Warren Buffet and the affordability of houses

It was a wake up call to be quoted in the press as having an abandoned blog.  And to think this one deals with real estate, my business.  So, I have elected to hop back on this bus and create the time to post again as I actually have a wealth of information on real estate sales.

Warren Buffett came out with a statement in the last couple of weeks where he indicated to a staff member that the absolute best investment today is real estate.  Boy, does that make sense! Why is that you might ask?  There are several reasons.

1) Money is virtually free.  When I bought my first house in 1982, rates on mortgages were 18%. Yikes!  Today's rate is between 4 and 5%, even lower for terms less than 30 years.

2) Inventory is huge!  There are more houses than there are buyers. Period.  I have recently counseled sellers to take their houses off the market if they can't afford to price BELOW market. That's right...BELOW market.  This is a buyer's market and has been for a few years.  The Buyers set the price.

3) Affordability is back to historic levels.  What this means is that the number of houses that are priced at levels that the average buyer can afford has increased.  The Maine average sales price is down to $160,000. This means that a family with an income of $53,000 can probably afford a house at this price.

What can you do as a buyer?  Talk to an experienced Realtor such as myself and get qualified.  If your credit score is rotten, that's OK. We can help you make a plan to get on track for that purchase. And best of all...being represented as a buyer is FREE!  That's right. No cost to you.
Shoot me an email at catmacgroup@gmail.com. I can help.

Unemployment DOWN in Portland, Maine, Mortgage Rates rising

OK I admit it has been way too long since I have written on this blog. That's what happens when one gets busy with work and life! Time to make time to communicate my observations on the real estate market in Portland, Maine.



This has been a fabulous year for my group (http://www.wesellmaine.com/), and I attiribute that to a combination of the now defunct tax credit and hard work. Now we are heading into a new year and a new market and I ask, "Where are the buyers?"



To cut to the chase, we hear all sorts of whining about the 9 plus percentage unemployment in the US as a whole. But that is a red herring when it comes to Portland, Maine.



Recently named one of four markets in the USA where the value of real estate is rising (Today Show), one need only look at an adjusted unemployment rate of 5.5% in Cumberland County ( OCT ME DOL stats online)to realize that we are NOT in the dire straits of the rest of the country. In fact, since its high of 7.3% in February of this year, Portland, Maine has knocked off almost 2 % from its unemployment rate. My guess is that unless you have a government job, which may see some attrition this year, you are probably OK job wise.



What stirred me to write this blog today is that CNBC just noted that mortgage rates are now over 5% on 30 year conventionals. This is a jump from the 4.3% rates seen this summer. We are back to rates seen early this year and they aren't coming back down........we have seen the bottom!



What does this mean for you as a potential homebuyer? Job security is looking pretty good compared to the rest of the country, housing prices are starting to rise and rates are going up and are NOT COMING BACK DOWN!



Buy now, potential buyer! Buy now!

Congress looking to expand Homebuyer Credit

Congress is considering the expansion of the $8000 tax credit to include all homebuyers who meet eligibility requirements. There are several proposals now before committees that would expand the credit from $8000 to as much as $15,000. Currently the full credit is available to first time buyers who make $75,000 or less ($150,000 for joint filers) and a partial credit for individuals making between $75,000 and $95,000 ($150,000 to $170,000 for joint filers.) Those in favor of extending the credit's scope say that doing so will boost home sales, stabilize housing prices, and create jobs.

Mark Zandi, chief economist of www.MoodysEconomy.com favors extending the credit until June 2010 according to a recent post on that website. He cites the impact of housing on the economy as a whole.

(Thanks to e news from Franklin Mortgage for the facts cited above!)

Interest rates will rise

Yup....you are hearing it here, but did you know that as economies improve the Fed will be forced to increase interest rates? Used as part of the "toolbox" available to market regulators, interest rates tend to increase when inflation is on the rise. Inflation occurs when there is too much money chasing too few goods.(It is actually more convoluted than that...) People are afraid that the Fed has put too much money out there for the volume of goods being produced.
However, unemployment is still high, so the Fed is artificially keeping rates low for the time being, in an effort to assist businesses in getting affordable credit to create jobs. If people go back to work, more goods are produced and consumer demand increases......well, you get the general picture.

Eventually, rates will need to increase, or be increased, to remove money from the system. The hard part for homebuyers is that mortgage rates will increase , also, as the rates are tied to long term treasuries. For every quarter point of a rate increase, the homebuyer's monthly payment increases. This can limit the price of a house one can afford.

Why wait?? House prices are LOW, mortgage rates are LOW! A buyer can get the best deal seen probably since...........this writer doesn't know when!

NOW IS THE TIME!!!

The Perfect Storm

October is the month of crazy weather changes and conditions that led to the October Atlantic storm giving rise to the conditions that were featured in the book and movie of the same name. This October is a perfect brew of conditions that are the most favorable that homebuyers have seen in a long, long time!



First time buyers in particular should be out searching actively for their perfect home. Not only can they take advantage of an $8000 tax credit (money in your pocket), but in Maine can possibly qualify for another $5000 towards closing costs through the Green Money program at Maine State Housing. Combine this with rates near and below 5%.......well it should be a no brainer.



If your credit score is above 640 and you have some money saved, get out there. The house you choose must be closed by December 1, 2009. It takes 4 to 6 weeks to close.....

Update on MSHA program

I have done a little more research and have talked to a lender who is as familiar with the program as can be at this point. It is actually a credit of UP TO $5000 but no more than 4% of the loan amount. The borrower must contribute 1% of the loan amount. Under programs such as MSHA/FHA this can be a gift. The program ends November 30, 2009. Hope that is more clear!

I strongly encourage any borrower to consult with a loan officer regarding whether or not this makes sense.

There are income limits ,also, that apply!

Maine State Housing Offers $5000 to 1st Time Buyers

I just learned today that MSHA (Maine State Housing) has finally launched their "Gift of Green" program. This program offers $5000 that can be put towards closing costs, down payment, or escrow funds. There are also coupons for up to $500 for energy audits. The money is limited to approximately 500 buyers. There are upper income linits. This is in addititon to the $8000 tax credit being offered by the Feds. For more information go to www.mainehousing.org.