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Chicago Sun-Times -- November 2010
by Don DeBat

The year 2010 may go down in real estaqte history as the best buyer''s market since the Great Depression of the 1930s.

Homeloan interest rates are at historic lows matching the early 1950s.  Benchmark 30-year fixed mortgages are readily available for less than 4.25%, and around 3.65% on 15-year fixed-rate loans, according to Freddie Mac.

And home prices are at rock bottom or near the basement in most areas of the country.  The respected Case-Shiller Price Index, one fo the most conservative national gauges of home prices, reports that the bottom is here or has already passed, in many cities.  As a result, housing affordability is near an all-time high.  All you need is a good credit score, a steady job and some down payment cash, experts say.

"Real estate is cyclical and this is a buyer''s market," noted condominimum conversion expert Nicholas S. Gouletas, CEO and president of American Invsco.  "Sound real estate investing involves a long-term cycle.  Today''s buyers and investors should understand the fundamentals and work the business cycles."

Nevertheless, home sales are only gradually creeping up, according to the National Association of Realtors.  And sellers are clearly still feeling price pressures.

Tara-Nicholle Nelson, a San Franciso-based real estate broker and housing analyst, reported that in october an all-time high 27 percent of American homes listed for sale in October had cut the price at least one time. (www.Trulia.com).

Real estate experts say there still are a number of barriers -- either psychological or real -- that are stopping buyers from locking in a deal on an affordable home at today''s bargain mortgage rates.  Here are details on some of those barriers:

*        Tighter home-loan qualifications.  Mortgage guidelines have tightened significantly over the past few years.  Now you need a credit score of 720 to qualify for a conventional mortgage and 620 for an FHA-insured loan.  Buyers also must document their income, show a proven stable job history and cash for down payment and closing costs.

"Many would-be buyers don''t even consider themselves serious prospects, disqualifying themselves in their own heads because they heard somwhere that a 20 percent down payment is necessary," noted Nelson.  "In actuality,  many buyers can qualify for a 3.5% down, FHA loan."

*        Forecosure fear.  The ongoing foreclosure fraud scandal and the resulting foreclosure freeze is slowing the housing market.  Many buyers are fearful that if they purchase a foreclosed home, that sale could be reversed down the road if it comes out that the banks wrongfully foreclosed on the former owner.

Others are waiting for the "shadow inventory" to hit the market.  This could be the estimated 7 million homes that have been or will soon be foreclosed on by the banks, which are not yet on the market.

According to Nelson, sellers should work with their Realtor to strategically stage the home and even do basic, inexpensive repairs, to make it stand out against the competition as a desirable property.

"Also, make sure your pricing is in line -- or even slightly below -- similar homes on themarket now, to ensure that your home seems like a very strong value for the price," she advised.

*        Waiting for the bottom.  With home prices falling over the past couple of years, a large number of purchasers are afraid tha after they buy, home price will continue to fall and they will lose their hard-earned investment in the home.

"Human nature is always to wait too long for the bottom, miss it, and then end up wishing we had bought sooner," Nelson noted.  "The behavioral economics theory of myopic-loss aversion explains this phenomenon.  The pain of losing money generates a greater psychological fear and avoidance than the prospect of gaining the same amount of money."

Nelson advises that buyers can set themselves up to gain over time by making smart decisions about the home they buy and how much they pay for it, and planning to stay in their home for a longer term than previous generations of buyers did.

*        Worry about unemployment.  Many people have jobs but lack job security.  To be ahome buyer you need the confidence of believing you''ll be able to keep your jobs in the future.  "Interest rates could be zero, and people will not buy homes as long as they lack job security," Nelson said.

Worry about resale.  Because home values currently are so volatile, there''s no guarantee that you can resell today''s new home tomorrow without taking a loss.

"If we''ve learned anthing from the housing crisis, we all know that it just doesn''t figure, financially, to buy a home on today''s market unless you plan to own the home for at least 7 years, give or take a year," Nelson said.

(Don DeBat''s weekly real estate column is syndicated by DeBat Media Services.  For more homebuying information visit his Web site at www.dondebat.net)



  

Chicago Sun-Times -- November 2010
by Don DeBat

The year 2010 may go down in real estaqte history as the best buyer''''s market since the Great Depression of the 1930s.

Homeloan interest rates are at historic lows matching the early 1950s.  Benchmark 30-year fixed mortgages are readily available for less than 4.25%, and around 3.65% on 15-year fixed-rate loans, according to Freddie Mac.

And home prices are at rock bottom or near the basement in most areas of the country.  The respected Case-Shiller Price Index, one fo the most conservative national gauges of home prices, reports that the bottom is here or has already passed, in many cities.  As a result, housing affordability is near an all-time high.  All you need is a good credit score, a steady job and some down payment cash, experts say.

"Real estate is cyclical and this is a buyer''''s market," noted condominimum conversion expert Nicholas S. Gouletas, CEO and president of American Invsco.  "Sound real estate investing involves a long-term cycle.  Today''''s buyers and investors should understand the fundamentals and work the business cycles."

Nevertheless, home sales are only gradually creeping up, according to the National Association of Realtors.  And sellers are clearly still feeling price pressures.

Tara-Nicholle Nelson, a San Franciso-based real estate broker and housing analyst, reported that in october an all-time high 27 percent of American homes listed for sale in October had cut the price at least one time. (http://www.trulia.com/).

Real estate experts say there still are a number of barriers -- either psychological or real -- that are stopping buyers from locking in a deal on an affordable home at today''''s bargain mortgage rates.  Here are details on some of those barriers:

*        Tighter home-loan qualifications.  Mortgage guidelines have tightened significantly over the past few years.  Now you need a credit score of 720 to qualify for a conventional mortgage and 620 for an FHA-insured loan.  Buyers also must document their income, show a proven stable job history and cash for down payment and closing costs.

"Many would-be buyers don''''t even consider themselves serious prospects, disqualifying themselves in their own heads because they heard somwhere that a 20 percent down payment is necessary," noted Nelson.  "In actuality,  many buyers can qualify for a 3.5% down, FHA loan."

*        Forecosure fear.  The ongoing foreclosure fraud scandal and the resulting foreclosure freeze is slowing the housing market.  Many buyers are fearful that if they purchase a foreclosed home, that sale could be reversed down the road if it comes out that the banks wrongfully foreclosed on the former owner.

Others are waiting for the "shadow inventory" to hit the market.  This could be the estimated 7 million homes that have been or will soon be foreclosed on by the banks, which are not yet on the market.

According to Nelson, sellers should work with their Realtor to strategically stage the home and even do basic, inexpensive repairs, to make it stand out against the competition as a desirable property.

"Also, make sure your pricing is in line -- or even slightly below -- similar homes on themarket now, to ensure that your home seems like a very strong value for the price," she advised.

*        Waiting for the bottom.  With home prices falling over the past couple of years, a large number of purchasers are afraid tha after they buy, home price will continue to fall and they will lose their hard-earned investment in the home.

"Human nature is always to wait too long for the bottom, miss it, and then end up wishing we had bought sooner," Nelson noted.  "The behavioral economics theory of myopic-loss aversion explains this phenomenon.  The pain of losing money generates a greater psychological fear and avoidance than the prospect of gaining the same amount of money."

Nelson advises that buyers can set themselves up to gain over time by making smart decisions about the home they buy and how much they pay for it, and planning to stay in their home for a longer term than previous generations of buyers did.

*        Worry about unemployment.  Many people have jobs but lack job security.  To be ahome buyer you need the confidence of believing you''''ll be able to keep your jobs in the future.  "Interest rates could be zero, and people will not buy homes as long as they lack job security," Nelson said.

Worry about resale.  Because home values currently are so volatile, there''''s no guarantee that you can resell today''''s new home tomorrow without taking a loss.

"If we''''ve learned anthing from the housing crisis, we all know that it just doesn''''t figure, financially, to buy a home on today''''s market unless you plan to own the home for at least 7 years, give or take a year," Nelson said.

(Don DeBat''''s weekly real estate column is syndicated by DeBat Media Services.  For more homebuying information visit his Web site at www.dondebat.net)