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Mortgaged to the Hilt / Adapting to a Changing Market
Ed Fitch of Fitch Properties notes "The financial markets do not function well with uncertainty and the FED responded to the foaming uncertainty and free falling equity markets with a ½ point cut in the discount rate. The FED has gifted the market with a few days of stability to really assess how bad the situation is, or very possibly could have been." Fitch offers six tips for success.
Sacramento, California (PR-WEB) August 20, 2007
The last series of real estate release(s) dated May 25, 2006 - July 10, 2006 published through PR-WEB and found on http://www.realtydollars2u.com and http://www.listanyhome.com discussed the inevitability of a future mortgage market crisis … that prediction has come true in recent weeks. Ed Fitch of Fitch Properties notes that "The financial markets do not function well with uncertainty and the FED responded to the foaming uncertainty and free-falling equity markets with a ½ point cut in the discount rate." The FED has gifted the market with a few days of stability to really assess how bad the situation is, or very possibly could have been. Continue to hear the terms capitulation, over-bought and over-sold, there will be mergers in the financial sector and interest rates are going to be intertwined with this market … certain hedge funds will be scrutinized and we will all wonder how the mortgage industry got this close to the edge for some time to come.
 If you are on the right track you will get a lot of resistance from others to your real estate investment strategy … stay strong and stay the course!  |
Ed Fitch Offers
Six Real Estate Tips:
1) If turnover plays a big part of your livelihood, or you have a pressing need to sell real property, you still have a 30-60 day window without significant price reduction to the current market … this statement assumes the target property is priced correctly for its location. If you do not need to sell, and your property is in a superior location wait out this correction.
2) Most lending institutions stuck with significant home inventory will continue to be flexible as they see dumping as their only alternative to holding, and some simply cannot raise the capital reserves necessary to hold. So do your homework and figure out which lenders continue to be flexible in the real estate market right now and try to take advantage of that. Countrywide for example is one of the few behemoths that have chosen to be firm with their own home inventory with respect to contract negotiations and initial pricing.
3) Begin the process of real estate acquisition … Northern California is a good place to start, Modesto, Sacramento and Stockton for example. Perform your property search or comparative market analysis using real time market data. Do not jump into this market, dip toes only. Holding power will be necessary and likely a 10% - 20% down payment. If you buy property at the market (which is totally unnecessary in my opinion) expect to carry a negative based on the current tone of the home rental market. Moreover, expect to wait two or even three years for a market correction … place a two year negative into your calculations, three years if you anticipate no rental adjustment.
4) Your acquisition mantra should be location, location, location, keeping price in mind as you have time to be picky. Remember FLM "Funny Lender Money" will be harder to come by this time around. Look for refinance opportunities, but expect money to be a little tighter for even the most credit worthy individuals.
5) Expect the FED to cut the discount rate again before the end of the year; however home mortgage rates will continue to be under a certain degree of pressure until the real estate market sorts itself out.
6) Look for ways to save on your next house property purchase and sale … utilize realtor services that offer commission discounts, flat fee services, significant Buyer incentives, significant on-line marketing reach and excellent property search tools.
Fitch suggests to remember the old adage 'buy low and sell high' and put it to good use. "If you are on the right track you will get a lot of resistance from others to your real estate investment strategy … stay strong and stay the course!"
Edward S. Fitch is a published author and financial expert and has written articles for Northern California Real Estate Publications. Fitch is the owner/broker of Fitch Properties found online @ http://www.realtydollars2u.com providing Flat Fee Real Estate Multiple Listing (MLS) and online marketing services to property buyers and sellers throughout the state of California. Fitch is also owner of http://www.listanyhome.com providing real estate marketing services to home sellers inside the borders of the United States.
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Northern California Home Sellers Adapt to a Changing Market
Monday, July 10, 2006 9:55 AM
(Industry: Real Estate
Roseville, CA -- (SBWIRE) -- 07/10/2006 -- In Sacramento, Placer and Eldorado Counties we see about ninety to one hundred net pending sales per day against an average of about two hundred and fifty to three hundred new listings. On average, there are greater than three hundred daily property price reductions, and for the last few days that number has eclipsed four hundred.
Why is this important? Had one religiously followed the daily real estate market activity over the course of the last two years, and fully understood what they were following, it would have been possible to anticipate a market correction. If one’s belief was strong enough they could have sold the market short, at the very least they could have liquidated at the top of this market cycle.
But what does one do now if they need to sell, and they are one of the fifteen thousand strong that have listed their property for sale with a Broker? Do not despair; first understand that many of the listings that you as a seller will be competing against have been listed too high for the present market conditions. This is evidenced by the fact that on average there are greater than three hundred daily downward price adjustments as previously mentioned. Moreover, the actual market slide was so sudden that it would be hard for many to comprehend what happened and to adjust to the new real estate environment.
Further complicating the situation is that new home sales, until recently, appeared strong. Moreover, the economic forecast for existing homes sales in California and other parts of the country continues to show small to moderate gains versus the twenty to thirty percent annual gains to which we had grown accustomed. The Central Valley is the enigma, and in contrast to forecasted gains anticipated in other areas of the state, the market has sharply declined, essentially wiping out two years of gains.
Thus the reality is that whether we like it or not, the Central Valley’s real estate market is faced with some real liquidity issues. Even though the decline in prices is not reflected in the published median price statistics, the decline really exists. As a result of the liquidity issues it will take some time to be a realized decline, versus today’s wholesale markdown in prices, or unrealized decline.
This real estate market represents an opportunity for both buyers and sellers. There is still tremendous appreciation in the marketplace, and homeowners have done very well through this cycle. Those homeowners that purchased property this year, or last year, are just going to have to wait out the cycle, or liquidate with a loss.
The rental market is firm at the moment, so if one cannot afford to absorb the loss they may wish to consider renting their home or adding a border, rather than defaulting on their credit obligations.
Understand too that there are buyers in this market place. One may want to get creative with their transaction. If one can afford to carry a note they will open themselves up to a larger pool of buyers (of course creativity options add an element of risk into the equation).
A nice home situated in a better than average location will sell at the right price. If one prices themselves out of the market at the onset they will very likely destroy their listing. The fixer property market is still alive, but remember, prices have adjusted substantially and the new federal lending guidelines ninety day hold rule has effectively removed wholesale flippers from the marketplace.
A further positive is that the fixed income market, specifically ten year and thirty year fixed mortgages is still very good. The Fed appears to have an excellent handle on the market right now. If the Fed does not raise rates at the next FOMC meeting the market in the Central Valley could be poised for a slight rebound.
If one is defaulting on their mortgage, the absolute worst thing they can do would be to walk away from their credit obligations without exploring all of their options. Learn about short sales specific to mortgage obligations and learn about the negative tax consequences associated with foreclosure.
Know this, things will get better. Land is scarce, the prices of raw commodities are high, permits are difficult to come by, and environmental hurdles will continue to restrict building. Your home will be an excellent investment over the long term. Hang in there!
Ed Fitch is a financial expert, published author, and has written articles for Northern California Real Estate Publications.
Contact Ed Fitch for more insights into this topic. Direct line: (916) 782-5015 Email: edfitch@comcast.net other helpful information regarding the can be found at:
Interest Rate Jitters Rock the Northern CA Housing Market!
Recent hawkish talk from the Federal Reserve is having the desired effect on cooling off the real estate market in Northern California. This regions housing market has begun to show real signs of illiquidity, bringing into question that maybe the Fed should consider easing off on interest rates.
Monday, June 19, 2006
(PressMethod) - Recent hawkish talk from the Federal Reserve is having the desired effect on cooling off the real estate market in Northern California. This regions housing market has begun to show real signs of illiquidity, bringing into question that maybe the Fed should consider easing off on interest rates.
With the housing market showing dramatic signs of correction, a concern is that the economists and pundits are hyper focused on old data, simply out of touch with the actual market. We are going to have to wait a couple of months for the real numbers to come out, but to remove any speculation that anyone might have, the numbers are going to be far worse than everyone seems to be predicting. Predictions of a soft landing are the majority belief, but is the majority belief specific to financial markets ever right? Many seem to have a short memory span when it comes to the historical picture of the financial markets, and right now that is quite possibly a good thing. Talking heads are one thing, most of us knows who the talking heads are, but the Federal Reserve has an interest rate shot gun and they as a group seem to be waiving it around ready to fire with both barrels. We have multi-trillion dollar debt to manage and the quagmire of numbers that are a product of that debt can be blinding, sometimes it is necessary to look at the reality of the economic situation incorporating the here and now information into the equation.
If you are a contrarian then maybe you should begin to look for bargains in this market. However, here is a little bit of advice for property owners that need to sell now you may wish to consider the following: In Northern California we are seeing hundreds of price reductions daily, but that doesn't tell the true story. Home sellers are pricing themselves right out of the market to begin with, only having to drop their listing price three weeks into their listing. The real estate market is noticeably correcting, and with the correction there is illiquidity. Moreover, there is an abundance of inventory, so the home seller has very little margin for error. Ed Fitch of Fitch Properties www.realtydollars2u.com points to one fatal Seller error, and he sees it all the time ... "Pricing your home too high initially will lessen the value of your Multiple Listing. Sellers feel if they price their home on the high side then they can accept a lower offer that will be palatable for them, and it does not work like that. Sellers will be continuously dropping their price far below where they would have sold in the first place had they priced correctly." The bottom line is that if a home sits on the market forever it has a stigma attached to it regardless of how nice it is ... pricing correctly at the onset of the listing is critical. An attractive property when priced correctly will sell in this market. However, if you are upside down on you property right now, you should try to negotiate with your lending institution rather than letting your property go into foreclosure.
Ed Fitch is a published author and financial expert and has written articles for Northern California Real Estate Publications.
Contact Ed Fitch for more insights into this topic. Direct line: (916) 782-5015 Email: edfitch@comcast.net other helpful information regarding the can be found at: http://www.realtydollars2u.com.
For More Information Contact:
Ed Fitch, Broker
edfitch@comcast.net
http://www.realtydollars2u.com
Housing Bubble Pricked by the Federal Reserve!
Thursday, May 25 2006
The recent rise in interest rates is contributing to a rise in property pre-foreclosures and foreclosures in Northern California and some home sellers find themselves trapped inside an interest rate bubble!
(Disseminated by PressMethod) - The recent rise in interest rates is contributing to a rise in property pre-foreclosures and foreclosures in Northern California and some home sellers find themselves trapped inside an interest rate bubble!
Wisdom shows us that home owners are getting squeezed by unconventional loans and are now finding that they cannot refinance in a falling market. Ed Fitch of Fitch Properties / http://www.realtydollars2u.com notes that "Sellers were sold a bag of goods by some mortgage lenders looking to make a fast buck and many sellers are now in trouble, and my fear is that it will only get worse." Negative amortization type loans, adjustable loans, interest only loans, 100% financing, 125% financing and now 50 year mortgages. It appears no thought went into the reality that interest rates do rise too! Right now if you are not in a fixed interest rate mortgage you are very likely feeling the pinch. "I am in the trenches, and it is very clear that listings are beginning to stagnate at the low end of the market, there is downward pressure there, and the low end is the driving force of the real estate market." "It can truly be said today that these are interesting times for real estate, and if the fed continues to push too far ... watch out!" Furthermore, with shrinking equity, real estate owners are finding it difficult to replenish their pocketbooks and/or payoff debts through the tool of equity lines that were the norm just a few months ago. Inflation fears continue to spook the market. "Flight to quality seems to be flight to gold or other commodities, but not the real estate market or the bond market." The fed is trying to stabilize the dollar and control inflation and commodities prices by raising rates, but they are they looking into the future versus numbers that may be 18 months in the past. "Reporting on the financial markets 25 years ago the financial markets were glued to the M1 figures which eventually became a non factor. We now find ourselves and the financial markets glued once again to a roller coaster of numbers moving in such a grand scale that the net effect is volatility." As an alternative to looking at the quagmire of numbers and the hiccups that they represent, it seems it would be equally important to examine the reality of the situation. The reality of the situation is you have a weakening housing market in many parts of the country, thus it is time to slow down and reevaluate which should lead to a soft landing.
One thing that is not being considered by the pundits is what happens when the two year adjustable mortgages obtained within the last year begin to adjust higher? Let's look at the positives ... "if the fed hints that they will stop raising rates soon we will be okay." "The real fear is that at some point property owners will have no choice other than to walk away from their mortgage obligations and the ripple effect to that would be equivalent to the savings and loans scandal of the 90's!
For those property owners that need to sell now you might wish to consider the following: "We are seeing hundreds of price reductions daily, but that doesn't tell the true story". Home sellers are pricing themselves right out of the market to begin with, only having to drop their listing price three weeks into their listing. Fitch points out this one fatal seller error and he sees it all the time ... "Pricing your home too high initially will make it worse for yourself. Sellers feel if they price their home on the high side then they can accept a lower offer that will be palatable for them, and it does not work like that. Sellers will be continuously dropping their price far below where they would have sold in the first place had they priced correctly." "The bottom line is that if a home sits on the market forever it has a stigma attached to it regardless of how nice it is ... pricing correctly at the onset of the listing is the key." If you are upside down on you property right now, you should try to negotiate with your lending institution rather than letting your property go into foreclosure.
Ed Fitch is a published author and financial expert and has written articles for Northern California Real Estate Publications. Fitch is the owner/broker of Fitch Properties found online @ http://www.realtydollars2u.com