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It’s time to “Ignore the Headlines”

Time magazine had a great article in the Feb. 25, issue.  The  title of the article was Ignore the Headlines!  A variety of people are quoted in the article written by Dan Kadlec.  Peter Lynch and John D Rockefeller, the kind of guys that understand something about both making and managing money are both quoted.  Rockefeller famously said “The way to make money is to buy when blood is running in the streets.”  The article goes on and Lynch indicates that now is the time to buy a home.  Kadlec concludes his article as follows, “Risks almost always seem most acute when the headlines give you ulcers.  But that’s exactly when you should think long term – and get off your thumbs.”  it as an article worth reading, because it runs counter to all the negative media and it is spot on.  Now  is the time for investors to jump in and get a great deal on a prime piece af real estate.  Our two most recent sales in the last 10 days were bank controlled properties.  The buyers in both instances got bargains.  It’s a great time to buy! 

The real upshot of this article is buy now while rates are down because once the rates begin to rise the concurent rise in the house payment will offset any additional savings you might realize waiting for the property to further decline in cost.

Jeff Blahnik

Existing Home Sales Rebound

This is a Press Release from the Grand Rapids Association of Realtors:            

FOR IMMEDIATE RELEASE:                                                                

CONTACT:       Julie Rietberg            Friday, February 29, 2008  616-940-8200  julier@grar.com                                                          

Existing Home Sales Rebound           

The Grand Rapids Association of REALTORS® reports that sales of existing homes, including single-family homes, vacation homes, and condominiums, rose to record levels in January of 2008.  The Association reported 996 sales in January of 2008 – an 18.9% increase over this same period last year, and its strongest January sales report since 2002.  This comes on the heels of the Association’s report that sales of existing homes in each month of the 4 th quarter of 2007 also rose to record levels when compared to 2006.  Jim Fase, President of the Grand Rapids Association of REALTORS®, said that this notable rise in home sales means we will likely see a faster and more meaningful recovery of the local housing industry, which will help to stimulate overall economic activity.  “The average price of an existing single-family home in January was $129,500, a reduction that was anticipated in light of the increased number of sales of homes in January that were at or near foreclosure.  Subprime loans and other risky mortgage products have virtually disappeared from the marketplace which means that current sales are more stable and will lead to steadily higher home values later in the year,” he said.  The adjustment in the average price will also enable more first time homebuyers to purchase a home.  The National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI)[http://www.nahb.org/news_details.aspx?sectionID=0&newsID=6228] reports that Grand Rapids ranks as the 5th most affordable major housing market in the U.S.  This is based on a measurement of the percentage of homes sold in the Grand Rapids area that are affordable to families earning this area’s median income. “The steady increase in the number of home sales in this area gives us confidence that we may have turned the corner,” Fase concluded.  The Grand Rapids Association of REALTORS® is a regional organization working toward the advancement of the West Michigan real estate community.  Its members are also members of the National Association of REALTORS®, America’s largest trade association, representing over one million REALTORS® involved in all aspects of the residential and commercial real estate industries.                                                                                          www.grar.com                                                

REALTOR® is a registered collective membership mark which may be used only by real estate professionals who are members of the National Association of REALTORS® and subscribe to its strict Code of Ethics.

Grand Rapids Michigan Market Update

It is time for a market update. What is happening in the Grand Rapids market? Several trends are apparent.

Values are declining in the West Michigan market. Ten percent of the homes currently for sale are either repossessed or in the process of being repossessed. Because the banks can afford to cut prices to move inventory they have adversely affected market values for the entire market. All neighborhoods are feeling the brunt of this trend from Ada and Cascade, to Rockford and Walker- all neighborhoods. Yours and mine included. Nobody seems to be exempt.

Why is this happening?

· Employment issues have negatively impacted our market. Delphi in Coopersville closed, Steelcase not so long ago employed 10,000 plus in West Michigan now only 5,000, they used to build refrigerators in Greenville- not any more, Johnson Controls has closed plants in Holland. I could go on but you get the message, I’m sure.

· Sub-prime loans- loans essentially issued to people who never should have been given a loan. Many lenders made loans to buyers who were not able to honor their financial commitments. These homes are being repossessed in massive numbers.

· Equity loans- Too many people resorted to using the equity in their homes as a source of cash and borrowed the maximum against their home’s value. Suddenly because of an employment issue they need to sell, only to find that between their original mortgage and their equity loan they now owe more than their home is worth.

Keeping it in perspective.

· This too shall pass. We have experienced difficult times in the past and we will again in the future. Do you remember 1980-1981-1982 when the entire country was in a recession and mortgage rates were 14, 15, 16, and 17%. I remember those days all too well, but we got through it and moved on. We will get through this and hopefully have learned some valuable lessons.

· Opportunity is knocking. Change is relative when buying or selling. Someone may sell an entry level home for less than they had hoped, but when they buy up they will get an even better bargain. Now is actually a great time to move up. For first time home buyers the inventory is vast and the opportunities are almost unbelievable. While the news media would have us all believe the sky is falling (because that is what sells) the reality is that there is opportunity at every turn.

Let’s all keep our chin up and persevere.

Jeff Blahnik

Five Star Real Estate