Archive for the ‘renters’ Category

5 Reasons Why Now is the Best Time to Buy a Home

Monday, October 8th, 2012

Many real estate agents, mortgage professionals and economists have been saying it: “now is a great time to buy.” In fact, those cries have been echoed for the last year or so. Interestingly, there ARE many ready buyers out there, but inventory is so low and it is very difficult to be the lucky one whose offer is chosen, as many homes that are listed on the market obtain multiple offers, often in the first day or two.

So what makes now such a great time to buy real estate? There are 3 main reasons:

1.  (Still) historically low interest rates. The interest rates are still at unprecedented lows. Part of this reason is because there is little inventory in most markets. As prices climb, inventory will rise (because sellers will see a good reason to finally sell again) and in turn interest rates will likely rise. It’s a Catch-22, but if you want the best rates, the end of a long downturn is a great time to take advantage.

2.  Prices are rising in many markets. Many buyers have been waiting, some for a long time, until the market “bottomed out.” Well folks, we have reached that point and are now on the upswing. Prices in north county have risen, homes are receiving multiple offers, and the condo market is officially a seller’s market. Single family homes are soon to reach that level as well. If you are a buyer who has been “on the fence,” now is definitely the time to climb off and start looking, lest you find yourself facing higher prices and more competition as we head toward the Spring/Summer selling season.

3. Distressed inventory is down. Foreclosures have slackened off since the start of the summer, mostly in part to lenders embracing short sales and other programs, like loan modifications or sales to third party investors that help people stay in their homes. With less distressed inventory prices can continue to rise at a steady, “normal” pace. Note that even if you live in an area where there are still a lot of short sales, the jump in averages prices in those neighborhoods will cause lenders who hold paper on the distressed properties to seek prices that are more in line with the comparable sold properties, and since many lenders are trying to close short sales quicker and are being stricter with prices they will accept, it is likely such sales will not have a substantial effect on comparable properties.

4.  Rents continue to rise and rentals are harder to find – great for investors, not so great for those seeking to rent. Rents have risen over the past year and are at a 10 year high, according to research reported in the Wall Street Journal. One study by Trulia even found that it is cheaper to own rather than rent in many markets. Not to mention the rental market is so hot, that it requires much luck to even find a rental and be chosen as a renter, since there is so much competition. I have had renters call on all my listings over the past year, asking if the sellers were willing to rent instead of sell – people are desperate. One of my investors just leased out a newly purchased property – the same floorplan I sold last year to a different investor – and he was able to obtain a monthly rent almost $100 higher per month than the first investor.

5. Low inventory. Low inventory in most markets means much greater competition amongst buyers. How, you say, is this a reason to buy now? Well, since competition is so high and prices are rising, if you are lucky to be the chosen buyer on a property you will likely end up paying less than when there is more inventory. There is only less than a three month supply of inventory on the market now in San Diego. If the many buyers out there looking cannot find a home to purchase now, and hold off until there is more inventory (usually after the holidays), there will also be more competition, as you will also get the buyers at that time of year who want to make a move after school gets out for the summer. Also, you will likely get a lower interest rate if you buy now rather than down the road, as many economists predict interest rate increases as inventory rises.

Do you need a few more reasons? How about this: housing statistics have been and continue to be on the rise. Building statistics are up in many areas, and many markets are becoming seller’s markets. So remember that “now is truly a great time to buy” may sound like an old cliche, but truly makes sense right now. If you are serious about buying now, make sure you understand the importance of writing a strong offer – click here for some great tips. Happy house hunting!

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New Lender Role: Landlord?

Thursday, October 20th, 2011

There have been quite a few crazy ideas proposed by the Feds to help the housing market, but in the recent panic to finally DO something, the latest proposal takes the cake: make lenders landlords.

As the number of lender-owned properties continues to rise, and as lenders remain hesitant to release them to be sold (mostly for fear of what it will do to the housing market and, more selfishly, because declines in prices will not net them as much as they might get in an improved market), the fact is that we are seeing less of these properties on the market. Lenders who own hundreds or thousands of homes need to find solutions, and quickly.

One proposal is that lenders of unoccupied homes that are held by the government should rent out these properties. This idea has received both criticism and accolades.

Proponents: Those who applaud the idea say that doing so will help neighborhoods by preventing vacant homes, unkempt landscape and neglect, and vandalism. It will put people in homes, which will benefit neighbors and prevent prices from declining by withholding these properties from the sales market.

Opponents: These people claim that lenders should stay out of the rental market. First of all, they do not have the manpower to dedicate to customer service (of course they should hire property management companies, but might choose not to do so to save money). Furthermore, they claim that putting renters in these properties will not have any positive effect on the neighborhoods, as the renters may not have the same respect for the neighborhood as owners.

Twist: owners to renters: There is one possible exception that may make sense: renting the foreclosed homes back to the foreclosed homeowners. This is a good way to prevent throwing millions of people out of their homes, and will likely keep these homes in better shape, compared to letting them sit vacant or finding renters. Maybe there could be a possibility of re-purchase down the road if the homeowners can show they meet qualifications (although I doubt lenders will go for this one). This is an idea I will support.

I believe that renting out these properties is only postponing the inevitable (noting the exception for owners-to-renters). The better solution is to sell these properties off now, get rid of all the excess distressed inventory and let us move on. As I have said many times, we cannot move forward and get back on track to a “normal” housing market when there is a plethora of inventory that needs to be taken off the books. It is not until we eliminate the overwhelming inventory of distressed properties that we can see the light at the end of the recovery tunnel.

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