Archive for Talking Real Estate
Indianapolis Renters Beware: Fraudulent Advertising
Posted by: | CommentsHeads up to Indianapolis renters. I have had approximately 10 calls from renters in the last 60 days who are inquring about great rental deals that they have seen on the internet.
They find my website through Google and call me because a property that they are interested in renting (and that appears on rental websites) also appears on my site for sale through the Indianapolis BLC (MLS) system. These fake ads are often www.craigslist.org postings or similar websites where vacant homes for sale around Indianapolis are posted for rent.
A significant number of these postings are done fraudulently. An individual in another state (Texas in my recent examples) picks a home from the Indianapolis BLC (MLS) system, copies over the photos, description and address. They post a rental ad on a website and are contacted by sincere, interested Indianapolis renters who recognize that the ad might be too good to be true.
An email dialogue develops after the renter contacts the “landlord” through the www.craigslist.org posting. There is typically a hard luck story and an explanation of why the landlord can’t return to Indianapolis immediately from out of state to show the home. However, the prospective tenant is informed that a deposit check will ensure that the property is not rented to anyone else in the interim. Often, the “landlord” also requests personal information for a “credit check.”
If you are renting a home around Indianapolis, ask the landlord to meet you at the property before submitting a deposit and for him to bring identification and something to substantiate ownership (a utility bill, mortgage statement etc.).
If you suspect that you have been involved in a fraudelent scheme, please report the incident to the FBI Cyber Crimes Unit at http://www.ic3.gov/default.aspx
Video Introduction from David Meek
Posted by: | CommentsPlease visit our YouTube channel for a home buying tip labeled “Home Buying Tip – The Good Faith Estimate (GFE)” that is referenced at the beginning of this video.
Giddy Up: Last Chance to Refinance Below 5%
Posted by: | CommentsIf you are an Indianapolis homeowner and have been sitting on the fence about when to refinance your loan, do it. Now.
I check mortgage rates with different lenders everyday when I first sit down at my desk in the morning. I am not an expert, but I have noticed gradual trends.
I’ve seen rates dip many times in the last year just under that 5.00% psychological threshold. But now I am confidently asserting that this is the last time that rates like this will be seen on the radar for 30-yr fixed rate mortgages for the foreseeable future. There are a couple of reasons:
- The expiration date of the Fed’s MBS (Mortgage Backed Securities) purchase program is March 31st, 2010. The Federal Reserve starting buying mortgage-backed securities 14 months ago that had been backed by Freddie Mac and Fannie Mae in order to give buoyancy and liquidity to the secondary mortgage market and keep money moving… $1.25 trillion worth of purchases. After the DJIA had fallen 3,000 points in a short time in 2008, investors had lost their appetites for the mortgage market. This program is ending in 45 days and a the government is leaving the MBS market. Fewer buyers of MBS means that the sellers of those bonds will need to offer a higher rate of return in order to sell them to the remaining buyers. That cost is passed on to mortgage consumers. Rates are pushed upward.
- According to my back-of-the napkin calculation, the average annual 30-yr fixed rate was 6.29% for the years 2000-2009. I found this data on Freddie Mac’s website under the Primary Mortgage Market Survey (that dates back to 1971). The artificially low rates that we have seen recently have been a result of government stimulus. Now rates will slowly seek equilibrium at higher levels over time as the economy inches toward lower unemployment and higher production.
Set your expectation level for doing a little work to get the lowest rate. Getting a mortgage rate under 5% will take a credit score above 720, at least a 20% down payment or equivalent equity position, a consistent job history and a loan amount exceeding $125,000.
Record-Setting Marion County Tax Sale Auction Starts March 18th
Posted by: | CommentsProperties in Marion County with delinquent taxes, sewer liens, special assessment liens and other uncollected penalties will be auctioned off in Indianapolis beginning on Thursday, March 18, 2010. The public auction will be held in the Public Assembly Room (room 230) on the second floor of the City-County building in downtown Indianapolis.
Properties in Marion County with delinquent tax bills, liens and unpaid special assessments will be auctioned in Indianapolis beginning March 18, 2010.
This year’s inventory sets a record for the Marion County Treasurer’s office at over 10,500 properties. The real estate on the list accounts for more than $61 million in uncollected taxes and fees.
The sale starts at 9:00 am on March 18th and runs for several days until the inventory is exhausted. In the event that the sale is not concluded on the first day, properties will continue to be auctioned on March 19th, March 25th and March 26th of 2010. Parcels not sold on these dates during the tax auction will not be offered again for sale this year.
The tax sale buyer’s interest is limited to a lien on the property for the first year after the tax sale (or 120 in the cases of properties on the C list). The current owner of the property has that amount of time to settle debts, penalties and interest on the property in order to “redeem” the property before legal ownership is given to the high bidder. If not redeemed within the statutory period, the tax sale buyer may pay all accrued taxes, liens and assessments current and then exchange his Tax Certificate for a Tax Deed.
In the event the property is “paid up” and redeemed by the current owner, tax sale buyers can be reimbursed. They are given back the amount that they paid at the auction for the delinquent taxes, penalties and/or special assessments plus interest at a 10% annual rate. It is important to note that it is the tax sale buyer’s responsibility to record any such payment in the office of the Marion County Auditor if the buyer expects to be reimbursed when the property is redeemed.
If you are going to bid on property at the tax sale auction, remember:
- to research liens with the Marion County Recorder
- to review plat maps in the County Assessor’s office
- all sales are final and no refunds or exchanges will be made.
For a complete list of bidding and redemption procedures, see the Treasurer’s website.
How Rising Consumer Sentiment Is Linked To Higher Home Prices
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Consumer Sentiment has been on the rise since last February and it’s something to which Indianapolis home buyers might want to pay attention.
The affordability of your next home may hinge on consumer confidence.
As the economy recovers from a near-the-brink recession, many of the elements of a full recovery are in place. Business investment is returning, household spending is expanding, and financial systems are gaining strength.
Consumer confidence is at a 2-year high.
What’s missing from the recovery, though, is jobs growth. Another net 20,000 jobs were lost in January. Data like that hinders economic growth.
That said, twenty-thousand jobs lost is a much better figure than the several hundred thousand that were shed per month throughout early-2009, but it’s still a net negative number. Not only does household income drop when Americans lose jobs but so does the average American’s confidence in his or her own economic future.
This is one reason why jobs growth is so closely watched by Wall Street — jobs are linked to higher confidence levels which, in turn, is believed to spur consumer spending.
Consumer spending represents 70% of the U.S. economy.
As confidence rises, it could be good news for the economy, but bad news for home buyers. More spending expands the economy and, all things equal, that leads mortgage rates higher.
Same for home prices. More confidence means more buyers which, in turn, squeezes the supply-and-demand curve in favor of sellers.
Later this morning, the University of Michigan will release its February Consumer Sentiment survey. If the reading is higher-than-expected, prepare for mortgage rates to rise and home affordability to worsen.
Real Estate Market Statistics for Indianapolis
Posted by: | Comments- According to the real estate website Zillow, the peak of the real estate market in the United States was March 2006.
- Zillow also reports that (as of December 2009), $5.9 trillion in value has evaporated from American homes.
- Homeownership peaked at 69% in 2006 and has fallen now almost 2 percentage points to 67.3%, a level not seen since 2000. In 2008, the Indianapolis homeownership rate was estimated at 75% by the U.S. Census bureau.
- Approximately 9% of all Marion County homes are vacant. Most are concentrated in Center Township. – IndyStar.com article Nov. 8, 2009
- Average household size for Indianapolis is 2.57 persons. -U.S. Census
- The $100,000 to $149,999 pricepoint represents the largest segment of owner-occupied homes in the metro area at 30.7% of the total.
- Homes over $1,000,000 in Indianapolis represent only 0.6% of the total owner-occupied housing inventory.
- According to the Bureau of Labor statistics, the unemployment rate for the Indianapolis area was 8.5% in December of 2009. The nationwide unemployment rate for the same period was 9.7%.
- 35% of Realtor transactions (3,979 properties) in Marion County in 2009 were sales of foreclosed homes.
Simple Real Estate Definitions: Shadow Inventory
Posted by: | Comments“Shadow inventory” is created when the seller of a set of items wants to control the entry of those items on to the marketplace in order to maximize the price. The seller sacrifices time (i.e. stretching sales out into the future) in order to receive a higher amount upfront. The bulk of the items being sold are held back for future sale.
Sometimes the technique is used to create urgency, as in the release of residential lots through multiple phases in a builder’s subdivison.
In the current real estate environment, it is being used to hold the line on property values. Banks that have taken back properties through foreclosure have an excessive amount of vacant homes on their books. Advertising these for sale all at once would dramatically increase supply and drive the prices down; leading to further foreclosure activity due to depressed prices. Even non-foreclosure sales would be negatively effected.
Banks and their REO departments (stands for Real Estate Owned which is bank-speak for “foreclosure inventory”) realize that driving prices down is not a good thing when you are trying to sell your assets to recoup your losses.
I have heard the term shadow inventory used recently in two contexts: bank foreclosure inventory and sellers who are waiting to put their homes on the market until conditions are more favorable.
In the Indianapolis, Marion County market in 2009, just over one-third of a Realtor transactions were sales of foreclosed homes. That number is likely to remain high as banks slowly divest themselves of the shadow inventory.
Family-to-Family Home Purchases are Ineligible for First-Time Homebuyer Tax Credit
Posted by: | CommentsA long-time family friend contacted me this afternoon to ask about the steps necessary to purchase the Speedway home that she has been renting from her in-laws. She was in part motivated to complete the purchase soon by the expiration of the (up to) $8,000 First-Time Homebuyer Tax Credit.
First, a little background. In order to be eligible for the tax credit, purchase contracts must be inked by Friday, April 30th, 2010 and go to closing no later than Wednesday, June 30th, 2010. Additionally, move-up buyers who have lived in and owned their current residence for five of the last eight years may qualify for up to a $6,500 tax credit on the purchase of their new principal residence. The old home does not have to be sold in order to be eligible for move-up tax credit.
The scenario was similar to another client inquiry that I had received in early December where an older brother was selling the family farm in Knightstown to his younger brother.
I researched the topic at www.irs.gov and discovered that both scenarios unfortunately would not qualify for the tax credit. The IRS prohibits eligibility for purchase transactions between close family members. This includes spouses, grandparents, grandchildren, parents and children. Here is the IRS website link that explains the exclusion. The topic is about 80% of the way down the page.
Non-resident aliens, investors and otherwise eligible homebuyers who exceed the income caps are also excluded from eligibility.
If the tax credit is your driving motivation for a home purchase, be sure to check your eligibility against the IRS exclusions before making a purchase.
The January 2010 Jobs Report May Lead Mortgage Rates And Home Prices Higher
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On the first Friday of every month, the U.S. government releases its Non-Farm Payrolls data from the month prior. The data is more commonly known as “the jobs report” and it swings a big stick on Wall Street.
Especially now — many analysts believe job growth is tightly linked to the future of the U.S. economy.
Therefore, when January’s jobs report hits the wires at 8:45 AM ET tomorrow, Indianapolis home buyers would do well to pay attention. A net job reading that is much higher (or lower) than Wall Street’s expectations can make a serious change in home affordability.
Wall Street expects that the economy added 13,000 jobs last month. It would mark the second time in 3 months that the jobs report showed a net monthly gain.
In November 2008, the economy added 4,000.
Jobs matter to the economy for a lot of reasons, but one of the biggest is that when Americans are working, Americans are buying and consumer spending accounts for 70 percent of the economy.
Job growth spurs the economy and draws money to the stock market. Unfortunately for rate shoppers, that kind of stock market growth happens at the expense of the bond market which is where mortgage rates are made.
Good jobs data usually means higher mortgage rates.
Also, job growth can lead to higher home prices. This is because working homeowners are less likely to default on a mortgage versus non-working homeowners. In this way, job growth helps hold foreclosures to a minimum which, in turn, suppresses the housing supply.
Less supply means higher prices for home buyers.
Mortgage rates are idling this morning in advance of tomorrow’s data. If you’re shopping for a mortgage rate, the prudent play may be to lock your rate before the jobs data is released. A jobs figure that’s higher than the 13,000 expected could cause rate to rise sharply.
