DFW Real Estate Predictions - Who Knows??
It seems that I read a different prediction each day in a newspaper or magazine regarding the recovery of the real estate market. It doesn't matter which political party you subscribe to, I believe that we have some of the smartest economic and financial minds in the world working on the problem. They all have different opinions and methodologies but as of today, I don't think any of the solutions implemented or proposed by either party have been too wildy succesful. It's frightening that educated people can't figure this out much less explain it. It makes people like you and me seems like real bone heads.
In today's paper it was noted that "Every commercial real estate building in the nation has lost 30 percent of it's value." Dallas Fort Worth has been impacted too. In the same paper it says that area homes have hit rock bottom according to the S&P/Case-Shiller home price index. But I bet that when the North Texas Real Estate Information Systems (NTREIS aka MLS) report comes out it will show something different. So which is right, which do we believe, which do we use to make decisions as to where to put our hard earned money?
Mark Doutzor, chief economist at the Real Estate Center at Texas A&M University (disclosure, my alma mater) said the news is better for home buyers but he also adds just a few short lines later that "The banks are turning down the screws even tighter on builders. What we have seen in declines in home construction is going to continue."
In Dallas Fort Worth, one in every four homes on the market is a bank owned property. Until that product is flushed out, property values are at risk.
But what about commercial real estate, my education tells me that it's impact will also impact the lending market and global economy even further. So far this year, the number of commercial real estate deals posted for foreclosure has grown more than 1o percent. But industry leaders worry that's just a preview of what's to come. "The vast majority of buildings bought after 2005 are absolutely not worth the debt," said Paul Whitworth, president of commercial real estate firm Jones Lang LaSalle's Dallas office. "Don't be shocked that there will be hundreds of millions of dollars in foreclosures in commercial real estate in 2010. Dallas just had a $41 Million piece of land put on the foreclosure list. The largest posting in at least a decade.
But wait, isn't this a global economy? The New York Times reports that there is almost daily news to confirm that Europe's commercial market is returning to health.
So what does it mean? I don't have a clue but I do believe this is the best time to buy a home. Rates are at record lows and they can't stay that low for much longer. The government is offering $8000 cash back to qualified buyers on primary residences and there is a lot of inventory. Remember that one in every four homes in Dallas Fort Worth is a bank owned property and those banks must get rid of that inventory. HUD homes are available in certain cases for $100 down and other municipalities are offering incentives to buyers with down payment assistance programs.
Don't wait for more confusing reports in the same newspaper on the same day, take things into your own hands and focus on the positive aspects. Real estate is coming back!
Wednesday, September 30, 2009
Friday, September 18, 2009
Don't Miss Out On $8,000 in Cash Back
The IRS first time home buyers credit is set to expire on November 30, 2009. While the National Association of Realtors and home builder organizations are pushing Congress and the White House to extend and expand the program, do not count on it.
You need to find that house and get it under contract within the next 3-4 weeks at the latest. With all the talk about health care and the expense involved for that, Congress may find it a hard sell to expand another government incentive program. Cash for Clunkers ran out of money and this may also. So in other words, don't bank on anything when it comes to our government.
The important thing right now is to get pre-approved by a lender, find the right house for you and get it under contract now. Additionally, there are lots of local government down payment assistance programs in place as well as $100 down options when purchasing a HUD home.
The program ends on November 30th and you may receive up to $8000 or 10% of the value of the home whichever is less based on your income. But the closing must occur before the 30th (not just a contract to purchase but the closing and funding) The good thing is there has never been such an array of homes to choose from. The bad thing is all of the lending head aches. Be prepared and know that this process will require some patience and work on your part. When the lender asks for something, you must get it immediately. Do not buy one single thing on credit during the time you are qualified until after you close. That will kill a deal.
There are so many horror stories about loans that do not close for qualified buyers. You must give yourself time to have an alternative if the home you contracted to buy does not qualify for some reason and believe me the lenders are looking for any reason. Let me give you an example:
Tom Smith is buying a condo from Fannie Mae that was a foreclosure. The condo appraises for $140k and the buyer has contracted to purchase the property for $120k since Fannie Mae wants to sell it. Smith is putting 20% down on the condo and has a 760 credit score. Smith is also using a Fannie Mae loan to purchase the condo. So Fannie not only gets to sell a non-performing property, they also get to lend to a highly qualified buyer. But one day before closing, the mythical underwriter who no one ever sees or hears from until the 11th hour says that because the property was converted from apartments to condos over two years ago that Mr. Smith will now have to put 25% down in order to buy the property. Keep in mind that Smith is buying the property at 14% below the appraised value and offered to put 20% down therefore leaving the value of the loan at only 66% of the total value of the home. But Fannie doesn't want to sell it without the extra 5% down. Fortunately the buyer had the additional $6k to put down on the property and it closed. But if he had not, the deal would have died and the buyer would have to start his search over again and Fannie Mae would be stuck with the non performing property and a lost loan. No one along the way, the REALTORS, appraiser, home owners association, loan officer or desk top underwriter could have logically foreseen this issue. Good business, I don't think so.
The moral of the story is this could happen to you and if you wait until the last minute to find your dream house, it might be too late to get that free bailout money from the government.
Don't waste your time, call a REALTOR now and find your home.
The IRS first time home buyers credit is set to expire on November 30, 2009. While the National Association of Realtors and home builder organizations are pushing Congress and the White House to extend and expand the program, do not count on it.
You need to find that house and get it under contract within the next 3-4 weeks at the latest. With all the talk about health care and the expense involved for that, Congress may find it a hard sell to expand another government incentive program. Cash for Clunkers ran out of money and this may also. So in other words, don't bank on anything when it comes to our government.
The important thing right now is to get pre-approved by a lender, find the right house for you and get it under contract now. Additionally, there are lots of local government down payment assistance programs in place as well as $100 down options when purchasing a HUD home.
The program ends on November 30th and you may receive up to $8000 or 10% of the value of the home whichever is less based on your income. But the closing must occur before the 30th (not just a contract to purchase but the closing and funding) The good thing is there has never been such an array of homes to choose from. The bad thing is all of the lending head aches. Be prepared and know that this process will require some patience and work on your part. When the lender asks for something, you must get it immediately. Do not buy one single thing on credit during the time you are qualified until after you close. That will kill a deal.
There are so many horror stories about loans that do not close for qualified buyers. You must give yourself time to have an alternative if the home you contracted to buy does not qualify for some reason and believe me the lenders are looking for any reason. Let me give you an example:
Tom Smith is buying a condo from Fannie Mae that was a foreclosure. The condo appraises for $140k and the buyer has contracted to purchase the property for $120k since Fannie Mae wants to sell it. Smith is putting 20% down on the condo and has a 760 credit score. Smith is also using a Fannie Mae loan to purchase the condo. So Fannie not only gets to sell a non-performing property, they also get to lend to a highly qualified buyer. But one day before closing, the mythical underwriter who no one ever sees or hears from until the 11th hour says that because the property was converted from apartments to condos over two years ago that Mr. Smith will now have to put 25% down in order to buy the property. Keep in mind that Smith is buying the property at 14% below the appraised value and offered to put 20% down therefore leaving the value of the loan at only 66% of the total value of the home. But Fannie doesn't want to sell it without the extra 5% down. Fortunately the buyer had the additional $6k to put down on the property and it closed. But if he had not, the deal would have died and the buyer would have to start his search over again and Fannie Mae would be stuck with the non performing property and a lost loan. No one along the way, the REALTORS, appraiser, home owners association, loan officer or desk top underwriter could have logically foreseen this issue. Good business, I don't think so.
The moral of the story is this could happen to you and if you wait until the last minute to find your dream house, it might be too late to get that free bailout money from the government.
Don't waste your time, call a REALTOR now and find your home.
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