Austin Real Estate Market Looks Good for 2011

In 2011, the Austin real estate market could be one of the most stable in the country. Some housing analysts are predicting a small price decline in the first part of the year, followed by years of growth and stability.

It could truly be a happy new year for Austin-area homeowners. Having avoided most of the housing-related drama of the last few years, the Austin real estate market has been relatively stable. Austin home prices are likely to appreciate in the latter part of 2011, barring any unforeseen catastrophes.

Ingredients for Housing Stability

Like many cities in Texas, Austin never experienced much of a housing bubble. This is one of the factors that spared it from the housing crash that devastated the rest of the United States. Population and job growth have also played a big role.

Over the last few years, the population in the Austin metro area (including nearby Round Rock) has grown considerably. Between 2000 and 2009, the population grew by 34 percent. This props up housing demand at a time when it’s shrinking in other metro areas. A relatively low foreclosure rate has kept home inventories in check. All of this helps balance the scales between supply and demand. It also sets the stage for a stronger Austin real estate market in 2011.

Austin, Texas skyline
Image source: Wikipedia. Licensed under Creative Commons 3.0.

Credit Suisse, an international finance company, recently released their monthly housing survey for the 50 biggest real estate markets in the U.S. The report showed changes in home prices from November to December 2010. Out of all 50 metro areas, Austin was ranked in the top three in terms of home-price increases. This and other reports seem to suggest that the Austin real estate market could be one of the strongest in 2011.

Austin draws in plenty of younger migrants from other parts of the country. According to data released by the Brookings Institution, the capital city attracted the largest numbers of young Americans (25 – 34) from 2007 to 2009. This is a prime demographic for first-time home buyers. Translation: The Austin real estate market is fueled by a steady influx of upwardly mobile young people.

Austin attracts young people

The data above was compiled by demographics researchers at the Brookings Institution.

The job market in Austin is also one of the best in the country. Much of this comes from the tech sector. According to Grubb and Ellis, a market research firm, Austin will have one of the strongest commercial real estate markets for the next several years.

LegalZoom, the Los Angeles-based provider of online legal documents, recently chose Austin as the future home of its regional headquarters. And they weren’t alone in this decision. According to the Greater Austin Chamber of Commerce, 2010 was a banner year for business recruitment. In that year, 27 companies relocated their headquarters or other operations to Austin. This means more jobs, more economic growth, and more home buyers to fuel the Austin real estate market in 2011.

Austin Real Estate in 2011

This is not to say that Austin home prices won’t fall in 2011. It’s still a possibility. In November of last year, Moody’s Analytics predicted that housing prices in the U.S. would decline though the first half of 2011. They predicted the worst declines in Las Vegas, Fort Lauderdale and Riverside, California. The least severe declines, said the report, would happen in places like Austin, Texas (which has more price stability than the rest of the country).

What will the Austin housing market look like by the end of 2011? Only time will tell. But if I were a potential buyer in the Austin area, I would make my move sooner rather than later. Mortgage rates will likely stay below 5 percent for the next few months, and home prices are equally attractive (Austin is one of the most affordable real estate markets in the country). Add in a dose of market stability, and you’ve got a pretty good scenario for home buyers.

Washington, D.C. Real Estate – Most Stable Metro for 2011?

What’s in store for the Washington, D.C. real estate market in 2011? According to some of the latest housing-market data and predictions, Washington, D.C. could be one of the most stable metropolitan areas in 2011.

Washington, D.C. Housing Market in the News

S&PThe most recent S&P / Case-Shiller home index (released at the end of December 2010) showed that home prices fell in all 20 of the monitored metro areas. But out of all 20 metropolitan areas, the Washington, D.C. real estate market fared the best. In both the monthly and yearly categories, home prices in Washington D.C. were the most stable.

The price drop from September to October was only 0.2 percent. The annual data showed a better picture, with a 3-percent rise in prices from October 2009 to October 2010. This was the strongest annual gain of all monitored metro areas.

VerosIn December of 2010, Veros Software, a California-based technology firm that serves the financial industry, predicted that Washington D.C. would be one of the strongest real estate markets in 2011. Specifically, they said it would be one of the five strongest metro areas in terms of appreciation. The company feels the D.C. metro area could see home-price gains of 2.5 percent, between now and December 2011.

Clear CapitalIn January of 2011, Clear Capital released a home-price forecast for 2011. Located in Truckee, California, Clear Capital provides appraisal / valuation services for the financial industry. Translation: They study home values for a living. According to their predictions, the Washington, D.C. real estate market could see the most home-price appreciation of any major metro area. An excerpt of their report is shown below.

As you can see, the company feels that home prices in Washington will increase even more in 2011 than they did in 2010. If this forecast holds true, it gives D.C. homeowners reason to celebrate.

Home Price Projections, Washington, D.C.

According to Jim Diffley, an economist at IHS Global Insight: “Given the area’s employment picture, we feel there is less risk of a [price] fall in the Washington region than in other parts of the country.”

Even as “far” back as February 2009, Forbes had listed Washington D.C. as one of the most stable housing markets in the country. That time frame could be viewed as the turning point for the D.C. real estate market, when home-price declines began to slow down considerably over the years prior.

2011 Market Drivers – Inventory and Unemployment

Row houses, Washington D.C.The question is, will home prices in Washington, D.C. decline, flat-line or increase in 2011? All of the sources mentioned above seem to agree that things are looking up.

For the most part, the answer lies within two key factors — unemployment and inventory. If the district experiences continued job growth in the new year, housing demand should rise. This would put upward pressure on home prices. But a large housing inventory (worsened by home foreclosures) could negate any upward ticks in housing demand.

Only time will tell, of course. But if I were a potential home buyer in Washington, D.C., I’d probably make my move in 2011. Mortgage rates are expected to remain below 5 percent for the first part of the year, and home prices are equally attractive. Add in a dose of market stability, and you’ve got prime buying conditions.

San Diego Real Estate Market in 2011 – Price Predictions

Advance summary: Brandon Cornett, the publisher of the Home Buying Institute, shares his local market research with San Diego home buyers.

San Diego

This is not the usual kind of story we publish. In fact, it’s not a news story at all. It’s a list of predictions and perspectives on the San Diego real estate market in 2011. You see, I’m actually in the market to buy a home in San Diego in 2011. So I’ve been doing quite a bit of research, to get a feel for what the market might be like next year.

Surely there are some other home buyers out there who can benefit from the information I’ve gathered. So, in the spirit of sharing, here are some thoughts and predictions about the real estate market in San Diego.

Real Estate Outlook for 2011

Here are some headlines relating to what the San Diego housing market might do in 2011. I’ve added some background information where it was necessary.

San Diego Market Forecast for 2011
KPBS Interview with Dr. Michael Lea, December 2010
On December 2, 2010, Maureen Cavanaugh from KPBS conducted an interview with Dr. Michael Lea. The subject of the interview was San Diego real estate, and what the housing market might do in 2011. Dr. Lea is the director of the Corky McMillin Center for Real Estate at San Diego State University.

In one part of the interview, Dr. Lea had this to say: “I think the bigger effect is you’re gonna see a weak market [in 2011] with declining house prices probably in the single digits … We’re not gonna really start to see a recovery until 2012, assuming that you can get the shadow inventory through the system.”

The so-called “shadow inventory” consists of bank-owned homes that are not listed for sale, as well as homes that are likely to be foreclosed upon in the near future.

Home Prices Expected to Rise in 40% of Metro Areas in 2011
Housing Wire, December 2010
Veros Software, a Santa Ana-based tech firm that serves the financial industry, recently shared some housing predictions for 2011. I know … I’ve never heard of them either. Their report said that San Diego should experience a 3.5 percent increase in home values in 2011. I’m not sure if this company has a vested interest in rosy outlooks. But theirs was the only forecast I found that suggested rising prices. Aside from San Diego real estate agents (who definitely have a vested interest in rosy outlooks), I could not find any upward pricing predictions for 2011.

Roundtable: Outlook Remains Bleak for 2011 Housing Market
The Daily Transcript, November 2010
In November of 2010, The Daily Transcript hosted a roundtable discussion about the residential real estate market in San Diego. On the panel were Borre Winckel (president of the San Diego Building Industry Association) and Rick Hoffman (president of Coldwell Banker Residential Brokerage in greater San Diego), among others. There wasn’t much optimism at the table. According to Andrew Keatts of The Daily Transcript: “The best anyone at the table could say for 2011 is that it can’t be much worse than 2010.” Well, maybe not much worse.

Housing Prices Facing a Double Dip
San Diego Union Tribune, August 2010
In August, the Union Tribune pointed out some data that suggested a double-dip in San Diego County home prices. They were reporting on data released by Zillow. According to Zillow, San Diego was one of the only metro markets where home prices declined in the third quarter of 2010, after five quarters of an increase. Of course, this kind of drop-off was expected. Those five quarters of rising home values were largely driven by state and federal tax credits for home buyers. But now the demand is down, even as inventories rise. This puts downward pressure on home values.

Price Reductions on San Diego Homes Increase
San Diego Union Tribune, August 2010
In August, the Union Tribune mentioned a report by that showed another disturbing trend for homeowners. From July to August, the number of price reductions on San Diego homes for sale increased from 20 percent (of all homes for sale) to 23 percent. San Diego had the fourth largest increase in the number of price reductions from July to August. This suggests two things: (1) many sellers are asking for more than the average buyer is willing to pay, and (2) housing demand may be shrinking.

Crystal ball disclaimer: These are just some tidbits I came across in the course of my research. Who can really say what the San Diego real estate market will do next year? Not me. But if I were a betting man, I’d put my money on some kind of home price decline in 2011. It’s a supply and demand thing. The expiration of the $10,000 home-buyer tax credit will reduce demand. And the post-moratorium renewal of home foreclosures will increase supply. Then there’s that whole unemployment thing. Given all of that, how could home prices in San Diego not decline in 2011?

Top Ten Signs You’re Ready to Buy a House in 2011

Thinking about buying a home in 2011? If so, you’ll find this top-ten list helpful. When you’ve completed most of the steps on this list, you’re probably ready to buy.

Buying in 2011

Home-buying activity is expected to pick up a bit in 2011, when compared to 2010. High inventory, low mortgage rates, and a slowly improving job market will bring more buyers off the bench. Will you be one of them? If so, there are certain things you need to know and do, before entering the market.

Here are ten signs that you are ready to buy a home in 2011:

1. You’ve made the decision to buy on your own terms.

You’ve probably heard this line before: Home ownership is the American dream. This notion was created by mortgage lenders and home builders. After all, these people stand to gain if you buy into the “dream.” While home ownership certainly has some advantages, it’s not a one-size-fits-all scenario. Buying a home makes sense for some folks, but not for others.

So if you’re planning to buy a home in 2011, you need to make sure it’s for your reasons — and not because someone else is selling you the dream. How will becoming a homeowner change your lifestyle? Will it make things better or worse? Do you have the financial stability that’s needed to buy a house? Or do you expect some job transition in the near future? Is home ownership even a priority for you? Answering these questions will help you gauge your emotional and financial readiness to buy.

2. You’ve been watching home prices in your area.

What’s the real estate market doing in your neck of the woods? This is something you need to know, before you pour your resources into a home purchase. Are you buying a home in a city that had a big bubble / bust over the last few years? If so, there’s a chance home prices will fall even further throughout 2011.

Or maybe you live in one of those fortunate few cities that experienced stable home prices, even during the housing bust. In that scenario, there’s a better chance your investment will hold (or gain) value in the coming years.

The point is you have to know what’s going on in your local market, before buying a home in 2011. You obviously can’t predict the future. But with an eye on the past and present, you can at least make an informed decision about your home purchase. This is what professional investors do, and it’s what you should so as well.

3. Home prices are stabilizing in your area.

This is an extension of item #2 above. The worst-case scenario is to buy a home in a declining market, where home values are still dropping. The best-case scenario is to buy at the “bottom” of the market, so you can ride the upward climb. In between the two is where price stabilization occurs. Almost every city in America suffered from housing depreciation after the 2008 collapse. Some of those cities have stabilized already, and a few are even seeing appreciation. But home prices in many more cities are expected to decline in 2011.

If you’re in it for the long-haul, this might not be a big deal. Home values will head north again, sooner or later. But if you only plan to be in the home for a few years, you should avoid buying in a market that’s still declining. The savvy home buyer will wait until prices are stabilizing, before venturing into the market.

4. You’re putting money aside.

The days of reckless lending are behind us. For now, at least. That means the days of “zero-down mortgages” are also history. The VA and USDA loans are the only options for 100% financing these days. But those programs are limited to certain types of borrowers. Everyone else will need to make a down payment of some kind. When you buy a house in 2011, lenders will require you to have some skin in the game. For an FHA loan, you could put as little as 3.5 percent down (if your credit score is above 580). Most conventional mortgages will require at least 5 percent down.

The down payment is just one of the costs you’ll incur when buying a home. You’ll also have to cover your closing costs, and these can add up to $2,000 – $5,000, depending on where you live. Your lender will probably require you to have some cash reserves in the bank as well, above and beyond your closing costs.

Many first-time home buyers are caught off guard by the amount of money they have to spend. Don’t be one of them. Spend some time researching the full cost of buying a house in your area, and start saving your money early.

Related article: How much money should I save to buy a house?

5. You have a FICO credit score north of 600.

When it comes to mortgage approval, credit scores are more important today than in the past. This will be a key factor when taking out a loan to buy a house in 2011. In the current mortgage market, this single item can make or break your chances of getting a mortgage loan.

Maybe you’ve heard that the FHA allows you to have a credit score as low as 500, when using the FHA loan program. That may be true, but it’s sort of a moot point. You still have to be approved by an FHA-approved lender, and they won’t approve you with a score that low. In fact, two of the biggest lenders recently increased their credit requirements for FHA loans — from 620 to 640.

Having good credit will help you get approved for a loan. But the benefits don’t end there. A person with an excellent credit score will also qualify for a lower interest rate, which can add up to huge savings over the life of the loan.

6. You’ve established a home-buying budget.

Believe it or not, you can get approved for a mortgage loan that’s too big for you. It’s not as common today as it was during the housing boom. But it still happens. So before you start talking to mortgage lenders, you need to establish a monthly housing budget. This budget should factor in all of the other debts you have. The two biggest reasons for foreclosure are loss of income and poor budgeting. You can’t always control the first item, but you can certainly control the second. So do the math in advance.

7. You’ve researched your mortgage options.

Which is better for your situation, a fixed or adjustable-rate mortgage? This is one of the first things you’ll need to decide, when taking out a loan to buy a house. A lot of it depends on your long-range plans. Fixed-rate mortgages are better for longer stays, while an ARM loan can be used to reduce interest costs during a shorter stay.

Many of the mortgage horror stories you may have heard come from people who used ARM loans improperly. They stayed in their homes beyond the first adjustment phase, and they subsequently saw their mortgage payments swell. What can we learn from these people? That it’s critical to understand the different types of home loans, and how they work.

And what about these FHA loans you’ve heard so much about? Are they a good option when buying a home in 2011? Again, this will depend on your particular scenario. In many cases, the FHA loan can be an excellent path to home ownership. But they have their disadvantages as well (and you can learn about them here).

I recommend that you spend at least a week researching these topics, before you contact any lenders. Yes. It’s that important.

8. You’ve been pre-approved for a mortgage.

Mortgage pre-approval is when you sit down with a lender to see what options you have. The lender will review your financial situation and tell you how much they’re willing to lend you. Getting pre-approved for a home loan is useful for several reasons. It will help you identify any financing obstacles, such as income or credit problems. It will also make sellers more inclined to take you seriously.

It’s harder to qualify for mortgage financing these days. Most homeowners know this. As a result, they probably won’t entertain offers from a buyer who lacks a pre-approval letter. When we sold our house in the summer of 2010, my wife and I got an offer from some buyers who hadn’t been pre-approved by a lender yet. We basically ignored it, and accepted a qualified buyer’s offer two days later. Their agent should have told them not to waste our time, or their own.

9. Your debt doesn’t eat up too much of your income.

When buying a home in 2011, you can rest assured the lender will put your finances under the microscope. Your debt-to-income ratio (or DTI) is one of the first things they will examine. This is a comparison between the amount of money you earn each month, and the amount you spend on your various debts.

The maximum allowable DTI ratio will vary from lender to lender. It also depends on the type of loan you’re using. There are actually two types of debt ratios. One includes your housing costs as well as your other debts. This is known as the back-end ratio. The other one, the front-end ratio, only includes your housing debt. Here’s what you really need to know. If your combined debts (including your mortgage payments) account for more than 36 percent of your gross monthly income, you might have trouble qualifying for a loan.

10. You’re considering bank-owned homes, as well as the “regular” homes for sale.

When shopping for a home, you shouldn’t ignore the bank-owned foreclosures that might be available. These homes can often be purchased for less than their true market value. And many of them are in decent shape, having been lived in right up until the foreclosure took place. In some places (like California and Florida), bank-owned properties make up more than 20 percent of the housing inventory.

Bank Owned

Many buyers are afraid of bank-owned homes. Perhaps they’ve heard a horror story about the buyer who went back and forth with the bank for six months, before walking away from the deal. But in reality, buying a bank-owned home is generally the safest bet (out of all the foreclosure stages). And given the fact there are many of these homes available, you shouldn’t rule them out. Most real estate agents are familiar with the process. How could they not be? So keep them in mind, when you’re shopping for a house in 2011.

The basic process of buying a home is the same in 2011 as it was in 2000. But many of the lending rules and requirements have gotten tighter. So the modern home buyer must be knowledgeable and realistic. I hope this article has given you some firm footing to start your journey.

The 5 States With the Most Underwater Homeowners

CoreLogic, a company that provides financial and property analytics, released its “negative equity report” for the third quarter of 2010. Among other things, the data shows that the five states hardest hit by the foreclosure crisis hold some other dubious distinctions as well. They also have the most underwater homeowners.

Definition: An underwater homeowner is somebody who owes more on their mortgage loan than the home is currently worth. Thus they are underwater in the mortgage. This is also referred to as being upside down in the loan.

The envelope please. Cue the drum roll. And the five states with the highest percentage of underwater homeowners are:

  1. Nevada – In many ways, the Silver State could be considered Ground Zero for the foreclosure crisis. And it still shows. Today, 67 percent of all mortgage holders are underwater in their loans. Home prices in Las Vegas fell 4.2 percent in the third quarter alone.
  2. Arizona – Another of the so-called “sand states,” Arizona was equally devastated by the housing crisis. As of December 2010, 49 percent of the state’s mortgage-holding homeowners were underwater in their loans. An Arizona State University study recently showed that Phoenix is experiencing a double-dip in home prices.
  3. Florida – Things don’t look sunny for homeowners in the Sunshine State. Florida is close behind Arizona, with 46 percent of mortgage holders underwater at the end of 2010. Home prices in Florida are expected to decline by as much as 9 percent in 2011.
  4. Michigan – Approximately 38 percent of Michigan mortgage holders are underwater in their homes. Michigan is also a national “leader” in terms of unemployment. Last month, the state had one of the highest unemployment rates in the country (12.8 percent), second only to Arizona.
  5. California – The Golden State used to rank higher on this list. But the number of underwater homeowners there has dropped to 32 percent. The California Association of Realtors expects a 2-percent rise in the median home price in 2011. Of course, this is an organization that relies on homes sales, so we can take this forecast with a grain of salt.

At the national level, many analysts and economists are predicting further price declines for most of the U.S., well into 2011. In contrast, there are certain places where prices are expected to rise next year. But on the whole, the 2011 housing scene could look very similar to 2010.

Morgan Stanley Sees Home Prices Declining in 2011

What will U.S. home prices do in 2011? It’s a common question, as we wrap up yet another painful year for housing. Property values have fallen considerably since the crisis began in 2008. And a recent prediction suggests they may have further to fall.

It’s good news for home buyers, and bad news for homeowners. Financial services firm Morgan Stanley expects home prices to decline by as much as 11 percent through 2011 and into 2012. Many had hoped the market would hit ‘bottom’ next year. But that may not be in the cards after all, if Morgan Stanley’s predictions are accurate.

To what do their financial analysts attribute this gloomy forecast? Supply and demand, of course. They feel that rising inventory and weak demand will push the current housing-market slump all the way into 2012. This jives with the consensus reached in our housing predict-o-meter, which shows that 2011 could be a lot like 2010.

Translation: Home prices will likely continue to decline in many parts of the U.S. next year, and possibly into 2012.

The Morgan Stanley analysts, led by Oliver Chang, said that tightened lending standards will continue to hamper home sales next year. “We see the trough occurring in 2012 instead of our previous call of 2011,” Chang told Bloomberg news, during a phone interview recently.

Indeed, it is harder to qualify for a home loan today than it was before the housing collapse. During the boom, nearly anyone with a steady paycheck could qualify for a mortgage. But things have changed dramatically since then. Today, risk-averse mortgage lenders require higher credit scores, more documentation proof of income, and lower debt levels. This shrinks the pool of qualified home buyers, weakening the demand side of the housing equation.

Also restricting demand is the fear of falling prices. For decades, we operated under the assumption that home values would always go up. This was viewed as an unshakeable truth. Now we know better. Just look at California, Florida and Arizona, the states hit hardest by the housing crash. Real estate values plummeted in those markets, and are falling still. This puts hear in the hearts of would-be home buyers. It’s a legitimate concern. Who wants to spend hundreds of thousands of dollars on an asset, only to see it depreciate from day one?

We have problems on the supply side as well. Millions of foreclosure properties flooded the market after the crash. There is not nearly enough demand to absorb them all. It’s the kind of situation that is measured in years, not months. What’s worse, these distressed properties are often sold for less than market value. This puts downward pressure on property values across the board, even for non-distressed homes.

Of course, none of this comes as news to the folks at Morgan Stanley. They are intimately familiar with the many woes of housing. It’s what led to their bleak predictions for next year.

Some markets will take longer to recover than others. We are seeing this even now, as the level of depreciation lessens in some markets and worsens in others. Speaking broadly, however, I would not expect to see a national rebound in home prices until mid 2012, at the earliest.

Morgan Stanley is a financial services firm that was founded in 1935. They offer a variety of investment banking, securities and wealth management services. They are headquartered in New York and serve clients worldwide.

Home Value Killers of 2011: Inventory and Unemployment

2011The current consensus seems to be that home values in most parts of the U.S. will decline, as we head into 2011. This should come as little surprise, when you consider the current level of housing inventory and unemployment.

But we may find ourselves surprised by the full scope of the price erosion. Once hailed as the “year of recovery” for the housing market, 2011 could be very similar to 2010.

Housing Inventory = Downward Pressure on Home Values

According to the S&P/Case-Shiller home-price index, home values nationwide fell 0.7 percent from August to September of this year. There was also a quarterly decline in values from the second to third quarters of 2010. That’s not to say there weren’t pockets of positivity, as in Washington D.C. where prices actually rose during the same period. But nationally speaking, the current trend is downward.

The foreclosure freeze will prolong the high inventory of homes, and probably add to it as well. If the listing of new homes continues to outpace the purchase of those homes, the inventory will rise in the coming months. Absent a major spike in home-buying activity, this will drive prices down in most areas. Supply and Demand 101.

Unemployment: Other Half of the Double-Whammy

The latest unemployment figures (as of December 2010) were unchanged over the previous month, still hovering at 9.6 percent. Some states, such as California, have more than 12 percent unemployment. This will continue to be a drag on the housing market in 2011.

Thankfully, though, we are starting to see some positive trends in the employment world. The unemployment rate in Virginia has fallen steadily over the last few months, and now sits at 6.8 percent. There are other cities and states with similar scenarios. So we will certainly see some job growth in 2011. But it will be a trickle.

What This Means for Homeowners

If you’re not planning to sell or refinance your home in the near future, this doesn’t affect you very much. Sure, your home values might drop a bit more over the next year or so. But they’ll trend upward again — eventually.

If you do plan to sell your house in 2011, you need to be realistic about how you price it. If you bought your home more than three years ago, there’s a good chance your home value has dropped since then. If you live in California, Arizona, Florida, Nevada or Detroit … well, I don’t need to tell you, do I?

The point is, you need to find out what your home is worth in the current market, and price it accordingly. It doesn’t matter what you paid for the home. It doesn’t matter how much you owe on your mortgage. Buyers and their agents will use recent sales data to evaluate your asking price. If you’ve overpriced the home out of desperation or wishful thinking, they’ll know. And they won’t give you the time of day.

What It Means for Home Buyers

If you can qualify for a mortgage loan, 2011 looks like another great year to buy a home. While home values might continue to drop in some areas, they probably don’t have far to fall. Karl Case, retired economics professor and co-creator of the S&P/Case-Shiller Index, recently said: “If I were betting even odds, I’d bet that we don’t have much further decline, but that we bounce along the bottom.”

So even if home values drop a bit after you buy, they’ll start upward again … and probably sooner rather than later. Additionally, mortgage rates will likely stay below 5 percent for most of 2011. So you have a combination of low home prices, a low cost of borrowing, and plenty of inventory. It’s a pretty good scenario for qualified home buyers.

Bank-Owned Homes in Henderson, Nevada – A Buyer’s Paradise?

The housing crisis has dropped home values all over the country, yielding some attractive deals for home buyers. But nowhere have prices fallen farther than in the so-called sand states: Arizona, Florida, California and Nevada. Take Henderson, Nevada for example. Here’s a place where you can buy a bank-owned home that was formerly worth a million dollars for less than $500,000.

At the time this article was published, there were nearly 2,200 bank-owned homes in Henderson, Nevada. Most of these homes are priced well below the peak values we saw five years ago. For anyone planning to buy a home in the Las Vegas metro area, they represent an excellent investment opportunity.

As part of the Las Vegas Metropolitan area, Henderson was also one of the cities hardest hit by the foreclosure crisis. That, combined with soaring unemployment, is what accounts for the high number of bank owned homes in Henderson, Nevada.

What’s a Bank-Owned Home, Anyway?

If you’re not familiar with bank-owned homes, here’s a quick primer. There are three basic stages of the foreclosure process. The first stage is referred to as pre-foreclosure. This is when the homeowner has defaulted on a mortgage loan, but the lender has not yet foreclosed on the property. When you buy a pre-foreclosure home (through a short sale, perhaps), your offer must be accepted by both the homeowner and the lender.

After the lender foreclose on the home, they usually try to sell it through an auction. This is the second stage in the foreclosure process. Buying a home at an auction is a good way to save money, but it’s also better left to the experienced investors. If you are not familiar with the auction process, you could end up paying too much for a home that needs a lot of work.

Then we have the bank-owned homes. If the home does not sell at an auction, it will go back on the market as a bank-owned home. Sometimes the lender will skip the auction process altogether, if they feel it’s not warranted. In either case, that property is now designated as a bank-owned home (also referred to as REO, or real estate owned).

The benefit of buying a bank-owned home is that you’re only dealing with the lender. The homeowner has been removed from the equation altogether. Price-wise, these homes typically fall in between regular listings and auctions. They are usually cheaper than the former but more expensive than the latter. In other words,buying a bank-owned home in Henderson, Nevada (or anywhere else) is a way to pay less than market value. But you won’t get as good a deal as you would through an auction or a pre-foreclosure sale. Granted, there are exceptions to every rule. But this is generally how it works in the foreclosure world.

Bank Owned

How much cheaper are they? It has a lot to do with how long the home has been on the market. “You can buy foreclosures for as cheap as 30% or 40% below market,” said John T. Reed, editor of Real Estate Investor’s Monthly. “But most foreclosures sell for 5% below market.”

For the novice home buyer, most experts recommend buying a bank-owned home over an auction or pre-foreclosure property. According to an article on “Bank-owned properties offer the safest deal for inexperienced foreclosure buyers … There’s no risk. There are no taxes, no liens, no tenants to evict.”

A Lot of House for the Money

I look at foreclosure data day in and day out, as part of my job. But the numbers don’t always tell the full story. So I went on to,, and several other real estate websites to see what you could get for the money in Henderson, Nevada. While there are plenty of good deals to be found, some of the best deals were the bank-owned homes in Henderson.

Consider the following example. I found one bank-owned property for less than $500,000 that probably would’ve been worth $1.5 million at the height of housing boom. The tax assessment was significantly lower than the listing price, so you could probably make an offer for less and still get the bank’s attention. This home had five bedrooms and four bathrooms, with a combined total of 4,000 square feet. It had a custom-built swimming pool, and is sat on nearly an acre. Granted, there aren’t that many home buyers in Henderson, Nevada now. But for the few who are qualified to get a mortgage loan, it’s like being a kid in a candy store.

The Bottom Line

There are plenty of bank-owned homes available in Henderson, Nevada. Buyers can generally get these homes for less than their true market value. You might not get them as cheap as you would through an auction, but the process is typically safer. When the property is owned by the bank, you can be reasonably sure that the title is clear (robo-signing aside). You can also get title insurance to protect your investment. And you’ll have the opportunity to do a home inspection when buying a bank-owned home, which is not always possible when buying at an auction.

Charlotte Real Estate and Mortgage Update – Q4 2010

Welcome to the Charlotte real estate and mortgage update, for the fourth quarter of 2010. Are you planning to buy a home in Charlotte, North Carolina soon? Perhaps you want to refinance your mortgage loan? Either way, you’ll find this guide helpful. We will talk about Charlotte mortgage trends, the local real estate scene, foreclosure stats and more.

couple walkingDisclaimer: This guide to Charlotte real estate was published on October 19, 2010. As a result, the mortgage rates and housing statistics may have changed by the time you read this report. For the most recent information, you can contact a real estate agent in the Charlotte area. In fact, we recommend that you do so if you’re planning to buy a home.

Charlotte Mortgage Rates

At the time of publication, the average home loan rates in Charlotte, North Carolina were as follows. These rates were compiled and averaged from a variety of local lending websites.

  • 30-year fixed – 4.29%
  • 15-year fixed – 3.81%
  • 5/1 ARM loan – 3.15%
  • 1-year ARM loan – 3.05%

When comparing these numbers to the average rates reported by Freddie Mac for the same period, you might notice something interesting. The rates for fixed-rate mortgages in Charlotte were slightly above the national average. While the rates for adjustable mortgages were slightly below the national average. This could be a reflection of the local demand for fixed versus adjustable loans, or it could just be a fluke.

As you compare Charlotte mortgage rates and lenders, you must also remember that the rate you get is driven primarily by your individual qualifications as a borrower. If your credit score and debt-ratios are better than the average borrower, then you’ll probably qualify for a better rate. And, of course, the opposite is true.

Some are predicting that benchmark mortgage rates will remain below 5% through the end of 2011. But there’s a good chance they will inch upward between now and then, as markets stabilize and activity increases. What does this mean to Charlotte home buyers and homeowners? It means that if you’re in the market for a mortgage loan, you might want to move forward sooner rather than later.

Defaults, Foreclosures and Bank-Owned Homes

Charlotte was not affected by the nationwide housing bust as much as, say, Las Vegas or San Diego. But there are still quite a few foreclosure properties on the market. At the time of publication, we found the following data on Charlotte foreclosure homes. Data was provided by

  • Pre-foreclosure homes * – 67
  • Auctions – 2,497
  • Bank owned homes – 3,849

* Pre-foreclosure means the homeowner is delinquent on the mortgage, but the lender has not foreclosed on the home yet.

There are relatively few pre-foreclosure homes in Charlotte, when compared to the bank-owned properties. This is usually a sign of a stabilizing market — not that Charlotte experienced much of a housing bust to begin with. Based on these numbers, we predict that the foreclosure inventory in Charlotte will decline steadily in the coming months.

Home Prices And Pricing Trends

According to data reported by, the average listing price of Charlotte homes for sale is between $135,000 and $165,000. The average sales price is lower, falling between $111,000 and $136,000.This suggests that many homeowners are listing their homes above market value, and/or they are being negotiated downward. Neither scenario is surprising in this kind of real estate market.

According to, Charlotte home prices have decreased by 4.5%, between August 2010 and September 2010. This was the most recent data available for pricing trends.

A recent HomeGain survey found that most Charlotte real estate agents and homeowners have a negative view on home prices. The majority of both groups felt that home prices will stay flat or decrease in the coming months. Only ten percent of agents felt that prices would rise over the next few months. This is noteworthy for home buyers. If you are planning to buy a home in Charlotte soon, you should keep a close eye on the market. You might be buying your way into a depreciating property.

FHA Loans Popular in Charlotte

FHA home loans are up in the Charlotte area, and elsewhere in the country. Over the last few years, the FHA’s market share has increased to around 30% of all mortgage activity. This number may increase even more in the near future. We recently conducted a survey to find out how many home buyers were planning to use an FHA loan. More than 80% said they wanted to use an FHA loan, mostly for the lower down-payment.

If you plan to use this government-insured mortgage program, you’ll need to find an FHA lender in the Charlotte area. The Department of Housing and Urban Development (HUD) website has a list of these lenders. Select North Carolina for state, and Charlotte for city, and then run a search. You’ll then be given a list of FHA-approved lenders in the Charlotte area.

Closing Comments

To close out this Charlotte real estate and mortgage guide, we present you with the following comments:

  • “Chief executive Wes Sturges said the Charlotte economy appears to be stabilizing, but real estate values continue to experience some deterioration.” –The Charlotte Observer
  • “Looking at our overall housing market at a regional level … you will see that while we have our issues, Charlotte is not drastically sliding price wise.” –Charlotte Property Hunters

We hope you have found our Charlotte mortgage and housing update helpful. If you would like to learn more about the home buying process, you can get started on our main website. It offers thousands of articles on mortgages, home buying, house hunting, and other topics discussed in this report.

San Diego Real Estate and Mortgage Report – Q4 2010

Welcome to the San Diego real estate report for the fourth quarter of 2010. This guide is intended to educate San Diego home buyers on mortgage trends, housing statistics, and other pertinent information. In this report, we will talk about current mortgage rates in San Diego, the local foreclosure scene, home prices and more.

san diego skyline

Disclaimer: Our real estate report for San Diego was published on October 18, 2010. Please note that the mortgage rates and other information contained in this report may have changed by the time you read it. We recommend that you seek out the most current information about the San Diego housing and mortgage market, especially if you are planning to buy a home there.

San Diego Mortgage Rates

At the time this report was published, the average mortgage rates in San Diego were as follows:

  • 30-year fixed – 4.19%
  • 15-year fixed – 3.62%
  • 5/1 ARM loan – 3.47%
  • 1-year ARM loan – 3.43%

The mortgage rates listed above are only averages. They are based on information reported by Freddie Mac for the time frame of this report.

When shopping for mortgage rates in San Diego, keep in mind that the rate you get has a lot to do with your own qualifications. You might qualify for a lower or higher interest rate than those listed above, based on your qualifications. One of the most important factors is your credit score. Lenders will use your credit score and loan-to-value ratio to determine the interest rate on your loan.

You may also have to pay points at closing, in order to qualify for the types of mortgage rates listed above. This is where the borrower prepays a certain amount of money up front, in order to lower the interest rate over the term of the loan. Depending on the difference in the long-term rate, this could work out in your favor.

Foreclosure Homes

As one of the hardest-hit states during the housing meltdown, California has a large inventory of foreclosure homes. The same goes for San Diego and surrounding areas. At the time this report was published, we found the following data relating to San Diego foreclosure homes. Data was supplied by

  • Pre-foreclosure homes * – 2,451
  • Auctions – 3,547
  • Bank owned homes – 3,910

* Pre-foreclosure means the homeowner is delinquent on the mortgage payments, but the bank has not yet foreclosed.

If you are thinking about buying a foreclosure property in San Diego, you need to educate yourself about the process. There are different stages of foreclosure, and the buying process is different for each of them. For example, if you want to buy a pre-foreclosure home through a short-sale process, your offer will be reviewed by the homeowner and the lender alike. On the contrary, if you are buying a bank-owned home in San Diego, you will submit your offer directly to the lender. You should also educate yourself about the foreclosure laws in San Diego, and find a real estate agent who is familiar with the process.

Home Prices And Pricing Trends

According to data reported by, the median sales price for San Diego homes (July 2010 – September 2010) was $322,500. Sales prices in San Diego have dropped nearly 35% over the last five years, but they seem to be stabilizing at present. The average listing price for the same period was significantly higher, suggesting that homeowners are overpricing their homes when listing them for sale.

According to, home prices in San Diego have increased by more than 8%, year over year. Their data reflects home sales and prices up to August of 2010. This is one of the few positive signs since the San Diego real estate market collapsed several years ago.

San Diego Real Estate Trends

Here are some of the things that are making news right now, with regard to the San Diego real estate market.

As you’ve probably heard, there has been a partial moratorium on foreclosures in the area. In fact, Bank of America recently halted foreclosures in all 50 states. We feel this stoppage will be temporary in nature, and that foreclosures will resume their normal pace in the near future.

Still, any slowdown in foreclosure activity means there will be an increase in inventory. If homeowners in the San Diego area are defaulting at the same rate, but the banks are foreclosing at a slower pace than before, there will eventually be a larger inventory of San Diego foreclosure homes. This would likely have a negative impact on home prices in the San Diego area. Some people are even predicting an average price reduction of 20% or more over the next year. This has yet to be seen, but there will almost certainly be a price drop of some kind. It’s something to keep your eye on, if you are planning to buy San Diego real estate in the near future.

We have also seen a rise in FHA home loans in San Diego. It’s no secret that the FHA has increased its market share since the housing bust. Borrowers who get turned down for a conventional mortgage loan can often get approved for an FHA loan. We also conducted a survey on the Home Buying Institute website recently, wherein the vast majority of respondents said they were planning to use an FHA home loan. This was a national survey, and was therefore not specific to the San Diego real estate scene. But the message is clear. FHA loans are more popular than ever.

If you wish to pursue this type of mortgage financing, you will need to apply through an FHA-approved lender in the San Diego area. You can find a list of these lenders on the HUD website.

Lastly, we would warn home buyers in the San Diego area that many homeowners are overpricing their homes. The reason for this is fairly obvious. Home prices in the San Diego area have dropped considerably in recent years. So many homeowners find themselves in a negative equity situation, where they owe more than their homes are currently worth. This is referred to as being upside down or underwater in the loan — two phrases you’ve probably heard a lot lately.

What does this mean to a home buyer? It means you need to scrutinize the asking price like never before. There is a very good chance the home you are considering is overpriced. So you need to look at comparable sales in the area to get a feel for what the market is doing. The value of a home is not determined by what the homeowner needs to get out of the deal. Nor is it determined by what the homeowner paid for the home when they first bought it. The value of a home is based on current market trends, and nothing else. Keep this in mind as you shop for homes in the San Diego real estate market.

Closing Quote

We like to close our real estate reports with an insightful comment relevant to the local market. We scour the Internet for such comments, and we choose one or two of the most useful comments to share with you. Here are some timely quotes about the San Diego real estate and mortgage scene:

  • “Lynn Reaser, an economist at Point Loma Nazarene University, said the latest figures provide further reassurance in a housing market that has experienced wide fluctuations in the last few years…” –San Diego Union-Tribune
  • “Demand builds back for housing in better neighborhoods: more buyers with cash want to take advantage of market bottom near Pacific coastlines … Public-company homebuilders buy relatively cheap residential land to prepare for an eventual upturn.” -Urban Land Institute’s Emerging Trends report

We hope you have found this San Diego mortgage and real estate report helpful. If you would like to learn more about any of the topics discussed in this guide, you can use the search tool located at the top of our main website. We have thousands of articles related to home buying, mortgages, and other topics discussed in this report.