Sales of previously owned homes fell 27.2% from June to a seasonally adjusted annual rate of 3.83 million, the National Association of Realtors said Tuesday, the lowest level since the industry group started its tally in 1999. (Source: Wall Street Journal) Job growth is going to be the key to economy recovery. Although the number of home sales went down, I don’t see any drastic reduction in home prices.

Everyone keeps talking about great bargains of $20,000 houses available in Detroit. If you are not living or working in Detroit area, what is the point of buying those houses anyway? Some may try them as investment properties. However, everyone needs affordable homes in the area where they have a job. If you are in the market for home in San Francisco bay area, you would know how difficult it is to find a decent single family house for less than $600,000. That’s not a bargain. It’s just not affordable at all for many of us.

I don’t see a dramatic fall in home prices anytime soon. The prices may stabilize in the next 12 weeks. I won’t be surprised if the prices move up a little bit next year. If you have a stable job and are able to find a decent home at a fair price, it’s a good time to buy the house especially given the low mortgage rates.

Related Link: Is it the right time to buy a house?

Just when you think you are out of the woods, one more stats will come out of the blue and strike you. This is how the stock market works! We heard about improvements in U.S. real estate market for the last weeks. Today, Commerce Department reported unexpected drops in home construction and building permits in October. The data showed housing starts decreased 10.6% to a seasonally adjusted 529,000 annual rate compared to the prior month. Economists expected 1.7% increase. The 10.6% fall carried construction to the lowest point in six months.

Building permits in October fell 4.0% to a 552,000 annual rate. Economists had expected permits to rise by 0.9% to a rate of 580,000. Building permits are a sign of future construction and it appears that future is not that bright for real estate market.

Related Link: Choppy Trading Continues

U.S. Real Estate market continues to give mixed signals. The data from Commerce Department indicates that new home sales climbed for the fifth straight month in August as sharply lower prices lured buyers into the market. However, the National Association of Realtors reported that the demand for used homes fell unexpectedly in that month from July, the first decline after four months of increases. As always, it all depends on where you want to buy. Some markets (such as Las Vegas) in U.S. are still going down. Some markets (such as Seattle) are stabilizing. Expiration of first time buyers credit in November 2009 may be motivating buyers now. This uptrend may not continue after November if the employment situation doesn’t get any better.

There are continuing positive signals in stock market. We mentioned about pickup in Mergers & Activities few days ago. The return of Mergers on Monday lifted U.S. stocks to their highest levels in five weeks as major acquisition announcements from Abbot Laboratories and Xerox boosted investor hope. We are entering October in few days. I think that U.S. stock market will slow down in October before picking up the momentum in November.

Related Link: U.S. Home Prices Up

If you look at action in stock market in the recent weeks, it may appear that we are out of woods. I think it’s too early to judge that. Real estate market gurus started singing their optimistic songs. If you look at stock price movement of builders like Toll Brothers, you can see there is lot of expectations about real estate market turn-around.

Although I like to believe in the hype and start putting my money in $70,000 house in Cape Coral, FL, I am hanging in there because it is just the hype. New York Times published an article about real estate market in Florida. It may be really tempting to go and buy couple of foreclosed properties in Florida and elsewhere. I am going to hold on to my money until employment situation is getting better. New York Times columnist mentioned in the article “age of the flipper is behind us”. You wish! Flippers make the real estate market looks sexy. Flippers are hiding for now, they will come back.

Yes the real estate market appears to be making a bottom. The numbers that have come out over the last few months point to a real estate market that is extremely weak, but seems to be coming off the bottom ever so slightly. In recent weeks analysts on Wall Street and talking heads on financial television networks have been speaking extremely highly of the real estate market. I think it is a good idea for investors to understand that the real estate market isn’t getting worse anymore, but I also think they should be very careful about diving back into a market that still has a huge amount of supply.

Overall I believe that investors should learn a major lesson from the real estate market bubble that burst in the last few years; your house should be a place for you to live and not counted on as an asset or an investment that will grow by leaps and bounds. Yes your home will probably increase in value over time, but you are better off thinking of that as a bonus than you are counting on this for your future needs. Unlike other assets the market for a home is not always extremely liquid, as we have seen in the last few years.

The demand for houses is likely to improve over the next few months, but do remember that there is a huge amount of supply on the market that has been there for quite some time. In addition, there are many sellers that have decided not to sell their home during the recent downturn who may come out of the woodwork and want to sell their home as housing demand improves.

The bottom line is that the real estate market is showing signs of life, but it is far from being a boom area that investors should jump into right away.

It doesn’t appear so when even our Treasury Secretary is struggling to sell the house! Webguild reports that Tim Geithner, Treasury Secretary, is having a hard time selling his house which he bought at the peak of the market in 2004 for $1.6 million. More about this at webguild.

On the same topic, if you look at the time Tim Geithner bought the house, it was 2004… just right before the peak in 2005. He was President of Federal Reserve, New York. It’s a little consolation for all buyers that bought at or near the peak, even the Fed President couldn’t see the coming crash.

Related Link: Foreclosures Spread

Thanks to action from the Federal Reserve in the last few weeks mortgage rates are definitely on the decline across the country. In fact, mortgage rates have just recently hit their lowest level in 52 years according to a recent survey. The long-term fixed mortgage rates are falling particularly fast right now. What does mean to you? Well, if you are a good candidate for refinancing a mortgage on your home then now is a good time to at least consider it as a possibility.

Bankrate has a terrific mortgage refinance calculator that allows you to plug in all the pertinent rates and information from your mortgage and then plug in current interest rates and see whether it is worth it for you to refinance. The calculator is designed to show you just how much you would save by refinancing your mortgage in the current environment. Obviously in some cases you wouldn’t save anything, but in others you can save a great deal.

Bankrate also has a thorough section which allows you to compare the best mortgage refinance rates in your area.  You are able to search by state or zip code and look for the best possible interest rates to refinance your home. You are looking for the lowest mortgage refinance rate possible, while still staying in a reasonable payment zone for you and your family’s income. Remember not to overstep your boundaries and try to payoff too much because that will actually force you deeper into debt in the long run.

While looking on a site like Bankrate is extremely helpful, it is also imperative that consumers also be proactive and call or go to their local banks and speak to someone in the mortgage department. Quite often they will be able to help you find an even better rate than is advertised if you go in and sit down and explain your overall situation. Shop around and don’t feel pressured, but rather just do what is best for you and your wallet.

Is it possible to network with other real estate investors without paying lot of money to Robert Allen kind of guys? I read good reviews about biggerpockets.com. This website has forums that are reasonably active. If you have questions about buying your first house or renting out your old houses or anything to do with real estate, check this out.  I believe that sites like this would be more useful for real estate investors rather than generic social networking sites like facebook or myspace.

If you are interested in real estate investing, check out the site. Investors only, not for speculators!

Related Link: Is it the right time to buy house?

I think so. I am not trying to time the market bottom for real estate. I don’t think any one can time the market top or market bottom. Based on what we are going thru today, it appears that buying a house is not a bad idea.

However, it’s not for every one. First of all, you should have steady income and stable job or business. Second, do not try to buy houses or apartments in areas like San Francisco bay area where the prices haven’t gone down much.

If you have a good feeling about your job or business, it’s better to buy a house rather than renting it. In the wild-wild-2006, you can get the loan with 0% down. Not any more. You should be able to make at least 20% down payment. If you put down less than 20%, it’s harder to get good mortgage rates. You will also need to pay for private mortgage insurance (PMI) in that case. PMI is bad, very bad.

Mortgage rates are hovering around 5.42% for 30 year fixed mortgage and 5.15% for 15 year fixed mortgage. If you can afford it, it’s better to go for 15 year fixed mortgage. The rates are higher for jumbo loans. Do not get adjustable rate mortgage (ARM) at this point of zero percent economy. (When the interest rates go up, you will need to pay more interest in ARM).

Home buyer tax credit of $15,000 approved by Senate also would also help the home buyers now. Buyers would get 10 percent of the purchase price of any home, up to $15,000, applied to their tax bill. Consumers would be allowed to spread out the credit over two years, making it possible for those who pay less than $15,000 in taxes to benefit. Anyone who buys a home within a year of the bill’s signature would qualify. Please note that buyers must occupy the house as their main residence for at least two years. This provision is in place to discourage the speculators and house-flippers.

First of all, I hope all of the readers of Moola Mania had a very Merry Christmas and Happy Holidays!

I’m sure as you are reading the title of this post almost all of you are saying “of course it is.” Obviously the information I am saying about the real estate market being in the doldrums is no breaking news. The question that I have, which is an important one for our economy, is at what point does the vicious cycle end?

Right now we are in an environment where there is huge amounts of inventory, no demand, and the value of homes is declining faster than it has in the last 40 years. Sounds pretty bleak huh? Well it truly is. There is no way to sugar coat what is going on in the housing market. There are very few buyers out there, and the buyers that are out there are in a wait and see mode because they strongly believe that the prices will get even cheaper the next month. After all, who are we to blame them because they want the best price?

There has been a lot of talk about what exactly will stimulate the real estate market and the credit market. One issue is, even those who want to buy a house are having a hard time getting a loan. There have been ideas tossed around regarding the government getting involved and providing tax breaks for buyers of homes or even buying some mortgages, but nothing has been set in stone yet. I understand that the government has to do something to help reward home buyers, but I hope the government doesn’t get too involved in this. In the end the largest reason we are in this real estate market bubble is that prices got way ahead of themselves and they are correcting, which is a healthy but very painful process. In the interim I think the government should go after the greedy schemers who put people in homes they knew they couldn’t afford and provide some incentives, but remember that simple supply and demand will eventually win out.