Jules Yates

It seems that every time you turn on the news you hear about the how bad the housing market is and if you are not in the business I would assume it could scare the pans off you. I would like to give you a first hand look at what's hot and what's not.

Let's start off with "What's Hot". All entry level homes are definitely hot right now as well as the foreclosure properties. Why entry level homes? Simply put the availability of government loans coupled with historic low interest rates and topped off with a $8,000 First Time Home Buyers Credit is bring buyers out of the wood work.

That tax credit is not just for first time buyers. You can qualify if you have not owned a home in the past 3 years. I just saw a poster up at Huntington Bank today and it said nothing about what it takes to qualify for the credit. For details visit http://www.federalhousingtaxcredit.com.

Also many investors are out looking at rental properties in the Traverse City area. Most of them are focused on REO (Bank owned properties) or those that are "short sales". A short sale is any sale which requires the lender to take less than the balance owing. Short Sales generally take place prior to a foreclosure.

REO properties are holding the market down because the banks want to sell their homes...now. It is not an emotional decision for them. They list the homes and if they don't sell they lower the price on a regular basis until they do sell. It is simple math for them. Most sellers don't have the luxury (or equity) to do that.

As for "What's Not" Selling. That is simple... vacant land and new construction. The vacant land market is saturated at this time. It is due to very few new homes being built and the low prices of existing homes. Fortunately I have had good success in both this year but the overall market is way down.

Few if any builders are taking a risk and building a home on speculation (a vary common sight in years past). Banks are tightening up on credit and now require 25% down payment in the cost of the total project. They used to use the appraised value or build cost, whichever was higher.

If you are in the market for vacant land you are in luck because the sky is the limit. Waterfront lots are much more affordable then they have been in 5 years. IF I were in the market I'd buy now. Feel free to contact me with assistance in buying or selling property in the Traverse City area. I can be reached at 231-218-5199.

How the Difficulty of Getting Jumbo Loans May Hurt Home Sales in the Traverse City Area

Despite my many years in the business I was really not aware of the significance of how specific types of financing really affected property sales. For example when I first started in the business in 1991 I only sold vacant land. If you wanted to purchase vacant land you either paid cash, got a home equity loan (people actually had equity back then) or you got some type of owner financing. Bank financing wasn't really an option.

As credit began to flow, more and more banks were offering vacant land financing. It started with 25% down then it want to 10% and finally $0 down with interest only payments. The availability of credit fueled the fire by creating more demand and priced continued to rise. When the bubble burst so did vacant land financing and the market for vacant land came to a screeching halt with it.

Back to jumbo loans.... In the Traverse City area I believe any loan over $414,000 is considered a Jumbo Loan and these days that means that if you need on, you will be paying a much higher interest rate than a convention loan. Why? Simply because lenders are not buying high dollar mortgages and longer and with not market for the paper (the note) they are considered higher risk.

There are now 3 types of loans - Loans up to $417,000 are considered "conforming," loans between $417,000 and $729,500 are "conforming jumbo," and loans over $729,500 are "super-jumbo." Although conforming mortgage rates are at 50-year lows, jumbo loans in general continue to remain very costly in comparison to conventional rates.

How does this affect you if you have a property that would require a buyer getting a jumbo loan? The short version is you will have a far more limited pool of buyers than you would have 5 years ago even if your selling price is significantly lower. Those low rates you hear on the radio and television are not available on your home if it is in the higher price ranges.

Higher interest rates raise the effective value of a home significantly. I won't bore you here wit the details but I would be happy to discuss your situation with you if you call me. I can be reached at 231-218-5199.

With the ever changing real estate market I feel that it is more important tan ever to screen (interview) your REALTOR very carefully when thinking of listing your home. In the past it may have been as simple as listing with your friend or neighbor simply because you had a relationship with them but that is not the case an longer.

For example, if you or someone you know is facing the possibility of foreclosure and you do not hire an agent with actual short sale experience, it may cost you valuable time in the long run and possibly your home too. Many times potential buyer will come along and may not be willing to purchase the home at or even near the listed price (which is often the amount of the balance owing and the closing costs) but would like to town the home.

If your agent is not familiar with your options they may elect to pass up what may be a legitimate buyer. Any good REALTOR will make every effort to get you a sale of course but inexperience may lead them astray. In this market you need to be creative.

As my father used to say, "Son, anyone can lean to drive a car in a few weeks but it is how you handle yourself in an emergency situation that can save your life." When it comes to selling your home that a definitely applies too. Don't get me wrong, there are a lot of new , well trained agents but if I had a choice I'd go with experience.

After 20 year full time in this business I can tell you I have seen a lot of changes and more in the past year then I thin k ever before. Only a full time agent will be able to remain up on current events such as the new plan to allow the First Time Home buyers Tax Credit to be used as a down payment on certain FHA loans.

I can be reached at 231-218-5199 anytime.

If I were to gage the local real estate market based on recent activity, then I declare that we have hit bottom. This past month has been one of my best in 20 years and it is not just short sales and bank owned sales. I closed on 2 new land / home packages, 2 conventional deals, 2 short sales and 2 bank owned properties this past month and the buyers are out in droves.

Naturally everyone is looking for a deal but with the opportunities out there who can blame them? I have seen homes sell this past month for 50% off their high list price from just 3 years ago but those are the rare $600,000 + homes that went into foreclosure. They are rare but once in a while we come across them.

As for the lower end (entry level) homes, we are seeing multiple offers coming in. From 2 - 5 offers at a time and there seems to be no shortage of willing buyers. The majority of them are looking for $0 down financing or are requesting the seller to contribute all or most of the closing costs.

The most common type of financing available is through Rural Development. You can find information on RD financing at http://www.rurdev.usda.gov/mi/sfh/sfhmain.htm. Low income individuals with good credit can get financing as low as 1% on some subsidized programs. The vast majority are looking at 5 - 5.5% fixed for 30 years (as of this posting).

If you are thinking of buying a home, now is the time to take advantage of this once in a lifetime opportunity. Feel free to contact me at 231-218-5199 for information on buying or financing a home in the Grand Traverse area. I look forward to working with you.

While 99% of the lender out there will tell you that you need 25% down to build a new home, this just is not the case. I work with a local lender and builder who can get you 100% financing on a newly constructed home.

Why aren't banks lending on new construction? Simply put the companies that provide private mortgage insurance (PMI) will not touch a new construction project. I have to attribute this to the number of foreclosures out there. A similar thing is happening with condo sales.

Despite the sharp decline in the number of lenders out there who offer low down construction financing, it can be found. Typically you will need to have a good credit with a score over 660 (as of this posting). In addition if you are turned down for conventional financing you may be eligible for Rural Development (RD Direct) financing.

RD still offers $0 down financing at competitive rates (in or around 5%). Some subsidized rates may be as low as 1%. Keep in mind that you have to be low income but for those who qualify this is a great program as well.

You can find information on RD financing at http://www.rurdev.usda.gov/mi/sfh/sfhmain.htm or feel free to contact me at 231-218-5199 for information on building a home in the Grand Traverse area.