Friday, October 24, 2008

When will the Real Estate Market Shift?

I speak to a lot of clients on a regular basis, and one question I hear frequently is “When will the real estate market shift back?” That’s a question that is on everyone’s mind. So let’s explore it and see if we can make any sense of it.
Real estate is driven by supply and demand. When there are more homes available than there are buyer’s buying, you are consequently in a buyer’s market, like we are in now. When there are more buyers than there are seller’s selling, you are in a seller’s market.
Buyer’s markets are good for buyers because they can get good deals on homes, sellers will typically pay more in closing costs and are more reasonable on pricing. Seller’s markets are good for sellers because housing prices appreciate because the demand is so high, just as in buyers markets, housing prices stagnate or correct because demand is lower. Sellers will get better deals in sellers markets and will typically make more money on the sale with a faster sale time.
We have been in our current market now for about 3 years. The average cyclical market time is between 3-7 years, depending on the economy and other factors such as mortgages and interest rates. It’s been expected that the market should regain it’s footing after the elections and start leveling some. However, that is just speculation at this point. We will not see the effects on our markets until we know how regulations will impact us, referring to capital gains, housing regulations, mortgage regulations, ect.
To keep things in prospective, we should be very close to rebounding from this housing correction, that is to say, as long as rates remain low, real estate taxes are kept as is or lowered, and the economy picks back up. However, if your currently looking to purchase, don’t let the real estate information scare you into not purchasing, because the more properties saturating the market, the harder it will be for us to make a comeback. Everyone has a part in this, including you!

Buying and Selling in Hampton Roads

Hampton Roads is a very military dominated area. Real estate here because of that is very stable. We have recently been ranked 5th most stable real estate market in the country, which should alleviate the anxiety that the media has been putting out there. Nationally, real estate has seen a correction of roughly 10%. Some may have seen more than that, like in the California market, but here locally in Hampton Roads, and especially in Virginia Beach, Chesapeake, and Norfolk, it hasn’t seen much of a correction at all, somewhere around 3%.
The main thing we are seeing right now helping our buyers and sellers is that buyers are asking for closing costs. They are trying to negotiate the price too, but for the most part, they just need their closing costs paid. The main reasoning for that besides being in a Buyer’s Market, is that most of the 100% financing loans out there have gone away, with a few exceptions, and it has become more and more difficult for the average buyer to be able to pay all their closing costs themselves.
For buyers, this is an excellent time, don’t buy into the media hype that it’s unsafe to purchase a home, that will just make issues worse. If you have stable employment, a good mortgage company, and a good loan program that doesn’t allow you to purchase more than what you can afford, you can take advantage of some great deals out there and live in the home until the market turns back around to a seller’s market again. From there you can sell and move up, or just continue to occupy it and reap the benefits of the appreciation and equity to follow.
For sellers, because we are in a buyer’s market, and the inventory of available homes are so great in numbers, you must price your property appropriately. No more pricing 10K above market hoping it will sell, because it will just sit there. The home needs to be in good to great condition too, if it’s not, then you must adjust the price to reflect that. If your home is priced right and is in good condition, and have an agent that will properly market your home for sale, there should be no reason why it won’t sell. The best thing about Hampton Roads is our military and the number of families transitioning in and out of the area constantly. That creates a stream of buyers that will keep coming.
For more information on our local marketplace, and to get some additional info on buying selling, or investing here in Hampton Roads, visit my website at

Monday, October 20, 2008

Stocks Vs. Real Estate Investing

Real Estate vs. Stock Market
Posted by Josh Schlesselman under For Buyers, For Sellers, For Realty Professionals, Regional News, Bailout, Virginia Beach
As we have all been witnessing over the last three weeks. The stock market has taken a tremendous hit. A reported 2 Trillion has been lost, possibly more, taken from everyone across the country that has money invested in 401K’s, stocks, mutual funds, ect……
There are conflicting comments on the volitility of the stock market, some are saying it’s a great time to get in, and others are saying to get out. Hedge Funds are some of the largest personal market investments out there, with minimum investment capital needed in the millions of dollars. It has been reported that 50% of all hedge funds have pulled out, which is one of the reasons we have see between 500-800 point drops in the DOW.
Personally, my opinion is that there is too much to risk in the stock market until we see some stability return, once that occurs, I would get in and ride the wave up, but as we can see now, it’s like gambling on the craps table.
Commodities have been a safer bet. Things like energy, gold, silver and even real estate are types of commodities. Commodities are tangible items mainly. I personally have a hoard of gold and silver I’m holding onto just in case the dollar tanks and we temporarily return to the barter system or need to exchange it for other currency. Which by the way, shouldn’t happen. I am still very optimistic about real estate, and it’s not because Im biased being a Realtor, it’s because I know that the real estate market is cyclical and it’s a tangible thing that everyone needs and relies on. Everyone will need a place to lay their head and over the long haul, it will rebound and continue to appreciate, whereas, with stocks, you don’t know if that company or particular stock will even be around in the next 5-10 years. Roughly about 30% of the stocks from the late ninety’s to early 2000’s are no longer in existence.
Real Estate must be a long term investment. Sure there are times in markets like we’ve just seen where you can purchase and flip to make good money, but you need to make sure that your in it for the long haul, and if the situation arises to where you can sell for profit, then take it! Don’t buy into the media hype about real estate, the market is correcting itself. There are markets worse than others, but here in Hampton Roads, we have a fairly secure and stable market. If the media scares potential buyers from buying the surplus of listings out there, then it can be more detrimental for the correction period and take even longer for us to correct ourselves.
Main point of my topic is don’t Panic! Continue to look for the good deals out there and just remember that if your getting a good deal in this market when we’ve seen decreases in prices of 2%-7%, then when the market does fully correct itself, you have just built in equity that you can hold for later purposes. Also, real estate is too important for our country to let fall to the wayside, every measure will be taken to ensure that real estate is fundamentally sound and secure. So, jump in, and get a good deal out there, there are plenty to look at and see, and call on me to help negotiate you the best deal.
You can check out my site at for more info and market updates

Government backed Loans and Today’s Marketplace

Government backed Loans and Today’s Marketplace
Posted by Josh Schlesselman under For Buyers, For Sellers, For Realty Professionals, Regional News, Virginia Beach

In today’s market, the most desireable and obtainable loans are the government backed loans. In total contrast to how the market was 4 or 5 years ago, where VA loans were frowned upon, they have become the norm.
The three most common loan products being used in our marketplace are the VA, FHA and the VHDA loans. The VA loan deals with military persons whether currently active or not, and offers 100% financing and very competitive interest rates with no mortgage insurance. FHA loans are open to everyone who qualifies and offers 3% down payment with competitive interest rates but does require mortgage insurance. Lastly, the VHDA loan program is targeted to first time home buyers, but offers a staggering 102% financing but once again, requires mortgage insurance.
Conventional products have just become not as applicable as of late because of the amount needed for downpayment and the higher mortgage insurance premiums. They are still being used for certain applications, but just becoming more and more out of reach.
If you are active or prior military, your best bet is to use your VA loan, one major misconception about it is that you CAN use it more than once. Actually, you can use it as many times as you want as long as you don’t go over 417,000K.
If you don’t have a military background but have purchased before and have some money to put on a downpayment, then your best bet is to go FHA. You will have the MIP to deal with, but for everything else that’s available to you, this will probably work the best.
If your a first time home buyer, and don’t have much if any money, they are still offering the VHDA first time home buyer program, which is great. It will give you a competitive 30yr. fixed rate with a competitive interest rate and you will need little to no money.
For more information on any of these topics, visit my website at

The Real Estate Sky is not Falling!!!

The Real Estate Sky is not Falling as the Media Outlets try to Portray.
Posted by Josh Schlesselman under For Buyers, For Sellers, For Realty Professionals, General Information, Bailout

With the recent passage of the enormous bailout from the government in the tune of 700 Billion dollars, many analysts believed it would be an immediate fix for the lack of liquidity in the market place. In consequence, the stock market has seen historic drops and closes within the last couple of weeks. It’s been a very volatile time for the stock market, but does that theory carry with Real Estate????
The answer to that question is a resounding “NO!” Many people outside the real estate industry are telling people that now is not the time to purchase, and that obtaining financing today is not the right move for you. Fears have been spilled into the marketplace, and consequently, it’s making it more difficult to correct the abundance of listings that are currently available, making the longevity of a market correction and turn around farther out of our reach.
What these so called ‘Gurus’ don’t understand is that if a buyer has stable employment, good credit, and some money for downpayment and reserves, along with a good reputable lender offering a solid 30yr. fixed rate loan program that the buyer can obliviously afford, it’s a fantastic time to purchase!!!!
Nationally, we have about a 5% foreclosure rate. Out of those, the majority of the people could either, not afford the mortgage with anticipation of reselling the house and pocketing the profit with appreciation, or wound up with a loan that does not have a fixed interest rate, but actually one that readjusts depending on where the prime rate floats. So if they started out with a teaser rate of say 5%, and with an adjustment of 1-2% a year, their rate could possibly go from 5%-7% in a year! If they have owned the property for say 3 years, their interest rate could have adjusted from 5%-11%. That’s almost double what they were paying to start with, which is a reason some of these adjustable rate mortgages or ARMS are so dangerous and have caused havoc in our industry.
On top of the silly loans that were issued, lack of government oversight to the practices of the evil and greedy lending institutions that gave these loans made matters worse. If there was proper regulation and oversight, they would have never given these crazy loans a second thought, and we wouldn’t have the mortgage meltdown we are seeing now. Am I for the government bailout? The answer is “Not Really.” The reason being is that 700 billion is a lot of money. That would equal about 400K for every household in the country! Why don’t they bail us out??? I mean, if we are just handing out money, hand it out to the people that need it most, the ones of us that were misled by greedy lenders that wanted to make bonuses on selling these stupid loans. Going back to the bailout, I am for bringing more liquidity into the marketplace. I believe however, we could’ve achieved that in alternative means, such as lower the capital gains tax, corporate tax, and other taxes that would give incentives for money to begin to flow again. Even if we couldn’t go that route, the bailout would have served a purpose if it had not been filled with Pork and wasteful spending to get the House and Senate to actually vote for it. Tax breaks for Wooden Arrows???
Getting back to the point of issue, don’t believe the media. They are in the business of making news, and there is no news, like bad news! Buying a house is the American Dream, and as long as you purchase a home, and plan to live it in for the next 3-5 years and with the criteria I have already gone over, you will be thankful you got into the market and got a great deal. Hampton Roads Virginia is one of the best and most stable real estate markets in the country due to our enormous military presence.
Check out my website at for more information and market updates.

Investment Opportunities in a Down Market

We have all been experiencing a buyer’s market for the last three years. The real estate market is a cyclical market and with the surplus of available homes, it’s only logical that you can negotiate a great deal! Now is the time to find a great deal and hold it for the next market swing to capitalize on the appreciation and demand that will follow in the next seller’s market.
As an investment specialist in real estate, my primary focus is helping investors seize great deals and properties for long term wealth accumulation. No matter where you are in your investment experience, I have helped the new and seasoned alike. My advice to anyone that is being conservative in their investment endeavors in this time of financial crisis and the bear market we are facing is to look at real estate. Real estate over the course of time has had it’s swings, but it will always recover and continue to appreciate in value. Unlike the stock market, it’s a tangible investment, and is something of necessity, whereas, everyone needs a place to live, and will never be worth nothing! The majority of people and corporations in this country will contribute their wealth to the holding and accumulation of real estate.
Real Estate nationally has seen a reduction in value, but it’s very modest in comparison to the stock markets losses. On average nationally, real estate has had a correction of roughly 10%. Whereas with the stock market, we have seen losses of roughly 20%-30% this year! Locally, in the Hampton Roads area, we have been very fortunate in our real estate market. Due to the large volume of military related personnel, our market has been one of the best in the country. Last report I viewed had us in the top 5 nationwide! We have had value corrections, however they have only corrected between 2%-5% area wide. Not bad!
The value corrections however are only one aspect of real estate as an investment. Other benefits of owning rental units include the monthly cash flow from the excess of rents vs. expenses. That should be a consistent monthly gain that you own the property given that it’s rented. You will also benefit from the tax breaks and shelter that they provide such as the interest paid, taxes, any repairs associated with the property, and the yearly depreciation. On top of all those benefits, each month that your tenants pay their rent and you pay the mortgage, you are paying down the loan amount, meaning that you are creating more equity in the property.
That leads us to making money in a down market. There are still ways to purchase the properties even though the financial lending has dried up some. First and foremost, if you plan to occupy one of the units up to a four unit complex, you can still receive financing between 100%-97% of the loan amount. If you have some cash sitting aside in a bank account not receiving the interest you deserve, and you do not with to occupy the unit, you can put between 10%-25% down to still get financing. More on the creative side of things, if you have money in an IRA or types of Life insurance, Money markets, or even some stocks or mutual funds, you can borrow the money from yourself without cashing out to come up with the down-payment for a property and then pay yourself back. Keep in mind, the money you put down on a property is not money lost, it will sit in the property and can be taken out at a later point if desired.
As you can justly see, this is a great time to purchase properties. The next market swing is just right around the corner and you can leverage yourself to make large amounts of money. Remember, the key to building wealth is to know when to purchase and to purchase at the right times. That time is now. You can negotiate some great deals in the market currently depending on the property and the owner’s motivation for selling. I have seen deals negotiated 10%-20% off market value. So besides all the other gains I mentioned previously, you just capitalized on another big gain just for purchasing now. Once the market swings back and the gains are realized, you will have made a sound and just investment. Much less riskier than the stock market and much easier to control and manage too! I am here to guide you into making the right decisions and maximizing your wealth, as it not only benefits you, but myself included. Call with any questions or thoughts.