Monday, December 29, 2008

Real Estate Outlook: Rates Drop

If low-cost mortgage money and property prices provide the fuel to power strong housing sales, we just might be on the verge of a takeoff, at least a modest one.
In a month that otherwise was filled with sobering economic numbers -- new construction starts down sharply, unemployment filings up, retail spending down -- mortgage rates provided a ray of hope for real estate in the months ahead.
The Federal Reserve's unprecedented moves to reduce inter-bank lending rates close to zero, and to pump even more capital into mortgage backed securities, had immediate, dramatic effects in the market.
Rates had already begun falling from about five and a half percent early in December down to 5.19 percent in the last week for 30 year fixed-rate loans, according to the Mortgage Bankers Association.
But the Fed's latest moves sent rates plummeting even lower. Some major banks, such as Wells Fargo, were quoting 30-year mortgages in the upper fours -- rates not seen in more than half a century.
Wells, Wachovia and other banks also cut their prime rates -- crucial to millions of consumers who have home equity credit lines and credit cards -- to three and a quarter percent from four.
But here's the big unanswered question: What impact will mortgage money at historic lows have on local real estate markets in a recession with rising unemployment?
Lawrence Yun, chief economist for the National Association of Realtors, has estimated that 500,000 resales could be stimulated by a one point drop in rates like we've just seen.
The reason: He believes that, even with higher unemployment, there is a huge pent up demand to buy houses in many parts of the country -- especially first time purchasers who see prices at 2003 and 2004 levels.
Combine those bargain prices with rock bottom mortgage rates, and the real issue for thousands of potential buyers in the coming months may well be: What are you waiting for? This is about as good as it gets!
Already there are signs of sharp sales increases in dozens of markets where foreclosures, REO and short sales dominate local real estate listings.
As perhaps an extreme example, the single hardest hit market of the decade in the U.S. -- Detroit -- which has been the epicenter of a regional economic downturn for years, has racked up a 47 percent increase in home sales this year, compared with 2007.
No doubt a lot of those sales were REO. But think about it: How else can the turnaround process begin?
For more information or to ask lake real estate questions, contact Michael at 877.365.cme1 (2631) or You can also log your opinions on Michael’s real estate blog,

Real Estate Outlook: Sales Picking Up Tempo

Here's a key question about the current market: Do you look at home prices to figure out where we are in the real estate recovery cycle, or do you focus on sales?

In an economy where an estimated 35 to 40 percent of all home transactions are foreclosures or short sales - distress situations in other words -- prices won't really guide you much beyond the conclusion that: We're still "correcting” the excesses of the boom years, still peeling back those wild and unsustainable hyperinflationary price run ups.
So it's no surprise that median prices are down, year to year, in a majority of large markets across the country.

Sales statistics, on the other hand, tell you how fast buyers are responding to those lower prices -- and greatly improved affordability. Right now, in market after market, sales are picking up tempo -- especially in places where prices once spiraled out of control.
Third quarter sales of existing homes in the U.S. were up by 2.6 percent over second quarter 2008 levels, according to the National Association of Realtors' latest study.
That's not spectacular -- but let's face it: It's forward movement … and we're in a recession.

In the Western states, sales were up by 13.1 percent in the third quarter! In Florida, sales jumped by 5 percent from year earlier levels, while median selling prices were down by 20 percent. In a majority of Florida's metropolitan markets, sales were up, year over year. For example, Orlando sales were 10 percent higher this October than the year before. Sales were up strongly as well in hard-hit Ft. Myers and much of the west coast of the state, and Fort Lauderdale, north of Miami. Similar recent upturns in sales are occurring in many of the California markets where prices have plummeted during the past two years.

No question that a high proportion of these sales are distress situations. But that's what the bottom of a real estate cycle looks like: Value-savvy buyers see the opportunities, move in and mop up the mess left over after the big party. Happily, in this cycle, they're getting real help from the capital markets: Mortgage money is at historically-attractive low levels, and is readily available to anyone with a downpayment and reasonable credit.
Rates fell again last week to an average 6.16 percent for 30-year fixed loans, according to the Mortgage Bankers Association, and to 5.87 percent on average for 15 year loans.
If you can spot the opportunities -- and have the resources -- it's not a bad time to be a buyer.

For more information or to ask lake real estate questions, contact Michael at 877.365.cme1 (2631) or You can also log your opinions on Michael’s real estate blog,


The "R" word is back -- and this time economists ranging from former Fed chairman Alan Greenspan to the National Association of Realtors' Lawrence Yun agree that we're likely to be dealing with a declining economy for months to come. The U.S. has entered a recession," said Yun in his latest forecast, "and (the economy) will contract for the next three quarters."
Certainly the sobering reports we're seeing on retail sales point in that direction, and the stock market's sharp declines over the past few weeks suggest that investors are betting we're in a recession as well. But are all recessions always horrible times for real estate and home sales? You might be surprised to find that as long as mortgage money remains available, and home prices are affordable, real estate sometimes can weather recessions better than other segments of the economy.
Take the last national recession we experienced -- back in the years 2001 to 2003. Regional economies went flat or declined, consumer spending spiraled down, and nearly two million jobs were lost. Times were tough for a lot of families -- no question about it. But the vast majority of households kept their jobs, and people needed houses.
Sales of existing homes actually ran counter to the overall economic trends during that recession, with total sales rising from 5.2 million in 2001 to 6.2 million in 2003, according to National Association of Realtors data. Even sales of newly-constructed homes rose during that recession as well -- from 900,000 to 1.1 million.
Now, no one can be confident that the same countercyclical pattern will occur in a short, relatively shallow recession this time around. But some building blocks are in place: First, mortgage rates are lower than they were during 2001, 2002 and most of 2003. Lenders working through FHA, Fannie Mae and Freddie Mac have direct, federally-backed access to the capital markets.
Second, a $7,500 home buyer tax credit is already in place to provide an extra incentive to get potential purchasers off the sidelines, plus there are legislative stimulus package efforts in the works to increase the size of that credit, and extend it.
Finally, home prices in many local markets have corrected back to levels not seen since 2003 and 2004.
Combined with affordable mortgage money and unquestioned pent-up demand, housing's performance might -- just might -- surprise a lot of people who assume recessions are necessarily all bad, all the time.
For more information or to ask lake real estate questions, contact Michael at 877.365.cme1 (2631) or You can also log your opinions on Michael’s real estate blog,

Selling Your Home in Todays Market

Selling Your Home in Today's Market: The media has been full of stories about the slowing housing market --and although this kind of market normalization is commonplace in the real estate industry, there is no question that in many parts of the country, houses are currently on the market a little longer and there is more competition for buyers.
Hire a Professional: If you want to sell your home, now is not the time to go it alone or possibly even worse; choose an agent based solely on their personal relationship to you. You want to make sure that your home gets the maximum exposure and the best marketing strategy. When you work with an experienced, knowledgeable real estate professional, not only is your home listed on the MLS database that other real estate agents can access your agent should also market your home to Lake area agents to make it stand out from competing houses. In addition, you get the benefit of an experienced marketer and negotiator who is familiar with real estate issues at Lake of the Ozarks.
When selecting someone to represent you, interview at least three real estate professionals who are familiar with your area. Ask questions such as: How will your home be marketed to reach the greatest number of buyers? Ask to see examples of their ongoing marketing campaigns both for individual listings as well as their overall strategy for obtaining a constant supply of prospective buyers who are looking for their ideal lake property. They should have an extensive client base already in place to whom they can immediately present your home. Ask what price can you expect for your home? A knowledgeable agent should be able to back up their answer with a report of recent sales and current listings in your particular neighborhood. Ask what's the average time their listings have been on the market? What is their sales track record? How many years of experience do they have in Lake of the Ozarks Real Estate and are they a full time real estate career professional? Ask them to provide the names of two or three of their most recent sellers who you may contact for a reference.
Price It Right: A correctly price house piques the interest of real estate professionals and buyers, while overpricing chases them away. If your home is priced too high, interested buyers may never even look at your home. It is true that you can always drop the price, but the first 30 days are the most critical. That is when interest is the highest, and it can be difficult to recapture people's interest later on. The longer the property is on the market, the fewer the prospects and in general, the lower the sales price at closing.
Who’s representing you at the negotiating table? Michael Elliott has been a full time real estate career professional since 1981. He is a Broker/Owner at Gattermeir Elliott Real Estate Company. Michael has assisted hundreds of buyers and sellers over the years. His largest source of business is from returning clients and referrals of their friends and family. His largest source of new business is derived from his unique and extensive marketing campaign.
For more information or to ask lake real estate questions, contact Michael at 877.365.cme1 (2631) or You can also log your opinions on Michael’s real estate blog,