From Doom and Gloom to Make Room for the Boom

Mark Twain once penned: “A lie can travel halfway around the world while the truth is putting on its shoes.” A half-truth probably goes even faster.

It seems almost daily we hear that foreclosure rates are soaring throughout the country as the effects of shifts in both housing and mortgage industries continue to be felt. But if you dig deeper than the headlines and sound bites, you might find that another phrase attributed Mark Twain would be even more appropriate: Reports of the demise of the housing industry are greatly exaggerated.

In order to understand how exaggerated, we need to understand exactly where such reports originate.

Most media reporters rely upon RealtyTrac, a real estate data aggregator that regularly reports various numbers relevant to the housing industry. RealtyTrac data is accessible and seemingly straightforward.

Data, however, are only as good as the methods used to collect them. And there’s where the problem begins. Housing data is usually collected at the county level. Specifically, foreclosures follow a procedure that requires filing paperwork with the county recording offices. There is no single system or procedure followed by each county. There are 3,140 counties in the United States and almost as many procedures which have to be followed in order to foreclose on a single property.
Also adding to the problem is that most foreclosures involve more than one bank, so in addition to multiple filings due to different steps in the foreclosure process, there may be up to as many as 5 entities making those filings, including HOA’s, 2nd, 3rd, & 4th lien-holders. It should be noted that, in some neighborhoods, there can be as many as 3 Home Owners’ Associations for a single unit.

In addition to requiring different filing procedures, which can include multiple “filings” for a single property, counties track their filings differently. Many are automated and digital, but many are still pretty much a paper, copy machine and microfiche. This means that one county might have real-time data, where another country might not be reporting their filings for 3 to 6 months after they are made.
The upshot of all this is that gaining a clear picture of exactly how many properties are really foreclosed is not as easy as it might seem at first. Up until late 2007, RealtyTrac was using the number of filings to count foreclosures. When they started using property addresses as part of their data collection, the effect was to reduce foreclosure counts by 20-30%. In other words, for most of 2007, the foreclosure rates that were reported in the media were inflated by at least 20-30%.
But even after adjusting for the multiple filings per property, the numbers are exaggerated. Foreclosures take time. The process can take 90 to 120 days. During that time, things can happen, including a buyer might be found. So some filings can be made that never end in a foreclosure.

RealtyTrac is reporting the number of properties on which foreclosure proceedings have begun, not the number of properties that are foreclosed.
Of course, none of this makes glamorous or sexy headlines. Doom and gloom sell papers and raise ratings. With the advent of the Internet, media outlets face a competitive market like they have never seen and content has been sacrificed for sensation. So rather than responsibly digging into the deeper story and helping consumers understand what different numbers really mean, many (not all) media reports remain negative.

This is why the savvy investor doesn’t pay attention to the headlines. According to Andrew Waite, in the January-February 2008 issue of Personal Real Estate Investor, the picture is not nearly as bleak as one might guess from the local evening news in your hometown. After examining the data and the ways in which the data is collected and counted, Waite asserts that as of 12/06/07, .078% of all homes in the U.S. had gone into “absolute foreclosure” in 2007. Less than 1%. Hardly a horrific crisis.
So if the data on foreclosures is difficult to follow and often reported poorly, what can the savvy Real Estate Investor do to understand when is a good time to invest and when is a good time to sell?

Probably the most important statistic to watch is population growth. The relationship between housing and population is an obvious and natural one. Currently in Clark County, we have a housing glut. This is due to many factors, including the recent shifts to stricter mortgage qualification requirements, the rise of bank-owned properties and fear-mongering that misleads both buyers and sellers from following more rational courses in pricing and buying/selling decisions.

These factors will adjust under the pressure of the coming population growth.

“The only action necessary to change the market is to change our expectations. We have been and will most likely remain the envy of the country for one reason alone … we create jobs. Employment is the engine that drives the economy and for the past 20 years or so, we’ve had the most powerful engine in the race.” – Patrick Egger, Understanding the Las Vegas Marketplace

Las Vegas is growing and is expected to grow by 50% in the next 12 years. This means the demand for housing will be huge. The current glut, and its suppression of prices, will not last.

Doom and gloom may sell papers and raise ratings, but when considering an investment like real estate, facts are more likely to increase profits than rumors.
Understanding a local market requires a local source of knowledge. The role of the local Realtor® can be much more valuable than the local newscaster. Our jobs as Realtors® are to keep abreast of the local economy neighborhood by neighborhood.

The Dulcie Crawford Group has accumulated a lot of knowledge about local economies and we are keeping up with the many changes current conditions are creating. Please feel free to ask us anything that will help you better understand how to reach your goals in the current market. We will be happy to help.

FIRST SEMINAR A SUCCESS!

Our thanks to the participants who came our first seminar, Where Should I Invest in 2008? held last Saturday at Windermere. We had a great turn out and a great discussion.

A special thanks to tax attorney, Jim Sexton, who reviewed the tax benefits of rental investments with a special eye for the current market.

Also, a special thanks to Eric Torres whose impromptu information on securing financing for rentals which greatly enhanced our discussion.

Look for more seminars soon. If you'd like to be notified of future seminars, please email us at Dulcie@DulcieCrawford.com and we'd be happy to put you on our mailing list. OR stay tuned for announcements right here!

Las Vegas Real Estate Market is Starting to Warm Up

The Las Vegas Board of Realtors (MLS) reported that, as of April 15, 2008 there were approximately 21,971 home listings throughout the greater Las Vegas valley, which includes the cities of Las Vegas, North Las Vegas and Henderson. This figure, one of the lowest numbers of monthly listings reported in the past year, is the result of the overall increase in pending and contingent transactions, now reported to be approximately 5,301.

Based on the current rate of monthly sales, this translates into about an 8-month supply of inventory, a definite improvement over any period in 2007, during which typical supply averaged about 20 months. This change represents a buyer increase of approximately 140% over similar periods in 2007 and is considered a good market indicator that the bottom has or will arrive soon.

If you take 2007 figures we averaged 1,077 sales per month. In 2008, over the first three and a half months we are averaging 1,393 sales per month which is an increase in sold properties of 29%, which is another indication that the market is improving. Furthermore, multiple offers on foreclosures are being reported, another good sign that buyers believe we are at or close to a market bottom.

The general market softened over the past 1.5 years due to the oversupply of available inventory and diminishing demand. This softening was the direct result of unrealistic sellers, a large portion of which were investors, and the lessening of credit programs formally available. In a typical market, if a property is priced appropriately, it will sell within a reasonable period of time. In a soft market, however, sellers have a tendency to be very unrealistic in pricing in order to minimize losses.

They do not take into consideration the dynamics of supply and demand.

Builders in the city believe that a full market correction will occur sometime in 2009. In adjusting to the downturn, they have lowered prices by 20%-30%, have less standing inventory and are constructing homes on an "as needed" basis. Its hard to imagine our local housing market will not right itself and come into balance, given the over $35 billion dollars worth of construction taking place on the Las Vegas "Strip." To date, approximately 6,000 people continue to move to the Las Vegas valley every month. This can only lead to an ever-increasing demand for housing. In their reluctance to buy, the ongoing major concern of buyers is whether or not we are truly at the end of a declining market.

Thanks to Paula Clark for this information.

Where Should I Invest in 2008?

SEATS ARE GOING FAST! BE SURE TO RSVP BY THURSDAY, APRIL 17TH!*

THE DULCIE CRAWFORD GROUP PRESENTS

Where Should I Invest in 2008?
Tax Advantages of Real Estate Investments
in Today's New Market

Speakers:
James Sexton, Tax Attorney
Esquire Group

Dulcie Crawford, Realtor®
Windermere Prestige Properties

Saturday, April 19, 2008
10AM to Noon

2200 Paseo Verde Parkway
Suite 160
Main Conference Room
Henderson, NV 89052

Limited Seating
RSVP 702-432-4600, Pattie Thomas, Marketing Coordinator
OR
Email: Dulcie@DulcieCrawford.com
BY Thursday, April 17

"Las Vegas, Nevada: Yes, Las Vegas has been hit hard by incoming investors, who watched their home values disappear and then left those homes empty. Las Vegas comes in quite high on the national foreclosure list, almost always within the top three metro areas. But there's an upside--a very strong job market. In 2007, Las Vegas experienced a 12 percent increase in population, partly driven by retirees looking for Sunbelt states to move to. Coupled with low prices, we could see inventories reduced here, which would also stabilize prices. Be careful what you buy, but I like it." -- Best and Worst Places to Buy a House by Danielle Babb, Entrepreneur.com, January 23, 2008.

Cyber-Shopping Revolutionizing Real Estate

Nothing short of a revolution is occurring in Real Estate. In the past few years, homebuyers have discovered the Internet and now most of them turn to cyberspace to start their home searches.

Henderson, NV (PRWEB) April 11, 2008 -- Clouded by headlines of bursting bubbles, subprime crises and economic stimulus packages, one may not have noticed that nothing short of a revolution is occurring in Real Estate. In the past few years, homebuyers have discovered the Internet and now most of them turn to cyberspace to start their home searches.

The largest and most visited site is Realtor.com®, which, according to Alexa's web statistics, sees an average of 500 million visitors a month. Las Vegas and Henderson zip codes are among the most searched on that site as well as a number of other sites available for home searches, with an average of 4.9 million homes viewed per month for Henderson/Boulder City alone.

"We have changed our advertising significantly in the past few years. It is a global economy now. Las Vegas is a place of major interest around the world and the Internet is where investors and homebuyers from all over the world can narrow their search and find the agent who can help them understand the local market," says Dulcie Crawford of Windermere Prestige Properties, recipient of Realtor.com®'s "Real Estate Online Marketing Award of Excellence."

The Award of Excellence recognizes top agents who consistently provide great marketing services on behalf of their buyers and sellers.

"There are always some real estate agents who distinguish themselves from other agents by doing a little more for their sellers. In particular; when the home they are selling is placed on a well trafficked site such as the 1st ranked REALTOR.com®, even simple efforts like having more photos displayed, crafting better descriptions or adding a full motion video, can make a home stand out from competing properties," says Max Pigman, Vice President of REALTOR.com®.

Pigman presented the excellence award to Crawford and other Las Vegas area Agents at a recent real estate marketing and technology seminar that demonstrated cutting edge techniques for leveraging the Internet and technology in real estate marketing.

"The extra steps agents like Dulcie are taking on behalf of their clients is the reason we thought it worthwhile to call out the effort we have seen these agents make online and to recognize them for providing these added value services," says Mr. Pigman.

"Internet marketing can make all the difference for sellers who are facing stiff competition in the current market," says Crawford, a native Las Vegas, who has had over 10 years experience in Real Estate. "My job has always been to help buyers and sellers find each other so that they both can benefit from the transaction. Buying and selling homes can be overwhelming at times, but when the right buyer finds the right home, the transition for both seller and buyer can be smooth and satisfying. A tool like Realtor.com® makes that job easier for me because it opens up the possibilities for both the seller and the buyer."

For more information on the award: http://www.rdcworkshop.com/

Credit Score Truths and Tax Myths of A Short Sale Vs. Foreclosure

A Great Summary by Aaron Gordon of some of the issues regarding the decision between selling short and going into foreclosure.

Some Highlights:

#1) WILL MY CREDIT SCORE DROP LESS IF DO A SHORT SALE INSTEAD OF A FORECLOSURE?

The short answer is "don't count on it." No one can answer this question for you correctly and that is because every case is different.

#2) WILL I BE ABLE TO BUY ANOTHER HOME QUICKER IF I DO A SHORT SALE INSTEAD OF A FORECLOSURE?

Once again, chances are no. Keep in mind, lenders make mortgage loans based on your ability and willingness to repay the loan. We determine this based, primarily, on your past credit history. Especially your past mortgage history.

#3) IS IT TRUE I AM NOT RESPONSIBLE FOR DEBT FORGIVENESS IN A SHORT SALE BECAUSE OF THE NEW MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007?

First let say, IN BOLD, I am not a tax professional. It's of the utmost important that you seek the advice of a tax professional before proceeding with a short sale or foreclosure.

The Mortgage Forgiveness Debt Relief Act of 2007 was primarily started so that people, who were upside down in their homes, could refinance their home using an FHA loan and then the second mortgage holder would write off some of their loan to enable this. This kind of loan hasn't caught on because most lenders didn't go for it.

...The bottom line here is before you do this, meet with your accountant to discuss the ramifications. There are too many possibilities to go over here.

If you get a 1099-C form in the mail, after a short sale that looks like this, http://www.irs.gov/pub/irs-pdf/f1099c.pdf, you need to head to your accountant immediately.


#4) BASED ON ALL OF THIS, WHY WOULDN'T I JUST LET MY HOME GO INTO FORECLOSURE?
For one, because you are giving the lender a chance to recoup some of their money. It is far cheaper for a lender to negotiate a short sale with you and your buyer than it is to rack up attorney fees and other costs in a foreclosure.

Foreclosure can take eight months to a year and in a declining market, your decision could cost them $100,000's more than a short sale.

The next reason is because some believe, as we discussed earlier, it may be easier to rebuild your credit after the process. Your credit will likely be destroyed either way, but the road back to a respectable credit score may be shorter in a short sale, according to many experts.

Finally, and probably the top reason for a short sale, is depending on what kind of loan you have, and in what state, the lender may be able to go after you personally for a deficiency judgment at a later date. In Nevada, where I live, lenders have three months after the sale to try and obtain a deficiency judgment.

Click here to read the full article.