Wednesday, June 29, 2011

Home Sales vs. Home Prices

The negative statistics about the current state of real estate continue day after day. Instead of any positive ones. Yet, over the past few days, I have been seeing more and more stories about the drops in home sales prices be presented in a positive light.

As much as I have been preaching the need for positive stories dealing with real estate, I also preach that these should be legit stories. Yes, home prices are generally dropping even further in much of the country. However, that doesn't mean it is a positive.

The point is being made that more recent drops in average home prices are not as much due to foreclosures and short sales as they have been over the past couple of years. This is being treated as a positive. I'm not certain that's the case.

That fewer homes seem to be getting foreclosed upon is certainly a positive. But that is not enough to group this fact with others relative to home sales.

Home prices being much lower than 5 years ago is not a positive for a large group of home owners around the country, perhaps the majority.

Even though foreclosures are down now, there are still a ton of homes around the country for sale at foreclosure or short sale prices. Those are in addition to distressed properties practically abandoned by builders and developers. The mere availability of this many properties at lower prices serves only to bring down the value of the homes surrounding it. And that is not a positive for more people than the number who can buy under current market conditions.

Too many home owners are right now stuck paying more than the property is now considered to be worth, and are under water with their mortgage. They cannot sell "for less". If they take a loss and have to write an additional check at the time of sale, there is no money for a down payment and to finance a new purchase. So there is no choice but to wait until or unless the local market returns to the point where they could get a price high enough to justify selling it.

Meanwhile, many who would like to take advantage of the buyers' market out there cannot. The availability of mortgages has gone full spectrum, from having been too easy several years ago to being way too difficult now. And that's for those who can even afford a sufficient down payment.

The same banks which contributed to this crisis are now cutting back instead of getting in there and actually (gulp) helping their customer bases. They are loaning on fewer properties, cutting back or eliminating options such as reverse mortgages, and sitting on defaulted properties they technically own due to foreclosures.

As a result, the banks are really a big factor in keeping home prices down, just as they are in keeping home sales down from where they could be. With no end in sight.

If only the news media would keep all of this in mind when reporting the "positive" news about the current status of real estate.

Monday, June 27, 2011

While HUD Has "no comment"?

After commenting earlier this month about the reduction of reverse mortgages, this article points out even more evidence of my point that seniors are looking at even fewer financial options in an effort to not outlive their savings:,0,6324717.column

The truly disturbing part of this article actually comes at the end, where the writer points out that HUD "had no comment". To me, this is an even bigger story than a large bank putting the stop on future reverse mortgages.

HUD is a government agency. The same government which appears to have practically wasted millions of dollars with its bank bailout program a couple years back. All that seems to have done is to bail out the coffers of some of the executives who may have helped to create this mess.

Having a government agency with "no comment" about this situation and its possible to probable negative impact on seniors is not a good sign.

Add this to the growing list of matters your local politicians should be discussing, but are not doing anything about.

Not that reverse mortgages are mass appeal or even ideal for every senior citizen. Without them, it is one less option for seniors. Here's hoping these seniors remember this when those same local politicans, who are now not helping them, come up for re-election.

Tuesday, June 21, 2011

An Orange Crush From China?

It appears that some of the smarter realty agents are also aware of what I pointed out months ago when it comes to seeking places that buyers might come from. A couple months back I pointed out the increase in cash buyers from Canada who knew to take advantage of certain Canadian tax laws in order to purchase properties in certain U.S. markets.

Now comes word of a noteworth increase in home purchases in the Orange County California area, specifically from buyers coming over from China.

Those agents who have been on top of this trend stand to do quite well for themselves by figuring this out at the right time. There is definitely money to be made, and buyers and sellers to satisfy, instead of continuing to knock on the same doors week after week.

All this going on while some agents continue to dwell in negative statistics about the market instead of seeking opportunities from wherever they can find them.

The next opportunity for aggressive realty agents might be seniors. With the uncertainty about Social Security these days, many more seniors are even more alarmed about outliving their funds along with their property losing value.

Meanwhile, some of the banks continue to bungle their finances and add to the chaos destroying the real estate market. This week Wells Fargo has announced it is discontinuing adding reverse mortgages:

This means even fewer options for seniors. While several mortgage brokers continue to offer reverse mortgages, they tend to be less aggressive about marketing them. I'm afraid that many seniors will read or hear the Wells Fargo announcement and give up on considering this option. The result will be less activity on the mortgage side.

Combine that possibility with the number of buyers from China paying cash instead of going the mortgage route, and it increases the financial bind that banks and lenders are finding themselves in, along with the many who seriously need to sell their homes.

If you are among those who need to sell, remember to look for sources and places your buyer could come from. Chances are the buyer you need is not local or you would have known about it by now. There is a whole world of potential out there.