Entries from July 2006 ↓

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The  real estate market in many parts of the country last year was pure passion. You saw a home, you placed an offer as fast as you could, and then hoped you got lucky. There was not enough time for rational thought or proper due diligence. If you asked for a home inspection odds are you would lose the home. This scenario played out  in  markets such as Washington DC, Boston, New York, Florida, and California.

Now the market has turned into a seduction. You have to woo the customer. There is no such thing as putting the home up for sale and having people come to your door. And the agents  that came into the real estate industry in these markets the last few years have not learned how to sell a home. They know how to do the mechanics, but the hard core selling and marketing is a skill they never had to acquire.

So now when you sell your home you will have to be patient and smart. You will have to have you home in great shape. You will have to price the home correctly. And you will have to find the right agent, not just get the  neighbor who you do not want to offend and help out. Otherwise, odds are the home will sit.

Today, however, that’s all changed. Although prices have softened only slightly so far, bidding wars are now a thing of the past as buyers mull over an inventory of unsold homes that has tripled since the same time last year. “We just don’t know if it’s the right time to buy anymore,” says Ruth Zitner, who has been shopping for a home in the neighborhood for the past year. “So we’ve decided to just wait and see.”

That attitude is fast turning the housing market on its head, not just in Chevy Chase but also in once hot neighborhoods from South Florida to San Francisco. The nation’s largest home builders are reporting rising cancellations of orders for new homes. Meanwhile, nationwide sales of existing homes fell by 8.9 percent in June, compared with a year earlier, and by as much as twice that in places like Boston.

With sellers increasingly anxious to unload their properties, inventories of unsold homes have swelled to more than a six-month supply, an increase of over

50 percent in a year. That’s considered a key threshold signaling the transition to a buyer’s market that is finally beginning to drive prices down. “Sellers have tried to hang in there and get their price,” says David Wyss, chief economist at Standard & Poor’s. “But there comes a point where they’ll have to give in.” via US News and World Review

North Carolina’s Triad region (click on map to right to see  full region) is going against t he  national trend by showing a 7 percent increase in housing sales since the same period last year. As another example that all real estate is local, the region is showing strong growth while many parts of the country are seeing sales declines.

According to statistics compiled by the North Carolina Association of Realtors, 14,959 residential units were sold in June throughout the state. Sales for the month totaled $3.4 billion, with the average existing home sales price up 5 percent to $227,403.

In the Triangle, 3,935 existing homes were sold during the month of June compared to 3,686 sales in June 2005 and 3,388 sales in May 2006, according to the Triangle Multiple Listing Service. The average sales price in June was $241,727, and total sales in the Triangle topped $951 million.

Nationally, total existing home sales declined 1.3 percent to 6.6 million units in June from 6.7 million units in May. June’s sales were 8.9 percent below the 7.27 million-unit pace in June 2005.

Home sales rise in Triangle, state - Triangle Business Journal:.

One of the reasons property prices are so volatile in Massachusetts is that the ability to develop properties is very, very difficult. The laws of the state have given the power to the anti development forces in the state and make it  very difficult and expensive to  build anything new. So prices remain high and fluctuations in demand move the home values more than most regions of the country.

That is changing to a lesser degree with new legislation that will make the permitting process in the  state easier to get through. Compared to most states, this  process  is still insane and difficult, but for Massachusetts it is an improvement. Some of the  changes in the  new legislation are:

• Create a new permit session of the Land Court.
• Allow developers to continue at their own risk in the face of an appeal once a special permit is granted.
• Provide funding for the Division of Administrative Law Appeals to remove the backlog of environmental appeals and require a 90 day-decision on future appeals.
• Require the MassHighways commissioner to create regulations for expediting access permits.
• Create the Massachusetts Permit Regulatory Office within the Executive Office of Economic Development.
• Change the Expedited Permitting Act — also known as Chapter 43D — to encourage more communities to opt in to a 180-day, site specific expedited permitting process.

via the Boston Business Journal:.

Looking at the signs of the financial markets, my barometer is telling  me we are nearing the end of the housing deflation. Why you ask? Well, as I see it when the mainstream media finally recognizes that a trend is happening, we typically are  nearing the end of that trend.

And now surveys being released and trumpeted by the media are showing that average investors have moved out of real estate and into energy. So that tells me energy has reached its peak and real estate has hit its bottom.

A survey of 1,000 randomly selected investors earlier this month by TD Ameritrade found that 51 percent said they were investing in energy, followed by health care (about 40 percent), consumer goods (about 35 percent), and financial services and telecommunications (about 30 percent each).
And the majority picked energy stocks to be top market performers over the next six months.
Asked about real estate as an investment, 64 percent described current conditions as “a buyer’s market,” suggesting it wasn’t a good place to make money now. Twelve percent said it was “a seller’s market,” and 24 percent described it as “balanced.” via Chron.com

Sue McAllister of the Square Feet Blog reports from the Real Estate Connect Conference that AOL is planning a relaunch of their  real estate site. The site will be much more editorial driven. I am all in favor of this as the major players in print and online media treat their real estate space as a pure dollar play without adding much to the conversation. By creating something worth visiting odds are they will monetize their pages much more effectively and create real value for their company.

AOL next week will launch a new version of its real estate offerings. The new pages will feature lots of original editorial content, said Samara Jaffe, AOL’s director of careers and real estate.
The new AOL real estate pages will be divided up into channels specific to different types of real estate customers: first-time buyers, vacation home buyers, investors, renters, etc. Of her competitors she said, “None of the sites really speak to first-time home buyers the way they need to be spoken to.” Jaffe herself just bought her first home, so she’s been through that confusing first-timer swirl.

Square Feet: Real estate and tech mingle at the Palace.

If you do nothing else this afternoon, go read the full editorial over at USA Today on why real estate agents are doing everything they can to thwart innovation in the market. The combination of technology and opportunity are going head to head with entrenched and politically connected protectors of the status quo and they are using every tool to protect the 6% commission.

And the sad part is with all this political muscle and money spent, they are going to lose. The smart real estate agents will recognize the opportunities presented and be very, very successful. The luddites will watch their industry get swallowed up and end up working in another industry. The following is a excerpt of the article, but please read the whole thing, especially if you are in the industry.

These questions have a common answer: because the industry is intent on keeping things that way. Through a combination of industry rules and recently enacted state laws, the major brokerage firms and the National Association of Realtors (NAR) are thwarting innovative, Internet-based real estate businesses that could bring real change to a business that is inefficient, anti-competitive and anti-consumer. And, oh yes, could bring huge savings for people who now pay ridiculous commissions to sell their homes.
These new companies, which come with such names as Home Quarters and ZipRealty, offer lower commissions for varying levels of service. If they gain a foothold in the real estate business, they could do for it what companies like Charles Schwab and E-Trade did for the stock brokerage industry - provide a low-cost alternative for do-it-yourselfers, while forcing down fees across a broad range of service levels.
While that might sound good to people buying and selling homes, full-service brokers see it as a threat. In the past two years, industry lobbyists, the NAR and local Realtor boards have used their clout with state legislatures to wall themselves off from competition. Some of their increasingly blatant tactics include: via  Yahoo! News and USA Today.

The New York Sun has an article talking about how Met Life is managing its extensive real estate portfolio. They threw in a tidbit that they are looking for buyers for their Peter Cooper Village and Stuyvesant Town properties on the East Side of Manhattan. This is an amazing announcement as the company has owned the properties for years and that the price could exceed 3 Billion Dollars.

I lived in Peter Cooper back in the late 1980’s. My Aunt had a rent controlled apartment that I used after she moved and before a Yenta who wanted the corner unit turned us in. It is a fabulous place to live in the city and the units are highly sought after. The one draw back is that it is the rent control capital of New York City with 75% of the units under one level or another of rent control.

Industry leaders expect MetLife to record another history-making event if it sells the Peter Cooper Village and Stuyvesant Town rental properties that make up the largest apartment complex in Manhattan, totaling more than 11,200 units in 110 buildings spread over 80 contiguous acres.
“We believe current market conditions are very favorable, and we have decided to test the market to gauge buyer interest in these properties,” the head of real estate investments for MetLife, Robert Merck, said. “MetLife believes there is a lot of capital seeking high-quality real estate of this caliber, and anticipates that it will see excellent market pricing for these properties.” via  The New York Sun

Update - 8/30 - It looks like Met Life is bumping up the asking price to 5 Billion.

If you are looking to live safely and have no worries about natural disasters affecting you or your way of life, I have one word of advice. Avoid these 10 cities as they are the most susceptable to natural disasters in the country.

The criteria that SustainLane using information from Risk Management Solutions to determine how dangerous the cities are to live in from the ill effects of Mother Nature are hurricanes, major flooding, catastrophic hail, tornado super-outbreaks, and earthquakes. They also looked at the potential frequency of disasters as well as the extent of damage to the individual cities.

1– Miami, FL
2 – New Orleans, LA
3 –  Oakland, CA
4 – . San Francisco, CA
5 –  Honolulu, HI
6–  San Jose, CA
7 (tied) –  Los Angeles, CA*
7 (tied) –  Houston, TX*
8 – Long Beach, CA
9 (tied) –  Tulsa, OK*
9 (tied) –  Oklahoma City, OK*
9 (tied) –  Columbus, OH*

For more visit SustainLane. 

This time of year is typically the busiest in the mortgage world. Families are trying to move into their new homes before school starts and get settled in. The local real estate agents call it the silly season. Except July, 2006 is very slow comparitively for mortgages as applications dropped 1.3 percent in just one week. Rates are 1 percent higher than they were a year ago, coming in at 6.7 percent as opposed to 5.7 percent in July, 2005.

Mortgage applications fell for a second consecutive week, an industry trade group said Wednesday, adding further evidence that the once robust housing market is softening. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity — made up of both refinancing and purchasing loans — for the week ended July 21 decreased 1.3% from the previous week.

The MBA data followed a flurry of recent measures of housing activity, nearly all of which point to a slowdown in the sector. The MBA index’s trend in recent months indicates a gradual decline of the housing sector in the USA, not a collapse, according to David Sloan, senior economist at 4CAST.

“The housing sector has certainly slowed, but this data doesn’t look as weak as the home builders survey,” he said. “I would say the MBA’s index has a slightly better correlation to home sales than the home builders survey.”Sloan was referring to a recent survey by the National Association of Home Builders which showed confidence of home builders fell to a 14-year low in July. via USATODAY.com

Real”ity” TV is heading into the world of real estate sales as the Bravo Network will be doing a reality show on the workings of the Hollywood Market. Does one ever get the feeling that Hollywood is so devoid of ideas that the producers of shows just look around their world and say “Oh look, lets do Gardener TV, the life of a gardener and how they fight to get the jobs outside of Home Depot.”

Bravo will pull back the curtain on yet another familiar world to watch what happens when ten top agents in California’s tough real estate market stop at nothing to close the deal on the next MILLION DOLLAR LISTING. The six-episode, one-hour series will look at the high-stakes, cutthroat world of real estate in the high-priced fantasy lands of Malibu and Hollywood and introduce an array of colorful personalities including high-powered agents, sellers and buyers as their riveting lives intersect. MILLION DOLLAR LISTING premieres on Tuesday, August 29, 2006 from 9-10 PM, ET/PT.

There is an abundance of intense emotions when agents, homeowners and potential buyers lose their patience and their minds, as they all attempt to get the most out of their MILLION DOLLAR LISTING. The players range from a rookie agent just learning the ropes, to an agent who calls herself the “condo queen,” as well as a violinist selling his multi-million dollar estate and a seller in Hollywood whose wife is urging him to unload his beloved dream house complete with a stripper pole. via Reality TV Website.com