Local Market Observations
What do you see in your housing market this weekend? Lower prices? “Australia’s much-debated property ”bubble” may not have burst but recent data shows house prices are deflating, posting their worst quarterly slump in a decade. The biggest falls were in Brisbane and Perth, down 4.6 and 3.4 per cent respectively. The quarterly decline was the largest since RP Data-Rismark began recording results in 1999.”
“Boston-area home values slid in February for the seventh consecutive month, according to data released yesterday by the S&P/Case-Shiller Home Price Indices, which measure repeat home sales nationwide. Karl E. Case, a cofounder of the index and retired Wellesley College economics professor, said housing values probably fell because buyers are having a hard time getting financing or are not convinced they should buy real estate.”
“To find a metaphor for the rise and fall of the housing market in the Great Recession, look no further than the 1,500-square-foot home at 948 Grant Ave. The house the Rockford Area Association of Realtors and city are giving away next week sold for $43,000 in 1996. By February 2006, its value dropped to $33,000. A Roscoe company bought it in March 2006 for $44,500, made some improvements and sold it in 2007 for $83,000. By March 2010, the bank had foreclosed on the 1930s Dutch Colonial home. The Realtors association purchased the three-bedroom, two-story home in July from the Federal National Mortgage Association. Purchase price: $29,601.”
“Jon Krause, president of RAAR, said it’s no surprise that prices continue to fall. ‘It is going to be a couple of years before we see prices rise again because there are so many distressed properties on the market,’ he said.”
“Los Angeles County’s employment sector hit bottom in 2010 and more job losses are coming - but a recovery is under way. That was the assessment of Nancy Sidhu, chief economist with the Los Angeles County Economic Development Corp. ‘We lost 356,000 jobs in the recession,’ she said. ‘Los Angeles County unemployment is just beginning to turn around.’”
“In the housing sector, foreclosed homes have provided buyers with a lower priced alternative, she said, and builders are having to compete. ‘Home prices have come down by half,’ Sidhu said. ‘We really have a question mark about what the housing market looks like in the future.’”
“Median sales prices for homes in Houston area are below their peak of $164,500 in June 2009. It’s a buyer’s market in much of the city now, according to local real estate broker Ken Smith. Smith recently spoke with Purva Patel about the market and what price data means for buyers and sellers. Edited excerpts are below.”
“Q: How does a buyer or seller know if a house is priced right? A: Either one can get out into the market and do their own research. In general, buyers have a lot more information than sellers. I like to say sometimes buyers are smarter than sellers. That’s because buyers are out shopping and sellers are sitting around in their living room, possibly holding on to yesterday’s price in their mind…Sellers should listen to their Realtor, and if they don’t believe their Realtor, they need to think like a buyer and emotionally detach from their property and view it like a piece of inventory they’re trying to sell in the marketplace, objectively. What they paid or what they have in it, those two things don’t matter at all.”
“Q: How much further do you think prices need to fall? A: I don’t think in Houston they need to fall much more than 5 percent. When I say prices are too high, that doesn’t necessarily mean prices need to fall. It could mean buyer demand goes up…I would point out that if you look at the overall broad market in Houston, more than half of all the listings will not sell at all during the listing period because they are extremely overpriced. For the first three months of 2011, there were 10,621 home sales. During that same period of time, there were 14,199 single-family home listings that were either terminated, withdrawn or expired. There are two markets. There’s a market of houses that sell and a market of houses that don’t sell.”
“Q: What’s the price difference between the houses that sell and those that don’t? A: Enormous. And here’s why: Of the houses that sell, they sell for 96 percent of list price in a relatively short period of time. The houses that don’t sell are way overpriced. I don’t have a way to tell how much they are overpriced because they didn’t sell.”
“Q: What concerns you about the local housing market? A: One of the things concerning me in Houston is that our volume has dropped so much. It’s not clearing as well as it should. In our last recession, prices dropped significantly but the volume was hot. Something’s got to give in a bad market — either prices or volume. In California, for example their prices dropped like 70 or 80 percent. Now they’re on the upswing, and that’s because the prices got down to bargain levels and now they’re snapping up the bargains. I’m not a big fan of the government rescue programs. I think the tax credit was a bad idea, I think the mortgage rescue is a bad idea, and I think that what we’re trying to do is alleviate some pain. We could be done with this already and on the upswing if they had just let prices fall. Prices would have fallen more than they did and we’d be on our merry way. Let’s list all the foreclosures and get them out there. If the market’s so good, get them sold. Buyers want to know there’s not another shoe to drop.”
For those reading here that may not know what the local market observations thread is, I post this so anyone can share information about their local market. Anything is fair game; anecdotes, failed developments, open house experiences. Links or no links, we just want to hear about what you see going on locally.
Ken Smith DOESN’T sound like an idiot. I have to say that I hadn’t really thought about the price information gap between buyers and sellers, but it stands to reason that people who are out there looking have a better idea of what prices houses are listing for than those who are trying to sell. Of course there’s no mention of the fact that many potential sellers CAN’T simply list their house at the current market price. They owe too much and can’t make up the difference. Instead it becomes the potential buyers job to convince the current lender that accepting less money will result in smaller losses than foreclosure. Which can be a time-consuming effort.
It’s a time consuming effort and you get the “my client is insulted” answer along w/a refusal to listen to facts.
This tells me the seller’s realtor is not on board with what’s going on either. Otherwise they’d have worked on them before going back to a buyer w/emotional answers that risk cutting loose the buyer.
It’s not the potential buyer that’s going to convince the lender to agree to a short sale, it’s the financial situation of the FB that will. I just became aware of another person (small business owner) who has stopped making payments on his house which he paid (with the banks money) $500k for back in the day. Seems the house is only “worth” $250k now, and he’s not interested in paying anymore even though he has the money. He tried to short sell it, and the bank wanted a promissory note for the difference. Either that, or they would extend the loan. They would not, however, agree to a short sale. So, he’s going into foreclosure.
But the potential buyer does have to convince the lender that this is the best price they’re going to get too..
“Los Angeles County’s employment sector hit bottom in 2010 and more job losses are coming - but a recovery is under way”
Contradiction in this statement ??
according to local real estate broker Ken Smith
In California, for example their prices dropped like 70 or 80 percent ??
Where ??
Not here! (Coastal “The O.C.!)
heheeeheeeheehaahaaahaaheeehaahaaa… (Hwy50™)
107-year-old bungalow, older than city, sells:
April 30th, 2011,/ by Marilyn Kalfus, real estate reporter / OC Register
A 107-year-old bungalow in downtown Huntington Beach, apparently the oldest home on the market here, has sold for $680,000.
The house, which predates the city itself, was initially listed at $839,000 in April 2010.
The price dropped a few times before the property went off the market, then returned at $750,000, which was $25,000 below what it was when it was delisted in October.
The 1,100-square foot, 2-bedroom, 2-bath bungalow at 324 8th has some unusual features for its period and location: high ceilings, which most homes back then did not have, and a private backyard, also not common for a downtown home 3 blocks from the beach. In addition, there’s a 2-car garage.
Stockton and Fresno. I don’t have many figures handy, but it was over 50%. Those are outliers though– most Sac valley towns dropped 30-50%.
Manteca is a suburb of Stockton, dropped 60% since 2006, see article below:
http://www.mantecabulletin.com/news/article/22837/
Here in suburban Boston (Arlington) more and more on the market. Prices seem to continue to drop. You can get a nice single family house for about $400K. This less then a year ago my guess about 20% less. But still too high. Not compared to so much to incomes but that fact that these are old 80+ years places with lots of charm (and maintenance) and that the taxes are high. Plus I don’t think many of the neighboorhoods justify the prices. There is tons of overpriced inventory that just sits and sits and sits. The applies to both ends of the markets. 50 year old brick garden apartment style condos for $100K and anything over $500K or $600K. Some places I have seen on the market for over a year. Here’s a more typical house. Just on the market. It’s nice as can be but I would never pay that price for it.
Asking $475K
http://www.realtor.com/realestateandhomes-detail/46-Hillside-Ave_Arlington_MA_02476_M39670-92760
And a condo in a nice building in town at the flat of Beacon Hill but still way way way too much. One bedroom, NO Parking. $450K
http://www.realtor.com/realestateandhomes-detail/145-Pinckney-St-Unit-334_Boston_MA_02114_M43647-50967
So Ca- east Ventura County
As active buyers (cash for a primary), we are seeing many UHS “buying listings”, and reducing the price, having locked in the contract. As others have stated, the housing priced right for the location and condition fly off the shelf. The rest sit. Although inventory is tight, buyers are few and being picky. Price is sticking at $400K in our criteria, but last year, some were at $460K-$500K. We’re making progress. The REO’s are bad location and condition homes. No deals and no disclosure protection like a private sale in Ca.
Wanting a one-story, we’ve passed up some good deals on two-stories w/ pools. We haven’t sacrificed this long to take a wrong turn. We’re getting older.
Oh, and recycled listings (they get re-listed in a new MLS as a new listing) is common. That’s why I keep a property by address notebook. I catch all kinds of shenanigans.
“I catch all kinds of shenanigans.”
There is a market for people such as yourself in that a lot of people need advice and assistance. If you can get the word out about who you are and what you can do you might do well as a consultant.
The Arlington, Ma. house looks like a decent $200-250k house in the late nineties and, based on rent estimates, that’s close to what it’s really worth now…
Exactly!!!! Yet they sell. Funny thing is there was a house the same neighborhood for selling for $420K. The open house was mobbed. House sold that weekend. $350K - $450 is the low end of the neigborhood. But the $475K house is about 30% more square feet and much better construction and condition than the one that went under contract for $420K. Wonder if the buyers are sorry already.
As you guys aware UHS.dom has a section where you can look up basic property tax and tax basis information. I use it all the time.
I learned that in my target area, the homes of my desire sold for $276K in 2002. Now they are reduced to move for $425K LOL, down from $625K at the peak.
a meant .com
combo
Thanks, but the NAR (which I belong due to my REIT career) would hire a hit man on me. LOL
Come get me
~Realtors Are Liars
Tiny offices are hot real estate:
April 30th, 2011, posted by Jon Lansner /OC Register
All those abandoned Home Offices / former tax deductible McMansion spare bedrooms, have created a new “approach”!
“We foresee steady upward growth in this segment of the O.C. office market over the next few years.”
Hwy forsee’s the need for a “Lease/Available Now!” sign museum in “The O.C.” someday.
Here’s the link for the USA UHS dot com
This is vital in getting the tax and sales info for an area. It’s the County Recorder files- “Reader’s Digest” version
http://www.realtor.com/property-search
Re-al-TOR DOT com, Germantown, about 20 miles northwest of the Washington Monument, still have to drive to the end of the Red Line:
This is the most telling stat:
From $0K to $450K:
Condo/townhome/co-op: 302
Single family home: 55.
Crash prices:
Apartment conversion condos built ~1980: can be had for “price reduced” $85K. MANY of these around.
Townhomes built in the mid-1980’s: can be had for “price reduced” $125K. Quite a few of these too.
Wishing prices:
SFH of any stripe, excluding as-is fixer-uppers.
Bubble-era housing of any stripe.
In other words, the most desired housing — mid-size SFH built before 1998 or so, livable but upgradable condition — is the type that is least likely to be on the market. And it’s still 30% too high.
Here’s a sample: http://www.realtor.com/realestateandhomes-detail/19215-Liberty-Heights-Ln_Germantown_MD_20874_M57672-11420
The pix show off the new granite kitchen. Too bad they opted for comparitively cheap white appliances. I do like the laundry room in the basement.
“What do you see in your housing market this weekend?”
How the #@$@ am I suppose to know now that NYSAR and VAR began withholding price and sales volume data from multiple counties?
By virtue of the fact the Realtor Crime Syndicate is hiding data, it’s safe to presume sales volume is collapsing. Prove me wrong you scumbag Realtors.
~Realtors Are Liars
I was excited about price moves in 2008. They bounced up again right after people felt their jobs were no longer in peril. The $300k niche and above is where we’re starting to see more bloated inventory and I would say above that all are buyer’s markets. But the lower price points are definitely seller’s market. In the last 30 years almost all new construction was McMansions. That’s not what people want anymore so now all demand is crunched into the very small supply in the lower niches. If it’s in good shape that is still a seller’s market. At $250 -$325k you see crazy variations on what a home offers and it’s price. Even my realtor has taken to declaring certain properties we’re in as overpriced. (This market is under 10k total housing units including apts and condos.)
Several of the homes I rolled my eyes at that sat over a year w/o cuts are finally making some decent discounts to asking price.
Apologies: We are in fact way under 10k people. Can’t quickly find housing count but we’re probaly under 4k units.
Note: Citydatadotcom now offers SF housing permit counts per year for each city. I was surprised to see the highest number given out was in 2009 although not every year is provided.
Ben, thanks for some really excellent reading. For my little corner of the world, Martin County, Florida, we actually had a very good March compared to the past three years. Not to convinced it will last, but who knows. I lost my crystal ball. You can see the stats here, if you have an interest:
http://www.treasurecoastflhomes.com/HomesAuthenticated.aspx?tabid=1911487
Hey…. a bona-fide lying realtor.
What’s shakin liar?
Prices in south Sacramento, Elk Grove, Natomas, Lincoln…basically the areas surrounding Sacramento metro have dropped 60-70% (I’m guessing), however, the more desirable areas such as East Sac & Folsom, have only dropped approx 25%.
I’ve been out shopping for the past 2 months in Folsom, and the “used” homes in the low $200,000’s are in very poor condition. It doesn’t seem to me that the condition is due to the down turn, it looks like the owners never maintaned the home in the first place. I keep hearing that Folsom “is different.” We shall see.
I don’t know if I should admit this or not.
Oldest daughter just bought a “short sale” house. Closing next month, assuming everything goes to plan.
Previous owner is taking a $30K plus hit, which is a bunch around here.
Built in 2005, 2300 sf in a decent school district, purchase price is around $125K. Their family income is 80-90K/year, so it’s affordable.
I personally wouldn’t buy squat until the chips finish falling, but, as related, her current neighborhood is sliding down the crapper fairly rapidly now, and she wants to get out sooner rather than later. They are also getting “free” babysitting from the in-laws, and this gets them closer to where they live.
Hope it works out. At least I have someplace to send all my house repair/refurb tools to now.
That’s a pretty sweet price per square foot! What shape is it in if you don’t mind my asking?
The previous owner had an odd taste in the color palate……so wholesale repainting of the interior is required. Inspection hasn’t been done yet, but it hasn’t been stripped for copper, concrete dumped down the sewer, feces smeared on the wall, pets left to die, etc.
Built in 2005 near Wichita. All the appliances stay with the house, too.
They have gradually developed a contrarian viewpoint. As there is no evidence that the job market is getting any better anywhere else than it is in Wichita, why leave relatively stable jobs and the family support structure to move elsewhere?
Santa Rosa, Ca:Santa Rosa Housing
Owner-occupied homes 55.9%
Median cost of a home $561,200
Median mortgage payment $1,608
Renter-occupied homes 44.1%
Vacant housing 4.9%
Median monthly rent $1,025
Average Income
Median for all workers $30,203
Median for all male full-time $47,485
Median for all female full-time $37,659
Household Income
Less than $10,000 5%
$10,000 to $14,999 7%
$15,000 to $24,999 11%
$25,000 to $34,999 9%
$35,000 to $49,999 15%
$50,000 to $74,999 21%
$75,000 to $99,999 12%
$100,000 to $149,999 12%
$150,000 to $199,999 3%
$200,000 or more 4%
“According to government data, the average salary for jobs in Santa Rosa, California is $42,572, and the median income of households in Santa Rosa was $51,454.”
————————————————-
Now this shows that the median income was $51,000 and yet the median cost of a home was $561,000.!!
Does this not indicate that the real estate market is out of line with the economic ability of the citizens to buy homes.
Now what is the solution other than having the home prices slide down to about $200,000 at the median.
TraderJack
“Now this shows that the median income was $51,000 and yet the median cost of a home was $561,000.!!
Does this not indicate that the real estate market is out of line with the economic ability of the citizens to buy homes.”
Are you questioning the integrity of god’s children?
“Median cost of a home $561,200
Median mortgage payment $1,608″
Median (annual) mortgage payment as a percentage of the value of a house: 100*(12*$1,608)/$561,200 = 3.4%. This sounds incredibly affordable; but where do people find mortgages at interest rates low enough so that payments + interest are only 3.4% of the cost of the loan? Or is it that the buyers come in with such incredibly huge down payments that the principle balance is nowhere near $561,200?
‘Tis a puzzlement.
My brother lives just south of San Jose, CA. A friend of his stopped by to show-off his new Tesla Roadster. He can afford it because he lives in a San Jose house with a friend who hasn’t made a mortgage payment for over a year, so there’s cash for ‘da toys. Since I’m supporting a family I can honestly say that I’ve never heard of the Tesla Roadster; had to look it up. I pay my bills, and I can only afford the areas with six months of winter while the fraudulent debtors enjoy the sunshine. Thanks, Dubya!
Tesla Roadster
http://www.youtube.com/watch?v=w1C44JQU7Pc
“He can afford it because he lives in a San Jose house with a friend who hasn’t made a mortgage payment for over a year, so there’s cash for ‘da toys.”
There seem to be an awful lot of stories in play about people living large because they stopped paying their mortgages. For how much longer will their lenders allow this to continue? And where will these people be in five years from now? (I’m guessing some kind of mortgage debt forgiveness bill will be passed over the next five years, in order to make sure these deserving folks are requalified to buy homes again by then…)
Pinellas County, FL, is still WAY overpriced.
Puget Sound region, WA:
Raw land still priced ABSURDLY high, as if the halcyon days are still here. $150k+ for any decent 5 acre parcel, with decent being the operative word. Anything nice is priced much, much higher ($500k isn’t unheard of). After bringing in power, putting in a well, and installing a septic system (including permits) you’re talking more than a quarter million dollars for the opportunity to start building a home, and that’s in an area of old mobile homes. It’s going to be years before sanity returns.
“Karl E. Case, a cofounder of the index and retired Wellesley College economics professor, said housing values probably fell because buyers are having a hard time getting financing or are not convinced they should buy real estate.”
Households having no jobs or savings or a much smaller income than back in 2006, relative to pre-2006 wishing prices, has nothing to do with it, then?
I spent the early am hours reading John Mauldin’s commentary on The End Game, what he expects when the country decides or is forced into the necessary period of deleveraging.
He is in good company. I’m hearing quite a bit of noise on this subject of all sudden which means the mouthpieces want to put their mark on it now that they see it approaching.
I’m tightening the seatbelt in anticipation of some turbulence ahead. And so are a growing number of people who have been watching all along. Certainly this information is not helping the housing market.
Why anyone except the very wealthy would buy a real estate money pit when the prices of food and gas are heading through the roof is a big mystery to me.
The market in the Palm Springs area is down at least 50%. I recently purchased in the Palm springs area a 2/2 townhome on fee land with a 2 car garage for $69,000. This was foreclosed on with a refri for $250,000. The units were selling up to $300,000.
The higher priced homes in the Long Beach areas of Naples, Belmont Shore, Belmont Heights, Marina Park are selling. There have been a few over $2,000,000 and the ones priced well are selling.
New Naples listing for $10,500,000
The downtown condo market is down at least 50-70%
The buyers are out there!
Personally, I don’t like to compare current house prices to their peak values to know if they are a good deal, but rather what they would sell for in the mid to late 90’s. Using peak bubble pricing as a barometer will get many people burned.
The previous owner of the unit paid $76,000 in 1999. It sold for $72,000 in 1986.
“Los Angeles County’s employment sector hit bottom in 2010 and more job losses are coming - but a recovery is under way. That was the assessment of Nancy Sidhu, chief economist with the Los Angeles County Economic Development Corp.”
So the employment sector hit bottom last year, it continues to worsen, and a recovery is underway.
Sounds like she is destined to be correct no matter what happens from here.
Comments on our local market (92127 — Rancho Bernardo West, San Diego):
1. The market has changed a lot since I began tracking it back in 2005. For instance, there are a lot fewer homes on the market now (generally over 200 SFRs on the MLS back then versus 131 current listings).
2. The median listing price has fallen from a peak of $1,395,000 to its current level just below $700,000 (roughly a 50% decline).
3. Quality-adjusted values appear to not have dropped quite so much; for instance, if you need 1800 sq ft of space to fit your household comfortably, it would have cost you $540,000 or so back in 2004 (what our landlord paid for the 1800 sq ft place we live in). Current listings for 1800 sq ft homes start out at $480,000, which is basically $60K off what our landlord nominally paid (in 2004 dollars).
4. Overall, it does not seem our prices have come down (or at least the prices sellers believe they will be able to get) by anywhere near the amounts reflected in official statistics (e.g. Case-Shiller/S&P index for San Diego).
Buena Park, CA recent listing 4BR/2BA for $198k. Home of Knott’s Berry Farm. 50% haircut.
Unlisted homes in financial limbo threaten Florida prices
April 07, 2011|By Kimberly Miller, The Palm Beach Post
Thomas Cordy, The Palm Beach Post
The forecast could be dim for the Sunshine State as a looming market of distressed and discounted homes threatens a struggling recovery.
According to a new report from the National Association of Realtors, Florida’s “shadow inventory” ranks No. 1 in the nation with 441,461 homes statewide. California is in second place with 227,961 homes.
Shadow homes are ones in limbo — bank repossessions, those with delinquent loans, and ones in foreclosure that are not yet listed for resale.
The size of the shadow is grim news for Florida’s home values, which could take a dive as the properties are listed and start trading hands for cheap.