If You’re Relying On Appreciation, You’re Gambling
KAJ 18 reports from Montana. “New buildings have been going up around the Gallatin Valley, and reporter Keele Smith found out how much construction is going on - and what we can expect down the line. Randy Stevens just moved to Bozeman to work at Montana State University. He and his wife bought a home in Loyal Gardens subdivision without ever going inside. ‘We quickly found out that this is a crazy home buying market and things move really fast, and we were not prepared for that,’ says Stevens.”
“Ami Grant is a broker for Prudential Montana and helped the Stevens find their new home, and says most people like new construction if they can afford it. ‘There’s a huge demand in the $250,000 range, $275,000 but very solid demand in the $300,000’s and low $400,000’s as well,’ Grant said. Many buyers are looking for the same thing, which is getting hard to come by. ‘Single family homes for sure, but there’s a big town home market as well because there’s only a few homes under $250,000 in Bozeman right now,’ Grant says.”
KMVT in Idaho. “The local housing market is booming, but sellers are having to wait a while before moving into their new houses, Because they haven’t been built yet. Property values are climbing again, which means you can get more money for selling your home right now. Homeowners who’ve been waiting to sell are finally putting their homes on the market. But appraisals are having a hard time keeping up with rising real estate prices.”
“Sid Lezamiz, owner of Lezamiz Real Estate Company, says, ‘We’re seeing more presold new construction being sold right now than we have since 2007. So we’re almost at the level we were in 2007, which was the peak of the market.’”
The Pacific Northwest Inlander. “For weeks, a deluge of advertisements for these FortuneBuilders seminars flooded Spokane radio stations. Call now, said the voice of Than Merrill (FortuneBuilders founder, ex-NFL player, former Flip This House star) and get two free tickets to learn how to rake in profit with very little risk. Spokane is the perfect market, he said, for house flipping.”
“Tony Natoli — once Merrill’s disciple, now one of his evangelists — speaks at FortuneBuilders seminars across the country, dangling the promise of big wealth through savvy real estate transactions. “There’s those people that say money’s not everything, money’s the root of all evil, money won’t buy you happiness. Why would they say that?’ Natoli says. The crowd murmurs their response. ‘Don’t have any, right. Listen, guys: I’ve tried it without money. I’m here to tell you that sometimes having a lot of money makes things a lot easier.’”
“‘Some people say, ‘Wow, I don’t need all of that,’ Natoli says. ‘But I’m telling you, deep down inside, you want it. And also I’m going to tell you you deserve it, if you’re willing to do what you need to do to get it.’”
“In the radio ads, Merrill claims Spokane is the perfect market for his system. He explains that the region’s low price point — plenty of homes under $250,000 — make it ideal for flipping. It’s an iffy claim. In October, listing service RealtyTrac named the high-priced home-flipping markets as the hottest, with the low-end market having decreased significantly.”
“Marianne Guenther Bornhoft, president of the Spokane Association of Realtors, says Spokane sale prices have been stagnant. ‘Prices are up 3.7 percent,’ Bornhoft says. ‘If you’re a house flipper, you need to have increases that are way higher than 3.7 percent.’”
“Merrill argues his system relies on solid home improvements, not appreciation. ‘If you’re relying on home appreciation, I think you’re gambling,’ Merrill says.”
The Bend Bulletin in Oregon. “Real estate has been a bright spot in Central Oregon’s economic recovery this year, with homes selling at a pace not seen since 2006, prices rising, foreclosures falling and building activity rebounding. But talking to a half-dozen local real estate officials will yield a half-dozen different opinions about the state of the market today and the near-term outlook. Not all of them are rosy.”
“‘Things have without a doubt slowed down,’ said Kip Lohr, owner and principal broker of Lohr Real Estate in Bend. ‘There was a point even two months ago where I could put a property on the market, and in two or three days it would have five offers and end up selling for $10,000 above the listing price. Now, almost like a light switch, we’re seeing very well-priced properties stay on the market.’”
“‘I’m worried interest rates will continue to climb,’ said Jim Mazziotti, owner and principal broker of Exit Realty Bend. Another factor could be a decline in the buying of foreclosed properties by investors who stormed the Bend market in the years after the 2008 housing collapse. ‘I think what some people think is a red flag is really a false indicator of the drop-off in investor activity,’ Mazziotti said.”
“Lohr said there’s some concern that prices could continue to drop over the next year, driven by a state foreclosure mediation law that prompted banks to hold off on thousands of pending foreclosures, creating a backlog. Lohr said his office has counted roughly 1,600 homes across Central Oregon that have received a notice of default on their mortgages or notices of judicial foreclosure, but haven’t come onto the sales market. Some of them have been in limbo since 2009, he said, with the owners giving up hope on keeping the home years ago.”
“‘We’ve got a backlog of these distressed homeowners. I think a lot of them have just abandoned their homes,’ Lohr said. ‘I think we’re going to see a lot of distressed inventory come onto the market’ into 2014.”
