Can I really buy?

If you are currently renting, maybe you shouldn't be. Everyone buys real estate. You can either buy it and own it for yourself, or if you are renting, you are buying it for someone else.

Consider this: if you are paying (for example) $1,200/mo in rent for your 2br, 2ba apartment or townhouse you can probably own a nice place for the same money. And it's yours!

That $1,200/mo rent probably equates to the same payment you would have on a $175,000 home! Interest rates are at all time lows. Today I see you can get a mortgage for around 4.5%. Of course this depends on your credit, but for the sake of argument, let's assume credit is good.

Here's how the numbers breakdown:
- A $175,000 home at 4.5% means that your payment to the bank for principal and interest would be about $897/mo.
- You have to pay property taxes (which you don't when you rent). Assume they are $2,000/yr. $2,000/12 = $167/mo.
- You have to pay home owners insurance to cover the home in case of fire, etc. That's probably around $44/mo. You are probably paying some of this now for your renters insurance.
- You have to pay mortgage insurance to the bank if you get an FHA loan (everyone gets FHA loans today because you only have to put 3.5% down). That's about $74/mo.
So, total monthly payment to own is $1,182!

When you are ready to move, you'll get money back (you won't renting!).

Just food for thought... why rent?

The Condo Problem/Opportunity

Condos, Condos, Condos... not too long ago, FHA (where most people these days are getting their loans) said that if more than 15% of a condo development is delinquent on condo fees FHA will not lend any money for mortgages in that development.

In today's economy, where people are losing work and investments are losing value, there are a lot of people using their money for things other than condo fees (like food, clothing, etc). That 15% delinquency is getting worse in lots of condo developments.

Then Fannie Mae and Freddie Mac made the same rule for their CONVENTIONAL loans. Delinquency rate over 15%... NO LOANS.

What's that mean? It means condos won't get sold because buyers can’t get a mortgage to buy them. Period.

Sellers still need to sell. So they lower the prices to fire sale pricing to attract cash buyers. That’s why prices are SOOOOO low for condos. Condos that were selling for $200k a few years ago and listed for <$100k now and still not selling (no mortgages!). My Doctor told me today that units in his development that sold for $300k 2 years ago (for 3,000sqft units) are listed for <$50k now. Sellers are trying to attract cash buyers. But… cash buyers won't buy condos because they cant sell them.

That's the problem. The opportunity is: When the condo problem is fixed and people can buy condos again, prices will go back up.

Prices are low now because there is no (buyer) demand. Once the problem is fixed and the demand is restored, prices will go up.

If you can wait for the condo problem to be fixed (who knows how or when it’s going to be fixed) you can get a condo at FIRE SALE prices now. What if you bought one at today's 40-50cents on the dollar and rented it until the problem is fixed and then sold it when prices were zooming back up? Good idea? who knows, but an idea just the same.

when it's time to move... move

this week is an advice column...

when you've decided that it's time to move, it probably will be for reasons other than to make money selling your house. It might be to move your kids into a new school district, buy a bigger house so your family is more comfortable, buy a smaller house because your kids are grown or whatever the reason, it will be a "life reason"

You've made the decision to move. Price your house so that you get what you need and be done with it. Don't price it high to "test the market" and plan to lower it. Go out with both guns blazing, set a fair price, sell your house and move on/up!

I see, too often, people that can't move because they tried to get too much for their house, "tested" the market with a high price, lowered it after a few weeks but the market had fallen out from under them. Now they can't get what they need and they are stuck in the house that is in the wrong school district, or too small or too big.

If you are moving for the money that's one thing. If your reasons are anything else,
-- PRICE YOUR HOUSE TO SELL RIGHT AWAY,
-- PRICE IT AT A FIRM PRICE AND DON'T BUILD IN NEGOTIATION BUFFERS,

Don't be stuck where you are.

Week in review

It's been a busy week. Why?

- Rates are super low. Depending on your credit (and other factors) rates can be as low as the high 4's.

- Inventory is high. There are a lot of houses on the market and more coming on quickly. There are a lot of houses still on the market that are over-priced or in poor condition but the nice ones that are priced right are selling!

- Home prices continue to decline. Bad news for sellers but good news for the market in general. Prices are coming back to where they should be. That will be good for the market as buyers see value and buy. Prices will come back when inventory is lower (high inventory = low prices, low inventory = high prices)

Buying in a fast(er) paced market

I have seen too many times lately, a buyer who loves a house and then looses it to someone else while they try to make up their minds.

In a market where more and more people are competing for a smaller and smaller number of (nice) houses, the early bird gets the worm. Meaning, you have to be prepared, as a buyer, to act when you find the home of your dreams.

Buying a house is a BIG step. I understand. When you (a buyer) find a house you like, in a area that you like for a price you like... make and offer! As a Realtor, it's part of my responsibility to help point out potential "gotchas" and to make sure that the contracts are structured so that you are not forced into buying a home that has problems.

For example:
- You'll get a home inspection (and septic, well, water quality, radon, etc). Those experts will tell you if there are problems. If the problems are workable, we'll ask the seller to correct. If not, you'll be able to back out and move on. Each transaction can be different so I'll make sure you understand what you are getting into.

- In Maryland, we use a contract that has a financing contingency, meaning that if you are unable to get a loan, you won't be forced into buying the house.

When you find a nice house at a nice price, you should know that other people are also going to recognize the value. Make a decision and then we'll let the expert inspectors confirm that you have made the right choice.

Things are picking up! Twice last week I had foreclosures sell before my buyers could make up their minds. Of course, it's always best to do your due dilegence but don't wait long in a warming market!

seller decisions...

Sometimes in today's Real Estate market, your only offer is your best offer. Problem is that we don't have a crystal ball to see into the future. Take for example a (fictional) house that in Sept was listed for $325k and had an offer for $310k. Too low for the sellers. Now, in Feb it's getting offers for $285k... So, we'll wait for the market to come back, sellers say...

Now I'm not an expert but the research I can find on the Internet says that since the 1890's real estate has appreciated at roughly 3%-4% per year. There have been decades where appreciation has been 8%-10% and decades where it has had negative growth. So, assume 4% a year. It will take the seller above ~5-6 years to get back to where they were a few months ago.

With another wave of foreclosures looming, a tough job market, fears of higher interest rates and inflation I don't think prices are going to go up soon.

Tough decisions for any seller...

Seems like we are finally digging out of the snow! Good thing too (real estate wise) because there is a lot of pent up demand, lots of good incentives to buy and the banks are helping (go figure, low rates...)

Anyway, the IRS tax credit for first time home buyers ($8,000) and repeat buyers ($6,500) is expiring in April. You can get it if you have a house under contract by April 30, 2010. There are other rules (see www.irs.gov) but that is the main one.

It's open house season too! Some agents don't like them but I LOVE 'em.

Come see 1616 Brimfield Ct Eldersburg MD 21784 (4br, 2.5ba, colonial, .3 acres, backs to woods, sweet, $323,500) on Sat Feb 20 from noon to 2

Come see 808 Weeping Cherry Ct Eldersburg MD 21784 (5br, 3.5ba, huge 5,000sqft colonial, .25acres, amazing! $600,000) on Sunday Feb 21 from noon to 2.

Mark Davis, over and out!

I was going to run with the Charm City Run group this morning. Supposed to do 14 miles as part of my training for my first marathon (frederick). But we have a showing on one of my nicest listings (808 Weeping Cherry in Eldersburg MD) that I want to be there for. So, duty calls.

Then I follow with showings in Halethorpe, Columbia and Laurel. The market really seems to be picking up!

back in the saddle

Where to start... 2009 was a wonderful year to help people get into the homes of their dreams (or out of the homes that were not dreams...). Thank you to all who trusted me with the roof over their heads!

Each day I'll be updating this blog with thoughts, links to info, new listings and all other things real estate.

I'll also be posting what I am up to.

Happy 2010~