Homebuyer Tax Credit Loan Program

Homebuyer Tax Credit Loan Program

Great news for first time home buyers that want a larger downpayment. MassHousing is now offering a loan program that allows first-time homebuyers to use the $8,000 federal tax credit as part of their downpayment or to cover closing costs, rather than waiting until they file their 2009 taxes. Combine this with the downpayment assistance programs that most towns have available for qualified buyers, and you could have over $15,000 given to you towards your downpayment!

How it works

1. Homebuyers who are using a MassHousing loan to purchase their first home apply for the loan program through their lender
2. The loan is used to cover closing costs or as part of the downpayment
3. In 2010, the homebuyer claims the $8,000 tax credit on their 2009 federal tax return
4. The homebuyer then repays the MassHousing tax credit loan
   • No interest is charged if the loan is repaid by June 1, 2010
   • Otherwise, the loan is amortized over the next 10 years, at the same interest rate as the first mortgage

Eligibility

To qualify for the Homebuyer Tax Credit Loan Program, you must

• Be a first-time homebuyer using a MassHousing loan
• Meet income limits and purchase price guidelines
• Purchase a one- to four-family home before November 30, 2009
• Use the property as your primary residence for the life of the loan

Other Information

• Loan may be used for downpayment and closing costs
• Principal and interest payments are deferred until June 1, 2010
• There is a $300 application fee. If the tax credit loan is repaid by June 1, 2010, the borrower will receive a $300 credit toward the principal of their first mortgage
• Maximum tax credit loan amount is $8,000 or 10% of the home's purchase price, whichever is less

For more information on the Hombuyer Tax Credit loans, call me, Jim Armstrong at 978-394-6736 or contact Mass Housing at 888.843.6432.

Surprise! REALTORS Missed the Housing Bottom

Surprise! REALTORS Missed the Housing Bottom

Posted using ShareThis

How are Condo Fees Determined?

How are Condo Fees Determined?

Monthly fees are calculated by creating a budget for the condo association. The amount each unit has to contribute to the budget is determined by multiplying the amount of the budget by the percent interest that the unit has in the association (usually found on the unit deed), then divide the result by 12 to get condo fee due each month.

The budget is made up of all the costs associated with running the association and the property. This could include master insurance, water & sewer charges, common electric, landscaping, snow removal, cleaning of the common areas, payment to a property management company, etc. What is included is really determined by the type of building, numbers of units, and by the trustees of the condo association. Smaller condo buildings such as 2-4 family conversions may not budget any funds for landscaping, cleaning or management, preferring to save money and take care of those items themselves. In larger complexes there may also be costs associated with fire systems, elevators, swimming pool maintenance, etc. There is also a portion of the budget that is given towards the reserves of the association. The reserves cover any high cost, long term maintenance items such as painting, roof replacement, re-pointing a brick exterior, etc., and also to cover any unexpected repairs/costs.

When you place an offer on a condominium there are some things that you should request from the listing agent or condo trustee. These are copies of the Master Deed, Declaration of Trust, Rules & Regulations, Budget, and the minutes from the most recent association meeting. Condo associations are required by Massachusetts law to meet at least once a year, but many smaller associations do not take notes or minutes of their meetings, so this may not be available.

The reason for reviewing the minutes of their meeting is to make sure there are no pending issues with the association, or any upcoming special assessments. Special assessment are fees charged to each unit for items not covered by the budget. This can happen if the association does not budget enough funds towards the reserve each year, or something unexpected needs to be repaired/replaced. A special assessment can be a small amount such as a couple hundred dollars, or can run into thousands of dollars. Payments on large special assessment are typically broken down over a period of months or years, but again depends on the association. If an association is well run, there should never be any large special assessments.

While on this subject, you should also ask a couple other questions.
Is the condo association involved in any pending litigation?
What is the percentage of owner/occupants in the condo complex?

Both of these could affect your chance of getting a mortgage approved for the condo. The bank usually does not want any large lawsuits pending because it could result in the association having to pay for any settlement not covered by insurance. In regard to the owner/occupancy, most mortgage companies will not finance any condo in a complex that has less than a 51% owner occupancy rate. That is, no more than 49% of the unit can be rented out. Many banks have even more strict requirements. It just make for a better condominium environment when a complex has a high number of owners actually living in their units.

Do not let any of the aforementioned issues sway you away from buying a condominium (which includes townhouses and lofts). The majority of condo associations are well run, even when self-managed. Condos are perfect for the home buyer who does not want the responsibility, or have the time to maintain the building, cut the grass, etc. They are also typically priced lower than a single family for the same amount of living area.

Multiple Offer Situations are Everywhere

Multiple offer situations are everywhere.

There are a lot of disappointed buyers out there who think we are in a market where you can offer 10% under asking price on any property. Many properties are selling for over asking price. Each property that a buyer is interested in has to be assessed individually. Of course there are still many homes out there that are still overpriced. You will see seller who think their home is worth more than comparable properties in any market.
Most of the multiple offer situations are bank-owned (REO) properties that have just come on the market. In many cases you have to see the property as soon as it comes on the market and submit an offer right away. There is no waiting until the weekend to see a "hot" property.

When making your offer you need to think about 2 things. The first is how much would this home be worth if it was in perfect condition (take to your REALTOR for help with this), and how much money would it take to do the required work? Take the value of the home and subtract the cost of getting it there and you will have the market value of the home in its current condition. Many bank-owned properties only need paint/paper and minor repairs. You then have to decide how much under (or over) that market value you want to offer.

The second thing you have to think about is how much is the property worth to you? If you like the property but it isn't your ideal home, its not going to be worth as much to you and therefore you may want to submit a lower offer. But when your offer gets beat out by another buyer don't say you wish you made a higher offer. In most cases you only get one chance to make an offer on a bank-owned property, and the highest/best offer will be accepted. Occasionally in a multiple offer situation where all or most of the offers are around the same price the seller (bank) will come back to all buyers and ask for their "final and best offer". This is a form of counter offer where you get a chance to up your offer one last time (or leave it where it is).

Make sure that you have a mortgage pre-approval letter in hand before you make an offer. You will not have time to call up your mortgage person to obtain one, and your offer will not even be considered without it.

You really need to work closely with your REALTOR to successfully get through a multiple offer situation. Even with all these considerations you may still get beat out by another buyer who really, really wants the property. Don't dwell on it...just move on. It happens. Just remember that the price in your offer is the main deciding factor with any seller. Good luck!

PENDING HOME SALES UP 3 MONTHS IN A ROW

PENDING HOME SALES UP 3 MONTHS IN A ROW

Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5.

Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”

The Pending Home Sales Index in the Northeast shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago. In the Midwest the index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008. The index in the South slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago. In the West the index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.

“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger downpayment. Buyers who are wondering about their options should contact a Realtor®, who can advise consumers on the housing assistance programs and resources available in a given area.”

NAR’s Housing Affordability Index is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.

A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.

Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”

The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.

See the Video Interview Below:

FHA Allows $8000 Tax Credit to be used Towards Downpayment

FHA Allows $8000 Tax Credit to be used Towards Home Purchase Down Payment

May 12, 2009 - At an address to several thousand REALTORS at the Real Estate Summit just held in Washington DC, the secretary of the U.S. Department of Housing and Urban Development, Shaun Donovan, said that the Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a downpayment.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment,” Donovan said. According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

This will greatly help first time home buyers with the purchase of a home, perhaps enabling them to increase their buying power. Previously home buyers would have to wait until 6-8 weeks after they purchased a home to access the tax credit by filling an amended 2008 tax return, or wait until they file their 2009 return next year.

We will have to see what sort of interest rate the FHA will charge for these bridge loans, but typically they keep their rates low. Also, because this is a bridge loan, you will be paying it back within a few months so the interest paid will be minimal.

With the deadline for receiving the tax credit rapidly approaching (November 30, 2009), this is just another reason that first time home buyers need to get serious about finding their dream home (or as close as they can get to it). You must have a home under contract by September to assure that it will close on time to qualify for the credit. Remember:

IF YOU CLOSE AFTER NOVEMBER 30TH,
YOU WILL NOT RECEIVE THE $8000 TAX CREDIT!

Contact one of Armstrong Field Real Estate's Buyer Agents today to start the search for your home.

OPPORTUNITY KNOCKS - Home Buyer Fair

Opportunity Knocks
Home Buyer Fair and Open Houses
Northshore Mall - Peabody MA
May 2, 2009, 10am-4pm

This Saturday, May 2, 2009, there is a Home Buyer Fair at the Northshore Mall in Peabody Massachusetts, along with open houses of affordable homes throughout the area. Geared toward first time home buyers, this fair is designed to give buyers the tools they need to purchase a home.

• Learn why it's a great time to buy a home in Massachusetts.


• Meet Lenders, REALTORS, and homebuyer counseling agencies. (Armstrong Field Real Estate will be there!)


• Learn how to obtain affordable, fixed-rate loans with no hidden surprises with only 3% down.


• Take advantage of the $8000 first time homebuyer tax credit (expires November 30, 2009)


• Tour open houses of affordable homes.

For more information, go to: http://www.masshomefair.com/

http://www.armstrongfield.com/
http://www.northshorefinerhomes.com/

First Time Home Buyer Tax Credit a Hit!

$8000 Tax Credit is a Hit With First Time Home Buyers!

Preliminary figures from the Internal Revenue Service suggest that 1.4 million home buyers are taking advantage of the $8000 tax credit that the government is giving to people to purchase their first home, and claiming it on their 2008 tax return. It looks like the program will meet and most likely surpass the goal set by lawmakers of providing 2 million home buyers with the credit. The tax credit expires on November 30, 2009.

A first time buyer buyer is defined by the IRS as someone who has not owned a primary home in the last 3 years. Someone who owns a vacation home or income property may still qualify for the tax credit.

IRS Form 5405 will allow qualifying buyers to claim the credit on either their 2008 (through an amendment) or 2009 tax returns, so many people purchasing homes this year won't be claiming the credit until next year. The credit is equal to 10 percent of the purchase price of the home, and is capped at $8,000 for homes purchased this year.

On the North Shore of Massachusetts we are seeing a incredible increase in activity from home buyers, with properties under agreement up 32% over last month. The driving force is the bottoming of home prices combined with mortgage interest rates in the 4's and the fact that the $8000 tax incentive will be gone before you know it.

Smart home sellers are placing their properties on the market now, knowing that after November 30th most home buyers will have already made their purchase and will be living in their new home with their $8000 tax credit check in hand. If you have a home on the market after November 30, 2009 - Good Luck! It will be a tough sell unless you have a home that is not something that a first time home buyer would purchase. That would mean most properties priced above $400,000. The most active properties are those that are priced below $325,000.

Jim Armstrong

http://www.armstrongfield.com/

http://www.salemmasscondos.com/

http://www.northshorefinerhomes.com/

First Time Home Buyers - Don't File Your 2008 Tax Return!

First Time Home Buyers -
Don't File Your 2008 Tax Return!

If you already did, don't fret. You can still amend it. I've been talking about the 1st time home buyer tax credit that the federal government is giving to 1st time home buyers that close by November 30. 2009. Well, did you know that you don't have to wait until you file your federal return in 2010 to receive this credit? That is why I am telling you to hold off on filing your 2008 federal tax return until after you buy a home. You can file an extension and receive another 6 months to look for your dream home - until October 15th! This only applies if you are due a refund. If you owe taxes to the IRS then, unfortunately, you still need to pay those by April 15th. But you can still get your Tax Credit quicker (see below)


Now if you haven't filed your 2008 tax return yet, and you buy a home by October 14th, you can file your taxes the next day and have that $8,000 check in your hands in 7-10 days! (along with any other refund due you) How many of you think that you will have some expenses after you buy your new home (repairs, updates & improvements, new furniture, etc.). All of you, I'm sure.


Now if you have already filed your tax return, don't worry. All that means is that you will have to wait a little longer for your tax credit check. When you close on a new home (using an Armstrong Field buyer agent, of course!) you can file an amendment to your tax return and have your check before your 2nd mortgage payment is due. The IRS is telling us that it is taking about 8-10 weeks to process amended tax returns. As we get closer to the November 30th deadline, you can bet that time is going to be longer.


The Massachusetts Association of REALTORS is predicting that come this summer that home buyers are going to be scrambling to find a home to take advantage of the tax credit. Remember, you must close by November 30, 2009 at the latest. If you close on December 1st - no $8,000! That means you need to have an accepted offer by October 15th at the latest. If something happens that delays the closing, it could jeopardize your tax credit. That's why we are recommending that you start seriously looking now.


The other reason to buy a home sooner rather than later is because of competition. Right now, while the market is getting busier, there is nowhere near the frenzy like there is going to be as we move toward the end of the summer and early fall. There are plenty of homes to choose from right now, and we can normally negotiate a price to quite a bit under the asking price. In the summer when the activity picks up and the properties on the market start receiving more homebuyer traffic, the sellers are going to be more choosy, and may hold out for a better offer.


For more information on the 2009 Home Buyer Tax Credit, go to:
http://www.armstrongfield.com/2009_home_buyer_tax_credit.html

Jim Armstrong
Armstrong Field Real Estate
http://www.armstrongfield.com/
http://www.salemmasscondos.com/
http://www.northshorefinerhomes.com/

What's with all the Lazy Real Estate Agents?

I work hard to give my clients the service they deserve. When listing real estate, marketing is one of the major concerns that a home seller has - exposing their property to the maximum number of potential buyers and enticing them to set up appointment to come see it.

That's why I don't understand properties I see listed with only one photo. Just as bad, a listing with multiple photos but with every one so out of focus you can't even make out any of the details (taken with a camera phone?) I can't think of any other reason not to have at least 15 to 20 quality photos on each listing other than the fact that the listing agent is just plain lazy. A loaf. A slacker. A hack. Take your pick...or use all of them when describing these agents.

It is well-known by anyone in the real estate industry (who keeps up on the latest trends) that multiple photos are the #1 reason that someone clicks on a listing when searching online. Might I add that according to the latest survey, 87% of home buyers now search online. So wouldn't you think that it was important to have the property well-represented with a nice photo array to this huge segment of the home buying population?

Maybe they do it on purpose? If they had multiple photos it might generate phone calls from buyers. Next thing you know they would have to interrupt their game of computer solitaire and actually get off their ass and show the property. Heaven forbid!

While I'm on the subject of lazy agents (you know who you are), here are a few other pet peeves of mine concerning real estate listings:

1. Bad grammar - There should be a rule where you have to have a basic grasp of the concept of grammar. This includes punctuation. I have seen many listings where you would swear a 5 year wrote the copy. Actually, I apologize to the 5 year old because they can write better than some of the adults in the business. If you know you have bad grammar, have someone else check it for you before it is posted.

2. Bad Spelling - No excuse here. I know MLS doesn't have a spell check program built in. So write the text in Word (other word processing program) and spell check it before you copy and paste it in MLS. I'm a decent speller myself, but when typing sometimes my mind goes faster then my (4.5 words a minute) hands. Don’t be lazy, run your copy through spell check!

3. Poor descriptions of the property - "nice sf home w/2 br & 1 bth near train. nice yard. must see" - this was an actual description I saw on a property listed in Salem. First of all, get rid of the abbreviations! This description is going to be posted on the internet to be seen all over the world. Just because we in the industry know what they mean doesn't mean that the buyers do. The MLS allows 500 characters in the property description field. I never have a problem filling it to capacity with information about the properties I list. Keep your lazy-arse fingers typing until you have filled the field. Do the right thing for your clients!

There are many more similar issues I could write about, but I have clients to attend to. After checking the new listings this morning and seeing several properties that fit this description, I just had to get this off my chest. Evidently the sellers of these properties either don't bother to check to see how their properties are listed, or they don't realize there are big differences in marketing capability between agents. Most agents do a good job when it comes to listing a property. But if you were selling your home, wouldn't you want a great job?

By the way, I ran this through a spelling and grammar check and found 8 mistakes. I guess I am only human.

Jim Armstrong

http://www.armstrongfield.com
http://www.SalemMassCondos.com
http://www.NorthshoreFinerHomes.com

See me on Facebook

See me on LinkedIn

Hurry up and Buy - Home supply going down.

SUPPLY OF HOMES ON THE MARKET GOING DOWN ON THE NORTH SHORE OF MASSACHUSETTS

North Shore, MA - The inventory of homes has been steadily dropping on the north shore since the begiining of the year. Typically as we get closer to spring we see the supply increase, but that is not occurring this year. It seems that savvy homebuyers and investors are snapping up properties left and right with the mind set that we are at the bottom of the market and it doesn't make sense to wait. Add to that the very low mortgage interest rates (below 5%) and the $8,000 tax credit for first time home buyers, and the result is a frenzy of people trying to get the best real estate deals.

According to MLS, the number of homes (condos, single family and multies) currently on the market on the north shore of massachusetts is 3,877. Last year on this same date (March 27th) there were 4,988 homes on the market. That's a drop of 22% over 2008!

Although inventory dropped for all types of homes, multifamily homes dropped the most. In 2008 there were 658 multies on the market, today there is 350! That is almost a 50% drop in the number of 2, 3 and 4 family homes available to choose from over last year. I'm not supprised by this because the list price of multies has dropped over 35% since 2005. You can actually buy a 2 family home as an investment and have positive cash flow from it - something you haven't been able to do in several years.

Here is a link to a video from WBZ TV in Boston about the current market:

http://wbztv.com/video/?id=74431@wbz.dayport.com

Jim Armstrong

Existing-Home Sales Rise In February
WASHINGTON , March 23, 2009

Existing-home sales increased in February, reversing losses in January. Even so, sales activity remains relatively soft, reflecting additional layoffs and buyers waiting for housing provisions in the economic stimulus package to take effect, according to the National Association of Realtors®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.1 percent to a seasonally adjusted annual rate1 of 4.72 million units in February from a pace of 4.49 million units in January, but are 4.6 percent below the 4.95 million-unit level in February 2008. Seasonal adjustment factors are more volatile in winter months, but sales rates over the past few months show dampened sales activity.

Lawrence Yun, NAR chief economist, said first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges. “Because entry level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February,” he said. “Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price.”

See the full story at Realtor.org: http://www.realtor.org/press_room/news_releases/2009/03/february_existing_home_sales

What Friday 13th Means for Real Estate

Today is Friday the 13th, and though here in Salem Massachusetts many people think that this is a lucky day, there are those around the world who fell that the number 13 equates with bad luck. Propertyportalwatch.com has posted an article on some of the people and countries that take #13 a little more seriuosly that most of us here in the U.S.

What Friday 13th Means for Property…

Posted using ShareThis

Waiting to Buy a Home may Cost You

"Some people say they want to wait for a clearer view of the future. But when the future is again clear, the present bargains will have vanished. In fact, does anyone think that today's prices will prevail once full confidence has been restored?"

This is a quote that makes a lot of since in today's real estate market. Many potential home buyers are waiting for the word (from whatever source they believe in) to make a purchase of a home they will be living in, or to buy real estate for investment purposes.

The problem is that if you wait until the media gives you the go ahead, it will be way too late to get a great deal on a property. This holds true for investments or for the owner/occupant. You will be competing with droves of other home buyers trying to take advantage of the turn-around in the market. We are already seeing this in some markets such as Lynn Massachusetts where 70% of lower priced (under $200K) single family homes have sold over list price during the last 2 months. We are seeing many multiple offer situations, and it is starting to happen in other towns. If you see a property you like, do not hesitate or you will take the chance of losing that home to someone else.

Now I'm not trying to rush you into making a rash decision to buy the first home you see. I (along with my hand-picked staff of Realtors) represent buyers to get them the best deal on a home or investment property. We will advise you when to jump, and when to take your time to investigate a property. Yes, we want your business, but even more important - we want your repeat business and referrals! We won't get that by pressuring you into buying a property that isn't right for you or is overpriced.


By the way, the quote above was made 77 years ago by Dean Witter in May of 1932.

If there is one thing we have learned in life is that history tends to repeat itself -especially in the financial markets.

Jim Armstrong
Armstrong Field Real Estate
Serving the North Shore of Massachusetts

• North Shore Real Estate
• Salem Massachusetts Condos, Lofts & Townhouses
• North Shore Massachusetts Luxury Properties
  

SALES UP, PRICES DOWN
IN ESSEX COUNTY MASSACHUSETTS

December 2008 total home sales in Essex County increased by 4.9% over December 2007, led by the sale of multi-family homes which went up by 172%! The sale of bank owned properties drove down the price of multi unit buildings by 33% to an average of $184,800 driving investors and savvy, bargain-hunting home buyers to the closing table. The glut of foreclosed homes has pushed down prices, and distress sales now make up well over half the market in some towns such as Lynn and Lawrence. Other towns, including Newburyport, Marblehead, Danvers & Hamilton, have had relatively few foreclosures and therefore homes prices haven't dropped as sharply.

Single family sales were relatively flat over the same period, despite a 17% drop in prices over 2007. But that is actually good news for sellers of single family homes, which for the most part in 2008 experienced declining sales numbers. But toward the end of the year sales have been coming back. Could the lure of a $7500 first time homebuyer tax credit be tied to this rise?

The home buyers that we have talked to have not indicated that the tax credit was the driving force that made them step up to the home buying plate. What was the driving force was the lure of getting a bargain-priced home at the bottom, or near bottom, of the real esate market. The second motivating factor was the availability of mortgage money at rates below 6.0%.

Jim Armstrong
http://www.armstrongfield.com
978-394-6736

BUYER POWER!

For the 11^th consecutive week Freddie Mac's Primary Mortgage Market Survey showed that the average interest rate for the 30-year fixed-rate mortgage (FRM) broke another record in the 37-year history of the survey. During the week ended January 15 the rate averaged 4.96 percent with 0.7 point, down from last week's average of 5.01 percent with 0.6 point.

This is the 11th week in a row that mortgage interest rates have dropped, due in part to a slowing economy, and also to the actions that the Federal Government has been taking. Some (healthy) local banks have been receiving funds from the Feds specifically for the purpose of supplying money for mortgages to local consumers.

We have had clients close on homes with mortgage rates even lower - 4.5%! This equates to a mortgage payment of only $1721.00 per month on a $350,000 home with just 3% down.

You could buy a $200,000 condo (or even single family) with 3% down ($6,000) and have a mortgage payment less than $1000! It's got to be cheaper than what you are currently paying for rent. Plus, unlike rent, your mortgage payment is mostly tax deductible, giving you a larger tax refund. Add on the $7500 first time homebuyer tax credit, and you would have to be crazy not to buy a home right now!

I know what you are thinking - "But you are a Realtor. Of course you want me to buy a home now. That's how you make your money and you have lots of Christmas bills to pay off!"

True, selling real estate is how a earn a living. But I earn clients for life by giving them what I believe to be good, accurate information that is going to help them in their decisions when buying or selling a home. I just recently purchased a home myself because of these ideal buying conditions. Though I had owned property before, most recently I had been renting - and waiting for the right time to buy.

This IS the right time.

Jim Armstrong

RECORD LOW MORTGAGE INTEREST RATES
MOTIVATE BUYERS

Interest Rates For Last 6 Weeks

December 18, 2008 - The current mortgage interest rates have just fell to under 5.0%! Mortgage rates have never been lower, with the good news that the trend will probably hold or fall a little more in the next couple of weeks, but who knows how long that will continue. The fact is that we have historically extremely low interest rates. You would be crazy not to take advantage of this situation, with home prices that are at 2002 prices in many cases, and still a great supply of homes to choose from like you haven't seen in 2 decades.

Well this combination has been spurring Home Buyers to start making offers left & right. The number of homes going under agreement has been steady in eastern Massachusetts. We have been getting our Buyers some really great deals on real estate. We even have out-of-state clients who are buying up multiple properties as investments - sight unseen! (except for photos from MLS)

Click Here to Apply for a Pre-Approval from Eastern Bank Mortgage

Home Sales up for the Second Straight Month as Affordability Drives Activity
11/25/2008
On Tuesday, November 25, 2008, the Massachusetts Association of REALTORS reported that single-family home sales were up 6.6 percent in October 2008 compared to the same time last year. This is the second straight month of year-over-year increases in monthly home sales in 2008. Condominium sales were only down 1.0 percent in October compared to the same time last year. The median price for a single-family home in October was $294,950, while the median price for a condominium was $250,000.

Still Waiting to Buy a Home?

6 Reasons Why Now is the Ideal Time to Jump!

1. The number of homes available on the market is dropping significantly.


2. Home prices are lower than they have been in the last 3 years, but seem to be bottoming out.


3. Interest Rates are still historically at their lowest.


4. The Home Sellers are very motivated.


5. You can deduct your mortgage interest (plus other costs) on your tax return, something you can't do with rent.


6. There is a limited time $7500 tax credit for first-time homebuyers.

Many potential homebuyers have been sitting on the sidelines waiting for the real estate market to bottom out. It's not a bad plan, as long as you have perfect timing. The experts can't even agree among themselves as to whether prices have reached the floor, so trying to time the market can be tricky. Though there are plenty of people who are buying properties right now, it will be nothing like it the rush there will be once prices start to rise again and everyone decides to jump into the mosh pit of buyers making offers!

OK, so there will be more competition in the next 6 to 12 months, but you want to make sure that you don't overpay for a home that you may be able to get for less in 6 months. So if you wait, you will get a better deal, right?

Not necessarily. First of all the inventory (number of properties on the market) has gone down considerably in the last few months, giving you less choices. When supply goes down, demand goes up. When demand goes up, prices tend to rise. It's a basic law of economics. Compared to last year, there are 23% fewer property on the market today, and the number of sold listings are up. The good news for you is that the median on-market home price is down 5.8% compared to October 2007 (for Essex County). But with selection dropping, can it be long before the market turns around?
Mortgage rates are still historically low (take it from someone who paid 14% in the early 90's), with rates hovering around the 6% mark. But rates are extremely volatile, especially with the shape of the financial market and everything that is happening with Wall Street lately. A couple of weeks ago the rates dipped into the 5%'s, but that only lasted a week before jumping up to 6.5% (they have settled a little since). It is likely that rates will trend up, according to most experts. With each jump in interest, you will be paying more in your monthly payment, which would negate any (potential) savings you would make by waiting to buy.

Another reason to buy now is that you are losing all your potential tax benefit of home ownership. You are able to deduct all of your mortgage interest, PMI & closing costs when you buy a home. This would result in a significant tax savings for you. On a $250,000 mortgage that could mean $4600 in tax savings, or about $380 per month over renting. Try out the Rent vs. Buy and Tax Savings calculators here.

One of the recent incentives initiated by the Feds is the First-Time Homebuyer Tax Credit. It gives a 1st time buyer up to a $7,500 credit on your taxes when you buy any home purchased between April 9, 2008 and July 1, 2009. This is not a deduction, this is an actual credit. So if you owed $6,000 in taxes next year, not only would you not have to pay them, the IRS would give you an additional $1,500 refund. If you don't owe any taxes and you are expecting a refund, then the $7,500 would be added to your refund. How cool is that? The caveat is that this is really a refundable credit, so it would be repaid, but only at the rate of around $500 per year starting in 2011. It is basically a no interest loan payable over 15 years. Everyone should take advantage of this credit! Go here for some FAQ on this credit.
One thing I want to point out about what you hear in the media. All real estate conditions are local. What is happening in another part of the country has no bearing on what's the market is like here in Massachusetts, and especially the North Shore.

*All mortgage calculations and tax savings are estimates and are examples for informational purposes only. Please contact your financial, tax or mortgage advisor for more information.

What's Really Happening with Real Estate Market

I'll be the first one to tell you that I'm no expert on the national real estate market. All I am concerned about is what is happening in the local market and how it will affect my clients, my agents, and ultimately...my business. Keep in mind that real estate is local. What is happening in California, Florida or Texas has no bearing on what is happening in the real estate market on the north shore of Massachusetts.

During the first 2 quarters of this year (2008), things were looking dismal, with a continued downward slide in prices, number of units sold, and traffic (number of inquiries received, open house attendees, web site visits, etc.). But something happened in the third quarter beginning in July. Buyers started making offers...and suddenly our business is up 85% year to date over 2007, and over 200% for the quarter. The fourth quarter has started off with the same gusto.

THE PERFECT (BUYING) STORM

What has caused this complete change? I believe it is the result of several ideal buying factors all occurring at once:

• Home prices have come down to a point where they haven't been in years. Add in the bank owned and short sale properties that are on the market and there are literally hundreds of bargains out there. The price that homes are selling at are equal to 2002.

• The inventory of homes on the market is still high. Though the number has come down compared to last year, it is still considered historically high, giving the home buyer plenty to choose from.

• Home sellers (including banks) have come to realize that if they want to sell their property, not only will they need to price it aggressively, they need to give some concessions to the buyer. You can get pretty much ANY seller to pay your closing costs, and even prepay your mortgage insurance to reduce your monthly payment!

• Banks and Mortgage companies have money to loan...still at historically low interest rates. (under 6% just a couple of weeks ago) And you do not have to have perfect credit! You do have to come up with 3% down, but this can come from a gift (from a relative, etc.) or your retirement account (401K, etc). There are several government programs that will also match your down payment, so you only have to come up with 1.5% down.

The local real estate stats show that the number of units sold during the last 3 months is about equal to last year, with the average price down from last year (single family) but up from the previous 3 month period this year.

The smart home buyers are going out and looking at potential properties, and jumping on the ones that meet their needs and budget. You could wait another year to see if prices will drop any further, but in the meantime you continue to pay rent and will not be reaping the tax benefits of home ownership.

Jim Armstrong

The Real Estate Market is Trending Up! (Just don't let anyone know)

It's just amazing to me that there is still gloom & doom appearing everyday in the news about the real estate market despite the encouraging statistics that have been coming in since earlier this year. The National Association of Realtors® has now reported four straight months of rising housing prices, but it seems the media and Wall Street are ignoring it.

According to NAR statistics, the median home price has fallen 15% from a high in July 2006 to a low in February 2008. Since February, however, it has risen steadily every month. By May the index has risen a full 6.6%. Another indicator, the mean home price (otherwise known as the average home price), has also shown strength and has risen 4.5%. It, too, has risen every month since February of this year. "I just don't know where Wall Street's brains are today," said David Michonski, CEO of Coldwell Banker Hunt Kennedy in New York City. "Everyone on the Street is wringing their hands over housing when in fact the average American has been out this spring buying homes and pushing the median price higher.

This has got to go down as one of Wall Street and Main Street's biggest disconnects in history." In addition, on an annualized basis the volume of home sales has also risen somewhat from a low of 4,890,000 homes in January to 4,990,000 in May. "Rising prices on expanding volume should not a crisis make on Wall Street," says Michonski.

So why the crisis? "They say that there are bulls and bears on Wall Street but there are also pigs. Pigs try not just to profit from a crisis but create one to profit from. Today there are just so many people who have positioned themselves to profit from a crisis that they refuse to admit the reality of what is happening on Main Street. It might hurt their positions."

Is this the bottom? "No one can know for sure, but the hard data is clear. The median price has risen four straight months. The average American is out there taking advantage of bargains in their local real estate market. They are not listening to Wall Street but following their own belief that the best time to buy is when no one else is, and they are out there buying. If this keeps up, February may prove to have been the low in prices." "It is possible that it will not be Hank Paulson or Ben Bernanke who will pull this country out of a housing recession, but the good common sense of the average American whose affordability to buy a home is at a five year high and is acting on it."

(Reprinted in part from RISMedia. http//www.rismedia.com)

Massachusetts Home Sales Experience Biggest April-to-May Increase in Past 10 Years

The Massachusetts Association of REALTORS® (MAR) reported that both single-family home sales and condominium sales experienced their biggest April-to-May percentage increase in the past 10 years. While year-over-year single-family home sales were down 10.1 percent in May, this is the smallest decrease since September 2007. May median single-family home prices were also down 9.2 percent compared to last year. The number of condominiums sold in May was down 24.5 percent, with median sales prices down 2.6 percent. On a month-to-month basis, median prices for both single-family homes and condominiums increased by 2.4 percent and 2.7 percent respectively from last month.

“While the number of sales for both single-family homes and condos were down in May, these decreases continue to narrow since the start of the year, which is definitely a move in the right direction,” said MAR President, Susan M. Renfrew, broker/co-owner of Renfrew Real Estate in Greenfield. “It is also a positive sign that median prices on a month-to-month basis continue to move up. However, the 9.2 percent year-to-year median price drop indicates that the growing number of distressed sales continues to have an impact.”

See the rest of the original article at the Massachusetts Association of REALTORS' web site.

Feedback from my weekly newsletter

Question:
Aren't all agents in a real estate transaction are ultimately paid by the buyer. Granted no "extra" money needs to come out of the buyer's pocket at the beginning of a house search, but in the end we are paying for it. Right? - Rachel

Answer:
Rachel, Thank you for your feedback.

You could look at it that way, but then you would have to say that a person who buys an automobile pays the salesperson's salary, or that you are paying the toll booth worker's salary when you cross the Tobin bridge.

Whenever you buy something, you are ultimately paying for (or at least part of) someone's salary.

A buyer's agent does not get paid directly from the Seller. They are paid by the Listing broker. In most cases the Seller pays the same amount whether there is 1 or 4 agents involved in the sale (and yes, there are many times when there are more than 2 agents invloved in a transaction).

I think what you are inferring to is that if there were no agents involved, a buyer would pay less for a home. A good buyer's agent can actually save you money, whether it is on the price of the home itself, inspection issues, knowing where to get the best mortgage, or any number of things that may be missed by the average homebuyer.

I am always open to hearing some feedback about any of the emails I send out. Please feel free to write to me any time you have a comment, suggestion or question.

Jim Armstrong
jim@armstrongfield.com

Real Estate Outlook: Market is Stirring
by Kenneth R. Harney

April 3, 2008
Affordable mortgage money is the fuel that is going to pull the real estate market out of the woods. And there are some encouraging signs that may be happening right now. Read the rest of the story at:
http://realtytimes.com/rtpages/20080403_realestateoutlook.htm

See the Real Estate Video News here for the latest updates on what is happening in the real estate market.


Video Real Estate Market Conditions for Salem Massachusetts

Real Estate Outlook: Existing Home Sales Rise

We don't want to overplay the significance of this, but we actually got some positive economic news this week: Sales of existing homes last month rose for the first time in half a year, adding fresh evidence that the housing cycle may finally be bottoming out after nearly three years of correction.
The national gains in resales announced on Monday were not huge -- 2.8 percent for single family homes and 3.7 percent for condominiums. Total sales hit 5.03 million units, though Wall Street economists had predicted another DECLINE to a consensus estimate of around 4.8 million units.
So breaking the 5 million mark is pretty good, given where we are in the overall economy.
Now in fairness, the latest sales gains were accompanied by a decline in the national median price of homes sold -- down by 8.2 percent from year-earlier numbers.
You might think an 8 percent drop in prices is terrible. But let's face it: The only way we're going to burn off that 10-month overhang of unsold houses on the market is through more affordable, more realistic prices pulling buyers off the sidelines.
There's another factor at work pulling down the national median number: Relatively more houses are selling in places like Texas, North Carolina and Utah, where prices are moderate and affordable, while there are relatively fewer sales in ultra-high-cost California.
So the median price may be lower, but it's not just because home values across the country are crashing. The mix is different, so the median price is a lower number.
Low-cost mortgage money is also definitely helping to fire up sales. Average 30-year rates declined to 5.875 percent last week -- and any time mortgage money is under 6 percent, you're going to see more homebuying.
By the way, sales in California, which have been a leaden weight dragging down national market numbers for more than a year, are likely to improve in the coming months as the new "super-jumbo" FHA, Fannie Mae and Freddie Mac mortgages start hitting the street.
FHA's mortgages should be especially popular in California, where the median home price in some local areas like San Francisco exceeds $700,000. Thanks to FHA's low 3 percent minimum downpayment requirement, Californians should be able to buy a $700,000 house with just $21,000 down -- and walk away with a 6.5 percent 30-year fixed rate.
Fannie Mae and Freddie Mac, by contrast, want a minimum 10 percent down for their new jumbos.
So let's take our good news about sales and interest rates … and look to better days as the Spring buying season kicks off.

By Kenneth R. HarneyMarch 27, 2008
Copyright © 2008 Realty Times. All Rights Reserved.

See more real estate news at: http://realtytimes.com/customnews/JimArmstrong.htm

Is State Crawling Out Of Housing Slump?

National Expert Says Region Moving In Positive Direction
UPDATED: 6:53 pm EST March 3, 2008

BOSTON -- A national real estate expert said Monday that the Massachusetts region could soon start moving in a positive direction. The chief economist for the National Association of Realtors offered a ray of sunshine to his New England members.
"The worst in the sub-prime foreclosures is probably peaking at this point, but most of the mortgages -- 90 percent of the homeowners -- are not exposed to sub-prime loans. A vast number of neighborhoods are doing fine," said Lawrence Yun, of the National Association of Realtors.

Massachusetts is just below the national average when it comes to foreclosures due to sub-prime mortgages.

Read the full story at The Boston Channel

PRICING YOUR HOME IN A DECLINING MARKET

When do you drop the price on your home?

If you are receiving a lot of buyers through your home but aren't receiving offers, then it is either priced too high or shows poorly. In this market, orice is the driving force. If you have receive offers, but they have been low-ball offers, then maybe you should look at the price. It's impossible to say when you should consider reducing your price without knowing all the circumstances, but if you haven't received an offer in 30 days, it's time to re-evaluate your price.

I just attended meeting of all the mortgage officers for one of the larger regional banks, and their treasurer and ecomomist was finding home prices dropping at 1-2% per month, and expected it to continue through this year. While I think this is a pessermistic outlook, what it could mean to you is that for every month your home sits on the market, it is worth 1-2% less. If you have a $400,000 home and it doesn't sell in 2 months, it could be worth $16,000 less. So even if you dropped the price by $10,000 you are still behind the eightball. You could be playing catch-up with the market for months.

An example of this is someone I know who was selling a condo in Florida (be glad you are not trying to sell there). They placed their property on the market in 2005 at just above what others had recently sold for (at the height of the market). Other units came on priced lower, and sold. They lowered their price to that level, but now the market had dropped even more. This scenario went on for 2 years until they dropped the price fast enough to catch up with the market. The bottom line - they originally listed their condo at $280,000 when they could have sold it for $250,000. Instead they played the waiting game and ending up selling for $140,000! This is an extreme example in a market that is much worst then we have here on the North Shore of Massachusetts (we actually have it pretty good for the most part)., but I have seen this same thing happen locally.

If you home is not selling, there is only one reason - marketing... and pricing your home correctly is an intergral part of marketing. Determining the correct price in a declining market isn't easy, though. But if your home is not getting many showings, or a lot of showings without offers, drop the price quickly if you are really serious about selling.

- Jim

IS IT POSSIBLE TO BUY A HOME NOW

AND SELL IT AT A PROFIT IN 2 YEARS?

It's possible, but there are so many variables that it is impossible to give you a definate answer. I will give you a couple of hints, though.

1. Buy low. Nobody can predict what is going to happen with the market in the next 2 year. Yes, some people try, many with very impressive credentials, but there are so many different opinions, who do you believe? The fact is, real estate will always go up in value over time. How much time is the big unknown right now. But if you buy low enough, you have a better chance of selling for a profit. And by low, I don't mean low-priced. I mean below current market value. Look at bank owned (REO) properties to find some great deals.
2. FInd homes that mainly need cosmetics. A coat of paint, new flooring, and a spruce up of the kitchen and baths will dramtically raise the value and lower market time. Don't buy a home that needs major renovations unless you can do most of the work yourself to keep the costs down.
3. Make sure the home is located in a desirable, fast-selling neighborhood. It doesn't matter how nice you make the place, if no one likes the neighborhood, they won't even want to see it, let alone buy it.
4. Concentrate on curb appeal. Make sure the outside of the house is immaculate. Spend some money on landscaping.
5. Enjoy the tax benefits in the meantime (assuming you are going to live there for the 2 years). Not only can you deduct the mortgage interest and some other expenses, when you sell you can make up to $250,000 profit and not pay any taxes on it! ($500,000 for couples). Please talk to your tax advisor for full details.

Remember - real estate is more than an investment when you are living in it. It is also your home. Whether you live there for 2 years or 30 years, buy something that you really like.

- Jim

Trade group lifts outlook for 2008 home sales,
insists US housing market is stabilizing

WASHINGTON (AP) -- Bucking conventional wisdom, a trade group for real-estate agents on Monday said the battered housing market is on the verge of stabilizing and inched-up its outlook for 2007 and 2008 home sales.

The revised monthly forecast from the National Association of Realtors, which followed nine straight months of downward revisions, calls for U.S. existing home sales to fall 12.5 percent this year to 5.67 million -- the lowest level since 2002. Last month, the association predicted 5.66 million existing homes would be sold this year, down from 6.48 million last year.
The Realtors' group also forecast sales will rise slightly in 2008 to 5.7 million, up from last month's prediction of 5.69 million.

See the full story at Yahoo Finance...

21 Rules That Will Bring Good Karma to Your Life,

And Make you Happier.

1. Give people more than they expect and do it cheerfully.
2. Marry a man/woman you love to talk to. As you get older, their conversational skills will be as important as any other.
3. Don't believe all you hear, spend all you have or sleep all you want.
4. When you say, 'I love you,' mean it.
5. When you say, 'I'm sorry,' look the person in the eye.
6. Be engaged at least six months before you get married.
7. Believe in love at first sight.
8. Never laugh at anyone's dreams. People who don't have dreams don't have much.
9. Love deeply and passionately. You might get hurt but it's the only way to live life completely.
10. In disagreements, fight fairly. No name calling.
11. Don't judge people by their relatives.
12. Talk slowly but think quickly.
13. When someone asks you a question you don't want to answer, smile and ask, 'Why do you want to know?
14. Remember that great love and great achievements involve great risk.
15. Say 'bless you' when you hear someone sneeze.
16. When you lose, don't lose the lesson.
17. Remember the three R's: Respect for self; Respect for others; and Responsibility for all your actions.
18. Don't let a little dispute injure a great friendship.
19. When you realize you've made a mistake, take immediate steps to correct it.
20. Smile when picking up the phone. The caller will hear it in your voice.
21. Spend some time alone.

How Much Do Real Estate Agents Earn?

Many people think real estate agents make huge amounts of money. Some do. Most don't. But lots of consumers want to know "how much"? Because agents are so easy to poke fun at, the media often try to present the figure in a way that indicates real estate agents are overpaid.
Maybe we'll bust a myth about that. Maybe not. During the writing of this blog, we'll calculate how much agents earn in commissions. Right now, as we write the blog, we don't know what the answer will be except that commissions are down from last year. We intend to calculate the figure as we go.

So let's start.

The median average sales price in America right now is $211,000 and we're currently on a pace to sell 5 million homes. Simple multiplication provides a dollar number on which the total real estate commissions will be based. Over 1 trillion dollars worth of homes sold. That's a lot.

Most of those sales will pay a real estate commission. Folks think that the typical commission is 6%, but it varies and by law is negotiable. Some "full service" agents charge seven percent. There are "discount brokers," too - and sellers will make different kinds of deals with companies offering different levels of services.

Combining all that together, the average commission charged per deal is between 5% and 5.5% depending on the region. Although the national average is probably around 5.14%, we'll go with a figure of 5.25%, just to play on the safe side. (In eastern Massachusetts, it is typically lower)

That comes out to a total of $55 billion. The number is probably high because the estimate for 2006 was a total of $61 billion. Sales are much slower this year and prices are down. But we'll go with $55 billion. According to estimates, between 22% and 27% of the total goes to the company. That leaves between 78% to 73% for the agents. Sure, some experienced agents have higher splits. Some have lower splits. Some even get paid a flat fee or a salary. To make it easy, let's assume that the higher end applies - 78%. That leaves $43 billion for the agents.

How many agents are there?

Though it is hard to put a number on it, states like California estimate they have one licensed agent for every 52 citizens. The Wall Street Journal estimates there is one real estate agent for every 75 people in America. That would be over 4 million agents! Though that many might be licensed in their individual states, most of those aren't actively selling homes. We won't use that number.

The National Association of Realtors claims 1.3 million Realtor members. Most of those are agents, but not all are actively involved in the business. At the same time, not everyone selling real estate is a member of the National Association of Realtors, either. They are still real estate agents, just not Realtors. Even lenders and appraisers are selling real estate nowadays.
So how many folks are actively working to sell real estate? Approximately 1.25 million says the Journal.

That sounds about right.

The average agent, then, would earn about $34,400 based on current values at the current sales pace. Some more. Most less.

Less an average 14% in expenses that the agent will incur. Total? $29,584. And that's only if they earn the full commission on the sale. The fact is, most sales involve 2 agents that split the commission equally.

How do we check the figures? According to independent sources, the average commission charged per house in the USA in 2007 is $11,000. With 5 million sales, that would be...(we promise we didn't check this in advance...)

Total commissions of $55 billion.

From Armstrong Field Real Estate's November 2007 Real Estate & Mortgage Newsletter

It's A Buyer's Market....So When Are You Going to Buy?

A buyer's market is technically defined as: "A market condition characterized by an abundance of goods available for sale."



The in-depth definition from the same source is: "When a buyer's market exists in commodities, the buyer is able to be selective in purchasing contracts, as there are many individuals wishing to sell. Furthermore, these buyers will generally be able to purchase contracts at lower prices than those that were previously prevalent."



The simple version is: when no one else wants a product of value -- buy it, because the price will be lower whereby you'll be able to maximize your investment for future gain. In essence -- buy low, sell high.



When it comes to purchasing real estate, it's not as easy as investing in your 401K or savings account. Those are simple. You can select as little as $1 to invest each month or as high as the law will allow -- thousands per year.



Most people really don't worry about how the stock market ebbs and flows as they are using the practice of dollar cost averaging to invest: "Dollar cost averaging is the practice of investing or saving money at specific times, regardless of market conditions or your personal financial outlook," according to a beginners guide to investing from About.com. The idea is that if you keep investing over the market levels (low and high) you will, through the law of averages, make money in the long haul.



The challenge with that type practice in real estate is that you can't slip into real estate investing. We don't buy our housing investments month after month with prices up and down. Instead, we slap down the down payment when it's time to buy. And wherever the market is, is where we start.



The best strategy for real estate and the best way to make money in real estate is to buy low, when the conditions are in the favor of the buyer to buy. Your start-up purchase is where you "begin" your investment growth -- and that's why I submit to my buyer friends the above headline question, again: "It's a buyers market. So when are you going to buy?"



Today in many markets you can buy a house for 5 to 10 percent below asking price. For a $300,000 purchase, that's between $15,000 and $30,000 off your mortgage. On a 30-year fixed rate mortgage at 6 percent, that reduction in mortgage amount would save about $180 per month (more than $2,000 per year).



In addition, many sellers are willing to help with closing costs just to sell their house. For example, in Fairfax County, Virginia (just outside the Washington, D.C. area) half of the 3 bedroom 2 bath single-family homes sold in the last 30 days included a seller subsidy ranging from $500 to $15,000 (the average seller subsidy was $8,790).



Then there are the prices. While they have been flat over the last couple years, they are starting to increase. This is where your research on the housing market must turn local. The national numbers mean nothing to you when it comes to investing in real estate. Where are your average prices? Are they flat, deflating or appreciating?



Nevertheless, there are hot pocket markets. In the DC area, there are several zip codes that, when looking at the numbers, are technically in sellers markets. In these areas, homes are selling in under 60 days, prices are up, unit sales have outpaced the level from a year earlier and total sales volume is expanding. The thing is, though, the pressure from surrounding zip code markets keep the prices from escalating as fast as their potential.



Let's review -- you have plenty of housing inventory from which to choose. Sales are slow, so sellers are offering thousands of dollars in incentives to tempt you to buy. Prices are flat. Interest rates are still historically low. Sounds to me like the buyer who has been waiting on the sidelines needs to get off the fence and pull out his checkbook.





From the November 2007 Armstrong Field Real Estate online newsletter - Real Estate Update

The Natural Cycle of the Real Estate Market

This blog was originally published by Greg at: http://blueroof.wordpress.com/tag/blogroll/local-stuff/
http://www.blueroof.com/home.php

As the real estate market was rising nationally the last few years the media went hog wild over the frenzy and everywhere you looked there was someone or something telling you that real estate was HOT HOT HOT! Prices were going through the roof and there was unprecedented growth and people were becoming multi-millionaires from selling their homes. It was craziness.
Now the “national market” is going through a correction because it has to- there was too much too fast. In many areas prices and inventory levels are decreasing. Is that a good thing? Yes, it is. It’s healthy for each market to go through it’s cycle. This ebb and flow is good and allows each market to grow and then collect itself and catch up, and then eventually grow again.

Often when an area does go through a slowing or correction, the prices do not actually go down, but rather just don’t go up as fast. Usually the decline of a market is actually just a decline in it’s growth rate.

Areas can see rapid appreciation for different reasons. Usually it’s because of either speculatory (investment) buying or a major influx of people in a short amount of time. When an area has too many properties being bought and sold solely for investment purposes, the market values rise quickly, but this can create hollow values, because the values rise faster than the populations ability to afford them.

When an investor buys a home for $200,000, puts $70,000 into remodeling and then sells that home two months later for $400,000, that home gained 100 percent appreciation in two months. No worries. But if that happens to 20% of the homes being sold in an area over a year, and the prices are now growing exponentially while the area wages are staying the same, you have trouble.

Eventually this can catch up to the market when people are no longer able to pay the prices of the homes. The other thing that happens during this time is people begin to notice how much these neighboring homes are being sold for and they want in on the action. When a market heats up and prices begin to rise quickly everybody starts throwing their homes on the market and the market becomes flooded with property.

Eventually when the demand slows, but people are still wanting to sell for more and more, those home-sellers (who are always the last to accept the end of a growth period) will need to adjust for this and the market can correct itself. Historically this has happened through a period of prices staying relatively flat and growth slowing for a period of time until the demand increases again.

When both factors happen at the same time (investors flipping homes and people throwing their homes on the market to get the high prices), and when new homes are built rapidly in the area because of the demand and the construction brings jobs related to that construction it can really make things interesting. Because these jobs are created by, and sustained by, the real estate market.

This is what happened in Vegas between 2001 and 2005- people began to move into the area, then investors starting buying and flipping homes, and then home builders began building homes as fast as humanly possible and they were hiring people to help build all of these homes and to staff the expanding casinos and the market appreciated over 50% in a year. When the market reached the point where the demand was no longer there (everyone had bought a new home?) and all of these builders no longer needed the help and the construction crews needed to sell but couldn’t and the prices had been artificially driven up by the investors, what happened to the market? It’s now in a period of decline.

According to Marc Garrison, founder of The National Association of Real Estate Investors (NAREI), there are four main components of the real estate cycle every area experiences. These are Expansion, Equilibrium, Decline and Absorption. It’s important to note that this cycle not only applies to large geographic areas, but also applies to cities and even neighborhoods.

Expansion brings job growth, population growth and a high demand on the infrastructure of an area. Roads need to be built, restaurants open, hospitals expand and prices rise.
Equilibrium is when things begin to slow and settle. Prices have reached their limits, or beyond, and this period of time brings high prices and as a natural consequence less businesses move into, or expand in, the area. Governments are less likely to offer incentives to businesses to move into the area and job growth slows.

Decline then occurs as the job growth stops and businesses begin to relocate to save money and the demand for housing decreases. During this time, prices become stagnant or even decline as rents and occupancy go down. Usually this decline is merely a slowing of the growth rate, but in markets where the rise was too fast the decline must result in a correction (decline) of prices.
Absorption occurs as the lower prices and occupancy fall below the national averages and/or the area becomes attractive again to businesses looking to relocate. Governments again begin to incentivize business to move into the area and the population begins to grow again.
These four periods of time are all necessary and this is why real estate is so local. One market may be in a period of decline, which pushes another market into expansion.

Just as nature has it’s seasons, real estate markets have a healthy way of transitioning from period to period. Experiencing these transitions and understanding them can give home buyers and sellers not only an understanding around them, but hopefully, more peace while trying to navigate through the moving process.

REAL ESTATE BARGAINS

If you are looking for a bargain in real estate, you have to keep your eyes open, check your email for updates at least once a day (you are receiving daily updates of new listings, aren't you?), and move quickly when you see the right property.

The property to the left has a 1 bedroom condominium that just came on the market today at $129,900, well below the city assessed value of $271,000. I took a walk through it, and through it needs a little bit of work (new carpets, paint)

Located on Lynde Street in downtown Salem, it is a few minute walk to the commuter rail station, and to some of the best restaurants on the north shore. I bet it won't last more than a couple of days on the market.

Many of the bank owned properties aren't bargains because the bank is owed more money than the property is worth. Most of the properties that were foreclosed on recently were purchased with 100% financing, and the real estate market has seen some lowering of values over the last year. The market seems to be pretty stable right now, and by most accounts will be flat for the next year or so.