Has the Housing Market hit bottom? There is a ray of hope on the horizon.

Has the Housing Market hit bottom? There is a ray of hope on the horizon.

The question that has been on the lips of real estate investors and homeowners alike is “Has the real estate market hit bottom?” It can rightly be said that we have made steps in the right direction with the release of the Pending Home Sales Index report on August 29, 2012.  I was very excited when I saw the numbers and could not wait to write about it. Read on to see why it matters to real estate investors.

The Pending Home Sales Index – What is it?

The Pending Home Sales Index was developed by the National Association of Realtors and is the leading indicator of housing activity and. Its purpose is to indicate existing home sales but not new home sales. If for example, if a contract is signed for the sale of a home but it is not yet closed, it is rated as pending. Under normal circumstances, it takes between four and six weeks to close such sale.

There is a relationship between housing and the general state of every given economy. It serves as an indicator for economic turning points.

 “A sharp drop in housing demand typically acts as a warning signal of economic slowdown. Buyers are reluctant to purchase houses when interest rates are high, disposable income is low, or consumer confidence is low. Conversely, a rebound in the housing market is often a leading indicator of an economic recovery.”

What happened to the Pending Home Sales Index in July?

The latest good news out of the housing sector is a 2.4 percent rise in the pending home sales index, a gain that points to further improvement for existing home sales. The year-on-year rate of plus 12.4 percent is the highest in nearly 2-1/2 years. Regional data show gains in 3 of 4 regions led by the South which is the largest region. Sales of existing homes have been trending higher for the last year though gains have been slightly lagging those for new homes.

 

Prior

Consensus

Consensus Range

Actual

Pending Home Sales Index – Level

99.3 

 

 

101.7 

Pending Home Sales Index – M/M

-1.4 %

1.0 %

-1.5 % to 3.5 %

2.4 %

 Released On 8/29/2012 10:00:00 AM For Jul, 2012

According to the statement released by the National Association of Realtors, “Pending home sales rose in July to the highest level in over two years and remain well above year-ago levels. The index is at the highest level since April 2010”, says the chief economist of the National Association of Realtors, Lawrence Yun. He also said…

While the month-to-month movement has been uneven, we now have 15 consecutive months of gains in contract activity. All regions saw monthly increases in home-buying activity except for the West, which is now experiencing an acute inventory shortage.”

With the existing home sales projected to increase by 8 or 9 percent in 2012 and 7 to 8 percent in 2013, it becomes an indicator that there will be up to 10 percent increase in home prices over the next two years.

Why do Investors Care?

The Pending Home Sales Index is an accurate gauge of both the demand for housing and the economic momentum. How is this? Simply put, “this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments.”

With the economic backdrop being the major influencing factor on financial markets, the output on home re-sales is directly linked to stocks, bonds and commodities. This means that the trends recorded in current home sales data should serve as indicators to mortgage lenders, home builders and home furnishing companies.

Yun, of the National Association of Realtors, goes further to state that…

“Falling visible and shadow inventories point toward continuing price gains. Expected gains in housing starts of 25 to 30 percent this year, and nearly 50 percent in 2013, are insufficient to meet the growing housing demand.”

Sound Financial Enterprise, LLC

PO Box 8611, Tacoma, WA 98419

Phone 253-215-4115;

http://soundfinancialenterprise.com/home.htm

http://www.facebook.com/#!/gordon.macdonald.3745

Graphic, excerpts and quotes from the following sources:

http://mam.econoday.com/byshoweventfull.asp?fid=451716&cust=mam&year=2012&lid=0#top

http://www.dailyfx.com/calendar/

http://www.realtor.org/news-releases/2012/08/july-pending-home-sales-rebound

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What Influences Consumers to Buy or Rent Their Homes?

What Influences Consumers to Buy or Rent Their Homes?

In discussing what influences consumers to rent a home or buy a home, it would interest you to know that almost every American citizen desires to be a home owner, not minding the biggest housing crisis that has rocked the country since the Great Depression. This conclusion was reached by Fannie Mae, the government-owned housing agency, after a recent study which at the same time, attempted to answer major real estate questions like: What influences consumers’ current home ownership status? What would motivate us to buy versus rent in the future? And are we influenced by unconscious biases that lead us to make less than ideal choices, such as buying too much house, or others that might prevent a well-qualified renter from buying at all? As a real estate investor, the answers to these questions could influence me on how I do marketing, what houses I invest in, and in what sector of the housing market I focus.

 One of the reasons why Fannie Mae had to investigate and find answers to these questions bordering mainly on the issue of whether to rent a home or buy a home is because the answers to these questions have implications for housing policy makers and the industry. In the course of the survey, it was determined that a higher percentage of Americans would love to be home owners.

“About 85% Americans said owning makes more sense than renting over the long term, and 64 percent of those polled said that they would buy a home if they were going to move.”

In carrying out the survey, Fannie Mae took a critical look at the three different groups of consumers in real estate: renters, homeowners with a mortgage, and those who own their homes outright. “The Fannie Mae National Housing Survey polls 1,000 adults each month across the United States with more than 100 questions about the economy, household finances and owning and renting; this study’s full-year data includes information from more than 12,000 people.”

“It was determined that demographics, which includes but not limited to marital status, employment status, income and age were the major factors that influenced people’s desire to be homeowners and as such, play major roles in deciding whether to rent a home or buy a home.”

The survey also revealed that homeowners with mortgages were mostly married, middle-aged and working full time with higher incomes. For renters, it was the other way round. As for the outright homeowners, they were mostly the retired, older and widowed citizens who are way past their peak earning years. The study went further to state that “renters’ and people with mortgages’ who had ‘intentions’ to buy or rent as their next move were largely driven by their financial and housing attitudes.” Therefore, the most influential factor as far as the three groups are concerned became the long term financial benefits of outright ownership of a home.

“…the most influential factor as far as the three groups are concerned became the long term financial benefits of outright ownership of a home.”

This means that as a real estate investor, it becomes necessary that you know some of those things that would influence the people’s decision to buy a home instead of opting to rent a home. The ease with which the people get mortgages will go a long way to determine the percentage that would settle for mortgaged homes.The Fannie Mae survey also found that “once consumers buy a home, get a mortgage and have a positive experience owning, they wanted to continue to own. But concerns about affordability — both for the home purchase itself and upkeep — were a major factor that discourages renters from taking the plunge.” 

“…once consumers buy a home, get a mortgage and have a positive experience owning, they wanted to continue to own. But concerns about affordability — both for the home purchase itself and upkeep — were a major factor that discourages renters from taking the plunge.”

The study also states that “For renters and mortgage-owners, aspirations for and belief in home ownership play a major role in decision-making, possibly forming a ‘home ownership optimism’ in determining whether they expect to own or rent in the future. It is possible that many of these drivers, especially the attitudinal ones, act as automatic or unconscious biases that lead consumers to less fulfilling and less successful housing choices,” the researchers concluded, stating that further research is necessary.

In all, the survey respondents stated that exposure to default, perceived appreciation or depreciation in home value, and self-reported underwater status had only a minimal effect on predicting whether they intended to buy or rent for their next move. Are you a renter or a home owner? What influenced your decision to rent a home or buy a home? Are you satisfied with the decision you made as a renter or home owner? Has your views on outright home ownership been altered by the housing crisis? 

Sound Financial Enterprise, LLC

PO Box 8611, Tacoma, WA 98419

Phone 253-215-4115;

http://soundfinancialenterprise.com/home.htm

http://www.facebook.com/#!/gordon.macdonald.3745

This post was originally written and published on CNBC on Tuesday, 7 August, 2012 by Tara Siegel Bernard of The New York Times.

Million-Dollar Forclosures – The Rich are Walking Away

Million-Dollar Forclosures – The Rich are Walking Away

Since the housing bubble burst five years ago, there has been visible increase in the number of wealthy American families that are losing their homes to foreclosure and in most cases, such foreclosures are said to be mostly voluntary.

From the report put together by RealtyTrac, an outfit geared towards tracking foreclosures, more than 36,000 homes worth about a million dollars were either foreclosed or served with a notice in 2011. Although the percentage falls below 2% of total nationwide foreclosures, it is higher in comparison to preceding years.

According to the vice president of RealtyTrac, Daren Blomquist, “These properties are accounting for a bigger piece of the foreclosure pie.” This can be seen from the report that among the foreclosed properties, there was 115% increase in foreclosure of properties that are valued at a million dollars and above beginning from 2007. The percentage is even higher in the case of homes that are valued at $2 million and above at 273%. Such cannot be said of the homes valued between $500,000 and $1,000,000 since their foreclosure rate reduced by 21%.

It would also interest you to know that a lot of homeowners within the multi-million dollar range were until recently, able to postpone every process that has to do with foreclosure of their properties. According to Blomquist, “they had more financial means to hold out against default.” It was also determined that those homeowners who made fair deals with the lenders were the ones that had other means of income, according to the President of Esslinger-Wooten-Maxwell, a Miami-based real estate firm, Ron Shuffield. It is also reported that 9% of the total foreclosures recorded last year in Miami was represented by properties valued more than $1 million.

Saddled with bloated mortgages after a long run up in property values, many high-end homeowners have chosen to pursue a “strategic default.”

But with a recovery in the housing market still years away, foreclosure has turned out to be a worthwhile option after all. Saddled with bloated mortgages after a long run up in property values, many high-end homeowners have chosen to pursue a “strategic default.” Even though they can afford the monthly mortgage payments, they still decide to walk away from their home because they owe more on the property than it is worth.

According to a national real estate and mortgage expert with Wilshire Holding Group, a Florida-based real estate firm, Stuart Vener, “In the lower-priced houses you’ll see more people defaulting because they can’t afford the payments and it’s a choice between feeding their family and paying the mortgage on a home that’s under water.”

“In million-dollar homes, you’re looking at people who can afford it, but they have to make a business decision: Does it make sense to make payments on a mortgage when the home is worth less than they owe?”

He goes further to say, “In million-dollar homes, you’re looking at people who can afford it, but they have to make a business decision: Does it make sense to make payments on a mortgage when the home is worth less than they owe?” In most cases, it has been said that the best financial decision to take in such cases is just to walk away. According to Blomquist, foreclosures take up to 348 days to be completed, the homeowners have enough time to pack up their belongings and leave. This is just equal to a whole year of free housing for the owners of such foreclosed homes.

Blomquist further states that the fact that a few houses were foreclosed within a given wealthy neighborhood does not in any way have any negative impact on the values of the surrounding homes. Vener says, “You’re not going to see the weeds growing.” He goes further to state that on the other hand, foreclosed homes are an opportunity for real estate investors to make good bargains. He sums it up this way, “In a good way, this is going to drive turnover.” 

Contact Sound Financial Enterprise, LLC for more information about your housing needs.

Sound Financial Enterprise, LLC

PO Box 8611, Tacoma, WA 98419

Phone 253-215-4115;

http://soundfinancialenterprise.com/home.htm

http://www.facebook.com/#!/gordon.macdonald.3745

First Published: February 23, 2012: 5:54 AM ET

By Jessica Dickler @CNNMoney February   23, 2012: 10:09AM ET

Article found  at: http://money.cnn.com/2012/02/23/real_estate/million_dollar_foreclosures/index.htm?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29

Bandit Signs – Get Creative!

Bandit Signs – Get Creative!

Most real estate investors have put up bandit signs to generate leads. If you have done that, you probably have also experienced calls from irate property owners telling you to remove the sign or they will call the cops. Part of putting up bandit signs seems to be avoiding the bandit sign police. I only had to put up bandit signs one time and my mind started to think, “There has to be a better way!” Here was my thought process: I often park my car in high traffic areas; I have bandit signs; so why can’t I put the two together to get my signs seen? Voilà! …and out popped this idea.

What you see below is my brain child – a twist on bandit signs where I have not gotten calls from the bandit sign police and I even got my first lead last week. The pictures below will show you how you could implement this in your market. I figured out a way to mount four bandit signs on top of my vehicle. It is pretty easy to do, just keep reading.

Frame it! First, I built a 2×2 frame that that would hold four bandit signs. I wanted people to be able to see them from any direction.

 

Get it up there! I placed the sign about 6” above the top of my car. I did that by making the frame with four legs. I had to cut the two legs on opposite corners a little shorter to account for the curvature of my vehicle roof.

 

Protect your car! I put rubber pads on the bottom of the sign frame, similar to what you put on your table legs to protect your floor. I drive a SUV and it is a bit of a stretch to reach it. The rubber pads definitely have saved the paint.

Screw down the sign! I used four broad-headed screws to mount the sight to the frame – one on each corner. More screws would not be good because the plastic corrugated material expands and contracts with changes in temperature.

Protect your bandit sign! I had to keep the sign from blowing off the top off the car. What I came up with will do that just fine, but it would not do much against the ne’er-do-wells that are bent on breaking things.

I used vinyl-coated wire cable and created two eye loops. One is attached to the sign and the other is for a lock. This seems to do the trick. I haven’t had any trouble with it.

Park Right! I have been parking my vehicle at a transit center and park-n-ride lot where there is a lot of traffic from all over the region. When I go the mall, I put it on top of the car. Crowds are good!

Go Mobile? I don’t know about that; I have never tried to drive around this with the bandit signs on the top of my vehicle. If that were to work, I think I’d have to strengthen the frame with some cross braces, and attach the signs with something more substantial.

Give it a shot and let me know if you have any improvements. More importantly, I want to know if you are getting any leads! Contact me by phone, email, or on Facebook.

Sound Financial Enterprise, LLC

PO Box 8611, Tacoma, WA 98419

Phone 253-215-4115;

http://www.facebook.com/#!/gordon.macdonald.3745

Good Credit Score: Key to Getting Those Great Home Loan Interest Rates

I have been reading lately about mortgage interest rates and how they are at record lows. I’m sure you have also heard how hard it is to get a home loan to take advantage of those rates. I want to share some financial tidbits with you and help you find the key to unlock those rates. Although this may seek like a no brainer, it is always good to have a remainder.

Credit scores have become very important to each of us whether we know it or not.  As I work with people on improving their housing situation and overall financial picture, credit scores have become an important factor in lowering their costs and improving options.  If you are concerned about this; let’s talk. 

A good Credit Score is the biggest factor to get the loan so you can get the home of your dreams. Here is a primer on how to do it.

Loan Repayment History

One of the obvious factors is repayment history on loans.  If you are late on paying a debt, but not 30 days late or more, then the late payment should not affect your score.  I am not saying be late a few days, because often there are penalties involved. Just know that being a few days late is not supposed to affect your scores.  Certain obligations also do not show on your credit report (such as utilities in Western Washington or your home phone bill).

Available Credit Limit

Unknown to many is the fact that available credit limit and amount used are factors in your scores.  If I have an available limit of $10,000 and I have used $5000 or more, I will lose points on my credit scores.  Keeping your amount used under 1/2 of the available will help boost scores.

Who is Your Lender?

If I get credit from a lender who loans at less than the best terms available (such as a finance company), then I will lose points.

Inquiries

These affect your scores on a limited basis.  If I am making application all over town or shopping for a variety of things (house, car, appliances, credit card offers …) within a short period of time, say 90 days; my scores will be affected for a short time. Here is something you might consider: if you are over 1/2 on a credit card and you have great credit and you can’t pay it down right away, ask the creditor to increase the limit a bit in order to owe less than 1/2 on the card or obligation.  This will lead to an increase in your score since you will owe less than 1/2 of the balance. Be careful not to increase your spending though!

How do I find out my credit score?

Much of the information that makes up our scores is not well known and is proprietary to the different credit bureaus. There are three credit bureaus:

Equifax

P.O. Box 740256

Atlanta, Georgia 30374

Experian

P.O. Box 9554

Allen, Texas 75013

TransUnion

P.O. Box 6790

Fullerton, CA 92834

 

You can request your free report online, by phone or by mail. Visit AnnualCreditReport.com, call 1-877-322-8228, or fill out the Annual Credit Report Request form and mail it to

Annual Credit Report Request

Service, P.O. Box 105281

Atlanta, GA 30348-5281

 

No matter how you request your report, you have the option to request all three reports at once or to order one report at a time. By requesting the reports separately, you can monitor your credit more frequently throughout the year. I recommend selecting three dates throughout the year that are significant to you, to help you remember.

To ensure that you are visiting the legitimate site, type https://www.annualcreditreport.com directly into the address bar on your browser.

 

Contact Sound Financial Enterprise, LLC for more information about your housing needs.

Happy Blogging

Welcome to Sound Real Estate Investing. This blog is a service provided by Sound Financial Enterprise, a budding real estate investment firm based in Tacoma, Washington. We specialize locally, and we understand how beneficial a healthy network can be to the real estate market. This blog is a place where we can post interesting and informative facts, opinions, projects, successes, and failures, in hopes that we might better understand the market, the people and the communities we work with, so we can propagate good faith and cooperation in our community.

We hope you find the information on this blog helpful, and we will do our best to keep it current with valuable and entertaining content. Please feel free to comment and give feedback, offer suggestions, or just chat! Visit our web site for more information about us at www.soundfinancialenterprise.com