Exit Realty Connestee Falls | Brevard NC real estate
Our real estate agents are ready to be your guide to purchasing homes and investment properties in the Brevard and Connestee Falls areas of North Carolina.
-Surrounded by natural foliage and hardwoods sits this nice 2 Bedroom 3 Bath home on 4.08 acres. The open living room & Dining room along with the galley style kitchen will make entertaining easy. Enjoy the natural splendor and wild life from the decks that surround this home. 2 bonus rooms on the lower lever (Possible Bedrooms) make this home complete.
Rare Find-10 Month old home in private Subdivision. Wood floors through out. Granite Counter Top and Stainless Appliances. 3 Bed, 2 1/2 bath. Master Bath with Slate shower and separate soaking tub. Full Unfinished basement w/ 10’+ Ceilings. Plumbed for extra Bath and wet bar. Central vac system plumbed in not installed. 1.04 Private acres
ONE LEVEL LIVING in this bright, cheerful home in Connestee Falls. Winter views of mountains and valley from large screen porch.Brick wood burning fireplace. Located at end of cul-de-sac. Private location.
15+ acres, 4 stall barn on the French Broad River. 4300 sq ft home includes 4 br-3.5 baths, huge eat-in-kitchen & family rm with rock FP, formal dining rm,library.rec/family rm w/rock fp,screen porch,in ground pool,2-car garage. Horse or no horse-look at this.
-Brand New 3B/2B manufactured home with many upgrades, Enjoy the 3 large decks, Nice front yard for the children to play. Permanet foundation. FHA approved!
In recent years, millions of homeowners have taken advantage of low rates and refinanced their mortgages. This article describes the advantages and possible pitfalls associated with a "refi."
Before You Start
Remember that refinancing to reduce debt can be a smart move, but refinancing in order to borrow more for consumer purchases (car, vacation, etc.) could set you back significantly.
Read the fine print on your current mortgage to learn whether you'll be assessed penalties or fees for "getting out" of that loan early.
Make sure you know whether you have a fixed or variable interest rate and what the terms are.
In recent years, Americans seeking to take advantage of low interest rates have lined up to refinance their mortgages. In fact, refinancings hit an all-time high in 2003, and remained high in both 2004 and 2005, according to the Mortgage Bankers Association of America.
But while it's true that refinancing has the potential to help you reduce the costs associated with borrowing money to own a home, it is not necessarily a strategy that makes sense for every individual in every situation. So before you make a commitment to refinance your mortgage, its important to do your homework and determine whether such a move is the right one for you.
2
To Refinance or Not
The old and arbitrary rule of thumb said that a refi only makes sense if you can lower your interest rate by at least two percentage points for example, from 9% to 7%. But what really matters is how long it will take you to break even and whether you plan to stay in your home that long. In other words, make sure you understand -- and are comfortable with -- the amount of time it will take for your overall savings to compensate for the cost of the refinancing.
Consider this: If you had a $200,000 30-year mortgage with an 8% interest rate, your monthly payment would be $1,468. If you refinanced at 6%, your new monthly payment would be $1,199, a savings of $269 per month. Assuming that your new closing costs amounted to $2,000, it would take eight months to break even. ($269 x 8 = $2,152). If you planned to stay in your home for at least eight more months, then a refi would be appropriate under these conditions. If you planned to sell the house before then, you might not want to bother refinancing. (See below for additional examples.)
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Remember -- All Mortgages Are Not Created Equal
Don't make the mistake of choosing a mortgage based only on its stated annual percentage rate (APR), because there are a variety of other important variables to consider, such as:
The term of the mortgage -- This describes the amount of time it will take you to pay off the loan's principal and interest. Although short-term mortgages typically offer lower interest rates than long-term mortgages, they usually involve higher monthly payments. On the other hand, they can result in significantly reduced interest costs over time.
The variability of the interest rate -- There are two basic types of mortgages: those with "fixed" (i.e., unchanging) interest rates and those with variable rates, which can change after a predetermined amount of time has passed, such as one year or five years. While an adjustable-rate mortgage (ARM) usually offers a lower introductory rate than a fixed-rate mortgage with a comparable term, the ARM's rate could jump in the future if interest rates rise. If you plan to stay in your home for a long time, it may make sense to opt for the predictability and security of a fixed rate, whereas an ARM might make sense if you plan to sell before its rate is allowed to go up. Also keep in mind that interest rates hovered near historical lows in recent years and are more likely to increase than decrease over time.
Points -- Points (also known as "origination fees" or "discount fees") are fees that you pay to a lender or broker when you close the deal. While a "no-cost" or "zero points" mortgage does not carry this up-front cost, it could prove to be more expensive if the lender charges a higher interest rate instead. So you'll need to determine whether the savings from a lower rate justify the added costs of paying points. (One point is equal to one percent of the loan's value.)
How Much Would You Save?
A homeowner with a 30-year, $200,000 mortgage charging 8% interest would pay $1,468 each month. The table below illustrates the potential monthly savings and the various break-even periods that would result from refinancing at different rates.
Rate After Refinancing
New Monthly Payment
Monthly Savings
Months to Break Even*
7.5%
$1,398
$70
29
7.0%
$1,331
$137
15
6.5%
$1,264
$204
10
6.0%
$1,199
$269
8
5.5%
$1,136
$332
7
5.0%
$1,074
$394
6
*Assumes $2,000 closing costs. Rounded up to the next highest month.
A Closer Look at Mortgage Fees
Using data collected during 2003, researchers at Bankrate.com determined the average fees charged to consumers who borrow money to buy a home. Based on a loan of $180,000, the fees broke down as follows:
Average Lender/Broker Fees
Administration fee:
$336
Application fee:
$205
Commitment fee:
$498
Document preparation:
$194
Funding fee:
$228
Mortgage broker fee:
$839
Processing:
$320
Tax service:
$73
Underwriting:
$269
Wire transfer:
$31
Third-Party Fees
Appraisal:
$327
Attorney or settlement fees:
$445
Credit report:
$29
Flood certification:
$17
Pest & other inspection:
$68
Postage/courier:
$45
Survey:
$174
Title insurance:
$605
Title work:
$200
Government Fees
Recording fee:
$76
Various taxes:
$1,339
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Stick With What You Know?
Finally, keep in mind that your current lender may make it easier and cheaper to refinance than another lender would. That's because your current lender is likely to have all of your important financial information on hand already, which reduces the time and resources necessary to process your application. But don't let that be your only consideration. To make a well-informed, confident decision you'll need to shop around, crunch the numbers, and ask plenty of questions.
Summary
The decision to refinance should only be made if the long-term savings outweigh the initial expenses. To calculate your break-even point, divide the cost of the refi by your monthly savings. The resulting figure represents the number of months you will need to stay in the home to make the strategy work.
Don't select a new mortgage based only on its annual percentage rate.
Also evaluate the term of the loan, whether the interest rate is fixed or variable, and the relative merits of paying up-front fees in exchange for a lower rate.
Your current lender already knows you and has your financial information on file, so you may be able to get a better deal that way, instead of going to a new lender.
To get the best possible refinancing deal, you'll need to shop around, crunch some numbers, and ask a lot of questions.
Checklist
Shop around and conduct a detailed cost assessment (with a financial professional, if necessary) to identify which mortgage offers the greatest financial benefits.
Read the entire contract before signing. Don't let anyone pressure you or rush you to make a hasty decision.
If refinancing results in lower monthly payments, use those savings to pursue other important goals, such as preparing for retirement and college costs.
The Pumpkin People, Brevard, NC
Oct 16, 2008
The Pumpkin People are back !!!
This fun tradition has been a part of the Brevard area for over 15 years. Located just 4 miles from Brevard on Greenville Highway ( RT 276 S) at ExitRealtyConnesteeFalls and Two Friends Gallery & Gifts. Come and share this tradition with us. Great for photos and making memories. Bring the kids and the camera! Until October 31
You Can No Longer Afford to be Indifferent
Oct 06, 2008
By Steve Morris
There are those who make things happen, those who watch what is about to happen and the rest who wonder what happened. Some people instinctively know precisely what to do next in order to progress and succeed, and yet the high majority has to be shown the way. The former are the leaders and the latter are the followers. Which one are you?
A leader in the real estate business in a brokerage is either the managing broker/owner, the top-producing salesperson or an administrator overseeing secretarial. It’s the individual who leads the pack, sets the tone and radiates an absolute sense of conscious competence. In other words, “they know that they know.”
In all expressions of human potential, no matter what the endeavor, energy flows from the high potential to the low potential. That’s simply Physics 101. The ones on top have acquired their knowledge, wisdom, understanding, strategy and timing through book learning, seminars and experience. The ones at the bottom haven’t. Moving from bottom to top is a matter of desire, absorbency and doing what works.
To move from here to there as quickly and effectively as possible requires leverage and momentum. In this regard, it’s imperative to surround yourself with good people and systems that are “state of the art.”
If you are an associate broker, broker/owner or someone who has a deliberate intention of running their own brokerage someday, then consider the following based on what has been said:
1. There are thousands of real estate agents who are Baby Boomers (50s and 60s) who are going to retire in droves over the coming months and years. 2. Like most people in North America, many of them have no pension to speak of and very little savings. 3. The change in market has eliminated a large segment of the cash value in their homes. 4. It’s going to become time for them to retire but they’re probably in a quandary as to how to do so gracefully. 5. If they quit their present brokerage, much- if not all-of their cash flow stops.
These people are between a big rock and a hard place, and old brokerage systems won’t solve the problem.
Let’s examine this further.
An Agent’s Predicament The real estate industry has always been predicated on the fact that, “you’re only as good as your last transaction,” or in other words, when you stop selling, the money stops coming. From this perspective, it becomes obvious that tremendous indifference concerning a salesperson’s family, future and safety is highly prevalent at all levels of a typical real estate brokerage operation, and runs rampant throughout the entire industry.
The entrepreneurial anthem has continued to be, “you eat what you kill,” and while this is fine and dandy in high-rising, long-lasting, positive marketplaces, it smacks of “who cares” when reality sets in and those so-called disposable salespeople simply cannot pay their bills or feed their kids, let alone have any kind of a lifestyle. From 2006 onwards, the foreclosure fiasco regarding sub-prime mortgages has rendered brokerages, salespeople and administrators in America rather helpless, all things considered. The fish are no longer jumping into the boat. It’s time for a reality check.
A Change in Approach Change is in the air in real estate. It’s occurring at every level of what we do and what we stand for. For instance, the approach used by many top producers over the last 25 years has been customer-driven, not client-driven. The “Do Not Call List” is starting to change all that. Hunting over the telephone is going to become a thing of the past in real estate, and because of this, the modus operandi of taking listings is going to have to be rearranged accordingly.
Up to this point, it’s been all about the numbers game of “taking the customer off at the knees” with sophisticated closing techniques and then letting the MLS sell the listing. The greater the number of listings, the greater the sell-through and dollar return. This, however, as a system, is going the same way as the dinosaurs. Once you’re on that list, you’ve stopped agents from calling. The methodology is then rendered benign. Again, the indifference of a non-service oriented approach has to be eliminated. It simply isn’t good enough.
The public wants service. Let’s face facts, they’ve already figured out that the MLS sells their listings. After all, how many double-enders have you done all year-5% or less? The industry is going to have to shift over to client-driven methods-a customer buys from you once, while a client buys from you every time. If they were good enough to deal with once, they should be good enough to do business with every time. Agents are actually going to have to develop a reputation for service again. Imagine that. But today, try to find an agent anywhere across the board who really follows up and follows through with people, with systems and services to the point that the customer would recommend them to others, or come in again for another try at a future date. It’s no wonder that the public is unimpressed with Realtors. They find them to be-let me say this one more time-indifferent.
My Own Personal Rant-Maybe It’s Yours, Too The industry allows just about anyone who can pass the “Pittsburg Glass Test” to have a real estate license. If your breath appears on the mirror, they will hire you. After all, as an example, you can get your license in Brooklyn, New York, with course materials lasting just six days and costing a mere $200. This bottoms out at $100 in some places in Florida.
In other words, there is practically no educational prerequisite of any consequence and no expense factor to overcome in real estate whatsoever, and, these factors can lure in those who are basically unemployable anywhere else. This makes for a loser mentality. This is an embarrassment to anyone and everyone who considers this to be a career and a reputable profession, as opposed to just a job. We all know that you become what you surround yourself with. The result of this is a pathetic state of affairs. Last year, more than 400,000 Realtors, out of a total of approximately 1.4 million, wrote not one nickel of business from selling real estate and they were allowed to keep their jobs. So the question is, where is management? But then again, nothing from nothing is nothing.
If you ever wonder why we took the time to create, develop and build EXIT Realty Corp. International and all that it stands for, you don’t have to go too much farther than this. We learned a long time ago that you can’t soar like an eagle if you’re going to surround yourself with turkeys.
An Interesting Comparison While getting my hair cut, I asked the manager of the operation how much it costs to get a hair-cutting license, and how long it would take. I’ve known him for years and he immediately responded saying, “You have to attend 220 days of classroom study and pay between $7,000 and $10,000, depending on the school. Now just imagine that-a solid year of participatory training and that kind of cost factor just to cut hair…and today, most use buzzers. By comparison, you can get a license to sell the largest asset a person will probably ever own for as little as $200 and six days of education. Now you can understand, with this “lack of flesh in the game,” why it’s quoted that 68% of all lost business in North America transpires because of indifference. Most of our industry’s participants just couldn’t care less. They’ve got nothing to lose.
So you can see, even with this, that most of the sheep are heading for the cliff. In order to make progress and succeed, it’s imperative to go in the opposite direction.
EXIT Realty is purposefully designed to be different but never indifferent. The “same old, same old” is simply not good enough here.
Prior to EXIT, there were companies that provided straight commission splits, desk fees, deal fees and multi-level marketing and they have not remedied the situation nor the circumstances whatsoever. None of the problems have been eliminated by those systems. They aren’t geared to provide financial leverage in shifting markets, let alone create a future or generate safety for a family. You could literally work there 40 years and retire broke. There are no retirement or beneficiary benefits whatsoever. They all scream out their battle cry, “Me first!”, “It’s all about me!” and “What about me?” and finish broke or broken. Try to find anyone who ever retired rich as a result of selling real estate to customers on one of these systems. I’ve been searching for 32 years and I haven’t found one yet.
The ego-driven attitude of “gimme, gimme” has resounded in real estate for decades. However, when you look at your own life and all of the goodness that has transpired there, am I correct in saying that most of it happened because of giving as opposed to getting? Isn’t empathy what we’re all looking for? Isn’t helping others for their sake important? Isn’t empathy (giving) what you’re trying to teach your kids?
With this in mind, we structured our entire system at EXIT around empathy. People helping other people; it generates a more productive, harmonious and compatible workplace. This far outflanks brokerages that are filled with people simply looking out for themselves. Ours is a safer, sounder and healthier work environment. Keep in mind that with those 10 signatures in the example above, (agents sponsored in earning $100,000 each), John would have $1 million in the bank in 10 years, generated by someone else’s energies.
Well-what are the chances of you having $1,000,000 in the bank in 10 years based on what you’re presently doing?
Interesting question isn’t it?
Look at this: If an owner of a substantial brokerage with 60 agents, for example, earning an average of $60,000 each, decided to convert to EXIT, some interesting financial benefits transpire. The broker would sponsor all the agents into EXIT at 10%. Well, 60 people earning $60,000 gross would generate $360,000 a year to that broker with no management hassles. Plus the broker could retire and still receive $252,000 a year. Not a bad pension!
If he continues the old way, however, he’ll eventually try to sell the brokerage. Question: For how much and to whom? Will he get all his money upfront, and if not, what and when, etc.? At EXIT, upon retirement, he would generate $504,000 in two years. Try to get that as a sale price on the street on the old system.
This EXIT System is great because it means more…much more of everything. In fact, single-level residuals were so impressive to the Canadian government that they paid us over a million dollars in grants for the development of the software program that pays residuals out through e-business. When your government backs you, you’re probably on to a pretty good thing.
Since the industry lacks education that’s thorough, effective and appropriate for the jobs that need to be done, we at EXIT have again gone the opposite way. We have the most advanced, most highly refined and most effectively taught educational programs in real estate anywhere in the world. Those who have witnessed it will attest to this. We consider all our agents valuable. They’re the assets of our business. And since selling is the only source of income flowing into a brokerage, whereby everything else costs money, we act accordingly. We respect those people and we do everything necessary to get the very most and best out of them accordingly.
Our mission at EXIT is simple and straightforward. We intend to be the very largest and most productively successful real estate company in the world. We are all focused on absolute success and we refuse to be indifferent!
Those who have taken the time to listen to the EXIT Formula of single-level residuals know and understand that our mission will become an absolute reality. It’s just a matter of time.
Those who have been all wrapped up in a busy market, now have the opportunity to revisit EXIT and take a longer look. Those who do so will recognize the opportunity immediately. Those who don’t will have to put up with the industry’s old ways.
EXIT is designed for those who truly want to get the finest return on their invested time from this business. If you’ll explore it, just for a moment, you’ll find a new world of potential that you would have never dreamed possible. We would love to have you join us and become part of this revolutionary movement of progress. If you’re a leader, you will find EXIT irresistible. If you’re a leader’s leader, you will recognize EXIT as a calling, not just a career. RE
Now Look at This for a Moment!
-All of those Baby Boomers previously mentioned, who will eventually be looking at retirement, have a unique potentiality at EXIT.
-During the currency of their stay at EXIT, they can introduce other agents to management and receive a benefit based on closed transactions equivalent to 10% of the gross of the new agent’s production every year the agent stays. This does not affect the new agent’s commission.
-When they retire, this reduces to 7%. This means cash flows in from the efforts of others still working, while they’re in retirement. It’s unlimited.
-An example (in large round numbers) would be as follows: John sponsors 10 agents producing $100,000 gross into EXIT (any place we exist) and Head Office pays him the equivalent of 10% x $100,000 or $10,000 per agent x 10 = $100,000 of extra money yearly. This is in addition to his commission for selling real estate. When John, retires this is reduced to 7% or $70,000 a year.
-Seven signatures equaling a pension of $70,000. Not bad!
-You can’t get that anyplace else. In fact, what is your pension when you retire on your current plan?
-Perhaps it’s a good idea to own a brokerage that provides this kind of opportunity.
-It’s certainly a fine decision to join EXIT in either case.
Steve Morris is the CEO and founder of EXIT Realty Corp.
by Lauren Streib Friday, September 26, 2008provided by
Sotheby's
Boston, Mass. Price: $4.25 million
In many parts of the country, luxury home buyers are finding deals. But those searching in specific markets are often finding better ones.
Nationwide home prices dropped significantly in the last year, according to the National Association of Realtors (NAR). The median existing-home sale price in the Northeast fell 9.6% in the second quarter this year, compared to the same period in 2007. The Midwest fared better; there, prices fell just .9%. In the South, prices are down 4.1% and in the West, a whopping 17.4%.
Prices in the high-end housing market -- the 2% of homes in the U.S. that sell for over $1 million -- have largely remained insulated from the nationwide downturn. But in some areas, prices have fallen to a point that makes luxury homes affordable to buyers previously locked out.
These include Boston, Chicago and Los Angeles. Prices there are down 8%, 7% and 21%, respectively, in the last year, the NAR reports. This means Los Angeles-area buyers looking at homes in the $4 million to $5 million range may get what would have cost them an additional $1 million last year.
In Miami Beach, Fla., luxury home prices have fallen 20% since early 2006, says Nelson Gonzalez, senior vice president of Esslinger Wooten Maxwell Realtors in Miami Beach. The Venetian Islands and the middle causeway areas of the city have been especially affected by the slump.
"There are good deals to be had, but we're a little bit immune to the soft market," says Gonzalez, who notes that sales volume has been increasing. "You have to have money to live in Miami Beach, because the cost of living is so high."
Coates, Reid and Waldron
Aspen, Colo. Price: $19.5 million
Wallet-Worthy Amenities
Still, in many places, your dollar goes far. Besides featuring luxurious kitchens, private pools and dozens of fireplaces, some high-end homes are in areas with top-notch school districts, beach views and solid cultural and entertainment options.
Oftentimes, that's enough to keep prices up. While sales volume in Aspen, Colo., has decreased 40% since the beginning of the year, according to Brent Waldron, managing broker at Coates, Reid and Waldron, home prices haven't budged. According to the S&P/Case-Shiller Home Price Index, prices in the area have risen .6% since the beginning of the year.
"It's because our sellers can wait," he says. "But there's much better selection, and, in many cases, sellers are negotiating off of list price."
In the high-end sections of Austin, Texas, like the Lake Travis area, which is known for its luxurious lakefront properties, sales have slowed, and luxury properties are selling between 10% to 20% below market price.
"We've weathered the storm better in the high-end range," says Mary Land, broker and owner of Capital City Sotheby's International Realty In Austin. "Our numbers are down, but not down to the point where we're seeing brokers leaving or consolidation."
Luxury home sellers in the Hamptons, including towns like Montauk, Sag Harbor and Southampton, have been lowering prices slightly because there aren't as many buyers.
"It's a great time to buy now, especially for anybody looking for new construction," says Susan Breitenbach, senior vice president of the Corcoran Group in Bridgehampton, N.Y. "But, it'll definitely start going back up next year ... There's still a lot of money and very few places."
Koenig & Strey
Lincoln Park, Ill. Price: $2.995 million
Some bargain house hunters have the weak dollar to thank. Buyers from the U.K., Russia and Asia are gravitating toward San Francisco, Manhattan and Boston.
"There's a perception that we're a bargain right now for the international consumer," says Tarin Patrick, of Boston-based Gibson Sotheby's International Realty. If a foreign family has a child in one of the many Boston-based colleges, parents are more likely to buy than rent a luxury apartment for four years. "Boston makes for a really interesting investment opportunity," says Patrick.
Many brokers are urging their clients to act fast. Any high-end slowdowns should dissipate by next year.
"When I see a lot of Americans buying when the economy is not great and notice that consumer confidence is stronger on the high end, that's a very good sign that we've hit the bottom," says Gonzalez.
Copyrighted, Forbes.com. All rights reserved.
Where Home Prices Are Likely to Rise
Sep 01, 2008
by Matt Woolsey Thursday, August 28, 2008provided by
Believe it or not, in the future people will be buying and selling homes. Some of them will even make a profit.
Oklahoma City -- Housing starts 2009 increase: 9.9%
It's not so crazy an idea. Consider Albuquerque, N.M. The mid-sized Southwestern city has experienced housing price declines since a peak in the third quarter of 2007, job growth has been flat, and housing starts are expected to fade by 45% through the end of 2008. Nevertheless, it's a city that home builders and economists are bullish about for 2010 and beyond.
According to analysts at Moody'sEconomy.com, Albuquerque's job growth through 2012 is projected at an average annual rate of 1.6%, fueled in large part by its low costs and local business expansion. Housing starts in the city are expected to reverse course in 2009, growing by 26.6%, according to the National Association of Home Builders (NAHB). This means builders have high hopes for 2010 and 2011, when those homes will be completed and on the market.
It's the same story in several other cities: more tough times to come in the short term, but potential for a recovery and a rise in prices in the long term.
Behind the Numbers
To determine where house prices are expected to rise next, Forbes.com looked at projections for housing starts from the NAHB and job-growth figures from Moody's Economy.com, for the 100 largest metro areas in the U.S. The estimates are based on the cost structures of business in the respective cities and the composition of the local economies.
Housing start projections from the NAHB may seem like wishful thinking. Trade-association economists often view their own industry through rose-colored lenses. The National Association of Realtors (NAR), for example, has developed a reputation for its positive outlooks despite negative numbers.
But the NAHB data are filled with laggards, signifying some realistic thinking. Housing starts in Las Vegas are expected to drop by 32% in 2008 and actually get worse in 2009, falling by a further 43%. In overbuilt, highly leveraged Phoenix, starts are predicted to fall 50% this year and descend another 11% more in 2009.
Because houses take six months to two years to build, that means home builders aren't expecting profits in the Vegas or Phoenix market until past 2011.
"These are some of the most overbuilt markets," says Robert Denk, an economist at the NAHB. "There are some markets that got really out of hand and they're going to be in trouble for a couple years still." He cites Cape Coral, Fla., as the poster child of overbuilding exuberance. "They built 10 years of housing in two years."
The prognosis isn't as bad elsewhere.
Texas on the Rise?
Centex, one of Texas' largest homebuilders, has been stung by overextension into Michigan and Colorado, as well as big bets on the vacation-home market in Texas. In July, the builder reported losses of $150 million. There's a bright spot, however.
San Antonio and Austin, Texas, have largely avoided the real estate crash, with price increases of 2.5% and 4.1% in year-over-year terms, respectively, according to the NAR. This is driven in part by the fact that the two markets are expecting building slowdowns of 24.7% and 28.2%, respectively, through the end of the year, as home builders are bearish about the remainder of 2008 and 2009 in the sales market or cannot find financing. Builders as a whole are taping their wounds and cutting back production, adopting a wait-and-see approach to home prices in the coming year.
But for the start of 2010 and into 2011, builders expect a more vibrant market for sellers. For homes built in 2009, which would come off the conveyor belt in 2010 and 2011, the NAHB forecasts a 9.6% increase in Austin and a 20.9% increase in San Antonio above 2008 levels. Much of that has to do with expected job growth in all non-farm sectors.
Recovery in Obvious Places
At this point, it's clear the subprime contagion won't be contained in the next year, based on the acceleration of home price drops and foreclosures nationwide. But when the bad vintages of loans finally come off the books, the cities where prices are expected to rebound are largely those with vibrant economies.
"The logic is pretty straightforward," says Mark Zandi, chief economist at Moody'sEconomy.com. "People will spend as much on housing as their income will allow them. House prices are very closely tied to household income over the long run when you look at business cycles."
This means that recovery is likely in the cards for even the hardest-hit spots. Cities like Atlanta and Colorado Springs, Colo., may be reeling from high defaults and foreclosures, but from 2007 through 2012, their economies are expected to experience 2% and 1.6% average annual job growth. That means more in-migration and more money in the economy, factors that help businesses grow and profit--and put more money in residents' pockets.
As local economies grow bigger and more dynamic, land values increase because the value of what can be produced on that land increases. When land prices go up, home values go up.
Home prices moving up; it sort of makes one nostalgic.
The economy will never recover if housing doesn’t find its footing first. But when will that happen? Cramer said he expects a bottom by the third quarter of 2009.
On top of this, Cramer added his thesis that stocks usually tell the story of their respective industries for six months out. So in a sense, investors can use stocks to see six months into the future. Part of the reason Cramer’s saying a year this time, though, is because the market is so horrible he’s allowing for setbacks. He doesn’t want to be premature, especially considering the aforementioned stock charts seem to indicate a year is a better timeline.
Cramer’s got street cred when making calls on housing. Remember when he told you last year that anyone who bought a home then would lose money on the purchase? They did. (Remember how the National Association of Realtors freaked out when he said that?)
But here are 10 more reasons Cramer thinks we’re in store for a housing bottom
We’re building fewer homes, so inventories have the chance to come down.
The recent housing-rescue bill authorized the Federal Housing Authority to put $300 billion toward getting homeowners out of difficult floating rate loans to the low fixed-rate kind.
Prices have come down enough to lure out the bargain shoppers, about an average of 7% year-over-year. Today’s S&P housing numbers showed declines of over 25% in some areas. That trend could continue.
At last the holdout markets have rolled over – think New York. When that happens, a recovery can happen.
If – and Cramer thinks this is a when – Fannie Mae[FNM5.620.43(+8.29%)]
and Freddie Mac[FRE3.970.68(+20.67%)]
are taken over by the government, mortgage rates will come down. They’ve been going up month to month recently.
The bulk of those teaser-rate loans – those that offer low rates for the first two years and then reset to much higher rates – will reset in the third quarter of this year because they peaked in the third quarter of 2006. That means there will be fewer foreclosures as a result because there will be few loans changing to those higher rates.
There’s a tremendous amount of household formation, 800,000 every year, Cramer said. Four million babies born each year, divorces, 2.5 million new citizen – they call create demand.
Immigration had been bringing in 1 million people a year, but that’s been cut back a bit. But both McCain and Obama are pro-naturalization, so that number could return to previous levels after November.
The horror shows that are the California, Florida and Arizona real estate markets are no longer bleeding into other areas. These heavy losses are being cordoned off, Cramer said, and different markets are evening out.
Lastly, even these horrible areas – Bradenton in Florida and the Central Valley in California – are bottoming. The first to fall is usually the first to return, Cramer said. He’s predicting that Miami and the Inland Empire are next.
Once that happens it will be the third quarter of 2009, and Cramer thinks he thesis will be apparent to everyone by then. So here’s the countdown: 309 days until June 30, 2009 – the deadline for a much-needed housing bottom.
