Archive for August, 2008

About Foreclosures

Saturday, August 23rd, 2008

Foreclosure Update:(Merrill Ottwein, August 2008)  The press is full of news, most of it bad, about the incidence of foreclosures.  Several aspects are reported here:  

If you’re looking for “foreclosures” to buy:  

From time to time, we have folks that come in looking for foreclosures, thinking there might be a bargain somewhere.  On the latter score, we always tell them that we’ll look, but that actual foreclosures are not that plentiful in metro-east, and most of all, when we do find them, they are usually very, very rough.  They may not end up nearly the bargain sought , (and are often really hard to evaluate!)     

Most of them are listed within the realty community, it appears, so they are easy to find, at least when they are ready to be offered for sale.  (There is a “black hole” into which they disappear from the time an owner defaults until title is ready to be offered for re-sale, and during that time they are hard to find, and usually not available when you do.)  

And there are more than usual on the market, by some margin at least.

All that said, we have helped buyers purchase several foreclosures and will certainly keep them in the mix of options. 

The incidence of foreclosures in Metro-East: 

Recent public counts of foreclosures as published in he St. Louis Post Dispatch in late June of 2008, prove that southwestern Illinois is way down on the scale of foreclosure-incidence when compared with the rest of the nation.  Almost all of Metro-East, and all of the cities we work with, have an incidence of 0.1 to 2 foreclosures per 1000 households…the lowest measurable category above “none”.  Higher incidences of foreclosure in Metro-East are in areas we very seldom take our clients.

Almost all of St. Louis County,

St. Charles

County and

Jefferson

County have incidences of 2 to 6 foreclosures per 1000 homes, (in the 1st quarter of 2008.)

 So actual counts prove that we’re better off, which we had suspected.  Here is what the article said about the reason:  “Although Madison and St. Clair counties have mortgage default rates comparable to counties in Missouri, far fewer homes fall into foreclosure, which some attribute to the longer and more borrower-friendly process in Illinois.” 

If you’re threatened with foreclosure: 

The recent congressional action in support of housing, (HR 3221) does contain some help for those threatened by foreclosure,….specifically to those owners who find themselves “upside down”…owing more on their homes than they are now worth. Again, please see your lawyer or tax advisor for details, but lienholders are required to help in this event by writing down the mortgage to no more than 90% of the then-appraised value.  For example, if a borrower owes $300,000 but the home is worth $250,000, the borrower will get a new loan for 90% of that number, or $ 225,000….the $ 75,000 is forgiven….but you now get a “partner”. 

When the home resells, the lender receives a sliding-scale portion of any appreciation, starting at 90% the first year, and ending at 50% the 5th year and any year thereafter. It could be a lifesaver in some instances….and sure beats foreclosure.  One bit of advice that is a “sure thing”;  Contact your lender if you start to fall behind.  Denial or delay will not help a bit, and usually, makes the consequences not only earlier but worse.  Lenders are increasingly anxious to avoid foreclosures and will usually trot out some helpful options.  If any friends of any readers become foreclosure-threatened, here are some resources that could be of help: “Better Family Life”     618-274-0316         

“Beyond Housing”        618-233-4990         

Land of

Lincoln Legal Assistance:   618-398-0958Urban League               314-615-3600 

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Six Signs of Market Change

Saturday, August 23rd, 2008

Six Signs That the Housing Market May be Changing

By Blanche Evans, as published in Realtor.com

(A verbatim reprint; July, 2008)If you’re waiting for signs of a housing bottom, join the club. Nobody blows a whistle and say, “It’s time to buy!” 

That’s why market timing is an art, not a science,First, stop paying attention to the national media. Fear has sidelined buyers even in good markets, and that’s exactly when you need to take advantage –­before other buyers wise up. Second, be ready to pounce when you see the home you want. 

The time is right to buy when you see these signs in your marketplace:

• Inventories start to decline. That means that the best buys are leaving the market, and best doesn’t necessarily mean cheap. It means the homes with the highest likelihood of profitable resale. Desirable homes will leave the market first.

• Days on market reduce. Days on market refers to the period when a Realtor enters a home in the MLS for marketing to other brokers, until the sale closes. When DOMs are shorter, that signals a coming seller’s market. A seller’s market has more buyers than homes, so prices go up and selection goes down.

 

• Mortgage applications increase. Interest rates recently turned back the clock, causing many homeowners to jump in and refinance. Purchase applications were also up. Either way, that means homes are about to leave the market, so less inventory means firmer prices. Sellers will stop dropping their prices.

 

• Sold homes go for closer to listing price. In 2007, home prices dipped for the first time in four decades. With a 1.9 percent decline, homes still sold within 97 percent of listing price. When they get to 98 percent, you’d better be ready.

 

• Prices remain firm or rise. Prices are a product of demand. To attract buyers, sellers reduce their prices and offer more incentives, if homes are selling reasonably well, prices won’t move downward — they’ll go up.

• Incentives disappear. When a market begins to favor sellers, they don’t have to do as much to sell homes, Watch new homes and see if builders are still giving away swimming pools and granite kitchens. If they aren’t, times have changed.

Any change in condition will change others, so again - be ready.

Now’s the time to buy a better house while prices are low, interest rates are low and inventory is still high.   

This note added by Merrill Ottwein: We would add a 7th “measure” here, which would be the number of “Pending” sales shown in the multiple listing service, a very quickly measurable indicator of increased market activity

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