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2007-08-20 13:00:00

Mortgaged to the Hilt - Adapting to a Changing Market

Sacramento, CA  -- Recent real estate articles discussed the inevitability of a future mortgage market crisis … that prediction has come true in recent weeks. The financial markets do not function well with uncertainty and the Fed responded to the foaming uncertainty and free-falling equity markets with a half point cut in the discount rate. The Fed has gifted the market with a few days of stability to really assess how bad the situation is, or very possibly could have been. Continue to hear the terms capitulation, over-bought and over-sold, there will be mergers in the financial sector and interest rates are going to be intertwined with this market  …  certain hedge funds will be scrutinized and we will all wonder how the mortgage industry got this close to the edge for some time to come.

The healthier approach now is, how can one take advantage of this real estate market as a result of this mortgage market idiocy, and to an extent, the financial crisis of 2007?

Six Real Estate Tips:

1.  If turnover plays a big part of your livelihood, or you have a pressing need to sell real property, you still have a 30-60 day window without significant price reduction to the current market … this statement assumes the target property is priced correctly for its location. If you do not need to sell, and your property is in a superior location wait out this correction.

2.  Most lending institutions stuck with significant home inventory will continue to be flexible as they see dumping as their only alternative to holding, and some simply cannot raise the capital reserves necessary to hold. So do your homework and figure out which lenders continue to be flexible in the real estate market right now and try to take advantage of that. Countrywide for example is one of the few behemoths that have chosen to be firm with their own home inventory with respect to contract negotiations and initial pricing.

3.  Begin the process of real estate acquisition … Northern California is a good place to start, Modesto, Sacramento and Stockton for example. Perform your property search or comparative market analysis using real time market data. Do not jump into this market, dip toes only. Holding power will be necessary and likely a 10% - 20% down payment. If you buy property at the market (which is totally unnecessary in my opinion) expect to carry a negative based on the current tone of the home rental market. Moreover, expect to wait two or even three years for a market correction … place a two year negative into your calculations, three years if you anticipate no rental adjustment.

4.  Your acquisition mantra should be location, location, location, keeping price in mind as you have time to be picky. Remember FLM "Funny Lender Money" will be harder to come by this time around. Look for refinance opportunities, but expect money to be a little tighter for even the most credit worthy individuals.

5.  Expect the FED to cut the discount rate again before the end of the year; however home mortgage rates will continue to be under a certain degree of pressure until the real estate market sorts itself out.

6.  Look for ways to save on your next house property purchase and sale … utilize REALTOR services that offer commission discounts, flat fee services, significant byer incentives, significant on-line marketing reach and excellent property search tools.

Fitch suggests to remember the old adage 'buy low and sell high' and put it to good use. "If you are on the right track you will get a lot of resistance from others to your real estate investment strategy … stay strong and stay the course!"


(Edward S. Fitch is a published author and financial expert and has written articles for Northern California Real Estate Publications. Fitch is the owner/broker of Fitch Properties found online at  www.realtydollars2u.com providing Flat Fee Real Estate Multiple Listing (MLS) and online marketing services to property buyers and sellers throughout the state of California. Fitch is also owner of www.listanyhome.com providing real estate marketing services to home sellers inside the borders of the United States.) 

Sacramento, CA  -- Recent real estate articles discussed the inevitability of a future mortgage market crisis … that prediction has come true in recent weeks. The financial markets do not function well with uncertainty and the Fed responded to the foaming uncertainty and free-falling equity markets with a half point cut in the discount rate. The Fed has gifted the market with a few days of stability to really assess how bad the situation is, or very possibly could have been. Continue to hear the terms capitulation, over-bought and over-sold, there will be mergers in the financial sector and interest rates are going to be intertwined with this market  …  certain hedge funds will be scrutinized and we will all wonder how the mortgage industry got this close to the edge for some time to come.

The healthier approach now is, how can one take advantage of this real estate market as a result of this mortgage market idiocy, and to an extent, the financial crisis of 2007?

Six Real Estate Tips:

1.  If turnover plays a big part of your livelihood, or you have a pressing need to sell real property, you still have a 30-60 day window without significant price reduction to the current market … this statement assumes the target property is priced correctly for its location. If you do not need to sell, and your property is in a superior location wait out this correction.

2.  Most lending institutions stuck with significant home inventory will continue to be flexible as they see dumping as their only alternative to holding, and some simply cannot raise the capital reserves necessary to hold. So do your homework and figure out which lenders continue to be flexible in the real estate market right now and try to take advantage of that. Countrywide for example is one of the few behemoths that have chosen to be firm with their own home inventory with respect to contract negotiations and initial pricing.

3.  Begin the process of real estate acquisition … Northern California is a good place to start, Modesto, Sacramento and Stockton for example. Perform your property search or comparative market analysis using real time market data. Do not jump into this market, dip toes only. Holding power will be necessary and likely a 10% - 20% down payment. If you buy property at the market (which is totally unnecessary in my opinion) expect to carry a negative based on the current tone of the home rental market. Moreover, expect to wait two or even three years for a market correction … place a two year negative into your calculations, three years if you anticipate no rental adjustment.

4.  Your acquisition mantra should be location, location, location, keeping price in mind as you have time to be picky. Remember FLM "Funny Lender Money" will be harder to come by this time around. Look for refinance opportunities, but expect money to be a little tighter for even the most credit worthy individuals.

5.  Expect the FED to cut the discount rate again before the end of the year; however home mortgage rates will continue to be under a certain degree of pressure until the real estate market sorts itself out.

6.  Look for ways to save on your next house property purchase and sale … utilize REALTOR services that offer commission discounts, flat fee services, significant byer incentives, significant on-line marketing reach and excellent property search tools.

Fitch suggests to remember the old adage 'buy low and sell high' and put it to good use. "If you are on the right track you will get a lot of resistance from others to your real estate investment strategy … stay strong and stay the course!"


(Edward S. Fitch is a published author and financial expert and has written articles for Northern California Real Estate Publications. Fitch is the owner/broker of Fitch Properties found online at  www.realtydollars2u.com providing Flat Fee Real Estate Multiple Listing (MLS) and online marketing services to property buyers and sellers throughout the state of California. Fitch is also owner of www.listanyhome.com providing real estate marketing services to home sellers inside the borders of the United States.) 

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