David Morris

GOOD NEWS ABOUT THE HOUSING MARKET!

2009-03-25T08:17:00.000-07:00

New-home sales climbed 4.7% during February to a seasonally adjusted annual rate of 337,000, the first month-to-month increase since July, the Commerce Department said. The data marked another favorable sign for the housing market, but prices continued to decline. The median price of a new home tumbled 18% in February from a year earlier to $200,900. The median price in January was $206,800.

In another positive sign for the economy, an earlier report from the Commerce Department showed durable-goods orders unexpectedly climbed 3.4% during February.

-WSJ March 25, 2009

Ambitious Foreclosure Plan Revealed - How Will It Help?

2009-03-06T12:53:00.000-08:00

By Kevin G. Hall

RISMEDIA, March 6, 2009-(MCT/RISMedia)-The Obama administration on Wednesday detailed its ambitious $275 billion plan to halt soaring foreclosures nationwide, outlining the financial incentives it’s offering investors, lenders and their bill collectors to lure them into modifying distressed mortgages to keep Americans in their homes. The slump in home prices is the root cause of the global financial meltdown, so the success or failure of the administration’s housing plan is vital to ending the deepening economic recession.

Shortly before financial markets opened, the Treasury Department provided its long-awaited update to the Making Home Affordable program, which the administration thinks can help up to 9 million homeowners.

“It’s a major break with the past because it really takes up a multifaceted approach. It used several different carrots and a stick to come at a comprehensive plan to reduce the number of foreclosures,” said Kathleen Day, a spokeswoman for the advocacy group Center for Responsible Lending in Durham, N.C. “That’s the only way you’re going to stabilize the financial system.”

The plan’s details came out a day before the House of Representatives is expected to pass compromise legislation giving bankruptcy judges power that they now lack to modify the terms of certain mortgages. Bankruptcy changes are the stick to go along with the carrots-new financial incentives for lenders to modify mortgages instead of moving to foreclosure.

The Obama housing plan attacks two problems that are creating a vicious cycle in the nation’s housing market.

First, it offers $200 billion to provide refinancing for some homeowners who owe more than their homes are now worth-shorthanded as being “underwater” on their mortgages. To qualify, these homeowners-5 million of them by administration estimates-must have their mortgages in the hands of Fannie Mae or Freddie Mac, the mortgage finance giants that the government seized last September.

“We have been advocating for one unified approach to help modify or refinance delinquent and underwater loans and thus we think this program will undoubtedly help servicers keep more at-risk borrowers in their homes, which is a crucial step to helping stabilize the mortgage and housing markets,” stated John A. Courson, president and CEO of the Mortgage Bankers Association (MBA).

Many of these homeowners would like to take advantage of today’s historically low interest rates and refinance but can’t, since the law prohibits refinancing if the current mortgages reflects less than 80% of the homes’ values. These homeowners now can seek to refinance if their mortgages are up to 5% higher than the present-day values of their homes. That helps some, but it won’t reach lots of homeowners in California, Florida and elsewhere whose homes are now worth substantially less than their mortgages.

Because most mortgages are bundled into securities and sold into a secondary market, it’s often difficult for homeowners to find out whether Fannie or Freddie owns their loans or whether they’ve been pooled with other loans and sold by an investment bank to other investors.

The other pillar of Obama’s plan attacks the problem of affordability. The administration provides another $75 billion in incentives to help prevent foreclosures in cases in which the homeowners, up to 4 million of them, are about to lose their homes. The money comes from the $700 billion bailout fund approved last October.

Under this complex portion of the plan, the president offers a stream of financial incentives to mortgage servicers, who are essentially bill collectors for private investors who own pools of U.S. mortgages. Some incentives stay with the servicers while others flow through to investors.

In exchange for the incentives, a servicer would modify a mortgage so that no more than 38% of a homeowner’s monthly after-tax income was taken by the monthly mortgage payment. The government then would step in and share the cost of reworking that mortgage so that no more than 31% of the borrower’s monthly income was tied up in the payment.

This could result in some mortgages carrying interest rates as low as 2% for five years. Critics think that this mortgage subsidy interferes with the natural process of letting the marketplace find the floor on home prices.

“Not only do these gimmicks prevent home prices from falling to the market-clearing levels that would give private lenders the confidence to loan, but the continued specter of subsequent government-mandated modification will keep lenders out of the game,” said Peter Schiff, the president of investment strategist Euro Pacific Capital.

Treasury Secretary Timothy Geithner told lawmakers Wednesday that the administration plan offers “a powerful set of incentives” and “persuasive force and some economic inducements to provide substantial improvements in affordability. With those changes you will be put in an economically viable position and stay in your home.”

Although lenders have worked over the past year to freeze mortgage rates that were about to adjust to higher monthly payments, few have been willing to take losses and significantly rework the loan terms. This has led to a high percentage of re-defaults on modified mortgages and avoided tackling the problem of affordability.

Federal Deposit Insurance Corp. Chairman Sheila Bair pushed unsuccessfully during the Bush administration to rework loans with an eye toward affordability, and the Obama administration is implementing her ideas.

Any lender that takes new taxpayer bailout money under the administration’s Financial Stability Plan will be required to participate. The Obama team also is betting that requiring a standard guideline for mortgage modification will provide more protection to mortgage servicers, who are bound by contract to investors, not homeowners, and can be sued if they modify mortgages.

The Obama plan got a strong endorsement Wednesday from the Financial Services Roundtable, which represents many of the largest mortgage lenders.

“Our member companies intend to implement the program for all at-risk borrowers consistent with program guidelines and contractual requirements,” the group said in a statement. “For the benefit of at-risk borrowers who are facing the loss of their homes, for communities and for our nation in this time of extraordinary economic challenges, it is imperative that investors and servicers that choose to participate in the program adopt a national standard model.”

In an administration background briefing that was conducted under the administration’s insistence on anonymity in order to speak freely, it was clear that the plan is far from a panacea.

Senior government and industry officials confirmed that homeowners who seek to refinance to the new low interest rates will have to foot the bill for a range of new fees that Fannie and Freddie require. It’s not clear whether these will have to be paid upfront or can be folded into the loans.

The officials also confirmed that there’s no standard procedure for lenders under the Fannie and Freddie portion of the plan. It will be up to each lender to determine whether the refinances go through them or whether mortgage brokers and other intermediaries can help homeowners seek refinanced loans under the program.

Officials were also careful to note that mortgage servicers won’t be able to modify mortgages if the terms of their contracts with the investors who own the pools of mortgages don’t allow it. That leaves matters at square one for many homeowners, since many investors, like lenders, have been reluctant to take losses in hopes of an eventual government bailout.

Officials confirmed that they have no reliable data on how many of these investors are on the other ends of contracts that prohibit mortgage modifications. That question is important, since many of the weakest loans underwritten during the height of the housing boom, from 2004 to 2006, were sold by now-defunct investment banks to investors abroad, many in Europe.

These pools of mortgages, called mortgage-backed securities, are the so-called toxic assets that are at the heart of the global banking meltdown. This unresolved question about their contract terms is relevant to recovery in housing and the financial sector.

So, who qualifies for help of what kind? Here are some answers for consumers:

Q: How do I know if I qualify?

A: Your mortgage must predate the start of 2009, you must live in the home and you’ll have to provide proof of income. Then ask two questions. First, are you already behind on payments or even in the foreclosure process? If the answer is no, then ask yourself whether your current mortgage rate is high enough to make it worth your while to refinance to take advantage of today’s low rates for 15-year and 30-year fixed-rate mortgages.

Q: That’s it?

A: No. If you think it’s advantageous to refinance, you must find out who owns your loan. Most mortgages are bundled together and sold into a secondary market, where investors technically own them. If Fannie Mae or Freddie Mac placed your loan into the secondary market, you can contact the company that sends your monthly mortgage statement to discuss the new program. If your mortgage is in the portion of the secondary market where the private sector issued the mortgage-backed securities, you don’t qualify.

Q: How do I know who owns my loan?

A: You’ll have to ask the company that sends your monthly statement. These companies are sure to be swamped with calls this week, so be patient. And be warned: Borrowers have found in the past that mortgage-bill collectors-called servicers-often are less than forthcoming with answers as to who owns the loans.

Q: What if my loan is owned by Fannie or Freddie but I have negative equity?

A: You’re not alone. Researcher First American CoreLogic reported Wednesday that one in five homeowners nationwide now owes more than his or her home is worth. To qualify under the refinance portion of the Obama plan, you can owe up to 5% more than your home is now worth. Thus, many homeowners in California, Florida, Arizona and Nevada, where home prices have plunged, won’t qualify.

Homeowners in 250 high-cost U.S. counties can seek help under either track, however, provided that they qualify, even if the mortgage is worth up to $729,750. This could help high-income homeowners in Middle America and the Northeast, where home prices haven’t fallen as much.

Q: What about those of us who are about to lose our homes?

A: A lot will depend on whether the mortgage bill collectors, the servicers, think that they have leeway from investors to modify the loans. They’re being offered an upfront fee of $1,000 and will get “pay for success” fees for three years if a borrower’s modified loan remains in good standing. They’re being offered even more fees if they get homeowners into this program before they fall behind on payments.

Q: What happens if the servicer agrees to modify my mortgage?

A: First, the servicer has to get your monthly payment down to 38% of your monthly after-tax income. It can do this by taking a loss on the loan or stretching a 30-year loan into a 40-year, for example. It’s allowed to reduce interest rates as low as 2%.

Once the 38% threshold is met, the government matches lenders dollar for dollar to get the payment even lower, to 31% of monthly after-tax income.

This percentage is calculated on the value of a first-lien mortgage. If a home carries a second lien-often called a second, or junior, lien-the servicer will get another $250 if it extinguishes the second mortgage.

Q: Is the modification a permanent fix?

A: The new interest rate would be valid for five years. Afterward, it can rise 1% a year until the lending rate hits the conforming loan survey rate at the time of the modification. Given that mortgage rates today are low by historical standards, the loan survey rate is likely to be well below the punishing adjustable rates that are at the heart of many distressed mortgages.

Q: Do lenders have to participate in Making Home Affordable?

A: If they’re getting Wall Street bailout money and hope to get any more, then they have to play ball. Many mortgage servicers are outside this realm, however, and their trade group, the American Securitization Forum, gave only lukewarm, qualified support to the Obama administration’s plan.

Q: Is there any way to force servicers to help homeowners?

A: The House of Representatives is expected to pass legislation this week that would allow bankruptcy judges to modify mortgages. This measure, which seems to have support in the Senate, too, would let judges shave off of mortgages the difference between what homeowners owe and what their homes are now worth. This would give homeowners some leverage in negotiations.

Q: But don’t these homeowners deserve what they get for overextending themselves?

A: Some think so. There are two parties to a bad deal, however-people who bought too much home and lenders who let their underwriting standards fail in lending to them. Somebody has to lose. The Obama administration is betting that keeping owners in their homes helps set a floor under prices. Critics think that only the marketplace can find a floor for home prices.

© 2009, McClatchy-Tribune Information Services.

The Other Side of the Story

2009-02-25T08:37:00.001-08:00

The beauty of these crazy low prices is crazy low monthly payments for homeowners that are taking advantage of this nationwide real estate sale. However, the other side of the coin holds a different story for renters and landlords.

When rents are high, investment properties are very profitable, easy income -if you have a management company doing all the heavy lifting of course. However, when rents go down, renters rejoice but your profit margin frowns. Now, with home prices being so low, moderate income buyers can purchase a home for equal or less monthly cost than renting someone else's home. A home they can't paint, remodel, or improve.

Even so, this speaks again to the profitability of buying investment properties only because the overhead is low as well. Then in 5+ years when you go to sell it, you've just made quite a lovely profit.

Check out this link for a Wall Street Journal article that covers the whole issue:

http://online.wsj.com/article_email/SB123552129423664663-lMyQjAxMDI5MzI1NTUyMjUxWj.html

Q&A on the New Housing Plan

2009-02-19T10:54:00.000-08:00

http://www.nytimes.com/2009/02/19/your-money/mortgages/19modify.html?_r=1&emc=eta1

Above is a link to a New York Times article that addresses the frequently asked questions regarding the new mortgage incentives as a part of the Obama Housing Plan.

Check this out for detailed information and to see if it can help you, or someone you know.

Give us a call if you have any other questions 775-828-3292.

We Need To Go On A Diet

2009-01-12T17:05:00.000-08:00

I just heard David give the best analogy to describe our market:

"Imagine I gained 200 pounds, can you picture how big my pants would have to be? Now imagine I lost all that weight really fast, but I still had to wear the same pants. I'd be little but my pants would be huge, THEY WOULDN'T FIT!

That's what our market is like; a thin pool of motivated buyers swimming around in an ocean of homes. We have to tailor down our oversized inventory to fit our thin buyer pool."

Ok folks, 2008 was a doozey and unless we want to prolong the pain past 2009, we need sellers to get realistic about fair market value and we need buyers to come to the table with serious, well-written offers.

We still have some muck to wade through (read: short sales and foreclosures), but all signs point to increased units sold in the latter half of 2009, which will help increase competition by tailoring down our inventory.

If the vibes and changes that come down from capitol hill boost consumer confidence, all sales fields will feel the love.

For anyone out there thinking about putting an offer in on a short sale:
I've noticed banks drawing a line when it comes to how low they will go and the "10% rule" doesn't cut it anymore. Unless you are right on, or darn close to, asking price (assuming it's a well-priced home), expect to see a counter from the bank at or above asking price. If they keep this up and more buyers agree to these terms, you will see a price floor form fast.

Happy New Year!

2009-01-04T19:42:00.000-08:00

We hope everyone had a wonderful holiday season and we wish you the best for 2009.

Stay tuned for a look back on 2008 and what to expect over this next year.

November 2008-sans stats

2008-11-07T12:02:00.000-08:00

I have one thing to say, BUY, BUY, BUY. If ever there was a time to get off of the fence it is now. I encourage all of you to BUY, and your friends to buy. As of today we are below 2004 values, year-to-date, with the exception of area 171 (southwest suburban) and that area is trending down as well.

The foreclosed market is finite, one TRILLION dollars is going to make a difference in this market and now is the time to buy. Over this weekend JP Morgan (read Washington Mutual) has acknowledged that the company needs to re think the foreclosure process and even go beyond to look at homeowners that are in good standing today but may become distressed sellers tomorrow. Other lenders are beginning to show signs of similar thinking.

Are the prices going to descend lower? Here is food for thought:
Double Diamond/Damonte Ranch, one of the hot beds for distressed sales, data is for homes under $300,000 sold in 2008 by quarters:

1st quarter sales: 21 homes sold for an average of $267,258
2nd quarter sales: 37 homes sold for an average of $263,010
3rd quarter sales: 47 homes sold for an average of $262,347

That is a change in values of only 2% over 10 months. The average home in escrow today is $265,627. I have to ask you is this the picture of a bottomless market?

With a trillion dollars and banks possibly rethinking how they foreclose, we are in a great position to see inventory drop and choices dry up. I am not suggesting a price bounce of any measure now, or any time soon. What I do see is that the deals of today will disappear much sooner than buyers realize.

Where are the good buys? Just about anywhere you look and for whatever your budget is. I do not see any price recovery for homes valued after late 2003 through mid-2007 for several years or more. The real road to recovery will be for the sellers that sell today and buy back into these much reduced values and ride the recovery from the bottom up. Holding on is going to be expensive for those that really want to sell and are trying to “hold out” for the market to “go up.”

Oh, one last thought, I have purposely written this on November the 3rd. Whatever happens tomorrow, regardless of your feelings, a major milestone will be behind us and we will all have the same opportunity to move forward for the better and look up. I for one plan on moving forward and I expect to find willing and capable buyers for every one of my clients and for my buyers, to find them a home that they can be proud of for many years to come.

Apple Hill Excursion

2008-11-03T09:43:00.000-08:00

The Morris family took a trip up to Apple Hill on Nevada Day and it was a fantastic way to spend the holiday. The drive up was gorgeous and all the orchards were brimming with shiny, fresh apples and apple products galore. Who knew so many different kinds of apples existed and were readily available so close to home?

After it was all said and done, we hit about half a dozen orchards and went home leaden with Winesape, Pink Lady, Arkansas Black, Granny Smith and even a few Red and Golden Delicious, not to mention all the apple butter and jam!

No trip to Apple Hill is complete without tasting some fresh, homemade apple pie. Kids Inc. had amazing French apple pie with vanilla icecream and cinnamon-caramel sauce. Since it was a state holiday in Nevada, the vast majority of cars in every parking lot had Nevada plates and the orchards offered discounts and fun freebies to Nevada residents, which was pretty special.

Apple Hill (near Placerville) is a fun and nostalgic way to kick off the fall/winter season. The apples are still great, so be sure to scoot over the hill soon and pick up a stash. Shauna has put her takings to good use and made an apple pie with Gruyere backed into the crust, as well as apple tarts, which were a great way to use up the "scraps" from the pie. She'd be happy to share the recipe as well.

Happy apple picking!

AOPA Article about Alamos Airlift

2008-10-22T11:26:00.000-07:00

Here is a link to the article AOPA did on their website about the relief effort supported by the Baja Bush Pilots:

http://www.aopa.org/aircraft/articles/2008/081021alamos.html

The article gives an overall description of the effort and the hurricane.

Alamos Airlift

2008-10-21T10:01:00.000-07:00

Ten days ago Hurrican Norbert tore through central western Mexico, leaving a lot of destruction in its path. Through the concerted effort of the Baja Bush Pilots a relief effort was put together to bring much needed supplies or food and clothing to the victims of Norbert.

The small town of Alamos was hit hard in the middle of the night on the 11th, leaving many homeless and sadly many lives were taken as well. David got involved with this incredible relief effort and we, along with 33 other pilots, packed our plane to the brim with supplies and headed to Mexico at 06:30 on Friday morning, and returned shortly thereafter at 16:30 (4:30pm) on Saturday afternoon.

Below are pictures of the rubble and river that runs through town, which flooded and took bridges and buildings with it. It was heartwarming to see so many people pull together in a private effort to help make a difference in the lives of this small community.

National Presence with RE/MAX

2008-09-29T09:55:00.001-07:00

What a week

2008-09-20T10:26:00.000-07:00

Well it had to happen sooner or later.

I am not going to hash out what the press has been saying, suffice it to say that the seriousness of the situation should give all pause to think. Reno, Sparks, Northern Nevada and our entire state have been affected for the last 2.5 years by the greed that entered the financial markets in the early part of this decade. Forbes just did a nice short and to the point piece on what has happened.

Is it time to panic? Actually, it's really not.

People need to go on with their lives, yes, saving would be a good idea, spending less than you make and putting off a few trips to the mall to shop for what you do not need is also a good idea. As bad as Wall Street has treated the American public there is still a lot right and our basic functioning economy is moving along, albeit slowly we are not negative.

Positive thoughts are very helpful in these situations and dreaming up the worst is not going to help anyone.

From my perspective this week I have been very busy on Thursday, Friday and today as I write this portion of the blog. I am showing properties and I expect two offers before the weekend is over.

Buyers are buying and homes are selling.

We are a strong country and lets put our backs into this and think clearly with a bit less emotion and work for our future.

Heck, we have two days left of summer, get out and enjoy yourself!

Reno Air Races

2008-09-10T20:35:00.001-07:00

This is the week of the Reno Air Races. It is some what ironic that last week was the Great Reno Balloon Races and this week are the Reno Air Races. Within two weeks Reno hosts the Great Reno Balloon Race and the Reno Air Races. From the age of un-powered flight to powered flight back to back.

Love it!

I have been fortunate to have been going to the races on and off for over 30 years. I remember living in the dorms at the University of Nevada, Reno and hearing the sound of P-51's and P-38's flying out to Stead for the air show and the races. If you have never gone to the Reno Air Races treat yourself to something special.

Air Races at one time were common across the country but over the years these very special races have gone into the history books but today in Reno one can see at one time a collection of history dating back to the first world war. Not only can you see history that made the 20th century. You can watch history fly! Many of these planes are now worth well over $1 million dollars and in Reno you can hear and watch these planes actually fly. Over the years planes from the WW1 years, the 20's, 30's, 40's, 50's to F22 are all here and you can actually touch many of them. Ever wanted to stand next to a Mig 15 and a F-86 and a F-117 and talk to the men and women that have flown them? Then come out this week and experience a stunning event.

When you go, not "if", go. Take a hat, take a light coat, sunscreen, be prepared for wind, sun, hot and cold, heck, this is Nevada! Bring good walking shoes (the runway is over a mile long and you can easily walk from one end to the other and back again. Bring a camera (but save the film on the actual racing and the air show, the planes are too far away and too fast to get a good shot, just enjoy the show) and get a pit pass and walk the planes and take your photos. The crews love to talk about their planes and still today you can stand next to a gentlemen that is old, grey and maybe even needing some help walking . Listen and he will tell you about being 22 and flying that plane into harms way.

Listen to the stories that the Reno Air Races bring to life. Talk with you soon.

Mt. Rose

2008-09-04T17:03:00.000-07:00

In many ways this has nothing to do with real estate and everything to do with real estate. After many, many years of looking up at Mt. Rose, all 10,770 feet and being too busy to take the hike to the top this week I finally hiked to the top of the mountain.

If I had known just how hard the last 2 miles and 2,200 feet was going to be maybe I would of been a bit less enthusiastic and put it off for another year. As I started my climb and crossed ice at the edge of the creeks I knew that the morning was going to be interesting. By the time I got to the summit it was very cold and windy but the view of Reno, Tahoe, Truckee, Donner lake and out across eastern Nevada were just stunning. I still hurt today but I look forward to another summit!

Even though I was really exhausted by the time I got back to my car the feeling of success was just terrific. Going back to work the next day was a pleasure and I have to admit this has been a great week.

OK, back to real estate news next time.

Join us in the Fight Against Breast Cancer

2008-09-03T13:04:00.001-07:00

REMAX International is a huge sponsor of the Susan G. Komen Race for the Cure and this year we are working hard to put together the biggest team we've ever had! Everyone in the David Morris Group has signed up to participate on race day and we would love to see you there too.

You can walk, run, or even sleep-in for the cure! If you're not able to join us on October 5th, then your generous donations to the cause are much appreciated and very welcome. Please visit the following link to donate or join. When you arrive at the site, follow the link on the main page that says "join my team" in order to join Team REMAX, or feel free to donate on our page.

Thank you for your support!

https://www.kintera.org/faf/donorReg/donorPledge.asp?ievent=274384&lis=0&kntae274384=CE9A1109B13848EA9B1E06A65A32F61D

We're Getting a Face Lift!

2008-09-03T12:51:00.000-07:00

OK, not an actual face lift, but we are changing our image. You'll start to see our new DMG logo on our email signatures and advertising as well as our stationary, which is coming soon. Of course, in the essence of being resourceful and Earth-friendly, you'll see some stragglers of the old logo we are phasing out.

Overall, don't fear the change, it's still the same great DMG that has been working hard for you for years! We hope you like our new look.

Brief details on the "New" housing bill

2008-08-21T17:49:00.000-07:00

I want to take just a moment and cover the primary changes in the bill HR 3221, with 800 pages I am going to only make comments on 5 points:

On Sept 30th 2008 DPA (Down Payment Assistance) programs will end. What does that mean?

Today a buyer can write an offer and ask the seller to up to 6% of the purchase price to be applied to the buyers recurring and non recurring closing costs/down payment. This has allowed a large group of credit worthy buyers to buy today. No more as of the end of Sept!

FHA Loan to Value decrease:

Buyers will need 3.5% cash to buy, up from 3.0%. Sounds small but combined with the end of DPA more buyers are going to be locked out of the market.

FHA MIP (Mortgage Insurance Premium" will increase:

Rate will go up from 2.25% to 3.00%. The loan insurance will go up slightly (this insurance for the loan is usually less than 4 years in duration).

$7,500 Tax Credit:

First Time Buyers (that is anyone who bought and did not won a home in the prior 3 years) can get a $7,500 tax credit if they purchase a home from April 9th 2008 to July 1st 2009. Look at this as an interest free loan for 15 years paid back at $500 per year.

Hope for Home Owners:

Upside down on the loan and want to keep the home? IF you qualify the lien holder will work the the borrower to write down the mortgage to no more the 90% of the appraised value. Example: if a borrower owes $300,000 but the home is worth $200,000 the borrower will receive a new loan for 90% of $200,000, which equals $180,00. The $120,000 is forgiven.

That is all for today.

Wait and Rent or Act and Buy?

2008-08-07T14:50:00.000-07:00

This is the rent versus buy example mentioned in the newsletter:

For the buyer here is a sale that closed on 7/28/08 and a buy now vs. a rent and buy and wait for the market to drop scenario:

2,500 square foot home rental value $1,500 per month x 12 months = $18,000 rent plus an extra move for $2,500 for a total out of pocket of $20,500 (if you do this for 2 years the numbers the cost is about $38,500). Purchase today with 10% down or $31,000 your P.I. payment will be fixed @ $1,730 per month.

Now in one year assume that the home has lost 10% value and rates have moved as expected .5% up the new P.I. will be $1,665 per month. You saved by waiting to buy 1 year $63.00 per month but you spent $18,000 to rent so you could get a “real deal”. The landlord said thank you and you will need 23 years to recoup your $63 that you saved by waiting for the market to “drop”. What if rates do not change? It will still take you over 10 years to get even for renting for a year.

Oh, on the same subject which is a better buy? A bank owned home or an upgraded owner occupied home competing with the banks to sell? I think that as a personal home or an investment, you are selling yourself very short by only buying on price today and not looking at the inherent value of upgraded owner occupied homes. As an investor some of the REO’s are clearly great buys but again, if you are buying for the long run, really take the time to look at your long term rental growth or costs to upgrade by looking at some of the owner occupied homes with their upgrades (many of the foreclosed home’s lack upgrades and improvements as the buyers were buying the minimum stripped down homes in many cases). The value of better located homes and better upgraded homes in the future can be counted on to return a better value/rent. Always keep in mind that money is in fact cheap and an extra $10 per day can make the difference between a plain Jane home and a really nice home.

Housing bill has Somthing for nearly everyone

2008-07-25T08:27:00.000-07:00

Today if all goes well the Senate will vote on the new housing bill and by next week may be law.

If you are ignoring this bill thinking that it is only for a few people in dire need of help think again.

Yes, the bill does focus heavily on homeowners in serious trouble but the bill has many other features as well, here is a brief list of what is in the bill:

RENEGOTIATING MORTGAGES: Creation of a program that may allow some people to replace old loans with new fixed rate loans. The troubled loan must have originated before Jan. 1, 2008 and the loan must be on your primary residence. Income verification will be required. Your loan to income payments must exceed 31% of your monthly income.

Lenders are not required to give you a better deal under the new law even if you do meet the new qualifications unless they feel that you are in fact close to default.

If you do get the new loan you may not do a home equity loan for 5 years and an additional fee will be required and the government will be guaranteeing this loan so they will share in any gain. Sell the home in less than 5 years and the government may get all of the gain.

FIRST TIME BUYERS: If you are buying a home for the first time as your primary residence a buyer may be eligible for a tax credit of $7,500 or 10% of the purchase price, which ever is smaller. As always there are catches and if you make more than $95,000 as a single person you are out of luck and if married you are on your own after $170,000 in income. But for buyers in more modest income ranges this is a nice boost.

In addition the buyer will be paying this credit back over a 15 year period of time so it may be better to think of this as an interest free loan.

Oh, the tax credit is retroactive to April 9, 2008. Any home bought from Jan. 1, 2009- June 30, 2009 can be used on the 2008 tax return. See your accountant for full information.

ADDITIONAL DEDUCTIONS: Your accountant per this bill may give you good news in that you get a federal tax deduction for $500 or $1,000 (if married) from your property taxes. Again see your accountant for the full details.

REVERSE MORTGAGE CHANGES: For older Americans the reverse mortgage has been a boom and to some degrees a disaster. The new bill attempts to address two problem areas. First a limit on origination fees at 2% up to $200,000 and 1% beyond up to a maximum of $6,000. In addition the borrowers cannot be forced to purchase an annuity or other financial insurance.

Last the maximum amount that can be borrowed has been raised and the nationwide cap is now $625,000 up from $400,000.

REDEFINITION OF JUMBO LOANS: This one is a bit hazy but it appears that our friends Freddie and Fannie can now buy loans up to $625,000. There is a 115% rule that will affect the actual amount so depending on where you are the new jumbo rate may be less than $625,000.

VETERANS: Lenders will have to wait 9 months, not 90 days to start foreclosure proceedings on homes owned by veterans.

This is a quick re-cap, things probably will change a bit but as you can see the bill does offer assistance to a much broader spectrum of the population that most people realize and many people here in Reno will benefit from the legislation.

Have a great day!

Housing Sales Up and Prices Flat

2008-07-24T10:17:00.000-07:00

On Tuesday the front page of the Reno Gazette-Journal had the headline "Housing Sales Up as Prices Stay Flat," while the Wall Street Journal and other sources say sales are down in June. So who do you believe?

As the author of this blog entry, my issue is with how information is given to you, the consumer. What is right, what is wrong and what to believe.

Heck, I'm all for good news but let's make it real. The Wall Street Journal is in fact correct, sales are down in June and probably in July as well.

My numbers only reflect the resale market and new home sales that are included in the MLS system. I do this because I feel that it is in fact the resale market that is our reality check on what is going on in the real estate market. Selling new homes is great for developers but as a home owner the question is, can you sell your home and for how much in what given period of time? All new homes sales quickly become possible sellers in the resale market over time, so what happens in the resale market is critical to the health of our business.

In the first quarter of 2007 838 homes sold and in the second quarter 1,013 homes sold for an increase in activity of 18%.

In the first quarter of 2008 597 homes sold and in the second quarter 991 homes sold for a increase in activity of 40%.

I realize that I am drawing from one set of numbers but from what I see, we have positive growth and that needs to be publicized, this is GREAT news!

Unfortunately, the press seems to want to make extremes out of news, either stating things worse than they are or better than they are. My issue is that when one pumps up the good news it opens the door to the next reporter to make the negative news look worse than it is.

The fact is that as of today, July of 2008 is running 30% behind July of 2007. So does that mean that we have fallen down?

The fact is that our market did well in the first six months of this year despite all that we are dealing with and we ARE working out our issues slowly but surely. The REO/short sale market is not unlimited and unless, as a buyer, you only want to buy within a fairly restricted area of the market, the depressed prices elsewhere will stabilize sooner than you realize. No, I did not say prices are going to rise but prices are going to stabilize sooner than you think. For sellers, all this means is that to sell you need to price to the real numbers that are being reported and to wait out this market, and get substantial returns for waiting, is going to be a very, very long wait.

Let's focus on the good news that we're seeing positive growth in the market and keep working in the right direction. The combined efforts of agents, buyers and sellers will help make this "adjustment" a thing of the past.

New York Times, good reading

2008-07-22T15:35:00.000-07:00

I found this article from the New York Times and thought that it was well written and was worth passing on, oh it is a long article: My thoughts are at the bottom.

"July 19, 2008
Uncomfortable Answers to Questions on the Economy
By PETER S. GOODMAN
You have heard that Fannie and Freddie, their gentle names notwithstanding, may cripple the financial system without a large infusion of taxpayer money. You have gleaned that jobs are disappearing, housing prices are plummeting, and paychecks are effectively shrinking as food and energy prices soar. You have noted the disturbing talk of crisis hovering over Wall Street.
Something has clearly gone wrong with the economy. But how bad are things, really? And how bad might they get before better days return? Even to many economists who recently thought the gloom was overblown, the situation looks grim. The economy is in the midst of a very rough patch. The worst is probably still ahead.

Job losses will probably accelerate through this year and into 2009, and the job market will probably stay weak even longer. Home prices will probably keep falling, shrinking household wealth and eroding spending power.

“The open question is whether we’re in for a bad couple of years, or a bad decade,” said Kenneth S. Rogoff, a former chief economist at the International Monetary Fund, now a professor at Harvard.

Is this a recession?

Officially, no. The economy is not in recession until a panel at a private institution called the National Bureau of Economic Research says so. Unofficially, many economists think a recession started six or seven months ago, even as the economy has continued to expand — albeit at a tepid pace.
Many assume that if the economy expands at all, then it isn’t a recession, but that’s not true. The bureau defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months.” If enough people lose their jobs, factories stop making things, stores stop selling things, and less money lands in people’s pockets, it is probably a recession.
Whatever it is called, it is a painful time for tens of millions of people. Indeed, this may turn out to be the most wrenching downturn since the two recessions in the early 1980s; almost surely worse than the recession that ended the technology bubble at the beginning of this decade; perhaps worse than the downturn of the early 1990s that followed the last dip in real estate prices.

But, despite what some doomsayers now proclaim, this is not the Great Depression, when unemployment spiked to 25 percent and millions of previously working people woke up in shantytowns. Not by any measure, even as your neighbors make cryptic remarks above dusting off lessons passed down from grandparents about how to turn a can of beans into a family meal.

How bad is housing?

Bad in many markets, awful in some, and still O.K. in a few.

The downturn has its roots in the real estate frenzy that turned lonely Nevada ranches into suburban ranch homes and swampland in Florida into condominiums. Speculators drove home prices beyond any historical connection to incomes. Gravity did the rest. After roughly doubling in value from 2000 to 2005, home prices have fallen about 17 percent — and more like 25 percent in inflation-adjusted terms — according to the widely watched Case-Shiller index.
Even so, most economists think house prices must fall an additional 10 to 15 percent to get back to reality. One useful measure is the relationship between the costs of buying and renting a home. From 1985 to 2002, the average American home sold for about 14 times the annual rent for a similar home, according to Moody’s Economy.com. By early 2006, home prices ballooned to 25 times rental prices. Since then, the ratio has dipped back to about 20 — still far above the historical norm.

With mortgages now hard to obtain and speculation no longer attractive, arithmetic has replaced momentum as the guiding force for housing prices. The fundamental equation points down: Even as construction grinds down, there are still many more houses on the market than there are people to buy them, and more on the way as more homeowners slip into foreclosure.
By the reckoning of Economy.com, enough houses are on the market to satisfy demand for the next two-and-a-half years without building a single new one.
The time it takes to sell a newly completed house has expanded from an average of four months in 2005 to about nine months, according to analysis by Dean Baker, co-director of the Center for Economic and Policy Research.

And many sales are falling through — more than 30 percent in some parts of California and Florida — as buyers fail to secure financing, exacerbating the glut of homes, Mr. Baker said.
No wonder that in Los Angeles, San Francisco, Phoenix and Las Vegas, house prices have in recent months declined at annual rates of more than 33 percent.

When will banks revive?

So far, they have written off more than $300 billion in loans. Many experts now predict the toll will rise to $1 trillion or more — a staggering sum that could cripple many institutions for years.
Back when home prices were multiplying, banks poured oceans of borrowed money into real estate loans. Unlike the dot-com companies at the heart of the last speculative investment bubble, the new gold rush was centered on something that seemed unimpeachably solid — the American home.

But the whole thing worked only as long as housing prices rose. Falling prices landed like a bomb. Homeowners fell behind on their loans and could not qualify for new ones: There was no value left in their house to borrow against. As millions of people defaulted, the banks confronted enormous losses in a bloody period of reckoning.

In March, the Federal Reserve helped engineer a deal for JPMorgan Chase to buy troubled investment bank Bear Stearns. Many assumed the worst was over. But, this month, the open distress of Fannie Mae and Freddie Mac — two huge, government sponsored institutions that together own or guarantee nearly half of the nation’s $12 trillion in outstanding mortgages — sent a signal that more ugly surprises may lie in wait.

To calm markets, the government last weekend hurriedly put together a rescue package for Fannie and Freddie that, if used, could cost as much as $300 billion. The urgent need for a rescue — together with another round of billion-dollar write-offs on Wall Street — has unnerved economists and investors.

“I was a relative optimist, but I’ve certainly become more pessimistic,” said Alan S. Blinder, an economist at Princeton, and a former vice chairman of the board of governors at the Federal Reserve. “The financial system looks substantially worse now than it did a month ago. If the Freddie and Fannie bailout were to fail, it could get a hell of a lot worse. If we get more bank failures, we have the possibility of seeing more of these pictures of people standing in line to pull their money out. That could really scare consumers.”
In one respect, Mr. Blinder added, this is like the Great Depression. “We haven’t seen this kind of travail in the financial markets since the 1930s,” he said.

More than two years ago, Nouriel Roubini, an economist at the Stern School of Business at New York University, said that the housing bubble would give way to a financial crisis and a recession. He was widely dismissed as an attention-seeking Chicken Little. Now, Mr. Roubini says the worst is yet to come, because the account-squaring has so far been confined mostly to bad mortgages, leaving other areas remaining — credit cards, auto loans, corporate and municipal debt.
Mr. Roubini says the cost of the financial system’s losses could reach $2 trillion. Even if it’s closer to $1 trillion, he adds, “we’re not even a third of the way there.”
Where will the banks raise the huge sums needed to replenish the capital they have apparently lost? And what will happen if they cannot?

The answers to these questions are unknown, an unsettling void that holds much of the economy at a standstill.
“We’re in a dangerous spot,” said Andrew Tilton, an economist at Goldman Sachs. “The big threat is more capital losses.”
Banks are a crucial piece of the economy’s arterial system, steering capital where it is needed to fuel spending and power growth. Now, they are holding tight to their dollars, starving businesses of loans they might use to expand, and depriving families of money they might use to buy houses and fill them with furniture and appliances.
From last June to this June, commercial bank lending declined more than 9 percent, according to an analysis of Federal Reserve data by Goldman Sachs.
“You have another wave of anxiety, another tightening of credit,” said Robert Barbera, chief economist at the research and trading firm ITG. “The idea that we’ll have a second half of the year recovery has gone by the boards.”

Is my job safe?

Economic slowdowns always mean job losses. Unemployment already has risen, and almost certainly will increase more.
The first signs of distress emerged in housing. Construction companies, real estate agencies, mortgage brokers and banks began laying people off. Next, jobs started being cut at factories making products linked to housing, from carpets and furniture to lighting and flooring.
But as the real estate bust spilled over into the broader economy, depleting household wealth, the impacts rippled out to retailers, beauty parlors, law offices and trucking companies, inflicting cutbacks throughout the economy, save for health care, farming and energy. Over the last six months, the economy has shed 485,000 private sector jobs, according to the Labor Department. Many people have seen hours reduced.
The unemployment rate still remains low by historical standards, at 5.5 percent. And so far, the job losses — about 65,000 a month this year — do not approach the magnitude of those seen in past downturns, particularly the twin recessions at the beginning of the 1980s, when the economy shed upward of 140,000 jobs a month and the unemployment rate exceeded 10 percent.
But Goldman Sachs assumes unemployment will reach 6.5 percent by the end of 2009, which translates into several hundred thousand more Americans out of work.
These losses are landing on top of what was, for most Americans, a remarkably weak period of expansion. From 1992 to 2000 — as the technology boom catalyzed spending and hiring — the economy added more than 22 million private sector jobs. Over the last eight years, only 5 million new jobs have been added.
The loss of work is hitting Americans along with an assortment of troubles — gasoline prices in excess of $4 a gallon, overall inflation of about 5 percent, and declining wages.
“In every dimension, people are worse off than they were,” said Mr. Roubini, the New York University economist.

Are consumers done?

That is a major worry.
The fate of the economy now rests on the shoulders of the American consumer, whose spending amounts to 70 percent of all economic activity.
When people go to the mall and buy televisions and eat out, their money circulates through the economy. When they tighten their belts, austerity ripples out and chokes growth.
Through the years of the housing boom, many Americans came to treat their homes like automated teller machines that never required a deposit. They harvested cash through sales, second mortgages and home equity lines of credit — an artery of finance that reached $840 billion a year from 2004 to 2006, according to work by the economists James Kennedy and Alan Greenspan, the former Federal Reserve chairman. That allowed Americans to live far in excess of what they brought home from work.
But by the first three months of this year, that flow had constricted to an annual rate of about $200 billion.
Average household debt has swelled to 120 percent of annual income, up from 60 percent in 1984, according to the Federal Reserve.
And now the banks are turning off the credit taps.
“Credit is going to remain tight for a time potentially measured in years,” said Mr. Tilton, the Goldman Sachs economist.
This is the landscape that has so many economists convinced that consumer spending must dip, putting the squeeze on the economy for several years.
“The question is, will it get as bad as the 1970s?” asked Mr. Rogoff, recalling an era of spiking gas prices and double-digit inflation.
Long term, Americans may have no choice but to spend less, save more and reduce debts — in short, to live within their means.
“We’re getting a lot of the adjustment and it hurts,” said Kristin Forbes, a former member of the Council of Economic Advisers under President George W. Bush, and now a scholar at M.I.T.’s Sloan School of Management. “But it’s an adjustment we’re going to have to make.”

Who’s to blame?

There is plenty to go around.
In the estimation of many economists, it starts with the Federal Reserve. The central bank lowered interest rates following the calamitous end of the technology bubble in 2000, lowered them more after the terrorist attacks of Sept. 11, 2001, and then kept them low, even as speculators began to trade homes like dot-com stocks.
Meanwhile, the Fed sat back and watched as Wall Street’s financial wizards engineered diabolically complicated investments linked to mortgages, generating huge amounts of speculative capital that turned real estate into a conflagration.
“At the end of this movie, it’s clear that the Fed will have to care about excesses,” Mr. Barbera said.
Prices multiplied as many homeowners took on more property than they could afford, lured by low introductory interest rates that eventually reset higher, sending many people into foreclosure.
Mortgage brokers netted commissions as they lent almost indiscriminately, offering exotically lenient terms — no money down, no income or job required. Wall Street banks earned billions selling risky mortgage-linked securities around the world, aided by ratings agencies that branded them solid.
Through it all, a lot of ordinary Americans borrowed a lot more money then they could afford to pay back, running up enormous credit card bills and borrowing against the value of their homes. Now comes the day of reckoning."

I think that the author has presented an interesting case. I will tend to take a more simplistic look though and remind myself and others that it is very easy to see only the best at times and the worst at times. It is times like this that make you stop and realize that maybe it really is darkest before the dawn and opportunities abound if we change our outlooks when we read news like this.

What the Heck is Going on Today?

2008-07-18T11:01:00.000-07:00

Lately I have stayed away from writing about the market but that time has come. I am going to attach in my next blog my last newsletter and will in the future add my newsletters as I prepare them.

This last Sunday the RGJ.com/business section had two very good articles. One on "High-end home sales dive but bottom could be near" and the other one by Diane Cohn on local insight on "What's hot, what's not in the Reno-Sparks residential area.

When this market started to develop in the fall of 2005 at first the projections were that Reno would see a soft landing, those of us that had deep experience felt that at best we would see a real thumper of a market change (oh hindsight is wonderful, if we had only known what a "thumper" was waiting for us) and I felt that we could possibly see prices recede to early 2005 values.

As 2006 came to an end, the media was filled with the facts that maybe the market change might be a bit tougher than expected but no worries, the market change in real estate values would never affect the rest of the US economy.

By late 2006 I knew that I was wrong on my feeling about what I expected in 2005 and now knew that we could easily roll back to 2004 values (I was laughed at, but then again I was laughed at in 2005 as well).

By the end of 2006 I was beginning to think that maybe, just maybe, a disconnect was going on in the economy with real estate and the rest of the market. Along came August of 2007 and in front of the whole world Wall Street undressed and exposed the true depth of the problem and as I speed up to July of 2008 it seems now that each month we wait eagerly for the next act in the drama playing out of Wall Street and the banking industry.

Today those of us active and knowledgeable in this business realize that we are working on triage with many of our clients. Just how bad or how good the markets are is going to be will depend on your viewpoint and the depth of your pocket book.

Sales in 2002 to July were 2,475 homes and today we are at 1,745 sales. Average sales price is higher in 2008 over 2002 by about $108,000. We have 3,168 homes for sale as a reference point.

I think that both articles were well written but lacked some important information. First the foreclosure/short sale market is eroding the markets and reducing our base values and how the banks look at foreclosures is interesting. I as a broker look at a home as to how to get the best value the banks look at the foreclosed home as a cost that needs to be disposed of at the least cost to bank and recover as much as possible of the bad debt. When the foreclosure rate was maybe a
less than 1% of the overall market such thinking was fine.

To measure a market and say that it is healthy to see a solid foundation develop is questionable due to how the banks are handling their sales.

Today with upwards of 42% of the sales in June being distressed sales the banks way of doing business is outdated and fueling our decline in values and is a leading cause of our seemingly bottomless drop in values. What are the fixes to this situation?

Well there are many suggestions but the primary fix needs to come from Washington, not with bail outs but with new regulations and incentives and tax credits, and programs. There are many suggestions and one that has been brought fourth is that the banks need to be encouraged to not dump the homes but much like new home builders they need to be allowed to offer "incentives" to borrowers. Incentives that FHA will allow and be acceptable to the government loan agencies. Incentives that will keep the lawn green, the home neat and encourage the buyer to pay real market values for the home and give the buyer some very strong bank approved incentives that allow the buyer to make major repairs or improvements without adding cash to the transaction. The banks need to be able of course write off the costs of the incentives to make such programs viable to them and the buyers need to be qualified buyers. For the moment at least investors need not apply.

In regards to the high end market it was the belief of many that the money issues would never rise to affect the well off. If the market had corrected in 2006 then that would have been true but by July of 2008 the time has come for many agents and their clients to understand that the rules really have changed.

The issue is what is normal, what is a good market? What are reasonable expectations? Are we at a bottom? A bottom of what?

As of July 17th in the greater Reno market place (this does not include Lake Tahoe but that we can talk about later as they now have their hands full) here is some food for thought:

High end is over $1 million dollars.

42 homes have sold in 2008 so far for an average price of $1,323,674
294 homes are for sale today for an average price of $1,357,500
11 homes are in escrow today for an average price of $1,228,043
(note I did not use two custom built homes in these numbers).

So, how long will it take Reno to sell all our current inventory? For a reference lets use 2006 as a guide for the top of the market. In the first 7 months of 2006, just before the market died off 79 homes sold for an average price of $1,395,000 or about 11.2 homes per month.

Today we have closed 42 homes for 6 sales per month. That means that we have OVER a 3 year supply of homes. The market needs to have a supply of high end homes of less than 18 months to become healthy and 12 month or less is where we really need to be.

Now lets stop here. First 42 sales is wonderful. The market is really strong and these are good numbers why, want to know what we sold in 2002? 22 homes for a $1,280!

Writers need to stop comparing numbers to 2005-2006. The funny money, stupid markets are gone and to make comparisons against those sales is only going to keep sellers fantasy's alive that some how they can still command silly numbers for their homes.

The sad facts are this: IF you bought during those markets your numbers are based on a foundation of quicksand. If you refinanced in those markets your issues are just as shaky. To talk about bottoms and floors first the REO markets must dry up and liquidity must return to the markets In addition expectations of the return to 10% + appreciation a year must be dropped.

It is in injustice for anyone, whether the media, the public or agents to keep measuring the markets by Wall Streets insanity and the results of an out of control market that was created in 2003-2006.

So where is the opportunity, every where, really. But there are just two rules, do not buy someone else's problem and buy for the long term (5 years). Oh and stop looking at price as your only option. More on that later.

We Want Your Thoughts!

2008-07-17T13:00:00.000-07:00

We're launching an online business directory that will include all types of service providers to offer a well-rounded resource for our clients and those who visit our website, who are looking for painters, landscapers, plumbers, babysitters, auto detailers, you name it!

So, we need you help to compile a list of high quality service providers of all sorts. People that you trust and use regularly that you would be happy to refer to your friends and family. Email your suggestions to shauna@dmorris.com or leave a comment right here on the blog!

Thank you for attending

2008-07-17T12:48:00.000-07:00

We co-hosted a small client party this week with Ancora West Advisors and it was a lovely event. Shauna did the catering, which was delicious, and Ancora provided amazing Italian wines. We'd like to extend a quick thank you to all our guests who attended. It was a pleasure to see you and we hope you had a good time! We look forward to having more events in the future and seeing more of our valued clients in "the real world."

July is Artown!

2008-06-30T16:16:00.000-07:00

Your dance card looks like it's getting fuller by the minute, between summer camping trips, 4th of July and family vacations, you wonder how you can stuff another thing into your calendar. Well, the most exciting month of the summer is upon us with the start of Artown happening tomorrow with a bevy of events. Get ready for 31 days of art, movies, theater, dance and other amazing performances. Here's a link to the official Artown website for more information: http://www.renoisartown.com/

We hope to see you at one of many great events!

We Are The Champions...Well Almost

2008-06-30T14:52:00.000-07:00

Team DMG has officially made rodeo history (according to rodeo staff)! Teammates Shauna Morris and Tova Ramos are the first all-female team to place in the Businessmen's Steer Decorating finals and Tova herself is the first female holder, ever!

The finals were a chaotic melee of steers, ropes and macho men. Because there were double the amount of teams (16) from every other night, there were two steer per cute as opposed to one, which was the seed of all the problems in the first place! Our steer in particular got twisted with our neighbor's and caused Tova, the holder, to let go of the rope. Now usually this means you can kiss your chances of finishing goodbye as your steer happily trots away around the arena, but fortunately our steer didn't try to make a break for it, instead he stopped and hung out until we caught him again and then proceeded to drag Tova across the arena by to lead rope and me by his own tail. Fortunately we got our act together and I tied that dang ribbon as fast as I could and booked it back across the arena to the final judge.

At this point, I knew we didn't get first but when I looked around I was getting either a lot of sentiments of peace or we had just taken second place, either way I was happy. The awards ceremony was completely disorganized and I overheard the fellow who was in charge of passing out the prizes say, "I have no idea what I'm doing! Why do I have three prizes when there's only two winners?" Needless to say we didn't get our prize in a big ceremony and then became confused on where we placed when we kept getting conflicting reports from just about everyone. Were we second or were we third?

All-in-all we came in third, but we were very impressed with ourselves, especially after having lost the steer and getting dragged across the dirt. Our prize was a sterling silver money clip with the Reno Rodeo logo in jeweler's bronze and on the back it was engraved with "2008 BSD Third Place." They're beautiful and highly functional, which makes it even better. I was given the third money clip to "give to my sponsor" so David too has a handsome money clip to call his own.

I'm already geared up to participate next year and take home the second place pocket knife and then come back for a third year and take the mother-of-them-all, the Reno Rodeo belt buckle! Keep your eyes peeled for the DMG knockout team and come out and give us your rowdiest support!

Hands-Free Mandatory in California

2008-06-25T17:35:00.000-07:00

California is cracking down on cell phone use in vehicles. Click on the link below for answers to frequently asked questions. Be sure you have bluetooth or other hands-free device for you cell phone, the new laws take effect July 1, 2008.

http://www.chp.ca.gov/pdf/media/cell_phone_faq.pdf

Reno Rodeo

2008-06-25T17:17:00.000-07:00

Our very own Shauna Morris participated in this year's Reno Rodeo in the Businessmen's Steer Decorating competition (sponsored by the David Morris Group of course), with teammate Tova Ramos. They were pitted against men twice their size, most of them veterans of the competition, not to mention being faced with wrangling a 300 pound steer! Low and behold they whipped the pants off their competition by a mile and took first place, much to everyone's surprise. They earned a place in the finals on Saturday, June 28 at 6:00 PM. Come out to cheer them on for the title of Steer Decorating Champion!

Historic Marsh Home

2008-06-11T17:25:00.000-07:00

Here is a sneak peak of our recent listing on Marsh Avenue. This is a truly unique property built in the 1930's, designed by Frederic De Longchamps. One of the most beautiful, historic and unique homes in Reno. Give us a call for more exciting details, 775-828-3292.

Smoke Before Fire

2008-05-16T10:35:00.000-07:00

We all know “where there’s smoke there’s fire,” and you must proceed with caution. The news is getting better on the outlook of our local real estate market every month, which is great but a slow process.

It’s a percolate up situation. The market is starting to repair, from the bottom up. If you look at the numbers we’ve accumulated so far this year, you’ll see a decline in the Months Supply of Inventory (MSI), which is a good thing; we ended 2007 with nearly 17 months of inventory, where five months is considered “normal,” now we’re down to approximately 11 months of inventory. In light of the number of listings sold going up, we are steadily catching up.

This is good news for sellers because it is bringing down buyer options to a healthier, more competitive level. Just after the housing bubble, when there was seemingly endless inventory, buyers were overwhelmed with options and had control of the prices. With supply so high, prices dropped (aided and abetted by the mortgage collapse yielding distressed properties) and if one seller wouldn’t accept a low offer, the buyer could just walk down the street and find someone who would.

Fortunately now, sellers have a little more strength in their corner as our market works its way through this adjustment. As a result, the real “deals’n’steals” are moving out of the market, making way for the owner-occupied homes that are in great condition, but still priced competitively with REO (bank-owned properties) and short sales. Not only are these homes well maintained, but now they’ll have even more reason and ability to fight for their price. With buyers’ options becoming more limited they will have to be prepared to pay Fair Market Value for these superior properties and accept that it won’t be an REO steal.

Even the Wall Street Journal is getting on board with the good news. “The Housing Crisis Is Over” was the title of an article on May 6th from WSJ.com. In spite of depressing headlines the article asserts “that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.”

If you also read our snail mail newsletter you’ll see the same opinion promoted but with the caution that the bottom does not mean housing bubble prices are on the horizon. Prices will continue their steady climb, but don’t expect to see those same outrageous numbers from 2005-2006 for another decade or so.

So, if you’re a buyer, get out there and buy! Don’t wait, or else the “bottom” you’ve been waiting so desperately for might just pass you by. If you’re a seller, hang in there, there is light at the end of the tunnel.

Mid August

2007-08-14T21:56:00.000-07:00

Time to take a break. We are about to come out of the mid summer slow down with summer vacations competing for the buyers and sellers attention, even real estate agents take summer vacations. In the next 10 days it will be interesting to see if we see a measurable tick up in showings. This last week did jump up but we need 3 weeks in a row to know that the late summer and fall buyer is back in the market. Considering how the last 8 months have been a solid fall buying pattern has become near critical for some sections of our market. Time will tell.

With that said I am going to take a couple of days off myself.

Late July update

2007-07-27T10:55:00.000-07:00

Lots of changes in the market this month. Sales are holding very well against last year and the overall market is only off about 5% for my primary market and values are off about 12%. More on that next month.

Countrywide's statement the other day was not the surprise to those of us dealing with sellers every day. The fact is the real estate market in much of the US that had very heated markets over the last few years are going to give back much of the gains. My guess is that most markets will strip back excess appreciation to net gains of 5%-7% depending on area on a year to year basis. That of course will leave people that refinanced their homes 2,3,4 and yes 5 times owing more than their homes are worth. It was one thing to re-finance for better terms but the number of people that looked at their homes as piggy banks is astounding that took real cash out of the homes and spent it.

What is import to focus on is the unit sales, other than a major adjustment in expectations of value, homes are selling and will continue to sell. When asked if this is a good time to buy the answer is yes, but only if you feel comfortable that you will be living in the home at least 3 years, otherwise rent for the next year or two. Owning for 3 years or more will make the purchase of the home a justified purchase and the market will have worked itself out by 2010.

July the 4th

2007-07-06T14:45:00.000-07:00

June finished out in a rush and it has been 7 days a week since the middle of the month. The market has continued to tighten up and as the numbers roll in for the full 6 months the news is what you want to make of it. For us, good but clearly that cannot be said of many people in the market today. Last year at this time the market for the areas of N.W. Reno (Somersett), Caughlin Ranch, S.W. Reno, Arrowcreek/Fieldcreek/ Saddlehorn, Galena, Double Diamond/Damonte, Wingfield Springs and N. Sparks had 796 sales in 2006. In 2007 we had 792 sales. Not bad for a "bad" year. Across the board the average price difference is about 13% down over the year before and we seem to be holding as of the 1st of July in most markets a 18 month to 28 month supply of homes.

An odd thing about the Reno market is our price difference between new homes and re-sales. In many established markets the new home construction will set the base values for the re-sale production home market, but not in Reno. Persistently for the 5 year in a row our re-sale market continues to try and sell for more than the new home market. In our current market that is just driving many buyers into the arms of the production builders. As it is they are virtually "buying" the buyers with some of their discount programs. In the last month I have seen buyer incentive programs of $50,000-$90,000 being offered to new home buyers, plus additional benefits. The re-sale market is not immune to this type of pricing and the drop in values is showing just what is happening but the unsold homes are acting as if nothing has happened. The split between asking price and final selling price is just to great to explain. Obviously the buyers are able to choose only those selling that are pricing for 2007 and avoid the sellers stuck in 2005.

With all of this going on I took 5 days and took a quick trip to Duluth, Minn. We had a grand time, great weather and some good local food (smoked lake trout and smoked whitefish). We flew our plane out for a 2,518 nm odyssey (that is 2,895 standard miles). We overnighted on the way out and visited Rapid City, S.D. and saw Mt. Rushmore, Crazy Horse, Custer State Park, drove the needles road and found a great little restaurant called the "Corn Exchange". To be back at work we decided to come home in one day. One very long day with headwinds on the nose for 9 hours. But we made it home by 2 in the afternoon (4 Duluth time) with one fuel stop and some rest.

What does the rest of year look like, I will answer that question on my next blog.

The first week of July has started out as a record breaker, in the area of heat. Yesterday we tied our record of 108 degrees, but it sure made for a great 4th!

What makes for a good client broker relationship

2007-06-11T05:37:00.000-07:00

Since we returned from our little getaway time has flown and the hours have been long. Over the weekend I received some great praise by several past and present clients but I also got it right between the eyes with 1 client last week and and many "clients" just seem to be to "busy" to ever respond to calls. On Sunday I was with a close friend and he was lamenting how difficult it is to get guest to RSVP for a party. No one seems to be responsible or want to be accountable but as he pointed out he must pay for the caterer, pay for the food and staffing, the room, and all of the costs associated with the event and an accurate count is very important. I both sympathized with him and empathized. For several years the DMG provide a yearly summer party. We went all out to do it right and thank all of our clients and let them know how much we appreciated their business and loyalty. Of course I have used the past tense. In frustration I finally canceled the parties when our RSVP list for people that said they would come topped 50% no shows (about 200 no shows) and people who did not RSVP made up 20% of the guest lists. Planning and costs just became unbearable with the huge swings in attendance.

So to my question. Respect, accountability, and an acknowledgement that a good sales campaign is a group effort. Many clients fail to be held accountable for the simple fact that they control all of the major marketing factors for a home. Yes, that is correct all successful marketing stems from the sellers basic decision on price, conditions and access to the home. Do not believe that, then just raise your price a few hundred thousand dollars and see what the market does, or drop a price by a hundred thousand and watch the buyers come out of the woodwork! When a seller takes an active role and works with the broker, not only is life good but the sales process is always a great experience. To those sellers that set price expectation's unrealistic, refuse to adjust to changes in the market, make demands to the buyers for inconvenient access to their homes, do not provide showing conditions that are less than ideal the process can become a nightmare.

Today we now do something unheard of years ago. When we realize that we have misjudged a seller and the seller expects us to provide miracles while they make life as difficult as they can for us, we graciously give them their listings back. Life is better, profits are up and those sellers that care we can provide so much better care and attention to them that I regret not making this decisions years ago.

Return from Mexico

2007-06-01T06:17:00.000-07:00

Well we are back from Mexico, actually, we got back early in the week but I am just getting time to write now. Being a guest at a wedding in Mexico turned out to be a wonderful experience and my family and myself just had a super time.

We did not know if we would be going up to 72 hours before departure due to the fact that my wife's passport had not arrived after waiting 3 months for it to be returned. We called our Senator for some last minute help and Senators Reids office was just wonderful (Ensigns office turned us down cold) the passport did show up and we made the trip and we will remember this and are very appreciative of the support (or lack there of?). Note: get your passport, you are going to be needing them. My wife's did not expire until August but the new rules say that it must be good for 90 days beyond the return date of the trip.

Great food, terrific weather and one day of superb sightseeing added to a delightful wedding experience. My best to the new bride and groom. We have never stayed at an all inclusive resort before and this property was billed as a "gourmet" experience. Yeah, right, long buffets is what I expected. Was I wrong. Great rooms, 4 different and outstanding restaurants with great innovative food preparations. For foodies it was nice. The staff was great and of course for those that are worried about Mexico you really did not know you were even in another country (that is always a disappointment for me when the soul of the country is removed from the experience, but that is another story).

Oh, and our return flight! I must admit that we do not fly commercial all that much any more. First, work consumes more time than I would like to admit and second for 3/4 of the year we can use our own plane for much of our travel. We have heard much about travel today and we ended up with the full experience. What a mess. US Airways covers what appears to be much of the world but getting there may not be worth it. All flights were late but at least we got to Mexico in one day. Other parties getting to the wedding experienced delays much worse and the grooms parents had the flight from hell, 2.5 days to get to the wedding and they missed their own reception dinner.

The return flight was really fun, before we took off we knew that we had already missed our connection to Reno, and most other passengers also had missed their connections as well. I must say the airline was really prepared with the overnight hotel vouchers, they appeared to be really experienced in handing them out. So a long day in getting back to the US and again up at 4 am to make our new flight and guess what, it was late as well but we did make it back to Reno! In retrospect the flight back in our plane is 2,400 miles (about 650 miles longer due to our going around the gulf). I could of flown this myself, had a nice planned overnight stay and a nice dinner and been home only 5 hours later than the airline delivered me. They travel at 500 knots per hour (about 575 mph) and I fly at only 175 knots (200 miles per hour) and that is crazy!

Well back to work. Our marketing efforts are paying off and I had 5 offers to work on when I stepped back into the real world (sorry, not all 5 came together but 2 have so far). More later.

Off to Mexico

2007-05-23T06:30:00.000-07:00

It is going to be a short week this week as we prepared to leave for a wedding in Mexico. Having never been to a wedding in Mexico this should be fun and my entire family is looking forward to it. Lindsey who lives in Tuscon and Shauna lives in Portland will meet us in Phoenix and then onwards for 4 days of sun and fun and a new experience. Our temperatures have dropped the last couple of days and getting up with the early sun at 5 am but 42 degrees outside has been invigorating so the warmth of Mexico has extra appeal this morning! I have no doubts that summer will be back and I will not be surprised to see high 80's for our return to Reno next week.

Everyone have a nice holiday weekend and I will be back in a week.

David

How to get an offer in todays market

2007-05-19T11:22:00.001-07:00

Wow, I just came from a listing appointment and this is a great time to talk about "How to get an offer in today's market".

I am going to keep this blog real simple today:

(1) Get your ego off of the table. (2) No one cares how many wonderful holidays you have celebrated in your home, the buyer has no interest in paying you for your good times. (3) Yes, you have nice neighbors, so do other people. (4) Yes, you certainly have put money into maintaining your home, that is a cost of owning your home, you are supposed to. (5) Yes, your landscaping is beautiful, but is it really $50,000 better than the other homes in the area? (6) Costs to build, your house is not new, if the buyer wants a new home they will buy one. (7) I had my home appraised and the appraiser told we what it was worth, yes but did he guarantee what it will sell for in the next 90 days? Worth and what a home will sell for in a given time frame are two different worlds. If you have a year to sell then put your home on the market in 8 months price correctly (8) My friends all tell me how great the home is and would all love to buy my home, great then ask them to write you a check.

To sell today you must get the ego off of the table and place your home on the market at a price that is realistic for your area. Homes sold in the last 60 days and homes in escrow today are the only true measure of real value. That coupled with the number, or lack thereof of homes sold and the amount of homes for sale will provide the basic building blocks for value. Do not price your home based on other homes in your area, that is unless you are only interested in listing your home and not selling it.

In today's market your home must scream value. That means you must (A) price the home within in the market (no, that does not mean the lowest price), (B) stage the home, (C) maintain your landscaping, (D) make access to your home easy.

If you will balance out these 4 basic points you can expect to see an offer on your home, it is that simple. PRICE, TERMS AND CONDITIONS.

2007-05-14T16:37:00.000-07:00

Busy, busy weekend. Open house, 50 people came through (it helps when the home is the "featured" home in the news paper and 3 people showed serious interest in the home! 3 buyers called wanting to see homes and wrote 1 offer and received an offer. Sunday being Mothers day was quiet and I enjoyed the morning with my mother, spent some time in the garden and then spent 2 quite hours on the Truckee river.

I was asked a question at the open house about how to tell if an agents marketing is good and effective. The answer is fairly simple and will depend somewhat on the price point that the agent and the seller are talking about and I will give my thoughts on that later this week.

Why stage a home to sell?

2007-05-07T13:44:00.000-07:00

It has been a busy weekend, managed to get a day off, the sun is out and it is warming up and back to work today. I spent the morning with a seller on the art of staging and they wanted to know why staging is so important. 1st the value of staging is a bit overblown but it is valuable in the right home and done the right way. Simply put staging is the art of creating an atmosphere in a home that allows buyers to see themselves in the home and excite their emotional response to want the house to become their home. What staging is not is redecorating the home to some one else's taste or making a home faddish. Staging is not cheap but by the same token does not need to cost $10,000's of thousands of dollars either. In addition staging does not mean that a home will sell for more money, in fact the real value of staging is to shorten the market time and improve the return to the seller (keep in mind owning your own home for 3-4 extra months with taxes, insurance and mortgage payments adds up fast). But to go into staging to think that the home will sell for more money is probably not the soundest approach. Staging came about for the simple reason that most homeowners did not have the time, money or assistance of a professional as they put their home together over the years. In fact many homeowners drag along old, outdated furniture from new home to new home and added to the daily clutter of all of our lives a home can show less than perfect. A good stager will compensate for these common issues and inject life into a home and create an atmosphere that is more appealing to the buyer and allow the seller to achieve selling the home at "fair market value".

Real estate market May 2007

2007-05-04T09:10:00.000-07:00

As I sit down to write a little bit today it has been snowing and we have almost an inch of snow on the ground (melting fast I must say) on May the 4th, welcome to spring in the Sierras! The last 120 days have been quite a ride for us so far this year and I have just completed my e mail newsletter for May. This provides me some reflection on how real estate and Reno for that matter is faring today and how we compare with last year. The facts are in and the market is down but then again anyone watching the news knows that. What the news fails to show is that the buyers are buying and the market has not fallen into a black hole and is not going to either. So far for the year we seem to be down on buyers about 18% over last year and as a whole the market has lost value of about 16% but I expect that number to change as we get in the May and June sales and I think the negative numbers will improve some. This week we have put several homes into escrow and our closing this week include one of the highest values for a home of it's type sold in the last 12 months! What I am seeing is a huge amount of buyer interest in wanting to make a purchase but also being very cautious. Our showing are way up and though our summer buying season is going to be weak I still feel that it will hold its own.
I have to admit that with the weather today the office is pretty quiet so I think that when I am done here that I will leave a little early today and go treat myself and sneak over to Orvis and look at some fly fishing stuff.

2007-05-02T17:10:00.001-07:00

I am officially blogging now!