My Response to Newsweek

Jane Bryant Quinn's column in this week's edition of Newsweek explains how homeowners can save money on the sale of their home by working with discount brokers, using "fee for service" brokers or even selling their home themselves.

Saving money is a good thing. But sometimes, basing a money-saving strategy on incomplete information can end up costing you a bundle (see my 6/21 post, A Very Expensive Lesson In Trying To Save Money).

In case Newsweek doesn't publish my response to Ms. Quinn's column, here it is:

Lights...Camera...Real Estate?

Real estate seems to be on everyone's mind, so it was only a matter of time before the major networks rolled out shows that were somehow centered in the real estate universe. And they have.

ABC leads the parade with Hot Properties. Think Designing Women as Manhattan realtors by way of Sex And The City.

NBC's entry in the field is Hot Property (boy, that whole 'hot property' thing must sound like a really great title!). Hot Property is about a Southern belle real estate agent in Houston who uses her charm to mask her cut-throat business antics.

Set your Tivo now...I'm not sure how long these hot properties will be with us. After all, the TV sitcom market isn't the sure-fire blockbuster that the current real estate market is. Maybe it's because in these TV shows, the realtor is the star. But when I'm working with my clients, I make sure that they are the stars.

You'll "Flip" For This

http://www.condoflip.com lets you flip your condo...even before it's built!

CAR: Home Sales Will Escalate & Prices Will Set Another Record

The Sacramento Bee reports that the California Association of Realtors has released its mid-year forecast. The association predicts the median price for an existing single-family home in our Golden State will hit $521,150 this year. That's a 16% increase over 2004's record median price of $450,990.

Meanwhile, economist Christopher Thornberg, of UCLA's Anderson Forecast, is sounding more curmudgeonly every day. "The housing market is in a bubble. At some point in time, we're going to pay for it. It may go for a year, it may go for more," he said.

Now that's stunning accuracy! "It may go for a year, it may go for more." Be sure to set your watch by this prediction.

At least the CAR forecast has changed. In October, this same group predicted that overall sales of existing homes would decline 2.5% this year. They have now changed that prediction to a 1.4% increase in sales due to long-term interest rates staying low when they were expected to rise by now.

The most interesting aspect of the CAR forecast is the methodology they use to calculate the affordability index, which they estimate will be 16% in 2005 (in other words, 16% of California households will be able to afford the median price home).

To calculate that percentage, CAR assumes all buyers make a 20% down payment and dedicate 30% of their income toward housing. Well, here in what we call "reality", actual buyer behavior is WAAAAAY different! With the growth of adjustable rate mortgages and other creative financing, most folks aren't putting down 20%...or anywhere near that. And as far as dedicating 30% of their income toward housing? Not in Los Angeles. In fact, if this one assumption were changed so that buyers were putting 40% of their income toward their monthly home loan payment, the affordability index would be more than 25%!

Aren't statistics fun? The good news, is you don't have to deal with them when you're ready to buy your home. Because every single case is a little different, I make sure that my loan consultant focuses on your individual needs...and doesn't worry about what the aggregate population is supposed to be doing. And that's when reality trumps theory and that's why more families get into the home of their dreams every single day.