Jay's Real Estate Predictions for 2010

There are a lot of sighs of relief now that 2009 is past, particularly coming from the real estate industry.

But will 2010 be any better?

I have just dusted off my crystal ball... and I can now offer my annual 10 predictions for real estate in the coming year:

1. The residential housing market will pick up early this year, but will dip again after mid-year.

2. Short sales will increase and foreclosure inventory will continue to rise.

3. Mortgage rates will rise and settle in around 6%+/-.

4. Appraisal guidelines will tighten and mortgage lenders will require stellar credit from buyers.

5. A lot of prospective move-up buyers will stay put.

6. Commercial real estate will continue to decline.

7. Builders will continue to be cautious and not in any particular hurry to gain project approvals or begin construction.

8. New construction prices will drop significantly.

9. Prices will continue to decline on higher end properties (over $1.5 million).

10. The terms "communication" and "service" will take on new meanings among real estate agents with the need for more direct contact with clients, such as phone and face-to-face contact as opposed to Internet, email and voicemail communication.

There you have it. Perhaps not the rosiest picture imaginable, but no one said that climbing out of a recession would be easy... or quick. Take a look at the graph below and you will see why. I would put us somewhere between the "depression" and "hope" positions of the graph.

The good news?

A lot of real estate transactions will take place in 2010, despite the market. Reasonable sellers, savvy buyers and service-centered real estate agents will win the day.

Carpe Diem! Make it a great year!

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Real Estate in 2010 vs 2009...Good News Ahead

Is This A Test?...A Quiz?...A Question?...A Poll?

This is a test.

Actually, it's more of a quiz.

Scratch that, it's really a question. Or perhaps a poll. It's for any and all real estate agents that may read this blog from time to time. Here's the set up:

It's the day before Christmas and Santa has agreed to give you any technology tool you want for your business. The cost range is $300 to $3,000. The question, therefore, is:

What single piece of real estate technology would you ask for and why?

All answers to this question will be posted on this blog for others to see and learn from.

I'll start it out with my own wish which would be to receive a new Palm PRE Smartphone...but with VERIZON as the carrier. Right now, Sprint is the only choice, but I have it on good authority that Verizon WILL be carrying it in 2010.

Here's why I like the Palm PRE...

1. The WebOS operating system. It's fast and smooth and allows you to keep multiple applications open at the same time.

2. Easy management of multiple email accounts, collectively or separately.

3. Contact management and scheduling are a breeze and information can be pulled together in one place from multiple sources.

4. Software updates come to you over the air...without having to log into your computer.

5. It has a slide-out tactile QWERTY board (as opposed to simply a digital screen version).

There's more that I like, but I don't want to sound too much like a Palm PRE advertisement.

So what's on your wish list?.....

Here's a link to Time Magazine's Top 10 gadgets.

The Night Before a Christmas Closing

This is for all those real estate agents who find themselves in the position of trying to close a transaction before the end of the year....

'Twas an hour before closing and the agents were tense,

To close Christmas Eve just didn't make sense.

But the seller was booked on the 6 o'clock flight

And had warned "THERE WILL BE A CLOSING TONIGHT!"

The agents agreed because business was dead,

And visions of commission checks danced in their heads.

The loan was approved by the lender's good grace,

Everyone knew it was a borderline case.

The buyers divorced, remarried again,

Divorced once more, and now were just friends.

The loan package complete to the attorney was carried,

With instructions to close before they remarried.

The title policy arrived via UPS,

From page One through Sixteen, a terrible MESS!

An improper legal, 3 judgments, a lien,

But a few lines on page seven, looked pretty clean.

The title was cleared and the closing was set,

But to finish today was not a sure bet.

The attorney dashed in waving the HUD,

It was covered with whiteout, coffee and crud.

But down in the corner you barely could see,

That the buyer still owed a buck thirty-three.

So the attorney decided to waive a part of his fee,

And the agents agreed better you than me.

To add to the turmoil, guess what hadn’t arrived?

The certificate of approval of Title V.

And the seller now wanted to change the disclosure,

His mother had just died of RADON EXPOSURE!

But everything else in his house was O.K.

(his cracked floors and walls were always that way)

About that time the buyer chimed in,

"We'd like to continue, but before we begin,

I noticed these papers - I'm likely to blame,

But I gave my agent the wrong legal name.

And one more thing I had hoped to avoid,

Does it really matter if I'm self-employed?"

Just then the closing attorney exploded,

Pulled out a gun and said it was loaded.

Everyone froze and sat there amazed,

He frothed at the mouth and his eyes were both glazed.

More rapid than rain, his curses they came,

He bristled and spouted and called them bad names.

"THE CLOSING IS OFF, DO I MAKE MYSELF CLEAR??

MERRY CHRISTMAS TO ALL – NOW GET OUT OF HERE!"

Can You Hear Me Out There? (Is This Mic On?)

Have you heard the latest?

The Hamilton Board of Selectmen (BoS) voted on Monday, November 30th, to increase the property tax rate from $15.23 per thousand to $16.25 per thousand (of assessed value).

That's right...INCREASE.

Here's their reasoning for raising your taxes 6.7% during the worst economic recession most of us have ever experienced:

According to the Hamilton Board of Assessors and the BoS, the total value of property in Hamilton has decreased by 4.1 percent this year. Of the total, 95 percent is residential, 4 percent is commercial, and 1 percent is personal. They say that the average single-family home values have decreased by 4.4 percent since fiscal 2009. When property values decline (they say), the tax rate on real estate automatically increases (a 4.4% average in this case for residential property owners and a 4.1% total increase for all property) to keep the tax revenues "neutral". If you subtract out the 4.1%, the net rate increase is 2.6% which is roughly the equivalent of the 2.5% levy growth.

That's their explanation.

Let's analyze that. First of all, it assumes that when you get your next property tax bill, your home will be assessed at 4.4% less than last year.

Anyone care to bet on that?

If it's not, then you should join the hundreds of other homeowners and get in line down at Town Hall to file for an abatement. To apply for an abatement, you must file within 30 days of receipt of your January tax bill.

Secondly, the explanation assumes that the tax levy must rise by 2.5% in order for taxes to be "revenue neutral". That's simply ridiculous. The 2.5% increase is ALLOWABLE, it is not REQUIRED. It's not a statute. It's a permissible entitlement that has come to be expected, but it should not be during these recessionary times. I blogged and conducted a poll about this last September [click here] and 86% of the respondents to the poll indicated that they would be willing to accept cuts in services in order to see a 0% increase in their property taxes for one year.

Lastly, the BoS's explanation that "when property values decline, the tax rate on real estate automatically increases" doesn't seem to account for the fact that when property values were rising, our real estate tax rate also increased. At least then we were seeing equity growth in our homes. Increasing taxes, even as the equity in our homes diminishes, simply adds salt to the wound.

And it goes even further than that. Higher tax rates (and Hamilton's are the highest on the North Shore) are driving buyers away from our town in favor of neighboring communities with much lower rates. Additionally, the high costs are driving residents away (read: Voting With Your Feet)...if only they could sell their homes. Which they can, but at discounted prices as compared to other towns.

And so, even as values decline due to the exceedingly high property taxes in Hamilton, your Selectmen have voted to increase your taxes...causing values to decline even more...and so on.

You have heard the term "enough is enough". Apparently our elected officials have not.

"Hello?...Is the mic on? Can you hear me out there?"