October 2006
In This Issue
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Greetings

Dear Friends,

Since the down turn in the real estate market has had a negative impact on both buyers and sellers alike, the team at Rose Realty is more dedicated than ever to helping our clients make all of their real estate transactions as positive as possible.

We believe in the current market conditions that knowledge is the key ingredient to making the best possible real estate decisions. We are pleased to introduce our new web site Roserealty.com. The site is full of quality and timely information to help you buy, sell, or invest.

Thank you for your continued support and please do not hesitate to call or write with your questions, comments and of course ALL of your Real Estate needs.

Kenneth Rose, Broker

kenrose@roserealty.com

What caused the recent housing boom?
  • Low interest rates.
  • The emergence of new mortgage products that made qualifying for a mortgage easier than ever.
  • Investor's demand for income producing properties.
What changes have impacted the market in the last year?
  • Mortgage interest rates have increased.
  • Homes sales have slowed down.
  • Inventory of homes available for sale have increased to a historic record.
  • Number of days a home is for sale has risen dramatically.

Supply has Increases
  • Over the past five years the number of new home construction rose sharply to meet the vigorous demand (which also drove up home prices at record rates).
  • The large monthly supply from builders, renovators, flippers and homeowners just looking to "move up" has outpaced the market's ability to absorb the inventory.
  • Many sellers (primarily investors) have placed their property on the market earlier than they normally would have in an attempt to reduce their inventories in the face of a slow down and to avoid the impact of increasing interest rates on their adjustable loans.

    • Demand has Decreased
    • The sharp decline in affordability reduced consumers' ability to purchase a home.
    • A belief that housing fundamentals are shaky and that the rapid rise in prices witnessed over the last decade necessitates a sharp decline in prices.
    • Some would-be home buyers are waiting until prices come down before they venture into the market.

    How the Market is Adjusting
    • A reduction in monthly supply of homes resulting from:
      • builders are reducing plans to build
      • flippers and speculators are getting out of the market completely
      • with the increase in rental rates many would be sellers will take their properties off the market and capitalize on the substantial rents that can be realized
    • Home owners are testing the market by listing their homes at prices they hope for and then downwardly adjusting the pricing and adding incentives to facilitate the sale of their homes
The continual coverage by the news media can give you the impression that the sky is falling in when it comes to the residential real estate market. And this could be true if you are a home owner anxious to sell your existing home and think you are going to make the same kind of money that your neighbors made when they sold their home last summer. However, for investors this is opportune time to take advantage of the change in the market place.

What are the advantages to investing this year compared to last year?
  1. The prices are coming down.
  2. Sellers are willing to make concessions including covering a portion of closing costs (less cash out of your pocket)
  3. You have more time when looking for a property, no need to rush to make a decision. The days of multiple offers have come to the end.
  4. In every real estate market there are always going to be sellers that have personal situations that make it imperative that they sell quickly and as a result are willing to drop down to rock bottom pricing. Today's market probably has more people in this situation due to the fact that the adjustable interest rates are starting to adjust upward and last years less savvy investors have taken on more debt than they can handle.
  5. Huge inventory of available properties to chose from.
  6. If the property is going to be used as a rental, rental rates are increasing and are projected to continue to increase over the next year.
  7. There are more and more properties out there that have been recently renovated making them a turn-key rental.

The key to success in buying investment property during this market is going to require two things:
  1. Commitment to keep the property for a minimum of five years to wait for the market to cycle around and also to take advantage of building equity.
  2. Doing your due diligence.
First Time Home Buyers
Who are the typical first time home buyers?
  • The median age is 32 years,
  • The average household income is $57,200.
  • Average purchase price of the home $150,000
  • Average down payment 2%, although, 43% of all first time home buyers made no down payment.


    • What types of Programs are available to help the first time home buyers?
    Maricopa County
  • City programs offer down payment and closing cost assistance for up to $25,000.
  • The "Home in Five" bond program. The program offers 6.125 percent, 30-year fixed rate mortgages and grants up to 5 percent of the loan amount to be used toward down payment and closing costs.
  • MRB program offers a competitive, yet slightly higher interest rate combined with down payment and closing cost assistance of up to 4% of the purchase price. (this program is also available to non- first time home buyers)


    • Montgomery County
  • "5 for 5" 5% closing cost and down payment assistance up to $10,000 and a 5% interest rate (5.26%APR)

We are specialists that work as a team to serve your better. Our boutique is niche oriented, we deal with hassle free sales of luxury homes and provide the highest level of service that our discerning clients expect. We not only work in these communities; we live here as well, making the Rose Realty Team your A to Z community resource. Whether you are relocating to Scottsdale, AZ, the southwest's finest luxury destination or to our nation's capitals most sought after suburb of Potomac, MD, Rose Realty will be there with the expertise and experience necessary to guide you safely and wisely. Call us today and find out just what a difference a specialist can make. You not only have my word but you have my name on it!

Sincerely,
Kenneth Rose
Rose Realty

phone: 480-607-ROSE

This email was sent to chrisbengel@cox.net, by kenrose@roserealty.com
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Rose Realty | 10122 River Road | Suite 202 | Potomac | MD | 20854