December 9, 2008 Newsletter

There is light at the end of the tunnel, even if you have to squint to see it. For those of you who didn’t read Ken Harney’s article in the Sun and Washington Post, let me recap. Over the last five years 273 real estate markets out of a total of 292 showed gains in value. Even though some markets are currently selling below what they were selling for in the last two years, over a five year period, the values are up. For example, in Washington D.C. and the surrounds the last year shows a 12.5 percent price decline, but over the past 60 months there shows a cumulative gain of 43.7%. So if you bought in 2003 or before, your typical gain (on paper) far exceeds your short term loss by a 3 to 1 margin. Using those numbers, if you bought IBM at $100.00 a share, and held it for five years you would have a paper profit of $43.70 a share, despite a short term loss of $12.50 per share. That’s an annual gain of over 8.00% which probably exceeds what your annual return on your stock portfolio looks like. These statistics tell us that even with the recent downturn in the market, the long term benefits of holding real estate, even in this market, is a good investment.

Rates are still fluctuating, but on December 8th they are around 5.75%, up a bit from Friday’s 5.5 %. I do have one lender who will do 100% financing for borrowers with quality credit, so call me if you have a need.

I want to repeat some advice given me by one lender friend. If you are over 62 and in danger of being foreclosed upon, (or know someone who is), look into a reverse mortgage. For people meeting the age requirement who have some equity in their home, it’s a sure way to retain the property and never have to make payments again. Reverse lenders look at the borrower’s age, equity in home, and to a lesser extent the rate, to calculate how much they can lend. Once the loan is in place, the borrower can’t be foreclosed upon for non payment as the payments are added to the principal. While the loan gradually eats up the equity, the owners are able to keep the home as long as one of the borrowers lives in the home.

We want to be your title company and law firm. We will continue to provide you up to date information on the marketplace. Your referrals are always appreciated. I can be reached at tee.tillman@colonytitle.com or 410 884 1160 x3007.