Real Estate on the Peninsula

Yesterday I had the wonderful opportunity to meet NAR’s Chief Economist, Lawrence Yun at the Virginia Peninsula Associate of Realtors (VPAR) General Membership Meeting.

He gave an excellent presentation that I found to be rather refreshing.  It was neither the “doom and gloom” of the media in general nor the “NAR cheerleader” mentality that he (and other NAR members and supporters) have been accused of.  He was very realistic in his presentation of the current state of the economy and the housing market, the issues that brought us here and what the future holds. 

Dr. Yun talked about the new economic stimulus package and some of its various components.  One of the main concerns is the need to remove the repayment feature of the current Home Buyer Tax Credit of $7500 (which he felt had a very good chance of being implemented) and making it available to all home buyers, not just first time home buyers (which he didn’t believe had quite as good a chance).  He also spoke on the need to bring the interest rate down and to increase FHA and VA loan limits.  And the need to address foreclosures, although preventing foreclosures alone will not work to move inventory.

Some other areas that need to be addressed are loosening restrictions on investors, who are a key component in reducing inventory.  And also the need to address property insurance issues as many companies have either stopped issuing new policies or have drastically increased premiums, especially in coastal areas.

The housing market is the key to turning the economy around and buyers are the key to turning the housing market around.  But despite the dropping home prices and very low interest rates, buyers are still hesitant.  More action needs to be taken to help ease the buyers off the fence.  Buyers need to understand that the bubble market (and subsequent crash) was only in limited areas.  Most areas had more modest price booms.

For example, this first chart shows the comparison between Columbus, Ohio (green line) and Ft. Myers, Florida.  You can see how Columbus shows a steady increase with a small corresponding decrease starting in 2006.  Ft. Myers on the other hand, obviously peaked sharply and fell just as sharply.

 And in this chart comparing Hampton Roads, VA to Washington DC, we can see that the price difference between the two areas stayed fairly consistent until 2002 when both areas experienced a rise in home prices.  However, the DC area had a far greater increase resulting in nearly triple the difference at the peak of the market.  In 2008, it shows the prices starting to converge back to a more normal variance.

Another rather interesting point is that in 1998 the monthly mortgage payment percentage of a median income household was 19%.  The monthly payment in 2008 was……. 19%.  This was because although home prices are higher, mortgage rates are significantly lower.  Thus further drastic drops in pricing will result in an overcorrection which could lead to further credit crisis.

Current credit guidelines have become too stringent.  In the past we lent money to people “you would never loan $20 to”.  Not only were lenders giving money to just about anyone (no money, no credit, no problem), consumers were buying homes way beyond their means. Everyone seemed to have forgotten that “becoming a homeowner not only requires financial responsibility but also a certain level of mental responsibility.”  But now we’ve gone to the other extreme and even buyers with strong credit are having difficulty obtaining financing today.

SO WHAT DOES THE FUTURE HOLD?

New housing starts are in the tank, foreclosures will continue throughout 2009 and we face a trillion dollar plus deficit.  However, with the implementation of the new economic stimulus package, existing home sales should slowly increase 10-20% in 2009 which more activity noticeably in the second half.  So yes, there is a light at the end of the tunnel.

Our country has been overtaken by fear.  Fear of what the future holds, fear of further collapse of the market, fear of recession, fear of further personal financial loss.  The problem with fear is that it is insidious and self propagating.  It is important that we, as Realtors, help educate people in understanding the housing market and our local market in particular (yes all real estate is “local”).

To sum up what I got out of the presentation (besides all the terrific information)…. 

Yes there are still tough times ahead but if we keep our chin up, stay informed (not misinformed) and continue to provide the best service we can to our clients, we - our clients, us, our country - will come through this a little “battle worn” but also a little wiser. Yes, this too shall pass.

Every year my family and I visit Busch Gardens in Williamsburg Virginia.  After all, it’s only a 10 minute drive for me.  We usually get season passes.  Busch Gardens has some amazing roller coasters, including Apollo’s Chariot and the newest ride, the Griffin.  It also has terrific shows and special events.  The theme at the Williamsburg location is Europe (or rather The Old Country).  Here you can ride the “Loch Ness Monster”, hoist a tankard of beer at the Festhaus, travel through the ruins of Pompeii and even pet the Budweiser Clydesdales.  It’s a great place to take the whole family and definitely a “must visit” for those amusement park fans out there. 

And that’s one reason why I was pleased to hear that Busch Gardens would once again be offering free admission to our military families. 

Anheuser-Busch InBev recently announced that it will continue its “Here’s to the Heroes” program in 2009.  Sponsored by Budweiser, the program was first offered in 2005 as a tribute to the service provided by our men and women in uniform and the sacrifices they and their family have to make. 

The program provides a free one day admission to the service member and up to three dependents.  Participants can choose from among the following parks:

• Busch Gardens, Europe - Williamsburg VA
• Busch Gardens, Africa - Tampa FL
• SeaWorld Florida - Orlando FL
• SeaWorld California - San Diego CA
• SeaWorld Texas - San Antonio TX
• Sesame Place - Langhorne PA
• Adventure Island - Tampa FL
• Water Country USA - Williamsburg VA

Participation is simple.  You can either sign up on line at www.herosalute.com or just show your Department of Defense photo I.D. at the entrance of the park.  The program is open to all active duty, active reserve, ready reserve or National Guardsman.  

So go and enjoy a wonderful day at Busch Gardens (or any of the other great parks) on the house!  

Busch Gardens also offers special rates for Virginia residents and you can also get discount coupons at their website.  For more information visit www.buschgardens.com.

Why is “bad” news so popular?  And are you guilty of perpetuating it?

I was watching the news this morning and there was a short sound bite about how gas prices are going up again.  Regular is now up to $1.48/gal.  GASP!!  Horrors!  According to the reporter, who was trying to sound properly concerned, that’s a whole 1 cent increase from last week.  What will we do?

This is newsworthy?  Didn’t anything more important happen over the weekend?  Seriously, I remember when gas was almost $4.00/gal.  And I remember when gas prices were rising there was constantly something in the news about it.  I remember in particular the reports of long lines and shortages in certain parts of the country.  And people in my area (Hampton Roads, Virginia) panicking because there was a shortage in Georgia.

Hmm, sounds a little like the housing market crisis doesn’t it?  Now I’m not denying that the market is definitely having some problems, but you can’t take what’s happening in California and apply it to Kansas (right Dorothy?). 

And where were all those reports when the gas prices were dropping? 

The media tends to focus on negatives because that’s what sells. 

This brings me to my original question….  Why is “bad” news so popular?  Why are people drawn to the negative stuff?  Why do we have rubberneckers at every accident?  Why do people come out of their homes in the middle of the night to watch their neighbor’s house burn down?  Yes, I know that some of them do so because they want to help in some way, but for most, it’s just plain morbid curiosity.  And let’s face it; gossip isn’t really any good unless it’s juicy.  But we do have moments when we are moved by good deeds as well.  Otherwise that email about the kid with cancer wanting to collect as many emails as possible wouldn’t still be making the rounds on the Ethernet.

Well when it comes to Real Estate I think that we as agents have a responsibility and obligation to our clients and the general public to be honest about the current market.  Learn your local market trends.  Know the average market time in your area now vs. last year or even the year before.  Know how much the average home prices have dropped in recent months and years.  And when you talk to people about the market, talk about the local market, not national.  Don’t perpetuate media generalizations. 

I remember when gas dropped below $2.00/gal.  I was thrilled!  Sure it was more than what I had been paying before the gas prices started to escalate but it was a lot less than the $3.80 I was paying a few months ago. 

Everything is relative, even real estate.

I have a challenge for you. 

Every New Year people make “resolutions”.  And every year, most people fail to keep their resolutions.  Admittedly the top few resolutions are very difficult to keep - lose weight, stop smoking, get out of debt.  But what makes it so difficult to achieve these lofty goals?

I believe the main reason we fail to succeed is that these resolutions are too generic, too broad and not very tangible.  In order to achieve our goals, we must have specific objectives.  And even more importantly, milestones along the way to mark our progress.  And perhaps most importantly, rewards to acknowledge our achievements.

First let’s stop calling them “resolutions”.  A resolution is a decision or a pledge.  But being “resolved” already sounds defeatist.  Sounds almost like being “resigned” to doing something.  As if it’s something we know we have to do but don’t really want to so we are resigned or “resolved” to doing it but not really committed to it. 

Now think about how you feel when you are challenged to do something.  Go ahead, I double dog dare you. Remember when you were young and someone would dare you to do something?  And even though it might have been something as foolish as licking a frozen flagpole in the middle of winter, you couldn’t back down on a dare?  Well I’m not asking you to lick the flagpole, but I am asking you to challenge yourself.

What do you want to achieve this year?  Determine what your final objective will be.  Then break it down into manageable steps.  And most importantly, don’t forget to decide how you will reward yourself for each step that you accomplish. 

For example:

• Goal:  Pay off credit card before December 2009
• Method:  Give up Starbucks coffee and lemon pound cake (anticipated savings of $25/week)
• Milestones: Pay an extra $100 towards credit card every month
• Reward:  One trip to Starbucks for latte and pound cake every month - after paying the credit card bill!
• Final Reward: Credit card paid off and Starbucks once a week instead of once a month.

Now go back and re-examine your resolutions.  Change them to challenges.  Plan your strategy and don’t forget your rewards!

And last but not least, I have a Challenge for you.  Did you see the movie “Pay It Forward” (starring Kevin Spacey, Helen Hunt and Haley Joel Osment)?  It’s presents an interesting concept of improving the world by one person doing something good for 3 people who would each then do something good for 3 people and so on….  Sort of a pyramid scheme or chain letter (or email) of good deeds. 

Anyway, I would like to challenge each of you to “pay it forward” this year.  It doesn’t have to be anything major.  You’d be surprised how sometimes something seemingly insignificant to you can have a major impact on someone else.  So go out and be nice to someone, do something good for fellow human being.  And maybe in doing so, it will have an unexpected impact on your life as well.

So, any takers on my challenge?

There has been so much focus lately on the housing/mortgage crisis.  And we all know about the various “bale outs” and government assistance for the mortgage companies and for the delinquent homeowners as well.  But there seems to be one segment that has received little attention and even less assistance….  Tenants.

One of the aspects of my job that I hate the most, yet find very rewarding, is relocating tenants who are being evicted because their landlords have not been making the mortgage payments.  I hate the job because I am the bearer of bad news.  So many of them are caught completely off guard. Here they are making their rent payments in a timely manner and the landlord is pocketing it and allowing the property to go into foreclosure.  Then I come along to tell them the home has been foreclosed on and that they will have to vacate the premises.  Some of them suspected something was wrong, but most of them are caught off guard.  And they are so devastated. And with such sort notice, finding a new home is not always easy to do.  That’s the part of my job that is rewarding… helping these people find a new place live. 

Renters are required to fill out an application form providing all sorts of details and undergo a credit check.  But what protection do they have from landlords who have less than stellar credit?  How about credit checks on landlords?  If I’m renting your house, what guarantee will I have that you are not a deadbeat landlord?  How will I know that you are not in arrears on your mortgage payments and that I will be evicted just a couple of months after moving in? 

In this litigious world we live in, yes the tenants could sue the landlord for return of security deposits, damages, pain and suffering, etc.  But at what expense to themselves?  And how long would that take?

Would landlords be willing to provide their credit reports as part of a lease agreement?  Or even just a statement from their lender confirming that the payments on a particular property are current? 

What can tenants do to protect themselves?

I was in a bit of a silly but holiday mood and put this together to share with you.  Sing it to the tune of the 12 days of Christmas.  Enjoy!

On my first day in real estate my broker said to me

Order some business cards

 On my second day in real estate my broker said to me

Send out announcements and …

 On my third day in real estate my broker said to me

Make cold call

 On my fourth day in real estate my broker said to me

Take floor duty

 On my fifth day in real estate my broker said to me

CALL ALL YOUR FRIENDS!

On my sixth day in real estate my broker said to me

Contact expired listings

 On my seventh day in real estate my broker said to me

Try door knocking

On my eighth day in real estate my broker said to me

Go talk to FSBOs

 On my ninth day in real estate my broker said to me

Hold an open house

 On my tenth day in real estate my broker said to me

Join a BNI Group

 On my eleventh day in real estate my broker said to me

Farm your neighborhood

 On my twelfth day in real estate my broker said to me

Get a designation

Farm your neighborhood

Join a BNI Group

Hold an open house

Go talk to FSBOs

Try door knocking

Contact expired listings

CALL ALL YOUR FRIENDS!

Take floor duty

Make cold call

Send out announcements and …

Order some more business cards!!!!!!

In the spirit of the season, I thought I’d share with you those movies that made me afraid of the dark (and other things).

My Top Ten Horror Movies (and the best scene)

1. The Exorcist - Linda Blair’s head doing a complete 360
2. The Omen - Little Damien watching his mother fall
3. Carrie - towards the end, just when you think it’s over…..
4. Jaws - Brody is throwing out chum and the shark surprises him. (”We’re gonna need a bigger boat.”)
5. Friday the 13^th - Jason strikes from under the bed
6. The Shining - “Here’s Johnny.”
7. Psycho - Oh course, the shower scene.
8. Halloween - Michael Myers as the “ghost”
9. Silence of the Lambs - “Hello Clarice”  It’s just the way he says it, sends shivers up my spine.
10. Alien - the scene where the alien bursts out of the guy’s chest.

What about you?  What movie scared the daylights out of you?

It’s back to school time which means new clothes, new supplies, new hair styles and in one case, a new school.  Sept. 2, 2008 was the “first day of school” for the new elementary school in Poquoson.  Located behind the old elementary school, the new 84,000 square feet facility boasts a full-size gym, cafeteria, media center and outdoor terrace.  Among the eco-friendly features are a geothermal heating and cooling system, water conserving plumbing and clerestory windows to take advantage of natural light.   

The school sits at the edge of the wetlands which teachers will be using to provide great “hands-on” learning opportunities for the students.  Access to the wetlands as well as parts of the facilities (like the media center) will be available to the community during non-school hours. 

Based on initial feedback, the new school is a big hit with students, faculty and parents.

Labor Day was established as a federal holiday in 1894.  As we head into the holiday weekend here are a few facts to consider while celebrating the occasion. 

According to the U.S. Census Bureau website… 

154.5 million
Number of people 16 and older in the nation’s labor force in May 2008 (82.6 million men, 71.9 million women).

82%
Percentage of full-time workers 18 to 64 covered by health insurance during all or part of 2006.

77%
Percentage of workers in private industry who receive a paid vacation as one of their benefits.  

7.7 million
Number of workers who hold down more than one job.  

10.4 million
Number of self-employed workers.  

10.3 million
Number of independent contractors.  

5.4 million
Number of people who work at home.

76%
Percentage of workers who drove alone to work.  

3.1 million
Number of workers who face extreme commutes to work of 90 or more minutes each day.

For more information visit the Census Bureau.  Have a great Labor Day!

Well it’s that time of the year again when yellow buses roam the streets and parents sigh in secret relief knowing they won’t have to hear “I’m bored” all day long.  Yes, it’s back to school time! 

On August 27^th the Virginia Department of Education updated the Virginia School Report Cards.  The reports contain information on proficiencies in reading and math, participation in testing, attendance and graduation rates.  The Adequate Yearly Progress (AYP) goals have become a little tougher since the No Child Left Behind Act of 2001.  By 2014 all students are expected to pass the reading and math tests.  These objectives are in addition to the Standards of Learning (SOL) requirements.

The reports contain a lot of information and can be an excellent resource to direct your clients to regarding local schools. 

And speaking of locally, in the Hampton Roads area 56 schools missed the AYP targets in at least one subject.  Among them Warwick H.S. (Newport News), Bethel H.S. (Hampton), Nansemond River H.S. (Suffolk), Deep Creek H.S. (Chesapeake), Page M.S. (Gloucester), Bay View E.S. (Norfolk), Churchland M.S. (Portsmouth), Great Neck M.S. (Virginia Beach), Lafayette H.S. (Williamsburg-JCC), Grafton M.S. (York County). 

For a complete list and additional information visit the Virginia Department of Education website.