Hindsight is always 20/20 and in November of 2011 it will be very simple to just review the past year and see what actually did happen. But since it’s now November of 2010 we will have to look to the past years and the current economic data to make a future prediction. It’s always interesting to me to revisit my past predictions and see how I did.

Here’s my prediction for the 2010 Knoxville area real estate market. For the first three quarters of the year Knoxville area Realtors have sold and closed 7,862 residential units, that’s single family homes and condos combined. For the entire year of 2009 that total was 10,511. I don’t think there is going to be another 2,649 sales before 2010 ends so using the best available data it looks as if we will be down in 2010 compared to 2009. I predict total Knoxville area homes sold in 2010 will end up around 9,000 to maybe 9,500; down a little from 2009 levels.

NOTE: The chart below only contains sales data for the first three quarters of 2010.

9,500 sales in 2010 will put us roughly around the 2001 levels. I’m basing this prediction on past sales and the current state of the US and local economy.

Sales in 2010 were somewhat artificially inflated by the $8,000 dollar tax credit that has now expired for most buyers but there are still exceptions, i.e. military personnel serving outside the US. That credit served to prop up the market a bit this year and will not be available in 2011. I predict, if we’re very lucky, home sales in 2011 will hopefully equal 2009-2010 numbers and we will sell around 9-10,000 homes in the greater Knoxville area.

I also believe the bulk of sales in 2011 will be in the lower price ranges as they are now.

Year to date there have been at total of 16 closed sales of houses priced over one million dollars; that’s 1.6 sales a month. Currently there are 83 houses for sale at that price level. To get the absorption rate (time to sell) for that price you divide the monthly sales into the current inventory and you get 51.8 months, or over 4 years to sell just those 83 houses assuming no new listings come along. THAT is a sluggish market.

Contrast that to the “hot” price range now of $120,000 to $139,999 where you find 347 closed sales of in 2010 or 34.7 per month. There are currently 242 active listings in that price range so that would make their absorption rate 9.86 months. Lower priced homes are selling but the time to sell is still high signaling a buyer’s market for those homes as well.

Here are some things I base my prediction on:

• JOBS: Jobs continue to be an economic problem, especially for housing. People with no jobs don’t usually buy houses and unfortunately, people with no jobs also get foreclosed on as well. The unemployment rate is officially 9.6% now and is essentially unchanged since May of this year. I believe the true unemployment rate is more in the 15-20% range because a lot of people have exhausted their unemployment insurance and are no long counted in the statistics. Also people like Realtors and other self employed persons are usually not eligible for unemployment benefits and are never counted whether working or now. Jobs will continue to be a drag on the housing market in 2011.
• Economic uncertainty will continue: “Says Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer confidence, while slightly improved from September levels, is still hovering at historically low levels. Consumers’ assessment of the current state of the economy is relatively unchanged, primarily because labor market conditions have yet to significantly improve. And, despite the uptick in Expectations, consumers continue to be quite concerned about the short-term outlook. Both present and future indicators point toward more of the same in the coming months.” I can’t say it better than that.
• Interest Rates: While interest rates are as low as I’ve ever seen them in my 30+ years in real estate, jobs, available mortgage money, and consumer confidence will continue to keep buyers away in 2011. Anyone qualified and sitting on the fence waiting for lower prices, lower rates, whatever, should probably go ahead and buy now. Mortgage rates cannot go any lower and most sellers are taking a beating now when they sell. The time for qualified buyers with a stable job  to buy a home has never been better than it is right now.

No, I’m not being facetious or implying you’re a dummy because you haven’t bought a house yet.

In fact, just the opposite; waiting until now has saved you thousands of dollars more that than measly 8 grand credit a lot of your friends got when they bought earlier this year. Here’s how.

Let’s take a look at the facts and mortgage market now compared to what they were then.

The $8,000 federal tax credit that got everyone excited earlier this year expired at the end of April, 2010. Buyers that had a contract dated prior to that were able to claim the credit and also got a loan with an interest rate around 5.5% or so.

If they bought the median priced house in the Knoxville, TN area, which would have been around $180,000, and got an FHA insured loan with the minimum 3.5% down payment they would have a monthly mortgage payment of $986.25 for their principal and interest. Taxes and insurance are added to that amount.

However, because you waited until now for whatever reason, interest rates have continued to drop. In the current mortgage market you can get an interest rate as low as 4.25% which would lower your monthly principal and interest payment to $854.50 or $131.75 LOWER than your friends who bought earlier this year and got the tax credit.

One huge benefit to you with the lower interest rate is that it’s actual cash you’re saving each month you can use for savings, bill paying, or whatever you choose.

And if you only own you house 5 years and 1 month and then decide to sell and move up, move down, or whatever, you have then saved $8.036.75 in actual cash payments which puts you Waay ahead of your friends and their $8,000 credit 5 years previously

Finally if you end up keeping your house and paying off your 30 year loan over the whole term you save a whopping $47,430 in actual monthly payments over your friends who bought earlier.

So if anyone tells you that you’ve missed the boat on that now expired tax credit,just whip out your calculator or this article and explain to them how you decided to wait until conditions were ‘more perfect’, as they are now, before pulling the trigger on your new home purchase. Then show them how much more they’re paying compared to the sweet interest rates you’re now able to take advantage of.

In the greater Knoxville, TN are visit www.KnoxvilleHomeCenter.com to see all the area homes for sale.

A little further north, Portsmouth, NH and Seacoast area buyers can visit www.NewHampshireMaineRealEstate.com. The state of New Hampshire also has a stunning 3.5% rate through their New Hampshire Housing program. These are the lowest rates in their 30 year history.

The only dumb question is the one you don’t ask; call or email us.

The nice folks at Lender411.com  wrote a very flattering  review of my blog. You can get some great mortgage information (not to mention a great mortgage) by visiting their website.

Content published by Jim Lee

This is a guest post by Brandon Fischer on VA benefits; I hope some veterans find it useful.

Jim

VA benefits

by Brandon Fischer:

For the men and women that have so willingly served our country, the government offers a variety of programs and incentives designed to enhance their quality of life after service. Benefits for our country’s veterans range from educational assistance to job training with benefits more specifically being:

• Job training
• VA health benefits
• retirement funds
• the GI Bill VetFran
• franchising opportunities
• The VA home loan program.

VA Home Loans

Since its creation in 1944, the VA loan program has provided millions of veterans and active duty service members – even those with imperfect credit – with the opportunity to achieve home ownership. The VA home loan program’s flexible eligibility requirements offer borrowers the ability to receive loans up to $417,000 in most areas of the country and loans up to $1,094,625 for borrowers looking to purchase a home in more expensive real estate areas.  Veterans can use a VA loan calculator to find the loan limit in their area.

What are VA Loan Benefits?

Because the VA insures part of each loan, VA-approved lenders have greater confidence in eligible borrowers. This greater confidence in borrowers inclines VA-approved lenders to offer qualified borrowers a variety of benefits they would not be able to find with conventional loans including:      zero down payment required

• Competitive interest rates
• Down payments in the form of gifts
• Flexible debt-to-income ratio
• No mortgage insurance required

How Do I Qualify for a VA Loan?

The VA Home Loan program offers some of the most flexible eligibility requirements which has allowed over 18 million service men and women achieve homeownership. More than 80% of all veterans and active duty service members who have obtained a VA loan would not have been eligible for a conventional loan. To initially qualify for a VA, a service member must:

• Have served 181 days on active duty
• Or served 3 months during war time
• Or have served 6 years in the National Guard or Reserves
• Be the spouse of a service member who was killed during active duty

Service men and women who meet the preliminary guidelines must also obtain a Certificate of Eligibility to apply for a VA loan. Although there are no required income minimums and flexible eligibility requirements for VA loans, most VA-approved lenders wll require a mid-range credit score of at least 620 to secure financing.

Near the town of Knoxville, Tennessee lies the 521,086 acre (more or less) 😉 Great Smoky Mountains National Park.

A scenic mountain range that attracts over 10 million annual visitors to view the scenic beauty of the rugged mountains and beautiful pastoral valleys.

A couple of strategically placed web-cams can give you up to date views of what the local weather and scenery looks like most anytime during daylight hours. I’ve seen some very beautiful scenes from looking at these webcams periodically no matter where I am or what I’m doing.

It’s also fun to watch the change of seasons on these webcams. One great use is to monitor the leaves as they change color in the fall if you’re coming for a visit.

One of my favorites is the one at Look Rock just off the Foothills Parkway below Maryville, Tennessee. This is a recent photo from the Look Rock webcam just before dark in late July around 9:00 PM.

Night falls over the Great Smoky Mountains National Park (GSMNP)

The mountain in the middle foreground with the three peaks on top is Rich Mountain; Cades Cove lies just behind it.

Here’s what you’re looking at in daylight on a clear day.

Here's a handy photo of what you're actually looking at.

Another great webcam is the one on Purchase Knob on the south side of the park. This camera is actually just inside the park boundary but faces east to northeast towards Bald Mountain, Johnson City, Tennessee, and Asheville, North Carolina to the east.

Here’s a shot from the Purchase Knob camera with prominent landmarks identified.

Did you ever wonder what you're looking at on web-cam shots? Here's some help

East Tennessee and the greater Knoxville area are known for natural and scenic beauty; pay a visit soon and look around. Lots of folks do and end up deciding they want to live here.

KnoxvilleHomeCenter.com is a great resources to find a home, condo, or land in and around Knoxville.

This past Thursday night I had the opportunity to go on a harbor tour/cruise of Portsmouth, New Hampshire along the harbor out to where it runs into the Atlantic Ocean.

Portsmouth New Hampshire harbor view

Portsmouth is a beautiful coastal city on the northern end of the New Hampshire seacoast. In the harbor view above you can see a new, waterfront condo project under construction and the white steeple of the Old North Church to the far right.

At only 17 miles long, the New Hampshire coastline is shorter than any other state that borders an ocean.

Memorial Bridge over the Piscataqua River connects Portsmouth to Kittery, Maine

Because Portsmouth is a working harbor with lots of large ship traffic in and out, two of the bridges over the river are drawbridges which raise every 30 minutes from 7:00 AM until 7:00 PM to accommodate harbor ship traffic. In this photo the middle section of the bridge is starting to lift.

Moran Tugboat & towing company tugboats

The Piscataqua River is the third-fastest tidal river in North America and also very narrow by modern shipping standards. Local river pilots take the helm of in and outbound commercial vessels and guide them safely through the channel. These two large tugboats are operated by Moran Towing & Tugboats. Because the Piscataqua flows so fast these tugs only operate at “slack tide”, roughly four hours a day.when the incoming tides temporarily balance the outgoing river currents. Check out this Portsmouth harbor cam to watch river traffic live. The images refreshes every 10 seconds.

The Portsmouth Naval Shipyard was established in 1800

The Shipyard’s primary mission today is the overhaul, repair and modernization of Los Angeles-class submarines. The dry-docks have recently been enlarged and upgraded to accommodate the new and larger Virginia class submarine with the first due in for a tune up later this month.

USCG Cutter Campbell based at Portsmouth Naval Shipyard

The Campbell regularly patrols the Atlantic Ocean from the Gulf of Maine south to the Caribbean Sea.

Portsmouth Naval Prison

This is Portsmouth Naval Prison which is curiously actually located in Kittery, Maine just across the Piscataqua River from Portsmouth. The prison has been closed and abandoned since the 1970s as too expensive to rebuild or to tear down. Scenes from the movie “The Last Detail,” starring Jack Nicholson were filmed there.

New Castle, New Hampshire the smallest city in NH

This is some of the waterfront of New Castle, the smallest city in New Hampshire and the only one located entirely on islands. New Castle is also home to a US Coast Guard station and the historic Wentworth by the Sea hotel.

Setting sun over Portsmouth Naval Shipyard

The green light at right is Portsmouth Light on the New Castle Coast Guard Station grounds.

Portsmouth light was originally established before the Revolutionary War when American was still a British Colony.

In 1946 the current lighthouse keeper’s wife Connie wrote a book titled not surprisingly “The Lighthouse Keeper’s Wife” and described the view from the top of Portsmouth Light. “I looked down forty feet to the little white scallops of incoming tide washing over the rocks, caressing each one lovingly. …We could look up the Piscataqua River to Portsmouth, with its gleaming white belfry of North Church, a landmark for sailors, silhouetted against the sky. …At the center of the harbor was Whaleback Lighthouse, and ten miles out to sea from that was the lighthouse on White Island, part of the Isles of Shoals. Both sent their beams across the water.”

Lighthouse keepers were or often became, a little ‘different’ from the rest of us. Imagine your job was taking care of Whaleback Lighthouse on an uninhabited, rocky small island day in and day out.

One lighthouse keeper was reported to use the top of his light to shoot passing ducks. He also had a small dingy that he used to row to shore occasionally where he would borrow a resident’s car to visit the local grocery store.

Whaleback Island lighthouse marks the entrance to Portsmouth Harbor

Whaleback Island is actually part of  a  jagged ledge known as Whaleback. This ledge is completely underwater at high tide and is a continuation of the southern portion of Gerrish Island in Maine.  The little dots you see in the water are buoys for lobster traps.

Whaleback Island at twilight as a light fog starts rolling in.

By the way, this is a working light house; the reason it appears dark in the photos is that the light only flashes on and off every few seconds but trust me, you do not have any problem seeing it when its light flashes. Whaleback light gives 2 white flashes every 10 seconds and during foggy weather, 2 blasts on its foghorn every 10 seconds. Click here to hear the Whaleback Light fog horn. It’s not too loud so it won’t blast you out of your seat. 😉

Portsmouth Harbor at night is a beautiful sight too.

We got back to the dock around 10:00 PM after a great tour of Portsmouth Harbor. If you ever in the area I recommend a harbor tour as a ‘must do’ part of your visit.

This is an amazing story about a guy that lives in an 89 SQUARE FOOT house!

Yep, that’s 89 square feet.

To give you some perspective a 10 X 10 room is 100 square feet.

Even more amazing is the fact that he’s turned this into a business. Seems the demand for tiny houses is larger than you would think.

To find more ‘normal’ sized houses in the greater Knoxville area visit KnoxvilleHomeCenter.com

For questions or advice on buying or selling a home in the greater Knoxville area Jim Lee is the ‘go to’ Realtor in town.