real/diaBlog - because real estate needs to change

Underwater Mortgages - An Interview on Nightly Business Report

A  story that has been getting alot of media attention lately is the impact on homeowners of owing more on there homes than the home is worth.  Usually referred to as being "underwater", this financial situation is becoming a serious problem throughout the country. 

It has led directly to the explosion of short sales and voluntary foreclosures and indirectly to the drop in consumer sentiment and a pull back in the American consumer's appetite for spending.  

I was lucky enough to interviewed by Stephanie Dhue of Nightly Business Report yesterday and the segment ran yesterday on PBS nationwide.  It is the second segment in this video.

Here are several stories regarding underwater mortgages.

The report from Deutsche Bank thatunderwater mortgages will hit 48%.  This was quoted in the NBR report.

An in depth report on the effect of underwater mortgages and foreclosures by CoreLogic.

Report that currently 1 out of every 4 mortgages in America is underwater.

"Flip This House", A&E and 813 Casting Looking For New Cast Of Characters For Upcoming Season

"Flip This House", A&E's #1 rated lifestyle show is looking for a team to be featured on the upcoming season. If you would like your team to be considered, send an email to [email protected] and include your contact info, bios on you and your team and some reasons why your team should be the next to be featured on "Flip This House". Teams should consist of four or more people.

Our team is focused more on the sale and purchase of residential real estate than "flipping houses" so we figured we'd spread the word to others who may be more experienced in this area. Good luck to all those who apply!

What Mainstream Media Says About The Real Estate Market versus Reality

There are many that follow the real estate market through mainstream media and economist's reports and projections. What people don't realize is that most of these real estate market reports are using data that is 3 to 6 months old, if not older. And once they have a rough draft of the article or report, it has to pass through various editors and the placement of the article or report within the paper, magazine or television program has to be determined. The bureaucracy of these mainstream media organizations delays the release and further decreases the relevance ot the data.

What is happening in today's real estate market is best known through a current analysis (within the last week to 1 month) of the stats for the particular county, town and subdivision/community you are in. In Ashburn, Virginia, not a huge town by any means, the difference in the conditions of the real estate market can even be seen between two communities only a mile apart (Ashburn Village and Ashburn Farms). Furthermore, there is a large difference in market conditions for properties below $350K, between $350K and $700K and those $700K or more. The type of property and price point also greatly affect your approach to buying and selling.

Being "hyper-local" is the key to finding out the true real estate market conditions and how they affect you as a buyer, seller or investor.

You can determine market conditions and how they affect you through local real estate blogs or web sites that provide up to the moment data for your particular area or by speaking with a knowledgeable and experienced local real estate agent or local lender. The first is for those who wish to do the research themselves while the latter is for those who wish to have someone else do the research and share their expertise with them.

Here's an example of what can happen to you if you follow only what the mainstream media says:

I had a client who thought that the market was still strong in Loudoun County in the fall of 2005 because the mainstream media said so. They read reports on how it was still a "seller's market" and the the overall market was still "strong". Because of that, they wanted to list their home for more than what the last comparable one in their community sold for a few months before.

It was clearly explained to them that the market had turned as of the summer (2005) and that properties were now selling for less than what the exact same property sold for just one or two months ago. Nevertheless, they chose to ignore the advice and stick with media reports and list it at $975K.

To make a long story short...they ended up chasing the market down for months and months and instead of selling their property for around $925K, the market value in the fall of 2005, they sold it for less than $800K.

They lost over $125K plus the cost of paying the principal, interest, taxes, insurance and HOA dues for almost a year (almost $40K). That's a loss of over $165K.

That's one heck of a hard (and expensive) lesson about mainstream media versus reality to learn.