Connecticut


My eight year old is playing in his first super bowl and I (we) are so proud!  Largely because he has made it through the learning curve, muddled his way through his first year largely playing special teams (kick off team) and occasional safety on defense.  He literally skips onto the field every time he gets put in…(so not football but really darn cute).  This is the same kid who explained bed sizes in this fashion; “if the big one is a King, medium is Queen, then this one must be a Jack, right mom?”  Who can argue with that…he’s right!

I am certain my boys glory years on the field are yet to come, but he has learned a lot and never got discouraged.  He missed only one practice and tried really hard.  I share this on my real estate blog to A) Brag about my terrific, hearty child and B) To suggest they can’t all be glory years, sometimes we just gotta learn.

The trick is applying what we have learned…So what has the current real estate climate taught us

1.  Neither the Highs or the Lows are all that good, sometimes being in the middle is just fine.

2.  The bigger they are…you know the rest.  Those McMansions have been hit hardest in this market, and many of the once mighty have fallen, got a little big for their britches.

3.  There are always going to be folks on the move, houses do indeed sell everyday.

4.  Real Estate is a long term investment!  It was never meant to have a short turn around time with fast cash.

5.  If it sounds too good to be true…read the fine print!  Be absolutely certain to understand your mortgage terms and conditions, rates, prepayments, etc.  If I had a dime for everyone who has said to me, “I didn’t know it said that” in the last 2 years….yikes!

6.  Whereas I am a firm believer in the investment value of real estate, it is a home first and foremost and that is absolutely priceless!

7.  The American Dream endures, even through less than ideal times.

So be fierce!  This is but a blip on the radar, it’ll pass!  Now go out and win the game :-)!

On so many levels, but for this blog post it is about the literal Eau de foreclosure.

I have been hitting the showing pavement very hard these last couple of weeks and have seen some phenomenal deals (what that means to me is houses that are a great value for their square footage, condition and amenities)–I have seen some “deals” at every price point. 

But I have no tolerance for the smelly foreclosures I have been seeing lately, no matter the deal!  I appreciate that the entire civilized world is out trying to save a buck right now,  but give me a break, wouldn’t it be money well spent and translate into a higher price for the property if many of the foreclosure properties could be at minimum cleaned up, cleaned out and stripped of offending odors?  Isn’t a empty canvas more palpable then a clearly disregarded and mistreated property?

So buyers beware–and bring a nose plug!  The foreclosure sale is a different sort of animal.  There are minimal safeguards in place to protect the buyers of foreclosure sales.  Read the fine print on the addenda before you sign, for that low, low bargain price you need to be handy and/or resourceful–and just as a little FYI, they are not wild about high time financing and  likely competitors are the contractor or investor with cash in hand–so deal seeking regular buyer get out early, get out fast.

Furthermore, information can be scarce and the foreclosure sale addendum not bestowed on the winner until after price has been negotiated.  But if the bargain deal is truly what you want, it shall be my mission as well.  I personally prefer a more level playing field for my buyers and the foreclosure sale only gives you a price advantage (and sometimes not even that)… it is buyer beware, as-is, where-is.

Like I said, foreclosures are stinking up our market.

Finally…a financial institution to be proud of in recent weeks and despite dismal reports!  This bank has taken the high road toward Main Street!

Back in July, Bank of America bought Countrywide Mortgages and announced today that they have implemented a program to help keep these struggling homeowners in their homes.  Countrywide was a high risk player and one of the first to buckle under bad judgement and questionable business management. (that may be me editorializing!)

Bank of America starts a new program December 1, 2008 called the Home Retention Program which could potentially help some 400,000 customers modify their loans in a meaningful, stay in your home kind of way.  You can check it out at www.bankofamerica.com .  This kind of thinking is what the world has been waiting for…instead of bailing out greed, Bank of America is going straight to Main Street and facilitating real and immediate change.

This is a “Bail-Out” I can get behind!  This type of reconsideration has the potential of changing the housing market in a very real way by stopping foreclosures and keeping properties out of inventory.  Less inventory, certainly less fire sale inventory, will improve the housing conditions for all homeowners, especially those paying their mortgages

Thank you Bank of America for giving me something positive to say!  I appreciate you leading the charge and hopefully setting the standard that will make others look positively foolish if they do not follow suit.  Furthermore, thank you for caring about the people you serve.  I hope this proves to be the smartest, most profitable, compassionate decision you have ever made.

I received an email last night from one of my buyers.  It was 3 sentences long and titled “Market Conditions”.  Given the events of 9/29/08, my buyer was concerned as to what this meant now and what the future holds for real estate, here is my answer:

You have asked the million dollar, or should I say the 700 billion dollar question!

I believe it is safe to say the market is currently stalled and waiting to see what the end result will be.  Buyers are currently experiencing difficulty in securing financing if they are putting less than 20 % down as there are less companies willing or able to insure those loans.  I personally closed 2 transactions last week which involved local banks, so houses are still selling, and these lenders (though more cautious than before) were never risky players in the mortgage game.

Houses are selling!  The obvious values are still selling quickly…a 1500 square foot contemporary ranch closed in Griswold yesterday for $270,000 after only 11 days on market; a lovely colonial in Canterbury also closed yesterday for $395,000 with less than 30 days of marketing under its belt.  Both were in the 95% range of list to sell price.  (these are just 2 examples…there are many more)

As to the future, ugh, if I only knew!  But I will predict…some form of a “bail out” will be passed (today likely scared the living daylights out of everyone) and a new president is right behind, which usually ushers in more consumer confidence.  No matter what, everything I read indicates that we are likely in for a bumpy ride for the next 10 to 12 months.

For you, the buyer with no house to sell and funds to invest, this is likely a perfect market!  Only once before in nearly 24 years of doing this business have I seen such a market for buyers of real estate.

Invest in Real Estate!  It is clearly a safer long term bet.

The response to my email was:  Thank you for your response, I guess I will get off the ledge now.

Yes, please do!  This is a time for cooler heads….

Kind of how things feel…

Enough said…at this point!

Seriously!

3 years ago it was nearly impossible to find a property under $200,000 in Southeastern Connecticut–today the story is a little different:

Per local towns, priced $100,000 to 200,000 active listings:  (this does not include condominiums)

Norwich, 93; Lisbon, 5; Canterbury, 5; Voluntown, 7; Griswold, 24; Ledyard, 27; Montville, 22

It is not, however, a lack of opportunity that is stalling the first time buyers.  I would argue it has more to do with the economic news which I think we can all agree has been at best, bleak.  Consumer confidence is incredibly lacking.  But, for the first time buyer, I simply can not recall a time when the incentives and opportunities have ever been better, allow me to count the ways:

1.  Tax incentive up to $7500.00!  Yep, there are nuances to this but really it does have a very broad reach.

2.  The fixed rate is currently in the low 6 range (there are many who are arguing that it is time to raise the rates to fight ensuing inflation–but I suspect they are keeping them low to try and entice you into the market)

3.  Downpayments are still doable…CHFA 3%; FHA 5%, VA 0%  (yes, 100% financing is incredibly rare right now, but there are still reasonable options)

4.  Mortgage money is indeed still being lent!  In fact, lenders have never been more diligent about securing business and offering tenacious service.

5.  Sellers, REALTORS, lenders, the economy are all vying for the first time buyers business!  This is an envious position to be in…just ask the sellers of a few years back.  Sure, it is about making money but the bigger picture is for the economy to start to improve the buyers need to take advantage of this market just for them.

So, still sitting on the fence thinking prices will go even lower?  Excellent point and one it becomes harder and harder to debate.  How much lower do you think it will go?  5%, 10%, 15%?  In a buyers market, you are indeed free to make that offer now!

The economy needs you, please come out to play..

So it seems, I am alone amongst my peers on this issue…I worry about the 200 billion price tag..

On a Sunday the federal government decided it was time to step in and shore up these lending giants.  For the short term, most everyone agrees this is a needed and smart move.  Only time will tell if it is truly wise or a bandaid fix.

Who will benefit?

It is reported that consumers will benefit with a lower interest rate and more available cash for lending.  More liberal lending than the current credit crisis is allowing.  Hmm, isn’t that kind of thinking sort of what got us in this boat in the first place?

Who will lose?

Taxpayers!  Someone has to foot the bill, and the estimated number I saw is huge.  Small and community banks are also at risk…too much capital invested in Freddie and Fannie, with dividends no longer being paid.

Theory

To right the economy, the housing market must be stabilized.  The 9 % NATIONAL (not Connecticut) foreclosure rate is stalling the economy.  The home value free fall is impacting the homeowners net worth, the credit crisis is causing consumers not to spend and further eroding consumer confidence.

Opinion

Yes, foreclosures in vast numbers, in your neighborhood are bad for everyone.  Yet, I wonder are we fixing anything or simply trying to lessen the impact of a tough economy and trying to ease this recession (yeah, I said it!).  Now or later, someone is going to pay and my fellow citizens I guarantee it will be you and I!

So, I hope we all get a better rate now…I recommend you get it fixed!

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