Banking crunch

What does this all mean? Well, for one, i strongly advise everyone to downsize. It's time to crunch and save and be prepared for shortcomings because they may well be around the corner. Many developers are turning to the rental market to wait out the storm while its becoming more difficult to qualify for a loan. However, if you do qualify for a loan, its a great time with the low rates and large inventory. The construction market is still quite healthy in Philadelphia. Luckily, many projects have reasonable exit strategies in fair retail prices or rental capabilities. Those that seemed to be a little unrealistic.... many of them arent built yet. Wonder why?

Please hear this... if its too good to be true, it is. Unfortunately, the mortgage industry isnt regulated. So a door to door aluminum siding salesman could be selling mortgages behind a desk and they make their money in volume. There is no licensing for this field. The fees are not always disclosed far enough before settlement. So, please be cautious and dont go for an interest only balloon that will explode by 3 points in 2 years and render your home purchase unaffordable. The traditionall 10 or 20 percent down mortgage at a nice warm 30 year fixed with very little upfront pointage is looking lovely these days. Go find one!

As for sellers, in this time with a heavy credit crunch, the buying pool has been shaved... maybe in half. We need to create value in your home. We need the perception to be that it is a worthy purchase and there is great differentiation in your home than the rest of the inventory. I just ran some inventory numbers for a developer client of mine and the news was grim. 19125 in the 400-600k home marketplace has a 27 month inventory. Northern Liberties has a 56 month inventory! What does that mean? If there is not one new listing in this price range, it will take 27 and 56 months to sell thru everything that is for sale today. So, competition is fierce. There are still transactions as people still need to move for whatever reasons.... however, the products have to stand out. Have a nice weekend!

Fall Newsletter

Hello everyone. I hope you all enjoyed your summer and lets all hope that this lovely fall continues for 60 days! I am proud of my real estate practice so far and truly grateful for everything I have been involved in. As you may know, I’m an economics major and a bit of a nerd. I believe a real estate agent’s knowledge of the product is extremely important for the client. Recently I was asked to assist the Central Philadelphia Development Corporation and the Center City District in compiling statistical evidence for their annual report entitled Residential Development, 2008: Grounds For Confidence. I was honored and of course leaped at the opportunity. Alas, there is lots to report to you in this newsletter. Philadelphia is a safe investment in real estate. The proof is in the statistics. Sure, the mortgage industry is interesting to say the least and getting a loan is no longer as easy as registering to vote, however, rates are at an amazing low this month. If you are qualified, this is clearly a BUYER’S MARKET! Some people say they want to “wait for prices to drop”…. This isnt happening in Philadelphia…. Not to a drastic savings. However, mortgage rates are dropping! The effect of that is greater than any waiting around theory.

As for Philadeplhia sales figures read the numbers pulled from the multiple listing service:

For zip codes 19103, 19106, 19107, 19122, 19123, 19125, 19146, 19147

Sept 07 to Sept 08: average days on market: 93, average sales price: $377,944, inventory accumulation: 13 months

The year before: average days on market: 92, average sales price: $378,347

As you can see, by annual comparison, center city Philadelphia is quite healthy compared to the national crisis in real estate. Philadelphia historically never peaked crazily and so it will not trough harshly. There is still such growth in Philadelphia neighborhoods that the market remains relatively unchanged. However, banks are not OK. The mortgage industry is in trouble from so many fraudulent and frivolous loans that were given away for years with the boom. SO, the government steps in, saves Freddie and Fannie Mae, rates stay low to encourage growth. So again, note the chart above and realize the savings one would have in buying real estate today.

There is now a federal tax credit for first time home buyers. The credit is for up to 10% of the home purchase price or a max of $7,500. This is another incentive to buy! Many new construction specialists are savvy and would prefer to rent at this time while many hesitate to buy. Don’t walk with the sheep. Think before you sign another lease. You may well be able to afford your first home and the overall financial benefits might well be worth the purchase versus paying someone else’s mortgage.

So, the cash on cash return on real estate investments in Philadelphia, home ownership or rental properties, can still be extremely healthy. It is certainly more reliable than the DOW Industrial Average drop of 449 points today. It is a smart time to buy. Ask me about particular neighborhoods that are stronger than others.

Going green? Like green? Wanna go greener? We all do and we all need to. Here are some simple tips and stats for your enjoyment and hopefully they will affect your daily lives. I know that I have been riding my bike all around the city as much as possible. Its almost faster and the PPA isnt cashing in on parking tickets on my Cadillac! J
Paper bags require a lot of energy to create and plastic bags are made from petroleum, a non-renewable resource, and they aren’t going anywhere. Considering that Americans use close to 85 billion a year, think about how many are just sitting in our dumps. The crusty reusable shopping bags seem to be everywhere now and are often free with advertising info on the sides. Hec, aske me for one if you need one… I have a dozen!
http://environment.about.com/od/recycling/a/reusablebags.htm
Blackout curtains. Ever thought about them? We lose 33% of energy in our homes during both seasons thru the windows. Blackout curtains are thick and go behind your decorative curtains…think of a posh and cozy hotel room where you can sleep late. Blackout curtains also curb noise pollution so for the urban dweller, they are quite handy.

http://www.greenlivingtips.com/articles/260/1/Saving-energy-with-blackout-curtains.html

Guess what?!?! You can reduce your consumption of electrical energy by simply unplugging electronics when they’re not in use. Phone chargers draw energy all day long when they’re left plugged into the wall, and electronics can use 40% of their regular running energy when plugged in on standby. So, hook up a power strip to that home theater system that glows red lights in stand-by mode and save on your electric bills. By the way, PECO is raising their gas rates by 20% and soon their electric. Yipee!
Americans buy 1 billion light bulbs a year. If everyone would switch out just one conventional bulb for a compact fluorescent lightbulb (CFL), it would be like pulling a million cars off the roads. Plus, because the bulbs last 10 times as long and are 25% more energy efficient, they’ll save you some green. The initial cost may seem more than the 2 or 3 for a dollar at the dollar store but the long term savings is great as is the world impact. Every little step helps.
http://www.energystar.gov/index.cfm?c=cfls.pr_cfls
Americans generate 13 million tons of glass waste each year and enough aluminum to rebuild an entire commercial airline fleet every three months. Get in the habit of recycling your glass, plastics, aluminum and paper. Philadeplhia has made it so easy incorporating a single stream recycling program. Starting in January of 2009, they will be picking up recycled containers every week!
http://www.recyclingpays.phila.gov/

I hope that wasn’t too much to read thru and I hope you save this email as a reference for how to improve the quality of your life… perhaps with a new real estate venture and definitely with a greener lifestyle. If you know of anyone looking to buy or sell real estate in Philadelphia, please let me know. I work hard for my clients, as many of you know.

Good day!
Nigel

PS
Enjoy http://nigelknowsphilly.blogspot.com/