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Buying or refinancing, now may be the time

March 20, 2009

I referred a friend here in Charlottesville who wants to refinance to a lender today.  I just received an email thanking me because they were able to get a low rate with no points.  This Wall Street Journal article that follows below confirms that they may very well have made the decision at the right time.     MARCH 20, 2009 Under 5%, Mortgages May Be Near The Bottom By JAMES R. HAGERTY The Federal Reserve is going to extraordinary lengths to push down long-term interest rates, including home-mortgage rates. But those hoping mortgage rates will fall sharply from current levels, already historically low, may be disappointed.  Mortgage firms Thursday were quoting rates averaging 4.75% on 30-year fixed-rate mortgages, according to Zillow.com, a real-estate information service. That is down from more than 5% two days ago and about 6% in mid-November. But further big declines will be hard to achieve, partly because the mortgage-lending market has grown less competitive in the past year as hundreds of small banks and independent mortgage lenders have collapsed. The big banks that dominate the market are eager to boost their profits margins, not give deeper bargains to consumers. Rates for borrowers with the strongest credit are likely to be in a range of roughly 4.5% to 4.75% for the rest of this year, says Mahesh Swaminathan, a mortgage strategist at Credit Suisse in New York.  Others say that is too optimistic. Assuming no big change in government policy, Walter Schmidt, an analyst at FTN Financial Capital Markets, sees a range of 4.75% to 5.5% for most of this year.  The Fed began driving mortgage rates down in late November when it announced plans to buy as much as $500 billion of mortgage securities this year. On Wednesday, the Fed expanded that program, saying it will spend as much as $1.25 trillion on such securities in 2009. That is enough to provide funding for more than half of all home-mortgage loans likely to be made in the U.S. this year.  The Fed also is buying long-term Treasury bonds to drive down rates on those securities, whose pricing affects mortgage rates. By historical standards, rates look incredibly low. Until recently, 30-year fixed-rate mortgages hadn’t been below 5% since the 1950s. For the past couple of months, rates have been bobbing between about 5% and 5.25%. The 30-year rate averaged 4.98% in the week ended March 19, down from 5.03% the prior week, according to Freddie Mac’s survey. Fifteen-year fixed-rate mortgages averaged 4.61%, down from 4.64%.  One reason mortgage rates often tick back up after a decline is that a rush of people seeking to refinance quickly causes backlogs at lenders, which frequently don’t have enough employees to process all of the applications.  “If lenders are working people overtime to close loans, they don’t have an incentive to compete too hard on price,” says Arthur Frank, who heads research on mortgage securities at Deutsche Bank in New York.  The situation highlights a conundrum for the government. It wants low rates to spur the housing market, but also wants the banks to make profits on loans so they can return to financial health. Many of the small mortgage banks that remain are struggling. Mortgage banks, often small, family-owned companies, aren’t licensed to take deposits and so lack that source of money for their loans. Instead, they typically borrow money for short periods from so-called warehouse lenders. They use this short-term credit to make loans to their customers and then pay back the warehouse lenders after selling the loans to bigger banks or to government-backed mortgage investors Fannie Mae and Freddie Mac.  But this warehouse credit is much harder to obtain than it was a year or two ago because many of the big banks and Wall Street firms that used to provide it have exited that business. Despite these constraints, the Fed’s action is “going to be a plus” for the housing market, says Thomas Lawler, an economist in Leesburg, Va. Lower rates make it more likely that home prices will hit bottom in many parts of the country later this year, Mr. Lawler says. The recovery, though, is likely to be gradual, partly because rising unemployment reduces housing demand.  Christopher J. Mayer, a real-estate professor at Columbia Business School in New York, says the Fed’s moves to cut rates are “helping to put a floor under the housing market.” But he worries that the Fed could face huge losses on the mortgage securities if inflation fears eventually push interest rates much higher.   As I always advise,  it may or may not be the time for you to sell, refinance, or buy.  Seek out an expert you trust and look at your individual situation.  If you want to sell be realistic and aggressive with your price.  If you choose to buy, get yourself pre-approved with the best credit score possible.  Remember, the more you can put into your downpayment, the better interest rate you will get.

Learning from the experts on staging a home

March 14, 2009

There is much to be learned from experts that stage model homes.  With as many homes as there are on the market, as a seller or a listing agent in Charlottesville and the surrounding Central Virginia area, this Washington Post article http://www.washingtonpost.com/wp-dyn/content/article/2009/03/13/AR2009031300149.html is a must read.  It offers insights on what to do depending on what type of buyer you are trying to attract to your farm, country property, or a home for the first time buyer.

How waiting for prices to come down could result in less buying power

March 10, 2009

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

March 10, 2009

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

March 8, 2009

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 dont's of social media

February 24, 2009

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?

February 23, 2009

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

February 17, 2009

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

January 27, 2009

Rex Nutting MarketWatch Pulse Buzz up! Digg It StumbleUpon Reddit WASHINGTON — Home values in 20 major U.S. cities fell at a record 18.2% in the 12 months ending in November, Standard & Poor’s reported Tuesday. The Case-Shiller 20-city home price index fell 2.2% in November, with home values in all 20 cities falling at least 1%. Prices fell 3.4% in Phoenix and 3.3% in Las Vegas in November. In the past year, prices were down 33% in Phoenix, 32% in Las Vegas, and 31% in San Francisco. The best performance over the past year came in Dallas, where prices fell just 3.3%. Falling home values have helped to plunge the global financial system into chaos because of mortgage-backed securities. Home owners have lost trillions of dollars of wealth. 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”

January 20, 2009

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. If you’re reading this article, there’s a good chance you already belong to Facebook. There’s a good chance everyone you know is on Facebook, too. Indeed, there’s a good chance you’re no longer reading this article because you just switched over to check Facebook. That’s fine—this piece is not for you. Instead I’d like to address those readers who aren’t on Facebook, especi! ally those of you who’ve consciously decided to stay away. Though your ranks dwindle daily, there are many of you. This is understandable—any social movement that becomes so popular so fast engenders skepticism. A year ago, the New York Observer interviewed a half-dozen or so disdainful Facebook holdouts. “I don’t see how having hundreds or thousands of ‘friends’ is leading to any kind of substantive friendships,” said Cary Goldstein, the director of publicity at Twelve Publishers. “The whole thing seems so weird to me. Now you really have to turn off your computer and just go out to live real life and make real connections with people that way. I don’t think it’s healthy.” I was reminded of a quote from an Onion story, “Area Man Constantly Mentioning He Doesn’t Own a Television“: “I’m not an elitist.! It’s just that I’d much rather sculpt or write in my journal or read Proust than sit there passively staring at some phosphorescent screen.” Friends—can I call you friends?—it’s time to drop the attitude: There is no longer any good reason to avoid Facebook. The site has crossed a threshold—it is now so widely trafficked that it’s fast becoming a routine aide to social interaction, like e-mail and antiperspirant. It’s only the most recent of many new technologies that have crossed over this stage. For a long while—from about the late ’80s to the late-middle ’90s, Wall Street to Jerry Maguire—carrying a mobile phone seemed like a haughty affectation. But as more people got phones, they became more useful for everyone—and then one day enough people had cell phones that everyone began to assume that you did, too. Your friends stopped prearranging where they would meet! t up on Saturday night because it was assumed that everyone would call from wherever they were to find out what was going on. From that moment on, it became an affectation not to carry a mobile phone; they’d grown so deeply entwined with modern life that the only reason to be without one was to make a statement by abstaining. Facebook is now at that same point—whether or not you intend it, you’re saying something by staying away. I use Facebook every day, and not always to waste time. Most of my extended family lives in South Africa, and though I speak to them occasionally on the phone, Facebook gives me an astonishingly intimate look at their lives—I can see what they did yesterday, what they’re doing tomorrow, and what they’re doing right now, almost like there’s no distance separating us. The same holds true for my job: I live on the West Coast, but I work in an industry centered on the East Coast; Facebook gives me the opportunity to connect with people! plea—to “network,” you might say—in a completely natural, unaggressive manner. More than a dozen times, I’ve contacted sources through Facebook—searching for them there is much easier than searching for a current e-mail or phone number. In fact, Facebook helped me write this story. The other day I posted a status update asking my Facebook friends to put me in touch with people who’ve decided against joining. The holdouts I contacted this way weren’t haughty—they were nice, reasonable people with entirely rational-sounding explanations for staying off the site. Among the main reasons people cited was that Facebook looked like it required too much work. Chad Retell, a network systems administrator in Madison, Wis., said he’d seen how his wife—my friend Katie—had taken to the site. But at the same time, it had changed her: “Now she’s obligated to spend time maintaining her Facebook page. She’s got to check it every morning. I have no desire to do that.” Retell and other Facebook holdouts also protested that the site preset! nets numerous opportunities for awkwardness—there’s the headache of managing which people to friend and which to forget, the fear that one of your friends might post something on your wall that will offend everyone else, the worry that someone will find something about you that you didn’t mean to share. Naomi Harris, a magazine photographer in New York, says that, for all that trouble, Facebook seems to offer little in return. “Why?” she asks. “I’m on the computer enough as it is for work. I don’t really want to be there for recreation purposes, too. I have no interests in someone from fifth grade contacting me and saying, ‘Hey, I sat behind you in class—want to chat?’ ” Finally, I heard what must be the most universal concern about Facebook—I don’t want people knowing my business! Kate Koppel man is a 23-year-old New Yorker w! ho works in the fashion industry. She was on Facebook all through cull ego, and she concedes that the site has many benefits. And yet, the whole thing creeped her out: “I had friends from back home knowing what was going on with my friends from college—people they had never met—which was weird,” she told me. “I found friends knowing things about what was on my ‘wall’ before I’d had a chance to see it—which was also weird.” Koppelman quit Facebook last year. She still uses it by proxy—her roommates look people up for her when she’s curious about them—but she says she’ll never sign up again. Yet of the many concerns about Facebook, Koppelman’s is the most easily addressed. Last year, the site added a series of fine-grained privacy controls that let you choose which friends see what information about you. Your college friends can see one version of your profile, your high-school friends another, and your family yet another; if you want, you can let eve! ryone see essentially nothing about you. Retelle’s worry that Facebook demands a lot of work is also somewhat misguided. It’s true that some people spend a lot of time on it, but that’s because they’re having fun there; if you’re not, you can simply log in once or twice a week just to accept or reject friends. Even doing nothing and waiting for others to friend you is enough: You’re establishing a presence for other people to connect with you, which is the site’s main purpose. That brings us to Harris’ argument: What’s the social utility to Facebook—why should you join? Like with e-mail and cell phones, there are many, and as you begin to use it, you’ll notice more and different situations in which it proves helpful. In general, Facebook is a lubricant of social connections. With so many people on it, it’s now the best, fastest place online to find and connect with a specific person—think of it as a worldwide directory, or a Wikipedia of people. As a result! , people now expect to find you on Facebook—whether they’re contacti ng you for a job or scouting you out for a genius grant. True, you might not want people to be able to follow your life—it’s no great loss to you if your long-lost college frenemy can’t find you. But what about your old fling, your new fling, your next employer, or that friend-of-a-friend you just met at a party who says he can give you some great tips on your golf swing? Sure, you can trade e-mail addresses or phone numbers, but in many circles Facebook is now the expected way to make these connections. By being on Facebook, you’re facilitating such ties; without it, you’re missing them and making life difficult for those who went looking for you there. Skeptics often suggest that online social networks foster introverted, anti-social behavior—that we forge virtual connections at the expense of real-life connections. But only someone who’s never used! Facebook would make that argument. Nobody avoids meeting people in real life by escaping to the Web. In fact, the opposite seems true: Short, continuous, low-content updates about the particulars of your friends’ lives—Bob has the flu, Barbara can’t believe what just happened on Mad Men, Sally and Ned are no longer on speaking terms—deepen your bonds with them. Writer Clive Thompson has explored this phenomenon, what social scientists call “ambient awareness.” Following someone through his status updates is not unlike sitting in a room with him and semiconsciously taking note of his body language, Thompson points out. Just as you can sense his mood from the rhythm of his breathing, sighing, and swearing, you can get the broad outlines of his life from short updates, making for a deeper conversation the next time you do meet up. It’s this benefit of Facebook that seems to hook people in the end: Their friendships seem to demand signing up. Last year, Darcy Stockton, a fashion photographer in New York, held nothing back in describing her hatred of Facebook to the Observer. “If you have time to network through a site like that, you aren’t working enough,” she said. “I just don’t have the time or the ability to keep up with yet another social networking site in my free time. I feel there’s other things and real experiences I could be having in real life instead of wasting my free time on Facebook.” Stockton now has 250 Facebook friends. In an e-mail, she explained that she’d decided to join the site when her friends migrated over from MySpace. She added, “Thank you for making me eat my words!” Farhad Manjoo is Slate’s technology columnist and the author of True Enough: Learning To Live in a Post-Fact Society. You can e-mail him at farhad.manjoo@slate.com. Article URL: http://www.slate.com/id/2208678/ Copyright 2009 Washingtonpost.Newsweek Interactive Co. LLC

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