Homefinding Book

Money Magazine recently published a study that shows Cincinnati is one of six cities where property values are most likely to rise and least likely to decline over the next 12 months. Buying a home today in Greater Cincinnati makes good financial sense. Why? Three key reasons:

1) Great Inventory. Anyone looking for a home today will find a tremendous selection - nearly 16,000 properties are listed in the Cincinnati MLS. Whether you’re looking for a starter home, a high-end custom home or something in between, you’ll find just the home you’re looking for.

2) Low Interest Rates. Mortgage rates determine how much you can afford. With the current low rates, you have significantly more buying power. How low are rates today? Those who bought a home in 1963 were paying roughly the same rate as you’ll pay today. The rates won’t stay this low forever. Buying a home now can save you thousands of dollars in interest.

3) Home Ownership Will Always be a Good Investment. Even if you are on the fence for now, that’s OK. There will be plenty of opportunities to buy a home when you’re ready. Home ownership is a vital engine in the American economy. It creates strong communities and builds wealth for families who buy homes. Home ownership won’t go out of style. Home owners are invested in our communities. They are the joiners, fixer-uppers, and watchdogs that make our nation strong. Nine out of 10 consumers consider home ownership to be a sound financial decision. Purchasing a home is a great way to invest your money. In the past 40 years, real estate has delivered the most consistent positive return over any investment. When you are buying a home, you are building equity and adding to your assets.

Most experts expect the housing market to slow further in 2008. Having dropped 3.1% during the first quarter of 2008, the housing slow down is showing no sign of stopping.

On the bright side, there are local markets which are doing well.  These markets are mostly costal 24-hour cities with excellent infrastructure. Their downtown office space in these cities should be a good investment. These cities have invested in fixing previously run down areas and have seen prices rocket. Though the market may be soft, the weak dollar keeps the market strong by making these locations affordable to international investors.

Here are some local markets that are doing well.

Seattle – A diverse economy and the presence of corporate heavy weights has lead to this city being a prize area for investment and new building.

Boston – Recovering from the millennium dip, new business has boosted interest in this city. However questions remain about the cities residential rental market.

Washington DC – Government doesn’t stop and this has lead to stability in the Washington market protecting from sharp downturns.

LA – Although Orange County has suffered a downturn as businesses move to cheaper areas, the LA market is still very strong with the nation’s top port.

San Francisco – Resurgence in technology business has lead to prices increasing even as supply increases.

San Diego – With businesses moving out San Diego’s downtown is ripe for new growth opportunities.

Denver - the only non costal city in this list, Denver has managed to extend their prime locations by linking the suburbs to them with a high speed rail link.

Smaller markets include San Jose, Honolulu, Austin, Sacramento, Portland, Salt Lake City, Orlando and Tampa and Nashville.

With recession expected this year and to last at least the next 1 to 2 years and house prices to fall significantly further recovery is not expected anytime soon yet wise investments can still be profitable.

With property prices dropping, first-time buyers might start celebrating. But is property really becoming more affordable? Lenders have been stung by the cheap borrowing over the last decade and now mortgage companies have become far more selective about who they lend to and are no longer prepared to give the low interest rates and 100% mortgages. In fact, to get a decent deal you now have to have a decent deposit of around 20% or more. Deposits are hard enough to get your hands on but with the cost of living rising sharply it is even harder to save in the first place. For those already on the property ladder, they are likely to have seen the price of their house price and home equity decrease.

For tenants who may think they are safe: rents are actually increasing as mortgages and living costs rise – landlords need to make more from their property. There are a growing number of tenants and fewer properties to rent as more and more people are putting off a home purchase and as landlords increase rents.

However it isn’t all doom and gloom. For those of us who saved while times are good, we can still avail of good mortgage deals. Those who brought there houses a long time ago are unlikely to fall into negative equity due to the phenomenal rise in house prices over the last decade.

There is also good news. Each state has its expensive and more affordable areas: a house which might cost $1 million in one area might be 100,000 cheaper in another. More than that, It is very important in the current trends to check out the market carefully, some areas are still rising and certain areas are dropping faster or more than others. Also, some areas are cheap but low house prices don’t make the area affordable, jobs may be few with low incomes. So where are the most affordable locations to live (in no particular order)?

Note: Average house prices that are double the yearly average income make the housing affordable.

Indianapolis, Indiana
Average house price – $112,500
Average income – $60,383
% of housing for sale that is affordable – 89%

Cleveland, Ohio
Average house price – $122,900
Average income – $57,472
% of housing for sale that is affordable – 82%

Detroit, Michigan
Average house price – $154,600
Average income – $63,052
% of housing for sale that is affordable – 80%

Pittsburgh, Pennsylvania
Average house price – $109,000
Average income – $54.872
% of housing for sale that is affordable – 76%

Cincinnati, Ohio
Average house price – $136,800
Average income – $60.146
% of housing for sale that is affordable – 78%

St Louis, Montana
Average house price – $134,400
Average income – $59.950
% of housing for sale that is affordable –77%

Atlanta, Georgia
Average house price – $170,400
Average income – $63,484
% of housing for sale that is affordable – 69%

Greensborough, North Carolina
Average house price – $145,100
Average income – $50,447
% of housing for sale that is affordable – 71%

Dallas, Texas
Average house price – $145,500
Average income – $58,738
% of housing for sale that is affordable – 57%

Austin, Texas
Average house price – $176,200
Average income – $65,739
% of housing for sale that is affordable – 56%

The current position of the US property market is not at all encouraging. Even as many homeowners persist to live the dream, there are already indicators on the way that a major reality check will happen soon. In 2007, a massive 1.5 million were expected to lose their homes, and many US residents will be financially scarred in the years to come.

Key Indicators of a Slow Real Estate Market:

•  Struck by the mortgage downfall, the greater part of the US housing market is in serious crisis plagued by an outbreak of foreclosures. This will worsen if government authorities do not continue to intervene.

•  The US foreclosure crisis is already hitting the majority of local housing markets. Housing Predictor forecasts that foreclosures will increase twofold with a total of 5.6 million homes by 2011. The forecast is the outcome of an exhaustive analysis of all 251 housing markets, which Housing Predictor tracks on a regular basis.

•  A recent private survey shows that, almost 20 US Metropolitan areas are experiencing slump in property prices. The numbers of foreclosures are increasing in the US almost everyday. In some areas, foreclosure is affecting almost one out of every 200 home-owners.

•  The situation has grown from bad to worst that nearly 2 million homeowners have already been forced to leave their homes, and more millions are feared losing their properties by way of foreclosure.

•  The Federal Reserve in an attempt to help the ailing US economy has considerably slashed the interest rates. However, it appears to be counting on exclusively reducing interest rates as the reaction to the foreclosure crisis.

As a direct result of the crisis, more than 175 lending institutions have defaulted on their obligations.

That said, markets go through different cycles of growth and contraction. While people always look for the next expansion period, there are many opportunities in both kinds of markets. With the right kind of training and knowledge, people can take advantage of these chances.

Techcrunch reports an Internet milestone as the US government has settled with The National Association of REALTORS to provide full access to home listings to online brokerages.

What does this mean? It means that home listings provided by and provided to real estate brokers and agents can now be taken (and presented) by sites such as Redfin and ZipRealty. It’s a win for the owners and buyers of these properties because they get more distribution.

It’s also a win for online brokerages because they, with more properties, can close more transactions with their innovative tools and lowers rates. Who’s at a disadvantage? The traditional broker and real estate agent: they have to compete with more players with better services.

The change is big change in the fragmented real estate industry. It will definitely result in more real estate transactions starting and completing online. Down the road, the market might consolidate with a few key players - probably the guys that do it well on the Web.

What do you think?