The Skinny on Real Estate

A blog about Broomfield real estate

You may have been too busy watching American Idol (I understand!) but there was some new news in the mortgage world today.

Six of the big, big, BIG boys in the mortgage business have decided to give homeowners, who are extremely late on their mortgages, a 30-day reprieve to try and work out a solution.

It’s called “Project Lifeline” and is for borrowers who are 90+ days late on their mortgage.

Of course we’ve already started to hear complaints from politicos who think this isn’t enough and that the banks (and/or taxpayers) should just buy these folks’ homes and let them live there free of charge. (Okay, so maybe I exaggerate here.)

US Senator Christopher Dodd said there will be “millionS” of foreclosures “in the coming months”.

Ummmmm what????

Millions?

It’s bad enough that he wants responsible folks, who are paying their mortgages, to foot the bill for those who default, but now he’s just saying silly and ridiculous things and pandering to the voters. (Talk about irresponsible.)

ALL borrowers will be sent letters explaining the 30-day reprieve and will urge them to contact their lender to try and work something out.

I think what would be really interesting to know is how many borrowers actually make the EFFORT to contact their lender to see what can be done.

Let’s face it, most of these near-foreclosure borrowers didn’t get there by accident, but are they purposely willing to make an effort to get out of the jam?

As for “millions” of foreclosures let’s look at the FACTS shall we? (I know, why would we do that???)

According to Hope Now, an organization that is working to help distressed home buyers, in the last half of 2007:

283,000 homes went all the way to a foreclosure sale.

283,000.

Not millions.

Not one million.

Barely above a half million as a matter of fact.

Nearly 1.5 million borrowers faced difficulties paying their mortgages in that same time period and more than 45% of them (45%!!!!) were helped out with formal, new repayment plans, and nearly 15% had their loans modified.

The study goes on to point out that only 1/3 of delinquent borrowers ended up going all the way to a foreclosure sale.

ALSO, and this is a direct quote from the study:

Frequently, borrowers do not respond to their servicer’s attempts to contact them until they receive their first legal action notice.

If you or someone you know is having trouble with their mortgage CONTACT THE LENDER. Sure it’s tough, but not as tough as losing your home, right? Suck it up and call your lender to see if there is anything they can do for you.

If you’re currently paying your mortgage, or thinking about buying a home, but are afraid that the housing market is collapsing don’t be. It’s not and it won’t. Mark my words.

Breaking news on the Broomfield real estate market, buying a home in Broomfield, and real estate issues in the Denver-Metro area, every day, on The Skinny on Real Estate.

I admit it, much of what Congress does bugs the crap out of me.

But I’m kinda liking the latest suggestion by Georgia Senator Johnny Isakson: he’s proposing a $15,000 tax credit for buyers who purchase a home (to live in, no investors please) between March 2008-February 2009.

Out of all the over-reaching and ridiculous proposals by many of the guys and gals in Congress this one probably bugs me the least.

Any time someone says “tax credit” or “tax cut” I sit up and take notice.

Although I do love the line in the article that reads:

“Isakson said he did not know how much the proposal would cost the goverment in lost revenue.”

Hey, I know, here’s a really unique idea, cut out all the stupid “bridge to nowhere” projects and you won’t have to worry about lost revenue!!

I would also like to add here that most reporters don’t inject a line into the article, in which they worry about lost revenue, when the proposal looks more like a big fat hand out than when it looks like a tax credit or cut.

Whether we end up with an additional tax credit or not, for buying a home, remember that you can STILL deduct your mortgage interest AND you can still deduct your Private Mortgage Insurance AND you can deduct what you paid in property taxes AND you may be able to deduct any moving expenses if you moved a certain distance for a new job. (For details consult your accountant because remember I’m not an accountant. I don’t even play one on TV!)

I am a Realtor however, so if you’d like to buy or sell your home email me at beth@bethskinner.com or call me at 303.887.1883.

“99% of US homes NOT in foreclosure”

While you may not see that headline it would be true.

According to RealtyTrac (which, according to some, is not the most reliable source in the world) 1 out of every 100 homes in the US are at some point in the foreclosure process. (Realty Trac has a response to that criticism here.)

That’s 1% folks. 1%.

99% of US homes are NOT in the foreclosure process.

So are we in the midst of a crisis? Or something less?

Breaking news on the Broomfield real estate market, buying a home in Broomfield, and real estate issues in the Denver-Metro area, every day, on The Skinny on Real Estate.

Ronald Reagan said one of the most feared statements had to be “I’m from the government and I’m here to help.”
This applies to many things, including over-reaching mortgage-related reform.

Consider this press release published by the Mortgage Bankers Association recently. David G. Kittle, Chairman-Elect of the Mortgage Banker’s Association, warns of the long term costs of extensive mortgage reform.

In it Kittle points out that:

“…more than 50% of borrowers with subprime ARMs scheduled to reset in the first months of 2007 refinanced or otherwise paid off their loans prior to reset.”

Roughly translated: the claims by the media, and groups that are pushing for extensive government intervention in the mortgage market, may be way overstated.

“2 million” is a number commonly thrown about as the number of mortgages that are expected to reset. Unfortunately many who report on this, report as if 2 million homes are expected to go into foreclosure as a result.

By assuming this, one falsely assumes that the banks won’t help their borrowers work out a single one of these loans, into easier to manage conditions, or that FHA won’t help borrowers refinance a single one of these into fixed rate loans, or that the owners won’t sell a single one of these homes before the mortgage resets and so on.

This is obviously just not true, as evidenced by the fact 50% of borrowers with subprime loans managed to work out some sort of solution in 2007.

This also doesn’t account for the majority of subprime borrowers who are paying their mortgages on time and will continue to pay them on time even after reset.

Extensive government intervention in the mortgage markets will drive up the cost of obtaining a mortgage in the long run.

THERE’S NO SUCH THING AS A FREE LUNCH!

And when the cost to obtaining a mortgage rises, the number of home buyers will decrease. Will it freeze “rich” people out of the market? No. They will absorb the cost increases.

It will freeze out first time home buyers and poorer people.

The very set of people that some of these organizations claim to be advocating for.

With friends like that…

Breaking news on the Broomfield real estate market, buying a home in Broomfield, and real estate issues in the Denver-Metro area, every day, on The Skinny on Real Estate.

“Congress takes paycut and turns down all earmark spending”

ha! I’m just kidding. Because that headline would obviously be a big fat lie.

Actually what I meant was: “2007, 5th highest year of home sales on record”

That headline, my dear Broomfield home buyers, would actually be the truth.

You can see it for yourself here in a statement by Lawrence Yun, the chief economist for the National Association of Realtors.

While nationwide average home sales are down, keep in mind that a nationwide average is of very little use to those of us buying and selling homes in Broomfield.

According to Metrolist statistics, the average home’s “sold” price in Broomfield for 2007 was $339,139 and the number of homes that sold in Broomfield in 2007 was 827.

In 2006, the average “sold” price in Broomfield was $325,097 and the number of homes sold was 822.

Not only did the average home price increase in Broomfield this year the number of homes sold increased as well.

Broomfield is a great place to buy a home! And with mortgage interest rates at 30-year lows it’s a great time to buy!

Call or email me if you’re looking to buy or sell a home in Broomfield. I give 110% to my clients no matter what type of home you’re looking to buy!

303.887.1883
or
beth@bethskinner.com

If you heard that .002% of households went into foreclosure last month what would your reaction be?

I suspect it would not be one of shock and horror. It might even make you think that the real estate “crisis” is not such a crisis after all?

Well guess what. It’s true.

The media is trumpeting the most recent foreclosure news released by RealtyTrac. Foreclosures are up a whopping 68% from this time last year! And 1 in 617 homes went into foreclosure last month!

Loosely translated: .002% of homes nationwide, went into foreclosure last month.

In Colorado, .003% of homes went into foreclosure last month.

Nationwide, foreclosures dropped 10% since last month which, according to Realty Trac, is the first double digit monthly decrease since April 2006.

I have other issues with RealtyTrac and the way they count homes in foreclosure but that’s for another blog post.

The Metrolist service released their monthly sales figures from August today and this is what they had to say:

For the Metro Denver area residential home sales are figuring quite a bit better than they were this time last year.

3,943 homes sold last month compared to 3,921 this time last year.

Average Days On Market remained the same at 92.

The median price (exact middle) was up to $257,500 last month compared to $252,900 last year.

Average sales price was up to $329,783 last month compared to $320,092.

Condo sales unfortunately didn’t fare nearly as well (unless you’re a buyer!). The average sales price a year ago was $196,659 and this year it was down to $182,741.

The average sales price on residential homes tends to jump around from month to month but August did considerably better than February of this year, which came in at the lowest: $292,143.

I maintain this is further proof that the doom and gloom scenario the media and the politicians are trying to paint is off. Are houses going under contract the minute you stick a sign in the yard? Hell no! That doesn’t however mean there is a housing market crisis. It just means that we real estate agents actually have to DO SOME WORK to get a listing sold. Suck it up, it will pass.

It also means that consumers need to carefully consider all their options.

How much equity do you have in your home? If the answer is none and you can afford to wait to sell you my want to hold out for a while. You may also want to consider renting your home out and moving into more affordable digs. It’s a great time to move up, while the market is soft, while you’re at it, turn your current home into a real investment and rent it out instead of selling.

What kind of condition is your house in? If you want to sell it quickly and for top dollar make sure it’s clean and ready to move in instantly. There is a lot of competition out there and your house needs to outshine the rest if you want to sell.

EFFECTIVE IMMEDIATELY: If you (or someone you know) are currently in an ARM that is adjusting to an amount you can’t afford, and you have a 30-day late for the FIRST time on this loan, you may be able to refinance into a more affordable FHA loan. My preferred lender, Eric Grandcourt at Waterstone Mortgage Corporation may be able to assist you so call 303.552.0375 with any questions.

If you’re thinking about buying a home you can have your pick of the lot right now at decent prices and good interest rates. This is an especially good time for renters to buy their first home! Lower prices mean good deals for buyers!! Not so great for sellers but prices will go up again and you’ll wish you would have bought when they were lower - there is no crisis and there is no real estate bubble - especially not in the metro-Denver area.

The Denver Post reports today that we’re in the midst of a “national housing meltdown…” Seriously? And on what planet would that be??? (As a quick aside I must point out that the best part about blogging is I can do what I want with punctuation.) Honestly, I think it’s irresponsible to throw out phrases like that in the guise of journalism when there isn’t a bit of solid data to back up an assertion like that.There is absolutely, positively, NO “national housing meltdown.” Not even close. Sure, it’s fun to write words like “meltdown” and I suppose people are more likely to buy the newspaper and actually read articles with words like “meltdown,” rather than “housing market kinda slowish at this time in certain areas…” Which is FAR closer to the truth than “meltdown” but a hell of a lot more boring.

Now to give the author some credit he does supply several quotes from economists who do not predict big trouble ahead for the American economy, but that doesn’t erase the “meltdown” comment in the first sentence that is stated as fact and not opinion.

Lawrence Yun, senior economist for the National Association of Realtors, was in Broomfield 2 weeks ago to give a talk on the state of the real estate market. (To which, I might add, the media was invited, but unless they were hiding, no one from the major dailies bothered to show.) He opened his talk with the words, “…the housing market is fundamentally sound.” Again, much more boring than “meltdown” but actually backed up by – wait for it – DATA.

I’ve griped about the media before and I’m sure to do it again but how about a little less hyperbole and a few more facts folks? The way the media presents things you’d think that every other house on your block was in the middle of foreclosure.

On August 27, the National Association of Realtors released sales DATA for July which showed home sales had remained stable and that “the market is holding on despite temporary mortgage disruptions.” [emphasis mine] Maybe I was too busy watching Big Brother at the time but I missed the flurry of announcements by the media on that news. How about some headlines proclaiming “Good news on the housing front” or “Housing market woes look to be lifting” or just a simple “Housing market holding steady”?

In fact, there were home sale increases in the west and Northeast which, Dr. Yun goes on to point out, that sales and prices in the Northeast have increased “on a fairly consistent basis the last few months” and that may prove promising because it was the first region that experienced problems after the boom and now that it appears to be coming back, other regions may follow. Again, didn’t hear a whole lot about that did we?

Along the Front Range in Colorado I can assure you there is nothing even remotely resembling a “meltdown.” According to Metrolist data in July, homes sales while down nearly 3% from the previous month were UP 2.68% from this time a year ago.

Metrolist will release the housing sales statistics on Wednesday for August and I can already predict how it will go – if housing sales are down by the tiniest amount it will be trumpeted all over the place – if they’ve held their own or are up, we won’t hear much.Am I claiming that everything is just peachy? Of course not. I have clients who have been personally and profoundly affected by adjusting mortgage interest rates and they are struggling. But I’m also smart enough to know that my anecdotes do not a market make.

I could go on forever but this is a blog after all and not an issue paper. But trust me, I’ll be back.

Yesterday’s headline in the Rocky Mountain News trumpeted: “Metro Home Sales Flat in 07”. As a Realtor I obviously hate to see things like this in general. But I REALLY hate to see things like this when I think it’s largely exaggerated or inaccurate. I don’t know about you, but that headline immediately leads me to believe things aren’t very good in the housing market in the metro-Denver area these days.

Yet according to Metrolist where home sale data is gathered, the average sales price for residential homes (not incl. condos) in June was $318,904 while down from April’s $322,510, it’s up from a low of $292,143 in February. Average Days On Market was down to 98 in June with a high of 125 in February. If you’re a seller, you know damn well how all-important that DOM number is. (That’s actually an entire mortgage payment.) The number of total houses sold was at an all time high for 2007 of 3,952. The number of homes that expired without selling was down to 1,242 from 2,362 in January.

While the housing market isn’t blazing away as it has in the past, where in some areas you could barely get a sign in the yard before it went under contract, I would say the word “flat” is hardly accurate. A cooler housing market is good news for buyers, especially first time buyers who would actually like to be able to afford a home for once! It’s also good news for investors who would like to purchase a property to flip or rent out.

It’s definitely not horrible news for sellers though – it just means you need to be at the top of your game. Your curb appeal needs to be great; buyers have a lot to choose from so make your house one they can’t refuse from the minute they pull up to the front door. The house needs to be clean, updated and staged well too.

Ultimately the house needs to be priced correctly. I can’t emphasize this enough. I’ve personally seen it at work. For instance, just because you installed gold plated faucets in your home doesn’t mean you can charge extra for them if similar homes in the neighborhood aren’t selling for the same price.

And unfortunately, just because you’ve refinanced your home several times and now owe more on your mortgage than similar properties are selling for, doesn’t mean that you can automatically sell it for what you owe. Unfortunately that sounds harsh but it doesn’t make it any less true.

If you currently owe more than your house is worth, but you aren’t in dire straits financially, it’s probably best for you to hold on to your home for now. But if you really want to sell your house, you may just have to resign yourself to actually bringing money to the closing table to get the sale completed at a price for which your home can actually sell. Yes, that sucks, but everyone makes mistakes and you may just have to chalk this one up to a good lesson learned the hard way.

On a closing note, consider this article from the Realty Times an online real estate newsletter which points out that the cost of living in Denver is 40% lower than San Francisco and San Jose. There are indeed 2 sides to every coin!

Need a Realtor who works for YOU? I can be that Realtor, all you have to do is call!

(photo courtesy of www.freephotosbank.com)