Start thinking about sealers, gutters, foundation vents
With fall's transition between the seasons comes a transition for your home as well. That roof and those four sturdy walls need to protect you from winter's fury, and there are several things you can do to help get ready.
1. Seal masonry surfaces: Apply a sealer to concrete driveways and walkways, brick patios and other exterior masonry. The sealer, available from paint stores and masonry supply retailers, prevents water from penetrating into cracks and crevices where it can freeze and cause serious damage.
2. Prepare your fireplace: Now is the time to get wood-burning appliances such as fireplaces and woodstoves ready for the season. Remove ash buildup; check screens and glass doors for damage; replace door gaskets as needed; and check doors, door latches, screen brackets, and other metal parts to be sure they are secure and operating properly. Check the condition of the exterior of the chimney or flue pipe, including the cap, and then clean the chimney to remove last season's accumulation of soot and creosote. Consider having a professional chimney sweep service clean and check everything at least every other year.
3. Prepare humidifiers: Winter is a dry time inside your home, and many people choose to use a
portable or central humidifier to put much-needed moisture back into the air. Now is the time to check your humidifier to make sure it's operating properly, that all necessary plates and filters are in place, and that the system is clean and the water supply is correct. Check your operating and maintenance instructions for more information.
4. Check the gutters: Check and clean gutters to remove leaf and pine needle debris, and check that the opening between the gutter and the downspout is unobstructed. Look for loose joints or other structural problems with the system, and repair them as needed using pop rivets. Use a gutter sealant to seal any connections where leaks may be occurring.
5. Change your furnace filters: Replace your old furnace filter with a new one. While you're at it, check the furnace for worn belts, lubrication needs or other servicing that might be required; refer to your owner's manual for specific suggestions, and follow any manufacturer safety instructions for shutting the power and fuel to the furnace before servicing.
6. Install a carbon monoxide detector: As we close up our houses for winter, the chances of carbon monoxide poisoning from malfunctioning gas appliances increases substantially. If you have a fireplace, water heater, or other appliance that is fueled by propane or natural gas, fall is an ideal time to install a carbon monoxide detector -- available from many home centers and retailers of heating system supplies. While you're at it, consider also having a professional heating contractor come out and inspect all of the fittings and components on your gas appliances.
7. Check smoke detectors: Fall is a great time to check the operation of your smoke detectors and to change batteries. You should also consider installing additional smoke detectors outside each bedroom.
8. Close off foundation vents: Depending on the winter climate in your area, you'll want to be thinking about closing off your foundation vents to help prevent pipe freezes. You can leave the foundation open for as many months as the weather remains mild, but close them off when the local forecasts begin calling for freezing temperatures. Once closed, you can leave them that way until it warms up again in the spring.
9. Check weatherstripping: Air leaks around doors and windows can rob your home of expensive heated air and create uncomfortable drafts that keep you feeling chilly. Check the weatherstripping around doors and windows, and replace any that are worn -- retailers who specialize in doors and windows can fix you up with the proper replacement type for your situation
Strategies to lower your mortgage interest rate
Interest rates on jumbo mortgages jumped about 3/4 percent in mid-August. Before settling for higher rates or giving up altogether, consider the following ways you might lower your financing costs.
Even though jumbos increased in price, conforming rates -- for mortgage amounts up to $417,000 -- decreased. On Aug. 20, for example, it was possible to find a 30-year fixed-rate conforming mortgage for 6.25 percent and one point. At the same time, jumbo mortgages over $417,000 were going for 7.25 percent and one point.
"Points" is a term lenders use for a mortgage origination fee that's paid by the borrower one time only at closing. One point equals 1 percent of the loan amount. By paying more points upfront, a borrower can lower the mortgage interest rate for the term of the loan.
Points are tax-deductible on purchase mortgages in the year of purchase for those borrowers who itemize deductions. Restrictions apply, so be sure to check with your tax advisor to see if paying points will lower your overall cost of financing. Usually, the longer you plan to keep paying on the mortgage, the more worthwhile it is to pay points for a lower rate.
HOUSE HUNTING TIP: Buyers who don't have the extra cash to pay points could ask the seller to pay points for them. Most lenders permit a seller to credit cash to buyers at closing for their nonrecurring closing costs. Points are a nonrecurring closing cost -- they are paid once at closing, unlike mortgage payments or homeowners insurance that is paid for on an ongoing basis.
Lenders have limits on how much a seller can credit a buyer. It's usually 3 to 6 percent of the purchase price. Before you write an offer, find out your lender's limit. Then ask the seller to credit you a dollar amount that falls within the lender's guidelines. This way you won't raise a red flag with the lender that could cause your loan to be denied.
Also be aware that appraisers are taking a hard look at seller credits to determine if they affect the market value of the property. If you inflate your offer price to cover the cost of points and this puts the price out of line with current market value, the lender could lower the appraised value. In this case, your mortgage amount might also be lowered, leaving you short on the funds you will need to close.
No one knows the future direction of interest rates. But, if you believe that interest rates will come down soon and that you'll refinance into a lower-interest-rate mortgage, you might be better off paying a higher rate now and no points.
Another way to reduce your mortgage interest rate on jumbo financing is to create a blended rate by combining a low-interest-rate conforming loan with a second mortgage. Secondary financing is available in amounts up to $500,000 for buyers with a 20 percent cash down payment, a good credit score (over 700 with some lenders) and verifiable income.
By combining a conforming $400,000 fixed-rate first mortgage at 6.25 percent with a fixed-rate $400,000 second mortgage at 7.4 percent, you end up with a blended rate of 6.8 percent. So, you create jumbo financing for under 7 percent in an over-7 percent first-mortgage market.
Most conventional second mortgages have payments that are amortized over 30 years, with a due date in 15 years. This means that there is a balloon payment when the loan is due, unless you pay the principal down substantially during the term of the loan.
THE CLOSING: Make sure that there is no prepayment penalty on the second mortgage so that you can make pay-downs or pay the loan off at any time without penalty.
Wednesday, October 31, 2007
How to protect home from winter's fury
Start thinking about sealers, gutters, foundation vents
With fall's transition between the seasons comes a transition for your home as well. That roof and those four sturdy walls need to protect you from winter's fury, and there are several things you can do to help get ready.
1. Seal masonry surfaces: Apply a sealer to concrete driveways and walkways, brick patios and other exterior masonry. The sealer, available from paint stores and masonry supply retailers, prevents water from penetrating into cracks and crevices where it can freeze and cause serious damage.
2. Prepare your fireplace: Now is the time to get wood-burning appliances such as fireplaces and woodstoves ready for the season. Remove ash buildup; check screens and glass doors for damage; replace door gaskets as needed; and check doors, door latches, screen brackets, and other metal parts to be sure they are secure and operating properly. Check the condition of the exterior of the chimney or flue pipe, including the cap, and then clean the chimney to remove last season's accumulation of soot and creosote. Consider having a professional chimney sweep service clean and check everything at least every other year.
3. Prepare humidifiers: Winter is a dry time inside your home, and many people choose to use a
portable or central humidifier to put much-needed moisture back into the air. Now is the time to check your humidifier to make sure it's operating properly, that all necessary plates and filters are in place, and that the system is clean and the water supply is correct. Check your operating and maintenance instructions for more information.
4. Check the gutters: Check and clean gutters to remove leaf and pine needle debris, and check that the opening between the gutter and the downspout is unobstructed. Look for loose joints or other structural problems with the system, and repair them as needed using pop rivets. Use a gutter sealant to seal any connections where leaks may be occurring.
5. Change your furnace filters: Replace your old furnace filter with a new one. While you're at it, check the furnace for worn belts, lubrication needs or other servicing that might be required; refer to your owner's manual for specific suggestions, and follow any manufacturer safety instructions for shutting the power and fuel to the furnace before servicing.
6. Install a carbon monoxide detector: As we close up our houses for winter, the chances of carbon monoxide poisoning from malfunctioning gas appliances increases substantially. If you have a fireplace, water heater, or other appliance that is fueled by propane or natural gas, fall is an ideal time to install a carbon monoxide detector -- available from many home centers and retailers of heating system supplies. While you're at it, consider also having a professional heating contractor come out and inspect all of the fittings and components on your gas appliances.
7. Check smoke detectors: Fall is a great time to check the operation of your smoke detectors and to change batteries. You should also consider installing additional smoke detectors outside each bedroom.
8. Close off foundation vents: Depending on the winter climate in your area, you'll want to be thinking about closing off your foundation vents to help prevent pipe freezes. You can leave the foundation open for as many months as the weather remains mild, but close them off when the local forecasts begin calling for freezing temperatures. Once closed, you can leave them that way until it warms up again in the spring.
9. Check weatherstripping: Air leaks around doors and windows can rob your home of expensive heated air and create uncomfortable drafts that keep you feeling chilly. Check the weatherstripping around doors and windows, and replace any that are worn -- retailers who specialize in doors and windows can fix you up with the proper replacement type for your situation
Strategies to lower your mortgage interest rate
Interest rates on jumbo mortgages jumped about 3/4 percent in mid-August. Before settling for higher rates or giving up altogether, consider the following ways you might lower your financing costs.
Even though jumbos increased in price, conforming rates -- for mortgage amounts up to $417,000 -- decreased. On Aug. 20, for example, it was possible to find a 30-year fixed-rate conforming mortgage for 6.25 percent and one point. At the same time, jumbo mortgages over $417,000 were going for 7.25 percent and one point.
"Points" is a term lenders use for a mortgage origination fee that's paid by the borrower one time only at closing. One point equals 1 percent of the loan amount. By paying more points upfront, a borrower can lower the mortgage interest rate for the term of the loan.
Points are tax-deductible on purchase mortgages in the year of purchase for those borrowers who itemize deductions. Restrictions apply, so be sure to check with your tax advisor to see if paying points will lower your overall cost of financing. Usually, the longer you plan to keep paying on the mortgage, the more worthwhile it is to pay points for a lower rate.
HOUSE HUNTING TIP: Buyers who don't have the extra cash to pay points could ask the seller to pay points for them. Most lenders permit a seller to credit cash to buyers at closing for their nonrecurring closing costs. Points are a nonrecurring closing cost -- they are paid once at closing, unlike mortgage payments or homeowners insurance that is paid for on an ongoing basis.
Lenders have limits on how much a seller can credit a buyer. It's usually 3 to 6 percent of the purchase price. Before you write an offer, find out your lender's limit. Then ask the seller to credit you a dollar amount that falls within the lender's guidelines. This way you won't raise a red flag with the lender that could cause your loan to be denied.
Also be aware that appraisers are taking a hard look at seller credits to determine if they affect the market value of the property. If you inflate your offer price to cover the cost of points and this puts the price out of line with current market value, the lender could lower the appraised value. In this case, your mortgage amount might also be lowered, leaving you short on the funds you will need to close.
No one knows the future direction of interest rates. But, if you believe that interest rates will come down soon and that you'll refinance into a lower-interest-rate mortgage, you might be better off paying a higher rate now and no points.
Another way to reduce your mortgage interest rate on jumbo financing is to create a blended rate by combining a low-interest-rate conforming loan with a second mortgage. Secondary financing is available in amounts up to $500,000 for buyers with a 20 percent cash down payment, a good credit score (over 700 with some lenders) and verifiable income.
By combining a conforming $400,000 fixed-rate first mortgage at 6.25 percent with a fixed-rate $400,000 second mortgage at 7.4 percent, you end up with a blended rate of 6.8 percent. So, you create jumbo financing for under 7 percent in an over-7 percent first-mortgage market.
Most conventional second mortgages have payments that are amortized over 30 years, with a due date in 15 years. This means that there is a balloon payment when the loan is due, unless you pay the principal down substantially during the term of the loan.
THE CLOSING: Make sure that there is no prepayment penalty on the second mortgage so that you can make pay-downs or pay the loan off at any time without penalty.
With fall's transition between the seasons comes a transition for your home as well. That roof and those four sturdy walls need to protect you from winter's fury, and there are several things you can do to help get ready.
1. Seal masonry surfaces: Apply a sealer to concrete driveways and walkways, brick patios and other exterior masonry. The sealer, available from paint stores and masonry supply retailers, prevents water from penetrating into cracks and crevices where it can freeze and cause serious damage.
2. Prepare your fireplace: Now is the time to get wood-burning appliances such as fireplaces and woodstoves ready for the season. Remove ash buildup; check screens and glass doors for damage; replace door gaskets as needed; and check doors, door latches, screen brackets, and other metal parts to be sure they are secure and operating properly. Check the condition of the exterior of the chimney or flue pipe, including the cap, and then clean the chimney to remove last season's accumulation of soot and creosote. Consider having a professional chimney sweep service clean and check everything at least every other year.
3. Prepare humidifiers: Winter is a dry time inside your home, and many people choose to use a
portable or central humidifier to put much-needed moisture back into the air. Now is the time to check your humidifier to make sure it's operating properly, that all necessary plates and filters are in place, and that the system is clean and the water supply is correct. Check your operating and maintenance instructions for more information.
4. Check the gutters: Check and clean gutters to remove leaf and pine needle debris, and check that the opening between the gutter and the downspout is unobstructed. Look for loose joints or other structural problems with the system, and repair them as needed using pop rivets. Use a gutter sealant to seal any connections where leaks may be occurring.
5. Change your furnace filters: Replace your old furnace filter with a new one. While you're at it, check the furnace for worn belts, lubrication needs or other servicing that might be required; refer to your owner's manual for specific suggestions, and follow any manufacturer safety instructions for shutting the power and fuel to the furnace before servicing.
6. Install a carbon monoxide detector: As we close up our houses for winter, the chances of carbon monoxide poisoning from malfunctioning gas appliances increases substantially. If you have a fireplace, water heater, or other appliance that is fueled by propane or natural gas, fall is an ideal time to install a carbon monoxide detector -- available from many home centers and retailers of heating system supplies. While you're at it, consider also having a professional heating contractor come out and inspect all of the fittings and components on your gas appliances.
7. Check smoke detectors: Fall is a great time to check the operation of your smoke detectors and to change batteries. You should also consider installing additional smoke detectors outside each bedroom.
8. Close off foundation vents: Depending on the winter climate in your area, you'll want to be thinking about closing off your foundation vents to help prevent pipe freezes. You can leave the foundation open for as many months as the weather remains mild, but close them off when the local forecasts begin calling for freezing temperatures. Once closed, you can leave them that way until it warms up again in the spring.
9. Check weatherstripping: Air leaks around doors and windows can rob your home of expensive heated air and create uncomfortable drafts that keep you feeling chilly. Check the weatherstripping around doors and windows, and replace any that are worn -- retailers who specialize in doors and windows can fix you up with the proper replacement type for your situation
Strategies to lower your mortgage interest rate
Interest rates on jumbo mortgages jumped about 3/4 percent in mid-August. Before settling for higher rates or giving up altogether, consider the following ways you might lower your financing costs.
Even though jumbos increased in price, conforming rates -- for mortgage amounts up to $417,000 -- decreased. On Aug. 20, for example, it was possible to find a 30-year fixed-rate conforming mortgage for 6.25 percent and one point. At the same time, jumbo mortgages over $417,000 were going for 7.25 percent and one point.
"Points" is a term lenders use for a mortgage origination fee that's paid by the borrower one time only at closing. One point equals 1 percent of the loan amount. By paying more points upfront, a borrower can lower the mortgage interest rate for the term of the loan.
Points are tax-deductible on purchase mortgages in the year of purchase for those borrowers who itemize deductions. Restrictions apply, so be sure to check with your tax advisor to see if paying points will lower your overall cost of financing. Usually, the longer you plan to keep paying on the mortgage, the more worthwhile it is to pay points for a lower rate.
HOUSE HUNTING TIP: Buyers who don't have the extra cash to pay points could ask the seller to pay points for them. Most lenders permit a seller to credit cash to buyers at closing for their nonrecurring closing costs. Points are a nonrecurring closing cost -- they are paid once at closing, unlike mortgage payments or homeowners insurance that is paid for on an ongoing basis.
Lenders have limits on how much a seller can credit a buyer. It's usually 3 to 6 percent of the purchase price. Before you write an offer, find out your lender's limit. Then ask the seller to credit you a dollar amount that falls within the lender's guidelines. This way you won't raise a red flag with the lender that could cause your loan to be denied.
Also be aware that appraisers are taking a hard look at seller credits to determine if they affect the market value of the property. If you inflate your offer price to cover the cost of points and this puts the price out of line with current market value, the lender could lower the appraised value. In this case, your mortgage amount might also be lowered, leaving you short on the funds you will need to close.
No one knows the future direction of interest rates. But, if you believe that interest rates will come down soon and that you'll refinance into a lower-interest-rate mortgage, you might be better off paying a higher rate now and no points.
Another way to reduce your mortgage interest rate on jumbo financing is to create a blended rate by combining a low-interest-rate conforming loan with a second mortgage. Secondary financing is available in amounts up to $500,000 for buyers with a 20 percent cash down payment, a good credit score (over 700 with some lenders) and verifiable income.
By combining a conforming $400,000 fixed-rate first mortgage at 6.25 percent with a fixed-rate $400,000 second mortgage at 7.4 percent, you end up with a blended rate of 6.8 percent. So, you create jumbo financing for under 7 percent in an over-7 percent first-mortgage market.
Most conventional second mortgages have payments that are amortized over 30 years, with a due date in 15 years. This means that there is a balloon payment when the loan is due, unless you pay the principal down substantially during the term of the loan.
THE CLOSING: Make sure that there is no prepayment penalty on the second mortgage so that you can make pay-downs or pay the loan off at any time without penalty.
Tuesday, October 23, 2007
One of the biggest misconceptions our clients have about homeownership is that the financial burden of a mortgage will be too much to continue the lifestyle to which they've become accustomed. Why, they ask, should I bother with such an enormous sacrifice?
The answer is that the relatively low interest rates of today's market combined with the numerous tax and equity benefits of homeownership are only a couple of the rewards of an investment in real estate. For example, in the state of Virginia, if you live in the home for 2 out of 5 consecutive years you are Capital Gains Tax free up to 250,000 for a single person and 500,000 for a married couple.
Also, there are numerous areas in the country, where the price of paying a mortgage is the same or slightly higher than paying rent. Here in Charlottesville, my brother and I bought a house and our mortgage payment is only $50 more than renting a two bedroom apartment. We were also able to buy a three bedroom house, so we brought on a housemate, and my brother and I are paying less than $500 a month to OWN a home. Compared to the $700 a month to rent an apartment, our lifestyle actually got better.
There are a number of ways to do things like this in our Real Estate Market. For example, someone can buy a home with an unfinished basement, finish it with a couple bedrooms, small living room, kitchen and bathroom and rent it out like an apartment. In some cases in Charlottesville, people are covering their full mortgage payment by doing this. So they are OWNING a home with SOMEONE ELSE'S MONEY. In fact, that's one of the best concepts to think about. Using someone else's money to own something. Great idea.
Feel free to check out my website for lisitings in and around the Charlottesville Area. http://www.robsellscharlottesville.com/
Also, please leave comments and subscribe to the blog. It will give me an idea of what you all would like to read about, and if the information I am giving is pertinent. Thanks!
One of the biggest misconceptions our clients have about homeownership is that the financial burden of a mortgage will be too much to continue the lifestyle to which they've become accustomed. Why, they ask, should I bother with such an enormous sacrifice?
The answer is that the relatively low interest rates of today's market combined with the numerous tax and equity benefits of homeownership are only a couple of the rewards of an investment in real estate. For example, in the state of Virginia, if you live in the home for 2 out of 5 consecutive years you are Capital Gains Tax free up to 250,000 for a single person and 500,000 for a married couple.
Also, there are numerous areas in the country, where the price of paying a mortgage is the same or slightly higher than paying rent. Here in Charlottesville, my brother and I bought a house and our mortgage payment is only $50 more than renting a two bedroom apartment. We were also able to buy a three bedroom house, so we brought on a housemate, and my brother and I are paying less than $500 a month to OWN a home. Compared to the $700 a month to rent an apartment, our lifestyle actually got better.
There are a number of ways to do things like this in our Real Estate Market. For example, someone can buy a home with an unfinished basement, finish it with a couple bedrooms, small living room, kitchen and bathroom and rent it out like an apartment. In some cases in Charlottesville, people are covering their full mortgage payment by doing this. So they are OWNING a home with SOMEONE ELSE'S MONEY. In fact, that's one of the best concepts to think about. Using someone else's money to own something. Great idea.
Feel free to check out my website for lisitings in and around the Charlottesville Area. http://www.robsellscharlottesville.com/
Also, please leave comments and subscribe to the blog. It will give me an idea of what you all would like to read about, and if the information I am giving is pertinent. Thanks!
Tuesday, October 16, 2007
‘Housing Decline Is Still Unfolding,’ Treasury Chief Says
WASHINGTON, Oct. 16 — Treasury Secretary Henry M. Paulson Jr. offered a pessimistic view of the country’s housing slump today as he called for help for hard-pressed homeowners and new mortgage regulations. But he urged Congress not to overreact by passing excessively harsh measures.
“Let me be clear: Despite strong economic fundamentals, the housing decline is still unfolding, and I view it as the most significant current risk to our economy,” Mr. Paulson said in a speech at a Georgetown University law forum. “The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.”
Mr. Paulson said that “a first and important step” is to identify struggling borrowers early, steer them to mortgage counselors “and find a sustainable mortgage solution.”
“We have an immediate need to see more loan modifications and refinancing and other flexibility,” Mr. Paulson said. “For many families, this will be the only viable solution.”
Citing recent surveys showing that as many as half of the borrowers who have gone into foreclosure never had prior discussions with mortgage counselors, Mr. Paulson said, “That must change; early intervention is critical.”
But he warned against what he sees as an overreaction to “predatory lending” practices, and he said Congress must proceed with caution in determining whether to impose greater liability on mortgage “securitizers and investors,” or risk “cutting off investment inflows to the housing market.”
Mr. Paulson’s remarks today reflected perhaps the most sobering assessment by an administration official of the housing industry. Two months ago, when credit markets around the world were freezing up in panic over failed mortgages, Mr. Paulson said he was confident investors would work things out for themselves.
“We’re going to work through this problem just fine,” he said in an interview with CNBC on Aug. 21. “I think what the American people need to understand, these things take a while to play out.”
Mr. Paulson says he still holds that view. But in a sign that administration officials are more worried about underlying problems in the markets than they had previously let on, Mr. Paulson and other top Treasury officials are prodding and pushing Wall Street firms and the mortgage industry to come up with solutions — and helping devise some of them as well.
The plan announced Monday involves no money from taxpayers, and it was negotiated primarily between the banks themselves. But it highlighted Mr. Paulson’s growing effort to marry two competing goals of the Bush administration: to stabilize the battered markets for mortgages and housing, but to avoid a government bailout that might encourage investors to take even bigger risks in the future — what economists call “moral hazard.”
“I have no interest in bailing out lenders or property speculators,” Mr. Paulson said today. “Still, we must recognize the very real harm to families affected by the housing downturn.”
The Treasury’s move coincided with a gloomy assessment of both the mortgage and housing markets by Ben S. Bernanke, chairman of the Federal Reserve.
“Despite a few encouraging signs, conditions in mortgage markets remain difficult,” Mr. Bernanke told the New York Economic Club in a speech in Midtown Manhattan Monday evening.
Mr. Bernanke said the overall economy is still growing, suggesting that the Fed is not likely to cut interest rates at its policy meeting at the end of this month unless conditions worsen markedly in the next couple of weeks. But he predicted that the housing market has yet to hit bottom and that it was likely to be a “significant drag” on growth through early next year. A weak economy, he added, could reinforce problems in the credit markets.
Mr. Paulson’s effort to hammer out a plan with major banks to support mortgage-backed securities was headed by two of his top deputies, Robert Steel and Anthony Ryan, both Wall Street veterans. The two men herded rival bank executives into meetings and conference calls over the past month, and helped devise a plan aimed at jump-starting the frozen mortgage market.
Mr. Paulson is becoming more active on other fronts as well. In his speech today, he called for new nationwide rules for mortgage lenders, changes in the practices of credit-rating agencies and tougher scrutiny by federal banking regulators.
Mr. Paulson also tried to step up pressure on mortgage lenders and mortgage-servicing companies to renegotiate terms for people in danger of defaulting on expensive subprime loans.
By EDMUND L. ANDREWS
Published: October 16, 2007
New York Times Business
http://www.robsellscharlottesville.com/
“Let me be clear: Despite strong economic fundamentals, the housing decline is still unfolding, and I view it as the most significant current risk to our economy,” Mr. Paulson said in a speech at a Georgetown University law forum. “The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.”
Mr. Paulson said that “a first and important step” is to identify struggling borrowers early, steer them to mortgage counselors “and find a sustainable mortgage solution.”
“We have an immediate need to see more loan modifications and refinancing and other flexibility,” Mr. Paulson said. “For many families, this will be the only viable solution.”
Citing recent surveys showing that as many as half of the borrowers who have gone into foreclosure never had prior discussions with mortgage counselors, Mr. Paulson said, “That must change; early intervention is critical.”
But he warned against what he sees as an overreaction to “predatory lending” practices, and he said Congress must proceed with caution in determining whether to impose greater liability on mortgage “securitizers and investors,” or risk “cutting off investment inflows to the housing market.”
Mr. Paulson’s remarks today reflected perhaps the most sobering assessment by an administration official of the housing industry. Two months ago, when credit markets around the world were freezing up in panic over failed mortgages, Mr. Paulson said he was confident investors would work things out for themselves.
“We’re going to work through this problem just fine,” he said in an interview with CNBC on Aug. 21. “I think what the American people need to understand, these things take a while to play out.”
Mr. Paulson says he still holds that view. But in a sign that administration officials are more worried about underlying problems in the markets than they had previously let on, Mr. Paulson and other top Treasury officials are prodding and pushing Wall Street firms and the mortgage industry to come up with solutions — and helping devise some of them as well.
The plan announced Monday involves no money from taxpayers, and it was negotiated primarily between the banks themselves. But it highlighted Mr. Paulson’s growing effort to marry two competing goals of the Bush administration: to stabilize the battered markets for mortgages and housing, but to avoid a government bailout that might encourage investors to take even bigger risks in the future — what economists call “moral hazard.”
“I have no interest in bailing out lenders or property speculators,” Mr. Paulson said today. “Still, we must recognize the very real harm to families affected by the housing downturn.”
The Treasury’s move coincided with a gloomy assessment of both the mortgage and housing markets by Ben S. Bernanke, chairman of the Federal Reserve.
“Despite a few encouraging signs, conditions in mortgage markets remain difficult,” Mr. Bernanke told the New York Economic Club in a speech in Midtown Manhattan Monday evening.
Mr. Bernanke said the overall economy is still growing, suggesting that the Fed is not likely to cut interest rates at its policy meeting at the end of this month unless conditions worsen markedly in the next couple of weeks. But he predicted that the housing market has yet to hit bottom and that it was likely to be a “significant drag” on growth through early next year. A weak economy, he added, could reinforce problems in the credit markets.
Mr. Paulson’s effort to hammer out a plan with major banks to support mortgage-backed securities was headed by two of his top deputies, Robert Steel and Anthony Ryan, both Wall Street veterans. The two men herded rival bank executives into meetings and conference calls over the past month, and helped devise a plan aimed at jump-starting the frozen mortgage market.
Mr. Paulson is becoming more active on other fronts as well. In his speech today, he called for new nationwide rules for mortgage lenders, changes in the practices of credit-rating agencies and tougher scrutiny by federal banking regulators.
Mr. Paulson also tried to step up pressure on mortgage lenders and mortgage-servicing companies to renegotiate terms for people in danger of defaulting on expensive subprime loans.
By EDMUND L. ANDREWS
Published: October 16, 2007
New York Times Business
http://www.robsellscharlottesville.com/
‘Housing Decline Is Still Unfolding,’ Treasury Chief Says
WASHINGTON, Oct. 16 — Treasury Secretary Henry M. Paulson Jr. offered a pessimistic view of the country’s housing slump today as he called for help for hard-pressed homeowners and new mortgage regulations. But he urged Congress not to overreact by passing excessively harsh measures.
“Let me be clear: Despite strong economic fundamentals, the housing decline is still unfolding, and I view it as the most significant current risk to our economy,” Mr. Paulson said in a speech at a Georgetown University law forum. “The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.”
Mr. Paulson said that “a first and important step” is to identify struggling borrowers early, steer them to mortgage counselors “and find a sustainable mortgage solution.”
“We have an immediate need to see more loan modifications and refinancing and other flexibility,” Mr. Paulson said. “For many families, this will be the only viable solution.”
Citing recent surveys showing that as many as half of the borrowers who have gone into foreclosure never had prior discussions with mortgage counselors, Mr. Paulson said, “That must change; early intervention is critical.”
But he warned against what he sees as an overreaction to “predatory lending” practices, and he said Congress must proceed with caution in determining whether to impose greater liability on mortgage “securitizers and investors,” or risk “cutting off investment inflows to the housing market.”
Mr. Paulson’s remarks today reflected perhaps the most sobering assessment by an administration official of the housing industry. Two months ago, when credit markets around the world were freezing up in panic over failed mortgages, Mr. Paulson said he was confident investors would work things out for themselves.
“We’re going to work through this problem just fine,” he said in an interview with CNBC on Aug. 21. “I think what the American people need to understand, these things take a while to play out.”
Mr. Paulson says he still holds that view. But in a sign that administration officials are more worried about underlying problems in the markets than they had previously let on, Mr. Paulson and other top Treasury officials are prodding and pushing Wall Street firms and the mortgage industry to come up with solutions — and helping devise some of them as well.
The plan announced Monday involves no money from taxpayers, and it was negotiated primarily between the banks themselves. But it highlighted Mr. Paulson’s growing effort to marry two competing goals of the Bush administration: to stabilize the battered markets for mortgages and housing, but to avoid a government bailout that might encourage investors to take even bigger risks in the future — what economists call “moral hazard.”
“I have no interest in bailing out lenders or property speculators,” Mr. Paulson said today. “Still, we must recognize the very real harm to families affected by the housing downturn.”
The Treasury’s move coincided with a gloomy assessment of both the mortgage and housing markets by Ben S. Bernanke, chairman of the Federal Reserve.
“Despite a few encouraging signs, conditions in mortgage markets remain difficult,” Mr. Bernanke told the New York Economic Club in a speech in Midtown Manhattan Monday evening.
Mr. Bernanke said the overall economy is still growing, suggesting that the Fed is not likely to cut interest rates at its policy meeting at the end of this month unless conditions worsen markedly in the next couple of weeks. But he predicted that the housing market has yet to hit bottom and that it was likely to be a “significant drag” on growth through early next year. A weak economy, he added, could reinforce problems in the credit markets.
Mr. Paulson’s effort to hammer out a plan with major banks to support mortgage-backed securities was headed by two of his top deputies, Robert Steel and Anthony Ryan, both Wall Street veterans. The two men herded rival bank executives into meetings and conference calls over the past month, and helped devise a plan aimed at jump-starting the frozen mortgage market.
Mr. Paulson is becoming more active on other fronts as well. In his speech today, he called for new nationwide rules for mortgage lenders, changes in the practices of credit-rating agencies and tougher scrutiny by federal banking regulators.
Mr. Paulson also tried to step up pressure on mortgage lenders and mortgage-servicing companies to renegotiate terms for people in danger of defaulting on expensive subprime loans.
By EDMUND L. ANDREWS
Published: October 16, 2007
New York Times Business
http://www.robsellscharlottesville.com/
“Let me be clear: Despite strong economic fundamentals, the housing decline is still unfolding, and I view it as the most significant current risk to our economy,” Mr. Paulson said in a speech at a Georgetown University law forum. “The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.”
Mr. Paulson said that “a first and important step” is to identify struggling borrowers early, steer them to mortgage counselors “and find a sustainable mortgage solution.”
“We have an immediate need to see more loan modifications and refinancing and other flexibility,” Mr. Paulson said. “For many families, this will be the only viable solution.”
Citing recent surveys showing that as many as half of the borrowers who have gone into foreclosure never had prior discussions with mortgage counselors, Mr. Paulson said, “That must change; early intervention is critical.”
But he warned against what he sees as an overreaction to “predatory lending” practices, and he said Congress must proceed with caution in determining whether to impose greater liability on mortgage “securitizers and investors,” or risk “cutting off investment inflows to the housing market.”
Mr. Paulson’s remarks today reflected perhaps the most sobering assessment by an administration official of the housing industry. Two months ago, when credit markets around the world were freezing up in panic over failed mortgages, Mr. Paulson said he was confident investors would work things out for themselves.
“We’re going to work through this problem just fine,” he said in an interview with CNBC on Aug. 21. “I think what the American people need to understand, these things take a while to play out.”
Mr. Paulson says he still holds that view. But in a sign that administration officials are more worried about underlying problems in the markets than they had previously let on, Mr. Paulson and other top Treasury officials are prodding and pushing Wall Street firms and the mortgage industry to come up with solutions — and helping devise some of them as well.
The plan announced Monday involves no money from taxpayers, and it was negotiated primarily between the banks themselves. But it highlighted Mr. Paulson’s growing effort to marry two competing goals of the Bush administration: to stabilize the battered markets for mortgages and housing, but to avoid a government bailout that might encourage investors to take even bigger risks in the future — what economists call “moral hazard.”
“I have no interest in bailing out lenders or property speculators,” Mr. Paulson said today. “Still, we must recognize the very real harm to families affected by the housing downturn.”
The Treasury’s move coincided with a gloomy assessment of both the mortgage and housing markets by Ben S. Bernanke, chairman of the Federal Reserve.
“Despite a few encouraging signs, conditions in mortgage markets remain difficult,” Mr. Bernanke told the New York Economic Club in a speech in Midtown Manhattan Monday evening.
Mr. Bernanke said the overall economy is still growing, suggesting that the Fed is not likely to cut interest rates at its policy meeting at the end of this month unless conditions worsen markedly in the next couple of weeks. But he predicted that the housing market has yet to hit bottom and that it was likely to be a “significant drag” on growth through early next year. A weak economy, he added, could reinforce problems in the credit markets.
Mr. Paulson’s effort to hammer out a plan with major banks to support mortgage-backed securities was headed by two of his top deputies, Robert Steel and Anthony Ryan, both Wall Street veterans. The two men herded rival bank executives into meetings and conference calls over the past month, and helped devise a plan aimed at jump-starting the frozen mortgage market.
Mr. Paulson is becoming more active on other fronts as well. In his speech today, he called for new nationwide rules for mortgage lenders, changes in the practices of credit-rating agencies and tougher scrutiny by federal banking regulators.
Mr. Paulson also tried to step up pressure on mortgage lenders and mortgage-servicing companies to renegotiate terms for people in danger of defaulting on expensive subprime loans.
By EDMUND L. ANDREWS
Published: October 16, 2007
New York Times Business
http://www.robsellscharlottesville.com/
Monday, October 15, 2007
Third Quarter Market Report
Third Quarter Market Report
Challenges, Opportunities, and Surprises, Oh My!
The Avery Group - Roy Wheeler Realty Co.
Someone named Anonymous once said, "Many an opportunity is lost because a man is out looking for four-leaf clovers." That quote seems to sum up the real estate market – buyers seem to be looking for some sort of incredible deal when great opportunity is right in front of them.
The slow pace of sales in the Charlottesville area real estate market is somewhat surprising given the “buyer’s market” we are experiencing. Buyers do not need a four-leaf clover to have luck in purchasing a home right now. Sellers, on the other hand, face a significant challenge.
There are some understandable “excuses” as to why buyers are hesitating – over-hyped mortgage crisis, trouble selling their existing house, waiting for the market to “bottom out” – but this market report will show the best time to buy is NOW! Ben Franklin said “time is money” and the longer you wait, the more money you are leaving on the table.
Overview Through the Third Quarter
The current real estate market is much more complex and variable than past years. The defining measure of this market is not the slower pace of sales; rather, the most dominating factor is the record level of homes for sale. As of early October, we have almost 3,500 homes listed “for sale” in the CAAR MLS system – three times the inventory level of three years ago. High inventory levels have kept the prices low, “Days on Market” high, and sellers reaching for Maalox.
Homes Sold
There were 2,875 homes sold in the first nine months of 2007, which was down 647 (-18.4%) from last year. All local areas (Albemarle -17.8%, Charlottesville -25.6%, Fluvanna -21.5%, Greene -34.7%, Louisa -18.5%, and Nelson -21.5%) posted lower sales than the same period last year. Looking at the past 6 years (see chart below), our region has returned to a sales level just above 2003 – which was a record at the time.
New Construction
New to the CAAR market report this year is a look at the number of new homes that were sold through the CAAR MLS system. It is important to note that many “new” homes are not included in this statistic. It is very common for a buyer to contact a builder directly to custom build a home. As a rule, new home statistics tend to lag behind the rest of the market as far as trends are concerned. New home sales peaked in 2006, a year after the overall market. New construction, both locally and nationally, slowed dramatically in mid-2006. If the record traffic of home shoppers at the recent Blue Ridge Home Builders’ Parade of Homes is any indication, new homes sales are poised to make a recovery.
Median Sales Price
It may come as a surprise to some that the median price of homes in our area actually increased in the first three months of the year. Remarkably, Charlottesville’s median price was up a whopping 17.2%. Before all you city dwellers get excited, there are a few explanations. First, the city had a lot of modestly priced condos sell last year, which lowered the median price. Second, there has been a significant amount of new construction in the city this year with price tags from $300,000 to $500,000. Finally, 25% fewer homes sold this year, which makes the middle of the market (otherwise known as the median price) more susceptible to dramatic change. It would be a mistake to assume that real home prices went up 17% in the city.
Overall, the median price rose $5,100 (+1.9%). Albemarle (-1.8%) and Louisa (-0.8%) were down slightly, but all other areas were up after three quarters. Other area increases were modest – Fluvanna (+4.7%), Greene (+1.9%), Nelson (+3.4%).
Days on Market (DOM)
The high inventory of homes for sale has created a “tale of two cities” for DOM. Homes that have sold this year, sold quickly, but many homes have been on the market much longer than the average. The median DOM for homes that sold through the 3rd quarter is just 59 days. By contrast, the median for homes on the market is 110 days. A third of the homes still on the market have been there for more than 150 days and a quarter of the homes for sale right now have been on the market more than 200 days. There are many reasons for this dichotomy of DOM, but the main reason is probably price. The axiom in the real estate industry is, “Any home will sell quickly if it is priced correctly.”
Inventory of Homes for Sale
The inventory of homes for sale in the Charlottesville area has been a key factor in the local market for the past several years. Inventory levels are generally a good indication of where home prices are going. In the early part of the decade, we saw extremely low inventory levels of around 4 or 5 months of supply. This caused home prices to soar, as buyers were forced to make aggressive offers to purchase the home they wanted. Today, we have a 20-month supply of homes on the market, which is very high and possibly a record. We are just entering a quieter selling season with the holidays approaching, so we will likely see a continuation of high inventory into the spring. First-time buyers, who don’t have a home to sell, have an extraordinary opportunity in this market.
Currently, we have 3,471 homes on the market and the median price of these homes is $329,000. The average DOM of these homes is 126 days. There are 588 homes for sale under $200,000 with an average DOM of 120. There are 262 homes currently on the market priced at a million dollars or more with an average DOM of 154.
Condos and Townhomes
The explosion of condominiums and townhomes in 2005 and 2006 appears to be over. Most sales of attached homes are in Charlottesville and Albemarle, so this report covers only those areas. The charts below show the attached homes sold in the first nine months of 2007 compared to past years. Inventory levels of attached homes for sale are still high, with 438 listed for sale in Charlottesville and Albemarle. This over-supply is presented in the 151 average DOM for the attached properties currently on the market compared to the 125 days for detached homes in Charlottesville and Albemarle. The median price of an attached home is $259,500, which is much lower than detached homes on the market.
Price Per Square Foot (Finished)
Looking at the average price per square foot of finished space in homes is interesting, but should not be relied on as a scientific number. The averages in this section of the report include the cost of the land, which varies greatly based on location and amenities. A lot at Wintergreen with fantastic views of the valley costs much more than a lot in other parts of Nelson. With that said, the numbers in this section continue to reflect the softening of prices we have seen in 2007.
Nelson County, thanks to the large number of resort properties, has consistently led the way in price per square foot, with Charlottesville generally second. City homes are higher than other areas, simply because they are located more conveniently to U.Va. and downtown. As the saying goes, there are three things that matter in real estate – location, location, and location.
Conclusions and Predictions
The seasonal aspect of the Charlottesville area real estate market allows us to draw year-end conclusions based on the first three quarters. The balance of the year is the “slow” time for sales, so unless there is a dramatic real estate swing, the third quarter will be reflective of the year-end situation. That means we will end the year with the 4th highest year for sales reported to the CAAR MLS. Prices will continue to rise slowly and inventory will continue to be the big story in the market.
Sellers looking for a return to the sales pace of 2005 will be disappointed with my prediction for the future. I do not see inventory levels dropping to reasonable levels for the next 12 months (at least). That means sellers will be challenged by a lot of competition. Sellers will need to listen to the advice of their REALTOR® and price the property competitively. Buyers will continue to have extraordinary opportunities for the foreseeable future. With any luck, we may all be surprised by the strength and resiliency of the local real estate market by the time the spring market hits its stride.
For more information on this report or the real estate market, visit http://www.theaverygroup.com/ or contact Rob Alley of The Avery Group at (434) 975-9000 or info@theaverygroup.com.
3rd_Quarter_Market_Report[1].pdf
Real Estate
written by Dave Phillips, CEO of CAAR
Challenges, Opportunities, and Surprises, Oh My!
The Avery Group - Roy Wheeler Realty Co.
Someone named Anonymous once said, "Many an opportunity is lost because a man is out looking for four-leaf clovers." That quote seems to sum up the real estate market – buyers seem to be looking for some sort of incredible deal when great opportunity is right in front of them.
The slow pace of sales in the Charlottesville area real estate market is somewhat surprising given the “buyer’s market” we are experiencing. Buyers do not need a four-leaf clover to have luck in purchasing a home right now. Sellers, on the other hand, face a significant challenge.
There are some understandable “excuses” as to why buyers are hesitating – over-hyped mortgage crisis, trouble selling their existing house, waiting for the market to “bottom out” – but this market report will show the best time to buy is NOW! Ben Franklin said “time is money” and the longer you wait, the more money you are leaving on the table.
Overview Through the Third Quarter
The current real estate market is much more complex and variable than past years. The defining measure of this market is not the slower pace of sales; rather, the most dominating factor is the record level of homes for sale. As of early October, we have almost 3,500 homes listed “for sale” in the CAAR MLS system – three times the inventory level of three years ago. High inventory levels have kept the prices low, “Days on Market” high, and sellers reaching for Maalox.
Homes Sold
There were 2,875 homes sold in the first nine months of 2007, which was down 647 (-18.4%) from last year. All local areas (Albemarle -17.8%, Charlottesville -25.6%, Fluvanna -21.5%, Greene -34.7%, Louisa -18.5%, and Nelson -21.5%) posted lower sales than the same period last year. Looking at the past 6 years (see chart below), our region has returned to a sales level just above 2003 – which was a record at the time.
New Construction
New to the CAAR market report this year is a look at the number of new homes that were sold through the CAAR MLS system. It is important to note that many “new” homes are not included in this statistic. It is very common for a buyer to contact a builder directly to custom build a home. As a rule, new home statistics tend to lag behind the rest of the market as far as trends are concerned. New home sales peaked in 2006, a year after the overall market. New construction, both locally and nationally, slowed dramatically in mid-2006. If the record traffic of home shoppers at the recent Blue Ridge Home Builders’ Parade of Homes is any indication, new homes sales are poised to make a recovery.
Median Sales Price
It may come as a surprise to some that the median price of homes in our area actually increased in the first three months of the year. Remarkably, Charlottesville’s median price was up a whopping 17.2%. Before all you city dwellers get excited, there are a few explanations. First, the city had a lot of modestly priced condos sell last year, which lowered the median price. Second, there has been a significant amount of new construction in the city this year with price tags from $300,000 to $500,000. Finally, 25% fewer homes sold this year, which makes the middle of the market (otherwise known as the median price) more susceptible to dramatic change. It would be a mistake to assume that real home prices went up 17% in the city.
Overall, the median price rose $5,100 (+1.9%). Albemarle (-1.8%) and Louisa (-0.8%) were down slightly, but all other areas were up after three quarters. Other area increases were modest – Fluvanna (+4.7%), Greene (+1.9%), Nelson (+3.4%).
Days on Market (DOM)
The high inventory of homes for sale has created a “tale of two cities” for DOM. Homes that have sold this year, sold quickly, but many homes have been on the market much longer than the average. The median DOM for homes that sold through the 3rd quarter is just 59 days. By contrast, the median for homes on the market is 110 days. A third of the homes still on the market have been there for more than 150 days and a quarter of the homes for sale right now have been on the market more than 200 days. There are many reasons for this dichotomy of DOM, but the main reason is probably price. The axiom in the real estate industry is, “Any home will sell quickly if it is priced correctly.”
Inventory of Homes for Sale
The inventory of homes for sale in the Charlottesville area has been a key factor in the local market for the past several years. Inventory levels are generally a good indication of where home prices are going. In the early part of the decade, we saw extremely low inventory levels of around 4 or 5 months of supply. This caused home prices to soar, as buyers were forced to make aggressive offers to purchase the home they wanted. Today, we have a 20-month supply of homes on the market, which is very high and possibly a record. We are just entering a quieter selling season with the holidays approaching, so we will likely see a continuation of high inventory into the spring. First-time buyers, who don’t have a home to sell, have an extraordinary opportunity in this market.
Currently, we have 3,471 homes on the market and the median price of these homes is $329,000. The average DOM of these homes is 126 days. There are 588 homes for sale under $200,000 with an average DOM of 120. There are 262 homes currently on the market priced at a million dollars or more with an average DOM of 154.
Condos and Townhomes
The explosion of condominiums and townhomes in 2005 and 2006 appears to be over. Most sales of attached homes are in Charlottesville and Albemarle, so this report covers only those areas. The charts below show the attached homes sold in the first nine months of 2007 compared to past years. Inventory levels of attached homes for sale are still high, with 438 listed for sale in Charlottesville and Albemarle. This over-supply is presented in the 151 average DOM for the attached properties currently on the market compared to the 125 days for detached homes in Charlottesville and Albemarle. The median price of an attached home is $259,500, which is much lower than detached homes on the market.
Price Per Square Foot (Finished)
Looking at the average price per square foot of finished space in homes is interesting, but should not be relied on as a scientific number. The averages in this section of the report include the cost of the land, which varies greatly based on location and amenities. A lot at Wintergreen with fantastic views of the valley costs much more than a lot in other parts of Nelson. With that said, the numbers in this section continue to reflect the softening of prices we have seen in 2007.
Nelson County, thanks to the large number of resort properties, has consistently led the way in price per square foot, with Charlottesville generally second. City homes are higher than other areas, simply because they are located more conveniently to U.Va. and downtown. As the saying goes, there are three things that matter in real estate – location, location, and location.
Conclusions and Predictions
The seasonal aspect of the Charlottesville area real estate market allows us to draw year-end conclusions based on the first three quarters. The balance of the year is the “slow” time for sales, so unless there is a dramatic real estate swing, the third quarter will be reflective of the year-end situation. That means we will end the year with the 4th highest year for sales reported to the CAAR MLS. Prices will continue to rise slowly and inventory will continue to be the big story in the market.
Sellers looking for a return to the sales pace of 2005 will be disappointed with my prediction for the future. I do not see inventory levels dropping to reasonable levels for the next 12 months (at least). That means sellers will be challenged by a lot of competition. Sellers will need to listen to the advice of their REALTOR® and price the property competitively. Buyers will continue to have extraordinary opportunities for the foreseeable future. With any luck, we may all be surprised by the strength and resiliency of the local real estate market by the time the spring market hits its stride.
For more information on this report or the real estate market, visit http://www.theaverygroup.com/ or contact Rob Alley of The Avery Group at (434) 975-9000 or info@theaverygroup.com.
3rd_Quarter_Market_Report[1].pdf
Real Estate
written by Dave Phillips, CEO of CAAR
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