Many people will say that now is the time to buy, and they would be correct.  Fewer people will say that now is the time rent, and they would be correct as well.  We’ve written a little bit more about the home buying aspect as of late, so now we’ll try and go into how much rents have decreased, why they have declined, and what the recovery looks like.

In 2009 rental reductions averaged 5.8% nationwide.  There are many markets that have not seen a decrease at all, while other have decreased well into the double digits percentage points.

2009 was not the best year for our economy.  Many factors helped the rental market stay strong and not completely and totally die.  In 2009 many borrowers foreclosed on their home, forcing them into a rental situation.  Many people were forced into a roommate situation, or increased roommate situation.  The largest rental age group, 20-34, increased and is expected to increase by about 5 million people over the next 10 years.  Also there was not a gross over building problem in the rental market, or at least as much as there was on the sales side of real estate.  Even with the economy taking a turn for the worse, these factors kept the average decline below the double digits.

As jobs are created and the economy strengthens, many things will change.  Roommate situations will decrease, family members will move back into rental units,  and the demand for rentals will begin to grow again.  Currently vacancy rates are estimated at about 8.8%, and will drop to about 6% between 2011 and 2013.

What should you do about this?  If you know you will be in Boston for more than the next year, you should find your next apartment or resign your lease as soon as possible, before the market begins to fix itself.  5 months from now (when most will make a move if they are going to move in 2010) the market can have a completely and totally different landscape.  Rents may start to increase, and as apartments are taken off the market, demand for the remaining apartments will increase and drive cost up, or keep pricing stagnant.

In order to get the best deal and most effectively negotiate your rent you should first do some research, find out what similar apartments in same neighborhood are renting for.  What is the vacancy rate in that area?.  Decide what you need in an apartment and what you want.  Are you able to sign more than a one year lease?

Although you want to find the apartment of your dreams, many times that does not match up with your financial situation.  Finding an apartment at the right price may come along with a compromise.  You may need to agree on a longer lease term, or pay several months up front.  If you’re unable to secure a rent as low as you would like, many landlords are willing to partially renovate, reduce move in costs such as security deposit and last months rent, or make some other consolation to prevent their property from being vacant an additional month.

Do you have any tips for renters from your experience?  What are some best practices for negotiating a deal on your next apartment?

As always you can contact us at info@ProperRealtyGroup.com with any questions or concerns.  Having an experienced real estate professional on your side will enable you to secure the best apartment at the best price!

If you are looking for for a housing deal, it may be a good idea to wait.  Not too long, not past the April 30th Tax Credit expiration date, but just a few more days and you could find the annoyances of short sales begin to disappear.

Starting on April 5th, 2010 the federal government will start providing financial incentives to banks , and other lending institutions, to complete more short sales.

Currently for a buyer to negotiate a price with a lender the process could last several months.  The buyer would submit an offer, if that offer is less than what is owed the lending institution would then order a Broker Price Opinion or an appraisal.  The lender would then receive this appraisal, compare it with the amount currently owed with the price offered.  The lending institution would then either accept, make a counter offer, or do nothing.  The whole process could last several months, in the mean time leave the potential buyer waiting for something that may or may not come.

On April the 5th things will change.  Lending institution will see financial incentives for short sales.  Under the new rules lending institutions will have Broker Price Opinions and or appraisals done before the distressed property is put up for sale, and share all relevant information about the minimum amount they are willing to accept.  They are also required to accept bids that are equal to or greater than the minimum amount shared within 10 days.

Will this help stimulate the housing market?  If so, how much?

I think this is the question for every piece of legislation, mortgage rate decrease, or tax credit.  We really will not know until after the fact.  The bottom line is this should help lending institutions cut loses, free up credit, and speed up a process that has some buyers weary of approaching.  I know there are some brokerages and agents that have stayed away from short sales as they more often than not lead no where.

Is now the right time to buy?  Believed the be the question without an answer.  We’ve written about home prices raising artificially due to increases in demand because of the Home Buyer Tax Credit.  Is that a nationwide issue, or only in certain communities?  If it is significant, how much exactly?

Interest rates on 30 year mortgages are going to steadily increase from now until the end of the year.  Exactly how much?  No one really knows.  That increase, I believe, is much more important as far as keeping money in your pocket is.  If decide to wait until after the expiration of the Tax Credit you will miss out on either $8,000 or $6,500 in tax credits as well as increases in interest rates.

How much does interest rate cost me?  Well, that really depends on how much you borrow and for how long.  With residential homes, most loans are 30 year and to get a good interest rate you are expected to put 20% down.  So for a residential home, on a $250,000 loan a one percent variance in interest rate could mean an additional $70,000 over 30 years.  That is quite a bit.

Does this mean I should buy now?  Yes, and no.  If you’ve found the home that is right for you, it may be beneficial to roll up your sleeves and make sure you’re able to go under contract before April 30th, and secure the best possible interest rate.  If you haven’t done so, it could be a mistake as finding the right home for you is the most important part of home buying.  This is a 30 year major financial commitment.  It would be wise not to take the decision lightly.

Aerosmith Drummer and founding member Joey Kramer has sold his coastal compound.  The property sold for $2.7 million, 27% less than the property’s most recent asking price and almost half of the original $5 million asking price when it first went on the market in July of 2008.

The property over looks the Atlantic and is rested on 17 acres.  It includes a 6,200 square foot home, a recording studio, a carriage home, as well as 3 garages.

Earlier today House Speaker Robert A. DeLeo outlined his plan to introduce a bill allowing two resort style casinos as well as limited slot machines at race tracks in Massachusetts.  This is similar, but at least not yet quite as heated, debate that is happening currently in the South.  Alabama is trying to legalize electronic bingo and casinos to hopefully recoup some of the money lost to neighboring lottery and casino friendly states.

Proponents of legalized gambling cite loss of income to neighboring states, job creation, and a way to finance better school system through taxation of these cash cows.

Those who are against legalized gambling mostly refer to the moral reasons for keeping casinos out as well as how casinos can tempt low income residents to spend the little money they have in a way that many consider irresponsible.

The Boston Globe has reported on Deleo’s bid to legalize slot machines and casinos.  The Globe also mentions Governor Patrick’s lack of a stance as he is up for reelection and many of his supporters oppose the idea of legalized gambling.

What do you think?  Can legalized gambling help with the aptly dubbed “blue collar depression”?  Are the moral sacrifices worth the potential job creation and greatly increased revenue to the state?  Let us know!

With mortgage rates near a 50 year low why are there not more borrowers taking advantage of the low rates and refinancing?  With many borrowers able to drop their rate by a full percentage point, and more than half able to drop their rates by three-quarters of a point it would seem the time is right.  It seems with house values plummeting and incomes falling equally as fast that a full percentage point (or even three-quarters) would be the thing to turn things around for many home owners in need.

Tightening credit restrictions, sky rocketing fees, and lacking equity, that’s not going to happen.

In 2008 Fannie Mae and Freddie Mac began instituting fees that, even for borrowers with good credit could face fees equal to 1% of the loan amount, or more.

On Monday the Obama Administration extended a year long program started in April to help borrowers who owe between 80% and 105% of the value of their home to refinance.  In September that program grew to include borrowers who owe up to 125% of the value of their homes.  The plan was thought to save millions when first launch, but less than 2,000 home buyers have taken advantage.

The Administration is looking into creating additional help for home owners in need.

Have you had a similar experience with securing refinancing?  Do  you know someone who has?  If you have any questions about any of the information feel free to contact us or feel free to discuss!

An article on The Wall Street Journal Online is discussing Harvard plan to sell up to $500 million in real estate assets.  Although Harvard’s endowment has approximately $5 Billion in real estate and future commitments to the properties.

Here’s an excerpt from the article about the losses posted and a little on the plan to sell:

Harvard’s own real-estate portfolio “suffered a loss of over 50%” for the fiscal year ended in June, according to a September report from Jane Mendillo, head of the company that manages the endowment, the nation’s largest. Harvard’s endowment posted miserable overall returns last year, declining 27.3% for the year that ended in June.

In November, Harvard began marketing a portfolio of stakes in more than 30 real-estate funds, ranging in size from $50 million to $500 million through Credit Suisse Group, according to several secondary-market buyers and intermediary firms familiar with the offering.

Some of the largest commitments are with real-estate-investment companies such as Beacon Capital Partners, Lubert Adler, Lone Star Funds and Westbrook Partners, according to documents reviewed by The Wall Street Journal. Close to 60% of the funds are in North America, but there are also a number of commitments with real-estate companies in Europe, Asia and South America, according to the documents. A spokesman for Credit Suisse declined to comment.

I really do not see this as a surprise at all.  Last year was not a great year for many investments at all, and really to see a 50% loss on real estate values isn’t as bad as some have seen.  Losing 27% of the total endowment is a strong blow, but when you have an endowment the size of Harvard’s (currently $26 billion) you generally have some room for ups and downs.

The Article states Harvard Yard is not for sale, but I am very interested in the price it would fetch.  I would also be interested in knowing if it’s true that everything is for sale, for the right price.