Reno Sparks Real Estate Today

More Homeowners Choosing Short Sales Over Foreclosure

With the number of foreclosures on the market at record highs, many troubled homeowners are looking for other options to avoid the damage to their credit and to simply get out from underneath their home loan as soon as possible. They often have a better chance of qualifying for a new mortgage soon after completing a short sale than if they were to go through a foreclosure. In most cases a Bank prefers an owner to do a short sale because it saves them from the expensive cost of a foreclosure.

As a result, there are more homeowners who are avoiding foreclosure by going through a short sale. Last year, short sales accounted for about 10% of the number of homes on the market nationwide. That figure has increased by 2% and short sales now account for about 12% of the homes on the market. In some states –such as Georgia, Michigan, Nevada, California and Colorado - short sales have become still more prevalent.

In California, for example, short sales accounted for about 25% of homes sold in the second quarter of 2011, a 7% increase year-over-year. In Colorado, they accounted for 17% of homes sold (also a 7% increase year over year). Bank of America expects to complete at least 100,000 short sales this year, which is twice as many as it completed in 2009. A Well Fargo senior vice president claims that short sales have increased recently because there are notas many bank-owned homes on the market in some areas, leaving eager buyers to actively seek out short sales.

 

Foreclosures Will Clean Up The Mess

It appears people smarter than me are finally figuring out, we need to get foreclosures and short sales done to get the market back on track.

http://money.cnn.com/2011/08/31/real_estate/housing_market_foreclosures/

I’ve long said, the government needs to quit throwing good money after bad and get out of the way.  The biggest problem with the real estate market today is lack of confidence.

Banks, buyers, sellers, real estate agents, loan officers, and other industry professional have no idea what is going to happen next. Is the government going to step in with another plan? Are banks going to get more incentives? Any new programs to help homeowners on the way? Is the fed going to keep interest rates artificially low? If so how long?

So many questions and so few answers.   

Confidence and some level of predictability is key in any market.  You can be confident the market is going down, it’s going to stay about the same, or is going up. If you can feel confident in the market direction you can begin to make important decisions.  

The longer we delay the inevitable, the worse it will get. Prices will continue to fall, more vacant homes will litter neighborhoods, and we will be talking about this a year from now.

The sad part of the story is if the market was left to fall on it’s own, a recovery would most likely already be underway. 

 

Something We Haven't Seen In About 5 yrs.

This picture was recently taken in the East Sparks Foothills in the D'Andrea area. After roughly 5 years, this ghost town of developed building lots has come to life.  New model homes are being built. Foundations, framing, roofing, stucco, landscaping, trucks, and everything else that comes with a new subdivision. 

My first thought when I saw the activity starting up was why?  Why build more new homes when we still have a bunch of standing inventory, foreclosures, and short sales to work through. Why add more?   

After thinking about it more I realized, shouldn't someone buying a home today be able to buy a new one if they want?  Are all homebuyers forced to "clean up the mess" that was left behind by the market melt down and only buy distressed homes.  I say no. 

New construction is a good sign. I've found new builders are usually ahead of the market by 6 months to a year. Back in late 2005 early 2006 when the market was trying to come to grips with the new reality, builders were slashing prices and giving crazy "incentives." Free trips, landscaping, plasma tv's, and I even saw one builder giving away a Hummer H3. This was a clear sign the market was in trouble. 

Builders invest millions of dollars in new projects. They have to be confident the markets are going to get better and buyers with actually buy these homes. 

I believe this is one more sign that better days are ahead for the Reno Sparks real estate market. 

 

Money For Nothing And Your ...... Houses For?

Even with all the doom and gloom you hear about the real estate market, it's an excellent time to go house hunting right now...

 

One reason it's a good idea to buy a house – even a second house – comes from historical U.S. mortgage rates. The cost to borrow money is most often the number one consideration in home-buying and -selling process.

 

The chart below displays the past 100 years in U.S. mortgage rates. Mortgage rates spent decades bouncing around between 5% and 6%. During the inflation of the 1970s, lenders were afraid of inflation digging into the value of their loans, and rates shot into the high teens.

 

Today, things are completely different. Interest rates have been stuck in a big downtrend since the 1980s... one that has dropped even lower in the past few years, thanks to the Fed's low-interest-rate policies.

If you have a down and decent credit, buy a house. We may not see money this cheap for decades.

Oprah,The Government, And Housing

Finally somene in the government states the obvious.  

House Speaker John Boehner is "skeptical" there is "anything the government can do" to alleviate America's housing crisis.

You can read the full interview and article here.  http://www.cbsnews.com/stories/2011/05/15/ftn/main20062782.shtml

The Government is like Oprah when it comes to home ownership. You get a house, you get a house, and you get a house. Everyone gets a house. No money, no worries we have FHA for you. Banks don’t want to risk giving you a loan because you have bad credit, no problem, we have Fannie and Freddie to take all the risk out. House prices are going to high, no worries we will call the FED cartel and have them lower interest rates to make it cheaper.
The government needs to get out of the mortgage and real estate market, period. Manipulating markets leads to bigger and bigger bubbles and less and less confidence in "the markets." You can not cheat natural forces of a "free" market and economy. The more you do the worse the consequences.
So like Oprah, after 25yrs of making everyone feel good, it’s time to move on.

What Do Americans Think About Home Ownership?

Fannie Mae publishes their National Housing Survey every quarter. They survey the American public with questions concerning today’s housing market. Here are a few points from thier recent report. 

The Most Important Reasons to Buy a Home

1. It means having a good place to raise children and provide them with a good education
2. You have a physical structure where you and your family feel safe
3. It allows you to have more space for your family
4. It gives you control of what you do with your living space (renovations and updates)

The Home as an Investment

• 66% of the general population (and 71% of homeowners) believe that home ownership is a ‘safe’ investment. This is the first time since the studies inception in 2003 that this number increased.
• 57% believe that home ownership has more potential as an investment than any other traditional asset class.
• 67% think that now is a good time to buy a home

Owning vs. Renting

• 65% of renters have aspirations to someday own their own home
• 74% of renters think that owning is superior to renting (up 6% since the last survey)
• 96% of homeowners see home ownership as a positive experience (3% see it as a negative experience) while 82% of renters see renting as a positive experience (16% see it as a negative experience)
• 92% of homeowners live in a single family residence while 48% of renters live in a multi-unit building

 One thing is clear, home ownership is still very important to most Americans. 

 

New Reno Sparks Foreclosure List Posted

A new customized list of foreclosure deals in the Reno Sparks area is now posted over atwww.4renohomes.com

Some great deals. Over 200 homes and condos. Starting at $21,000 up $749,800.

This Foreclosure List gives you access to inside information normally available only to real estate agents and industry insiders. Our list contains homes that are on the market now, homes you can look at today, and purchase today.

You can get the list here Reno Sparks Foreclosure List

 

Home Ownership Down - Lowest Since 1998

Many in Washington are debating whether government programs designed to promote homeownership are worth the risk and costs. Many have suggested pulling the plug on Fannie Mae and Freddie Mac, and seriously reforming FHA.   

I believe the government has no place in homeownership. Despite all the programs and efforts to make homes affordable and give everyone a chance at the “American Dream,” homeownership rates are at their lowest level since 1998 and are expected to go lower.

According to the census bureau homeownership rates were 66.4% at the end of the first quarter. This rate is well below the pre-boom level.

So let me get this straight, after all the real estate hell most of us have faced the last decade plus, fewer people own homes today than they did in 98?

We can end the debate right there. If homeownership was the goal, the government programs failed miserably. Not the mention the hundreds of billions of dollars tax payers (the American people) are on the hook for. Fannie, Freddie, banks, AIG, etc..  We would have been better off just buying subprime borrowers homes for cash. At least they wouldn’t be getting foreclosed on, and driving the market down.

You may be saying, “wait a minute, aren’t you a real estate agent?”  “Don’t you want as many homeowners as possible?” 

I want a solid and stable real estate market. One that is made up of homeowners and investors that have some “skin in the game” and have demonstrated the ability to save money, manage their credit, and make good financial decisions. I want a market where owning a home is an earned privilege and not an American right.  A solid real estate market will benefit everyone.  Buyers, sellers, banks, title companies, insurance agents, construction people, cities (property taxes), and yes real estate agents.

 

New Reno Sparks Foreclosure List Posted

A new customized list of foreclosure deals in the Reno Sparks area is now posted over atwww.4renohomes.com

Some great deals. Over 250 homes and condos. Starting at $14,900 up $688,800.

This Foreclosure List gives you access to inside information normally available only to real estate agents and industry insiders. Our list contains homes that are on the market now, homes you can look at today, and purchase today.

You can get the list here Reno Sparks Foreclosure List

 

Former Fed Chief Says Gov. To Blame For Economic Lag

If you follow this blog, you know I have been all over the government and their "fixes" for the housing mess. These programs have done nothing but prolong the inevitable. Not only that, uncertainty is at an all time high. Think about it, has the tax credit, HAMP, HAFA, and countless other programs made the market better? No! Not to mention billions of tax payer dollars that have been flushed down the drain. The longer the market chokes on short sales, foreclosures, and shadow inventory the lower prices go. The lower prices go the more people go under water, the more people give up, and the more inventory comes on the market. The madness has to stop. The government has to get out of the way and let the market correct. The sooner we deal with the disease (prices) and quit treating the symptoms (appraisals, interest rates, refis. etc.) the sooner the market will get healthy.

It appears I am not alone in my opinion -    

Former Federal Reserve Chairman Alan Greenspan said yesterday that massive government intervention to save the economy is to blame for the lagging recovery.  Greenspan argued for less government intervention to get the recovery rolling and businesses investing in equipment and plants.  "What we need to do now is to calm down; let things move by themselves," he said at a forum at the Council of Foreign Relations. "And indeed the rate of activism has decreased significantly and the ratio of capital flow has inched back up."  Greenspan's views are starting to gain an audience again. Many Republicans share his opinion that intervention has created uncertainty and deterred private sector investing.  Greenspan targeted deficits created by the $787 billion 2009 Recovery Act as the main culprit behind the current sputtering recovery.

Why are deficits to blame?  Because the Treasury Department's borrowing "crowds out" companies from finding similarly low interest rates to borrow funds for capital investments on equipment and plants.  At the same time, he acknowledged that America's biggest and most-trusted companies aren't having trouble finding good interest rates. But smaller companies, he said, are struggling.  "Microsoft is not being crowded out," Greenspan said. "It's those who find an 8% or 9% interest rate, which are required of junk bonds and small businesses, which is too high."  He said he estimates that government borrowing is effectively reducing long-term capital investment by one fifth.  But Greenspan goes further in his criticism of government intervention, also blaming housing programs for having delayed and prolonged foreclosures. He said such efforts have created uncertainty about when the housing market will hit rock bottom, at which point speculators can rush in and start buying up houses.