Tuesday, February 26, 2008
"House Lust"
If you're interested in the psychology behind the recent housing boom (or bubble?), pick up a copy of the new book by Daniel McGinn, House Lust - America's Obsession With Our Homes. Written by a Boston-area Newsweek correspondent, it's an enjoyable overview of our country's recent infatuation with all things real estate, from the "McMansion" building boom to home makeover television programming to get-rich-quick investment schemes. When you're not laughing at some of the gross excesses that McGinn catalogs, you'll probably be cringing at how closely many of his observations hit to home.
Sunday, February 17, 2008
Supply and Demand
Any economics student can tell you that two factors drive the price of just about any product - Supply (how much of something is available for sale), and Demand (how much of it people want to buy). When Supply goes down, prices usually go up. And when Supply goes up, prices usually come down.
Looking at the supply of homes currently available for sale in Holbrook, we see that Supply has come down considerably from the record highs of the past couple of years. On February 1, there were 50 single-family homes listed for sale in Holbrook in the Multiple Listing Service. While that may sound like a large number, there were 69 homes for sale on the same date in 2007, and 63 in 2006. In other words, the supply of homes is considerably smaller today than it has been in recent years.
Does that mean prices will begin rising soon? Not necessarily. Supply is only half the equation. And the current supply is still far above what we saw in 2004 and 2005, when prices were soaring. (On February 1, 2005, there were only 23 single-family homes listed for sale in Holbrook, and on February 1, 2004, the number was 16!) But it does suggest that the local real estate market may be closer to "balancing out" between buyers and sellers, which would result in prices beginning to stabilize instead of continuing to drop each year.
Looking at the supply of homes currently available for sale in Holbrook, we see that Supply has come down considerably from the record highs of the past couple of years. On February 1, there were 50 single-family homes listed for sale in Holbrook in the Multiple Listing Service. While that may sound like a large number, there were 69 homes for sale on the same date in 2007, and 63 in 2006. In other words, the supply of homes is considerably smaller today than it has been in recent years.
Does that mean prices will begin rising soon? Not necessarily. Supply is only half the equation. And the current supply is still far above what we saw in 2004 and 2005, when prices were soaring. (On February 1, 2005, there were only 23 single-family homes listed for sale in Holbrook, and on February 1, 2004, the number was 16!) But it does suggest that the local real estate market may be closer to "balancing out" between buyers and sellers, which would result in prices beginning to stabilize instead of continuing to drop each year.
Thursday, February 7, 2008
What's a "Short Sale"?
If you've been following the fallout from the recent wave of foreclosure activity in the Bay State, you may have heard the term "short sale" being used more often. So, what exactly is a "short sale"?
Basically, a short sale is a sale of real estate in which the purchase price is not enough to pay the amount that is owed on the house, and the mortgage holder agrees to "write off" the difference. We see them most often in situations where a homeowner is already facing foreclosure, and owes their lender more than the house can be sold for in the current market. Instead of foreclosing on the property, many lenders would prefer to "take what they can get" when the house is sold and allow the homeowner to walk away without paying the difference.
Why would a lender agree to a short sale? Because lenders generally do not want to become property owners. If possible, they would prefer to avoid the time and expense associated with foreclosing on a property, as well as the additional time and expense required to sell that property to a new owner down the road.
Basically, a short sale is a sale of real estate in which the purchase price is not enough to pay the amount that is owed on the house, and the mortgage holder agrees to "write off" the difference. We see them most often in situations where a homeowner is already facing foreclosure, and owes their lender more than the house can be sold for in the current market. Instead of foreclosing on the property, many lenders would prefer to "take what they can get" when the house is sold and allow the homeowner to walk away without paying the difference.
Why would a lender agree to a short sale? Because lenders generally do not want to become property owners. If possible, they would prefer to avoid the time and expense associated with foreclosing on a property, as well as the additional time and expense required to sell that property to a new owner down the road.
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