Hey everyone, what a great weekend it was. On a lovely Friday afternoon I left the office a little early and headed to the Cleveland Zoo with my wife and daughters and it was a blast! It’s so fun to watch my girls watch the animals! After that, it was family time and relaxation… just perfect. BUT, I did manage to check out some interesting articles to share with you. Here’s to a good investing week!
Stay tuned... I have an exciting announcement coming up this week about our Coaching programs.
June 7, 2010 - This Week’s Topics:
- Home Buying Outlook for Summer Not so Rosy
- Freddie and Fannie Next in Line for Reform… Really?
- Prediction of Increased, Sustained Housing Price Drop
- These 20 Things Can Change the Value of a Home
- GSEs to Begin Accepting HAFA Short Sales
- Characteristics of Top SREC Students
Home Buying Outlook for Summer Not so Rosy
We suspected that after the homebuyer tax credits expired at the end of April, housing sales would slow down. We’re now finding out that that is indeed the case, but early indicators are that sales fell sharply in the last few weeks; worse than anticipated. In actuality, it’s looking like a decrease of about 25%. Without the extra push created by the tax incentive, people don’t feel they have to move as quickly to close a deal. Applications for home-purchase mortgages have dropped in the last four weeks also, despite near-record low mortgage rates. According to the National Association of Realtors, things aren’t looking up for June and July, when sales are expected to remain weak. They’ll be closely monitoring for any signs of hope for August and September. On top of the lagging sales, the number of homes entering the market continues to rise by an average of 1.7%. Here’s the tricky thing about the data. Sales figures could show an increase as those who took advantage of the tax credit have until June 30 to close on their sales, which could impact numbers for May and June, even though new sales activity has fallen.
Freddie and Fannie Next in Line for Reform… Really?
Over the last how many months, we’ve seen Freddie Mac and Fannie Mae get pushed to the back of the line when it comes to the government figuring out what to do next with the GSEs. But according to Treasury Secretary Timothy Geithner’s latest comments, Freddie and Fannie might be addressed soon. Last Thursday he said that they would be addressed once work is finished on the financial regulatory reform bill is complete. He’s even predicting that both Congress and the White House will move quickly to get the reform in place, perhaps even by July 4. According to Geithner, “We've had a very careful process in place now for the last nine months to look at options, alternatives. And, again, we're going to be able to deliver that [swift action], because again, you see broad support among both Republicans and Democrats for the recognition that we've got to change that basic system of housing finance." Not everyone agrees. Some think it may not happen until after next year’s mid-term elections.
Prediction of Increased, Sustained Housing Price Drop
On Thursday, International Monetary Fund economist Prakash Loungani predicted that housing prices will continue to fall, and for much longer, than many predict. He based his prediction on analyses of housing busts since 1970 in the countries that make up the Organization for Economic Cooperation and Development. Previous housing slumps lasted for 18 quarters and prices dropping a total of 22%. The current housing slump has, so far, lasted 14 quarters with price drops of 15%. But, since this bubble was so much bigger than any in the past, it’s logical to anticipate a bigger downturn, he explained. Prices rose 113% over 41 quarters, compared to an average increase of 39% over 39 quarters. Loungani predicts the big downturn as what as to happen for things to normalize and moderate again.
These 20 Things Can Change the Value of a Home
When purchasing a home to sell – whether you’re flipping, rehabbing, retailing or holding to rent, take a look at these two interesting lists. These are 10 things that can increase the value of a home, and 10 things that can decrease the value of a home. Great things to keep in mind when determining where to allocate money from your budget – when are you going to recoup your money, and when is it best to leave something to the new homeowner.
10 That Increase Value:
- Updated kitchen – you’ve heard this before, and it’s true. Buyers look for updated, workable kitchens, preferably open to other parts of the house. Don’t go overboard – stay in the neighborhood norm or risk not recouping your investment.
- Modern bathrooms – after kitchens, bathrooms are the most important rooms to focus on.
- A master “suite” – complete with bathroom and big (walk-in) closets and lounging area.
- Natural materials – ceramic, hardwood, granite, whether real or a good imitation.
- Curb appeal – Tidy and well-cared for will lead to a terrific first-impression.
- Airy, spacious feel – do whatever you can to make the house feel light, open and airy – whether with paint colors, opening walls or cutting in windows or with room arrangement.
- Good windows – insulated windows are always a plus, no matter the climate.
- Landscaping – trees, flowers, shrubs and touches of decorations can increase appeal and warmth.
- Storage – this one is self-explanatory. People like to know there is room for all their stuff and more!
- Basement – a finished basement can add loads of value – they’re very popular now.
Watch Out for These 10:
- Pool – not the automatic selling point you’d think – it limits your buyer pool (no pun intended) due to the upkeep.
- No/small garage – most buyers will look for a 2-car garage.
- Odd floor plan – if a house has no flow or it is too easy to get “stuck,” that will impact value.
- Old appliances or systems
- Stale or overly personal décor
- Bad roof
- Bad location – what’s in back of the lot? At the end of the street? Across the street?
- Poor maintenance – if it looks like a house has not been taken care of, potential buyers may wonder what else is wrong, but hidden?
- Environmental hazards – lead, mold, asbestos.
- Too many needed improvements – a big to-do list will scare buyers away for sure.
GSEs to Begin Accepting HAFA Short Sales
Both Freddie Mac and Fannie Mae announced last week that they will allow homeowners with GSE loans to pursue short sales or deed-in-lieu of foreclosure if they can’t secure a modification from the government. Initially, GSE loans were not considered eligible for the HAFA program. Freddie and Fannie loans must first be found eligible for the Home Affordability Modification Program (HAMP). If they can’t meet their HAMP obligations, a HAFA short sale of deed-in-lieu of foreclosure will be offered only after all other options have been exhausted. Servicers will receive $2,200 for every short sale and $1,500 for every deed-in-lieu completed. Borrowers are eligible for $3,000 to help with relocation expenses. The program is effective through the end of December, 2012.
Characteristics of Top SREC Students
Having worked with hundreds of real estate investors around the U.S., we've asked our coaches to identify those characteristics seen in their most successful students.
Here are just a few:
1. Attitude: They need to believe that they can always find a way; that they will learn what they need to learn and succeed regardless of the challenges they face.
2. Enthusiasm: They can instill enthusiasm in peers, referral sources, agents, sellers, etc., by asking questions that lead to bigger ideas and just being generally excited about life.
3. Motivation: This is the primary and essential driving force behind student success. Motivated by their own passion for the course material, successful coaching clients are likely to find the resources within themselves that are required to achieve the standards experienced by top investors.
4. Commitment: Successful coaching clients are committed to their studies. They search for that extra book or that extra information. They reach beyond themselves.
5. Ignorance and Confusion: These are essential components of all learning. If you try to hide your confusion it just gets worse, but if you instead try to explain your problems to others the ideas start falling into place.
6. Curiosity: Successful students are inherently curious.
Hope your week is filled with real estate investing success.
Until next time… ~Josh
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