Sell Now or Wait? What the Experts Are Saying

More and more homeowners are questioning whether they should keep their homes on the market or wait until next year to sell. The thinking obviously is that next year the market will be better and therefore they will be able to garner a higher price. But, is that true? Is there any evidence that the market will come roaring back next spring? The evidence actually points to the exact opposite. Most experts are predicting that we will not see appreciation until the end of 2012 and even then the appreciation will be minimal. The MacroMarkets LLC co-founder and Chief Economist is Robert Shiller, the founder of the S&P Case Shiller Report. Professor Shiller surveys 109 economists, real estate experts, investment and market strategists each month for the their Home Price Expectations Survey. In the July survey, it was reported: "The consensus indicates diminished confidence in the prospects for a near term recovery . This month, 60% of the panelists projected negative home price growth for 2010." That percentage was up from 40% just two months ago! Mean Cumulative Change from Current Price The survey went on to say: "The July survey results also revealed a less optimistic longer-term home price forecast. Terry Loebs, MacroMarkets Managing Director, remarked, "Although still positive, the average outlook for five-year cumulative home price appreciation fell in July for the second consecutive month, and is now in single-digit territory. This new consensus suggests a less robust housing recovery scenario." The experts are predicting that cumulative appreciation will not reach positive numbers until the end of 2012 and will still be under 10% by 2014. What does this mean to you? If you are thinking of waiting for the market to show appreciation before selling your home, you have a two year wait not a one year wait. And if you are looking for double digit appreciation, it is five years away. Perhaps it is best to sell now and get on with the things in your life that caused you to think about moving in the first place.

Will the Shadow Inventory Ever Come to Light?

The big question about shadow inventory is when this backlog of foreclosures will come to market. Prices will not be adversely affected until these distressed properties are actually put up for sale. Only then will they truly be competition to existing homes for sale. It seems that day may be upon us. Much of the main stream media are concentrating on two major changes which are occurring in the foreclosure numbers: 1. Foreclosure filings by banks are decreasing 2. Homeowners who are falling behind on their mortgage payments are decreasing What the media has not concentrated on is that the number of homes banks are actually repossessing (REOs) is up 38% over last year. According to the most recent foreclosure report from RealtyTrac: "The pace of properties entering foreclosure slowed as lenders pre-empted or delayed foreclosure proceedings on delinquent properties with more aggressive short sale and loan modification initiatives. Meanwhile the pace of properties completing the foreclosure process through bank repossession quickened as lenders cleared out a backlog of distressed inventory delayed by foreclosure prevention efforts in 2009." The reason banks are concentrating on repossessions instead of foreclosure filings is to clear the existing foreclosure inventory from their books. How many properties are we talking about? From the same report mentioned above: "The midyear numbers put us on pace to exceed 3 million properties with foreclosure filings by the end of the year, and more than 1 million bank repossessions." That is 1 million properties the bank will be bringing to market. That number is on top of the number of short sales already in the works. What does this mean to you? The banks have sped up the repossession of foreclosed properties in preparation to bring them to market. On average, an REO property is sold at a 34% discount. This wave of discounted properties will become your competition if you are planning to sell this year. Price your house to sell now before the banks release their inventory.

5 Reasons Why You Should Buy a Home Today

Homeownership almost seems like a dirty word in today's society. People are blogging, tweeting and facebooking their belief that buying a home is just plain stupid. I respect their opinion on the issue though I totally disagree. Why?

This might be the best time to buy a home in American real estate history.

Some might think I'm crazy. Cynics might think that I am saying this because I hold a real estate license. My reason for saying it is actually quite simple. Owning a home makes more sense than not owning a home for the vast majority of families in this country. Let me give you five reasons why.

1. Real Estate is a Great Long Term Investment

Don't take my word on this. This is what Mike Mandel, former chief economist at BusinessWeek and current Senior Fellow at Wharton's Mack Center for Technological Innovation, had to say:

We've just had the biggest boom and bust in real history in recent history. Nevertheless, real estate has still greatly outperformed the stock market over the past ten years.

Below is his chart actually showing the difference between real estate and the stock market.

2. A Home Is a Better Place to Raise a Family

Don't take my word on this. When Fannie Mae asked current renters for the major reason to buy a house in their National Housing Survey 2010, these were the answers renters gave (they could pick multiple answers):

� 78% said it was a good place to raise children

� 75% said because they would feel safe

� 70% said because you have control of your own space

3. A Home Creates a Sense of Community

Don't take my word on this. The Federal Reserve Bank of New York just published a paper The Homeownership Gap. The paper explained:

Because owners have a financial interest in their property, they have incentives to take measures that will maintain or increase the value of that property. Some of these measures-such as fixing a leaky roof-are closely related to the house itself. Others, such as investing resources in the betterment of the neighborhood and the community, have broader beneficial effects on the local area, creating what economists call "positive externalities."

4. It's Cheaper to Own Than Rent in Many Parts of the Country

Don't take my word on this. Housing Wire just reported on a Credit Suisse study:

While a segment of the renting population continues to rent, many are looking to dip their toes in the homeownership waters. Credit Suisse said the percentage of median household income needed to pay the mortgage on a median priced home is at a 30-year low. Low mortgage rates and property values makes homeownership more attractive than renting for many. In many markets - including Washington DC, California's Inland Empire, Las Vegas and Phoenix - paying for a mortgage is less expensive than renting.

And here is a graph from the study:

5. The People Who Do Buy a Home Don't Regret It

Don't take my word on this. Probably the best people to ask if buying a home makes sense are the people who currently own homes. A recent national poll commissioned by Bankrate.com found:

Ninety percent of homeowners say they don't regret buying their home despite a nationwide tsunami of foreclosures, short sales and loan modifications.

It's a great long term investment. It's a great place to raise a family. It gives you a greater sense of community. It's less expensive than renting. People who currently own have no regrets. Buying a home seems like a no brainer to me.

Are You Drowning in a Sea of Real Estate Information?

One of the most difficult things to do if you are thinking of buying or selling a home is to navigate through the sea of information available today. If we google "real estate" there are approximately 441 million sites. That's 441 MILLION!! Other searches you might try: � "real estate information" - 277 million sites � "selling a home" - 55+ million sites � "buying a home" - 76+ million sites � "what is my home worth?" - 73+ million sites The amount of information seems endless even if you narrow the search dramatically. Google "Montana real estate" and you get over 31 million sites. That equates to 75,000 real estate web sites for each residence in the state! What you find on the best of sites can also be confusing. Time.com recently had these two article titles listed at the same time on front page of their real estate section: 1. New data say house prices may be nearing a bottom. 2. House prices keep dropping and they're not done yet. Same source, same day, two articles saying exactly opposite things! What should you do? Seth Godin, a best-selling author and founder of Squiddo.com, when he addressed the business community on the issue of gathering and dispensing information said: Many people and organizations are contributing to this mass of data, but few are taking advantage of the opportunity to collate it and present it to people who desperately need it. Think about how much needs to be sorted, compared, updated and presented to people who want to choose or learn or trade on it. You must find those industry leaders in your local real estate market (both agents and loan officers) that have made it a mission in their lives to truly gather all the pertinent information for their clients and customers. They will then become experts who are able to understand not only what is happening in the current real estate market but also why it is happening. Once you have found that person, make sure that they take the time to simply and effectively explain your options. Then you will feel confident that you are making the best decision for yourself and your family based on all the information available. Don't get lost in the sea of information. Hire a real estate expert to help you navigate.

Walk Away and Fannie Mae Will Chase You Down

Many lending institutions are beginning to take action against those who decide to walk away. Fannie Mae, according to an article in Housing Wire, announced: Borrowers who are determined to have the ability to make their monthly payments but walk away from their homes will not be able to secure a Fannie Mae backed mortgage for seven years after the foreclosure. Fannie Mae will also take legal action against borrowers who strategically default in order to recoup mortgage debt. The actual Fannie Mae announcement quotes Terence Edwards, executive vice president for credit portfolio management at Fannie: "Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time." In a subsequent article it was reported: If Fannie Mae determines someone strategically defaulted, then they say they will hold the borrower accountable for all associated costs of getting the house back on the market, in areas that lawfully allow deficiency judgments. Often when a home forecloses, Fannie Mae brokers and contractors discover vandalism and missing appliances and fixtures when they ready the home for resale. The cost of making those repairs and replacements will be included in the determination of the deficiency amount, a Fannie Mae spokesperson said, in addition to the difference in the mortgage balance and the proceeds from the foreclosure sale. What does this mean to you? Considering a strategic default? Know the ramifications before 'walking away' from your mortgage obligation.