Late July and August can be a slow time for house hunting. But it is a good time to search online listings and neighborhoods. Use our worksheet to keep notes.

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Try to wrap your mind around this thought: America's housing market was hammered in 2008 to the point where when all is said and done on January 1, 2009, the losses should mean that more than two trillion dollars in housing value disappeared for the year. Due chiefly to declining home values nationally, which was reflected in an 8.4% loss for the first three quarters of the year, homeowners are now holding onto property that could be worth significantly less than it was a year earlier.

Not all markets are performing poorly, but the five biggest loss leaders are each located in California. According to an analysis of recent Zillow Real Estate Market Reports, Stockton, CA had the biggest single year over year drop of any market in the US, with home values dropping by 32.3% during that period. Also experiencing huge losses were Merced, Modesto, Salinas, and Vallejo-Fairfield, tallying losses average 30% for the year.

In the midst of the bad news there are a few markets which have actually seen a slight rise for 2008. These markets are State College PA , Anderson in South Carolina, and three North Carolina metropolitan areas including Burlington, Winston-Salem, and Jacksonville. Indeed, Jacksonville has led the way for the year, reflecting an average home increase of 4.9%.

"This year marked the acceleration of the market correction, and is likely to end with the eighth consecutive quarter of declines in home values," said Dr. Stan Humphries, Zillow's vice president of data and analytics. "In general, homeowners in most areas we cover are struggling with foreclosures pouring into the market, large amounts of negative equity and dropping home values. On the positive side, in the third quarter, some markets - particularly those hit hardest in the downturn - showed smaller year-over-year declines than in the prior quarter. Our optimism here, though, must be tempered by the knowledge that the larger economic problems that emerged in the fourth quarter will likely further challenge the real estate market."

Zillow's survey covers 163 metropolitan statistical areas (MSAs) across the USA. Most chilling is Zillow's calculation that as many as 11.7 million American households owe more on their mortgages than their homes are worth. One in seven of all homeowners (14.3 percent) were “underwater” by the end of the third quarter with that number expected to increase significantly when fourth quarter figures are tallied early next year.

Source: Zillow.com

2008/12/16 Home Buying

Lots of people are in good shape financially despite the recent gyrations of the stock market. Sure, their retirement portfolios may have taken a hit – a bad one at that – but they're income is stable and they're still able to stash away some cash for the future.

Moreover, there is a segment of the populace who are renting their homes and are looking to jump into a housing market that has seen double digit declines in value and sales for the past year or two. Inflated beyond belief, many markets have returned to more modest valuations, shedding years of hyper growth almost overnight.

For the person in the position to buy a home, an opportunity awaits them. However, many people are timing the market in a bid to buy in at the best possible price, particularly as housing prices hit the bottom.

Unfortunately, there isn't any way to determine when the bottom has been reached, and that usually becomes apparent several months after a recovery has begun. For these home buyers, the bottom has been missed and they'll end up paying more for their homes, perhaps thousands of dollars more if the market rebounds quickly.

I like to read various real estate publications and articles to see what the experts say about when to buy a home, but cannot give to you consensus based on what has been written. Clearly, there are contradictory statements being made, information which can leave you more dazed and confused, than reassured.

Happily, there are some things to consider which can help you get in the market at a good price, bottom being hit or not. Sure, prices may continue to drop later on, but if you're planning to be in your home for at least five years, you should recoup your investment and then some. Consider the following:

Your local market has already retreated considerably – Get with a real estate agent who knows your local market and ask her to pull up price comparables (comps) over the last few years. Some of that information may be online, but if there is a specific neighborhood that you like, get reports for that area directly. Try to find similar sized homes and compare what those homes sold for 1-3 years ago and what they are selling for today. If the drop has been sharp, the worst of the pull back has likely taken place, but if the decrease has been small, there could be additional changes over the next several months. One caveat: that neighborhood could be incredibly stable, bucking local trends or the opposite may be happening.

Your local economy is turning the corner – Newspapers, television news shows, and online publications can be good sources to help you discover what the job market is like in your area. Is a major company cutting back, instituting a hiring freeze, or have they announced an expansion which will lead to new jobs? One company's good fortune doesn't make for an improved market, but if you're hearing good reports from several employers, then housing demand will soon climb as people move into your area. One more sign: new home builders are putting up fresh housing developments – they don't start new projects in a sour economy.

You have enough money for a down payment and are pre-approved for a mortgage – Perhaps the best reason to buy a home now is that you have the financial wherewithal to swing a sale. You not only have a significant chunk of change to put down, but you've lined up a mortgage, and you have enough cash left over to cover closing costs, make monthly payments, etc. Guess what? The market may not have bottomed out, but you're in an excellent bargaining position to pay even less than what the owner is asking. You don't want to make a low ball offer, but a bid that shaves 5% off of the asking price is definitely reasonable.

The national economy may be going through a recession, but your personal economic forecast could be a good one. Waiting for the market to “bottom out” could end up being a wonderful opportunity missed, so don't delay – there are bargains out there awaiting you today.

2008/11/03 Home Buying

Homeownership Is Still Within Your Reach

America is coming out of a strange fog, one that first settled down on our country during the heady days of the 1990s. Back then, the way lenders determined how mortgages and other loans should be offered was relaxed, allowing consumers to become homeowners with little or nothing down.

The worst form of that fog could be found in the form of no-documentation mortgages, those lending vehicles where prospective homebuyers were not required to show proof of income. A well meaning plan to help low income people become homeowners ended up being a boondoggle, one whereby homeowners could not keep up with mortgage payments and soon found themselves having their homes foreclosed. A contributing factor to today's economic climate were these sub-prime mortgages, something that has cost our country dearly.

Qualifying For A Home Loan

Lending requirements have tightened considerably over the past few months, making it much more difficult for first time home buyers to jump in the market. With housing prices off considerably from highs reached in 2006 and 2007, the opportunity to find an affordable home is quite good. Still, many borrowers are finding that they need to have very good credit (a credit score of at least 700) and a sizable down payment, usually 20%.

These two requirements has made it difficult for first time buyers, especially those who don't yet qualify for a loan. However, what you can't afford today, you may be able to afford six months, one year, perhaps three years from now, opening up a world of opportunity if you can patiently wait.

To reach your goals of having enough money for a down payment, the following steps can help you get there as soon as possible:

Establish a savings pattern -- If you have $15,000 saved toward the purchase of a home and know that you'll need as much as $30,000 to qualify for that $150,000 house, that means you need to save another $15,000 in as reasonably short a period of time as possible. If you desire to become a homeowner within the next two years, then that means you'll have to set aside $625 per month in savings to reach your goal. If you can spare that much money over that time, then your goal is within reach. If not, you either need to stretch out your savings plan or consider other ways to raise the money.

Attack your debt -- While saving for a home, you'll want to also make sure that your debt is reduced and that you are up to date on all payments.  Your credit history will be scrutinized by your future home lender. Make sure you pull your credit reports and clean up any potential problems. The better your credit, the higher your credit score. The higher your credit score the increased likelihood you'll be approved for a loan and get that mortgage at a fair rate.

Control your expenses -- The #1 hazard to your bottom line are your expenses. Some costs you cannot control, but many of them you can. Consider consolidating debt, choosing a better cell phone plan, downgrading your cable, eating in, shopping in bulk, cutting back on entertainment costs, etc. There are plenty of ways you can save on expenses without radically adjusting your lifestyle -- make good use of the internet to find the best way to conserve your cash!

Live on a budget -- Once you have full knowledge of your income and expenses, then you'll be a position to establish a budget that can help you reach your goals. You'll have a better understanding of where your money goes and what steps you can take to save more money with a budget.  Living on a budget now will help you when you become a homeowner, giving you the power and freedom you need to succeed.

Bank on it -- The money you are setting aside for your down payment should be placed in an interest bearing savings account. This is no time for you to put your money at risk, but it could be a good time for you to lock in your money for twelve months or longer at a high interest rate. Currently, certificates of deposits (CDs) are paying about as much as 4.25% through online institutions such as ING Direct. Your money is insured, it'll grow faster, and you can reach your goal sooner.

Seeking Help As You Embark On Your Journey

Finally, if you are having trouble reaching your goals, being accountable to someone else can certainly help. Your spouse, friend, or trusted professional can be of assistance to you, offering their perspective on matters and encouraging you along the way.

Saving money to buy a home can be a trying experience. However, once you qualify for a home and find the house that you like, you'll find that all of your hard work has paid off, giving you the most valuable asset that anyone can own.

2008/10/22 Home Buying

FSBO – or For Sale By Owner – is a method of home selling that has been embraced by a growing number of homeowners over the past decade. Thanks to internet access many people are finding it easy to list their homes themselves, thereby bypassing a real estate agent and saving thousands of dollars on commissions.

However, with the market very slow right now, is FSBO still a good idea? It can be, but you may need to rethink your strategy in today's business and housing climate, one of the most challenging times to buy and sell property in recent memory.

Where there are challenges there are also some good opportunities, ways for you to sell your home without taking a beating. But, before you make a move, you'll want to find out what you're up against, to create a strategy that will work for you. Let's explore some ways you can sell your home yourself and not take a beating in the process.

Assess Your Local Market -- Whatever you do, dismiss the national news when it comes to selling your home. In fact, most state and regional news pundits will have their opinions about the market, but their ideas may not correspond will your local reality. Specifically, your neighborhood could be something buyers want, especially if it is convenient to everything. On the other hand, people who live in neighborhoods on the far side of town could find that their micro market has dried up, thanks to be poor location and a host of other factors.

Keep A Tab On The Trends -- What have homes sold for over the past few months? How long did these homes stay on the market? Are prices trending upwards, downwards, or are they flat? You can find out this information by obtaining real estate market comparables (comps) for your area, something a real estate agent friend can provide for you. Just keep in mind that these reports offer only a decent barometer of the market, but they may be a little behind current trends. Make certain that the information you get is the most recent, but also take the time to drive around your neighborhood to see whose home is for sale and what prices are being asked.

Make A Plan – If you must sell your home within a certain period of time, how long will you keep it FSBO before hiring a real estate agent? If you get no bites within two weeks time, consider finding an aggressive agent and offering her full commission to sell your home. If you aren't in a rush, tweak your campaign by making certain that your home is easily found online (e.g., through FSBO sites, Craigslist, and multiple listing sites). Also, is your personal lack of availability to show your home causing you to miss prospective buyers? Consider setting aside each day to show your home and give out your cell phone number so that people can reach you wherever you are.

Price It Right – Is your home priced right? Have you taken into consideration the recent shifts in the market? Some markets have seen prices drop by twenty percent or more in just a few months time, while other markets appear to be on the rebound. Be prepared to offer whatever sweeteners you need to entice buyers, perhaps pricing your home three percent lower than the going price, to split your real estate commission fee savings with your buyer. Offer to pay closing costs or kick in appliances for some other feature that the buyer wants, but maybe you didn't make part of your original offer.

Cut Your Losses Or Cut The Sale – If you must sell now, consider taking a loss on your home if you cannot get a buyer that will pay the price that you want. Make certain that you can pay off the mortgage with the funds received and talk with a tax accountant to find out how you can make this loss work to your advantage taxwise.

These aren't the best of the times when it comes to the housing market, but they aren't the worst times either. Stay cool, be ready to make adjustments immediately, and keep your head on your shoulders when it comes time to consider offers. If you aren't getting the price that you need and you don't have to move, then wait the market out – things will certainly improve a year or two down the road.

2008/10/07 Home Buying

Consumers today are feeling the impact of a financial crisis that only seems to be getting worse. Much of the crisis can be traced back to a series of bad decisions made in the lending industry, particularly when consumers were encouraged to purchase homes when they really weren't in the position to become homeowners.

One of the worst mortgages made available at that time were "no doc" or no documentation mortgages where lenders allowed buyers to purchase homes without proof of income. These buyers were some of the first to default on their loans, while other buyers couldn't handle adjustable rate mortgages especially when their mortgages reset to a higher rate.

Not All Of The News Is Gloomy

But, the news isn't all gloomy especially for the person who has wisely weighed the real estate market and is ready to jump back in. While some people smell bad news others see an opportunity and are ready to seize what they can before the coming rebound kicks in.

One mortgage vehicle worth considering are various "no closing cost" mortgages. On the surface, you may think that this option is too good to be true, but some lenders are still luring home buyers with this attractive option. As the name suggests, you can buy a home without pay closing costs as these costs are picked up by the lender.

Let's take a look at no closing cost mortgages and see if this type of loan could be right for you:

No Closing Costs, Perhaps Not -- To key to a no closing cost loan is that you're not saddled with closing costs which can make it very difficult for home buyers to meet on the day that they purchase their new home. Fees of $3000 to $5000 are possible, but your loan isn't truly free of closing costs unless the lender picks up the title search fees; survey and recording fees; appraisal, home inspection, and warranty fees; you name it. If the bank says that they'll cover all of these costs including your attorney fees, then you probably have the real deal. If not, find out what they won't cover -- they have to give that information to you soon after you put start doing business with them.

They Want Your Business -- Why would a bank want to provide a no closing cost loan to you? That answer is easy: they want your business. In this highly competitive lending market, lending institutions know that if your credit is excellent, then you're in a position to shop around for the best deal. Banks, mortgage companies, and other financial institutions only make money by lending it out. If you're considered a low risk, expect to receive favorable terms including no or low closing costs.

Higher Rate Possible -- Conversely, not every lender will agree to offer you a no closing cost mortgage without trading off for something else. Namely, they'll cover your costs, but your mortgage interest rate could be slightly higher, perhaps by 1/8 of a percent. On the surface, this may not sound like a bad deal, but it could add thousands of dollars of interest charges to your mortgage, effectively canceling out your no closing cost option.

Check Up On Your Lender

Of course, when dealing with any lender today, you want to find someone who is reputable and solid. Do a google search to find out how healthy your lender is and find out from other borrowers if they're satisfied with their mortgage provider or not. The internet has made home buying fairly transparent, but you still need to do your homework to find out if your lender can provide what they say that they will and be around for the long term.

2008/08/27 Home Buying

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