Central Ohio Home Source

Some of you may have heard recent reports that existing home sales are up.  You also may have heard that the Federal Reserve chairman announced, “The Recession is Over…”.  But, it may be a “jobless recovery”.  OK, sure.  That reminds me of the thinking that my 10-year old nephew exhibited when he saw a billboard for the citywide strongman competition, and he confidently announced, “I am going to enter that and win!”. (He always was an extremely confident boy!).

The “recession” may be “over”, but the volume of bank owned foreclosures has increased dramatically.  There were efforts in the early part of 2009, encouraged by the administration, to postpone many foreclosures and attempt workouts for delinquent borrowers.  But those have been minimal, at best.  

So, what does all this mean?  Plenty of bank-owned foreclosures are in the pipeline, ready to hit the market.   Not good news for your property value, if you are in a neighborhood that had a huge runup in prices from ‘04-’07. 

Fannie Mae and Freddie Mac recently announced that they collectively have over 100,000 homes that they need to sell, a number that has doubled over last year. 

Here is a quote from Fannie Mae’s announcement (keep in mind that REO=Bank-Owned Home):

“While temporary suspensions of foreclosure transfers and recent loan modification efforts reduced the rate of growth in our charge-offs and REO acquisitions during the second quarter of 2009, our provision for credit losses includes expected losses on those foreclosures currently suspended…”

Clear as mud, right?  Well, in plain english, they have been postponing the inevitable, and now the chicken has come home to roost (or however that saying goes…). 

Here is link to that article on Fannie Mae Foreclosure data.

If you need a refresher, Fannie Mae and Freddie Mac are nicknames for pseudo-government organizations that were founded to purchase loans from banks, in order to free up money so that those banks can make new loans (Banks are required by law to have a certain amount of cash reserves on hand, just in case).

What does all this mean? Just be on the lookout for more bank owned foreclosures coming.  Even though most will probably be in Nevada, California, and Florida, we will see our fair share here in Columbus and Central Ohio.

(Photo Credit: 8 Mile Rd House by swainboat, via Flickr)

I laugh everytime I watch this video.   There is always a bit of truth in every comedy bit.  Where is the truth here?  OK, fellas, it is our better half’s who do the real deciding!

Enjoy.

(This guy probably DOES have cattle)

I recently finished up reading Thomas Stanley’s, “The Millionaire Next Door” (OK –I confess, I actually listened to the Book on CD in my car — but it was the COMPLETE, UNABRIDGED version!), and it really did shed some fresh light on my take on the housing market in Columbus and Central Ohio over the past 5 years or so.    Now, I originally read this book back in 1999, before the huge bubble, and its subsequent “burst” (although check some of our past posts on whether or not Central Ohio had a “bubble”). 

If you have not read the book, here is a very brief synopsis.  Thomas Stanley and his associates are sociologists specialize in studying the rich (whom they define by how many millions in the bank versus gross income).  They set out to find out what characteristics and behaviors typified the wealthy.  What they discovered was that most millionaires (the self-made variety) don’t really look, live, or consume like millionaires, thus the title.  Here are some things they discovered about the folks they studied:

• Millionaires tend to live WELL below their means
• Most drive conservative American automobiles
• Most have never paid more than $300 for a watch
• Most tend to be very frugal

Now, on to my local perspective.  The title of my post refers to a line in the book, where the authors were interviewing a Texas millionaire who made his fortune in oil and other investments.  He used the line to refer to those folks in Texas who looked and acted wealthy, but didn’t have the massive herds of cattle to back it up:  “Big Hat, No Cattle”. 

We have had a 5 year run in our Market, and across the country, of folks acting like they could afford a certain level of home, without the true means to do so.   They were aided and abetted by Real Estate Salespersons, Mortgage Lenders, Builder Salespersons, etc., who assured them that they most certainly could afford the home. 

Case in point:  how could a salesperson convince a recent high school graduate and her little sister that it would be wise to not just move out of their parents home, but BUY A BRAND NEW HOUSE??!!  What happened to rent a 2 bedroom, $500/month apartment?   But I don’t fault those two girls.  They were manipulated by the system. 

What about a newly married couple with two small children buying a $250,000 new build home on a $50,000 household income, with no downpayment?  

In Stanley’s book, he notes that most of the “high net worth individuals” live in neighborhoods, not populated by CEO’s, Doctors, and Attorneys, but more likely plumbers and teachers.

Now, the Columbus, OH market was less speculative than those in places like Northern California, Las Vegas, Phoenix, and Florida, where you had that same $50,000 couple signing a no-doc loan (one where they didn’t need to provide any documentation of their income) on a $500,000 mortgage, with no downpayment.

I think that homeowners in our market have gotten a dose of reality over the last 18 months or so, and it will take a while for all of the wrongs that were perpetrated on our housing market buy uninformed or unscrupulous members of the real estate and lending industry to work themselves out.  Those neighborhoods that have seen waves of short sales and foreclosures will soon find new families filling up those empty houses, and values should level out, and get back to the slow, steady growth that has characterized Ohio for the last 100 years.

After a fresh look at this book, this should definitely be required reading for every child before they graduate high school.  The future housing markets will benefit from a more educated customer base.

Photo courtesy longhorndave via Flickr. Photo posted via Creative Commons rights.

Photo via Flickr

The Ohio Department of Education just released their latest rankings of all school districts in Columbus and Central Ohio.    Not much has changed since last years’ rankings.  Our focus today is how the “quality” of the school district correlates to the average home price in that community.  We have been saying for years that school district is an important consideration when selecting a neighborhood in which to live, even if the buyer is single, or newly married, and does not have children yet.   Although some communities can vary from this trend, just look at the list (one was published in the 8/25 Columbus Dispatch), and it is fairly clear to see that there is a connection.  

The #1 Ranked School district in Central Ohio is Upper Arlington, which posted an “excellent with distinction”, meeting all the states required standards.  Upper Arlington real estate has also seen the most minimal effect in value over the past 3 years.  (stats to follow)  Is this sheer coincidence?  No, clearly not. 

When it comes to home values in Central Ohio, school district matters.    Always keep that in mind when shopping for a home.  (oh, and don’t forget to note what your property taxes will be in that new home as well!)

Photo posted via Creative Commons, courtesy krispdk

We will be attempting to highlight our new bank owned/REO/Foreclosure listings as they come up.  Keeping up may be a challenge, as we are expecting many, and they seem to be going into contract rather rapidly.  I had recently heard that the banks have a “shadow inventory” of homes, meaning they have thousands of homes that they have taken deed to after Sheriff’s sale, but have not yet put on the market, possibly to allow the inventory to slowly be absorbed into the market, as opposed to dumping them, thus driving down the values.   So housing news is good, but there are still many foreclosure homes in Columbus that are “waiting in the wings”.

Back to our subject property.  This home is on the east side of Columbus, OH, just off Noe Bixby Road, in the Walnut Bluff subdivision (Columbus city schools).   This looks to be already in contract, after just a few days, due to being aggressively priced at $35,900.  This is rehabbers/handyman special.  Looks to need a new roof, soffits, gutters, new flooring, some doors, new kitchen, bathroom repairs, and some other basics.  And make sure you check out the commode (or throne) in the lower level bathroom/utility room - quite a vantage point!

But a solid 3 bedroom split level that will probably be looking pretty sharp in the next few months.  Some very comparable homes in this neighborhood have sold for in the $80’s (k), and one complete rehab sold for $99k back in May. 

The Mrs. and I hit the BIA Parade of Homes at Tartan Ridge, just north of Dublin last friday.   This year, the builders were encouraged to focus on more traditional designs, ones that would mimic the look of 100-200 years ago (at least thats what one of the folks working at the Gossing model told me. 

 Did the builders hit the mark?  Well, there is only so close that luxurious 5000 square foot homes in suburbs can go to mimic the humble homes of years gone by, with their lack of a 90 degree corners,  and 7 foot ceilings (if you were lucky).  I did wonder:      How would Laura Ingalls Wilder have felt soaking in the giant tub of the glorious master suite in the Romanelli and Hughes model?  I guess we’ll never know…

I would have to honestly agree with the judges as to the “winners”.   The Kevin Knight model, the Duffy Homes model, and the Gossing Construction model were my 1-2-3.   The New England Homes was a close 4th.   They all hit the “traditional” theme spot on.

 The Kevin Knight & Co. home was the unrivaled favorite for us.  This year is  the first time that we have gone back to see a model a second time.  I think Mr. Knight thought he had a ready buyer, based on the amount of time we spent there.  The Mrs.  loves wide open spaces, natural surfaces, and DESPISES formal living areas, and the Knight home hit all those marks.   It hadn’t sold yet as of our visit.  I was somewhat surprised, but the more I pondered, the more I realized that his design did not have the typical large home appeal (read: Palatial).  We talked to the builder, as well as the window contractor and the flooring artist.  Kevin Knight described the design as  ”seeing how close to the edge he could get without going too far”, or something like that.   

Here are a few shots I took.  I forgot to increase the resolution on the camera, or these photos might be better.  

2nd floor technology area - Knight Model

Open living in Knight Model

 

Close up view of Kitchen Table

Subdued Master Bedroom

“Huh?  I know Google, but what is Google Voice?”  I thought you might say that.  

Short version?  A quick and easy way to get in touch with us — just click the “balloon” on the right side of our front page, input your area code and phone number, and it will ring your phone and connect you directly with us — that simple!

Here’s a more detailed explanation:  In Google’s never ending quest to add more and more unique applications that we cannot live without, they have struck a sweet spot with their new Google Voice.  More accurately, like they did with YouTube and other applications, they have found a very promising new toy that already existed (it was called Grand Central before), and added it to the Google family.

Here’s what it is:  you have a unique, NEW phone number that you select, and you decide which phone you want that number to ring to.   Its just that simple.  You can change which phone it rings to at any time, so your number can “follow” you.  Plus, it has built in voice mail, which e-mails you when you get a new call or message.  Got Google’s GMail?  It will e-mail you a computerized transcript of the message (its a computer doing it, so it can be a bit amusing to see how the message gets transcribed, especially if the caller is talking fast). 

Long distance calls in the lower 48 states?  FREE!  Plus incredibly low rates for worldwide long distance (like $0.02 per minute to Europe) — almost unbelievable to me — if you are old like me, you might remember your phone bills 20 years ago when you were in college calling your girlfriend 2 states away — it sure as heck was NOT three cents a minute — and she WASN’T in Switzerland!!

Technology is an amazing thing.

OK, so how much per month does Google charge for all these great features?  NOTHING - ZILCH - NADA!  Zero dollars and Zero cents.  Wow.

There could be a waiting list as I write this.  I got signed up 18 months ago, when it was still “Grand Central”, and I had to wait around for a while to even be able to pick my number from the available list that they had.

Go type in “Google Voice” to Googles search engine and check it out…

Mortgage News Daily reported on Tuesday that data released from the American Bankers Association seems to point towards more loan delinquencies and potentially more mortgage defaults.   If you want to read the article in its entirety, here it is: Bad News for Housing Recovery.

Essentially, the article states that they are seeing increasing rates of delinquent payments  in most of the loan types (other than mortgages), such as home equity loans, home equity lines of credit, auto loans, etc.

Job losses and decreased hours seem to be accounting for these numbers.