Open House by Jim Woodard

Distressed properties — foreclosures, pre-foreclosures, bank-owned and short sale properties — represent an estimated 40 percent to 50 percent of all home being sold today in major U.S. markets. In fact, it is estimated that 8 million U.S. properties will be foreclosed upon by the end of 2009.

Resulting bargain prices, combined with interest rates that are still near historic lows and a substantial tax credit for first-time buyers, make today's real estate market an attractive buying opportunity. In fact, a study by the Federal Housing Finance Agency shows that home prices have declined an average of 36 percent since the market's price peak.

Another change is the growing number of renters. Many former homeowners who have been forced by financial problems to leave their homes are now living in or seeking a rental property. This stimulates the market for apartments and other multifamily properties. Builders, developers and investors are taking note.

Rental prices have stabilized in areas where rental prices were statistically dropping. In fact, rental prices are increasing in some metropolitan markets. Vacancy rates in multifamily properties are lowering.

Bottom line: While many homeowners are experiencing difficult times with mortgages they can't afford, home buyers and investors are benefiting from current market conditions.

Q: Is it a good idea to use online services to establish a home's value?

A: It's particularly difficult to establish a realistic value of a home in today's fluctuating market. Yet, arriving at the right asking price is vitally important to owners with homes to sell. If set too high, the owner will be cut off by competitive offerings and it will be hard to remove an "overpriced" stigma even after reducing the price. If it's too low, the owner will obviously lose money.

Some owners depend on online estimates. This is usually a mistake. It might be a helpful beginning, but not a total resource.

"Real estate cannot, and never will, succeed on technology alone," said Greg Hanson, senior vice president of RealEstate.com. "While mobile applications, the Internet, and other high-tech methods have made it easier for buyers and sellers to demystify real estate, they'll never fully replace the expert insight and personalized advice provided by a professional."

That especially applies to determining a home's market value.

An onsite appraiser will see and consider many factors that are unknown to a computer database.

Q: What are the top considerations for today's home buyers?

A: The three top considerations revealed in a recent survey by Roost.com for today's buyers are: 1, affordability; 2, location or neighborhood; 3, the house itself.

Before the current economic slump, the No. 1 factor in deciding on a home purchase was location, thus prompting the oft-quoted term "location, location, location." The realities of today's economic environment have changed the order of key considerations.

One survey, conducted several years ago, noted that about three-fourths of all home buyers pointed to location as the most important factor.

Q: Are more buyers looking for homes online?

A: The Roost.com survey reported that homebuyers are spending more time on average in researching potential homes online. Overall, more than 11 hours per week are spent online checking out homes and neighborhoods. For women, the time spent is greater.

The time devoted to online research varies from region to region. The greatest time spent is in the Northeast, where the average is 15.2 hours per week.

It's a well-established fact that many prospective home buyers do their preliminary research online, then call in a professional to arrange for inspections and handle the purchase transaction.

Q: Is the number of new homes being built going up or down?

A: The production of new single-family homes is rising as builders and developers respond to improving conditions for buyers of newly constructed homes, according to U.S. Commerce Department figures. Overall, construction starts of residential units are still falling, but new single-family homes are on the increase.

Single-family building permits are going up even more rapidly than constructed units. This is a good indicator of increasing sales activity in upcoming months. Construction of multiunit structures is down.

Q: What proportion of homes on the market has reduced prices?

A: A recent study by Trulia.com revealed some interesting information. It noted about 23 percent of homes for sale today have experienced at least one price cut, totaling $22.4 billion in reductions. The average reduction in list price was 10.6 percent.

Major metropolitan areas have been hit hardest with 33 of the 50 largest U.S. cities having seen prices plummet by 25 percent or more. That's higher than the national average of 23.6 percent.

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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