Free Annual Credit reports
Since I talk about real estate with some regularity I thought I should share some personal experience around getting your credit report.
First things first, get your credit report when you are beginning to think about buying a home. If you have a low score you will need to address any inaccuracies or problems the report brings up or you won't get approved by a mortgage lender (or you will get charged a higher rate). In fact, you should probably get one annually anyways to avoid higher rates on credit cards and loans and to help avoid landlords from renting to you, etc.
Next, if you want a free credit report, use www.annualcreditreport.com. The federal government passed legislation allowing you to request a free report every 12 months and this is the site to do so. Those of you who try the others (like www.freecreditreport.com) beware - Read the fine print and you'll see that getting the report will sign you up for a subscription of some sorts that will charge you on a monthly basis until canceled. They typically say that if you cancel within 30 days you won't be charged. I'm not alleging that they're outright lying, but I canceled within 3 days and was charged for 4 months and was never able to recover the charges. Your mileage may vary, but why bother?
Real Estate predictions for 1Q 2007
I occasionally write columns on real estate here and given the latest news I thought I should post an update. CNN and other major outlets have all been reporting the news for some time - the housing market is stagnant and the bubble has burst.
They're right. The bubble has officially burst and those of you who got into the speculative game in Florida, California, Las Vegas or some of the other areas who saw incredible gains are now paying the price. I don't have much first-hand knowledge of those markets, but as I mentioned before they were well overpriced, they continue to be overpriced and I don't imagine that we'll see any appreciable gains (real gains, adjusted for inflation) in home prices in those markets in the coming quarter, year, and probably not in the next five years. Definitely nothing like those ridiculous 20%+ YOY gains of the past. Gains of that nature are unsustainable in the long term and we're seeing a natural correction in the market.
As for the secondary and tertiary markets, I'm predicting that as a result of the general malaise felt by the aftershocks of the major-market bubble-burst prices will remain at current rates or, in some markets, achieve single-digit gains. Investment in homebuilders and other real estate related holdings will be dropping as returns disappoint (no more flipping properties for a 100% profit!?) and this will ripple into some of these smaller markets holding down price growth.
While this is bad short term news for many owners who bought into the market in the past couple years, assuming you bought into the market for the right reasons (not to flip, the real estate equivalent of day trading), time frame (more than 5 years), and with the right financing (fixed rate mortgages that fit in your budget) you should feel comfortable holding onto your holdings. Those of you who hold ARMs may want to consider dropping properties and even forfeiting deposits on properties in construction which were intended to be sold for profit from appreciation.
More Real Estate Predictions
Time for yet more of my completely biased and unresearched opinions on real estate...
The general consensus is that the housing hot streak has ended. I would agree with that sentiment. But as I was alluding to in my earlier real estate predictions, the mainstream media has a myopic view of the market and define it by the hot markets - Vegas, Florida, California. These markets may indeed see a significant slowdown in sales, a rising inventory and likely even depreciation in prices. But the majority of the country will weather this slowing period by sustaining current price levels. Housing has been historically resiliant to downward movements in price, and will continue to do so.
Secondary and tertiary markets will continue to have great undervalued investment properties. Being a landlord isn't for everyone, obviously, but with mortgage rates rising and currently high prices which are unlikely to drop, it's expected that rents will inch higher in the mid-term future. In many of these smaller markets it's easy to find rental properties will will easily generate profit with current rent levels, house prices and tax rates - with a lower barrier to entry due to stagnant/undervalued prices.
Update: Here's to some great timing - The local Rochester newspaper has two articles today which fit nicely with the above: Area homes undervalued and Landlords' costs force likely uptick in rents. (Though I would argue that rents will rise because of more forces than costs, the rising rates will help keep renters from buying their first homes, causing higher demand in the rental market).
[For newer predictions check out Real estate predictions for 1Q 2007. To see my back history, check out Real Estate predictions.]
Local Real Estate Sales Continue to Impress
Yet another impressive report on Rochester area home sales. The article notes striong sales in Monroe County and the city of Rochester. I still firmly believe that the city will continue to pick up in prices and demand this year. As I've stated before, the housing prices in Rochester have been depressed for at least a decade, so the price increases are a natural adjustment. As a city resident, I also strngly believe some of this can be attributed to the new administration. There's been a palpable feeling of excitement and enthusiasm for the region - and people are starting to back that up with their dollars, not just their words. (For example, the closed Genesee Hospital was recently purchased and plans are to demolish and construct apartments, condos and commercial property in the city. The developers stated they wouldn't have considered the purchase unless they believed the city was undergoing a renaissance).
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