How To Know When The Rebound Is Near ...

The news is grim for the housing market ... I've remained positive throughout this slump, as you'll see in my other posts, but there are some statistics you just can't ignore ... For instance, over 1/2 of the major housing markets in the U.S. are in decline, with some expected to post double-digit losses over the next 5 years. And, even the National Association of Realtors (NAR), usually a glass-half-full type of organization, has predicted a nationwide drop in home prices (for the first time in the 4 decades they've been making these predictions).

While it's impossible to know exactly when the down-market will turn around, there are several key indicators to look for in your local market:

• inventory is declining - a good local broker should be able to tell you how many months worth of inventory is on the market in your area. As long as it's in the 6 month ballpark, you're probably okay. Between 6-9 months, prices should remain stable. Over 9-10 months, you'll see prices decline. At last check, there were approximately 12 months worth of inventory on the market in the Athens/Oconee market.
• realtor attitudes - a few years ago, everybody you knew had a real estate license or was thinking about getting one ... it was easy money right? Well, times have changed. In the past year, I've heard more people say "how do I get outta this business" than "how do I get in" ... there's just not enough business to go around. In this industry, and especially in down-times, the top 10% of salespeople do 90% of the business. And the remaining 90% of salespeople do the remaining 10% of the business. With sales slower, that 10% isn't enough to feed 90% of the agents, so we're seeing alot of agents find new careers.
• sellers act less desperate - if you read the home for sale ads in your local publications, you'll see offers for new cars ... $10,000-20,000 bonuses ... first 6 months free ... you name it - I'm sure it's been tried. In a more stable market, the supply & demand keeps the market active ... no need to lure clients with lucrative bonuses. As the market strengthens, you'll see less and less of this.

Condo or Townhouse?

In a college-town such as Athens, GA, condominiums and townhomes account for a large portion of the residential housing inventory. As a licensed agent specializing in sales such as this, I was somewhat embarrassed when an agent that I mentor recently asked me the difference between the two ... I didn't have a good answer. I knew, but I couldn't provide a clear answer - so, I decided to do a little research.
The word "condominium" is Latin, and means "common ownership". Owners of condos own the interior of their unit and own a percentage of the common elements surrounding their unit (grounds, pool, exterior walls, etc). Residents are members of a homeowners association, and typically pay dues for the maintenance of the common area.
Owners of townhomes actually own the ground beneath their unit and the roof above. Townhomes often times include garages, small yards, etc for which the owners are responsible. Townhomes often have common elements as well, but more of the ownership lies with the individual than in condo-ownership.
Horror stories frequently arise from poorly managed associations, but their are significant advantages ... a responsibly managed association serves as somewhat of an insurance policy for owners, helping to maintain property values and control unruly neighbors.

Look On The Bright Side ...

In this doom & gloom real estate era, it's easy for buyers & sellers to find reasons to complain ... not as easy is finding positive aspects of this soft market.

A co-worker of mine recently sent me the following tid-bits, providing a positive spin on the current state of the residential real estate market:

For Buyers:

• Right now, you have an unusually wide selection of properties to choose from, including those owned by people highly motivated to sell immediately.
• With so many potential buyers holding off, you have a much smaller number of people competing with you for the available properties. When the turnaround comes, those "waiters" will be your competitors, making your offer less attractive to those selling their homes.
• Financing is still available at historically low interest rates, but are sure to escalate when activity resumes at more normal levels.

For Sellers:

• If you sell for present market value, even though the price is less than it would have been in the past, you can reinvest at the same relatively lower range ... the home you buy with the proceeds will have gone down in price as well.
• If your present property has appreciated in value over the years, a reduced price affects only "paper" value, which you never actually realized.
• If you genuinely want to sell and have a good reason for doing so, there is little to be gained by waiting for "things to get better," especially if you'll be reinvesting in the same market.

Interesting Perspective ...

I was sent this forward from a friend today, and while it has nothing to do with real estate, it was so powerful that I decided to post it here anyway. I have no desire to see this blog become a political forum, but regardless of party lines, this piece should make you think.

It's from Jay Leno ... that's right, Jay Leno ...

"'The other day I was reading Newsweek magazine and came across some poll data I found rather hard to believe. It must be true, given the source, right? The Newsweek poll alleges that 67 percent of Americans are unhappy with the direction the country is headed, and 69 percent of the country is unhappy with the performance of the President. In essence, 2/3's of the citizenry just ain't happy and want a change.

So being the knuckle dragger I am, I started thinking, ''What are we so unhappy about?'' Is it that we have electricity and running water 24 hours a day, 7 days a week?Is our unhappiness the result of having air conditioning in the summer and heating in the winter? Could it be that 95.4 percent of these unhappy folks have a job?Maybe it is the ability to walk into a grocery store at any time, and see more food in moments than Darfur has seen in the last year? Maybe it is the ability to drive from the Pacific Ocean to the Atlantic Oceanwithout having to present identification papers as we move through each state? Or possibly the hundreds of clean and safe motels we would find along the way that can provide temporary shelter? I guess having thousands of restaurants with varying cuisine from around the world is just not good enough. Or could it be that when we wreck our car, emergency workers show up and provide services to help all, and even send a helicopter to take you to the hospital.

Perhaps you are one of the 70 percent of Americans who own a home. You may be upset with knowing that in the unfortunate case of a fire, a group of trained firefighters will appear in moments and use top notch equipment to extinguish the flames thus saving you, your family and your belongings. Or if, while at home watching one of your many flat screen TVs , a burglar or prowler intrudes , an officer equipped with a gun and a bullet-proof vest will come to defend you and your family against attack or loss. This all in the backdrop of a neighborhood free of bombs or militias raping and pillaging the residents. Neighborhoods where 90 percent of teenagers own cell phones and computers. How about the complete religious, social and political freedoms we enjoy that are the envy of everyone in the world? Maybe that is what has 67 percent of you folks unhappy.

Fact is, we are the largest group of ungrateful, spoiled brats the world has ever seen. No wonder the world loves the U.S. , yet has a great disdain for its citizens. They see us for what we are. The most blessed people in the world who do nothing but complain about what we don't have , and what we hate about the country instead of thanking the good Lord we live here.

I know, I know. What about the President who took us into war and has no plan to get us out? The President who has a measly 31 percent approval rating? Is this the same President who guided the nation in the dark days after 9/11? The President that cut taxes to bring an economy out of recession? Could this be the same guy who has been called every name in the book for succeeding in keeping all the spoiled ungrateful brats safe from terrorist attacks? The Commander-In Chief of an all-volunteer army that is out there defending you and me? Did you hear how bad the President is on the news or talk show? Did this news affect you so much, make you so unhappy you couldn't take a look around for yourself and see all the good things and be glad?

Think about it...are you upset at the President because he actually caused you personal pain OR is it because the 'Media' told you he was failing to kiss your sorry ungrateful behind every day. Make no mistake about it. The troops in Iraq and Afghanistan have volunteered to serve, and in many cases may have died for your freedom. There is currently no draft in this country. They didn't have to go. They are able to refuse to go and end up with either a ''general'' discharge, an ''other than honorable'' discharge or, worst case scenario, a ''dishonorable'' discharge after a few days in the brig. So why then the flat-out discontentment in the minds of 69 percent of Americans?

Say what you want, but I blame it on the media. If it bleeds, it leads; and they specialize in bad news. Everybody will watch a car crash with blood and guts. How many will watch kids selling lemonade at the corner? The media knows this and media outlets are for-profit corporations. They offer what sells , and when criticized, try to defend their actions by 'justifying' them in one way or another. Just ask why they tried to allow a murderer like O.J. Simpson to write a book about 'how he didn't kill his wife, but if he did he would have done it this way'...Insane!

Stop buying the negativism you are fed everyday by the media. Shut off the TV, burn Newsweek, and use the New York Times for the bottom of your bird cage. Then start being grateful for all we have as a country. There is exponentially more good than bad.

We are among the most blessed people on Earth, and should thank God several times a day, or at least be thankful and appreciative. 'With hurricanes, tornadoes, fires out of control, mud slides, flooding, severe thunderstorms tearing up the country from one end to another, and with the threat of bird flu and terrorist attacks, 'Are we sure this is a good time to take God out of the Pledge of Allegiance?' Jay Leno, 2007

Buy Or Rent? The Answer May Surprise You ...

At some point, almost everyone will rent ... college? internship in new town? retirement community? ... these are some common scenarios when renting is the easy choice. But, even after the booming real estate years when everyone was encouraged to be a home, there are more times than you may think when renting would be more beneficial than owning.

The first thing you need to consider when making this rent vs. buy decision is "how long will I be living in this location". If you're going to stay less than 2 years, renting is probably a good idea. By the time you pay closing costs to buy and brokers fees to sell, you'll lose 5-10% of your homes value. Make sure the appreciation rate, when multiplied by the length of time you're staying, will make up that 5-10% loss, or you'll be upside down.

If you're staying longer than 2 years, the math isn't quite as easy. With rates as low as they are now, you can probably get a mortgage with a monthly payment at or below the rent rate on a similar property. However, you must also take into account utilities, taxes and insurance, which often times are covered by the landlord in a landlord-tenant relationship.

As a Realtor whose income is 100% dependant on people buying houses, it's sometimes difficult to tell people to rent ... but, having to explain to them that they're upside down on a house they need to sell after a couple of years is an even more difficult conversation.

If you think buying is for you, please CLICK HERE to learn more about the advantages of home ownership.

Great Time For A "HELOC" ...

Given the dramatic decrease in lending rates over the past few weeks, there's never been a better time if you need to borrow a few bucks ... depending on what you need the money for, a Home-Equity-Line-Of-Credit (HELOC) may be the perfect fit.

A HELOC is secured by the equity in your home, and you only pay interest on what's borrowed (no matter the size of your credit line). Credit bureaus look more favorably upon HELOC's than non-secured debt, and the interest is typically tax-deductible since it's attached to your home.

My wife and I just took out a HELOC on our personal residence to restructure some small credit card debt (7% sure beats 20+%), and we were able to close on our new loan with $0 origination fees. Here's a few pointers I learned along the way:

• Look for incentives - your bank may offer a discount because you're already a customer, or they may offer a rate reduction if you sign up for your payments to be auto-drafted
• Don't borrow more than 90% of your home's value - some banks will loan up to 100%, but if you borrow 100% of your homes value in this unsteady market, you're taking a big risk
• Read the fine print - some lenders charge inactivity fees, have minimum draw amounts, or early-termination fees ... don't get burned by rushing through the paperwork.

Gotta Messy Neighbor? ...

Thinking about selling your home, but the car on blocks or knee-high grass next door has you worried? ... No matter how much curb appeal your home has, your neighbors dump next-door could have a devastating impact on the value of your home. Here's a few pointers on how to solve this problem without a major confrontation:

• Check your neighborhood covenants - if you live in a subdivision with restrictions, you may be able to get the homeowner's association to send a letter to your neighbor ... the strength of the association will have a much greater impact than your suggestions alone.


• Appeal to your neighbors economic sense - explain to them that a higher sales price on your house will help the value of their home ... and, you can't get full-market value when the goats in their front yard are scaring buyers off (-:


• Offer to pay for cleanup - as a last resort, if nothing else works, tell your neighbor that you're willing to pay for someone to clean their yard. I know, I know ... it's not your responsibility ... but, the return on investment will be worth it in the long run.

In any event, be civil with your approach. If your neighbor senses hostility, they may be less-willing to help or even worse, they may intentionally worsen the situation.

Racial Divide in Housing ...

Given the MLK-holiday, most every newspaper, TV and internet source in the country will report on some racially-charged topic today, so I figured "why should my blog be any different?"

Since real estate is all I can speak intelligently on (-: I'm going to examine and report on the racial divide, as it pertains to home ownership.

Recent studies suggest that approximately 76% of white Americans (responsible for their housing choice) own their own homes. In contrast, only 60% of Asian-Americans, 58% of Native Americans, 50% of Hispanics and 48% of African-Americans own their own home in the U.S. Given that information, one can conclude that there is still a large discrepancy between the homeownership rates among different racial groups.

However, the gap is closing with ownership rates increasing more substantially for minorities ... over the past 10 years, ownership rates among minorities has increased at a 15-20% rate, while home ownership among white Americans has only increased 5-10%.

In today's headlines, from the mostly liberal media, you'll hear numerous takes on how we're not much better off now than we were then, and how Mr. King's dream isn't being fulfilled. I'm not ignorant enough to say there's no inequality, or that racism doesn't exist, but statistics don't lie ... instead of honoring Dr. King by focusing on what still needs to be done, let's recognize what has been done to bridge the gap, and use it as a roadmap for future progress.

Moving Up To The White House? ...

Sure, most of us would consider occupying the White House as a significant step up when compared to our current dwelling. But, moving into 1600 Pennsylvania Avenue isn't as big a perk to some of our presidential hopefuls. Check out the current digs of some of our candidates (in no particular order), as provided by Money Magazine ...

• Hillary Clinton - owns a 5100+ square foot Georgetown mansion valued at $4.8 million, and also has a second home in New York valued at $3.9 million


• John Edwards - lives on a 100+ acre estate in Chapel Hill, NC valued at approximately $6 million, and also has a $2.3 million beach house and a Virginia condo


• Barack Obama - currently resides in a $1.9 million home on the south side of Chicago, complete with a wine cellar and 4 fireplaces


• John McCain - lives in Phoenix, AZ in a 3000 square foot condo worth $2.5 million, and owns a 3300+ square foot ranch in AZ and a condo in VA


• Rudy Guliani - has 2 homes in New York ... one a 7200+ square foot condo valued at $5.25 million and a 6000 square foot home valued at $3.95 million


• Mitt Romney - their main home is in Massachusetts and is valued at $3.5 million, but also owns a $5.2 million house in Utah and a $10 million lake estate in New Hampshire

UGA Med-Campus Looking More Likely Than Ever ...

The idea of a medical branch of the University of GA being developed on the 50+ acre site currently occupied by the Navy supply school gained some momentum this week.

Earlier in the week, a hired consultant to the University System Board of Regents recommended opening an MCG expansion in Athens after the Navy leaves Normaltown. If the state legislature follows through on the recommendation, it would bring jobs and tax revenue to Athens, and much-needed physicians to all of Georgia. The report recommends expanding the main MCG campus in Augusta and satellites in Athens, with 240 students here when it's fully built out.

And, just yesterday, Governor Perdue proposed his budget, which included plans for a $7.2 million expansion of MCG, including a new campus in Athens in conjunction with the University of GA.

While nothing is certain, the right people are saying all the right things for this to become a reality.

"Upgrades" That Negatively Affect Your Homes Value ...

The word "renovation" doesn't automatically mean "appreciation" ... some perceived upgrades can actually cause the value of your home to go down in the minds of most. If you're considering selling in today's soft market, you need every advantage you can get, so here's a few things NOT to do prior to putting your home on the market, courtesy of Money Magazine ...

• Adding a Swimming Pool - if you live in sunny Florida or Arizona or parts of California, a pool is a must, and having one will increase the value and marketability of your home. However, in most of mainstream USA, a pool is viewed by buyers as being a negative, especially if your home is in an area that appeals to families with small children.
• Trendy Finishes - shiny finishes on door and cabinet hardware are out, and the cold stainless look of a "commercial kitchen" is being replaced by warmer looks. While both were popular not long ago, trends like this fade away quickly. You don't want your home to be too boring, but even worse is trying to sell a home decorated with trends of yesterday.
• The Jacuzzi - large master baths are great, but if half of it is an enormous jacuzzi tub with more jets than an airport, you could be in trouble. An oversized shower with jets is preferable to today's buyer.
• Unsightly Additions - no matter how much space we have, it's never enough. We've all been tempted to "add a room", but be careful ... think twice about how this new space will affect the curb appeal of the house from the outside. Most people visualize how this space will look from the inside, but an ugly addition (from street view) will kill your resale value.

2007 Year-In-Review Statistics ...

Just how bad was it for the Athens-area real estate market in 2007? Everyone is screaming "the sky is falling", but is it really?

We've all heard the hype, but check out the statistics below, taken directly from the Athens Board of Realtors:
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1st Quarter 2006 - 696 sales, avg 167 days on market, $183,463 avg sales price

1st Quarter 2007 - 638 sales, avg 162 days on market, $196,258 avg sales price

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2nd Quarter 2006 - 1080 sales, avg 165 days on market, $202,017 avg sales price

2nd Quarter 2007 - 929 sales, avg 153 days on market, $203,104 avg sales price

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3rd Quarter 2006 - 952 sales, avg 152 days on market, $202,446 avg sales price

3rd Quarter 2007 - 786 sales, avg 156 days on market, $207,276 avg sales price
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4th Quarter 2006 - 665 sales, avg 146 days on market, $191,925 avg sales price

4th Quarter 2007 - 525 sales, avg 163 days on market, $190,432 avg sales price

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So, what does all this mean, you ask? Here's my take ... the overall number of sales in 2007 were down approximately 15% from 2006. However, values remained fairly constant, as did the average time on market. Part of the reason for the decline in overall # of sales is because sellers are hesitant to list in this perceived "down" market.

Sure, the market is not great ... even I will admit that we've seen better times. But, let's not get caught up in the media hysteria about a doomed real estate market. Real estate value is ultimately based on location. With our proximity to Atlanta, the University of GA in our backyard, and our vast array of other desirable attractions, Athens will never see enormous value-losses in my opinion. We probably won't ever see 20-30% annual gains like some markets (coastal Florida, Las Vegas, etc), but on the other hand, we won't suffer the depreciation that those areas do in a national slow-down.

If you'd like to see more detailed statistics about the Athens-area market, current or from years past, please visit our website www.AthensRealEstateInfo.com and email me anytime.

Prepay Your Mortgage Or Invest?

If you're lucky enough to stumble upon a large sum of cash, it may be tempting to put it toward the mortgage on your home. On the other hand, buying stocks seems very risky, especially now. Paying off that mortgage may feel good, but look closely at the following two scenarios, and you'll see that it may not be the most financially-savvy move you can make:

• Paying off a mortgage is similar to any other investment ... the return is basically the interest rate on the loan. Paying off a home loan with a 6% interest rate would be the same as earning 4.32% on your money (if you're in the 28% tax bracket) because you can deduct interest payments on your taxes in most cases.


• By investing in the stockmarket, you'll pay a 15% tax rate on your long term capital gains and dividends. Historically (over the past 25 years), an investment portfolio of 80% stocks and 20% bonds has returned 7.5% after taxes!
  

I'm certainly not a financial planner (I rarely balance my own checkbook), but even I know that 7.5 is a better return than 4.32. Of course, there are situations when paying off the mortgage would be a better decision, but in most cases, the long-term benefits of investing your bundle of cash will reap far greater benefits for you.

If you need a financial planner or mortgage professional for any reason, please don't hesitate to call me anytime. I have great contacts in both fields.

Keep Your Home Safe ...

We've all heard the FBI statistics ... there's a home break-in every 15 seconds ... sad, but true.

The fear of having an intruder in your home drives U.S. homeowners to spend millions every year on expensive protective measures. While high-tech security systems serve their purpose, there's plenty of low-cost stuff you can do around your house to stay safe ...

• don't leave windows open and doors unlocked (sounds simple, but you'd be surprised how many burglaries occur when the owner didn't follow this simple rule)
• buy a timer that turns on your lights and radios (for a little more money, you can buy timers that open and close curtains)
• when out of town, cut off your mail and newspaper delivery
• don't leave a voice mail that says "out of town" or "we'll be back soon"
• secure the home with deadbolt locks and solid doors
• closely trim outdoor shrubs and prune tree branches that cover windows
• make sure that your alarm is on and has a battery backup (a recent study shows that the alarm wasn't even on in 41% of burglaries that occurred in alarm-protected homes)
• ask your neighbors to keep an eye on your home while you're away