Capitol Building of Texas

While not unscathed by all of the recent real estate troubles, Texas has, in many ways, been buoyed by strong growth, in its economy and in its population. That growth—which has shaped Texas into one of the most sought-after places to live, and landed many of its cities on “Best of” lists for everything from lifestyle to job-seeking—will, it seems to me, continue to propel Texas’ real estate market in the decades to come, making today’s prices a rock-bottom bargain when compared to future growth. Here’s why:

How strong is Texas’ economy right now? Powerful indeed, when compared to national averages, and exceptional when viewed outright. According to the Federal Reserve Bank of Dallas, Texas was home to 43 percent of the net jobs created in the entire country, from June 2009 to May of 2011. That’s nearly half of all jobs in the country, created just in the Lone Star State. It’s clear that Texan business is booming. And with that boom comes jobs in manufacturing and the energy sector (among others), along with the intricate web of service sector jobs that support the modern lifestyle. People with jobs, of course, need somewhere to live, and it’s easy to suggest that a majority of those workers will, at some point in their lives, want to buy a house.

Thanks in part to job growth, population growth, too, has been strong in Texas, with continued gains in both domestic and international immigration. Travis county, part of which falls within the Austin-Round Rock-San Marcos metropolitan area, has seen a nearly 25 percent growth in population from 2000-2010; Williamson county has grown nearly 69 percent in the same period. Attracted by plentiful jobs, and a top-notch cultural and educational climate, places like Austin are moving forward toward the future, even while much of the nation has been stalled by the recent recession. And the numbers hold true all across Texas; a recent data release from the U.S. Census Bureau (as reported by Texas A&M University’s Real Estate Center) suggested that Texas will see a 43.5 percent increase in population from 2005 to 2030—that’s an additional 10 million people calling Texas home within the next twenty years!

Affordability, of course, is a major concern, and keeping sales prices tenable for both existing and new homes in Texas has been a priority for many leaders in the political and business arenas. Many families are finding that new home construction in the exurban areas of the state’s larger cities is helping to relieve price pressures, and providing affordable, desirable and financially-realistic homeownership options. Well-planned urban in-fill projects (like Austin’s Mueller) are also keeping Texas’ housing affordability reasonable, and providing buyers with lots of choices, at a variety of price points.

So the twin engines of regional growth—population increases and rising employment numbers—are here, and already shaping tomorrow’s Texan real estate market. New home construction is responding, and taking advantage of Texas’ abundant land to address the need for new homes. The question, of course, is what side of the fence today’s potential buyers will be on, once the market ignites and truly starts to rev.

This surprised me a bit b/c the changes weren’t addressed on the austinenergy.com FAQ until today, when they pulled it down. http://screencast.com/t/Ekes1RYN

The amendments to the ECAD Ordinance affect condo sellers quite a bit in that condominiums are no longer exempt from the ordinance. All owners of a condo older than 10 years old will now require an energy audit at the point of sale.

Another fairly poignant rule change has to do with the time period the energy audit is to be provided to the buyer. In the past, the energy audit had to be provided prior to closing. Now, the audit must be provided to the buyer while the buyer has at least 3 days remaining in his/her option period.

There is change in the wind regarding real estate mortgage financing for home buyers, but at present, no one seems to be confident that they know just what those changes will be. Real Estate sales and new home construction are vital to the health of the overall economy and the consensus seems to be that without a robust real estate industry, economic recovery will be difficult, if not almost impossible, to achieve in the short run. It is almost universally understood that the current economic downturn which began in 2008, was precipitated primarily by the mortgage meltdown. Although the first headline making news of the economic crisis was the failure of major Wall Street firms and the resulting “Wall Street Bailout” known as the seven hundred billion dollar Troubled Asset Relief Program or “TARP” which many regarded as just a government program to benefit investment firms and was often not closely associated directly with the mortgage market. The reality is that the Troubled Assets were “mortgage backed securities”.  (Visit  this authors Katy Real Estate, Cinco Ranch Real Estate, & Cinco Ranch Katy Texas website for more information on various topics such as this)

Countless articles and editorials have been published attempting to assign blame for the meltdown and resulting deep economic recession. Numerous proposals have been advanced to rectify the problem, but a realistic solution remains elusive. The truth is that the problem took many years to grow to a crisis situation and is extremely likely to take many years to correct. Rather than try to assign blame for the crisis or attempt to promote any specific “quick fix” solution, I think that it is useful to provide a perspective on what happened and how it happened. This perspective is coming from the observations of one who has been engaged in the real estate and home building industries for over forty years; not from an economist, government agency nor political party.

While we tend to regard the real estate mortgage market as we have experienced it over the past several years as “normal”, it is instructive to understand that what we have seen in recent years is not “normal”, but rather an aberation of of an historical view of mortgage financing. Prior to the Great Depression, long-term residential mortgages were relatively unknown and real estate was typically purchased for cash, or when financing was involved, a cash down payment of fity percent or more was required for financing the purchase of a home. The institution making the loan was a local bank or savings and loan association making the loan out of assets consisting of deposits by other customers of that institution and the note was retained by the institution making the loan and payments were collected by that institution for the life of the loan. After the Depression and World War II, the federal govenrment sought to stimulate the housing market and make it easy for returning veterans to purchase a home. Thus, the VA loan guarantee came into being and was quickly followed by FHA insured loans. Both programs served to enable vast numbers of buyers to purchase a home with less than a five percent cash down payment (in many cases with no down payment at all). These programs also introduced the concept of “long term” mortgage financing and extended the period of repayment to twenty years. At that time, the rate of home ownership was 43.6% and in a period of only forty years, that rate of home ownership soared to 64% and remained at that level for many years. Over time, private lenders (banks and savings and loan institutions) began offering long term mortgage financing and the down payment requirements for these type loans declined to an average of twenty percent. Down payment requirements for these loans were made available at less than twenty percent cash down payment for those borrowers who could meet strict financial underwriting criteria. There were now three avenues of financing available to would be homeowners. These were VA guaranteed mortgages, FHA insured mortgages and Conventional mortgages. All had their own distinctive advantages and disadvantages and their own qualification requirements, but regardless of the type mortgage selected, all had qualification requirements and financial verification procedures in place to assure that the borrower would, in fact, be able to repay the mortgage loan. Even with the introduction of VA loan guarantees and FHA insured loans, the loans made to individual borrowers were made from the assets of the individual institution making the loan and remained “on the books” of that institution. In the case of a default, that individual financial institution suffered a direct loss.

As home ownership and the price of housing soared over time, the demand for mortgage financing expanded beyond the ability of banks and savings and loans to meet the demand from their own assets and the “secondary mortgage market” was born. While the secondary mortgage market, which grew to mean Fannie Mae and Freddie Mac, did not actually lend money to individual borrowers, it did set the standards regarding qualification guidelines. Individual financial institutions came to be no longer lending their own funds on a long term basis, but rather “originating” the loan and then bundling the mortgage instruments and selling them to the secondary market. This greatly expanded the ability of individual institutions to make mortgage loans since their funds were quickly replenished and the liability no longer remained with the institution. The secondary mortgage market dictated the qualification requirements for mortgage loans since the guidelines had to be met in order for the loan to be purchased by the secondary market. An individual financial institution was not legally required to adhere to the “Fannie Mae guidelines” in order to make a loan, but those loans not meeting those guidelines could not be sold in the secondary market and would, therefore, remain on the books of the institution and count against the firm’s reserve requirements. In order for the secondary mortgage market to obtain the vast amounts of funds necessary to continue to purchase the mortgages generated by financial institutions, the mortgage backed security came into being. These mortgage backed securities allowed Wall Street firms to participate in the profits generated by real estate mortgages despite the prohibitions against their directly making mortgage loans. Over time, almost all financial institutions making mortgage loans packaged more and more of their loans into bundles sold to the secondary market, rather than retaining those loans. The “portfolio loans”, or those retained and serviced by the institution originally making the loan, grew to be a rarity and were often not competitive with other types of mortgage loans in regard to rates and terms. Although convential loans were not specifically guaranteed or insured by the federal government, virtually all mortgage loans became considered “federally related” loans and, therefore, had to comply with the Fannie Mae and Freddy Mac guidelines.

The government policies promoting home ownership to an ever expanding proportion of the population are a noble objective, but as is often the case, were pursued without regard to the law of unintended consequences. Almost every financial institution in the nation was virtually compelled to promote the government objective of expanding home ownership to ever increasing segments of the population or suffer substantial consequences from federal agencies and regulators. The ideal of promoting home ownership became more important than sound underwriting and business practices and those institutions that did not make those loans that promoted the government policies, were subject to severe penalties and sanctions and the avoidance of those sanctions became more important than sound business practices. Also, with the mortgages themselves having been sold into the secondary mortgage market and then packaged by the secondary mortgage market into morgage backed securities, the individual financial institutions were relieved of the possibility of loss from defaults. All of this worked extremely well so long as real estate values were increasing rapidly and in the event of a foreclosure, the entities owning the mortgages were left with an asset that was typically more valuable than the outstanding balance of the loan and the costs associated with disposing of the asset. Where the law of unintended consequences took over with a vengeance was when the values of the homes securing the mortgages not only stopped increasing rapidly, but rather began rapidly declining in value. The mortgages and the securities that they backed became what are now known as “Troubled Assets” and required a massive federal bailout to prevent the failure of financial institutions in general and a meltdown of the entire national economy.

Now that the immediate crisis is perceived to be past and the nation’s economy is showing some signs of growth, much attention by government agencies and regulators has become focused upon fixing the problem and more specifically in assuring that it does not happen again. The focus of these efforts are naturally directed at regulations regarding mortgage financing and extensive changes are expected in the mortgage finance industry. While massive changes are predicted and very significant changes have been proposed; even announced to be implemented April 1st of this year, few substantive changes have actually taken place as of this date. In order to avoid a repeat of the foreclosure crisis, the current administration and federal regulators have proposed changes that are almost certain to raise the interest rates and fees on mortgage loans; particularly low down payment loans. We have already seen some changes in FHA insured financing including the raising of required credit scores and a substantial increase in the monthly Mortgage Insurance Premiums for those loans. It has also been recommended that the required minimum cash down payment be increased from the current 3.5% to 5%. Other proposals include raising the requirements for non-government (conventional) loans to a required twenty percent cash down payment in order for the loan to be considered “qualifying” under the regulatory standards. Also, the proposed regulations may require that the financial institutions originating mortgage loans be required to retain at least five percent of the loans on their own balance sheets. There is also talk of eliminating Fannie Mae and Freddie Mac and letting the private sector provide its’ own secondary mortgage market although there has been no credible plan put forward as to how that might be accomplished.

Since the announcements of regulatory changes have been delayed (until when none seems to know), there is a great deal of uncertainty in the mortgage industry and each institution is left to try to predict what those specific changes will be and take steps to protect their assests by adopting practices that they believe will be in keeping with the new regulations they know are coming, but have no specific information as to what the regulations actually are.  The guidelines provided to mortgage loan officers in the field by the institutional investors often change daily, if not more frequently, making it difficult for the loan originator to be confident that a borrower who is today “qualified” will actually be funded when it comes time to close the real estate transaction.

While we do not know what the specific changes will be, it is pretty much a certainty that mortgage interest rates will increase substantially from today’s historically low rates and that down payments and associated mortgage fees are very likely to rise noticeably. Higher cash down payment requirements will certainly shrink the pool of prospective purchasers of residential real estate and higher mortgage interest rates, coupled with higher fees and more stringent loan qualification guidelines will eliminate many more prospective borrowers; even those who are able to accumulate sufficient savings to make the larger cash down payments. The one absolute certainty is that substantial changes are coming. Exactly what those changes will be remains a mystery and are subject to change, even after they are announced. It has been said that “a camel is a horse that was designed by a committee” and it may not be far from reality to expect that changes to the mortgage finance industry designed by elected officials, government agencies and federal regulators are likely to resemble a camel rather than a horse.

Author, David Bell, is a veteran real estate expert with over 40 years of experience.  You may visit his website at jdavidbell.com which focuses on real estate in the Katy Texas area which is just west of Houston Texas.  In addition to Cinco Ranch Real Estate he lives in and specializes in Falcon Point Homes. 

When thinking about professional office space, the traditional model has always been something around the lines of private offices, conference rooms, kitchen, copy room, etc. for a baseline setup.  Nowadays, business are tending to slim down to conserve during hard times or on the opposite end of the spectrum, running a start up company where the owner might be the single employee, no need for big office space.  Whether these smaller businesses want the traditional space or are avid café customers who sit down for hours on end enjoying free WiFi in order to work – they are both constrained by an inflexible office market that wants to sign up a tenant for 1+ years in a space of a minimum of 500 square feet.  This leaves little opportunity for business too small to afford hefty rent payments.  So what are their options?

Over the past few years, landlords have gotten creative to accommodate the smallest businesses.  Take Intelligent Office for instance.

Intelligent Office is a company that now has nearly 50 franchises across the country.  Each offers executive, private offices in a shared environment.  Amenities such as an answering service, kitchen and conference rooms are shared among all tenants.  Just like a typical office, there is IT support, security and even furniture available to decorate an office.  A small business now has the capability of having a prestigious office to show off to clients without breaking the bank.

Impressive is just a starting point too.  Check out some of these offices Intelligent Office offers:

A similar concept of shared space has popped up in Santa Cruz, CA.  The concept coined by NextSpace differs from Intelligent Office’s model of a traditional-looking professional office space; rather it thrives on a dynamitic work space that involves sofas and picnic benches to foster a more café-like and collaborative environment.

Santa Cruz locals and NextSpace Co-Founders Jeremy Neuner and Ryan Coonerty, say that the words “rent” and “NextSpace” should never be in the same sentence.  NextSpace is all about the membership.  For $135/ month to $650/ month, a member has the ability to work in a unique atmosphere that has all the basic amenities that a normal, commercial full-service lease would include (kitchen, answering service, janitorial for those who actually have an office, etc.).  Importantly though, there is the NextSpace Effect which sets this concept apart from most other shared-work environments.

The NextSpace Effect happens out of spontaneous connections gained between Members.  The building is filled with individual work stations, couches, big comfy chairs – all specifically designed to make a friendlier, relaxed environment where conversation can more easily happen and sporadic connects are then made.

Here’s an example:

Someone’s working on their laptop at one of the many comfy sofas in the building and happens to strike up a conversation with another member working at the next sofa over.  They realize their businesses could benefit each other and suddenly, they are passing customer leads back and fourth.  The NextSpace Effect strikes again!

But NextSpace is not right for all small businesses and visa-a-versa for Intelligent Office.  It will be interesting to watch these next few years as the economy (hopefully) begins its recovery and businesses continue needing small spaces to thrive.  Whether it’s a relaxed, collaborative environment or a more professional, impressive office to show off to clients, demand from small business for small space will continue.

If you would like more information on any part of this article, please visit Barry Swenson Builder or feel free to contact the author at jwoodyard@barryswensonbuilder.com

By Marc Rasmussen: – Sarasota Florida real estate

The number of homes for sale is dropping, sales are increasing, interest rates are still low, the economy is starting to show signs of improvement and the recent unemployment rates improved. U.S. companies are going to report the best 4^th quarter results in 19 years and are sitting on a record amount of 2 trillion dollars of cash.  So is it finally time to buy? Has the bottom hit?

Yes….well maybe.

No one knows for sure if the bottom is here. Time will only tell. The foreclosure mess will continue to put downward pressure on home prices. The price of anything is determined by supply and demand. If there are too many homes out there for sale and the buyer demand is not brisk enough prices will fall. However, they may not fall that much. My personal opinion is that we are scraping along the bottom. Some segments of the Sarasota real estate market have hit bottom while others need to come down a little more. I imagine most other real estate markets are similar.

If you are looking to buy a home would you rather buy one today that you absolutely love for $250,000 or buy a home you kind of like a few months down the road because you can get it for $240,000?

Home prices might fall a little bit more but so will your options. As the market bottoms out you will have fewer homes to choose from. If you are one of those really picky buyers you better start looking now. You don’t have to buy now but it is a good time to learn the market and manage your expectations.

Someone asked me the other day if home prices started to rise and if they needed to jump in the market. I told her it was a fine time to buy if your time horizon was long enough.

If you buy a house make sure you plan on spending a few years there – probably at least 4 or more years. The market is volatile. It could drop a little for the next 12 months, sit flat for 2 years and then start to rise. It could be oversold and we might see rapid appreciation once the inventory is depleted. There are many different possible scenarios.

If you buy today and then want to sell in a year or two then you will probably lose money because of the transactions costs. If you are ok with that then feel free to jump into the market

The bottom line is that you need a place to live. Sleeping outside under a tree probably isn’t much fun. You can be a renter. There is nothing wrong with that. You can also be a home owner. If you are the type of person who likes to move every couple of years you might be better off renting. If the thought of packing all of your belongings and moving turns your stomach and you envision yourself spending several years in one location then this might be the perfect time for you to buy a home.

If you are interested in putting your home on the market, it is important to do as much as possible to make the home attractive to potential buyers. One way to accomplish this goal is to make your home eco-friendly. While some eco-friendly modifications can be quite costly, there are several options available that won’t cost too much to implement. Even better, they can actually increase the value of your home and help you get it sold more quickly. Here’s a look at a few of the eco-friendly changes you can make to your home in order to increase its value.

Eco-Friendly Tip #1: Install a New Thermostat

Installing a programmable thermostat is an attractive change that will certainly please any potential homebuyer. This is because a programmable thermostat makes it easier to adjust the temperature throughout the day and night. With the help of a programmable thermostat, the homebuyer can set the thermostat to turn down or up while away at work or while sleeping, which could help save up to 5% on the gas and electric bill.

Eco-Friendly Tip #2: Install New Appliances

Updating your appliances is a good way to add value to your home. When selecting new appliances, look for ones that are EnergyStar rated. EnergyStar appliances can potentially save hundreds of dollars every year in the energy that is saved. Obviously, this will be looked upon favorably by potential buyers.

Eco-Friendly Tip #3: Replace Insulation

If your insulation has become damaged or has been compressed, it is a good idea to replace it before you put your home on the market. Not only will this help to improve your home’s energy efficiency rating, it will also reduce your chances of having problems with your home inspection. As a general rule of thumb, more insulation should be added if you have less than six inches of cellulose insulation or less than seven inches of fiber glass insulation in your home. You can further reduce heating costs by placing an insulating jacket around your hot water heater and pipes.

Eco-Friendly Tip #4: Install a Low-Flow Toilet

Installing a low-flow toilet is generally a simple task, as all of the necessary piping should already be in place. Not only will this update help to give your bathroom a fresh, clean look, but potential buyers will be pleased by the water savings that these toilets provide.

Eco-Friendly Tip #5: Replace Your Faucets

Replacing your faucets with a water-efficient version will also be viewed favorably by potential buyers. The variety of water-efficient faucets available today is quite impressive, so don’t think you need to skip out on the extras in order to save on water.

About the Author: Brian Kinkade is a broker and team lead with Brokers Guild – Cherry Creek Ltd, one of Denver’s fastest growing full service Denver real estate firm. Brian’s team of Internet savvy agents service the Denver Metro area while specializing in Denver luxury homes, and Colorado horse property.

This was emailed to me today & I thought it was a great read.  Rent has been steadily increasing & rental inventory has been steadily declining for the past year.  I think we’ll see this trend continue, and believe we will be in a real housing shortage by 2012.

By: David Tandy, CEO
Gracy Title, a Stewart company
As published on Realty Line Magazine 8/2010

While the Austin MSA continues its rapid population growth rate, single family and multi-family construction has gone through a dramatic slow-down. Will this slow-down in new construction cause a housing shortage?

In June, Austin was the fastest growing market (year-over-year) in the U.S with a 1.3% annual growth rate. Although our population growth has slowed from its hyper-growth rate in 2006 and 2007, we are still projected to grow between 40,000 to 50,000 in 2010. We have averaged over 55,000 per year for the last 5 years. According to the City of Austin Household and Population analysis, one household is created for every two and 1/2 new Austin residents; therefore, we will be adding about 20,000 new households per year to the Austin area based on our population growth. Looking forward over the next decade, those projections show we will add between 500,000 and 600,000 new residents: the equivalent of the entire population of Austin in 1980.

So the question is: Will Austin have sufficient housing options for these new residents?

It’s doubtful multi-family options will meet Austin’s housing needs. For the Second Quarter of 2010 the Austin Planning Commission showed only 975 multi-family units in projects with site plans under review and 8,885 units in projects with site plans approved. Since it takes at least a year to obtain planning commission approval and a year to build and there are only 975 units currently under review, it seems likely that a shortage of apartment units over the next several years will begin to develop. Real Estate developers would already be building more projects but for the challenges of securing commercial financing.

The Texas A&M Real Estate Center projects there will only be about 2,500 units completed this year and we could have as few as 1,000 building permits issued for multi-family units. This would compare to about 8,000 multi-family building permits in 2006 and 2007. Add the additional single family new construction and it’s still hard to imagine how Austin’s housing needs will be addressed. There were 6,678 Residential (single family) building permits issued in 2009 and we are on track to issue about 7,000 for 2010. By comparison, there were 17,600 permits issued in 2006.

To summarize, if Austin’s population continues to grow at its historical rate, in 2010 we will create about 20,000 new households but will create fewer than 10,000 new single and multi-family units combined. These were about the same number of units created for 2009. Due to the difficulty in financing new subdivisions and new apartment projects, we should see a similar deficit in new housing units in 2011 and 2012. At some point, Austin will have a noticeable shortage of new housing units which will impact resale inventories and home prices. Austin has not seen this small number of new housing units since around 1994 when the Austin MSA population was just under 1,000,000.

If you’re like most people, you don’t want to have to pay more for your home’s energy than what you need to. Forget for a moment concerns about waste and the environment, and understand that most homeowners are throwing money away every month because their homes could really stand to improve their energy efficiency.

Fortunately, there are some relatively basic and quick things you can do if you want to improve your energy efficiency today:

•    Start by assessing the situation. There are a number of online energy efficiency calculators you can use to estimate how much money you’re burning every month just because your home could stand to see improved energy efficiency. These calculators take all of about five minutes to use. If you’re more aggressive and have more time, you can bring in a professional energy auditor who can do a thorough assessment and tell you where the most effective energy efficiency improvements will be for your particular home.

•    Change out your thermostat. One of the quickest ways to improve energy efficiency in your home is to start with the thermostat. You can install a programmable thermostat fairly simply, and they’re really not that expensive at all. They are readily available at most local hardware stores, and you’re almost certain to find them at the big box tool and home improvement stores.

•    Check your insulation. Whether it’s adding some insulation to your attic or simply caulking around your exterior doors and windows, taking an hour or two to better insulate your home and reduce the air flow is a great way to quickly improve the energy efficiency of your home.

•    Make use of an alternate heat source. If you have a fireplace, use it. Of course, you want to make sure that the damper on the fireplace is shut when you’re not using it, and that all of your seals around your fireplace’s hearth are tight.

•    Get energy efficient appliances. If you’ve got a 20 year-old clothes dryer, chances are pretty good you’re not being anywhere near as efficient as you can. Today’s appliances are greener (not to mention much more feature rich) than those of decades past.

About the Author: Brian Kinkade is a broker and team lead with Brokers Guild – Cherry Creek Ltd, one of Denver’s fastest growing full service Denver real estate firm. Brian’s team of Internet savvy agents service the Denver Metro area while specializing in Denver luxury homes, Colorado horse property and International sales. They invite you to visit their advanced real estate website today to search for homes, gather local information, and learn about Denver neighborhoods. Brian and his team are standing by, ready to assist with your home purchase, property sale or relocation needs.

Are you trying to determine the value of your home? If you are planning to put your home on the market sometime soon, determining its actual value is the first and most important step in the process. After all, you need to know the value of the home in order to determine a fair asking price. At the same time, you want to get as much for your home as possible. So, how do you go about determining the right asking price for your home?

Pricing Too High…..Big Mistake

Unfortunately, many sellers make the mistake of asking a price that is more than the fair market value. For these sellers, the belief is that asking a higher price will allow them to sell the home for its actual value. According to this logic, asking for more than the fair market value gives the buyer more room for negotiation. While this may seem logical, the reality is that overpricing a home can cause it to sit on the market for too long. Many propects will not even take the time to look at the home because of the perception that the seller’s may be unrealistic. As a result, the seller may ultimately end up selling the home at a price that is well below the actual market value.

Time on the Market

It is a well-known fact within the real estate industry that a home loses value the longer it sits on the market. Furthermore, the longer a home sits on the market, the greater the probability it will not sell. In fact, a simple formula is used to calculate what is known as the “absorption rate,” which is the probability of the home not selling. To determine the absorption rate of your property, simply divide the number one by the number of months of housing inventory on the market. If there are 12 months of housing inventory in your market, for example, the probability of it selling in any given month will be 8.3%. This means the probability of it not selling is a whopping 91.7%. With odds such as these, you certainly don’t want anything to stand between you and getting your home sold – and that is just what will happen if you ask for more than the home is actually worth when you put it on the market.

Time is Money

Of course, the longer your home stays on the market, the more it is costing you. After all, while your home sits on the market, you still have to pay the mortgage, utilities, insurance and other costs associated with maintaining the home. By holding out for an unreasonably high price, you increase your expenses by keeping the house on the market for longer than necessary. Furthermore, even if you do find someone who is willing to pay what you are asking for your house, the buyer will be very unlikely to find a lender who will provide the buyer with a loan. Remember, this is an investment for the lender and paying more than the actual market value simply is not a good investment.

Correctly Pricing Your Home

So, how do you go about determining a realistic price for your home? Getting an appraisal is a good first step, but you and your Realtor can use a number of other methods to determine the best asking price possible. For example, your Realtor can do a Comparative Market Analysis (CMA) to compare the prices of comparable homes in your area on a price per square foot basis. Or, you can use online resources such as Zillow.com, which allows you to learn more about competitive pricing as you determine the price to ask for your home. Although Zillow’s Zestimates are sometimes a useful tool, appraisals and CMA’s are much more reliable and accurate.

If you are considering listing your home in this challenging real estate market, proper and realistic pricing is a must. Work with your Realtor to establish a competitive asking price so that you can get your home SOLD.

About the Author: John C. Allen is the broker and owner of Allen Real Estate Services, a 30 year real estate firm in Sarasota, FL. He specializes in representing buyers and sellers of Sarasota luxury homes for sale, including condominiums, exclusive golf communities and waterfront houses. Stop by his award-wining website to lean more about the Sarasota, Florida area. In addition there is free access to thousands of MLS listings and detailed information on hundreds of neighborhoods and condo communities. From vacation properties on the barrier islands to downtown Sarasota real estate, John’s team of Internet specialists can help you explore all of the options currently available.

The property market has been a hot discussion topic for quite some time now but there is no more pressing issue than that of shadow inventory, the element of the market that seems to be lurking the shadows with the potential to set the growth of the market back to an unbelievably negative degree as recovery begins.

This debate has been started by a Standard & Poor recent report, which advocated that the absorption of the shadow inventory in existence at the moment will take up to three years.  Defined as “outstanding properties that are (or were recently) 90 days or more delinquent, in foreclosure, or real estate owned (REO), but haven’t yet hit the market inventory”, this category is therefore worth in excess of $480 billion. As these properties are set to hit the market in the very near future, it is looking bleak as a result of the low prices that they will be sold at. Supply will heavily exceed demand and this may drive house prices down further.

However, there are a few issues with the assumptions made about the shadow inventory. For example, nobody actually knows how large it is because estimates stand at anywhere between two and eight million. As such, there is no way of knowing how many homes will flood onto the market in the near future. Furthermore, the problem is not exactly uniform in its coverage across the nation. Instead, the average shadow inventory is 34 months but some areas have lower or higher inventories. Phoenix, for example, is the lowest with 16 months worth and New York is the highest with 103 months worth according to Standard & Poor’s report. However, despite these discrepancies, it appears that the shadow inventory is shrinking according to the National Association of Realtors with the national total down by 3.4% in May.

The shadow inventory is certainly a problem at this moment in time because an influx of foreclosed properties into the market will definitely cause prices to plummet. However, this largely depends on the scale of the rush. Properties dripping onto the market may not cause as many problems as millions hitting the market at once. It is suggested that lenders may well seek to hold properties to enable them to get the best possible price. This trend is evident in the commercial market at the moment, where properties have not hit the market all at once thanks to realtors holding properties in shadow inventory.

Although residential shadow inventory does differ significantly from the commercial market, it should be noted that there are several categories within the market. For example, many distressed properties are low end and will not bring the higher end of the market down as well. As a result, it is fair to say that there are so many factors that could affect the market in relation to shadow inventory that it is not possible to draw solid conclusions at the present time.

Standard & Poor did issue a warning about the national shadow inventory numbers though. Careful action could undoubtedly offset the impact of the shadow inventory as it hits the market. Low interest rates and tax breaks could sustain demand and prevent disaster hitting the market at the worst possible time.

Dylan Taft is an experienced Hudson Valley real estate professional working in home sales and purchases. Visit Dylan’s professionally optimized website for more information on property taxes, and details on the Ulster County Foreclosures.