Foreclosures: When Perception Is Not Reality

Today’s blog post is brought to you by two great powers: Richard C. Oliver and Wiley Miller.

One created the inspiration, and one brought the inspiration to my attention. So let me share with you Wiley’s (he prefers being addressed as such) genius before we go on:

Now let’s talk about why this is wrong.

We’re Building the Future

Hopefully the country is following suit, but as for us here in San Antonio, Texas, we’re not building houses and waiting for people to come love them and buy them. New home development has historically been slow and thoughtful here in the Alamo City, and we like it that way. When it did boom (ahem Stone Oak area, I’m talking about you) we realized our infrastructure was lacking and began quickly taking measures to ensure that folks had access to fire, EMS, and police services, and we’re upgrading those roads to get everyone in and out quickly. It’s more than a matter of supply and demand, it’s what makes sense.

We’re putting up houses with a purpose. Shelter is a basic human need, but it seems like all people really care about is money these days. With new lending restrictions the FHA and banks in general are making sure that when people need money to buy a house, that they’re not getting in over their heads. If it works the way it should, we should see fewer foreclosures and a return to the “good ol’ days.”

2011 is Mistakenly Called the Peak

I think calling this the peak is fine if you’re plotting the foreclosure rate on a graph, but I’m going to call this the trough, and I hope I don’t come off as a pessimist. But the truth is foreclosure isn’t a good thing, and calling it “a peak” makes it seem that way.

It’s going to get worse before it gets better. This January 13 article by Janna Herron of the AP states that “about 5 million borrowers are at least two months behind on their mortgages,” and until the job market picks up and unemployment goes down, we may not see much of a change.

The Rest Can Only go up from Here, but We’ll Do What we Want

The saying goes “Once you’ve hit rock bottom, the only way is up.” San Antonio hasn’t been hit nearly as badly as the rest of the nation. Our median home sales price has stayed right around $150,000 for more than a few years now, meaning value hasn’t changed much and prices haven’t sunk like they have in Florida, Michigan, Nevada, and California.

As a matter of fact, three major San Antonio areas saw slight upticks in sales prices in 2010, and we’re hoping to keep them that way. This article by San Antonio Express-News writer Jennifer Hiller details those areas and recounts the SABOR 2011 Housing Forecast put on by the San Antonio Board of Realtors (SABOR).

Is there Good News?

There always is. I always look for silver lining, even on the darkest clouds. Unfortunately this silver lining comes at a high cost to some.

With interest rates as low as they are, and an influx of foreclosures on the market (or coming onto the market), we’ll see a spike in investor purchasing. Getting the money is just as difficult, if not more difficult, than in previous years, but please don’t think that that will stop investors from doing everything they can to get their hands on homes ripe for the picking.

A future benefit of current investor purchases: while investors are buying up houses on the cheap, they’re planning on fixing and flipping them. They may not sell these houses for top dollar in the future, but they’re sure to make money on the transaction, and hopefully the next buyer will get a house that’s been revamped and is ready for an owner-occupant to live and love it.

The way it used to be, the way it should be.

Danny Charbel is a Keller Williams Realtor in San Antonio, Texas. Please contact him with any questions, comments, concerns, keep the spam to a minimum, bring on the jokes, interesting banter, comical retorts, and insightful inquiries. You can email him at dcharbel [at] kw [dot] com, or follow him on Twitter @dannycharbel.

Buyer’s Series – Does the Stimulus Package help me?

I’m planning on buying a house, but I don’t know if I should buy it now or later, what’s the main strategy these days? I know a few of my friends are saying I should do it quick in order to get the Stimulus Package benefit. Help!

First of all, calm down. You don’t have to buy it today or tomorrow (or yesterday) in order to benefit from the current market. It’s a buyer’s market, it’s been one for a while, so you’re in good shape.

As I understand it, with all income limits considered and whatnot, first time homebuyers will qualify for UP TO $8,000 tax credit (not deduction). What determines the total amount of your credit is the total price of the house. The credit will go toward 10% of the price of the house.

There are also income limits, so read the new bill carefully (if you’re single it’s one thing, if you’re married is another). My best suggestion is to talk to your favorite mortgage lender about it.

Finally, it’s great to realize that it’s a credit and not a deduction. Meaning the money comes right off your tax liability. Pretty cool if you owe Uncle Sam a lot next year.

Questions? Comments? Want to talk more about the bill? Email me at dcharbel [at] kw [dot] com.

Y’all come back now, y’hear?

The Fort Worth Business Press has published an interesting article this morning detailing the reasons (one in particular) that particularly affluent people may consider moving to Texas.

The article, titled “Gone To Texas Troubled borrowers seek Lone Star relief,” examines the forgiveness Texas has toward folks looking bankruptcy in the eye.

The article quotes Jim Gaines, a research economist at Texas A & M’s Real Estate Center as saying “It may not work for everyone, but if you have a lot of money and even more debt and you are trying to beat the clock before all your troubles catch up to you, then Texas may be your Holy Land.”

An example? Well in many other states lenders can sue debtors for the price difference between what was owed on their mortgage and what the lender was able to sell the house for after foreclosure. The method of payment? They garnish your wages of course. Unless you live in Texas. Turns out we don’t like that much here, so we won’t allow it. Oh, and we won’t let them touch your alimony or your child support payments either. Do I hear a bunch of Californians hollerin’ “yee-haw?”

I strongly suggest you read the article, it lays out a few very interesting points. Including:

-How and why home lenders can’t seize your car (but your car note lender can);
-How much property can be exempt if you live within city limits;
-How much property (and a strategy to protect the rest) can be exempt if you live in a rural area;
-For those of us who still value our IRA and 401K accounts, you can thank Texas for safeguarding them;
-And of course, ways to stay out of court.

Be careful though. These exemptions and loopholes are really in place to help the cash-rich, those people with a lot of money and a lot to lose. Also, hopefully you’ve got a way to show residency in Texas for the past two years, or a way to hang on for the next two years while you establish residency here. Turns out all 50 states have a rule about claiming these exemptions: you have to be a resident of the state.

Questions? Comments? Concerns? Ready to mosey on down to the great Lone Star State? Email me at dcharbel [at] kw [dot] com. I’ll be happy to wrastle up some grub and welcome you to the Alamo City.

Buyer’s Series – I have no credit! Help!

A friend of mine just moved to the United States six months ago. He has six kids, a wife, and no credit history. He’s got a job, is a reliable person, but can he qualify to buy a house if he doesn’t want to rent?

The short answer, is “maybe.” It really depends on the market you’re in, but if you’re in a place anything like San Antonio (chances are good since this blog is being read in 5 countries on three continents) then you’ve got choices in this case.

Odds are that without a sterling credit history you’re not going to be a great candidate for lending from an institution. What’s my recommendation in a situation like this? Seller financing.

Seller financing is available when a homeowner is willing to sell a house as well as collect the mortgage payments (plus interest of course).

Upon completion of the payment schedule the house is owned outright by the buyer. Depending on the state title may or may not be transferred to the buyer at the time of closing/funding, or the seller can wait until the completion of the loan.

What are the benefits of seller financing? You’re more likely to have luck buying a house this way if you have no credit or less-than-perfect credit.

What are the drawbacks of this option? Just like everyone else, sellers who offer financing are looking to make money, so they can charge a higher interest rate than a bank or other lender would. You’ll also be expected to invest in the house with a down-payment.

When in doubt, find a Realtor and ask for their assistance! Need help finding a Realtor you can depend on? Email me or fill out the “Contact Us” form on my website.

Questions? Comments? Concerns? Looking for seller financing properties in your area? Email me at dcharbel [at] kw [dot] com.

Is a bailout the way to go?

It seems all the news channels are on the same wavelength these days with talks about our current economic situation and the potential government-funded bailout. USA Today reports this morning that President Bush is urging Congress to take decisive action in order to reverse current market conditions and put the U.S. economy back on track.

Sources quoted the President as saying “this is a difficult vote for members of Congress” and “many are uncomfortable with what’s transpiring in the economy. We’re in an urgent situation and consequences will grow worse each day we do not act. If our nation continues on this course, the economic damage will be painful and lasting.”

I have to say, I agree with the President on a few of these points, but is a federal-funded bailout the only way? I’m no economist, nor will I claim to know more about the inter-workings of the economy than our current administration, but I do know that I’m not terribly comfortable with just handing public companies my hard-earned tax dollars.

I’m perfectly fine paying veteran’s retirement and medical bills, I love helping fund public education, I find a certain satisfaction in knowing that my pennies help pay for my roads and other infrastructure. But do I want a golden parachute helping out Wall Street?

If it means the difference between economic stability and an irreversible economic downward spiral then, sure. Take it. Take all of it. All $700 Billion. But if there’s any other way, I’d love to hear that option.

After-all, isn’t that what this country is founded on? Giving the citizens a choice between options? Again, I’m a professional Realtor, not a politician, but it’d be nice to have a few options here.