THE REAL ESTATE ROLLER COASTER

by John McClellan on February 28, 2010

Your grandfather always told you, “Location, location, location.” I am here to tell you that it is all about timing in specific locations. Investors have always given a lot of weight to the location of real estate, and this strategy has worked well in the past.  However, to maximize rate of return investors in today’s highly competitive market need to understand that, even though location is a very important part of the puzzle, timing in specific locations is even more important.

I like to compare real estate to a roller coaster. “How so?” you ask. Let’s take the example of the California market over the last seven years. If you listened very carefully seven years ago, you could hear the tic – tic – tic of the roller coaster of real estate as the appreciation rates climbed and demand grew. As long as that soothing tic – tic – tic sound was heard, the market continued to grow at a fantastic rate. About a year and a half ago that sound stopped. [click to continue…]

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I have been talking a great deal lately about the Fed’s exit from its program of buying mortgage-backed securities (MBS).  Over the last 13 months the Fed has spent more than one trillion dollars—that’s $1,000,000,000,000.00—to buy these securities in order to drive up their price, thereby artificially keeping interest rates low.  This program has succeeded in keeping mortgage rates in a tight spread between 4.5 percent and 5.25 percent.  The classic supply-and-demand formula is to drive higher demand for anything and the price will go up.  (Price and yield are the inverse of each other, which is how mortgage rates are determined.)

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“Short Sales… Get a Box!”

February 17, 2010

My first sales job out of College taught me a lot about the cliché’s “cut your losses early” and “stop the bleeding”. I even learned about “a bird in the hand is worth two in the bush”. The wisdom gleaned about these sayings came out of three words, many times spoken at elevated volume levels [...]

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Sweeping Changes from HUD on FHA loans…Really?

January 21, 2010

Today HUD announced some sweeping changes for FHA loans.  I use the descriptor sweeping because the media and even HUD are portraying these changes as sweeping.  Truth be told, most of these changes either have already been made at the origination level or are a reverting to old standards that have been set for previous [...]

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The Year of the Incentives . . .

January 14, 2010

“incentive (in⋅cen⋅tive) any factor (financial or non-financial) that enables or motivates a particular course of action, or counts as a reason for preferring one choice to the alternatives”
Our world is founded and based upon incentives either to do something or not to do something.  Today’s real estate market is driven by incentives, organic and [...]

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Pending Home Sales Index down 16%

January 7, 2010

The Pending home sales index was released this week and the decline was far below the consensus….pending homes sales dropped 16% from the previous month…that is a big number.

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The Dead Cat Story……….

January 1, 2010

Dead Cat StoryClose your eyes.  Relax.  Think back to a simpler time—a time before cell phones, before email, before PDAs and internet search engines.  Think back to a time when real estate agents had glamour-shot photographs on their business cards and online was not around.
Now, ask yourself these questions:  How did real estate agents look [...]

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A year in the life of the 30 year fixed rate mortgage…..

December 28, 2009

The last 12 months have not only been interesting but they have been expensive for the American Taxpayer.  Over the last 12 months the Fed has spent over one trillion dollars (yes I said trillion) on Mortgage Backed Securities (MBS) and will continue to do so until the end of the first quarter 2010. By [...]

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How to be a Flipper not a Flopper

December 26, 2009

How to make money, not lose money, when flipping real estate
I want to get into real estate and flip houses! That statement or the question that follows (How do I do that) is said over and over again to me on a weekly basis.  There are a few Flippers out there who do very well [...]

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The “Real Estate Zone” has Moved!!!!

November 15, 2009

We are proud to announce that “The Real Estate Zone” has moved to 590 KLBJ am and FM at 99.7 590’s simulcast…Sunday’s from 11- noon
As always your hosts John McClellan and Kevin Bown will give their insight to Central Texas Real Estate….
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