To Buy or Not to Buy, that is the question….

I come across this question all of the time, especially in this market. Many people I feel want to take advantage of the market, but they’re just not sure if NOW is the time or not. When is the perfect time to buy? We will only really know that once prices start going back up, then everyone will say “that was the time to do it.” However at that point, it will be too late. The market will have started to recover. There are signs pointing to recovery, but I think there is still a ways to go. Does that mean that buyers should sit back and just wait? I don’t think so. There are too many good incentives to let this market pass you buy.

Will home prices get better? Maybe, but maybe they won’t. If you read my last blog post you could see that home prices in Cincinnati dropped 13% on average when compared to last year. And as I mentioned in that post, as inventory shrinks and more demand is created, prices will start to climb back up. Get the prices now while we KNOW they are low. It’s the law of supply and demand.

Another great incentive are the low mortgage rates we are seeing right now. I don’t think that today’s first time home buyer really appreciates the low rates we’ve got going right now. They will all be in for a shock when they go to sell 5 years from now and may have to pay quite a bit more. Today’s rates, although they fluctuate a lot, they are still historically low, generally between 5-6%. Once everything starts to bounce back you can pretty much kiss these sweet deals good bye…

If you’re a first time home buyer you may want to finally jump on the home buying band wagon. Your 8k tax incentive is up Nov 30, 2009. That means you have to CLOSE by Nov 30. The clock is ticking my friends… who is eligible? Anyone who hasn’t owned a home in the past 3 years if they meet income limits single buyers, $75,000 a year; married couples $150,000. The credit decreases for single buyers earning between $75,000 and $95,000, and between $150,000 and $170,000 for home buyers filing jointly.

Call me today if you have any questions on purchasing a home in Cincinnati! I’d love to help.<-->

Hello my readers.  I do want to apologize for the 2 month hiatus that I’ve taken.  I should have warned some of you, but I got a bit of blogger burn out…  Hopefully, some of you have been reading my tweets (if you’re not following me on twitter, you should be http://twitter.com/jamistutzman) and you know that homes are selling and that I’m keeping VERY busy.

What?!? some of you may be saying.  Homes are selling??  Yup! its true.  As of right now in Hamilton County alone there are 1341 houses that are pending in the MLS.  Thats fantastic!! Who is buying?  It mainly seems to be the first time home buyers, the people who are under the 250k range.  They’re coming out in force to get the 8k tax incentive.  If you haven’t owned a house in 3 years, you’d be eligible for it as well.  Ask me for more details.

Does this mean that the housing market is in the clear?  Not yet, but it shows that we are on our way to recovery.  I have a feeling its going to be a long process, but it looks to be headed in an upward direction.  Once these first time home buyers start buying up the inventory, the higher priced houses will start to go.  Many people above the 300k mark need to wait for their house to sell before they can buy up.  Its frustrating for those sellers, but they need to either drop their price or just be patient.  We are lucky to be in Cincinnati, we didn’t see the extreme highs of the bubble and therefore we won’t see the extreme lows of the downward turn.  Don’t think that every seller out there is desperate and every home is over priced.  Many homes that are coming up on the market are priced very well for the current day and are actually selling pretty fast!

So, now is the time to get out there and shop!  If you have a first time home buyer house and you’re looking to upgrade, don’t be afraid to try and sell it.  Afterall, if you take a little hit on the selling side, you will probably make up for it on the buying side.

What goes down, must go up. Right?  At least thats how things in general play out in Life.  So why shouldn’t real estate be any exception?  It isn’t. Does that mean its coming back… hmmm not sure yet.  Have we reached the bottom and are at least stabilizing?  I think maybe so or at least we’re close.

I recently read an article on realitytimes.com where Dr. Mark Zandi, chief economist for Moody’s Economy.com, surprised analysts by announcing that “the bottom of the housing downturn is in sight for the nation.”   I had heard whispers of this through some of my out of state colleagues, that some of the hardest hit areas are starting to see some comeback and stabilization.  This is great news!  Why? Because theoretically what was hit the hardest first should also then be the first to start to recover.

Well, I think the key word in Marks quote is that the bottom is in “sight.” Not that we are there yet.  But before that much-desired recovery can take place, the economists warn that there will be more pain. Home values in some of the nation’s hardest-hit markets — in particular Florida, California, Nevada and Arizona — will continue to see prices plunge. In some of the worst-hit places, the peak-to-trough percentage losses will soar as high as 70%. Of the 381 metro areas that the firm looked into, it estimates that 100 will experience peak-to-trough declines of 20% or more. The bright spots on the map — the 42 metro areas that are expected to see a decline of less than 1% — will mainly be in the South.  Of course, job loss will also factor into the ability of some metro areas to improve. Only states that were somewhat immune to the housing boom at the beginning of the decade should expect a quicker recovery.

This is not so good  news for the hardest hit areas, but is somewhat a  sigh of relief for us in Cincinnati. We didn’t see incredibly high home prices and therfore we won’t see ours plunge out of control either.  Housing is still very affordable in Cincinnati.  Our home prices continue to stabilize and more and more homes are starting to come back up on the market.  First time home buyers are ready to use their 8k tax credit and are out searching for the right house.  Our economy looks relatively stable when compared to other parts.

I think its a great time to buy and those who don’t will be kicking themselves in years to come.

Its that time of year where the market opens up its gates and the houses start popping up everywhere.  I was on Realtor tour today, turned down a street and saw 5 houses all for sale. Yikes!  I’d hold some group open houses if I were those agents.  We are in the start of our open house season.

So that leads me to discuss the ever so big question of, “do open houses work?”  I get asked this question a lot.  All across the board I think you’ll find agents come up with different answers and different reasons for those answers.  I think it depends on what the agents ultimate objective is.  Are they looking for buyers to represent?  Are they looking to actually sell the house they’re in?  Are they looking to get as much foot traffic in the house as possible? As a seller, you’ve got to ask yourself would it work in my neighborhood?  Is it worth me being kicked out of my house on Sunday?  Here are a few commonly asked questions regarding open houses.  Every agent is going to have a different story probably depending on their market.  Afterall, all real estate is local and trends in every neighborhood are different.

1. Do open houses sell the house that is open? Directly- usually not.  Indirectly-  possibly.  I know that’s a wishy washy answer, but its a complicated question.  Rarely does a person walk into a house, never having seen it before fall in love with it and buy it.  Sometimes they see it online, go through it with their agent and then go back through it at the open (bringing their friends, family, etc) and then end up buying it (or the order of that could be reversed - go through it, see it online and go back with their agent).  As buyers agents, open houses are nice because some clients are fine checking them out on their own on Sundays and letting you know which ones would work or not for them.  The 2008 NAR study of buyers and sellers says that 15% of buyers found the home they purchased from a yard sign or an open house sign (I wish they would break that statistic down further).  So, its a good idea to have them, it just shouldn’t be your only marketing effort to sell your house.

2. Why do most agents hold Open Houses? 2 reasons: 1. to get traffic through and hope that a buyer will walk through the doors or 2. for the agent to find prospective (unattached) buyers.  The latter is usually the main reason agents hold open houses.  They want to pick up buyers.  So to my sellers I always suggest to hold it open right at the beginning of the listing.  Get the momentum going and get people talking about your house.  Also do them at price reductions, or if significant changes are made. You don’t want to hold your house open every weekend.  It becomes shop worn… If my sellers insist, I will do them, I just let them know up front not to expect a lot.  Its a very passive way of marketing.  These times call for something more aggressive.

3. What is an Broker Open House? This I find is the real way to get your house sold (if you’re going to go with open houses - I’ve sold a couple just from Agent tour).  Its called Agent/Broker tour.  Its not always popular everywhere, but where I work all the agents are extremely tour conscious.  Here in Cincinnati, every Tuesday agents can hold open their listings (or upcoming listings) for other agents to view.  Many Times we have lunch or things to entice agents to make it to our home.   This is a great way for Agents (who are in contact with MANY buyers) to see your home and possilby come back with clients.  Or maybe you don’t have a client yet, but when you do, you can remember that you’ve been through it and recommend it.

4. Open house activity doesn’t correlate with potential buyer activity: Many times (especially as the weather gets nicer) people who aren’t even looking to move will spend their Sundays going to open houses.  Its a nice free way to spend the afternoon.  As the trees bloom so do the ‘tire kickers.’  Make sure your agent knows how to spot the difference between a looker and a keeper.

Over all, Open houses should still be apart of a marketing strategy, but it shouldn’t be the only one.  If that’s all your agent is doing for you, you may want to consider a new agent. On occasion I have been known to coordinate a ‘neighborhood wide’ open house.  Where every agent held their home open at the same time so that buyers could go through them all at once.  Each time I’ve coordinated it, I’ve actually sold the house I had listed.  It wasn’t your average open house, so its not going to produce average results.

What are your thoughts?  As buyers/sellers do you find open houses helpful or not?

I saw a startling statistic last week that prompted me to write this post.  It said that “58% of all Cincinnati agents sold 3 homes or less in 2008.”  YIKES!  That means over half of the agents out there are not working full time?  They’re only doing 1-3 deals a year.  How on earth are they paying their bills?  Real Estate isn’t that bad as to only allow 3 transactions a year.  It is a signal to me that there are many part time agents out there.  Would you want your surgeon to only have done 3 surgery’s before he works on you?  Absolutely not, then why would you want to trust someone with your largest financial decision that doesn’t have the experience or the qualification?  I think there are still a lot of part time agents out there.

I won’t bore you or try to sell you one me (of course my business partner and I completed 46 transactions last year…) but I do want you to think about who you are choosing and why you are choosing them.  As a seller or a buyer you should be prepared to ask your agent questions and make sure they’re qualified to handle your transaction from start to finish.   Here are a few things to make sure of:

1. Be sure that your agent and all parties involved are full time -  I’m currently trying to hammer out a deal where the LOAN OFFICER is part time and doing my client a ‘favor’ as a friend.  Not having someone who has dealt with many different scenarios in the business has been a trying time for both myself and my client.  I just hope we make it to closing…Of course some agents will tell you anything to get your business, but you can ask to see results and references.

2. Make sure they know the area - This would apply more on the listing side than on the buying side of the transaction.  A buyers agent can pull up comparables of any area to make sure a buyer isn’t paying more than the area/neighborhood demands.  For the listing side, you want to make sure that the agent is well connected or willing to engage in the community where possible when listing your home.  We recently spoke to a seller who was willing to go with a particular agent because they were really nice and helpful, but they had never sold in the neighborhood/market area nor do they know anyone in that market segment… it didn’t make sense to me.

3. Don’t just pick an agent because they have the lowest price - the old ‘you get what you pay for’ motto is around for a reason.  I’ve had friends choose discount brokers to ’save money’ and then they get no help on the pricing, contracts, or anything.  What motivation does an agent have if you cut their price down to nothing?

4. Don’t be afraid to ask to see results or ask how their marketing differs from the competition.  Everyone can put your house on the internet, not everyone can get a contract and keep the deal together.

5. Your agent should be a professional.  Don’t just work with a friend because they’re your friend.  Make sure they’ll do the job you want them to do.  Whenever a friend asks me to list or help them buy, I always have the ‘lets keep business, business and friendship friendship’ I don’t want business to interfere with our friendship and I lay specific ground rules for keeping it that way.  I always want to help a friend out and make sure they get the best service possible.

Essentially, do your homework.  If you’re going out to purchase a car or buy the next gadget, you’re probably doing some research ahead of time.  Make sure you do it with your agent.  The best place to start is just by googling their name…

Everyone has been asking, waiting and wondering; “how do I file my taxes to include my credit?”  Well, all of you early birds can rest a bit easy.  The forms are now up on the IRS website ready for you fill in.

Enjoy and passs on.

The details are out.  Not as great as I’d like, but some of the changes have been for the positive.

Here is the scoop:

1. the limit has been increased to 8k max

2. Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence.

3. Income limits - Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).

4. Repayment - No repayment for purchases on or after January 1, 2009 and before December 1, 2009

5. Effective on purchases Jan 1, 2009-Dec 1, 2009

For a full comparison of the old vs. new tax credits click here.

I really wish that the entire credit would have been made open to all home buyers.  This really would have stimulated the move-up buyers who are having trouble with getting motivated to sell their homes and move to the next phase.  Perhaps if they  had some incentive, there would be more sales outside the 100-300 range.  Overall, the changes they’ve made are good and I hope those who get it, actually put that money back into the economy.

If you have any questions, email me or talk to your loan officer.

Its 7,500 for first time home buyers only and must be paid back.  Next its $15,000 open to all home buyers, now it $8,000, now its gone?….  What is it?  What do we know about the fate of this home buyer tax credit?

Well, unfortunately nothing has been decided officially, yet… So that means until the president signs it, its up to change and change again.  No one disputes the fact that we need something to spur the housing market, they just can’t decide what form it will take.

I’ve been faithfully watching  C-Span waiting to hear something about the fate of this, but nothing has been decided.  Last I looked the house was actually congratulating the Pittsburg Steelers for their 6th super bowl win.  I’m happy that they’re really doing great stuff down there in Washington.

After searching the web, I’ve found a few things - but once again nothing is final until the president signs and there are reports that will not be until Monday at the earliest.

• The $15,000 tax credit for home buyers that was in the Senate’s version has been reduced to $8,000.
• The $8,000 tax credit will only be for first time home buyers
• Unlike the already existing $7,500 first time home buyer “credit”, the new $8,000 is a true tax credit – it does not have to be repaid. The $7,500 credit needed to be paid back over 15 years

At least there is something back on the table.  Yesterday they wiped out the 15,000 all together.  It will be interesting to see how it all pans out.    I just hope it doesn’t create another bubble or have some other ill effect that we weren’t hoping for.

Now back on C-Span the house has moved on to discuss the naming of the post office in Sparta Georgia….

It seems as though the Cincinnati housing market is picking up since the holidays, even with the snow we’ve had.  I’ve spent the past week trudging around everyday in the snow!  Buyers don’t run around in the snow for no reason, they’re serious.  But not everyone is thinking the market is as good as I do.  So that has got me thinking.  Who is buying right now? When I look at the majority of my sales over the past few months, I’ve definitely seen a trend.  Well, I can’t speak for everyone but this is what I personally see:

First time home buyers with at least 3.5%down in the 100-250k price range.  They have started to jump on the buying trend, mostly due to the low rates (in the low 5%’s)  and the great incentives ($7500 tax credit).  Its great that these people are buying up some of the stagnant inventory that is out there.   Those who aren’t first time home buyers?  They seem to be sellers who don’t have to sell to buy or they sell their home first and then go out shopping for homes.

So that begs the question, what about those sellers who HAVE to sell before they buy, but are reluctant to do so because they’re not going to get as much as they want/need from their home.  Some sellers see that if they take a little hit on their home now, if they’re buying in the next price range they can take advantage of the great market and save on their new home.  This logic doesn’t work for everyone.  Most of us out there are a direct benefits kind of consumer.  We need to see the direct savings.  I’ve been trying to think of what would spur these buyers/sellers to take the plunge and help us out of our national housing crisis.

Well, over the past few day’s I’ve heard the flurry of news activity around another tax credit being introduced in our stimulus package.  The proposal would allow a tax credit of 10 percent of the value of new or existing residences, up to a $15,000 limit.  Current law provides for a $7,500 tax break but only for first-time home buyers.  This new credit would be open to everyone.  I think this is a step in the right direction.  First time home buyers have begun to take the plunge, its the others that need a little boost.   If its not this tax credit, it needs to be something like it.

Stay tuned for more details and if you have questions feel free to email me.  I’m happy to help.

Our society seems to run on trends.  People are always searching for the latest coolest thing to do, wear or say.  Housing is no exception to this.  Often times we see people giving their homes the latest trend make over in order to sell it fast.   Anyone can google the latest housing trend or in fact all they have to do is open up the latest pottery barn or crate n’ barrel magazines to see it.  But for those people looking to remodel and not sell until a year or 2 down the road.  What about them?  How can they make best use of their money now?  Should they put granite/stainless steel in the kitchen?  Or will it just be outdated in 2 years?  Trends are always hard to predict, but there are a few that are starting to fall by the wayside.  According to a recent article I read theses seem to be the top trends leaving… I’m not sure I agree with all of these.  I’ll post my opinion in italics…

1. Fireplaces: The fireplace skyrocketed in importance in homes in 1991 with 62 percent of new homes having one or more. But the number has steadily been decreasing ever since. In 2007, the number dropped to 51 percent. 

I’m not sure I agree with this one.  In my area, most of the fireplaces don’t work but people still love having them around.  There is a sense of nostalgiawhen it comes to a fireplace.  Especially the Rookwood ones we have.

2. Carpet: While 54 percent of homes still have carpet floors, the number is decreasing and hardwood floors are taking the place. Vinyl and ceramic tile flooring also are being bypassed more by buyers. Seventeen percent of new homes contain hardwood floors throughout the entire house. 

I do agree with this.  Most buyers I have prefer to have hardwood floors.  Some of them still want carpet in the bedrooms.

3. Living room: These once-decorative centerpieces of homes are slowly vanishing from newer homes. Thirty-four percent of consumers say they’re willing to buy a home without a living room.

I’m assuming that this is the ‘formal living room’ that new construction and older homes don’t have.  I find people want a family/living type room.  Gone are the days of the family room and a formal living room. Today’s buyer wants a room that will work for both purposes.

4. Desks in the kitchen: These desks were once looked at as great storage areas but they’re often too small and quickly become clutter spaces in a home, said Gayle Butler, editor in chief of Better Homes and Gardens. Instead, more consumers say they prefer larger desks in or near the family room—equipped with a messaging center—where they can keep an eye on their kids as they work on the computer.

Ha Ha, this one makes me laugh.   Of course these aren’t in any of the older homes I sell.  But I do see them in the suburbs.   We actually had one in the house I grew up in.  My mom used it all of the time.  Of course those were they days before the personal computer.  Now, we’ve got home offices and computer rooms taking the place of these spaces.  People find it a waste of space today.

5. Skylights: The little windows that allow natural light to seep into a home from above are falling out of style. Only 10 percent of new homes will include them this year, a continuing downward spiral for skylights.

I don’t have anyone that dislikes skylights.  I don’t really see this one as being a dying trend.

6. Upscale kitchen finishes: Granite counter tops are slowly becoming less desirable among buyers who are now moving toward affordable, low-maintenance laminate countertops—which tend to last longer and now come in various styles.

This still seems to be a trend in our Cincinnati market.  Everyone is wanting the granite and stainless steel kitchens.  I have often thought of all these kitchens becoming outdated relatively quickly.  My thought is, don’t do it to sell.  Do it because you want to and enjoy it while you’ve got it. 

When it comes to equipping your home with the latest and greatest you take a risk that it will become outdated eventually.  If you enjoy it, then its worth the money.  Have you seen any trends out there that you think are going by the way side?