Real Estate Investing

Possibly due to the housing relief bill signed into law in Washington, D.C. last week, the phones in real estate offices have begun to ring again.  This will probably be an artificial jump in housing sales, but for now every little bit helps.  One component of the bill will eliminate the down payment assistance programs currently at the disposal of buyers who need help getting into a new home.  According to the Ellis Team of RE/Max,

Buyers who wish to buy with no money down had better hurry, because the new Housing Bill signed recently essentially eliminates down payment assistance from the seller on all FHA loans, and Congress added in the bill a provision that the new minimum down payment  will now be 3.5%, up from the previous 3%.  Financing is getting increasingly harder to get, and underwriting guidelines are changing daily.

As a result, buyers I’ve been working with for some time have found a renewed urgency and are kicking their home search into a higher gear in order to buy prior to October 1, 2008 - when the programs are expected to end.

However, the FHA Loan Advice site doesn’t believe the programs are down for the count,

For both political and practical reasons, many in Congress agree that down payment assistance programs should be continued. Although the portion of the new law banning down payment assistance has not yet taken effect, HR6694, the “FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008” was introduced on July 31. All the non-profit organizations which have been facilitating the program are already out beating the bushes to round up support. If you would like to help, the Nehemiah Corporation has a website set up to help you find out how. You can find it by clicking here.

I’m hoping the members of Congress who are supporting legislation to continue the programs will be successful.

Meanwhile, I found an extraordinary site called Calculated Risk that is being added to my list of *must-reads* if you like reading about investing, finances, and other economic information.

Photo was found here.

I live in a major metropolitan area - not big like New York or San Francisco or Chicago, but the metropolitan area is at 1.5 million.  I’ve recently been on a quest to find a buyer a home and we’ve definitely been on a roller-coaster ride.  I don’t like roller-coasters because they make me think my head is going to explode when the migraine sets in after being jerked, rolled, and having had my stomach fly up to my throat.  Just no.  

Fortunately, the roller coaster Aunt B. and I have ridden hasn’t been that drastic, but some of the results have at least warranted an upset stomach for me.   The problems we’ve encountered in the hunt for her home begs the questions B. asks,

And it just leads me to continue to wonder–when we talk about there being a lot of affordable housing in Nashville, is that really the case?  Right now, for instance, there are 695 houses on the market under $125,000, which makes it seem as if there’s a lot of housing stock for working class people.  But if sixty percent of those are pits that need major help before you can get into them, are they really real possibilities for folks?  Because, even if you can rehab them–if you have the skills–if you don’t have the money, is that house really feasible?

This observation led to another’s comment that really sums up a silent problem our nation is having:

But more generally, the loss of affordable housing stock for the lower 50th percentile of folks is the unmentioned scandal of U.S. cities.

Are there affordable homes available in our U.S. cities?  If they are affordable, are they liveable?  Do they require tens of thousands of dollars in renovations before someone can move in?  Will the pipes need to be replaced to gain a strong water flow free of potential lead poisoning.  Is the roof ready to cave in?  Are there vines growing out from outlets?  I’ve seen all of these problems in the last year - most in the past month.

Forbes magazine recently published an article about the most affordable places to live.  Included are Atlanta, Cincinnati, and Minneapolis… a city for every climate!

From personal and professional experience, I can tell you that although home prices are dropping daily and meeting qualifications of FHA loans may become more difficult, it doesn’t mean buyers will have an easy time finding a home that meets their needs.

People looking for affordable homes often need to have easily accessible public transportation, need to be able to purchase food nearby, should live in an area with plentiful jobs, and the cost of utilities shouldn’t be crazy expensive.  Are there really places like this out there?

Angelina Jolie, Brad Pitt, and their four - soon to be six - children will be moving into a home located on 1,000 acres in the south of France.  In addition to 35 bedrooms and a forest surrounding the estate for privacy, the home has some mighty fine neighbors including Bono and Johnny Depp.  The rest of the story.

I’m not kidding when I tell sellers that the return isn’t as great when placing ads in magazines and newspapers rather than investing in some online promotions.  I use Visual Tour software and Animoto (we talked about that earlier this week).  But another company offers “short documentaries” about high-end homes which I find fascinating.

In today’s residential real estate market, off by as much as 20- to-30 percent on a year-over-year basis in some regions of the country, brokers and home sellers have been forced to find ways to get biggest bang for their marketing bucks. And it’s no surprise that most of their budgets are being spent on the Internet.

According to the National Association of Realtors, between 85 percent and 90 percent of today’s buyers depend on the Internet for links to individual real estate agent home pages, ColoradoRealtor.com, Realtor.com, Zillow.com and corporate real estate Web sites.

The rest of the techno story here.

I still believe we are near the bottom of the market, though this writer disagrees. 

Can we expect a lone realtor to determine the exact bottom of the market for a potential buyer? NO! Not even the most esteemed experts know exactly when the real estate market is at bottom. What the realtor must do is give the best assessment possible and the best advice they can muster, and let the buyer decide - without hype.

And even if we haven’t reached the bottom … who cares?  If you are ABLE to buy a home at a GREAT INTEREST RATE and you NEED to buy a home, then by all means:  Buy a Home.  The thing is, it’s not just about your “investment” - rather it’s about having a place to live.  If you’re qualified and find a place you love, it may or may not be there in a month or two or five when the real estate market “hits bottom.”  If you feel like it’s home, then make it your home without being distracted by the yaysayers and naysayers.

If you’re waiting to see what the future holds, remember the future never comes. 

Unless you live on Mars, then the future could be coming.  And it could look like this.

Photo from here.