Archive for March, 2011

Intero Insider: Why Aspiring Homeowners Will Ignore Money Gurus

By Gino Blefari | March 29th, 2011 3 Comments

Suze Orman. She’s the sassy “money guru” you often see on CNBC, PBS and Oprah speaking to an audience of middle-class men and women who hang on her every word. Their eyes always seem to be looking for answers, looking for a way out, or a sure-fire method for gaining control.

Flipping through PBS a couple of weeks ago, there she was – proclaiming to her audience that homeownership is no longer the American Dream it once was, that she’s been hearing a lot lately from folks who can’t wait to get rid of their houses and go back to renting. Owning a home apparently is a dream now dead.

Seriously? Or is it more like sensationally?

Let’s look at what Suze is really saying.

In her latest book, “The Money Class,” Orman points to the troubles that many Americans will have getting the financing to buy a home now and in the future. She points to the fact that many are still jobless or underemployed, making it even harder to save for a house and sustain the income needed to keep one. Borrowing standards are strict and getting stricter – and those with spotty credit histories will be left in the lurch.

These are all great points – and true. But not being able to afford a house and not wanting a house are two entirely different things.

The woman in the audience of the PBS show I saw stood up and told Suze how paying her mortgage and associated housing bills was killing her finances and that she couldn’t wait to get out from under this mess. It’s easy to conclude here that owning a home isn’t ideal for this woman because she’s buckling under the weight of the bills.

What Suze failed to dig into was whether this woman would rather own than rent should the financial situation be different. In other words, if a magic wand was waved and she could comfortably afford her home, would she stay?

A recent survey done by Wells Fargo tells an entirely different story. More than 70% of folks surveyed said that even despite market setbacks, they still want to own a home. Of these people, those in the younger “Millennial” generation were even more keen on buying a home, seeing the stricter lending guidelines as a good thing because to them, that means they’ll be financially stable and able to stay in their homes as long as they want.

Sure, it’s all a bit anecdotal. Let’s just not be so quick to listen to these people who conclude that home ownership is dead or no longer a dream. Just because the economy is slow and loans are harder to get, doesn’t mean young renters won’t aspire to be homeowners. It just means that the dream is back to being the challenge it was before the days of loose lending.

And maybe we end up with a much better homeowner in the process – one who worked hard to get the house and one who will continue to work hard to keep the house. We end up with homeowners who are in homes they can afford, and we avoid stepping into this same housing mess all over again.

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Intero Insider: How to Read the Latest National Market Report

By Gino Blefari | March 22nd, 2011 0 Comments

The national housing numbers show a pretty lousy market right now – sales of existing homes fell by 9.6% in February and prices fell to the lowest level in nine years, according to data out this week. Here are some things to think about in light of this news:

With lower home sales comes a hotter rental market.

If you’re a buyer who’s decided to wait a bit longer to purchase, expect tight competition in many rental markets. The national vacancy rate for the fourth quarter of 2010 was 9.4%, which was 1.3% lower than the 10.7% rate during the same period in 2009, according to U.S. Census Bureau statistics.

National vacancy rates haven’t been this low since the first quarter in 2003.

Good or bad?

Good if you’re a landlord looking to rent out your apartments. Good if you’re a homeowner looking to rent out your place while you wait to list your property for sale. Good if you’re an agent looking to dabble in the rental market.

Bad, though, if you’ve decided to size up or relocate your rental instead of buying this year. Bad if you lost your home in foreclosure and are looking for a new roof over your head.

All in all, the rental market news shows that at the end of the day homes are places to live. When people can’t afford to buy or keep their homes, they still have to live somewhere. It’s an interesting market indicator to watch for that reason.

With lower home prices comes major opportunity for first-time buyers.

This one’s so obvious it hardly needs mentioning – except that in times like these, some buyers will choose to wait and wait because the uncertainty makes them too uncomfortable.

My advice is to not try to time the market, but to instead think about your financial future in a vacuum. If you’re ready financially and you’re feeling secure in your job, then pay no attention to news reports about national housing figures. Here’s why:

  1. These reports reflect zero reality of what’s happening in your local market.
  2. You still need to live somewhere. And a tighter rental market with more competition isn’t going to make it any cheaper for you.
  3. Interest rates are still historically low.
  4. A wildly changing lending market is going to be more and more difficult to navigate as time passes. New regulations may disqualify you from getting a good loan. Or you may find that you need more money down at this time next year to buy the same house for the same price.

I’m not going to be delusional about the housing market this week. But I’m also not going to buy into this report as reality for everyone. I like to look at the cause and effect of numbers like this – and to step out and see how other segments like rental are impacted.

These are interesting times we’re living in! And at the end of the day, we do still all need a place to live.

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Intero Insider: Gas Prices Throw a Wrench in Housing Rebound

By Gino Blefari | March 15th, 2011 1 Comment

It’s looking more and more like the rebound in housing markets across the country won’t rear its head until 2012. At the end of last year, many folks expected more slow and steady recovery in 2011, but even that seems optimistic.

Why? A few reasons, of course. But the biggest and easiest scapegoat right now is gas.

Have you visited the pump lately? Each week, the cost of filling up is rising so fast you think your final price must be a mistake. That’s not for my car, you think. But it is.

Historically, the price of gas is a serious enough issue for many Americans to cause a chain reaction of paralysis on consumer spending. It starts with the trade-offs like less eating out and shopping, then seeps into small changes like fewer car trips and different commuting habits, then onto downsizing – smaller, more fuel-efficient cars. Then finally, it gets into our heads.

And when it gets into our heads, we start to feel uncertain about the economic future (as if we weren’t there already). This very psychology is enough to derail major purchasing decisions like buying a house or car, or making risky but beneficial moves with your business or career.

The other thing to think about with gas prices and the effect on housing is location. In many parts of the country, your car is your only means of travel. If we continue to see climbs in gas prices and sustained high prices like some are anticipating, then eventually this will start to impact how we think about where to live.

Suddenly, the “Can I live here?” question includes a lot more considerations.

As we move through the market this year, we had expected some obstacles thrown in from a new lending atmosphere and congressional attempts to regulate. We expected slow growth due to a slow job market. But did we stop to think about something as seemingly unrelated as the price of gasoline? Maybe not. But now it’s time to realize how these things affect everything around us – big and small. And housing is definitely one of them.

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Intero Insider: 5 Housing Trends to Watch

By Gino Blefari | March 9th, 2011 0 Comments

We’re just about to enter the spring home-buying season and a lot of forces out there are working for or against the market this year. Here are five things to watch out for:

1. Tighter, stricter lending. Lenders continue to be more and more stringent with loan qualifications. As real estate agents, we should be sure to keep our clients up to date and look for ways to help manage expectations when loan shopping. As consumers, we need to be on top of our game – keeping our credit histories in good shape, documenting income, and making sure we have solid cash for down payment.

2. Continued buyer’s market. Even as more buyers come out of the winter lull to go home shopping, the high inventory levels in many markets, strict borrowing requirements from lenders, and sluggish job market are keeping the scales tipped in buyers’ favor. More inventory + not as many qualified borrowers = a buyer’s market for most places.

3. Changes to down payment requirements. The powers that be are still grappling with instilling new down payment requirements on all types of loans, but it looks like a 10% minimum down payment requirement is imminent for FHA loans. Higher down payments is a good thing in that more money down (i.e., collateral) tends to equate to fewer foreclosures. But in the short-term it may delay some buyers from getting into the market now.

4. The end of a government-backed mortgage finance system? This of course is less of a trend and more of a major event. The Obama Administration has been searching for ways to get rid of Fannie Mae and Freddie Mac, the two government-sponsored finance companies that historically have made it possible to keep record amounts of money available for the nation’s home buyers.

Obama and others in Congress are serious about dissolving these quasi-governmental companies because tax payers essentially foot the bill when there’s a major housing fallout like the one we’ve seen in the incredible foreclosure crisis.

What does it mean for you and me? More privatization of the mortgage market, potentially the end of the 30-year mortgage, higher interest rates for most borrowers, and potentially more fees for borrowers.

5. Increased globalization. A lot of factors are making foreign real estate investors increasingly interested in buying property in coastal cities like San Francisco and surrounding areas like Silicon Valley. Intero is at the forefront of this trend and will continue to lead by expanding our presence in Asia, where a lot of these interested buyers are located. This is a trend we believe in and think will contribute positively to the housing recovery.

I’ll continue to monitor these happenings and give them time for discussion in Intero Insider throughout the year.

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Mike Bidwell’s Insight on the UK Real Estate Market

By Teressa Francis | March 7th, 2011 0 Comments

CEO of Intero UK, Mike Bidwell candidly speaks with Intero COO, Tom Tognoli and shares his insight on the UK real estate market.

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Intero Insider: Younger Americans Still Keen on Homeownership

By Gino Blefari | March 1st, 2011 1 Comment

The housing market may not have the rosiest headlines in town, but there are some great things happening if you open up the hood and look closely. Here’s one:

Younger Americans still like the idea of owning a home. The 18- to 34-year-old demographic (also known as Generation Y) in a recent Fannie Mae survey said they believe buying a home has a lot of potential as an investment, despite their peers seeing the steepest decline in ownership during the housing decline.

In fact, this group, along with Hispanics and African-Americans were more positive about homeownership than any other Americans.

In the spirit of helping younger Americans bring their homeownership dreams to life, here are four pieces of advice for making it happen:

1. Start saving as early as you can. Banks have been more stringent with downpayment requirements and there are a number of initiatives in Congress right now that may end up increasing downpayment requirements even more.
2. Don’t wait too long. With interest rates low and supply levels high in many areas, now really is a great time to buy. However, many expect the loan process to get even harder and rates to increase this year so these conditions won’t last forever.
3. Think long-term. Real estate is for the long haul and much more difficult to unload than a stock portfolio. Figure out where you want to be in 5-10 years and then zero in on your real estate goals.
4. Find a Realtor you trust. Real estate is difficult – even for the most intelligent buyers out there. Having an agent you are comfortable working with is priceless when it comes to navigating the process and dealing with unexpected twists and turns.

It’s good to see that owning a home still holds prominence in the minds of young Americans. A lot of folks have speculated that this group would end up not valuing homeownership as much as their parents and grandparents because of the financial collapse, recession and rising cost of ownership compared to personal incomes.

I think it’s a sign that real estate is not and will never be dead.

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