Many real estate professionals insist there is a psychological component to buying a house—and that a lot of negative publicity about the housing market can have an effect on whether consumers will buy, sell or sit. Chances are, when you are thinking about buying a home (and you’re really honest with yourself), factors such as your credit rating, income, debt load, the available houses in your market and the prices in your market are going to have more of an impact than what you read or hear over your morning coffee.

When it comes to sales, the biggest factor is “the local economy,” says Dick Gaylord, president-elect of the NAR. “But I can tell you that almost every buyer I talk to today thinks they’re going to get a phenomenal deal.” In the Midwest this year, one big yardstick is job growth torquing the force of supply and demand. “If jobs come, there will be buyers,” says Lawrence Yun, a senior economist with the National Association of Realtors. “And if jobs don’t come, there won’t be buyers.” “But I think the media does have an influence,” he says. “I get calls from Realtors who have been working with buyers for months—then the buyer reads or hears something that predicts a price crash or large inventory and the buyer decides to wait. The media is trying to portray the reality of the market.” But many times “there tends to be a slight slant that tends to scare potential buyers,” he says. “People start placing a lot of reliance on what they read, particularly from major papers.”

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Real estate has its market cycles like any type of investment, and lately it’s been getting bad press. Investors may have second thoughts about putting money in this asset class right now, what with all the talk about a bursting housing bubble, the glut of unsold condominiums and homes, declining property values and the growing number of foreclosures.

“Owning some paid-for, income-producing real estate, in addition to having a solid portfolio of other investments, can be a very good thing,” says radio talk-show host Dave Ramsey, best-selling author of “The Total Money Makeover.” For investors willing to invest for the long term, owning properties “can be a path to financial freedom for many,” says Ramsey.

Single-family homes make good first properties because they don’t entail the same hassles and headaches associated with multi-unit apartment buildings. “Single-family homes, which can be easily turned into rentals, are also much more affordable than, say, multi-family units such as duplexes, triplexes and so on,” says Robert Sheehan, consulting economist for the National Apartment Association.

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search for : Real estate, unsold condominiums, declining property values, foreclosures

America’s housing market soared to record heights in recent years on easy credit and innovative financing. Now those forces are unwinding in ways that could exert a slowing influence on the housing market through this year and 2008. A key symptom of the challenge ahead: Foreclosure rates are rising not just for risky subprime borrowers but for a range of adjustable-rate loans made in recent years.

Some 1.1 million homeowners who took out adjustable-rate loans between 2004 and 2006 will probably face foreclosure, according to a new forecast by First American CoreLogic, which tracks national housing markets. That number would surge to 1.9 million, the firm estimates, if home prices fall by 10 percent from where they began the year. In total, there are about 76 million owner-occupied housing units in America.

Inventories of previously owned homes have also been edging up, according to numbers released last Friday by the National Association of Realtors. Sales volume rose in February, but the unsold inventory climbed a bit faster, to a 6.7-month’s supply. The challenge of loan defaults appears small relative to the overall market in which some 7 million homes can change hands in a year. But in any market, changes at the margins often play an important role.

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search for : easy credit, innovative financing, subprime borrowers, adjustable-rate loans

It started with vacations. Vacations stretched into winters. Lured by the warm weather, Harold and Belle Neuhut were snowbirds for 10 years, traveling between South Florida and their home on Long Island, N.Y. Finally, tired of juggling two homes, the couple five years ago decided to live full time in their lakefront condo in Pembroke Pines.

“We had years of snow. It was enough for both of us,” said Harold Neuhut, a retiree in his 80s. In addition to the warm weather, the couple thinks Florida’s cost of living is a bargain compared with New York, and there’s no state income tax. “We’d recommend Florida for everyone,” Neuhut said.

According to a recent University of Florida study, almost one in four people ages 55 and older who moved full time to the Sunshine State between 2000 and 2003 started out as a snowbird. In addition, 30 percent of current snowbirds said it was “likely or very likely” they would move here year-round at some point.

Florida led the country in the number of snowbirds, with about 818,000 winter residents in 2005, followed by Texas and Arizona, the study found. Snowbirds add billions of dollars to the economy. But with spiraling property taxes and the threat of hurricanes, Florida “is facing more competition from other states that are becoming attractive to seniors,” such as Georgia and the Carolinas, said demographer William Frey of the Brookings Institution in Washington.

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search for : South Florida, lakefront condo, snowbirds

Realtors continue looking at the sunny side of the sales slump that has hit the nation, state and local area. “We are adjusting to a stabilizing market,” said Todd Hague, president-elect of the West Volusia Association of Realtors. “I have spoken to several broker-owners and they are seeing an upturn, with more pending sales this past month than they have seen in the last few months.” Still, sales of existing single-family homes in Volusia and Flagler counties were down last month, compared to last year, according to figures released Friday by the Florida Association of Realtors.

Statewide, sales of single-family existing homes totaled 10,779 in February, down 23 percent form 14,080 in February 2006. The statewide median price last month was $235,500, down 3 percent from $242,500 in February 2006, the association said. Real estate experts say the outlook for the housing market has brightened.

“Underlying trends point to a housing recovery in 2007, but it will take a couple of months for us to get a better handle on it,” said David Lereah, chief economist for the National Association of Realtors. The National Association of Realtors reported Friday existing home sales climbed 3.9 percent last month, pushed higher by a milder-than-normal winter that boosted sales in areas of the country such as the Northeast.

It was the biggest one-month gain since March 2004 and left sales at an annual rate of 6.69 million units, a pace that was still 3.6 percent below a year ago. Even with the improvement in sales, the median price of a home kept falling, dropping to $212,800 in February, down 1.3 percent from a year earlier. It marked a record seventh straight decline in prices compared to the same month a year earlier.

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If there were a Hall of Fame for real estate investors, Sam Zell would be a certain first-ballot inductee. The Grave Dancer, as he long ago dubbed himself for his ability to revive moribund properties, has had a golden touch with real estate ever since he got his start managing apartment buildings as a college undergrad. The blockbuster sale of Equity Office Properties Trust last month, which netted Zell about $1 billion, only enhanced that legend.

What’s your outlook for commercial real estate?

ZELL: I think the commercial real estate market is very strong. I think it’s going to get stronger. ... When we have our next recession, and I don’t know when that might be—if I were betting, I’d bet on the first quarter or the first half of ‘09 only because historically in a new administration everybody wants to fix everything—but when that next recession comes, you’re obviously going to see an impact on office, as you would in any recession.

And for residential?

ZELL: The for-rent market is very strong. It is not as strong as it was last year, but it’s still very strong by historical standards. As it gets stronger, the rent-to-buy comparison narrows. So in effect, it’ll result in more balancing and probably generate more buyers in some markets.

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search for : Sam Zell, The Grave Dancer, Equity Office Properties Trust, commercial real estate market

Cities such as New York, San Francisco and Los Angeles might be great places to jump-start your career, but their high cost of living can break the bank for many grads and young families. Some of the best places to live and work may be smaller so-called flyover cities such as Pensacola, Ferry Pass and Brent, Fla., Fayetteville, Ark., Blacksburg, Va., or Logan, Utah, according to Bert Sperling of Sperling’s Best Places.

He has put together a list of the top 10 affordable job powerhouses for MSN Real Estate: places where the cost of living and unemployment are low and the number of jobs is growing steadily. Here, Sperling says, residents enjoy a good quality of life, including a high level of home ownership, without having to make a fat salary.

These aren’t boomtowns, Sperling cautions, but that’s a good thing, as boomtowns often lead to real estate hangovers and strained city resources and infrastructure. “These are places where people have an opportunity to grow with the town,” he says. Many of them are college towns, providing access to cultural and sporting events that are rare in other burgs their size. Others are framed by national parks, lakes, rivers and other breathtaking natural scenery, an added plus for outdoor enthusiasts.

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search for : high cost of living, Sperling’s Best Places

The well-publicized woes in the business of subprime mortgages—a surge in foreclosures, turmoil in the stock market—are raising a big question: Are regulators partly to blame? Federal regulators over the past decade issued rules to tighten standards for making loans to borrowers with blemished credit or low incomes. Yet standards still declined and the volume of loans surged in the past two years.

One reason: Changes in the lending business and financial markets have moved large swaths of subprime lending from traditional banks to companies outside the jurisdiction of federal banking regulators. In 2005, 52% of subprime mortgages were originated by companies with no federal supervision, primarily mortgage brokers and stand-alone finance companies. Another 25% were made by finance companies that are units of bank-holding companies and thus indirectly supervised by the Federal Reserve; and 23% by regulated banks and thrifts.

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search for : subprime mortgages, foreclosures

Subprime mortgages have been generating a lot of attention, and worry, among investors, economists and regulators, but those loans may be only part of the threat posed to the housing market by risky lending. Some experts in the field are now concerned about the so-called Alt. A mortgage loan market, which has grown even faster than the market for subprime mortgage loans to borrowers with less than top credit.

A market has grown even faster than subprime, some believe it could shrink even faster amid growing concerns in the marketplace. That means another pool of money that has supported home sales and housing prices being yanked just as home sales and prices are already in decline.

The loans were very popular with buyers seeking investment property rather than a home to live in. And while default and delinquency rates for Alt. A are just a fraction of the rates for subprime, the widespread use of the loans by investor-buyers is a concern. That’s because there’s a glut of investor-owned homes and condos already up for sale – with prices tumbling in many markets.

“There’s a reason they ask on the application do you intend to live in the property,” said David Berson, chief economist for mortgage financing firm Fannie Mae. “People who live in a property are less likely to default than investors.”

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search for : Subprime mortgages

With home prices retreating from fever-pitch highs, a new breed of real-estate investor is eclipsing the speculator: the landlord. More Americans are hanging out “for rent” signs. Some were forced into the business after buying investment houses or condos at top dollar during boom times that they now can’t sell. But many are discovering their inner landlord on purpose, often buying properties well below prices from a year or two ago.

At the National Association of Residential Property Managers in Virginia Beach, Va., membership in the past year has increased by more than 20%. In Nashville, Tenn., Wilson Group Real Estate’s property-management-services arm has nearly doubled to 250 clients in the past year, thanks to the landlord boom.

Getting into real estate remains relatively easy. Despite the difficulties in the loan market for higher-risk, subprime borrowers, there are lots of financing options available for investment real estate, assuming your credit is good.

But that doesn’t mean it is a good idea for you. Think of it like operating a small business, even if it is just a single condo. Tricky tax laws, obscure local ordinances and other imponderables can turn what looked like a no-brainer rental into a money pit.

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