Carolina On My Mind

No, not the James Taylor song. At least in this instance.

This may serve as the most classic of examples regarding my point over the past few months about how the real estate brokers sometimes shoot themselves in the foot.

Keep in mind that I have seen all of these stories within this week. It's not like conditions have changed since one or the other was written. That is far from being the case.

First, a couple of the stories released within the past few days with help from the very real estate associations that agents pay dues to and support:

http://www.digtriad.com/news/local_state/article.aspx?storyid=119397

http://www.newsobserver.com/business/story/1409013.html

So after reading these, why would an out-of-area (or even local) real estate investor even think of buying there? Some might even put an X through that region on their map and be done with it. Again, those stories above include info provided by the realty association. No one is out to attack the local marketplace.

And then, a national builder's association announces its 15 "best" builders markets around the country. And can you guess which state appears more than once in their Top 15 list?

Very good - it's North Carolina, with the Raleigh area being its highest, showing the top 7. And top 2 nationwide other than the state of Texas:


http://www.builderonline.com/local-markets/the-healthiest-housing-markets-for-2009.aspx?page=10

Right now I wish I had a client that is a builder in any of those areas of North Carolina, but unfortunately I don't. I'd be on them hour after hour to start a campaign showing that the reason the home market is in shambles is because there is so much interest in (name of developments). And show their web site and phone number.

What's that saying? "If you build it, they will come"? Especially in North Carolina. Ouch.

If you are thinking refinance, think it now!

About half of my work week consists of contacting mortgage lenders and brokers around the country, including current and potential clients. Some appear to be holding the "wait and see" attitude regarding campaigning for business, including refinances. They could lose out, just as consumers could, by not looking into a refi as soon as possible.

Personally, my wife and I took advantage of the quick dip a year ago and reduced our monthly mortgage payment by more than $200 per month while the getting was good. I already know that this latest dip isn't worth it for me, but that's because I have been working with realty agents and mortgage lenders for 20 years. I'm not like most home owners and potential buyers out there.

Lowering the monthly payment is not the only reason for a refi. Just because the amount due is lowered on a refinance, it doesn't have to mean a reduction. Paying the $200 per month (or whatever you save) toward the principal will make a difference in the long run.

Yet, many mortgage lenders are playing the "wait and see" game and it keeps consumers from finding out the advantages of refinancing now if it makes sense. The smart ones have already done so, some at higher rates in late 2008 than what is out there right now.

Freddie Mac reports that U.S. homeowners cashed out over $17 billion (that is BILLION) in home equity through the refinance of prime first-lien mortgages for in the 4th quarter of 2008. That is the lowest amount since the first quarter of 2001. Statistics show that 14% of refinancing homeowners paid in extra money when they refinanced, reducing their mortgage debt. This is the highest cash-in share since the fourth quarter of 2004, when 19 percent of refinancing homeowners put cash into their home equity.

Not only that, but by playing the "wait and see" game, the additional funds being paid each month until or unless you refinance your home are going to add up. In other words, if you wait 6 months to save $300 per month instead of $200, it will in effect cost you an additional $600 by waiting.

In addition, there are no guarantees to home owners that the fees involved with a refinance will not rise between now and six months from now. Using the example in the previous paragraph, if six months from now the lender's fee to refinance increased even $500 from today, your waiting for better rates would actually be an additional $1,100 out of your pocket. (Compare that amount with your current monthly payment!)

This while I talk to homeowners who "figure" the mortgage rates will go down even further this year, and to lenders who want to "wait and see what happens". Seems to me there are a lot of homeowners who should know their mortgage refi options.

Too many negative statistics.............

Those of you who have been following my blog for a while know how much I comment on the realty associations spending time and money to publish negative statistics about the local real estate market. Throwing more matches into the fire.

While I don't like seeing anyone put into this position, I will admit I found an element of humor while reading this story today:

http://www.naplesnews.com/news/2009/feb/10/home-resale-office-closes-miromar-outlets/?partner=RSS

Yes - it is true. The realty office of the President of the local Realty Association in Naples has shut down.

Naples thrives on those retiring and relocating from the cold weather cities up north, and here we are in the middle of February of one of the most brutal winters across the country in years. For this guy to have been elected President of the local realty Association, he has to have a great reputation and track record in the area.

But when people around the country, including the areas which have previously drawn home buyers to the Naples area, continue to be pounded with negative statistics, the carry over effect has had a direct impact.

Sure, I'm not going to deny that the economy has impacted many lives and that fewer people are looking at retiring and moving to Florida and/or buying a second home. But you can't tell me there isn't plenty of inventory to be had in south Florida, and probably at the best prices available in quite some time.

However, as people read about the decline in sales compared with previous years, it reflects poorly on the market - and not on the overall economy. My point continues to be that I could have just as easily read that "hundreds of homes sold in the Naples area in what many consider to be a down economy, with the most recent sales including an $800,000 home" or whatever it may have been. That would make someone get online or pick up a phone and seek more information. Reading that sales have dropped in a particular area is a negative reflection.

I don't know how many listings that realty office in Naples had, but now a large group of potential sellers is forced to relist their property simultaneously. While their association continues to pour out the negative statistics.