Yonas Woldu Greater Las Vegas Real Estate

"To buy or not to buy?" - that is the question many renters ask. The last time hoards of renters answered "Yes!" in the midst of the housing boom, they ended up with easy credit loans doomed for foreclosure. Then housing prices in Las Vegas went so high that homeownership was much more expensive than renting. Now that housing prices are coming down, mortgage rates are low for qualified buyers, and incentives are in place for buying, whether to buy now is an intriguing question for many tenants. Realtors are ready to point out to hesitant buyers that the numbers make the time favorable to buy.

Homebuying has always been about more than economics, as intangibles like the pride of ownership and family security, had a role in the decision to buy. Traditionally over the past 18 years, after tax mortgage payments were about 26% higher than rent. By 2006, when housing prices were severally inflated, the cost to own in some markets was as much as 66% more than the cost to rent. Many potential buyers deferred plans to buy and signed the lease for another year. By 2008, as housing process tumbled, the average after tax mortgage payment the 50 largest metropolitan areas was $1,300 as compared to rent of $1,045. The gap between renting and owning has now fallen to 24%. If mortgage interest rates fall to the predicted 4.5%, the own to rent ratio should fall to 14%.

In Las Vegas, the ratio is as low as it's been in 18 years. With plenty of available housing, including bank owned properties put on the market at low prices, buyers may do better than the average. In some cases, home seekers are finding that their mortgage payment will be less than their current rent which also skyrocketed along with home prices.

This makes it a great time for renters with good credit to buy homes for their families. At Prudential Americana, Yonas Woldu and Nebi Adhanom can show you affordable properties in Henderson and the Greater Las Vegas area. Check out our Vegasrealproperty website for a handy mortgage calculator so you can see how a mortgage payment would compare to your rent.

Ever wonder why all those foreclosed homes seldom show up in MLS propriety searches on agent websites? Obviously, when homes are foreclosed, they are not zapped out of existence. They continue to blight our neighborhoods, so where are they?

Up to this point, banks have reclaimed ownership of the properties; they try to sell properties at auction, but if that is not successful, the homes become part of the banks' inventory and are then considered Real Estate Owned (REO) properties. Investors who are willing to take them "as is" often try to negotiate with the bank for a below-market value price.

In some cases, banks used realtors, but since they were already taking a loss, they shied away from paying commissions which would increase their loss. As a result, FDIC-insured banks currently have $23 billion in REO property on their books and under the radar of the MLS. Three quarters of the inventory is held by very large banks with assets greater than $10 million. About that same percentage evades the MLS.

This process has made REO homes inaccessible to the average home buyer who is seeking a nice place to live with his family. Buying an REO home was complicated and took too long. Now faced with new pressures to modify loans of current borrowers and remain stable, banks are likely to release much of their REO inventory into the market this year through realtors. That is good news for buyers.

The new crop of REOs on the market give prospective home owners even more choices in this "buyers' market." REO homes often need a little work but tend to be good values. They can offer a buyer the layout and amenities he wants in a neighborhood he might not have previously considered.

Though many lenders will still turn to auction to save commissions, more REO properties are likely to be turned over to realtors who have acquired experience in this specialized area. This is in line with the President's goals of making affordable housing accessible for families. Selling to individuals through a realtor may be the best way to accomplish this goal.

If buying an REO home sounds like a good deal to you, give us a call. Yonas Woldu and Nebi Adhanom have the experience to help you find your ideal property in Las Vegas. Check our out Vegas Real Property website for more information.

Bargaining has always been part of the real estate experience. Sellers typically price their homes knowing they will get less than their initial asking price, while buyers regard "getting a deal" as a satisfying part of the buying process. In a buyers' market, where some sellers who need to move their homes are facing the prospect of having them on the market longer and ultimately selling for less, it's tempting for buyers to overestimate how far down sellers will go.

It is a fact that many sellers overprice their homes, especially when selling them FSBO, but even when an agent is involved. A realtor can present an arm load of comparative market data on area home prices, but if the seller insists that his home is special, the initial asking price may be too high. Now that real estate values have fallen dramatically, sellers still think in terms of what they paid, what homes used to go for, and what their mortgage payment is. Time on the market is quite sobering for sellers, especially if they are motivated to move on.

Even in a favorable market, buyers need to be realistic. Its unlikely that a home priced at $500,000 will sell for $250,000. Doing a little neighborhood research will reveal what other comparable homes in the area have sold for - maybe for $50,000 less. Making a bargain basement offer to a seller often comes off as insulting. Some sellers may overvalue their homes because of what they've put into them, what they speculated the home would be worth, or just because its theirs. Few sellers react well to a buyer who comes in, exaggerates all the flaws in the home, and then makes a lowball offer. (If the seller quickly takes such an offer, rent a copy of The Money Pit and hope for the best!) The seller may need a little reality therapy, but if you, a potential buyer, want the house, you are probably not the one to give it. (Here's the time to look to your agent.) Sellers have been known to refuse to deal with buyers who offended them by trash-talking the house while accepting low offers from those they liked.

Just as the buyer is working within a budget and hopes for a great deal, the seller has a bottom line price in mind that he needs to pay off his current mortgage, cover selling costs, and move on to his next home. Assuming that your real estate agent has helped you structure a reasonable first offer, a very motivated seller might accept it or counteroffer on the price or terms. A take-it or leave-it attitude on either side doesn't work, but some honest bargaining on both sides will result in a satisfied seller and a relieved buyer.

For information on beautiful homes in Clark County, including short sale and bank owned properties available at great prices, contact your Prudential Americana Group Realtor® Yonas Woldu at (702) 236-8997 or Nebi Adhanom at (702) 277-9922 or visit www.VegasRealProperty.

Acting on the one thing anyone agrees on about fixing our economy - "Fix housing first" - President Barack Obama just revealed his new $75 million housing relief plan. The funds, coming from the taxpayer funded-financial rescue package, will be supplemented by a $200 billion government commitment to stabilize Fannie Mae and Freddie Mac by buying their stock and $50 billion more for the housing twins to buy up certain loans. Not intended as either a quick fix or a universal one, the plan combines several different approaches to the multidimensional housing problem.

In formulating the plan, Obama faced the choice of who to help. Confronted with the prospect of three million new foreclosures in the first year of his presidency and a growing tide of underwater mortgage holders who owe more on their home than the traffic will bear, Obama tried to reach out to each group.

An estimated 5 million homeowners will be helped by a provision of the plan that will remove restrictions that prevent Fannie Mae and Freddie Mac from refinancing homes where the mortgage exceeds the market value of the house.

Another 4 million homeowners will benefit from offers to lenders incentives to refinance subprime loans by offering cash incentives and by the government paying a portion of the difference between the old payment and the new. The plan will standardize the target payment for refinancing deals at 31% of the mortgage holder's income. Lender would absorb losses on loans over 38%, while the government would pick up the difference to lower the payment to 31%.

There are way more than 9 million troubled homeowners, but some won't be eligible for help under the new program. The plan is based on the hard choice to help "preventable" foreclosures. With joblessness soaring, many families without sufficient income to make a payment of 31% will not qualify. Investors won't qualify either, even if they temporarily rented out the home. Some underwater mortgagees where the amount owed is way out of whack with the value may be out of luck too. The new plan allows a refinance up to 105% of the market value, but it still remains voluntary for lenders to write down the loan over the 105%.

There are some "partial cramdowns" in the bill, particularly a provision to allow bankruptcy judges to modify mortgages. The part of a mortgage above current market value might now be considered unsecured debt that can be modified. Lenders have traditionally opposed this but a recent case involving Citibank opened the door to inclusion of this provision in the bill.

In addition to helping current homeowners, Obama hopes that bolstering Fannie Mae and Freddie Mac will help keep mortgage rates low enough to entice homebuying. Coupled with the new $8,000 credit authorized by the larger stimulus bill passed last week, home seekers with good credit have two incentives to buy. Some potential buyers may fear investing in a home where the market value could erode further. The hope is that the total plan will stabilize the market enough to convince buyers they are making a good choice to buy now.

How will this play out in the Las Vegas market? Early predictions are that tens of thousands of local buyers will be helped by the legislation. We'll keep you posted in the coming months on how local foreclosure rates as well as buying trends change.

Ready to buy a house now to take advantage of the new tax credit? Or ready to in the near future? At Prudential Americana, Yonas Woldu and Nebi Adhanom are as near as a phone call. Call (702) 898-9838 to take advantage of great deals in the Greater Las Vegas area.

Our current administration came to power on a mandate of change. When the House passed a version of the economic stimulus package, critics were quick to condemn the bill as "more of the same" even though the bill was not strictly of the President's making, was delivered less than 10 days after the inauguration, and was not intended to be a panacea for all the ills of housing market or any other troubled segment of our economy.

Housing issues in this country are very complex; no one program is going to increase home sales, spur new construction, stabilize housing prices, prevent housing from losing value, make housing affordable, provide relief for underwater mortgagees, end foreclosures, help foreclosure victims, make mortgage loans accessible, modify some loans and refinance other, protect investors, bail out mortgage lenders... The list goes on. Even listing the many facets of the housing crisis makes it apparent there's not one universal fix will make everything right.

Versions of the stimulus bill (and recent proposals by the Treasury Secretary) have addressed small parts of the problem with measures such as the $15,000 housing credit and plans to direct more funds toward loan modification efforts. President Obama is expected to announce additional plans in future weeks.

What's important is that President Obama, working in conjunction Congress, is committed to finding a more aggressive solution to a multifaceted problem rooted in the very system of how homes were financed. The President shows a willingness to consider alternatives that will lead to long term solutions and help homeowners in the short run. Will everyone like every proposed solution? No! It is encouraging is that there is fresh thinking in Washington.

I believe that the long term stability of the housing market lies in helping people with good credit and with deposits in hand buy homes they can afford. Plans like the proposed housing credit ($15,000 or 10% of home's value) will encourage skittish buyers to take the plunge. Developing a body of homeowners who have equity from day one is an important component of any housing strategy.

But that's only part of the story. I have found in my own business, from working the lending side and the real estate side, there are many homeowners in trouble because they a.) got bad advice, b.) were greedy, c.) some combination of a and c, or d.) lost their job or got tied up some other personal dilemma that affected their ability to pay. Though the government cannot counteract all instances of bad judgment or bad luck, it will have to find a way help these homeowners. Proposals like this come under criticism because they appear to reward some unwise and/or unfortunate homeowners while ignoring those who have struggled to make their payments - but this may be the right course of action for the general good and to restore stability. .

To search for your new home in Las Vegas, including bank owned properties available at great prices, contact your Prudential Americana Group Realtor® Yonas Woldu at (702) 236-8997 or visit www.VegasRealProperty.com. The N&Y team, led by partners Nebi Adhanom and Yonas Woldu, is always ready to serve you.