Happy New Year!

From all of us… we wish you a Happy New Year! 

Thanks for reading in 2007, and we hope you will bookmark us and visit often in 2008!

If you're going to be out tonight… please drive carefully!

Common Mistakes Made by Unprepared Home Buyers

An unprepared home buyer always makes the same mistakes when looking for real estate.  Here are the five most common mistakes you should avoid at all costs.

• Not knowing exactly what you want - It's very important to define your goals before you begin looking.  Determine exactly what your goal is: how long are you planning to keep the property and how much would you want to gain afterwards.  You should also think through the common worst case scenarios and prepare a solid backup plan.
   
• Thinking in a hurry - If someone wants to sell you something suspiciously fast, it’s never a good idea to allow yourself to be pushed into a corner.  Making a large purchase like buying a house without doing all the necessary homework beforehand is just not smart.  Get yourself a good real estate agent who will agree to represent you as the homebuyer and make sure every agreement is written down.
   
• Quality over location - An older or inferior property located in a good neighborhood is usually better than a palace in the middle of nowhere.  This is a mistake a lot of home buyers make, when they don't do the research and end up with an expensive home in a bad location.
   
• Relying on one source - Never, ever rely on just one source of information.  Ask more real estate agents about their opinion, ask more home inspectors, lawyers and do your own research.
   
• Unclear legal status - Many people forget to actually check the legal status of the home properly.  Many things could resurface later when you've already paid.  Make sure you look into title insurance and talk to your lawyer.

These are just 5 starting point mistakes.  There are many others.  Contact us to avoid making any of them!

Help on the Way for Strapped Homeowners

The Senate moved against the worsening mortgage crisis, voting recently to make it easier for thousands of homeowners with ballooning interest rates to refinance into federally insured loans.

The legislation, approved 93-1, would allow the Federal Housing Administration to back refinanced loans for borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial "teaser" levels.

The bill also tries to make FHA loans more attractive than risky subprime loans by accepting lower down payments and expanding the eligibility for counseling for homeowners having difficult with their mortgage payments.

The Senate's proposed changes are especially important now, given the credit crisis that has made it much more difficult and more expensive for people to refinance or get financing to buy a home.  Private lenders have been reluctant to make new loans.

Allowing the federal government to insure more and bigger loans should help provide some relief and ease the credit crunch.

The Senate also passed legislation that would allow homeowners to receive mortgage forgiveness from their lender tax free. That's when a lender allows a homeowner not to pay a portion of their mortgage.

The IRS currently taxes any loan forgiveness as income. The tax forgiveness is available on mortgage indebtedness of up to $1 million.

What do you think?  Will this new legislation help the current state of the real estate market and/or the overall economy?  We'd love to hear your feedback.  Leave us your opinion by clicking on the "Comment" link below.

Pending Home Sales Rise Unexpectedly

Pending sales of existing U.S. homes rose modestly in October, bucking Wall Street forecasts, but the decline from a year ago was the third largest on record, a reminder of just how far the housing market has fallen.

The National Association of Realtors reported recently that its Pending Home Sales Index, based on contracts signed in October, was up 0.6 percent at 87.2 from an upwardly revised index of 86.7 in September.

The forward-looking indicator of home sales was more upbeat than expected by economists, who had forecast a decline of 1.0 percent.

Still, the boost in pending sales was not enough to increase analysts' hopes for a housing recovery anytime soon.

Year-over-year, pending sales were down 18.4 percent, the third-largest drop since the trade group began keeping such records in January 2001.  Only the declines registered in August and September were deeper.

Existing home sales in 2008 should hit a pace of 5.70 million, compared with an expected 5.67 million this year.  The NAR said median home prices would likely fall 1.9 percent this year, but rise 0.3 percent in 2008 to $218,300.

This year's home price decline would be the first annual decline since the Great Depression.

The Future of the St Louis Real Estate Market

The subprime mortgage crisis has extended itself throughout the economy.  According to Congress' Joint Economic Committee, some 3.7 million homes will probably foreclose as a result of the crisis.  As of August, 1.7 million of those homes had already foreclosed, and another 2 million are expected during the next two years.  Some of the largest names in the financial industry are now subject to multiple lawsuits and are writing off tens of billions of dollars as lost.

The short term future of the housing market looks grim.  The Fed chief testified to Congress in November, noting that the housing market will suffer the worst of the consequences of the housing crisis from now until the end of 2008.

While some analysts are expecting lower mortgage rates to help the housing market rebound in the middle of 2008, that is treated by many, including the generally optimistic Federal Reserve Board, as wishful thinking.  It is, after all, hard to an envision a scenario wherein the national real estate market will recover while in the middle of the worst of the subprime crisis. 

A more likely scenario will probably play itself out in the last quarter of 2009, when improved consumer sentiment and several additional rate cuts by the federal reserve will have served to increase demand in the housing market sufficiently to turn a weak rebound into a steady increase in the value of the nation's housing.

What do you think?  We'd love to hear your opinion on the future of the St Louis market.  Leave us your comment below.