a quick history...the mortgage crisis

As a continuation of the first time homebuyers series, I thought I would do a quick history of the mortgage crisis - haha just kidding. But what I do want to do is direct you all to the two part series entitled The Giant Pool of Money and Return to the Giant Pool of Money created by the radio show This American Life. For those of you who don't already listen to This American Life, it is a weekly public radio show broadcast that has a theme to each episode and presents a variety of stories on that theme. 

The Giant Pool of Money episode first aired in May of 2008 and presents an amazingly thorough and easy to understand explanation of the housing crisis. The second episode in this series aired in September of 2009 and does an equally great job of following up with the original stories. While it has been almost six years since the stock market crash and five years since the first episode aired, the stories are still very relevant as they provide a context to the post mortgage crisis environment that first time homebuyers are operating within. And again, I am not an expert so I will not go into detail about what characterizes the post mortgage crisis environment but I think we all can agree that times have changed. 

When I think about buying now (which in all fairness I didn't think much about buying a home prior to 2008 as I was 20 years old) I feel an immense amount of fear. Fear of taking on a mortgage that is too big for us, fear that we won't be able to sell the house when we are ready, fear that we will have to take a loss when we sell and the list goes on. I know that when we do decide to purchase we will try to be educated as possible and hopefully will be able to reduce (but not eliminate) some of this fear but buying a home seems to be a pretty scary thing these days.  I try to balance the feelings of apprehension with thinking about all the positives of owning your own home and there are a lot. So my recent homeowners/lookers, how do you feel about it? Would love to hear your thoughts!

Realty Round Up: Orchard Lake Area, Michigan

I am on the last leg of my grand Michigan tour in the Orchard Lake area of southeast Michigan. I grew up here and its where my parents live so I visited relatively often. Each time I visit, I become more and more grateful that this is where I grew up. The people are friendly, there are lakes everywhere and the four seasons are something not to be missed. My recommendation for local attractions are:
- It's A Matter of Taste - waterfront dining with too many yummy items to list
- Keego Harbor Specialty Sausage Co.  - a great local source for sausage and other locally produced fare
- Detroit Garden Works - a beautiful garden store for the passionate gardener 
- Mezza Mediterranean Grill - so good! 

House #1: $0 - $250,000

information and images via Zillow

This is parcel 2 of 3 that is currently for sale. The property is described as a tear down, however, I think there is real potential in the original house. The main attributes of this home is its lot with direct views and access to Morris lake and  all the surrounding green.

House #2: $250,000 - $500,000

information and images via Zillow

This home requires a special eye but could become a pretty cool midcentury home if the right renovations were made. Plus look at that amazingly clear water! 

House #3: $500,000 - $750,000

information and images via Zillow

I love the open floor plan and outdoor living space of this home. It is also located on a canal which gives you water access while providing a quieter setting.  

House #4: $750,000 - $1,000,000

information and images via Zillow

Located on a lake point with 154 feet of frontage, this home has water views from most of its rooms. It also has a separate garage with an apartment above which adds to its already sizable square footage. 

Have a good weekend!

First time homebuyers

We have several friends who have recently purchased their first home or are in the process of looking. Most of them have been working for a few years, are feeling settled (enough) to stay in one place for a while and were tired of renting. I have spoken with all of them about what their experience has been like as first time homebuyers and they have all said the process is rather overwhelming. They didn't know where to begin, what they should be committing to, who the appropriate people were to talk to, if they were getting a good deal etc. Hearing all of this and knowing that at some point (not sure when) we would be in the same position, I wanted to do a first time homebuyer series. However, I was/am unsure where to start as its not necessarily a linear process and seems very dependent on location and timing. So I decided that I would just come at it from all different angles without necessarily having a plan. 

I will start with sharing an article I read in USA today a couple of weeks ago. Entitled First time buyers losing out as home sales rise, the piece describes how for the last 14 months U.S. home prices have risen showing a positive trend in the market, however, the number of first-time buyers is lower than in years past. According to the National Association of Realtors, in May of 2013 first time homebuyers accounted for 28% of existing home purchases which is down 6% from last year and 8% from two years ago. The article, written by Julie Schmit, goes on to cite three key factors in this reduction.

1. Competition - A growing number of current buyers are cash buyers (33% this past May) or repeat buyers who can provide larger down payments. First-time buyers are unlikely cash buyers and often use low down-payment loans for making their first large purchase.

2. Tight Credit - Home loans are harder to get since the mortgage crisis especially for those with a lower credit score.

3. Recession - The recession affected everyone, however, the 25-34 year old age group experienced a higher unemployment rate than adults overall according to Jed Kolko, a Trulia economist.  

The implications are that young people are missing out on low interest rates and below average home prices. In addition, first time buyers are vital to a housing recovery as they allow existing home-owners to sell and move into larger and more expensive homes. 

As I am not economist or anyone who really knows anything about mortgages and the housing market, I can't really personally comment on the article. It did get me thinking though and has sparked me to pay closer attention to what is going on with mortgage rates and current market trends. 

Stay tuned...