HAVING THE PRIVILEDGE OF BEING THE TOP PRODUCING AGENT IN MORRIS AND SUSSEX COUNTY WITH PRUDENTIAL NEW JERSEY PROPERTIES; I WOULD LIKE TO SHARE SOME ACCURATE PERCEPTIONS ON THE CURRENT REAL ESTATE MARKET AND ACTIVITY.
MANY PEOPLE ARE THINKING IT IS NOT A GOOD TIME TO BUY BECAUSE PRICES ARE STILL DROPPPING A LITTLE EACH MONTH AND THE ECONOMY IS UNCERTAIN OF WHEN IT WILL IMPROVE..
2010 IS A GREAT TIME TO CONSIDER TO BUY FOR THE FOLLOWING 3 REASONS:
VERY LOW INTEREST RATES,
NEGOTIATING ROOM WHEN YOU MAKE AN OFFER.
HOUSING HERE IN MORRIS, WARREN, SUSSEX AND ESSEX COUNTIES IS BECOMING WAY MORE AFFORDABLE! .
THE TRUTH OF THE MATTER IS WE ALL NEED A PLACE TO LIVE.
WHY NOT THAT PLACE TO LIVE BE YOUR OWN PLACE? WHY PAY SOME LANDLORD INSTEAD OF YOUR OWN MORTGAGE?
GOOD ENOUGH REASON?
WELL, THE BEST REASON IS “THERE NO PLACE LIKE HOME” AND ESPECIALLY WHEN IT IS YOUR HOME.
THE HOUSING MARKET AND ECONOMY WILL RECOVER AND WHAT YOU BUY THIS YEAR WILL BE WORTH A LOT MORE THAN YOU THINK IN THE NEXT COMING YEARS.
THAT IS NOT JUST CONJECTURE. IT IS A FACT AND THE REWARD OF A GOOD INVESTMENT.
STILL JUST THINKING OF BUYING?
ARE YOU THINKING OF SELLING YOUR CURRENT HOME? IS THERE A MOVE IN YOUR FUTURE?
RETIRING,RELOCATION OR RE-INVENTING YOURSELF ?
WITH THE RECESSION COMING TO A SLOW DOWN AND CONSUMER CONFIDENCE UP; NOW MAY BE THE BEST TIME TO SELL WITH THE IMPROVED BUYER ACTIVITY AND GREAT INCENTIVES FROM THE GOVERNEMENT ALONG WITH GREAT INTEREST RATES FOR BUYERS.
THE SPRING REAL ESTATE MARKET FOR 2010 LOOKS VERY PROMISING!
BUYING OR SELLING THIS NEW YEAR MAYBE THE RIGHT TIME FOR YOU!
HAVING THE PRIVILEDGE OF BEING THE TOP PRODUCING AGENT IN MORRIS COUNTY WITH PRUDENTIAL NEW JERSEY PROPERTIES AT 17 ELM STREET, MORRISTOWN; I WOULD LIKE TO SHARE SOME ACCURATE PERCEPTIONS ON THE CURRENT REAL ESTATE MARKET
AND ACTIVITY.
MANY PEOPLE ARE THINKING IT IS NOT A GOOD TIME TO BUY BECAUSE PRICES ARE STILL DROPPPING A LITTLE EACH MONTH AND THE ECONOMY IS UNCERTAIN OF WHEN IT WILL IMPROVE..
2010 IS A GREAT TIME TO CONSIDER TO BUY FOR THE FOLLOWING 3 REASONS:
VERY LOW INTEREST RATES,
NEGOTIATING ROOM WHEN YOU MAKE AN OFFER.
HOUSING HERE IN MORRIS, WARREN, SUSSEX AND ESSEX COUNTIES IS BECOMING WAY MORE AFFORDABLE.
THE TRUTH OF THE MATTER IS WE ALL NEED A PLACE TO LIVE AND A PLACE TO CALL HOME.
WHY NOT THAT PLACE TO LIVE BE YOUR OWN PLACE? WHY PAY A LANDLORD INSTEAD OF YOUR OWN MORTGAGE?
GOOD ENOUGH REASON?
WELL, THE BEST REASON IS “THERE NO PLACE LIKE HOME” AND ESPECIALLY WHEN IT IS YOUR HOME.
THE HOUSING MARKET AND ECONOMY WILL RECOVER AND WHAT YOU BUY THIS YEAR WILL BE WORTH A LOT MORE THAN YOU THINK IN THE NEXT COMING YEARS.
THAT IS NOT JUST CONJECTURE. IT IS A FACT AND THE REWARD OF A GOOD INVESTMENT.
STILL JUST THINKING OF BUYING?
ARE YOU THINKING OF SELLING YOUR CURRENT HOME? IS THERE A MOVE IN YOUR FUTURE?
ARE YOU RETIRING,RELOCATING OR JUST RE-INVENTING YOURSELF?
NOW MAY BE THE BEST TIME TO SELL IN THE UPCOMING SPRING MARKET OF 2010.
IMPROVED BUYER ACTIVITY IS A RESULT OF THE GOVERNMENT INCENTIVES ALONG WITH ATTRACTIVE INTEREST RATES FOR BUYERS.
BUYING OR SELLING THIS NEW YEAR MAYBE THE RIGHT TIME FOR YOU!
HAVING THE PRIVILEDGE OF BEING THE TOP PRODUCING AGENT IN MORRIS AND SUSSEX COUNTY WITH PRUDENTIAL NEW JERSEY PROPERTIES; I WOULD LIKE TO SHARE SOME ACCURATE PERCEPTIONS ON THE CURRENT REAL ESTATE MARKET
AND ACTIVITY.
MANY PEOPLE ARE THINKING IT IS NOT A GOOD TIME TO BUY BECAUSE PRICES ARE STILL DROPPPING A LITTLE EACH MONTH AND THE ECONOMY IS UNCERTAIN OF WHEN IT WILL IMPROVE..
2010 IS A GREAT TIME TO CONSIDER TO BUY FOR THE FOLLOWING 3 REASONS:
VERY LOW INTEREST RATES,
NEGOTIATING ROOM WHEN YOU MAKE AN OFFER.
HOUSING HERE IN MORRIS, WARREN, SUSSEX AND ESSEX COUNTIES IS BECOMING WAY MORE AFFORDABLE! .
THE TRUTH OF THE MATTER IS WE ALL NEED A PLACE TO LIVE.
WHY NOT THAT PLACE TO LIVE BE YOUR OWN PLACE? WHY PAY SOME LANDLORD INSTEAD OF YOUR OWN MORTGAGE?
GOOD ENOUGH REASON?
WELL, THE BEST REASON IS “THERE NO PLACE LIKE HOME” AND ESPECIALLY WHEN IT IS YOUR HOME.
THE HOUSING MARKET AND ECONOMY WILL RECOVER AND WHAT YOU BUY THIS YEAR WILL BE WORTH A LOT MORE THAN YOU THINK IN THE NEXT COMING YEARS.
THAT IS NOT JUST CONJECTURE. IT IS A FACT AND THE REWARD OF A GOOD INVESTMENT.
STILL JUST THINKING OF BUYING?
ARE YOU THINKING OF SELLING YOUR CURRENT HOME? IS THERE A MOVE IN YOUR FUTURE?
NOW MAY BE THE BEST TIME IN THE LAST 2 YEARS TO SELL WITH THE IMPROVED
BUYER ACTIVITY AND GREAT INCENTIVES FROM THE GOVERNEMENT ALONG WITH GREAT INTEREST RATES FOR BUYERS.
BUYING OR SELLING THIS NEW YEAR MAYBE THE RIGHT TIME FOR YOU!
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How far did you stretch for your first home?
Yes, the financial system almost collapsed because mortgage bankers and brokers told lies about loan terms and loosened standards in dangerous ways, and investment bankers packaged those loans into bonds that were far more toxic than ratings agencies predicted.
But the roots of the mortgage contagion lie with all of us and our desire to own just a bit more house.
So as the one-year anniversary arrives of our near financial collapse, it’s a good time to blow up a long-standing but underexamined maxim of real estate — that you should always stretch financially when buying your first home.
No one is quite sure who came up with this idea, though suspicions rest on real estate agents or kindly parents with the best of intentions who never expected that real estate prices could fall. Whatever its origin, the economists and financial planners I spoke with this week are almost unanimous in their rejection of it.
Here’s how they dismantled the old saw — and a list of seven suggestions they offered up in its place.
START WITH THE BASICS Let’s begin with some other standards, tried and true advice that served banks and borrowers well for years, until they forgot all about them in the race to write more loans and buy bigger houses. Put 20 percent down, so you have less of a chance of owing more than your home is worth if prices fall again. Get a fixed-rate mortgage, so the biggest part of your monthly housing bill remains stable.
If you’re determined to be truly conservative, don’t spend more than about 35 percent of your pretax income on mortgage, property tax and home insurance payments. Bank of America, which adheres to the guidelines that Fannie Mae and Freddie Mac set, will let your total debt (including student and other loans) hit 45 percent of your pretax income, but no more.
That said, if you end up with an adjustable-rate loan, banks may not be concerned with whether you’ll be able to afford the maximum possible payment when the interest rate adjusts in five or seven years. But you should be worried about it.
CONSIDER YOUR INCOME The best case for stretching for a first house is that first-time home buyers in their 20s and 30s will probably see their incomes grow more quickly than older people buying their second or third home.
Harvey S. Rosen, a Princeton economics professor, finds in a forthcoming Journal of Finance article that he co-wrote with two Federal Reserve Bank economists, Kristopher Gerardi and Paul S. Willen, that the size of a house that someone buys tends to be a good indicator of what their income will be later. “People can, on average, make reasonably good predictions of their future incomes and act on them in sensible ways by buying bigger houses,” Mr. Rosen said.
Indeed, much of the mess in the mortgage market has been because of people borrowing money with loans that they didn’t understand — or betting that housing prices would continue to rise enough that they would be able to refinance their loans before the payments rose. Income overconfidence may have had something to do with it (and high unemployment worsened the problems), but it’s probably not the primary cause.
BOW TO UNKNOWNS This research is all well and good as long as you continue to work. But if you’re buying your first home before you have children, you may feel quite differently about work once you become a parent. And if you do, you may not want a mortgage boxing you in to going back to the office three months after the baby is born.
Bobbie D. Munroe, a financial planner with Fraser Financial in Atlanta, encourages younger clients in this situation to model out their budget, including any proposed mortgage, three ways — with both spouses working full time, one working part time and one staying at home for a few years. She also suggests imagining or even practicing living on one income, to see if it’s truly realistic.
“What people should do is ultimately their own decision,” she said. “But they should do it with eyes wide open.”
Even people who don’t want to have children need to consider this. Besides the obvious possibility of sustained unemployment, what about the need to escape a dying industry or an early midlife crisis that necessitates career change to stave off depression? Even government employees and medical residents who believe that their incomes are set for life ought to consider this possibility.
MAP OUT EXPENSES It stands to reason that anyone tempted to stretch for a house will be inclined to play down the expense of maintaining it. These costs are anything but ancillary, though.
For many years, Dennis G. Stearns, a financial planner in Greensboro, N.C., has been alarmed enough by clients’ unrealistic expectations that he’s maintained a home cost spreadsheet that he shares with clients shopping for houses. He also updates it periodically with aggregate, real-world data based on their subsequent experiences.
Mr. Stearns estimates that owners of a newer home that do some work for themselves but contract major work out to others will pay 3.6 percent of the original purchase price annually for maintenance and 4.5 percent if it’s an older home. So if you own a $400,000 home, your costs will probably hit the five figures each year — and may rise with inflation. These expenses will be another 20 percent or so higher if you live in a severe weather area. He does note, however, that the tax benefits of home ownership can offset half or more of these costs in some areas of the country.
BUY BEST (OR CHEAPEST) All of these caveats have given rise to some unusual strategies. Michael Kalscheur, a financial planner with Castle Wealth Advisors in Indianapolis, suggests buying the dream house you covet (if you can afford it) or an inexpensive starter house but not anything in the middle.
“If people have their heart set on something, inevitably, if they can’t afford what they really want, they buy the next best thing,” he said. “That’s absolutely the worst thing you can do. Not only do you not get what you want, but it sucks you dry.”
Why? Well, if you buy that entry-level home instead of the silver-medal home, you can save a lot more money each month after making the house payment (as long as you’re disciplined) than you would if you were paying a big mortgage toward that next best house. And all of your other housing costs will be lower, too. Then, several years later, you’re in a much better position to buy what you actually want.
STRETCH THE HOUSE Better yet, keep in mind that you don’t ever have to move from that first home — and incur all of the transaction costs associated with selling and buying and moving again.
J. Michael Collins, an assistant professor in the department of consumer science at University of Wisconsin’s School of Human Ecology in Madison, suggests paying less for a home that you can upgrade periodically when your income is stable and your savings or available credit make it possible.
In other words, stretching out your tenure in a home (and the physical boundaries of the home itself) may make more sense than stretching for each successive mortgage in a series of two or more houses.
THE EIGHT-HOUR RULE One rule about all of these rules is that it’s unlikely that every one will apply to every circumstance. Individuals and their income streams are too varied, and real estate markets are themselves unique.
When all else fails, however, you can always fall back on the eight-hour test. Whatever the size of your mortgage, you have to be able to sleep soundly at night. So if an impending loan has you stretching for the Ambien, it’s a pretty good sign that the loan is a bit of a stretch as well.
The OTTEAU REPORT
HOUSING MARKET IMPROVES SLIGHTLY, INVENTORY STOPS RISING
The decline in the housing market which began during the 2nd half of 2005 is evidenced by the rising tide of unsold homes on the market. While there are many contributing factors, the supply of competing properties is paramount as it creates a ‘mood of the market’ which determines whether home buyers feel any sense of urgency. For example, as Unsold Inventory declines and a buyer’s choices diminish they are inclined to purchase sooner rather than later driving inventory even lower and home prices higher in the process. Conversely, rising inventory extends normal marketing time causing home sellers to reduce their asking price. In this rising tide environment home buyers adopt a ‘wait & see’ stance due to concern about falling home prices, leading to further increases in Unsold Inventory and thus creating a downward spiral. Any reverse of this cycle is then predicated upon a decline in Unsold Inventory. While this is admittedly a simplistic view which does not take into account corresponding demand factors, the bottom line is that the housing market can not improve significantly until Unsold Inventory declines. And the first step toward inventory decline is for it to stop rising.
The New Jersey housing market provided a glimmer of hope in July as Unsold Inventory declined for the first time since January. That this decline accounted for less than a 1% reduction in Unsold Inventory makes it clear that the housing recession is far from over and will continue into 2008. However, should inventory hold at its present level would signal the ‘beginning of the end’ for the housing recession.
The July housing market also saw an increase in contract-sales activity on a seasonally adjusted basis. As demonstrated in the NEW JERSEY CONTRACT-SALES ACTIVITY chart, July sales were higher than one year ago confirming that while the housing market is weak it still has life. No surprise here as despite the decline in sales activity over the past 2 years the underlying demand for housing is still bubbling beneath the surface. This is because life goes on with continuing household formation, marriages, the birth of children, job promotions, divorce and retirement all leading to changing housing needs which translates into housing demand. Thus, the stage is being set for a rebound in the housing market once the current challenges sort themselves out.
From a market absorption perspective, the Unsold Inventory presently reflects a 9.0 month inventory of homes as compared to 8.9 months in June. This however compares to a 4.0 month supply in July 2005 suggesting that inventory is currently about double where it needs to be before home prices will start rising again. This is important to would-be home sellers who are considering waiting things out before selling their present homes as any rise in home prices is likely several years off. WWW.MORRISCOUNTYHOUSEPRICE.COM
The Obama administration yesterday announced plans to widen the eligibility parameters of a key housing initiative. The change would allow borrowers with mortgages valued at 125 percent of their home’s worth to refinance into more affordable loans. Previously, only borrowers with so-called loan-to-value ratios of 105 percent or less could do so. The mortgage refinancing program is part of the president’s two-pronged plan to pull the nation out of its worst housing slump since the Great Depression. Coupled with efforts to modify troubled mortgages, the government believes its Making Home Affordable initiative can reach up to 9 million American homeowners. “The president’s Making Home Affordable plan is already helping far more families than any previous foreclosure initiative, and with today’s announcement we will extend its reach still further,” Housing and Urban Development Secretary Shaun Donovan said.
Here are six things you need to know about the expanded rescue:
1. Fannie/Freddie only: Despite the higher loan-to-value ceiling, the original framework of the program remains in tact. For example, only borrowers with loans owned or guaranteed by government-controlled housing finance giants Fannie Mae or Freddie Mac can participate. At the same time, borrowers need to be current on their mortgage to qualify.
2. Falling prices, less equity: The expansion of the qualification parameters comes as the real estate market continues to erode. Home prices in 20 major metropolitan areas fell by more than 18 percent in April from a year earlier, according the Case-Shiller home price index. Among other things, sliding home prices suck equity out of homes. Because of plunging values, more than a fifth of American homeowners were considered “underwater”—meaning they owe more on their mortgages than the property is worth—in the first quarter of this year, according to Zillow. This evaporation of home equity threw sand in the gears of the administration’s refinancing initiative. That’s because the original terms of the program precluded borrowers with mortgages exceeding 105 percent of their home’s value from participating. But by expanding the loan-to-value cap to 125 percent, even borrowers who are significantly underwater will be eligible to refinance through Uncle Sam.
3. Efforts so far: When it rolled out the initiative earlier this year, the Obama administration said the refinancing program could reach up to 5 million homeowners. But in its release yesterday, HUD acknowledged that only “tens of thousands” of refinancings have occurred so far.
4.Expanded reach: The new standards could make up to 2 million additional borrowers eligible to refinance through the program, according to the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac. “This program could assist many homeowners who otherwise would have difficulty refinancing due to declining house prices,” FHFA Director James Lockhart said yesterday.
5. Mortgage ratehurdle: But not all of those 2 million additional borrowers will end up refinancing. Some won’t meet other program requirements, such as being current on their loan. But it’s the recent upward trend in mortgage rates that represents perhaps the biggest threat to the program’s success. Refinancing applications surged last fall and winter, after the federal government engineered mortgage rates of below 5 percent. But as bond traders became rattled by sharp increases in government spending, they sent yields on 10-year treasury notes—which fixed mortgage rates typically tack—skyward in recent months. As a result, mortgage rates surged, hitting 5.81 percent on June 11, according to HSH.com.
Since borrowers generally need a full percentage-point difference between their current rate and market rates to benefit from refinancing, higher rates have hammered the housing market. What’s more, even as mortgage rates have drifted lower in recent weeks, refinancing applications have remained depressed. “While 30-year rates in the mid-5s are low on a long-term historical basis, they’re not very low relative to the last five or six years,” Mike Larson of Weiss Research said in a report. “The average since mid-2003 (when we had the last mega-boom in [refinancings]) is 6 percent, according to Freddie Mac. So the universe of mortgages that can be refinanced on a “rate and term” basis isn’t very large in the mid-5s. …We’re going to need to see rates head back into the 4s to get the mortgage train rolling again.”
6. Second housing tweak: The expansion of the Making Home Affordable program follows the Obama administration’s recent change to its first-time home buyer tax credit. In mid-February, the president enacted this tax incentive—which offers up to $8,000 to qualified first-time home buyers—to stimulate housing demand and help mop up excess supply. In late May, HUD unveiled a program that would provide buyers more immediate access to these funds, which they could put toward closing costs as well as a portion of their down payment.
YEARS FROM NOW , US REALTORS WILL BE TALKING ABOUT A FLURRY OF BUSINESS HAPPENING LATER IN THE NORMAL SPRING SELLING SEASON. THAT LADIES AND GENTLEMEN SEEMS TO BE THE TREND WE ARE SEEING NOW.
DESPITE ALL THE ECONOMIC WOES AND WORRIES ABOUT THE ECONOMY; PEOPLE ARE STARTING TO SEE THE AFFORDABILITY AND ADVANTAGE TO BUYING NOW.
WILL PRICES STAY STABLE OR HAVE WE NOT HIT THE BOTTOM YET?
THOSE WITH A CRYSTAL BALL ON THE FUTURE; JEFF OTTEAU MIGHT BE THE CLOSET THING WE HAVE TO A PROPHET OF THE NEW JERSEY HOUSING MARKET-SAY NOW MAY BE A MOST ADVANTAGEOUS TIME TO BUY.
LOTS OF CHOICES OF HOMES TO CHOOSE FROM AND THE POWER TO NEGOTIATE SUPERCEDES THE FEARS AND DOUBTS OF PRICES DROPPING UNTIL THE ECONOMY GETS STRAIGHTENED OUT.
HOME OWNERSHIP IS MORE THAN JUST THE AMERICAN DREAM. IT IS BECOMING AN AFFORDABLE REALITY!
YEARS FROM NOW , US REALTORS WILL BE TALKING ABOUT A FLURRY OF BUSINESS HAPPENING LATER IN THE NORMAL SPRING SELLING SEASON. THAT LADIES AND GENTLEMEN SEEMS TO BE THE TREND WE ARE SEEING NOW.
DESPITE ALL THE ECONOMIC WOES AND WORRIES ABOUT THE ECONOMY; PEOPLE ARE STARTING TO SEE THE AFFORDABILITY AND ADVANTAGE TO BUYING NOW.
WILL PRICES STAY STABLE OR HAVE WE NOT HIT THE BOTTOM YET?
THOSE WITH A CRYSTAL BALL ON THE FUTURE; JEFF OTTEAU MIGHT BE THE CLOSET THING WE HAVE TO A PROPHET OF THE NEW JERSEY HOUSING MARKET-SAY NOW MAY BE A MOST ADVANTAGEOUS TIME TO BUY.
LOTS OF CHOICES OF HOMES TO CHOOSE FROM AND THE POWER TO NEGOTIATE SUPERCEDES THE FEARS AND DOUBTS OF PRICES DROPPING UNTIL THE ECONOMY GETS STRAIGHTENED OUT.
HOME OWNERSHIP IS MORE THAN JUST THE AMERICAN DREAM. IT IS BECOMING AN AFFORDABLE REALITY!
Welcome to Bob Idakaar’s Blog! This blog will provide you with valuable information, tips, and general insight into the real estate market within the Morris, Sussex, Essex and Warren counties locations in New Jersey.
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