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Robert Thomson's Articles in Real Estate

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How to Succeed in Real Estate Lead Generation When one talks about real estate as a business, it is unavoidable to think about how highly competitive the industry is. Since economic situations are dynamic and rapidly change... Tips For Finding The Best Lake Homes For Sale Lake homes are the most popular type of second home. They're also popular as main residences for those who don't mind commuting. The Tipping Point For Realtors It is a challenging time for a realtor that is for sure. The notion that land would appreciate forever, that traditional marketing always worked, and that your sphere of influence would support your business has been shattered. Do We Really Need to Maximize Home Ownership Rates? There needs to be an open discussion of the goal of maximizing home ownership. Owning a home has become synonymous with the American Dream. Every Presidential administration has had the expansion of home ownership as one of its goals. The tax code is structured to give tax breaks to home owners to encourage home ownership. The idea of home ownership is deeply embedded in our culture. However, it is not good public policy to maximize home ownership rates because the methods for achieving this end Only a Fool Believes Real Estate Prices Always Go Up In 2007 and 2008, house prices declined nationally for the first time since the Great Depression. From 2002 to 2006, there was a massive Ponzi Scheme of ever-increasing debt that fueled the Great Housing Bubble. People bought in to this Ponzi Scheme because they believed real estate prices always go up. They were encouraged in this belief by the National Association of Realtors. Housing Bubble Deflation - The Stages of Grief Markets are the collective actions of individuals, and the psychology of the markets can be broken down to the psychology of the individual participants who make it up. When price levels in a financial market collapse, most people lose money. Any loss has a psychological impact on the individual causing her to experience grief. The grieving process is generally divided into several overlapping stages: denial, anger, bargaining, and acceptance. These stages are also apparent in the mass psycholog How Does Leverage and Debt Impact Returns on Residential Real Estate? As a speculative investment, residential real estate has the potential to make or lose vast sums of money due to the impact of financial leverage (debt). Houses are typically leveraged at 80% of their value. During the Great Housing Bubble, this leverage was often provided at 100% by various lenders. Housing Bubble Market Psychology Financial markets are driven by fear and greed: two basic human emotions. Rationality and careful analysis are not responsible for, or predictive of, current or future price levels in markets exhibiting bubble pricing as the emotions of buyers and sellers takes over. When Will Housing Prices Stop Falling? House prices became very elevated relative to fundamentals of income and rent. Since these fundamentals underpin the housing market, prices will continue to fall until they come into alignment with historic norms. Residential Appraisals and Collateralized Debt Obligations There are three methods of appraising the resale value of residential real estate: the comparative-sales approach, the cost approach, and the income approach. The comparative-sales approach uses recent sales of similar properties in the market because comparable sales reflect the behavior of typical buyers in the marketplace. The cost approach determines market value by calculating the replacement cost of an identical structure plus the cost of the land or lot upon which the house would sit. The The Housing Bubble was a Credit Bubble The Great Housing Bubble was not really about housing; it was about credit. Most financial bubbles are the result of an expansion of credit, and the Great Housing Bubble was no exception. Housing just happened to be the asset class into which this capital flowed. Valuation of Lots and Raw Land The valuation of land used for residential housing is mysterious and often misunderstood. The valuation of lots and raw land requires a detailed knowledge of construction and marketing costs as well as a good estimate of the sales price of the final product: a residential housing unit. In short, the value of a lot is the total revenue (sales price of the home) minus the costs of production and the necessary profit. Land value is a residual calculation. The Inflation Premium for Residential Real Estate Residential housing does have a cash-saving value, if financed with a fixed rate mortgage. Over time, the growth in income and rents increases the cost of housing for renters. The inflation of housing costs for renters is greatly lessened for homeowners using a fixed-rate mortgage because their housing costs are effectively frozen at the rate of their ongoing mortgage payment. Other costs of home ownership, such as property taxes, insurance and maintenance do still rise with inflation, but since How Much Does a House Really Cost? When contemplating purchasing a home, one should examine all of the costs of ownership to budget properly for the expenses they will face. Most people simply focus on the payment, and soon after they purchase, they realize that the true cost of ownership is often 20%-30% greater than they expected. Should You Worry About the Opportunity Cost of a Housing Downpayment? The initial equity in a home is equal to a purchaser's downpayment. If a buyer pays cash for a home, all equity is initial equity. There is an opportunity cost associated with downpayment money. This cost should be considered when someone considers buying residential real estate. Moving Overseas Moving overseas is a small adventure; the more prepared you are the more you will be able to enjoy the new circumstances of your life. Fifteen Common Lies Realtors Tell Realtors are agents of sellers. It is their job to obtain the highest possible sale price for a piece of real estate. The most common ploy realtors use it to attempt to create a sense of urgency in a buyer. In a seller's market, prices are rising, and buyers already feel a sense of urgency. In a buyer's market, prices are falling, and there is no urgency on the part of buyers. This fact does not stop realtors from trying to create urgency even if the truth is cast asunder. The Pent-Up-Demand Meme Is Complete Nonsense The realtor spin about "pent up demand" is complete nonsense. There is probably a lot of pent up desire for housing, but demand is measured in dollars, and there is a major lack of demand with the absence of lender funds, and a large and growing "pent up supply" of foreclosures. Resorts and Harbor: Lagoon Las Vegas On the fringes of the Las Vegas Strip resides the 3,592-acre Mediterranean- fashion Lake Las Vegas Resort, a confidentially -owned manmade lake in southeast Nevada. Strict Loan Documentation Standards Will Help Prevent the Next Housing Bubble One of the most egregious practices of the Great Housing Bubble was the fabrication of income by borrowers that was facilitated and promoted by originating lenders. Stated-income loan programs were widespread, and they were the cause of much of the uncertainty in the secondary mortgage market during the initial stages of the credit crunch in the deflation of the bubble. Basically, investors had no idea if the borrowers to whom they had lent billions of dollars were capable of paying them back. Housing Bubble Economic Problems - Have We Seen the Worst? The foremost problem resulting from the deflation of the Great Housing Bubble was the imperilment of our banking and financial system. The bailouts emanating from Congress have mostly focused on keeping the banking system solvent. Considering most institutions were secretly bankrupted by the housing collapse, this was not small problem. The economic ramifications are severe, and 2009 will likely not be the end of the crisis. Know Your Rights - Info For Renters, Patients, And Employees It is important to know what your rights are and what to do if they are violated. It Is Different This Time... Not! Each time the general public creates an asset bubble, they believe the rally in prices is justifiable by fundamentals. When proven methods of valuation demonstrate otherwise, people invent new ones with the caveat, "it is different this time." It never is. Residential Real Estate Markets Crumble from the Bottom Up The real estate market can be visualized as a massive pyramid. There are very few multi-million dollar properties at the top of the pyramid, and a large number of relatively inexpensive entry-level properties forming the base. Like any structure, if the foundation is weakened, the structure may collapse. In the same way, housing markets collapse from the bottom up due to problems with affordability. Home Price Appreciation and Transaction Fees - Only the Realtors Get Rich Profiting from house price appreciation requires getting more money from the sale of a property than was originally paid for it and not having that profit cancelled out by moving costs, transaction fees, and a large spreads between the cost of ownership and the cost of rental during the ownership period. Buying and selling residential real estate incurs significant transaction costs that are not reflected in the price. It is quite common for properties to sell for more than their purchase price HIPS Don't Lie! Discussion on pros and cons of Home Information Packs in the UK property market. Real Estate Only Goes Up... Not! The mantra of the National Association of Realtors is "real estate only goes up." This economic fallacy fosters the belief in future price increases and the limited risk of buying real estate. In 2006, prices in many markets began to fall. By 2008, the rate of price decline had greatly accelerated. This is dramatic proof that real estate does not always go up. Despite this obvious fact, the National Association of Realtors still tries to lure greedy buyers with fantasies of unlimited wealth in Higher Interest Rates and Residential Real Estate Markets - What Would Happen? A key factor impacting the fundamental value of housing and thereby the bottom is interest rates. Higher interest rates would devastate residential real estate markets. When interest rates go up, the amounts borrowed go down assuming a consistent payment. As amounts borrowed go down, so do real estate prices. Debt-to-Income Ratios Impact on Residential Real Estate Markets The debt-to-income ratio is a measure of how far buyers are "stretching" to buy real estate. Buyers have historically committed larger sums to purchase real estate when prices are rising in order to capture the appreciation of rising prices. Conversely, buyers have historically committed smaller and smaller percentages of their income toward buying real estate when prices are declining because there is little incentive to overpay. Some may look at this phenomenon as a passive effect of the rise Hyperinflation and the Housing Market The Federal Reserve under Ben Bernanke began aggressively lowering interest rates at the end of 2007 in response to the severe economic downturn caused by the collapse of house prices and the related difficulties falling house prices had on the banks and other institutions that made loans using houses as collateral. Many are concerned that these policies will ignite a period of hyperinflation in the United States. Fundamental House Value, What Are Houses Really Worth? The fundamental value of all housing prices is equivalent rents. Rents define the fundamental value of real estate because rental is a direct proxy for ownership; both rental and ownership provide for possession of property. Most people believe comparable sales define the value of real estate. In reality, comparable sales measure the collective foolishness of buyers who often have no idea what a property is really worth. Of Cabbages And Kings – Atlanta Homes From Cabbagetown To Buckhead Atlanta real estate has long held a solid reputation for providing investors with not only a solid and sound return in the long run, with an almost guaranteed return, but also the opportunity to live and enjoy one of the most popular and vibrant cities anywhere in the US. Whilst in many parts of the country, and indeed globally, prices are slowing and even falling, putting many first time buyers and investors off the idea of purchasing real estate, Atlanta is home to one of the fastest growing and most imaginative real estate markets, and provides what is perhaps the most stable and reassuring economical picture to be found. Renting Property in Dubai - Classifieds Guide Moving to a foreign country can be intimidating and finding the best place to rent can be daunting. Panama Real Estate: Evictions Our law firm, Panama Legal, occasionally gets queries about the eviction process in Panama for residential real estate.