There are at least 11 million people in the US that owe more than their home is worth, and a ton more whose property is worth a bunch less than they paid for it.  If you fall in this category you may not be as trapped as you think. 

According to the Wall Street Journal, record low Mortgage rates and a new slump in home prices are presenting some unusual opportunities in the housing market.  Even underwater home owners may benefit.

Many home owners are intentionally taking a hit on their current house writing a check to retire the loan in order to buy a much larger house for not that much more money.  Some are throwing conservative financial advice to the dogs.  They are opting to cash in refinancing.   They are paying thousands out of their pocket to settle their loans and then taking out new mortgages with lower payments and shorter terms.

Essentially these people are doubling down on their homes and taking a chance that when the economy recovers they will have put themselves in a position where there new properties will appreciate faster than if they had waited for their older home to do so.  Economists are saying that this may not be such a bad idea.  Christopher Mayer from Columbia Business School says that “If you are trading up, what better time than now”  Interest rates are rock bottom and the cost of a larger home is much less then what it was 2,3 4 years ago. Someone who wants to refinance is home could plunk down cash to retire the  higher rate loan then refinance the new loan and might be able to reduce his monthly payments as well as shortening is loan term.  Look at the graphs below

For example, 2 years ago someone bought a home for 246,000. That same home has appraised for 228,000 today.  Our home owner has paid 29,000 in principle and closing costs to refinance his current 30 year loan at 5.87% into a 20 year loan at 4.5%.  This will save the home owner 95,000 in interest over the life of his loan and lowers his monthly payment by 148.00 dollars.  If you do the math our home owners not only saves the 95 grand over the course of his loan.  He also earns a return of about 10% a year for 5 years on his investment of 29,000.

It is not easy for many of us to accept the fact that we have lost tens of thousands of dollars on our homes.  However for scores of home owners summoning the courage to take a loss now could lead to large gains later. 

This is agreat time to be a buyer especially in Morris Plains.  There are a number of homes in town that are competively priced to the current market.  These homes will sell very quickly, I know of one that already has had alot of interest in it.  If you need any information about the town give me a call and I will be happy to assist you.

Thanks for reading my blog on Morris Plains Homes NJ and here is the Quote.”Go back a little to leap further.”  John Clarke

In Morris Plains there are 31 homes for sale in Morris Plains that have been on the market for an average of 100 days.  They range on the market from 32 all the way up to 271 days.  10 homes have been on the market for 4 months or more.  Now before you say “well that is because of the economy or the market”.  The truth is there are currently 10 homes under contract that where on the market for an average of less then 30 days.

Why did these homes sell in such short time?  They were all correctly priced to the market when they were listed.  These 10 homes where not all inexpensive properties, six where priced over 549,000 dollars.  The highest priced one was priced at 699,000.  Four of these  homes sold in under two weeks. 

It is not rocket science, there is a lot of competition in the market.  If a buyer cannot find the home he wants at the price he wants in Morris Plains he will go to Denville or Morris Township or Hanover to find his home.  Remember the market dictates what your home is worth.  The current average absorption rate for Morris Plains is up around 6 months.  In the long run incorrectly pricing your home will cost you tens of thousands of dollars.  Hoping to get your asking price is not a strategy it is a mistake.

Thanks for reading my Morris Plains Real Estate Blog:  Here is the quote: “This country will not be a good place for any of us to live in unless we make it a good place for all of us to live in”.  Theodore Roosevelt

Investors weary of the European dept crisis and the turbulent stock market have shifted money into the safety of US Treasury Bills.  Fixed rate mortgages tend to track that yield.  The unemployment picture shows that few private sector jobs have been created.  This has made the investors nervous of the stock market and pushed bond rates higher and interest rates lower.  When bond yields fell interest rates followed. 

It was expected that when the tax credit for home buyers program had ended that rates would move higher.  Fortunately for the home buyer just the opposite has happened.

Another good omen showing that the economy is improving.  Is that it appears that corporations do not appear to fear future restrictions on credit.  Many corporations have begun stock by back programs.  Instead of hoarding cash to use in the event of tighting credit, corporations are out buying their own stock back.  Over 122 billion has been spent buying stock back.  This is a boom to share holders.

Consider the performance of the Buyback Letter, edited by David Fried, an advisory service that recommends stocks based on buyback activity. Since the beginning of 1997, which is when the Hulbert Financial Digest began tracking this service, it has produced a 10.7% annualized gain, compared to 5.1% for the overall stock market (as measured by the Wilshire 5000 index). Among all the services the Hulbert Financial Digest has tracked since 1997, the Buyback Letter is in third place (second when ranked on a risk-adjusted basis).

Private equity is getting into the investment picture as well.  Just look what happened in Delaware last week.  A refinery that Valero Refining Company had shut down in November and affected the income of over 4,900 families was bought by a private investment company.  The new Delaware Refining Company has already called people back to work to begin startup procedures.

If you are thinking of buying or selling a home in Morris Plains NJ give me a call.  I can help you through the process.

Thanks for reading my Blog Morris Plains Homes NJ.  Here is the Quote: There are so many men who can figure costs, and so few who can measure values.  ~Author Unknown

  What is really interesting is that of those 29 homes that are on the market, over 25 percent are not new listings.   These 8 homes have been on the market for over 6 months some have been on the market for over a year.  Morris Plains has an absorption rate for homes priced under 500,000 dollars of 2 months.   For those homes priced over 500,000 it is 4 months.   This statistically means that that a home on the market in Morris Plains will go under contract in less the 3 months.  Now wait a minute why have these homes not sold in over 12 months?  The reason they have not, is that they are over priced. 

What is  interesting is that Morris Plains still has a Sellers Market Absorption rate of three months.   This means that homes that are well priced have sold so fast that they have off set the fact that 25% percent of the homes listed in town are overpriced and have not sold.   

One of these homes was originally priced at 629,000 this home was on the market for almost 8 months.  It eventually sold at 502,500.  There is another home in the Hill Section of town. It has been for sale a total of 1,274 days.   It first went up for sale in 2006 priced at 899,000 it is still for sale at 699,000 today.  This house is the perfect example of a home that is completely out of touch with the market.  Homes in the same neighborhood same style and have sold for between 550,000 and 670,000 dollars.  Price your house right.  Price your house right.  Price your house right.  If you don’t all you are doing is having a party put not inviting anybody to attend. 

Now that the Tax Credit is finished we may see a slow down in first time home buyers looking for a houses.  With this we are seeing buyers asking for sellers concessions at closing.  Buyers are asking the seller to pay their closing costs or points on their mortgage.  Some sellers are actually offering to pay closing costs up to 8,000.00 and adding that information to the listing to encourage more buyers into their home.  This has been a very popular feature in selling homes in the Midwest and Western sections of our country.  It will become more and more popular with buyers and sellers in the months to come.  

I have also had a buyer request the seller to pay for half of the home inspection.  I have seen sellers offer home warranties to buyers.  As the housing market continues to recover, both buyers and sellers will see more and more concessions from sellers to market their homes to a more educated buyer that has many options to consider.

Hey in closing congratulations to the Morristown High School Boys Lacrosse Team and their run in the Morris County Tournament.  Good Luck against Mountain Lakes.

Thanks for reading my Blog Morris Plains Homes and here is the quote:  “The secret to staying young is to live honestly, eat slowly and lie about your age”  Lucille Ball

Like a lesson in the conjunction of Latin Verbs that Sister Hell on Wheels would pound into my 15 year old head in high school the bad news in the housing market is force feed to us every waking moment.  One report claims that 1 in 4 home owners are under water in their home loans.  Another claim the housing market is awash in foreclosures, and another warns us of the coming commercial real estate meltdown.   Ah duh this is the same crap we have heard for the last year.  Where were these people 2 to 3 years ago when we all could have used some of their bad news predictions?  All the bad news is in the market it is not relavent any more.  Now tell Bobby something that we  don’t know.

Ok how about I share this with you.  Did you know that 382 non financial firms in the Standard and Poor’s 500 have reported results for the fourth quarter and are now sitting on 932 billion dollars?  That is billion with a “B”.  What these companies have done is during the down turn they cut costs and capital spending looking to survive the storm.  What are these companies doing now?  They are coming out of their caves and are looking to spend.  Let’s face it a trillion dollars sitting in a bank account is not doing anyone any good.  That money needs to be put back into the economy.   Some of these companies have increased dividends and bought back stock but this signals to the market that they don’t have a better use for their cash.  Stockholders want value and growth.

What is happening now is companies are using their cash to buy other companies.  Bank of New York just spent 2.3 billion for PNC Financial Services, Diamond Foods Inc’s 615 million purchases of Kettle Foods, Air Products offer of 5.12 billion for Airgas Inc.   These are just a few examples of how these companies see positive signs where the economy is going.  Capital for expansion is more readily available and this capital is cheap.  Instead of using what many CEO’s consider their under valued stock to finance a merger these companies have leveraged their cash and the availability of cheap capital to expand through purchases and mergers.  Their view of the economy is that their stock is undervalued and when you compare that to the cost of cash and financing it is pretty easy decision to make, use the cash.

So what does this mean to the average home buyer?  Well 382 CEO’s are out looking to buy.  The reason they are buying is the same reason you should be buying as well.  Reason number 1: the market is at the bottom, in some metro areas the bottom is slipping away.  Reason number 2: interest rates have never been lower.  Everyone will agree that rates will not stay at these levels for long.  30 year mortgages have slipped under 5 percent once again. Reason number 3: waiting for prices to drop.  Home prices are at 2004  levels.  We have seen prices fall almost 5% a year since 2006. Will prices fall further I don’t think so. Why you ask? Because of, Reason number 4 the Economy is Improving.

Thanks for reading Morris Plains Homes   NJ Blog.   Here is today’s Quote   “Stay strong eat right and go for the gold”  John Sittmann

PS this just in    The Unemployment Numbers for February are in.   The  Consensus is that had we not been “snowed in” in February we would have seen a job gain instead of a job loss & this is perceived as a strong economic indicator