Vtvogt's Blog

KCM Blog-Reports that despite lowering house values homeowners still believe in homeownership.

vtvogt — Tue, 03 May 2011 13:50:09 +0000

According to a survey done by Pew Research over half the homeowners polled believe that their house is worth less than it was before the recession. They also feel that the prices will not increase until at least 3 years from now. Even though the values of their homes have decreased they still believe that in the long-term it is the best investment they could make.

2011: The Year a House Again Becomes a Home- From KCM Blog

vtvogt — Thu, 30 Dec 2010 14:59:02 +0000

For almost a decade now, every time we talked about real estate we immediately discussed money. We didn’t talk about the value of a home but instead about the price of the house. We didn’t worry about a roof over our heads but instead the ceiling on our interest rate. We didn’t care as much about where we raised our family as we cared about how much we increased our family’s net worth.

That will change in 2011. The KCM Crew believes very strongly that real estate will return to what it has been for the 200+ year history of this country: a place for us and our families to live comfortably. It will also prove to be a great long term investment as it always has been.

Our parents and our grandparents didn’t buy their homes as a short term financial investment. They bought it so they had a place of their own to come home to at the end of the day; a place to raise their family; a place they could feel safe.

Sure they dreamed of a ‘mortgage-burning’ party. They realized it was a form of forced savings. They were taught that, if they paid their mortgage every month, they would wind up with a little retirement account decades later.

And, they realized that wouldn’t happen if they rented.

However, in the last decade, we somehow forgot that the financial aspect was the serendipity not the major reason to buy. We believe that 2011 will be the year that people return to the historic reasons families purchased a home. This is the year when we again remember that homeownership is a major part of the American Dream.

What about the challenges to a housing recovery? Let’s look at them.

The Economy

Most reports are showing that the economy is doing better than expected. This shopping season provided additional proof of this point. As the economy recovers, so will consumer confidence. This will be great news for housing.

Unemployment

There is much talk about a ‘jobless recovery’. We agree that unemployment will continue to be a challenge. However, when you talk about housing, it is not the unemployment rate that is all telling. Instead, it is the change in the rate. As unemployment skyrocketed, people started to worry about their own job. Any change creates concern. Unabated concern turns to fear. Fear causes paralysis. The spike in unemployment has plateaued. People no longer have the feeling that ‘they are next’. The fear will diminish and people will start moving on with their lives. This too will be great news for housing.

Interest Rates

It seems the bottomless pit in which rates have been falling does have a floor after all. And it seems we have found it. Those purchasers who had been waiting for the best interest rate may have already missed it.

Prices

Economists are projecting that prices will not see any appreciation in 2011. Sellers who had been waiting for 2006 to return will come to the realization that waiting any longer makes little sense. They will instead decide to get on with their lives and sell this year.

Prices probably will soften further. However, the possible savings to potential buyers will be minimized by a rise in interest rates.

Bottom Line

This is the year that normalcy returns to real estate. People will buy and sell based on the desire for a better life for themselves and their families. They will realize that is the true value of homeownership and they will be willing to pay for that value.

Questions you should be asking your lender. -From KCM Blog

vtvogt — Thu, 30 Dec 2010 14:53:23 +0000

We have run this post before but want to make sure you still are asking the right questions of your loan officer. Here is a great list from Dean. – The KCM Crew

More and more, consumers are learning that there is much more to getting a mortgage than just the interest rate and points. A good mortgage planner is more in the advice business than the lowest price business. With tightening guidelines, often the question first is “Will the loan be approved?” But moreover, the borrowers’ concerns need to involve some of the answers to these non-price questions:

1. What type of lender should I use?

There are three basic types of lenders. Mortgage BROKERS promote a broad product menu, competitive pricing, and entrepreneurial approach; however, BROKERS cannot lock, commit, or approve your loan because they are not actual lenders. Banks and Credit Unions rely on financial strength, direct lending capabilities, and stability; however, the have limited product menus and often a “cover my ass” mentality. Mortgage BANKERS blend the best of both- direct lending ability, financial strength and stability, wide product offerings, competitive pricing and the entrepreneurial spirit.

2. What loan products should I be considering?

Make sure your lender has multiple types of products (Conventional, FHA, VA, State Mortgage Agency Products, etc.). While most people today do choose a 30 year fixed, it is not always the wisest choice. Borrowers need to consider how long they will be staying in the home and any changes in their income during that time period before just accepting the same loan as everyone else. Additionally, with many properties in need of some renovations or repairs, you need to explore the FHA 203K Program discussed in last week’s blog.

3. Should I lock or float my interest rate?

Most mortgage planners are trained to dodge this question. I believe you should be hiring an expert who should have an informed opinion about the direction of rates….in the short term and the long term. Weighing numerous factors ranging from your projected closing date to upcoming economic reports, a good mortgage planner can counsel a client into saving money. While no one can predict with absolute certainty, you need to reach a comfort level that the lender you choose has the best information and your best interest at heart.

4. What are mortgage rates based on?

There is only one correct answer. It is the pricing of Mortgage Backed Securities. (Unfortunately, too many people answer the 10-year Treasury Bill.) If you get the wrong answer on this basic question, what else don’t they know?

5. How do economic releases impact rates?

How will a Jobs Report, a Fed Board Meeting or Inflation Number affect your home loan? Your mortgage planner should know, should explain it to you, and keep you informed.

6. Can I improve my chances of approval while keeping costs low?

Sometimes even minor improvements in a credit score, the amount of your down payment, or how you position your assets can make a big difference. During your counseling sessions, your mortgage planner should be advising you on how the “little things can make a big difference’”

Good advice, whether it’s from your doctor, lawyer, real estate agent or lender, can be invaluable. Finding a lender who is an expert….who has your goals in mind…and who offers creative solutions is one of the most important factors in a successful real estate transaction.

How Will the Foreclosure Mess Impact Prices? by KCM Crew Dec. 17, 2010

vtvogt — Sat, 18 Dec 2010 13:03:26 +0000

Three months ago, it was revealed that many banks were guilty of improperly processing the paperwork on their foreclosures. Most banks at the time declared foreclosures moratorium while they reviewed their paperwork and corrected any errors. Today, we want to give you an update on the situation and explain how the housing market will be affected.

The banks have admitted to some procedural errors. The severity and intent of these errors is still being investigated and proper sanctions are being debated (one state attorney general is threatening jail time). However, there seems to be no evidence that families were incorrectly forced from their homes.

So what does this mean to the housing market?

When this discounted inventory enters the market, it will put downward pressure on house values. Foreclosures entering the market put downward pressure on non-distressed properties trying to sell. A foreclosure is competition to other homes as they sell for 41% discount.

When will this inventory come to market?

Celia Chen of Moody’s Analytics on when this inventory is expected to hit the market: The “robo-sigining” scandal is beginning to show up in U.S. foreclosure data. The inventory of homes in foreclosures rose sharply in the fall, reflecting the fact that a number of large mortgage servicers placed a moratorium on foreclosures midway through October, and were thus unable to complete these foreclosures and reduce inventories. Servicers have already lifted some of these moratorium and it is likely business will return to usual by the beginning of 2011.

…sales of REOs to third parties and other types of distress sales such as short sale or auction sale to a third party will step up in the first quarter of next year as servicers resolve the foreclosure processing issues.

What impact will it have on house prices?

Prices will be affected. The question is to what degree . Ms. Chen explains it simply:

….the larger the ratio of distress sales to normal, nondistress sales, the greater the downward pressure on prices.

How many distressed sales are out there? According to Daren Blomquist, managing editor of the Realty Trac:

“Even with this big drop in November we do have a continuing building inventory of properties in foreclosure or REO. We’re estimating those properties plus delinquencies to equal 3 million to 4 million homes waiting to hit the market.”

Bottom Line

With the enormity of the challenge, prices can be impacted in a big way. Ms. Chen in her report said she sees a 5% decline in prices through the first three quarters of 2011.

Demand for Housing will increase by 2011- from KMG Blog- By KCM crew

vtvogt — Mon, 13 Dec 2010 15:20:02 +0000

The last Pending Home Sales Index from the National Association of Realtors (NAR) showed a substantial 10.4% month-over-month increase. According to NAR the index measures:

housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Modeling for the PHSI looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years.

This increase confirms a growing feeling that demand for housing has begun to increase.

Both NAR and Fannie Mae expect an increase in sales over the upcoming five quarters.

Bottom Line

Sales will increase over the next several quarters. The increase will initiate a housing recovery. However, price increases will not take place until current inventory levels diminish. That could take 12-18 months.

Why You Must Not Wait to Sell Your House. From KCM Blog.

vtvogt — Tue, 23 Nov 2010 19:30:30 +0000

The best real estate professionals are trying to convince anyone thinking of selling in the near future to correct the price on their home and sell now before the home loses even further value. Some cynical homeowners think the agent is just trying to create fear in order to make a quick sale. Some sellers are waiting until after the holidays. Some sellers are waiting until the ‘spring selling season’. Today, we want to say that your agent is giving you great advice - Sell Now!

We want to prove this is the best thing for you and your family. The most complete data available is usually generated by the local and national real estate associations. We realize that this data is sometimes considered suspect by the consumer (especially the cynics). For that reason, we will make our point without using any industry data generated by these associations. Instead, we will use the government agency Fannie Mae’s November Economics and Mortgage Market Analysis Report.

Fannie Mae forecasted median home sales prices for the next eight quarters. Their projections call for prices to fall and to not again reach today’s values until the 3rd Quarter of 2012 . Remember, these are not real estate industry projections.

Bottom Line

If you are looking to sell within the next two years, the highest sales price you will be able to attain for your home is its current value. Don’t wait. Take the advice of your agent and price it to sell today as the house will not gain value as we proceed forward.

5 Reasons You Should Use a Real Estate Professional by The KCM Crew on November 9, 2010 ·

vtvogt — Tue, 09 Nov 2010 17:09:26 +0000

Should you spend the money on a real estate commission or save that money by selling your home by yourself? That is a question many home sellers ask themselves. Today, we want to discuss why it is crucial to have a true professional guiding you through the mine field of challenges that exist in the current real estate market. The housing market today is more challenging than it has ever been and seems to be becoming more difficult each day. What impact will foreclosures have on prices? Which loan products that were available just last month are no longer available? How do you convince perspective purchasers to pull the trigger on an offer when everyone is telling them that they should see another 100 houses before they make a decision? These are tough questions for a trained, experienced professional. The lay person would find it almost impossible to keep abreast of this rapidly evolving industry. Here are five important reasons to use a real estate professional: 1. Pricing Is Difficult Just a few years ago, you didn’t have to worry about overpricing your home. If it was too high, all you needed to do was wait as historic appreciation was taking place. The situation is quite different today. With experts calling for another drop in home values, overpricing your property will cost you time. In this market, time costs you money. A professional real estate agent will discuss how increasing inventory could dramatically impact the value of your property in the months to come. They will help you set the right price in today’s market. 2. Negotiating Ability Is Crucial Buyers today have an almost unlimited supply of homes from which to choose. They realize that puts them in a great negotiating position. Most buyers are now also being represented by an agent. Sellers need to also be represented by a professional expert trained to negotiate real estate contracts. 3. Mortgaging Is Key to the Deal The biggest impact of the housing market collapse is that lending standards are much stricter today than they were a few short years ago. Rules are constantly changing. Even FHA has gone through a guidelines overhaul in the last several months. You need a real estate expert who has teamed up with a knowledgeable mortgage professional to make sure that the buyer in the deal is in fact capable of obtaining a mortgage. Losing time with an unqualified buyer costs you money in a market prices are falling. 4. Your Family’s Safety We have always found it puzzling that the same person that will lock every door and window and set the alarm today will then allow total strangers into their house tomorrow. The real estate industry trains its practitioners to take steps to protect themselves and their clients. Take advantage of putting a person between you and the person calling on an ad or yard sign. 5. You Probably Have More Important Things to Do Selling a home could turn into a full time job. Learning the necessary disclosures, coordinating the dates of your closings, dealing with a challenge regarding your appraisal and re-negotiating the offer after an engineer’s report are just a few of the concerns you may face. You would probably be better of spending that time with the items important to you and your family and leaving the challenges to your agent. Bottom Line To make sure the sale of your home is handled professionally – hire a trained professional. In the long run, you will wind-up with more money in your pocket and have less challenges with the move.

Can Rates Go Down Any More? by Dean Hartman Oct. 21,2010 in For Buyers,For Sellers 204

vtvogt — Mon, 25 Oct 2010 18:26:44 +0000

It appears they CAN and that they WILL. The buzzwords today are Quantitative Easing. It is another of the weapons the Fed has at its disposal to impact the economy, as a whole, and interest rates in particular. Let me explain. In so far as the Fed has already lowered the rates they charge to lending institutions as much as they can, and they still see a sluggish economy with weak employment numbers and growth, the Fed appears ready to enter a second round of Quantitative Easing (QE). QE is when the Fed begins to buy Mortgage Backed Securities in earnest. They do that by paying more than the market price for MBSs; therefore, pushing interest rates lower. But why do it? I mean rates are historically low already. Is lowering rates another quarter or half percent going to get someone to buy a house that hasn’t already gotten off the fence? Maybe, but I can’t see the number of people deciding to buy at 4% rates being that significant as compared to those looking to buy at 4.5%. There HAS to be other reasons. Maybe…. The Fed realizes that lower rates will stabilize home prices. Lower rates mean borrowers can borrow more money based on their income, enabling them to pay more for a home which can slow the decline of prices, stabilize prices, and in a few areas even raise prices of homes. The Fed needs to look like they are doing SOMETHING to energize the economy or get consumer confidence turned around. The Fed has an agenda other than lower mortgage rates. Maybe the Fed is using the lowering of rates, in an effort to devalue the US Dollar abroad. By lowering the value of the dollar, our products become a better bargain to buyers overseas. So, maybe, just maybe, this is actually an attempt to kick start the economy. If we sell more products overseas, we need to produce more products, hire more employees to make, sell, and distribute those products. Can I smell job growth through QE? Understand that a weakened dollar will eventually force rates to move up (to re- strengthen the dollar); so, there is going to be a window of even more incredible mortgage rates, but, the window will need to be carefully watched because it can’t be left open forever. There is no history we can point to predict if QE can or will work. Nor is there any real indication of the level of aggressiveness the Fed will take in this area. (Listen to the rhetoric between now and next week’s release of the Fed’s Beige Book as hints.) It may just be another shot in the dark, but personally, I am in favor of ideas that promote job growth more than government hand outs and bail outs.

Homearama This Weekend- Oct.2-3rd

vtvogt — Fri, 01 Oct 2010 14:32:08 +0000

Don’t miss out on the Homearama in Richmond this weekend. You can see new homes with innovative building ideas and fantastic interior designs. The cost is $10.00 for adults and children 12 and under are free. The event is open 12-9pm. The Parade of Homes runs for two weekends and it starts the weekend of Oct. 9th. This event is open 12-5 pm and is free to the public. You can get a guide to the homes at your local grocery store.

The Best Ways to Get to Know your New Hometown by: Louis Llovio

vtvogt — Wed, 08 Sep 2010 18:33:54 +0000

According to Discover Richmond Magazine there are several ways to get to know your new hometown. First drive around and simply explore neighborhoods and shops. Second, buy a guide book so you can learn historical facts and discover where locals go to eat. Another way to experience your new home is to talk to your neighbors. They are a wealth of knowledge and can tell you the best places to eat, shop, take the kids to play and see a show. And last but not least join a book club. This way you meet people who like similar things.