On Tap for 2010: Social Media, and
(More) Foreclosures and Short Sales
No, I don't predict the direction of home prices.
But housing trends are another matter.
Fortunately, if you're an Edina Realty agent, corporate does that for you (or at least helps).
Each year, senior management highlights at the annual meeting -- and reinforces during the year -- the themes and issues it expects to drive the marketplace over the coming twelve months.
From experience, their track record is pretty good.
So what is management emphasizing now?
Training on how to get up to speed on two things: 1) So-called "social media" like FaceBook, LinkedIn, Twitter, etc.; and 2) handling foreclosures and short sales.
If there is an honorable mention, it would be becoming proficient with alternative financing (contract for deeds, assumable mortgages, and various other "seller-facilitated" financing).
Showing posts with label alternative financing. Show all posts
Showing posts with label alternative financing. Show all posts
Saturday, January 23, 2010
Wednesday, November 4, 2009
Alternative Financing: Back to the Future?
Contracts for Deed & Assignable Mortgages
Last Fall, Edina Realty's excellent legal department identified FHA loans and short sales as the two, big looming issues for Realtors to prepare for in 2009.
Good call.
So, what is Edina legal predicting will be big in 2010?
Alternative financing.
As in, contracts for deed and mortgage assumptions.
Expected: Higher Interest Rates
Both are likely to be more common in the housing market in the coming year(s), for four reasons:
One. Higher interest rates. The Fed's ginormous, $1.25 trillion(!) buy-down of mortgage rates (yes, it's been happening all year) is slated to be phased out early in 2010.
Without that subsidy, rates are expected to float higher. In fact, they already are.
Contracts for deed are are a time-tested alternative to more expensive, less available bank financing.
Two. A continued weak economy.
Consumers who've lost a home to foreclosure typically can't qualify for a mortgage for at least three years.
But if they have steady income, there's no reason why they can't make payments on a contract for deed.
Three. Continued, volatile investing climate.
As investors know all too well, the interest rate on short-term savings is now effectively zero (and has been for over a year). Just because banks are expected to charge more for mortgages doesn't mean that savers can expect to earn more on their balances.
Meanwhile, many investors' appetite for stocks is, shall we say, diminished.
Contracts for deed provide an attractive alternative to home sellers with considerable equity.
And guess what?
Something like two-thirds of homeowners over 60 years old own their homes free and clear!
Four. Buyer and Sellers will assume and assign, respectively, below-market rate mortgages . . . because they can.
Fully 50% of the mortgages made in 2009 have been comprised of FHA and VA loans -- both of which are assumable.
If rates hit 7%-8% in the future, as many expect, being able to step into your seller's 4.75% interest rate is a no-brainer.
P.S.: one more way U.S. taxpayers are going to get shellacked if/when interest rates rise: all those assumable FHA and VA loans will have to be written down by the tens of billions.
Last Fall, Edina Realty's excellent legal department identified FHA loans and short sales as the two, big looming issues for Realtors to prepare for in 2009.
Good call.
So, what is Edina legal predicting will be big in 2010?
Alternative financing.
As in, contracts for deed and mortgage assumptions.
Expected: Higher Interest Rates
Both are likely to be more common in the housing market in the coming year(s), for four reasons:
One. Higher interest rates. The Fed's ginormous, $1.25 trillion(!) buy-down of mortgage rates (yes, it's been happening all year) is slated to be phased out early in 2010.
Without that subsidy, rates are expected to float higher. In fact, they already are.
Contracts for deed are are a time-tested alternative to more expensive, less available bank financing.
Two. A continued weak economy.
Consumers who've lost a home to foreclosure typically can't qualify for a mortgage for at least three years.
But if they have steady income, there's no reason why they can't make payments on a contract for deed.
Three. Continued, volatile investing climate.
As investors know all too well, the interest rate on short-term savings is now effectively zero (and has been for over a year). Just because banks are expected to charge more for mortgages doesn't mean that savers can expect to earn more on their balances.
Meanwhile, many investors' appetite for stocks is, shall we say, diminished.
Contracts for deed provide an attractive alternative to home sellers with considerable equity.
And guess what?
Something like two-thirds of homeowners over 60 years old own their homes free and clear!
Four. Buyer and Sellers will assume and assign, respectively, below-market rate mortgages . . . because they can.
Fully 50% of the mortgages made in 2009 have been comprised of FHA and VA loans -- both of which are assumable.
If rates hit 7%-8% in the future, as many expect, being able to step into your seller's 4.75% interest rate is a no-brainer.
P.S.: one more way U.S. taxpayers are going to get shellacked if/when interest rates rise: all those assumable FHA and VA loans will have to be written down by the tens of billions.
Tuesday, May 5, 2009
Distressed Markets Show Improvement
What Goes Down . . . Must Come Up?
Nice piece in the NYT encapsulating the competing trends roiling the housing market nationally.
On the one hand, housing prices -- especially foreclosures -- are tantalizingly cheap.
On the other hand, the severe recession is hamstringing people's purchasing power, and ability to qualify for mortgages.
No surprise, then, that cash purchases and various types of alternative financing (contracts for deed, Seller-provided second mortgages) are on the upswing.
When buying is cheaper than renting, markets begin to turn. At the current rate of sales, there is less than three months of inventory in the Sacramento market. In normal times, that would indicate a seller’s market. Except these are not normal times. The unemployment rate in the county is 11.3 percent, the highest in decades. That will prompt more foreclosures all by itself. Furthermore, banks have lifted various processing moratoriums that lowered foreclosures last fall.
--David Streitfeld, "Where Home Prices Crashed Early, Signs of a Rebound"; The New York Times (5/5/09)
Nice piece in the NYT encapsulating the competing trends roiling the housing market nationally.
On the one hand, housing prices -- especially foreclosures -- are tantalizingly cheap.
On the other hand, the severe recession is hamstringing people's purchasing power, and ability to qualify for mortgages.
No surprise, then, that cash purchases and various types of alternative financing (contracts for deed, Seller-provided second mortgages) are on the upswing.
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