April 30, 2012

Bits Bucket for April 30, 2012

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April 29, 2012

HBB Fundraising Week

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The Exurb Conundrum

Readers suggested a topic on living environments. “I would like to see a topic on the future of the exurbs. The Washington Post had an article recently on how outer exurbs are dwindling. According to the article, somewhere between 30% to 50% of people in the US would like to live in a walkable urban environment. Add that to high gas prices, and the prognosis doesn’t look good for the exurbs.”

“I have noticed that everyone I know who lives in an exurb has ended up with a horrid commute sooner or later. Sooner or later people switch jobs. When that happens it’s rare that people living in exurbs can get another job close to where they live. One of the reasons why I lean toward the walkable urban option even if its in a suburb is because I have seen exurbanites and their commutes. I can tell you that the younger end of generation X and generation Y have noticed it too and want to avoid the exurban commutes if at all possible.”

A reply, “I think what you’re more likely to see is exurban satellite office sprawl, if the industries can stay in business long enough. For example there is an SAIC/Bechtel office building in Frederick, Maryland, an exurb of DC. The SAIC workers can live in a McMansion a 10-minute drive, or even closer, to the office. But they can easily train/metro for an hour only on days when they have meetings with the gov workers downtown. For those who want the walkable urban feel, the housing bubble has already built the walkable urban environments — I’ve seen dozens of work-here-live-here-shop-here condos developments in such towns.”

“With video and telecommuting, we may see a return to the small town supported by one industry, only instead of being a tire factory or a lumber mill, it’s a white-collar office building.”

Another said, “I am currently antagonizing over the walkable/exurb conundrum. In Pinellas County, FL., the best academic school pattern is in a far-flung, car-only exurb. Some of the toughest schools are in gorgeous, walkable parts of St. Pete. In other ‘middle ground’ areas, you have both problems: mediocre schools and unwalkable ‘hoods’.”

“We spend, get this, about 20% of our take-home on motoring: $400 gas, $410 car payment (one is paid for), $200 insurance. This doesn’t even include routine maintenance or big ticket repairs.”

From KTAR. “The rapid population growth that drove Arizona’s economy before the Great Recession could return in large part within several years as things improve elsewhere, experts say. Elliott D. Pollack, CEO of the economic and real estate consulting firm Elliott D. Pollack & Co., said Arizona’s economic growth depended on adding 100,000 people every year. The population boom fueled growth in ‘people-serving’ jobs, such as doctors, real estate agents and salespeople, he said.”

“Pollack said he doesn’t expect Arizona to return to the job growth of 2007, just before the crash, until 2015. ‘It will be almost a lost decade,’ he said.”

“Marshall Vest, an economist with the University of Arizona’s Eller College of Management, said many people across the country can’t move because they owe more on their homes than they’re worth. ‘We’re experiencing the lowest mobility in this country that we’ve seen at least in 60 years,’ he said.”

“Pollack said that Arizona will eventually lure more people because of factors that include climate and relatively inexpensive housing. ‘Have any of those dynamics changed? Not really,’ he said.”

The Modesto Bee. “Stanislaus County homes sold for a median $129,000 last month, which was about the same price as two years ago. The long-predicted housing market recovery just isn’t manifesting itself in higher home values. ‘This is the market. That says it all,’ advised Lorraine Cardoza, who has been selling real estate for more than 30 years. ‘What was going on (during the housing boom) wasn’t normal. It was outrageous.’”

“Cardoza said homeowners and buyers must realize that ‘craziness’ is over, and those high prices are not going to return anytime soon. That’s a tough reality to face for people who purchased houses during the first five years of this century. The market was soaring then, and their homes seemed to gain value every month.”

“Stanislaus home prices peaked at a median $396,000 in late 2005, then fell steadily until leveling off about two years ago, according to DataQuick. Some homes are particularly hot sellers. Oliveira said three-bedroom homes priced at less than $160,000 typically sell within a week. ‘Homes priced to the market are getting multiple offers and selling quickly,’ said Cardoza. But pricing a home ‘to the market’ can be heartbreaking for homeowners who have watched their equity disappear. That’s because all homes now must compete with prices fetched by foreclosures.”

“‘Nobody is adjusting (home valuations) based on whether it’s a traditional sale, bank-owned or a short sale,’ Cardoza said.”

The Charlotte Observer. “The Vue’s new owner has started foreclosure proceedings on the luxury residential high-rise in uptown, according to court documents filed Tuesday. Northwood Investors paid about $100 million to take control of the complex in early April. The 409-unit condominium tower was announced during the real estate boom and was one of the few uptown high-rise projects to be finished despite the recession. Yet, the Vue’s developer struggled to sell units and close sales on contracts signed in better economic times.”

“Real Estate Alert has speculated that the tower, which offers an Olympic-size swimming pool and tennis courts, is ripe to be turned into apartments. Investors have eagerly snapped up multifamily complexes and announced new apartment projects in the Charlotte area. Rents are forecast to rise as more people turn to renting.”

“The Vue has said it had about half the units under contract but it has closed sales on less than two dozen condos. Some buyers have sued to get out of their contracts. Others say they have had trouble getting financing because appraisals for the condos are coming in below contracted sales prices.”

“Also this week, a couple sued the Vue asking for their $90,987 deposit back. Stephanie Rizzo and David Rizzo of Wake County said in court filings they agreed to pay $699,900 for a two-bedroom, two-bathroom condo but that the developer changed the floor plan, eliminating one bedroom, and downgraded the quality of promised appliances. The couple says they informed the developer within the allowed two-year timeframe that they wanted out of the deal, according to documents filed in federal court.”

The Herald Tribune. “A Georgia firm has bought land in downtown Sarasota that had been planned as a 17-story condo tower during the mid-2000s real estate boom. Jebco Ventures Inc.’s $1.5 million purchase represents the latest sign the Sarasota real estate market, long in the doldrums, is recovering. ‘We bought it for the location and because of the price, and because I believe there is a market in downtown Sarasota for either townhomes or apartments,’ Jim Bridges, Jebco Ventures’ CEO said Friday.”

“Jebco could build up to 73 units on the 2.2-acre tract, bounded by Ringling Boulevard and the Laurel Park neighborhood. The land had been planned for Atrium on Ringling, an 88-unit, luxury condo tower. Atrium fell victim to market oversupply in June 2008, when Fifth Third Bank foreclosed, according to county records. Fifth Third sold the land to Jebco. The Jebco deal illustrates just how far the market has sunk: When Atrium developer Leonard Garner bought the property in 2005, it traded for $12.36 million.”

“‘At these prices, we could see new development,’ said John Harshman, president of a Sarasota commercial real estate brokerage. ‘It’s one of the positives regarding banks taking back parcels — that in order get property off their books, they’re selling at prices they can get in the market today.’”

Bits Bucket for April 29, 2012

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April 28, 2012

Bits Bucket for April 28, 2012

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April 27, 2012

You Can Buy Almost Anything, And You Will Not Lose

It’s Friday desk clearing time for this blogger. “As India’s real estate industry is still in a recovering state, industry experts think it is the right time for consumers to go for their dream homes before the prices shoot up. Property expert Sai Chand Talluri says that 2.5K units arrive in Hyderabad market every year and real estate companies are managing to sell half of them and the rest are carried forward to next year. ‘Even though the overall absorption rate is slow real estate market is active for completed projects as there is limited supply, said Rajalakshmi Raghavan, GM-Marketing Vasathi Housing. She conforms that not only first home buyers, but also second home buyers are also adding to the market. ‘Stock markets are unstable and gold prices are rising day by day, so people keep an eye on real estate since this the opportunity which gives more returns’ said Sai Chand Talluri.”

“For Shen Dongjun, the 22-hectare chateau in Bordeaux seemed a priceless investment and a natural addition to his new wine business, rather than being just an expensive holiday home. Shen is part of a new wave of Chinese investors who are snapping up wine estates across the world. ‘Wine is not part of the traditional drinking culture in China, and as such many buyers, who haven’t been in the wine industry, may find it hard to operate the wineries,’ says Duan Changqing, director of the grape and wine research center at the China Agricultural University. ‘But it is fine if they are just buying the properties for fun.’”

“The bankruptcy of Hangzhou Glory Real Estate, a comparatively small homebuilder focused on the high-end residential market in Hangzhou, raised concerns over the health of China’s property sector. ‘Developers’ financial position has rung an alarm in the industry,’ says Alan Chiang, head of residential properties, Greater China in his April property report. ‘For the top 30 publicly-listed developers in China, 22 have recorded a negative cash flow as at the fourth quarter of 2011. In addition, 13 developers’ debt ratio has gone up to or over 70 percent. Unsold inventory turnover rate skyrocketed to an average of 1,667 days,’ he adds.”

“Since gaining popularity as a tourist destination, China’s Hainan island has seen a boom in property development projects. And developers continue to be optimistic of the property market despite falling prices and the high number of vacant units. Currently, about 60 to 80 per cent of these units are vacant. Tiley Real Estate marketing director Ji Cheng, said: ‘In Hainan, seaside property is increasingly scarce. In Hainan, our customers are generally second, third or even fourth time and above buyers.’”

“Experts don’t believe there will be repeat of the 1990s property bubble, even though up to 80 per cent of units remain vacant. CEIBS Lujiazui International Finance Research Centre deputy director Gary Liu said: ‘There is real estate bubble all over China so if you compare Hainan to other parts of China, the bubble would not be so serious.’”

“Russian citizens bought real estate worth $245 million in Australia last year, Australia’s Foreign Investment Review Board said. Russians ranked sixteenth in a list of buyers of Australian property last year, the board said in its report. The top three buyer nations are U.K. citizens in first place, spending $4.6 billion, the Chinese in second with $4.09 billion and U.S. citizens third with property purchases worth $3.4 billion.”

“Non-residents of Australia purchased property worth of total $41.513 billion last year, double the figure for 2010.”

“While renters are queuing up and offering bribes to secure a home, there are as many as 48,000 dwellings unoccupied across the state, according to analyst BIS Shrapnel. Some properties were reserved as holiday homes or undergoing renovations, however many owners were living overseas or sitting on the property while they waited for prices to rise following a record-long recession, BIS Shrapnel managing director Robert Mellor said. While property prices in Perth and across WA have fallen on average 8 per cent since March, 2010, REIWA says the downturn is levelling out.”

“‘There was huge growth in holiday homes in the late 90s to the middle of the [first decade of the] 2000s,’ Mr Mellor said. ‘Low interest rates really encouraged that and baby boomers [gained] higher wealth status and decided to buy a holiday home.’”

“Tamara Treleaven was 16 and working part-time in a music store when she started saving for a house deposit. Now 28, she owns three investment properties worth $830,000, two of them jointly with her husband. She aims to be a property millionaire by the age of 30 and financially independent by 40, even though she works part-time at home helping administer her husband’s gym and as a paid mentor for young investors. ‘The whole idea is we’ve got time in the market, so we’re not planning on selling. The little ups and downs, the property cycles, don’t concern us because we have the long-term view,’ she said.”

“Financial adviser Daniel Brammall said he liked their approach in deciding to build wealth, but they were in danger of having no plan B if either became sick or jobless, if the property market plummeted or if negative gearing was banned. ‘Their plan A appears to be like Monopoly - the winner owns the most property. [But] very few lives run uninterrupted without a hiccup.”’

“Greg Hoy, reporter: Negative growth in Australian home values in recent years has seen hordes of Australians drawn to the American Dream - riding the strong Australian dollar into the US housing market, which in large areas has remained depressed since a huge housing bubble and glut of subprime properties helped trigger to global financial crisis. Jeremy Laws, investor: You can buy almost anything in a larger city, and you will not lose, and you will kill the returns you will get in Australia.”

“Hoy: Queensland policeman Alan Wilkie pinned his and wife Jillian’s retirement hopes, and $300,000, on assurances given by Jason Paris of US Properties. The Wilkies bought an LLC title to a foreclosed house and townhouse in Las Vegas, which never delivered the rental returns assured by Jason Paris, and can’t be resold for anything near the price paid. Wilkie: It looks like the retirement plans are shot to pieces. I will probably have to work until I’m 100.”

“Figures from the National Association of Realtors show that China has become the No 2 international investor in US properties in terms of buyers at 9 percent, after Canada’s 23 percent. International buyers prefer properties in metropolises such as New York, Los Angeles, San Francisco and Miami, brokers say. For instance, Brazilians tend to congregate in South Florida, while Chinese customers seek properties in the Bay Area.”

“New York City’s priciest borough is another favorite for Chinese buyers, says Kathy Tsao, chairwoman of the Asian Real Estate Association of America. ‘Many of my customers are purchasing properties because their children will be attending school in the city. Most of them are attending Ivy League schools on the East Coast. So a property in Manhattan is an ideal situation for them.’”

“Chinese buyers tend to prefer paying cash rather than taking out mortgages, says Hiroko Akutsu Lee, a New York broker. She once saw a Chinese customer buy a house on Long Island with $1.2 million in cash. ‘Twenty years ago, Japanese came to buy properties. But after the burst of the real estate bubble in Japan, their enthusiasm in properties subsided,’ Lee says.”

“The maximum debt service ratio that Canada Mortgage and Housing Corporation will insure is 44 per cent of gross monthly income. As long as you’re shopping for a home, not buying a house as a speculative investment, it’s always a good time to buy, said mortgage broker Chris Pughe. ‘Personally, I believe that the only way to create a net worth for yourself is to buy property,’ Pughe said. ‘If you’re thinking about it, you should certainly get off the couch and do it. As long as you love the place you’re in, even if the market goes down, as long as you can pay the monthly payments, you can stay there until the market comes back.’”

“Canada has been held up as a ‘miracle’ economy that escaped the worst of the GFC. But any Kiwi looking at its present performance will be reminded of NZ a few years ago when we had a mirage of booming housing and consumption. Canadian real estate has surged in sympathy with other markets and a regime of low interest rates. But a central driver is Canada Mortgage and Housing Corp.”

“It is a huge, crown corporation fully backed by the Government. Until 1999 it had quite tough requirements, including a 10% deposit. Since then it has insured mortgages without limit, without deposits, with amortization of 40 years and the possibility of paying interest only for the first ten years. In 2011 homes became ATM’s, and the average homeowner had only 34% equity in their home, a fall from 55% only 4 years ago. Canadians have pulled $220 bln out of their homes in revolving home equity lines of credit (HELOCs): on a per capita basis, this is about three times as much as the Americans borrowed at the peak of their boom.”

“Vancouver is being driven partly by massive buying from Chinese investors and residents. My guess is that Chinese buying is very significant on the margin, especially for expensive properties in western suburbs where the median price is C$2 million. Vancouver is the world’s second most unaffordable city (after Hong Kong). It’s median price in 2010 was C$602,000 which is 9.5 times the median household income of C$63,100.”

“A recent study by the Bank of Montreal found that 4 out of 10 borrowers stated they could not repay their loan if interest rates rose slightly. Canadian investment in residential investment is now just over 7% of GDP: every time in history when this level is reached there is a crash within 2-3 years.”

“After six years in a condo, Madison resident Jessica Ramirez Torres is ready for a bigger home, but the market isn’t cooperating. She tried to sell the renovated, 900-square-foot unit for more than eight months, at less than $100,000. Almost nobody showed any interest, and the one offer she did get was ‘way below’ what she was asking, she said. So Torres, 32, like a number of hard-pressed but determined home sellers tired of being stymied by the housing slump — at least in terms of desired price — pivoted over to Plan B and decided to become a temporary landlord.”

“For the next year or two, she will take advantage of a hot rental market to pay the mortgage, while moving back home to save more money for a down payment on the house she wants to buy with her boyfriend. She thinks it’s likely the housing market will be better then, and she’ll be able to sell her condo without taking a big financial hit. Even so, she said, the decision wasn’t easy to make. ‘We didn’t want to be landlords at all,’ she said.”

“By the time a foreclosed home goes on sale, it’s near the end of the process. But the Sarasota Association of Realtors reports that only 15% of March sales came from either foreclosures or short sales. So the increase in foreclosures that RealtyTrac reports – 36% more for March this year than March 2011 – seems to point to homes going into foreclosure for the first time. ‘From then on you have at least a year or more – sometimes up to six years before the properties can actually become available for sale,’ says real estate attorney Anne Weintraub.”

“So why are homes just now going into foreclosure, more than four years after the housing market began to crash? One reason: the robo-signing scandal slowed foreclosures way down, but did not stop them. ‘A pregnant pause, but unfortunately the baby’s coming,’ Weintraub says. ‘We are going to have a lot on the market, I’m sure.’”

Weekend Topic Suggestions

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Bits Bucket for April 27, 2012

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April 26, 2012

Bits Bucket for April 26, 2012

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April 25, 2012

Now Or Never

The Mercury News reports from California. “Sales of all types of homes in the Bay Area in March were up 35 percent, to 7,694 homes from February and up 9 percent since March 2011. The median price was virtually unchanged. Agents are reporting multiple offers on both sides of the bay. One home in Cupertino received 50 offers before the seller accepted a bid of slightly more than $1 million. ‘Inventory’s low,’ said Don Orason of Intero Almaden. He said that’s because not only are fewer homes being offered for sale, but they are snapped up almost the minute they go on the market.”

“‘People are finally waking up to the fact that we probably hit bottom and they better get in while the rates are low,’ said Paul Ward of Keller Williams in Danville.”

“Cheryl and Ken Mensing bought their first house this month after 28 years in a mobile home. There were nine bids on the 4-bedroom, 2-bath foreclosure in the Santa Teresa area of San Jose listed at $429,000. The couple won with a bid of $442,000. Mensing said she and her husband saw prices edging up and decided that the stars were aligned for ‘a leap of faith’ into the housing market. ‘The prices finally came into where we could actually afford them and get into the market,’ she said. ‘The interest rates were so low, so we thought this is the time — now or never. We just closed our eyes and jumped.’”

The Signal. “The dwindling inventory is leading to bidding wars over homes, local Realtors said. ‘It’s crazy right now,’ said Tom Delgado, Realtor with Keller Williams VIP Properties in Valencia. ‘Here you are in these tough economic times, yet at same time, in the range from the $200,000 mark all the way up to the $650,000 range, you’re fighting competition,’ he said.”

“But sellers won’t see the rapid price accelerations they saw during the real estate bubble. Many buyers may be limited by the amount of money they were prequalified to spend, and if they offer more on a home, they will have to come up with the difference out of their own pocket, Delgado said. Another hurdle is that property appraisals often will no longer support the higher sales price. ‘We are now in a trough where it will take four to six years before the market will elevate up,’ Delgado said.”

The Burbank Leader. “Christopher Rizzotti, president of the Burbank Assn. of Realtors, said that among the declining number of homes on the market, most are selling in the $400,000 to $500,000 range. ‘Because of the low inventory, it’s created a frenzy for buyers who are trying to lock in at great interest rates,’ said Rizzotti. ‘Everything we’re involved with right now is multiple offers.’ Once the hiring picture improves, ‘we’re going to see our real estate market really take off,’ he said.”

KFSN TV Fresno. “The first four months of 2012 is proving to be a bounce back year for local home builders. There are new communities springing up everywhere. Granville Homes is in the midst of building four new communities in Fresno County. In the first quarter alone, the company is seeing a 70-percent spike in home sales compared to this time last year. Granville Homes President, Darius Assemi told Action News, ‘Most of our communities are almost sold out. So much that we’re concerned that we’re going to have a shortage of lots in the Fresno area.’”

Bakersfield Californian. “Home shopper Dian Schneider was four houses in on a whirlwind tour of local homes for sale Friday when her real estate agent issued her a warning. ‘Now if you like this one you’ll need to move today because there are already two offers on it, and they’re both above list price,’ said Anna Hernandez of McKinzie Nielsen Real Estate. ‘They’re not crazy high, but you’ll have to go in high, too, if you’re serious about it.’”

“There are plenty of existing homes, but many of them are in the hands of banks that are reluctant to dump their massive shadow inventory all at once. That would drive down the prices not only of those assets, but of other homes with outstanding mortgages banks hold that could be driven into default in another market collapse. ‘It’s in their best interest to let these houses out in drips and drabs to maintain their value,’ said Stuart Gabriel, a professor of finance at UCLA and director of the university’s Ziman Center for Real Estate.”

The Record.net. “Five years after the housing bubble burst and San Joaquin County became a poster child for the mortgage meltdown, the region continues to struggle economically with some of the highest default rates in the nation and nearly no new construction. Douglass Eberhardt, CEO of Bank of Stockton, agreed that the real estate sector continues to struggle. And that situation is likely to continue as major mortgage holders - major banks and Freddie Mac and Fannie Mae - slowly process their troubled loans.”

“‘They’re dribbling out their foreclosures; it just prolongs the length of the recession,’ Eberhardt said.”

The Press Enterprise. “Real estate analysts and people who work in the field say that banks and other lenders that have taken over foreclosed properties are reluctant to sell them, which is slowing up sales. Jane Blesch, owner of Blesch & Associates Trademark Properties, a Redlands-based brokerage, called the market ’slow as molasses’ right now, and said the banks, by holding onto properties, are not helping.”

“Rich Simonin, co-owner of Westcoe Realtors in Riverside, said agrees that there is not enough inventory. ‘The banks have still not put many of their foreclosures on the market. We don’t even know where they are,’ Simonin said. ‘I’ve stopped trying to figure the banks out.’”

“Steve Johnson, Riverside director of MetroStudy, said banks and other lenders are being cautious. There are government programs in the works to allow homeowners to reset loan terms under certain conditions, and the banks are also developing pools of properties for investors. ‘They’re waiting to see if these programs will have an effect,’ Johnson said.”

“A Riverside family who moved back into their home in December after being evicted by lenders has five days to vacate the property, according to a ruling in Riverside County Superior Court. ‘We’re not asking for anything special,’ Arturo de los Santos said after the hearing. ‘We just want the bank to give us a new contract.’”

“Brad German, a spokesman for Freddie Mac, said the foreclosure and previous eviction processes were lawfully completed and the mortgage has been extinguished. Obtaining a new Freddie Mac mortgage after a foreclosure would require seven years of re-established credit history. ‘This is the only way to reduce further losses on a mortgage that hasn’t been paid in more than two-and-a-half years,’ German said after Friday’s hearing.”

The Contra Costa Times. “When William Quintana tried to take advantage of a federal program that helps homeowners lower their mortgage payments, he never imagined it would land him in bankruptcy and on the verge of losing his house to foreclosure. But that’s exactly what happened after the Antioch resident and his wife applied for a loan modification through the federal Home Assistance Modification Program, or HAMP.”

“‘They say owning a home is the American dream, but it’s become the American nightmare,’ said Quintana, a plumber. ‘I’m not a failure or a loser. I’m a complete victim.’”

The Sacramento Bee. “‘At the low end of the market, there is a feeding frenzy going on in Sacramento,’ said Robert Machado, president of HomePointe, a local company that manages rental properties. Rick Lunsford bought several rental properties for the first time in 2009. A home Lunsford bought in Natomas for $235,000 in 2009 is likely worth $190,000 today, he said. ‘I thought we were at the bottom then, but we weren’t.’”

The Glendale News Press. “The dwindling number of houses up for sale is still impacting the local real estate market as the number of condominiums on the market plummeted by 70% last month compared to March 2011, according to the latest figures. The low housing inventory is creating a frenzy among buyers who are trying to snatch up houses because interest rates are low and median prices have been declining, which results in greater housing affordability, said Shannon Cistulli, president of the Glendale Assn. of Realtors.”

“Some homeowners who must move are opting to vacate their homes and rent them until the real estate market picks up again, said Cistulli, who is also branch manager of Dilbeck Real Estate in Glendale. Meanwhile, median sale prices for homes and condos continued to tumble in March. The median price for a single-family home dropped from $670,000 in March 2011 to $572,000 last month. Condos saw their median price edge down from $283,000 in March of last year to $253,000 last month.”

“In La Cañada, the median price of a home dropped to $900,000 last month, compared to almost $1.2 million in March 2011. The number of homes for sale decreased by about 35.5%, from 104 in March 2011 to 67 last month. The ratio of distressed sales compared to total sales continued to be more than one-third, coming in at around 40% last month compared to almost 42% during March 2011. ‘The big question is, ‘What happens next?’ said Realtor Keith Sorem with Keller Williams of Glendale.”

The North County Times. “After watching the value of their homes slide through most of 2011, many homeowners pulled their properties off the market this year. At the same time, local foreclosure rates dropped, reducing the number of bank-owned properties on the market. The resulting drop in inventory has left buyers competing for the few remaining properties, steadying prices, Realtors and other observers said.”

“The median house price in North San Diego County hit $415,000 in February, down 3.8 percent from February 2011. In Riverside County, the median home price in February hit $193,000, down 1 percent from the year before, according to DataQuick. ‘The biggest problem I see now is inventory,’ said Bob Nielsen, a Carlsbad real estate agent. ‘A lot of people that are underwater are waiting to sell.’”

Bits Bucket for April 25, 2012

Post off-topic ideas, links, and Craigslist finds here.

April 24, 2012

A Murky Monopoly Game

The Missoulian reports from Montana. “In recent years, Missoula real estate broker Rebecca Donnelly had gotten in the habit of bringing a book to open houses. The dreary residential housing market meant visitors were few and far between. This year, Donnelly hasn’t done much reading. On top of that, the last three offers Donnelly has submitted for houses ended up in competitive offer situations. ‘I don’t bother with the book anymore, I have 10-13 groups through on average (at each open house),’ said Donnelly.”

“Donnelly said sellers are realizing that the market isn’t going to bounce back quickly. The incentive of getting more on the other end has prompted some to list. ‘You may take a loss … but chances are, they will get a lot more house than what they already have at a cheaper price, so it’s really not a loss,’ Donnelly said.”

The Idaho Statesman. “New-home permits in Boise, Meridian and Eagle have doubled in the first quarter this year compared with the same period last year, and more buyers are seeking houses in the $400,000 range, said Bobbie Schultz, president of the Building Contractors Association of Southwest Idaho and owner of Jordan Homes in Eagle. ‘It shows that people are buying those less expensive houses and bumping people up as well,’ she said.”

“Buyers are turning to new homes because of the persistent shortage of existing homes for sale and because of good deals on new construction, said Kit Fitzgerald, president of the Ada County Association of Realtors. Marc Lebowitz, executive officer of the Ada County Association of Realtors said people are speculating about the effect bank-owned houses could have on recovery if they were put up for sale. But he said the increased level of demand and the rock-bottom inventory suggest the market can handle them.”

“The lack of supply means that multiple buyers are putting bids on homes. ‘It’s who can get it first,’ Fitzgerald said.”

“Because of demand, prices are now going up, and builders aren’t offering concessions or discounts as they have in the past few years, Fitzgerald said. ‘Everything in every price category has gone up,’ she said. ‘Anything $150,000 and less is just flying off the shelf.’”

StateImpact Idaho. “Lynne Smith pushes open the door of the home she’ll move into in just a couple of weeks. It’s brand new. ‘This is it!’ she says. ‘It’s just nice to come in and look around and say, ‘Oh, this is going to be my house!’”

“It was low interest rates and depressed home prices that drew Smith into the market. She thought she’d buy a foreclosure, and snap up a good deal. Instead, the search was a slog. She saw a lot of homes that had been damaged, or neglected. For the better places, competition was fierce. ‘The things that are really nice and in good, clean shape that people actually took care of, they’re gone in like a day,’ she says. ‘We would call the listing agent, and they would say, ‘Oh yeah, we have multiple offers,’ or, ‘We just got that offer sealed up 15 minutes ago.’ So – you really have to move quickly.’”

“Idaho Business Review reports the number of bank-owned homes for sale in southwest Idaho dropped almost 20 percent from February through the end of March. ‘This fact is worth mentioning since foreclosure sales are still occurring, and the vast majority of properties are going back to the lender, but there haven’t been that many REO sales to account for the decline,’ Idaho Data Providers President Charlie Nate said in the report. ‘This is evidence that lenders are holding REOs off the market and probably renting them for a while to help keep the market stable.’”

The Juneau Empire in Alaska. “Assessment data the city has collected and calculated has found that in 2011, housing sale prices in Juneau reached an all time high. In 2008 the median value for single-family homes was $318,000. That number dropped and hovered just above $308,000 for three years, and in 2012 the median value has risen to $332,000. City Finance Director Craig Duncan said the four year trend is a 9.6 percent increase, with an average increase over those years of 2.4 percent per year.”

“‘If you just compare ‘11 to ‘12, it looks like it went up 11 percent,’ Duncan said. ‘But then you would be forgetting it went down for several years.’”

McCleans on British Columbia. “While warnings about a Canadian housing bubble and rising household debt keep piling up, the government of British Columbia appears intent on fuelling the fire. This spring, first-time homebuyers can get a cash-back bonus of up to $10,000 for a newly built home. This ‘tax relief,’ which aims to also ‘assist the residential construction industry,’ will last until 2013. Government stimulus seems like the last thing Vancouver’s market (the priciest in the country) needs.”

“Tina Mak, a broker with Coldwell Banker in Vancouver, knows of at least two condo projects that sold out in a matter of hours earlier this year with prices starting well above $500,000. Mak expects a buying boom. Her phone has been ringing off the hook with clients interested in the rebate.”

The Vancouver Courier in British Columbia. “According to last week’s Real Estate Weekly survey, 46 per cent of Lower Mainlanders think now (spring 2012) is a good time to buy a home mainly due to low interest rates. On the supply side, 56 per cent think it’s a good time to sell, mainly due to high prices. But what do they think in China?”

“Now more than ever, Chinese eyes gaze east to places like British Columbia, which has no restrictions on foreign ownership. But anecdotal evidence abounds. Empty homes, bought and mothballed for future sale, decrease housing stock, increase demand and up prices. According to the Real Estate Board of Greater Vancouver, last year the average price of a detached home in Metro Vancouver rose 11.2 per cent to $887,000. On the West Side, the average home price rose 20.7 per cent to $1.99 million.”

“Trafalgar, they used to call it. A patch of urban plain between West 16th Avenue and King Edward in Arbutus Ridge on Vancouver’s West Side. Prime real estate in a beautiful city. And ground zero of the investor invasion. It’s no longer a community, it’s a commodity. A pocket of land bought and tilled by speculators. Down went the old stucco bungalows, once the neighbourhood’s signature home, up went dozens of ‘developer specials’—two and three-storey monstrosities that often sit empty, windows shuttered, for months. Sometimes years.”

“Colin grew up in the neighbourhood, at Trafalgar elementary and Prince of Wales secondary. He remembers streets bustling with life. Kids on bikes. Barbecues and burning leaves. Now a 38-year-old investment adviser, he lives in a rented bungalow not far from his childhood home. While the street names remain the same, the neighbourhood is unrecognizable.”

“Colin, not his real name, wishes to remain anonymous, fearing backlash and smears. If you dare note the ethnicity intrinsic to foreign real estate investment in Vancouver, you court charges of bigotry from industry benefactors. Last Friday, Colin took me on a Trafalgar tour. Street after street with many vacant homes. He pointed as we walked. ‘That’s empty. That one. That one. The whole side of this street almost.’”

“In Trafalgar, bilingual ‘For Sale’ signs in English and Mandarin dot front lawns. During our afternoon stroll, we happened upon a grey, two-storey with white-trimmed peaks. The front door was wide open. A young Asian man appeared in the foyer. ‘Yes?’ ‘Is this an open house?’ ‘No,’ he said, in limited English. ‘We show to private buyers.’ ‘How much? What’s the price?’ ‘Three point eight nine million.’”

“That’s typical of Trafalgar and other sections of Arbutus Ridge, probably the most overpriced neighbourhood in the city. It’s a market within a market with baffling trends. According to Colin, several Trafalgar homes seem to exist solely for ’sale’ yet never get occupied. ‘These three places in a row,’ he says, near West 21st and Yew. ‘No one’s ever lived there but [For Sale] signs go up for a few weeks then go away for few weeks. It just doesn’t make any sense.’”

“It’s a murky Monopoly game. Where do the interests of your global industry and our city diverge? How deep doth thy zeal for globalization run? No, they want this conversation to go away. Shut it up before folks get wise. If you’re troubled by dead neighbourhoods shuttered by foreign investment, you’re a racist dog stuck in 1923. Get back to your rented bungalow. You’ll be hearing from us soon.”