2012 is on track for the beginning of a housing resurgence!

So have we really hit the bottom of the housing market?

It would seem that the housing market is finally starting to heal. The housing inventory in Los Angeles is at the lowest level since 2005 and the interest rates on a 30 year mortgage are still at historic lows.
These facts combined with solid economic data over the past few months, seems to be fueling a housing comeback.

The data is pretty straight forward. Existing home sales were up by 4.3% in January.
Pending home sales were up by 8% in the latest report. The S&P hit an almost 4 year high and consumer sentiment is at a one year high. So what is going on?

This is a very media driven cycle, as I have said in past blogs, and with the apparent economic recovery underway, the average consumer has gained confidence, and with that gained confidence they are now turning to the housing market.

If you have been looking for home lately you know that the inventory is almost nonexistent. Most of my clients are getting extremely frustrated to say the least; almost every property has multiple offers.In one of my last blogs I stated that this was the opportunity of a life time, and it is turning out to be true.

The best advice I can give any potential home buyer or seller is not to assume that you know how to time this market, or any market.

Here are some facts you may want to know:

• The Federal government does not control interest rates.
• The Banks are more than likely not going to flood this market with millions of foreclosed homes.
• This is definitely not a classic buyers market!

I want you to know this because interest rates are already going up slightly and will probably continue to go up. If you are of the opinion that this doesn’t matter you would be well advised to consider the following. If you have a $500,000 loan and interest rates go up 1% you will pay an additional $500 per month, that’s an additional $6,000 per year and an additional $180,000 over the life of the loan.

For the home sellers thinking about waiting to sell because the market may go up. This could also be problematic as more and more sellers start thinking the same thing. Remember when the economy starts to heal, interest rates will go up! And when more sellers put their homes on the market prices will soften. Your window of opportunity is now! If you are buying or selling this is your time to take advantage of what you know that your competition may not know.

If you are interested in a free, no obligation buyers consultation or listing presentation please contact The Barasch Group

2011 ended on a high note, and the economic indicators all seemed to be pointing to a better year for the economy. Unemployment for the month of December was down to 8.5% and first time jobless claims were also down. This stronger than expected data was a welcome relief to the constant bad economic data that consumers had been barraged with in the beginning to the middle of 2011.

As I have stated in previous blogs public perception is driving this market. Now that the economic data has been much better, home buyers are starting to pay attention to the amazing low interest rates and pushing aside the fear card. What we are seeing in the housing market may be compared to someone taking their hand off of a spring.

How is this affecting the housing market? The answer is that we are now seeing the beginning of a turnaround in the housing market. Many buyers are becoming frustrated because they are getting out bid in multiple offer situations. Many home buyers are realizing that this really is the right time to buy, and many of them are nervous that they might be missing the boat. We are seeing a tremendous amount of competition for homes that are well priced, and prices are actually starting to trend up. The point is that without the fear in the market people are starting to see this market for what it is, a great buying opportunity.

So everything is rosy right? Well maybe, but there are a lot of things to consider. We just might not be out of the woods just yet! Here are just a few of the storm clouds that the home buyer or seller should be aware of.

The first potential for economic trouble is Europe. Like a bad penny, Greece has resurfaced as an issue. German Chancellor Angela Merkel and International Monetary Fund Managing Director Christine Lagarde will meet in Germany to discuss and finalize the debt restructuring deal for Greece. Back in October, a deal called for Bondholders to “accept” a 50% haircut on the face value of the Greek debt – but as creditors and authorities have started to forge a final deal, the actual haircut back to investors is looking to be larger than 50%. This is simply because worsening financial conditions in the Greek economy make paying back the debt with “just” a 50% haircut highly unlikely or maybe impossible. A recession in Europe is actually becoming more likely and that’s if we are lucky! A complete financial meltdown in Europe is a potential as well.

The second storm cloud on the horizon is Iran. The Iranians pose a potential economic nightmare, because even the threat of closing off the worlds shipping lanes will have a disruptive impact on world markets. Now add to that 2012 is an election year and you have a lot of potential issues that could rock the boat. There are many more worrisome scenarios, but I don’t want to seem all doom and gloom.

There is also an equal chance that this really is the beginning of a true recovery. Remember in a service/ consumer driven economy. The more people spend, the more people will hire, the more people hire, and the more people will spend, and so on. It’s like a self fulfilling prophecy. My point is very simple, if you think interest rates will stay this low forever you might just want to think again. If you think that higher interest rates will keep home prices low, just take a look at history and you will see that this is probably not going to happen this time. If you are considering buying or selling a home in this market here is my best advice.Don’t make assumptions that could cost you. If you are considering selling you might want to take advantage of the extremely low inventory, and be ahead of your competition. If you are waiting for prices to rebound, that could be a costly mistake, because the question you should be asking yourself is how much do you think the market is going to rebound and how fast? In a best case scenario there will be modest gains for the foreseeable future. If you are waiting for prices to rebound to 2006 levels you will most likely be waiting for a long time.

If you are considering buying a home, it is my opinion that there is no better time than right now! Prices are still at historic lows for Los Angeles and Interest rates are so low it’s just plain crazy! If you are waiting for things to get worse so that prices will drop remember, “PIGS GET FED, and HOGS GET SLAUGHTERED!”The bottom line to is “You never know what you don’t know, until you know it!” Take advantage of the market we have, not the market you think we will have. It is the buyer and seller who is willing to act that will profit in 2012.

If you are interested in a free, no obligation buyers consultation or listing presentation please contact The Barasch Group

In the early part of 2011, the economic data was so bad, that even with historically low interest rates and very affordable home prices, by California standards, the housing market seemed to be completely frozen. The threat of a double dip recession, and historically high unemployment rates, not to mention a hyper volatile stock market made the beginning of this year absolutely astonishing. The only people who were buying homes in the early part of 2011 were investors who were trying to cash in on what I was calling a fear driven market.

I would like to take a second to examine some the six biggest misconceptions of 2011.
1. The banks are not lending.
2. My home will never appraise.
3. Nobody’s buying homes right now.
4. There are a lot of homes on the market.
5. The housing market is going to go down another 20%
6. The banks are going to flood the market with foreclosures.

In my opinion none of the six statements are true. If you have read any of my previous blogs you know that I believe that this market is almost completely driven by public perception.
The Banks are lending you just need to know which banks to go to. New home appraisals are getting much easier to obtain, in fact out of all of my transactions this year I have only had one home that did not appraise. There are a lot of home buyers looking for a home and right now. The housing inventory is the lowest we have seen since the peak in 2006.The housing market is more than likely at or near its bottom. The banks will more than likely not flood the market with foreclosures, as that is counterintuitive to how banks work. Banks are in business to make money, and when they sell foreclosed property they lose money.

In my last several blogs I have been saying that if you remove the fear factor from this market it is going to rebound very quickly. The economic data has been perceived as very positive in the last several months, and the fear of losing out on these interest rates has pushed the reluctant home buyer over the edge.

So now we are seeing multiple offers on any home that appears to be priced well. Pending home sales have been up for the last several months; in fact the pending home sales are at a 19 month high for November. The pending home sales were up over 7% nationally and almost 14% in the west and existing home sales for October were up 5%.

So what is going on? Are we out of the proverbial woods? Has the market truly turned around? The answer is not so simple and I don’t pretend to have a crystal ball, however this is my 2012 prediction!

As the housing inventory stays tight and interest rates stay between 4% and 5 % for the near future the activity should remain fairly robust, that’s the good news! The thing to remember is that Real estate is almost completely supply and demand driven, so as the sellers realize that they can sell their homes and as we get closer to spring you should see more homes going on the market and the activity will start to slow again. In short 2012 should be another up and down year and the overall trend should be somewhat neutral. There are a few things to consider; the 2012 presidential election, a very volatile European economy, and uncertain fed policy. Another thing to remember is that if you’re waiting for home prices to go up so you can make more money on the sale of your home, you may be making a mistake. When prices go up on your current home they will also go up on the home you wish to purchase. The interest rates will also eventually go up and that means the additional money you may have made on your sale will probably be given back on your purchase.

The housing market is changing very rapidly and the only thing that is certain is what you know right now at this moment. Don’t try to time the market; take advantage of the current housing situation. My strongest advice is to be educated, informed and in the know. Make strong and informed decisions and remember a home is a place to live, but it is also one of your largest financial investments of your life.

I wish all of my readers a happy and blessed new year!

If you are interested in a free, no obligation buyers consultation or listing presentation please contact The Barasch Group

The housing market is changing right before your eyes!

Are you going to get left behind?
In many of my previous blogs and newsletters, I have expressed my opinion that this market is being driven by public perception. The average person makes decisions on whether or not to get into the housing market based on what they hear or read about the economy. This is a very news driven market, and as I have stated previously, the media is creating the event and not the other way around.

If you are listening to the recent headlines, it would seem as if the economy is getting stronger by the second. Almost all of the key economic data has been positive lately. If all you do is listen to the headlines, it would sound something like this. Pending home sales surge up 10%! New hiring was much stronger than expected! New home sales were up 1.3%! The latest consumer board survey states that consumer confidence is up by 15.1%! Based on this data it would appear that we are in the middle of a very strong economic rebound.

Now add all of this extremely positive economic data to an extremely tight housing inventory and historically low interest rates and BAM! You have resurgence in the housing market going on right before your eyes!

The obvious question though is whether or not this data is accurate or not. The answer is that it doesn’t really matter. If the public perception is that the economy is getting better than there is a good chance that the economy will get better, at least in the short term. I heard a statement once, I don’t know who said it but it seems to be a truism. He said, “I don’t know what the average American is going to do; all I know is that they will all do it at the same time.” The thing to remember is that we are a service oriented economy and how the average consumer feels about the economy in general is an extremely important factor to a true economic recovery. The other key factor in any economic recovery is the housing market. If the housing market starts to show consistent strength, then the economy will follow.

The last point I want to make is that if you do the research, and don’t just believe the headlines you will see that all of this rosy economic data has some potential down sides. The point is that if you’re considering buying or selling a home in this market, you need to be aggressive and proactive.

Follow the trends; be informed, up to date, and in the know! Don’t get left behind.

If you are interested in a free, no obligation buyers consulatation or listing presentation please contact The Barasch Group

If you’re asking yourself whether or not this is the time to jump into the selling market the answer might surprise you. Generally there are five economic factors that control a housing market.

The first factor is supply and demand; I call this the prime mover of any housing market. If you have been looking for a home in the Los Angeles area lately you may have noticed that the housing inventory is extremely low. There aren’t a lot of homes on the market in any given price range, we measure the inventory in terms of time on the market. When the housing market was at its worse there was two years worth of homes in Los Angeles. Now we have approximately two months of homes on the market. The last time the housing inventory was this low was in 2006 and that was the peak of the housing market. In short if we didn’t take another listing from today’s date we would run out of houses in two months.

The second factor is the interest rates for the 30 year mortgage. Today’s’ interest rate is hovering around 4.5%.That is the lowest interest rate in decades. The issue is that interest rates will definitely go up and when the rates go up they could go up a lot. It is not a question of if interest rates will go up, it is a question of when, and by how much? The common thought is that when interest rates go up, prices come down. That is not always the case, and it probably won’t be the case this time. As interest rates go up the pressure to buy a home will increase. The reason is that the cost of a home will go up substantially as rates rise, and buyers will rush to beat the next rate increase.

The third factor is the affordability index. This is an economic indicator that shows how many people by percentage rate can afford a home in today’s housing market at the median home price. The median home price in Los Angeles at the peak was approximately $484,000. The median home price has consistently declined year after year since the housing crises began. The affordability index for homes in Los Angeles County adjusted for the value of the dollar is the lowest it’s been in decades.

The fourth factor is the current unemployment rate in Los Angeles the true unemployment rate is approximately 20%. The common wisdom is with so many people unemployed the housing market can’t recover. It may sound harsh but the truth is that 20% of the population cannot buy a home; however 80% can and most probably will at some point.

The fifth and final factor is public sentiment. In 2011 this is probably the most important piece of the puzzle. This market is completely fear driven; it is as if people are standing around a pool waiting for someone else to be the first to jump in. The thing that you have to realize is that the feeling of uncertainty is starting to wear thin. At my last open house I had over 25 potential home buyers,
that was an extremely strong showing.

In this the right time to sell a home? The answer in my humble opinion is that this might be a very good time to put your home on the market. Remember if you are waiting for prices to recover that could take a while and if you’re waiting for prices to return to prices of 2007 that may never happen. It all comes down to what I have always said “Perfect is the enemy of good, take advantage of what you know and don’t believe everything you hear.” Here is an article that should give you something to consider!

If you are interested in a free, no obligation buyers consulatation or listing presentation please contact The Barasch Group

Why are Americans so unwilling to show courage in the face of adversity?

What is the effect on the housing market? And how do we turn this around?

The fear that is gripping the nation is contagious, and it is also very dangerous. It is abnormal for Americans to be driven by fear. We are by nature a very optimistic people. It has always been a part of our national mindset that we can overcome any obstacle, we can do anything, accomplish anything. We have been taught that if we work hard, are honest, ethical and kind amazing things will happen. So why is this happening? The answer in my opinion is that Americans have lost confidence in our leadership or lack thereof. The media is constantly telling us how scared everyone is. Almost every news article is laced with negativity. It seems like unless you literally shut out the world the only thing you hear is negative information. Fear seems to be the word of the day. Just look at the website for CNBC the nation’s leading business network, you will notice that even on the day after a major jobs speech by the President of the United States 9 out of 10 articles are extremely negative and fear based. Words such as default, dangerous and hanging by a thread are recurring themes.

My point is; that not only is this fear driven mentality bad for the economy, it’s also illogical and irrational! The stock market will turn around, the Real Estate market will turn around, it always does and it always will. The only question is when? It really doesn’t matter as long as it endS. The problem is that the longer it takes the consumer to dive back into the market the longer it will take for the economy to recover. Don’t be foolish the number one rule of investing is; buy low sell high. It doesn’t say buy at the bottom sell at the top. No one can time a market; it’s impossible. This is an amazing opportunity to Invest. It’s time to wake up stop believing everything you hear. Ignore the talk of double dip recessions, ETC. Real Estate has created more millionaires and billionaires than any other industry or investment.

The one thing to keep in mind is that not only is Real Estate a great investment it’s an investment you can live in. Try living in a bar of gold. The housing market is at or near the bottom; interest rates are the lowest they have been since they started tracking interest rates.

It has never made sense to me why people are afraid to buy due to uncertainty. You never see someone who doesn’t rent because of uncertainty. What’s the difference between paying a mortgage and paying rent? Everyone needs a place to live! The difference between paying rent and a mortgage is that you get a tax deduction and you stand to make money, a lot of money! In addition you can actually own a part of America. Don’t let the other guy be the smart guy while you potentially loose out!

We can overcome this economic cycle, we can restore this economy, we can achieve our dreams and highest goals, we just have to believe and do the leg work and the good will prevail. The good news is just like negativity is contagious so to is positivity

It’s your choice!!!! Be Blessed

If you are interested in a free, no obligation buyers consulatation or listing presentation please contact The Barasch Group

The so called Euro zone is in deep economic trouble and that definitely has an effect on the markets in the United States. The question of whether or not we will have a double dip recession is purely academic. In one of my recent blogs I pointed out that the news is creating the events not the other way around, and if the experts are discussing the possibility of a double dip recession it means that we are probably already in one now. Just look back to the beginning of the last so called recession the experts were constantly debating the issue, are we or aren’t we in a recession? Then, like now the average person had already felt as if we were in a recession and sure enough when the experts looked back at the data they realized that the recession had really started and the argument was an exercise in technical jargon.

Add to this economic uncertainty that the month over month existing home sales numbers were much lower than expected. The average person is fraught with fear. The paralysis of this market is completely fear driven. It seems as if people don’t have the ability to think rationally. It is my humble opinion that we are not in a normal cyclical recession at all, but an economic contraction. This is a much larger event and it will take some time to recover.

It is absolutely amazing to me to that most people have not only missed the silver lining in all this, but they don’t even seem to understand how amazing this opportunity really is. Hello! Homes are a natural protection against inflation, an unstable market, a weakening dollar and economic unrest. The best so called flight to safety is home ownership!

The more the Euro Zone struggles and the world economy slumps the more people seem to be buying U.S. Treasury’s which are driving the interest rates down. Today’s interest rate on a 30 year fixed mortgage is an astonishing 3.875 % that is amazing and with home prices at or near a bottom you just may be missing an opportunity of a life time.

To paraphrase Warren Buffett the time to be greedy is when everyone else isn’t. When interest rates start to rise and they will you may just have wished you didn’t follow the crowd.

Is Buying a Short Sale a Good Idea?

Most Real Estate agents will tell any interested home buyer to stay away from short sales. The reason for this is because short sales are usually very difficult transactions, and can take a long time to close, and there is some truth that. If you are looking for a bargain, a short sale may not be the best way to go, but here are some facts you should know that you may not know.

The deal in a short sale is between the seller and the buyer, not the seller and the bank. The seller still owns the home. The bank will decide if they are ok with financials of the deal, not the deal itself. Once the seller has signed the deal, it’s a deal! They cannot accept any other offer. In fact, if the bank is Bank Of America, you can only upload one offer at a time. The second thing to be aware of is the fact that the listing agent cannot give you any special advantages. He or she has no more control over the deal than the buyer’s agent, nor does he or she make extra commission. In fact, most listing agents use outside negotiators to deal with the banks. It’s a short sale, so the bank is already losing money on the deal. Therefore, they are not going to pay extra commission to a listing agent. If you are using an agent you trust to help you find and acquire a home, there is no reason for you to give up your right to expert representation. You will gain nothing except the loss of control and proper representation!

The Senior Real Estate Liaison for Bank of America released the following guidelines for short sales in their most recent webinar:

1. The Time period for a normal approval is approval.
2. The buyer should expect a counter offer in all cases.
3. The value should be competitive with a fair market sale.
4. The buyer must be approved for their loan not pre-qualified.

Here are a few questions that every informed agent or prospective buyer should ask when considering a short sale:

1. Is the price listed for the property approved by the bank?
2. Is there more than one more loan?
3. Which bank holds the note?
4. Are there any offers currently in front of the bank?

Why are these questions so important? It’s simple. The answers to these questions will determine whether you should even attempt to submit an offer on any given property. For example, if the price is not approved, the list price is just a guess for what the bank will accept, at best. The next question regarding how many loans the property has is VERY important! If there is more than one bank involved, you will have an additional challenge getting the deal approved. Which bank has the loan also plays a major part in the approval process. Some banks are much easier to deal with than others, and if there are already offers submitted, forget about it! As I stated earlier, there can only be one deal presented at a time.

At the end of the day should a buyer consider a short sale? Maybe. It just depends on all of the issues mentioned in this blog. Sometimes you may get lucky and get a great deal. You just remember…if it seems too good, it probably is!!

If you would like to inquire about our expertise in short sale negotiation please contact us!

So how does being a bargain hunter hurt the average buyer? The answer is quite simple, the longer the average seller waits to place his or her home on the market the fewer homes there will be to purchase and this will only hurt the buyer. The home buyer who is looking to purchase his or her primary residence is finding it very difficult to compete with the investor who is paying all cash.
The frustration that the home-buyer is feeling is obviously the result of a shortage in homes to purchase. If this trend continues the divide between the buyer and the seller will widen. As interest rates go up and the inventory continues to decrease prices will start to rise, not only will the buyer pay more for his or her home, but with higher interest rates he or she will get hit twice.

In case you haven’t been keeping up with recent trends, 35% of all home sales in the last fiscal quarter were all cash transactions. This should be an alarming statistic for any buyer who is trying to buy their first home, or their dream home, or just a nice place to live. These are not the investor/buyers who are like predators closing in for the kill. The problem is that these investors are helping to slow what should finally be a re surging housing market.

Don’t misunderstand me, I am a free market business owner, and I support the idea of making money. However, not every home is the right home for the investor/ buyer that is looking at the home only to make a profit.

The key to understanding this market is that every home is different, some homes are perfect investments, and others are perfect homes to live in.

How do you get the home you are looking for and get a fair price for the home?

The answer goes back to what I said in a recent blog we are at or near the bottom of a Real Estate down turn and with interest rates at an all time low, any home you by is by definition a bargain.

Now is the time to engage in what I call win to win negotiating. If you really love a home you will benefit substantially by giving the seller what he or she is asking for the home. This is assuming that the seller has been realistic in his or her pricing. This may seem as if I am only trying to serve the sellers but this is not true. It is absolutely in the buyer’s best interest! The reason is that you will be buying amicability. The both the buyer and seller will have the feeling that they have both benefited from the negation. The seller is now a willing partner in the process, and you will be surprised at how easy the rest of the transaction will be. There are additional reasons but that will be the subject of next week’s blog.

The last benefit is to the real estate market as a whole, if the sellers perceive that they can get a reasonable price for their home, they will be more willing to list the property adding to our inventory. This will allow us to have a reasonable recovery instead of a feeding frenzy and that would not be good for anyone.