I attended the National Association of Realtors annual convention and do so most every year to participate and take note of the trends effecting the economy and the housing market so that we can be on the cutting edge of our industry. I have had the pleasure serving the NAR on its Resort and Second Home Committee for the past several years and will be serving as the Vice Chair and Chair (god willing) during the next two years.

Here's the latest from the economists and prognosticators:

Transition and the Economy-

The news to report is mixed, much was relayed on the transition of government, everyone agreed we needed change and we got change.

There was a great deal of discussion on the economy naturally and on the GSEs (Gov't sponsored enterprises) now transitioning to GOEs (Gov't owned Enterprise) as the Bail out, stimulus bill are being rolled out.

Help is on the way in the credit sector, whether you like it or not (the plan), there will be relief from debt, consolidations, modifications, buy downs and general affordable credit made available to the those who need it the most, our home owners that are under water!

Regulations will be put in place to monitor the bail out process and the financial institutions that will be receiving the funds to distribute to"qualified" home owners.

Defaults, delinquent loans and Foreclosures are still on the increase as a result of the sub prime and variable interest rates loan that have become unaffordable for many, often times equaling more than the homes are worth said Chairman Lockhart of the FHFA Agency.

The interesting dynamic at play however, is that in many areas in the country, the buyers including first home buyers and investors, are coming into the market place in substantial numbers, as a result of the attractive declining prices that foreclosures, short sales and distressed sale have brought to the real estate market.

We have a future-Slightly hazy...

Dr Yun, NARs Chief Economist, forecasts that the "recessionary like" economy will see some relief by the 3rd and 4th qtrs of 2009 fueled by the influx of funds from the monetary markets not only to the housing sector but also the manufacturing, energy and green job development.

On the longer term forecast he was optimistic that the housing market would see increased demand based on the growing population and immigrations and the shortage of new development, supply and demand. Other factors he noted included the international and overall demand for our "recent attractively priced" housing and the opportunity for a secure and decent "roi", pressure to diversify ones portfolio (that which left of it) including commercial and industrial property.

Opportunity knocks and the Local Market-

70 million baby boomers, first time homebuyers, internationals and investors are still poised to buy an affordable home, lifestyle and investment property but have been cautiously waiting on the opportunity and the market.

Real Estate in comparison to other investment platforms such as the stock market, has fared far better, historically has continued to draw good appreciation and most of all...can be enjoyed!

Our resort realestate market has survived the turbulent ride better than much of California and many other markets that overbuilt propelled by the insatiable demand of the investment market.

The Lake Tahoe basin has some built in supply factors, inherent with the slow growth environmental policies which helped insulate the area to some extent.

That said however the market has seen a decline in median home price of approx 20% over the past 2.5 years driven by the foreclosures, short sales and motivated sellers.

The good news is that inventory is down (as compared to the past year) 10% approx and pending a sales are up by over 20%.

As long as the interest rates and the flow of money holds, I'm forecasting a continued increase in pending sales and closed escrows, even in this beleaguered economy.

Real Estate represents a sound investment at this time.

I'll send you Dr Yun's report as soon as it is out, however I've attached the International home buyer's profile for your review as it is a dynamic at play in our market.

Happy Thanksgiving to you and yours.

Best Wishes,

Deb Howard
Deb Howard & Company
Lake Tahoe's Real Estate Resource
866-542-2912 toll free
530-542-8657 fax
deb@realtordeb.com
www.realtordeb.com
3599 Lake Tahoe Blvd. Ste A
South Lake Tahoe, CA 96150

More excellent information from Norm Hansen at AmWest Mortgage:

From: Norm Hansen
      Thursday, September 18, 2008 10:04 AM

Deb,

In these times of financial stress the question as to availability of financing for consumer homes looms large.

In short…it is there, it is plentiful, and the rates are excellent.

30 year fixed = 6.125% no points (was 5.875% last week).

FHA primary to 97%

FHA “Buy and Fix” = 102%

Jumbos…(forget the new hybrid Jumbo…Norm’s advice).

We have a Jumbo product that is a 5/1 @ 5.375%.

When the conventional Jumbo market comes back within 5 years then switch to a 30 year.

Here’s the bottom line:

Most all conforming loans go through Fannie and Freddie. Which by the way were once government agencies that became private Government Sponsored Enterprises (GSEs). The government is assuring their liquidity. Here’s how it works: Fannie buys the loans from the lenders/banks/wholesalers that made them to consumers...they then create mortgage bonds based on the flow of these loans and sell those bonds to investors to create more cash to fund new loans…eventually the bonds come due and the buyer of those bonds needs to be paid…those funds comes from selling new bonds…a circle.

The government is guaranteeing the payment of those maturing bonds and/or interest payments on them because selling new bonds has been a little slow (investor confidence).

It worked well because the markets got the ‘warm fuzzies’ started buying mortgage bonds…that reduced the rates…and is keeping cash flowing…for now.

The future requires investor confidence to continue buying mortgage bonds. Investors (each of us) are finicky…we can be fooled once…but normally not the second time.

That said…the banks/lenders/wholesalers are selling/originating only good quality loans…to use your words…real people with real income and good credit scores (traditionally the best saleable mortgage). This will keep a good flow of cash.

With stronger underwriting guidelines and Wall Street not offering CDOs and their hybrid MBS (collateral debt offerings and mortgage backed securities…where all the risk was and created the crises) it means the best buy (highest yields)…even better than some treasuries are Mortgage Bonds.

Regards,

Norm

Norm Hansen
Managing Partner
AmWest Mortgage
                                                                      
norm@amwesthomeloans.com 
212 Elks Point Road, Suite 448 /PO Box 12300                                                                      
Zephyr Cove, NV 89448                        
775-586-1130 Tel.
775-586-1140 Fax.

I wanted to share this with all of our readers.  It's an email I received yesterday from a friend at AmWest Home Loans.

From: Norm Hansen - amwesthomeloans.com
 
      Thursday, September 18, 2008 2:30 PM

Deb,

This is a good read…it comes from our advisors back east…

In a bid to ease the credit crunch and restore a sense of calm in the financial markets, the Federal Reserve authorized a $180 billion expansion of its swap lines with other world central banks.  The funds, which will be provided by the Federal Reserve, can be injected into money markets through overnight and term loans.  Stocks are liking this news so far and this is pressuring Bonds.

Something to think about - The Fed is attempting to be savvy and creative in its ways to help the financial system get back on track.  However, there is simply no one who can draw upon past experience to find answers here.  This situation is historic...and we are living through it.  It is almost comical to hear the utter stupidity that comes out of the mouths of some of the politicians who are paraded in front of the cameras...I can't help but think that we actually elected these people.   

There is a lot of panic out there.  People are very worried about their life savings.  Is money in the bank safe?  How about if it is in a life insurance policy?  How about in bonds?  Unfortunately the answer is no, no, no.  Yesterday, the panic reached a level that caused such a demand on Treasuries, that the total return of some short-term paper went negative.  That's right...the premium paid was higher than the return provided by the yield.  So keeping your cash under the mattress is better than an investment in some Treasuries, and apparently safer than the financial market. Suddenly, guess what may become the most attractive way to protect your money?  Think about it...you can touch it, get a tax break, live in it too.  Yes, Real Estate is starting to look pretty good, especially since it has become more reasonable priced.

South Shore Lake Tahoe

The dog days of summer are upon us! We are ramping up for increased real estate activity on Tahoe’s South Shore which almost always grows progressively through the start of summer and until the end of October. The Tahoe Fall season has become a popular time for our tourist guests to visit us and I expect we’ll see this seasonal trend again this year.

Though things are far from typical…it certainly hasn’t been “business as usual” for us in the past few years. With the unprecedented run up of prices from 2001 to early 2006, followed by an unprecedented down turn in the market since, we have been hard at work keeping up with the changing dynamics in the market.

But what a difference a year makes (or 2-3)
 
At this time in 2007 we were recovering from a horrific firestorm that destroyed 250 homes and structures in South Tahoe. Much more damaging than the physical destruction, was emotional devastation and toll on the many families affected by the fire. As small communities are known for, we pulled together and rallied around the fire survivors, opened our doors and hearts and started the healing.

Today many of the families are returning to their “new and improved” custom homes or have simply moved on with other housing options. There are still the scars that remain but the “Angora Hills” area, once a lunarscape, is now a bustling sea of construction and positive energy focused on renewal.

Mind you this area’s redevelopment is somewhat of an anomaly given the current state of housing market and the economic downturn and it makes this active construction scene a bit surreal. 

What do the numbers look like since the down turn in the realestate market?

For most of us with our ear to the ground in this industry, we knew that the market couldn’t sustain the continued upwards climb in pricing; there wasn’t an interest rate low enough to offset the high prices and certainly our incomes weren’t growing at the pace of inflation let alone housing prices.

 Although the market came to an abrupt halt in October of 2005 the statistics (see attached) show the median home price of “homes sold” climbing until May of 2006 to an all time high of ~$486,000. Since then home prices have slowly and steadily declined at almost 1% per month to give us an overall decline in price since the peak in May 06 of 21% or $399,000 for the same home sold at the time of this writing.

Unintended Consequences and Help is on the way?

No one wants to see their home prices dropping and the terrible consequences it can have on equity (what’s left of it for so many).
However, it is a market place condition that must be observed. We have so little control as consumers and even the lawmakers with the billions of dollars they are pumping into the credit and financial markets seem to have had little immediate impact. But we are hopeful the government assistance with GSEs will shore up the shaky credit markets and provide options to the hundreds of thousands who are facing upside down pricing to mortgage scenarios.

Some Good News with a touch of reality!

The bright news is that due to the new levels of affordability (pricing), buyers are coming back in to the market place, this not just perceived but rather real. Here’s the new trend information that I have observed:

Since January of 2008 we have seen, on an average, the year over year pending sales numbers increasing and have continued to do so for over 7 months.  Certainly in our office we are up over 20% in pending and closed sales from this time last year.

While the number of sales are picking up, comparing it to the early 2000’s, there is nothing to brag about. That said, it is a very good indicator that buyers, who have waited out the market, are returning. What is attracting the buyers back in to the market is the lure of a great bargain; short sales, foreclosures and “killer deals”, and there are plenty to be had, even in our resort market.

Having waited for the right time to buy these investors are interested in value first and foremost…so, pricing is key negotiating point in current transactions. Having a great negotiator on your side is critical. Ultimately, it takes a win – win to put a sale together and a knowledgeable team to close them (even more important these days).

Forecast for the next year-
 
If the economy can remain relatively stable along with interest rates I believe we’ll see the housing market emerge as one of the growing markets again.

Resort real estate is an interesting barometer of the economy. Tahoe real estate is generally viewed as a “luxury lifestyle” purchase but in recent years with an aging baby boomer population (a key target demographic), our market has become a safe “investment” option for those that have money to shelter and invest. The returns are great not only in the financial ROI sense, but in the quality of life department too. With the 1031 tax rules in place and the conversion rules of your investment property into your primary (which have recently undergone some changes, check with your accountant) many are converting heir vacation rentals into their retirement homes and/ or moving to Tahoe and telecommuting.

While I do see prices continuing to settle, certainly until the foreclosures and distressed sellers are out of the inventory, I believe we are near or at the bottom of the market in terms of bargain pricing. No doubt the next few months will tell the story, and we’ll keep you posted of course.

For more information email us at deb@realtordeb.com
Or call us toll free 1-866-542-2912

It is our pleasure to earn and retain your business!
We wish you and yours a fabulous fall season and hope your summer was all you wanted it to be, with plenty of Tahoe time!

Best Wishes

Deb Howard
Broker/Owner
NV/CA
3599 Lake Tahoe Blvd. Ste.A
South Lake Tahoe, CA 96150
deb@realtordeb.com

The Lake Tahoe market has shown signs of of improvements in terms of units pending and sold over the past 6 months year over year.

That's good news and I'm suggesting this is a trend as apposed to an anomily. However the dark lining on this bit of trend news is that the price point has been declining.. at about 1% per month over the past 18 months (see South Tahoe Association of Realtors stats).

While we're seeing the increase in activity, the market trends are showing the attraction (from buyers) to be driven by and to the "best deals" which, in our most recent market, looks like foreclosures, short sales and distressed.

Time to buy!

We're alive and well dispite the smoke which only slightly put a damper on the Elvin Bishop charity concert at Horizon Casino on Tuesday june 24th.

More to follow.

Originally Posted by Deb Howard
on 6/9/2008 11:16:31 AM

While Tahoe has been a popular destination of International visitors and investors historically, it is becoming ever more so based on a few things that I have observed
in addition to my notes on the NAR DC visits;

1) globalization and immediate access to information expanding the exposure of our resort market to the international market,
2) access to resorts (you can get here from there)
3) Desirability of 4 seasons resort,
4) As said earlier - Values! safe investment, enjoyment, weather and good exchange rates are driving a lot of new interest.

The move up market of existing foreign investors is another market we are experiencing.
Antidotally I have a couple who are from Singapore who are looking to upgrade from a vacation income property they already own here in Tahoe to another larger grander property to retire to 6 month out of the year. (check on guest/foreign homeowner visitor visas, another good topic to investigate). Water, views, floor plan to accommodate entertaining their friends from around the world and located in a safe or gated community are their top criteria. They also bring with them a whole host of friends and family that will join them in investing in Tahoe.
More to follow.

Deb Howard

Originally Posted by Deb Howard
on 3/25/2008 7:38:19 AM

Bring it on! Spring that is!

Hope springs eternal and we are very hopeful this year that as the season changes from Winter to Spring that it will bring with it a renewal
of interest to our Lake Tahoe Real Estate market.

We're well prepared for the anticipated turn in the market;

PRICES have not been better in years for the resort and home buyer who find the time to be right to get off the fence and find that Lake Tahoe mountain dream home. Median homes prices for our South Shore residential homes that have recently sold are down about 7% -10% from the height of the market and are currently sitting around the $435K price range. You'll be amazed at the amount and quality of home that you can find and at what amazing values are to be had.

INTEREST RATES are anticipated to drop to the best rates they've been in many months perhaps as low as we have seen in recent years, with fixed 30 years rates
hovering around 6% and anticipated to go lower.

HOME LOANS AVAILABLE- Thankfully the fed has been very aggressive in the financial markets with the infusion of billions of dollars of Fed backed funds for purchase money home loans and even more importantly refi alternatives to the ugly neg am sub prime loans that have been the demise of many home owners sadly. This will certainly be a big help as we hopefully turn the corner of a very shaky economic time in our history.

LIMITED SUPPLY- Unlike many markets, particularly in California and lager urban cities through out the nation, we have very limited supply of new development. While this is troublesome for those who have wished to build over the years it has served to keep our prices relatively stable and will continue to do so as the economics of "supply and demand" will continue to serve our realestate values well. Currently there are a approx 400 residential homes on the market at this time in the California south shore market place. The median home price of our actives residences currently on the market are hovering around $535K. To view them go online to www.realtordeb.com and see what fabulous values are to had right now.

NEGOTIATE- While the supply is stable, there's a great variety of homes, condos and a cabins to buy and call your own and the willingness of our sellers to negotiate has never been better. Today's seller's are serious and have priced their homes for the current "buyer's market" prices and negotiation practices.

If you're in the market for the perfect Lake Tahoe property, our team of buyers' specialists are ready to find if for you. Feel free to start your search right now on our user friendly, easy to navigate web site or here at  www.realtordeb.com. You'll find all the great homes, trends and stats of our current market place and you'll find a full profile our team of local realestate specialists; the most knowledgeable and enthusiastic in providing you the personal touch you deserve. 

Our best to you and yours this Spring with our hopes that it will bring us together as we assist you with your real estate needs.

Best Wishes,

Deb Howard