To Rent or Not to Rent?

Additional Reasons to Buy NOW!!!

2008-09-13T11:36:00.000-07:00

Anyone paying attention to the housing market will realize that now is the time to buy rather than rent. For first time home buyers, the Federal government is offering up to $7500 in tax credits. This tax credit must be paid back over the first few years of home ownership, but it is a great incentive if you need assistance for a down payment or to pay closing cost.

Not only this, but the interest rates are at a low that we have not seen in many, many years. With these rates, you can easily buy a home for less than you can rent. To go a little further, there are still places where you can get 97% financing and possibly more.

If this is not enough of an incentive, the housing market in the Raleigh/Durham/Chapel Hill area that many sellers are highly motivated and will be willing to make major concessions to include price and/or terms.

For example, I represented a young couple in their purchase (it will be closing at the end of Sept), and my clients received a number of concessions to include $12,000 off the list price, $6,000 in closing cost and $4,000 for appliances on a home listed just under $300,000. My clients are very happy and are getting a beautiful home; you could be next.

For more information about the benefits of buying a home today, please call or email me as I will be happy to talk with you about it.

Not sure if you should buy! Foreclosures are up making it a great market to buy

2008-08-14T12:40:00.001-07:00

The Triangle Business Journal reported today that North Carolina foreclosure filings make a tremendous jump in July. RealtyTrac, a California based real estate tracking company, reports that there were 4,303 foreclosure filings in North Carolina in the month of July. This is a 127 percent increase from July 2007 and up 24 percent from June 2008. These filings includes default notices, auction sale notices, and bank repossessions.

For every 936 North Carolina household, there was one foreclosure filing, which ranks North Carolina 25th in the nation. The highest foreclosure rate was Nevada, where one in every 106 households; California second with one in every 182 households, and Florida is third with one in every 186 households.

The states with the highest foreclosure totals included California (72,285), Florida (45,884) and Ohio (13,457).

Nationally, there are 272,171 foreclosures notices sent out in July which represents a 55 percent increase over last year and nearly an 8 percent increase from June, 2008.

RealtyTrac went on to say that approximately 17 percent of the national inventory of homes for sale were bank REOs (Real Estate Owned).

This is a major problem for home sellers across the Triangle and North Carolina, but a huge positive for home buyers. First of all, banks are more incline to negotiate on price to get the home off their books, even if it means taking a loss on the value of the home. Last year, I helped an investor purchase a foreclosed home in Raleigh for nearly $30,000 less than the market value at the time.

Secondly, the added competition from banked owned properties forces individual home sellers to negotiate on price or repairs in order to sell their homes. Homes in Raleigh are being reduced in price at an alarming rate in order to generate interest in the home and get it sold. Quite a few months ago, I helped a couple purchase a home that had already been reduced $30,000 dollars and we purchased it for $35,000 less than that listed price. The buyers actually purchased a home with approximately $65,000 in equity built-in.

As I mentioned, sellers are more willing to negotiate then ever before, so it is possible to get a seller to pay for you to get out of your current lease if you purchase their home. To get a seller to pay for your lease, you will most likely have to make a full price offer, but it is a small price to pay to get out of the lease and to begin to build equity in your new home.

There are many ways to get into a new home if you are currently renting and I would encourage you to contact me with any questions about purchasing a home in the Raleigh/Durham/Chapel Hill areas.

Gas Prices at 3 month low; How low can it go?

2008-08-13T13:34:00.000-07:00

Did you hear the good news? Gas prices are down to the lowest level in 3 months. GAS PRICES ARE DOWN TO THE LOWEST LEVEL IN 3 MONTHS!!!

The average price U.S. consumers paid for a gallon of gas hit a three month low as the cost dropped 7.1 cents last week to $3.81. Yes, this is still $1.04 a gallon higher compared to a year ago, but it is moving in the right direction, primarily due to the lifting of the Executive Order by President Bush to drill off the coast.

This has caused a $33 drop in crude prices that we should expect to continue to fall over the coming weeks. According to the Energy Information Administration (EIA), every $1 price drop in crude oil results in a 2.4 cents off the price for a gallon of gasoline. If this is truly the case, then gasoline should fall about 79 cents from its peak according to the EIA. Of course, the national price has only fallen 30 cents, but common sense would dictate that the prices will decline slower then they rise due to unforeseen circumstances.

In the EIA's survey, the highest price for gas was on the West Coast at $4.06 a gallon, down 8.3 cents last week. This is the only region to remain above $4 a gallon with San Francisco having the highest big city price at $4.18, down 7.9 cents.

According to AAA Automobile Club, the average price in North Carolina has dropped dramatically over the past month from a high of $4.006 a gallon to $3.879 this month. Of course, this time last year, the price in North Carolina was $2.82 a gallon.

First-Time Homebuyers Tax Credit Enacted

2008-08-05T11:58:00.001-07:00

The National Association of Home Builders (NAHB) has announced a major success for them as a tax credit for first time home buyers has been added to the new Housing Stimulus Package. According to the NAHB, the temporary first-time home buyer tax credit will help stimulate home buying, reduce excess supply in housing markets and shore up home prices. They go on to say that it is imperative that the word of this new tax credit get out to those who could benefit from this credit.

This milestone legislation will help provide an enormous boost to the housing industry in the form of a tax credit for first time home buyers as well as much-needed measures that will improve mortgage liquidity, foster refinancing of troubled loans and expand the supply of affordable rental housing.

A new consumer website www.FederalHousingTaxCredit.com has been introduced to give first time home buyers more information about this great product.This site includes details and a set of comprehensive questions and answers about how the credit works and how consumers can take advantage of it.

As a real estate agent, I can appreciate this program as I know many builders who have been struggling with selling homes in this current market. I am not a huge fan of the entire package, but this portion of the package will be very beneficial to help many move into home ownership.

For more information about this tax credit, please call or email me.

Executive Townhouse with Great Location

2008-07-17T19:03:00.000-07:00

JUST LISTED!!!

This great townhouse is very conveniently located near Crabtree Valley Mall and the I-440 Beltline. This gorgeous home, built in 2006, has all the upgrades to include Corian countertops, wainscoting in the dining room and the stairs, wrought iron on the stairs, and plantation shutters in the family room. This home also has hardwood floors, and tile in this fabulous 3 story home. Not only does the family room have plantation shutters, but is also pre-wired for surround sound and a warming spiral staircase from the foyer. This home has 4 bedrooms and 2 full and 2 half baths and has nearly 2500 sqft. The master bedroom has cathedral ceilings and the bath has a separate garden tub and shower as well as a large walk-in closet.

The garage and a bedroom are located in the basement along with the utility room. The garage has epoxy flooring for long life and stain resistance. Additionally, the garage has plenty of storage room for the family bikes. The basement bedroom can be a game/entertainment room or a private bedroom for the teenage or the in-laws.

The kitchen is immaculate with plenty of counter space and an island bar for family breakfast. The kitchen also has a large pantry and is connected to the dining room. The deck overlooks the large and spacious common area shared by the surrounding neighbors. It is a great place to spend time with the children or the pets as there is a walkway completely around the common area.

Backyard Large common area for family and the pets to play, complete with a sidewalk that circles the common area.	Bedroom 2 Large bedroom with a sitting area and a good closet. This bedroom will be great for a guest room or for the teen.
Bedroom 3 Spacious bedroom on the second floor that has a good closet and place for a student's desk.	Bedroom 4 Spacious bedroom in the basement that could be an office, game/entertainment room or an in-law suite.
Deck Nice wooden deck that overlooks the common area with plenty of great foliage for your viewing. It makes for a great spot to spend the evenings with a glass of wine.	Dining Room Cozy family dining room with wainscoting whose window overlook the common backyard.
Family Room Spacious family room that has a gas fireplace, pre-wired for surround sound, and plantation shutters will be a cozy family gathering area to create family memories.	Finished Basement The finished basement includes an oversized garage with plenty of storage space, a bedroom that could have many different uses, and the utility room with a half bathroom.
Fireplace In the family room,the gas fireplace will make for cozy evenings for the entire family.	Garage Oversized garage with epoxy flooring, this garage has great storage space for all of the family toys.
Gourmet Kitchen Large kitchen that comes with Corian countertops, a large pantry, and an island bar, great for family breakfasts. This homes comes with all of the white appliances in the kitchen, including the refrigerator.	Master Bathroom The master bathroom comes complete with a large, garden tub and an oversized separate shower. This bathroom has 2 separate vanities for his/her use. Additionally, there is a large walk-in closet and a linen closet.
Master Bedroom A cathedral ceiling adorns this spacious room. It has plenty of room for a king-size bed and all of your special furniture. For more information about this beautiful home, please visit 2741LaurelCherry.com.

Announcing a great new Listing

2008-06-30T14:54:00.001-07:00

A great home in a starter community close to Raleigh, this home offers much potential and many amenities for the 1st time home buyer or an investor. With 3 bedrooms and 2 baths, this home has the basic needs for a young family. However, this home also offers the added benefit of having a great sun room/den in addition to a large family room with a wood fireplace. This is a must see home for the investor or young family.

This home also offers a great backyard that will be great for barbecues, pool, or extended decking system. Additionally, the children will benefit from having a great yard to play as it is very clear and flat for many activities.

Little River park is approximately 1 mile from this home and offers a picturesque waterfall, a great swing set, and numerous picnic sites for the family to enjoy. Visit this great park when you visit the home as it is a quaint park with many trees.

For more information about this home and to view all the photos of this home, please visit the website 221PineviewDrive.com or email me with your questions.

Renting is more expensive than buying!!!

2008-04-21T12:29:00.000-07:00

The National Association of Realtors recently reported that the "real reason" why home sales don't crash for too long is simply, rents. Basically, when purchase demands slow down, rentals speed up. So, rents provide the floor that stops housing prices from any major declines.

All of the national media outlets have been reporting on the fall of home prices across the nation. It has been on CNN, CBS, FoxNews, just to name a few. However, they fail to report that rental prices have actually gone up dramatically across the nation. In fact, the 1st quarter of 2008 marks the 24th consecutive quarter that rental prices have increased nationwide.

The softer home markets and the tougher lending restrictions have forced many would-be homeowners into becoming renters. This is not necessarily a good thing for the family budget as many renters are spending more than half of their income on housing, while not gaining any equity or wealth.

To compound this issue, about 40% of all potential home buyers are first time homebuyers, so eliminating them from the homebuying equation, you have successfully limited the pool of buyers for homes that are currently on the market. Add to the mix that most of the first time homebuyers purchase homes from previous first timers, who are looking to move up to a larger, more expensive home, and now you are creating a cavernous hole of unsold homes due to a lack of buyers.

A bright spot is that most mortgage lenders have found an increase in the number of loan applications, despite a slight rise in the interest rates from 5.75% to 5.78%. Another bright spot is the typical buying season is the spring and activity is bound to start up again.

In closing, if you wish to pay more for rent, then continue to rent. If you are interested in buying a home, email me and I will get to work on getting you into your new home.

What is the cost of waiting to Buy your 1st Home?

2008-04-01T20:38:00.000-07:00

There are many advantages and disadvantages to owning real estate. You most likely know all the stated advantages to owning your home and the disadvantages to owning your home. There is no secret that owning a home is better in the long run for anyone who wants to build individual wealth, by building equity, not to mention the tax advantages to writing off mortgage interest.

As a result, many of you that are currently renting a home have the dream of owning a home at some point in the future. Is it attainable or just a pipe dream? What is it costing you to wait? Is it the right time to buy a home with the market the way it is? First of all, it is always a good time to own real estate and buy it. But, to take it a step further, I will be discussing exact reasons why you should buy now and what it will cost you to wait. What would be the cost to wait six months to a year before you buy your first home?

The common thought process at this time with 1st time home buyers is to wait for the real estate market to "bottom out", where they can get the best price and will not lose any value after they purchase that new home. The problem with this scenario is that there is no guarantee that our market will "bottom out". In fact, it has been predicted that Raleigh and the Triangle will be one area that will see positive appreciation this year. Despite the difficulties across the nation last year, this area saw a positive appreciation of about 3%. Can you risk that the housing prices will fall this year when every indication is the slight recession that the nation is experiencing will be short-lived and may be over by the end of 2008. So, if you wait to buy a home until the end of the year, you risk paying a higher interest rate on your home due to an improving economy.

It is no secret that the first thing that the Federal Reserve Chairman typically does when the economic numbers are good is to raise the prime rate to prevent inflation. This prime rate is a funny thing when it comes to the home mortgage rates. When the prime rate falls, you do not see an immediate effect on the mortgage rates as it may take a few months to the rates to fall. However, when the prime rate goes up, you will see almost an immediate increase in the mortgage rates. For the profit minded people, this is no surprise since the lending institutions make more money when the rates are higher than they do when the rate are lower. So, it makes sense that they will go down slower then they will go up.

With this in mind, you could actually have a situation where you may pay less for a home in six months than you will today, but have a higher mortgage payment since the rates will most likely be higher in six months than they are today. We all know that the bottom line is how much we have to pay a month and not how much we actually pay for the home.

Another trend makes it more advisable to purchase your home today is the incentives that builders are giving to sell their homes. I have seen where a builder is paying $10,000 towards upgrades or closing cost on a home priced in the high $100,000-low $200,000s. Others are discounting there homes by $50,000 to sell their inventory. You see this trend with the national builders who are seeing a major downturn in their business in other areas of the country and want to make up the difference here.

The fact that the economy is slumping a bit means that it is a great time to buy a home in the Raleigh, Cary, Durham areas. Money is very cheap and sellers are very motivated to sell. Whenever it is a buyer's market, it is a great time to buy. My mantra has always been that it is always a great time to buy and own real estate, but there are varying degrees as to when is more advantageous than others. With the effects of the national real estate market making its way into the mindset of many North Carolina homeowners, it makes this the perfect time to buy a home. My lenders will tell you that money is still available to borrow and there are many programs still available for the 1st time home buyer. Call or email me if you would like to see if you can buy a home today.

Path to Wealth is Through Real Estate Holdings

2008-01-29T12:26:00.000-08:00

One of the most sure fire ways to improve your wealth is through the purchase and maintaining of real estate. Real estate is typically the safest investment tool as it will always perform well into the future. You may see short term reductions in the real estate market due to adjustments like we are seeing now in many areas throughout the country. However, real estate will always appreciate over the long-term. There are many reasons we have seen a major "bubble bursting" in the real estate market throughout the U.S. and chief among them is speculators. Real estate is not a "get rich quick scheme", but rather a means to generate positive growth through the years.

The first issue with the current state of the real estate market is the speculation that has been done over the past 5-10 years. Many people began to view real estate as they did the Dot.com stocks of the '90s; a means to a quick buck. This is not the nature of real estate. Consider the fact that many people have held land in their families for 50-100 years to see a major profit from their initial investment. Using real estate as anything but a long-term investment is a highly risky venture since short term factors may affect the value of the property. These factors are virtually eliminated if the property is held for a longer period of time.

The average homeowner is not going to see a major increase in their property values annually and expect to maintain the increases. Traditionally, real estate appreciates 3-5% annually. This does not sound like much and it isn't much for the short term. But, keep the home for 5-10 years and you should see a much more favorable return. For instance, a 5% increase on a home that cost $200,000 is nearly $10,000. Now, this sounds good and is good, but consider the commissions and closing cost you will need to pay to sell the home and you are looking at a net loss since commissions can be anywhere from 3-6% and another 1% for additional closing cost.

Now, consider the same home that has been held for 5 years. The return would be much greater compounded over 5 years and would be approximately $255,250. Now, take out 6% for the maximum closing cost of $15,315 and you would see a profit of nearly $40,000. Keep the same home for 10 years and the numbers grow even more.

When the market appreciates too quickly, you actually price too many people out of homes and there is a natural correction within the marketplace. You see this happen with the stock market where there is a correction if it is considered to be overpriced. Historically, quick appreciation or either real estate or the stock market results in a correction.

There are two primary investment tools in order to improve your financial position: real estate and stock market. With the stock market, you are buying into a business that usually makes money, but there is no guarantee that it will. If the business loses money as many have in 2007, then the stock will not perform very well for you. Additionally, how many businesses have gone bankrupt in the past 5-10 years? You always have that issue when investing in the stock market that the business will not be viable for the long term and minus inside information, which is illegal, an individual on the outside does not really know how viable the business actually is. Many people thought Enron was a very viable company, until the doors were locked and the employees dismissed.

Real estate is a much better option in which to build your wealth. Despite short term hazards, the long term position for real estate is always strong. First of all, they are not building anymore land, so it is a limited commodity. Secondly, real estate will always appreciate over the long term barring a major catastrophe. Real estate is the more solid investment tool for long term wealth building.

Should all of your investment dollars be in real estate? Of course not, since the number 1 rule of investment planning is to diversify. A first home and possibly investment property will always be beneficial to your bottom line and will result in increased wealth. On average, 23% to 29% of your wealth should be allocated to real estate with 11%-13% of your real estate investment being your primary home.

Call me if you are interested in improving your net worth via real estate in the Raleigh/Durham market. Even if you are looking outside this area, I can get you in touch with a successful agent who can help you.

Mayors Conference warns of doom and gloom

2007-12-05T08:53:00.000-08:00

A report released by the U.S. Conference of Mayors suggests that the mortgage crisis may impact the overall economy in 2008. With an escalating mortgage crisis, the report suggests that another 1.4 million U.S. homes will be foreclosed while driving the nationwide property values lower by 7 percent next year. Add to the lower property values, it will result in lower property tax revenue to many states to include California and Florida where home values had soared over the past few years.

The forecast, prepared by the economic consulting firm Global Insight, was released as the non-partisan mayors group began a special meeting in Detroit to address the foreclosure crisis and its connection to problems such as neighborhood blight and crime.

The consultants have forecasted that the U.S. homeowners would see property values fall by $1.2 trillion in 2008 with almost half of those overall losses occurring in California, which translates to a 16% drop in property values and costing the state nearly $3 billion in property taxes.

Furthermore, the report stated that the weakening U.S. property market would reduce home values by some $676 billion and another $519 billion in losses could be tied directly to the financial problems facing borrowers that are unable to meet their escalating monthly mortgage payments.

The problem came as a result of the property value booms of 2004 and 2005, which resulted in higher housing values. With the low cost of borrowing money that we prevalent during this period, private investors wanted to increase their profit returns by offering more sub-prime loans which have a higher risk for the investor, but also a higher rate of return than the conventional loans. The investors felt that their investments were safe due to the increasing value of homes. The resulting downshift in property values has made their investments into these high risk loans a liability for the homeowners and the investors. This has resulted in these new homeowners owing more on their homes than the homes are valued.

The representatives of the Conference of Mayors are expected to call upon mortgage investors and loan servicing companies to make a collective effort to work out new payment terms to avoid defaulted loans from these new homeowners.

The report also warned that they U.S. economy would grow by only 1.9% in 2008 with both hiring and consumer spending stagnated.

The effect on the Raleigh-Cary market will be decidedly less than many areas around the country due to the economic factors and housing prices being much better than the rest of the country. Additionally, the housing prices have continued to increase in this area for the time being. However, it is expected to be a much tougher real estate market in 2008 than it was in 2007 as these market conditions will finally hit the Triangle market, but to a lesser degree than the rest of the country.

It has been bantered about that the doom and gloom about the real estate market should subside after the 2008 Presidential elections. Traditionally, election years generate more apathy and concern about the economy as a whole, despite any actual figures that may counter the cause of concern. For instances, the 1992 election year brought national concern about the economy and the Clinton’s came into office due to the economic climate. The actual figures though suggested that the economy had recovered from its minor setback experienced the year before.

In conclusion, the economy will continue to climb and fall in cycles and there is nothing that can be done about it despite Congress’ claims to fix it. Usually, they are the cause of these declines in the economy and are not the ones to fix the problems. As Americans, it is imperative that we stay the course and continue to do what is right and just for ourselves, our families, and our communities. Everything else will take care of itself.

As long as we have a portion of our society looking to make a quick buck there will be trends that will make money for some, and eventually hurt the majority. Such is the example of the Dot.com era on the 1990s. Caution should be applied to any investment that is made and it better be money that you can afford to lose.

The Changing Face of Downtown Raleigh! NOW IS THE TIME TO BUY IN DOWNTOWN RALEIGH!!!

2007-11-08T07:58:00.000-08:00

For better or worse, the climate, feel and image of downtown Raleigh is changing before our eyes. The new skyline is changing and a new lifestyle is emerging in our backyard, an urban lifestyle.

Currently, there are more than 525 new housing units planned by the end of 2008 to include the new RBC Centura Tower (139 units), the LaFayette (80 units), The Hudson (64 units), the Bloomsbury Estates (110 units) and The Nash (207 units), just to name a few. Additionally, a number of hotels are in the works to include The Raleigh with 150 rooms and a handful of condos, The Marriott Convention Hotel (400 rooms), and the LaFayette (120 rooms). Without giving too much information overload, as much as 500,000 sqft. of new office space will soon be available.

With all this new development in the downtown area, it is being marketed as an urban lifestyle with the city as your living room. Some may fear that affordable housing cannot be found with all these new developments, but rest assured, there are affordable housing opportunities. For more information about the downtown developments or to view any of these condos or townhomes, please contact me and I will be happy to assist you. These are exciting times for Raleigh’s downtown.

Is It A Great Time To Buy? Market Trends

2007-10-17T11:49:00.003-07:00

The decision whether to buy now or wait is a very important one and one that cannot be made without weighing all the pros and cons. Of course, it all depends upon your personal situation as to whether or not it is the right time to buy, but basically, it is always a great time to own real estate. This may be an over simplified answer to the questions, but real estate remains a very solid investment, no matter what the economic situation. The bottom line is that the purchase of personal real estate in which you intend to live is not simply an investment instrument. For investment purposes, it may not be the best time to purchase real estate, but for personal use, it is always a great time to buy.

What are the reasons that this is a great market in which to buy? First of all, the Triangle area of North Carolina is one of the strongest real estate markets in the United States, but without this major reason, here are a few additional ones that extend beyond Raleigh, Cary, or Wake Forest.

1. Selection, selection, selection. Currently there are more than 17,700 single family homes listed for sale in the Triangle area, up from only 14,500 in October, 2006. This simply means that you have more options available for you to purchase. With the exception of a few isolated price ranges and locations, the supply of available homes is much greater, so you will have a better opportunity to find exactly what you need and want.

2. No Bidding Wars. Raleigh has never been an area where we experienced bidding wars for homes. However, we have had homes that had multiple offers that often resulted in either a full price offer or more than a full price offer. This was the results of the high number of people selling their homes in other parts of the country for much more than the paid for them and moving here with plenty of money to buy exactly what they wanted. Today, that segment of the buying population are finding it more difficult to sell in these once "hot" markets, and thus, cannot buy here until they sell. This has resulted in fewer buyers with a greater selection.

3. You can make an offer. Again, the Raleigh market has never seen a situation where housing was not negotiable. However, it may be a great time if you are interested in new construction as many builders in the Triangle are ready to make a deal and sell their inventory due in part to the national trends, not the local ones. In fact, many of the national builders are feeling the pinch due to the real estate markets in other parts of the country so they are willing to make deals here. As for resales, many sellers are concerned about the national attention that the real estate market has been given and thus, are more motivated to sell and willing to consider any and all offers. Ida Terbet has said that the offers she has received for many of her listings have been challenging to say the least. Where last year, these offers were not even considered, they are now being taken serious and attempting to be worked out to benefit both parties involved.

4. Patience is tolerated. Last year, timing was everything when it came to a home. You had to act quickly in order to get the home for the fear of losing the home. Today, buyers have the opportunity to view the home a few times and make a solid decision about the home and the neighborhood without as great of a fear of losing the home. This is not to say that homes are not still being sold and buyers will not lose out on their dream homes if the fail to act, but the odds are greater that they will not.

5. Location, location, location. With the added inventory that we have in the Raleigh market, buyers are more likely to get the exact location they wish. Less competition for these homes and a greater number of homes available means that you will have a much easier time getting to the neighborhood that you like the most. Of course, there are some locations that are still hot properties which include North Hills, Cary, and inside the Beltline. There are also some price ranges that are limited in inventory to include homes between $200,000-300,000. If this is the range or location you are wanting, I would suggest that you start looking now to get it before it is gone.

6. Real Financing is Still available. I have never been a proponent of many of these products that have now failed in our national housing market. The zero down, no doc., adjustable, sub-prime loans are basically gone for now. Will these instruments be back? Of course they will be back, but with tighter requirements than in the past. In 2005, if you had a pulse, you could basically qualify for a home loan. This is not the case now nor should it ever be the case. You have to be able to manage your personal finances before you consider buying a home. Word of wisdom from my mother: "Your monthly housing payment(rent or mortgage) should never be more than a third of your monthly income." This would be good for anyone to consider before buying a home.

If you have any questions about this article or wish to discuss it with me, please feel free to call or email me. My door (and phone) is always open to anyone.

Is it a great time to buy Real Estate in Raleigh, NC

2007-10-03T07:41:00.000-07:00

As a real estate professional, I have been asked this question time and time again. Is is truly a good time to buy real estate or not?

The answer to this time honored question that has been plaguing potential home buyers for many years has a very delicate answer. It depends!!!

You may wonder why I am saying that it depends, but truly, it depends on the individuals personal situation.

First of all, everyone should ignore the national media with the doom and gloom coverage of the real estate market. If you notice, that the guest for these national shows usually does not include a real estate agent. What types of guest do they have for their shows? Financial planners, stock brokers, national builders are among the top guest for these shows. Financial planners and stock brokers want you to invest in the stock market so they have a vested interest in you giving up on the real estate market. These national builders are more viable guest for this subject, but even they tend to be more concerned about their stock prices and designing a reason why their company's stock may be down at the time. What better reason for a builder's stock to be down than the housing market slump? I am not saying that this is always the case, but often times, their stock price is down because of poor business decisions to overbuild is certain markets too quickly. In the Triangle market, we had a record year for transactions in 2006 and thus, many builders became cocky that the situation would continue unabated. Furthermore, many areas in the country had record transactions last year which has fed into this overproduction of products.

It Depends

Whether or not to buy now depends on many internal reasons that have nothing to do with real estate. It is my personal opinion that, from a purely financial situation, it is always a good time to buy real estate. However, the answer to this question for you is a personal one depending on your situation.

1. Credit Rating. It is no secret that many people in Raleigh have credit issues that will make it more difficult for them to buy a home for the lowest rates available. If your score is too low, you may not be able to get a loan these days with the failure of the sub-prime mortgage markets. In fact, this section of the mortgage market has failed in part due to the number of home buyers who should have improved their credit before purchasing a home, thus avoiding these types of loans that have the highest interest rates. A low credit score also hinders you in more than one way. It limits your negotiating position on a home to get the most for your money by forcing you into homes where the sellers are willing to pay the closing cost in exchange for a full price offer. In addition to this, these buyers often are forced to buy homes that they may not want due to the high interest rates and the debt vs. income ratios. It would be much better for these potential buyers to pay off some of their debt, improve their credit scores, and work on generating down payment money.

2. Length of Stay.

It is no secret that most home buyers are in their home for 5 years or less before selling their home here in Raleigh and the surrounding communities. This does not always bode well if a buyer needs to have a 100% loan. In this situation, the buyers are betting that the house will appreciate enough in the short term to allow them to purchase a larger home and pay all closing cost. Historically, the Raleigh market has supported this increase in value, but not always and for every corner of Wake county. Some parts appreciate better than others and there are no guarantees that last year's performance will be applicable to the next year's performance. Other outside factors may cause the area to appreciate faster from year to year. For instance, the past few years have seen great appreciation for Briar Creek (8-10%/yr), but this year, this area has been struggling more and the appreciation is not close to this figure since there is a surplus of homes on the market for this neighborhood. Additionally, how will the completion of I-540 to Knightdale impact the housing prices in that community? No one can say for certain, but eventually, it will help this area greatly.

3. Job Situation.

Your job situation can be a determining factor in your decision to purchase or not. If your company has been or rumored to have downsizing issues, then it may be better to ride it out before making a commitment to buy a home. Furthermore, is there a chance that you will have to relocate in the next year or two? If so, you may want to continue to rent instead of buy since it would be unlikely that you could recoup all of your investment in such a short time frame. Remember, we are not only talking about the price of the home, but also the closing cost on both the buying and selling of your home. To add an extra layer, selling your home may not always be a quick of a proposition that you would like it to be. Not only does choosing the right agent matter, but the overall market condition matters when you are selling a home.

3 Investment Only.

Many people consider the purchase of their private homes as an investment. This really is not a good way to think about it. Investments concentrate upon only the bottom line as far as increasing personal wealth. You invest in 401ks, stock market, and other such items for a pure profit motive. When it comes to your personal home, you are not making an investment decision, but rather a personal one. You are deciding if you could live in this home and raise a family in this neighborhood. You are deciding if the location is ideal for your commute to work and other activities that may interest you. You are deciding if the layout of the home would be conduce to your lifestyle and furniture. You are deciding if the schools are good enough to teach your children. The last thing you are deciding is the profitability of this purchase. It is always good to have a home that in the end appreciates and allows you to make money when you sell, but is this the most important thing? Most people would agree that a successful personal home purchase and subsequent sale would involve making enough on the sale to cover the sales price, closing cost and a small down payment on a new home.

Now, real estate can be a great investment if you approach it in this manner. There are many great homes, condos and townhouses that would make for a great investment in Raleigh, Cary or another community in the Triangle. For these purchases, one must have a different mindset than you would have for a personal residence. You must look at the viability of the home increasing in value of the term of ownership you plan to have. Flippers be aware that you must do your homework before making a purchase. To successfully flip a home in Raleigh, it must be a great neighborhood with a home that is under priced or undervalued due to the condition of the home. It would be difficult to make $100k on a flip in this market as the appreciation rate in this market has not been that dramatic. We have traditionally had a modest appreciation rate of 3-5% a year which is why our housing market is still competitive and has not priced many people out of the market.

4. Market Conditions.

I have left this topic for last because this is usually the least important item, but must be considered. I have met people who have purchased homes in areas that have seen dramatic increases in property values and the result was that they bought on the high end. The law of physic applies here in that "what goes up, must come down." This does not mean that the property values will return to 2001 price levels completely, but it will come down dramatically. The only winners in this situation are the ones who sold before the market began to descend. There again, who can predict to the day when a real estate market will begin to sour and the values of the homes will begin to decrease.

Traditionally, the Raleigh market has not been subjected to the national market trends since we are currently an untapped resource throughout the nation. We have been given some major press as being one of the best places to live, best sellers market, great business climate, low unemployment rates, etc. However, we have not been the market that has gone to the extremes of the market place. We have been very consistent with our growth, despite the number of people moving to the area. In part due to the untapped land that is yet to be developed in this market. The urban sprawl has begun in the Triangle, but has not gotten to the point that there is no land available to build new subdivisions. Many of these areas that have seen prices soar in the past few years have a shortage of land. If Raleigh and the Triangle reaches the projections of 2 million in population, then we may actually start to run out of land for development.

For more information about the buying process or if you have any questions about this article, please contact me and I will be happy to answer any questions you may have.

Rent Vs. Buying

2007-09-25T06:57:00.000-07:00

This article has been reprinted from the Ginnie Mae website.

There are many advantages to buying a home versus renting one. View these advantages in the Buy vs. Rent Comparison Chart, or view a financial comparison of buying versus renting in the Buy vs. Rent Calculator.

Your income, savings, and monthly expenses play an important role in determining how large a mortgage you can afford. To figure out the amount you can afford, please click Affordability.

Savings: Buying

In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.

Buy vs. Rent Comparison
The chart below shows a cost comparison for a renter and a homeowner over a seven year period.

The renter starts out paying $800 per month with annual increases of 5%
The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000
After 6 years, the homeowner's payment is lower than the renter's monthly payment
With the tax savings of homeownership, the homeowner's payment is less than the rental payment after 3 years

Years	Rent Payment	Mortgage Payment	Monthly Difference	After Tax Savings	Yearly Difference	After Tax Savings
1	800	1000	-200	-50	-2400	-600
2	840	1000	-160	-10	-1920	-120
3	882	1000	-118	+32	-1416	+384
4	926	1000	-74	+76	-888	+912
5	972	1000	-28	+122	-336	+1464
6	1021	1000	+21	+171	+252	+2052
7	1072	1000	+72	+222	+864	+2664
8-30			*Savings increase every year*

Monthly Expenses: Buying

Your rental company takes part of your rent payment to cover certain housing expenses. When you decide to purchase a home, you accept responsibility for paying for these expenses (listed below). They are additional costs to your monthly mortgage payment and should be included in your budget estimates:

Property Taxes and Special Assessments
Home/Hazard Insurance
Utilities
Maintenance
Home Owner Association (HOA) Fee: Doesn't apply to all purchases. It pays for trash and snow removal and maintenance of common grounds if applicable.
Membership Fee: It may pay for recreational facilities and other services (cable TV).