How waiting for prices to come down could result in less buying power
Suntrust Mortgage’s Charlottesville Branch distributed this analysis (interest rates a year ago vs today’s) a few days ago. It provides us with something to think about as it relates to buying a property before interest rates go up even if prices go down.
Purchase Price/Rate Comparison from Suntrust’s Charlottesville’s Branch office:
“We all recognize that interest rates can’t remain low forever, although it should be noted that on Friday mortgage interest rates were 1.375% lower than the same day last year. Home prices are lower than the same time last year, yet many potential purchasers are still waiting for prices to move lower. The risk is when the price comes down will today’s low rates still be available (not to mention will the loan option still be available). Follow me on this.
1. A $300,000 purchase with an 80% mortgage ($240,000) at today’s 30- �
Year fixed rate would have a P&I payment of $1,270.
2. If the sales price drops 10% to $270,000 with an 80% mortgage ($216,000) at the interest rate on this day last year, the P&I payment would be $1,329.
3. If the sales price drops to $255,000 with an 80% mortgage ($204,000) at the interest on this day last year, the P&I payment would be $1,256.
4. Sale prices have already reduced significantly over this time last year.
5. How long will rates stay down and will the purchase price drop an additional 15% before rates go up?
A year ago Fannie & Freddie introduced ‘Risk Based Pricing’ and have continued to change the parameters. Adding the ‘Risk Based Pricing’ to the above example a borrower with a 720-739 credit score would have the following scenario:
1. A mortgage of $240,000 would have a P&I payment of $1,348 with last year’s interest rate.
2. A mortgage of $204,000 would have a P&I payment of $1,272 with last year’s interest rate.
Potential buyers must recognize that at some point waiting may change to ‘We waited too long’. These potential buyers stand the chance to miss the most lucrative purchasing window the industry will see for many years to come.”
Understanding and Dialoging in today and tomorrow’s social media
The key trend over these next few years (2009-2012) will be understanding the impact and successfully engaging in the social media/networking marketing strategy. It has been amazing to watch how what was a small niche in our industry has reached “the tipping point” stage. It can no longer be ignored by agents and more importantly, companies without the risk of losing opportunities that could be the difference between future success or failure. Many of us do not like change and if we had our choice, we would rather do business the way we have always done it. Our company believes that we need to lead our Realtors into the world of Facebook, LinkedIn, Twitter, etc. It is uncomfortable for most of us but something we need to have a handle on if we want to communicate with this next generation of buyers and sellers. Therefore we at Roy Wheeler Realty Company are striving to be proactive in offering social media/networking classes to our agents. The key element is agents sharing how it has impacted their business. At the same time, we must never forget that nothing replaces the time honored and tested fact that however we create business relationships, personal (hand written notes, phone calls, dropping by to say hello) follow up is what will always set us apart from everyone else. Whether our clients are 1st time, move up, or buyers purchasing a farm or estate, we believe they want us to know how they want to get their information.
Some signs that Charlottesville Real Estate is improving
1) In February, both in Charlottesville and Albermarle County, sales increased over February of 2008
2) The National Association of Realtors reported that the relationship between home prices and family income is the most favorable it has been since 1970
3) The Wells Fargo Housing Market Index showed that Builder confidence has improved for the 1st time in months due to increased buyer activity.
These figures may not mean an improving and consistent trend but it is good news nonetheless. In Charlottesville and the cenrtal Virginia area, it is still a very price sensitive market. Whether you are talking a large multi-million dollar farm and/or estate or your very first home, when the price drops to a certain point, facts show that there are buyers that want to take advantage of the interest rates and the opportunity to buy a home they couldn’t have afforded 2 years ago.
From excessive texting to the don’ts of social media
Nothing is more maddening than when people start mass mailing their business to everyone through Facebook, LinkedIn, Twitter, etc. Matthew Ferrara has written an excellent piece posted here that cautions folks from abusing what is a great way to communicate with those around us in cyberspace. Enjoy!
http://www.matthewferrara.com/featured/socialnetculture
Are cell phones a thing of the past?
As much as we don’t want to admit it, the way we communicate is changing rapidly. It doesn’t seem that long ago that I heard people saying, “why would I ever need a phone in my car”? The only way I got my wife to have one was “in case of an emergency”. Now folks aren’t even calling each other any more. They are using texting as referenced in this Washington Post article http://www.washingtonpost.com/wp-dyn/content/article/2009/02/21/AR2009022101863.html?sub=AR or other forms of social media like Facebook, LinkedIn, Twitter, etc. There are social ramifications for this phenomena but the bottom line is if you want to know what is going on with friends or for business purposes, you will soon have to surrender to learning a whole new way to stay in touch.
There seems to be an uptick in the market
Every Charlottesville, VA Realtor I know is saying they are busier than they have been in quite awhile. Although it hasn’t resulted in alot of contracts being written, most seem to think it is just a matter of time. My feeling is that it is still about price and sellers have to keep that keenly in their mind. There are buyers out there but they want to make sure the price is right. An article in the Wall Street Journal seems to echo that point. http://online.wsj.com/article_email/SB123431356988570855-lMyQjAxMDI5MzE0NzMxMTczWj.html
At least in the Central Virginia area, For some, now might be a good time to consider taking advantage of low interest rates and sellers being realistic about price
Home prices falling around the country
Rex Nutting
MarketWatch Pulse
Hopefully, like Northern Virginia, home prices will fall to a level that will bring buyers back into the market. Housing inventory there has dropped from 10 months last year to 5 months currently.
Copyright © 2009 MarketWatch, Inc.
An interesting article on Facebook being the “real deal”
For those of you who years ago thought cell phones would never be what they are today, you need to read this article now that you are saying Facebook is not for you.
| � You Have No Friends Everyone else is on Facebook. Why aren’t you? By Farhad Manjoo Posted Wednesday, Jan. 14, 2009, at 4:56 PM ET At 1:37 a.m. on Jan. 8, Mark Zuckerberg, the 24-year-old founder and CEO of Facebook, posted a message on the company’s blog with news of a milestone: The site had just added its 150-millionth member. Facebook now has users on every continent, with half of them logging in at least once a day. “If Facebook were a country, it would be the eighth most populated in the world, just ahead of Japan, Russia and Nigeria,! ” Zuckerberg wrote. This People’s Republic of Facebook would also have a terrible population-growth problem. Like most communications networks, Facebook obeys classic network-effects laws: It gets better—more useful, more entertaining—as more people join it, which causes it to grow even faster still. It was just last August that Facebook hit 100 million users. Since then, an average of 374,000 people have signed up every day. At this rate, Facebook will grow to nearly 300 million people by this time next year. Article URL: http://www.slate.com/id/2208678/ |
| Copyright 2009 Washingtonpost.Newsweek Interactive Co. LLC |
Tips on understanding the Housing and Mortgage market
Check out this link http://vimeo.com/2806617 to a panel discussion last week launching VAR’s Virginia Homeowners Alliance web site.
Two more accolades for Charlottesville!
This week Charlottesville made two more Top Ten Lists:
1) The Princeton Review named The University of Virginia the #1 Best Value Public College in America for 2009. William and Mary located in Williamsburg was touted as #3.
2) Charlottesville also was named one of the Top 10 Healthiest towns in America.


