Benefits of Home Ownership

Homeownership in Hoboken, NJ can bring with it many blessings. Yet, the idea of caring for and maintaining a home, as well as affording a mortgage can seem daunting, but let's review some of the many reasons that homeownership can be beneficial.

The most obvious benefit is building wealth. The U.S. Department of Housing and Urban Development (HUD) notes that home equity is the largest single source of household wealth for most Americans.

What is home equity? Home equity is the difference between the home's fair market value and the outstanding balance of all liens on the property. Let's say you have a balance of $100,000 left on your home's mortgage, but the property appraises for $150,000. You now have $50,000 worth of home equity.

And let's not forget about appreciation. While there is no set year-to-year rate that is considered normal, reports indicate that you can expect around a 6.5 percent average value increase in your home each year.

The National Homeownership Strategy cites that through homeownership, a family invests in an asset that can grow in value and generate financial security. This is what sets homeowners apart from renters.

Real-Estate Recovery Signaled

The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006.

Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. Sales will rise about 6 percent this year, and housing will account for 0.25 percentage point of the 3.6 percent growth. The underlying trend is turning positive.

The Senate last week approved a $138 billion measure that would extend unemployment benefits and provide additional aid to states. President Barack Obama praised the bill’s passage, saying it will help put the U.S. back on a solid footing.

Real-Estate Recovery Signaled

The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006.

Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. Sales will rise about 6 percent this year, and housing will account for 0.25 percentage point of the 3.6 percent growth.
The underlying trend is turning positive.

The Senate last week approved a $138 billion measure that would extend unemployment benefits and provide additional aid to states. President Barack Obama praised the bill’s passage, saying it will help put the U.S. back on a solid footing.

Federal Reserve Biege Book/Consumer Confidence Creeping Back

If you're trying to figure out where real estate is headed in the coming months, should you listen to the Federal Reserve or do you focus on the latest pending home sales numbers?

Probably both, but here's a key fact: The Fed's latest "Beige Book" report based on economic data from each of its 12 regional member banks found positive signs in nine of the 12 regions it covered. Despite blizzards and bad weather in January and early February in large portions of the country, the Fed's regional banks found consumer spending and manufacturing output increasing.

What does that signify? Consumers are slowly coming out of their shells, regaining confidence, and beginning to feel good again about buying more goods and services.

On the housing front, the National Association of Realtors reported last week that the severe weather that paralyzed entire sections of the country also put a damper on home shopping last month, knocking down pending home sales by 7.6 percent in the process.

Home Purchases Expected to Rise

Despite the Mortgage Bankers Associations report two weeks ago that purchase applications fell to a 13-year low, mortgage analysts now anticipate home sales to restart yet again as the deadline for the $8,000 first-time homebuyer tax credit and the $6,500 move-up homebuyer tax credit. Lawrence Yun, Chief Economist for the National Association of Realtors, says the recent decline in purchase transactions is due in large part to the delay among homebuyers that have been searching for a home, then ultimately closing on it.

People who got into the market after the homebuyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales. Overall the doom and gloom of the market seems to be a figment of imagination. Jobs also seem to be stabilizing in the 9.5 to 10% range thus we can probably see a decline in the unemployment number very soon.

Enough is Enough

Thanks to the media pundits and agendicized politicians, fear seems to be the theme. Weather or not you believe we will experience a double dip, the numbers tell a different story. On a seasonally-adjusted basis, Case-Shiller's 20-city index was up three tenths of a percent -- the seventh consecutive monthly improvement in pricing. US Housing Starts have reached record lows, why is this bullish?

With less new development on the horizon the market will start to absorb what we call the resale. Inventory has creeped up recently, with housing start numbers lagging it will take a few months to factor in this level of improvement. All in all weather your in Hoboken, Jersey City or the tri state area, the numbers show a different story and as educated consumers we should recognize we are NOT heading into a great depression.

The Starter Home Boom

As we start this new decade with rising debt, a smokey business environment and no direction from washington, its safe to assume it will be another year or two before we get out of this great recession.

That being said there is tremendous demand for starter homes, more and more young couples and families are buying into their American dream. If they still have a job, have saved enough for a hefty down payment they are making offers.

Demographics have dictacted every countries rise and falls in business cycles, this one is no different. For real estate developers in urban areas like hoboken and jersey city we are seeing a rise in housing permits and parcels of land being swept up. "We will build this year and sell into 2011 and 2012" -Ardan House Developer said of 3121 central ave., Union City, NJ.

Interest rates are still low and will remain at these levels for the next few months. Prices have been dropped as far as they will go in most places and the lookout for new and fresh inventory has started. So will demographics from age 25-32 save our country and help us out of recession? No one has a cyrstal ball but its safe to assume with real demand picking up, we will start to see signs of improvement in the next 2-3 years.

Real Estate Outlook: Strong Sales Predicted

Will housing outperform the overall economy in 2010 as we pull out of the Great Recession?

Nothing is absolute in the predictions business, but there are solid indications that, yes, housing is likely to rebound more energetically than the overall economy.

Here's why: Even the most bearish Wall Street analysts now concede that home sales are up in many areas from year-earlier levels -- sometimes by extraordinary percentages.

For example, MDA DataQuick reports that sales in the greater Phoenix market in November were 62 percent higher than the year before.

Prices either have bottomed out in dozens of these markets or are close to it. That's because the distressed sales component of local volume - short sales, REOs and foreclosures - has been declining slowly but steadily.

In his latest forecast, Jay Brinkmann, chief economist for the Mortgage Bankers Association, says both existing and new home sales will be higher in 2010 than in 2009 - and 2009 was better than 2008.

No question that a key part of the energy in housing will be the direct result of stimulus efforts by the federal government - especially the two tax credit programs -- that will push sales and even pricing through mid year.

The overall economy, on the other hand, according to Brinkmann, is likely only to grow slowly in the first half of 2010, and not really warm up until the second half.

The heavy anchor dragging on national economic growth -- and on housing demand -- will continue to be unemployment. Brinkmann says that "the time of job destruction is over" in this cycle - that is, the number of new layoffs and new unemployment insurance claims filings are trending down.

But we haven't yet moved into the next phase nationwide - that of "job creation," which may not begin until later in the year, he says, and may be a long, slow process.

The National Association of Realtors' chief economist, Lawrence Yun, sees a strong sales year ahead - up 20 percent over 2009. In some markets, he also expects to see a return to modest and sustained price increases - anywhere from two to five percent on average.

Will higher interest rates put a big dent in these projections? Many economists are forecasting 30 year rates in the upper 5 percent range later in the year.

Stabilization Seems to Be Here Sooner than We Think

http://www.dsnews.com/articles/home-value-losses-stabilize-in-2009-zillow-2009-12-10

According to market experts we have seen the worst in 2008-2009 and now see stabilization begin to occur. 2010 seems to be the year of the resale. Builders, such as toll brothers have been saying they will start construction on new projects during 2010 not until 2011 will they start to unload, so if you have been waiting for new construction now is your chance to pick up the remaining pieces.

Few Things Buyers Should Know

1) Stop holding yourself to knowing everything about the real estate market!
- Buyers need to understand that you can not know it all. This market changes everyday, what we recommend is to know enough to make the proper decision.

2) Fear drives the buyer to a decision or no decision
- lets put this in perspective. as a potential buyer of property you must have done something worthwhile to get to this point, is fear driving you away from pulling the trigger? Don't let it. You have saved countless months for this point to come and the worst is to let your emotions dictate how you see this process. Lose the fear or lose the condo

3) It comes down to the price you are looking for
- many people start looking way out their price range look for a month get frustrated, and depending upon how the agent assisted them they fall off the face of earth, why? you started looking for a reason, and your just going to give up?

the bottom line is that weather we are in Hoboken or Jersey city, the same rules apply no matter how you buy real estate, work with someone who knows he market and trust them depending upon the vibe you get from him because it is extremely important to be comfortable when working with an agent in assisting you buying a condo.

Flipping Properties Require Margin and Fixed Expenses

The number one equation to take into account on this project is the margin. What is your cost to get into the house and the average sales price of a house in the selected neighborhood on a remodeled home? Obviously, you want this margin to be as high as possible. The challenge in today's market in hudson county especially in Hoboken and Jersey City, when looking at it nationally, is that many of the diamonds in the rough are located in areas where prices are still declining, so the investor must be sure to purchase the house, gut out the old, insert the new, and get out of the house before the declining price catches up with him and his profit.

Successful flipping is all about your margin. I would love to give you a set equation with fixed expenses, but every house is different. The challenge of a profit margin is that it can be quickly removed in a declining market or the negotiation process in a buyers market.

Prices Rising in Hoboken

Prices have stabilized in the last few months in Hoboken, NJ. We have seen an uptick in prices for the month of October. Mostly the homes consist of renovated condos or need to be renovated multi families especially in the uptown section from garden to clinton.

The value to risk ratio is in investors and first time home buyers favor. Supply and demand hasn't changed here and the land isn't growing, we are still one square mile. The point being if there is a time to buy its now, appreciation rates might start within one year from now. No one has a crystal ball, but we do have eyes and can see a trend coming.

Extending the Credit

Late last week a bipartisan plan emerged in the Senate that would continue the $8,000credit for first time purchasers beyond November 30, but would create a new, smaller credit of $6,500 for people who've owned and lived in their houses for five consecutive years and now want to buy another as their principal residence.

That would still be enough, sponsors of the plan believe, to encourage people now on the sidelines to get into the market for new and existing homes in early 2010 -- and thereby help stimulate the economy and create jobs.

The Senate plan would also raise household incomes limits for the credit to $125,000 for single buyers and $250,000 for married couples - far more generous than the current $75,000 and $150,000 maximums.

Is the Hoboken Real Estate Market Just Right?

You probably remember the line about porridge from Goldilocks: It wasn't too hot, it wasn't too cold, it was ... just right. Last week's new housing starts in Hoboken were reported by the media as further evidence of the deep hole the home building industry is in: Starts were up by barely half a percent nationwide, and permits for future construction were down.

But is that "cold," or maybe something else? If you dig below the anemic sounding half a percent gain, you discover something very different: New starts by builders on single family homes were actually up by nearly four percent for the month nationwide.

Now a 4 percent gain, combined with lower permits, are hardly dramatic enough to say new home building is heating up. Then again, they're definitely not stone cold.

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The New Market

Despite what we know about the market and what could possibly happen, we have data that backs a recover that we have not seen before. is it possible that we have learned from our mistakes in the past and used this downturn to our advantage?

I believe so and heres why:

As I have said in previous posts, real estate has not come down since 1945. Buyers, instead of fearing the market they lean right into it hoping to make a killing once the market bounces. I believe this may be cause of a new kind of american investor or home buyer willing to take on risk in turn for big gains in the future.

The only problem hovering over the horizon is the dollar. The dollar is dropping and dropping fast. Real Estate is measured in dollar value. Hence if the dollar drops then purchasing power of the investor drops as well causing overall market values to disintegrate.

As I always tell my clients, no one has a crystal ball, however we can give our best guess if we do enough research and work hard at understanding how our economy works.

Refusing To Give In

This market has made or broken realtors dreams of being a success. As a professional who still is number one in my Hoboken office, its essential to see what is happening in the trenches in terms of the real estate market. Housing prices have been up despite market sentiment. Data from August 27th to September 27 states housing prices have risen 3.7% up .5% from previous July to August data.

With the government proposing to extend the $8,000 tax credit, buyers are jumping at the chance to buy while prices are still stabilizing and in an upward trend. Bottom line figures prove the bottom has come and gone and now more than ever should be the time for you to jump on buying the home of your dreams.

For more information please call 201-410-3020

Every Agent is Not Created Equal

We hear of horror stories working with the wrong agent. Most of us use an agent from a friend that has used him or her in the past. Sometimes this works, sometimes it doesnt. Bottomline is most agents do mean well however now is the time that working with an agent who has experience really helps you go the distance.

First time home buyers have taken control of this market, they call a broker, they go out and never seem to feel as comfortable enough to make an offer on a property. If an agent isnt taken the time to explain to you the market and the way a transaction should work, then your agent is not a good agent, plain and simple, thus you should move on to someone who knows. there should be three things you should watch for when selecting an agent to work with.

1) Does he/she have a good grasp on the market?

2) Has he/she explained to you the process?

3) Do you trust him or her?

if you answered yes to all these questions, your working with the right agent.

Fixing Our Hard Wired Mind

Its important to understand that buying low and selling high is what most primary resident buyers and investors do. However sifting through this market working with buyers and sellers on a daily basis, its amazing how almost 60% of people feel like the market isnt good so im not going to buy. WHAT?! The fact of the matter is most people just cannot help themselves but wait until we get into a bull market to buy a home.

Buyers need to understand, real estate is not stocks, gold, bonds or any other asset that fluxuates on a daily basis and is effected in a way when the economy is bad real estate is bad.

Keep in mind, real estate HAS NOT GONE DOWN FOR 60 YEARS! Despite recession and wars fought over the years. What does this mean? The fact is if a home is undervalued back to 1996-2000 levels, buy.

The facts are facts:
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2 percent to 97.6 from a reading of 94.6 in June, and is 12.0 percent higher than July 2008 when it was 87.1. The index is at the highest level since June 2007 when it was 100.7.

Mortgage Rates Close to Yearly Lows

In the beginning of 2009, we saw a steep drop in sales and mortgage rates. Since then with spring and summer that rolled around afterwords, we had a surge of prices and rates. As of 9/21/09, the 30 year fixed rate with 10% down is at 5%!

What does this mean to you (buyer). Rates this low most likely wont happen again if we start to pick up. Since we have a divergence in the prices of homes sold in the hudson county area related to the mortgage rates, now should give you plenty of reason to buy (if the $8K tax credit isnt good enough already)

The Market Conditions

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2 percent to 97.6 from a reading of 94.6 in June, and is 12.0 percent higher than July 2008 when it was 87.1. The index is at the highest level since June 2007 when it was 100.7.

This is a good sign and one that just may be the most optimistic we have seen in recent months. Since we are still at a stand still with investory levels at highs and demand low, we hope as realtors we can see a significant movement in the time to come. Hoboken and Jersey city statistics have reflections this increase in the existing home sale sector

Banks and Their Short Sales

Short sales have been flooding the real estate market since the end of 2007. Now, more than ever in certain areas, there is an influx of unattended properties being foreclosed on.

In 2008, banks were accepting 50k to 60k less than the asking price, now its 5 to 10k off the asking if your lucky, why?

1) Banks want to hold until things get better
-the basic premise of this is even though they are taking a hit, they figure we will take the losses once things turn around and in there own way they believe that banks (the ones that got us into this mess) can get us out by selling nothing less than the appraised value.

2) Local vs. National
- you will be lucky to get a local but a national can take months and I mean months, thus it wont be worth if you have to move at a certain time. Try to find one that is local, they have less inventory and it will be more personable to the agent who listed the property.

3) Deal with the Bank Directly
- its as simple as that, you have the authority to ask the seller for permission to speak with the bank directly, in the hopes for getting things moving forward in a timely manner.

Steps to Purchasing Your First Home Successfully

I have been getting many calls regarding first time home purchases. It seems like there is a lack of understanding because everyone, instead of taking the time to research what to do and what they need, thinks buying a home in this market is easy. This point of view cannot be further from the truth. Thus, I made up the best list I could think of, of what first time buyers/investors need to do before talking to an experienced professional:

1) Getting a "Preapproval" letter
- this is huge and probably the biggest step in the process because it proves to us, the realtor, that you have the money for a mortgage thus the bank trust to give you x number of dollars for a mortgage etc...

2) Time frame of the move
- if you are looking to move within 6 months to a year or have NO time frame, what does that tell realtors? It tells us that you cant be serious enough if you have a time frame longer than 3 months. Look, we know this is the biggest decision of your life, financially speaking however if you have the funds, think this is the time in the market to buy, always waiting for the perfect opportunity why are you waiting.

3) Have you been looking for a while?
- if you just started chances are you wont by for a while, you have to get used to the area, used to professionals you want to work with, and used to what you want, without this experience by yourself it is hard for you to say ok this is what I want, now im ready to pull the trigger.

- so look for a while on your own, once you feel that your "ready" and say i want to move as soon as possible and have a preapproval, then you are officially a "buyer" and congrats :)

Knowledge is Power

Hope this helps, any questions regarding the buying process, contact me directly at (201) 533-3070

Realtor Mumbo Jumbo

Recently I was searching for a website to give my clients a dictionary in regards to real estate "mumbo jumbo". this site http://www.realestatewiki.com/ is a pretty good source that shows you the terms and phrases used by real estate professionals.

Given market conditions, there are ALOT of first time home buyers that need guidance so this site should definitely help you out.

Featured in Brokers Weekly

As of Wednesday, July 22, Brokers Weekly put out an article about the ardan house, one of the best craftmenship jobs I have seen in a while. This 12 Unit complex had everything you can think of under the sun in terms of layouts, materials and perfection. Raffi Arslanian is the builder who Griselle and I work with to get his properties sold. Raffi was named a "visionary" in union city urban development by coldwell banker.

There is one more left, so I suggest any one of my clients reading this article should schedule an appointment very soon!