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Is It Time To Buy Again?

Sometimes I’m a bit slow on the draw.  Today is no exception.  Here is an article that was published in late March that I just came across.  It’s a long one, so get your coffee cup ready…

In a nutshell, it’s an interview with Mike Castleman, CEO of Metrostudy, a company that tracks real-time data on the country’s inventory of new homes.  You can read the article HERE.

I try to bring a balanced view of the housing market by providing a variety of articles, each with unique and different perspectives.  As always, feedback is welcome…

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Dear Seller…

seller

“My family and I would very much like to purchase your home. I am a single gay man with 2 adopted, handicapped children…”

Have you ever written a letter like this to present to a seller of a home? I’ve done this on behalf of my clients before (not this exact letter, but something similar). And with good success, I might add. The New York Times recently ran a piece that spoke about this tactic (however, the content differs dramatically from what I’ve seen and written in the past).

Letters like those written in the article are perfectly acceptable in my opinion. What should be mentioned from a cautionary standpoint, are words that could be misconstrued as discriminatory in nature as defined by HUD (Housing and Urban Development). Title VIII of the Fair Housing Act prohibits discrimination against a variety of classes. So, even with the best of intentions in mind, a letter like the sample above could be a lawsuit in the making. I am thinking of using the letter from the NYT article though…

What are your thoughts?

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Is the recession over?

Here is another article from the Wall Street Journal that has charted Housing Starts since 1972. According to this article, each time new housing starts have dropped below the one million mark, that signaled an end to the housing slump. The article makes some good points, but as always, we never know about making history until after its been made…

What are your thoughts about the housing market?

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The Housing crisis is over!

If it’s in print, then it must be true. Right?
Don’t misunderstand me because as a Realtor, I like reading articles that are positive for my industry. But I live in the real world, not the financial world where analysts look at things on a more global or macro scale. I just hope that the people reading the article live here in the Seattle area where it will actually have an impact on our local housing market.
And let’s be completely honest, does the average person really understand the full meaning of what is written in articles such as these? I’ve always been a bit confused when the economists use phrases such as “When the rate of house-price declines halves, there will be a whoesale shift in markets’ perceptions… when valuing the collateral, market participants including banks are extrapolating…” What does all of this mean? I consider myself a pretty smart person, and I understood most of what was written, but I’d much prefer to read articles in more basic terms that the general public can understand.
Anyway, here is the full article in the Wall Street Journal. Maybe someone can read it and explain it to me…

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Save money, buy now?

According to a recent report by Radar Logic, a real estate data and analytics company, homes are less expensive on a $/sqft basis now than they were 1 year ago.

Seattle is down 1.4% from February 2007, however our area led the group of 25 metro areas with a 6.2 percent two-year annualized gain in price per square foot, while Sacramento, Calif., suffered the largest loss during that period at 18.8 percent. Seattle led with a five-year annualized gain of 9.6 percent, while Detroit was last on the list with a 2.5 percent five-year annualized loss.

February 2008 RPX Index

Rank MSA % change Feb ’07-Feb ’08
1 Charlotte, N.C. 3.6%
2 Milwaukee, Wis. 3.4%
3 New York, N.Y. 1.1%
4 Seattle, Wash. -1.4%
5 Columbus, Ohio -1.7%
6 Philadelphia, Pa. -3.9%
7 Denver, Colo. -5.4%
8 St. Louis, Mo. -7.2%
9 Washington, D.C. -7.3%
10 Cleveland, Ohio -7.3%
11 Chicago, Ill. -8.0%
12 Jacksonville, Fla. -8.2%
13 Atlanta, Ga. -9.2%
14 San Jose, Calif. -11.2%
15 Boston, Mass. -11.3%
16 Minneapolis, Minn. -11.8%
17 Detroit, Mich. -12.7%
18 San Francisco, Calif. -14.1%
19 Tampa, Fla. -16.4%
20 Miami, Fla. -17.7%
21 Los Angeles, Calif. -19.3%
22 Phoenix, Ariz. -19.4%
23 San Diego, Calif. -24.7%
24 Las Vegas, Nev. -26.2%
25 Sacramento, Calif. -29.8%

Source: Radar Logic Inc.

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A top reason not to buy stocks?

It seems these days that everyone is down on the real estate market. Well, not everyone. According to famous Wall Street investor Peter Lynch in a recent Time Magazine article, “A top reason to not buy stocks is if you don’t already own a home–in which case, that should be your first investment, since an owner-occupied home is nearly always profitable.” Sounds strange coming from someone who made his fortune in the stock market, but his words ring true. In spite of everything that you hear about the housing market, now may be the best time to buy. Read more about it here.

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Slate on Real Estate

A couple of days ago, Slate wrote a piece on a Century 21 real estate TV ad. The author’s take on the ad is not new. It reflects the growing dismay of the typical consumer about the Real Estate industry. High prices, low inventory, and the inability of the average Real Estate agent to educate the customer appear to be the cause of the uproar.

To be sure, selling a home is not an inexpensive proposition. The average cost to a seller in my area is about 9% of the sales price. But, only 6% of that cost is commission. The remaining 3% is for excise tax, title fees, escrow fees, etc. that a seller must pay regardless if an agent is involved or not.

So, it appears that the debate centers around the sales commission, since that is what the author of the Slate ad focused on. I agree with his initial assessment of the Century 21 ad and how it could be perceived as further reinforcement of the common negative attitude that consumers have. However, I lost respect for the author when he commented “of course your agent wants you to buy a house you can’t afford – she gets a bigger commission”. Not only would this be unethical, but the increase in income to the agent is miniscule compared to the long term trust that the agent is trying to create.

It is easy to jump on the commission bashing bandwagon, but consumers should instead be focused on the services that we provide. Bottom line: If an agent cannot justify his/her value in the transaction, the consumer should shop elsewhere.

What are your thoughts?

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A brief history on the Mortgage Interest deduction

I remember when I was looking to buy my first home, I searched for reasons to justify the higher monthly payment as compared to paying the rent on my apartment. One of the justifications that I heard from my friends had to do with the mortgage interest that I would pay along with the principal each month. It is part of an acronym called PITI which stands for Principal, Interest, Taxes, Insurance.

Just recently, I came across an interesting article on the mortgage interest deduction, and I thought others might enjoy learning how it came to be.

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