Deaton Investment Real Estate & The Wake County Apartment Association

Friday, October 28, 2011

WCAA - Next Meeting 12/1/11

There will be no meeting of the Wake County Apartment Association in November. Perkins Restaurant has closed, but fortunately we were able to reserve the private meeting room at the Golden Corral on Glenwood Avenue for December 1st. I am excited we have a chance to move back to this location.

The manager was reluctant to reserve the room for us into 2012, but agreed to give our group a "trial run." We need to have a large group and everyone in attendance must eat. exchange for the room reservation we need to show that our group brings a lot of paying customers so they will welcome us back.

I hope that most of you will go ahead and put 12/1 from 6 PM - 8 PM on your calendar. Details for the meeting will come in a few weeks.

Monday, October 24, 2011

Buying a house not part of the 'American dream' for some ::

Buying a house not part of the 'American dream' for some :: Raleigh, N.C. —
The shaky economy has some college graduates rethinking the traditional "American dream" of buying a house.

North Carolina State University senior Ben Galphin is more focused on looking for jobs all over the country.

"Everybody strived for that coming out of school – get a job, buy a house, start a family, the whole thing," mortgage banker Jeremy Salemson said Wednesday. “Now, the reality is they are not finding jobs or not finding jobs that are paying enough to feel they can qualify for a traditional mortgage."

Many people are opting to rent, which homeowner Jackie Armstrong sees as a waste of money.
“I would encourage people my age to buy a house, because if I had not stayed here for 18 months and was renting, I would have spent around $18,000,” she said. “That’s a considerable amount. Even if I sell this for as much as I bought it 18 months ago, I'm still not throwing money away.”

Armstrong cautioned that people should be confident and stable in a job before opting for a mortgage, a big fear for 20-somethings in the recent economy.

“If things continue to go down, would I have a paycheck?” Galphin worried. “It's something where I don't want to be sealed in to a 20-year agreement with a bank and can't hold up my end of the bargain.”

Salemson said the Triangle housing market has fared better than other areas, in part because of the diverse work opportunities in the area.
Reporter: Tara Lynn
Web Editor: Kathy Hanrahan

Friday, October 21, 2011

Housing Crash Continues

By: Dawn Wotapka and Alan Zibel

Here’s even more bad news for housing: Sales of previously occupied homes in the U.S. fell last month. September’s existing-home sales decreased by 3.0% – more than expected – from a month earlier to a seasonally adjusted annual rate of 4.91 million, the National Association of Realtors said Thursday.

The market is “in a holding pattern. It’s not breaking out,” said Lawrence Yun, the trade group’s chief economist. (We’ll point out that this holding pattern has been going on for some time.)

The results show that the housing crash continues. The foreclosure crisis drags on, exacerbated by the fact that many Americans owe more on their homes than they’re worth. That has plenty of would-be buyers jittery and stuck on the sidelines. In addition, requirements for loans are tighter than ever and, now, the size of loans backed by government entities including Fannie Mae and Freddie Mac have fallen, hurting housing even more. The limits, which went into effect at the start of this month, vary by location but are now $625,500 in expensive markets such as New York and San Francisco, down from $729,750.

According to the Realtors, the median sales price came in at $165,400, down 3.5% from $171,400 a year earlier, showing that the nation’s depressed home values have yet to stabilize.

The inventory of previously owned homes listed for sale, meanwhile, fell at the end of September to 3.48 million. That represented an 8.5-month supply at the current sales pace, slightly above the healthy level of about six months. (Keep in mind that plenty of would-be sellers have pulled their homes off the market or are waiting to sell.)

Foreclosures and other distressed properties represented about 30% of sales, showing such deals remain a big part of the battered marketplace. Investors purchased 19% of homes in September, up a hair from a year earlier. First-time buyers accounted for 32% of deals.

Here’s what industry watchers had to say:

Ian Shepherdson, economist, High Frequency Economics: “With mortgage demand still dead we expect no serious near-term movement. Prices continue to decline, with the y/y rate trending at about -4.5%. This is a significant barrier to recovery, because most people tend not to want to borrow multiples of their annual incomes to purchase depreciating assets, no matter how low is the nominal mortgage rate. Housing will recover in time as the labor market picks up and people start moving around the country to take up new jobs, but for now the market is dead.”

Jed Kolko, economist, Trulia: “Today’s month-on-month drop in existing home sales won’t be the last drop we see. The current month-on-month decline in home-purchase mortgage applications, released by MBA yesterday, indicates that sales – which lag mortgage applications – will continue downward.”

Dan Oppenheim, analyst, Credit Suisse: “We think these levels of months’ supply continue to indicate current and future pricing pressure, suggesting downside risk to existing and new home pricing (NAR inventory also would not include shadow inventory not for sale). We think home builders will need to adjust pricing lower to remain competitive with the more attractively priced existing home market.”

Friday, October 14, 2011

Should a First-Time Buyer Be A Landlord?

A great Q&A that appeared on

Q. I am a single professional in my 20s who rents with a few roommates. I read your comments about how Austin is a good place to invest in property, given the volatility of the stock market. I, too, am considering it. I am thinking of buying a three-bedroom, $150,000 house in a good neighborhood. With help from my family, I can put 20% down. If I rent out the extra two rooms, the income will cover the property tax and mortgage. But I travel a lot for work and I am not sure whether my company will transfer me or if I even want to stay in this area. Should I do it?

--Austin, Texas

A. I applaud your desire to invest in your financial future. And landlords get generous tax breaks while collecting rental income. But from what you've told me, I recommend holding off buying a home.

Managing a property—which includes screening tenants, collecting rents, paying bills and keeping the lawn mowed—while you are traveling is difficult. But my bigger concern is that you are not sure if you are even going to stay in the area. Unless you buy a fixer upper at a discount, rehab it and resell it quickly, the only way to make money in real estate is to hold on to a property until it appreciates. Even though prices have been rising in Austin, you will need to stay in the area for at least a few years to recoup your costs on a market-rate house.

As a homeowner and landlord, you will have many expenses besides taxes and a mortgage. Assuming you put 20% down on a $150,000 house in Austin, you will have to pay an estimated $4,938 in closing costs, according to Zillow's calculator. You also will have to budget for repairs and maintenance—expect to pay between 1% and 3% of the home's purchase price each year—as well as for repainting and freshening the rooms when tenants move out. You will need insurance, and if you have a homeowners association, you will have to pay dues. When you sell, you will have to pay a broker's commission, probably around 6% of the selling price, and some fix-up costs.

Rental income will help to defray these expenses, but you cannot depend on a steady stream. There will be periods when one or more of the rooms will be vacant, and you may have to shoulder some extra costs to evict someone who doesn't pay the rent. You should have about six months of mortgage payments in reserve to cover these possibilities. You also should have cash on hand to handle expensive emergencies, like a furnace that conks out in a cold snap. Since you will have to tap family funds for a down payment, it doesn't sound like you have enough of a cushion yet.

That doesn't mean that you should give up on the idea of owning property. Just postpone it until you know where you will live and are on a more solid financial footing. In the meantime, continue to familiarize yourself with various neighborhoods and properties, talk to lenders and work with a real estate agent who understands your situation. Then you will be in a position to act when you are ready to put down roots.

Write to June Fletcher at

Monday, October 10, 2011

Wages for young college graduates down almost 10%

This sobering chart comes from The Wall Street Journal Blog

Citing research from the US Census Bureau, recent college graduates without graduate degrees have seen a larger decline of income between 2000-2010 than any other age group.