mae, Freddie Mac and FHA conforming loan limit will be permanently increased to 115% of the median area home price from $417,000. More details will be available in the coming days as to how they will define the median area home price, but the Washington DC metro area will see a limit higher than $417,000.  You may recall this was temporarily raised in the stimulus package earlier this year.

A first-time homebuyer tax credit of $7,500 for anyone closing between April 9, 2008 and July 1, 2009 goes into effect. A first-time homebuyer is defined as anyone who has not owned a home in the past three years. The credit is reduced gradually for single filers with an adjusted gross income over $75,000 and joint filers with adjusted gross income over $150,000. The refund is actually an interest-free loan that must be paid back over 15 years in equal installments.  Logistics of this have yet to be worked out.

For 2008, the bill provides an additional $500 single filer deduction for folks who do not itemize their taxes, $1,000 for joint filers.

How much will this really help the housing market?  That remains to be seen.  The permanent increase in the conforming loan limit is the most useful for our market in the long run.

Do you think this bill will improve the housing market?  Post a comment for us to read…

I can’t tell you how many calls I get from exited buyers when Ben Bernanke and his crew cut the Fed Rate. Fed Rates tie to home equity lines of credit, credit cards, and car loans and do not directly impact mortgage rates.

Do you think the rate cuts have a physiological effect on the housing market?

From The Washington Post: Home Sales Plunge, Feed Recession Fears: “The housing market plunged deeper into despair last month, with sales of new homes plummeting to their lowest level in more than 12 years.”

With headlines and stories like this one, it’s no wonder new home buyers are hesitating to entering the market. Based on these reports, the situation sounds bleak and you’d think buying a house is the last thing you should do.

The scary part to me is that nowhere above does the article say “nationally.” The author has forgotten the adage that all markets are local and when buying in real estate the only criteria you should remember is “location location location.”

The November 2007 real estate trend report for Washington, DC, shows overall sales down 12 percent but prices up more than 7 percent. But if you drill down even further to particular zip codes you’ll see 20002 had in increase in sales of 11 percent with a decrease in sales price of 4 percent, while zip code 20005 saw an increase in sales of 7.5 percent and a sales price increase of 19.5 percent.

Is the upshot not to believe the media? No, but we need to have an eye for how the media can parse statements. Know your numbers for where you want to live. Of course that’s my job to give you the information you need.