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Gulf Coast Real Estate Market Update

by The Pat Wattam Team

It has been a very busy summer at the beach - and I'm specifically speaking of the Alabama Gulf Coast in the Gulf Shores/Orange Beach area.  Hurricane Ivan was three years ago, and we are all still holding our breath that we will get through this season without a hurricane!!  The rental that we own, in it's first year being used as a rental, has stayed full all summer.  As summer winds down, rentals are slower, as we expected.  But according to the leasing company, this has been a grand summer at the beach!

For those people who have considered buying a place on the beach, now is a fabulous time!  As we mentioned in a blog at the first of the year, the prices there have really come down and, in fact, looks like it is starting to turn back up - especially on properties in the $400K range.  We recently sold a property in the Phoenix, 2 BR, for $365K!!!!!  I found another unit in another nice condo with 3 BRs on the beach, for $420K!!!!  Folks, we haven't seen these prices in several years!!! 

Even if you are just curious about what you can afford, either send me an e-mail, or go to our web site at the beach:  www.GoBeachRealty.com and we'll set you up for an automated property search so that you can see what I'm so excited about.  What better place to create memories with friends and family! 

Subprime Lender Fallout

by The Pat Wattam Team
The Truth Behind Mortgage Company Closings
As two more lenders closed their doors this week, it has caused some serious concern in the Baton Rouge area on how it will impact our real estate Market.  First, to clear up some misconceptions.  People with good credit will be able to obtain home loans as always, and will have the best rates available.  For most of my real estate career, this is the way it was.  If your credit wasn't up to the required standard, then you worked on cleaning it up - by paying bills consistently on time, and paying off credit cards and other items so that your debt to income ratio, including your house note, did not exceed 36%!!!  Part of my buyer counseling was looking at these numbers with my clients and helping them get into a house as quickly as possible.  For some people it took two months for others it took one year. 
Then the government decided that home ownership should be available to anyone...which is a fabulous idea in theory.  But, the next thing you knew, people were buying a house with 50% dept to income, and predatory lenders would refinance your house for 125-150% of what it was worth! These loans were usually made to people in distress.  And, the end result would be that they would have to sell their house because they could not afford it any more, and, since they borrowed so much, the couldn't sell it for what they owed.  When meant foreclosure!
Next, we had people obtaining loans who struggled to pay bills on time to start with.  I remember a couple of years ago I sold a place to a young woman who had been referred to me by one of my past clients.  Her lender told me to stay in touch with her because there was no way she would keep up the payments - based on her credit history.  Guess what?  Within 2 years she called, way behind in payments, and had to sell or be foreclosed on.  My question was, why did anyone ever make her a loan?  It was because she fit into the guidelines that allowed marginal borrowers to purchase.
Now we are experiencing the fall out from all these years of bad loans.  The sad part is there are a lot of people who need to buy a home and have a substantial downpayment, or really good jobs, but have had some hard times in the past - so they need a subprime loan for a couple of years as they reestablish their credit.  In the 'old days' the lender would look at them on a case by case basis.  Now, they don't even have a chance.  BUT, in one or two years, just like it was 20 years ago, they WILL be able to purchase, and it won't be a subprime rate!!  So while we experience a little discomfort now, with a smaller pool of buyers, over the long haul this will just be a little blip.  And in the end it will be better for everyone.

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Pat Wattam
RE/MAX First, Independently Owned and Operated
4750 Sherwood Common
Baton Rouge LA 70816
Office Direct: 225-298-6900
Office Main: 225-291-1234
Fax: 225-295-1234

RE/MAX First
Each Office Independently Owned and Operated
Main: 225-291-1234

Licensed by the Louisiana Real Estate Commission