Tag Archives: brian davison investment

Tips for Spotting a Desperate Seller
With fewer homes on the market, it is still a seller’s paradise. They can choose from a variety of offers until they find the best one. This might lead one to believe that the seller still has the advantage. However, there does seem to be a few sellers out there who are desperate to sell their property as fast as they can. When buyers come across this type of seller, the advantage suddenly shifts in their favor. Of course knowing how to find or spot this type of seller isn’t always easy.  Look for terms like, “priced to sell,” “quick close,” or “seller relocating,” to provide you with some clues as to the buyer’s state of mind. If you are looking to find a good deal or a desperate seller, start by searching for properties that have been on the market for a long time. The longer...
If You Want to Predict The Housing Market, Go West
Back in 2007, it seemed as if the housing market crash would never end, and that foreclosures and decreased home values were to become the new norm. No place was this more apparent than in California, where home prices plummeted by about 42%. Slowly, though, the market began to recover, and California, as well as the rest of the country, began to see an upturn in the housing market. Today, however, affordable housing in California is harder and harder to find. It is estimated that only about a third of the population in California is now able to afford the costs of buying a new home. Why is this concerning for the rest of the country? Because California is actually one of the biggest indicators and predictors of what will happen in the housing market across the country. In other words, if housing prices are too high...
Homeowners Prejudiced Against The Growing League of Renters?
Ask almost any American which type of neighbor is ideal, and the answer can be reduced down to “people like us”. It is the impetus behind Italian neighborhoods, Polish neighborhoods, Jewish neighborhoods, and every other neighborhood defined by ethnicity. And while it’s no secret that people want to live with other people who are like them, it may be surprising to learn that, over the past three decades, “residential segregation” has increased, based on a study conducted by The Pew Center. The study also found that the share of U.S. middle class areas is down to 76% in 2010 from 80% in 1980, while the share of lower-income neighborhoods rose to 28% from 23%, and upper-income areas have doubled to 18% from 9%. The home ownership rate now hovers at 65%, the lowest since 1995, according to the Census Bureau. So what happens when millions of...
With Homes for Sale in Short Supply, Prices Rise
Home prices increased 12.5% this October over last October, according to a report from Case-Shiller, which also reveals that the increase is likely due, not to a reduction in foreclosures, but a tight supply of unsold inventory. Home price gains are the strongest in eight years, according to the National Association of Realtors, rising in 88% of metro markets, and encouraging real estate investors. Among individual states, home prices rose 25.9% in Nevada, 22.4% in California and 14.2% in Georgia, considered the hottest market because this percentage represents the smallest gap across all states, and is only two percentage points away from the highest year-over-year price increase in thirty-five years. Cities posting growth of 10% or higher include Las Vegas, Los Angeles, Atlanta, Phoenix, Detroit, and Miami, among others. And there is more good news. The Case-Shiller report lists twelve US cities with double-digit annual returns, along...
Risks That Crouch Hidden In the Grass
“As prudent investors and managers, we must be aware of the realities we face.” ~ John Mauldin No one would argue that there has been plenty of time for discussion of the 2008 financial crisis among central bankers. But coming up with answers, well, that’s a different crouching tiger. Central bankers have accepted no responsibility for ignoring the warning signs of excessive debt, keeping interest rates too low for too long, ignoring housing market bubbles, or failing to regulate banks properly. In fact, they were hugely rewarded with money, power, and prestige, leaving taxpayers to foot the bill for bailouts. Does this point to the need to remove banking supervision from central banks? Or to put politicians in charge of setting interest rates? Clearly, reform of the Federal Reserve is sorely needed. However, more rules and regulations are not needed - rather, holding the feet of central...
Wars in the U.S. Housing Market? Bidding Wars That Is…
Mortgage applications for U.S. home purchases have tumbled 17 percent since May on a seasonally adjusted basis and are down 6.9 percent from the same time a year ago. Capital Economics Ltd. last month lowered its 2014 home-sales forecast to 5.2 million from 5.4 million after U.S. pending residential sales for September that slumped 5.6 percent, the fourth straight monthly decline. The firm predicts prices will rise 4 percent next year, half of this year’s projected gain. “We are shifting from a frenzy to where buyers are taking a step back and being more analytical and unwilling to just make rash decisions,” said Ellen Haberle, an economist for Seattle-based brokerage Redfin. Asking prices in September were lowered on about 25 percent of listings, the biggest share in two years, while last month they were cut on 23.8 percent, according Redfin, which tracks 22 cities across the country. The inventory of unsold...
Mortgage Applications Continue to Fall
Business Insider reports that mortgage applications, for the week ending November 9, 2013, fell 1.8%, on the heels of a 2.8% decline the week before. Also, the purchase index was down 1% for the week ending Nov. 9, compared to a drop of 5% the week prior. A similar trend was seen in the refinance market with that index dropping 2% during the week ending Nov. 9, a noticeably smaller decline than the 8% drop the week before. According to Freddie Mac, an organization chartered by Congress in 1970 which is designed to provide liquidity in the mortgage markets by purchasing qualifying mortgages from lenders, the 30-year fixed mortgage rate remained relatively unchanged at 4.16% for the week ending, down from a recent two-year high of 4.58%. However, in the following week ending November 14, rates took a significant one-week jump to 4.35%. Rates across the...
Flood Plains and Flood Pains
A law most Americans have never heard of quietly went into effect on October 1, 2013, the same day as the U.S. government came grinding to a shutdown. The law, known as the Biggert-Waters Flood Insurance Reform Act, will roll out over several years. Each year, a portion of the subsidies that keep federal flood insurance premiums artificially low for over 1 million policy holders around the country will be eliminated. Homeowners qualified for the subsidy because their property existed before the initial drawing of flood insurance rate maps. Approximately 20% of all property owners with federal flood insurance receive these subsidies. For example, some homeowners who currently pay approximately $1,000 per year for federal flood insurance will end up paying, after all subsidies are removed, an estimated $8,000 and $9,000 per year for the same policy. Premiums are based on the cost of the...
Alternatives to the Stock Market Bubble
On Friday, November 8, all 3 of the major U.S. stock indices, the Dow Jones Industrial Average, NASDAQ, and the S&P 500, all closed at all-time record highs. As a whole, the U.S. stock market has been soaring recently, bringing untold ‘paper profits’ to millions of investors. However, there are people associated with the market that believe it to be significantly overvalued. Fund manager John Hussman points to the following measures in his weekly Hussman Funds Newsletter during the first week of November:
  • Cyclically adjusted price-earnings ratio (current P/E is 25X vs. 15X average)
  • Market cap to revenue (current ratio of 1.6 vs. 1.0 average)
  • Market cap to GDP (double the pre-1990s norm)
These are not just slightly overvalued indicators, they are grossly overvalued indicators. In his same newsletter, Hussman provides commentary that supports his claim that the stock market crash that is forthcoming will be extreme, somewhere in...
Looking for a Leader When it Come to Mortgages?
Taking a broad view of mortgage interest rates, one could easily argue that compared to interest rates of the past several decades, today’s rates are comparatively low. However, no one has the opportunity to finance a home with comparison rates from yesteryear. The reality is we are at the mercy of the interest rate markets at the time we are looking to finance a property.  The leading 30-year, fixed rate mortgage in September ascended to 4.53% from 3.35% last spring. That small 1.2% change in interest rates may not seem like much on the surface, but as we drill down, it plays a much larger role in easing pace of the U.S. economy. In late October, Bankrate.com reported that households earning the median income in only 8 of 25 major U.S. metropolitan areas could afford the median priced home in the same metro area. That is...