There is a great deal of buzzing going on right now as to the impact of the lifting of the government mandated moratorium on foreclosures. You may recall that back in November and December of 2010 the government issued another moratorium on most foreclosures with the hope of shifting some of those mortgages, homeowners and lien holders into a loan modification program. The hope was that the slowdown in foreclosures and the attempt at modifying some of these mortgages would somehow help keep people in their homes and help in the overall economic recovery. You will receive a number of different opinions as to its success or failure and just wait for the elections of 2012 to see the various spins that you will hear on the subject.
Now that this moratorium has been lifted, these lending institutions have been busy with the foreclosure process and are moving towards liquidating those assets. With this comes the fear of increased inventory in our local real estate markets and the potential for a slowing of the overall recovery. No one really knows how much inventory will actually hit the open market and some local markets may not be affected at all. I think we should be realistic that there will be some impact but at the same time I continue to remain cautiously optimistic with the forecasts that I read and follow.
One thing that I can say with complete certainty is that; this increased inventory will bring a number of opportunities both in the immediate and also in the long term. In the immediate future there will be a number of deals to be had for those with the resources to make that happen. These buying opportunities will be one way in which the recovery process will begin and although it will be painful for some, the end result will move us toward a shrinking supply of homes. Those who have the ability to hold on to their home will continue to wait, they will continue to hunker down and save. Most of the sales will be the bank owned homes (REO’s) and short sales. This will pretty much be a repeat of what we experienced in 2010. I don’t see that it will cause a dramatic reduction in home prices (on the high side perhaps an additional 10%), nor do I see it as a further implosion of the Real Estate market. I believe that the actual demand for houses will outpace the supply in the not so near future from the simple reality that housing starts (new construction) remains so low. As the population increases (and it is) there will just be no way to meet the demand as new construction is way behind the curve and as such the existing housing supply will begin to decrease. When this happens we will begin to see house prices rise at approximately 4% to 6% per year and in some markets ever greater than that.
It is even possible we will start to see the supply of homes level out or even decrease toward the later part of 2011. With a spurious 2012 election year on the horizon; we may also see a number of new political promises that will be pitches as incentives and opportunities that will help to create this new demand for housing. I think it was Will Rogers who back in the 1930’s said; “Buy land, they aren’t making any more of it”. Perhaps we need a reminder that real estate remains a good investment and even though we have experienced some significant loss in property values these past several years; the potential is there for better times in the not too distant future.
Written by
Mike Southwick
Use by permission only
Sunday, February 13, 2011
Friday, January 28, 2011
A School Bus and the American Dream
I was driving into my Real Estate office this morning and there was a school bus in front of me that made a stop to pick up a child for school. The driver of the bus put out her stop sign and I and the cars behind me patiently waited for the child to board the bus and for the driver to detract the stop sign and proceed. As I watched, the mother of the child stood at the curb with a smile as she watched her daughter leave for the school on the bus. For a moment I pondered this simple little American way of life in which this sort of thing goes on day in and day out throughout our various communities. My heart was actually touched as the mother watched her daughter board the bus. It was her smile that told me she was comfortable and trusting that all would be well until her daughter returned later that afternoon and the process would be repeated again and again.
I realize this is a rather simple story and you might be saying; “What does this have to do with the American Dream and frankly, what actually is the American Dream”? For me this story represents a little piece of what makes our country what it is and it helps me to see that it is our local communities and those people in the community that make us unique. There are just certain things that we often take for granted, many of them simple things, and for me this school bus moment served as a reminder that although some things change, it is nice to see that some things don’t.
There is something else that is important to Americans and that is the value of home ownership and many define that it is the core of the American Dream. I recently read an article from the Realtor House and Home magazine in which they quote Martha Stewart who says; “Our families and our homes are the center of American life. And everything we do is to make those homes – and the lives in them – more beautiful, more comfortable, more functional, and more full of life and light and joy for those we love. At the end of the day, that is the American Dream. All the rest is just window dressing”. This really hits home to me as I think we as Americans need to take a good deep breath and recognize that what we have in home ownership and everything associated with that actually provides good stability to our communities and our very way of life. A recent National Association of Realtors poll shows that both owners and renters cited financial security as the most important factor in achieving the American Dream. When asked if owning a home was a better financial decision than renting, the results were overwhelmingly positive from both groups (96% of the homeowners said yes, and 71% of renters also agreed). The NAR-Harris poll also shows that young adults (ages 18-29) are just as committed to becoming home owners as was the case with their parents and grandparents. In fact 3 out of 4 of the young adult who participated in the poll state that owning a home provides a healthy, stable environment for raising a family and more than two thirds say owning contributes to their long term financial goals as well as the fact that it just makes good sense.
If you need assistance in pursuing the idea of home ownership, then please call me. I have helped many people realize a piece of the American Dream and I would love to help you also.
Written by:
Mike Southwick
Mike Southwick
Use only by permission
Thursday, January 27, 2011
New IRS rules for Rental Property
A new law has gone into effect starting this year (2011) in which anyone who has a single or multiple rental units will need to track all vendors that do a minimum of $600 worth of work for you. This is nothing new for large property owners but it now applies to those who have as few as one rental.
There are a few exceptions to the requirement, such as; would gathering the information create a hardship or a burden for you, or the income from the rental doesn’t meet the minimum threshold requirements. Be careful in misinterpreting these exceptions and be sure to speak with your tax advisor before assuming that you do not need to comply with this new law.
Basically if you own a rental you will need to obtain the vendors name, address, social security number or tax identification number and also keep record of the income that you paid them for the year. You will in turn have to issue a 1099 indicating the amount that you paid that vendor and all vendors that did work for you. The new law is called the Small Business Jobs Act of 2010 (H.R. 5297) and it applies to all rental property owners no matter how small; as they are considered to be “conducting a trade or business” and the 1099 reporting requirement now applies to them.
You should already be tracking the payments that you are making to vendors in 2011 as you will need to send the vendor or vendors their 1099 in early 2012. There will no doubt be more guidelines issued by the IRS which is why you should discuss this further with your tax advisor. The requirement applies to all independent contractors who provide services to you and receive a cumulative amount of $600 or more in a calendar year.
As always, I am available to discuss any questions you may have about real estate. If you are interested in buying or selling real estate anywhere in California, I can help you.
Written by:
Mike Southwick
Use only by Permission
There are a few exceptions to the requirement, such as; would gathering the information create a hardship or a burden for you, or the income from the rental doesn’t meet the minimum threshold requirements. Be careful in misinterpreting these exceptions and be sure to speak with your tax advisor before assuming that you do not need to comply with this new law.
Basically if you own a rental you will need to obtain the vendors name, address, social security number or tax identification number and also keep record of the income that you paid them for the year. You will in turn have to issue a 1099 indicating the amount that you paid that vendor and all vendors that did work for you. The new law is called the Small Business Jobs Act of 2010 (H.R. 5297) and it applies to all rental property owners no matter how small; as they are considered to be “conducting a trade or business” and the 1099 reporting requirement now applies to them.
You should already be tracking the payments that you are making to vendors in 2011 as you will need to send the vendor or vendors their 1099 in early 2012. There will no doubt be more guidelines issued by the IRS which is why you should discuss this further with your tax advisor. The requirement applies to all independent contractors who provide services to you and receive a cumulative amount of $600 or more in a calendar year.
As always, I am available to discuss any questions you may have about real estate. If you are interested in buying or selling real estate anywhere in California, I can help you.
Written by:
Mike Southwick
Use only by Permission
Wednesday, January 26, 2011
Century 21 Select Real Estate - Placerville & Pollock Pines
I manage this office and it is located at49 Placerville Drive
Placerville, CA 95667
I also manage this office and its address is:6584 Ridgeway Drive
Pollock Pines, CA 95726
Tuesday, January 25, 2011
Bank Owned Property Inventory Dump
We are once again hearing the phrase “Shadow Inventory” being discussed in the media and it is causing some confusion. To some the definition of “Shadow Inventory” is some large pool of unsold real estate that the banks are sitting on that has already been foreclosed on. Others define “Shadow Inventory” as those properties that the banks have yet to foreclose on in which the homeowner is more than 60 days behind on their mortgage. There are a host of other definitions that combine both definitions and something in between or even beyond what I have described here.
The mere use of the word “shadow” allows for a very broad definition and also allows the user to be as vague as they so choose since the definition is so elusive. The fact is there is just no factual basis for its use and one has to wonder as to the motivation behind it all. I imagine we could come up with a host of reasons as to why this subject continues to resurface and keep everyone on edge.
One thing for sure is that the banks and those who service lienholders/investors do not want to hold on to real estate inventory/assets that they have foreclosed on any longer than they have to. There are a number of things that hold up the liquidation of these assets and slow down the overall process, and the most significant hold up us is physically acquiring the property back from the owner or tenant. In addition to this the banks have to ensure the Title is clear and in some cases there may be repairs and maintenance to address.
In fact many of these bank owned homes are sold in bulk packages and then bought up by single investors or groups of investors. They are in turn repaired or repackaged and then sold or “flipped” which then end up becoming traditional sales. This process alone has changed the way in which many properties return to the market and have also changed the perception of the entire “foreclosure” market.
For those properties that the banks are unable to sell in bulk are the ones that typically make it to the open market and are usually listed with a Realtor. Until there is an improvement in the labor market and in turn the overall economy, then we will continue to see foreclosures. The banks however, are in the banking business and although there may be some exceptions to the rule, you can be sure that they are not holding on to properties with the anticipation of flooding the market with new inventory.
If you are in a position to buy then I can think of no better time than now. Home prices are low, interest rates are low and people continue to listen to negative reports as to the real estate market. There are deals to be had – call me!!
Keep in the game:
Mike Southwick
530-363-8662
mikesouthwick@gmail.com
Written by:
Mike Southwick
Use only by Permission
The mere use of the word “shadow” allows for a very broad definition and also allows the user to be as vague as they so choose since the definition is so elusive. The fact is there is just no factual basis for its use and one has to wonder as to the motivation behind it all. I imagine we could come up with a host of reasons as to why this subject continues to resurface and keep everyone on edge.
One thing for sure is that the banks and those who service lienholders/investors do not want to hold on to real estate inventory/assets that they have foreclosed on any longer than they have to. There are a number of things that hold up the liquidation of these assets and slow down the overall process, and the most significant hold up us is physically acquiring the property back from the owner or tenant. In addition to this the banks have to ensure the Title is clear and in some cases there may be repairs and maintenance to address.
In fact many of these bank owned homes are sold in bulk packages and then bought up by single investors or groups of investors. They are in turn repaired or repackaged and then sold or “flipped” which then end up becoming traditional sales. This process alone has changed the way in which many properties return to the market and have also changed the perception of the entire “foreclosure” market.
For those properties that the banks are unable to sell in bulk are the ones that typically make it to the open market and are usually listed with a Realtor. Until there is an improvement in the labor market and in turn the overall economy, then we will continue to see foreclosures. The banks however, are in the banking business and although there may be some exceptions to the rule, you can be sure that they are not holding on to properties with the anticipation of flooding the market with new inventory.
If you are in a position to buy then I can think of no better time than now. Home prices are low, interest rates are low and people continue to listen to negative reports as to the real estate market. There are deals to be had – call me!!
Keep in the game:
Mike Southwick
530-363-8662
mikesouthwick@gmail.com
Written by:
Mike Southwick
Use only by Permission
Hot 2011 Real Estate News – Part I
I don’t know about you but I am ready for some good news about the Real Estate market especially since in one way or another it touches all of our lives. Ever since the economic tsunami that sent property values into a tailspin we have witnessed a number of assaults on our personal wealth and home equity, all of which has created total devastation for some and a “hunker down” mind set for others. This article is not intended to be anything but a statement of the obvious which is the simple fact that there remains much more hard work, as well as hope and trust that the actions of 2010 will produce positive results in 2011 especially in relation to the housing market.
The economic “big picture” outlook for 2011 appears to have somewhat stabilized from the extreme crisis of 2-3 years ago. In the United States the GDP (Gross Domestic Product) is up approximately 3% from where it closed in 2010 and the projections are that we will see some growth in our exports toward the latter part of 2011. If this occurs then the manufacturing sector should start to see some investment in growth and some expansion in the labor market. We need to keep the overall big picture in mind and realize that some risks and investments will succeed and some will fail, but overall if manufacturing companies see a higher demand for their products, then they will need to increase their employment force to meet the demand.
So why does a real estate guy want to talk about the economy and jobs? It is because both are tied to the real estate market and we need them both to improve in order to have a vibrant housing market. The reality is that the job market is a work in progress and initially it will be simple “baby steps” that will bring about the stability we need in all markets.
As employment improves, so will the housing sector all of which will bring about an influx of first time homebuyers. This should start to evidence itself more toward the spring and summer of 2011.One key factor to remember is that real estate markets are driven by their own local employment figures, so some areas will see improvement quicker than others. However, improvement will come to those regions where employment improves and on that you can be sure.
We have to understand that good economic news can be a double edged sword and it can lead to higher interest rates which will be the subject of my next newsletter. I will be focusing on a bit of a forecast for home prices and the continued impact of foreclosures, short sales, and government legislation on the housing industry.
In the meantime, be sure to take advantage of low housing prices and the low interest rates if you are in a position to purchase or refinance a home. Remember, I am always available should you need assistance or advice on matters of Real Estate. I can help you no matter where you are located in California. My alliance with Century 21, the largest brand name in the Real Estate industry, as well as Century 21 Select Real Estate, one of the larger companies in Northern California, can offer you enormous advantages that you always have with our relationship together.
Written by:
Mike Southwick
Use only by permission
The economic “big picture” outlook for 2011 appears to have somewhat stabilized from the extreme crisis of 2-3 years ago. In the United States the GDP (Gross Domestic Product) is up approximately 3% from where it closed in 2010 and the projections are that we will see some growth in our exports toward the latter part of 2011. If this occurs then the manufacturing sector should start to see some investment in growth and some expansion in the labor market. We need to keep the overall big picture in mind and realize that some risks and investments will succeed and some will fail, but overall if manufacturing companies see a higher demand for their products, then they will need to increase their employment force to meet the demand.
So why does a real estate guy want to talk about the economy and jobs? It is because both are tied to the real estate market and we need them both to improve in order to have a vibrant housing market. The reality is that the job market is a work in progress and initially it will be simple “baby steps” that will bring about the stability we need in all markets.
As employment improves, so will the housing sector all of which will bring about an influx of first time homebuyers. This should start to evidence itself more toward the spring and summer of 2011.One key factor to remember is that real estate markets are driven by their own local employment figures, so some areas will see improvement quicker than others. However, improvement will come to those regions where employment improves and on that you can be sure.
We have to understand that good economic news can be a double edged sword and it can lead to higher interest rates which will be the subject of my next newsletter. I will be focusing on a bit of a forecast for home prices and the continued impact of foreclosures, short sales, and government legislation on the housing industry.
In the meantime, be sure to take advantage of low housing prices and the low interest rates if you are in a position to purchase or refinance a home. Remember, I am always available should you need assistance or advice on matters of Real Estate. I can help you no matter where you are located in California. My alliance with Century 21, the largest brand name in the Real Estate industry, as well as Century 21 Select Real Estate, one of the larger companies in Northern California, can offer you enormous advantages that you always have with our relationship together.
Written by:
Mike Southwick
Use only by permission
Housing Recovery - When?
There is a great deal of speculation as to when we will see a sustained and genuine recovery of real estate in the United States. Depending on who you talk to you will get a wide variety of opinions on the subject. Nearly all agree that the job market needs a substantial and sustainable jolt to truly spur any serious and long term recovery and with that will hopefully come a healthy and robust real estate market. I think we have a couple of choices; we can wait and see or we can plan and do. I prefer the later and I hope you do as well.
Here is an interesting portion of an article that was published in Time Magazine back in 1992 which stated; “The US economy remains almost comatose. The slump already ranks as the longest period of sustained weakness since the Depression. The economy is staggering under many ‘structural’ burdens, as opposed to familiar cyclical problems. The structural faults represent once in a lifetime dislocations that will take years to work out. Among them: the job drought, the debt hangover, the banking collapse, the real estate depression, the health care cost explosion, and the runaway federal deficit”
It’s a little scary, but this picture of the state of the economy in 1992 mirrors what we are experiencing today in a lot of ways. The thing that I want to point out is that the years following 1992 witnessed an enormous amount of growth and opportunities in the economy, stock market and in housing. I would agree that history often repeats itself (sometimes over and over) and perhaps we should be looking ahead to a better future with some of the opportunities in the present. There are some good long term buying opportunities in today’s real estate market. You will find it more often than not, that the best investors buy during the most pessimistic times.
I hope this provides you with a little different perspective and a better hope for the future as we plan and do rather than wait and see. If you or someone you know have questions about real estate or financing, please call me and if I don’t have the answer I will steer you to someone who does. I am here to help.
Best regards,
Mike Southwick
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