Use real estate trends and forecasts for investor success

Investors are making the most of real estate trends and forecasts in various ways. Having these up-to-date forecasts can help a company know where to invest, how much to invest or why not to invest. These forecasts are tools to use for current and future investment needs.

Real estate industry trends are available through news organizations, real estate agents and brokers and national tracking organizations. They are updated monthly or quarterly, but local agents can produce these week by week if needed. When using trends for investment decisions, consider the following:

1. Insist on getting real estate forecasts from experienced professionals in the industry.

2. Keep in mind that real estate trends in the U.S. come out quarterly, but local trends can have monthly monitoring.

3. Couple real estate trends and forecasts with the company's long-term goals, noting forecasts are not guarantees of future performance.

Utilize real estate market trends to find low-priced property for investment

Current real estate trends allow an investor to find property hot spots, where real estate is priced well. High foreclosure areas may have low prices. Drops in house and commercial building value may make investments more affordable.

Obtain real estate analysis to use for negotiation purposes

Current real estate forecasts can be used to help an investor to buy a property at a more affordable price. With the help of a real estate agent, the property values in the surrounding area and forecasts can be used to negotiate the price desired by a property lower. Use accurate and published reports to verify trends.

Require the use of real estate sales trends for selling property

Investors, commercial owners or others can use trends in real estate to help make key decisions about when to sell and how well to price real estate for sale. Knowing realty trends allows investors to know if they should sell now or hold onto the property long term.

Tips & Tactics

Helpful advice for making the most of this Guide

•  Invest in the United States real estate market with a thorough understanding of what is happening within it. Investors, private or commercial, can use this information to help them consider transactions, negotiate deals or to help them renegotiated mortgages on current property. A real estate agent can help with this requirement.

Fear of overpaying for property is common these days, especially in places like New York where prices continue to be unstable.

If you encounter potential buyers who are frozen because they are concerned that they will pay too much, here are some factors to point out:

• Waiting for the right time can be expensive. Some buyers would have more equity today, despite falling prices, if they had bought when they were first considering it, instead of continuing to pay rent.
• Financing is fickle. Some people who were highly qualified last year can’t find financing this year because the credit market has tightened or their personal financial situation now makes them an undesirable borrower.
• Interest rates are headed up. If prices decline by another 10 percent, but interest rates increase by 1 percentage point, the monthly payment will be the same.
  
  Source: The Wall Street Journal, Douglas Heddings (07/27/2009)
  
  

Economic recovery is still a few months away, say economists surveyed by USA Today, but two-thirds of them think existing-home sales have bottomed out.

Both housing and automotive markets “have the potential to generate some quite large percentage increases,” says Bill Cheney, chief economist at MFC Global Investment.

Overall, economists say unemployment won’t peak until the first half of next year and credit markets will remain tight.

"I think (the recovery) is going to be anemic," says Allen Sinai, chief economist at Decision Economics. "I don't think consumers have the wherewithal to buy a lot of cars and a lot of houses."

Source: USA Today, Paul Davidson; Barbara Hansen (07/27/2009)

June 24, 2009: Roger D. Perkins earned the distinguished title of Professional Residential Manager (PRM). PRM is the designation of individual membership in the Advisory Council of the Florida Association of Residential Property Managers FARPM Inc.

Come to our Open House in Eagle Harbor on Sunday 26 July 2009

Time: 12:00 – 4:00 p.m.

Address: 2215 Lookout Landing, Fleming Island, Fl 32003

Directions: From 295, S on Hwy. 17 approx. 6.5 miles, right on Eagle Harbor Parkway, go to 2nd stop sign and turn left on Harbor Lake Drive, right on Eagle Watch Dr. to home on left.

One way that buyers without enough money to get a mortgage can purchase a home is with a lease-purchase agreement.

Usually, the terms of the deal include a lease and an option to buy with part of the rent going toward the down payment. The forced savings helps buyers amass enough to buy the house in the specified time frame, usually three to five years.

Cindy Walker, an associate with South Island Real Estate in Melbourne Beach, Fla., recently helped a young couple negotiate such a deal. She received a rental commission for the lease arrangement, and she will get a sales commission if the purchase option is executed.

Some real estate professionals find this arrangement unacceptable, but Walker says, “I look at it as money in the bank."

She offers these tips for anyone contemplating using a lease-purchase option:

Don’t be afraid to ask the seller if the owner would accept a lease-purchase agreement. Sellers might find it attractive once they understand it will generate regular rental income.

Negotiate how much money will go toward the down payment and whether the buyer or the seller or both will handle maintenance and repairs.

Avoid prepayment penalties. No prepayment penalty increases the incentive to do the deal quickly. In most cases, that’s a good thing from both the buyer’s and the seller’s points of view.

Source: Florida Today, Anne Straub (07/19/2009)

Don’t forget to remind potential buyers of something that is obvious to real estate professionals: Now is the time to buy, but that opportunity may be slipping away.

For people who have a job and money, a dream house is within reach, writes Marc Roth, founder of Home Warranty of America and a columnist for Business Week.

He points out that mortgage rates remain low, prices are still at historic lows, and the government is offering incentives for first-time homebuyers.

He also adds that the inventory of homes to buy is still large, but it is shrinking. According to the NATIONAL ASSOCIATION OF REALTORS®, the housing inventory peaked in November 2008 at an 11-month supply. At the end of May 2009, it had fallen to a 9.6-month supply.

Roth says anyone who dallies will miss a good opportunity to buy a first home at a terrific price or go shopping for a move-up property that is a great buy.

Source: BusinessWeek.com, Marc Roth (11/17/2009)

Having a sound and well-functioning real estate sector is critical to our country’s economic growth and development, as well as the growth and sustainability of many small businesses, according to NATIONAL ASSOCIATION OF REALTORS® testimony on Capitol Hill before the House Committee on Small Business.

“By enacting provisions that stabilize America’s real estate markets, you are helping small businesses and America’s communities thrive and prosper,” testified NAR President Charles McMillan.

The 2009 stimulus legislation has proven helpful to small business owners—which includes many REALTORS®—most notably by beginning to stabilize the housing market and stimulate the economy, according to NAR. “Along with other tax bills passed in 2007 and 2008, the 2009 stimulus legislation included a number of provisions that are helping the nation recover,” McMillan said.

What's Working

The focus of NAR’s testimony was on three provisions that are having a positive impact on the real estate industry:

The first-time homebuyer tax credit
The elimination of the mortgage cancellation tax
The SBA loan programs

The 2009 stimulus increased the amount of the homebuyer tax credit to $8,000 and eliminated the repayment feature of the credit. It also extended the program up to December 1, 2009.

“It appears the tax credit is now being embraced based on the number of inquiries we and our members are receiving and the increased activity in the first-time homebuyer market,” said McMillan.

Extending the Tax Credit

NAR has asked Congress to take steps to ensure the tax credit continues to stimulate the housing market and help families achieve the dream of homeownership.

“We hope Congress will extend the tax credit through next year and make the credit available to all purchasers of primary residents,” McMillan said. “Additionally, to be fair, we’d like the repayment requirement from the 2008 stimulus bill to be eliminated so families are not penalized for buying their home just a few months before the new legislation went into effect.”

Making the Mortgage Relief Act Permanent

The second provision is the Mortgage Cancellation Relief Act passed by Congress in 2007. The tax relief has been extended through 2012, but NAR would like to see this become permanent.

“It just doesn’t seem right to further penalize a family that has acted responsibly and has lost their home or been forced into a short sale because of market conditions," McMillan said. "Eliminating the tax on the excused debt will help many families begin to recover more quickly and maybe will allow them to once again own a home."

Granting Loans for REALTORS®

Lastly, NAR addressed the Small Business Administration loan program that provides fee waivers for some of its SBA programs and new loan programs and raised guarantees.

“We applaud these efforts,” McMillan said. “However, the SBA often deems independent contractors, which most REALTORS® are, ineligible for its programs and its standards are not always evenly applied across regions.”

REALTORS® and other independent contractors are often denied access to SBA programs. NAR asked Congress for assistance in making these loans available to more small business helping them to grow and prosper.

Source: NAR

Consumers across the country can now take advantage of a Federal Housing Administration program to allow qualified homebuyers to apply the $8,000 tax credit when purchasing a home. FHA will now permit its lenders to provide a short-term bridge loan that will let qualified home buyers use the tax credit to either make a larger down payment above the FHA required 3.5 percent, cover closing costs, or buy down their interest rate.

“A true housing recovery depends on buyers returning to the market and reducing inventory,” said National Association of Realtors® President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “Since many of the homes available are lower priced starter homes, the ability for individuals to use the tax credit at closing should have a meaningful impact on home sales and values and will allow thousands of families to achieve the dream of homeownership.”

Shaun Donovan, secretary of the Department of Housing and Urban Development, announced the change today. In an address to several thousand Realtors® gathered at NAR’s Real Estate Summit: Advancing the U.S. Economy, Donovan announced HUD’s plan to offer the tax credit as down payment assistance. Donovan detailed the modifications to that original proposal and announcement.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans,” Donovan said. According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans allowing eligible home buyers to access the funds immediately at the closing table.

NAR has supported monetization of the tax credit, which was part of an Obama administration housing stimulus plan enacted earlier in the year. NAR petitioned HUD to allow home buyers to use the $8,000 tax credit to help them cover down payment or closing costs to bring new home buyers to the market and stimulate home sales.

“We think this is a good program; our members have been getting many inquiries from potential buyers about it,” McMillan said. “NAR is pleased that this enhancement has been made to the administration’s housing recovery program. As we have heard before, there can be no economic recovery without a housing recovery. With an abundance of inventory, reduced home prices, historically low interest rates and now the availability of the tax credit at closing, we expect to see the housing market further stabilize and improve.”

SOURCE: http://www.realtor.org/press_room/news_releases/2009/05/tax_credit

Demand for mortgages returned last week after two consecutive down weeks, pushing the index up 10.9 percent to 493.1 from 444.8 the previous week on a seasonally adjusted basis that reflected the July 4 holiday.

On an unadjusted basis, the index decreased 0.5 percent compared with the previous week, but rose 7.2 percent compared with the same week a year ago.

The refinance index increased 15.2 percent, while the purchase index rose 6.7 percent.

Mortgage rates were mostly unchanged from the previous week. 30-year fixed-rate mortgages were flat compared to the previous week at 5.34 percent;15-year fixed-rate mortgages increased to 4.83 percent from 4.81 percent; and 1-year ARMs increased to 6.58 percent from 6.52 percent.

Source: Mortgage Bankers Association (07/08/2009)

The Treasury Department on Wednesday expanded its foreclosure prevention plan, lifting the current 105 percent loan-to-value cap to refinance up to 125 percent of a home’s value.

Applications to refinance mortgages have fallen as rates have increased in the last couple of weeks, but this move may bring more borrowers to the table.

At the same time, Fannie Mae and Freddie Mac have agreed to reduce the processing fee for borrowers who select a 25-year mortgage.

Fannie said in a statement, "The reduction is intended to lure borrowers to select shorter terms and build positive equity in their homes sooner than with a typical 30-year mortgage.”

The Treasury Department on Wednesday expanded its foreclosure prevention plan, lifting the current 105 percent loan-to-value cap to refinance up to 125 percent of a home’s value.

Applications to refinance mortgages have fallen as rates have increased in the last couple of weeks, but this move may bring more borrowers to the table.

At the same time, Fannie Mae and Freddie Mac have agreed to reduce the processing fee for borrowers who select a 25-year mortgage.

Fannie said in a statement, "The reduction is intended to lure borrowers to select shorter terms and build positive equity in their homes sooner than with a typical 30-year mortgage.”

• Northeast: The Pending Home Sales Index in the Northeast rose 3.1 percent to 80.9 in May and is 6.8 percent above a year ago.
• Midwest : In the Midwest, the index slipped 1.3 percent to 89.2 but is 11.4 percent above May 2008.
• South: The index in the South declined 1.7 percent to 92.6 in May but is 7.9 percent higher than a year ago.
• West: In the West, the index rose 2.2 percent to 96.9 and is 0.7 percent above May 2008.