For months, we’ve been expecting the next wave of foreclosures to hit the market. With a record number of homeowners defaulting on their mortgage payments, it’s bound to happen sooner or later. According to yesterday’s headlines from Housing Watch, we’ve got a “shadow inventory” of almost 1.8 million homes that are on the brink of foreclosure. Of the 1.6 trillion in existing mortgages packaged into mortgage backed securities by Wall Street, approximately $425 billion worth are “extremely late” on their payments.
Despite the best intentions at assisting distressed homeowners, bad mortgage debt continues to rise with little hope of reigning it in. The tough job market and high unemployment rates serve to add fuel to the economic firestorm. After all, it’s difficult to pay the mortgage without any income.
The current shadow inventory estimate is about half of the entire market of homes for sale, according to Housing Watch. Additionally, there are many other homeowners who have hesitated putting their home on the market due to market uncertainty. In essence, this only clouds the housing market’s supply and demand picture. Our local Fredericksburg, Virginia area isn’t any different than the rest of the nation. We’ve got plenty of foreclosures on the market, and many others waiting for the market to turn.
Current estimates indicate that existing foreclosures , and the additional shadow inventory, will take nearly three years to sell at normal market absorption rates. Can you imagine what will happen to home prices once the shadow inventory, and other would be sellers put their homes on the market? Normally, I’m not an advocate of predicting the future. But, in this case, with an overabundance of homes, and current economic conditions, something has to give.
When that time comes, do you think the sound we’ll hear is the shattering of the price floor for homes? If so, let’s hope we’re not caught unawares. We’ve certainly had plenty of warnings.
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Since the height of the market in the summer of 2006, homes prices across the United States have fallen a great deal. Many homeowners who purchased prior to that summer, and now have orders to move, are faced with the prospect of selling a home that may now be half the value it was when purchased. Fortunately, there is hope.
As part of the American Recovery and Reinvestment Act of 2009 (ARRA), the Department of Defense (DoD) expanded the Housing Assistance Program (HAP) to provide benefits to service members who are moving (in military jargon, PCSing – Permanent Change of Station), among others.
To be eligible for HAP, military members must have, 1) Purchased their home prior to 1 Jul, 2006, and 2) Have PCS orders dated 1 Feb 2006 thru 30 Sep 2012.
Have you heard of HAP? Many service members have, but few homeowners understand just what it takes to sell their home using their Housing Assistance Program entitlement. To educate service members, DoD and the Army Corps of Engineers have provided specific, informative guidance on their HAP website.
The website explains, among other things:
1. Who Is Eligible
2. How to Apply
3. The Benefits HAP Provides
4. Where HAP is Implemented
In addition, applicants are able to download the necessary application package to be sent in for eligibility. Their FAQ (Frequently Asked Questions) section, not only responds to the questions most of us have about applying and how the process works, but also provides updates on the Expanded program.
HAP is providing other ways for eligible members to get answers to their questions. Coverage is handled by the three regional offices in Savannah, Fort Worth & Sacramento. They do answer their phones and are ready to reply to questions about the program. As well, representatives from the National Program Office will provide informational briefings if requested.
In the Fredericksburg and Stafford area, C21 AdVenture has been fortunate enough to host HAP’s Assistant Program Manager (PM), Mr. Donald Chapman, for an informational briefing last month for local Realtors. While his presentation answered some of our HAP questions, the opportunity to ask questions was the perfect opportunity for him to dispel some of the misconceptions held about the program by those in attendance. As a follow up, he’s returning in March to speak to a much larger audience of local military homeowners.
HAP leadership is pedaling as fast as they can in their attempt to inform military and civilian home owners who qualify, how to apply and participate in this timely offering. To make this program work, all involved need to know what the requirements and expectations are. Most endeavors take a little time to get off the ground, and this one is no exception. They’ll certainly be bumps in the road for sellers and buyers who participate in this process. Preparing yourself, by using the resources HAP is providing, may go a long way in making those bumps a bit more tolerable.
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Successfully selling homes isn’t rocket science. Or, is it?
Does a home sell itself, or is smart marketing the key? Or, is it a little of both?
While most of us realize that targeted marketing is a sound sales strategy, it is tough to sell a lemon in any market. But most would agree, rarely is a buyer willing to pay more than an item is worth, unless of course, there’s more to the item than meets the eye. But, that is seldom, if ever the case. Wouldn’t you agree?
Attempting to accurately price homes requires consideration of various factors including:
1. Home Inventory
2. Current Market Conditions
3. Recent Comparable Property Sales
4. Condition of the Property
As many who provide valuations of property will tell you, any good Comparative Market Analysis (CMA) will provide a property owner with an accurate price window for his/her property. If we’re comparing like properties, it is hard to go wrong with a CMA. But, if you’re expecting an apple to be the same as an orange, you could be in trouble! So, where do those inflated listing prices come from? The owner? Yes, at times. But, unfortunately, often, the blame lies with the Realtor.
An article in a recent Business Week reviewed William Poundstone’s new book, Priceless: The Myth of Fair Value (and How to Take Advantage of It). In it, Poundstone examines both the psychology of buyers and sellers, and the logic used when placing a value on a product or service. The author argues that pricing is anything but an exact science. In his words, ”In the new psychology of price, values are slippery and contingent….” According to the article, many “clueless” consumers are vulnerable to the marketing or sales practice of anchoring. Anchoring, in its purest form, is the act of using of a high priced item that may never sell, in order to make a lesser priced similar item much more attractive. Often, the same manufacturer may sell two like products, one tagged with a designer name and price, the other, a “great deal” at almost half price. The “cheap” one sells like gangbusters!
Since it’s hard to ask twice as much for a similar home, overpricing occurs far too frequently. The good news is, that high price tag makes all the rest of the homes look lots better! The bad news is, the anchor model is probably going nowhere.
While pricing or valuing a home isn’t quite as easy as 1-2-3, accuracy is a result of using the proper comparable properties when determining the listing price of a home. But, if instead, you believe your property to be priceless, and list it accordingly, don’t be disappointed if you find the price you’re offered is only what the educated buyer thinks it is worth.
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Recently, I came across an article on AOL’s Real Estate page highlighting an article in the blog DailyKos. For those not familiar with the ‘Kos, it is devoted mainly to political and social commentary, along liberal lines. In the article AOL cited, the ‘Kos urged those homeowners struggling with their mortgage to, walk away from their unpaid mortgages. In their words:
“The real risk to the banks and investors is that the people in those homes might just decide to walk away. And that’s what we must do. Doesn’t have to be everybody, of course; but anyone who finds themselves seriously underwater with no hope of ever recouping their investment….just walk away Renee. Morality has nothing to do with it. You are a cog in the wheel of a machine that is killing this country and if you remain a cog you enable it. Remove your cog and the machine will not keep running. Remove millions of cogs and the machine gets replaced.”
In other words, the Kos is advocating mortgage debt anarchy; a revolution of sorts. It then cites Realtors from across the U.S. who seemingly justify the action. Why? In the words of one agent, since the economic and housing recovery is projected to take perhaps as long as a decade, “Isn’t it better to just cut the losses up front”?
According to a recent report by First American CoreLogic, nearly one in four are underwater or upside down with their home mortgage. In other words, they owe more for the property than it is worth. According to the N.Y. Times, the housing collapse left 10.7 million families owing more than their homes are worth. Is that a problem? Of course it is. Will walking away from a mortgage solve that problem? Not hardly. Have the Administration’s loan modification measures worked as fast or as well as hoped? No, they haven’t. Nonetheless, the programs were enacted for the affected homeowners to use. I have yet to hear of a homeowner not being able to remain in their home as they attempt to modify their payments.
How about you? If you know of a friend, relative, or client that has been forced out of their property despite the fact they’ve continued to make a payment, or partial payment, please let me know.
Is walking away from a mortgage debt justified? While its track record isn’t perfect, the short sale is getting its act together. Perhaps, for both the lender and the those upside down, it is a better alternative than burning the mortgage.
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In September of last year, the U.S. Department of Housing & Urban Development (HUD) announced a change to FHA appraisal validity periods. The announcement was met with unanimous approval from all sectors; lenders, home owners & buyers, and yes, even appraisers.
The change to appraisal periods involved decreasing the validity time for FHA appraisals from six to four months for both existing homes and those under construction. Since the first of this calendar year, 2010, the new standard has been in effect. Why does the change matter?
For those of us that have faced selling properties, only to encounter difficulties with the appraisal, this reduced turn around time, or reduction of validity time, couldn’t have come sooner. Because, no matter the soundness of an agent’s estimation of a property’s value, it is the appraiser’s that matters most.
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I’ve recently been contacted by Mesothelioma Cancer Center and asked if I’d assist in spreading the word about this form of cancer, which is caused, almost always, by exposure to asbestos. Rarely, in life, do things happen by coincidence. We buried a friend of mine less than three weeks ago. He had been diagnosed with Mesothelioma less than four months ago. Please pay attention to the Center’s article that follows. Asbestos is a hazard. Be aware.
The home buying process is an exciting time, but one that may bring additional responsibilities into your life. Many homes may need renovations or inspections, especially in areas that are susceptible to natural disasters. Having the assistance of an experienced and honest real estate agent will make this process smooth and stress free.
Some older homes may still contain obsolete building materials. Citizens of this great state are striving to move to a green lifestyle, advocating environmentally sustainable methods to be used throughout the state. Building or remodeling your homes with eco-friendly materials can lower utility and water bills, higher real estate value, purer air quality, reduced waste sent to landfills and conservation of natural resources.
Asbestos + Healthy Tips
Asbestos is a fibrous mineral that was used in construction applications for the greater part of the 20th century. Often appearing as insulation, piping, roofing and flooring, homes and buildings could still contain asbestos materials if they were built prior to 1980.
If you locate any suspected asbestos in the home, most experts suggest leaving it un-disturbed until a home inspector can examine your property, take evaluations and determine the safest course of action. Sometimes the best action is no action at all. Disturbing asbestos in good condition may cause its fibers to be released into the air. The removal of asbestos must be undertaken by a professional abatement contractor who is trained in handling dangerous materials.
Exposure to this material can lead to the development of mesothelioma, a lung ailment associated with asbestos exposure. Though a cure does not exist, mesothelioma treatment options such as radiation, chemotherapy and surgery may be available to patients to battle the disease. Mesothelioma compensation has become tough to predict for victims and their families because diagnosis can take 20-50 years. For this reason, many people refer to it as a silent killer.
Removal of asbestos in public facilities, workplaces and homes should be performed by licensed abatement contractors as long as the National Emissions Standards for Hazardous Air Pollutants (NESHAP) are not violated. They must wear protective equipment such as masks and gloves to avoid any exposure. The materials should be removed in as large pieces as possible and places in disposable bags.
Green Building Benefits
Each and every human being would like clean air to breathe and crisp water to drink. It takes a lot of effort and political advocacy to achieve this on a macro level. The implementation of eco-construction, green energy solutions will play an important role in the transformation to a healthier and sustainable world. Many locations throughout Alabama are swiftly changing their construction practices to suit the environment and the health of human beings.
There are many green, eco-friendly materials that replace the need for asbestos and can reduce energy costs annually. These include the use of cotton fiber, lcynene foam and cellulose. Cotton fiber is quickly becoming a favorite for home builders and renovators. Made from recycled batted material, it is also treated to be fireproof. Research has demonstrated that the use of eco-friendly insulation alternatives can reduce annual energy costs by 25 percent.
Implementing green methods of building can have positive environmental, health and economic benefits. These include: Conservation of natural resources, enhancement of air quality, energy sustainability, increase property value, improve quality of life, improvement of pulmonary/cardiac health and reduction of waste.
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