The Pointing You Home Real Estate Blog

WHEN: Friday, November 18th at 7:30pm
WHERE: The Auditorium at the University of Maryland at Shady Grove  (9630 Gudelsky Drive, Rockville, MD 20850)
COST: FREE!
RSVP to: Tickets@pointingyouhome.com or call 301-963-8000

• Read More »

On the radio show on October 16^th I spoke with my friend Randy Kutz who traveled from Phoenix, Arizona to join me on the show.  Randy used to run a short sale company helping people sell their homes when they were underwater, and currently trains realtors across the country how to navigate the short sale world effectively.  On the show he discussed some of the things he has come to learn about today’s short sale market.

A short sale is when a homeowner is forced to sell their home for less than the total mortgage on the property.  Right now 22 percent of the nation is struggling with homes “underwater” meaning they owe more on their homes than they are worth.  If you are a buyer, I recommend you purchase your home on a 15 year mortgage rather than a 30 year mortgage.  In 15 years, you will have paid off your mortgage, though you will pay a little more than the 30 year, you save a ton of interest when you’re done with it.  Of course, you could take out a 30 year mortgage and pay more than the minimum while benefitting from a lower monthly payment if you may become unemployed in the near future, or if the unexpected occurs, you won’t be locked into a higher payment.  If you are facing foreclosure, you may be able to avoid it with a short sale.  Call Eric’s team 1-800-900-9104 for help & information on short sales.

The DC area market is in a recession.  No matter what you hear, prices are declining; the market is not as strong in reality as is often touted on the news.  If you are worried about your home’s value, you should check up on it regularly.  I offer a free home evaluation which I’d love to provide to you – no obligation!

• Read More »

Peter Orszag, former directory of the OMB (Office of Management and Budget) just published an article suggesting that renting may be the key to help the US housing market pave a way towards recovery.  Do you agree?

Here is an exurb:

After any financial collapse, housing plays a key role in the hard slog that typically follows: a weak housing market feeds into a weak economy, which then feeds back onto a weak housing market. So even if the European banking system somehow avoids a meltdown, economic recovery in the U.S. will continue to languish unless we act more aggressively on housing.

No matter what the government might try to do to break the housing-economy cycle, the deleveraging process will still be painful and take some time. But that’s not an argument against action; just because a headache can still hurt some even if you take aspirin doesn’t mean you should skip the aspirin. One thing the Obama administration could do now — probably with Republican support — would be to attack the oversupply of housing stock by allowing a tax write-off for investors who buy empty properties and rent them out.

To understand why this would help, consider that the problems in the residential real-estate sector have two dimensions. First, we have an excess supply of owner- occupied housing, which puts downward pressure on prices. Second, millions of American households now have negative equity in their homes. Dealing with excess inventory by shifting vacant properties into the rental market would help to stabilize prices and thereby mitigate, to some degree, the negative-equity issue — although additional action would also be warranted to attack such “underwater” situations. (A future column will discuss possible responses.

To read the full article “Renting Housing Recovery” click here.

• Read More »

A recent study by the Mayo Clinic finds that having a positive attitude and exuding happiness can help you live longer!  Perhaps it’s time to “rightsize” and start living?  See the Cowans:

Here is the Original that they played after a check up at the Mayo Clinic!  Some happy retirees!

• Read More »

A recent conversation with a client resulted in a request for a compilation of information that would be useful for sellers to remember as we look for a perspective on “fair” values.  The following list of points is not comprehensive, but will help most people to get a handle on trends and changes, the power of lending practices, and reasonable expectations based on historical precedent.

First, I would like to address interest rates.  A $100,000 loan at today’s rate of 4% will cost a borrower about $477/month (principle and interest only) for a 30 year loan with a fixed rate.  At the historically “healthy” rate of 8%, this same loan would cost $734/month.  If we woke up tomorrow to those rates, a $500,000 house would have to be reduced to $325,000 for a buyer to maintain the monthly expenditure they could afford.  If the rate were 15%, as it was in the early 80’s, the monthly cost would be $1,264.  Waking up to this rate would require the same $500,000 house to be adjusted to $190,000 to maintain affordability for the buyers.  A note on interest rates is that they will follow the trends of inflation.  Lenders can’t be trapped behind loans that are less expensive to the consumer than the current inflation, as they would now be “paying” people to take the loan.

In 2008, the United States economy operated on $800 billion in circulation.  In 2011, there is now $2.4 trillion available to circulate because of a few rounds of money printing by the government.  Banks that are holding this money are being paid to keep it out of circulation because of the inflation it would cause when injected into the operating economy.  We are either paying banks to sit on that money, or they will lend that money to consumers in order to pursue profit.  One scenario adds to the national debt, and the other creates a surge in inflation.  If inflation rises, the interest rates on all new loans will rise to reflect the devaluing money (see above).

Household income is stagnant.  Published reports show the median income today to be at or below the median income from the year 2000, which is the beginning of the rising value surge for housing in the county.  These figures are not adjusted for inflation, which means that the typical household has higher expenses today in real dollars despite bringing in fewer of those dollars.  This clearly allows a smaller portion of the income to remain allocated for housing expenses.  For perspective on housing costs over that period, the median sales price in Montgomery County in the year 2000 was $190,000.  In 2005, that number had risen to $425,000.  Last year (2010), the median had dropped to $350,000.  As can be seen by these direct comparisons, the affordability index of housing is currently facilitated exclusively through low interest rates on fixed rate loans.

In the Fall of 2008, there were major collapses taking place in the banking industry, most notably the collapse of Lehman Brothers.  This precipitated a shock to the system, where confidence in housing pricing was shaken and resulted in a roughly 10-12% drop in prices in only 3-4 months.  The year over year comparisons of October through December of ’08 vs. ’07 showed about a 15% drop in new contracts.  That means that about 15% fewer homes found satisfied buyers as the same time a year earlier.  This contraction in buyers only produced a 10-12% drop in value.  By comparison, August of ’11 shows a reduction of new contracts compared to August of ’10 of over 33%!  September statistics are not published yet, but our “seat of the pants” analysis of the activity supports a continuation of this attitude from buyers.  Similar to ’08, there was a trigger event when the federal government’s credit rating was downgraded.  This, combined with international economic news in Europe and China, has created a volatile environment that makes buyers feel entitled to tender very low offers.  On the surface these offers may seem insulting, but they are most likely a sneak preview of the year to come.

A recovery of about 5% was enjoyed by all in the Spring of ’09.  These new values held steady for the better part of two years, but it is important not to confuse the “cycle” of real estate with a direct and corresponding stimulant: cheaper money and incentives.  A proper analysis of affordability shows that we should have continued a downward trend in ’09, but a combination of tax incentives for buyers and ever-lowering interest rates (see above for the multiplying effect of these rate reductions) delayed this correction to over-priced housing.  The tax rebates ended in the middle of ’10, but the rates have continued downward.  Currently, the strong pull-back of buyers despite 4% loans identifies a distinct shift back to price correction.  Anyone waiting for the Spring market of ’12 is confusing the stimulant effects of ’09 and ’10 with “market cycles”.  In the words of a client during a discussion on the topic, “If buyers won’t make an offer on my house while interest rates are 4%, all of these houses must be worth a lot less than we think.”  Very good analysis.

Because the last round of stimulants did not take hold permanently, there will be little desire on the public front for a repeat of those expensive measures.  We have new debt to reflect the last attempt and strengthening public pressure to deal directly with the debt problems across the country.  It is not likely that there will be a new and significant stimulant to attempt another revitalization.

In the Spring of ’12, most large banks will begin bringing houses to the market that they have repossessed through foreclosure.  These banks have held this inventory off the market while foreclosure practices were under review in the court systems.  This has created a backlog of foreclosure properties that would have come to the market in ’11 but will now double the supply in ’12.  The downward pressure on values will be significant.

The good news for sellers: although buyers typically have general feelings about what is a “good deal”, most of them don’t have as complete of a picture as the one just given to you.  A seller that gets ahead of the curve today can sell, get off the down escalator, and watch it correct from the sidelines.

• Read More »

U.S. Consumers are known for their excesses, whether food, clothing, or things; the last is the cause of annoying clutter in most homes. If your wish is to fill up all the empty corners and spaces you can find, you end up having a chaotic house. If this is the case, you probably feel as though you should free up some room. After having tried everything from disposing unwanted things at Goodwill and thrift stores to getting good deals for your antiques at specialty shops, you may not have any other choice left but to look for cheap self storage deals.

If you decide that there is no place else for your excess belongings to go but into storage, it’s time to do a little homework. It is imperative that you look for storage services that offer the best deals depending on your needs. Basically, the costs of renting storage spaces differ according to location, size of unit, and services provided. There are also other considerations like climate controlled units and free use of moving trucks. Storage units with climate control are mostly available for indoor spaces only, but there are some exceptions.

The first thing you need to do is to establish the size of the space you will need for your belongings. This will be your basis for making price comparisons. Smaller units are usually lower in price as compared to larger units. However, you still need to match one company’s rates against another’s to really get the best arrangements. Downsizing your possessions further would help; make sure everything you keep is worth the extra cost.

Next you can start the search for the most excellent deal. Unlike other industries, the self-storage industry does not yet have high transparency of prices online. Therefore, it is beneficial that Sparefoot and SelfStorage.com provide information on pricing and related amenities through storage facility management software. These are sites wherein you can search specifically for what you are looking for in a storage service. You can find out which services offer drive-up units, climate control, 24- hour access, free moving truck rentals, or strong security. They also allow you to sort through the prices posted by facilities, especially those nearest to you.

Evaluate the savings you could get from promotions available for short-term contracts. Determine whether you could benefit more from engaging short-period services or whether you’re better off with long-term ones. The amount of time you plan to rent matters. A three-month price may be good if you stick to that period. However, if you think you might utilize the space for longer than that, it is best to look for deals that suit the actual time you will be using the storage. More often than not, long-term deals are more affordable than renewing a short-term deal.

To find the best self storage arrangement for you, you should consider amenities you would like, the potential size of your unit, price, and the length of time your items will need to be stored away from home. Don’t forget to evaluate all your belongings to see if you could give anything away before storing it.

Need help Getting rid of Clutter?

I can help – call for a free copy of my “Rightsizing Guide” which will help you walk through the process of throwing away unwanted or unnecessary items in your house!

• Read More »

This is a very interesting article about how first-time home buyers are growing weary of the hassle that often comes with buying a bank-owned property.  Months of delays, certifications, and other hoops to jump through add to the many obstacles home sellers are facing to attract new buyers.

Survey shows first-time homebuyers growing weary of short sales

First-time homebuyers are growing tired of short sales, which take nearly 17 weeks to complete, according to the latest Campbell/Inside Mortgage Finance housing survey.

While first-time homebuyers acquired 54.1% of all short-sales in November 2009, the segment’s share of acquisition activity fell to 39.7% in August with many buyers losing interest due to several factors slowing down the process, the Campbell/Inside Mortgage Finance survey showed. The August figure represented a “three-month slide and was the lowest level for first-time homebuyers ever recorded in the survey” of 2,500real estate agents.

To Read the full article, about weariness of first time home buyers, click here.

• Read More »

CNNMoney just published an article noting that Existing Home Sales across the country jumped in August by 7.7%!  That’s great news for the struggling summer months and sets us up for a healthy fall market!

Home buyers are starting to creep back into the housing market, lured by rock-bottom prices. Sales of existing homes rose 7.7% last month to an annual rate of 5.03 million homes, from 4.67 million homes in July, according to the National Association of Realtors.

Economists had expected August sales to come in at a rate of 4.7 million homes, according to consensus estimates from Briefing.com. Home prices have cratered since the start of the recession, and mortgage rates have also been very low. Last week, 30-year mortgages hit a record low.

“All year, the relationship between home prices, mortgage interest rates and family income has been hovering at historic highs, meaning the best housing affordability conditions in a generation,” said Ron Phipps, president of NAR, in a written statement.

To Read the full story from CNBC about existing home sales, click here.

• Read More »

Washington’s 630 WMAL AM Now Available on FM

Cumulus Announces Simulcast on 105.9 WVRX FM First Platform Change Following Acquisition of Citadel Stations
WASHINGTON, D.C., September 19 — In an effort to compete directly with nation’s highest-grossing radio station, Cumulus media today at noon begins simulcasting news and talk programming from 630 AM WMAL on 105.9 FM WVRX — providing FM listeners in the DC area with access to WMAL’s 85 years of award-winning programming and community service.
“By expanding our successful brand to the FM dial, we will be a viable listening and advertising option for many more people in the Washington, D.C., area”, said WMAL President/General Manager Jeff Boden. “There are many potential listeners who never listen on AM, and we are now making programs of wide interest available to the largest possible audience. Programming simulcast as of noon today on AM and FM includes The Chris Plante Show, Rush Limbaugh, Sean Hannity, Mark Levin and “Morning Majority” (hosted by former Fox News anchor Brian Wilson, “The Daily Caller’s” Mary Katharine Ham and WMAL veteran Bryan Nehman).
This simulcast uniquely positions WMAL/WVRX to compete head-to-head with WTOP, whose $57 million in annual ad sales make it the highest-grossing station in the nation. While WTOP has a repetitive news-wheel format, WMAL/WVRX programming is interactive through a mix of news reports and call-in shows that allow for engagement with listeners.
“When we grew to 570 stations nationwide last week after closing the Citadel deal, I told my team to be creative at using innovative ways for the newly acquired stations to bolster our community involvement, and that’s what our Washington, DC team has done so elegantly here,” said Lew Dickey, CEO of Cumulus.
On Friday, following approval from the Department of Justice and Federal Communications Commission, Cumulus completed a $2.2 billion purchase of Citadel Broadcasting and is now the nation’s largest pure-play radio owner with 570 stations reaching 93% of Americans each week.

• Read More »