The US will today make public details of a $500bn (£343bn) plan that will incentivise investors to buy up toxic assets. The plan will offer subsidies to private investors to encourage them to buy troubled mortgages and other loans. Essentially, these subsidies are low-interest loans.
The US Treasury Secretary Timothy Geithner said the programme is essential to help the world markets recover.
The "Public-Private Investment Programme" will buy toxic mortgages, securities and loans from banks. Initially the programme will free-up $500bn but the Treasury has made it clear the fund could stretch up to $1 trillion.
He also alluded to one of the very significant hurdles to a global economic recovery: the fact that banks are unwilling to free up credit to potential investors because they are still reeling from toxic debt losses. He pointed out that the private sector would share the burden of toxic assets with the taxpayer.
Generally, the news has been well received and it's expected that the markets will react positively as further details are announced today
Monday, March 23, 2009
Tuesday, March 3, 2009
Real Estate Positioned for Growth
by Kenneth R. Harney
No economist has more information at his or her disposal than Federal Reserve chairman Ben Bernanke, and what he told Congress last week should be encouraging news for anyone interested in real estate: The recession that has gripped the country painfully for 18 months will "end" later this year - moving us into positive economic growth.
In the meantime, housing may be better positioned than other major industries. That's because there appears to be significant interest in the improved $8.000, nonrepayable home buyer tax credit plus a historically-favorable combination of low interest rates and rolled-back home prices.
In a new research report, the National Association of Home Builders found that affordability of houses is now at its best level in years. The association's "Housing Opportunity Index" -- which measures the percentage of homes sold in local markets around the country that are affordable to families earning area median incomes -- hit a near-record 62.4 percent in the most recent quarter for which data is available.
By contrast a year earlier, the index was at 47, meaning that less than half of households could afford to buy a median priced home. During the boom years it was even worse.
Although rising unemployment is a sobering counter-trend, the improvement in affordability may be setting the stage for a real estate rebound -- even if monthly ebbs and flows in sales look gloomy in the first quarter of the year .
Mortgage rates continue to hover in the mid-5 percent range for 30-year fixed rate loans. Fifteen year rates are at 4.7 percent.
While average prices of homes continue to decline on a national basis, according to the Federal Housing Finance Agency, dozens of local markets -- most of them ignored by widely-publicized surveys such as Standard & Poor's Case-Shiller Index -- continue to show net positive selling price performance.
According to the agency's latest quarterly survey, local markets in much of Texas registered higher prices year-to-year, along with parts of the Carolinas, the Northeast, and the Gulf states.
For example, houses selling in Austin, Texas, were up 4.4 percent over last year. In Boulder, Colorado, the average gain was 3 percent. In Houston 3.7 percent; Decatur, Alabama 6.6 percent; Kingsport-Bristol Tennessee 6.3 percent; and Syracuse, New York 3 percent.
You don't hear about these positives because these areas were lower profile during the boom, never experienced a bust, and are just not on the New York radar screens.
But they're for real, and their moderate, sensible growth patterns may be where we're headed in real estate this year.
No economist has more information at his or her disposal than Federal Reserve chairman Ben Bernanke, and what he told Congress last week should be encouraging news for anyone interested in real estate: The recession that has gripped the country painfully for 18 months will "end" later this year - moving us into positive economic growth.
In the meantime, housing may be better positioned than other major industries. That's because there appears to be significant interest in the improved $8.000, nonrepayable home buyer tax credit plus a historically-favorable combination of low interest rates and rolled-back home prices.
In a new research report, the National Association of Home Builders found that affordability of houses is now at its best level in years. The association's "Housing Opportunity Index" -- which measures the percentage of homes sold in local markets around the country that are affordable to families earning area median incomes -- hit a near-record 62.4 percent in the most recent quarter for which data is available.
By contrast a year earlier, the index was at 47, meaning that less than half of households could afford to buy a median priced home. During the boom years it was even worse.
Although rising unemployment is a sobering counter-trend, the improvement in affordability may be setting the stage for a real estate rebound -- even if monthly ebbs and flows in sales look gloomy in the first quarter of the year .
Mortgage rates continue to hover in the mid-5 percent range for 30-year fixed rate loans. Fifteen year rates are at 4.7 percent.
While average prices of homes continue to decline on a national basis, according to the Federal Housing Finance Agency, dozens of local markets -- most of them ignored by widely-publicized surveys such as Standard & Poor's Case-Shiller Index -- continue to show net positive selling price performance.
According to the agency's latest quarterly survey, local markets in much of Texas registered higher prices year-to-year, along with parts of the Carolinas, the Northeast, and the Gulf states.
For example, houses selling in Austin, Texas, were up 4.4 percent over last year. In Boulder, Colorado, the average gain was 3 percent. In Houston 3.7 percent; Decatur, Alabama 6.6 percent; Kingsport-Bristol Tennessee 6.3 percent; and Syracuse, New York 3 percent.
You don't hear about these positives because these areas were lower profile during the boom, never experienced a bust, and are just not on the New York radar screens.
But they're for real, and their moderate, sensible growth patterns may be where we're headed in real estate this year.
Monday, March 2, 2009
Selling Your Home in a Declining Market
Selling a home in a declining market starts with a proper attitude and finding the right Realtor® who is optimistic and knows the right sales techniques in this tough market. Even though most people and economists are down on the housing market (feel it is depressed, that the economic recovery isn't going to happen in the next few months, and consumer confidence is down), it doesn't mean that you can't sell your home.
The truth of the matter is many people will sell their homes between now and this summer. While many sellers and real estate agents take a reactive approach to market conditions, those sellers who take a more proactive and realistic approach to the market will be the ones who sell their homes. These are the sellers who take advantage of this market and move up to their dream home! First, be honest about appraising the condition of your home.
The key to successful selling in a 'declining market' is pricing your home at today's market value, having your home in tip-top condition and being able to work with a prospective buyer on financing needs and terms. Don't let your ego or pride get in the way when determining a price for your home. Put yourself in the buyer's shoes and walk across the street. Curb appeal to a new buyer is a very important and is many-times overlooked.
Secondly, take a leisurely walk through your home jotting down the little things you might do to spruce it up. New carpeting, a fresh coat of paint, new light fixtures, mirrors, etc., are items that will give your home more emotional appeal and does not cost too much. Put away the clutter throughout the home. Rooms free of clutter will appear bigger and the new buyer can visually 'move into' your home much easier. Remember, new buyers are not buying your furniture.
Finally, be patient. The real estate market has changed considerably since the last run-up where homes sold in hours or days. We are now experiencing a more "normal market" where homes take 90-120 days to sell. Remember, inventories are at an all-time high right now. Bank foreclosures are all around you and many buyers will have difficulty qualifying for a new loan. Lenders also have very strict guidelines now and consumer confidence is very low. Allowing for a normal marketing period will do a lot to alleviate your impatience when you have few showings of your home or a lack of offers to review.
A good Realtor® will keep you abreast of market changes, activity on your home and others in the neighborhood, while maintaining a "teamwork" concept that is paramount for a successful sale. Properties need ample time to be exposed to the public and finding the right buyer requires a good understanding of the market as well as sales values. In all honesty, there are no easy answers but one thing is for certain, even in the worst markets, there are people selling homes and taking their equity!
The truth of the matter is many people will sell their homes between now and this summer. While many sellers and real estate agents take a reactive approach to market conditions, those sellers who take a more proactive and realistic approach to the market will be the ones who sell their homes. These are the sellers who take advantage of this market and move up to their dream home! First, be honest about appraising the condition of your home.
The key to successful selling in a 'declining market' is pricing your home at today's market value, having your home in tip-top condition and being able to work with a prospective buyer on financing needs and terms. Don't let your ego or pride get in the way when determining a price for your home. Put yourself in the buyer's shoes and walk across the street. Curb appeal to a new buyer is a very important and is many-times overlooked.
Secondly, take a leisurely walk through your home jotting down the little things you might do to spruce it up. New carpeting, a fresh coat of paint, new light fixtures, mirrors, etc., are items that will give your home more emotional appeal and does not cost too much. Put away the clutter throughout the home. Rooms free of clutter will appear bigger and the new buyer can visually 'move into' your home much easier. Remember, new buyers are not buying your furniture.
Finally, be patient. The real estate market has changed considerably since the last run-up where homes sold in hours or days. We are now experiencing a more "normal market" where homes take 90-120 days to sell. Remember, inventories are at an all-time high right now. Bank foreclosures are all around you and many buyers will have difficulty qualifying for a new loan. Lenders also have very strict guidelines now and consumer confidence is very low. Allowing for a normal marketing period will do a lot to alleviate your impatience when you have few showings of your home or a lack of offers to review.
A good Realtor® will keep you abreast of market changes, activity on your home and others in the neighborhood, while maintaining a "teamwork" concept that is paramount for a successful sale. Properties need ample time to be exposed to the public and finding the right buyer requires a good understanding of the market as well as sales values. In all honesty, there are no easy answers but one thing is for certain, even in the worst markets, there are people selling homes and taking their equity!
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