Archive for the 'Market Trends' Category
Wanted: Leaders With Good Judgment
August 25th, 2008 categories: Market Trends, Relocating
“Judgment is absolutely the most essential element in presidential decision making…I cannot emphasize enough how important that elusive quality is; far more important than organization, structure, procedures, and machinery. These are all important, yes, but nothing compared to judgment”
These words, spoken by President Kennedy’s friend and longtime advisor Ted Sorensen, were in response to a question about Kennedy’s exercise of judgment during the Cuban Missile Crisis. As you can see, Mr. Sorensen emphasizes the importance of proper judgment in times of crisis. He goes on to include decisiveness as another necessary leadership trait. While Sorensen was focusing on Presidential Leadership, these traits, and judgment specifically, are “must haves” for any leader. Recent words and deeds from Stafford County’s Supervisors makes one wonder if the word “judgment” was absent from their job application.
First, we had the Business, Professional, and Occupational License (BPOL) tax approval by the Supervisors, despite overwhelming opposition (reported to be 9 to 1 against) from their constituents. Following this vote, most of the county’s residents were asking themselves, “Did we really elect this group?” The BPOL is a tax on gross receipts with no deductions and must be paid even if the business is losing money. Advocates see BPOL as an untapped source of revenue. Those opposed regard it as grossly unfair. The public hearing on the tax was long and heated, but at the end of the day (actually, the meeting ended about 3:00AM), the supervisors voted 4-3 in favor of the measure. While innocent observers may wonder how occurred, a simple viewing of this short video of the meeting speaks volumes. In other words, it kind of says it all…and, it ain’t pretty!
Last week another public forum discussion took place, another Supervisor’s public hearing, to discuss a controversial proposal to shrink the Urban Services Area (USA), portions of the county where public sewer lines can be extended and high density development is recommended. Current USA boundaries encompass about 46,000 acres. The new boundaries would remove over half - 26,000 acres - from the USA, and phase in another 5,000 acres by 2019.
A recent study by George Mason economist Stephen Fuller found if the boundary changes are adopted, Stafford County could potentially lose around $100 million in net revenue from business. While real estate taxes could rise to make up for the loss, it would essentially make the county a “high-cost location” from resident and businesses. Instead of attractive new residents and businesses, higher costs would have the opposite effect. Fuller’s study was paid for the Fredericksburg Regional Chamber of Commerce who want supervisors to review it closely. Supervisors indicated they plan on evaluating the boundary proposal during next month’s work session.
For many Stafford County residents, there’s still plenty of room to grow. For others, any growth is bad growth. With any prospective venture, before we jump to conclusions, let’s try and make this a Win-Win resolution.
One of the first steps in getting there might be by making a stop at Smart Growth, the site of some of the best and brightest ideas for smart community growth. As they indicate, “In general, smart growth invests time, attention, and resources in restoring community and vitality to center cities and older suburbs. New smart growth is more town-centered, is transit and pedestrian oriented, and has a greater mix of housing, commercial and retail uses. It also preserves open space and many other environmental amenities.” So, as you can see, it attempts to use the strengths and objectives of both sides of the argument to improve and expand communities.
It might be a good idea if that and other useful sources of information were “required reading” before next month’s Stafford County Supervisors get together. Judgment may be important, but it sure makes decision making a lot easier when you have the information you need before making a decision.
| Discussion: No Comments »
Can the Home Owners Association Really Do That?
August 23rd, 2008 categories: Market Trends, Relocating
As many of us know, a Home Owners Association (HOA), within a neighborhood or subdivision, is made up of property owners within that subdivision, and is established to govern relations between the owners, and administer the rules, bylaws, and covenants of the complex. These guidelines or governing rules are normally covenants, conditions and restrictions (CC&Rs - not to be mistaken for the more popular CCR!) that restrict ownership rights.
For those looking to purchase a home, the HOA covenants can be both a relief and a concern. One of the considerations we face when purchasing a home in a particular neighborhood is, what do the HOA covanents cover? Are there restrictions on the number of people who can live in a home? How about the size of color of the fence? Pool hours? Will it help to keep the subdivision looking good? As a matter of fact, HOA covenants are as restrictive as the home oweners decide they will be. But, more than anything else, HOAs are designed to provide a neighborhood that its occupants enjoy living in, by maintaining standards that are theirs.
But, two recent cases have put the focus on the enforcement powers HOAs exercise. The first case involved a California owner whose subdivision sent him a notice informing him that he was vioalating a subdivision rule prohibiting pickup trucks in the driveway. And his pickup was new! A Ford F-150.
According to the HOA, luxury pickups like the Cadillac Escalade, Honda Ridgeline and Lincoln Mark LT are allowed, but not the the tried and true F-150. Their belief is that these “luxury” pickups market to “a different class of people.” The F-150 has to be parked out of sight and in the garage.
Last week, in another HOA exercise of power, a local Stafford home owner was ordered by the St. George’s Estates neighborhood HOA to remove political election signs from their yard or face a fine. The home owners, Pat & Heather Stefl, responded by citing their consitutional right to free speech. “I did not sign away my constitutional rights by buying into this home, and I do see this as a First Amendment right”, said Heather. But, the Stefls may be out of luck. While state law prohibits localities from banning the disply of political signs on private property, the law DOES NOT apply to HOAs. The Stefls have until August 29th to comply.
Guidelines and controls on what we can and can’t do with our property, aren’t restrictions to be taken lightly. But, before we sign that contract for the purchase of your new home, or, more specifically, before we actually agree to the HOA covenants we’re handed to review as part of the home buying process, make sure you read and understand what you’re agreeing to. As they say, ignorance is no excuse!
| Discussion: No Comments »
Hot Air Will Travel
August 21st, 2008 categories: Market Trends, Relocating
A couple of days after my last post, I received a call from a Mayflower employee. As a matter of fact, he happened to be one of those travelling in the subject of my last post; the Mayflower Hot Air Balloon. He called to say he’d seen the post and was glad we’d (yes, I wasn’t the only individual spying the balloon that afternoon) noticed! Additionally, he mentioned that more information about the balloon, and its’ pilot, could be found on Mayflower’s home page.
I’ll provide a bit of that information here, just in case you aren’t able to take a look at their page. But, you ought to, you may find, as I did, some items of interest! Here are some balloon facts (straight from Mayflower’s Hot Air Balloon page) you may find interesting:
2005 marked the inaugural year of flight for the Mayflower Transit balloon. The balloon is made of ripstop nylon and sports a bright, green, yellow and red design with three Mayflower ship inflatable appendages that give the balloon a special shape. The balloon is fueled by propane, which heats the envelope. Variation in the envelope temperature provides vertical movement, but the direction of the flight is completely dependent upon prevailing wind currents.
While the ballon’s specifications were of interest, this military retiree found the balloon’s pilot’s background a bit more compelling. Flying “hot-airs” since 1989, Kevin Niels Knapp is a retired Army major who is a full-time commercial balloon pilot, has owned and operated the “ARMY” hot-air balloon since 1994, and owns Airborne AD-Ventures, a full-service, hot-air balloon company. So, as you can see, Mr. Knapp is anything but ”retired”.
As far as the the phone call, the Mayflower representative informed me the balloon is an interesting and valuable marketing tool that normally elicits more than a few inquiries from the public.
For those of us outside that day watching it float by, seemingly without a care in the world, we wondered what it might be like floating up there, so high and so free…..
And, while Mayflower may be on my list of vendors to call next time I move, I don’t think I’ll be calling them anytime soon for a my first ”Hot Air” trip. But, then again, if the mood strikes me, maybe so. It sure looks fun.
| Discussion: No Comments »
The Mortgage Crisis - A Boon For Homebuyers?
August 5th, 2008 categories: Market Trends, Real Estate News
Home buyers must feel a bit dizzy these days. As they say, “so many homes, and so little time!” Well, maybe that’s not exactly what they say, but you know what I mean. As the market’s downturn has continued, the proverbial “seller’s pain”, is definitely the buyer’s gain.
CNNMoney’s news last week of the most recent S&P/Case-Shiller Home Price Index told us something most of us already knew; home prices are continuing their decent. As the article reports, the good news is, according to Mike Moran, chief economist for Daiwa Securities America, the new sales numbers may mean that the market is starting to stabilize.
But, while there may be hints of market stabilization, many believe the mortgage/housing crisis is far from over. With foreclosure numbers increasing weekly, home prices won’t be on the mend anytime soon.
Simply put, home prices are subject to market forces. Home foreclosures drive down home prices. So, until we hit the foreclosure critical mass, recovery can’t begin. And, since as we aren’t there yet, don’t put you’re worry beads away yet! But, hopefully, as the Home Index Report suggests, we’ve begun to see positive signs.
One of those signs for buyers is the increased number of former short sale properties that are now foreclosures. Properties that formerly seemed impossible to purchase, even with the best of terms (the lender seemed ignore), now can be had, oftentimes, very rapidly, at bargain prices!
Stafford & Spotsylvania County’s most recent sales figures through June are indicative of this:
|
STAFFORD 2008 |
2007 | % Change | |
|---|---|---|---|
| Total Sold Dollar Volume: | $ 46,221,188 | $ 61,893,991 | - 25.32 % |
| Average Sold Price: | $ 302,099 | $ 375,115 | - 19.46 % |
| Median Sold Price: | $ 278,900 | $ 363,000 | - 23.17 % |
| Total Units Sold: | 153 | 165 | - 7.27 % |
| Average Days on Market: | 110 | 114 | - 3.51 % |
| Average List Price for Solds: | $ 336,553 | $ 399,342 | - 15.72 % |
| Avg Sale Price as a percentage of Avg List Price: |
89.76 % | 93.93 % |
SPOTSYLVANIA
| 2008 | 2007 | % Change | |
|---|---|---|---|
| Total Sold Dollar Volume: | $ 42,932,318 | $ 59,331,500 | - 27.64 % |
| Average Sold Price: | $ 286,215 | $ 339,037 | - 15.58 % |
| Median Sold Price: | $ 262,450 | $ 310,000 | - 15.34 % |
| Total Units Sold: | 150 | 175 | - 14.29 % |
| Average Days on Market: | 138 | 98 | 40.82 % |
| Average List Price for Solds: | $ 318,932 | $ 356,727 | - 10.59 % |
| Avg Sale Price as a percentage of Avg List Price: |
89.74 % | 95.04 % |
For those looking moving to the Stafford and Fredericksburg area, the market continues to make buying a home an inviting choice. While more than a few may opt to rent instead, you may be passing up a golden opportunity that you won’t see again for many years to come.
With low prices, as well as mortgage rates still around 6 percent, how can you pass up the chance market professionals long for; buying low, to later sell high. It almost sounds too good to be true. But in this case, it’s nothing more than smart buying!
| Discussion: No Comments »
Do You Like To Play Dominos?
July 14th, 2008 categories: Finance, Market Trends
“IF you can keep your head when all about you
Are losing theirs…”
While the weekend past didn’t witness the height of the current mortgage crisis, the announcement of the financial troubles of Fannie Mae and Freddie Mac resulted in both to lose half their stock value, and more than a bit hand wringing by the Treasury Secretary, Henry M. Paulson. Fortunately, despite the government’s longstanding claim of not backing the debt of both these agencies, in the midst of a near financial stroke, Mr. Paulson seemingly did a “one eighty” by announcing on Sunday that the government would not let either of these agencies fail. One could hear the loud and long sigh of relief from Main Street to Wall Street upon hearing Paulson’s words of assurance. Unfortunately, the weekend’s news came on the heels of IndyMac Bank’s collapse and subsequent takeover by the Federal Deposit Insurance Corp (FDIC) on Friday. Predictably, the mortgage crisis dominos continue to fall with little relief in sight.
With many analysts indicating that failed banks are “lagging” and not “leading” indicators, how much more ”road kill” will the mortgage mess deliver? Will the next casualty be another national bank like Wachovia or Wells Fargo, or, is it the local banks who are due to walk the sub-prime gangplank? And, just who caused this mess in the first place? A sample line-up of likely suspects would probably look something like AJ Nisen’s list:
-
Sub-prime Mortgage Brokers
-
Banks
-
Rating Services (Standard & Poors, Moody’s, etc.)
-
Wall Street Investment Banks
-
Bond Insurers
-
Government Agencies (The Federal Reserve, Congress, Federal Trade Commission, The Accounting Regulatory Agency, just to name a few)
While his list is fairly comprehensive, what about the borrower? Was the borrower asleep when the lender was explaining the loan options to him? Does the borrower have a responsibility to do a risk assessment/analysis at some point prior to committing to the loan? Or, are they blameless?
What about the borrower’s real estate agent? What are their fudiciary duties? Since many of us don’t “pre-qualify” our buyers any longer, can we look after their best interest in what loan vehicle they choose? Or, do we simply take the word of the lender, even one we aren’t familiar…you know, the internet kind.
Well, enough of the finger pointing. Where we sit is the reult of a journey chock full of bad choices by many of those involved. It didn’t happen overnight. As Robert Louis Stevenson said, “Sooner or later in life, we all sit down to a banquet of consequences.” Little did we know that in this case, the meal just happens to be gruel!
| Discussion: No Comments »
What’s “short” About A Short Sale - Part II?
June 29th, 2008 categories: Finance, Market Trends, Real Estate News, Repairs
So, despite the promise and benefits of a “short sale“, why do they seldom work? Why does there seem to be such a huge disconnect between the seller and their real estate agent, and the lender?
Unfortunately, there are a number of reasons for the general failure of the short sale process.
1) One of the biggest obstacles to a successful short sale is the lack of communication between the listing agent and the lender. Coordination between the real estate agent, who has listed the property, and the lender, or the asset manager handling the property is crucial for a successful transaction. Communication between the asset manager and real estate agent is problematic at best. In almost all short sale cases, attempts to contact the lender’s loss mitigation department or asset manager are rarely successful.
As any agent whose handled a short sale transaction will tell you, in a transaction whose success depends on coordination, frequent and easy communication with the asset manager handling the transaction is rarer than rare. Despite agent’s best efforts, it’s normally a struggle (and that’s putting it midly!) to contact the lender’s point of contact. Building this bridge between the listing agent and the lender is crucial to the success of any short sale. Without this relationship, the short sale is destined to be Dead on Arrival (DOA).
2) The asset managers are overwhelmed by their case loads. Like most of America, lenders were blind sided by the subprime mortgage mess, and are in the crisis management mode attempting to stop the financial bleeding. In other words, the lender’s employees, especially those in loss mitigation, are peddling as fast as they can.
3) The real estate community, much like the lenders on the other side of this short sale joy ride, are, in most cases, lacking the preparation needed to properly market the property in coordination with the lender. To begin the process of coordiation with the lender, the listing agent must compile a full package with supporting documentation from the seller. Rarely, if ever, will the lender even begin to listen to an agent without a complete short sale package in front of them. This short sale submission package should include, among other things:
1. A synopsis of items enclosed.
2. Completed financial disclosure.
3. A hardship letter, preferrably hand written. Remember, this the opportunity to relay the seller’s “story” to let the lender know why they’ve missed payments and won’t be able to make them in the future.
4. Purchase contract.
5. Net sheet or HUD1.
6. Proof of income for the last two pay periods.
7. Copies of last two bank statements.
8. Copies of last two years tax returns with W-2s and 1099s.
9. Third party authorization form.
Some additional items that may be helpful include, a Broker Price Opinion (BPO) or Comparative Market Analysis (CMA), neighborhood foreclosure stats & proof of active listings in the area that are priced low but aren’t selling. All of these will assist you in presenting the seller’s case to the lender.
Pricing the property correctly is another must. A simple method is to take the low end of the comparables, and price the property $10,000-$20,000 lower. It’s important to price the property to peek interest, but the pricing needs to be realistic as well.
An opportunity for a short sale is beneficial to both the seller and lender. For both parties, it’s an escape from a difficult financial predicament. The seller unloads a property they can no longer afford, as does the bank, with minimal damage to the credit rating they need for future investments. The bank, unlike a foreclosure, can avoid managing a property, and unload one on much better terms than if foreclosed.
With the attractions of the short sale option, we can only hope the practice gets much better before the window of opportunity for this “bargain” creeps closed. There’s work to be done on both sides of the transaction. For lenders, establishing a routine and regular avenue of communication with the real estate agent listing the property is a necessary first step. For agents, taking the time to learn the steps necessary to comply with lender requirements might make the coordination process on the other end a bit easier to navigate. In either case, progress is measured in dollars, not finger pointing. So, what are we waiting for?
| Discussion: No Comments »
