Atlanta Real Estate | Atlanta Housing News for Real Estate

The new budget proposal has a lot of interesting items included in this Trojan horse budget proposal.  The administration is proposing trimming the amount of interest that could be written off depending on income.  While at first it sounds fair the reality is that those top income earners that make over $208,850 are at risk for higher taxes and itemized write offs on all fronts.  Home owners in those brackets above it is proposed to limit the tax rate at which high-income taxpayers can take itemized deductions to 28 percent.  For home owners in high priced markets New York, California, Boston and DC this will be a hardship.  For real estate agents this will take the wind out of the sails of many buyers as home buyers become more realistic on how much home and expense they want to carry.  This tax would not only limit the amount of mortgage interest that could be deducted, but also state and local property tax and charitable contributions.  The amount deducted would be capped for these upper income earners (over $208,850) to 28 cents on the dollar as opposed to the current 35 cents.  This will have a severe impact on real estate as we know it.

In more expensive areas where it takes a large income just to qualify for the average home because of the high cost of living... this is a major blow to those struggling to pay their mortgage, pay increasing local property tax, and other expenses.    There should be a major outcry from the real estate community on this portion of the budget proposal.  Legitimate deductions are being trashed while the pork in DC just grows and grows and grows!  How come there are no cuts in the Federal Budget?

You think things are bad now?  Wait.  The massive budget that was proposed by the administration this evening.  For those that thought there would be a boost to education guess again.  Higher education will be placed into the dark ages with the governments proposal to shift all education funding of student loans from Sallie Mae to the Department of Education.  Just what we need bigger more unresponsive government!  This is the governmetn that could not handle Katrina, oversee the banks, and Wall Street, and keep our borders safe.  The real reason is the government can probably loot the til just like they do with Social Security. 

I am also reading that most economists are saying there is no room for error with a budget this big.  The administration is taking a big risk instituting a massive budget that is bigger than anything the USA has ever seen. The way I view it, the risk is not to the politicians, it is to the people of the USA.  It is our tax dollars, and our future at risk.  

The government doesn't have a good track record for fixing anything.  In spite of what is happening in the economy, the administration is proceeding with an agenda that has nothing to do with the current state of the economy.  This is an agenda for socialism, and bigger government.  Bigger government is what brought us to this disaster we are all now facing, and making it bigger will just increase the burden on all, and make all things less accessible, and more unresponsive.  These budget proposals are based on the erronious assumption by politicians that income will keep going up.  It will not.  It will contract under the burden of loss tax revenues from repressive taxes, and a spiraling budget that is totally out of control.  They did not even factor in the loss of revenue from the new cap on CEO's saleries at 500K.

• AIG (US now owns 80%) which was lent 150 Billion Dollars in Government money just a short while ago has just suffered more major losses.  More Money Needed?  Analyist are estimating another major loss last quarter.
• CitiBank which the US now owns 40% of has their issues...More Money Needed?
• GM may have underestimated its losses...More Money Needed?
• Fannie Mae reported a $25.2 billion fourth-quarter loss....More Money Needed?
• They have bailed out banks promising liquidity and things are worse!
• Bailout after bailout, and there is no relief taking place. 
• Watch Wall Street Friday.  It will be interesting to see how those that create fortunes and wealth view these proposals!

Rick Santelli is a trader spokesperson on CNBC that hit a  raw nerve with he administration this week, so much so that the Press Secretary had words with Rick.  The one thing this nation should never do is silence Free Speech!  We have a right to hear all opinions.  Speech is where we get a chance to make up our own minds what is good or bad.  Free speech allows the individual to form opinions rather than the government form that opinion for us...that is tyrannical.  Our founding fathers fought to preserve those rights in this new nation that was conceived in those liberties.

Rick questioned the soundness of the government's bailout plan at the expense of other taxpayers.  The video is worth seeing!

Our FMLS in Atlanta has a story posted as a warning for personal safety which is very chilling.  We all need to remind one another of the dangers of showing homes to unqualified buyers.  It is disturbing because this is a very common scenario when showing condos especially.  Because condo and town home sales are way off in Atlanta sellers are desperate to show them to anyone.  That is totally foolish, and could cost persons their lives. 

If you are showing a unit next door, it is not unusual to be approached by a seller that says "Show mine unit too!"  It happens all the time.  It isn't very smart to invite strangers and danger into your home.  My heart goes out to those that try to sell their homes as For Sale By Owners.  My first thoughts are protecting life, and most especially the lives of those in my family.  That is why it is important that even if your home is listed with an agent, never invite an unescorted stranger into your home.

Please read the story of a recent Atlanta home owner that was murdered!

A news story that just broke this evening less than a few hours ago in the New York Times Online that the Administration is going to seek to have taxes on those earning over 250K a year increased to pay for Health Care.  It will be introduced this Thursday as part of the new budget proposal.  This is not good, not only does it apply to the individual, but to combined joint income of spouses, and more importantly to over 60% of mom and pop businesses across the country.  Personally I think this could not come at a worse time.  What a government can give, it can also take away from its citizens.  It is part of the administrations plan to redistribute income from the wealthy to those that are presumed not so affluent.  The proposed revenue of this tax increase will account for over half the 634 billion in healt care set asides.

While 250K sounds like a lot of money, it will apply to most small businesses in the country that have even a good number of employees.  For husbands and wives in real estate it will start eroding their income.  The interesting item I find in the story is that at no time has an economy every got better by making things comfortable on the bottom.  Opportunity and profit are more likely to occur with risk as opposed to those that are comfortable punching a time clock 9-5.  So the question will be to entrepreneurs..."Why bother?"  Where is the incentive to take risk?

Read the story

During the boom times all the 'real estate 101' rules went out the window along with common sense.  Buyers were caught up in a sea of presumed intense competition. They purchased anything and everything without giving any thought to future value.  No questions asked!  They were consumed by the moment, and many will pay dearly for this.  When the reality of what they purchased sinks in, it will feel like a bad hangover and "What did I do?"  Other buyers will not be so hell bent to buy that home on the road now that there is a lot of competitively priced inventory available.  That home under the high power electric lines, or the one that backs up to the major highway that sits way below the grade probably isn't a good buy.  Beside, who wants a home in a flood zone? 

Reality needs to sink in.  Buyers  with the advice of an experienced Atlanta buyers agent must think the process through.  They have to acknowledge the reality of each individual home they are considering buying, and look at the both the positives and the negatives of each property.  The home is a knockout once you get inside but the reality out side the front door or backyard will never change.  A buyer knows when a home is loaded!  That is every buyer dream to find the right home, at the right price.

When a buyer finds a knockout home is usually has loads of upgrades, it has granite counter-tops, stainless appliances, under-counter lighting and a tumbles stone back-splash.  A 'dream home' the master suite is a knockout also.  The seller even offered to pay your closing costs and sweeten the deal for your agent with a bigger commission.  It is just oo good to pass up or is it?  So what's the problem?  Your eyes say "Buy," and your gut says "No!"  What should you do?  Listen to your gut!  I'm sure there are many would be home sellers asking themselves "What was I thinking when I bought this?"

Your first instincts are always are right.  When you look at a home in a flood zone, on a hill or in a hole it most probably overpriced and will be sold at a loss just to get rid of it.  Builders often doll up these homes with loads of extras that no other homes in the subdivision have just to get rid of it.  The technique is called "Bells and whistles selling!"  The extras like a free finished basement, granite counter-tops, upgraded appliances, upgraded lighting package, and free hardwood floors and extras are really a warning not an invitation to buy.  These may all be tell tale signs of how to move a hard sale!  So it is just like your parents taught you as a child "If it sounds too good to be true...run don't walk away from this one!"  Chances are if you buy it, you will have a lot of difficulty selling it at some future point in time.  Buyers with a good buyer's agent that educates them about the value of what they are buying will move on to better and more realistic sales.  This is a great choice rather than risking their real estate career by selling a bad product to their client.

This is a real estate Blog I feel compelled to write.  I am always struck by the comments I read on Active Rain and have to ask myself "Does the agent have any sense of reality?  Have they ever sold anything?" I feel many in the real estate industry today do not have a clue what is taking place.  You cannot stage away this market to make things happen, nor can you think it away with positive thoughts. You can feel the pulse in the Blogs and comments written. "Will real estate recover in a few months?" "If only we had DPA!" "We need lower rates!"  The Irish have a saying for this and the saying goes "They haven't a clue!"  We live in a very different day and age one that is not based in common sense, but is deeply rooted in emotions and wishful thinking.  Society today is not a fact based society, and most decisions are made on impulse rather than weighing out pros and cons, or looking at the actual balance sheets.  Agents and brokers suffer, but so do their clients for lack of sound advice.  That erronious thinking is exactly what brought us to the precipice looking into the dark abyss.

For those that were lucky and fortunate enough to survive earlier down turns in the economy in the 70's, 80's and 90's...they we're blessed, and this current downturn does not compare in any shape or form to those times.  However, there were many lessons learned.  When you consider earlier times where people actually put money down before purchasing a home even they were not immune to troubled times.  However what we are living through is much worse.  There are no points of comparison in my own life.  Over 50% of the mortgages written in the past few years had no money down.  Down payments themselves were financed. 80/10/10, and DPA.  The lesson? Don't hold your breath for a quick cure. 

In the late 70's mortgage rates had jumped to about 9.75% for a 30 year fixed rate mortgage. We were in a transition period of adjusting from a high inflation left over from the Carter era.  Most lenders and banks were not writing loans, you could call for weeks trying to find lenders, but there were not many takers.  The terms?  You have to have a minimum of 25% down, and pay your own closing costs.  Proof of employment was a must, and you needed at least 6 months cash reserves.  I forgot to mention, you'd also better be a depositor in the bank.  By July of 1980 the mortgage rates for a 30% fixed rate mortgage were at 15.5% and rising.  A 70K loan PITI was over $1500 a month.  25% down was the norm.  Real estate sales were predicated on selling the tax advantage of the high mortgage payments, but the monthly budget dictated other wise.  There was no rush to buy homes.  By the late 1980's foreclosures and HUD homes were common.  Many banks especially state savings and loans failed from bad real estate loans.  Persons could sell their homes.  Buyers could not get reasonable funding to buy homes.  Interest rates were in the high teens now, and paying the monthly mortgage was painful.  If a person had to buy, mortgage assumptions was the way to go if you had cash. LIBORS and ARMS became the new instruments that later lead to even more problems. If there was a first and second loan a WRAP mortgage was used. 

The 80's were full of new lessons to be learned for those that struggling to survive.  We learned of absolute auctions, negative equity, LIBORS, COFI funds, bank failures, the dissolution of the FSLIC, and the creation of the Resolution Trust Corp RTC.  It was a painful time that lasted until the early 90's.  Back then, no one yearned to be in real estate.  A career in real estate was filled with long hours and not too much income. From the top of the market to bottom back then...real estate markets were in a malaise, and then remained flat for quite a while.  The downward trend that started in the mid 80's continued for many years into the early 1990's. It was over a decade. No one back then would be so nieve to think recovery could be measured in months.  It was a common understanding that real estate appreciation could be flat.  It was not uncommon for many real estate companies like Merrill Lynch, Mount Vernon Real Estate fell off the face of the earth.  The number of agents more than halved, when the job market improved and they could make more money elsewhere.  The difference back then was that real estate had bottomed.  We're not there yet.

Here are the interesting lessons I learned from times gone by. 

1. There was no quick fix for real estate!
2. It is important to know all aspects and trends in your market.
3. Appreciation may not exist.
4. Property values do not always go up.
5. Without buyers property values can quickly drop.
6. Recovery is not measured in months.
7. If you think it is bad now - wait.
8. Real estate is all about fulfilling needs of buyers and sellers.
9. There is no law that says "You must make a profit when selling!"
10. Listing periods must be long enough to give you a chance of selling.
11. Price and terms rule.
12. Location is important - you may be there longer than you think.
13. Quality of construction is critical - future maintenance costs must be considered.
14. Buy for the long term.
15. Patience is a virtue.
16. Every offer is worth looking at!

With bank failures, the collapse of many Wall Street Brokerages that traded Collateralized Mortgage or Debt Obligations CDO one really has to step back and ask themselves what really happened?  Someone in the banks had to say "Lend" to persons they knew could never pay them back...so they can sell the bad mortgages to a brokerage that bundled them into an instrument and then sold them as securitized "AAA" bonds and investment grade investments to cities, banks, and holders around the globe.  Most of the global collapse was caused right here in the USA.  David Faber's Special this week was an eye opener!  The special was entitled the "House of Cards" was extremely well done and very informative, but leaves you asking more questions.

As a nation we may be throwing good money after bad bailing out banks that should fail for unsound lending practices, and giving the same politicians that caused this a blank check that will most probably be a political slush fund for them to create more havoc for the nation and grow government even bigger.  My question(s) arebigger. than the innocuous head lines, and all I would like to ask is "Where are the indictments?"  Where are the subpoenas?"  "Where are the investigations into corrupt Politicians and bankers that allowed all of this to happen?"  "Where are the special prosecutors?" 

If something happened once it is a mistake.  If something occurred more than once and pattern is picked out that is questionably corrupt, unethical where was the oversight?  When politicians received money from Fannie Mae, Freddie Mac, Countrywide Mortgage where are the resignations?  Where is the indignation form Americans? and Last but not least...Where are the indictments for "Racketeering" once a clear pattern of repeated corruption and theft has occurred?   Why are there no calls for enforcement of the Racketeer Influenced and Corrupt Organizations ACT RICO

Banks that knowingly made bad loans - and want federal monies (Taxpayer bailouts) to make them right are guilty of Federal Crimes!  Politicians sitting one committees taking monies from those they are supposed to be overseeing should step down in shame.  As Americans we need to demand it!  Even in the years preceeding the "Great Depression"  borrowers had to put down 50% to obtain a mortgage!  We really are heading for deeper trouble if we do not demand the right actions from our Government.  No investment will be ever safe again, no bond will be trustworthy, and no bank safe to save our money.

Atlanta Real Estate January 2009.

Atlanta FMLS statistics were just released today, and it does not paint a good picture for Atlanta real estate.  I debatedp osting this, but felt it is the right thing to do.  For buyers there are plenty of great opportunities, and for realistic sellers there is hope if your home is priced correctly, has been well maintained, has upgrades, and is in turn key move in condition. 

In January 2009 there were 2,520 closings for all single family which is a 24.3% drop from January 2008.  The last time in Atlanta that we had so few closings we would have to go back to January 1999. The FMLS reported that with prices dropping back to late 1990 levels in almost all classes of real estate properties...is that we are not witnessing a price correction but a collapse.

At a glance: 

• 2,220 closings single family detached in January - a reduction of 22.1% from Jan 08'
• 300 closings for single family attached in January - a decline of 37.6% from Jan 08'
• 6,511 expired listings for all single family in January.
• 2,404 Withdrawn listings also declined year-to-year for all single family.
• Average sale price for all single family closings in January was $181,799. Feb. 1999 was the last time we saw a lower average sales price. Jan 09' average price is also $90,000 below the all-time high from June 2007.
• Average sale price for single family detached was $185,294 in Jan 09 - 23.5% below Jan 07'  and 35% below the all-time high, and 19.4% below 08's average.
• Average sale price for single family attached (condos & townhomes) was $155,936 in Jan 09‘which is $25,000 less than Jan 08' and $46,000 below the all-time high.

Everyone loves the Internet because the use of it is FREE!  Well up until now it has been a place where you could surf the net, gain knowledge, and not pay anything.  Well under the budget crisis, nothing may be sacred anymore.  In the last hour the Governor of New York State Governor David Paterson proposed a Tax on Internet downloads. Governor Patterson proposed this afternoon a new 4% tax on all Internet downloads.  This fee would apply to all downloads of books, video and other content that one normally downloads on the Internet.  His measure is proposed to lower the gap on New York States 15 billion dollar budget deficit.  If the Governor was floating a balloon in my own opinion it was a 'lead balloon!'  I for one do not like the idea.  There are plenty of places to start cutting the fat first before taxes are raised.

Let's talk about the big freebies the Government gives out each year to persons that do not pay one cent into our systems.  As a generous nation basically no one is turned away from free hospitalization, education, health care, housing even if they are not citizens of this country.  Hugh deficits are run up each year at tax payers expense who in turn are charged higher fees.  So guess what?  They have run out of ideas to pay more taxes.  The Tax Ponzi scheme has run out of victims. So now they are looking in areas that normally no one in their right mind would tax!  A few months ago they floated an idea to tax soda drinkers 18% tax under the guise they would eliminate obesity, but gain over 400 million annually in taxes.

I am from New York State originally, I moved out years ago because the taxes were absolutely insane.  Friends and relatives in NY tell me all the time of the high taxes whether it is local property tax of with holding taxes. When will enough be enough?   I have lived in the city, and I have lived in the Buffalo NY area.  I moved out in 1992 because I could no longer afford to pay high taxes.  The taxes on my 180K home in East Amherst NY in 1992 was almost 12K a year.  That is not right.  The Government has to come to the realization it is out of control with spending and not its citizens.  They are the last ones to cut back their own budgets, and new measures for taxation will only be counter-productive to tax revenue.  Ideas like this will stifle the growth of business, and force more companies to look abroad for relief.