BrokersFirstRealty.com | Shining Some Light on the Local Atlanta Real Estate Scene » 2008

Archive for October, 2008

Despite September Sales Gains Nationwide - Atlanta Housing Outlook Remains Bleak For Sellers

Posted by Doug Quance on October 26th, 2008

September Gains Were Not A Sign Of A Housing Recovery

The jump in the number of resale homes sold nationally in September is welcome news to a battered U.S. housing market. Sales of existing homes of all types were up 5.5% nationally for the month to a seasonally adjusted annual rate (SAAR) of 5.18 million units, up 1.4% from the same month last year. Single-family home sales were up 6.2% to a SAAR of 4.62 million, 3.8% above the pace of last September.

This is the first year-over-year sales gain since November, 2005. According to the National Association of Realtors (NAR), 35-40% of those sales were foreclosed or distressed properties - and 80% of those buyers intended to live in the homes they bought.

At first blush, these numbers look promising - but what the media fails to analyze is how changes in financing is responsible, in part, for these gains. The housing bill that was passed into law in July banned down payment assistance programs, and virtually all lenders immediately canceled those programs for loans that would not fund by September 30, 2008. Buyers who needed to take advantage of these programs moved quickly to ensure that they could buy their homes.

At the same time, foreclosure filings continued to rise in September - and the tsunami of subprime loans has not yet subsided. Many experts believe that by the end of the year, between a quarter to a third of all homes for sale are going to be foreclosures - thus keeping the housing market depressed through 2009. Currently, the absorption rate gives the U.S. a 10 month supply of homes.

Keep in mind that many of those foreclosed home sales in September were based upon contracts written in July and August - and at that time, we had not yet experienced the credit crisis. Add to that a stock market going from a bear market to a world-wide meltdown, and you can see why this writer does not see much light at the end of the tunnel - at least as far as sellers are concerned.

In the long term, I am bullish for both the stock market and the housing market. No one can predict the bottoms of either markets - but we can recognize when markets are depressed and where opportunities can be exploited. The first part of the equation of buying low and selling high - is buying low… and this market provides that opportunity.

For example, I have recently discovered great opportunites from both low-end as well as high-end properties here in the greater Atlanta area. Some of the recent properties I have found include a condo that can be bought for $40K in a community where the rents are around $700 a month… or a single family home that is only a couple of years old with comparables in the $500-550K range - with a current list price of $360K.

Many homes in the 2006 price range of $400K to $600K are now getting killed from oversupply. These homes were built to accommodate the demand from buyers who were able to use slick financing schemes to finance homes that would otherwise be out of their reach - and builders were more than happy to satisfy that demand. Many of these same homes are now selling for a steep discount, as those types of loans are no longer available. If you can afford a home in the $300-400K price range, NOW is the time to take advantage of these values.

Although a recession is looming, and the upside of the housing market a few years away, the real gains may be realized by buyers who are able to take advantage of both today’s prices - and today’s relatively low interest rates. Many financial analysts predict a rise in long-term fixed mortgage rates, which means that buyers who lock in todays rates AND depressed prices may be the smartest real estate investors of all.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

Foreclosures, Investment Properties, Mortgages, Real Estate News, Tips For Buyers, Trends | 2 Comments »

Atlanta Real Estate Agent Gets 14 Years In Federal Prison For Fraud

Posted by Doug Quance on October 11th, 2008

Just Another Facet In This World-wide Economic Crisis

Joseph Jetton, 61, was sentenced yesterday to 14 years in federal prison and ordered to pay $11.2 million in restitution for leading a mortgage fraud ring in the greater Atlanta metro area. He was charged with conspiracy, bank fraud, wire fraud, and money laundering, and was convicted after a three-week trial in November 2007.

During the final months of the housing boom, from late 2004 to early 2006, Jetton ran a scheme that involved unqualified straw purchasers; crooked loan officers; crooked builders; and crooked attorneys.

Jetton was able to profit through this maze of co-conspirators who assisted in the fraudulent purchase of properties by inflating the sale prices, and pocketing the difference on each transaction. The straw purchasers are reported to have received as much at $600K per property from the fraudulent loan proceeds.

You can view a copy of the indictment HERE.

Many of the co-conspirators were sentenced earlier this year. Like others in the business, I have been following this story, as it affects our industry - and my clients.

In January 2007, I warned the public to be wary of the mortgage fraud comparables, as this had become a serious problem that could easily spill over and harm an innocent buyer trying to make a good faith arms-length purchase.

Since I monitor foreclosures, I had already viewed some of the properties that Jetton’s gang had "purchased". I couldn’t write about most of them, as my gut feeling had always been that a fraud had been committed - but without evidence, I could not put my feelings into writing.

If there is one good thing to come out of the collapse of the housing market, it is that we will root out most of these criminals - and with due process, they’ll pay the price for their crimes.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

Atlanta Area News, Consumer Alerts, Foreclosures, Tips For Buyers, Trends | 2 Comments »

Until You Sell Your Home - You Have Neither Made Money Nor Lost Money

Posted by Doug Quance on October 2nd, 2008

Purchase Establishes Basis - Sale Determines Gain Or Loss

If there is one lesson to be learned from all of this calamity in the real estate market, it is that your gains or your losses are similiar to those in the stock market - they are tied to the point in time at which you acquire or sell an asset.

The goal, naturally, is to ‘buy low and sell high’.

Many people who bought real estate during the peak of the market feel that they have lost money. But have they lost money? Only if they sell.

Take someone who had bought a $200K home two years ago that might be worth $180K right now. Have they lost $20K? Only if they sell the property. Until they actually sell the home, the loss is only on paper. That same home could be worth more than $250K in five years - but if sold today, the loss will be finalized.

Some homeowners believed that they had actually made money when their home values went up - and then used second mortgages or equity credit lines to convert equity to cash. The reality is that they were simply borrowing more money.

The smart money - in both the stock and real estate markets - is chasing distressed assets. Why do you think world-class investor Warren Buffett just invested $5 billion in Goldman Sachs and $3 billion in General Electric?

Depressed markets provide the best buying opportunities, and the current market is no exception. If you are forced to sell in this market, you will be transferring your profit potential to the next owner - just like the big banks are doing right now.

In times like these - it’s good to be a buyer.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

Foreclosures, Investment Properties, Real Estate News, Tips For Buyers, Tips For Homeowners | No Comments »

Time and Temp

Atlanta Weather

Area Median Price Trends

Atl Business Chronicle

Building Online

Snellville Talk

Norcross Talk

Around Sandy Springs

Duluth Talk

Northside Talk

Scenius: Switched-On Marketing

The Roadmap

Ask The Broker

Syndicate

Quick Links

Recent Posts

Recent Comments

The Roadmap

Quick Links

Archive for October, 2008

Despite September Sales Gains Nationwide - Atlanta Housing Outlook Remains Bleak For Sellers

Atlanta Real Estate Agent Gets 14 Years In Federal Prison For Fraud

Until You Sell Your Home - You Have Neither Made Money Nor Lost Money