Foreclosure and Real Estate Blogs

I’ve been looking at some properties and found a couple of bank owned houses on the same street, separated by one house in between them.  In itself, the proximity of the two is kind of alarming, but the bigger question is how many other homes in that same area will end up going through the same process.  I’ve already talked about home pricing and affordability, these samples are just kind of anecdotal references to a process repeating itself in many of the “boom” areas.

Property #1
3 bedroom 2.5 bath 2949 square feet sold on the open market for $809,000 in May, 2005
HSBC took the property back for $824,240 in August, 2007
Currently listed for sale at $759,900 with no takers yet.

Property #2
3 bedroom 2 bath 1836 square feet sold on the open market for $850,000 in January, 2006
Argent took the property back for $712,720 in August, 2007 (probable drop in opening bid)
Currently listed for sale at $725,000 with no takers yet.

Housing prices in many areas are now a moving target, and that target is on a downward trend.

Fed Chairman Ben Bernanke testified in Feb., 2006 that:

“For example, a number of indicators point to a slowing in the housing market. Some cooling of the housing market is to be expected, and would not be inconsistent with continued solid growth of overall economic activity.
However, given the substantial gains in house prices and the high levels of home construction activity over the past several years, prices and construction could decelerate more rapidly than currently seems likely.
Slower growth in home equity in turn might lead households to boost their saving and trim their spending relative to current income by more than is now anticipated.”

That was a reasonable prediction. The “cooling of the housing market” part has pretty much happened in all the hot markets, but I haven’t seen much regarding the “households to boost their saving and trim their spending relative to current income” part.  What does that mean to me?  A predicted drop in consumer spending which will most likely lead to a rise in the unemployment rate.  It’s fairly obvious that unemployment will rise in construction, lending and real estate related industries, but when consumer spending declines, there isn’t as much demand for those goods and services that fly off the shelf during the “happy happy” times.

So here’s a prediction for how the real estate markets are going to move.  Gradual decline through 2010 for any area that has seen double digit valuation gains.  Why?  The crappy loans given to anyone breathing don’t finish the majority of their resets until 2010.  After 2010?  Probably more decline.  Housing prices move inversely to unemployment rates.  When unemployment is really low, housing prices tend to move up.  When unemployment goes up, housing prices tend to move downward.

I don’t know that there’s ever been a housing induced recession, but it looks like we’re going to get to experience one.  The good news, of course, is that those people who do not live in wildly inflated real estate markets probably won’t see too much of a decline.  Interesting times, indeed.

Msnbc has an article about Increasing Your Home’s Value.
Since some parts of the U.S. are now having problems retaining property value, I thought this might be a good/interesting article that people might find helpful.
Tip 1: Maintenance Pays Off-big time
I can’t argue with that concept, a well maintained house will always outsell the falling apart POS down the street. That is, of course, assuming that the prices are reasonable aligned between the two properties.
Tip 2: Keep up with the Joneses.
The concept is to keep your property, and it’s improvements, in line with the area. Buyer expectations in a given area will pretty much match the improvements in an area. The provided example of granite countertops is accurate, in an area where granite is common, you probably shouldn’t install canary yellow Formica on your counters.
Tip 3: Size does matter.
“Creating living space within the confines of the existing structure”? I can see the conversion of a basement into a family room, but adding a bedroom in an attic? I suppose it might work, but I can’t see that kind of add-on helping value much. Maybe if I was living some kind of horror movie life and had some scuttling relative that needed to be locked in the attic.
Tip 4: Some rooms are better than others.
So the feeling is bedrooms and bathrooms are important because they indicate how many people can comfortably live in a house. Well, IMHO, two bedroom one bath homes are kind of obsolete unless the buyer is looking for a “cottage” type home. Three bedroom two bath homes are fairly common in many areas, four and five bedroom homes are kind of standard in a lot of new construction. Is a five bedroom home worth a lot more if it’s in an area of three bedroom homes? NO. It’s worth something more, but overbuilt properties usually won’t recover the cost incurred in the overbuild.
Tip 5: It’s all about balance.
Now the writer talks about improvements and making sure you’ll be able to recover your expenditure.

Overall, it’s not a bad article, but it probably should have stopped at Tip #2. Improving a home’s value inexpensively can be done by making sure everything is functional and maintained first, then upgrading portions of the house as time and money allows. Bathrooms, kitchens and flooring can be expensive upgrades, plan and save for those upgrades. You can start with:
Interior Paint- Fix all the holes in walls, take your time, get good coverage and clean edges
Electrical Outlets and Switches - Uniform and new throughout the house
Doors and Hardware - Change out all interior doors and hardware, think lever sets instead of knobs
Lighting - If the house has ceiling mounted lights, change them out.
Window Coverings - Personal choice, think neutral colors so room colors can be changed later on
These improvements can be done fairly inexpensively and will give your home a “fresh” appearance which can help your state of mind while waiting to proceed with the more expensive improvements.