1. Figure out all of your debt. Multiply your gross monthly income by .36 to find your total allowable monthly debt.
2. Add up all of your fixed monthly expenses.
3. Subtract your fixed monthly expenses from your total allowable monthly debt.

Like most of America the Great Smokies and more specifically Sevier County has seen a very large increase in the number of foreclosures and short sales in the past 2 years. However, in the past few months the quality and quantity of those properties has started to dwindle.

The opportunities that were available to get a good deal (one of our clients always says, ’I wants steals not deals’) on a great home are not lasting as long on the market and their are fewer of them. Several of the short sales and foreclosures that don’t need major repair now have multiple offers.

I know the arguement that these properties bring the average sales price down and hurt the overall market. I can’t disagree. They do, however, generate an incredible amount of future income for the people who now have the capital to take advantage of these deals and provide entrance into the market for some who couldn’t otherwise afford such properties. Neither is a bad thing for a battered segment of our economy.

The decrease in the number of these properties tells me that our market, like so many others across the country, has started to stabilize. I know it will be some time before prices increase but this is the first step in a very anticipated recovery.

The first wildflower hike I took this year was about 3 weeks ago on Porter’s Creek Trail

Wild Orchid

. At the time, the ground was covered in what appeared to be a carpet of tiny white flowers and so many trilliums that it was impossible to count. It was still a bit cool then and not many leaves had formed yet.

This past weekend I decided to hike Porter’s Creek Trail again to see if anything new had grown since my last trek. To my delight several different plants, including a few spectacular orchids, were in bloom.

I can’t wait until the second week of May so I can head out and try to find a pink Ladyslipper. Wish me luck

Does Spring create irrational optimism? I hope not. I’ve been feeling a sense of optimism with the warm days, flowers blooming, and sunshine. I hope everyone else is feeling it too.

It appears that everyone else could be feeling the same way. When looking at the headlines today regarding our financial state (I think we’re definetly all in this together so I say ‘our’) I see good news. The stock market is up, manufacturing orders are up, and most importantly home sales are up.

So, maybe it’s just Spring but I sure hope not.

I’ve been speaking to some of my agents about pricing their sellers’ homes ahead of the market. That was an easy thing to do when the market trends were going up. Now that they are headed in the opposite direction I find that many agents do not want to have that conversation with their sellers.

Pricing ahead of the market as prices were increasing was almost a pleasure. “Mr./Mrs. Seller” the last home on your street sold for $305,000 last week, so with appreciation at 4% per quarter this year and the average time on the market at 100 days your home should sell near 318,000. GREAT! That was an easy conversation to have and meant that you could be the bearer of good news on almost every occasion.

Today the conversation is not so eagerly anticipated. “Mr./Mrs. Seller” the last home on your street sold for $280,000 100 days ago and the market is declining at a rate of 4% per quarter with an average time on the market of 180 days. That means your home should sell in the range of $245,000. OUCH! That’s a conversation most people want to avoid.

However, we are in the reality/real estate business and to indulge the fantasies of sellers to their own detriment is not in either of our interest. They want to sell, we want to help them sell and ultimately be paid at closing for our efforts and knowledge.

It’s still a tough conversation to have with most sellers. Especially for a group of people who care about their customers and clients the way these guys do.

I know we all look forward to changing the conversation as foreclosures slow and prices level off.

I’m going to say it, WE’VE REACHED THE BOTTOM! I’ve been thinking it since the first of the year but now I really believe that in 6 months the media will be saying it too. I’ve been waiting because I didn’t want to sound like somone with their head in the clouds. Some guy who says the market is on the verge of a turn around (turn around being a little subjective, I believe stabilization to be a turn around at this point) every 4 or 5 months just to have to eat crow and start all over again.

Looking at the number of foreclosures and short-sales (and the sellers who qualify for a short-sale) in our market leads me to believe that the end of the malaise is near.

Of course, by then all of the truly exceptional deals on property will have been snatched up by investors. That’s OK because I’m ready for someone to ring the bell and say ‘yep their it was 6 months ago and now we can move on with the rest of the economic recovery.

I have to admit that I’ve been aprehensive about 2009. It’s not as though 2008 gave me that much to look forward to in the way of business, the type of business you can count on, can budget with. 2009 is proving to be much more agreeable though. Beginning the last 3 weeks of December we started seeing marked improvements in our real estate business.

Short-sales, foreclosures and just great deals on some of our rental properties have inspired many buyers to act (along with almost comically low interest rates).

Someone once told me that ‘no one rings a bell when you reach the bottom, you only recognize it when it’s already past by at least 6 months’. I have the distinct feeling we could be hearing a bell soon and I couldn’t be happier.

Happy 2009!

Being in the real estate business is an exercize in constant change. Even in the boom periods we are always adapting to new technology, new customer demands, and the ever changing regulations that guide us.

I get bored easily so the persistent need to change hasn’t bothered me. I remember our first web site back in the 1990′s and training my agents to use email and send attachments some time after. It seems that the advent of the IDX web site came quickly with some local brokers skeptical but it was an exciting time for me.

I wonder what the next change will be. I wonder if we have reached a point where great innovation has stopped and we’re just going to experience fine tuning of the internet tools and services we use? Will the downturn in real estate sales produce some sort of new market or marketing technique?

I think about what an instructor from a class I attended several years ago said, ‘The real estate business is and always will be one agent working with a buyer to find the right house, it’s a face to face business.’ Has the internet really changed that? Sure, people start their search online but when it comes time to look at the houses, write an offer, and negotiate they still look to us (the people who have spent thousands of dollars and hours educating ourselves) to help them navigate the waters and find their way. I guess, even thought I like change, I can take some comfort in the fact that we’re still needed.

I was asked a question from a customer recently that I had not considered, ‘can I still get a loan?’ I say I had not considered it because I had taken it for granted that everyone knew that loans were still readily available to customers who have good credit and a downpayment (around 5% for these folks).

These are rational people who have heard about a credit crunch and believed, as I now think many do, that home loans are difficult to acquire. After our conversation they promptly bought a house with no lender issues what-so-ever.

Reminds me of the old saying about assuming (haha).

Snow on the Mountain

Early Sunday morning we had our first snow in Gatlinburg. It started out more like a rain/snow mix but then later became that cold white stuff that we look forward to. Sunday morning I woke to find Mt. LeConte covered in beautiful white snow with the mountains below still showing remnants of Fall color (we had an amazing Fall this year, with brilliant color). My deck and the trees surrounding it were white too. A frosty reminder that winter in the Great Smoky Mountains is almost here.