ARE YOU BEHIND IN YOUR MORTGAGE PAYMENTS?
DO YOU NEED TO SELL YOUR HOME?
DO YOU OWE THE BANK MORE THAN YOU CAN GET FOR YOUR HOME?

What are your OPTIONS?

Many people are not aware that they have a few options to explore when they are facing these situations. Some people just give up and abandon the house for the bank to take it over. Before you do this, it is important to explore other options that may affect your credit and personal finances less than foreclosure.

The first thing you have to find out is who owns your loan note (it may be different from the lender who sold you the loan and/or different from the company who services the loan). Once you find out who is holding your loan, you may want to call their LOSS MITIGATION DEPARTMENT, which specializes in dealing with these matters.

Notes: I am assuming that when you took the loan you were properly informed of the conditions, and that your lender performed all required disclosures as required by the Truth In Lending Act (if you feel you were not informed properly, or believe there was fraud involved in your loan, you have legal recourses you can pursue). Also, some of these options may have tax implications for you. If the lender accepts a short sale, the amount of principal they “forgive” may be counted as income for your tax return. It is essential to consult with your CPA and attorney before taking final action.

Option 1: LOAN FORBEARANCE Depending on your circumstances, a “temporary fix” option you might wish to consider as a way to prevent foreclosure is mortgage forbearance. This option is commonly used for temporary financial hardship situations such as short periods of unemployment or poor health. Mortgage forbearance enables you to temporarily stop making your mortgage payments. However, interest on your loan continues to accumulate and is added to the remaining principal balance of the loan. You are generally also asked to sign a forbearance agreement that states when the lender will require you to pay the amount you owe. Once the forbearance period comes to an end, you are once again obliged to make full payments on your home loan.

Option 2: LOAN MODIFICATION If your mortgage interest has readjusted upward (as in an ARM) and you cannot afford the new payment, or you are having trouble paying your mortgage and you are in a high-interest loan and cannot refinance, your lender may consider changing the terms of your loan to help you. Some of the factors that your lender will consider are: Nature of the hardship that is causing your mortgage payment problems; the amount of equity you have in the property; your ability to pay the mortgage; the amount owed on the mortgage; and mainly, what is financially better for them – whether to foreclose or pursue a loan workout with you or modify your loan.

Option 3: DEED EN LIEU OF FORECLOSURE This option basically provides a “free out of jail card” for the homeowner, who agrees to give the property back to the lender if the lender agrees to forgive the debt that was secured with the real estate. Deed-en-lieu-of-foreclosure is only approved by lenders in certain hardship circumstances (conditions vary according to each lender). Both sides have to enter the transaction voluntarily and in good faith. The property needs to be transferred at a fair market value.

Option 4: SHORT SALE In a declining real estate market, it is quite common for homeowners to owe more on their home than what they can net from sale at a “fair market price”, especially if they haven’t lived long in their home. In many cases you can still sell your home, provided that the lender(s) and other lienholders approve a short sale, where they are paid less than they are owed. Any other liens affecting the property (including mechanics’ liens, tax liens and any judgments against you, the owner) will have to be cleared to be able to “short-sell” the property.

Option 5: RE-FINANCE If you are in a situation where your loan is at a high interest rate, you may wish to consider re-financing (with the same or with a different lender) to lower your monthly payments. However, in the last two years the guidelines for re-financing have changed, making it impossible for some homeowners to re-finance their mortgage. The main recent changes affecting your ability to re-finance are: Declining home values; reduced loan-to-value and debt-to-income ratios; your payment capability and your credit score.

Option 6: FORECLOSURE Foreclosure is a legal process whereby the lender(s) exercise their right to take possession of your home and kick you out for not honoring your commitment to pay the loan(s). This is a slow process (in SC it can take from 6+ months) and it is expensive for the lender. It also affects the homeowner’s credit substantially and for a long period of time. If you fail to pay your loan on time, you will first receive written notices that you are in default and warning you to pay or face foreclosure. After a few months (depending on the lender), they will issue a notice of their intention to foreclose. The case will be handed over to an attorney, who will file suit to foreclose and will file a lis pendens notice at the County Courthouse. Once the court rules the property will be sold to the highest bidder at public auction on the courthouse steps. If you are still living in the house, the new owner will file a motion to evict you.

Option 7: BANKRUPTCY In some particular cases, the only option that may make sense to you will be to file bankruptcy. The latest changes to the bankruptcy law make it a bit harder for some to file bankruptcy. Some filers with higher incomes won't be allowed to use Chapter 7, but will instead have to repay some of their debt under Chapter 13. You will have to get credit counseling before you can file a bankruptcy case. And, because the law imposes new requirements on lawyers, it may be tougher to find a bankruptcy attorney.

Alan Donald is a bilingual REALTOR® with Keller Williams Realty in Charleston, SC.You can ask him questions by sending him an email to adonald@kwcharleston.com or by visiting his website at www.BuyHomesInCharleston.com .

TO "LOCK" OR TO "FLOAT"?

It is very important for home buyers or for those who want to re-finance to be aware that in these volatile financial markets we are living in, interest rates on mortgages can fluctuate substantially in a matter of hours! I have heard many stories from mortgage lenders about how they were able to lock a fantastic interest rate for a loan using a 2-3 hour "window of opportunity" that disappeared afterward, or others that missed out because they floated the loan (to "float" means to let the interest rate fluctuate with the market). Understanding how "locking-in" a rate works may help you evaluate your options and could result in thousands of dollars in savings!

So, what is a "lock"? A lock is a GUARANTEE from a lender that if you close your loan within a stipulated time (usually 30 days), the note on your loan (i.e. the nominal interest rate) will be set at a specific interest rate.

When you ask a lender for a quote (also called a "Good Faith Estimate" or GFE), you can ask how long the rate is good for. Bear in mind that until you lock the interest rate, it can (and probably will) change. If you think you need more time to close the transaction, ask the lender for an adjusted rate quote. If you are afraid that interest rates may rise, lock your rate now (rate locks are recommended when interest rates are on the rise, to avoid ending up with higher monthly payment than anticipated). Floating the loan in a volatile market is a gamble - you may win if rates drop, but you may also lose if they go up.

What many people don't know is that long-term mortgage rates don't depend on the inter-bank rates set by the Federal Reserve Bank. This rate normally affects only short-term lending (such as credit cards, car loans, home equity lines, etc.). Long-term rates depend on the behavior of the financial (stock & bond) markets. Thus, if bonds are in high demand, mortgage rates drop.

Professional mortgage representatives are constantly checking the financial markets and related news releases to be able to predict future movements in interest rates. Ask your lender to keep an eye out for a favorable rate to lock in your loan! This is one of the reasons why it is very important to pick a very sharp and experienced mortgage representative (if you ever have the need for one, I can recommend several...)

COMMERCIAL REAL ESTATE - ALSO GOING SOUTH?

Today I was reading an NAR update on Commercial Real Estate (CRE) - it seems that CRE is following the path that Residential Real Estate took two years ago!

Donald Trump just asked for more time to pay his $770 million in construction loans on his Chicago Tower. Many of the leading commercial developers are having difficulties making the payments on their construction loans because absorption has been slower than expected (when the economy slows down = fewer jobs = less need for space).

To add insult to injury, we'll see many banks suffering from defaults in their commercial loan portfolio next year... this is not good news for residential real estate either - more defaults = more restrictive credit for everyone.

On the flip side, Wall Street woes and unpredictability may convince investors that, after all, real estate is a great long-term leveraged investment!

REVERSE MORTGAGE PROGRAM UPDATED

The Daily Real Estate News reported today that the limit for FHA-backed reverse mortgages (or Home Equity Conversion Mortgages - HECMs) had been increased to $417,000.
This new regulation also places a 2% cap on origination fees for the first $200K of the loan amount, or a 1% cap for higher amounts, with a $6,000 limit (adjustable for inflation).
Senior citizens will be allowed to use HECMs to purchase a new property, and lenders will no longer be allowed to sell annuities and other financial products along with the mortgage.
I think this will increase the flexibility for those seniors (like my own parents) who are “house-rich” but “cash poor”. Good move!!

WHAT’S HAPPENING TO THE MORTGAGE MARKETS? (Sept. 18, 2008)

On the positive side, Freddie Mac reported that 30-year fixed rate mortgages fell this week for the 5th consecutive week. According to the Mortgage Bankers Association (MBA), lenders saw a 58 % surge in mortgage applications since August 15th, led by a 122 % surge in re-financing applications. Fixed-rate mortgages are currently the predominant choice (95 % of all new applications) among home buyers. Applications for adjustable rate mortgages (ARMs) have fallen by almost 50 % since the end of last year.

After the government takeover of Freddie and Fannie last week, rates came down substantially (by almost 1%). We are now experiencing very low 30-yr rates (similar to 4 years ago). Definitely a great relief for potential buyers, and a great opportunity for refinancing higher interest loans.

On the other hand, there are a multitude of negative factors affecting the eligibility of buyers to get a loan. The Downpayment Assistance Programs (DAPs), that allowed 100% financing, are disappearing as of October 1st. Mortgage insurance rates are going to be drive (upward, I imagine) by credit scores. And lender underwriters went from one extreme (you just had to fog a mirror to get 100% financing three years ago), to the other (demanding an overwhelming amount of information and questioning issues that verge on the ridiculous for event low LTV loans).

So, on one hand we have great interest rates that should drive demand for housing up. On the other hand, it is difficult to qualify for those loans.

Where are we going? This is my crystal ball: I believe lenders will finally realize that they are in the business of lending money, not just in the business of avoiding losses. If they make it very difficult for buyers, their lending business will die. So they will probably start to relax their guidelines and requirements a little next year. I also believe that inflationary pressures are evident, and when inflation goes up, it affects negatively the stock and the bond markets, so I believe we’ll see mortgage rates creeping back up after the presidential election.

The next six months will be a great window of opportunity for buyers and investors who wish to buy inexpensive properties and get low interest rates. Beyond six months, it is hard to say… In the long term (4+ years), I believe real estate will prove that it is still one of the best and most stable investments around (look at the S&P 500 roller-coaster this week!)

REAL ESTATE JOKE OF THE MONTH

A client bought a new home and the broker ordered some flowers to be sent to him for the occasion. They arrived at the home and the owner read the card; it said "Rest in Peace".

The owner was angry and called the florist to complain. After he had told the florist of the obvious mistake and how angry he was, the florist said:

"Sir, I'm really sorry for the mistake, but rather than getting angry you should imagine this: somewhere there is a funeral taking place today, and they have flowers with a note saying, "Congratulations on Your New Home".

HOUSING AND ECONOMIC RECOVERY ACT OF 2008 - A MIXED BAG!

Although it has been heralded as a piece of "life-saving" legislation for the housing market, The Housing and Economic Recovery Act of 2008 that will kick in on October 1st contains some important provisions that will affect our industry adversely:

1. It eliminates DAP (downpayment assistance programs) that allowed buyers to borrow 100% of the purchase price. While this makes sense from a risk-based analysis point of view (these types of loans defaulted at a much higher rate than loans where the buyer actually puts in a downpayment out of their own money) it does not stimulate the housing industry by restricting first-home buyers, who are the ones supporting the whole housing "food chain". No one disputes that homeowners have more to lose if they have a downpayment, so maybe they will "try harder" to make ends meet when the going gets tough. But a responsible, stable income buyer will be a better credit risk than an irresponsible buyer with a downpayment.
   
   Comment: I believe that this provision will affect the demand from first-home buyers substantially. In this economic climate it is very difficult for a person with moderate to low income to save any substantial amount for a downpayment. A more equitable and fair way of determining default risk and access to use these types of programs would be by looking at the buyer's ability to pay (income & employment history) and financial responsibility track record (i.e. credit scores).
   
   


2. It amends Section 121 of the Internal Revenue Code (which is the exclusion that allows homeowners to sell their qualifying primary residence and exclude up to $250,000 ($500,000 for a couple) of capital gain from capital gains tax. Many savvy investors were combining this exclusion with the 1031 exchange provisions to build up equity via several 1031 exchange transactions, and then convert this investment property to a primary residence to take advantage of the capital gain break. With this amendment, Section 121 no longer permits homeowners to take advantage of the full tax-free exclusion on the sale of a home that was their primary residence if there was a non-qualified use of the property (i.e. investment) prior to being held as primary residence.
   
   Comment: I believe this amendment is just closing a loophole that only savvy investors with high net worth were using, so I am OK with it. However, it will restrict the demand for investment property transacted with investors looking to maximize their tax-free equity, and the sale of homes via 1031 exchanges.
   
   


3. It provides up to $7,500 in tax credits for first home buyers (or individuals who have not owned a home in the last 3 years). While this is being publicized as a "great thing" for our industry, this amount is only an interest-free loan for a 15-year period.
   
   My opinion: People with irresponsible credit behavior will be lured into home ownership by the shine of this tax credit (we are already seeing many volume builders advertising this credit) , will spend the $7,500 on consumer goods when they receive it, and increase their indebtness to the point of default. I believe it is our duty as REALTORS to point out to our clients that they will have to pay this amount back, and strongly suggest that they use the $7,500 instead to pay off high interest credit lines, or principal off their mortgage to shorten the life of the loan, build equity and have some forced savings.
   

ROAD IMPROVEMENTS PAVE THE WAY FOR MAGNOLIA
(Charleston Daily Journal)

Magnolia Development LLC has chosen two general contractors to begin road improvements in the upper peninsula area where it plans to build a large, mixed-use community on about 150 acres of highland. Workers are expected to begin constructing a 1,400-foot bridge and refurbishing three nearby roads next month.

COURT UPHOLDS SMOKING BAN, STRIKES PENALTY
(Charleston Daily Journal)

The town of Sullivan's Island's attorney said the ruling reaffirms local governments' authority to ban smoking. Though the original penalty was ruled unconstitutional, the town earlier this year changed it to comply with state law.

HOW DO YOU DEFINE QUALITY SERVICE?

For every business (especially for those of us in professional services) client satisfaction guarantees future success.

Happy clients bring more clients, and a great reputation in the marketplace (especially in a small market like Charleston’s) is a very desirable asset. It is essential to have business strategies and practices that result in repeat business and word-of-mouth referrals from our client base.

So, how does one make sure that clients are happy? Obviously, we need to provide them with “outstanding service”. The problem is that not everyone is on the same page when it comes to defining “outstanding service”. In order to avoid disappointing clients, I recommend following these guidelines:

1. Clarify mutual expectations from the beginning. Ask your clients what they expect from your service, as well as letting them know what you expect from them. This way everyone will know what to expect, and you can EXCEED your clients’ expectations.
2. Educate your clients. Explain the whole process from A to Z and identify the most common potential problems, so that they don’t get surprised if they happen.
3. Keep in constant communication. The worst you can do when there is a problem is to avoid communicating with your clients, thinking the problem may just go away, or that you may be able to solve it without their involvement. It is much better to let them know what the problem is, why it is happening, and how you are working to resolve it.
4. Assume responsibility. If there is an unforeseen event that affects the process, assume responsibility (even if it is someone else’s fault) and try to provide proactive solutions.
5. Be honest. Your clients will appreciate your honesty, even if the news that you bring are not favorable to them.
6. Show genuine interest for your clients. Give them personalized attention and be sensitive to their personal situation. This will set you apart from other service providers and will provide the “personal touch” that will remain in your clients’ memories looking forward.

You Can Now Buy a Home in Belle Hall Using an FHA Loan!

As of today, the Federal Housing Administration (FHA) loan limit was raised from $268,000 to $335,000!

Now buyers can buy some homes in Belle Hall using this program, which currently is the most flexible available for buyers...

7 Deadly Sellers' Sins

Adapted from " The 7 Deadly Sins Your Sellers May Be Committing" By Thomas M. Mitchell as published in National Realty News, March 6, 2008

So, what's the biggest mistake home sellers make? Thinking that potential buyers will walk into their home and just love the way they have decorated. Wrong.

Here is what the Accredited Home Staging Council refers to as the Seven Deadly Sins of Staging. Do you know any sellers guilty of any of these potential deal breakers?

1. Failure to thoroughly deep clean the home – especially the kitchen and bathrooms.
2. Failure to de-clutter the entire home.
3. Failure to de-personalize the entire home.
4. Failure to use neutral colors when painting both inside and outside.
5. Failure to spotlessly clean the windows and window coverings.
6. Failure to make the pets disappear.
7. Failure to spruce up the number one calling card – the landscaping.

What is a Market Analysis?

Setting the right price is probably the most important step in the process of selling a home, and this is especially true in an over-supplied (buyer’s) market, where price and condition sometimes are as important as location in the eyes of the buyers.

So, how do you arrive at the “right” price for your home? Is it necessary to spend $300 to $400 for a professional appraisal of your property before placing your home on the market?

Please note that a professional appraiser's opinion of a property's market value is based on the recent comparable sales (comps) of similar homes in the neighborhood, adjusted by the square footage, condition and features of the property. Different appraisers may come up with different figures. Even if all of them agreed on a value, there is no guarantee that you would receive that amount for your property.

An alternative to a professional appraisal is to ask an experienced, professional REALTOR for a written market analysis of your home. This market analysis may include:

· general market area and neighborhood trends and statistics;

· information about recent home sales in your neighborhood (the facts of what has actually happened);

· information about current “active” homes listed for sale on the MLS, similar to yours in location and size (the competition); and

· information about “withdrawn” and “expired” homes in your neighborhood (what has not sold)

A REALTOR like myself may provide this service free of charge or obligation. If you are still unsure of the value of your home, you may wish to pay for a formal appraisal.

Please keep in mind that while appraisals and market analyses give you reasonable guidelines, the actual value of your home is determined by the market, and not by what you, the appraiser or the REALTOR^Ò think the home is worth.

Strategic pricing is one of the very important services that your REALTOR should offer to be able to achieve your selling objectives.

Should you Buy Now, or Should You Wait?
I read this interesting article on MSN about when to buy now and when to wait. Here is the summary:

BUY NOW IF:

Prices in the neighborhood you are interested in are relatively stable. Either they are holding their own or increasing, or the pace of decline is slowing significantly. If you have to move and don't like apartments, the small penalty you pay for missing the bottom may not mean much.
You plan to stay in the home for more than five years. If you can stick it out that long before selling, economists say you’ll probably ride out any downturn and come out ahead on price.
Your rent rivals a mortgage payment. If you can afford to buy, it can give you one bonus that renting can't: the mortgage-interest deduction on your taxes.
You've found the right house in the right area for you. The schools are great. You love the area and know it would be hard to find another house like the one you have your eye on. In a better market, you would most likely have much more competition for that home.
You've built equity in your house and are moving to a place where homes are cheaper. In your new market, your money will go a lot further.

WAIT TO BUY IF:

You've lived in your house less than two years. Chances are you haven't had enough time to accumulate equity in your home. Indeed, you may have negative equity, if you live in many areas such as California, Florida, Arizona or Nevada.

Your job security is uncertain. If your company or business is in distress, it's probably better to stay put until the smoke clears.

You don't plan to stay in your next house at least five years. While it's not important to buy at the exact bottom of the market, it is important to stay long enough to ride it out completely.

You don't have good credit or a decent down payment. Do you have a job and income you can document? As a result of the subprime lending crisis, lenders are much more careful about whom they're giving their money to.

You have an existing home to sell in a neighborhood where prices are dropping precipitously or where the number of foreclosures is spiking. In this climate, you're probably better off waiting out the storm.

Click HERE to read the full article.

Homeowners in Distress

These days everyone is talking about foreclosures and buying distressed properties, the fallout from the sub-prime mortgage debacle.

What many people don't know:

• The process a property goes through before and after the lender takes control of it
• The issues, players, risks and opportunities involved in purchasing a property in distress

This tends to be a common path for an owner in distress:

1. The owner defaults on the loan (stops paying mortage payments)
2. The lender sends several letters warning owners they are in default and telling them they will foreclose if not brought up to date.
3. The lender places a "lis pendens" on the title of the property. This is a clear indication that the lender plans to get control of the property.
4. The lender forecloses on the property and takes control.
5. The property is auctioned to the highest bidder at the courthouse steps. If no bids match or exceed what the first mortgagee wants to net, the first mortgagee usually "buys back" the property and evicts the former owner.
6. The property becomes a "Real Estate Owned" (REO) property and is offered for sale by the lender.

House OKs Lift on Fannie, Freddie Loan Limits
The economic stimulus package hammered out between the White House and Congress on Thursday lifts the size of home loans that may be bought or insured by Fannie Mae and Freddie Mac.The Fannie/Freddie cap would rise to $729,750 for one year. Currently Fannie and Freddie are capped at $417,000.

The measure also would permit the Federal Housing Administration to indefinitely insure loans up to that same level. Currently, FHA loans may not exceed $367,000.“The stimulus package announced today is a positive step toward strengthening the housing market and our economy," NAR President Dick Gaylord said in a public statement. "The increase in loan limits should provide liquidity to the mortgage market in all parts of the country allowing qualified home buyers who may have been on the sidelines to enter the market."

The measure is also expected to make jumbo loans more affordable because it will make them more attractive to investors, who since summer have shunned home loans that don’t pass through Freddie or Fannie.“In high-cost states, many home buyers with good credit could save $3,000 to $5,000 per year by not being forced into the current jumbo mortgage market," Gaylord said. "Currently, only families in lower cost areas are able to qualify for these types of affordable loans.

Such a move would stimulate home sales and help stem the rise in foreclosures, reducing the number of foreclosures by as much as 210,000."In particular, prospective home buyers in costly regions like California, Northern Virginia, and New York have faced higher mortgage rates and tougher loan terms, and those areas would get relief under the plan, says Susan Wachter, a professor of real estate and finance at the Wharton School of the University of Pennsylvania.

"This is meaningful because the mortgage crisis and meltdown is geographically concentrated," she says. "This response will assist the stressed areas."

Source: Reuters, Patrick Rucker (01/24/08) and REALTOR Magazine Online

Real estate rates fall overnight

30-year fixed rate at 5.31%; 10-year Treasury yield at 3.44%

Wednesday, January 23, 2008 source: Inman News

Long-term mortgage interest rates dropped Tuesday, and the benchmark 10-year Treasury bond yield tumbled to 3.44 percent.

The 30-year fixed-rate average sank to 5.31 percent, and the 15-year fixed rate fell to 4.82 percent. The 1-year adjustable rate dipped to 5.25 percent.

The 30-year Treasury bond yield was down to 4.2 percent.

Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

***

Mt. Pleasant Market Update – January, 2008

Has the single family home market hit bottom yet?

This is the most common question in everyone’s minds right now. Sellers are anxious to see their home sold, buyers are anxious to buy, but don’t want to lose equity by buying in a declining market, and investors are waiting for the cycle to turn around to start re-investing in property.

Although picking the bottom of the housing market is as difficult as predicting the stock market, there are some encouraging signs that point to a recovery during 2008. The following charts show statistics for single family homes in Mt. Pleasant (MLS Areas 41 and 42), taken from the MLS.

As the above chart shows, inventory is still very high, although, for the PAST FIVE MONTHS inventory has been slowly declining. I believe this encouraging sign is due to several factors:

1. Sellers have finally realized they are not going to get the price they were expecting (based on the 2005 market), and they are withdrawing their home from the market;
2. There is very little new speculative construction going on; and
3. Re-sales are continuing to happen (at the 2003/04 level).

We Were Spoiled!

In Mt. Pleasant we had such a good market during the last 4 to 5 years before this downturn, that everyone expected to place their home on the market and sell it in two weeks! While this was true at the peak of the market in the Summer of 2005 (see the following chart), today the average time to sell a home in Mt Pleasant has risen to almost 160 days. This is also due, in my opinion, to several factors:

1. Much higher inventory levels mean that, on average, any single home will take longer to “get its turn” to sell if the demand stays the same.

   

   Notable exceptions to this rule are homes that are priced aggressively from the onset. Those homes are still selling quickly.
2. Buyers are more cautious and are generally looking around for a much longer time before making a decision.

Another factor that has changed is the “negotiability” of list prices (see next chart). While in 2004 the average Sale Price/List Price ratio was above 99%, today it is around 95%, which means that buyers are negotiating harder and getting better deals than before.

And the current ratio is probably underestimated, given that it is calculated based on the LAST list price before the home goes under contract. If this ratio was based on the original asking price (like in 2004) it would be much lower. The chart also shows how sellers become more negotiable in the slow winter season, and

less negotiable in the busy summer season (demand-driven).

The “Months of Inventory” indicator shows that Mt. Pleasant is still in a “buyers’ market”. This number is calculated by dividing the total number of available listings by the number of listings sold every month. It is used as a measure of the average time that it would take to sell all the available inventory.

From May 2003 until January 2006, the market had just 2-3 months of inventory (a sellers’ market). From that time it started to climb steadily, until reaching a peak of 18 months in October, 2007.

Although it is encouraging that this number has come down during the “slow” winter season, we’ll have to wait another 2 to 3 months to be able to tell if the market has indeed turned for the better.

Future Outlook

My prognosis for this year is positive, for the following reasons:

1. Interest rates have come down to the lowest level in 5 years – this will encourage “hesitant” buyers to jump in.
2. Prices have come down and sellers are a lot more realistic than a year ago. Sellers who are motivated to sell will price their homes strategically and those homes will sell first. Real estate is cyclical, prices will come back up, following the basic supply and demand theory (more people, same amount of land available)
3. There are virtually no new homes being built at the moment in Mt Pleasant, so the existing home inventory will begin to decrease.
4. We are still receiving many out-of-town and out-of-state buyers who are interested in living in Mt Pleasant.

Potential risks that can affect the recovery of our real estate market:

1. The sub-prime debacle is far from over. I believe we’ll see more foreclosures and tightening of lending standards this year. I believe the numbers are not significant enough to affect the market, but negative media attention does affect the public’s perception.
2. Consumer spending/credit crisis – Many consumers have been funding their credit purchases with their home equity. As real estate markets decline and this equity disappears, this may cause economic hardship which may lead to a national recession.
3. The presidential election – Markets are always unsettled in an election year.
4. The hurricane season – Although the past season was a non-event for Charleston, a major hurricane will affect the property market.

Source: Charleston Trident MLS – information deemed reliable but not guaranteed.

Disclaimer: This analysis constitutes a market opinion and should not be construed as investment advice. Prospective buyers, sellers and investors must rely on their own research and interpretation of facts to base their decisions.