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A Guide to the Top Real Estate Terms
You might be ready to buy or sell your home, but how much do you know about real estate lingo? Before you venture into the world of home buying and selling, it might be a good time to familiarize yourself with the top phrases. Top Terms for Buyers Adjustable rate mortgage – a mortgage loan with an interest rate that adjusts over the life of the loan. The adjustment rate is usually determined by a market indicator, such as the weekly average of U.S. Treasury Bills, but is limited by how much and often it can be adjusted. Appraisal – the determined value of a property based on initial purchase price compared with the sales prices of similar properties in the area. Your bank or mortgage company may require an appraisal before they will lend you the money for the home. Closing costs – all monies that need to...
Monthly Mortgage Payments Versus Monthly Rent
Not so long ago, the housing market ballooned so high that monthly mortgage prices were much higher than monthly rental prices. This disparity hasn’t been seen since the early 80s. Typically, as mortgage rates rise, rent prices also rise along a normal rate of disparity. These rates allow buyers or renters to decide whether they can afford the monthly mortgage rate, or would be better off with just renting a home. Usually, the mortgage rate will be higher than the rental rate. However, after the housing market crashed, mortgage rates fell so sharply that they were actually lower than the average rental rate. With so many calamities in the housing marketing, especially the high rate of foreclosures, many potential buyers opted to pay higher rents. The scary prospect of trying to own a home, alongside the risk of foreclosure, forced people to become or stay renters. However, the...
The Influence of Buyers & Sellers on Supply & Demand
No matter what industry you look at, supply and demand always plays a large role. This is especially true of real estate and home prices. When there is a large inventory of homes for sale, pricing declines, while a lack of inventory will drive up pricing. This is usually how supply and demand works. However, there are times when a large supply of highly desirable inventory is paired with a large demand. When this happens, pricing may also rise. There are many factors that can play into this, such as the location of the homes. The more desirable an area, the more people will want to buy a home there, and even if there is a large amount of inventory, there will still be competition to buy the best of that inventory. Another influence on supply and demand in the housing market is the type of people...
Housing Market Hopes on the Rise
Last summer existing home sales reached a peak of 5.38 million, but according to the seasonally adjusted rate basis (SAAR) reported in January, they have since declined to 4.62 million.  This 14% decline has left the market feeling a bit weak, but there is some good news on the horizon, as many experts predict this weakness to be only temporary. What is causing the Weakness? There are several factors causing the ups and downs of the housing market. From increased mortgage rates and prices, to a decrease in available distressed sales and investor buying. Another theory being discussed among those is real estate, is the influence of the Polar Vortex, which has gripped most of the country this winter. With so many people not really being able to go outside because of bitter cold temperatures, it makes searching for a new home less of a priority. There may not...
Foreclosure Rates Still High in Some Florida Cities
The real estate market might be on the rebound for most of the United States, but in some cities foreclosure rates are still on the rise. According to the January 2014 U.S. Foreclosure Market Report™ recently released by RealtyTrac®, default notices, scheduled auctions and bank repossessions were up by 8 percent. While this is an increase from December 2013, it is still lower than it was in January 2013. It is no surprise that foreclosure activity would rebound in January, since things tend to become quiet over the holidays. However, RealtyTrac reported that the 8 percent increase seen in January is the largest since May 2012. Even with this increase, the foreclosure rates for the entire country is still on the decline and has been for the past 40 months. Florida One of Top States for Foreclosures While the population in Florida may be growing, so are its...
The Myth of the Shadow Inventory
One of the biggest myths floating around the real estate sphere is that of the “shadow inventory.” Proponents of this myth believe there is a large inventory of homes, either empty or repossessed, waiting to enter the market. This idea is especially false in markets that are functioning as they should be, i.e. markets where homes that are for sale are for sale. What is perpetuating the idea of the shadow inventory? Some experts in the real estate industry believe that banks and mortgage companies are holding up the foreclosure of a large number of homes. As a result of this so-called hold-up, there are hundreds or maybe thousands of distressed homes waiting to flood the market. However, banks, such as Wells Fargo, and investment firms, such as Barclays Capital, have denied and debunked the existence of the shadow inventory. In fact, in the third quarter of...
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...
There Goes the Neighborhood?
“We’ve seen the shift from the time we first moved in here from 2009 to now. The neighborhood is already declining.” 30-something mom and homeowner’s board member, Brooklyn, New York They block school buses and garbage trucks by parking on the narrow streets. Neighbors complain of hearing teenagers outside at all hours of the night. Fast food restaurant trash is seen strewn on the ground. What force could be causing this neighborhood devastation? Renters. “Homeowners are more likely than renters to do neighborhood maintenance, get involved with community groups and vote with greater frequency.” (Research paper, Edward Coulson, economics professor, Pennsylvania State University) Behemoth alternative real estate investment firms own thousands of rental properties in family neighborhoods. They believe that funneling money into properties that would otherwise be left vacant improves communities, boosts the quality of rental homes and affords moderate-to-higher-income families access to better quality schools. But these large landlord...
At the Doorstep of Immense Investment Opportunity
For the most part, Republicans blame Fannie Mae/Freddie Mac and government policies for inflating the housing bubble, while Democrats blame Wall Street for creating exotic investments that funneled subprime mortgages. Regardless, Wall Street’s success in the alternative real estate market depends largely on unparalleled demand for rentals from American families who homes were lost to foreclosure and from renters who want to buy but cannot get mortgages due to restricted credit banking practices following the 2008 real-estate bust. Investors Seek Higher Returns The U.S. homeownership rate today stands at 65.3 percent, the same as 20 years ago. However, because single-family rentals represent 10 percent or more of the housing market, lending and investment opportunities, still in their infancy, are immense. These properties offer 10 percent or higher yearly yields in rental income, and tidy profits when the homes are eventually sold. Funds set up by Blackstone, the...
As Feds Slow Bond Program, Mortgage Rates Jump
United States mortgage rates soared to their highest since September 2013 as real estate investors speculated the Federal Reserve’s slowdown on its $85 billion-a-month bond-buying program is aimed at maintaining lower borrowing costs. Freddie Mac reports the average 30-year fixed mortgage rate was 4.46% during the first week of December, up from 4.29%, while the average 15-year rate rose to 3.47% from 3.3%. Despite near-record lows in May, mortgage rates have steadily climbed, all while the Fed continues to weigh when it should scale back its stimulus. 10-year Treasury notes yields are their highest in two months, due to lower unemployment rates. The Treasury notes are considered a benchmark for home loans. Experts agree that the Federal Reserve is likely to taper sooner, not later. With a December 17 meeting looming, Federal Reserve Bank of Atlanta President Dennis Lockhart said he is optimistic about the economy's outlook. "I...