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California, Technology, and Potential Real Estate Opportunities

As we head into 2009, foreclosures are reaching their highest levels in decades. According to a recent Fortune Magazine article I read, the Los Angeles housing market is expected to decline another 25% in 2009. And only a couple of markets in California are expected to show positive gains in 2010. What does all of this mean? I believe it means we are on  the front end of seeing some great opportunities for real estate investments. As prices continue to fall we will see a continued increase in foreclosures, with California leading the way. The California housing market tends to lead the rest of the country anywhere from 12 to 18 months in advance. And with the California market at least expected to stabilize if not show some positive signs in 2010, the rest of the country could hopefully see the same in 2011 and 2012.
If you’re looking for a way to find great deals in residential real estate, you’re in luck. With the amount of information published online and almost in real time, the real estate game has changed. Anyone with an internet connection has access to thousands of distressed property listings at any given time. For example, Williams & Williams auctioneers allow you to invest not only on site, but they offer a number of “online only” auctions. This means you could be bidding against people from all over the world. This may not sound to exciting considering today’s technological achievements, but when you put in context of the real estate markets, think of the last significant downturn, say 1992. Al Gore was only in the beginning stages of inventing the Internet. Good job Al.
Back in those days you not only had to be present at the auction, but think about how you would have examined the market place. Sure, a call to a local real estate agent would help, but think about how difficult it would be to find past sale information, estimated values (such as Zillow.com), liens against the property, property taxes, even a map. In today’s real estate market, using only the internet, you can probably find 95% of this information in a matter of minutes. The real estate landscape has changed significantly, and unless you are armed with the tools to not only access information quickly, but make decisions quickly, there are hundreds of others out there that you will be competing against. And they don’t even need to be located in your real estate market.
For more information go to this Real Estate Investment Resource.

Oklahoma City Real Estate | Busting the Midwest Real Estate Bubble

Despite a gloomy economy and a stumbling real estate market, Oklahoma City remains a viable market with strong buyers and sellers working together to rejuvenate the economy. If you are in the market for a real estate investment, Oklahoma City is a prime location to find some of the countryÃ?s best deals.

Oklahoma City is located near the center of the state of Oklahoma and serves as the stateÃ?s capital and the seat of Oklahoma County. The city covers 621 square miles, making it one of the largest cities in land area in the United States, according to the official Oklahoma City website. The city has a population of 558,000 people.

Energy forms an important piece of the economy, both of the city and of Oklahoma state, with oil reserves first discovered in the area in 1928. Ã?Oklahoma remains an energy state and the heavy concentration of oil and gas activity in the metro area will provide a boost to area job and income growth as long as energy prices remain high enough to encourage local firms to expand their operations,Ã? according to the 2008 Oklahoma Economic Outlook report by Mark C. Snead of Oklahoma State UniversityÃ?s William S. Spears School of Business. Because of this, the rising oil costs that are bringing other regions to their knees may actually be helping counties in the state of Oklahoma.

Ã?The Oklahoma City region is outperforming the state for much the same reason that the state is outperforming the nationÃ?energy,Ã? according to Snead. Ã?The greatest income gains in the metro area have occurred in Oklahoma County and have propelled the county among the ranks of the top ten nationally in terms of income growth in recent data releases.Ã?

The city boasts a low median housing cost of $134,900, according to Zillow.com, and 87 percent of Oklahoma City homes are occupied, leaving the area with a 13 percent vacancy rate. Of occupied homes, 38 percent are rental units with the remainder being owner-occupied. A property owner in Oklahoma City should expect to pay approximately $1,104 per month for property-related expenses and mortgage payments, while owners without a mortgage will pay approximately $373 on average, according to 2006 U.S. Census data. Median gross rent was $570 per month as of 2005, according to census data.

Oklahoma CityÃ?s overall economy may bode well for investors. Although job growth in the area was down in 2007 from previous years, it still exceeded the national average growth rate for the year. The Oklahoma City Metropolitan Statistical Area (MSA) experienced a job growth rate of 1.7 percent for 2007, a drop from a rate of 2.2 percent in 2005. The United States averaged a growth rate of 1.3 percent for 2007. Oklahoma City is expected to add 6,800 jobs in 2008 and 9,400 jobs in 2009, according to Snead.

And, despite the difficulties befalling housing markets around the world, Ã?[t]he Oklahoma City construction market has hardly noticed the national building slowdown and should remain strong through 2009. While some housing-related hiring weakness is expected in the financial services sectors, the metro area will primarily be impacted by the national housing slowdown in an indirect manner through marginally slower U.S. economic growth,Ã? according to Snead. He also wrote that homeowners can expect home values in the Oklahoma City MSA to increase by 2 to 4 percent through 2009.

So there you have it, Oklahoma City remains a diamond in the rough. It is a perfect time to consider this pristine Midwest city is the place to invest your next real estate dollars.

State Of The Phoenix Real Estate Market Address

To members of Congress, President Bush, President-Elect Obama, fellow Americans, and current and future residents of the Phoenix area, the state of the Phoenix residential real estate market is “weary but hopeful.”

Numerous challenges including an onslaught of short sales and foreclosed properties, deteriorating home values, and the onset of a global recession have rocked the Phoenix real estate market to its core. Indeed, recessionary concerns are large on people’s minds and add much uncertainty to the market. These challenges have yet to fully play out in the marketplace so that their full impact is felt and measured.

Government efforts are underway to resolve the current credit crisis though their target and implementation vary by the week. Some efforts are specific and being done by departments whose sole purpose has always been associated with the housing market while larger departments work on grander problems with much less clear and intentional aim. For these, it is too difficult to ascertain their net benefit to the Phoenix residential real estate market.

But there are bright spots in the local marketplace. Prices have adjusted substantially downward since the downturn began, buyer activity for 2008 showed strength, and the market shows some inclination that market forces are working to slowly evolve this housing market to a better state. In addition, the Phoenix real estate market is becoming more affordable once again, as affordability was the first casualty of the price appreciation the area experienced several years ago. Many buyers sense that there are deals in the marketplace whether a purchase is to be their primary residence, a second residence, or an investment property. And the Phoenix area’s population continues to grow as more out-of-state residents and companies decide to call the Valley of the Sun home.

In summary, the Phoenix housing market has been “beaten down but is not to be beaten” and holds hope for improvement in the coming year.

Times Have Been Difficult for the Phoenix Housing Market

The Phoenix housing market is moving into its fourth year of the downturn. As such, it is important to look back on its causes briefly in order to look forward.

The Phoenix housing market was victim to excessive speculation and false assumptions that fueled a frenzied pitch in home and real estate demand. This demand spurred rapid appreciation of homes in the greater Phoenix metropolitan area and in other parts of Arizona. This rapid appreciation culminated in as much as a 47% rise in home property values over a 12-month period.

The acceleration of appreciation took hold in the latter half of 2004 though the necessary drop in inventory to support this market change could be seen as early as March 2004. Pricing likely peaked in September 2005. By that time, inventory had begun to swing the other way again but how far it would rise was not known. Though sales prices peaked in 2005, by no means had prices declined substantially until well into 2006.

Inventory rose dramatically with more than 50,000 properties available for sale by 2007, a staggering figure. Arizona was designated a “Declining Market” by Fannie Mae in 2007 as well. This designation had the near-immediate impact that borrowers using conventional loan products would have be required to put significantly more money down (typically, from 5% to at least 10%) to purchase a new home. Due to this increase, borrowers quickly moved to take advantage of FHA loans whereby borrowers only had to put 3% down on a new home. As for foreclosures and short sales, these finally took full hold in the market toward the end of 2007.

In 2008, FHA loans have been a significant lending source for activity in the housing market here. Down Payment Assistance usage took off as well though this program was eliminated October 1st. Sales activity has shown some strength with a peak in activity in September (likely due to the rush to use down payment assistance before the cutoff). In addition, the sales activity has been weighted more heavily at the lower bands of the market consistent with the raised FHA limit of $346,250.

Since September, activity has been slowing. This is due to that month being a peak associated with down payment assistance usage, due to broader economic concerns, and due to the onset of the holiday season.

The Extremes of the Local Market

Parts of the Valley are experiencing the worst-case scenario in terms of the impact from the downturn.

Short sales and foreclosures have hit towns on the outskirts of the Valley the hardest. These are towns such as Queen Creek, Buckeye, Surprise, and Maricopa to name a few. These areas share a common thread – high speculative investor activity concentrated in new build communities.

These towns grew exponentially as homebuilders sold homes as quickly as they could produce them. In fact, new build development saw such prolific investor activity so that many areas that were largely built in the 2004-2006 timeframe have been subjected to a heavy turnover activity and a heavy decline in valuations.

Today, in some communities such as Maricopa, foreclosures and short sales fuel more foreclosures and short sales. Because home values have dropped to 40-55% of their 2006 values, any homeowner who is suddenly faced with a need to move, i.e. a job relocation or loss, medical hardship or other reason, there is no choice but to pursue a short sale or walk away from the property altogether. Of course, these actions will have a severe consequence to the homeowner’s credit.

Separately, Scottsdale, known as a favorite destination for its resorts, golfing, and shopping among out-of-state visitors, is trending at a low 7% of listed properties being under contract for purchase. This is likely due to average home prices in Scottsdale being much higher in general while much of the current buyer activity is taking place well below this point.

From a different point of view, properties priced above $400,000 in value account for just 12% of the closed transactions in 2008, though they make up 23% of available properties. From a “Pending” or under contract status perspective, only 4.2% of properties priced above $400,000 are currently in escrow to be purchased. Drilling lower into the market, available properties priced below $200,000 account for 51% of closed transactions in 2008.

Clearly, the heavy concentration of sales is at the lower bands of the market which means that home owners with homes priced above $400,000 will require different selling strategies than those priced well below $400,000. Based on this, one can see why the more affluent communities like Scottsdale and Fountain Hills are struggling in comparison to other parts of the Phoenix area.

The Bright Spots

Ironically, some of the most active sub-markets of the Phoenix housing market is in those very areas where short sales and foreclosures are the most prominent. The precipitous drop in prices is fueling stronger buyer activity in places like Queen Creek and Maricopa.

Queen Creek currently has nearly 23% of listed homes under contract which is the highest rate for the Valley. Maricopa currently has 19% of listed homes under contract. Avondale, in the West Valley, currently has 18.5% of listed homes under contract.

In terms of the more central Valley areas, Chandler and Gilbert are doing relatively well also. Chandler, located between Tempe and Gilbert in the Southeast Valley, is currently at 16% of available properties being under contract. Gilbert is trending at 17.7% of listed homes currently being under contract.

Where the Deals Are and How They Are Won

The deals in the Phoenix marketplace come from three different sources: foreclosures, short sales, and well-positioned sellers.

Foreclosures currently make up approximately 38% of homes currently under contract in the Phoenix area. These properties are often priced very low from the start as the lender that owns them is truly trying to liquidate these properties from their books.

Foreclosures are easier than short sales in that the buyer is dealing with a single owner that has ready decision-making power to approve or reject an offer to purchase. The downside is that the lenders can be harder to deal with than a common homeowner, can’t be emotionally negotiated with and are in fact single-mindedly focused on the bottom line, and will require ‘As-Is’ and other contract documentation that tries to eliminate any future liability.

Short sales likely account for 10-18% of properties currently under contract for purchase in the housing market here. Short sales are the most difficult transactions as often they involve the buyer, the homeowner, the first mortgage lender, a second mortgage lender or other lien holder on the property. There could also be HOA liens and tax liens associated with the property. Though the homeowner may sign off on an offer, it is really the lender(s) that have to approve the transaction and provide lien releases as they will be shorted some amount of money through the process.

Like foreclosures, there are great deals that can be obtained, but a short sale has additional downside risks. Namely, the process could take several months before any approval from the lender(s) is obtained if it is obtained at all. As a result, many home buyers will be left disappointed through this scenario.

Lastly, the deals in the Phoenix area are found with the traditional committed seller who has appropriately positioned their property based on its condition, location, and competition. These represent the best transactions in that the buyer often has more power to negotiate, full property disclosures are often made available, and sellers may be more reasonable to cover the cost of repairs or other items that come up during the inspection process.

An adage in the Phoenix market for sellers is this,”There are reasonable buyers for reasonable sellers,” meaning that a seller can find a buyer if they position their property well and treat the transaction flexibly and earnestly.

To win a strong value, the name of the game isn’t the lowball. The right strategy is knowing what makes a “great deal” and positioning accordingly to get it. That positioning may include the low ball but not necessarily. Buyers who expect to lop off an additional 10%+ off the price for any property and win the home will find this strategy doesn’t work well and they will often lose out on great values as other buyers step in to purchase them.

Separately, for the pure investor who has a strong cash reserve, the Trustee’s Sale or Maricopa County foreclosure auction could present an excellent opportunity to obtain properties more cheaply than on the open market.

Market Outlook for 2009

The Phoenix residential real estate market will continue to see serious challenges and changes moving into 2009. Indeed, properties that do not compose one of the three areas mentioned above – foreclosures, short sales, and well-positioned sellers – can expect to experience additional price declines as their positioning is not in keeping with current market conditions. Foreclosures and short sales will continue though many will be watching for some level of abatement and how this may spread across the Phoenix real estate market. The current recessionary climate poses additional risks and its influence could dampen real estate activity.

Property owners for homes priced above $400,000 will carry additional risk and may experience sharper price declines to adjust to the changing market. All home sellers will continue to face stiff competition to sell their homes. Opportunities for buyers to obtain strong values in the marketplace will continue.

Finally, the impact and potential benefit of the current federal government bailout will be more visible over the next six months. If successful, these programs could help to stabilize credit markets, ease economic concerns, which in turn would benefit the housing markets.

Overall, the Phoenix housing market will continue to slowly work through the issues it currently faces.

The Phoenix residential real estate market is “weary but hopeful” for the coming year.

Austin Real Estate Market Summary for 2008 and Forecast for 2009

While Austin has continued to have one of the best real estate markets in the country, we will finish the year with lower sales activity, higher unemployment and real estate inventory levels, lower rents, and a deteriorating economy. Real estate sales are trending down, even with near 50 year low mortgage rates. Rents are following the same pattern.

Consumer confidence is very low. Consumers are holding cash and focusing on their immediate needs. This has impacted every industry. Though credit is harder to obtain, it is not the driving factor for the reduction in consumer spending. It is consumer confidence. Even if car dealerships are offering huge discounts and zero percent interest, consumers are keeping their existing cars and not going into debt for a car they don’t absolutely need.

We are seeing the same trends in the real estate market. Tenants are staying put and renewing their leases; homeowners are delaying home purchases on fear of job loss or price erosion in the real estate market; and it is getting harder to qualify for a mortgage as Fannie Mae changes its guidelines. For example, a borrower now must have a 740 fico score to obtain the best mortgage interest rate, assuming they have the down payment and reserves for a conventional loan.

For the past two years, we have consistently raised rents. This trend continued until the financial crisis hit us this fall. Many homeowners are not able to sell their homes at a desired price point and are forced to lease their homes and become landlords. Inventory of rental homes is at an all time high in Cedar Park/Leander and Round Rock areas.

We are dropping rents on all existing inventory. Properties priced below $1,100 month have weathered the storm better than higher priced rental properties. The most resilient rental homes are those priced below $1,000/month. Homes leasing at or above $1,200/month earlier in the early part of the year are now leasing for 10% less. As rents increase, the pool of qualified tenants decreases. We are also seeing tenants downsize and move to more affordable homes.

We have transitioned from a landlord market to a tenant market. Next year, we will renew most of our leases at the same price point and may drop rents to keep current tenants. I expect to see more rental applicants affected by job losses, financial troubles, and foreclosures as homeowners lose their homes and are forced to rent. I anticipate the days on market will increase as long as our inventory remains at high levels. Owners will need to look harder at applications to avoid long term vacancies.

Though Austin continues to have one of the best economies and real estate markets it the country, our unemployment rate has increased, and our real estate sales market is deteriorating. According to the Austin American Statesman, our unemployment rate was below 4% in early 2008 and 3.5% a year ago. It has now reached 5.0%. This is still below the Texas and national average. However, Austin is not immune from the national economic, mortgage, and financial crisis. November home sales were down 40% in Austin, a level not seen since 1997. Some areas were down almost 60%.

Long term, Austin will continue to have one of the best economies and real estate markets in the country. 2009 will be a year of recovery. Rents and home prices most likely will trend downward, and inventory levels will remain high. If the job market recovers more quickly, we will see the market stabilize. Now is a great time to purchase a home or take advantage of the down market.

If you have a current mortgage on a primary residence with a rate above 5.75%, it may be a great time to refinance your mortgage. Mortgage rates for primary residence are in the 4.75% range. Our office provides sales, leasing, property management, handyman, and mortgage services.

Article written by our Broker, Chris Warren, Smart Source Realty

Why Building a Qualified Buyers List Will Keep You in the Real Estate Business in 2009

When it comes to selling properties, if you donâ??t have immediate access to buyers it doesnâ??t matter how many houses you have listed for sale or how many you have in your inventory.  You may be able to sell a house here and there that is priced right and shows well, but rememberâ?¦the key is to line up a house with a buyer as soon as possible, especially since youâ??re probably working extremely hard at getting properties sold!  And with that, keep in mind that the bigger your buyers list is, the quicker you get your listings sold and you paid; not to mention the greater opportunity to get a dual commission!

More buyers means:

More Profits
More Commissions
Quicker Closings
More money saved on holding costs (if you buy it as an investment and flip it)
Less Stress
Etc��

These are all benefits that Iâ??m sure no real estate agent or investor would like to pass up.  But these benefits and the buyers that bring them wonâ??t come on their own.

Now�the question I get all the time is,�How do I build a qualified buyers list?�  The answer is very simple: marketing, networking, and organizing your contacts.

Here is a quick reference guide on different ways to market for buyers:

Open Houses
Classified Ads/Newspaper Ads
Internet Ads
Foreclosure Auctions
Home Buyers Seminars
REIA Groups (local Real Estate Investment Associations)
Investment Clubs
Landlord Associations
Bandit Signs (Build your wholesale buyers list by calling competitors signs)
Jobsites
Supply Houses
Lumber Yards
Chamber of Commerce meetings
Better Business Bureau functions
Friends and Family
Everywhere else you can imagine!

Now letâ??s go over the importance of NETWORKINGâ?¦.

Networking! Networking! Networking!  This is a great way to continually generate new buyers.  Whether you network as a real estate investor, a licensed real estate agent, or both, you must build a solid list of buyers to provide a steady influx of homebuyers to match the properties you have in your inventory.

Everyone, and I mean everyone, you talk to is a potential buyer. Iâ??m not just talking about the fellow investor at your local REIA meeting that is actively looking for his next deal.  I am talking about your next door neighbor, your doctor, or even the lady next in line at the grocery store.

Many of the people you talk to may be happy in their long term residency and not be in the market to purchase a home, but sooner or later someone you meet will either be looking to purchase a home or they will know someone looking to purchase a home.  The more relationships you build with people, or at least the more connections you make in which people know what you do, the more references you should see.

Now letâ??s go over the importance of organizing your contactsâ?¦.

Whether you are building a buyers list, sellers list, a list of real estate agents, or a list of mortgage brokers, you need to make sure you organize them.  Many investors and agents work so hard in building relationships, but end up losing them in the long run due to the fact they are not organized. The best way to do this is to compile them into a CRM (customer relationship management). I have found a real estate CRM, called FinerSolution.com, which has been second to none.

Organizing all your contacts is essential.  Real estate agents and investors lose so much money year after year because of this part of their business. For example, wouldnâ??t it make sense if you had a system where whenever you got a new property in your inventory you could just send out one email to all of your contacts (real estate agents, investors, mortgage brokers, etc)?  Wouldnâ??t that aid in you building your buyers list and ultimately selling your properties?

The bottom lineâ?¦to stay in business in 2009 we have to concentrate on building our buyers list, and the way we do that is by doing 3 simple things: marketing, networking, and organizing our contacts!

For more real estate industry articles and videos visit www.RealEstateBusinessMentors.comwww.AskBobLachance.com for any real estate questions. or visit

Seattle Washington real estate

In term of housing market price, the Seattle Washington real estate is performing outstandingly well. According to Trulia.com, the median price of Seattle Washington real estate only dropped 10% in 2008, in contrast to Los Angeles’36% and Chicago’s 21%. Furthermore compared to the median price of five years ago, the median price in Seattle Washington real estate actually rose 29%. But the analysts are still agnostic about whether Seattle Washington real estate can hold the line until the economic recovery.

The reason why analysts are stopping short at pronouncing the sanguineness of Seattle Washington real estate out right is because while the median price show a “soft-landing”, the picture is not all bed of roses. The number of sales for 2009 showed a sharp decline in the first three month while both the number of listings and average listing price in Seattle Washington real estate rose slightly. What worries most people is that the decline in sales compounded with increases in listing would cause a collapse in the housing market prices, but that has not occurred yet. One can only speculate why the law of supply and demand has not set in regarding Seattle real estate market. The common sense tells us that after the subprime loan collapse, banks are reluctant to lend out money, thus caused fewer number in sales. Also, the fact that the listing prices did not drop tells us that there are fewer foreclosures in Seattle Washington real estate market than places like Los Angeles.

On a positive note the statistics provided by First exclusive on Seattle Washington real estate market does show slight sign of recovery in March, also there are positive predictions coming from the financial sector that the recession might end in 2009. In short, nobody knows in the aftermath of the mortgage crisis and stimulate packages, which direction the Seattle Washington real estate market is likely to go, most analysts still prefer to adopt a wait and see attitude and caution investors to do the same.