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Author Archive

55+ Survey

move

Finally some real evidence on how the Bank of Mom and Dad has been influencing the real estate market – see the bold print:

http://www.freddiemac.com/finance/report/20160608_55ers_significant_impact_housing_market.html

With 55+ homeowners controlling almost two-thirds or $8 trillion of the nation’s home equity*, the housing decisions they make in the coming years will significantly reshape America’s housing market.

The first Freddie Mac 55+ Survey focuses on this 55+ generation of 67 million people because of the impact they are having, and will continue to have, on affordable housing inventories, home prices, and the transition of America’s housing stock from one generation to the next.

The overwhelming message in this first survey is that homeownership works and that 55+ers are confident as they head into retirement or are already there. Some of the key findings include the following.

Baby Boomer Homeowners Expect a Financially Comfortable Retirement

  • Overall, 76 percent of homeowners over the age of 55 are confident they will have a financially comfortable retirement, according to the Freddie Mac 55+ Survey. Majorities in every demographic group surveyed share this confidence to varying degrees: African-Americans (77 percent), Hispanics (64 percent), Asians (80 percent), homeowners who are currently working (74 percent), as well as homeowners earning less than $30,000 (55 percent).
  • The Freddie Mac 55+ Survey also shows consistently strong links between homeownership and a person’s satisfaction with their home, community and financial situation. Specifically, 59 percent of homeowners are “very satisfied” with their communities, 64 percent with their current home, and 54 percent with their quality of life.
  • A majority also believe homeownership makes financial sense for most Americans.  Specifically, 96 percent feel homeownership makes financial sense for people who are either married with children or between 35-49 years of age. Smaller majorities said homeownership makes sense for people over 55 (87 percent), married couples without children (85 percent), single people with children (79 percent), and single people without children (53 percent).
  • In terms of helping others become homeowners, nearly 25 percent of the respondents say they have already helped someone financially with a down payment.

Why Baby Boomers Drive the Housing Market for Millennials

  • The Freddie Mac 55+ Survey also identified a number of other opportunities and challenges for the housing industry that will stem from the decisions Baby Boomers and other older homeowners make over the next few years.
  • For example, 63 percent of the 55+ homeowners surveyed say they prefer to age in place if they had complete control over it. However, nearly 40 percent indicate they would prefer to move at least one more time. This suggests nearly 25 million homeowners over age 55 may move again. When asked when they expect to move next, 13 percent think they will move within four years.
  • Of those homeowners who would consider moving, 12 percent believe their next home will be more expensive than their current one, while 37 percent believe it will be in the same price range, and half believe it will be less expensive. At the same time, 23 percent of homeowners say they would have to make major renovations in order to age in place.
  • 55+ers cite cost and convenience as the top factors influencing whether to move and where to live: affordability of living in a particular community (46%); having the amenities needed to live there for many years after I retire (44%); Less maintenance (41%); proximity to other family members (31%); having a place where I was no longer responsible for caring for the property (e.g. yard work, snow removal) (30%); being in a walkable community (28%); having abundant services for adults my age (25%); access to public transportation (17%); warmer climate (19%); having a place that is smaller than my current home (e.g. downsizing) (19%).

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Posted by on Jul 22, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Conditions, One-Story | 1 comment

Micro-Housing

int

Here’s another guy who insists on ‘disrupting’ real estate.  While the mobile devices are handy, are people – especially the affluent baby-boomers who are making the real estate market, going to give up their more-traditional homestead to live in a 320sf tin can?

http://www.forbes.com/sites/petertaylor/2016/07/19/meet-kasita-the-micro-housing-start-up-thats-about-to-revolutionize-real-estate/

You can tell immediately that Jeff Wilson, the 42-year old founder of Kasita, an Austin-based micro-housing start-up, has been courting venture capital. He has his sales pitch nailed—which is pretty impressive for a former university dean and professor who used to live in a dumpster.

When I ask Wilson what fundamental problem his company is solving he tells me without flinching: “Kasita is on the verge of disrupting the urban housing market in ways not seen in real estate and development in 150 years.” Wilson’s confidence may just be spot on. And perfectly timed.

Over the past decade my wife and I have asked each other countless times why everything else we own is completely mobile with the glaring exception of real estate. It’s not an unreasonably philosophical question. Every current aspect of our personal and business lives—from banking and corporate communications to reading the news or planning a vacation—now runs entirely off of five mobile devices and a wireless hotspot. So why do we still sleep in a house every night with two-foot thick brick walls that hasn’t moved an inch in 128 years?

Seeing a massive, mobility-starved void in the dead center of one of the largest segments of the US economy (while living in a dumpster), Wilson is betting that his tech-stuffed, 320-square foot, portable living capsule (a.k.a. casita, or “small home”) is poised to transform the fundamental concept of what real estate means to a new generation of Millennials, empty nesters, and upwardly mobile creative types (e.g., us) who are looking to trade-in their 30-year mortgage for mobility, simplicity, and financial independence.

Read full article here:

http://www.forbes.com/sites/petertaylor/2016/07/19/meet-kasita-the-micro-housing-start-up-thats-about-to-revolutionize-real-estate/

Posted by on Jul 22, 2016 in Interesting Houses, Jim's Take on the Market, Market Conditions, Modular Homes, The Future | 3 comments

Chinese Bank Files Lawsuit

ccb

The PC paranoia about foreign investors could get run over by determined bankers.  Once they get momentum from a couple of successful cases, it could temper future investment. From the G&M (H/T SM):

http://www.theglobeandmail.com/real-estate/the-market/chinas-citic-bank-tries-to-seize-real-estate-assets-in-canada/article30637786/

China CITIC Bank Corp Ltd has launched a Canadian lawsuit to try to seize the assets of a Chinese citizen the bank claims took out a multimillion-dollar loan in China then fled to Canada, the lender’s Vancouver-based lawyer said on Monday.

The bank is looking to seize numerous Vancouver-area homes, valued at some $7.3-million, along with other assets, according to the lawsuit, which was filed in the Supreme Court of British Columbia in Vancouver on Friday.

The defendant, Shibiao Yan, owns three multimillion-dollar properties in a Vancouver suburb and lives in a $3-million Vancouver home owned by his wife, according to court documents.

China is in the midst of a massive corruption crackdown and has stepped up efforts to find fugitives it says are hiding stolen assets abroad. The lawsuit comes amid a debate about the role foreign money, particularly from China, has played in Vancouver’s property boom.

“The person involved left China with a large debt owed,” said Christine Duhaime, a lawyer who represents China CITIC Bank in the case, adding that she was not aware of any criminal charges against the man.

Yan could not immediately be reached for comment. He has not yet filed a response to the lawsuit and the claims have not been proven in court.

China has been working with Canada for years to finalize a deal on the return of ill-gotten assets seized from those suspected of economic crimes. The agreement was originally announced in July 2013 and has not yet been ratified.

But it is rare for Chinese banks to use Canadian courts to pursue those who have left the country.

Chinese Foreign Ministry spokesman Hong Lei said the bank was protecting its rights in accordance with the law.

“This is a normal thing to do internationally,” Hong told reporters in Beijing.

According to the lawsuit, China CITIC Bank is seeking repayment for a line of credit worth 50 million yuan, or roughly $7.5-million, taken out by a Chinese lumber company and personally guaranteed by Yan, who was the company’s majority shareholder at the time.

Vancouver residents have questioned the legitimacy of foreign funds invested in the city’s real estate market and have urged authorities to do more to scrutinize their origin.

Housing prices in the west coast city have jumped 30 per cent in the last year.

http://www.theglobeandmail.com/real-estate/the-market/chinas-citic-bank-tries-to-seize-real-estate-assets-in-canada/article30637786/

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Posted by on Jul 21, 2016 in Jim's Take on the Market, Market Buzz | 0 comments

Long Listing = Inflated Price

code

How about the agents who deliberately over-price their listings?

It’s not the mean and nasty ‘deliberate’; it’s more of a friendly wink and a nod. Sellers want more money, not less, and it’s irresistible for them to hire the agent who quotes them the highest price.

Agents who ‘high-ball’ to get the listing leave a tell-tale sign.  They insist on 6-12 month listings, which means they have no confidence in the price today, and are just praying they get lucky.

But let’s check the N.A.R Code of Ethics:

  • Standard of Practice 1-3

REALTORS®, in attempting to secure a listing, shall not deliberately mislead the owner as to market value.

The key word is ‘deliberately’, and here is the definition:

Carefully weighted or considered; studied; intentional

Agents who intentionally high-ball their price to get the listing leave evidence.  They insist on a long listing period.  But if you had confidence in your price, why the long listing?

Is high-balling a problem?

Yes – if the Code of Ethics means anything.  Agents should be ethical and rely on demonstrating their skills to get the listing, and not buffalo the sellers by deliberately quoting an unrealistic price.  But agents get away with it because there is no enforcement, and as long as prices trend upward, eventually the market catches up with their price.

How can we inflict the Code of Ethics on agents? If there was a limit to the maximum number of days (90-120) of a listing, then all agents would have to be sharp on price.  The quoted prices would all be about the same, which would shift the sellers’ focus to who has the best skill set to achieve a top dollar sale.

As the market enthusiasm wanes in the second half, this will matter more as the tide goes out on the high-ballers.

After months of trying, they will blame their failure on the ‘market’, and then push for a price reduction.  But the buyers have caught on by then, and it will take a bigger drop just to get their attention.

Everyone believes that it takes a long time to sell an expensive house.  Really?  Have you checked the stats?

The 176 NSDCC houses priced over $2,400,000 that sold in the last six months had an average DOM of 80 days, and a median DOM of 58 days!

Let’s compete on a level playing field and see who wins!

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Posted by on Jul 21, 2016 in Jim's Take on the Market, Listing Agent Practices, Why You Should List With Jim | 0 comments

Lowball Strategy

typical agent

Have you seen a home sale close at a surprisingly-low price, and you said,

“Geez, I would have paid that!”

Usually the house has been on the market for months, and everyone else has forgotten about it. The seller doesn’t want to lower the price, but tells his agent, “Just bring me an offer”.

The agent revises the MLS remarks, adding gems like ‘Extremely Motivated’, and ‘All Offers Considered”.  A buyer who saw it earlier with another agent decided to approach the listing agent directly with an offer 20% below list – take it or leave it.

With visions of two commissions twirling around in their head, the agent tells the seller this is the best they could do. The seller really is motivated, so after months of failure at a too-high price, frustration sets in and he signs it.

If any seller is tempted to take a lowball offer – more than 10% below list – they should instruct the listing agent to immediately lower their list price to the midpoint between the offered price and current list price.

Let’s see who else is out there!

Watch how many you see that close at 15% to 20% below list and the listing agent represents both parties.  It isn’t enough to change the market, but a notable strategy.

You shouldn’t burn your old agent though – there are enough listing agents who are wimpy about dual agency and prefer that you have your own agent anyway. It is the same net to the seller, so he won’t care either.

Posted by on Jul 20, 2016 in Ideas/Solutions, Jim's Take on the Market, Thinking of Buying?, Tips, Advice & Links, Why You Should Hire Jim as your Buyer's Agent | 0 comments

Republican Platform – Housing

trump

If the Republicans sweep in November, Fannie/Freddie will be under siege – but it’s very unlikely that they would go away.  If they did, it would cause the big banks to dominate mortgage lending, leading to that Too Big To Fail thingy.

From HW:

Lost amid the uproar over Melania Trump’s supposed plagiarism of Michelle Obama on Monday night, the Republican Party actually conducted some official party business during the first night of its convention, when it approved its 2016 party platform.

And if the Republican Party sweeps November’s elections, the world of housing finance could be in for some significant changes, as the 2016 Republican Party platform calls for seriously cutting the government’s role in housing, potentially abolishing the Consumer Financial Protection Bureau and ending the use of disparate impact to enforce fair lending laws.

According to the Republican Party platform, which can be read in full here, one of the GOP’s goals for 2016 and beyond is to “advance responsible homeownership while guarding against the abuses that led to the housing collapse.”

The GOP platform states that the party believes in the importance of homeownership and wants to do more to help more people achieve it.

“Homeownership expands personal liberty, builds communities, and helps Americans create wealth. ‘The American Dream’ is not a stale slogan. It is the lived reality that expresses the aspirations of all our people,” the Republican Party platform states. “It means a decent place to live, a safe place to raise kids, a welcoming place to retire. It bespeaks the quiet pride of those who work hard to shelter their family and, in the process, create caring neighborhoods.”

And to return to healthier levels of homeownership, instead of the current near-record lows, more needs to be done, but not by the government, the Republican Party argues.

According to the Republicans, the government has already done more than enough.

“The Great Recession devastated the housing market. U.S. taxpayers paid billions to rescue Freddie Mac and Fannie Mae, the latter managed and controlled by senior officials from the Carter and Clinton Administrations, and to cover the losses of the poorly-managed Federal Housing Administration,” the Republican platform states. “Millions lost their homes, millions more lost value in their homes.”

To remedy this problem, the Republican Party believes the government should play far less of a role in housing than it does currently.

“We must scale back the federal role in the housing market, promote responsibility on the part of borrowers and lenders and avoid future taxpayer bailouts,” the Republican platform states.

“Reforms should provide clear and prudent underwriting standards and guidelines on predatory lending and acceptable lending practices,” the platform continues. “Compliance with regulatory standards should constitute a legal safe harbor to guard against opportunistic litigation by trial lawyers.”

The Republicans also call for a “comprehensive” review of federal regulations, “especially those dealing with the environment,” that make it “harder and more costly for Americans to rent, buy, or sell homes.”

But much of the Republican animus towards the government’s (and the Democrats’) role in housing is centered on the ongoing conservatorship of Fannie Mae and Freddie Mac.

And the Republicans’ message on Fannie and Freddie’s ownership structure should give pause to the Fannie and Freddie shareholders fighting for the recapitalization and release of Fannie and Freddie.

“For nine years, Fannie Mae and Freddie Mac have been in conservatorship and the current Administration and Democrats have prevented any effort to reform them,” the platform states.

“Their corrupt business model lets shareholders and executives reap huge profits while the taxpayers cover all losses,” the Republicans continue. “The utility of both agencies should be reconsidered as a Republican administration clears away the jumble of subsidies and controls that complicate and distort home buying.”

The Republicans also call for the FHA to end its “support” of “high-income individuals,” and state that the public “should not be financially exposed by risks taken by FHA officials.”

The Republicans also state that they will “end the government mandates that required Fannie Mae, Freddie Mac, and federally insured banks to satisfy lending quotas to specific groups,” adding that “discrimination should have no place in the mortgage industry.”

The Republicans also state their opposition to the Obama Administration’s Affirmatively Furthering Fair Housing program, which the administration heavily touted last year as a way to ensure that all children are given a “fair shot.”

The Republicans argue that the Affirmatively Furthering Fair Housing program is an attempt by the government to “seize control” of the zoning process away from local governments.

(“The Affirmatively Furthering Fair Housing program) threatens to undermine zoning laws in order to socially engineer every community in the country,” the Republicans state. “While the federal government has a legitimate role in enforcing non-discrimination laws, this regulation has nothing to do with proven or alleged discrimination and everything to do with hostility to the self-government of citizens.”

The Republican platform also echoes several points of the recently released Republican-crafted plan to repeal and replace the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Part of that plan involves changing the structure of the Consumer Financial Protection Bureau to replace the agency’s director, a position currently filled by Richard Cordray, with a bipartisan commission and changing the CFPB’s funding mechanism to bring the agency’s budget under Congressional oversight.

Posted by on Jul 20, 2016 in Jim's Take on the Market, Mortgage News | 5 comments

One-Story Premium

cabela

On June 11th we noted two single-story homes for sale in Carlsbad.

This 2,726sf single-story house in SW Carlsbad listed on June 9th for $1,149,999 – and it had the extras like a good yard and view.

They received multiple offers, and it closed for $1,165,000, or $427/sf!

http://www.sdlookup.com/MLS-160031583-6678_Cabela_Carlsbad_CA_92011

How do two-story homes compare?

This is asking $278/sf nearby and unsold:

http://www.sdlookup.com/MLS-160022454-1365_Cassins_St_Carlsbad_CA_92011

Asking $299/sf with ocean view:

http://www.sdlookup.com/MLS-160030800-6393_Ebb_Tide_Carlsbad_CA_92011

Base-grade tract house at $286/sf:

http://www.sdlookup.com/MLS-160026464-1672_Fisherman_Dr_Carlsbad_CA_92011

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Posted by on Jul 18, 2016 in Jim's Take on the Market, One-Story, Why You Should Hire Jim as your Buyer's Agent | 0 comments