I don't have all the infomation yet, but apparently there is a way of qualifying for two primary residence loans. This does not mean that you can qualify for two homestead exemptions, so do not confuse them. There may be a way for you to qualify for a second primary residence as far as financing is concerned. When I receive a copy of the Fannie Mae guidelines, I will try to break it down for you. Essentially, if you are purchasing the property for elderly parents or adult children who have certain disabilities, you may be able to qualify for a home under primary residence requirements.
If you purchase a second home or investment property, you will have to put considerably more money down. You will also likely have a higher interest rate, and qualifying may be more difficult. If you purchase a second primary residence under these Fannie Mae guidlines, you may be able to qualify with less down payment and you should be able to get the same market interest rate you would receive with any primary residence. As I said earlier, when I get the details I'll post them here, so check back.
www.OrlandoRealEstate.me, Orlando Real Estate Blog
Apparently, someone forgot to tell Dwight Howard of the Orlando Magic that the economy is shaky, and that Orlando real estate is a questionable investment. He just paid a record $8 million for a new home in Longwood. You can read all about it in the Orlando Sentinel. There is even a short video showing off the home. By the way the Magic lost their first game last night. If only real estate agents made that kind of money without closing the deal.
On to banking. The Treasury has pumped billions into the banking industry, and the Fed has dropped the Fed funds rate by a point in the last three weeks to 1%. In a nutshell, money is cheap and there is plenty of it, so banks should start lending. Wake up guys, if you don't lend you can't make any money. The White House actually had to tell banks to start lending money. The faster they get out of cost cutting slash mode and back into profit mode, the faster we will get things back on track. Otherwise we just have a lot of cheap dollars laying around in vaults.
It reminds me of the guy that drowned in the flood. The flood waters started to rise, and the police came to his house and told him to leave. He said, he would stay and pray for God to save him. The flood got to his house, and a rescue crew arrived in a boat. He said, he would stay and pray for God to save him. The waters rose to the roof, and a helicopter came to rescue him. He said, he would stay and pray for God to save him. He drowned, and when he got to heaven he went to God and asked why? God looked at him and said "I sent the police, the boat and the helicopter." Banks, the helicopter is waiting.
www.DavidWelch.com, Orlando Real Estate Blog
I have to say, the condo in Baldwin Park that I have been blogging about for a while now, has turned out beautifully. My customers are closing on it tomorrow, and the home inspector Monday found just three very minor issues with unit. After the home inspection, we had the walk-through with the builder Centerline Homes and it took all of five minutes. It is rare in a new home that there are so few issues. I think most people expect a new home to be perfect, but keep in mind the number of systems, subcontractors, and details involved. That is why I always recommend having a home inspection of new homes. There are rarely serious problems with new homes because of the code inspections, but there are almost always minor issues that can be caught by the home inspector and many times corrected before closing.
I will also give a plug to the window treatment company they are using, because I had a very good experience with them too. The name is Payless Blinds and the owner is Luis Moraguez. You can reach him at 407-932-1441 or mobile 407-873-2705 or by e-mail at PaylessBlinds@aol.com. I have to say that Luis is extemely professional and knows what he is doing when it comes to blinds. I felt that he provided a very good value as well.
On another note, I was contacted by a journalist with the Florida Realtor magazine that wants to interview me about blogging for the next issue. How cool is that?
I will preface this by saying that I am a Central Florida native. I attended the University of Central Florida in Orlando. My MBA is from Crummer Graduate School of Business at Rollins College right here in Winter Park. My wife was born in Orange Memorial now Orlando Health. So yes, I am biased when I speak about Orlando, but that does not change the facts.
First, the weather here is fantastic. Today is October 28, 2008 and it is absolutely gorgeous outside. Blue skies, clear and sunny with a high around 66F. That is actually a little cool for us. I had customers here from Canada recently, and they could not get over the weather. Take everything else away, and we still have great weather. We also are 45 minutes from the ocean and 90 minutes from the gulf.
Second, quality of life in Orlando is outstanding and getting better. Healthcare and biomedical research is on the brink of something huge here. Our new medical city rivals a similar undertaking by Dubai. The University of Central Florida is opening a new medical school, the Burnham Institute has begun staffing their biomedical research facility, recently ground breaking ceremonies were held for the new VA hospital and Nemours has a green light for their new Children's hospital. As far as education, the arts, sports and entertainment is concerned, few cities our size can match what we have to offer. The University of Central Florida is the sixth largest university in the nation, Rollins College is ranked #1 in the South for Liberal Arts Colleges and their MBA is ranked #37 in the nation. A brand new arena has just begun construction, and new fine arts center is expected to be completed by 2012 and the Citrus Bowl is also scheduled for a complete renovation. We are probably best know for our entertainment, so I doubt I need to talk about all the options we have there.
Third, community is a big part of the Orlando way of life. We are working on commuter rail to ease the burden of our highways. Neighborhoods like Baldwin Park are being built to be more walkable with lots of parks and pathways and open spaces. Cities like Winter Park actually have requirements that require a certain number of acres of parks for every 1000 people. So, you will find that Orlando is a big city that is also a small town. The downtown area of Orlando is fantastic and very accessible.
Finally, Orlando is affordable again. Recent reductions in real estate prices have positioned Orlando as very affordable. In fact September's affordability index was about 124. This means that the median wage earner makes about 24% more than they need to make to afford the median priced home at $182,000. If you are renting, you will find a good supply of rentals available as well with a median rent for a three bedroom of around $1,200 a month. Search for homes at www.DavidWelch.com/OrlandoMLS
Here in Orlando, sales were up significantly over September of 2007. In fact sales were up nearly 38% compared to a year ago. The month over month sales increase was somewhat less at just over 4%, but that is because we had a pretty strong August too. Sales were up across the state of Florida, and it was reported last week that sales nationally were up better than 5% compared with August. At the same time it was announced the new home construction fell to the about the pace it was at in 1945. Yes, I said 1945.
This dramatic slowdown in building will eventually create the turnaround in the real estate market. I have not seen inventory numbers at the state or national levels, but as I have posted here before, local inventory levels have dropped significantly. So far, October sales look fairly strong, and the median price is continuing to hold in the low to mid $180's. Properties under $180,000 are getting hard to find without running into competing offers. Our lenders here are working very hard with down payment assistance programs and their own stimulus packages to help buyers get into homes. As they say, when the going gets tough, the tough get going.
Just click for Orlando Real Estate Market Statistics.
I have been doing business with Jeffrey Sachs with FBC Mortgage for several years. In fact, I believe that I have been referring people to Jeffrey for probably ten years now. I was meeting with him today to talk about what we could do to help our buyers. He has come up with a stimulus package to help you get into your next home. If you purchase your home through me and finance it with Jeffrey Sachs at FBC Mortgage, your appraisal is on the house. (pun intended). That is approximately a $350.00 value being offered through the end of the 2008. I will take that a step further, and offer to re-imburse you up to an additional $350 toward your home inspection at closing.
Unlike the $7,500 tax credit from the government, you don't have to pay this back. This is free money. Just buy a home with David Welch at Re/Max 200 Realty and finance your home through Jeffrey Sachs with FBC Mortgage, and your appraisal and home inspection up to $350 will be reimbursed to you at closing. Jeffrey is putting together a coupon that I will have on my website that you will be able to download and print.
This is just sort of a random post, so forgive me if it does not have a lot to do with Orlando real estate. I was just thinking, thank goodness this political campaign is about to come to an end. It is hard to predict who will be our next president, but with any luck we will have an answer in 12 days. I cannot recall a campaign (or maybe cam"pain") cycle that has lasted so long, and I believe set a record for the money spent. At least one sound bite I heard was the $1 Billion was spent just on the presidential campaign advertising. Keep in mind there were congressional campaigns, as well as all the state and local campaigns and issues being decided. The protracted time frame and the amazing amount of money spent has benefited one industry. The media has had a field day with this, and I imagine has made a bundle on all the ad space they have sold.
Now that this is coming to an end, who is going to be filling all that ad space?This brings me to my investment advice. Sell all your media stock. The LA Times I believe has already stopped printing a real estate section, because nobody advertises in it. All the negative press has finally begun to depress our economy, and the first thing most companies cut is advertising. The political campaigns will end November 5th. So where is the media's ad revenue going to come from? My prediction, they will be looking for a government bailout to save the free press. I am only half joking.
While our market is still slow for sellers by comparison with the last several years, homes that are priced well are moving. I have been working with three buyers recently that are actually having a little difficulty getting properties under contract, because of multiple offers being placed on the homes. The downtown condo market is soft, which has lead to lower prices. The high desirability of downtown has kept rents fairly high ($900-$950/mo for a 1 BR). Prices in some of the more moderate communities are well below $100,000. I am seeing potential returns as high as 10% not including potential appreciation.
In other areas I am running into properties, townhome and single family, that are in position to cash flow with 20% down. This is starting to attract investors back into our market. Even with multiple offers, properties are still not selling for over the asking price. The amount of discounting is going down somewhat in areas with a lot of foreclosures and short sales. There are still plenty of properties that are way over priced too. For now, I am asking my buyers to be patient and diligent. I continue to try to encourage my sellers, but also keep them updated with anything happening in their neighborhoods.
I regulary check my positioning on Google, because let's face it if you are not on Google your website might as well be invisible. Through some of the webmaster tools available on Google, I determined that the number one search for my area is Orlando Real Estate - big surprise. Through search engine optimization tools, continuous updating of my website and blogging here and on ActiveRain and Realtor.com, I have been successful at moving my website up the ladder. This morning I found myself on page one. Please go ahead and try it yourself. Go to Google and put in Orlando Real Estate. These positions do change, but hopefully you will still find me at number ten.
While you are there, go ahead and check out www.DavidWelch.com. I have added a Zillow Search page, and Eppraisal page, and the brand new consumer website that gives you access to the Orlando MLS. At the bottom of the page you will also find a brand new Foreclosure Search tool. Google me today.
It looks like rates are easing a bit. I have customers that were being quoted rates in the low sevens last week, and down around six percent today. That is nice.
www.DavidWelch.com, Orlando Real Estate Blog, www.OrlandoRealEstate.me
This actually has nothing to do with "Joe the Plumber", but since the last Presidential debate Joe has been a great attention grabber. This post is actually about something closer to home for the folks in Orlando. I am going to go ahead and go out on a very precarious limb, and say that we have hit the price bottom here in O-town. Last month our median sales price dropped to $182,000 and so far this month with almost 500 closed sales we have a median sales price of $185,000. That is not to say that we are on our way back up. There are always ups and downs from month to month. I do have a few reasons why I believe we are at the bottom barring any more unforseen challenges.
First, sales are continuing to remain in the 1,400 range which is relatively strong compared to last year. In fact September's sales of 1,390 were about 38% higher than September of 2007. These stronger sales numbers have stabilized and somewhat reduced our inventory of homes for sale from the peak last October of more than 26,000 to just over 24,000. This does not include all of the builders inventory which has actually dropped considerably over the last two years from over 24,000 in inventory to around 6,000. New construction is still way off even last years numbers, so look for builder inventory to continue to decline.
The second reason I belive we are at the price bottom is that the current properties under contract (over 3,500 of them) have a median list price of $182,000 compared to $191,000 for the most recent closed sales. This number is a bit lower, but it is effected by the higher proportion of distressed properties. About 23% of all active listings are distressed, while about 44% of pending sales are distressed properties. However, only 33% of the closed sales are distressed, so a higher percentage of the distressed properties are not closing.
Finally, and maybe most importantly, is affordability. At the current price level, the affordability index for Orlando is nearly 124. That means the median income earner makes 24% more than necessary to afford the median priced home. There have been some articles written recently about rents -vs- home prices which also illustrates the point of affordability here in Orlando. Historically, home prices have reportedly run about 15 times annual rents. At $180,000 that equates to annual rent of $12,000 or $1,000/mo. I doubt that you will find the median home in Orlando available to rent for $1,000/mo. At least on source I found on the internet (zilpy.com) had the median rent for a three bedroom home at $1,171. I am sure there are more reliable sources, but that is really close to my expectation.
www.DavidWelch.com, www.OrlandoRealEstate.me, Orlando Real Estate Blog
Construction of new homes dropped by more than 6% which is quitea a bit more than the expected drop. The current rate of construction is 817,000 units a year compared with the expected 880,000 units. The good thing about this is that builders are not adding to the already bloated inventory of properties for sale. Here locally, builders are pretty much not starting construction of any new properties unless they have a contract. Prices have actually dropped to a point at or below the actual cost to build, so I don't expect to see this trend improve for some time.
David Welch, Orlando Real Estate Blog
The President is supposed to make a speech today that has been identified in the press as a "pep talk." I hope it has a lot of pep. If you read my blog regularly, you know that I have been asking for this for some time.
Something I saw on the internet yesterday caught my eye. It was a three question survey of around 3,600 people. Only 18% got all three questions correct. By the way, I got all of them correct - yea for me. The first question was "which party controls the house of representatives?" Second, "who is the Secretary of State?" Third, "who is the Prime Minister of Great Britain?" What really blew me away was that 44% of British did not know who their Prime Minister was. Scroll down for the answers.
There is a new way to find me on the web www.OrlandoRealEstate.me.
Answers
1) Democrats (they control the Senate too). Did you know congress has a lower approval rating than the President? hmmmmm
2) Condoleezza Rice
3) Gordon Brown
If you are thinking of buying or selling in Orlando where do you turn to for information. Like 80%+ others you check the internet first. You may be checking out areas of town that are close to where you work or go to school. You might be checking to see how much your neighbor is asking for their home, or how much that house sold for. Regardless of the type of information you are looking for, much of the data is on the internet. That is especially true in Orlando which is one of the most wired cities in America. The problem is...where do you go on the internet for the most up to date and accurate information?
There are a number of third party websites available to help with your data gathering such as Zillow and Trulia, and Realtor websites like Realtor.com and Remax.com. Realtor.com and Remax.com pretty much are marketing websites to advertise the listings that are for sale. Sites like Zillow and Trulia have information about only some of the homes for sale, and they provide public information about sold properties as well. All of the sites now offer some type of property valuation tool, but none of them have the most current and accurate information.
Now, thanks to the Orlando Realtors and Mid Florida Regional MLS we are able to provide consumers with the most current information about all the homes for sale and closed sales going back up to one year. You can access the website by going to www.DavidWelch.com/OrlandoMLS. This site offers terrific search tools that let consumers search the available listings just like an agent would. It also lets you search for agents based upon the area where you are looking. Buyers and Sellers can use the valuation tool to search for comparable properties and determine likely values of the home you are interested in buying or selling. You can also pick and choose the properties that you think are most comparable. This site was modeled after the Houston Area Realtor site HAR.com. HAR.com is used by more than 50% of consumers researching real estate in Houston. We are hoping that you will find our new site to be a great resource. Check it out, then contact www.DavidWelch.com, Orlando Real Estate Blog
Activity has really been picking up on my website over the last 30 days or so. I have had visits from a number of different countries especially Canada and the UK as well as 22 states here in the US. Later today I will be unveiling a brand new search site for consumers looking all across the Central Florida region. I am very excited about it, and I think that you will find it a fantastic tool with all the listings straight from the MLS, plus information on sold properties, as well as a valuation tool that is far more reliable than anything else out there because it is the most up to date information. Check back later for this. I believe more people will begin using this than any other real estate search available for the Central Florida area.
This is what one of my customers said about me recently.
"We've never had a realtor so informative about the area and give us such honest opinions about the properties. Thanks!" JL from BC, Canada
I have never been one to make a big deal out of the nice things my customers have said in the past, but I have read that people searching the net are very interested in customer testimonials. So, for anyone interested this is the first one. If you would like to see others, I think I have kept most of the cards and letters people have sent over the years. I just am not sure where I kept them. I moved my office about two and half years ago, and I think I packed my folders away.
I am working with a couple buying their first home together here in Orlando, and yesterday they spoke with a couple of lenders about rates and loan programs. Both lenders were recommending FHA as an option for them, but the interest rates they were quoted were significantly different. One rate was around 7.25%, and the other rate was 6.5%. On a $100,000 loan that is a $50.11 difference in the monthly payment. The difference between $632.07 and $682.18. They will be borrowing more, so the difference could cost them a lot more than $50 a month.
When money is tight, like it is right now, you need to shop for it. I do expect that those rates will be climbing, and I also expect rates to be somewhat volatile over the next quarter. You see what the stock market has been doing, but most people do not watch the bond markets which have also been having some ups and downs. They do not swing as wildly as stocks, but you can see from the example above that a small change can have a significant effect.
Centerline Homes in Baldwin Park held an American Dream Street Open House yesterday, and from what I saw it was a tremendous success. I don't know how many homes they sold, but there were quite a few people there when I went through. I live in the neighborhood, and stopped by to check all their floorplans out. That was the most traffic I have seen at any of the builders in a long time. Most of the neighborhood is built out at this point, but Centerline has about 10 condos that are either available right now or soon will be. I sold one of their units that is closing at the end of this month. It is the Gramercy, which is the 3/2 and you can see some pictures of the construction and a YouTube video I shot earilier in the construction process.
I was certainly encouraged and inspired to see the turnout for their event.
The current market reminds me of the story of the exodus in the bible. If you want to read about it check out chapters 13 and 14. The particular part of the story I am referring to is when they get to Canaan, the land of milk and honey, the promised land. When they arrive just outside of their destination, they send 12 spies into the land to survey the situation. When the spies return, 10 say the land will devour them, the people living there now are giants that make the Israelites look like grasshoppers. Two of the the spies Caleb and Joshua reported that the land flowed with milk and honey, and was ready for them to take. In the end, the people listened to the bad report, and it cost an entire generation. They spent the next 40 years wandering in the desert.
Many people have been waiting for prices to come down, they have. Many people have been waiting to find the right house, and the inventory of homes for sale is still at all time highs. All the negative press has many people concerned about taking the next step toward home ownership. The truth is, if people don't start buying homes, the economic slide we are on will continue. Our leaders are doing all they can do with the bailout plans and coordinating efforts around the globe to free up money to lend. If nobody is willing to invest in a home, it does not make any difference what they do. I am not asking anyone to trust me or put their faith in my opinions. I am asking you to consider this question: what is it going to take to get you to buy a home? Prices here in Orlando are down 22.5% compared to a year ago, the interest rate is in the low to mid 6% range, and there are still over 24,000 homes for sale. There are down payment assistance bonds available for first time home buyers that make still allow you to get into your first home for little or no money.
I spoke with the CEO of the Orlando Regional Realtor Association regarding the median price reported yesterday, and guess what. There was an error in the calculation of the official reported numbers. They are in the process of double checking to make sure this was a one time occurrence, and so far it appears to be just that. They just want to double check before the corrected figures are published. Look for a correction soon, and by the way it looks like my numbers were correct. You heard it here first. The median price will be reported around $182,000.
My Orlando Real Estate Blog, www.RealEstateOptimist.com is the featured blog on Realtor.com for my post on October 8th about the Fed. You can check out what I said by by going to www.Talk.Realtor.com. Just look on the left side under October 8th, and click on the link to my post. This is the second time I have been featured on Realtor.com's blog site. I have to say that I have already had a number of comments on this post on my ActiveRain blog site. You can see what other had to say by going to www.ActiveRain.com/RealEstateOptimist.com.
Speaking of rates, it is curious to me that the LIBOR is staying so high after all the central banks cut their rate to the banks. Could the banks be keeping it artificially high for all those borrowers with adjustable rate mortgages based on the LIBOR? Believe me, I am no conspiracy theorist, but it is suspicious that the LIBOR has not come down. Keep in mind, even with all the foreclosures and short sales, the vast majority of borrowers are still making their payments. If something does not happen with the LIBOR soon, I would be concerned about why it is really still so high.
The official numbers came out yesterday, a day early, and I think there may be a mistake on the median price. I will be contacting the association as soon as I can to get some clarification on it. I have been reporting sales of 1,329, and the official number was 1,335. That is easily explained by exactly when the number is pulled from the data. I have also reported a median sales price in the mid $180's. Originally, I found a median of $185,000, but I repulled the numbers the next day, and it had dropped to $182,900. The association is reporting a median of $210,000. The official numbers and mine are rarely off by much, so I am really questioning the official result on this. I would love to say that prices are starting back up, but it is the lower prices that have lead to the increase in sales. In fact, sales this September were 37% better than September 2007. That is something to get excited about.
I am sticking by my numbers until I get to the bottom of the official numbers. By the way the median list price of the current pending contracts is around $188,000. At these prices homes are selling much closer to their asking price, so I suspect October's median to again be in the low to mid $180's. Check back to read what I find out about the price situation.
I just blogged yesterday that I thought the Fed might drop the rate half a basis point, and I read in the paper (online of course) today they did just that. They may cut it again at their next scheduled meeting. Just in case you are a buyer and think that this means mortgage rate dropped half a point too, they did not. The Fed rates are short term rates that are charged to banks that are literally borrowing overnight to make sure they have adequate balances for reserves. Mortgages are tied to long term money rates. The Fed rate has an effect on mortgages in the long run, because they have an impact on banks liquidity or access to funds.
In the near term, this could actually have the effect of raising interest rates on mortgages, since this move underscores the Fed's negative view of the economy. If the Fed is concerned about the economic situation, then banks are too. That concern equates to more risk, and therefore higher rates of default on loans. If loans are riskier, the banks will require higher returns which means higher rates. If this action begins to stimulate the economy, and the financial picture starts to look better, then rates will come back down.
I just went to a short seminar by Jack Gritter and Chip Gregory with Trinity Mortgage about a bond program in which they participate. This is for first time home buyers. Basically, a first time home buyer is someone who has not owned a home for the last three years. There are some exceptions to that, so call with your specific situation. This program offers up to $10,000 for down payment assistance and/or closing costs, based upon income and you must still qualify for the mortgage. It is designed to work with FHA, but there may be opportunities to use it with conventional 90% financing. The great part about this program is that there are no payments or interest charges. If you stay in the home for the full 30 years, you don't even pay it back. If you have to sell and the market has gone down, the $10,000 is forgiven. You don't pay it back unless you refinance, sell, or move out of the property.
If you were trying to use Nehemiah or Ameridreams, this can still get you into a home with virtually no money down. Contact me today for more information. You can apply online with Chip or Jack by going to www.DavidWelch.com/industrylinks and clicking on Trinity Mortgage near the top of the page. Get qualified with them, then contact me, so I can help you find that first home.
With the stock market meltdown yesterday, and the Fed meeting today, look for a rate cut. Other central banks around the world, I expect will also be cutting rates to stem the tide of sentiment that the economy is shrinking. I say a headline yesterday that said that a majority of people surveyed expect us to head into a depression. The difference between a recession and a depression you ask? In a recession you lose your job, in a depression I lose mine. Hopefully, the central banks around the world will be able to put together their own bailout plans and cut rates sufficiently to put some confidence back in the market place.
I still firmly believe that if we had elected officials with the backbone to say that things will get better, it would go along way toward turning the sentiment around. You see 94% of people still have jobs and earn the same amount of money that they were earning last year for the most part. They are just afraid to do anything with it. There are probably a third of them that do not own a home, and they are not taking advantage of the greatest buyers market in decades, because they are concerned about where things are going. So, you see sentinment has a great deal to do with the success of all this. If everyone keeps waiting for someone to say its OK, then nobody will buy, and eventually the negativity becomes self-fulfilling.
The Dow is tanking today over global credit concerns. The EU failed to come up with their own financial bailout package, sending investors into a selling spree. If I read correctly, Asian markets were off 8.5% and the European markets were off about 8% in overnight trading. Keep in mind that if someone is selling there must be someone buying to effect the sale. It is very hard to predict when or where the bottom is until we are headed back up, so try to take the long term view on whatever investment you have. This is hard to do in today's immediate gratification oriented world. I wish I was sitting on a pile of cash, so I could take advantage of the deals in the real estate and financial markets.
When the Orlando real estate statistics are published for September look for the median home price to have fallen to $185,000. That is a 7.5% drop from August, with an increase in the number of closed sales of about 100 or 8%. Looking ahead at the pending sales, the median list price is around $188,000. As these properties close, look for the Orlando median price to drop to below $175,000. Investors should take a serious look at Orlando at these prices. I showed downtown condos this weekend that could return 10% on the rental income without factoring in any appreciation.
As of this morning 1,322 closed sales were recorded for September, that is up from 1,225 in August. October is usually a better month, so hopefully buyers will not have trouble getting loans funded this month ahead of the effects of the bailout. I believe we could see over 1,400 closed sales in October which would be around the same number of sales we saw in June and July (our peak months). Although prices have come down considerably. I am noticing an increase in buyer activity. Personally, I will be out showing downtown Orlando condos, and homes all day today.
The condos downtown are an amazing bargain right now. They are literally half price from where they were last year. Many of the units I am showing today sold in the last two years for $130,000 to $150,000 and are now priced from about $60,000 to $90,000. The one bedrooms rent from around $800 to nearly $1,000 per month. If you pick one up for $72,000 and have a net rent after association dues and taxes of $600 that is a 10% pre-tax return. Assuming no appreciation, you are still doing better than most any investment I can think of right now.
I know just a couple of days ago I said that it looked like we would be lucky to post 1,100 closed sales for September. On September 30th we hit 1,100 on the dot, but another 178 sales were posted in the last couple of days putting us at 1,278 as of this morning. Brokers are supposed to get closings in the MLS within two business days after the closing takes place. They actually wait until the 5th of the following month to pull the official numbers just to make sure they are all in (they usually still have a number of straglers). Any way you look at it this is a plus for our market, although about 30% of the closings are distressed properties. At least some sales are getting closed.
Just a spoon full of sugar helps the medicine go down. Remember that song from Mary Poppins? Well, that is apparently what it took to get the Senate to take their medicine on the bailout bill. Hopefully, the house will take up the issue today, and agree to take their medicine as well. I do not like this much government intervention in anything, but I do feel like something has to be done to stabilize the financial markets. Unfortunately, many are paralyzed by the uncertainty in all the markets. The housing market, mortgage market, financial market, and commodities market are each taking hits from the overall negative sentiment. Of course, this has caused an influx to the bond market, specifically the government bond market is seen as a bit of a safe haven.
The dollars have gotten huge in all of this, so look for potentially big swings in all of these markets if this gets passed. First, if the governement goes to the bond market to raise the capital for this infusion of cash, it will push long term borrowing rates up effecting mortgage rates. There will be cash available, but it may come at a higher cost than what it is right now. This could have a downward effect on inflation, and therefore push commodities down since they are often purchased as a hedge against inflation. With any luck, cheaper oil will encourage economic expansion. Home purchases should encourage economic expansion, and we could get back on track. However, until we get through the inventory of foreclosed houses, don't look for real estate price stabilization for at least a few quarters.