S.O.S. Sorting Out Subprime

Does distress in the housing market spell lasting trouble or has it created prime opportunities to put your money to work?

in this market should ask: “‘Am I in a safe
neighborhood with good schools and in a community that I like?’ If the answer’s yes, then their investment is no more of a risk today than the day they bought the house.”

Make the Most of It
How to navigate the subprime fallout
If you’re buying a home …

  • Investigate all sources of funding. Work with a reputable lender and investigate community-based programs that may offer down payment or closing assistance. _Ultimately, make sure you fully understand the terms of the loan.
  • Negotiate for what’s important. Get a home inspection report from a licensed contractor or home inspection company. Ask the seller to focus on critical repairs, but consider fixing cosmetic concerns yourself.
  • Assemble a team. Get references for any professionals–real estate agent, mortgage broker, attorney, etc.–who will provide information that’s vital to your decision _making.

If you’re selling a home …

  • Stage the home. Paint, replace carpeting, etc., to ensure the house appeals to the widest range of potential buyers.
  • Price to sell. Work with your realtor, visit the local _property assessor’s office, and use online resources to research what comparable homes in your area are _selling for.
  • Be willing to negotiate. Understand where you may need to be flexible to avoid killing the deal.
  • Consider leasing. Weigh the possibility of leasing the home to minimize potential losses and buy some time for the housing market to improve.

If you’re managing your portfolio …

  • Buy solid companies on the dip. Market volatility and investor fear can cause a stock to drop, regardless of the company’s future viability.
  • Think defensively. As the economy slows, look for opportunities in sectors that are more likely to hold up in a downturn, such as healthcare and utilities.
  • Check your asset allocation. Make sure that you’re holdings are diverse and make any necessary adjustments.
  • Hold on to cash. Don’t be afraid to increase your cash position as you wait for increased stability in the _market.

Where’s the value of your home headed?

Metropolitan Area Median Home Price (2Q 2007) Percent change from year prior Percent change forecast,year ahead
Atlanta $174,400 0.6% 3.1%
Boston 416,880 -1.7 -7.8
Charlotte, NC 202,750 4.5 0.9
Chicago 287,240 2.9 0.7
Columbus, OH 147,990 -1.5 2.3
Dallas-Fort Worth 153,020 -1.2 3.0
Detroit 100,320 -2.1 -3.4
Houston 151,860 1.7 2.3
Indianapolis 122,100 0.8 3.3
Jacksonville, FL 196,490 0.0 -6.7
Los Angeles 553,560 5.9 -8.3
Memphis, TN 141,510 -0.9 2.0
Miami-Fort Lauderdale 380,220 2.7 -7.6
Nashville, TN 183,370 -1.4 2.1
New York 534,620 3.3 -7.3
Philadelphia 235,800 2.9 -4.7
Phoenix, AZ 260,620 -1.5 -10.9
Raleigh, NC 223,450 5.5 1.6
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