The New American Reality.... RENTING!!

Before I go on to part 3 of 3 of my personal experiences in the Real Estate of the Great Recession, let me tell you a story about the state of the homeownership market in Nevada.

A friend of mine (sorry i can't tell you his name), ask me last week if I know many people who opted out to just renting rather than buying.  Since I am in the Real Estate business, the salesman in me would rather say that the market is such a buyers market and people would be crazy to just rent if they can afford to buy.  However,  I did confess that buying and renting at this point in time is largely based on his future plans. 

As the Great Recession devastated the Nevada housing market, many part of the State ( i.e., Las Vegas) have seen homeownership decline to an average of 60% owner occupancy.  Prominent homeowner destination such as Las Vegas during the boom market saw great declines of non-investor related purchases.  In Reno, NV there are census out there that says a 47% owner occupancy. High rates of foreclosures and job unemployment have greatly contributed to the rise of renters.  
Now, its hard to blame the decline of homeownership in Nevada solely on foreclosures and job unemployment, we have to admit that both the southern and northern part of Nevada are very accustomed to transient living.  Many people in the State of Nevada tend to move within 3 to 5 years. We can interpret this in so many ways, however, this is the reality of our Nevada housing market.

Now, how do we turn this around? Well, there are simply no easy answers to this.  However, it thus help if current homeowners be more pro-active in building an active community.  Neighbors meeting neighbors, owners actively participating on homeowner association decisions and providing volunteer work to enhance our parks and school systems etc. Potential Buyers should start jumping off the fence and start picking up vacated homes.  The longer buyers decide to wait for lower price homes, the more likely neighborhood deteriorates and foreclosure occurs.  By the time potential buyers wait for the neighborhood of their choice to hit rock bottom, their might not be a good neighborhood left to live with.  If at all possible, current homeowners should still work with their bank and possibly modify their loan.  I know I will hear arguments to this but I believe we should do all we can to stay in our home and keep our neighborhood from deteriorating due to foreclosures.  I have seen many neighborhoods like this in Reno, and what was once great and beautiful, are now dead grass and broken windows. Neighborhoods like these attracts robbers, juveniles, and rodents. Definitely, not the nicest thing to see.

There are simply no easy answers to turn around the decline of homeownership in Nevada other than Time.  In Time, massive foreclosure will past, lenders will start to lend more, and unemployment will decrease.  But for now, I believe the trend is going towards RENTING, which I call the New American Reality.

THE GOOD O'll TIMES 2003-2007 part 2 of 3...

Short Sales.... What is that??
Foreclosure..... In Nevada?? 
Underwater or Negative home equity....  Probably in Michigan!!
Banckruptcy.... oooohhh mmyyy Gooddd, those guys must have done something wrong!!!

Seriously, back in the good o'll days, none of these occur. Back then, the word "Short Sale" does not even exist.  The words you hear during those times are "New home builder waiting lists, home equity, positive cash flow, 0 down payments, interest only loans, and stated income."  So much have surely changed.  Well lets go back in time on what was going on with myself and friends who are in the real estate business.

In 2003, I was able to buy my first home in the Northwest part of Reno for $175,000 that I sold for $380,00 by June of 2005.  This positive gain on home equity are common occurances. I usually have buyers during those times that bought homes that gain 30,000 more after 3 months.  Many buyers  were snatching as many homes as they can for the purpose of possibly flipping them within 6 months.  Many real estate agents have a monthly commission of atleast $15,000 a month.  The truth of the matter is, I hear other profession grumbling with negative opinions about Realtors that we make too much money without having too much education.  The fact of the matter was, many Real Estate agents saw this as something "Normal."  Nevada Real Estate agents felt that we were suppose to make a minimum of $10,000 a month since we had 4 months of Real Estate School and passed a Real Estate License exam. With Licensees making 10, 15, 25,30 thousand a month, the big boy toys started arriving.  Home purchases upward of $700,000, Boat, Mercedes costing $70,000 or more, BMW's, Ferarri, Lamborghini (in Vegas), camper trailers, and Rolex Watches were common purchases.

  European vacations, All you can eat steak and lobsters, and massive home improvements were very common as well.  In Reno, Home builders would build 20 to 30 homes at a time to meet buyer demands while car dealers are selling Mercedes like they were affordable Hondas. Many Real Estate agents and Mortgage loan officers felt that this will go on forever; and for a while it did.  At this point in time I have already started my own Real Estate Company.  I had 13 agents at the time, and many of them were making over $100,000 a year.  I had a few who made over $250,000 a year.  During those times, I would get lawyer threats from buyers our company represented  because they did not get the home they wanted and lost out on a 10,000 rise of home equity the following month because of too much buyer competition.  I would oversee over 40 company buyer/seller transactions per month and close 99.9% of them.  It was duing those times that I achieved multiple Real Estate sales designations and expertise. I also achieved multiple insurance sales awards in life and property casualty.

I gained so much real estate experience but I was definitely tired when I got home at night.  Money was flowing like river water, but "Real Family" time was a little unsatisfactory.   I was in my late 20s during those times and I had to run a million dollar Real Estate Company and a top producing Farmers Agency with multiple staff.  I felt during those times I was spending too much time at work and less time with my new wife and 1 year old daughter Isabella.  I was definitely bringing home the bacon, but I regret the lack of time I could have spend with them.  As the old saying goes, "too much of something may not be all that good for you."  Well, I'd like to end with this for now, In part 3, I'll write about the Great Recession that occured from 2008 to the present. 

To be continued......

How I Became a Real Estate and Insurance Agent part 1 of 3.....

First of all I'd Like to thank Nurses. 

I respect their profession and convincingly believe that they are one of the hardest working profession I came to know.  Now, why would I start thanking Nurses and the Nursing Profession? Well, because I almost became one.  I was studying to become a nurse back in 1998 and was literally 3 months away from graduating with a Bachelors of Nursing from the University of Nevada Reno in the year 2000.  Many of my classmates did not understand why I suddenly switched majors right before graduation.  But the truth is, I learned something about myself during those times in Nursing School.  I learned that being a Nurse require you to be passionate with the task at hand in the hospital.  I learned that you must love being a nurse to become one.  Even though I was passing with A's and B's throughout my nursing classes, I did not feel the passion (as a Nurse) to do this for a living.  I know that the pay is good and the profession is stable, but I seriously felt this was not my calling.  I prayed to God hard about what I should do next, and ultimately graduated 2 years later with a Bachelors Degree in Psychology and a minor in CIS (Computer Information Systems) at the age of 26. 
     Not to bore you with too many details, but by the age of 25 I have already received my Real Estate license. At first, I did not take Real Estate all that serious.  I attended Real Estate school (while in college) and felt that this is a profession for adults 50 years of age and over.  I sat in the class, and behold, most of the people are indeed 50 years and over.  Many of them wondered what the heck am I doing in the class room.  Whenever someone asked me, I would say " I am doing this to assist my Dad who happens to be in Real Estate as well."

By the time I graduated from college in 2002, the Real Estate Market was starting to pick up.  I was averaging 1 transaction a month (not bad at the time) and received production awards from my Real Estate Broker. I also took an interview job with Farmers Insurance right before graduation and the company decided to take me in as well.  Let me tell you the story how I got hired.  2 months before graduation, around March 2002, my Dad showed me a Reno Gazzette advertisement for Farmers Insurance.  He knows that I was looking for a job in the banking industry during that time, but felt that a career in Real Estate and Insurance will serve me well.  I called the advertisement and talked with the Assistant District Manager at the time named Bobby Turner.  The conversation went something like this (As I remembered it) :

Erwin: Telephone call. Bobby: "Hi, This is Bobby how can I help you?"
Erwin: "Hello, my name is Erwin Sigua, and I saw your ad in the paper looking for insurance agents.  I am 
           about to graduate from UNR, and I am hoping to become a Farmers Agent." 
Bobby: "Well, the position are not usually for someone who is just graduating from college, this may not be
            the career you are looking for." 
Erwin: "Oh, ok, well does it help to say that we have a Mortgage Company and my Dad and I are licensed  
           Real Estate agents?" 
Bobby : "Well, shoot, you should have told me that earlier, how does 1:30 p.m. sounds?"
Erwin: "I'll be there" Click... 

The funny thing was that I honestly believe that I would not have that interview if I was not in the Real Estate Business.  9 years later, I am still in the insurance business and loving it.  Let me end part 1 here.  Part 2 tells you my life as a Real Estate and Insurance Agent during the Real Estate Boom years....

Where Have All The Buyers Gone??

Where have all the Buyers Gone??  Now a days, that is pretty much a question asked by many Realtors. In fairness, not every market suffer from a perceived lack of buyers.  In Reno, Nevada (Yes, I am in the #1 forclosure State), we are slowly witnessing a decline of active buyers looking for homes.  A great deal of explanation to this is the end of the subsidized Firsts Time homeowner tax credit.  This is a government program that enable home buyers to receive a 10% tax credit for a purchase of a home with a maximum amount of $8,000 for the 2009-2010 calendar year.  With a September 30, 2010 deadline, many home contracts that was purchased before April 30, 2010 are now scrambling to complete their transactions.  However, as the July numbers shows, Nevada just suffered a 15 year low in home purchases. We can only hope that succeding monthly data show an increase in home sales. 

Another explanation to the lack of home purchase is that most buyers are waiting if prices will continue to dive down in prices. Well, in my opinion, this could be a self-fulfilling prophecy.  As more buyers wait for prices to drop, more homes are left unsold. With more supply than demand, and banks lowering prices on recently foreclosed homes, prices will certainly drop.  Greed sets in, and market become depressed.  Food for thought, a depressed real estate market is never good for anyone; as we have experienced in the last couple of years with this Great Recession. 
Another explanation why more buyers are riding the fence is that they fear for their own job security and making a huge purchase at the moment is out of the question.  As of September 2010, we have seen a great deal of upswing and downswing of the paper market (stocks, bonds, mutuals).  There has been good news that the retail and the manufacturing sector of our economy are going through positive numbers.  Many people, in my opinion, are willing to spend more on necessities, and smaller priced items.  As the uncertainty continue, we will still see shaky confidence on buyers buying big items such as house.
I do feel that the Real Estate market has gone through its worst time.  however, I also believe that it will still take a few short years before most home buyers will feel a sense of absolute confidence to jump in and buy homes.  My suggestion however is not to follow the lemmings of this world.  When times are tough, that's when we find the greatest deals.  When buyers starts buying, thats when all the great deals are gone.  So, if you are one of the people who have the means to buy a home at this particular point in time, buy now and enjoy your home.