Rates Drop

The 30-year fixed-rate average sank to 5.82 percent, and the 15-year fixed rate fell to 5.4 percent. The 1-year adjustable held at 5.53 percent.

That's good news if you want to buy a home...

The Nadir of Short Sales

I've written a lot about short sales in the last few months. While they certainly remain an option for distressed homeowners, they are not without their frustrations--for the seller, buyer and agents. Two examples from the last few weeks:

1. On one of my short sale listings, the bank rejected the contract (at $195K,) saying that the property was worth at least $235K and they wouldn't take anything less. Unfortunately, the property simply will not sell at that price. If it was worth $235K, it would have flown off the market in April when it was listed at $229K. The bank has put my seller in the impossible position of demanding more than the property is worth.
   
2. I have just taken another short sale listing and have been informed by the bank that the maximum will pay in brokers commissions is 4%--substantially less than the industry standard of 6% which was listed on the contract. This will no doubt affect the amount of traffic we receive (many buyers' agents don't appreciate getting paid less than industry standard for their work and simply won't show the listing.) Realtors provide the valuable service of facilitating the sale of property and our commission is the price of doing business. By cutting that commission, the bank has again put my seller in an impossible position.
   

If either or both of these properties goes into foreclosure, the bank will receive far less than they would have had the homes sold with a short sale discount. This is a lose, lose, lose situation for everyone.

Real Estate Facts to Consider

There has been plenty of negative news about the state of the market right now. Much of it is justified but also overblown. Here are some things to consider that may bring some perspective on the soft market we are seeing today.

• Even though national housing prices are likely to dip around two percent this year, 2007 will still be the 5th best housing year on record.
• The East and West Coast typically flex higher and lower than the middle of the country, so it's not surprising that when the housing boom started back in 2002, prices skyrocketed in California and Florida, while going flat in other places.
• Rapid price gains are unsustainable, and will always overcorrect before settling back to normal rates of appreciation.
• Those believing that price gains would go on forever are the ones who were likeliest to get hurt -- speculators and homebuyers who bought beyond their true means.
• Most foreclosures and delinquencies are concentrated in the subprime market, and those who qualify for conventional financing are still seeing extremely favorable interest rates.
• Homeownership is not a quick in and out purchase like stocks. Wealth is built over the long term, which is one reason why homebuying is heavily subsidized by tax savings and generous loan programs that enable people to get into homes without large downpayments.
• Stocks and houses aren't the same. Over 10 years, a $10,000 investment in the stock market at a normal 10 percent market rate of return would yield nearly $24,000. The same investment as a down payment on a $200,000 home at a normal appreciation rate of 5 percent would return nearly 5 times the stock market return, or over $110,000.
• While some markets have reported major losses in home values, they also have extenuating circumstances such as major job loss as is the case in Detroit, or overspeculation, as in parts of Florida. For many communities, home values are going up, not down.

I would also emphasize that real estate remains a "local" game. If you have questions concerning your market, consult a professional in your area.

First Time Home Buyer's Workshop Nov 29th

Thinking about buying a home but don't know where to start?

Have questions about the home buying process but you don't know who to ask?

Do you want reliable information but not a high pressure sales pitch?

Attend this free First Time Home Buyer's Workshop. It's a great way to educate yourself about the home buying process--giving you greater confidence as you move forward toward your goals for home ownership.

In my presentation, I will cover a variety of topics including:

* The home buying process from start to finish.
* Financing options for first time homebuyers.
* Tax information on bridging the gap between renting and buying.
* Samples of a different types of properties across different price points.

Date: Thursday, November 29th
Time: 6 pm, lasting roughly 1 hour with ample time for questions
Location: Chase Bank 3335 N Ashland, Chicago, IL 60657
I will be joined by Adam Lawrie, Home Finance Specialist with Chase.

Please register at http://www.agentbarclay.com/homebuyersseminar.html
Seating is limited so be sure to register early.

News and notes for Monday Nov. 5, 2007

With woeful news out about the economy adding to an already unsteady housing market, there are many theories as to what are the root causes of buyer and seller squeamishness. Of course, there is plenty of blame to go around too. Loan officers? Appraisers? Greedy, unrealistic sellers? Promise the moon Realtors? Broderick Perkins says it's for sure not the media's fault.

Speaking of the blame game, appraisers may have to pay the piper over the issue of inflating their appraisals. Appraisers are supposed to offer an independent opinion of a property's value--resisting any pressure from banks to give a specific number in order for the loan to go through. Now there is news that the attorney general of New York, Andrew Cuomo, has sued a major appraisal management company for allegedly giving in to pressure from one of the largest lenders in the country, Seattle-based Washington Mutual.

David Reed writes that the Mortgage Reform and Anti-Predatory Act of 2007 is a bad idea at the wrong time.

On a sad note, I'm not the first Rock and Roll Realtor. That would be Linda Stein. Blanch Evans writes of her amazing live and her horrific, untimely death.

Man, that's about all the news I can take today. Hope tomorrow is a little brighter...