FSBO BLOG

Home Prices Fall for 8th Month . from the S&P/Case Shiller composite index of 20 metropolitan areas declined 0.2 percent in February from January on a seasonally adjusted basis for a drop of 0.3 percent.

This is based on all sales, which over 40% are FNMA or bank short sales. FNMA & banks are taking a loss of 30-40% on each sale, simply unloading as fast as they can. You take these distressed sales out and the sales figures would look better.  The government and banks want real estate values to improve, yet they are the reason for the negative headline. Eventually they will wake up to this fact!!!

the supply of new houses on the market hit their lowest level since August 1967. The Commerce Department said sales rose 11.1 percent to a seasonally adjusted 300,000 unit annual rate, after an upwardly revised 270,000 unit pace in February. A report last week showed there were 3.55 million previously owned homes on the market in March, well above the economy’s historic rate of between 2 million and 2.5 million.

Carlyle Group and Blackstone Group LP are leading a record number of private-equity managers aiming to raise real estate funds as the world’s top buyout firms accelerate an expansion beyond corporate takeovers.

Blackstone, the biggest private-equity firm, is planning to raise its next real estate fund, with a target of about $10 billion. Carlyle is in the process of raising a new fund for U.S. property deals.

The two are among 439 private-equity real estate funds seeking a combined $160 billion, the largest number on record, according to London-based researcher Preqin Ltd. KKR & Co.

Probably the highest share on record. Todays report: Purchases increased 3.7 percent to a 5.1 million annual rate, exceeding the 5 million median forecast of economists surveyed by Bloomberg News.

Those ‘cash sales’ made by investors buying bank owned property. If you want to reduce the inventory to solve the dropping prices and sales of real estate, the government just needs to provide investor financing.  Simple as that!!

First is increase in demand. This has been low for the past few years.

Second is increase in replacement cost. Raw materials, such as; copper, aluminum, etc have been increasing dramatically the past few years. Huge demand from China, Brazil and other developing countries have pushed raw materials up each year. This is the backbone of inflation which is right around the corner or is already here according to Shadow Government Statistics newsletter and Walmart CEO Bill Simon.

FSBO.com feels a short term increase in demand will occur this spring, make sure your property is ready to be shown. This will probably be a very small window of opportunity.

This months article in Fortune Magazine reports now is the time. Owning is much more affordable then renting.

Accordig to Deutsche Bank’s study: affordability measured in two ways: the share of income that Americans are paying to own a home, and the cost of owning vs. renting.

The 10 Best Cities starts in Atlanta with Rent as % of after tax mortgage payment: 151.2%

however, the headlines read: “Home prices fell 6.7 percent in February”. According to new report from CoreLogic, that number includes distressed sales (sales of foreclosed properties or short sales, where the bank agrees to let the homeowner sell for less than the value of the mortgage). If you take those sales out,  home prices were basically flat. The banks are their own worst enemy. They tighten lending, so sales slow down, then to make sales they lower the price of their inventory, which leads to lower values, which leads to more people ‘under water’ with their mortgage, which leads to people walking away from their property.

according to the latest data from the Federal Reserve. At the same time, apartment vacancy rates are dropping and rents are rising. Many good credit borrowers are not even trying, that shows up in statistics on credit scores for loans financed with backing from Fannie Mae and Freddie Mac. The average credit score has risen to 760 from 720 a few years ago. For FHA loans, the average score has gone to 700 from 660. Loans made to borrowers with sub-620 scores are almost nonexistent. Check your Credit Score.

A good article in Time Magazine, April 11, ‘Vulture Investing’ tells of an investor with $200 million buying like it’s ‘2004′ at depressed prices. Their view is that “76.7% of the 2.8 million oversupply of housing inventory has burned off”.