Single-Family Homes a “Very Attractive Asset Class Now” – Warren Buffett

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The news spread like wildfire.  No, it’s not another politician’s sex scandal or the latest (definitely not greatest) gas prices.  It is the monumental statement made by Warren Buffett that he would buy up “a couple hundred thousand” single-family homes.  The catch is that he would do that if it were something he could practically manage. He may not be able to practically manage it but individuals certainly can.

Think about that.  For months, if not more than that, countless Realtors have been urging their clients and potential clients that now is the perfect time to buy.  Now that it comes from one of the biggest investors of our time, it brings new light to the subject for many investors and has generated widespread industry buzz from the moment the billionaire uttered those words.

In an interview where he discussed several topics, soon into the discussion with Becky Quick of CNBC’s Squawk Box, he said that in addition to equities, single-family homes are probably the most attractive investment there is out there right now.  With the low rates that seem to be heading further down still, he suggests buying at these low interest rates and then for homeowners to refinance if and when the rates dips even more. 

He cited that the only reason he has not purchased as many homes as he would have liked is because of the practicality of managing the transactions and properties.  Apartment units might have been more manageable and in his words, he said he would “load up on them” had that been the case. But for the everyday investor it makes perfect sense to seize this opportunity and Warren Buffett highlights this repeatedly in his most recent discussion on CNBC.

Mr. Buffett shared his perspective on the idea of buying homes at distressed prices, fixing them up and renting them out as an ideal way to get a solid return on investment.  Referring to the changing trends and attitudes within the housing market, he also said this is the perfect way to “short the dollar” because with a 30-year fixed rate mortgage it can go two ways; either the interest rate is too high down the line after which you can go and refinance or if it’s too low the other guy’s stuck with it for 30 years.  Could this be the return of the house-flipping craze that we saw boom in the mid 2000s?

Mr. Buffett’s statement brings new light to something that so many agents and mortgage consultants have been saying all along.  Buy now.  At a time when stocks are just now rebounding after four years of inching their way back up, he says that consumers should acquire 30-year fixed rate mortgages and then refinance when rates go down further. 

If homeowners can hold on to their property for a long time after purchasing it at the lowest rates the industry has to offer they are sitting on the best investment possible of our time.  Of course equities are still very strong but they have come up quite a bit and Warren Buffett says owning a home is a “leveraged way of owning a very cheap asset”, making it quite possibly the most attractive investment that you can make.

It’s Movie Time! Come Watch the New Dr. Seuss Classic On Us!

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We’d love to spend some time with you and treat you to a fun morning watching the new Dr. Seuss movie.  Ever since The Lorax was made into a film and released into theatres, kids (and adults) have been raving about it! So for our client movie this time around we’re inviting you, your children and your neighbors’ children to come on down to Newport on the Levee Saturday March 17th at 10am.  Come join us to watch The Lorax – see you there!

January 2012 Cincinnati Market Update

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Real estate trends of the past are the most telling prediction of what is to come in the future – leaving aside catastrophic events such as the 2007 mortgage subprime crisis or the robo-signing scandal that broke out in 2011.  But for the most part as long as things are quiet we can tell where the market seems to be heading.

Sales and Inventory – Up From Previous Year

Year over year sales numbers were reported almost as much as twenty five percent up from the previous year.  This is great news for us! Similarly, based on MLS statistics our inventory is also up about 25% from the same period of time as last year.

Housing Prices Still Declining

Though our sales were up and inventory was also up, housing prices dipped about 10% year over year.  Even though buyers are enjoying this aspect of the property market, declining home prices continues to create a challenging situation for sellers.

Interest Rates Still At or Near All-Time Lows

Nationally, as well as locally, we have seen all-time low interest rates that have continued to provide welcome relief to many homeowners looking to have more affordable monthly payments through refinancing.  This has also been an ideal time for first-time homebuyers to be able to get into a new home that they may not have been able to do in any other economy.

Lenders Control a Fourth of the Market

Focusing on active inventory, we are reporting about 24% control by lenders.  More than one third (36%) of properties that are sold fall under the category or either short sales or REO properties.

Pending Sales Figures Up From Previous Year

Again, we are seeing an upward trend with pending sales numbers comparing this year’s sales with the previous year’s figures.  A nearly 8% increase in pending sales points to a long-awaited positive upward swing in the future.

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Looking ahead it seems that 2012 will be a strong year for sales, we will continue to see existing inventory move and buyers will likely continue seizing opportunities available to them.  Government programs will remain in action and we will likely see fewer new foreclosures with more loan modification situations taking place.  Prices will continue to decline slightly but both prices and interest rates will not change during this year.

If you have any questions or would like to learn more about how our market is performing – please give us a call and we’d be happy to share the latest numbers with you!

Ten AWESOME Reasons Why You Should List Your Home During the Winter

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Traditional school of thought dictates that selling a home during the holidays is a bad idea.  People are busy celebrating with their families and will hardly go shopping for a home, right?  Not so!  There are numerous advantages to listing a home during this season and below are ten great reasons to put a home on the market now. 

More serious buyers – Less time wasted

These are people who are interested in buying so there is a far greater chance of actually selling the property.  Nothing is more promising to a seller than a motivated and qualified buyer that knows what they want and is actively seeking to get it.

Fewer Homes On the Market

The less competition there is, the higher the chance there is for homes on the market to sell. Where during the peak season sellers might be dealing with some interest from buyers on their home, nonetheless there is more selection for buyers to choose from and they can stray to another property.

In January Inventory Increases – Chances of Selling Decreases

With so many homeowners assuming the holidays is a taboo time to sell there is a plethora of new listings in January, resulting in a diminished chance of your home selling.  Also, there is a risk that the price you may receive on the home can be less.

Decked Halls Look Great!

Homes are very appealing to prospective buyers when they are decorated for the holidays.  With all the festive décor, lights, greenery and added beauty of the season – the home shows very well and attracts buyers faster than if shown during other times of the year.

More Time To Browse Homes

Buyers have extra time off from work and are on vacation, which translates to a more aggressive buying pattern and more chances of your home being viewed.

Show The Home With Flexibility

Sellers that have their home listed prior to the holidays have the added advantage to be able to “pause” the process so they can celebrate the holidays, essentially not showing the home during a period of time during the break.  When the festivities die down, things can pick up again and the seller has not only managed to save potentially lost time but can also jump right back into the market.

Sell Now For More Money Then Delay Closing

Extended occupancy can be negotiated, leaving both parties the leniency to get through the holiday season and past the New Year so that all sides can rest assured the deal is done but it can follow through at a more convenient time.  For sellers this option is great because they are able to secure a higher selling price on the property before the market is inundated with new listings come January when the selling values drop.

Enjoy Non-Contingent Buyer Freedom

With the home sold, sellers can enjoy non-contingent buyer status during the rest of the slow season and take advantage of the market when there is a flood of new listings upon the New Year. 

Fewer Foreclosures On the Market

Many banks will suspend foreclosure listing during this time of year, especially on properties where there are still families occupying the home.  As a result of this, some of the competition that arises for sellers from low-priced foreclosures can be avoided during the holidays.
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Keep in mind that the idea of your home’s value increasing significantly over the next several months is a myth.  The truth is that housing values likely only go up when consumer income rises.  Pay rates increase at a rate of three to five percent each year and that is about the maximum yearly increase we can expect to see in a home as well.  So if you are wondering whether or not to put your home on the selling market now, or to wait – one important factor is that waiting will not provide much benefit.

How to Make a Buyer WANT Your House! Staging your house, before it’s too late and you lose the sale

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If you’ve shopped for a home, chances are you’ve come across one that you really wish you hadn’t visited in the first place. True, houses for sale ought to have a certain “lived in” quality to them, because they are to be lived in after all, but the art of tactfully balancing just the right amount of homeliness with neutrality is not so simple. You need to know what you’re doing when you prepare to set up your house and show it to potential buyers. We’ve put together some great tips for home-sellers so you can get the same results you’d get by hiring a professional staging company.

Fix Up the Place

One of the biggest mistakes homeowners make before putting their house up for sale is to neglect areas in the house that need attention. Folks, don’t leave that faulty step unrepaired, only for a potential buyer to step on, slide off of or worse, get injured on – FIX IT! You might think potential buyers won’t notice but they are walking around on your premises like hawks, noticing each little detail. The good news is that they are noticing the first-rate stuff too, so as long as you have the home’s amenities in order and other major areas in tip-top condition, you should be in good shape. Here’s how:

Get Rid of the Clutter

If you want to successfully sell your house, you need to get those potential buyers to imagine they already live there. Too much clutter, hobby-oriented items or personal possessions that most people may not be able to identify with, can easily get in the way of that vision. Organize things in stylish storage bins or better yet, have a garage sale before the open house and get rid of unwanted stuff. You have to move soon anyway, why not kill two birds with one stone? A clean and organized home will seem like a clean slate to buyers, who can then see themselves moving in without much hassle and settle in effortlessly.

Stay Neutral

Skip the tie and dye sofa cushions, shaggy 70s rug and don’t light incense on the day of your open house. While you’re at it, don’t fill the space with gender-specific things either. Buyers should walk into a neutral ground – literally. Light to medium colors, preferably in beige tones, are the simplest way to pull buyers’ attention away from other personal aspects of your home that they may not be able to identify with. Beige goes with almost anything so if someone considering purchasing your home can imagine their things in the space, then you’ve just crossed one of the most major hurdles in home-selling – making a buyer identify with the home.

Make It a Modern, Inviting Environment

If you don’t already have them, invest in a few modern decorative accessories to improve the look of your space while lending an air of style and taste and making it more enticing. It doesn’t have to take much but depending on how you set it up, you can enhance a given space with a few simple additions and deletions. Take your over-crowded study and rearrange the bookshelf to display only a few strategic but essential books, like a leather-bound set of encyclopedia or some literature classics. In the same way, leave a few children’s toys in a child’s room but be sure to display them tastefully.

Put a Few Finishing Touches in PlaceThe idea is that you want your house to be sold – and you probably want it sold fast. If you are careful to respect the people who are visiting your space to decide whether it’s the right one for them, then you are doing something that a lot of homeowners neglect to consider. Taking down a piece of controversial artwork that may make a potential purchaser uncomfortable could be the one bargaining chip that could make or break the sale. Arranging for all those who currently live in the home to be away during the open house and while showing the house being dressed in a way to present a good impression are also great ways to tip the scales in the right direction.

It’s very simple. You need to make the potential buyer feel right at home from the get-go. If from the moment they walk in and smell cinnamon cookies baking makes them wish this was already home – then you’re already two steps ahead and can call the open house a success! Of course, a signature on the dotted line is where the real success lies and as long as the buyer feels at home, chances are that if everything else lines up – the sale is a winner!

With Market and Interest Rates Down – Does That Mean Property Investment Is a Good Idea?

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So many people are wondering these days whether it is a good time to invest in property.  It’s no secret that interest rates are at an all-time historic low and when combined with the low housing prices we are still seeing these days, more and more people are considering real estate investment.

How can you tell if it is the right thing for you?  And if you do decide you want to venture into buying property for the sake of investment, how do you go about it and what type of dwelling makes the most sense?

The answer is largely dependent on your individual investment goals.

Overall Appreciation Perfect for Long-Term Security

The easiest way to enjoy significant returns on investment is through the purchase of a single-family home.  Historically more popular, these properties are easier to rent out, entail less day-to-day management and they can be assumed as primary residence at any given time the investor would so choose, providing an added sense of security.  Home values do appreciate with time and single-family homes typically rise in value faster than other rental property types.

It is important that the property is located in a desirable location and also that it is easily rentable.  Your Realtor can assist you with an analysis of the area’s statistics in term of rent versus buy situations as well as a look at what other similar properties are renting out for.

Slow and Steady Monthly Income

Rental units that comprise of anywhere from 2 to 12 (or more) family units within the property are perfect for monthly real-time cash flow. While they may not appreciate as much as single-family homes, they provide the comfort and safety net of steady monthly income.  If increased cash flow is the goal then opting for multi-unit rental properties may be the best route to take.

Demographics play a key role in determining your investment.  For instance, if you live in a college town then a rental home near the college or downtown would be ideal for many senior or grad level students that prefer easy access yet quality housing.  Conversely, resort homes are also attractive and as long as they are located near some tourist attractions you may be able to yield decent rental income. Rental units in big cities are also popular in the more bustling areas of town.
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Given the increase of rental units and investment properties being rented out, there has been an influx of property management companies set up.  Ideal for the silent investor or someone that does not have a lot of time to put into the actual management of properties, property management companies handle anything from market analysis, finding and screening tenants plus managing the move-in process to handling day-to-day affairs like collecting rent or property maintenance.

If you can afford it and have investment goals that line up with some of the returns that are apparent with property investment, contact your Realtor to get a feel for what is available out there.  This is definitely a very interesting time to pursue an investment property.

Selling Your House Now Is Not A Bad Idea At All

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So many prospective sellers are unsure of the best time of year to sell their home. Sure, there are more buyers lurking in the warmer months but that is not to say that inventory does not move at all during the fall and winter months. In fact, very surprisingly to many, there is only a small difference in the numbers of closed and pending sales that take place in the summer versus winter.


Fewer, But More Serious Buyers

While there are fewer buyers out there seeking their dream home beginning September onwards, there are still buyers who must buy a home. In fact, it turns out those buyers are the ones who are more likely to be serious about their purchase. One of the advantages to buyers who are in the market during off-seasons is that mortgage lenders are less busy than during other times of the year. These are often buyers who want to find their home, make an offer and move in quickly and efficiently.

Not Too Much Difference Between Mid-Year and Year-End

Looking at the sales in our area last year, the 2010 numbers clearly demonstrate how there is not much difference in the cooler months compared to the warmer time of year when looking at homes that come off the market in pending or closed status.

June 2010: Of the reported 14,530 potential units that were offered for sale, 1,481 were removed from the market after going under contract. This translates to 10.1% of the total inventory of homes that came off the market.

September 2010: Considering the same factors, 14,665 units were listed for sale in September, of which 1,339 of them were removed from the market after going under contract. The total percentage of inventory removed during this month was 9.1%.

October 2010: This month the numbers were almost identical to September, with 9% of total inventory coming off the market after going under contract.

November 2010: Again, 9.2% of the inventory was removed from active listing status in November, demonstrating the same sale to pending ratio for several preceding months.

December 2010: What is considered one of the coldest months of the year in many markets and what many would believe is the heart of the “off-season”, the total percentage of inventory in December that changed to pending status was 8.6%.

What Do The Numbers Mean?

Even though the number of sales may differ, the main thing to keep in mind is that the ratio of homes sold or those that go into pending contract status typically remains about the same throughout the year. As you can see in 2010 in our market, as the inventory moved throughout the year, the number of available properties decreased significantly but the percentage of houses going under contract stayed about the same.

With only a 1.4% difference between what most would consider peak season in June versus what many perceive to be the worst time to sell, it is clear that buyers will buy despite the season and sellers should continue to list their homes no matter what season it is.
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Regardless of where a property is sold, there is a moving economy and life must continue. People get new jobs; sadly there are layoffs in some cases, families increase in size and financial situations change. There will be a number of reasons that many people will need to sell or buy a home regardless of what time of year it is. So to answer one of the most frequently asked questions, “when is the best time to sell my house?” – the best time is NOW.