I live in a place that’s surrounded by beautiful trees. It’s one of the benefits of living in the hills of North Carolina.
In the summer, the canopy of trees around my house is a rich, soothing green and the rustling of the breeze moving through the leaves is peaceful. In the fall, the canopy turns into an astonishing palate of yellow, orange, and red, followed shortly by an avalanche of vegetation as A-L-L those leaves cascade down into my front yard and back yard.
I read somewhere this year that the average tree drops somewhere around 200,000 leaves in the fall… making a leaf harvest in the multi-millions a pretty real possibility at my house.
Except for the oak trees. Oaks, as you probably know, hold on to most of their leaves all winter long. Unless it’s dislodged by a particularly strong gust of wind or a squirrel or something, the dry oak leaf only falls when the new leaf bud forces the old leaf to let go of the twig to which its attached. I have a selection of oak trees around my house, and they tease me. Usually about a day after I get all the other leaves out of my yard, the oak trees casually drop a couple of hundred of their leaves, just to mess with my head... the bastards.
So I’ve been waiting and waiting for the last of the oak leaves to fall so I can finally finish the harvest. This morning, when I looked into the rich, blue Carolina sky… I noticed that all of the oak leaves were gone… replaced by the little strings of new growth that will eventually become a new green oak leaf.
I’m taking this as a good sign. Something is going to change. After days and weeks and months of dry, brittle, tasteless anticipation just hanging around, rustling for no earthly good and trashing up the place, I believe that something positive is going to happen.
You just wait. You’ll see.
Saturday, April 4, 2009
Wednesday, April 1, 2009
Certain Doom In Uncertain Times
Heard any good news lately?
Probably not, if you’ve had the television or the radio tuned to any of the local or mainstream news outlets or had the newspaper open to anything other than the recipe pages. Without question this has been a long and fertile season for near-hysterical news coverage. With my 20-year background in television, I might be more attuned to — and critical of — the ins-and-outs of broadcast news than other, more “normal” folks. And in my view, we’ve been under an absolute avalanche of negative news, dating back almost two years or more to the sub-prime mortgage meltdown. I, for one, have heard enough.
Several months ago, in an editorial in the Raleigh News and Observer entitled “Whoa On The Woe”, small business owner Matt Cook also suggested that we were hearing too much about “how bad things are” and questioned if things were really that bad to begin with. Mr. Cook writes “those who say we are in the worst shape since the 1930s must prefer interest rates in the teens (late ‘70s) and inflation in double digits (‘79-’80) to what we have today.”
Since Mr. Cook wrote his article, elements that define this recession have unquestionably gotten more severe. But in my opinion so have the ways that media outlets continually and incessantly report each and every negative bit of news related to the economy. Seriously, do we need to hear a report on each and every quarterly loss in American business… in each and every newscast? Is it necessary to begin each and every story with a paraphrase of “here’s another sign of our faltering economy”? Do we need to hear incessant arguments from legions of competing economists… none of whom really know whether any particular plan or strategy is going to work against the ever-shifting forces of businesses, brokers, and bureaucrats?
In the midst of the Great Depression, with the nation in far worse economic shape than it’s in today, newly-elected President Franklin Delano Roosevelt delivered the oft-quoted line from his inaugural address: ”...the only thing we have to fear is fear itself...” That sentence ended with “nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”
I’m not an expert, but one doesn’t have to look too far or too hard to see that folks are reacting to what they hear by “hunkering down” and holding on to what they’ve got. And if consumer confidence is an element of any pending economic recovery, doesn’t it seem reasonable that confidence might go up — even just a little — if there were fewer reports of gloom and doom from every side?
In 1933, FDR used the relatively new thing called “radio” to break new ground and speak directly to the American people… his “fireside chats” were successful in blunting the “nameless, unreasoning, unjustified terror.” Today, the media is everywhere... constantly tabulating every hiccup and sneeze of both our nation's economy and its leadership. Maybe our approach to reaching the same end as FDR should involve just turning the darn things off.
Robert Flinn, REALTOR®
919-698-2040 (Direct)
919-402-1242 (Office)
rflinn@fmrealty.com (email)
Probably not, if you’ve had the television or the radio tuned to any of the local or mainstream news outlets or had the newspaper open to anything other than the recipe pages. Without question this has been a long and fertile season for near-hysterical news coverage. With my 20-year background in television, I might be more attuned to — and critical of — the ins-and-outs of broadcast news than other, more “normal” folks. And in my view, we’ve been under an absolute avalanche of negative news, dating back almost two years or more to the sub-prime mortgage meltdown. I, for one, have heard enough.
Several months ago, in an editorial in the Raleigh News and Observer entitled “Whoa On The Woe”, small business owner Matt Cook also suggested that we were hearing too much about “how bad things are” and questioned if things were really that bad to begin with. Mr. Cook writes “those who say we are in the worst shape since the 1930s must prefer interest rates in the teens (late ‘70s) and inflation in double digits (‘79-’80) to what we have today.”
Since Mr. Cook wrote his article, elements that define this recession have unquestionably gotten more severe. But in my opinion so have the ways that media outlets continually and incessantly report each and every negative bit of news related to the economy. Seriously, do we need to hear a report on each and every quarterly loss in American business… in each and every newscast? Is it necessary to begin each and every story with a paraphrase of “here’s another sign of our faltering economy”? Do we need to hear incessant arguments from legions of competing economists… none of whom really know whether any particular plan or strategy is going to work against the ever-shifting forces of businesses, brokers, and bureaucrats?
In the midst of the Great Depression, with the nation in far worse economic shape than it’s in today, newly-elected President Franklin Delano Roosevelt delivered the oft-quoted line from his inaugural address: ”...the only thing we have to fear is fear itself...” That sentence ended with “nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”
I’m not an expert, but one doesn’t have to look too far or too hard to see that folks are reacting to what they hear by “hunkering down” and holding on to what they’ve got. And if consumer confidence is an element of any pending economic recovery, doesn’t it seem reasonable that confidence might go up — even just a little — if there were fewer reports of gloom and doom from every side?
In 1933, FDR used the relatively new thing called “radio” to break new ground and speak directly to the American people… his “fireside chats” were successful in blunting the “nameless, unreasoning, unjustified terror.” Today, the media is everywhere... constantly tabulating every hiccup and sneeze of both our nation's economy and its leadership. Maybe our approach to reaching the same end as FDR should involve just turning the darn things off.
Robert Flinn, REALTOR®
919-698-2040 (Direct)
919-402-1242 (Office)
rflinn@fmrealty.com (email)
Thursday, February 19, 2009
First-Time Home Buyer Tax Credit Details
The $787 billion stimulus bill that President Barack Obama signed into law Tuesday includes measures designed to help revive the real estate market. Here are six things you need to know about the freshly-enacted $8,000 first-time home buyer tax credit.
1. Eight grand, new buyers: The tax credit included in the economic stimulus legislation is much narrower than the $15,000 proposal floated by the Senate. This credit is equivalent to 10 percent of the purchase price of the home--although it's capped at $8,000--and applies only to first-time home buyers and principal residences. But unlike the 2008 $7,500 home buyer tax credit, this one does not have to be repaid.
2. First time buyers defined: For the purpose of this legislation, a "first-time home buyer" is someone who hasn't owned a principal residence for three years before buying a house. (The date of purchase is considered the day that the title is transferred.) That means if you've owned a vacation home--but not a principal residence--within the past three years, you would still qualify for the credit.
3. 2009 buyers only: Only those who purchase a home on or after January 1 and before December 1, 2009 are eligible for the credit. Anyone who bought a home last year won't be able to take advantage of it. If the home is purchased and closed prior to April 15, 2009, the credit can be applied to 2008 taxes.
4. Income limits: The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, that's $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.
5. Refundable: Because the tax credit is "refundable," qualified buyers can take advantage of it even if they don't have much tax liability.
6. Recapture: Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)
Source: U.S. News & World Report/usnews.com
1. Eight grand, new buyers: The tax credit included in the economic stimulus legislation is much narrower than the $15,000 proposal floated by the Senate. This credit is equivalent to 10 percent of the purchase price of the home--although it's capped at $8,000--and applies only to first-time home buyers and principal residences. But unlike the 2008 $7,500 home buyer tax credit, this one does not have to be repaid.
2. First time buyers defined: For the purpose of this legislation, a "first-time home buyer" is someone who hasn't owned a principal residence for three years before buying a house. (The date of purchase is considered the day that the title is transferred.) That means if you've owned a vacation home--but not a principal residence--within the past three years, you would still qualify for the credit.
3. 2009 buyers only: Only those who purchase a home on or after January 1 and before December 1, 2009 are eligible for the credit. Anyone who bought a home last year won't be able to take advantage of it. If the home is purchased and closed prior to April 15, 2009, the credit can be applied to 2008 taxes.
4. Income limits: The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, that's $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.
5. Refundable: Because the tax credit is "refundable," qualified buyers can take advantage of it even if they don't have much tax liability.
6. Recapture: Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)
Source: U.S. News & World Report/usnews.com
Wednesday, February 18, 2009
Homeowner Affordability and Stability Plan
Here’s the summary of the Obama administration’s plan aimed at helping Distressed Homeowners. Key components of the Homeowner Affordability and Stability Plan are:
1. Affordability: Provide Access to Low-Cost Refinancing for Responsible Homeowners Suffering From Falling Home Prices
· Enabling Up to 4 to 5 Million Responsible Homeowners to Refinance: Mortgage rates are currently at historically low levels, providing homeowners with the opportunity to reduce their monthly payments by refinancing. But under current rules, most families who owe more than 80 percent of the value of their homes have a difficult time refinancing. Yet millions of responsible homeowners who put money down and made their mortgage payments on time have – through no fault of their own – seen the value of their homes drop low enough to make them unable to access these lower rates. As a result, the Obama Administration is announcing a new program that will help as many as 4 to 5 million responsible homeowners who took out conforming loans owned or guaranteed by Fannie Mae or Freddie Mac to refinance through those two institutions.
· Reducing Monthly Payments: For many families, a low-cost refinancing could reduce mortgage payments by thousands of dollars per year:
Example: Consider a family that took out a 30-year fixed rate mortgage of $207,000 with an interest rate of 6.50% on a house worth $260,000 at the time. Today, that family has about $200,000 remaining on their mortgage, but the value of that home has fallen 15 percent to $221,000 – making them ineligible for today’s low interest rates that now generally require the borrower to have 20 percent home equity. Under this refinancing plan, that family could refinance to a rate near 5.16% – reducing their annual payments by over $2,300
2. Stability: Create A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners
· Helping Hard-Pressed Homeowners Stay in their Homes: This initiative is intended to reach millions of responsible homeowners who are struggling to afford their mortgage payments because of the current recession, yet cannot sell their homes because prices have fallen so significantly. Millions of hard-working families have seen their mortgage payments rise to 40 or even 50 percent of their monthly income – particularly those who received subprime and exotic loans with exploding terms and hidden fees. The Homeowner Stability Initiative helps those who commit to make reasonable monthly mortgage payments to stay in their homes – providing families with security and neighborhoods with stability.
· No Aid for Speculators: This initiative will go solely to helping homeowners who commit to make payments to stay in their home – it will not aid speculators or house flippers.
· Protecting Neighborhoods: This plan will also help to stabilize home prices for all homeowners in a neighborhood. When a home goes into foreclosure, the entire neighborhood is hurt. The average homeowner could see his or her home value stabilized against declines in price by as much as $6,000 relative to what it would otherwise be absent the Homeowner Stability Initiative.
· Providing Support for Responsible Homeowners: Because loan modifications are more likely to succeed if they are made before a borrower misses a payment, the plan will include households at risk of imminent default despite being current on their mortgage payments.
· Providing Loan Modifications to Bring Monthly Payments to Sustainable Levels: The Homeowner Stability Initiative has a simple goal: reduce the amount homeowners owe per month to sustainable levels. Using money allocated under the Financial Stability Plan and the full strength of Fannie Mae and Freddie Mac, this program has several key components:
§ A Shared Effort to Reduce Monthly Payments: For a sample household with payments adding up to 43 percent of his monthly income, the lender would first be responsible for bringing down interest rates so that the borrower’s monthly mortgage payment is no more than 38 percent of his or her income. Next, the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent. If that borrower had a $220,000 mortgage, that could mean a reduction in monthly payments by over $400. That lower interest rate must be kept in place for five years, after which it could gradually be stepped up to the conforming loan rate in place at the time of the modification. Lenders will also be able to bring down monthly payments by reducing the principal owed on the mortgage, with Treasury sharing in the costs.
§ Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
§ Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.
· Institute Clear and Consistent Guidelines for Loan Modifications: Treasury will develop uniform guidance for loan modifications across the mortgage industry, working closely with the bank agencies and building on the FDIC’s pioneering work. The Guidelines will be used for the Administration’s new foreclosure prevention plan. Moreover, all financial institutions receiving Financial Stability Plan financial assistance going forward will be required to implement loan modification plans consistent with Treasury Guidance. Fannie Mae and Freddie Mac will use these guidelines for loans that they own or guarantee, and the Administration will work with regulators and other federal and state agencies to implement these guidelines across the entire mortgage market. The agencies will seek to apply these guidelines when permissible and appropriate to all loans owned or guaranteed by the federal government, including those owned or guaranteed by Ginnie Mae, the Federal Housing Administration, Treasury, the Federal Reserve, the FDIC, Veterans’ Affairs and the Department of Agriculture.
· Other Comprehensive Measures to Reduce Foreclosure and Strengthen Communities
§ Require Strong Oversight, Reporting and Quarterly Meetings with Treasury, the FDIC, the Federal Reserve and HUD to Monitor Performance
§ Allow Judicial Modifications of Home Mortgages During Bankruptcy for Borrowers Who Have Run Out of Options
§ Provide $1.5 Billion in Relocation and Other Forms of Assistance to Renters Displaced by Foreclosure and $2 Billion in Neighborhood Stabilization Funds
§ Improve the Flexibility of Hope for Homeowners and Other FHA Programs to Modify and Refinance At-Risk Borrowers
3. Supporting Low Mortgage Rates By Strengthening Confidence in Fannie Mae and Freddie Mac:
· Ensuring Strength and Security of the Mortgage Market: Today, using funds already authorized in 2008 by Congress for this purpose, the Treasury Department is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market and to help maintain mortgage affordability.
· Provide Forward-Looking Confidence: The increased funding will enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners, and provide forward-looking confidence in the mortgage market.
· Treasury is increasing its Preferred Stock Purchase Agreements to $200 billion each from their original level of $100 billion each.
· Promoting Stability and Liquidity: In addition, the Treasury Department will continue to purchase Fannie Mae and Freddie Mac mortgage-backed securities to promote stability and liquidity in the marketplace.
· Increasing The Size of Mortgage Portfolios: To ensure that Fannie Mae and Freddie Mac can continue to provide assistance in addressing problems in the housing market, Treasury will also be increasing the size of the GSEs’ retained mortgage portfolios allowed under the agreements – by $50 billion to $900 billion – along with corresponding increases in the allowable debt outstanding.
· Support State Housing Finance Agencies: The Administration will work with Fannie Mae and Freddie Mac to support state housing finance agencies in serving homebuyers.
· No EESA or Financial Stability Plan Money: The $200 billion in funding commitments are being made under the Housing and Economic Recovery Act and do not use any money from the Financial Stability Plan or Emergency Economic Stabilization Act/TARP.
From: Wall Street Journal, WSJ.com Washington Wire
1. Affordability: Provide Access to Low-Cost Refinancing for Responsible Homeowners Suffering From Falling Home Prices
· Enabling Up to 4 to 5 Million Responsible Homeowners to Refinance: Mortgage rates are currently at historically low levels, providing homeowners with the opportunity to reduce their monthly payments by refinancing. But under current rules, most families who owe more than 80 percent of the value of their homes have a difficult time refinancing. Yet millions of responsible homeowners who put money down and made their mortgage payments on time have – through no fault of their own – seen the value of their homes drop low enough to make them unable to access these lower rates. As a result, the Obama Administration is announcing a new program that will help as many as 4 to 5 million responsible homeowners who took out conforming loans owned or guaranteed by Fannie Mae or Freddie Mac to refinance through those two institutions.
· Reducing Monthly Payments: For many families, a low-cost refinancing could reduce mortgage payments by thousands of dollars per year:
Example: Consider a family that took out a 30-year fixed rate mortgage of $207,000 with an interest rate of 6.50% on a house worth $260,000 at the time. Today, that family has about $200,000 remaining on their mortgage, but the value of that home has fallen 15 percent to $221,000 – making them ineligible for today’s low interest rates that now generally require the borrower to have 20 percent home equity. Under this refinancing plan, that family could refinance to a rate near 5.16% – reducing their annual payments by over $2,300
2. Stability: Create A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners
· Helping Hard-Pressed Homeowners Stay in their Homes: This initiative is intended to reach millions of responsible homeowners who are struggling to afford their mortgage payments because of the current recession, yet cannot sell their homes because prices have fallen so significantly. Millions of hard-working families have seen their mortgage payments rise to 40 or even 50 percent of their monthly income – particularly those who received subprime and exotic loans with exploding terms and hidden fees. The Homeowner Stability Initiative helps those who commit to make reasonable monthly mortgage payments to stay in their homes – providing families with security and neighborhoods with stability.
· No Aid for Speculators: This initiative will go solely to helping homeowners who commit to make payments to stay in their home – it will not aid speculators or house flippers.
· Protecting Neighborhoods: This plan will also help to stabilize home prices for all homeowners in a neighborhood. When a home goes into foreclosure, the entire neighborhood is hurt. The average homeowner could see his or her home value stabilized against declines in price by as much as $6,000 relative to what it would otherwise be absent the Homeowner Stability Initiative.
· Providing Support for Responsible Homeowners: Because loan modifications are more likely to succeed if they are made before a borrower misses a payment, the plan will include households at risk of imminent default despite being current on their mortgage payments.
· Providing Loan Modifications to Bring Monthly Payments to Sustainable Levels: The Homeowner Stability Initiative has a simple goal: reduce the amount homeowners owe per month to sustainable levels. Using money allocated under the Financial Stability Plan and the full strength of Fannie Mae and Freddie Mac, this program has several key components:
§ A Shared Effort to Reduce Monthly Payments: For a sample household with payments adding up to 43 percent of his monthly income, the lender would first be responsible for bringing down interest rates so that the borrower’s monthly mortgage payment is no more than 38 percent of his or her income. Next, the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent. If that borrower had a $220,000 mortgage, that could mean a reduction in monthly payments by over $400. That lower interest rate must be kept in place for five years, after which it could gradually be stepped up to the conforming loan rate in place at the time of the modification. Lenders will also be able to bring down monthly payments by reducing the principal owed on the mortgage, with Treasury sharing in the costs.
§ Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
§ Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.
· Institute Clear and Consistent Guidelines for Loan Modifications: Treasury will develop uniform guidance for loan modifications across the mortgage industry, working closely with the bank agencies and building on the FDIC’s pioneering work. The Guidelines will be used for the Administration’s new foreclosure prevention plan. Moreover, all financial institutions receiving Financial Stability Plan financial assistance going forward will be required to implement loan modification plans consistent with Treasury Guidance. Fannie Mae and Freddie Mac will use these guidelines for loans that they own or guarantee, and the Administration will work with regulators and other federal and state agencies to implement these guidelines across the entire mortgage market. The agencies will seek to apply these guidelines when permissible and appropriate to all loans owned or guaranteed by the federal government, including those owned or guaranteed by Ginnie Mae, the Federal Housing Administration, Treasury, the Federal Reserve, the FDIC, Veterans’ Affairs and the Department of Agriculture.
· Other Comprehensive Measures to Reduce Foreclosure and Strengthen Communities
§ Require Strong Oversight, Reporting and Quarterly Meetings with Treasury, the FDIC, the Federal Reserve and HUD to Monitor Performance
§ Allow Judicial Modifications of Home Mortgages During Bankruptcy for Borrowers Who Have Run Out of Options
§ Provide $1.5 Billion in Relocation and Other Forms of Assistance to Renters Displaced by Foreclosure and $2 Billion in Neighborhood Stabilization Funds
§ Improve the Flexibility of Hope for Homeowners and Other FHA Programs to Modify and Refinance At-Risk Borrowers
3. Supporting Low Mortgage Rates By Strengthening Confidence in Fannie Mae and Freddie Mac:
· Ensuring Strength and Security of the Mortgage Market: Today, using funds already authorized in 2008 by Congress for this purpose, the Treasury Department is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market and to help maintain mortgage affordability.
· Provide Forward-Looking Confidence: The increased funding will enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners, and provide forward-looking confidence in the mortgage market.
· Treasury is increasing its Preferred Stock Purchase Agreements to $200 billion each from their original level of $100 billion each.
· Promoting Stability and Liquidity: In addition, the Treasury Department will continue to purchase Fannie Mae and Freddie Mac mortgage-backed securities to promote stability and liquidity in the marketplace.
· Increasing The Size of Mortgage Portfolios: To ensure that Fannie Mae and Freddie Mac can continue to provide assistance in addressing problems in the housing market, Treasury will also be increasing the size of the GSEs’ retained mortgage portfolios allowed under the agreements – by $50 billion to $900 billion – along with corresponding increases in the allowable debt outstanding.
· Support State Housing Finance Agencies: The Administration will work with Fannie Mae and Freddie Mac to support state housing finance agencies in serving homebuyers.
· No EESA or Financial Stability Plan Money: The $200 billion in funding commitments are being made under the Housing and Economic Recovery Act and do not use any money from the Financial Stability Plan or Emergency Economic Stabilization Act/TARP.
From: Wall Street Journal, WSJ.com Washington Wire
Saturday, February 14, 2009
Straight Talk - What The Media Doesn't Want You To Know
Every morning I spend at least a few minutes — and sometimes more than that — scanning selected news and information sites concerning the economy, and the real estate business in particular. I don’t need to tell you that news about our economy isn’t particularly pretty. But I do believe it’s important to recognize that ALL of the information that we read, see, and hear is passing through different filters, and in the process the impact of what we learn can be manipulated. In some cases the real truth can be — and is being — obscured.
Case in point: The daily news concerning besieged mortgage markets.
Julie Straub, Senior Loan Officer for F-M Lending said it well a few weeks ago: “If you listen to the media you would think mortgage money was not available,” Julie wrote me. “I can tell you after almost 23 years in the mortgage industry, that is just not true. We have an amazing number of different loans available with rates at unheard-of lows.”
Mortgages are in the news a lot these days. But here are some facts about the housing and mortgage industry that you might NOT have heard:
● 30% of all real estate in this country is owned free and clear of a mortgage. Putting that in perspective, of the 10 houses that surround you on your block, the homeowners in 3 of them own them outright.
● 93.9% of homes with mortgages are current in their payments. Subtracting those three homes that are paid off, only one homeowner around you has been late or missed a payments to his lender.
● 97.2% of homes with mortgages are NOT in foreclosure. But even that one neighbor isn’t so far behind that he’s in trouble with the bank.
● 40% of foreclosures nationally are non-owner occupied properties (rentals, investments, or second homes). There is a reason that Nevada, California, and Florida are constantly topping the lists of states with the highest foreclosure rates. Those states are meccas for vacation homes or investment and rental property. When the exotic mortgages written to purchase those homes started triggering higher monthly payments within the last two years, the owners quickly went into default on their payments.
The burden for cleaning up the mess falls on all of us, but the media never talks to those four out of ten who walked away from their commitment to their lender just because they decided to give up their vacation home.
Without question, we are under a blizzard of bad news, and I believe we have been for the past two years. Julie Straub has some more encouraging words: “This is probably the best time in most of our lives to purchase a home. Interest rates are at historical low levels. Not since the 1950’s have we seen rates as low as they are today. In addition, we live in an area that is constantly looked at as a place people want to move. North Carolina was the fourth fastest growing state last year. The Triangle is constantly listed on the ‘best of’ lists.”
Also, please remember this: Real Estate is an incredibly local business. The state of things in one part of the country does not translate to ALL parts of the country. What might be true in one area might not be — and probably is not — true in another area. The next time you hear a news report concerning “how bad things are” in the Triangle real estate market, please call me for some perspective… and for the truth.
Robert Flinn, Realtor/Broker
Fonville Morisey Realty, Inc.
919-698-2040 (Direct)
919-402-1242 (Office)
Case in point: The daily news concerning besieged mortgage markets.
Julie Straub, Senior Loan Officer for F-M Lending said it well a few weeks ago: “If you listen to the media you would think mortgage money was not available,” Julie wrote me. “I can tell you after almost 23 years in the mortgage industry, that is just not true. We have an amazing number of different loans available with rates at unheard-of lows.”
Mortgages are in the news a lot these days. But here are some facts about the housing and mortgage industry that you might NOT have heard:
● 30% of all real estate in this country is owned free and clear of a mortgage. Putting that in perspective, of the 10 houses that surround you on your block, the homeowners in 3 of them own them outright.
● 93.9% of homes with mortgages are current in their payments. Subtracting those three homes that are paid off, only one homeowner around you has been late or missed a payments to his lender.
● 97.2% of homes with mortgages are NOT in foreclosure. But even that one neighbor isn’t so far behind that he’s in trouble with the bank.
● 40% of foreclosures nationally are non-owner occupied properties (rentals, investments, or second homes). There is a reason that Nevada, California, and Florida are constantly topping the lists of states with the highest foreclosure rates. Those states are meccas for vacation homes or investment and rental property. When the exotic mortgages written to purchase those homes started triggering higher monthly payments within the last two years, the owners quickly went into default on their payments.
The burden for cleaning up the mess falls on all of us, but the media never talks to those four out of ten who walked away from their commitment to their lender just because they decided to give up their vacation home.
Without question, we are under a blizzard of bad news, and I believe we have been for the past two years. Julie Straub has some more encouraging words: “This is probably the best time in most of our lives to purchase a home. Interest rates are at historical low levels. Not since the 1950’s have we seen rates as low as they are today. In addition, we live in an area that is constantly looked at as a place people want to move. North Carolina was the fourth fastest growing state last year. The Triangle is constantly listed on the ‘best of’ lists.”
Also, please remember this: Real Estate is an incredibly local business. The state of things in one part of the country does not translate to ALL parts of the country. What might be true in one area might not be — and probably is not — true in another area. The next time you hear a news report concerning “how bad things are” in the Triangle real estate market, please call me for some perspective… and for the truth.
Robert Flinn, Realtor/Broker
Fonville Morisey Realty, Inc.
919-698-2040 (Direct)
919-402-1242 (Office)
Monday, February 9, 2009
Good News!
WASHINGTON, D.C. - Pending home sales increased as more buyers took advantage of improved affordability conditions, according to the National Association of Realtors®. Big gains in the South and Midwest offset modest declines in other regions.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, rose 6.3 percent to 87.7 from an upwardly revised reading of 82.5 in November, and is 2.1 percent higher than December 2007 when it was 85.9.
Lawrence Yun, NAR chief economist, said the index shows a modest rebound. “The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month,” he said. “The biggest gains were in areas with the biggest improvements in affordability.”
NAR’s Housing Affordability Index rose 10.9 percent in December to 158.8, the highest on record. The HAI shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.
“Significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” Yun added.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the rise in contract signings is encouraging. “However, housing activity remains weak compared with potential demand, and the market is fragile given the economic backdrop,” he said.
“We can’t take our eye off the need to stimulate housing, which can set the foundation for an economic recovery,” McMillan said. “Last week’s actions in the House to eliminate the repayment feature on the first-time home buyer tax credit, and to raise mortgage loan limits, are helpful. However, we need to take additional steps to meaningfully draw down inventory and stabilize home prices.”
Yun said the outlook for housing and the economy is murky. “Although Congress and the Obama administration are taking steps to help the economy, the stimulus package must deal with the root cause of the economic downturn, and apply the right fix to turn it around. If housing is ignored, a significant downward overshooting of home prices would continue to drag the economy down independent of the scale of the stimulus,” Yun said.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, rose 6.3 percent to 87.7 from an upwardly revised reading of 82.5 in November, and is 2.1 percent higher than December 2007 when it was 85.9.
Lawrence Yun, NAR chief economist, said the index shows a modest rebound. “The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month,” he said. “The biggest gains were in areas with the biggest improvements in affordability.”
NAR’s Housing Affordability Index rose 10.9 percent in December to 158.8, the highest on record. The HAI shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.
“Significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” Yun added.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the rise in contract signings is encouraging. “However, housing activity remains weak compared with potential demand, and the market is fragile given the economic backdrop,” he said.
“We can’t take our eye off the need to stimulate housing, which can set the foundation for an economic recovery,” McMillan said. “Last week’s actions in the House to eliminate the repayment feature on the first-time home buyer tax credit, and to raise mortgage loan limits, are helpful. However, we need to take additional steps to meaningfully draw down inventory and stabilize home prices.”
Yun said the outlook for housing and the economy is murky. “Although Congress and the Obama administration are taking steps to help the economy, the stimulus package must deal with the root cause of the economic downturn, and apply the right fix to turn it around. If housing is ignored, a significant downward overshooting of home prices would continue to drag the economy down independent of the scale of the stimulus,” Yun said.
Friday, January 9, 2009
Risky Business
What's the most dangerous thing you've ever done? Friends of mine have snapped tendons, blown out knees, and broken various bones while pursuing their individual passions. And while I admit to my share of risky behavior, I can’t claim my friends’ level of glory; I've been fortunate to have only suffered a broken wrist when I was 7 and a cut forehead that required ten or so stitches when I was about 12.
Things that are dangerous are usually also intensely thrilling… and that’s probably the basis of their appeal. The rush of adrenaline that comes from an activity that most of your friends would call insane can be addictive. There’s also something about facing — or ignoring — your fears that many folks find exhilarating… and liberating.
Through much of 2008, my business has been all about living with people’s fears. Specifically, the fears that Buyers have had this year concerning their perception of the real estate market in the Triangle. Very early in the spring market, I called it right. When folks would ask “how’s business” my response was that it felt as though Buyers were nervous… fearful… and seemed to be holding back. And that was long before the economy started its current freefall.
So what’s next? An adjustment. A reset. A recovery.
Here in the Triangle, we are currently seeing a drop in the number of homes on the market. There were 18,600 homes listed in TMLS at one point in September. The numbers fell in October, November, and December. As I write this, there are 17,619 listings currently on the market in the Triangle. This drop in inventory is a good thing. One very smart person I know anticipates that inventory will get low enough again in the next year or so that we could even be looking at a housing shortage because many builders are no longer building. When this happens, the value of resale homes will begin to increase again as demand outpaces supply.
But in my view, it’s only going to begin when people get over their fear. At some point, the log-jam that is paralyzing consumer spending has to break. Rates are low. Inventory is available. Millions and millions and millions are waiting to be lent. Bargains are waiting to be had. But Buyers are still nervous.
Maybe the tide will begin to turn in a few weeks when a new base of power takes the helm in our nation’s Capitol. Our new Commander-In-Chief became just that by convincing folks to hope. So… okay, Sir. That’s mine. Get to work on it… and God be with you.
My hope for you is that your New Year is happy and prosperous. And my promise to you is that we’ll ride this thing out… together.
Robert Flinn, REALTOR®
919-698-2040 (Direct Line)
919-402-1242 (Office)
rflinn@fmrealty.com (email)
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About Me
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- ROBERT FLINN
- Raleigh/Durham/Chapel Hill/Hillsborough, North Carolina
- I am a dedicated, dependable, patient and professional Real Estate Advisor for you and for people you care about.
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