I ran across this videom all about wayter filters.  They seem to be playing an larger role in the Green Movement.

        

When it comes to figuring out when to buy or sell, the bursting housing bubble and the ensuing financial crisis has presented some real challenges to most of us.  And, like they say, “timing is everything.”  Recently however, we have some real indicators that the time to buy, or to sell, is now.

For sellers… if you purchased your home before ‘04 or ‘05, and you haven't withdrawn equity from it, you're probably in a pretty flexible position. You've had time to pay off some principal and the current price drop probably hasn't eroded all of your equity.

Prices in our market probably won't go up for at least 24 months.  That is especially true if your home is in the over-$300,000 price range. And… many feel that the larger, more expensive homes will be flat or declining for five years.  We have a huge supply of these homes in our market and few buyers.  To sell a $300,000+ home, you will need aggressive pricing, have it in above-average condition and execute an effective marketing campaign.

If you want to sell a home in the under-$250,000 range you are in a little better shape, but you'd best get it on the market as soon as possible.  And to sell quickly it will need to be competitively priced and in good shape. Homes in poorer condition are often passed up and bring less when they finally do sell.  As always, good marketing will make a difference.

For buyers... The Feds are offering a tax rebate for first-time buyers as well as those who have already owned a home.  The credit is $6,500 for repeat buyers and $8,000 for first-time home buyers. To qualify a buyer must have a binding purchase contract in place by April 30, 2010 and must close the deal by June 30.

Since the financial crisis Fannie Mae and Freddie Mac have supplied virtually all of the money for residential mortgages.  This spring the Feds will cease buying up mortgage-backed securities from Fannie and Freddie. This will likely increase rates.

This month President Obama will announce restructuring plans for Fannie & Freddie.  It will be a very controversial process.  Concern over the Federal deficit will likely drive the solution to more privatization which will also tend to push rates higher for residential mortgages.

Unemployment in the lower 48 is encouraging people to relocate to our state. But unemployment is also responsible for many foreclosures outside. That drives the prices down which puts many people moving up here upside-down in their mortgages making it difficult or impossible for them to sell their old home and buy a new one here.

That’s why many experts feel the current housing crisis won’t be fixed until the unemployment problem turns around.

Also...owners with a job that owe more than their homes are worth are a growing concern. It seems that more and more of them are acting like Wall Street bankers. They are walking away from negative-equity mortgages that, if paid as agreed, would take them years to break even.

As a buyer... you currently have a lot of homes to choose from with a tax credit to help and low mortgage rates in your favor.

As a seller... if you want to sell within the next two years, it probably won’t get any better than it is right now.  If interest rates go up or the recovery takes longer than expected, it could get worse.

        

Based on a True Story

It all started in August 2005 when Fred Smith got a loan from his local mortgage company to refinance his house and pay off some high-interest credit card bills.

However, Fred’s lender didn’t keep that mortgage. They sold it to a large bank that buys lots of mortgages. That bank then sold it to an even larger bank.  And that bank’s name was Goldman Sachs.

The guys at Goldman Sachs took Fred’s mortgage and mixed it in with lots of other mortgages in a big pot. This pot was called a “Collateralized Debt Obligation.” Some of the mortgages in it were good, some not so good and others were so bad they smelled terrible. It was a “derivative.” 

Then, to hide the smell, the guys at Goldman Sachs bought a magic wand called a “Credit Default Swap” from AIG and waved it over the pot. It covered up the bad smell!  Then they sold the pot to the people on Main Street for $100 million!

Besides covering up the pot’s terrible smell, the Credit Default Swap would be worth $100 million if the pot’s contents spoiled and started smelling bad again.

So the guys at Goldman Sachs, suspecting the pot that they had sold to the people on Main Street would probably go bad, called AIG and bought eight more Credit Default Swaps.

Then in the fall of 2008 the pot started to stink really bad, like a “toxic derivative” and the Credit Default Swaps became worth $100 million each. The guys at Goldman Sachs went back to AIG to cash them in.

AIG didn’t have the $800 million but it was OK because they got it from the taxpayers and gave it to the guys at Goldman Sachs. The guys at Goldman Sachs were happy and they got a raise.

        

In the last couple of months I've noticed that the price of gasoline sometimes varies by as much as 35 cents a gallon from one station to the next.

Normally the price a station charges is based on the wholesale price of it's last delivery. If the wholesale price drops, then the station will normally lower their price at the pump to reflect the decrease.  Conversely, if the wholesale price increases, they will bump the retail price up.

Some stations sell more gas than others. They are known in the trade as "pumpers."  They may receive deliveries more than once in a day. Other stations may only receive deliveries once a week or so.

So when you see a wide range of prices check out the "pumpers."  If they are high then go to the lower-volume stations to buy your gas. They may not bump up the price for a few days after the pumpers react to the increase.

On falling prices check out the pumpers. They'll have the best prices!

        

   
Every January I sit down and try to figure out what happened in the Real Estate market for the previous year. I like to think that this information helps me prepare for the coming year.

This year, rather than working with all of the homes that were sold, I decided to focus my research on a specific size and type of home. So what better choice than the “Typical Valley Home?” A 3-bedroom, 2-bath home with a 2-car garage is pretty typical for our area.

So I took sales information for of all the “Typical” homes sold for each calendar year from 2004 through 2009. I tallied the number sold each year and averaged the sales price, list price, the age of the home and how many days it took to sell.

The graph on the left shows how the market has changed from  2005  through 2009.  Seventy of these “typical” homes sold in 2005 at an average sales price of $203,827.  In 2007 ninety-five of these homes were sold. By then the average sales price had increased to $221,266.

Then in 2008 the number of sales dropped back to the 2005 level.  Interestingly, the price did not.  It increased to $222,245.  It kind of “overshot” the market.

In 2009 the number of sales didn’t change much but the price fell like a rock.  The financial crisis had a lot to do with the drop in price, but almost as many homes were sold in 2009 as in 2008.

The tax credit for first-time home buyers had a significant positive impact in the last part of 2009.  Local Realtors® that I spoke with attributed 10% to 30% of the last half of the year’s sales activity to the FTHB plan.

 We have a new home buyer incentive program for 2010.  It includes people that have previously owned homes as well as first-time buyers.  Income limitations have also been raised which should allow even more people to qualify.

It’s reasonable to think that the Federal tax credit program combined with some of the State’s energy incentive plans will get us off to a good 1st quarter this year.  I think it will, especially for the Typical 3-BR, 2-BA, 2-car garage home we’ve discussed here.

The big question is... what will happen when the Buyer incentives go away? Will the normal demand be enough to prevent prices from falling still more?

The current program is due to go away April 30th. Historically that’s about the time our market perks up.  We’ll see...

Questions? Comments?  Call or click we love to talk Real Estate!

        

There are some pretty attractive incentives out there right now if you want to buy a home or update the energy efficiency of the one you already own.

 The Feds have extended and modified the American Recovery and Assistance Act of 2009. That piece of legislation brought us the First-Time Home-Buyer Program last year that gave a $7,500 tax credit to lots of folks buying their first home.
 
For this year they have lowered some of the income limits and raised the amount of the credit for first-time buyers. The credit is now $8,000 and if you have owned a home and don’t qualify as a first-timer, you can get a $6,500 tax credit.

You also get a reimbursement for money you spend updating your home’s energy systems. Furnaces, water heaters, lighting and most energy consuming appliances qualify.  For information on all of the Federal programs go to www.irs.gov/recovery.
The Alaska Housing Financing Corporation also has several programs to put  cash in your pocket. If you buy a new 5-star plus home you can get a $7,500 rebate from AHFC.

The State also has the AHFC Energy Rebate Program with which you can get as much $10,000 for energy improve-ments for your existing home. Go to the AHFC site at www.ahfc.state.ak.us for more information.

Like the TV announcer says “This is a limited time offer.”  So if you want to take advantage of any of these deals you need to act quickly!

        

House of Representatives lawmakers working on finance reform have approved an amendment to proposed consumer protection legislation that will retire the current appraisal rules that went into effect last May.  The old law, known as the Home Valuation Code of Conduct (HVCC) will be phased out if this new bill is passed.

HVCC was intended to establish an "arms length" relationship between lenders and appraisers.  But as lenders started using middlemen, known as appraisal management firms, to select appraisers the quality of appraisals suffered.  National appraisal management firms, not familiar with local markets, often selected ill-qualified appraisers who produced low quality and inaccurate appraisals.  As a result home purchase deals fell apart when the bad appraisals came in.

This amendment will redefine the rules to protect the integrity of appraisals.  It should provide appraiser selection methods and rules to achieve more accurate appraisals. There are provisions to allow communication of sellers, buyers and brokers with appraisers. 

There are also provisions dealing with compensation for appraisal services. Many appraisers have been forced to accept lower fees when appraisal management firms are involved with the current HVCC rules.  And... unlike the old HVCC, this law will apply to all loans. HVCC applied only to HUD loans like Fannie Mae & Freddie Mac gauranteed mortgages.

Questions? Comments? click or call... we love to talk real estate!

        

If you plan on applying for a mortgage in the near future you need to know the new rules. They have changed this year.

One of the big changes has to do with your FICO score. If you have a FICO score of 760 or better you are in great shape. If your score is 620 or below you will have a difficult time getting a loan.

The first thing to do is find out what your scores are. Notice I said scores? That’s because there are three primary credit reporting bureaus: Equifax, Experian and TransUnion.

The reason you want this information before you apply for a loan is that they are notorious for having errors. So find out if you need to correct bad information with them ahead of time.

A good way to go about getting the info is to use a web site created and sponsored by them. It’s web address is AnnualCreditReport.com. At this site you can get one copy of all three reports free each year. You may notice a difference between them. Each will have your FICO score. Go over each one to check for mistakes.

Here’s how to help your FICO score.
Don’t cancel any credit cards. Try and pay balances down. They look for high limits and low balances.
Get rid of inaccurate information on your report. Bills that have been paid off but are shown unpaid are common.
Don’t incur any more debt while you are considering a new loan. Consider paying off as much debt as you can.

Questions? Comments? Call or click we love to talk Real Estate!

Links for more help and advice:
Clark Howard
Definition of FICO score

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If you are having difficulty making your home mortgage payments you might be a candidate for loan modification.  The process of loan modification is not well understood by most homeowners. Here are some facts that may help you:

Almost any loan can qualify for modification, not just FHA.  You can modify any type of loan whether it's a jumbo, fixed-rate, adjustable-rate, FHA, HELOC, etc.  If you have a second mortgage you can modify it alone, both the first and second or both.

You don't have to be behind in your payments to qualify for loan modification. While you do have to prove hardship, you don't have to be delinquent in your mortgage payments.  Your bank will probably require a hardship letter from you.  Here's a link to some samples of hardship letters.  The most important thing is that you want to stay in your home and pay your mortgage.

Remember the debt to payment ratio your lender talked about when you first qualified for your loan?  If your income has dropped since then, or if you have accumulated more debt, it may now be out of the guidelines of your bank.  If loan modification can bring it back in line with that debt-to-payment ratio then you have a good chance of qualifying for modification.

How it works.  Most modification plans result in applying a lower interest rate to your loan.  If lowering the interest rate results a payment that works for you, and the lender is agreeable, that's it. Here's an on-line calculator to help you determine if your situation is right for loan modification.

A note of caution. There are lots loan modification of scams out there.  The best place to start the process is with your lender.  If that doesn't work contact an attorney.

Questions? Comments?  Call or click we love to talk Real Estate!

        

I love things that put hard-to-understand concepts in practical perspective. Here's one I ran across while waiting for my wife at the hair dresser the other day. It's about our own galaxy, the Milky Way. Scientists think that there are between 200 and 400 billion stars in the Milky Way.

To get a sense of what that means you can compare it to the grains of salt in that familiar blue and white round carton of Morton's salt. You know the one I'm talking about with that little metal pour spout that flips up. Well it turns out that there are about 15 million grains of salt in one of those cartons.

So if you go out and buy 26,000 of those cartons of salt you will have as many grains of salt as there are stars in the Milky Way galaxy.

And if you wanted to make a two-dimensional model of the Milky Way you'd lay out all those grains of salt on a large piece of black cloth so that each one was seven miles from it's nearest neighbor.

But I don't advise you try this at home.  The piece of black cloth would have to be twenty-five times larger than the earth!

That's how big the Milky way is...