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Category Archive: ‘Market Buzz’

Flipper Crowdfunding

crowd

Remember last time? When you don’t have mortgage underwriters being strict with the money, you are entering bubble territory:

http://www.cnbc.com/id/102537364

Chicago-based Ben Walhood used to sell brain surgery equipment; on the side, he flipped a few houses.

“When I had the W2 and a good income, getting a mortgage was relatively straightforward,” he said.

But when the flipping profits grew, Walhood, 33, decided to go into it full time. Without the sales job, though, he had no W2, and that’s when the money dried up.  “At that point it was essentially impossible to get funding from the big banks,” he said.

Walhood turned to San-Francisco-based RealtyShares, one of a growing breed of crowdfunding platforms. Essentially, it is an online marketplace for real estate investing, where individual investors can open a free account and access investments in properties across the country. They need a minimum of $5,000 to invest and must be accredited, which includes either an annual income exceeding $200,000 or a net worth of over $1 million.

Walhood would get his property purchases funded by this “crowd” of investors, who would lend him the money. As with a mortgage, he pays interest on the loan, and the investors get about a 9 percent return. Once each property is sold, the loan and the investors are paid off.

“This gap has been left by banks that now crowdfunding platforms, like RealtyShares, are able to fill,” said Nav Athwal, CEO of RealtyShares. “They are able to provide quicker, more efficient capital that helps meet the needs of these investors who are looking for speed of execution and the ability to be flexible with their terms as well as with the underwriting standards. Banks just aren’t meeting that need.”

http://www.cnbc.com/id/102537364

Posted by on Mar 26, 2015 in Flips, Market Buzz | 2 comments

Mortgage for Self-Employed

2015-03-22 19.08.47

We haven’t been hearing much lately about how tight credit is choking off the housing recovery.  Once it was announced that the GSEs were going to purchase 97% loans for the first time is five years (which starts today), the tight-credit talk started to subside.

But you still have to qualify for a mortgage, which has always been difficult for self-employed folks who write off their expenses to lower their taxable income.  The obvious solution is to lower the write-offs and pay more taxes – but that goes over like a lead balloon with those who are used to creative accounting.

The common belief is that you need two years’ worth of tax returns to qualify.

But did you know that Freddie Mac will accept only one years’ tax return?

That’s right, and I just saw it happen.  I just had a self-employed buyer with excellent credit and a 20% down payment close escrow after qualifying by using their 2014 tax return only.  The Freddie Mac Loan Prospector (their automated-underwriting service) determines whether you need 1 or 2 tax returns – so as long as the computer approves, you’re in!

For the self-employed who had a strong 2014, you may want to bite the bullet and pay more tax now so you can qualify for a bigger loan.  The Freddie Mac maximum loan amount in San Diego is $563,350, which puts your payment around $2,700 per month, plus taxes and insurance.

Get Good Help!

Posted by on Mar 23, 2015 in Jim's Take on the Market, Market Buzz, Mortgage Qualifying | 4 comments

Home Buyers from Tech Industry

tech

One segment fueling the market – thanks daytrip!

http://www.latimes.com/business/la-fi-0321-tech-real-estate-20150321-story.html

Although he primarily lives in San Francisco, entrepreneur and investor Justin Yoshimura focused on Southern California when it came time to buy property, with the aim of making it his home away from home.

In December, he paid $2.04 million for a three-bedroom, three-bathroom home in Santa Monica for $250,000 below listing. Every few days, the 25-year-old flies north for the workweek, returning to Santa Monica on weekends.

“Compared to San Francisco in particular, it’s very cheap,” said Yoshimura, who founded and later sold a loyalty platform for retailers called 500friends. “Santa Monica is one of the most desirable neighborhoods in L.A. and I have a yard with a pool and a beautiful home for less than what I would pay for an equivalent-sized condo in San Francisco.”

Tami Pardee, a real estate agent specializing in West L.A., is representing several tech buyers from up north. She estimated that 10% of current clients live in Silicon Valley, including engineers from Facebook and several venture capitalists. The budgets are high: anywhere from $2 million to $5 million for a home.

“They’re buying second homes — or third or fourth homes,” she said. “We’re seeing it a lot.”

In general, Pardee said, the potential buyers are more savvy than usual, having done extensive research online before traveling down to view properties. They have specific requirements: A lot of people don’t want to be north of Montana Avenue in Santa Monica, preferring to live further south, closer to the hub of tech activity. Many say they’d like a walkable neighborhood and a home with a “refined, finished” design.

“They don’t want a modern box,” she said.

http://www.latimes.com/business/la-fi-0321-tech-real-estate-20150321-story.html

Posted by on Mar 21, 2015 in Jim's Take on the Market, Market Buzz, Market Conditions | 7 comments

Millennials

saxy

The hubbub about Millennials and home-buying keeps coming.  When you see the big boys getting involved, you can’t help but think that another generation should hold on to their wallet:

http://www.goldmansachs.com/our-thinking/outlook/millennials/index.html?cid=tw-or-mil-3

Propaganda about millennials will probably help shape the outcome. My question: are millennials ready, willing, and able to live where they can afford?

Posted by on Mar 4, 2015 in Market Buzz, The Future | 5 comments

Zestimate Tune-Up?

z

When they first rolled out the improve-it-yourself feature, it turned out to be no more than an opportunity to list your upgrades – because little or no value was added to your zestimate.  I received this by email today:

Hi Jim,

Today Zillow announced enhancements to the Zestimate® home value that allow homeowners to edit their home facts on Zillow and, depending on the new information they provide, potentially see an immediate impact on their Zestimate. For instance, if the square footage of a home is out of date on Zillow, the homeowner can correct this information and see an adjustment in their Zestimate.

Can listing agents use this feature to affect the Zestimate?

We encourage you to work with your seller prior to placing the home on the market to ensure all information on Zillow is accurate. If your seller is concerned about the Zestimate, check the home facts and make updates where needed. We suggest you communicate that the Zestimate is an estimate, not an appraisal.

We continue to iterate on our existing offerings to improve how buyers, sellers and homeowners use the resources available on Zillow. Should you have any questions about the Zestimate, visit www.zillow.com/zestimate.

Sincerely,

Greg Schwartz, Chief Revenue Officer, Zillow Group

I’ll believe it when I see it!  In the end, the zestimates will likely be more inaccurate as sellers fluff their values to the moon.  But Zillow is learning the ways of the industry, and is now siding with the sellers.  Get Good Help!

Posted by on Feb 27, 2015 in Listing Agent Practices, Market Buzz, Thinking of Selling?, Tips, Advice & Links | 12 comments

RSF Auction Today

The highly anticipated, no-reserve auction in Rancho Santa Fe happens later today.  It was on the market for $36,500,000 back in 2006 and for sale ever since – the latest list price was $22,500,000 last year.


Casa Del Sol — from Concierge Auctions

This is the second no-reserve auction in Rancho Santa Fe by this company.  The first was the gambler’s house, and it sold for $13,000,000 last month:

http://www.sdlookup.com/MLS-140037638-5425_Los_Mirlitos_Rancho_Santa_Fe_CA_92067

Any guesses on tonight’s final price?

Posted by on Feb 26, 2015 in Auctions, Market Buzz, Rancho Santa Fe | 8 comments

NSDCC New Listings YTD

It used to make sense that the higher prices went, the more people would sell.

But now here we are at all-time high prices, and not many are interested.  It must be due to the lack of other options – not selling looks better than selling.

New Detached-Home Listings Between Jan 1 – Feb 15

Year
# of New Listings
Median List Price
2001
783
$659,000
2002
760
$707,450
2003
827
$829,000
2004
568
$999,950
2005
632
$1,166,000
2006
890
$1,099,000
2007
777
$1,200,000
2008
758
$1,166,836
2009
706
$1,195,000
2010
663
$959,000
2011
747
$995,000
2012
620
$935,450
2013
622
$1,121,950
2014
622
$1,300,000
2015
603
$1,380,000

One place where there has been some nice action is the $700,000 – $900,000 range along the I-15 corridor.  There has been a steady stream of new product coming to market, and momentum is building as most sell within the first week (catching many sellers and agents by surprise).

When there are only a smattering of new listings like we’re having along the coast, buyers struggle with whether the pricing is real.  A few will sell here and there, but more listings would provide more comfort to buyers, one way or another.  If they see them selling, then they’d be more likely to jump in!

Posted by on Feb 21, 2015 in Jim's Take on the Market, Market Buzz, North County Coastal, Spring Kick | 6 comments

Bubble or No Bubble?

thorn

This article is talking about Oakland, California, but these conditions exist up and down the coast.  Thornberg has been one of the more level-headed bubble analysts:

http://ww2.kqed.org/news/2015/02/18/is-the-bay-area-in-a-bubble-and-will-it-burst

An excerpt:

“This is not a bubble,” says Chris Thornberg, an economist in Los Angeles.

Though he’s just one guy, we called him because he has the dubious distinction of having predicted the 2008 market crash. His colleagues used to call him “Dr. Doom.”

He says that the money flooding the Bay Area isn’t built on speculation like the last boom.

“These are people with real money, with real incomes,” he says. “They have enough money to live in whatever cities and neighborhoods they want, so if there’s not enough high-end housing, they’ll just gentrify lower-income neighborhoods.”

And while the growth may slow, it won’t stop, Thornberg predicts. He believes the solution is a matter of adding to the housing supply. As more units come on the market, prices become more reasonable for everybody, he says.

But others argue that without policies making sure some of the housing is affordable, it’s not going to make any difference for middle-class and poor people.

“That’s completely wrong,” Thornberg says. “The evidence tends to suggest that for the most part, when you start layering rule after rule after rule on real estate developers, ultimately you end up simply hurting the supply worse.”

So what should Eaton do?

Thornberg’s answer? Buy now. Anything you can get.

Posted by on Feb 19, 2015 in Bubble-Era Pricing, Forecasts, How Hot?, Market Buzz, Market Conditions | 11 comments

Not So Hot

It’s happening everywhere you go, and it’s in every conversation with agents – the market is buzzing with “lots of activity”.

What does that mean?  Does it mean anything?

Here’s what it means:

  • Buyers are giddy about getting a 3.75% jumbo rate.
  • Agents are giddy about driving around.
  • Sellers are giddy about selling for more than the last guy.

Sellers and agents who have lots of showings think their house is red hot, and they demand a premium – or at least they aren’t coming off their price much.

But they should be more realistic about those who aren’t offering.

If you have 10-30 showings and only 1-3 offers, it means the vast majority of buyers thought your home was over-priced.

Just because there are a lot of lookers doesn’t mean the eventual buyer will pay your price either.

Here are stats on the NSDCC closings so far this year:

Houses Closed Under $1,000,000

SP:LP = 96.3%

Average days on market: 51

Houses Closed Over $1,000,000

SP:LP = 92.5%

Average days on market: 86

Buyers want to pay a reasonable price, and those averages show that they are being patient.  Of the 192 closed sales so far in 2015, only NINE PAID OVER LIST!

All participants need to be smart about how the market works now.  You get a flood of interest in the first two weeks, and then the activity drops off to nearly zero – and those occasional showings are being used to sell the house down the street.  Be smart, read the market signals, and keep egos in check.

And Get Good Help!

SD prices15

 

Posted by on Feb 10, 2015 in Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal | 0 comments

Z Talk

Spence has been seen everywhere promoting his new book – we might as well give him some coverage here.

His smugness gets in the way, and it seems that he’s really only looking to prove that he is king of the hill, not give tips that are actionable.

For example, his comparing male to female agents provides some sexy shock value, but he doesn’t go into what it means, or apply any common sense.  If male agents are better at pricing, shouldn’t female agents be better at negotiating because their price is ‘wronger’?


World News Videos | ABC World News

Posted by on Feb 7, 2015 in Market Buzz | 0 comments