John Morrison - Boston area real estate - Everything you need to know about buying in Massachusetts

Can I use the first-time homebuyer tax credit as part of my down payment?

Thu, 11 Jun 2009 21:35:09 -0500

The U.S. Department of Housing and Urban Development recently announced that eligible borrowers who intend to purchase an FHA-insured home may elect to 'monetize' the first-time homebuyer tax credit and apply those funds toward their down payment or closing costs. Previously, buyers could only receive the credit (up to $8000) by amending their 2008 income tax return or waiting until they file their 2009 return.

Facing foreclosure? Don't give up.

Sun, 31 May 2009 21:29:27 -0500

There are resources available to home owners who are falling behind in mortgage payments. A major program has been launched to help people in this situation, or those whose home value has fallen below the amount they have financed.

Visit "Making Home Affordable" to find out if you qualify to either refinance your existing loan(s) or have your lender/servicer modify your loan(s). This site also features answers to frequently asked questions and some other resources that you may find helpful.

If you are falling behind making payments or are struggling to make ends meet in Massachusetts, help is available. Visit your local city/town hall for information, ask a real estate professional, or talk to someone who may know where you can turn. Whatever you do, do not fall prey to the various mortgage protection scams wherein companies promise to rescue you from foreclosure. They simply do not work. We're rooting for you and are here to help.

How much would you pay for this building? Sign of the times...

Tue, 31 Mar 2009 17:01:16 -0500

The image you are looking at is the Hancock Building in downtown Boston. It was sold today at a foreclosure auction. What would you bid for this landmark?

In 2006, this commercial investment was worth around $1.2 billion to a group of investors who purchased it, hoping for a solid CAP rate and increased rents from the various businesses leasing space in the tower. Like many properties purchased before the bubble burst, their goals were not reached, they fell behind on payments, and ultimately ended up in foreclosure.

What did it sell for today? A paltry $660.6 million. In case you don't have your calculator handy, that means the new group of investors purchased the property for slightly more than half price compared with the sale price three years ago. Come back in another three years and we'll check on the market value... Any guesses?

First time home buyer tax credit: changes that may benefit you

Wed, 18 Feb 2009 15:36:10 -0600

The stimulus package recently signed into law by President Obama, known as the American Recovery and Reinvestment Act, contains some modifications to the tax credit for first-time home buyers that was created last July.

Here are the new details that will help folks that buy in 2009:

* The credit will be the lesser of 10% of the cost of the home or $8000.

* Any single-family, primary, owner-occupied residence is eligible.

* The credit reduces income tax liability by up to $8000. Any portion of the credit that is unused will be refunded to the purchaser.

* Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).

* Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase. * Credit applies to homes purchased on or after January 1, 2009 and before December 1, 2009.

* If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.

* The biggest change: this credit will actually be a credit, not an interest-free loan. The credit does not have to be repaid, subject to sale restrictions as listed above.

If you are a first-time buyer thinking about purchasing real estate in Massachusetts, this year is the time to do so. To learn more about the housing market in any town in MA or to set up a time to sit down together to discuss your particular situation, please do not hesitate to call or email. All details discussed will be kept confidential. Since I work only on behalf of buyers and never take listings, you can rest assured I will represent your interests only.

1.800.252.8937 (ask for John) or reach me via email

President Obama's 'Homeowner Stability Initiative'

Wed, 18 Feb 2009 14:02:31 -0600

President Obama announced a plan today designed to help millions of homeowners around the country. While final details and rules & regulations will not be announced for two weeks, we learned some details today. The plan is scheduled to begin March 4.

Some homeowners will be able to refinance their existing mortgages, only on owner-occupied properties. There are several criteria they must meet. Owners must be current on their mortgage payments, must have a conforming loan (less than $417,000) that is owned or guaranteed by Fannie Mae or Freddie Mac, and apparently must owe more than 80% of their home’s value. Currently, lenders are not likely to refinance loans for borrowers who have less than 20% equity in their home. A further caveat: the new mortgage and refinancing costs must be no more than 105% of the current value of the home. Obama’s administration predicts that this plan will help up to five million “responsible homeowners.”

This initiative also aims to bring mortgage payments down to no more than 31% of borrowers’ income. The goal for this portion of the plan is for lenders to reduce interest rates on loans to bring monthly payments down to 38% of income and the government will further subsidize lenders and servicers to bring the ratio to 31%.

Check out this article from CNN for more information on this hot-button issue.

There are plenty of details surrounding this plan that I haven't included, such as the government throwing more money to Fannie and Freddie, etc., with the end goal being to keep mortgage interest rates down for some time.

What do you think? Is the plan going to work? Will it really help millions of at-risk homeowners?

MA home buying 101: avoid common mistakes

Tue, 27 Jan 2009 14:43:23 -0600

Many common mistakes that buyers of real estate make can usually be avoided. Here are a few mistakes many buyers make, and some ways to avoid them.

#1. Buying before selling. It sounds simple, but the lure of that new house can have an overwhelming effect on your finances. Sell the home you currently own before buying a new one. Sure, bridge loans can be obtained, but in the current buyers’ market, who knows how long your home will be on the market before someone purchases it? Unless you are able to pay cash for that new place, wait until you are certain your home sale will close before placing an offer on another piece of property.

#2. Continuing to look when it’s time to make an offer. This mistake, most often made by first-time buyers, is very common. Many folks think they must look at 30, 40, 50 properties before making a decision. If you see property you like, it fits your budget and needs, and you envision yourself living there, pull the trigger! Assuming your real estate agent is working for your best interests only (as Exclusive Buyer Agents are, hint hint), they should have a good idea of what you are looking for in a home based on your preliminary interview, and should be knowledgeable about what’s on the market as well as what’s not. They are likely to show you the properties that match the majority of your search criteria first. Don’t fall into the trap of feeling anxious because you feel haven’t looked enough. Remember, this is only the first part of a long process. Be grateful it was easy.

#3. Waiting for prices to drop. In most towns, real estate prices have dropped significantly over the past few years and show few signs of increasing. Many buyers fear paying too much for their home. Keep in mind that real estate is cyclical, so prices will move up eventually. There is no failsafe way to ‘time the bottom’, and you should take the long view. If you are planning to spend more than a year or two in the home you are purchasing, don’t worry about short term price changes. Focus on finding a great place that you can afford. Large price drops are very uncommon in the short term, so don’t fret. Either way, it is almost always a better use of your money to make mortgage rather than rent payments. History shows us that real estate has been one of the safest and lucrative investments ever.

I’d be happy to discuss your home buying wants and needs if you are thinking about starting a home search. I work only for buyers and as such have your best interests in mind at all time and my only loyalty will be to you. Call me at 800.25.BUYER (ask for John) or email me.

Check back soon, as there are many mistakes buyers make that I have yet to cover. An educated consumer is the best consumer.

Will speculators prevent a housing recovery?

Tue, 27 Jan 2009 13:37:28 -0600

Kathleen M. Howley wrote an interesting article recently. Check it out on Bloomberg.com. Howley's thesis, built in large part upon interviews with Nobel laureate economist Joseph Stiglitz and co-creator of the widely used S&P/Case Shiller real estate price index Robert Shiller, submits that speculators are largely to blame for the current housing recession and these same flippers/professional investors will keep prices down for some time to come.

How did this happen? Flippers bought more than they could afford thanks to no-documentation loans and other risky mortgage products during the housing market bubble in the late 1990s and early 2000s. When many of these loans ultimately went into default and the homes were foreclosed on, the bubble burst. This has been happening for four years now, and prices are still rapidly dropping.

These same speculators have been buying up foreclosures at auction and directly from lenders, which has prevented the housing market from collapsing completely, but Professor Stiglitz contends that speculators may cause a double housing recession. He said, "We’re creating a shadow inventory of homes that will be right back on the market as soon as the economy and the housing market begin to improve."

The problem is huge, and banks (who own at least $11.5 billion of homes, according to the FDIC) also continue to contribute to it. How do you feel about banks, Professor Stiglitz? "...the same banks that created the problems by mismanaging their risk are mismanaging the disposal of their assets."

There is no easy solution to this murky issue, but states will soon receive money allocated from the Housing and Economic Recovery Act of 2008 to purchase & renovate foreclosed homes, then sell them to families who intend to occupy the homes. States have 18 months to use their money or they will lose it. Hopefully this program will be run well by states and community groups so that potential buyers, mostly low-income, can occupy their own home, which will improve communities and settle the housing market. I have seen no indication that this money has been sent to states yet, but it is likely to be soon. Florida, Nevada, California, and Michigan, those most widely affected by foreclosure, need to act quickly and rationally.

If you are interested in purchasing a foreclosure in Massachusetts, feel free to contact me to learn how to do so and avoid potential pitfalls and risks.

800.25.BUYER (ask for John) or email me

Stemming the foreclosure crisis: MA Attorney General's plan

Tue, 27 Jan 2009 11:55:44 -0600

Massachusetts Attorney General Martha Coakley, together with several State Senators and Represenatives, has filed two pieces of legislation aimed at reducing foreclosures and negating some of the negative effects of abandoned properties as a result of foreclosures.

What is Ms. Coakley’s hope? According to the AG website,

“We hope that this legislation can provide for Massachusetts some relief while we wait for action at the national level. The effects of the housing crisis have rippled through all sectors of our economy, and until we tackle the underlying problem of the subprime lending crisis, no bail out package, no matter how big, can appropriately stabilize our economy,” said Attorney General Coakley.

If you are interested in reading the full text of these pieces of legislation, please view the ‘press release attachments’ near the top of the page from the link above. If not, read on for a brief synopsis of each.

The first piece of legislation, titled An Act to Require Commercially Reasonable Efforts to Avoid Foreclosure, will essentially force lenders (creditors) to make loan modifications on owner-occupied primary residences. This is aimed in the right direction, and it should bring hard-working homeowners and their lenders together. It remains to be seen whether this legislation will actually reduce the number of foreclosures in the Bay State, but the initial groundwork is being laid.

The second piece of legislation, titled An Act Regarding Community Leadership, Neighborhood Revitalization and Urban Violence Protection, aims to accomplish two main tasks. First, it would create an abandoned & vacant property registry. Owners of such properties (primarily lenders and service companies) would be required to maintain these properties as they are added to the registry. The hope is that this will reduce dilapidation, building code violations, and different types of criminal activity like drug dealing, theft, and arson.

Secondly, it would establish a second-hand metal registry. Currently, thieves target abandoned and under-construction properties to steal and re-sell copper, lead, building materials, etc. Junk dealers and pawn brokers, many of whom are unlicensed, are the buyers. They would be forced to register with the state and obtain a license. With this additional monitoring, Coakley hopes to reduce such thefts. Sounds like bureaucracy in its purest form to me, but hopefully it too will work.

To get more information about these proposed pieces of legislation or learn about buying a foreclosure, feel free to call or email me.

800.25.BUYER (ask for John)

2009 home buying trends?

Thu, 08 Jan 2009 10:38:47 -0600

For an interesting read and one broker’s opinion about home buyers this year, head over to REALTYTIMES®. Author Mark Nash, a real estate practitioner in the Chicago area, has done a concise job summarizing what is in and out for home buyers. According to his bio on the site, Nash has been doing his year-end “What’s in, what’s out for homebuyers” series for some years and has been featured on television and in print.

One of the ‘what’s in’ headlines surprises me and I’m not entirely confident it applies to the majority of real estate agents. The headline: Real estate agents as a housing resource, not a salesperson. While we at Buyer’s Choice Realty act as consultants to our clients, there is still evidence that the vast majority of agents care much more about getting sales than helping people, providing them with solid information, and educating them realistically, especially when such information may cause a prospective purchaser to hold off on buying a piece of property.

I hope this trend is changing, because consumers have the right to be educated about purchasing real estate, and need to know that it may not be right for them at this time based on their income, job safety, budgeting, etc.

Pending home sales down across country; Northeast no exception

Tue, 06 Jan 2009 12:40:46 -0600

The National Association of Realtors® reported today that their forward-looking statistic, “Pending Home Sales Index“, based on contracts signed on previously owned homes, is down nationwide. With the economy going down the drain, huge job losses in many sectors, and consumer confidence very low, this number is no surprise.

Here in the Northeast, the numbers are the worst. The index dropped 7.2 percent to 63.2 in November and is 14.6 percent below a year ago.

Is there light at the end of the tunnel? Perhaps. The NAR’s “housing affordability index”, a complicated relationship between prices, mortgage rates, and family income, is approaching record highs not seen since 1972. Housing is actually becoming affordable again.

Real estate prices in Massachusetts show few, if any, signs of increasing for the moment. That could change by the end of this year if soon-to-be President Obama and his team roll out an effective stimulus package that focuses on housing. Financing a home purchase is as cheap as it was in the 1950s & early 60s thanks to the Federal Reserve, but if foreclosure numbers do not decrease soon, prices will continue to fall.

For more information about your prospects of becoming a home owner in Massachusetts this year, do not hesitate to contact me.

Real Estate year in review: 2008

Mon, 05 Jan 2009 20:36:04 -0600

Now that the holidays are over and we are into a new year, let's take a break and look back on 2008. Assisting us today will be Stefan Swanepoel, a noted author and speaker who has been right on with his prognostications regarding real estate and the direction the industry will take.

Mr. Swanepoel (aka 'Mr. Internet') has not released his full annual report for this past year but he did share some of the high points in a 'Top Ten' list. What impacted the industry in 2008?

Emergency Economic Stabilization Act of 2008 (The Bailout)
The Presidential Election
In Memory Of: Countrywide, IndyMac, Washington Mutual, Wachovia, etc.
Facing Foreclosure Frenzy
Home Prices Spiral Downward
NAR-DOJ IDX Settlement
Brokers Go Bust
Keeping It Short (Twitter)
ActiveRain Explodes Past 100,000 Members
NAR Celebrates 100 Years

There are quite a few conversation starters in this list, and 2008, a year filled with volatility, disappointment, more than a few bankruptcies large and small, is one for the history books. I'm sure more than one of you are glad to see 2009 although many challenges face the industry that will take time to work their way through.

What headlines are you thinking about that should have made Swanepoel's list?

Crane Beach in Ipswich, MA

Mon, 29 Dec 2008 15:34:23 -0600

Why move to Ipswich, MA? Views like this one. Ranked among the world's best beaches, Crane Beach is the place to be all summer long. It is certainly less crowded in the middle of winter, but still provides amazing views as you can see.

To learn more about the town of Ipswich and Ipswich MA real estate, call me at 800.25.BUYER (ask for John) or email me.

FOMC gets aggressive: mortgage rates will continue to drop

Tue, 16 Dec 2008 14:41:37 -0600

The Federal Open Market Committee (FOMC), a component of the Federal Reserve, announced today that they are lowering rates yet again. Without getting bogged down in the minutiae, this is great news for potential Massachusetts real estate buyers.

Why? Property values continue to fall in Massachusetts as a whole as well as the Boston area, but it is very possible, and indeed likely, that Boston area real estate market values will reach a bottom over the course of the next year.

How will this happen? With the help of today's FOMC decision, key interest rates will soon reach their lowest levels on record. The cost of capital will be almost nil, and as a result banks will undoubtedly lower mortgage interest rates. Lower rates mean that more folks that are undecided whether to purchase a home will lean towards buying.

Think how much money you could 'save' by paying 4.5% over 30 years versus paying 5%. This thought, combined with the ever-volatile equity and bond markets, means that real estate will be your best investment (and most stable).

To learn how buying real estate in Massachusetts will be great for your investment portfolio, feel free to contact me at 1.800.25.BUYER (ask for John) or email me

MA home buying 101: assessed value vs. appraised value

Wed, 03 Dec 2008 19:56:47 -0600

If you are in the market for Massachusetts real estate, you will sooner or later come across the terms assessed value and appraised value. Is there a difference between an assessment and appraisal? If so, how will this difference affect you and your ability to purchase real estate?

Definition of assessed value: the worth or value of a piece of property as determined by the taxing authority for the purpose of levying an ad valorem (property) tax.

In Massachusetts, each town has a tax assessor, and this person is responsible for determing the value of each parcel of land and its improvements (typically houses). After the tax assessor determines the value, he/she passes this information along to the town for the purpose of levying the tax.

How is this value determined? In most cases, the assessed value is based on some percentage of market value. Typically the assessor, in conjunction with the town, will figure out what the tax base needs to be for a given year to meet budget requirements. They will then look at previous records and current market values and assign a value to each parcel of land. At times, assessed values will be almost 100% of market values, but typically they are a lower percentage. Assessed values of properties are public records, and can be found by visiting the tax assessor's office at your local Town Hall or by viewing local land records.

Definition of appraised value: an estimate of value based on an appraiser's analysis of data within the context of the appraisal problem that the appraiser was employed to solve. While this appears to be a mouthful (and it is), let's break it down so it is more understandable.

First, what is an appraiser? This person will be a qualified professional, typically licensed by the state in which they practice. A more experienced appraiser will be certified. Who do they work for? Appraisers work for appraisal companies, banks, real estate companies, and other lending institutions.

If you need a loan to purchase Massachusetts property, in most cases the entity you are borrowing from will hire an appraiser (at your expense, typically $250-$600) to provide an unbiased value of the subject property based on many factors. In almost all cases, the appraised value must be equal to or higher than the proposed purchase price. Basically, the bank will want to make sure they are making a solid loan and that you as the borrower will not be borrowing more than the property is worth at the time of purchase.

On what factors is an appraisal based? Major factors include current market values of similar homes in similar conditions in the same neighborhood as well as housing trends and demand for the subject area. Appraisers typically have access to census data that shows population trends by town or region. Additionally, an appraiser will take into account any additions that have been done (are they fitting with the style of house?) and other improvements to the property (curb appeal matters!). There are a few different types of appraisals, but the key is that the appraiser should be familiar with the area so he/she can provide an unbiased expert opinion of value which can be a benefit to sellers and buyers.

In the current Boston area real estate market, buyers are finding that houses can be bought for thousands of dollars below assessed value. If you have a question about assessed values or appraised values, do not hesitate to contact me to discuss your questions or concerns. Seeking answers from a qualified professional is never a bad way to go, and I guarantee to save you money when you buy a home in Massachusetts.

call 1.800.25.BUYER and ask for John

email me

MA mortgage rates down? Thank you, Federal Reserve

Tue, 25 Nov 2008 20:10:22 -0600

The Federal Reserve announced today that over the next year (18 months at most), they will be buying up mortgage-backed securities to the tune of $500 billion.

This is what the Fed had to say in a statement, per a Bankrate.com article,

"This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally."

What a nice Thanksgiving-week treat! Rates have immediately dropped today, and are likely to drop slightly over the next few weeks barring any unforeseen financial collapses or other major news. If you are currently in the market for a home loan, experts suggest you lock in your rate to take advantage of the recent drop. 30-year mortgage rates are back below 6%.

If you are interested in purchasing real estate in Massachusetts, feel free to contact me to discuss what this will mean for your prospects. While I am not in the mortgage industry, I can assist you in shopping for loans and finding an advantageous rate with few or no junk fees, and I know the questions to ask any potential lender.

call 800.25.BUYER (ask for John) or email me

Was the bailout ill-conceived? Say it ain't so!

Wed, 12 Nov 2008 13:31:11 -0600

My main man Hank Paulson, head of the HPHF, has changed his mind about spending some of the $700 billion that he hopes to soon access. As of today, Paulson has roughly $60 billion left of the initial $350 billion which has been spent buying preferred shares of banks and insurer AIG.

Remember the Troubled Asset Relief Program (TARP)? The initial plan was to buy illiquid/mis-priced mortgage securities in order to get them off the balance sheets of huge companies in order to stabilize the market/economic system. The Treasury is the only entity that could afford to hold them for a couple years in hopes that the housing market would level out and the price of these securities could return to normal/par. Well, that is not going to happen.

Hank announced today that he wants to go in a different direction. Read all about it. My favorite part of this Bloomberg article is as follows,

"Paulson's remarks are an acknowledgment that the centerpiece of the $700 billion bailout request to lawmakers was ill-conceived."

Anyway, Hammerin' Hank now plans to throw money at consumer lenders so that Joe Q. Public can get a car loan, credit card, or student loan more easily. How will that happen? There is plenty of ill-liquidity in the consumer lending sector, and adding billions of dollars to that sector will ease pressures. Well, maybe.

So much for helping the housing market. Unfortunately, Paulson essentially has carte blanche regarding how he wishes to spend TARP money, and is not even required to announce plans for spending tax dollars.

The motto of this bailout and associated plan(s) of action? Ready, Fire, Aim...

Cleaning up the housing mess, FHFA style

Tue, 11 Nov 2008 13:57:00 -0600

James Lockhart, Director and Chairman of the Federal Housing Finance Agency (FHFA), announced a large loan modification plan today.

How big is it? According to Lockhart, tens of thousands of mortgages can be renegotiated. Servicers of these loans have agreed to this plan and will receive $800 for each loan modified by the program. Unfortunately, it appears that the only folks eligible at this point are borrowers who are at least three months delinquent in their mortgage payments, and the loans must be owned or securitized by Fannie Mae or Freddie Mac. The plan is designed to get homeowners into mortgages they can afford. Mortgages may be extended, and Lockhart mentioned a 3% rate for 40 years with a balloon payment on the unadjusted principal that remains at the end of the term. Naturally, many questions remain about actual plan implementation. Lockhart wants to renegotiate mortgages so that borrowers will have no more than 38% debt-to-income ratio.

The Chairman of the Federal Deposit Insurance Corporation (FDIC), Sheila Bair, when asked for her thoughts regarding this plan, called it a, "step in right direction, but falls short in what is needed to address widescale mortgage issues."

Why should mortgages be renegotiated? Why bail out people who made bad decisions? Lockhart answered those questions and stated that foreclosure is extremely expensive for Fannie and Freddie. It often costs them 50% of the loan, and renegotiating should only cost 20%. He went on to say it's good for homeowners in general because it will start to stem price declines in neighborhoods where there are foreclosures. He believes this program will hopefully help in the overall market to stabilize home prices.

While this is only a first step, it is sure to be hotly debated in the days to come. What are your thoughts?

Update: President-Elect of National Association of Exclusive Buyer Agents (NAEBA): Benjamin Clark

Thu, 06 Nov 2008 15:33:01 -0600

Ben Clark will be leading NAEBA in 2009 2010 (see Ben's comment below). If you are unaware, all members of NAEBA work exclusively on behalf of real estate buyers. I encourage you to help me welcome Ben to the role of President of this organization, and take a moment to read some of his salient thoughts about our side of the industry.

P.S. Ben, we are looking forward to hearing your ideas about the direction of NAEBA and what you plan to accomplish as President over the next year.

If you are interested in learning more about the concept of Exlusive Buyer Agency in Massachusetts, call 1.800.25.BUYER and ask for John, or email me.

MA 2008 ballot question results

Tue, 04 Nov 2008 21:20:29 -0600

It looks like MA voters will vote down a measure to repeal the state's income tax, which is currently 5.3%. About 99% of districts have reported, and the NOs are ahead 70%-30%. Who says the public doesn't have common sense?

Also, the measure to decriminalize possession of less than one ounce of marijuana will likely pass. 65% of voters feel that having some weed should be a civil offense rather than a criminal one.

As far as greyhound racing, 56% of voters want to outlaw this activity.

Holy liberal, Batman.

Update: Solving the foreclosure crisis. Any ideas?

Thu, 30 Oct 2008 15:50:50 -0500

Some smarty-pants Professor from Yale got the NY Times to publish his thoughts about solving the foreclosure crisis. As I was unable to get an op-ed piece in a major newspaper, you can read a few of my thoughts on this same issue from a previous post.

That stated, Mr. Geanakoplos, along with coauthor and fellow smarty-pants Susan Koniak, provide a sound argument for enacting new legislation based on their ideas. If you are a home owner, potential home buyer, potential home seller, or engaged in business with any of these parties, take a few minutes to read

Mortgage Justice Is Blind

MA residential property inventory down

Wed, 29 Oct 2008 18:55:31 -0500

A needed step appears to be taking place in the Massachusetts housing market. The Massachusetts Association of Realtors® reported September 2008 market data recently, and the housing correction continues.

Feel free to read all about it over at Bay State Realtor News. Here is an excerpt:

“The inventory of residential properties on the market as of September 30, 2008 decreased 13.6 percent compared to the same time last year (from 53,957 listings in 2007 to 46,598 listings in 2008). At the current sales pace, this represents approximately 10.2 months of supply, a decrease from 12.0 months of supply in September 2007. On a month-to-month basis, the average months of supply is up from 8.1 months in August 2008. It is considered a balanced market when there are between 7.5 and 8.5 months of supply.”

What have we learned? Inventory must come down in order to have a normal housing market. Unfortunately, prices do not continually drop in a ‘normal’ market, so we are not quite there yet. Prices are down for single family homes and condominiums across the state over the past year (multiple years for many towns across the Commonwealth). Once prices start to stabilize, we should be nearing the other side of the current economic downturn.

If you plan to buy real estate in MA, you should consider doing it before the end of 2009. Your property’s value may decrease in the short-term (6 to 18 months) after you purchase, but if you stay in your home for at least five years, odds are high that you’ll make a buck or three upon the transference of your deed.

If you are in the market to purchase MA real estate, why not hire someone at no additional cost that only has your best interests in mind and never works for sellers? Call me: 1.800.25.BUYER (ask for John) or email me.

Credit rating agencies questioned before Congress

Wed, 22 Oct 2008 16:31:51 -0500

Finally! Some tough questions for the CEOs of the big three: Moody’s, Standard & Poor’s, and Fitch, the credit rating agencies that many feel are ultimately responsible for the sub-prime crisis and ensuing meltdown on Wall Street. For a little background, see my previous post questioning who is to blame for the sub-prime crisis.

As Jeff Macke says of these agencies on CNBC, “they should be taken out and annihilated…they are bringing economy around the globe down...”

Simply stated, the ratings agencies did not do their job. They are were the symbols of trust and credibility to a giant industry that spans the globe, and they have failed. When will someone be punished for this amazing lack of common sense? Not everyone that works for one of these companies is to blame, but the fact remains that the companies made money by bestowing AAA ratings on suspect mortgage-backed-securities (MBS).

For an example of how ridiculously shameful this behavior was, check out this article.

Looking for a scapegoat to blame for your declining retirement savings? Here are three:

Raymond McDaniel, Moody’s CEO

Stephen Joynt, Fitch CEO

Deven Sharma, Standard & Poor’s President

MA 2008 ballot questions: vote NO on question 1 this November

Wed, 22 Oct 2008 15:34:55 -0500

There will be three ballot questions facing voters this election cycle in my home state of MA. They are each important, but the one that will affect your money the most is question one.

What is question 1? Should MA eliminate personal income tax? Read more about this question on this page sponsored by the MA League of Women Voters.

Why should you vote no? Michael Widmer, president of the Massachusetts Taxpayer Foundation, wrote an interesting opinion piece for the Boston Globe recently. In his article, Widmer brings to light the most serious potential consequence voting yes likely will bring about: higher property tax.

Massachusetts, already facing a budget shortfall, will have to make up lost income tax revenue from another source if this question passes. Sales tax will likely rise as well. The low-to-middle income home owner will suffer, and, according to Widmer,

"would likely end up paying more in taxes, just out of a different pocket. Meanwhile, the wealthier who pay a higher share of income taxes would get a big tax break."

If you are undecided about how to vote, I encourage you to visit both pages linked to above.

There are two additonal questions on this year's ballot.

Question 2: Should MA decriminalize possession of an ounce or less of marijuana? If this passes, folks over age 18 who get caught with an ounce or less of pot will pay a $100 fine, and since the offense will be a civil one, nothing will go on their record. No public opining from me on this one...

Question 3: Should MA protect greyhounds by outlawing dog racing? This only applies to racing where money is wagered on the outcome, and I suppose there is no reason to race the pups unless people are betting on it. I've never been to Wonderland nor Raynham Parks, but I am a dog lover and have read about mistreatment of racing hounds, so I'll vote yes.

Hammerin' Hank's Hedge Fund: another HPHF update

Wed, 15 Oct 2008 18:28:56 -0500

It appears our economy is in a bit of a spot right now. No kidding, right? We learned over the past few days that our U.S. banking system has effectively been nationalized. How did this happen? Hammerin' Hank, of course.

Paulson conspired worked with his Wall Street buddies, the Federal Reserve, and the FDIC before deciding how to use the first $250 billion that we recently invested into the HPHF.

What do you mean, 'nationalized'? The always insightful folks at the Wall Street Journal wrote an informative blog post describing what actually happened early this week. Basically, Hank bought a bunch of super senior preferred shares from many of the country's largest 'banks'. Goldman Sachs, a bank? Apparently it is becoming one. A few of these firms got $25 billion each, and a few got $10 billion. JP Morgan Chase, Wells Fargo, Citi group, Bank of America, you get the drift. These preferred shares mean that the HPHF owns up to 28% (in the case of Morgan Stanley) of the shareholder equity in each of these companies.

HPHF stands to make out pretty well. They will be paid 5% per year for the next five years on their investment in the form of quarterly dividends. The government gets its share before any other preferred or common shareholders do. After the initial five-year period, they will make 9%.

Hank himself terms this capital injection a 'temporary investment' in order to restore confidence in our banking system and encourage private equity to reinvest in these companies.

What effect does this bank bailout have on real estate/the housing market? It is HPHF's hope that banks will now send that new money through the system by writing new loans and providing liquidity to the credit markets. Will more folks be able to qualify for a loan? Probably not, but here's hoping. Keep an eye on the LIBOR, which has dropped almost 30 basis points over the past few days, and is a solid indicator of where mortgage rates are going.

Sign of the times: US national debt clock runs out of digits

Thu, 09 Oct 2008 12:55:46 -0500

Having a great day? Here's a bit of news to bring you back down to earth. In 1989, real estate developer Seymour Durst created a big clock that tallied our government's debt. Durst was so amazed, dismayed, and outraged that the national debt was approaching $3 trillion (a paltry $2.7 trillion at the time), that he invented this gigantic clock and put it on display in Times Square.

Just last month, the clock ran out of space. They had to change the dollar sign to a one (1), because the debt had spiralled to more than $9.999 trillion. There was no more room!

(AP photo/Kathy Willens)

What is to be done? The Durst family (Seymour passed away in 1995) plans to replace the clock next year with one that has an additional two digits in order to keep recording the debt. Can you guess how high the new clock will be capable of going? A quadrillion dollars!