2008 Could Be the End of the Housing Slump?

Wall Street Journal columnist Cyril Moulle-Berteaux predicts the real estate slump will end in 2008, in his recent opinion column The Housing Crisis is Over.

He makes a very good argument for his opinion, reminding us that the current housing bust is now nearly 3 years old! 

Hard to believe, isn't it?  2005 saw the peak of it all, when we were getting 50 leads a day and realtors were little more than order-takers.  Here it is in mid 2008, and real estate agents everywhere have left their careers, many because they came on board when they didn't have to SELL, but do little more than answer the phone, reply to emails, and cherry-pick the leads.

According to the journalist, New Home sales are now down 63% from then, and new construction is less than 1/2 of what it was, back to the levels of 1982.

Mr. Moulle-Berteaux writes:

"The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.

Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.

Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in."

The author opines that in the past five major housing market crashes and corrections, when home sales bottomed, prices starting rising.  He says that in 1974, 1982, and 1991, total market inventory got to 11 months of supply, and within 6 months, price declines slowed.

He says that inventories will drop to 7 months of supply by the end of 2008, and although the magic number is 5 months (he predict by 2009) there will be a significant impact on the prices this year.

Also, mortgage rates are presently at 5.7% for a 30 year fixed rate.  In the 70's and 80's, it was in the teens - a big difference in payments and who can or cannot afford to buy.  With lower payment come less foreclosures.  Foreclosures lower market values which lowers prices, so everything working together will bring us back in the game.

Resort homes and condos in Myrtle Beach are traditionally more of an investor driven market, so may not follow the exact path of regular housing, but it's still a ray of light and hope in the horizon for Myrtle Beach real estate sales overall.

See our websites for the available Myrtle Beach MLS listings and find the best deals on Myrtle Beach condos for sale.  Coming soon, a new website for cheap oceanfront property on both coasts.

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Myrtle Beach Real Estate Not the Worst

CNN compiled a list of the cities and markets that were suffering with foreclosures and lowered real estate values faster than the rest.  There weren't really many surprises, and thankfully Myrtle Beach homes and condos, though falling in price, are not yet on the list of the heaviest losers.

CNN says they used data from a San Francisco based MLS tracking service call Zip Realty to compile the following:

Number 10 on the list...
Atlanta GA with prices down 7.1%, blamed on overbuilding in the condo market and high foreclosure rates in other, poorer counties in Georgia.

Number 9 on the list...
Detroit, MI with prices down 7.7%, blamed on the cities economic woes as much as the market.  Also the subprime lending in the Detroit area was heavy.

Number 8 for losing market value...
Jacksonville, FL at 8.7%.  According to CNN, Jacksonville never had the price boom that the rest of the resort areas enjoyed, which meant less overpricing to accommodate for.  Still 8.7% is pretty bad in my book.

Number 7 is no surprise...
Phoenix, AZ down 9.5%.  Phoenix had the real estate boom like Florida and Vegas.  They say there are a whopping 51,643 homes on the market now...wow!

Number 6 was a bit of a surprise...
Miami Florida at 10.6%.  I would have guessed they would be in the top 2 or 3. They say there are 80,000 homes for sale and the sellers are refusing to drop the prices.  (Probably can't without a short-sale) The market in Miami is therefore stagnant with few deals to be had and buyers sitting on the fence.

Number 5 I would have guessed lower as well...
Los Angeles, CA down 10.7%.  From what I've read, California seemed to suffer the most from the sub-prime ripoffs and every kind of scam to go with it.  Los Angeles home prices are to the roof anyway, and foreclosures are high.  There are over 100,000 homes on the market in this city right now!

Number 4 highest in pricing woes...
Tampa Florida, with prices lowered to 11.7%.  Like most of Florida, the "condo flippers" were heavy here, and building escalated while prices rose too fast.  When the bottom fell out, most of the buyers were investors who tossed in the cookies and went home to sulk.  56,386 homes for sale.

Number 3 is no surprise from last year's headlines...
San Diego, CA at 17.1% loss of market value is paying for the unrealistic price climbs they enjoyed in 2005.  They do say that sellers are reducing the asking prices accordingly.

Number 2 - I would have bet it would be the top one...
Las Vegas prices dropped by 17.2%.  Vegas is still enjoying a good market, according to my realtor friends there.  But the foreclosures and short-sales are huge.  Vegas real estate was largely investor buying, and when that stops, it all stops.

They are, however, using up their inventory quickly, and in the long run it may help their overall market.  I was surprised to learn from my friend that the problem was affecting single family homes in nearby Henderson, NV as well as the luxury condos surrounding the strip.

The All-Time Number One Worst...
Sacramento, CA.  They say it was overbuilt to the hilt (pun and rhyme intended).  Foreclosures are extremely high, and almost half of the sellers have relisted with lower prices in an attempt to sell their homes.

It may seem to our local realtors that times are hard, but compared to these areas, we are doing very well.  According to Realtytimes.com, we are only at 2.5% lowered pricing, and 97% of sellers will get their asking price.  It is taking from 6 months to a year to complete a sale, however.   It's a great time to find cheap oceanfront property 

Oddly, I saw in the local paper, The Sun News, that some of the condos here were at almost a 20% lowering in price.  I suspect this difference is between the prices of the newer Myrtle Beach resorts for sale now, which were overpriced from the start, and the existing condos that increased dramatically, but not to the extent of the new ones.  Like always, though, the media loves to exagerate and cry doom all the time.

Myrtle Beach Web Design is now affiliated with the local Keller Williams Group, and we hope to help them increase sales and be the best Real Estate Agency in Myrtle Beach!  See our other blog for Myrtle Beach Condos for Sale .

Tax Deductions for PMI Insurance on Mortgages

According to the Wall Street Journal, there is a new tax break for 2008 that will help some home buyers across the nation.

Those familiar with mortgages know that we often get saddled with an add-on charge to a new mortgage called PMI, or Private Mortgage Insurance.

If you've financed a home AFTER January of 2007 and make under $100,000 in adjusted gross income, you can use this additional fee charged as a deduction on your 2007 income tax.

The usual reason lenders tack on the PMI fees is because you've put less of a down payment than they like.  Another little known fact is that as soon as the balance of your mortgage reaches the crucial point, usually 80% of the appraisd value, you can request the PMI be dropped, and if your account has been kept current, they are obligated to do so. This can really lower your payments as well.  The kicker is, YOU HAVE TO REQUEST IT.  They won't be suggesting it to you, by any means.  But until that point, if you financed your home with less than an 80% down payment, it will be nice to have that extra tax deduction.

All lenders don't require the PMI fees, and with this new constantly irritating habit they have of selling your mortgage multiple times, you can also get lucky and have the extra amount dropped by the new mortgage company that has purchased your contract.  Now if they would just lay down rules to prevent the lenders from swapping you back and forth at whim, I would be happy

Search the Myrtle Beach Real Estate MLS with our new websites.  Don't fill out any nosy forms until you need to contact us.  Have new listings of Myrtle Beach condos come directly to your email, and learn about South Carolina's best kept golf community secret, Pawleys Island Real Estate.

Pawley's Island Real Estate

Well, it's official that we (David, Mike and I) are now working to do marketing for our local Keller Williams Real Estate agency.  We haven't ironed out the details yet, but we're going to have a marketing company and do what we can to help the many KW agents in and around Myrtle Beach.

The first area we are going to target is Pawleys Island real estate and Pawleys Plantation.  There is a big KW presence in Pawleys and Litchfield, and I think we can help them to get some internet interest from buyers.

I've put up some pages just for Pawleys Island homes, and more will come.  It's one of the most beautiful areas in the Grand Strand, and anyone who doesn't want the hustle and bustle and tourist traffic should consider the Pawleys/Litchfield area to relocate.

I have a friend, Joe Russo that used to live in Willbrook before he moved back to Connecticutt, so I'm somewhat familiar with that development...and it is so impressive.  Golf course homes are some of the most beautiful places to live anyway, and those lowcountry plantation-designed courses in Pawleys are some kind of elegant.

More to come.  We have to choose a name for our company and have SOOOO much work to do!

Forbes Magazine Reports on "Moderate" Real Estate Markets?

Undervalued Markets?? Wow! Come to Myrtle Beach!

Forbes magazine has identified five cities where the economy is roaring but home prices are still moderate. MODERATE? By whose standards, I wonder?

You can buy one of the finest 2-3 bedroom Myrtle Beach oceanfront condos around for under a half million...WELL under, in many cases. I would say the average brand new North Myrtle Beach home about 3 blocks from the ocean will run less than $400K. Granted you aren't going to get a huge lot for that price...but who cares when you can walk to the beach?  Anyway, here is what Forbes considers a great bargain...

Charlotte, N.C.-
Forbes says this is one of the cheapest markets in the country on a per-square-foot basis. It is a career hub, and the market is still strong there...but it's not a "pretty" place to live. Not unless you can afford to be on Lake Norman. And that is probably a good bit more than what Forbes says a typical four-bedroom, two-and-a-half-bath home on a quarter of an acre is selling for - about $550,000. Not my idea of living in paradise.

San Francisco-
The technology and biotech sectors of the economy in the Bay Area continue to grow and there is no build up of housing inventory here. A typical four- bedroom, two-bath home sells for about $800,000. Now they have beauty...but all those HILLS! And if you are morally objectional to alternate sexual lifestyles, this won't be your favorite place...:-)

Seattle-
Seattle missed the condo boom because multi-family residential construction was slow in Seattle in 2002 and 2003. Now, Seattle condo real estate values are climbing at the fastest pace of any condo market in the country, according to Radar Logic, a real estate research firm. An attractive two-bedroom, two-bath, downtown condo property with panoramic views of city and Elliott Bay is selling for about $1 million. Now...let's take into consideration that you will spend over half the year enjoying rainy weather. And the winters are brutal. And I swear, I read somewhere many years ago that something like 80% of all the serial killers that are known are from Seattle!

Boston-
The housing market in the trendy Back Bay has slowed, while Boston's downtown and waterfront areas are attracting buyers interested in living near its booming tech businesses. A one-bedroom, one-bath condo with a view of Boston Harbor sells for less than $650,000. One bedroom for $600K???? Yikes! And I'm not sure about this, but it seems like I remember hearing the crime rate in Boston is nothing to twirl a switchblade at. And those cold winters??

New York City- We have a video of Donald Trump that I recorded off the Larry King Live show...and Trump elaborates on how Manhattan is in a world of its own as far as the real estate market is concerned. He says it's hotter than a firecracker right now. Forbes says a condo in a pre-World War I building with two bedrooms and one bath in the Financial District is selling for about $750,000. OUCH. But I guess if you enjoy a place like New York, and you have to work there, that's pretty good news. I guess...

Now, how about the closest thing to Paradise if you don't count Florida and some of the Caribbean Islands? Myrtle Beach is the place, compared to what I've read above. Our market is slow right now...all the better for a smart buyer! But you can have a luxury oceanfront penthouse in the fanciest Myrtle Beach resort for about the same price as that 2 bedroom yucky building that overlooks a dirty sidewalk in New York.

You can wake every morning to the salt air and the seagulls calling, too. Granted we don't have the nearby techo-jobs that pay in the 6 figure ballpark. But our cost of living is less. And there are plenty of jobs if you've a mind to look.

And if you can't afford a half million dollars, find a nice 3 bedroom home 3 or 4 rows off the boulevard and move in for around $300,000. Move out a mile from the beach and get a beautiful golf course condo from $100K to $250K. Look hard and you can find a one bedroom around for under a hundred thousand.

Our winters are mild. Our summers are HOT. Our springs and falls are heavenly. I think we've got attractions that rival anywhere except maybe downtown Manhattan.  Maybe the Forbes people need to pay us a visit!

Source of figures: Forbes, Matt Woolsey (11/13/2007), and Realtor.org (11/26/2007).
Opinion by Myrtle Beach Web Design