House Hunters Are Running Out Of Time To Act
Readers suggested a topic on the house buying season. “Anyone want to talk about seasonal issues? Not just holiday shopping, but a general discussion about what the onset of another winter season with even lower interest rates and a ton of shadow inventory will bring and maybe even what we are seeing with rents. I think this is a discussion influenced by location to a certain extent. I’m probably going to sign a 2 year lease in a few weeks to lock in a 3% increase for the year after next (will be 4% for next year). Saw a newspaper article earlier today that the October retail numbers weren’t great and retail might be getting nervous for the holidays.”
“We’ve talked about ‘duration’ issues before, and it is another 5 months before the north is back in prime listing/selling season again.”
A reply, “Here in Tucson, the snowbird season is about to crank up in earnest. These birds land in seasonal nests all over town — short-term and extended-stay hotels, B&Bs, apartments, guest houses, friends’ extra bedrooms, etc.. They also spend quite a bit of money.”
“I’ve heard that the past few winters were a bit of a disappointment as far as sales of goods and services to snowbirds are concerned. What’s predicted for this winter? I don’t know, but I’ll monitor the situation for y’all.”
The Wichita Eagle in Kansas. “National and regional home sales slipped predictably in September as the peak summer sales period waned, according to an index by the National Association of Realtors that measures pending sales. Lawrence Yun, the NAR’s chief economist, said in a statement that the housing market is being constrained. ‘A combination of weak consumer confidence and continued tight lending criteria held back home buyers, even though the private sector added nearly 2 million net new jobs in the past 12 months,’ he said.”
“Nonetheless, Wichita brokers are happy with the beginning of the slow season. ‘We always expect a slower period right now,’ said Willie Kihle, president of Prudential Dinning-Beard Realtors in Wichita. ‘And August was a very good month for us, so it’s not unusual here for a good month to be followed by a little slower month.’”
“‘We’re up over last year, and we’re very pleased to be holding our own,’ said Penny Johnson of Keller Williams Signature Partners in Wichita. ‘The market isn’t booming, but it’s not dead either. I think people are always going to need to move,’ she said. ‘Marriage, jobs, things like that.’”
“Nationally, Yun is calling for higher loan limits and urging banks to loan more money to stimulate the market. ‘America’s monetary policy is contradictory and confusing, where some consumers with the best financial capacity and top-notch credit scores pay higher mortgage interest rates,’ he said in his statement. ‘Just leaving excessive cash to sit in banks and not work into the economy is a drag on the overall recovery. We need a comprehensive approach to address housing issues — not additional impediments.’”
The Daily News in Washington. “Record-low mortgage rates weren’t able to stimulate sluggish home sales in Cowlitz County in October, the Northwest MLS reported. Real-estate agents sold 48 homes, down 20 percent from the 60 sales September. Last October, 45 homes were sold in Cowlitz County. ‘There’s nobody that had a good month. The malaise, I think, is just everywhere,’ said Gerry Flaskerud, broker/ owner of Longview-based Coldwell Banker Bain.
“Flaskerud noted that most Western Washington counties also had a slow sales month, which he attributed to buyer uncertainty about the national economy. Prices in Cowlitz County remained low in October, with the median falling about 7.5 percent, to $134,000, NMLS reported. The county’s median price was $145,000 in September and $149,900 in October last year.”
“Sales of foreclosure homes continued to drag down prices: About 34 percent of last month’s sales were bank-owned homes, according to Kathy Thompson of Longview-based Kathy & Steve Real Estate Inc. Total inventory fell to 533 in October, the lowest of the year. Sellers tend to start pulling their homes off the market as the holiday season grows near, then try to sell again in the new year, Flaskerud said.”
From What House in the UK. “The clocks going back is a sure sign that winter is on its way and house hunters hoping to make their move before the start of the festive season are running out of time to act. The latest discount from Bett Homes in Scotland will catch many homebuyers’ eyes: a massive £34,000 drop in price for luxury family homes at Academy Grove, the company’s prestigious development of new homes in East Dunbartonshire.”
“The five-bedroom ‘Sandringham’ homes have been reduced to £730,000 from £764,000, are ready to move into and, as a special offer to anyone reserving in November, come complete with landscaped gardens, carpets and curtains. With a sales and marketing suite open on site seven days a week, there’s ample opportunity for house hunters to visit the site and talk to the Bett Homes team in person in time to complete their move before Santa comes knocking.”
“‘This is a fantastic opportunity to move into a new family home in time for Christmas and with the price of these outstanding properties now reduced by £34,000 there will be no need to cut back on the Christmas shopping!’ says Bett Homes’ sales and marketing director, Grace Brownlow.”
From China Daily. “A taste for the good things in life is feeding China’s burgeoning home decoration market. ZARA, from Spain, is not alone among big foreign or Taiwan-based home decorating and household goods retailers looking to cash in on a market awash with cashed up, fashion-conscious buyers, particularly in the midst of a real estate boom, even if that is now cooling.”
“Harbor House, based in Hangzhou, Zhejiang province, started in 2008 and has opened 15 outlets in China, the latest over 1,740 square meters in Shenyang, Liaoning province, last month. ‘We are familiar with the changes in the home decorating industry in the US,’ says Ji Qing, general manager of Harbor House. ‘Seeing the rapid development of real estate in China in 2007, we saw the chance for interior decoration. People admire fashionable products and have the money to do so.’”
“Wang, who works in a bank in Beijing, spent more than 300,000 yuan in Harbor House for his 400-square-meter villa in Shunyi district in Beijing two years ago. ‘I like its sofas, beds and interior decorations,’ he says. ‘They are tidy and simple. Even now I often go to the stores at Shin Kong Place and Financial Street to buy paintings, lamps and lanterns and other small items. Last month I brought back some plastic flowers that cost about 2,000 yuan.’”
Sunshine Coast Daily in Australia. “Melbourne Cup day has been and gone and with it came the Reserve Bank’s decision to reduce the official cash rate by 0.25%. This is widely regarded as a well deserved relief for mortgage holders and property investors. The big question is how will this affect the property market here on the Sunshine Coast.”
“Luke Carter of Amber Werchon Property Caloundra says that with summer on its way and many economists predicting further rate cuts in the future, this can only mean positive things for the Coast’s property market. While there are no immediate drivers for property prices to increase in the short term there has been a lift in transactions in recent weeks as as buyers see value in Sunshine Coast property. These are the first signs of recovery, Luke said, and a good indication that the bottom of the market may be right now, if it has not already been.”
“It’s much the same message at Noosa. Dowling & Neylan principal Dan Neylan said that while people continue to put away money in banks the the smart money is buying, including the top end properties. What’s that telling you? Mr Neylan asked. People are moving on the good buys now.”
“Independent auctioneer Jason Andrew said there are an increased number of buyers who are ready and willing to act, but unwilling to pay a premium.”
“Frank Gentile of Costa Constructions believes that now is the right time for people thinking of building to stop sitting on their hands and take advantage of the market conditions. He said the number of building suppliers and tradespeople has decreased dramatically since the GFC due to a variety of reasons yet the attraction of working in the mining areas is the latest. We are seeing an increasing amount of manual labour being shifted to the mines in Queensland and Western Australia. The remaining suppliers and tradies are the ones that are well embedded into our local economy and are doing exceptional work and at the right price due to the economic conditions to keep afloat.”
“This means that at the moment, it is the right time to build a new home. Exceptional work at an exceptional price. The hazard of waiting too long is that once the confidence starts to change the demand increases, backlogs will start to occur and by the simple laws of supply and demand, prices will start to increase.”
We need to reform the lending system to lenders stop making bad loans which are then paid off by the taxpayer. This world financial crisis is due to bad debt imploding due to slack lending. Once the debt markets are fixed - the most import reform being forcing lenders to bear repayment risk - then all of the debt-based problems will begin to heal.
But we must stop making bad loans and dumping the bill on the taxpayer. This enriches Realtors and Wall Street, but impoverishes the rest of the nation.
Wow. Typo city. And I’ve had my coffee so I’ve got no excuse. Hopefully the point gets through
Wouldn’t lowering the loan limits at this point serve to reduce recent progress to restore affordability?
“This enriches Realtors and Wall Street, but impoverishes the rest of the nation.”
It’s great to remember the role of Wall Street’s ‘privatize profits, socialize losses’ business model, as we ponder why Wall Street bankers are still rolling in the dough while Main Street lives under a broken down bus.
Rental News from “The OC!”
Apartment buildings avoid dramatic price drops
November 5th, 2011, by Jeff Collins
Whittier broker James Joseph, a 30-year veteran in apartment sales who handles real estate in Fullerton, Buena Park, Anaheim, La Habra and other north Orange County cities, spoke recently to the Apartment Association of Orange County about the state of the multi-family market for landlords.
As a member of the Century 21 International commercial advisory board, he speaks nationally on the marketing and sales of apartment buildings.
We asked him what’s happening with apartments …
Us: Is the apartment market getting ready to boom or merely skidding along the bottom?
Jim: According to the research, prices bottomed out last year and are edging up slightly.
Apartments avoided the dramatic declines in prices that have hit both single-family and commercial. The number of foreclosures in apartments is extremely small largely as a result of big down payments in the hot market and lenders that did not budge on underwriting standards. Apartments have thus avoided the downward pressure that has afflicted other real estate.
Us: If vacancy rates re dropping, does that mean we finally are in a recovery?
Jim: Two or three years ago apartment owners were offering discounts and specials, but recently I am hearing that this is not the case so much anymore, and vacancies are filling up. As people lose their homes, they look to rent.
Us: What are apartment owners doing? Buying? Selling? Exchanging? Holding? Fretting?
Jim: Many apartment owners look at alternative investments and, going back five to 10 years, see that it was wise to invest in apartments as they have so overperfomed other vehicles.
Happy and satisfied, they are sitting put. The number or apartment sales in my market (North Orange County) has declined 85% from the peak in 2004 and 2005.
Us: What is the view from Realtor population?
Jim: Looking forward to the pent up demand due to the dearth of sales. As divorce, death and personal changes cause people to sell, life goes on, so the current level of activity is far below par.
Us: What are apartment owners telling Realtors?
Jim: We are happy with what we have, our loans have gone from fixed to adjustable, and as a result the interest rate has dropped quite a bit.
Our units are full and rents are creeping up. Friend and colleagues who are in the stock market or have CD’s are crying the blues. We are glad we own apartments.
“Flaskerud noted that most Western Washington counties also had a slow sales month, which he attributed to buyer uncertainty about the national economy.”
Land prices remain stratospheric in WA. While they have come down a bit, there are innumerable people asking several hundred thousand dollars for raw, undeveloped acreage, though sold prices paint a slightly different picture. Still, though, there are sales at prices which boggle the mind.
There are two tiny plots of land for sale on the in bound side of Wisconsin Avenue in Chevy Chase, MD between downtown Bethesda and the shopping area right at the DC border. I suppose you could have put a miniscule house on either of these lots at one time, but my bet is that they are considered too small now or someone would have already bought them and built on them. One is used as a Christmas tree lot for a few weeks a year. The best use for them probably would be for one of the adjacent lots (next to or behind) to purchase them and have a larger side or back yard (they are both splendid sizes for gardens or even a gazebo), but that clearly hasn’t happened. The taxes would be one heck of a bite for those uses.
I wonder what the asking prices are?
Knew a tenant with a sausage wagon(s) at entrance to CNE grounds who made over $150,000 a year for only three weeks work. He made the mistake of telling me about it. Tiny plot of land.
Better, yet, if you could come up with a way of duplicating those New York hot dogs !
“villa” = 400 sq m = 4000 sq ft.
“Furnishings” = 300,000 Yuan = ~$48000.
“Plastic flowers” = 2000 Yuan = ~$315.
House hunters are not running out of time to act, by a long shot. I think we’ll be bouncing along this bottom, with more drops in most of the country, with more time. Increased interest rates will just drop prices even more, not really affecting PITI all that much.
The only reason to act soon is if the rent/buy equation pencils out.
For jbunii, who asked yesterday if I had figured in taxes and insurance in my calcs. Answer: Yes. Zillow has a function that will calculate the whole monthly PITI payment. I can buy a very expensive (to me) house for the same PITI as my rent. If I score a cheaper house, I’ll save upwards of $500 a month by buying. That buys a lot of maintenance. Utilitie are a wash because I pay those separately anyway.
“National and regional home sales slipped predictably in September”
Well, y’all should be happy it wasn’t “unexpectedly”.
Apartment rents in my area have held steady. Lots more newer “higher end” stuff is going up. $1700/mo for 2bd/2bath in Norfolk VA. I Think its targeted that two Navy guys can split housing allowance between them.
My rent hasn’t gone up in a long time, but I feel like I’m getting burned by being a renter. 6+ years of over $1000/mo. Various issues, they fix them but it’s a hassle. I’m sort of with Oxide on her thoughts on buying. But since I’ve been renting my day job has hit hard times. They are behind about $100,000 in payments. They are starting to do better but still my savings have suffered greatly.
I Think its targeted that two Navy guys can split housing allowance between them.
And as soon as two Navy guy room together, the rental prices will all go up, hoping for two other military guys to room together. Rooming together used to mean extra cash, but pretty soon it will be necessary just to pay the rent. Singles, non-military, and non Section 8 will be squeezed out, that’s for sure. This is exactly what happened when households went from one income to two incomes.
Prices rise to fill the income available. And then, when all the income is used up, and people simply stop buying, banks extend more credit just to keep people to keep going to the mall. Then prices rise to fill the credit available. This is why the old idea of paying cash “like my grandparents did” will never work. The banks need to go out of business when people can’t pay back the loans, or the credit cycle will never end.
The only way around it seems to be that you need to be willing to live around people who make significantly less than you. Something we normally avoid in our culture.
“…This is exactly what happened when households went from one income to two incomes….”
Except that’s not what happened.
Two income (+) households began when the cost of living became too high for one person to maintain one (in the late sixties.) Grads began living communally, generational families moved in together, old Victorians were subdivided, many simply “crashed” wherever they could find a spare sof– often for years.
The “one income” household was a post WW2 anomaly, (heavily subsidized by a government bent on restoring the population base,) not the historical norm. And for the educated middle class, it wasn’t the norm for long then, either. Most of wives in my parent’s circle of friends worked at least intermittently throughout the sixties and seventies.
The commercial space I rent for our geek lab, the owner is behind. Loan went to auction. Another developer bought the loan and moved to foreclose, to turn the 9 story commercial building into apartments. Owner declared bankruptcy. Our time is limited, but the city seems to have interest in us since it’s mainly a creative class anti-brain drain type of lab (called a hackerspace.)
All the housing inventory needs to hurry up and turn into cheap rentals to take the heat away from the apartment buildings.
I pay $1040/mo for 3800 sqft of commercial space, power included. (32 other people help with the rent tho
I pay $1175 for 2bd/2bath apartment. Nothing huge. Nothing fancy, water,trash,sewage,cooking gas incl.
Sorry when I say 32 other people help with the rent, they help cover the $1040/month.
3800 sq ft for $1000 — that’s nuts. The last band I was in, I paid $80 (my share of $320 a month) for a10X10 practice room. Man am I glad I’m not doing that anymore. Just stupid expensive for some dudes who where just practice players.
http://www.cherihonkala.com/
Housing is a RIGHT! Free houses for everyone! The Free $hit Army wants your vote.
“Frank Gentile of Costa Constructions believes that now is the right time for people thinking of building to stop sitting on their hands and take advantage of the market conditions.”
Labor is inexpensive, however, material costs still seem quite high.
Labor is inexpensive, however, material costs still seem quite high ??
Not in RAL’s world…His construction management software says he can build you a house for $56. per square foot….I am about ready to ship him here so I can build for $56. & sell for $500….
Send him here first. I’ve got the land and the plans, but haven’t picked a general contractor yet.
Some neighbors are replacing the concrete on their front porch. Somehow DH got to talking with the contractor… it seems he and some others in the biz are sharing crews. He said there is just no work and he can’t afford to keep his own. He mentioned that the town has laid off inspectors, so longer waits for sign-offs slows up what work they do have.
How do you think work is bid? Tell us. TELL US. What does your firm use to estimate? Strings, erasers and steel tapes?
What does Kiewit use to develop a bid? RS MEANS
What does Bechtel use to develop a bid? RS MEANS
What does CH2MHILL use develop a bid? RS MEANS
And we profitably use….. RS MEANS
You’re no more in the construction contracting business than I am a belly dancer.
“I am a belly dancer”
I have new respect for you!
I looked at a 30×40 pole barn on two crappy acres this week. Dirt floor. Set into a steep hill with improper grading. $50K, dropped from 79K. The entrance is an awful switchback, my RV would never make it. Owner says to me: You can’t hardly build a pole barn for that these days! LOL, I don’t think so!
I really don’t know what I’m doing, but quonset hut kits, pole barn kits, under $10K for this size building. Grading and some Amish get er done. Another $10K maybe?
There’s an ad for similar size barn for rent. $130 per month. Sure, prices have nowhere to go but up.
Why store the RV? Wrap it in a stromboli and be done with it until spring.
I just returned to Washington’s Columbia Basin following a five day visit to San Jose, CA. The economic cracks are beginning to appear everywhere. I noticed lots of empty retail space — even in the upscale west side and downtown districts. The small businesses look like they’re once again being “manned” by the aged owners suggesting that the young help has been let-go. I saw the same thing around trendy Scottsdale, AZ a year ago. Looks to me like a marked chill in retail spending by folks who probably have the discretionary cash, but are likely circling their wagons and counting bullets. It reminded me of the numerous FOR RENT and FOR LEASE signs back in the seventies and early eighties.
I went a little further north than I usually do to buy groceries this weekend. The strip mall with the spices store was close to half empty. I was shocked.
FREE HOUSING!! Hey it’s legal if you can pick the right house.
Cases of people claiming squatter’s rights in Tarrant County under inquiry:
Similar seizures may be taking place all over Tarrant County, Mansfield Deputy Constable D. Garnett said.
He said his office is investigating more than a dozen similar cases of people claiming ownership of what they say are abandoned homes.
“It’s an elaborate sham,” Garnett said Friday. “These people just go to an empty house, change the locks, put up no-trespassing signs and move in.”
http://www.star-telegram.com/2011/11/04/3501585/cases-of-people-claiming-squatters.html