Thursday, September 6, 2007
Recently the most blogged about issue in the real estate industry, the sudden death of the sub-prime mortgage industry. Ok, that is a tad exaggerated. The sub prime market isn't dead, just much more strict than it has been in the past 5 years. Prior to today, as long as you were a legal citizen making minimum wage you could get approved for a mortgage loan. All the sudden, with much more strict lending policies, many sub prime borrowers are discovering they are either unable to refinance their homes or totally unable to purchase a home at all.
Perhaps this is just the shockwave of the housing bubble bust? During the housing boom that ended in 2005, money was dumped without concern into unconventional mortgage loans that let people to buy homes with nothing down or without providing verification their yearly income. This was the fan that flamed the housing boom fire. Lenders were fully mindful of what they were doing all along. They had no business offering some of their loan products to people of B paper credit and in the thoughts of many people the very notion of doing so could be seen as predatory lending. I mean let's be real, giving an individual who barely makes above minimum wage an interest only 3 year loan? What do you think is going to happen in 3 years? But the banks didn't care at all because the investors didn't care and as long as there were people to buy the loans back there was no need to stop.
And that's when Freddie Mac dropped the bomb. On February 27th, government sponsored loan and securities investment organization known as Freddie Mac informed the real estate world that they were tightening their requirements and were no longer purchasing high risk loans made to borrowers with bad, or sub-prime, credit history. The shockwave of this news could be witnesses all the way around the globe as stocks began to almost immediately sell off. Without this government sponsored entity to buy back loans that lenders were creating, they would assuredly run out of monies to create more loans. And with the increasing number of defaults on previously made loans, that capital would dry up even quicker and soon leave red ink. Due to this neck snaping news, many sub prime lenders have stopped operations. At last count fourty-four home loan lenders have stopped business or seriously scaled back their outfits, including sub prime leviathan New Century. Now, lenders, financiers and buyers of mortgages are pulling back as well.
The New Century case is of particular worry because of worries that problems in the sub prime game could spread to prime mortgages, causing issues for many more lenders. The only question of the moment: What effect will the sub prime home loan crisis have on the overall economy? Sub-prime mortgages made in 2006 could end up resulting in more defaults than any previous year, according to explorations conducted by investment bank UBS. Almost 8% of all loans made this year are at least 60 days unpaid, up from 4.5% less than year ago. Foreclosure instances have doubled in the past year as well.
The pullback will be most rigorously burdened by minority and poor home buyers and owners who will experience trouble in refinancing exotic loans that they can no longer afford. Those looking to buy homes with a small down payment or none will also be forced to accept higher interest rates and may not be able to simply declare their salaries without providing documentation like tax papers and paycheck stubs.
How Do You Find the Right Value of Your Home
When you are ready to sell your property there are a few different routes you may go about to receive the amount you see fit. You may do it yourself, get a housing professional, or get the home evaluated. The best and most proper evaluation of a property’s market value is done through an real estate appraiser. An appraiser will look over the house top to bottom and inside and out noting several different things. He will consider location, view, age, and number of rooms and bathrooms, just to name a handful. After the initial visit to the property, the appraiser will write a analysis. In his analysis he will judge your home to two or three different houses which have sold recently. The properties used for comparison are very comparable in square footage and location to your house. Then the appraiser will adjust the value of your property based on its characteristics in regards to the homes that have been sold. Don’t forget that a lot of things you may think add value to the home might not whatsoever. One example of such an item is above ground swimming pools because they are thought of the owner’s personal property and can be removed whenever the owner chooses to. On the flip side an in ground pool will likely add the home’s worth along with ceiling fans and central air conditioning systems. Because this is a very extensive process, the average fee for an appraisal is about three hundred and fifty dollars. Most appraisers will estimate prices over the phone while others simply will not because it is difficult to quote a price without first visualizing. Getting an appraisal is a wonderful way to go; however it is very much recommended that the property owner do his own research. Attempt to educate yourself on your market and experience a few open houses to make comparisons. You especially might need to pay attention to is the market itself. Is it a good time to sell? Or are properties around you selling for less than their value? Before you decide to sell, keep your eye on the market for a while and look for any trends. If you are set on getting an agent be sure to meet with more than one to be sure you are getting the best price. If you get an appraisal and then go to one agent they may say you are asking too much, while another agent may very well agree with you. But be sure you are not asking too much. Overpriced homes do not tend to sell! What you should’ve gotten from this article: When the time comes to sell your property, do your research! If you are going to do it yourself, be sure its the right time to sell and get an appraisal. If you would rather go with a real estate agent, talk to a few until you find one you can trust. These are some very simplistic steps you should go through to make certain that you get a fair price for your home.
Working in both Austin and Houston TX, Chandler Smith is a successful real estate expert. He oversees Texas Appraisal Team along with Houston Real Estate Appraiser
Monaco Tops London Property Prices
Economic rules of supply and demand in the real estate market are likely to see Monte Carlo's property prices rise further in the short and medium term, according to a Monaco property company.
One bedroom apartments in the Principality are already at the million Euro level and the lack of properties coming to the market and the absence of new builds could make today's prices seem like a bargain in five years time.
'Three years ago there were six hundred properties on the market', claim the company, 'Now there are two hundred. Coupled with increased demand, especially from the UK, prices have been rising and could go quite a bit further if current trends continue.'
Visitors to Monaco and Monte Carlo are often surprised at the lack of apartments for sale as they can see new buildings under construction.
'The apartment buildings under construction are for local Monaco people', they explain, 'Rather than for the open market where anyone can buy a property. The situation is unlikely to improve in the short and medium term but the number of buyers is rising - and consequently so are the prices. Monaco now has the highest priced property in Europe.'
Other reasons for the shortage of property in Monaco include that residents are holding on to their apartments longer, enjoying the tax free status Monaco affords, and as the owners see their property rising in value holding on to it as an investment.
To maintain residency in Monaco residents need to live in the Principality for six months a year. Winter time often sees a lot of apartments mothballed with the owners wintering in the Caribbean.
Monaco Property Prices
With property prices in Monaco the highest in Europe and one bedroom apartments after closing costs starting at around a million Euros, longer term the shortage of property will be helped by a new island being built off Monte Carlo.
It's thought unlikely that the new island to be built off Monaco will reduce prices much overall though, despite the increase in the number of property units available as Monaco property is always in demand.
It is believe that most new apartments will be sold to investors off plan well in advance of any building work starting.
'The problem with property in Monaco is not the lack of buyers', they say, 'but more the lack of good properties for buyers to choose from. Hopefully the new island will address that. Everyone in Monaco is aware of how important the environment is thanks to Prince Albert's initiatives in pushing it up the political agenda, and any new developments will be low rise. With the good weather in Monaco expect to see plenty of solar panels on the roofs to make the buildings energy efficient'.
It is possible that the new island will be incorporated into future Monaco Grand Prix, which could give more overtaking opportunities.
During his first year Prince Albert has successfully made the people of Monaco aware of global warming and taken steps to combat it, and for his second year and beyond he is likely to be campaigning just as hard at home and abroad on the issue he believes in so much.
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YourMonaco.com providea an insight into Monaco and Monte Carlo, including the economic powerhouse for the principality of the Monte Carlo casino, which now competes against online poker and also has a map of Monte Carlo
