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Category Archive: ‘Frenzy’

Hurricane Flippers

Hat tip to Richard for sending this in:

LINK

An excerpt:

Addressing a real estate conference in flood-ravaged Houston this month, longtime investor Ray Sasser detailed his strategy: buy up to 50 flooded homes at deep discounts, then fix and flip them for a hefty profit.

Sasser first followed that game plan after Tropical Storm Allison flooded the city in 2001. He bought homes for 30 to 40 percent of their pre-storm value, spent another 15 percent on repairs, and sold many a year later – at full value.

The quick recovery surprised him, he said.

“This can’t be true,” he recalled thinking at the time.

The bet that home prices in hard-hit Houston neighborhoods will fully recover after Hurricane Harvey could be riskier, Sasser and local economists said. But a rush of investors eager to snap up flooded homes reflects broader confidence in the resilience of Houston’s unique metropolitan economy.

While the region’s unchecked development has come under fire for exacerbating flooding, it also reflects its core strength: A rare combination of rich job opportunities and low cost of living, driving explosive population growth in America’s energy capital.

The surging demand has sustained home prices through four major floods since 2001 and a historic oil price crash starting in 2014. Though Harvey caused far more damage than previous storms, investors such as Sasser see plenty of opportunity in the region’s estimated 268,000 flooded homes.

Tara Waggoner, the Houston market manager for brokerage and online listings firm Redfin, said the firm’s local agents were getting about four times the number of calls they usually get from investors. They ranged from individuals looking to buy one flooded house to groups of ten or more pooling their money for a home-buying spree, she said.

“You have people with millions of dollars to work with,” she said in an interview days after the storm. “They want to go in, pay cash, get the discount and fix it up to sell.”

Read full article here:

LINK

Posted by on Sep 22, 2017 in Flips, Frenzy, Jim's Take on the Market, Real Estate Investing | 3 comments

More Insanity

Hat tip to Richard for sending this in…..how much more can buyers take?

A house in Sunnyvale just sold for close to $800,000 over its listing price.

Your eyes do not deceive you: The four-bed, two-bath house — less than 2,000 square feet — listed for $1,688,000 and sold for $2,470,000.

“I think it’s the most anything has ever gone for over asking in Sunnyvale — a record for Sunnyvale,” said Dave Clark, the Keller Williams agent who represented the sellers in the deal. “We anticipated it would go for $2 million, or over $2 million. But we had no idea it would ever go for what it went for.”

This kind of over-bidding is known to happen farther north in cities including Palo Alto, Los Altos and Mountain View. But as those places have grown far too expensive for most buyers, future homeowners have migrated south to Sunnyvale, a once modest community that now finds itself among the Bay Area’s real estate hot spots.

Close to tech employment centers, it makes for a convenient commute — and prices there, too, are now pushing the limits of middle-class buyers. The house that sold for $782,000 over asking in Sunnyvale — it’s on Prunelle Court — is about a mile from Apple’s new spaceship campus.

The buyers, who work in tech, had been hunting for a home for a while — but kept getting out-bid, said Mini Kalkat, the Intero agent who represented them: “They lost two before they bid on this one, so we kind of knew what the numbers would be. It’s a crazy market, but there’s a way to maneuver the market.”

The property is one of more than 50 South Bay homes that sold in the last month for at least $200,000 above the listing price. More than half of those deals were made in Sunnyvale. Others were made in Cupertino, Saratoga and West San Jose, according to Alain Pinel agent Mark Wong. He compiles a monthly list of such “over-asking” transactions.

Over-asking sales are at least partly the result of agents’ sleight of hand. It’s become common strategy to list homes under their market value in order to entice Silicon Valley buyers; they are all too willing to fight over the few houses available in this chronically tight market.

Read full article here:

http://www.mercurynews.com/2017/09/12/now-this-is-ridiculous-782000-over-asking-for-a-house-in-sunnyvale/

Posted by on Sep 13, 2017 in Frenzy, Interesting Houses, Jim's Take on the Market, Market Conditions | 8 comments

Housing Crisis Due to Flippers

We saw this happen in Bressi Ranch when Jenae and Company went on their 100% financing spree. Her victims weren’t deadbeats – instead, they had good credit scores and other assets, and they were just duped into the get-rich-quick scheme.  When it didn’t pan out, they dumped everything.

Hat tip Richard!

LINK

The grim tale of America’s “subprime mortgage crisis” delivers one of those stinging moral slaps that Americans seem to favor in their histories. Poor people were reckless and stupid, banks got greedy. Layer in some Wall Street dark arts, and there you have it: a global financial crisis.

Dark arts notwithstanding, that’s not what really happened, though.

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

Analyzing a huge dataset of anonymous credit scores from Equifax, a credit reporting bureau, the economistsStefania Albanesi of the University of Pittsburgh, the University of Geneva’s Giacomo De Giorgi, and Jaromir Nosal of Boston College—found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse. The lowest quartile in the credit score distribution accounted for 70% of foreclosures during the boom years, falling to just 35% during the crisis.

So why were relatively wealthier folks borrowing so much?

Recall that back then the mantra was that housing prices would keep rising forever. Since owning a home is one of the best ways to build wealth in America, most of those with sterling credit already did. Low rates encouraged some of them to parlay their credit pedigree and growing existing home value into mortgages for additional homes. Some of these were long-term purchases (e.g. vacation homes, homes held for rental income). But as a Federal Reserve Bank of New York report from 2011 reveals (pdf, p.26), an increasing share bought with the aim to “flip” the home a few months or years later for a tidy profit.

Read full article here:

LINK

Posted by on Aug 29, 2017 in Flips, Frenzy, Jim's Take on the Market, Market Buzz, Mortgage News | 9 comments

Frenzy Fever

As the national drought in home supply dragged into its 21st straight month, competition among buyers drove prices up once again.

And the fiercest competition was in the Bay Area.

A new report from Redfin shows that 73.7 percent of homes sold above the listing price in the San Jose metropolitan area in June. That was the highest percentage in the nation, followed by the San Francisco metropolitan area (70.6 percent, second highest in the U.S.) and the Oakland metropolitan area (69.8 percent, third highest). They were followed by Seattle (62.3 percent) and Tacoma, Wash., (52.6 percent).

“Every record in market speed and competition that was set in May was broken again in June,” the report stated.

The Redfin report comes two days after the Mercury News reported on a rash of over-asking home sales in Sunnyvale and Cupertino. In the last month, more than 50 homes in those two cities sold for at least $200,000 over the asking price. One modest Cupertino house — 1,046 square feet — sold for $660,000 above its listing price.

According to Redfin, San Jose had the nation’s largest decrease in housing inventory, falling 42.2 percent in June from one year earlier. The second largest year-over-year contraction of the home supply was in Rochester, N.Y., where inventory fell 29.7 percent. The third largest shrinkage happened in San Francisco, where inventory fell 26.6 percent.

Read full article here:

http://www.mercurynews.com/2017/07/13/new-report-bay-areas-rocketing-real-estate-market-leads-nation-in-over-asking-sales/

Save

Posted by on Jul 13, 2017 in Bidding Wars, Frenzy, Jim's Take on the Market, Sales and Price Check | 0 comments

NSDCC Months of Inventory

Market conditions are favorable throughout the NSDCC.  Here are stats on the individual areas:

Area
Zip Code
ACT
PEND
SOLDS – April
Months of Inv. (A/S)
Cardiff
92007
19
11
9
2.1
Carlsbad NW
92008
38
37
18
2.1
Carlsbad SE
92009
75
78
52
1.4
Carlsbad NE
92010
15
33
11
1.4
Carlsbad SW
92011
27
25
26
1.0
Del Mar
92014
69
19
15
4.6
Encinitas
92024
95
56
40
2.4
La Jolla
92037
180
44
29
6.2
RSF
67+91
246
49
27
9.1
Solana Bch
92075
24
16
12
2.0
Carmel Vly
92130
85
82
30
2.8
All Above
All
873
450
269
3.25

It used to be that 6 months of inventory was considered normal. Can we say the new normal is more like 3.0?  Areas that are performing very well are 2.0?  Those on fire are 1.0?

Posted by on May 16, 2017 in Frenzy, Jim's Take on the Market, Market Conditions, North County Coastal | 0 comments

The Future of Selling Homes

The onslaught of new-fangled ways to sell homes is getting bogged down in their own zeal – there are so many choices now, which way do you go?  You have the sexy off-market package driven by celebrity realtors above, or the typical new-age mobile app at a discount below:


Find Home from Reali on Vimeo.

The Winners?

  1.  The widget that spends $100 million/year on advertising.
  2.  Single agency.

The scarcity of sales should drive more agents out of the business, and the those agents who remain will be increasingly focused on putting their own buyers and sellers together.

We have the listing agents who hold listings off-market in order to find their own buyer, but there are also agents who will do ‘sold before processing’ with an outside agent. This happens quite frequently.

If a listing agent isn’t going to round-trip the commission, and instead let a second agent represent the buyer – why wouldn’t you do what is best for your own client (the seller), and expose it to all agents via the MLS?

An old veteran agent told me that he hoped he would sell his new listing before MLS input, and he did – and an outside agent represented the buyer.  The house had been vacant for years so there wasn’t an occupant who held up the showings – all he had to do was install a lockbox, take a few photos with his phone, and spend 15-30 minutes doing the MLS input.

He did input the listing onto the MLS after he found the buyer, so was it the installing of the lockbox and taking a few photos too much of a burden?

Why wouldn’t he do what is best for his seller?

He must either be flat out lazy, or he wanted everyone on the MLS to see that he was the latest to breach his fiduciary duty.  It is like a badge of honor!

The realtor business is slowly eroding right before our eyes.

Save

Posted by on May 15, 2017 in Frenzy, Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training | 0 comments

“You Do Whatever It Takes”

It’s one thing to offer above the list price, but would you waive all contingencies too? 

I think a judge would be reluctant to have a buyer lose a deposit.  Listing agents who might keep a deposit should do a pre-listing home inspection, and give a copy to anyone making an offer with no contingencies, just in case.

LINK

Homes are selling fast in Seattle, spending about 25 days on the market, down from 65 in March 2012. It can be hard to find parking at open houses and some are so crowded that it’s hard to move around to see the home.

Sellers are seeing some of the biggest price gains in almost a decade, and they know they’re in the driver’s seat.

“You put a house on the market you will have 100 people through the open house on the weekend and maybe 15-20 offers,” said Patti Hill, a real estate agent who has worked in the Seattle market for more than 17 years.

To win a home, buyers are putting in aggressive offers.

“Some of them are kind of scary because they’re waiving contingencies that puts earnest money in jeopardy if something happens,” said Hill. It’s common for Seattle buyers to waive inspections and appraisals and go above list price.

When Harris and his partner found their soon-to-be new home, they did everything they could to come up with the winning bid. They waived all contingencies, went above the asking price and had an escalation clause.

“Buyers are totally at the mercy of whatever the sellers wants,” he said. “If you want the house, you do whatever it takes.”

The pair also talked to the listing agent to find out about any special circumstances about the owner and incorporated that into a personalized letter and also offered a 30-day rent-back-to-owner for free.

Their winning bid was $425,000 — $60,000 over the asking price and above their original budget.

Posted by on May 11, 2017 in Bidding Wars, Frenzy, Jim's Take on the Market | 2 comments

Seattle!

Yesterday it was Seattle that had the highest increase in their Case-Shiller Index, rising 12.2% Y-o-Y.  You know that frenzy fever is high when the quotes barely make sense:

LINK

Andrea Conway’s home selling story has become the norm for Seattleites. She bought her Ballard home for a little under $500,000 around Easter 2014 and just sold it for more than $750,000

From the time they listed to the time they sold, the Conways, who are moving to California, had multiple offers and closed within a week. Realtors say that is very common right now for Seattle sellers. The buyers paid in all cash.

“Sellers are putting houses on the market, and it’s just normal for things to sell above list price and in some cases well above list price,” John L. Scott Realtor Carl Shaw said. “In a lot of cases, you’re seeing anywhere from four-to-eight, up to 15 or 20 offers on houses.”

The Conways say they may move back to Seattle in a few years, but right now they have decided to leave the city.

“We love it. We love the Seattle vibe, but the real estate market is so hot right now that we’re not comfortable, and we really can’t afford to put our money in this market right now,” Conway said.

She has this advice for buyers.

“Be prepared to spend considerably more than the asking price, especially if it’s in one of the hot neighborhoods like Ballard, or Fremont, or Wallingford, or West Seattle,” Conway said.

Shaw told us that buyers should be prepared to have as much cash ready as possible or have complete loan approvals.

Shaw has been doing this for 28 years and says the only other time when he saw this hot of a job and housing market was in 2006.

“In that market (2006) we had a ton of inventory, we had builders with a ton of inventory, and the difference now is that we have really strong job growth and next to no inventory,” Shaw added.

Next to no inventory is a tough reality for buyers, but for the Conways it is a blessing.

“We’re thankful, and we’ll see what the next adventure holds for us,” Conway said with a smile.

Posted by on Apr 26, 2017 in Frenzy, Jim's Take on the Market, Market Conditions | 10 comments

Burbank!

http://www.cnbc.com/2017/04/24/spring-housing-strongest-sellers-market-ever.html

Spring homebuyers are pounding the pavement at a furious pace, but the pickings are getting ever slimmer.

Even as more homes come on the market for this traditionally popular sales season, they’re flying off fast, with bidding wars par for the course. Home prices have now surpassed their last peak, and at the entry level, where demand is highest, sellers are firmly in the driver’s seat.

“I’ve been selling real estate for 25 years and this is the strongest seller’s market I have ever seen in my entire real estate career,” said David Fogg, a real estate agent with Keller Williams in Burbank, California. “A lot of our sellers are optimistically pricing their homes in today’s market, and I have to say in most cases we’re getting the home sold anyway.

Fogg listed a three-bedroom, two-bathroom, 1,240-square-foot home in Burbank for $789,000 and had three offers before the first open house Sunday. In the Los Angeles-area market, that is considered an entry-level home. The open house drew more than 100 potential buyers, most of them already weary of the competition.

“It’s very tough. Most of the listings are intentionally listed a little low to get a lot of attention, and it’s not uncommon to get 12 to 16 offers on one property,” said Jilbert Mosessian, who has been renting in the neighborhood but wants to buy. “In three properties recently, we did our best, we went considerably over the listing price, and we were told that there were still five people above us and they were only going to deal with them.”

Mosessian said he will have to try another neighborhood and cut his expectations.

Posted by on Apr 24, 2017 in Frenzy, Jim's Take on the Market, Market Conditions | 1 comment