Home prices at a bottom?

The top story in today’s business news is that home prices are mostly back to 2000 levels. This is based on the widely followed Case-Shiller Index for November, which was released January 31.  The Case-Schiller Index is based on national averages.

Below is a graph from the well-respected economic blog, Calculated Risk.  To view the source, Click here.  The graph backs up what the Case-Schiller Index tells us:  there has been a decline in home prices relative to rents.  In fact, the graph shows that the ratio of home prices to rents has, which is the blue line, declined to the levels experienced in 2000.

This is very significant. I believe that the price-to-rent ratio will set a floor on the decline in prices.  At some point, mortgage payments become  less than rent payments for an similar house. This attracts buyers.  The price-to-rent ratio that we are now experiencing may signify we are at or near the bottom: it may be cheaper to buy than rent. The graph below illustrates the point.

Here is an explanation of the graph, which was created by the writer of the Calculated Risk blog. The Bureau of Labor Statistics publishes an “owner’s equivalent rent” index. CoreLogic publishes an index of home prices.  In the graph above, the home price index from CoreLogic is divided by the rent index from the BLS. The result is a price-to-rent ratio, represented by the blue line; January 1998 is the base year and is assigned the value of “1″.

You can clearly see from the graph what has happened since the peak that occurred in 2006 and where we are now in terms of home prices. At the point when it becomes cheaper to buy than to rent, I believe demand to buy and own will increase. When demand increases, prices will rise. This is absolutely inevitable and immutable in our free enterprise system. It is basic Economics 101 in its truest form, without embellishment.

Now is the time to buy, before prices start to increase significantly. I am ready and armed with all the information and tools you need to buy wisely and well. Call me! I am eager to go to work for and with you.

Another Unique Opportunity – A Business

Warning – This is not your typical real estate listing.  It is a special opportunity for the right person or organization.  It is an ongoing business, one that focuses on restoration and creation of natural systems, primarily in Florida .  Included are 40 acres of land, an operating plant nursery specializing in native plants and supporting buildings and facilities.

It is called Biosphere Consulting Inc.  and involves bioscaping.  The term BIOSCAPE, coined by the company, is defined as “landscaping to improve habitat, conserve water, decrease maintenance and use of fertilizer, pesticides and other chemicals”.  The term include the consideration of the human habitat as well in to make the bioscape as attractive as possible.

There is so much more than I can put into a short posting.  For more information, visit my web site dedicated to this opportunity, www.BioscapeFlorida.com.  To visit the firms regular site, go to www.BiosphereNursery.com.

I believe the opportunity in this business, looking forwar,d is huge for the right person or organization.

The real estate news, especially in Florida, has been dominated by ForeclosureGate.  The analysis by the housing blogs and others involved in or who follow the real estate market closely ranges from

A)  A minor back office paperwork glitch that will be corrected in a few weeks to

B)  A major failure of banks and others mortgage issuers to comply with state property laws as the mortgages were packaged and resold.  That could resulting in major legal problems and costs for the big banks.  And, at the extreme,  it could cause most existing mortgages to be re-written, probably at a lower interest rate or other modified terms.

The likely impact on the real estate market and such things as short sales is hard to determine at this point, there is such a wide range of possibilities.

I will provide more information when the impact becomes clearer.

Come back often.

“One of a Kind” Property

Today I am excited to introduce you to one of my listings — a truly unique property.  It is nearly 35 acres of beautiful pasture land with a 4,000+ sf “main” house and very nice second home situated within the city limits of Lakeland.

Many properties in Florida boast 25 to 50 acres of pasture land and a nice home. Some may even have a second home.

What makes this property unique is the location. It is situated within the city limits of Lakeland, and horses and other large animals are permitted by right. This property is a natural for the family who has equestrian interests yet prefers to live in a quality suburban setting, such as near my wonderful city of Lakeland.

You can visit  http://www.myplaceforhorses.com, the website I commissioned for this listing, to see  photos and other information. To see it on Google maps where you can zoom in and out, click on the address,  4325 Oakglen Rd.  For more complete information, you can click here.

There are several other possibilities for this property, not just horses.  It is an estate home for the person who desires privacy, yet wants the convenience and security of a near-urban location.  Or it works as an investment — developers will covet this property when the market becomes robust again.  Are you getting all you want from your CD, or your off-shore bank? Probably not. Consider this property as an alternative.

In addition, the property has potential for a school or college campus, or as a retreat center for a religious or other organization that needs space but also needs good access to hotels, restaurants and airports.

This property may not be for you, but perhaps you know someone (or organization) who is looking. Let him or her know that this opportunity now exists in the heart of Florida.

My next post will be about a new listing. It’s also very interesting — a native plant nursery and ecological restoration consultation, installation and management business located in central Florida. It’s a wonderful opportunity.

In the meantime, if you are thinking about buying or selling, please contact me. As my logo states, I want your NEXT real estate experience to be your BEST real estate experience.

I’m Back

I am very excited to let everyone know that I have re-joined Coldwell Banker. Arguably, Coldwell Banker is the best known real estate sales organization in the world, and its reach is truly global.  A listing with Coldwell Banker is on 350 websites within 48 hours. Absolutely no other company compares with the internet presence that Coldwell offers.

With the debt crisis in Europe, it seems reasonable that some capital will flow from Europe to the U.S. and some of it will be invested in real estate. What better place to invest than in Polk County? I want my clients positioned to take the greatest advantage possible of the next upturn in the real estate market. We know it will come; crystal balls are fuzzy as to exactly when. The best strategy is to be ready.

Here are some thoughts about Polk County and Lakeland real estate at the present time.  Sales are increasing (both pended and closed transactions), and the number of homes for sale (inventory), is decreasing. The April 30 inventory of 2210 homes actively for sale in the Lakeland market represented an 8.4 month supply of homes; today, the number of active listings in Lakeland is 1898, down even more. The month with the highest inventory of homes occurred in January, 2008, with a 27.6 month supply of unsold homes. April sales were up almost 60% compared to January and average prices seems to have leveled off, albeit at a low level compared with the high, which occurred in January, 2007. Isn’t hindsight fabulous?

But what clouds the picture is the Home Buyers Tax Credit, essentially a discount for many buyers.  To qualify for the $8,000 or the $6,500 tax credit, the contract had to be signed before the end of April and close before the end of June.  So this will cloud the sales numbers into June.   How much of a dip will result from the expiration of this program is unknown.  Keep this in mind when you see sales numbers in the Ledger or other sources.  The good news is that the program did increase home prices.  The bad news is that it used tax dollars to do it.

And housing activity depends on the economy as well.  There is improvement in the overall economy, but it seems to be at a snail’s pace.

The Treasury Department just issued a report of the HAMP program.  This is the government’s loan modification program, intended to reduce foreclosures by reducing mortgage interest rates for those who qualified.  You can see it at:

http://www.financialstability.gov/docs/April%20MHA%20Public%20051710%20FINAL.pdf

Have you had any experience with this program?  Would you share your story with our other readers?  If so, just leave a comment.

Also, if you have a question about real estate,  leave a comment and I will get back to you.  I do read and approve all comments.  You comments do not appear until I have reviewed it.

More entries are coming, on subjects like “strategic defaults”.   Check back often.

Foreclosures & Investing

Foreclosures continue to be a major problem in our area and are continuing to depress housing prices. This is both good news and bad news.

First, the bad news:

The Clerk of the Courts reports a total of 896 foreclosure cases were filed in September, compared to 878 in August (The Ledger, 10/21/09).

From Bloomberg.com,  “Oct. 19 (Bloomberg) — BB&T Corp., the North Carolina lender that acquired Colonial BancGroup Inc. in August, reported third-quarter profit dropped 58 percent as more real-estate borrowers stopped making payments (italics added).”   That means many more foreclosures are coming in future months.

I receive daily reports from the Mid-Florida Regional Multiple Listing Service, the MLS to which I belong.  While there are some sales and some new listings, the bulk of the updates are price reductions. And the preponderance of sales continue to be resales of foreclosed properties.

When will our real estate market turn around?  As Yogi Berra is reported to have said, “It is tough to make predictions, especially about the future.” And to make it more challenging, it’s very difficult to sort through all the reports, which are usually very narrow and/or actually conflicting, to try to come up with an answer. More on that in a future post (soon!)

Now, the good news:

The bottom line is this: Now is the time to buy, while Florida is truly “On Sale”.

The old real estate mantra, location-location-location, has changed to timing-timing-timing. Now that the Dow is over 10,000, this might be the perfect time to take some profit in the stock market and direct a portion of the proceeds to investment in real estate.

If you will contact me, you and I together will develop a real estate investment plan tailored to meet your specific goals.  We will evaluate the kinds of property, best locations, amount of leverage needed (and where it may be available), and other factors that need to be considered for your plan.

Then I will go to work, finding and submitting to you opportunities that fit your investment strategy.

The timing is perfect, and I am ready to start now. Are you?

By The Way -  Recently, I attended a Lakeland Chamber of  Commerce  Breakfast and Business meeting and met a newcomer to Lakeland, Jack Duncan. Jack owns Radiance Road Marketing, an internet marketing company. As I’ve mentioned before in this space, internet marketing is now absolutely key to successful marketing in most industries, especially real estate. Here is his blog.     http://www.radianceroadmarketing.com/internetmarketingblog/marketing-online/lakeland-chamber-event-breakfast/ Check it out!

Central Florida Real Estate

Florida is a great place to move to or invest in.  If you don’t believe me, would you believe esteemed financial guru Dave Ramsey?  Here’s what Dave said about Florida real estate yesterday in a discussion with Neil Cavuto. I hope Fox News doesn’t mind my showing  a 1 minute 5 second clip from its 9/30/09 broadcast.

Real Estate in Central Florida, Polk County, Lakeland and Winter Haven is certainly on sale. And it won’t stay that way forever. If you considering buying a home to live in or if you are an investor, I can help.

From a recent AP article in our local paper, The Ledger, ”Nearly 2.2 million people applied for Social Security retirement benefits from start of the budget year in October through July, compared with just under 1.8 million in the same period last year (Source).”

If you are one of the above 2.2 million and don’t already live here, maybe now is the time to consider a Florida investment.

If you are going to be retiring in the next few years, consider buying property now in Lakeland or Winter Haven and rent it out until you retire.  You will have a place to retire to, bought at a low price, when interest rates were very low.

As a bonus, the renter will likely pay pay most of the expenses of owning the property.  I can suggest local professional rental management companies to handle the details of managing the property, qualifying prospective tenants, collecting the rent, depositing it per your instructions, etc.

You will probably want to, but you don’t even need to, come to Florida; everything can be done remotely.

If you are local, now is the time to buy real estate.  The current combination of low prices and low interest rates won’t last.  The time to buy is NOW.  And I am the best Realtor to help you accomplish your objective.

The next move is yours.

Contact Me Right Away

Should You Invest in Real Estate Right Now?

This is not an easy question. To a large extent, the answer depends on your risk tolerance your liquidity requirement. However, I believe there are bargains in the housing market right now that may disappear soon. We cannot predict the bottom of this decline, and likely we may not even notice it. The best way to see the bottom (or the top) of any market is in hindsight. That said, I believe now is a very good time to invest in real estate, with single family homes at the top of the list. An article in today’s issue of Smart Money magazine bears this out. While the author discusses other ways to invest in housing (such as homebuilder stocks, home remodeling retail stores, real estate investment trusts), the article makes several important points. Nationally, the information (which is micro-reported by each nano-second) is contradictory, and real estate is a very local phenomenon. Home-builders are not able to compete with re-sale houses. It is interesting that while the bubble was forming, re-sale houses had a very hard time competing with new houses. This is now completely reversed. And finally, current savvy investors are not buying in bulk but are buying single family homes one or two at a time in their local markets. Click here to read the full article. Check it out. You’ll find it interesting and encouraging. Whether you are a V, U or W recovery proponent, Dave Ramsey, Dave Lindahl and I believe that the savvy investior can find profitable real estate to buy in any market.