December 28, 2011 Newsletter

MY intent on writing this newsletter each month is to focus on real estate issues in a positive light, while presenting a balanced picture of what is out there. If all I was presenting was fluff, I wouldn’t expect you to read it. The market has been challenging for 2011 and for those of us in the industry, the prospects for 2012 are daunting. Nonetheless there are opportunities. BUT, before looking at 2012, a review of 2011 is in order.

In 2011 we have seen record lows in interest rates, which will probably continue for at least most of 2012 if the Federal Reserve promise is to be believed.

In 2011 we have seen a gradual settling of property values. Compared to most areas of the country, the Baltimore Washington corridor has seen a smaller drop in property values. If statistics are to be believed, across the spectrum property values have dropped 20- 25%. A greater drop appears In our hardest hit areas, like Prince Georges County, where the greatest concentration of mortgage “issues” have been evident, with the resulting highest percentage of foreclosures of any jurisdiction in the state.

Foreclosures are still the wild card. It appears the lenders are taking a realistic approach to workouts. The bottom line is that with the changes in the law, lenders have been given an incentive to work out many delinquencies. Realistically, as in any market some foreclosures are warranted. If you need help, call us.

Now the positive. As indicated above, rates are phenomenal. If you are envisioning a move in five years or so, take a 5/1 ARM. On my personal residence, I refinanced to a 5/1 ARM at 2.875%. I have a fixed rate of 2.875 for 5 years, with the ability to save over $7200.00 a year, and still refinance within the 5 year period, if the situation warrants. If you have kids going into college next year it gives you relief over the 4 year period.

With property values down, an investment in rental real estate makes perfect sense. If you have heard that building starts are up, it’s true. The builders are building apartments because rents are going up. The ability to purchase investment real estate with a positive cash flow is apparent. Builders don’t build apartments unless they know the rents are gong to carry the debt.
We are looking for investors, both to help with their legal and title needs, and to put in properties. We have seen all kinds of markets and understand what works.

We want to be your title company and law firm. Call or email me at 410 884 1160 x3007 or at tee.tillman@colonytitle.com.