John Paulson made a lot of money while others lost it.  At a net worth of $12.4 billion, he sits at number twenty on the Forbes 400 list.  Now he is predicting the short term future, saying that double digit inflation is coming and it is time to ditch short term bonds for stocks.  All of this is according to a Forbes article reporting on a talk Paulson did in New York a month ago.  He also had some interesting things to say about the real estate market (quote taken from the same article):

“If you don’t own a home buy one,” Paulson recommended; ” if you  own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”

I’m not much for predicting the future, and I think that timelines are quite different in local markets, but this got me thinking.  Although activity is down here in Boise, I still track prices for single family homes and multi-family investment properties on a daily basis.  We have nice homes listed for $70 per square foot in Boise and duplexes for under $100k.  In Nampa, you can buy a duplex, triplex or fourplex for around $30k per unit (read: cashflow).  Rents are still pretty steady as more people go from being home owners to renters again.

So is this the best time to buy a home or investment property?  If it isn’t, it’s pretty close.  Close enough that ten years down the road, you won’t notice that you missed the bottom by a few months.  However, if you wait until the bottom is reached, time will no longer be on your side and you will have probably missed it.

Photo Credit: Forbes.com

The Treasury Department released their details today regarding the Homeowner Affordability and Stability Plan.  There are a few different versions of the plan depending on the borrower’s situation.  The abbreviated version is that you need to call your lender to find out about your own personal eligibility.  However, here are some of the basic eligibility requirements (taken directly from the Treasury Department’s summary):

• Loans originated on or before January 1, 2009.
• First-lien loans on owner-occupied properties with unpaid principal balance up to $729,750. Higher limits allowed for owner-occupied properties with 2-4 units.
• All borrowers must fully document income, including signed IRS 4506-T, two most recent pay stubs, and most recent tax return, and must sign an affidavit of financial hardship.
• Property owner occupancy status will be verified through borrower credit report and other documentation; no investor-owned, vacant, or condemned properties.
• Incentives to lenders and servicers to modify at risk borrowers who have not yet missed payments when the servicer determines that the borrower is at imminent risk of default.
• Modifications can start from now until December 31, 2012; loans can be modified only once under the program.

To find out if you qualify, you’ll have to call your lender and supply them with your income, debt and asset information.  For more information about the plan itself, check out the following links from the Treasury Department:

• Modification Program Guidlines

• Summary of Guidlines

Photo Credit: woodleywonderworks via Flickr

“The plan will help up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure.”

Don’t have enough equity to refinance or are you completely upside down in your home loan?  Or has your income changed, keeping you from qualifying for your current loan?  The government is here to help.  At least, that’s the idea.

The new Homeowner Affordability and Stability Plan will help homeowners that don’t currently qualify for standard refinancing options.  This includes people who have less than 20% equity in their home or owe more than their home is worth.  There isn’t much information out about the program yet, but they are planning on releasing more details on March 4th.  For now check out these links or give me a call at 208-631-3545.

• Homeowner Affordability and Stability Plan Fact Sheet
• Consumer Q & A
• White House Blog FAQ

*****UPDATED HERE*****

Visit msnbc.com for Breaking News, World News, and News about the Economy

In case you don’t want to take the 4 minutes to watch the video, I will list the myths for you here:

1. Sellers today are desperate – Very few sellers are in a desperate situation.  Don’t look at the days on market as an indicator of a good deal, instead focus on why the owner is selling.
2.  Don’t buy before prices have bottomed – This is a classic mistake because the bottom won’t show itself until prices are on their way up.
3. You can’t buy a home with less than 20% down – FHA is still offering first-time home buyers financing with 3.5% down.  Obviously, you still have to qualify, but the program does exist.
4. Now is the absolute worst time to sell – Although it is not a good time to sell, many markets are recovering.  Our own market here in Boise and the surrounding areas has been seeing much more activity in the past month compared to the last two quarters.
5. Before you refinance, shop around – I’m not sure I agree with this one, but the advice is true that your current lender will fight hard to keep your business so it may not be worth your time to shop around.

There you have it.  Now go search for a home or sell yours.

httpv://www.youtube.com/watch?v=bNmcf4Y3lGM

Thanks Kim!

I’ve been looking for a way to explain to my buyers that now is a great time to buy (I know – does a real estate agent ever stop saying this?), but I’ve held back for a few reasons.  First, I don’t actually know what is going to happen to the economy in the next month, year or decade.  And second, I didn’t live through the Great Depression and I wasn’t really paying much attention during the past few recessions.  Basically, my prediction skills are lacking.  So, as with anything else that I don’t know much about, I’ve done some research.

As I was reading through the real estate blogs that I read everyday (see column on the right), I came across Greg from BlueRoof.com’s blog entry about Warren Buffett’s opinion article in The New York Times.  Basically, Buffett tells us what we all know – buy low, sell high.  But he puts it in a way that makes it easier to understand during these times of confusion. He also talks about the stock market specifically, but his advice can be useful in real estate as well. From the article:

“What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.”

What is the lesson here? Right now, prices are low (hint: that is when you buy).

Photo Credit:  woodleywonderworks via Flickr

For weeks we have all sat around listening to talk of a 700 billion dollar “Wall Street Bailout.”  Why Wall Street and why $700 billion, we all asked.  Nobody seemed to know.  The plan wasn’t passed…then it was…but it was different…the Dow is down 777 points…up almost 1000 points within a few days.  What is going on?

I didn’t know either.  In fact, I was very much against the bailout plan when I first heard about it and somewhat relieved when it didn’t pass the first time.  Then the second version passed and I didn’t know what to think.  None of the news sites or other trusted resources had any answers.  Then Ira Glass came in and explained everything.

Remember my blog post about the mortgage crisis?  Well, the “This American Life” radio show has done another episode in which they explain the bailout plan – what it is, why we need it, and how we got in to this mess in the first place.  You can  listen to the show here.

It is about an hour long show and it is definitely worth listening to.

The Idaho Business Review reported that the national foreclosure rate was down 3% last month. Good news, right? Not really. The national foreclosure rate is still up 53% over last year. Of course, that is the national foreclosure rate, not the local rate.

The Idaho foreclosure rate is down almost 20% from this time last year. Still, like the national rate, that probably doesn’t mean much to you. Let’s get down to some numbers. In Boise (as of 7/14/08), there are 697 properties that are in some stage of foreclosure (pre-foreclosure, auction, bank owned). In Meridian, 466 properties and Eagle has 208.

I imagine you might have a couple of questions about this information: what does this information mean and where did I get these numbers?

The numbers don’t mean much. If you’re selling your home this information may help you understand the market a little better and allow you to see what you are up against. If you’re buying a home, make sure you look into any foreclosure or bank owned properties that match your criteria. They are a lot more work to purchase and require a lot of patience (think DMV on a Monday morning times ten), but they can yield a great result. Besides, the increased work load is my job, and I’m happy to do it. I subscribe to both local and national foreclosure property lists, so if you are interested in these types of properties, let me know.

Photo Credit: escapo via Flickr

I absolutely love the radio show “This American Life.” Normally, I wouldn’t be sharing this type of information, but last week’s show had some great information about the “credit crisis.” The show does a great job of explaining this country’s financial situation and how we got to where we are.

So, if you’ve wondered how this all happened and want a better understanding of the financial markets, listen to the show; it’s available as a free podcast.

Listen to the show here.

Photo Credit: noahwesley via Flickr

I’ve been trying to avoid the latest addition to the consumers’ vocabulary (subprime) that the media has been spewing constantly, but after reading an article in the Statesman today, I just had to talk about it.

The article is titled “Idaho foreclosures up 21 percent.” This might lead one to believe that we are all doomed and everyone in the valley will soon be homeless, but the article does point out a lot of positive information about Idaho. Although 21% seems like a steep increase, Idaho had very few foreclosures in the past so it only takes a small amount of new foreclosures to increase the percentage to a high number (ie. going from 1 to 2 is doubling or a 100% increase). Also, Idaho and the Boise area in general have a very solid economic base in industries outside of real estate. (Of course, Micron is having its own issues right now.)

So are we doomed? I don’t think so. If you are patient and realistic, you’ll be fine.