Intracoastal Is Again #1

It's official, Intracoastal Realty is the number 1 real estate company in New Hanover County with a total volume of over $288 million.  This is $36 million ahead of #2 and almost $100,000 per sale higher.

Home Sales Increase Across the Country

The National Association of Realtors recently released their 2011 3rd Quarter Housing Report. In the report, they showed that combined sales of single family homes, condos and co-ops increased in EVERY state as compared to the 3rd quarter of last year. Here are the state-by-state

  

The next time someone says houses aren’t selling, ask them which state they live in and show them the chart.

Why You Need an Expert - Part II

Yesterday, I explained that having someone who truly knows the market was crucial if you were planning to buy or sell a home today. This expert should know what is happening in real estate, understand why it is happening and be able to simply and effectively explain each point to you and your family.  Today, I want to discuss the consequences if you don’t have a true industry professional on your side.

When families enter into a contract to buy or sell a house, two things are true:

1.The buyer wants to own the home.

2.       The seller wants to sell the home.

In order for both these things to take place, the transaction must be completed. That is not an easy task in the current market.  The National Association of Realtors (NAR) released their Existing Homes Sales Report yesterday. In the report, NAR announced that one out of every three contracts to purchase a home in October never made it to a closing table.  How does that ratio stack up against previous numbers? Here is a graph showing previous rates of cancellations:

Cancellations have more than quadrupled in the last 14 months!  According to NAR, cancellations are caused by:

“… declined mortgage applications, failures in loan underwriting from appraised values coming in below the negotiated price, or other problems including home inspections and employment losses.”

Bottom Line

No one can guarantee you won’t face challenges. However, the best agents and mortgage professionals know how to manage the expectations of all the parties involved thus dramatically increasing the chances your deal will close and you and your family will be able to move on with your lives. Hire that true professional!!



Reprinted by Permission from KCM

You Need an Industry Expert in This Market

In today’s real estate market, it is easy to get confused. There seems to be an overabundance of information and much of it seems to be conflicting. As an example, we offer you two headlines that appeared within 24 hours of each other last week.

National Delinquency Rate Falls to Lowest Level in Three Years

- Mortgage Bankers Assoc. 11/17/2011

Second Consecutive Increase in First Mortgage Default Rates

- Standard & Poors 11/18/2011

(Remember, foreclosures impact home values and the cost of mortgage money. This makes current delinquency rates an extremely important data point.)

Though these headlines seem to be saying opposite things, both are actually correct. Each report was looking at different data points over different periods of time.

In their article regarding the MBA report, DSNews explains:

“Industry data released Thursday indicates the number of borrowers in the United States behind on their mortgage payments is showing signs of improving. The Mortgage Bankers Association (MBA) reported that the national delinquency rate for residential home loans fell to 7.99 percent in the third quarter.”

In their post, S&P claims:

“First mortgage default rates rose from 1.99% in September to 2.08% in October.”

Bottom Line

Make sure you are dealing with local real estate and mortgage professionals. They will help you and your family decipher the hordes of information available so you can truly understand your best options.

How Much Should You Put Down

Like most questions, the answer is “it depends”. Today, I thought I’d give you some things to consider.

Let’s begin the discussion with loans that don’t require Mortgage Insurance. The suggestion is to borrow as much as you can afford. As an example, borrowing $310,000, as opposed to $300,000, will increase your mortgage payment by about $51 at 4.5%. Recognize that by doing so, you will have $10,000 in the bank. It is my experience that it is easier to find $50 more every month than it is to save $10,000. Even if you had the discipline to set aside the $50 monthly, it would take you 200 months to re-accumulate the $10,000 in principal (longer with lost interest).

Understand too, that the interest paid on the extra money borrowed is tax-deductible. In a 25% tax bracket the $51 additional has a real cost of about $38!

Having the $10,000 liquid has other potential advantages as well:

1.If rates go up in the future, you could potentially make more interest than you are spending.

2.       If you can avoid using credit cards for furniture, home improvements, etc., you can save a bundle on those non-tax deductible interest rate costs.

3.       In a world where home values have declined, the more you borrow, the less you have at risk. You transfer the risk of the future value of the home to the lender.

Now, many borrowers today will need some sort of Mortgage Insurance, whether it’s a Conventional Loan with less than 20% down or an FHA Mortgage. These borrowers should sit with their loan officer and run the numbers because the cost of the Mortgage Insurance can vary based on loan-to-value and other factors. Examine the costs and the relative benefits.

The PRICE Is the Same, But the COST Is Less

There is more and more research coming out showing that it makes great financial sense to purchase a home today . Whether it be rent vs. buy ratios, income-to-price ratios or income-to-mortgage payment ratios, purchasing a home right now is a bargain compared to historic norms. Now we want to look at the COST of a home today compared to pre-peak prices.

According to the most recent S&P Case Shiller price index, residential real estate values have returned to 2003 1Q PRICEs. That, in itself, says something. However, when you factor in mortgage rates, the case for buying a home today becomes even more compelling.

In 2003, 30 year mortgage rates stood at 5.88%. Today, they are 4%. How does that impact the actual COST of a home? On a home purchased for $250,000, here is the difference in monthly cost:

That means you save $285.30 a month, $3,423.60 a year and $102,708 over the life of a 30 year mortgage! You buy the home for the same PRICE but the COST is over $100,000 less.

Bottom Line

This is why so many financial advisors are saying that this may be one of the greatest times in history to purchase a home.