Having attended at least one listing appointment per week for the last several months, we have had to share our fair share of bad news.  In fact, we talk more people out of selling than into selling.  That’s the truth.  As we have said before, we are in the market of selling homes, not listing homes.  If we take a listing it is because we think we can sell it.  This is not the market to get what you want for your house, and it’s really not, in some cases, the market to get what you need.  If I can paint with a broad brush here, I don’t think I’m going out on a limb by saying that inventories remain high and homeowners remain frustrated. 

There is some positive though.  This strange market we are in has created a counter culture for the rental market for the landlord and the tenant.  It has become harder and harder to secure financing thanks to the tightening credit market so more and more renters are looking to take advantage of the market not by buying, but by renting.  What does that mean? 

Many homeowners find themselves upside down on their mortgage or simply refusing to take a large loss by selling their home.  So, what’s a homeowner to do?  Rent it baby!  As in the resale market, a well priced rental home rents fast.  It’s really a great time for the tenant too because they are, in many cases, able to rent a home/townhome/condo at a discount versus the traditional apartment complex.  It’s a win-win for everybody because these new opportunities for tenants allow the landlord homeowner to move on and accomplish goals as well, such as moving up, down, or out of town. 

We have been fortunate to work with some smart couples recently that did not let the market scare them.  In fact, they are rolling with the punches and maximizing their opportunity.  Two couples in particular have already bought or are under contract to buy their “move up” home while renting their current condo/townhome.  This window of opportunity to buy in a perfect storm of high inventory, depressed home values, and historically low interest rates will not last forever.  The smart buyer understands the economics of this decision beyond the initial sticker shock of two mortgages.  A break even on a rental, or even a slight negative cash flow, can pay massive dividends when coupled with a purchase in these times.  As said before, money can be made in an “up” market, but a whole heck of a lot more can be made in a “down” market. 

If you want to move, but you feel stuck or out of options, let’s talk.  We have some great ideas, and we will be happy to discuss the options available to you with no obligation to buy whatsoever.  We aren’t here to talk you in to anything.  We don’t operate like that.  In fact, I think our clients would agree that we are fairly conservative on the risk front.  Regardless, we have relevant statistics and ideas to share with you, and we want all of our clients to make the decisions that are best for them and consistent with their long term goals.

In an effort to bring you the best information on the market possible, we make this research available.  We have a world of data to share with you if you are interested.  Just give us a call or send us an email.  Here’s a little glimpse of what we can provide thanks to Chart Master Chuck Carr.  It’s a great example of what is going on in the market.  Here are a few interesting observations:

1. The month supply of listings by price range goes up as the prices go up.  Hope you aren’t trying to sell your $2M+ listing right now.  There’s 44.7 months worth of inventory or close to 4 years.  The good news here is that the total amount of inventory represents 9.2 months.  This number has been over 12 months less than 6 months ago so we are making progress.
2. Foreclosures are clogging the <$200,000 price range. 
3. Foreclosures represent 1 in 4 market sales right now.  We actually think its higher than that.  Unfortunately there are some agents who miscode their listings.  Agents have to “code” the listing as a foreclosure for it to relay in this data.  Many times agents are calling their foreclosure listings “corporate owned.”   In our market center circles we believe the number of foreclosures may be more like 1 in 3 sales.
4. The price ranges that are moving best over the last 6 months are the <$100,000 and $200,000-$300,000 ranges.
5. Homes are selling on average in 77 days on the market for 91.9% of their list price.

With new tax advantages coming (fingers crossed) for homebuyers, historically low interest rates still hanging around, and spring busy season almost among us, I feel comfortable in saying that we are in for a boost.  If you are considering selling your home, we understand that this data is rather daunting.  However, if you are buying up, it is safe to say that you can make up your loss and then some on your next home.  We can help you take advantage of this market.  When selling your home, think like a buyer.  We are in a price war right now.  You have to be ready for battle and dressed to kill!

Today may have been the most positive day in the last year for our beaten down real estate market.   John Adams is reporting today, according to his sources, that Fannie Mae is lifting it’s 4 property limit.  In other words, an individual can only have 4 Fannie Mae loans currently on his/her credit report under current FNMA policy.  In order to understand the magnitude of this potential move, you need to back up a little bit.  In August of last year, Fannie Mae cut off investors from financing more than 4 properties with an announcement known as 08-22.  The previous policies allowed investors to have up to 10 financed properties on their credit report at any given time.  The changing financial market and added risk was just too much apparently, and Fannie Mae felt they needed to do something.  It was a bonehead move though because it crippled investors.  Their once “easy” source of financing was severed, which meant they had to self finance or rely on the help of private money.   One thing that the investors do is buy ugly, unwanted houses, the glut of the housing market.  They have vision for what others don’t, and they don’t get emotionally involved with property.  This Fannie Mae announcement created a ripple effect in the investor network, and the rise in foreclosures, short sales, and distressed properties only compounded the trouble in the housing market.  The investor network and many of us in the real estate business have been lobbying FNMA to get their heads in the game and lift this silly policy.  The results of reverting back to the 10 property limit could really help us mop up the excess inventory, and we will need it if the rising tide of short sales comes through like many are predicting.  John is reporting that we will see an official announcement from Fannie Mae in the coming weeks, and let’s keep our fingers crossed. 

This exciting news coupled with the new tax credit passing through the Senate, courtesy of Senator Johnny Isakson from Georgia, and we have two awesome pieces of news for our beloved real estate market today.  The tax credit would incent ANYONE who may buy a home in the current year with 10% of the home’s purchase price up to $15,000.  The home has to be the primary residence, and the homebuyer must live in the home for at least two years.  This new credit would replace the current $7,500 credit available over the next few months ONLY to IRS-qualified first time homebuyers. 

Hello Mr. and Mrs. Buyer!  You have a perfect storm vastly in your favor right this minute, and the stars won’t align like this forever.  You’ve got depressed values, the lowest interest rates in the last 30+ years, high inventory, and now the government is potentially paying you to buy.  What else do you need?

Stay tuned here for more developments that are relevant.  As always, if we can help you in any way, please know it would be our pleasure.

Inflation. Is it our friend or foe? Well, we all know that dollar won’t get what it used to. I bought a jumbo sized package of Wrigley’s gum the other day and paid $1.69. It doesn’t seem like that long ago when it was 79 cents. Everything goes up in price. The same can be said for home prices. That’s why 30-year loans are so attractive. You’re buying and locking at a time in space that typically over a 30 year period will see massive amounts of inflation, positively affecting price and value.

Looking at this economy and the money that is being thrown around or proposed to be thrown around, one thing is obvious. We’re going to be printing more money folks and lots of it. The most likely solution to this economic dilemma is good old fashioned spending. Lots of spending. What’s President elect Obama calling for? Survey says, “Spending!” These events will sooner rather than later lead to a classic case of stagflation, for all you economic minded folks out there. All that means is that we will have an ecomony that isn’t growing while prices are rising. Unemployment will rise as well for a time period as the economy searches for a bottom. This infusion of dollars into our economy will dillute our buying power, costing us more and more to buy the things we want and love. That’s the negative. The positive is that it’s going to add value to our appreciating assets at a larger than life rate. In perhaps one of the most historic times to buy a home from an inventory, price, and interest rate point of view, we have something else to consider now in short term inflation. It’s bound to happen. It’s simply a matter of how much inflation we’ll see. The likely response to the stagflation is to spend more and more and more to a point that we out run it and get over the hump. The cash will eventually lead to more than an artificial boost to our economy. Meanwhile, property owners will see their home values rise considerably. Unfortunately, so will interest rates. The government has demonstrated that it is prepared to do whatever it takes to boost our economy. So fire up that money press, Mr. U.S. Mint, and lock those floating interest rates and lines of credit!

If you are taking a significant hit right now on the sale of your home, don’t sell. Rent. Keep your home. We have told many clients this here recently. We’ve told clients for months now to buy investment property.  Why not treat your primary residence as an investment property and buy your next home while the rates are ridiculously low, prices are painfully low, and inventory is incredibly high?  Nothing pains us more than to give bad news, but we are not going to expect or coach you to list your house below what you paid for it, if we can help it at all. The rental market is great with plenty of folks looking for a deal to rent that depressed valued home that either they can’t afford right now or are too scared to buy. Despite low interest rates, the lenders are ruthless in making you stand on your head to qualify for loans. In addition, first time homebuyers have to put down a minimum of 3% on the purchase of a home, which is downright hard to come by for some aspiring homeowners. I might argue that if you don’t have 3% to put down on a house, perhaps you should not be thinking about buying a home, but that’s a totally different conversation. By renting, you may not be in a position to get your value back to where you need it to be in the time frame you want, but it can’t get much worse, right? Give it a couple of years and let inflation help you out. I’m not cashing in my IRA right now just because it lost 25% of its value over the last quarter. By the way, that’s a true story. Whew! I’m buying real estate from now on as opposed to the stock market. Call me crazy, but at least I can do something to the real property. Improve it, rent it, something besides pray it goes up in the stock market. Hang on folks. This year is going to be historic for the economy, and the housing market will lead the charge back. We’ll be here whenever you need us.

The “Jewel of the South,” as many have called Atlanta, refuses to be denied.  With an influx in population due to steady job growth, Atlanta earns the #10 spot in a recent Forbes Magazine article. 

This just in case you were about to jump off the cliff after listening to the national real estate update on the news.  You really have to filter the news when anything is reported as a national statistic or trend.  You wouldn’t listen and believe a weatherman if he told you it was going to be sunny over the entire United States tomorrow, would you?  How is that any different from the real estate market?

Certainly be thankful you are in a growing city like Atlanta, where there will always be demand for housing.  What is down, won’t be down long.

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.

As one real estate agent or a team of real estate agents or even as a company of real estate agents, there’s certainly things we can do to impact this market.  I think the most important thing is that we have a positive attitude and remain opportunistic, work harder and smarter to ensure that our clients are receiving the highest level of service possible in a time when there’s a lot of finger pointing and shoulder shrugging.  Perhaps one of the best things we can do as real estate agents is pool our voice and become better advocates for our industry, an industry that affects virtually every family in the nation.  One of the benefits of being a part of the National Association of REALTORS® is that as one we are rather quiet, but as a group of REALTORS®, we have a tremendous voice.  As further evidence of the NAR’s committment to furthering our industry, the organization has put forth a 4 Point Plan aimed at “tweaking” the previously passed Emergency Economic Stabilization Act.  I believe that Act was monumental at a time when we all needed stability, but as time passes, there appears to be weaknesses that might miss the mark in truly impacting in the areas originally intended.  Lesley and I support the National Association of REALTORS®’ plea for more.  NAR has urged Congress to include the following provisions in any future legislation as part of this 4 Point Plan:

1. Make the $7500 tax credit available to all purchasers and eliminate the repayment requirement.  The credit’s limited availability and required repayment terms have severely limited the credit’s appeal to potential homebuyers.  As a result, the credit has not been widely used or proven effective at stimulating sales. 
2. Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent.  New rules for 2009 would significantly reduce the FHA, Fannie Mae and Freddie Mac loan limit from their 2008 levels. Now is not the time to limit the availability of affordable mortgages. 
3. Get the Emergency Treasury bank relief program back on track by targeting more funds to mortgage relief efforts and increasing efforts to mitigate foreclosures.  Don’t just give the banks unrestricted cash. Make the program work to improve mortgage and housing markets as it was originally intended.
4. Permanently bar banks and banking conglomerates from engaging in real estate brokerage and management.  The banks have proven they have enough to do to simply properly manage their current lines of business.  Do we really want them to manage the home buying process?  Imagine what could have been the situation now if they already had the added ability to engage in real estate sales.

The economic turnaround is, of course, complicated, but there is little doubt that stabilizing the real estate market by shoring up the lending market and finding ways to get money moving in and out is a neccessity.  Stay tuned for updates on how these changes are being accepted and more importantly implemented.

My son just celebrated his 2nd birthday last week.  The highlight of the day was him receiving a 5′x4′ train table that he plays “choo-choo” on with small wooden Thomas the Train engines, freight cars, etc.  It was kind of a big deal.  One of his favorite engines is a great big blue engine pulling the “Express” passenger cars.  His name is Gordon, and we hear all about him.  Gordon’s mantra, in which he repeats over and over, is “Strongest and Best!”  He says it, and he believes it.  The Thomas and Friends television show, which we have become intimately familiar with, portrays Gordon as a very proud engine.  He’s dignified, and his attitude demands of him the best.

It got me thinking.  I see a story in almost everything.  That’s just kind of what I do.  I know you’re thinking, “How does this relate to real estate?”  We have to have a mantra in life, a core value or set of values that drives us and resignates through our personality.  This mantra is not something to be bottled up and brought out when appropriate.  It spills out like a cresting cup of coffee on a bumpy road.  It becomes your personal life.  It becomes your business life.  In short, it becomes your life.  My drive has always been wrapped around doing the right thing and operating under the highest moral standards.  I think that’s kind of a given for most respectable business people.  But, besides that, what is my mantra? 

When we started The Peters Company we built it around one simple philosophy: Over service and over deliver.  Today without a doubt it’s my mantra.  It’s what I say, and it is what I believe.  We over service people by going the extra mile and paying the upfront cost.  You’ll find us doing anything from fielding a midnight phonecall from a client to working literally 28 days straight, which we have done by the way.  We over deliver by always giving our clients more than they were expecting.  When you read our reviews on Kudzu or simply talk to one of our clients, I believe you’ll hear this consistently.  We think you’ll agree that we are what we believe.  Give us a ring or drop us an email and let us show you what over servicing and over delivering is all about.

- Andy.

1. People have to have a place to live. – It’s basic but it speaks volumes about the real estate profession. Today there are 4.78 million people in the metro Atlanta area; it’s predicted there will be over 8 million by 2025.  That’s a lot of people coming in who will need a place to live.
 
2. Well-selected residential real estate will always go up in value. –According to the most recent report (2nd quarter, 2008) from the Office of Federal Housing Enterprise Oversight, home prices/values in Georgia continue to rise. There has not been a 12-month period in which home values have declined in Georgia. Click here for that report. 
 
3. All of us face challenges in our lives at one time or another. — A challenging market makes you appreciate the good times. It’s as simple as that.
 
4. Interest rates go up and interest rates go down, but you can always refinance when the money is cheap. — We are in a temporary situation in which it’s hard to find money for non-owner occupied properties and in which the public’s perception is that interest rates are high. But they will still
buy.
 
5. The greatest expense you will have in your lifetime, without a doubt, is taxes. – The level of taxation we experience in this country is remarkable.  Real estate is an investment that allows you to reach financial freedom and reduce your tax burden.
 
6. The tax benefits of real estate are, indeed, too good to be true. But they are true. – We need to constantly tout to our customers the exclusion from taxation of gain on a primary residence as the number 1 reason to own a home.
 
7. Inflation is our friend. — Sounds crazy, but controlled inflation can be helpful in growing our economy.
 
8. You can retire comfortably on as few as 8 – 10 rental houses. — Eight to ten rental properties, paid off, can be a substantial retirement income.
 
9. Investing in real estate is simple but it’s not easy. — Seek the advice of those who have ‘been there, done that,’ but don’t be afraid to jump right in.
 
10. In the words of John McCain ‘Our economy is fundamentally sound.’ — We are in a financial crisis, not an ecomonic crisis. Some of the media is comparing our current ecomony to the Depression; however, the unemployment rate during the Depression was over 25%, whereas our current national unemployment rate is around 6%. Also, compare our GDP to that of the Depression and they are nowhere near the same. We will overcome the current financial crisis and move on with a healthy economy.

John Adams is a broker and investor and known as an Atlanta Real Estate Expert. He also writes frequently for the Atlanta Journal Constitution and speaks publically about Atlanta’s real estate market!

We would personally like to thank John for all his insightful tips, articles and information!

Yesterday I talked a little about the opportunities out there, and I wanted to add a few more thought.  I received an uplifting email from our operating partner Shaun Rawls, and it inspired this message…

Increasing gas prices and the backlash from gas lines due to a shortage will continue to force people to evaluate the locations of where they live and where they work in the metro area, and you’ll see many home sales and purchases take place to solve these dilemmas. 

Consumers’ lack of confidence in the financial markets will, once again, prompt a flight to the real estate market.  After all, you can actually do something to improve the value of any piece of real estate, whereas the only thing you can do to improve the value of your stocks is to hit your knees and pray. 

Also, it’s hard for anyone to make a case other than “this is the worst of times.”  I think the prices of real estate in the wake of the biggest financial mess in modern history are virtually as low as they will go.  Any buyers who continue to hang onto the stale position of “it’s going to get worse before it gets better” has got to be responded to with a look that says, “You’ve got to be kidding.” 

This may be one of the blessings in this whole financial mess.  I think every real estate professional in our industry has the ammunition to feel confident in declaring, “This is the worst!  It can only get better from here!”  That means opportunity for those who seek it.   

There are two very important things in our near future, both of which will put wind in the sails of our industry.  One, a financial bailout WILL occur. Two, a new President will soon be elected.  I think November 5th will be a great day no matter the outcome.  With the election comes the removal of the dark cloud of uncertainty that we all have to live with for five more weeks.  Change is coming with either ticket.  Republican or Democrat, both parties offer a historic change component. 

In the meantime, Lesley and I must study the data, study the numbers and study the information that helps us be the most prepared real estate agents, selling houses for sellers and finding opportunities for buyers.  You must combine the right mentality with the right actions to create your success, and Lesley and I are poised to help you make sound decisions and take advantage of the market.  It’s easy to fall prey to fear just like everyone else, but if you rise above it, you can really prosper.

First time home buyers, Clients who need to buy their first investment property, Clients who need to sell and buy a bigger home, eco-friendly buyers and sellers, people who have growing families, getting married, commuting too far, dying, divorcing, losing their jobs, getting new and better jobs…all represent opportunity for you in this market!  Turn off the news, and you’ll notice that by removing the blinders your opportunities are much easier to find.