The Wall Street Journal reported recently that rates on 30-year fixed mortgages have once again hit a new low. According to their article, the new rate for this mortgages is 4.32% this week – down from 4.36 percent last week and 5.08 percent a year ago. Of course, this drop isn’t significant; rates have been hovering around this area for 11 weeks, and this week was just another smaller drop.

Other mortgage rates are in the same state. According to the figures in the WSJ article, a 15-year fixed mortgage now has a rate of 3.83 percent. ARMs, or adjustable rate mortgages, also seem to stay in the same area. A standard ARM is 3.5 percent, while a hybrid ARM is 3.54 percent. All rates mentioned in the WSJ article are from Freddie Mac.

These figures, however, don’t represent the entire state of the market. From the perspective of the realtor, the market needs some serious assistance: prices are down 30 percent from the middle of the decade, while few new properties are actually being sold. Pending home sales, additionally, are also in a state of flux. According to this article from Business Insider, 90 percent of properties being sold are existing – few newer ones are being sold – but the market seems to be steadying.

The fact is, the real estate market will never recoup the 2004 to 2006 levels in such a short period of time. While prices on homes significantly increased during the first half of this decade, many purchasing such homes were also given ARMs and were unaware of the rate increases over time. Such a swift increase can only result in significant ramifications; in this case, the less-than-decent practices from agents and homeowners unable to pay quickly-rising ARMs both surfaced by 2007.

When it comes to real estate, the housing market burst in 2007, went down, and has stayed at a low level for about two years. While this varies in some parts of the country – real estate in New York seems to be picking up – the next shoe to drop is considered the commercial real estate market. Or, will it? In some parts of the country, the demand for commercial real estate is increasing, while in others, such as Las Vegas, the demand is still low. When it comes to inflation, commercial real estate is considered a stable point amidst the storm.

According to the article linked above, commercial properties protect against real estate, their value keeping overall amounts from dropping lower. The author, in fact, describes them, as a “hedge against inflation” and they also help set the pace against inflation. In fact, those creating a varied investment portfolio are advised to add commercial real estate because of its stability. As far as the real estate itself is concerned, the ability for a property owner to adjust rents over time correlates to economic growth.

Unfortunately, this latter aspect is where the commercial real estate market – and in economy in general – is lacking. The state of the economy, including a lack of jobs and a stagnant homebuyers market, has put pressure for rents to lower to keep up the pace of inflation – or, more appropriately, deflation. Rent, in general, has declined over the past 18 months at a rate quicker than the typical inflation index.

Nevertheless, the author predicts that rent on commercial real estate should outpace inflation over the next few years, as the demand for “goods” will increase the pressure for inflation. The lack of job opportunities, however, means that the consumer has little buying power, and this factor keeps the homebuyers market stagnant. Do you think that the market will improve once job opportunities increase, or will it increase on its own?

The options for selling a home have increased, but having a real estate agent eliminates the work you need to do to sell the property. An article on MSN gives some tips for finding a real estate agent, as not all agents are equal. Some, as the author found out, will end up charging you more money and will price the house higher. Others may have a better idea of the neighborhood’s market. Before you find an agent, do some research. Some of the points for this mentioned in the article include:

• Going to open houses to learn about various local agents. This also helps you get a better picture of what homeowners and agents are charging for selling prices.
• Which local agents have sold a large portion of real estate in your neighborhood?

After you’ve found some potential real estate agents, interview them to see if their intentions align with yours. Ask them about:

• Their approach and method to marketing efforts.
• Do they have any client references?
• Can they refer you to home inspectors for a full examination of the property?
• Will they let you out of an agreement if you’re not happy with services?
• What should I, as the current homeowner, do to make the property more marketable?

The MSN article suggests the approach to finding an agent is much like that of a job interview. Additionally, the article also mentions about selling the home yourself. Although you’ll be responsible for the marketing efforts alone, you can list the home yourself for $300 to $500 in MLS. If you do plan to use an agent, the point the author makes is to never go by personal reference. All homes are different, not all agents are as knowledgeable about each neighborhood, and finding someone who can meet the needs of your home is the most important factor.

The state of tourism and the statistics on housing tell two different pictures of Las Vegas. The former, according to an article published in the Wall Street Pit, is busier than in previous years and expects a three-percent increase by the end of the year. The overall state of real estate in Vegas, however, is still very bleak. The paradigm of a bust, Las Vegas had home prices drop to 50-percent of 2006 home prices, and the average price for a home in the Sin City now is slightly less than a home cost in 2000, inflation not adjusted. The market, however, has been stable for two years.

When considering states with the most foreclosure filings, Nevada comes in first, according to the article linked above, and Las Vegas is the number one city for foreclosures in the state. This number is taken from a percentage of overall foreclosure filings for homeowners: at the moment, 58.6 percent of all residents have a mortgage, and only 15 percent of the state owns a home. While these figures are taken from the present, the state and Las Vegas both saw high numbers for mortgage defaults and foreclosures over the course of the recession.

Commercial real estate, an uncertainty at the moment in many areas of the country, has also hit an overall low in Vegas. Although the casinos and tourist attractions appear to be bustling, the city still has a 24-percent office vacancy rate.

As the article above mentions, Las Vegas appears to be attracting many foreigners and locals looking for a staycation. Considering the state of real estate in Las Vegas – and the state of the economy to go with it – could Las Vegas have a future in catering to a foreign market, which would increase jobs and also the ability to purchase real estate? Or, is the slight increase in tourism masking the state of the local economy?

The relationship between the real estate market and economy appears to be circular and reciprocal: one helps out the other, who responds positively. When neither the real estate nor the economy is in a good state, however, both continue to remain at the bottom: a less of a demand for homes (who can consider purchasing a home when no jobs can be found?) results in a flat real estate market, and a lack of purchasing power keeps home prices stagnant. A recent article from The Epoch Times indicates that the state of both could keep the current economy in a state of recession.

The fact that few jobs have been created as a result of the stimulus package, as opposed to recovery efforts from the Great Depression that created various government manual labor jobs, indicates that the economy is stagnant. With that, is the real estate market. In the piece in The Epoch Times, Alan Greenspan is paraphrased as mentioning that the declining home prices are one indication that the country is still in a recession. And, when you consider the unemployment rate, it has remained around 10-percent for the past year. Only those in higher income brackets have buying power at the moment.

Nevertheless, if the economy was in better shape, real estate would be a buyer’s market. Mortgage rates are low and many properties, through foreclosure, are up for sale at affordable rates. Rather, with a greater increase in unemployment constantly looming overhead, many are afraid to make a significant investment, such as purchasing a home or a car. Instead, the latest trend across all forms of spending is saving and taking an economical approach. Surely, if you can clip coupons to save on your monthly food bill, your home doesn’t need an upgrade for the time being.

It appears to be a buyer’s market out there. As we wrote a few weeks ago, the current state of the real estate market appears to benefit buyers. Although this may not be the case all over, it certainly is in Manhattan. As the paradigm of a recovering real estate market, Manhattan saw a significant increase in sales for spring. Could it be the nice weather convincing everyone to move to the city and purchase property, or are other factors involved?

With real estate, few move because of the weather – even if it’s to Florida. And, then there are those moving away because of hurricanes and the Gulf oil spill. In New York, particularly for apartments, low mortgage rates are enticing buyers to purchase property. Coupled with the tax credits, this factor makes now the best time to buy in Manhattan.

The mortgages rates have been flat or seen very slight increases over the past year in New York and the rest of the country. But, as far as sales are concerned, spring 2010 saw an increase of 42 percent, compared to sales from a year ago.

Nevertheless, the properties being bought up aren’t average priced condos and apartments. Rather, these fall within the higher end of the housing market, and those purchasing them are those who can afford a one million-plus dollar apartment. However, as far as the market is concerned, the state of Manhattan reflects improvements that real estate over all should see. Buyers should be – and are, in certain areas – enticed by lower prices and, as a result, start purchasing a home or condo when the time is right. Maybe Manhattan is the start of a trend that will pick up in other parts of the country: those with money to spend will go after higher end pieces of real estate and push the market further into recovery.

To follow up on the last post, the real estate market isn’t in as great of shape now as many of predicted. Yes, 2009 and the first quarter of 2010 have seen a few improvements, but periods of stagnancy have also characterized these past two years. Additionally, while home sales have also increased at points, where are these figures coming from? Are people actually buying new homes, or, instead, are foreclosures taking up a large portion of the market?

According to a recent article on Boston.com, the latter might be more accurate. Figures released recently by RealtyTrac indicate that 30 percent of home sales in the first quarter of 2010 were foreclosures. In Massachusetts, more specifically, the sale of “distressed” homes – any foreclosed or short sale properties – conuted as 42 percent all off homes sold during this time period.

So, with such a significant percentage of home sales associated with foreclosures, is the real estate market really in a state of recovery? The answer at this time might be one of uncertainty. While foreclosures came in large quantities back in 2007, they appeared to have lessened over the past three years. At the time, however, the sudden abundance of foreclosures was more of a shock than the properties being sold.

In the present, it appears that the amount of individuals filing for foreclosure or short sale has lessened (although this can’t be said for commercial real estate), but, perhaps, the foreclosed properties from a few years ago are still on the market. Buying foreclosures does have a significant advantage in the current market. Rather than worrying about tax credits expiring, buyers can purchase a home that is 27 percent less than the median home price. Assuming the property is in good shape (and this can vary with foreclosures), the buyer might actually be getting a good deal on a new home.

Which came first – the recession or the crash of the real estate market? For most, this scenario isn’t exactly a chicken-and-egg association. The crash of the real estate market began in 2007, and the recession was declared official in 2008, although signs pointed to it as far back as late 2007. So, in essence, the timing was perfect – if, by perfect, you mean real estate and job markets that are wallowing at the bottom together.

A recent article discusses the relationship between these two, particularly how the state of the real estate market may be keeping the recession from improving. What are some of the factors it cites?

• The number of buyers who signed contracts to purchase homes dropped off in May. The author hypothesizes that this could be the result of the expired tax credits and cancellations resulting from those wanting to buy – as long as they could get a tax credit. Additionally, figures for homes sold at this time were adjusted for April and March.
• The real estate market has no safety net. Past market crashes – the tech crash in 2000 and the real estate crash in 2005 – had solid markets to fall back on. This time, the real estate market crashed first and, in a year, so did the job market.
• Buyers finding their homes are worth less than what their mortgages are worth.
• 2010 has seen an increase in foreclosures and short sales.
• Homeowners with modified mortgages are now falling behind on their payments.

Could 2010 be a repeat of 2007? Although the real estate market may never get to pre-crash levels, the market may not yet be in a period of recovery. As the unemployment rate is still about 10 percent, many who had purchased homes prior to 2007 may no longer be able to pay their mortgages. Going into foreclosure ruins their credit. Without credit, in some cases, an individual may not be able to obtain a job – and afford a home later. Perhaps the job market should start on improvements first, and then the real estate market will follow.

A few weeks ago, we discussed an article in which commercial real estate might be on the way up. The article talked about more properties being purchased for industrial purposes in Minneapolis. But, perhaps, Minneapolis is only a positive snapshot in a subset of real estate that still hasn’t reached the bottom yet.

According to a recent article, the state of commercial real estate has deteriorated significantly over the past 18 months. In 2007, as the article mentions, the market was in excellent shape. Although with too much spending and taking out too many loans, is this a true assessment? However, the article mentions that even when the residential subprime market declined sharply in 2007, the commercial real estate market was unaffected and, instead, the year saw the highest number of transactions for the entire decade.

Considering the amount of subprime lending and dishonest practices seen in 2007 for residential properties, similar practices extending to commercial real estate might be expected. Up to 2007, banks were increasing their commercial lending and, by the end of the year, 36 percent of their assets were in commercial real estate loans.

However, as the article explains, the economy tanking in 2009 didn’t mean a decrease in commercial real estate – at least on the surface. Companies, it appeared, held on to this real estate in 2009, and now they may be paying the price. April 2010 saw a seven percent delinquency rate, and 17.1 percent of commercial real estate loans were 30 days delinquent. Additionally, the issues go beyond delinquent loans. Businesses may have loans in the process of foreclosure and owners may be under pressure to or have already declared bankruptcy.

None of these are positive signs for the commercial real estate market over all. But, does this look like the bottom or just part of the market’s descent?

Often on this blog, we talk about the real estate market and properties from the perspective of the agent. Of course, that’s the audience for the blog, but sometimes, as with all industries, the agent needs to think from the view of the consumer. In the case of the current real estate market gradually on the rebound, nearly anyone considering buying or selling a home is asking, “Is now a good time to do it?” Three years ago, the answer would have been, “No.” But, particularly since the start of 2010, the amount of properties being bought has increased and prices have slowly crept up, as well. Tax credits played a part in the slight increase of homes bought this year, but even without these, should a person be buying a home in the current market?

A recent article captures much of the view for a homebuyer in the current real estate market. Many still strive to own a home and will find a way to do so. Those also considering purchasing a new home, not a foreclosure, also see the market as being more affordable than a few years ago. Couple this with solid mortgage rates and better lending practices, and now, more than three years ago, looks like a more stable time for purchasing a property.

Of course, the real estate market is far from perfect at the moment. For many who bought a home between 2004 and 2007, their property has been devalued because of the real estate crash and the disparity between their mortgage and what their home now goes for is too great. Prices, however, are gradually rising but are nowhere near where they were in 2007 and a few years before. Presently, such factors make the market better for first time homebuyers and still significantly questionable for a person looking to sell a home and buy another.