Archive for Real Estate
Correctly Price That House!
Posted by: | Comments7.29.2010
Interesting article on correctly pricing a house from USA Today:
Article – Home Prices Will Sell if Priced Right; Foreclosures Have Impact
This particular line from the article my real estate friend Joe called “Shakespeare”:
“Rennie is discovering the cold reality of post-housing-bust prices: No matter what she thinks her house is worth, what matters is what buyers are willing to pay.”
I would have to agree that most people, taking the value of their home too personally, get angry when real estate agents give them a market analysis that they “feel” is too low. I catch myself falling victim to this too – no one cares what we feel our house is worth – it’s worth what the market says it is. And sometimes, that’s too tough for people to swallow…
4,000 Repossessions Per Month in South Florida
Posted by: | Comments7.17.2010
Here’s the story – Condo Vultures – 4,000 foreclosures/month
Banks likely know they need to repossess now if they hope to get anything for these houses in a rising rate environment. Therefore, now that the Zero Interest Rate Policy (ZIRP) of the Fed has allowed the banks to borrow at Zero and lend out at 5% (a margin much larger than average), they have cash on the balance sheets – enough to take the losses that they misleadingly didn’t show on their balance sheets over the past year or 2 (banks have to put “non-performing loans” and “real estate owned” on their financial statements – both numbers are negative to bank valuation if rising).
So now they will start plowing through all the non-performing loans and foreclose those people…
Your HOA Can Foreclose on You Too
Posted by: | Comments7.15.2010
Just so you know – if you were thinking you could use the gym and pool without consequence:
FYI…
$10,000 tax Credit? How About a $38,000 “Tax Credit?”
Posted by: | Comments7.8.2010
As I mentioned in 2 previous articles (one at the supposed end of the real estate tax credit last fall and the other time near the real end of the tax credit in April) – house prices would likely fall AFTER the credit by more than the credit amount:
According to the article citing a Boston Herald piece on Boston area home prices falling ~$38k or so, the end of the tax credit was not the end of deals for buyers.
from the Herald article:
“Savvy buyers knew the real savings would come after the artificial stimulus ended,” he said. “Lots of buyers felt that the credit was a fool’s game. They were determined not to be fooled by the credit’s come-and-get-it expiration date, and they weren’t going to be fooled into a bidding war.”
~ Bill Wendel, owner of Real Estate Cafe in Cambridge, MA
Just so you all know, there is no rebound in housing coming soon – as I have discussed. Housing prices are a LAGGING economic statistic – meaning they fall behind economic activity because people buy new homes and upgrade AFTER they get a job or a pay raise…and unless you work for the bankrupt state of Illinois, you likely aren’t getting a pay raise…
Debt Issues on the Minds of Commercial Real Estate Companies
Posted by: | Comments7.3.2010
An interesting survey revealing how pervasive the debt problems of commercial real estate owners has become:
For those of you that aren’t up to speed on this, rates on commercial real estate debt have risen even though rates on residential mortgages have fallen in the past 2 years. Reasons include the interference in the residential market by the Federal Reserve and the larger risks of commercial loans needing to be mitigated by the lenders (if a homeowner defaults, it may be a 300k loss, if a commercial borrower defaults, it could cost the bank $3 million!).
Therefore, rates above 7% are commonplace for commercial borrowers and unlike residential loans, 30 year fixed rates are not happening. A good borrower may get 5-7 years fixed but often borrowers are using variable rate loans because that’s all the bank will give them or fixed rates are too high for the rental income to cover the debt service.
All around, it’s a tough time in commercial property (though it may open opportunities for cash buyers now).
Real Estate Market – “The Fat Man That Can’t get Up”
Posted by: | Comments6.25.2010
“The real estate market is like a fat man that can’t get up,” Kelman begins. “The U.S. government has modified loans, extended tax credits, lowered interest rates; we’ve fired a lot of our guns, and at this point the market is just going to have a long slow period of decline.”
“The day after the tax credit ended, traffic to our web site dropped like a rock,” says Kelman. “People stopped signing up for tours, people stopped writing offers.”
Redfin CEO Glenn Kelman on Realty Check
Read more here
China Has Their Own Florida
Posted by: | Comments6.18.2010
Not wanting to keep collapsing real estate prices all to ourselves, China’s “Hawaii,” Hainan, a tropical island off the coast of China, experienced an almost 30% price drop in May vs April of this year according to CapitalVue:
On the beach in China's "Hawaii"
Now that’s exciting! If you are over age 50, did you ever think you would see real estate prices bounce more than day-traded stocks?
Apartment Owners Installing Electric Vehicle Plugs
Posted by: | Comments6.4.2010
Multifamily property owners are starting to install electric vehicle charge stations on site to accommodate the increasing number of tenants who will own electric vehicles such as Government Motors’ (GM) Volt (had to throw that jab in there):
Increasingly, we have more single people who want to live in low maintenance housing (nice apartments) and these folks will desire a convenient place to charge their cars. It may provide additional revenue to the building owner at the expense of local gas stations (long term short – gas station operators in younger hip cities like San Francisco and Seattle?). This also sounds quite convenient! Imagine coming home and your car is recharged in the AM ready to go out again.
Side Note
As mentioned in previous articles, electric vehicle use is also good for energy independence but will likely be slightly detrimental to environmental interests since over 50% of US electricity comes from coal power stations (can you hear McCain screaming “Clean Coal technology!!!”? – hehe not sure that exists). It will mean increased revenue for electric companies too – along with the resource providers to them – including natural gas, coal, etc.
LEED “Silver” SF Condo Building 100% Sold
Posted by: | Comments6.3.2010
On a positive real estate note, San Francisco’s Arterra Condos sold out recently:
This LEED Silver certified property features energy saving designs and various layouts. It is close to AT&T Park (baseball) in a great neighborhood (South Beach):
Mark Hanson: Real Estate Shadow Inventory Could Take 8 Years to Clear
Posted by: | Comments6.3.2010
One of the smartest people in the mortgage market shared this analysis with his blog readers:
According to his research, if foreclosures kept up at the April 2010 pace, it would take more than years to clear all of the non-performing, NOD type homes (shadow inventory – not marked as defaulted on bank balance sheets) in the market.
While you are digesting that report, check this out. For a good example of adding to the figure of shadow inventory, and following up my article yesterday about foolish Congressmen (thanks to Calculated Risk for finding this):
Apparently, in the development outlined in the article linked above, they failed to sell even ONE unit.
Not one unit sold in this building
*picture from NewsObserver site
Survey: Renting Preferable to Owning in Current Market
Posted by: | Comments5.27.2010
Not surprisingly, renting is preferable to those who saw home equity eviscerated over the past 4 years:
The survey also found that both renters and homeowners are not eager to make any changes in their housing status within the next year; 60 percent of renters plan to continue renting their current or new residences within the next year, while 71 percent of homeowners plan to stay in their current home over the next year.
MHN News
“(The US Real Estate Market) is a Market Purely on Life Support”
Posted by: | Comments5.26.2010
“This is a market purely on life support, sustained by the federal government…Having FHA do this much volume is a sign of a very sick system.”
David Stevens, FHA Commissioner
Apparently, even those in the government know that the government can’t be financing more than 90% of loans if it were a healthy market. Without the government, at these rates, there would likely be NO LENDING done. Why? Would you lend money for 30 years at 5% if you may have to pay 7% on a CD 4 years from now? Likely not. However, this is exactly the situation that our government and Federal Reserve has put us in – a screwed up market which will require much pain to get back to normal. Read more here on Commissioner Stevens’ comments:
Updates On Mortgage Modifications from Calculated Risk
Posted by: | Comments5.18.2010
Calculated risk put out a few update posts on the government’s effort to see mortgages modified.
FHA Reducing allowable seller concession
And a good piece from CNBC – here’s a quote:
Imagine that: Folks who didn’t have to show any proof of anything to get a trial modification, weren’t able to sustain that modification. The big guys have now changed that, requiring full documentation. So big surprise the report now shows a drop in the number of new modifications, because if you have to get all that documentation up front, then it’s likely going to take longer…
“A 64.3% DTI is so far out of scope with the pre-bubble years safe and sound 36% total DTI — and even typical bubble-years full-doc DTI’s of 50% — it is absolutely irresponsible,” says mortgage analyst Mark Hanson. “Servicers are pushing the envelope with respect to getting people to qualify,” he adds.
House Prices Fall After Credit Ends
Posted by: | Comments5.13.2010
I didn’t think I was going out on a limb when I hypothesized that home prices would fall after the original October 31 tax credit deadline in this article from last fall. Here is an excerpt of what I wrote:
“But what do you think will happen the day after the credit expires? yeah you got my drift – there will likely be a demand vacuum and I would hypothesize that you could get more than $8,000 off of an asking price AFTER the credit ends, when fewer buyers are around – especially if it’s offseason. It looks like they might expand the credit until June 2010 – just as the Spring home buying season ends – therefore, next summer might be a good target time to start making offers, unless we have the usually awful and slow winter (when I bought my home).”
Apparently, what I predicted is happening. read CNBC here:
or watch here:
It usually doesn’t pay to follow the pack in investing…unless you’re a skilled momentum trader i suppose!
Real Estate Market After June – Look out!
Posted by: | Comments5.8.2010
Mark Hanson, aka Mr. Mortgage, from Mark Hanson Advisors, forgot more about the mortgage market than most people know. Here is an excellent (long) interview of Mark by Eric King of King World News (who interviews a lot of great people – see his site here).
“This market could be so bad (without extending this credit) that this could affect elections”
- Mark Hanson
If you are interested in real estate, and what happens next, grab a notepad and pen and listen to this interview for 30 minutes. If you plan to buy/sell in the next year or two, you must hear this: