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Daily update

7/26/07

Doubtless you’ve heard that the stock market is crashing, the sky is falling, and the world as we know it is all about to end just because of the housing market slump.  As you know by now, I don’t believe all of the hype and you shouldn’t either.  Here in Central Texas the market is strong.  This latest bunch of trouble started because Countrywide Mortgage announced that it was starting to see problems with increasing missed payments among its “low risk” loans, and it was foreseeing an increase in foreclosures which have a tendency to lower house prices and increase the number of foreclosures in a vicious cycle.  This is probably true, however, you should take all of this with a grain of salt.  First of all, Countrywide advertises that it approves 96% of the people who apply, now I doubt that 96% of their applicants have a credit score above 700.  Also, Countrywide provides a large number of second mortgages and 100% loans.  This means that people are borrowing the full price of the home and sometimes more than full price because they are rolling in closing costs.  This is particularly dangerous in an area that had really large run-ups in housing prices like California because these are the areas that are experiencing price corrections now.  Therefore, it’s logical to assume that if you borrowed the full amount of an inflated house price and try to sell you will be upside down in your loan, which means you owe more than your home is now worth.  Couple that with a job loss, the inability to work, or any other unforeseen financial problem and you could be facing foreclosure.

This is not to say that there is no mortgage money out there or that it is impossible to buy a home, however, it will be harder to get a mortgage.  So what do you do?  First and foremost, start saving, save enough money for a down payment as well as closing costs.  Once upon a time, we all used to do this, but it has fallen out of favor.  Now is the time to bring it back in vogue.  This is a good idea anytime, but especially now, it can save you from ending up underwater in your mortgage.  Second, clean up your credit report and improve your credit score.  I know its no fun, I’m telling you to save money for a down payment and I’m not letting you run up your credit cards while you do it.   MSN Money has a lot of articles on saving money and improving your credit score, here’s a link to one I really like Beef Up Your Credit Score.  Finally, while your saving money and improving your credit score you should have developed a good sense of your budget.  This is good practice for one of the toughest things you should do, which is determining how much house you are comfortable paying for.  Notice I did not say how much of a loan you are approved for, I said how much you feel comfortable paying.  For a long time the advice was buy the most house you could qualify for because houses appreciate over time.  If you learn one lesson out of this recent expansion and contraction of the housing market it is that real estate values like the stock market go both directions.  Make sure that you only buy as much house as you can pay for, even consider buying a house that you can cover if you lost your job and had to replace it with a lower paying one.  Or try something my husband and I did if you are in a two-income family, only buy a house that you can afford to make the payments on if one of you stopped working. 

I realize this means that you probably won’t be able to afford the fanciest house on the block, and maybe you’ll have to live with grey carpet until you can afford to install bamboo.  However, buying a house you can improve leads to putting in sweat equity, which is an almost guaranteed way to make money in real estate.  More about this topic later.

7/23/07

I just saw another article that is discussing how good the local real estate market is here in central Texas.  Austin and San Antonio are among the top 5 seller’s markets in the country.  Here is a link to the article.  The determination of whether a market is a buyer’s or a seller’s market is largely a function of inventory as well as supply and demand.  Here in the Austin area we have a strong job market coupled with reasonable home prices and a fairly low inventory of homes available on the market.  This makes for an excellent time to put your home on the market.  That said the national headlines are blaring that the housing market is going to crash, the failure of the sub-prime lenders mean there is no money available to lend to first time buyers, and  that the war is undermining the consumer confidence of all Americans.  This constant stream of doom and gloom has led buyers in our area to feel like this is a buyer’s market, so they are out bargain hunting.  What’s the answer?  Now more than ever pricing your home appropriately is key to a successful sale.  Also, your home must show better than its competition so that buyers feel like they’re getting a bargain.

 

7/18/07

Welcome to the first installment of my real estate blog.  I was reading MSN at lunch today and I read an article that said there is a 34.6% chance that real estate prices will go down in 50 Markets.  The good news is that the Dallas, Fort Worth, and Houston only has a roughly 7% chance of going down.  This is another example of how real estate is local.

OFFICE:

Tamara Deering, Realtor®

Jimmie Ann Vaughan Company

908 Main Street

Bastrop, TX  78602

Phone:  512-303-3738  Fax:  512-303-6774

www.javcom.com

tamara@javcom.com

 

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