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October 2007
Keeping Current Matters
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Supply
December 2003 August 2005 July 2007
Months supply of inventory on the market
9
8
7
6
54
3
2
1
Source: NAR
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Inventory vs Sales -Aug
3,119
36,309
Inventory Sales
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Demand
Ho
usessoldinmillions
5
5.5
6
6.5
7
7.5
Source: NAR
2007 NAR Projections (month to month)Actual Sales
2004 2005 2006 Jan Feb March April May June July Aug
Actual sales August 2006 vs. August 2007 were off12.8%
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9/29/2007
Demand
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Nationally, Moody's is projecting an average price declineof 7.7
percent. That's a jump from the 6.6 percent totalprice drop that
the company was forecasting in June andmore than twice that of last
October's forecast of a 3.6percent price decrease.
"The housing market is in a free fall," said Mark Zandi,chief
economist with Moody's Economy.com
9/28/2007
Value
http://www.ocregister.com/
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Since 1994, Kenneth Heebner, has managed the $1.7 billionCGM
Realty Fund. It has the best 10-year record of all
real-estate-focused mutual funds, up an average 19.7% a yearduring
the past decade, according to Morningstar Inc.
Fall 2006: I see about a 50% decline in the inflatedcoastal
markets.
September 2007: I think the decline in housing priceswill be
broader and deeperthan I originally thought.
9/10/2007
- as quoted in the Wall Street Journal
Value
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"In markets where home prices almost doubled infour years, you
could easily see price cuts of20% to 30%," said Thomas Lawler, a
housingeconomist based in Vienna, Va.
Value
9/22/2007
http://online.wsj.com/home
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9/2007
Value
Ms. ZelmanPresidentZelman & Associatesa housing related
research firm
"This recession in housing is more severe than the 1990and 1991
downturnand it will be longer in duration."
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Alan Greenspan, the former chairman of the FederalReserve, told
the Financial Times that US house prices arelikely to fall
significantly from their present levels and thedecline "is going to
be larger than most people expect."
9/16/2007
Value
http://www.ft.com/
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Goldman Sachs noted that it is bearish on the housing
market seeing home prices 13% to 14% over-valued.
Goldman is of the opinion that it could take "several"years for
home prices to reach fair value.
Value
9/9/2007
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Challenge is good for the soul!
It is the Law that any difficulties
that can come to you at any time,
no matter what they are, must be
exactly what you need most at the
moment, to enable you to take the
next step forward by overcoming
them. The only real misfortune,the only real tragedy, comes
when we suffer without learning
that lesson."- Emmet Fox
I could have just used my imagination !
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Value
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9/29/2007
Value
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Rates
5.5
6
6.5
7
7.5
8
8.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source for historical rates: Freddie Mac
http://www.freddiemac.com/
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Rates
Source: HSH
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U.S. Mergers and Acquisitions in 2007
The Fed Cut
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9/19/2007
The Fed Cut
http://online.wsj.com/home
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With unusual flair, the Federal Reserve slashed short-term
interest rates by a more-than-expected 1/2 point.The average
30-year fixed-rate mortgage respondedby rising, closing the
nation's leading survey of
mortgage prices at an average 6.80%.9/21/2007
The Fed Cut
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Mortgage Crisis
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The benefits of a better FICO score are dramatic for mortgages.
Raising ascore from a range of 580-619 to 660-699 could save
someone with a 30-year, $300,000 fixed mortgage $5,148 in one year,
according to FairIsaac's Web site.
Mortgage Crisis
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Up 115% from
last August!The jump in foreclosure filingsthis month might be
thebeginning of the next wave ofincreased foreclosure
activityRealtyTrac Chief ExecutiveJames J. Saccacio said.
Foreclosures
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First American Corp.s Christopher Cagan has doneresearch which
investigates the correlation between
foreclosures as a percentage of total sales and the sizeof the
discount buyers typically receive when purchasing
foreclosure properties. For example, in areas whereforeclosure
sales accounted for 0.5 percent of total sales,the median discount
was 3.8 percent; whereas in areas
where foreclosures made up 8.9 percent of sales, the
median discount was 20.0 percent.
Foreclosures
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As of June 30, the non-owner occupied (loans to buyerswho do not
plan to live in the house) share of defaultedloans (90 days of more
past due or in foreclosure) was 32percent in Nevada, 25 percent in
Florida, 26 percent inArizona and 21 percent in California,
compared with 13percent in the rest of the nation. These investors
aremuch more likely to default on their mortgages if they
see the value of their investments falling due to falling
home prices.
Vacancy Rate
9/6/2007
http://www.mbaa.org/
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FOR ACCIDENTAL LANDLORDS
Here's some advice for novices from property managers, agents
and other experts:
Talk to the neighbors: Make sure they know you'll be renting and
encourage them to tell you aboutany issues that come up. Then check
back in from time to time to make sure everything's working
out.
Know the laws: State and local governments regulate everything
from how many smoke detectors
must be installed in a house to how long landlords have to
return tenants' security deposits. Failing toknow the rules can
lead to lawsuits, civil penalties or worse.
Keep up with maintenance: Many owners assume that since a
property is a rental, they don't need toworry about routine
maintenance. Not so, say experts. Keeping up with repairs will help
draw bettertenants and will prevent bigger maintenance bills down
the line.
Study the market: Rental agents say many landlords set their
rents based on their expenses, ratherthan on what the market will
bear. Then they wonder why their units don't rent.
Vet prospective tenants: Credit scores alone aren't enough. Dig
into credit reports, verify income andmake sure to call references.
But make sure not to run afoul of discrimination laws, which bar
landlordsfrom rejecting tenants based on age, marital status and
other factors.
--Ben Casselman
9/21/2007
Vacancy Rate
http://online.wsj.com/home
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The Good News
0
10
20
30
40
The graph shows theamount of subprime
adjustable-ratemortgages hittingresets(in billions of
dollars)
Source: First American
2007 2008
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9/24/2007
Countrywide Financial Corp, the largest U.S. mortgage
lender,said on Monday it expects to modify terms on nearly
25,000home loans this year to help people avoid foreclosures.
The
company said it has already modified more than 17,000 homeloans
this year, and provided assistance on about 35,000
mortgages, including through repayment plans, postponementsof
payments and refinancings.
The Good News
http://www.reuters.com/home
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It proves there is a pent up demand. There are home
buyers out there who are willing to buy a home if
they think they are getting an attractive price.
Larry Sorsby, CFO
After selling 2,100 homes in three days(10 times greater than
their weekly average)
during a 30% off sale.
The Good News
http://www.khov.com/Home/Brands/KHV/BrandHome.htm
