Not Found business of real estate | Garage with a Detached Home | Gwinnett County GA

LaneBailey.com

Garage with a Detached Home

Contact Lane

  • Custom Listings

    Sign up to get notified when new listingscome on the market that meet your specs.

    Read More

  • Browse Listings

    Take a look at what is currently on the market in the areas that interest you.

    Read More

  • What's YOUR Home Worth?

    Get a free Maximum Price Analysis to find out the current market value of your home.

    Read More
  • 1

Follow Me on Pinterest

Category Archives: business of real estate

The Case For Home Ownership

Friday, 14 October 2011 08:00
Written by
0 Comments

I believe in an ownership society.  And while I will easily concede that owning a home isn’t for everyone, I would argue that home ownership SHOULD be encouraged… and is a cornerstone of America’s society.

There are a few things in particular that make home ownership valuable…

  • Personal Stability
  • Community Stability
  • Long-Term Financial Planning

There are a variety of ways that home ownership fosters Personal Responsibility.  To begin with, it is easier to put down roots in a community when you know that the lease isn’t coming up in a year or two, leading to a possible move.  Part of putting down those roots may include making friends with the neighbors, volunteering at school, getting involved with a local church or other community organization.

That leads directly into how home ownership increases Community Stability.  The very essence of community stability is personal involvement.  The community will naturally be more stable if the people that live there volunteer for local organizations and get to know each other.  Neighbors looking out for each other and helping each other are a community. And people that have decided to stay in a community for the long term worry about things like school quality, taxes and parks… quality of life issues.

A side benefit is Long-Term Financial Planning.  I won’t get into things like comparative tax benefits… those could change… but one thing that is less likely to change is the payment.  With a fixed rate loan, the payments are almost set for the duration.  There will be minor changes due to fluctuations in tax rates or insurance, but the larger portion of the payment, the principle and interest, won’t change over the duration.

 

The downside of owning a home is liquidity…  If job or life changes require a move, it may be difficult to quickly react during some phases of the market.  And there have been a LOT of people that experienced that during the recent (and possibly continuing) housing bust.

Related articles
Enhanced by Zemanta

Wayback Wednesday… How ’bout Those Housing Starts

Wednesday, 12 October 2011 08:00
Written by
0 Comments
Old photo of the estate Hollander Höfe (Höben)...

Image via Wikipedia

Three years ago I published a little article about how housing starts were at their lowest level since 1991…  There were 820,000 starts in September of 2008.  And to me, that was a good thing.  If there is too much inventory, making more inventory isn’t the best idea.

Well… that was three years ago.  In August of 2011 (the last month with available numbers that I could find) there were 571,000 starts.  And furthermore, aside from a couple of bumps, starts have been bouncing along under 600,000 starts since December of 2008.  And I STILL say that it is a good thing.

Inventory is WAY more balanced than it was, even compared to just a year ago.  However, values are still well below where they should be. And there are still the persistent rumors that “the banks” are going to release millions of foreclosed homes that are “in the pipeline”.  Personally, I have been discounting those rumors for a few years… because the same rumors have been around for several years.  For a couple of years now, there have been rumors alluding to “shadow inventory” that was 3-6 months from the market.

So, if inventory is balancing, and starts have been down for years, how could I think that they need to stay low longer?  Well, it comes down to a few factors…

  • Pricing…  It still doesn’t pay for builders to put up houses in many markets.  Basically, pricing almost has to be below the cost of materials plus land in order to get the house sold.
  • Vacant Inventory…  Even in the depths of the crash, I didn’t see as many vacant homes as I do now.  I don’t have stats to back it up, but it seems like vacant inventory is surging.  (BTW, I think that is actually a sign of a recovery forming…)
  • Buyer Fear…  Despite incredibly low interest rates on mortgages and very low prices on homes (even Clark Howard is saying it might be time to move back into real estate), most buyers are still nervous.

Oddly, if you look over my market reports, I specifically refer to a couple of segments as being WELL into Seller’s Market territory.  And it is hard to square these two points…. that there is an active Seller’s Markets (in some segments) AND that starts need to stay low because the market is still weak.  But it comes down to averages…  One city might be rocking the sales, while just up the road everything is stagnant.

Location…

 

Housing Start Source.

Related articles
Enhanced by Zemanta

How to Read a Market Report…

Monday, 10 October 2011 08:00
Written by
0 Comments

A lot of real estate agents write them.  Some have a lot of information, others… not so much.  Some are well laid out and go past the numbers into interpretation.  Others have plenty of numbers, but they don’t even give any sort of scale to use for reference.

I try to give mine a sense of scale, as well as interpret what the numbers mean.  I also wait to post them… until the numbers are fairly solid (and even a few weeks later, the numbers might change a little bit…), but not so long as to make the report outdated as it is published.  Below is an excerpt from one of my market reports:

Market stats for Suwanee, GA, August, 2011 indicate that there are 593 properties on the market (down from 612 last month). Overall, there is about an 7.3 month supply of properties (down from 7.4 last month). August had 83 sales. Compared to 2010 (55), that was VERY strong. Inventory was down, as well, compared to 2010 (636).  The last two months have been very strong, but that comes on a very weak June and just average sales for a couple of prior months.  Obviously, I’d like to see continued strength here.

So, let’s break it down.

  • 593 Properties… also showing the number of properties on the market the previous month.  Is it going up or down?  Which way SHOULD it be moving?
  • 7.3 month supply…  This is the Absorption Rate.  Here is a whole post explaining absorption rates, what they are and what they mean.  Balanced, in most real estate segments, is about 6.  Higher is a buyer’s market, lower is a seller’s market.  I also generally show the level of the previous month.
  • 83 sales…  and to put it in perspective, we also want to know how many sales there were last month AND how many for the same month last year.  Sometimes, in slower segments, we might look at the last three months of sales (combined) and compare those with the previous year.  For low volume segments, that will be a number that doesn’t jump all over as much and will give a better idea of market direction and strength.
  • Interpretation & Prediction…  I try to do a little of this for most segments of the market.  I track 7 different postal cities (not the city limits, but the mailing addresses) and each in 6 different price ranges.  That makes for a LOT of predictions and interpretation…  But I try to give what I think of each one… assuming there is enough data to get an idea of what is going on.
  • Something graphical…  My newest tool is a graphical representation (from Zillow) showing a history of the region.  Even more than the pinpoint data of the report, the simple graph gives the aerial view of what is happening.  However, it needs to be kept in perspective…  The beginnings of trend are pretty hard to spot on a long-term graph.

Hopefully this will help you get the most from my market reports…

Atlanta Metro Zillow Home Value Index

Related articles
Enhanced by Zemanta

Wayback Wednesday… Title Insurance…

Wednesday, 14 September 2011 08:00
Written by
0 Comments
Abraham Lincoln, the sixteenth President of th...

Image via Wikipedia

A couple of years ago I wrote a quick little primer on Title Insurance.  (Check out the link for more details…)  Title Insurance is one of the subjects I am questioned about regularly… even by buyers that have previously purchased 3 or 4 homes.

It can be confusing… there are two distinct flavors of Title Insurance, Owner’s and Lender’s.  And while sitting at the closing table, buyers are usually paying for a pant-load of other items.  Sometimes they draw a line and decide that skipping the Owner’s policy is a way to avoid spending another few hundred dollars.  Other times, they just give in and spend the money without knowing what they are buying.

Neither of those situations are good for the buyer.  Some buyers ABSOLUTELY need to have Owner’s Title Insurance.  For others, it is a luxury, or even a waste.  (Sorry, but if you have a loan, you WILL be paying for Lender’s Title Insurance… they will require it, and despite the fact that you won’t benefit, you get to pay for it).

Of course, I would be remiss if I didn’t remind you that I am not a lawyer, and I don’t even play one on TV.  You should always ask your attorney about the legal ramifications of a decision like this.  But keep in mind, the closing attorney is selling the insurance product, and they DO make money from it.  Some of the closing attorneys I have worked with have flat out told buyers that they would NOT answer questions about the suitability of the insurance product because of their conflict of interest.

Related articles
Enhanced by Zemanta

It’s About the Jobs…

Friday, 09 September 2011 08:00
Written by
0 Comments
selfmade image of U.S. Unemployment rate from ...

Image via Wikipedia

Every time I say this, I annoy a lot of my real estate friends…  Real estate is NOT the solution to the economy.  It is a symptom.  Nothing more.

To put it simply, People without jobs are NOT buying homes.  People that are worried about their jobs are NOT buying homes.  and as long as those people aren’t buying homes, people that DO want to “move up” can’t… they need to sell their current homes.  As I write this, the unemployment rate is around 9%.  But, the BLS also says that the “real” unemployment rate (including people that are not filing for unemployment anymore) is closer to 17%.

And while I tend not to get too political on this blog, I will make a couple of statements…

  • Attacking job producers, like Gibson Guitars, is NOT going ot make entrepreneurs take the risks that they need to take in order to start or expand their businesses.  (If you didn’t know, they are not allowed by the government to import raw Indian Rosewood, but they ARE allowed to import the manufactured fretboards made from Indian Rosewood.  In effect, the government is telling them to set up manufacturing for those parts outside of the US rather than doing it in Nashville, TN).
  • Attacking companies like Boeing Aerospace for expanding in ways that the union (big money contributors to the Obama campaign) doesn’t like.  (If you didn’t know, the NLRB is trying to stop Boeing from opening an additional production facility in South Carolina.  They have continually been hit by union strikes in Washington state, and want to have a second facility in a “Right to Work” state… one which doesn’t force union membership).
  • Supporting companies like GE, rewarding the CEO with a Chair on President Obama’s “Jobs Council”… as the company inks a deal on expansion and job creation… in China, but not the US.  All the while, GE is holding money off-shore to avoid taxes.

The private sector WANTS to create jobs.  But, with the incredible growth of deficit spending (which squeezes private lending), and the incredible growth of regulation ($1.74T in regulatory costs to businesses), and the desire to increase taxes on those same business, and the increasing costs on the horizon from ObamaCare, businesses are not willing to take the risks.

The government doesn’t create permanent jobs, except for the people that they directly hire… and the government is already too big.  But they certainly have the ability to kill jobs in the private sector.  And until the government stops trying to kill jobs, there won’t be a recovery in real estate… 

No matter what Nancy Pelosi says about how Unemployment is a GREAT stimulus, people aren’t buying homes or cars or much else while they sit on unemployment… 

Related articles
Enhanced by Zemanta
Copyright © 2009 - 2019 Garage with a Detached Home | Gwinnett County GA. All Rights Reserved. Created by Blog Copyright.