ThomasGoodwin.com

I will over-state the obvious and tell you it’s a buyer’s market for real estate. Great news if you’re a buyer. Even better news? The government wants to help you pay the costs to buy a home.

That’s right, welcome home. It’s more than just a door mat saying. That’s the name of the government program that will help pay your closing costs to buy a home if you meet the following criteria:

1. You do not currently own a home.
2. Your household income is at or less than 80% of the average income for the area where you are looking to buy a home.

So it’s not clear who qualifies because you could very well qualify in one area but not another. If you are looking to buy a home in Hamilton County, Ohio (which is essentially Cincinnati), you would qualify for the 2nd requirement listed above if your household income was at or less than $52,960 for a household of one or two people. That maximum amount of income allowed to qualify for the program is increased to $60,904 for a household with 3 or more people.

In more rural areas, such as Adams County, Ohio (some 3 counties east of Cincinnati and Hamilton County) a couple making $56,640 or less would qualify and a family of 3 or more people would qualify with $66,080 or less in income.

You can see the maximum income amounts allowed by the program as they pertain to all 88 counties in Ohio by visiting the Federal Home Loan Bank of Cincinnati’s website.

If you meet the above requirements, the government (a.k.a. The Federal Home Loan Bank) will let you have up to $5,000 of downpayment assistance. It’s yours for the taking, first come, first serve! It must be used for a home that you occupy, so no rental properties.

The only catch is that if you sell the property within 5 years of taking this downpayment assistance, you will have to repay it to the government on a pro rated basis. For instance, if you sell the home after two years and had received $5,000 of assistance, you would have to repay $3,000. The loan from the government becomes a gift to you at the rate of $1,000 per year. After 5 years, the government says congratulations! You will need to discuss any tax implications of taking this assistance with a tax professional.

This is a grant program, and like most grant programs there isn’t an endless supply of free money to go around… so this is not like the free money that the government is sending out to tax payers as part of the economic stimulus that Congress passed. Once the money for this grant has been dispursed, that’s it… no more money. So if you are thinking of buying and meet the eligibility guidelines above, tell your Realtor and/or Loan Officer to get you into this program right away!

I, unfortunately, cannot take credit for discovering this good news. I found an article about this grant/down payment assistance program in my May 2008 Ohio Realtor newsletter. Therefore, I also cannot accept blame or responsibility for any errors or omissions in this article. I would encourage anyone that is interested in the program or has questions about it to visit the Federal Home Loan Bank of Cincinnati’s website or talk to your mortgage loan officer. That is my disclaimer! I’m just sharing news that I found in my trade publication.

As always, I welcome your comments and feedback…

It’s a sad story that we’re seeing more and more here in Cincinnati. A beautiful home in a nice suburb, literally torn apart by crack. Well, ok… not the drugs that you see on tv or hear about on the news. We’re looking at the physical structure that you live in once again. Cracks in the foundation of your home are becoming more common due to the drought that we experienced in southwest Ohio and all across the midwestern US this summer.

I discussed this earlier this summer when the “drought” was actually just a slight shortage of rainfall. My blog entry on July 16th entitled An Urban Legend in Gardening?! discussed what I thought at the time was just an interesting idea without much scientific support. But today I was on the Cincinnati Enquirer website and came across this article:

Drought Cracked Foundations article on Enquirer.com

I have also saved and uploaded this article in Adobe .pdf format, see link below, as I’ve learned that The Enquirer likes to archive its articles rather quickly… therefore making my links in my blog articles useless a few weeks later unless you wanted to pay $$$ to get the article.

Drought Cracked Foundations article in Adobe .pdf format

While the article does not come right out and say “water the ground around your foundation”, it spells it out pretty clearly. The ground we have here in Cincinnati, Ohio (and the same holds true for Ohio and much of the midwest) contains a lot of clay. As clay hardens it is prone to cracks and as the article further notes, it shrinks… hence the ground around your foundation can pull away from the walls of the structure.

This sets up a few problems: 1) the ground can shift causing cracks to form in the foundation, 2) the ground can settle unevenly and your house can settle unevenly and therefore not be level (also causing cracks) and 3) when you do get rain, the ground that has pulled away from your house can act as a funnel sending water against your foundation - compounding the problems in 1 & 2.

While I am not one to water my lawn just for the sake of wanting to mow the grass more frequently, I do see the value in spending $20 to $40 more on my water bill so I’m not spending $1,000… $2,000… $5,000… $10,000 or more repairing my foundation and sealing it from leaks. I don’t have a scientific study to prove that watering around your foundation in a dry time works to keep your foundation in good shape, but I do see the results in this Enquirer article of what happens if you do nothing and the soil shifts, shrinks, or pulls away from your foundation.

As always, I welcome you comments and feedback…

I just posted a blog entry about the latest in the national real estate news, as reported by Yahoo! Finance. It’s only fair that for comparison purposes we look at how the local market in Cincinnati, Ohio is doing as well.

September Home Sales Off 15% (Adobe .pdf version of the Cincinnati Enquirer article)

While the market is pretty slow here in Cincinnati, it’s not as bad as the national average. Of course, the national averages are being driven more by the larger markets and areas that are experiencing much sharper declines - such as many parts of California and Florida. The Cincinnati Enquirer article does a good job of summarizing the softening in sale prices and the supply of homes on the market.

The recent withdrawl of some prominent and national home builders from various new subdivisions in and around Cincinnati (namely Ryan Homes as mentioned in an earlier blog entry) has increased the supply of homes available in the short term through the sale of the already constructed model homes and any speculative construction - or “spec” - homes. The fact that these builders have stopped building new homes here will help ease the 10+ month supply of homes that are currently on the market. This is a much better scenario for the local real estate market in the long term.

It would be mostly through the sale of model homes though, as not many builders have been undertaking speculative construction in the past year. Speculative construction is when the builder will start to build a home before a buyer is found, in contrast to the pre-order scenario where a buyer picks out a plot of land, signs a contract with the builder and then has the home built.

As always, I appreciate your comments and feedback…

Home Sales Plunge 8% (Yahoo! Finance News Article in Adobe .pdf format)

We all know it’s a tough market to sell a home, so this news doesn’t come as a surprise. For sellers, this is the worst market in 16 years… and this article from Yahoo! Finance points this out: “more problems to a housing industry in its worst slump in 16 years.”

While I realize this sells a lot more newspapers than if you tout that this is the best market for buyers in 16 years, I don’t think it’s fair to paint the real estate market as something people should go running away from as fast as possible. That 8% decrease in sales means that people who are currently renting and can afford to purchase a home have more buying power now than they’ve had at any time in the past 16 years.

To further the point, those that can’t afford to purchase and those being foreclosed on and can’t afford to stay in their homes are driving up monthly rent prices in many areas of the country (yet another excellent buying opportunity for real estate investors/landlords - falling prices and increasing rental income).

I guess what it comes down to is this: if your area of the country is anything like the national average or trend of falling prices and increased buying power, anyone that is 34 years old or younger has the best buying opportunity in their lifetime (since turning 18 and becoming legally able to purchase real property).

So this news, while it’s not a surprise and it is not a good sign for sellers, is actually a good thing for buyers. It would be nice to hear the news tout the pleasant news for buyers rather than continue to bad mouth the industry. The media is essentially representing the seller-side in its reporting.

As always, I welcome your comments and feedback…

Just a reminder that the deadline to file/apply for the Homestead Exemption is October 1st, which is this coming Monday.

The Homestead Exemption is a tax break for homeowners age 65 or older or disabled. If you are not yet 65 but will turn 65 prior to the end of this year (this tax year I should say… which for the vast 99.9% of us is the same as the calendar year) and owned your home as of January 1st of this year, then you are able to apply as well. Furthermore, it is my understanding that only one of the owners (if the property is jointly owned by a husband and wife) needs to qualify in order to claim the tax credit. When in doubt, submit the application and if it’s rejected you will be notified why. The county auditor is required by law to notify owners being rejected by November 1st, so within a month of the deadline. Or you can simply call your local auditor’s office, your accountant/CPA, or tax attorney for advice.

You can download an application (in Adobe .pdf format) from the State of Ohio’s Department of Taxation website or you can get them at the county auditor’s office. You cannot file the form electronically; you must submit it to the county auditor’s office in the county that you own your home. A signature is required on the form and proof of eligibility.

Previously the Homestead Exemption was only available to those individuals that were 65 or older and made no more than $26,200. The income qualification has been removed, thus making all seniors who own their homes eligible for the tax credit. The tax credit previously only made the first $5,700 of a home’s value exempt from property tax, this has been increased to the first $25,000 of the home’s value being exempt along with the elimination of the income requirement.

As always, I welcome your comments and feedback…

The non-compassionate housing market. We hear about those people that were duped into biting off more than they could chew in a mortgage payment, often by using Adjustable Rate Mortgages (ARMs) or nonconventional loans and subprime loans.

But when the housing market pulls back there is an interesting bunch that is also affected, and you usually don’t hear much about them. These are the people who buy houses in a new community or subdivision, only to end up seeing the subdivision fizzle and be surrounded by empty lots. The Cincinnati Enquirer did an excellent job of bringing this problem to light in an article on its website: Ryan Halts Building in Some Areas

There is an added risk to being the first person to buy a home in a new subdivision. Sure, you get your choice of lots. But you also are living in your home and making payments long before the subdivision is finished. It’s not uncommon (at least in the greater Cincinnati, Ohio area) for a decent sized subdivision to take anywhere from 2 to 4 years to complete. And that was in the good times when homes were pre-sold prior to construction and they were backordered.

The Enquirer article mentions a couple that bought a home and are now one of only 4 homes in the new development. The homebuilder (Ryan) had promised a walking trail, community pool, play areas for kids, and two fishing ponds. Well, there are 4 homes out of 200 possible homesites and there are none of the ammenities that Ryan promised. To top it off, Ryan Homes pulls out of the community and says they will not be building any more homes (which of course means they won’t be adding a pool, trail, etc.)

These four buyers now live in a subdivision filled with graded lots, empty and unfinished streets, and a generally depressing looking, undeveloped neighborhood. I’m sure if you drove through the area and were not familiar with the situation you might think some kind of war took place, or a pandemic occurred.

The rest of us need to learn from this. It’s much better that we learn at others’ expense rather than our own. When you go to buy a newly constructed home, or when you plan to build a home, consider the following:

Many people go straight through the builder and the builder’s sales representative. Resist this urge. Builders are almost always happy to work with Realtors; let’s face it Realtors help them sell “spec homes” (speculative homes built without buyers to be sold on the open market) as well as sending the builder referrals for custom built homes and pre-built orders. I also don’t know of a builder that would refuse to let you hire your own real estate attorney. Considering most builders have their own pre-printed real estate contracts, having an attorney is a great idea!

Back to our Enquirer article and the people who make up 2% of the lots but 100% of the subdivision’s population. While the homebuilder promised all these cool ammenities, I am almost willing to bet there was no mention of walking trails or a pool in the contract to buy the home at whatever price they agreed to pay. Without a doubt, these homeowners have suffered a decrease in property value since the builder pulled out of the subdivision, especially without the ammenities that they were promised and were naturally taken into consideration when the buyer agreed to pay the contract’s stated amount. But without those ammenities being expressly written into the contract, are they owed such ammenities?! That would be a legal question that I as a Realtor cannot answer. This is where having an attorney that specializes in real estate would make all the difference in the world.

Remember this if you remember nothing else at all: the builder and the builder’s sales representative will ALWAYS be working in their own best interest, their own self interest, and NEVER yours. You are their CUSTOMER, not their client. They want to get the highest sale price out of you that they possibly can. And by going directly through the builder you are letting down your guard and showing them your poker hand. When you go through the builder you will never see their cards but they will see yours. That doesn’t sound like a fair handshake.

Have a pre-closing home inspection by an independent, third party certified home inspector of your choice. Construction defects can sometimes take years to discover. If the basement starts leaking 4, 5, 6 years or more down the road it will be difficult to tell whether this was a construction defect or something that happened later down the road. A good home inspector can help detect problems early on and you can have them corrected before you even close on the house.

We could go on at great length about new construction and the many ways you need to protect yourself during a deal to buy a new home. This article is just scratching the surface, and the Enquirer article helped remind us to watch out for our own best interest in these types of deals. If you’re considering buying a new home or having one custom built, you are wise to have people on your side to protect your investment.

As always, I welcome your comments and feedback…

Yesterday I posted some more gloom and doom news about the national picture in real estate (an expected drop of 8.6% in home sales nationwide this year). I thought it was only fitting that to put that decrease in home sales into perspective I would offer up a silver lining and keep it local. While the number of sales nationwide is down significantly, there MUST be an increase in the number of homes sold per year in the greater Cincinnati area, or at least this is true when we look at the long-term of the past 5 to 7 years instead of just this year.

Since 2000, the percentage of owner-occupied housing in the greater Cincinnati area has grown from 66.2% of homes to 69.6% of homes. This is a significant improvement over a seven year period (the figure was through the end of 2006 - not through the year to date in 2007). Ironically, in 2000, the national average was also 66.2% of homes in America being owner-occupied. So in 2000, the Cincinnati area was just a prime example of the mix of homeowners and renters, a microcosm of the nation if you will.

The national homeownership percentage also increased over that same time period, but not by as much as the greater Cincinnati area. The national average for homeownership was 67.3% at the end of 2006, well below Cincinnati’s level of 69.6%.

There is some caution to reading these numbers in such a positive light though. Within the city of Cincinnati itself, the home ownership rate did increase but remains well below the national, state, and regional levels. The city of Cincinnati increased from 38.9% in 2000 to 42.3% at the end of 2006. The state level was 70%.

Certain high growth suburbs, like Mason, Ohio in Warren county helped drive up the median home price AND the percent of homeownership in the area.

In stark contrast, a recent article in the Cincinnati Enquirer highlighted the Hamilton County Sheriff’s role in assisting Cincinnati Police in reducing the amount of crime in neighborhoods like Over the Rhine. While the article was directed at the city and county joining forces to reduce inner city crime, it did casually mention in passing that the homeownership rate in Over the Rhine was less than 10%!!! That’s right, single digits. Less than 1 in 10 people.

So now we see the two extremes tugging on the average… Mason and similar suburbs on one extreme of good examples of growth, and Over the Rhine and inner city neighborhoods struggling to compete with the suburbs.

It is still encouraging to see homeownership levels on the rise though, both locally and on the national scale. Only time will tell if or to what extend this growth in homeownership was attributed to risky mortgage products that would have otherwise forced some new home owners to continue to rent.

As always, I welcome your comments and feedback…

Numerous statistics and references were drawn from the Cincinnati Enquirer online edition. Namely, the article Homeownership at Record High by Enquirer writer Lisa Bernard-Kuhn was used as a reference in writing this blog entry.

The National Association of Realtors (hereafter referred to as NAR)released preliminary data today from its Senior Economist, Lawrence Yun, that the sale of homes nationwide would be down approximately 8.6% in 2007. This would amount to 5.9 million homes sold in 2007 compared to 6.5 million sold last year. On the bright side, the NAR expects home sales to climb to 6.3 million next year, a slight rebound but still lower than sales in 2006. The 5.9 million homes expected to be sold in 2007 is the lowest the housing market has seen since 2002 when approximately 5.6 million homes were sold.

While the fears of subprime mortgages are still a concern, there has been a reduction in the number of new homes being constructed and therefore not as much pressure is being added to the current inventory levels by builders. If the foreclosure rate increases unexpectedly, or more than expected I should say, the inventory levels could go higher and cause further price deteoration and a lingering stagnation (or glut) of properties on the market. Such a spike in foreclosures could reduce the number of units sold in 2008 and further drive down the average sale price as well. It remains to be seen how much the subprime mortgage market and the foreclosure rate will affect the market but it is something being closely watched by investors in the US and abroad.

Investors (both of real estate investment and those investing in securities) as well as homeowners, real estate practioners, and so forth would be wise to take note of the following dates when real estate industry data is released:

The 16th of every month: Number of housing starts and building permits (data released by the US Commerce Department).
Last business day of every month at approximately 10:00am EST: New Home Sales for the month prior (data released by the US Commerce Department)
Around the 25th of every month: Existing home sales for the prior month (data released by the National Association of Realtors)

All of the above economic data can be found by going through financial websites, newspapers, etc. For example, you can go to Yahoo! Finance and click on Economic Calendar and see a list of economic data being released on any given date and time. A brief explanation of the data can be found by then clicking on the name of the item once you are in the economic calendar.

Some statistics in this article were derived from a Yahoo! news story published online on September 11, 2007 by Alan Zibel, an AP Business Writer. The Yahoo! story was entitled “Realtors Predict Drop in 2007 Home Sales“

I am proud and excited to announce that I have submitted my renewal fee and application to the State of Ohio Department of Commerce, Division of Real Estate and Professional Licensing. My real estate salespersons license, which is due to renew on this month, will now be valid until this same month in 2010.

As many of you may know from reading my About the Blogger page, I have been an Ohio licensed real estate agent since 2001. This will essentially ensure that I will be a nine year seasoned professional the next time my license is due for renewal.

While it may not seem significant that I only have six years experience at this point in time, it is important to remember that I am only 26 years old. Therefore, I have been licensed to sell real estate since I was 20 - and likewise 3 years longer than I myself have been a homeowner.

I am excited about my growing tenure and experience in the real estate industry due to the notorious high turnover of newly licensed associates. It is no secret that over half of newly licensed associates leave the business within the first year, and the number that stick around after three years (the first time the license is renewed with the 30 hours of continuing education in Ohio) is even more dismal - I’ve heard upwards of 80 to 90% drop out of the business before they reach the three year anniversary.

This is also an excellent opportunity to remind the general public that there is a distinct difference between simply being a licensed real estate agent and a member of the National Association of Realtors. I have been a member Realtor since my original licensing in 2001 and firmly believe this organization helps increase the standard of care by member agents with respect to dealing with clients, fellow agents, and the general public. While it may seem trivial to ask an agent if she or he is a member of the local board of Realtors, it is important because those licensed agents have agreed to be bound by a higher code of ethics than what the Ohio Revised Code requires. I personally am a member of the Middletown Board of Realtors and likewise the Ohio Association of Realtors and the National Association of Realtors.

I look forward to serving the public for many years to come and I want to reassure my clients - both past and present - that as long as I am able to maintain my license, I will continue to be here to help in the buying and selling of real estate in Ohio.

As always, I welcome your comments and feedback…

Please pardon my recent absence. It was partially due to some long hours of work and completing the required 30 hours of continuing education for my real estate license. It was also partially due to taking a little time off to relax and enjoy the Labor Day weekend. There will be a separate post regarding the holiday weekend! This post is an update to my August 20th article:

I found the letter!!! It turns out I did not throw it away, it was buried under a stack of bills and magazines in my living room. Here are the details:

For $69.50, National Deed Service Inc. will send you a “Certified Copy of your Deed” to your property. By “Certified Copy” they simply mean they will request a copy from the county recorder’s office in which you bought the property. As I mentioned before, they do have the disclaimer that they are “not affiliated with any governmental agency” and “Many government records are available free or at nominal cost from government agencies” but I guess they are banking on people not reading that far down the page. Or perhaps they feel that $69.50 is a fair price to pay for their company to do all that tough work of requesting a copy of the deed and mailing it to you.

Bottom line is this: you can call the county recorder where you bought the property and request a copy of your deed if you want/need one. If you recently bought your property, namely within the past month or so, you might want to call the title agency or attorney that facilitated the transaction and ask for a copy to be sent to you. There you have it, plain and simple. Don’t pay for something that you should be able to simply request and receive upon completion of your purchase. The Deed is your receipt showing that you bought the property, you shouldn’t have to pay someone $69.50 for a receipt.

Note: I may scan a copy of this letter into Adobe .pdf format and post it to this blog in the near future. Till then, be alert when you receive these official looking letters in the mail.

As always, I welcome your feedback and comments…