Real Estate and Homeowner News & Knowledge

eNeighborhoods Neighborhood News

Buyers and sellers find balance as housing market cools

For the last few years, residential real estate burned hot in the headlines with speculation, soaring property values and brisk sales. But now, with mortgage rates rising and sales slowing in many areas, the tide is turning. Clearly, with homes selling at a slower pace, buyers have some additional leverage to apply at the bargaining table.

With housing inventory up, buyers typically have a larger selection to choose from, and more time to make buying decisions. Also benefiting most homebuyers is the lack of competition from speculators. As home prices shot up in the last few years, it was possible for investors to “flip” properties by buying and quickly reselling at a profit, but current market conditions make this practice much more difficult.

In fact, a time-tested strategy to maximize returns on residential real estate is to simply stay put. Just like buy-and-hold investors, homebuyers who keep their homes for more than five years are much more likely to see profits than those who buy and sell in a shorter time period.

But that doesn’t necessarily mean the party’s over for sellers. Nationally, home prices have remained solid and a well-priced home in a desirable neighborhood should move quickly regardless of current conditions. And though interest rates are rising, they are still low by historical standards…as anyone old enough to remember 30-year mortgage rates north of 16 percent in the early 1980s can attest.

Did you know?

After raising the Federal Funds interest rate 17 straight times in 27 months, the Fed left it at 5.25 percent in early August, saying it wanted time to study the rate’s effects on inflation.

Has your home insurance kept pace with property values?

Homeowners policies are long, complicated documents that aren’t exciting to read. Many people avoid them because they feel confused by the language and complexity, but there are some basics every homeowner should know. For example, in case of a total loss, does your insurance enable you to rebuild a comparable house in its place?

In many areas, home values have soared in the past few years. If you’re fortunate enough to live in such a neighborhood, now is the time to check with your insurer – not after you’ve filed a claim and learned your coverage isn’t up to par.

If you’re not sure, ask directly what your replacement policy covers. You may be surprised to learn that “cash” or “fair market value” may not replace all that was lost. For example, fair market value factors in wear and depreciation, so you might receive what your furniture and appliances were worth before being damaged, not what it cost to replace them after. Ask your insurer if your policy includes “full replacement value” for your home’s contents.

If you’ve taken advantage of low interest rates to remodel or upgrade your home, check with your agent to make sure you’re covered for the full value you’ve added. You may need to produce documents or receipts for any renovations.

Dubai Real Estate Investors Deterred by the News of Frauds

Dubai dream may not be over as yet, but it’s fast fading away. Global recession has already reduced the tourists and foreign investment coming into Dubai real estate sector to bare minimum, and now the news of frauds and scams are there to further frighten off the investors. These days, Dubai is in the news for all the wrong reasons (the most recent being the “standstill” request being made by Dubai World, which has literally shaken the world’s economy). There’s no doubt that Dubai government is doing its best to control the damage, taking steps like tightening up on fraud companies and professionals, introducing new laws, and seeking financial help from Abu Dhabi (who doesn’t appear too keen to help). However, the setbacks like recession, credit crunch and frauds are coming out in succession (just like the opening of Pandora’s Box), making it really difficult for Dubai to regain its charisma. Sorting out all of these problems is not going to be easy, but one thing is sure; Dubai cannot afford to loose its credibility at this critical juncture.

Dynasty Zarooni was one of the first well known real estate company to appear in the news along with fraud allegations. The chairman Kabir Mulchandani, who at first denied the allegations (not surprisingly), ended up being held later on accusations of “fraud and embezzlement”. The lawsuits filed against the firm involved more than AED 6 billion. Then some top officials at Nakheel were investigated for bribery charges. Even though, you can’t blame Nakheel for the wrongdoing of its executives, the name associated with the accused was enough to scare investors. A fairly recent scam to surface on the scene is the one that involves Al Fajer Properties.

Charges are laid against many individuals, lots of arrests being made, however that’s not enough to satisfy the investors. One thing that continues to woe the investors is Dubai authorities attempt to brush local’s involvement in some of these frauds, under the carpet. Many experts are now questioning the credibility of all these probes and sentences taking place. Nothing intimidates investors more than the risk of fraud, for that reason Dubai government needs to act fast before it is too late; otherwise it’ll be hard to get back investor’s trust and transparency once it’s gone. In that case, the Dubai authorities will have no one else to blame, but themselves.