How (mobile home loans) Local Elections can Dictate the Value of your Home

October 3rd, 2009 admin Posted in realestate |

By Brian S. Icenhower

With local elections on the horizon, it is essential to understand the significant impact that our newly elected leaders will have on real estate values in our area. Most individuals consider housing, or shelter, to be a necessity item on par with essentials such as food and water. However, unlike commodity items like milk or wheat, housing supply is completely unregulated by the federal government. The Subdivision Map Act provides the State of California with a very slight amount of power to regulate housing since Californias cities are required to report their General Plans for anticipated growth to the State for approval, but the States process for approval does not focus on economic factors like near-term housing supply and demand. As a result, the vast majority of housing development regulation is enacted and enforced by local city governments.

To illustrate the tremendous burden this responsibility places upon planning commissioners and city council members, it is important to understand how the fundamental economic concept of supply and demand is applied to housing. If the supply of housing rises to a level of a surplus without a correlating increase in demand, housing values will decrease. This concept may seem to be obvious now that housing prices have plummeted up and down the state, but many of Californias local leaders were amazingly oblivious to this notion during the real estate boom years several years ago.

Shortly after the turn of the century and during one of the fastest appreciating real estate markets in history, many local governments justified their seemingly endless approval of residential development projects by citing to the increase in city revenues and jobs that these developments will generate. Unfortunately we now know how quickly these benefits can be erased by not paying attention to supply and demand principles. Once buyers demand could not keep up with escalating home prices, unprecedented numbers of home builders began to reduce the prices of their homes in order to compete with one another. This caused housing prices to begin falling. Home values began to drop so rapidly that foreclosures became the only viable option for many borrowers as selling or re-financing became impossible since all the equity in their homes had been wiped out by this excessive competition. Soon foreclosures began to flood the market driving supply up even further. Home builders were then forced to reduce their prices further to compete with banks that were offering their foreclosed-upon homes for much lower prices. All the while the values of homes caught in the cross-fire were diminished to astonishingly low levels and the fear of continuous declines in housing prices kept buyers on the sidelines and demand at historical lows.

Now it is easy to ignore a potential lesson learned here by simply claiming that this was a national housing crisis that local government leaders had no power to avoid. In reality, it was these civic leaders alone that could have prevented such wide-spread economic devastation within their respective municipalities. Had they simply assessed local statistics addressing population growth, income levels and existing housing supplies prior to handing out rubber-stamp approvals, they might have learned that their local housing supply was quickly outpacing demand.

In addition, not all cities succumbed to the pressures of filling city coffers and decreasing short-term unemployment figures. In fact, those cities that have traditionally regulated their housing supply by more intensely scrutinizing proposed developments have mitigated their pain relatively effectively. Cities that were more selective in their approval of residential developments can be found throughout California. There are many cities across the country that restricted growth to keep foreclosures at bay and local economies intact.

It is no surprise that local candidates for office are now uniformly using smart growth and concentric development as primary focuses of their campaign platforms. It is our job as voting citizens to ensure that they maintain these pledges when our local economy once again finds its pulse. We must remember that although it is tempting to rely on the principles of free-market economics, our local leaders must not overlook the fundamental economic principle of supply and demand. Otherwise, local residents may not like the results with which they are left.

Brian S. Icenhower Esq., BS, JD, CBR, CRS, ABR, GRI is an attorney, a real estate broker, an instructor in real estate law at the College of the Sequoias, a California Association of Realtors State Director, a real estate litigation expert witness, a prosecution consultant for district attorney real estate fraud units, and a frequently published author.

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The Housing Market Forecast for 2009

By Alan Brymer

Allow me to give you my thoughts on what the housing market forecast is for the remainder of 2009. So far this year, I have heard unbridled optimism from many hopeful sellers, agents, and investors, believing that the market and values cannot possibly stay down any longer.

On the other hand, some experts and real estate professionals predict another Great Depression that will last 10 years or longer. They base this on the fact that the real estate bubble was allowed to grow so much larger than ever before, the ramifications of it popping have got to be all the more severe.

I agree that the housing market will probably be worse than it has in the last half century, but I don’t believe it will be the next Great Depression, for the following three reasons.

Reason #1: If you remember the Depression, many investors lost 100% of their profits, and banks were forced to go out of business. That is because the nature of the stock market is that you have to buy stock for whatever its current value is.

Real estate, on the other hand, still has value, and will someday regain the value it had in the past. No one’s property has “gone out of business.” They are still there, and as long as they are not sold or caused undue expenses, have not even generated a loss for their owners.

Reason #2: There is no national real estate market. For this reason, no one (including myself) is qualified to predict what will happen in every city and county in the United States. Real estate markets are local, and although the market may be cold in the majority of places at one time, your location might be stable or even appreciating.

However, in general, I predict that it will take several more years of slow decline or flatlining before values begin to pick up again. This has been the case during the last two market cycles as well.

Reason #3: Real estate values in many places are still going down, though much, much more slowly than they have declined before. I believe that this is causing many people to believe that things are not as bad as they were before, or that the market is improving already.

For these three reasons, my housing market forecast for 2009 is that prices will flatline or continue to decline slowly in many metropolitan areas, and begin to pick up again in three to four years.

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Knowing Housing Trends Can Help You to Invest in Real Estate Wisely

By Alan Brymer

Buying a real estate investment property is a major decision, and likely represents a lot of time and energy on your part coming up with the funding, finding the right property, and doing your due diligence. For this reason, you deserve for each investment to be as profitable as you can make it.

I’d like to address a few ways that knowing and understanding the housing trends in the real estate market you invest in can help you to double your profits safely and easily.

The first thing I’d like to address is…why are you buying property where you live? There are hundreds of real estate markets around the country and you happen to live in one of them. Instead of taking what is dealt to you where you live, why not seek out the locations where prices are far more likely to increase and add to your bottom line?

After all, values may be down in your area, and are not set to rise again for another 5-7 years or more. Some locations, such as Detroit, Michigan, have been depressed for 20 years or more. If you lived there, would you sit on your hands and do nothing for a quarter of your life, or would you find a better place to invest?

I’m willing to guess that you are afraid to buy property far from where you live because you cannot manage it personally and you’re afraid that if you can’t see it, something awful will happen. I can promise you, after 5 years of buying properties in multiple states and in several market cycles, that there is no more risk buying out of state than there is in your town, if done correctly.

After all, there are contractors, real estate agents, and property managers in other locations as well, and I wouldn’t recommend doing their job for them even if you were investing in your backyard.

For these reasons, I strongly recommend researching the housing trends in a variety of metropolitan areas in the country, and investing in the markets that are likely to go up very soon.

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