According to the paper, a lot of investors were not pleased with the European markets and this has driven them to other avenues.

I always talk about the “bundle of costs” that are involved in a purchasing decision.  These costs include interest rate, price, insurance, taxes, regime fees and possible income.  I think it is great for the market that these rates continue to be at all time lows. 

We need some good news in this real estate market and I think this is a great start!

If you’re thinking of buying a resort property on Hilton Head, I have never seen a better time to buy.  I know there are a lot people whose New Year’s resolution is going to “pick up a place at the beach”; well now is a good time to do so. 

All of the lights are green when you look at what is important.  First of all, prices are down to approximate levels that we saw 6 or 7 years ago.  Second, interest rates are at historic lows.  Third, inventory levels are extremely high.  In other words, whatever you want, we probably have three or four of them. 

When you look at what is happening in the real estate market now it is a great time – the wait is over!

For buyers it is also good news that there are a number of bank foreclosures properties that banks are willing to sell at greatly reduced prices.  So not only do you get a good value but you get a good location, good interest rates, and there are a lot more motivated sellers that want to get their property sold.

How long will this window of opportunity last?  Well, I don’t know but I know usually the market picks up in the Spring.  So if people are looking to purchase, I tell them now is a good time to do so.

Sincerely yours,

James Wedgeworth

A $300,000 mortgage at 5.02% today for example works out to be about $1,614 a month. On the other hand, at 6% the mortgage amount would have to be $270,000 to maintain the monthly payment at $1,614. It is clearly in your best interest to buy or refinance now with so many unbelievable deals and selection at 2002 housing prices plus all time low interest rates.

Now is a great time to buy Hilton Head Island Real Estate!

Nevada leads the country with 7% of homes being foreclosed on – that is hard to believe.  In other words, that is a foreclosure on every cul de sac. 

There were over 303,000 that were in some stage of foreclosure during the month of foreclosure, up 17% from the previous month and 41% from December 2007.  This surprised everyone. 

People ask me what the #1 reason is why homes go into foreclosure.  This is obvious – falling home prices.

For example, say a family buys a house for $250,000, they put down 10% so they owe $225,000.  If property values drop 20%, the house is now worth $200,000 and they owe $225,000.  They have to pay a Realtor $14,000 to sell the house, so in essence, they have to bring at least $39,000 to the closing table just to sell their house.  In that case, they usually just let the house go into foreclosure.

As long as home values continue to drop, foreclosures will increase – especially because of the very liberal lending rates that we had in 2004 and 2005 when many people could get into homes for as little as 3% down.

Congress is concerned about this, but I do not think they really understand the problem.  They keep talking about all the people that they want to help keep from going into foreclosure.  What they do not realize is that the best way they can help these people avoid foreclosure is doing all they can to make a stronger market because then home prices will rise and less people will be in foreclosure.

When people buy Real Estate they basically make their decision based on what their costs are.  Lower interest rates means costs are less and higher taxes mean their costs are more, high regime fees mean their costs are more and they usually look at their bottom line. 

In other words, what does it cost them to own a condo at the beach out of pocket?

Your income in this situation would be your rent and your expenses would be mortgage costs, regime fees, taxes, utilities and association fees.  Over my years of selling Real Estate I have had many people say that if they could own a place at the beach that they could use two or three times a year and it only cost me $10,000, I would consider doing it.  If that same cost was $20,000, they might not consider doing it. 

Now is a good time to keep your costs down simply because the #1 factor in your overall cost is the price of the property.  As we all know, prices have dropped somewhere between 20% and 25% since the high of June of 2005.  Therefore, the #1 cost factor would be the cost of the property.  The #2 factor would probably be the interest rate which is at an all time low.  The other costs (taxes, insurance, regime fees and association fees) are up – but they are not up as much as the others are down which means now is a good time to buy.

It is my opinion that the latest rate decline will have a positive effect on the ailing housing market.  My theory is that rates are part of the affordability factor which covers more than just interest rates (taxes, insurance, utilities, association fees, and things like this are combined to make up the total cost of ownership).  Most people will agree that mortgage rates are the most important factor in the total ownership package.

A couple of years ago, I said that I did not think mortgage rates could go any lower because they were already historically low.

This will be a big boost to first time home buyers which is the first leg in the snowball effect improving the overall real estate market.  The theory is that once they buy, the people that they buy their house from can buy a larger house and the people they buy their house from can buy a larger house and the snowball starts running down the hill.

With mortgage rates going down – it will also probably mean that interest rates on savings accounts are going to go down and people would take money out of the bank and invest in real estate because they are not making much money on they bank accounts. 

This is just another indication that 2009 is going to be a year of opportunity.

Great for Real Estate

Obviously this is great for the real estate market because it makes housing more affordable.  In fact, housing might be at an all-time low affordability rate adjusted for inflation when you consider that prices are off 25%-35% from several years ago and with interest rates down as well the cost of ownership is down tremendously. 

Help Around the Corner

Recently I have felt that the market has not been slow because of interest rates, but slow because of consumer confidence.  Maybe this will help with consumer confidence.  We are willing to take any help we can get.

One of the problems we have had in our market are bank’s reluctance to lend money.  In fact, there are only several banks on Hilton Head Island doing lot loans at this time and they have restrictions on what they will do.  Lot sales are down 92% this year compared to a 10-year average.  If you cannot get a loan on a lot, most people are not going to purchase one which makes the market worse and drives prices down.

It is about time we got some good news; most news recently has been very negative.  All you have to do is look at the front page of the newspaper and it is one negative headline after the other.  This has had a major effect on consumer confidence driving it to a 30-year low.