I like reading economists – such a different view of things from anyone else who writes about politics. Anyway, here is a post by Matt Rognlie that compares our reaction to changes in the price of oil versus the price of housing.
Interestingly, one of the distant implications of an article like this, if you accept the reasoning, is that the process of mass defaults on mortgages may actually be in the long-term best interest of the USA. Blasphemy! But something to think about.
A Yahoo article “Why the Housing Market Is Three Times Worse than You Think“ gives us good information about why you should probably avoid selling right now if you can – IF all you intend to do is sell. All evaluations of housing markets are from the selling side, based on the idea that everything is driven by inventory. From an individual standpoint, each transaction has a buyer and a seller.
In the article, the writer gives an indicator that in the United States overall this is a “Buyer’s Market:” inventory gets absorbed, or sold out, over 8.6 months, or even longer if you agree with what is said about properties in distress and bank-owned properties not yet on the market.
The combination of amazing mortgage rates right now, and historically low prices right now, indicates that right now is also a great time to purchase a home. These elements are usually associated with a “Seller’s Market.” And when you add the fact that in Reno and Sparks, short sales and most bank-owned properties accept offers within a few days of coming on the market – that is a BIG indicator of a “Seller’s Market.” This is because the “Buyer’s Market” factors are trumped by pricing, which is driven by what bank-owned properties are doing.
This can be a terrific time to move up to a larger home, or a newer one (or both): the price you are paying per square foot will probably be greatly reduced. It can be a terrific time to purchase an investment property: there are condos that are priced well enough that you may be able to pay cash, and get a monthly return that is as good as anything other investment vehicles have to offer. At this time, newly-purchased rental properties are very likely to cash flow.
This is all evidence that, just as in any real estate market, you should evaluate your goals whether you are an investor or a homeowner. Don’t just fall for hype. See what options are available for YOU.
I was amazed to come across this New York Times article about a fellow named Charlie Engle, who is now in prison for mortgage fraud. Back in the “boom times” of 2005 and 2006, he took on one or two (hard to say for sure) stated income loans, sometimes called “liar loans.” And now he is in prison, although the evil former CEO of Countrywide, Angelo Mozilo, roams free. It doesn’t seem fair, and here is all I can come up with as a moral to the story: do your best to make a short sale if you are having trouble making your payments, and do your best not to be noticed! And if you knowingly committed loan fraud, or even wonder now how you got that loan, you definitely need to consult with at least one attorney.
This last week I earned my Certified Distressed Property Expert [CDPE] designation, and learned plenty about the options available for a homeowner who is having trouble making the payments. Having attended a couple of other courses about distressed loans, including the Short sale and Foreclosure Resource [SFR] course, I feel the CDPE agent is going to be your best candidate to interview for listing your home. You can find a CDPE here, and learn about the designation at the same site.
These are tough times for almost everyone, and it DOES NOT MATTER whose fault it was at this point. Now is the time to find out what your options are, and ACT.
There are plenty of renters who are worried about the landlord and the mortgage payment. It has become one of the standard questions a prospective renter asked about a property: “Is the landlord current on his mortgage?”
Last week a long-time renter called to ask me about the mortgage at her residence. She told me some young men had come to her door and said they were trying to find out “who lived there” because they were working for the mortgage company. No identification, no name of a mortgage company, no paperwork served. How safe would you feel about this unannounced visit without credentials?
If you would be OK with it, maybe you shouldn’t be. Right after the phone call I verified with a title company that there is nothing going wrong with the mortgage at this property. My concern at this point is that people have decided to pose as representatives of mortgage companies in order to case properties, and see if the people or property there may be good targets.
If someone knocks on your door claiming to be from “The Bank,” there is no need to open the door. If they have notices to serve, they can post them on the door. Don’t take a chance.
Posted in Foreclosure, Landlords, Reno, Sparks, Tenants
I get lots of calls from people who want to know how much rent they could get for their house. Before I should answer that, I have some questions of my own: How much is the house costing you to own each month? How much is the loan on your property? When did you purchase it? And is this house your personal residence?
The answers to these questions are going to me an idea about how likely you are to walk away from the property, leaving a renter in a bad spot; and, very importantly, whether I would be acting in your best interest to agree to find you a tenant. Because if this is your personal residence, you may be eliminating a lot of possibilities for working with your lender(s) to keep the property, and perhaps creating a huge tax bill—in the tens of thousands of dollars— just from collecting a few months’ rent.
If the home is your personal residence, in the event of a foreclosure you will probably not receive a 1099 form from your lender reporting part of the debt as income. But it may be a different story if you have turned it into an investment property. Homeowners, banks, and tenants have gotten all kinds of help during our ongoing Equity and Payment Crisis. The Small Investor and the Speculator were just about the only people who weren’t protected by recent changes in the law: in Nevada, you may be pursued by the lender in the form of a deficiency judgment when you let the bank foreclose on your investment property; and the Federal Government will consider forgiven debt a form of income in many cases.
This means that if you decide to rent out your personal residence, you should be prepared to hold on to it for the long haul, and in any case find out with the help of your tax and legal professionals what you must be prepared to do or pay in the cases of a short sale or foreclosure.
