Real Estate

Washington Continues to Aid 1%ers

Fannie Mae, originally developed to assist home buyers purchase houses for their primary residence, (for the first time ever) recently issued guarantees for mortgages made by the nation’s largest corporate owner of single-family homes. Invitation Homes, the 2012 buy-to-rent creature of private equity firm Blackstone, and now owner of 48,431 single family homes (courtesy of the Fed’s cheap money spigot) obtained $1 billions in government guarantees for mortgage backed securities. (That’s a billion dollars that we the taxpayers are now on the hook for.)

So let’s recap the story. Just prior to the financial crisis, people were hoodwinked into taking out risky mortgages on over-priced houses by major banks and mortgage companies. The Fed supplied cheap money and overlooked glaring deficiencies in their business practices which enabled the mega banks to make mortgages to anyone who could fog a mirror. When this ponzi scheme blew up, the Fed then enabled the mega banks to walk away with nary a slap on the wrist and literally gave them the funds to rebuild their balance sheets. On the other side of the equation, millions of lowly home buyers lost their homes and were cast to the curb with foreclosure and bankruptcy. If that wasn’t enough, the Fed then coughed up even more cheap money so that firms like Invitation could buy tens of thousands of recently foreclosed homes and turn them into rentals. (Those were houses that you nor I could not buy and fix up ourselves.) Now the plot thickens and when the next downturn in the economy hits, you can rest assured that they’ll be another bailout for the banks and hedge funds— and that the common man will take the brunt of the storm.

Trump promised to drain the swamp. Now, if only he would.

If you’d like a guide through these mine fields, you know who to call. I work harder to make good things happen!

Home Sales & Prices Rise

The bean counters just finished tabulating what took place in the local real estate market this past year. And (to nobody’s surprise) the MIBOR Realtor Association reported both sales and prices of single-family homes in central Indiana were on the rise.

Closed sales totaled 35,423 for the twelve months, up 10% over the previous year. The total number even surpassed the peak of the last bubble in 2006.

On the other hand, new listings were up a scant 1% in 2016. Now, you put together surging sales with flat new listings, and the resulting increase in median sales price is no surprise, rising 5% to $154,000 in 2016.

Nevertheless, Indy (and central Indiana) remains one of the most affordable places to live. Witness, US News magazine named Indianapolis #5 on this year’s list of The 20 Best Affordable Places to Live in the US and MarketCrashers.com accorded it the #2 slot on their list of Most Affordable Cities to Live In. Affordability is a great thing— for both the people living here and for the long-term health of the metro area.

On the down side, the local housing market is very tight, with limited inventory available. Houses for sale at year end numbered just 8,946 (down 14% from a year earlier). And with close to 3,000 buyers nailing down purchase contracts even in the slow month of December, that leaves buyers with limited choices. Now, if you’d like a lil’ coaching on how to successfully navigate this competitive marketplace, call me. I work harder to make good things happen!

Who Pays Closing Costs?

They’re lots of misconceptions on this topic. It seems, sellers think buyers should pay for just about everything, and many buyers want sellers to pay all costs (thus reducing their required cash out of pocket). The truth is the answer as to “who pays?” is negotiable.

So, when it comes to closing costs, what exactly are we talking about? On the seller’s side are real estate commissions, legal fees, pro-rated real estate taxes, and owner’s title insurance. Sellers almost always pay the commissions; and pay the other items as well more often than not. On the buyer’s side are inspection fees, appraisal, loan fees, homeowners insurance, and escrow set-up costs. Buyers pay these almost always, unless they can negotiate to have the seller pay some or all of them. Generally speaking, sellers pay buyer’s closing costs most often on lower-priced homes and on deals where the buyer has a limited cash down payment (say, like 5% or less).

Sometimes the amount of buyer’s closing costs that seller can pay is limited by law. For example, VA loans only allow the seller to pay buyer’s costs up to 4% of the price. With FHA that number is 6% and with Conventional mortgages it is 3% if the buyer puts 10% or less down, and 6% otherwise. On contract transactions their is no limitation.

Like so many things in a real estate deal, who actually pays closing costs is negotiable. If you have questions about how to best structure a deal so it works for you in your specific situation… call, text or write. I work harder to make good things happen!