The Real Story

The Real Story…

News and commentary about the real estate market and related topics.
Dave Parrish, ABR®, CSP, GRI, ePRO®,REALTOR ®, RE/MAX MarketPlace

The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.

How’s the Market?

How’s the market is the question everybody is asking… Following that is: When will the market recover? While the question is frequently asked, I never tire of looking for indicators of a recovery and sharing my insights.

There has been a barrage of positive reports as 2011 came to a close and we began a new year entering into what is now the sixth year of market contraction in the housing market. With a national increase of 5% in units sold during 2011, many are proclaiming 2012 the year of market recovery. I, however, have serious doubts that these wishful thinking market cheerleaders are accurate.

Now don’t get me wrong… I too am wishing for a market recovery… I have however learned that what I want and what I get do not always coincide.

While it is certainly encouraging that the number of units sold last year increased over the dismal numbers of 2010… and further, that New Housing Starts are expected to increase in 2012, those increases (real and projected) do not tell the whole story.

While it is certainly encouraging that inventory levels in the Birmingham MLS Market have, for the moment, fallen to below 10,000 units, the number of units (homes) sold in the Birmingham Market increased only 1% as compared to the National rate of 5%.

Even as you look at the improved sales numbers, when we look at sales as compared to inventory we saw a modest increase in months of inventory from 2010 to 2011 (not the direction we wish to travel in). Then there is the price received as a percentage the last list price for homes that moved from 94.94% in 2010 to 94.79% in 2011… again wrong direction. From December-to December we did see a drop in the months of inventory on the market from 11.49 to 10.74 months… a move in a positive direction… albeit probably a very temporary improvement.

All in all it feels very much like we are either approaching or bumping along the bottom of the market in what is likely to be a very wide valley.

Rather than looking solely at history, perhaps it would be useful to look at what is going on at the present that will impact the future movement of the market. Perhaps more important than last year’s sales numbers and far more indicative of market direction, the rate of mortgage delinquencies points to an ever increasing inventory of homes on the market many of which will be distressed properties adding to the downward valuation of homes.

The one thing that might have some middle-term impact on this erosion of market value is a movement by lending institutions and investment groups to convert the huge inventory or REOs (post foreclosure properties) to rentals. The advantage of such a move would be to arrest the physical decline of unoccupied properties and thus slowing the erosion of property values while responding to an ever-increasing shortage of rental properties, a market segment where we have been seeing substantial increases.

All that said, the most important of all factors to remember is that these national statistics really provide little useful information to you the individual reader… for you see all Real Estate is LOCAL!

The Birmingham Market is literally made up of hundreds of micro markets, each with its own set of dynamics to be understood to be able to answer your questions about market conditions in a meaningful way.

Therefore, to get a meaningful answer to this question for any particular individual market (unless you are a macro economics aficionado) the person providing you with their insights should be asking the question where do you live or which market are you wanting an answer to for that question.

If you’re looking for answers to that question for any of the Birmingham Metro Markets you can get answers targeted to your specific neighborhood at www.HomeValuesInTrussville.com … Note that this site let’s you define by address the area / neighborhood that you are interested in market conditions… Furthermore, it does include the ability to see more than neighborhoods in the Trussville Market… So take a look at the facts for yourself…

And as always, if you need any help determining the meaning of that information drop me a note or contact a Trusted Realtor Professional familiar with your specific market.

 May the market be with you.

The Real Story…

News and commentary about the real estate market and related topics.
Dave Parrish, ABR®, CSP, GRI, ePRO®,REALTOR ®, RE/MAX MarketPlace

The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.

Waiting until Spring to list?

Thinking about selling your home… But waiting until spring to list?

Many sellers want to wait until the spring before putting their home on the market. This might be for any of several reasons:

1. They don’t want to be inconvenienced during the holiday season.
2. They believe that they will see more potential buyers and as a result will get a higher price.

In a normal real estate market, this may make sense. However, this market is anything but normal. This spring will also see some abnormalities. The biggest difference will be the direction prices will take.

In years past, the spring market would favor the seller because increased demand would outpace any increase in supply: the number of houses coming onto the market would not be as great as the number of buyers newly entering the market. In most situations, when demand is greater than supply, prices increase.

Late last year, banks were warned that they needed to guarantee that the paperwork necessary to start a foreclosure process on a family was both accurate and complete. Since then, the banks have slowed down the foreclosure process while they re-examined their procedures. They are now confident that all the required documentation is in order. We are currently waiting on a settlement between the banks and the state attorneys general that will establish what penalties will be assessed.

Once this settlement is reached, the banks will again move forward on many homes that are currently stalled at some stage in the foreclosure process.

In it’s September report, RealtyTrac explained:

“U.S. foreclosure activity has been mired down since October of last year, when the robo-signing controversy sparked a flurry of investigations into lender foreclosure procedures and paperwork. While foreclosure activity in September and the third quarter continued to register well below levels from a year ago, there is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up.

In November, RealtyTrac’s U.S. Foreclosure Market Report™ for October 2011, reported:

…foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 230,678 U.S. properties in October, a 7 percent increase from the previous month, but still down nearly 31 percent from October 2010… “The October foreclosure numbers continue to show strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year as lenders corrected foreclosure paperwork and processing problems,” said James Saccacio, chief executive officer of RealtyTrac.

How many homes are we talking about?

There are millions of homes in this category. In August the Calculated Risk Blog (http://CalculatedRiskBlog.com) quantified the situation:

“There are a large number of seriously delinquent mortgage loans in limbo waiting for this settlement. According to LPS, at the end of August there were about 1.87 million loans seriously delinquent and another 2.15 million loans in the foreclosure process. This is only down slightly from a year ago when 4.4 million loans were seriously delinquent or in-foreclosure. Once the settlement is reached, the pace of foreclosures will pick up sharply.

As more foreclosures come to the market at discounted prices, there will be greater downward pressure on all housing values… translated: PRICES Will Fall further!

What Do Experts Believe the Impact Will Be?

Here are the pricing projections by several major entities:

▪ Zillow believes we will not see a bottom in prices until the first quarter of 2012.

▪ Standard & Poors thinks prices will drop 5% in the next few months.

▪ JP Morgan Chase believes prices will depreciate 6 to 7% over the next six months.

▪ Barclays says prices will fall 7% by the end of the first quarter of 2012.

▪ Fannie Mae has published a recent report indicating that it will take the market another 5 years to rebound. “We are five years through a 10-year adjustment process,” said Fannie Mae chief economist Doug Duncan

Bottom Line

Waiting for the spring selling season to put your house on the market may not make sense this year. The increase in demand may be overshadowed by an increased supply of distressed properties. Most agree this increase in inventory will far outweigh buyer demand. In situations where supply is greater than demand, prices decrease.

You may pay a hefty price for the convenience of not having your property on the market right now.

May the market be with you.

The Real Story…

News and commentary about the real estate market and related topics.

Dave Parrish, ABR ®, CSP, GRI, ePRO ®, REALTOR ®, RE/MAX MarketPlace
The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.

Should I wait? (for the Buyer)

If you’re a regular reader, you have heard (read) my opinion that we are unlikely to see a substantial recovery in the housing market prior to 2020. Seems lately that more and more “experts” are agreeing with this time line. Even so, people are still making decisions everyday to buy or sell their homes.

What seems most important is that buyers and sellers make those decisions wisely. Doing so requires a deeper understanding of the factors that most buyers and sellers should be considering as they struggle with their respective decisions.

Last time I focused on the Seller’s Decision Making Process. This column focuses on the Buyer’s Decision Process and primarily on the decision for first-time buyers (those not now owning a home). My last column addressed the Buy Decision for Current Homeowners.

FACT:  For most markets, prices continue to fall and are likely to continue falling for the next several years.

Reasons to Buy:

1. Children/Family Needs: You desire a good place to raise your children and provide them with a good education. Related to this is the basic need for safety. It is increasingly difficult to find affordable rentals in the areas with the best schools and neighborhoods.
2. Control: Control over your environment… What colors you paint your walls… Having pets… etc…
3. Home Affordability vs. Rents: With declining prices and historically low interest rates, home affordability has been increasing substantially. At the same time with so many potential home buyers being removed from the buying market due to credit and employment issues, rents are on the rise and are expected to continue to rise until the market gets better. We have returned to the era where for the same amenities, it is cheaper to buy than to rent.
4. Historic Low Interest Rates: One day you’ll be telling folks “Yea, I remember when interest rates were 4% and lower…” These rates have been around for long enough that we’ve grown accustomed to them… But we all know that this is a temporary situation… While no one knows when this is going to happen, rates will go back up and with them the associated monthly payments for the same home, a 1% rise in interest rates over today’s rates is equivalent to a 20% increase in a home’s selling price (if you are financing 95% of the home’s price).
5. Interest Tax Deduction: The interest tax deduction provides even more costs reduction in the real cost to purchase a home over renting. Despite all the political discussion about tax reform…  the possibility of this deduction going away is highly remote.

Reasons to Stay Put:

1. You’re unsure that you will remain in the area for at least five to seven years. With declining prices over the course of the next several years followed by several years of minimal appreciation you would likely have negative equity at the time of sale. Get out your spreadsheet and see if the benefits gained will outweigh your likely equity position. Note: I am developing a spreadsheet that helps prospective buyers do just that. When complete, I’ll publish a link that gives you access to the tool.
2. Your job security is uncertain. If your company or business is in distress, it’s probably better to stay where you are until you are in a more secure situation.
3. You don’t have good credit or a decent down payment. Do you have a job and income you can document? Lenders have become much more careful about whom they’re giving their money to. Work on rebuilding your credit now. It’s possible it can be repaired much more quickly than you think.

May the market be with you.

The Real Story…

News and commentary about the real estate market and related topics.

Dave Parrish, ABR ®, CSP, GRI, ePRO ®, REALTOR ®, RE/MAX MarketPlace
The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.

Should I wait? (for the Seller)

If you’re a regular reader, you have heard (read) my opinion that we are unlikely to see a substantial recovery in the housing market prior to 2020. Seems lately that more and more “experts” are agreeing with this time line. Even so, people are still making decisions everyday to buy or sell their homes.

What seems most important is that buyers and sellers make those decisions wisely. Doing so requires a deeper understanding of the factors that most buyers and sellers should be considering as they struggle with their respective decisions.

Even though it’s definitely a Buyers’ Market, the first group that I focus on is that of the Seller.

FACT:  Now is NOT a Great time to sell… Even so, it could be the Best time to Sell!

Reasons to Sell:

1. Safety: Do you fear for your safety? If you don’t feel safe in your own home all other reasons to stay or go are pretty heavily diminished.
2. Job Change/Relocation: Job transfers or losses are often driving concerns for homeowners to sell. Do you really want to maintain this home from a distance? Are you considering renting the home… are you up to the task and risks of being a landlord? Has a job loss or change made the option of continuing in this current home unrealistic?
3. Market Values have dropped significantly: If values in your home’s market area have dropped or are dropping significantly (especially compared to surrounding areas), selling now may be your best option to preserve what remains of your equity or to stop future losses.
4. You have equity in your home and are moving to a place where homes are cheaper. In your new market, your money will go a lot further. Count your blessings!
5. You have outgrown your existing home and expansion doesn’t make economic sense. Don’t put more money into a home than you will be able to recoup unless your plan is to remain for several more years. If you are looking to upsize… you’re probably better off moving up now while mortgage rates are at historic lows and there are plenty of bargains on the market that will met your needs and desires.
6. You’ve found the right house in the right area for you. The schools are great. You love the area and know it would be hard to find another house like the one you have your eye on. In a better market, you would most likely have much more competition for that home. Understand that even in this market the most desirable properties can still experience multiple offers and bidding wars… but much less frequently than in times past.

Reasons to Stay Put:

1. You’ve lived in your house less than five years. Chances are you haven’t had enough time to accumulate equity in your home. Indeed, you may have negative equity.
2. Your job security is uncertain. If your company or business is in distress, it’s probably better to stay where you are until you are in a more secure situation. Conversely, it might be a time to consider downsizing as a way to cut future expenses. But be aware of the potential for negative equity if you have been in your current home less than five years.
3. You don’t have good credit or a decent down payment. Do you have a job and income you can document? Lenders have become much more careful about whom they’re giving their money to. Selling when you have credit problems could lock you out of a purchase of another home, even if your purpose is to decrease expenses.
4. You don’t have a driving reason/motivation to sell. If there is no driving need or motivation for selling (see reason to sell above).  

Next time we’ll take a look at the decision process for Buyers.

May the market be with you.

The Real Story…

News and commentary about the real estate market and related topics.

Dave Parrish, ABR ®, CSP, GRI, ePRO ®, REALTOR ®, RE/MAX MarketPlace
The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.

It’s a Changed World…

One of the things I most enjoy about my profession is the opportunity to talk with a wide variety of people about their dreams, troubles/concerns and aspirations. It not only gives me an opportunity to serve and help my neighbors but also the opportunity to learn about what’s going on in the world and where things might well be headed.

While everyone’s story is different, patterns of changed attitudes and expectations emerge that are very revealing about the future direction of many things. Take for example the term “Bigger and Better!” The mantra of the masses but a decade ago has clearly been rejected for “smaller, faster, cheaper, better.” This is a movement of light years at warp speed!

While many are holding their breath waiting for a return to the “era of excess” or even to something that feels normal, the truth is the world has changed! It may not be the change we wanted… but pining for what was is not a useful survival technique. In this faster world, it is in your best interests to accept the fact that the world has changed, understand the change and learn how to survive if not prosper in that changed world.

So how has the world changed and how should you respond?

First, I suggest you began listening very carefully for the number of times you hear the following words: Smaller, Simpler, Simplify, Sustainable, Downsize… These words describe the direction and the tone of the changed world! The day of the McMansion has passed… If you own one, now is the time to act because the market for it is clearly shrinking. If you can sell and breakeven let alone salvage some of your equity you are among the lucky!

Holding out for the return of the market will prove to be a big mistake.

So where is the market headed? The under 35 market (the Millennials) is clearly trending away from large suburban homes toward more urban and modest homes… and the upper age limit for this trend is clearly moving up! As a matter of fact an increasing number of Baby Boomers are trending in the same direction!

Secondly, understand that today’s interest rates are an anomaly! If you are intending to stay put in your larger home as your final home, content with the rising cost to maintain and operate that home… by all means make sure that your home is either paid for or in a permanent mortgage arrangement at these record low interest rates. By all means exit an ARM (Adjustable Rate Mortgage), as quickly as you can.

Finally, don’t procrastinate… That’s one thing that hasn’t changed!

May the market be with you.

Resuming our conversation “Why Buy…”

Buying Real Estate is a Good Investment

Last time we documented that the driving reasons for the purchase of a home aren’t all about price or even financial considerations. Even so, we would be remiss not to consider the financial aspects of the decision to buy. We documented additionally, that despite the current fall in real estate values, real estate has out performed the Stock Market over the course of time even the tumultuous recent past beginning January 1, 2000… and that did not include the recent declines in stock prices occurring the first part of this month. Taking that decline into consideration gives Real Estate an even more “glorious” track record…

We also established that just like day trading, short-term real estate investment is not for the feint of heart or the casual / uninitiated investor. I’ll speak more about flipping and investing in a future article. True enough; there was a time when it was a sure thing almost regardless of what you purchased. Now that day is gone; and, buying smart is paramount, as it should have always been.

WSJ: Buy Now

Even so, it’s about more than price. To me, the financial decision really comes down to those of quality and costs… the quality of the investment and the cost of the investment.

First Quality! The first thing in selecting any investment should be the quality of the investment… In real estate this can be summed up as location. No other attribute impacts the value of real estate as location. Location determines the potential for a property to perform in the future. And yet all too often, I see buyers make their decisions to purchase based on easily changed property characteristics, such as room color or whether the yard is shady or not … all the while seeming oblivious to location. True bargains are based on quality versus cost!

Buy Smart .. Buy to Hold!

Cost: Please understand price and cost are not the same thing! The cost of money is another factor of the cost of an investment. Granted if you’re paying cash you may not feel that cost so directly (even though it’s still there). But most homeowner’s are not paying cash… they’re borrowing the money!

Yes the FED just committed to keeping interest rates low for the next two years. But the truth of the matter is that the FED discount rate and the yield on T-Bills aren’t the only things that determine consumer interest rates. At today’s nominal rates (4.25% for a 30 year fixed rate mortgage) expect a rise to 5.5% interests (not out of the question 12-18 months out). A 1% rise in rates above the current rate of 4.25% represents an increase in the monthly payment (P&I) for a 30-year fixed rate mortgage of 12.15% of $59.59 per month on a $100,000 loan amount.

If we assume the drop in home prices for the next 12 months will be 6% (the number forecast by various sources vary between 4% and 8%) and the interest rate increases projected do occur… let’s say 1% to 5.25%, our increase in cost (Principal & Interest) would be a 5.4% increase in cost. So to absorb the likely increase in interest rates (1%), values would have to drop at least 11% to retain the same payment (monthly cost). No one is predicting price declines in this range for the Metro Birmingham Market or anywhere close to that for anything but the most depressed Alabama Markets.

So you don’t believe interest rates will rise 1%! To manage even a .5% increase in mortgage interest rates, prices would have to fall at least 5.75%! So what is the rate of decline in the market where you would like to buy a home?

These scenarios assume that there will be no inflation. So how does inflation impact these costs?

 While I’ll not go into the subject deeply here, inflation puts pressure on interest rates (causes them to rise) because future dollars are worth less than today’s dollars. Inflation also tends to have a greater impact on new home prices than existing home prices… so it’s effects aren’t felt evenly across the board when it comes to home prices. Even so, inflation has a tendency to push home prices up but not necessarily at the same rate that it is occurring due to market forces (supply and demand). In a word inflation is not good for those sitting on the sidelines.

At the present we are experiencing an inflation rate of 3.6% with all indicators pointing toward much higher rates in the future. A major impact inflation will have on the market in the current economic environment is driving up rents. Some of you may be old enough to remember the rent controls that went into effect in the 70’s when inflation rates approached the 12% rate. Or the 20% interest rates for home mortgages in 1980 when inflation was running at the 14-15% range.

Home ownership is a definite hedge against inflation! And yes… Despite the media… Now is a great time to buy! But buy smart… get the help of a reliable and professional counselor/advisor helping you make a truly informed choice.

May the market be with you.

Why buy…  (Part 1)

It seems that whenever anyone mentions real estate the conversation immediately turns to the financial aspects of buying a home. Where are prices headed? Where are interest rates headed? Is now the time to buy? Should I wait to try and get a ‘better buy’? Should I wait until I can get a ‘steal’?

National Housing Survey

The funny thing about all these questions is that survey-after-survey confirms that price is not the reason families actually buy a home.

When money is considered at all, it is in light of not paying rent to a landlord. Let’s look at two recent surveys as examples:

The top five reasons given in the survey for buying a home, in order, are:

Why they buy...

• It means having a good place to raise children and provide them with a good education
• You have a physical structure where you and your family feel safe
• It allows you to have more space for your family
• It gives you control of what you do with your living space (renovations and updates)
• Paying rent is not a good investment

The Myers Research and Strategic Services Survey

The top five reasons given in the survey for buying a home, in order, are:

• Home ownership provides a stable and safe environment for children and other family members
• Home ownership means the money you spend on housing goes towards building equity, rather than to a landlord
• Home ownership creates the opportunity to pay off a mortgage and own your home by the time you retire
• Home ownership creates the opportunity to live in a neighborhood that you enjoy
• Home ownership allows you the right to decorate, modify and renovate your home as you see fit

And yet price dominates our conversation when we talk about buying a home. However, when it comes down to it, we actually buy for the same reasons our parents and grandparents did – we want a better lifestyle for our families and ourselves.

Real Estate vs Stock Market ROI

Despite the precipitous fall in real estate values that has occurred over the past five years, real estate has still outperformed the stock markets. It seems that what has really happened is that the “sure-thing” mentality derived from years upon years of appreciating values lured the public into an unrealistic expectation of non-stop appreciation… no-risk gain. As with all markets, there will be ups and downs… Real estate is no different from any other investment in that regard. Even so, when you look at true performance year-over-year, it has out performed most other investment options available to the general public.

Now I don’t want to discount the financial reasons to buy… It’s just that they aren’t the major reason for buying. Even so, let’s take a look at what the record actually shows about the value of real estate as an investment and what the financial experts have to say.

As the Oracle of Omaha, Warren Buffett, believes and does… He buys to hold. He looks at the intrinsic value of any option before investing his hard earned cash and then buys to hold for the long-term. He shuns the short-term view, as should most investors. The short-term, often highly dependent on market timing, will always be higher risk and require greater skill (and perhaps luck) to be successful.

I’ll continue this discussion in my next column… until then…

May the market be with you.

The Real Story…

News and commentary about the real estate market and related topics.
Dave Parrish, ABR®,CSP,GRI,ePRO®,REALTOR ®, RE/MAX MarketPlace

The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.

No man is an island…

We like to think of ourselves, as free and independent… it’s built into the genes of every American citizen and those too who wish to be citizens of this land. As a matter of fact, a large part of the holiday just celebrated honors not only the historic event occurring more than 200 years ago but also a national belief that we operate independently of all others. It is very much similar to thinking of ourselves, as an island unaffected by the events of foreign shores or different planes…

No Man Is An Island… All mankind is of one author, and is one volume; when one man dies, one chapter is not torn out of the book, but translated into a better language; and every chapter must be so translated…As therefore the bell that rings to a sermon, calls not upon the preacher only, but upon the congregation to come: so this bell calls us all: but how much more me, who am brought so near the door by this sickness….No man is an island, entire of itself…any man’s death diminishes me, because I am involved in mankind; and therefore never send to know for whom the bell tolls; it tolls for thee.  John Donne   Meditation XVIIFrom Devotions Upon Emergent  Occasions (1623)

In the realm of real estate we have quickly and painfully learned how inaccurate this idea is… for we are now paying for the irresponsible and greedy actions of many. They may have been mistakes made by others and it may even be that we too contributed to those pains now shared.

As much as we want the turmoil of this recession and the dower real estate market to be over, it is not nor will it be anytime soon. As a matter of fact there are reports from dependable sources that not only is it continuing but that it may even dip further.

In a recent interview economist, author and Yale University Professor Robert Shiller (co-founder of the Case-Shiller Home-Price Index) says that chances are ‘substantial’ that the United States is headed back into a recession.

A weak U.S. housing market and a murky global economy indicate that the country is at a "tipping point" at the edge of a fresh economic contraction. While some economic models suggest the economy is on the path to recovery, we are in unchartered territory, which due to the numerous unknowns makes these models less reliable. Shiller believes the U.S. economy will face a double-dip… further economic stress largely based on the current fragility of the housing market.

Home prices dropped 33 percent in 20 cities through March from their 2006 peak, reaching their lowest level since 2003, according to the latest Case-Shiller report on May 31. The decline means the sector has double-dipped back into negative territory, as the index fell below its previous post-housing-bubble low set in April 2009.

Shiller has said that U.S. housing prices could decline another 10 to 25 percent over the next five years. "There’s no precedent for this statistically, so no way to predict," Shiller said recently, according to Bloomberg.

With so many houses in foreclosure, prices will stay depressed, especially with unemployment at 9.1 percent and tighter lending restrictions being the norm at many financial institutions.

Other experts agree that high unemployment rates and a tough economy mean housing prices are still well on their way on a downward slope.

In a recent Bloomberg report Paul Dales, a senior U.S. economist stated "With the foreclosure pipeline still full to bursting, it’s hard to see this downward pressure on prices abating."

While many believe the housing market may see a pickup in prices this summer, Shiller is concerned about the long-term path the sector is taking. Among many of the items impacting markets are issues that many may seem remote… yet their impact looms large on the recovery.

For example the economic crisis faced in Greece, a country the same size of the state of Alabama in terms of area with a population and in terms of population smaller than that of Metro Los Angeles area (compared to other nations Greece is number 73 based on population), has the potential of disastrous impact on the entire world economy… first to the European Union but then spreading to other nations including the U.S and China.

Here in the U.S.  (much as happened with Japan’s failed efforts to ease their economic crisis of the 90’s), in our efforts to avoid/lessen the pain of the economic crisis…the Federal Reserve has pumped hundreds of billions into the economy in order to spur more robust economic growth, while interest rates stand near zero. However, all the loose monetary policy in the world won’t help if consumer demand just isn’t there.

"When the demand isn’t there, you can lower interest rates all the way to zero and people are still not willing to spend — that’s where we are right now," Shiller says.

Closer to home, we must be concerned about the actions of individuals electing to do Strategic Walk-Away’s (those allowing their homes to go into foreclosure when in fact they are able to make their mortgage payments) as a means of protecting themselves from the reality of negativity equity caused by the current economic down-turn while individually contributing to a deepening of the housing crisis.

Truly “no man is an island”.  Understand this or better yet remember it often, as you go about your daily business. Act in a way that honors the impact we have on the world around us, with a sense of fairness, justice and compassion, with an attitude and actions that leave a trail of integrity and happiness in your wake with ripples of joy as you pass through the lives of others. Be aware that we may be like ships passing as in the night, but even so, we all are sailing upon the same sea, each one of us, perhaps unknowingly, affecting the journey of the other. Or as my wife loves to say: Do right, karma is real… What goes around comes around.

May the market be with you.

The Real Story…

News and commentary about the real estate market and related topics.

Dave Parrish, ABR®, CSP, GRI, ePRO®,REALTOR ®, RE/MAX MarketPlace
The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.

5 Reasons You Should Consider Selling Now

The decision to sell right now has been a difficult one for many. Seems everyone is waiting on the bottom… Waiting on a return of the housing market. The truth of the matter is that while we may well be bumping along the bottom of the market now, we are still a long way away from the recovery of the market and we will see further declines in housing prices, as inventory levels continue to rise. As you have read here before, I don’t believe that we will see a true stabilization of the market before 2016 at the earliest… and it could be even longer perhaps 2020. So if you plan on moving anytime in 2011 or perhaps even the next couple of years, you may want to strongly consider selling your house now rather than waiting. Here are five reasons why:

1. Increased Buyer Activity…

There is currently an increase in the number of buyers attending open houses and searching online for a home. This surge dramatically increases the exposure for your house. The best chance of getting quality offers (perhaps even multiple offers) is RIGHT NOW!

2. Distressed Property Sales will continue to increase for the near term.

The good news is that the number of people paying their mortgage on time is increasing. This will lead to fewer new distressed property listings once the current backlog is put on the market. The not-so-good news is that there is still a large inventory of existing foreclosures and short sales that will still be coming to market.

The Wall Street Journal:

Why It’s Time to Buy

“Despite all the gloom, there are growing indications that it is a good time to buy… The long-term benefits of home ownership remain very much intact. For now, at least, you can deduct the mortgage interest on your taxes—a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord. And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free. Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with.”

LPS (Lender Processing Services) reported in their latest Mortgage Monitor that:

• There are still twice as many loans going 90+ days delinquent as are starting foreclosure (pointing to a growing back log – future foreclosures).
• There are almost three times more foreclosure starts as there are foreclosure sales (indicating a still growing inventory of foreclosures).
• Distressed property inventory levels are almost 45 times the rate of monthly foreclosure sales (current sales levels are unable to absorb the current level of foreclosures and short-sales).

This backlog of properties that will start coming to the market in about 90 days as banks clear up their paperwork problems. These properties sell at deep discounts. They will be your competition. Based on the existing home inventory plus all the additional inventory about to be added, we are looking at up to six years to work through that inventory pointing to a continued decline in home prices… So you can expect to get less for the your home next month than you will three months down the road… less next year than this year!

3. Interest rates are up over the last six months.

Recent Interest Rates

Also bouncing along the bottom last fall at historical lows, interest rates have climbed over 1/4% in the last six months. Every time the rates increase 1/4%, approximately 250,000 buyers are eliminated from qualifying for a mortgage. In an environment of volatile rates, waiting could mean that there will be fewer buyers eligible to purchase your house. It also could mean that you will pay a higher rate on the next home you buy.

4. Qualifying for a mortgage is about to get even more difficult.

Besides increasing rates, there are other factors that will hinder a buyer’s ability to qualify for a mortgage as we move forward. Lending standards have been getting tighter over the last year. And as the government debates the new proposed risk retention guidelines for mortgages with less than 20% down (QRM – Qualified Residential Mortgages), banks are gearing up for even more stringent standards.

Morgan Stanley recently stated: “Recent developments in issues such as GSE reform, Dodd-Frank securitization rules, and foreclosure settlement issues suggest a tighter and more expensive environment for mortgage credit.” This may impact any potential purchaser for your property and may also impact your next purchase.

5. It’s time to get on with your life.

Maybe the most important reason to sell now is so you can get on with your life. Do not allow a less-than-stellar housing market prevent you from reaching your goals. Think about the reasons you decided to move in the first place. Are these reasons still important to you? If you have to take less than you were originally hoping to get for your house, your family has a question to ask each other: Is the difference in sales price worth putting off our plans? Only you and your family know the answer to that question. If you plan to sell this year or even next, the reasons above prove that selling now makes more sense than waiting to later.

Sit down with a trusted real estate professional today to fully understand the best option for your individual situation.

May the market be with you.

Research for this column was based personal research and from information extracted from the KCMBlog.com  (Keeping Current Matters / Steve Harney  ©)