Is this a Buyers' Market?

By this time, everyone that has anything to do with Real Estate should have heard that this is a Buyers Market.

What exactly is a Buyers' Market?

What it is supposed to be is a time when:
*Homes are priced well

*Loans are at low interest rates

*People are prepared to buy.

When all of the above criteria have been met, then it can be called a Buyers' Market.

Let's take a look at today's Real Estate Climate and decide whether or not it is a Buyer's market right now.

As everyone knows, Real Estate is Local. This means that while it may be a good time to buy in say, Florida, it may not be a good time to buy somewhere else. For the purpose of this post, I want to discuss the local real estate options here in Rhode Island. (since these are the only ones I am completely knowledgeable about:)

The first criteria: Homes are priced well....This seems to be fulfilled. Many buyers' are wondering if prices will fall even more here in Rhode Island. My guess is, yes, they will continue to decline for another year at least.

The second criteria: Loans are at low interest rates. This also seems to be fulfilled. Many buyers' are also wondering if rates will fall even more....My guess is, yes, they will continue to fall, again for another year or so, but then will level off.

The third criteria: People are prepared to buy...This is definitely not fulfilled. Partly due to high unemployment rates, the economy, poor credit and general uneasiness about the market.

With only two of the above criteria met, it would suggest that it is not a bonafide Buyers' market.

However......................

Homes are priced very well right now and combined with the lowest interest rates around in the past ten years makes this an excellent time to buy.

Consider what would happen if you wait until next year or the year after. Here is an example:

You purchase a home at $150,000. today at an interest rate of 5 3/4% for 30 years. Your principle and interest payments per month will be $876.00 per month.

Say you wait for two years and purchase the same home for $132,000. (this is a depreciation rate of .5% per month for 24 months) assuming the general trend here continues.

Two years from now, there is a good probability that the interest rates will have not only dropped but started climbing back up as is generally the case when home prices have dropped. Let's say they have only crept up to the original 5 3/4% and you go for a mortgage for 30 years. Now your mortgage payment would be $770.00 per month!

Sounds like you should wait? Wrong. First, what are you paying for the 24 months you are waiting? Are you renting at say, a low price of $500.? (rare in Rhode Island if you have more than one room). If so, then you are paying over the next 24 months $12,000 minimum and still do not own your own home!

On your mortgage you would have saved over the course of 12 months, $2,544.00! Subtract this from the $12,000. you have paid out and you are minus $9456.00!! (which if you had it to throw away, you could have at least used it towards your furniture in your new house)

This is only one example, based on a buyer using a loan to purchase. If you have the cash to buy, the example would be simple, again if you are renting, what exactly would you be saving by waiting? In the same scenario you would have saved, over the course of 24 months, $9,024.00! That's $4512.00 per year. In this scenario, it may be better to wait, unless you are unhappy with your current arrangement and really want to get into your own home.

Opinions are of Karen Hurst, Broker/Owner of Stonehurst Realty only. For a free consultation, visit me at Stonehurstrealty.com and find out if this is your time to buy.

Two Family Cranston RI REDUCED!!!!

This is it! Your chance to own a two family in a great neighborhood and get help with your mortgage. See the Virtual tour below.

This house has been drastically reduced for a quick sale. This is a bank owned home and will be selling AS IS. Mostly needs updating. You will need a prequalification letter to make an offer, so get that first then call me. Don't wait too long.

Follow this link to see the tour.

New Housing Plan in a Nutshell

Is there a Silver Lining in all the latest Foreclosures and Doom and gloom in the Real Estate Market? Maybe...Have you heard about the most recent possible help you, as a delinquent homeowner, may have? Here is a synopsis, taken from Bloomberg News, highlighting the general conditions needed to qualify.

Under the proposal, mortgage servicers will work with borrowers to reduce monthly payments to 38 percent of their gross income, a threshold of affordability, by lowering the principal, reducing interest rates and extending the length of the loan term. The plan doesn't include money from the Treasury's $700 billion bank rescue and isn't mandatory for companies that received federal aid.
Conditions and Fees
Homeowners that qualify will receive notices about the program. Their loan modifications won't become final until they have made three consecutive payments, and there is no limit to the number of times a loan can be modified. The new payment will include all of the borrower's monthly housing costs, such as taxes and condominium payments.
Fannie and Freddie are paying mortgage servicers $800 to process each modification, which isn't available for investment or vacation properties. Fannie and Freddie will absorb the losses on loans or mortgage securities they own while investors in mortgage bonds guaranteed by the government-run corporations will bear a brunt of the losses on that debt.

So, if you qualify, you will receive a notice. Refinancing your home to 38% of your income will help you make those monthly payments, stay in your home and breathe a little easier! Basically, this percentage is what it "should" have been in the first place.

Maybe the Holidays won't be so bad, after all!

Historical Election Day for the United States of America

Today is November 4, 2008 and it is Election Day here in the United States of America. As many have said, it is historical for many reasons, no matter who is the President elect by tomorrow.

I voted this morning at Saint Mary's School in Warwick Neck and the turn out was not as large as I had anticipated. One of the volunteers did say that there was a large turn out approximately an hour before I arrived. I am not one for counting Electoral votes as I do not think they accurately represent the Vote of the People! To me, the Vote of the People should be the ONLY vote there is in any election. However, this is the way it is and we need to get out their and make our voices heard in sheer numbers.

My opinion is that many Americans have forgotten what our forefathers had originally intended when they wrote the Constitution. Especially the first amendment to the Constitution which is the Bill of Rights.


1 -freedom of worship, speech, press, right of peaceful assembly, right to petition the government

2 -right of citizens to bear arms3 -troops may not be quartered in private homes without owner's consent

4 -guards against unreasonable searches, arrests, seizures of property

5 -requires indictment by a grand jury for major crimes before trial, prohibits repeated trials for the same offense, forbids punishment without process & that you don't have to testify against yourself

6 -guarantees a speedy public trial for criminal offenses, trial by an unbiased jury, legal counsel for the accused, and that witnesses must attend the trial in the presence of the accused

7 -guarantees trial by jury in civil cases in anything valued at more than 20 US dollars

8 -forbids excessive bail or fines and cruel or unusual punishment

9 -people have other rights than those mentioned in the Constitution

10 -powers not delegated to the federal government belong to the states or the people

I would like my readers to take a moment and read each one, then stop and think about each one. How many of these are still the same in our current lives?Today is an important date in our history, not just because we have our first female vice president candidate and our first black candidate, but because our freedoms (Rights) have been usurped. The economy both in Federal and State governments has been grossly mishandled. We have been outright lied to and nothing can be done about it. Our rights to privacy are gone. The World hates us! The list is enormous and I do not have the time to list all the current problems we as a country are facing.

We should all be rioting in the streets, yet we are not.
Today is the day to be heard. If you do not vote today, you will have no recourse. Make this the day, we as Americans, stand up and be counted.

Take back our country. Our freedoms. Our Rights!

Green Hill Beach

I took this photo about 6 months ago. It is a new home being built on a property that my Dad sold awhile ago in the Green Hill Section of South Kingstown. The original house was an older L-shaped ranch/beach house which we all miss! Apparently Green Hill is no longer a "beach" community of cottages. All the homes there are upscale. We do miss the old "neighborhood".

Neighborhoods in Rhode Island

Once again Rhode Island Monthly has put together a great resource for Rhode Island neighborhoods. After each one there is a general synopsis of the neighborhood. Check it out here if you are wondering about a specific neighborhood. Also Active Rain has started their Localism site which will eventually be featuring small neighborhood areas.

Help for troubled homeowners

A new housing bill was signed into effect. Here is an excerpt explaining how it will affect people in trouble with their mortgages, from CNN.
As with anything else, there is a price to be paid. Read the entire article.
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NEW YORK (CNNMoney.com) -- President Bush signed a $300 billion housing rescue bill Wednesday aimed at helping troubled homeowners avoid foreclosure and supporting mortgage giants Fannie Mae and Freddie Mac.
After the law kicks in on Oct. 1, thousands of at-risk borrowers will be able to refinance their unaffordable old mortgages into new low-cost fixed-rate loans insured by the Federal Housing Administration (FHA).
The Congressional Budget Office estimates that 400,000 borrowers with $68 billion in loans may benefit from the program - but the bill allows for as many as 1 million or 2 million borrowers to participate in the program.
Here's what homeowners need to know.
Who's eligible?
Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007. Additionally, they must be spending at least 31% of their gross monthly income on mortgage debt to be eligible for the program.
They can be up to date on their existing mortgage or in default, but either way borrowers must prove that they will not be able to keep paying their existing mortgage - and attest that they are not deliberately defaulting just to obtain lower payments.
Before homeowners can get FHA-backed mortgages, they must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years, unless it's to pay for necessary upkeep on the home.
To get a new home equity loan, borrowers will need approval from the FHA, and total debt cannot exceed 95% of the home's appraised value at the time.
How can I apply?
Borrowers can contact their current mortgage servicer or go directly to an FHA-approved lender for help. These lenders can be found on the Web site of the Department of Housing and Urban Development.
How does the refinancing process work?
This is a voluntary program, so lenders holding the original mortgage have to agree to rework a given loan before things can get started. The bill requires lenders to make major concessions, writing down the value of the loan to 90% of the home's current value. In areas where prices have plummeted by as much as 20%, that will mean a substantial loss for the lender.
But lenders won't sign off on a workout unless they think that they'll lose less money on that than they would by allowing a home to go through the costly foreclosure process.
Each loan will have to be underwritten by an FHA lender on a case-by-case basis. That means the banks will do a new appraisal to determine the home's current value, as well as examine and verify income statements, bank accounts, job histories and credit scores.
Based on that new appraised home value, the FHA lender must determine how much the original lender has to reduce the original mortgage, so that it will reflect 90% of the home's market value.
If the original lender agrees to the writedown, the new lender buys the old loan and takes over the reworked mortgage.
As part of the deal, the old lender writes off any fees and penalties on the original mortgage, including prepayment penalties, and accepts the proceeds from the new loan on a paid-in-full basis. Additionally, it pays the FHA an up-front premium equal to 3% of the mortgage principal.
What does it cost?
There should be little up-front costs for borrowers to bear. Loan origination fees will vary by lender, but these can usually be paid by the borrower over the life of the loan in the form of a slightly higher interest rate.
However, the refinanced loans do come with many strings. For one thing, borrowers are responsible for paying an insurance premium to the FHA guaranteeing the loan, which will be 1.5% of the principal annually.
Borrowers also agree to share any profits from future home-price appreciation with the FHA. To do that, they'll pay a "3% exit fee" of the mortgage principal to the FHA when they resell or refinance.
Plus, they'll agree to pay the FHA 100% of any profits they realize from higher home prices if they sell or refinance within a year. So if the original loan principal is $200,000 and the home sells for $250,000, the borrower will owe the FHA $50,000, minus costs.
After a year, borrowers will share 90% of the profits with the FHA. The percentage keeps dropping in 10% increments to 50% after the fifth year, where it stays.
What will I save?
Savings depend on what borrowers are paying for their present loan and where they live, but for most people it will be substantial, even after factoring in the FHA fees.
In areas that have sustained huge price drops, such as Sacramento, Calif., where prices have fallen by about 30% over the past year, some loans might be reduced by more than 40%.
Additionally, the FHA loans carry reasonable interest rates, which are fixed for the life of the loan, as opposed to a subprime adjustable-rate mortgage that can jump higher every six months.