In another sign that the government is going to do whatever it takes to get us out of this mess, the Fed rate was cut again last week, which has created another dip in mortgage interest rates.  Despite tighter lending requirements, this market is going to make a lot of smart people a lot of smart money.  Smart money is already starting to move in.  Our phones are buzzing over these historically low rates, depressed home values and inflated inventory levels.  If you have been considering buying a home, now is without a doubt the time to explore it further.  If you have been considering buying a second home, now is the time to explore it further.  If you have been considering selling and moving up, now is the time to explore it further.  If you have been considering refinancing, now is definitely the time to consider it.   We are very skilled at interpreting the market, getting homes sold quickly, and finding amazing opportunities for our clients.  Let us show you how to maximize this market.

Considering what’s going on in the real estate market, you have a tremendous opportunity.  This opportunity requires you to make a decision though!  You have to decide if you are going to be a pioneer or a settler.  No, you’re not playing a game of Oregon Trail so calm down you children of the 80’s.  So what’s the difference and what are you?

pi⋅o⋅neer   [pahy-uh-neer] - one who is first or among the earliest in any field of inquiry, enterprise, or progress: pioneers in cancer research.

set⋅tler  [set-ler, -l-er] - one who establishes himself in a new region.

A pioneer in this real estate market is quite honestly a smart buyer, keeping in mind that the money to be made in real estate is not in the up time.  It’s all about buying low and selling high in those up times.  If you’re one of the few who is buying a primary residence with no other strings attached (such as, not owning another home somewhere else and/or having the good fortune of selling your previous home), words can’t describe the opportunity before you.  You can be a pioneer by simply buying smart.  Many homebuyers are sitting on the sidelines waiting to see just how low things can go.  I believe at the end of the day those folks will be very sorry considering inventories are high (although falling and showing promise of a turnaround) and rates are in the low 5% range (and sure to rise). 

If you already have a home which you are bound to for various reasons or maybe you have no desire to move, you can be a pioneer too.  Investment property, which I have talked about previously, is a golden opportunity for you to actually experience a return on investment RIGHT NOW.  Have you looked at your 401(k) or securities accounts lately?  Returns?  What’s that?  Learn the value of cash flow, buy an investment property, build equity, and sleep well at night Mr. Pioneer.

The alternative is to be a settler, the person that follows the market and the crowd.  When it’s just about to crest, you are buying and following those clever pioneers.  The bad news is that crest soon turns into a valley, and there goes your profit, your equity, or even worse your property.  Sure, you can make money as a settler, but literally every day you wait costs you money. 

As your real estate consultants, our job is to advise you and keep your home search or home sale “between the ditches,” as my grandfather used to say, teaching me to drive his old truck on dirt roads in south Georgia.  Simply put, we win when you win, and that includes finding values, negotiating values, and facilitating a smooth transaction.  The moral of the story is, as in all of life, you have a decision to make.  If you can afford to do so, be a pioneer.  Your long term wealth will thank you for it later.

As always, we’d love to be your home base for all your pioneering needs.

If you get the Metro Atlanta Real Estate Update from us then you have already received a peek at the falling mortgage rates.  If you are not getting the Metro Atlanta Real Estate Update, first of all WHY?  Second of all, there’s always time to get signed up.  Email me at andy@thepeterscomany.com for the weekly email update on all things relating to our market.

The Fed was looking for a way to expand lending, and the expanded rescue has done just that.  Mortgage rates tumbled as much as a half of a percent on Tuesday and are the lowest they have been all year.  The Peters Company has been calling this for months, and it couldn’t have come at a better time.  People are swarming to refinance as the volatility leaves everyoe worried that this is a small blip and that the rates will surely jump back up.  I wouldn’t play around if you are considering refinancing.  Sure, the rates could go lower, and they probably will slowly.  However, I’m not willing to take the chance given where we are in the low 5% range.

So, what does this opportunity to refinance mean for the economy?  Well, perhaps the best thing is that it potentially frees up more money for consumer spending, which is something very much on the minds of all of us churning towards the holidays.  The auto industry could use a little bit of that money I believe, but perhaps the best thing that could come of this is to fight off continued talk of a recession.  On this eve of Thanksgiving, lets all be thankful that our government is being proactive in its attempts to navigate the financial storm.  As always, we will come out of this stronger, and hopefully wiser.  Hold on to your seat.  Don’t get too high, and don’t get too low.  Keep thinking like a buyer, and Happy Thanksgiving.

For more information on the good news, click here for more from the Wall Street Journal, and go lock some rates if you are floating!

I read a lot of blogs.  I get a lot of new updates.  I sift through a lot of stuff to bring you what I hope to be valuable content.  I found a great update on the foreclosure situation including statistics suggesting foreclosures are up 25% from October 2007 but only up 5% from September of this year.  Is the carnage beginning to slow down?  Are the government programs starting to help?

Here’s a great video from The Wall Street Journal and Delores Conroy, a real estate economist from the University of Southern California.

http://online.wsj.com/video/programs-helping-slow-foreclosures/E822DF82-B800-4BEF-9BCD-01144D141D80.html

Keller Williams produces and distributes very useful information.  The video included below is a nice review of the national market for the month of October including statistics and in depth analysis.  I encourage you to take a look if you are interested in the macro view of the real estate market.  Keep in mind that our goal is to ALWAYS keep you up to date with the micro view in the metro Atlanta area.  You will see local statistics scattered between here, our mailings, our email updates, our Facebook update group, and our Active Rain blog.

Perhaps one of the greatest statistics:  If interest rates go up 1% that represents a 10% increase in the purchase price.  Interest rates are incredibly low and fell again last week.  Don’t wait too long to take advantage of this prime opportunity to buy your first home, your first investment property, or move up.

The Peters Company is very fortunate to have outstanding relationships with some of the nation’s most reputable lenders, with no strings attached I might add.  One of the benefits of these type relationships is great updates on the market and relevant consumer information.  I must take this opportunity to say that we, The Peters Company, do not gain financially from recommending anyone from lenders to inspectors, vendors, etc.  We gain only piece of mind when we know that our clients are receiving exceptional service from lenders and vendors we know and trust.

Those of us who have bought a home before know that trying to decide on a mortgage lender can be a stressful process that can leave you wondering whether or not you are getting the best “deal” possible.  I find the need to negotiate everything.  It drives Lesley crazy, but it’s the truth.  I love to negotiate.  I always looked at the selection of my mortgage lender to be an opportunity for me to exercise my negotiation skills.  I love this article by our friends at Countrywide Home Loans because it really helps you understand what you should be looking for and what is just “smoke and mirrors” sales jargon.  Today I feel a little differently about selecting a mortgage lender.  I think first and foremost that it’s important to find a lender that you are comfortable with, someone who you like and trust.  Much like the real estate buying and selling process, the lending process has its fare share of ups and downs.  You want to make sure that the lender you select is there for you and someone that gives you honest, well founded guidance.

From Countrywide Home Loans, courtesy of Scott Meldrum, Robert Gilbreath and Kim Nehiley:

Many, probably most, consumers will talk with more than one mortgage lender when applying for a home loan.  They will want to get the “lowest” rate, or the “best” terms, or something along these lines.  If consumers are going to be shopping an industry that they are not familiar with, I believe it becomes our job to make sure that they are an “informed consumer”.  So let’s look briefly out how to correctly shop for a mortgage.

If It Seems Too Good To Be True, It Probably Is…

Yep, no big surprise there.  Most realtors and lenders have heard a client say, “Well, Mortgage Company X said they can do my loan at a 5% interest rate, no money down, and they’ll pay all my closing costs!”  Here’s the deal, while some mortgage companies may portfolio very specific types of loans for very specific types of borrowers, allowing them to offer better terms or rates, generally speaking, all lenders get their money from the same places.  Thus, all lenders, on most loans, should be closely aligned in terms of interest rate and programs offered.  So, if it seems too good to be true, you’d better start finding out where the hook is.

Make Accurate Comparisons…

Lender fees to Lender fees.  That’s it. Don’t compare one lender’s bottom line to another lender’s bottom line.  Lenders are responsible for quoting estimations on third-party fees, but they DO NOT control them.  And some might under-quote those fees to make their bottom line seem smaller.  Always and only, lender fees to lender fees.   And no matter what a lender says their APR is, get a Good Faith Estimate from them to verify fees.

Rates Change Daily, Sometimes Hourly…

Recognize that mortgages are instruments of investment, like stocks, and therefore change their accompanying interest rate on a daily, sometimes hourly, basis.  It is completely pointless to get a quote from Lender A on Tuesday and then get a quote from Lender B on Friday. This would not be an accurate comparison and you’ll just end up driving yourself crazy trying to figure it out!  If you’re going get quotes, figure out what lenders you want to talk to, sit down on the phone, and call them one after another, receiving not just an interest rate quote, but a full list of the terms that go with it (discount points, prepayment penalties, etc.).  For example, make sure that one comparison isn’t using higher fees to get a lower rate, or conversely, using a higher rate to quote lower fees.

Simple Math:

Amazingly Low Rates + Depressed Home Values + Vast Inventory

= First Time Homebuyer Heaven

If you are a first time homebuyer sitting on the sidelines, your amazing opportunity window may be shortening as the home market is poised to rebound.  For months we have been proclaiming the dubious position that first time homebuyers are finding themselves in.  We have been fortunate to work with more than a handful of first time homebuyers this year, and I’m always blown away at what is out there waiting for them. 

Great Mortgage Interest Rates!  I heard my dad and my father-in-law for the last few years tell me about how high rates were “back in the day” of the 1970’s and 1980’s.  10-12% interest rates were not only common, they were pretty darn good.  We have really been spoiled here recently.  In fact, rates dipped below 6% again this morning, and they appear to be going lower according to our friends at Countrywide Home Loans.  If you are floating in the short term, waiting for interest rates to drop further, I encourage you to lock those rates.  With the volatility we are seeing in all the financial markets, anything could happen.  You may lose a little on your rate by locking, but you could also look like a hero on these sudden spikes we’ve seen in the last couple of weeks.  Adjustable rate mortgages may be tempting, but with rates this low and if you can afford to do so, lock your rate for 30 years and forget about it.  You’ll be glad you did.

Home Values are Down!   The Median YTD September 2008 sales price was down 10.3% versus the same period in 2007.  Foreclosures represented over 23% of the overall sales in the 3rd Quarter.  As mentioned before, you can’t always consider a foreclosure a good “deal”, but you sure have to look at them in this market.  It’s an equity cash grab if you find the right one.  Sellers received 93% of their list price in the 3rd Quarter, which is 3.5% worse than the same time last year.  The sellers are finally starting to accept the market, which is even further good news for the homebuyer. 

Inventory is Still High!  There is a 12.3 month home supply in the market right now, which is 20% higher than the same time last year.  However, it’s important to note that the home supply has dropped each of the last two months as this market attempts to correct itself.  A 6 month supply of homes is a good balanced market to give you a point of reference.

Other great benefits in this market for first time homebuyers include the fact that 75% of all home sales included seller paid closing costs!  FHA loans are available with 3% down, which can be in the form of a gift.  The other good news is that we are entering the winter months when home sales typically slow down, making an offer even more attractive for a seller. 

If you are considering buying a home for the first time or for the fiftieth time, there truly could be no better time than right now.  We have received high praise from our clients for our consultative approach, making the homebuying process a simple and enjoyable experience.   We would love to help you.

All statistics are cited from Chartmaster, 3rd Quarter 2008 Metro Atlanta Profile: Single Family Detached Residences.

My business card reads Realtor, not Psychic.  Nobody knows when the turnaround will occur in the real estate market for sure.  It’s been said that you don’t know when you’ve reached the bottom until things start to go back up again.  On a national level, I’ve heard “experts” say the end of the first quarter.  I’ve heard middle of the year.  Economists at the National Association of Home Builders semi annual forecast conference suggested that home prices will hit bottom in the middle of next year as a result of increasingly affordable prices, new home incentives, fewer housing starts, declining interest rates and pent-up demand (Wall Steet Journal, June Fletcher 10/29/08).  We really are blessed in Atlanta.  Recent data from ChartMaster is positive suggesting a turnaround is ocurring right now in metro Atlanta.

Home inventory in the metro area appears to have reached a bottom.  The months supply of homes has come down every month since July of 2008 after a steady climb at the beginning of the year.  Do you see the bottom?

The rate of decline in number of homes sold vs. the same quarter one year earlier accelerated during early 2007.  However, the rate of decline from the previous year reversed after the first quarter of this year.  Do you see the bottom?

All we can do is deal with the hands we are dealt.  Make lemonade out of lemons.  Make mole hills out of mountains.  Put on our big boy drawers…Whatever cliche you want to use.  The good news is that it can’t get much worse.  The election will most likely bring some stability to our economy, no matter who is elected.  Rates will go up a little further in the very short term and then fall in the long term once the dust settles in my opinion.  The government is trying to spur on refinances of troubled mortgages, which should help stave off a percentage of the foreclosures rushing through the market.  In the meantime, be opportunistic if you are a buyer or investor, and if you are a seller, play the percentages and think like a buyer.

As always if we can help you in any way, it would be our pleasure.

Liquidity is a term being thrown around a lot right now as banks clamor to secure deposits so they can in turn lend money.  The long and short of it is that there is still a lot of money out there, but a lot of people have pulled money out and are sitting on the sidelines waiting for this mess to settle down.  These giant peaks and valleys we have seen in the market are a perfect example of that “sideline” money jumping into the market and then dumping.  Don’t expect that trend to end any time soon.

This liquidity challenge has changed things in the lending industry.  It’s a little harder to secure a loan these days, but there are still plenty of loans being made.  Don’t panic!  Lenders were destined to become more cautious with their loans, because they were so greedy reckless during the boom of 2003 through the beginning of 2007. Their carelessness has created the newspaper headlines we see today describing delinquencies and foreclosures, made worse by falling home values.  Here’s some things you should expect in the wake of the recent financial greed party situation.

You will need more documentation to secure a loan.  This simply means that lenders are doing more than the quick check of credit to preapprove buyers.  Expect lenders to request W-2s, tax returns and bank statements more times than not.

Private Mortgage Insurance standards have tightened.  When a buyer doesn’t put down at least 20% down on the purchase of a home, most lenders require private mortgage insurance (PMI), which is to insure the lender upon your default.  By the way, the buyer foots the bill for the monthly premium payments.  Some mortgage insurers are refusing to insure properties that fall into a declining market category as determined by their independent research.  This leaves buyers scrambling to hold deals together.  The fine folks at the FHA have stepped in to help in these cases with the only downside being you’ll have to use a lender that has FHA certification.

Fannie and Freddie are passing along fees.  Before the government took over Fannie Mae and Freddie Mac, the two entities started adding fees onto mortgages for consumers or passing along through increased an interest rate.  These are often times referred to as “loan level adjustments.”  These fees are being reevaluated currently as they are seen as an obstacle in supporting affordable housing.

Jumbo loans are tough.  Jumbo  loans are issued for mortgages of $417,000 or more, and these jumbo loan rates are higher than rates on conforming loans considering theres’ more at stake for the lender.  Many lenders are requiring as much as 12 months’ worth of house payments in readily available savings in order to secure their jumbo loans.  With higher jumbo rates, many borrowers are turning to 5/1 adjustable rate mortgages to help bridge the gap. 

On a positive note, rates have been falling here recently on an apparent reaction to the Fed’s rate cut on the 8th of October.  Despite challenges on the documentation and qualification side, money is inexpensive to borrow, and my contacts in the industry suggest that the mortgage rates will continue to fall.  Today’s 30-year fixed rate was at 5.625, and I almost fell out thinking about it going lower.  If you have good credit, there’s absolutely nothing to worry about.  The developments mentioned above shouldn’t affect those with good credit much, if at all.  The first time home buyer really will not know much of a difference, but just be prepared if this is not your first home purchase.  A little bit has changed recently.  Nonetheless, it’s still an amazing opportunity to buy, and you will be rewarded for your inconveniences with an excellent interest rate. 

Lesley and I work with some wonderful lenders that, like us, simplify things for you.  You can click on “Vendors” under the “Resources” tab on www.thepeterscompany.com to see some of our recommendations.

In today’s market, it’s hard to look at property in ANY price range and not find at least one short sale.  I came across a Business Week article online that’s a good resource for short sells, answering fundamental questions you may have about these type opportunities for both buyers and sellers needing help. 

We all hear the news and read the newspapers that proclaim the doom and gloom of the real estate market.  I’m hear to tell you that in Atlanta, it’s not as bad as advertised.  However, as a buyer, it is in your best interest to understand the new opportunities out there such as short sales and certainly foreclosures.  They are not all good “deals” for buyers since they aren’t all priced at the bottom as a bargain, but the main point to get across is that the process in making an offer and procuring these type properties is different than your traditional real estate transaction.  It requires a little more patience on your part if you were to go out making offers on these type properties.  We describe it as a “high risk, high reward” opportunity. 

On the sellers’ side, we are recommeding many inquiring sellers seek the approval of short sale status if they are incredibly upside down on their home and in deep need of selling.  It’s a tragedy that it reaches that level, but it is definitely better than a foreclosure.  A closing attorney once told me as I was signing my name a million times at a closing table that in Georgia the bank can take your home in a process that is “quick and painful.”  It’s true.  Explore all your options if you are in jeopardy of losing your home, which definitely includes gaining approval on a short sale.