Sunday, June 26, 2011

My Grandfather Was Right

There are many reasons for the current situation in the real estate market: greed, unexpected loss or change of employment, health crisis, predatory lending, and bad decision-making are all high on the list. Many homes are now being sold as short sales or foreclosures creating a log-jam of available properties that, as of late, doesn’t seem to make much sense to most economists.

Home prices are presently at an all-time low, while residential mortgage rates also remain aberrantly low-- two things that invariably never happen at the same time. The Wall Street Journal recently published a 15-year conventional mortgage rate at an unbelieveable 3.65%!

So why aren’t people taking advantage of the current real estate market?

Consumers have adopted a “wait and see” attitude, despite the fact that housing prices and mortgage lending is the lowest it’s been in many decades. The fact of the matter is this lack of consumer confidence is feeding off of itself. People are caught in a spiral of fear and have decided to play it safe. Many consumers got burned by a never-fail system. Think about it. What baby-boomer hasn’t heard (and reiterated) these words from the previous generation, “You can’t go wrong with real estate!”

The ironic fact is the pre-boomer generations was absolutely correct. However, when they gave this sage advice, they assumed that we would be like they were: a stationary generation. Planting roots, living simply, and staying in one place, one community, one neighborhood, one home, for the duration of our adult lives just isn't the way most of us live. The “boomers” and the generations that follow, are transient. In this changing postmodern world, many of us move around our home state region and our country in search of better living and better working conditions, or to be closer to our children (and grandchildren) who are also seeking the same.

The secondary issue that plagues the real estate market, is that a large group of Americans in the recent past, have treated real estate like the stock market, and became day-traders. The issue here is obvious: when you’re a day-trader [in the stock market] and you loose your “stake,” you don’t usually loose your home too.

So does that mean residential real estate is a bad bet?

Not at all, as long as you just follow four simple rules:

1. Don’t “gamble” with your home It serves three significant purposes:
a. It is a place to live and nurture family
b. It is a place to shelter money [via the interest deduction from the IRS]
c. It is a place to steadily grow considerable wealth over long periods of time

2. If you don’t think you will live in one place for at least 5-7 years, you should probably rent or (forgive me mom’s and dad’s) stay at home a little while longer and try to save money for a future purchase with a long-term goal.

3. Only buy what you can afford. If the only way you can afford your dream home is to finance it with a risky short-term ARM (Adjustable Rate Mortgage), or by leveraging everything else you own, you probably should wait or reevaluate your expectations. (Greed is partially what got us into this mess.)

4. If you decide to play “real estate investor,” don’t gamble with your primary residence, unless you want to end up living in your car.

The real estate market is on its way back to normalcy. We all must remember that when you look at the real estate market in 10-year chunks, it still remains one of the soundest and safest investments around.

My grandfather was right, “you can’t go wrong with real estate!” Just remember the rules.

Thursday, June 24, 2010

Be in the moment...

It’s been a number of months since I’ve posted anything… business has been-- busy!

In spite of the economic news our business has been flourishing. Many of our friends and clients continue to pass my name out to their friends and family, and for that I am very grateful. Being busy is a good thing… I think.

Over this past week, one of our dear colleagues lost her husband suddenly at a very young age to a massive heart attack. I’ve been thinking a lot about her and her children. I wrote this short email to our team and I thought I’d like to share it with all of you:

Susan and I are headed to the Cape for the next few days.

Some of you have asked if you could help with my business while I’m gone-- thanks, I think I’m all good. As always, I’m proud to call you my colleagues and friends. I may reach out to you individually if something unforeseen should arise.

I thought a lot about Vicki and her family this week…

I challenge each one of you (along with my own personal challenge), to stop and be in the moment as much as you can, especially with the long weekend approaching next week.

Be in the moment…

It sounds so simple and yet, there’s always a bill that needs to be paid, or a client that needs our attention, or something in the house that needs to be cleaned of fixed.

Be in the moment…

Give that gift to yourself for a little while… for the weekend… a day… or just a couple of hours… or even just a moment.

Peace and Happy Fourth of July!

Wednesday, January 27, 2010

Those Who Wait Will Pay Thousands More This Spring

Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).

Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board's mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now if you are planning on buying a home.

Here are a few reasons why:

On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.

Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these "seller concessions" can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.

The short answer is this: The only one way to avoid being affected by all of these costly changes that lie ahead – (after you have found a home to purchase) you must apply for your FHA mortgage before April 1st, 2010.

Thursday, October 29, 2009

Looks like it's going to happen... HOORAY!!!

It's (almost) official... and it's about time!!! The senate has finally reached a consensus on the first-time homebuyer tax credit and it looks like they may expand the benefits to include other homebuyers. It also looks like they are going to expand the income restrictions as well.

This is great news for all of us. Everytime someone buys a house they make a trip to Walmart, K-Mart, HomeDepot, Bed, Bath & Beyond, etc. They also hire contractors, landscapers, painters, and so on. All of this helps strengthen our economy.

Check out the full report from this mornings Wall Street Journal.

Thursday, August 13, 2009

Who’s Really Responsible for…
The Crushing Burden of Debt in America

As a Realtor, I maintain a special checking account and credit card just for real estate-related expenses. This past week, I sat down to pay bills and got a huge surprise (and it wasn’t a good one). When I pulled up my AMEX bill online, something didn’t look right. For some odd reason there was a $172 finance charge on my bill. (While I’m not proud to admit this, out of necessity I sometimes carry a balance on my business credit card.) What I couldn’t figure out was, why was the previous month’s charge only $32?

Here’s what I found out…

I paid May’s American Express bill 4 days late. My payment was due on the Friday preceding the Memorial Day weekend; I paid it on Tuesday of the following week. Other than this instance, I don’t think I’ve ever had a late payment. Because my payment was 4 days late, they readjusted my interest rate from 4.99% to over 27%! After I called AMEX complaining and threatening to cancel my card, they immediately readjusted my interest rate back to 4.99% and they are reimbursing me for the overcharged interest of $142.

That same afternoon, I looked at my electronic bank statement from Bank of America and for the past 2 months they had charged me $9.95 per month for the privilege of keeping money in their bank. When I called them about it, I was told, “Oops… you’re a good customer; we didn’t mean to do that.” They removed the charges immediately.

So, being the good dad that I am, I figured I better send an email to my grown children to tell them to beware. Here are their replies…

Reply from Christi: Dad, mine jumped from 10.65% in April to 17.90% in May. Should I switch credit cards? I think I've only been late on a payment like once... I don't even look at that stuff.

Reply from Rocco: Hmm, I just checked this and my Discover Card went from 6.99% last month to 12.99% this month!!! I called to find out why and they said it was a "business decision" across all accounts and was not because of any late payments or anything on my credit record. It sounds like they're all piling on the increases during this 9-month grace period before the new credit card legislation goes into effect.


Apparently, in the American credit markets, the word “fiduciary” has been conveniently replaced by “caveat emptor – buyer beware!” Unfortunately nobody told the consumer! Unbridled greed on all sides is not only eroding our economy but it is tilting our moral compass way out of whack. I guess it’s just not enough to pay your bills on time anymore, now you have to look over your shoulder when you do it! It’s just not right.

If you want to protect yourself from out of control interest rates, here’s a link to info on how to opt out of future increases:

*crushing debt image courtesy of American Consumer News LLC.

Friday, May 29, 2009

How 'bout an Old-Fashioned Summer Vacation on Cape Cod

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I say, forget the Caribbean... Europe will wait... save Mexico for next year. If you've ever craved an old-fashioned, laid-back, lazy summer vacation, then look no further. Susan and I and our 3 kids and my brother-in-law, sister-in-law, and their 3 kids, and my other brother-in-law... well, basically our whole family have been enjoying summer vacations on the Cape for over 25 years.

The natural beauty of Cape Cod is unmatched, offering a wide variety of outdoor activities. There's lots to do... kayaking, surfing, tennis, golf, sailing, fishing, sight-seeing, bird watching, and so much more. Most of the time we just hang out at one of the wonderful beaches or freshwater lakes in Eastham. And every 4th of July we have a huge family bonfire at the National Seashore.

Don't get sucked in by consumerism this summer. Money is too tight. Spend some quality time with your family and get to know them... again. You'll be glad you did!

If you're looking for a place to stay, we highly recommend The REACH, and why wouldn't we-- it's our home away from home.

HUD Announces New Details on First-Time Home Buyer Tax Credit

On May 29, 2009, U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan announced that the Federal Housing Administration (FHA) will allow home buyers to apply the Obama Administration's new $8,000 first-time home buyer tax credit toward the purchase costs of a FHA-insured home. Donovan said that this will help stabilize the nation's housing market by stimulating home sales across the country.

The announcement detailed FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. [Source: NJ Association of Realtors]