Thomas McCormack

First the good news: Due to the ongoing financial crisis playing out on Wall Street (as well as around the world), everyone is finally waking up to the fact that in order to pull us out of this mess, the housing market needs to get back on firm footing and because of this recognition we're more quickly approaching the bottom of this cycle. That means that the small glimmer of light on the horizon is not an oncoming train but rather the beginnings of a recovery.

Ok, now the bad news: We're not there yet. According to Jeff Otteau of the Otteau Valuation Group, we're still about 10 months out. Otteau says that in New Jersey, while we had been experiencing a 1/2% monthly value reduction, we're now facing a full 1% monthly reduction. This means we've got 10% more to go until we reach a critical point in affordability... where the median home price meets the median income level. For the state this equates to a 28% value reduction since the market downturn in August 2005. Of course, this is a state average... according Otteau, Monmouth County fares a bit better with an estimated 25% change.

The take-away: Keep in mind that unless you're paying cash, you'll want to factor in the cost of financing a home purchase in addition to the actual purchase price. Interest rates in the long term are expected to rise and since every increase of 1% in your interest rate equates to 9% increase in cost, those looking to "time the market" should begin now to educate themselves on their desired market, the housing inventory and real values. There are some very good buys right now and both first-time buyers and investors are making their first moves now. If you'd like to discuss your market strategy (for both buyers & sellers), please send me an email or call (732-212-0440 x212).

First-time Home Buyers are beginning to discover that now is a wonderful time to leave the world of renting and become homeowners. There are many reasons why the next six months will be "prime time" for this group who has largely been shut-out of the real estate market for the past seven years or so.

Let me be clear, this is not the time for folks who have poor credit, no job and no visible means of support... hopefully we will no longer see loan programs that allow anyone with a pulse to qualify.

But if you are employed, have been paying your bills and have established a decent credit score, you may not only qualify but you'll find there are various programs available that may help you save big money. In addition, prices have been falling and will soon have reached a critical point of affordability: where the median home price meets the median income for New Jersey residents. And while Monmouth County's median home price is high, it's wonderful open space & beaches, great schools and proximity to New York make it highly desirable.

STATE FUNDED PROGRAMS

The New Jersey Housing & Mortage Finance Agency offers a below-market, fixed interest rate to first-time homebuyers. A first time buyer is defined as anyone who has not owned property in the past 3 years. Down payments of as little as 3% are required and must come from the borrower's own assets. Loans are 30-year fixed rate. Certain closing costs can be gifted by family members, non-profit organizations or government agencies. HMFA loans can be written as conventional or FHA loans. In addition, the HMFA has the Smart Start program which gifts the down payment to the borrowers, up to 4%. Visit their website for qualifying guidelines.

MORTGAGE PROGRAMS

Companies like Wells Fargo are helping first-home and other buyers afford a new home with creative programs such as their 3-2-1 Buydown.

What is a Buydown? A regular temporary buydown allows for payment changes to occur once every 12 months (1% max per year) for the first 3 years; in the 4th year the rate is locked for the remaining term (i.e. it becomes a 30 year fixed rate at that point.) This 4-30 year fixed rate is confirmed when the loan is originated so you know up front what the rate will be. This is not a negative amortization loan.

Example: On a 3-2-1, assuming a note rate of 6%, the following would apply:

• Year 1 interest rate - 3%
• Year 2 interest rate - 4%
• Year 3 interest rate - 5%
• Year 4-30 interest rate - 6%

What is the cost? The cost of the interest rate buydown may be paid by the seller at the time of closing. The cost will be paid for from the proceeds of the sale of the home (as a Sellers Concession.) The cost of the 3-2-1 buydown is based on the mortgage that the buyer takes from the bank. A 3-2-1 buydown cost is approximately 4% of the mortgage amount.

Example: Loan amount of $300,000 at 6% = cost of $13,056 to be paid by the seller. Given the current market this may very well be an acceptable amount for the Seller to contribute as part of the contract negotiation. This is a direct savings to the buyer of over $13,000.

For more information, guidelines & restrictions about this program contact Steve DeLizza at Wells Fargo.

AVAILABLE HOMES IN MONMOUTH COUNTY

For a list of affordable homes in Monmouth County, visit my website and click the First-Home Buyers button on the left for homes listed for $350,000 or less. You can also search the MLS and create your own specific searches and save them in your password-protected account (free!) If you need help setting it up, just send me an email.

If you're interested in getting your search started right away, feel free to give me a call... I love first-home buyers!

Sorry for the delay. This was from my September Monthly Market Update:

Summer's over and everyone is back to their tasks at hand... kids are in school, the beach gear is packed in the garage, and all the much-beloved distractions of summertime at the shore are put on the shelf till next year. Typically, this is a season when we see a good number of new homes enter the market as well as buyers who now have some time to consider what their next move will be. How 'bout you? Be sure to give me a call if you're thinking about moving. A quick pulse read on our market: Taken as a whole (including all the towns included in this market area*) here's how our area has fared over the past 6 months when compared with the same period last year**:

• Unit Sales: down 23%
• Average Sales Price: down 6%
• Available Inventory: up less than 1%
• List-to-Sale Price Differential: less than 1/2%

What this means: The most important factor is obvious: there are fewer buyers out there with almost 1/4 fewer homes sold. But while prices are down, average values have not dropped as much as most people seem to think... less than 6% from a year ago. And while this is no cause for celebration, it certainly puts our market forces into perspective: we're experiencing a cyclic slowdown, not a market meltdown. In addition, the available inventory is holding steady (about the same number of homes as last year) and the percentage of the asking price that homeowners are getting is about the same as 12 months ago.

Welcome to the Jersey shore real estate podcast: a show about all things real estate along the Jersey shore from Sandy Hook to Cape May with a special emphasis on Monmouth & Ocean Counties. Hosted by Thomas McCormack, Sales Associate at Resources Real Estate. www.ThomasMcCormack.com.

Questions, suggestions for future shows or want more information about what you've heard? Call 1-877-226-5731 x3000.

To receive tips for new buyers send an email to newbuyers@getresponse.com.

Click link to listen: Jersey Shore Real Estate Podcast - 1.07.08 - First-home buying tips, chat with Jared Morgan (recent first-home buyer), suggested first-home buys (currently available homes).