The reporters should go into more detail here, rather than leave the viewer hanging – for example, where’s dad(s)? Hat tip to daytrip:
Category Archive: ‘Market Conditions’
This article lays out the basic 12 tips for homebuyers to use when preparing to buy a home:
The local market has been very competitive lately, with multiple offers on every quality offering. Here are other things for home buyers to expect from sellers once you start making offers.
These aren’t thought out clearly by listing agents; instead, they are things done to them on previous deals so they will want to impose them on you whether they make sense or not:
1. They will want you to shorten your contingency periods.
The common belief is that shorter periods will make you move faster, and then blow you out quicker if you aren’t a player. But in reality, buyers get irritated and want to pay less or cancel as the manipulations start mounting.
2. No appraisal contingency.
Buyers are prone to think, “But this is your price, and you want me to risk the appraisal coming in low?”
3. Seller rentback.
Sellers want you to fund their retirement account, and have you let them live in your house for free for weeks or months. Make sure the rent is retail-plus with heavy penalties if they don’t leave on time to ensure they move as agreed. Consider that the seller could declare bankruptcy the day after closing and make your life miserable for six months.
4. Ernest-money deposit.
Even though it is refundable until you sign off all contingencies, the sellers will want you to increase it, just to make sure you know who the boss is.
5. Buying ‘as-is’.
It already says in the contract boilerplate that the property is sold “as-is”, but the listing agents will mention it again just so you don’t get any ideas about asking for seller repairs. Once you complete your inspection, the sellers and agent will expect you to live with any defects – regardless of how much you paid.
6. Seller disclosures.
The confidence is already running high, so if there are any borderline disclosure issues, they might get left out by the sellers. Make sure you thoroughly inspect the property, neighborhood, and HOA!
7. Escrow and title companies.
Don’t even think about selecting your escrow and title companies, and expect that the seller choices on both will include some ‘co-ownership’ fine print later (i.e. kickbacks).
8. Removing attached items.
Items attached to the home are part of the real estate, and are included in the sale by definition. But don’t be surprised if the sellers strip out all the good stuff (TVs, lights, window coverings, etc.), and leave you with holes.
9. Termite clearance.
Ha ha, very funny. The sellers will expect you to live happily ever after with their termites, just like they have.
10. Listing agent dominates the home inspection.
Buyers deserve to have a good look around during the home inspection, and get comfortable with what they are buying – chances are they have only seen it for a few minutes before then. Yet the listing agent wants to be there to “answer any questions”, and use that as a guise for snooping on the inspector to see if the problems and defects are really that bad. Kudos for being concerned, but uncomfortable buyers are less likely to close escrow.
Because a bidding war feels like hitting the lottery, sellers and their agents get giddy and don’t consider how their demands can turn off buyers, and make them want to pay less, not more.
If you want to sell for top dollar, hire a listing agent who can tactfully include safeguards that don’t cause buyers to go backwards.
Fannie interviews 1,000 people every month, and then leaves it up to their ivory-tower guy to explain it to the masses. Here’s my conclusion from my own personal survey: buyers are being cautious due to prices going up so fast.
Consumer attitudes toward housing appear to have stalled somewhat amid a recent dip in confidence regarding personal finances and income growth, according to results from Fannie Mae’s March 2015 National Housing Survey™.
Among those surveyed, the share who expect their personal financial situation to improve over the next year fell to 41 percent last month, while those who said their household income is significantly higher than it was 12 months ago fell to 22 percent.
Additionally, the share of respondents who said they would buy a home if they were to move decreased 5 percentage points to 60 percent – a new all-time survey low.
On the bright side, the share of consumers who believe now is a good time to sell a home reached a new survey high of 46 percent, narrowing the gap with those reporting it is a good time to buy, perhaps signaling a more balanced housing market.
“Consumers are being patient prior to entering the housing market. Our March survey results emphasize how critical attitudes about income growth are to consumers’ outlook on housing,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “We’ve seen modest improvement in total compensation resulting from a strengthened labor market. However, income growth perceptions and personal financial expectations both eased off of recent highs, consistent with Friday’s weak jobs report. Simultaneously, the share of consumers expecting to buy on their next move has declined. We believe the recent setback in consumer sentiment should be short lived if early signs of income growth bear out and occur in proportion to expected interest rate increases. Meanwhile, the wait for housing expansion continues.”
Fannie Mae has been over-pricing their REOs by at least 10% since 2012, and have been getting away with it because buyers think that because it’s a foreclosure, they are getting a deal, and because Fannie provided ‘HomePath’ financing where no appraisal was required.
They instituted a seven-day First Look Program, where only the owner-occupying buyers were allowed to purchase, which helped to whip up the excitement in unsuspecting buyers, many of whom were purchasing their first home.
But in October, 2014, the HomePath financing was terminated, and apparently the REO portfolio needs to be goosed again.
Here the ‘new’ 20-day First Look Program is rolled out by our N.A.R. goons, and presented as a great new idea to help buyers and preserve neighborhoods. But in reality, it’s extending the period that Fannie can take advantage of unsuspecting buyers:
More on the ultra-rich and deals being made around L.A. – thanks daytrip:
It’s not uncommon on the Westside of Los Angeles for people to shell out $20 million or more for a house.
And then take a wrecking ball to it.
Jeff Hyland, of the high-end Beverly Hills real estate agency Hilton & Hyland, had a recent tear-down sale of $35 million in the Trousdale section.
“It was in absolutely magnificent condition,” noted Hyland, who would not reveal the owner’s name but said his client was happy to pay all that money “just for the dirt,” with plans to erect a dream house.
Tearing down a $35-million house in a region where the middle class is disappearing, affordable housing is scarce and multiple families are crammed into homes or apartments — not to mention the tens of thousands living on the streets — is the kind of thing that makes you think the world is about to end.
But that’s the way things are in the Westside hills, where there’s no shortage of buyers from around the world snapping up estates. Longtime residents, suffering in cramped 10,000-square-foot quarters, are squawking about new and rebuilt estates the size of aircraft carriers.
One house just sold for north of $80 million, right around the time the Economic Policy Institute published a study concluding that “more than half” the residents of metro Los Angeles “are struggling to achieve economic security.”
The year 2014 was the biggest on record for his agency, said Hyland, with $2.9 billion in sales across Beverly Hills and Bel-Air, through Brentwood and out to Malibu. But that mark could be topped in 2015, with Hilton & Hyland’s 100 agents chasing a target of between $3 billion and $3.2 billion.
“We’ve sold, I think, 10 houses this year for over $20 million,” Hyland told me while we toured some of the most expensive homes on the U.S. market in his Rolls-Royce Ghost.
“The Chevrolet of Beverly Hills,” Hyland said of his car, which rides like a dream. The base price for a new Ghost is about $300,000, or roughly the median price of a new house in the United States.
See the great video in this full article:
One segment fueling the market – thanks daytrip!
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.
Are your kids involved with your real estate decisions? Many love it!
(Hat tip to daytrip)
A year and a half ago, Skye van Merkensteijn was shooting hoops with a friend who lives at the Aldyn, a condominium-rental hybrid on Riverside Boulevard with its own indoor basketball court, climbing wall and bowling alley.
Thirteen-year-old Skye was impressed — and envious. Well, his worldly pal told him, he just happened to know of an apartment for sale on the 21st floor.
Skye went home, jumped online and called up a video of the property in question — a 12-room spread with a hot tub and private 37-by-15-foot outdoor pool.
“When my husband, John, came home,” said Skye’s mother, Elizabeth van Merkensteijn, “Skye announced: ‘We’re moving and this is the place we’re moving to.’ ”
Read full article here:
The real estate market around Orange County is similar to ours in San Diego, and they are feeling the seasonal surge like we are currently. Mortgage rates under 4% are certainly contributing to the fever – live it up while you can!
January buying was slow, too. Then all of a sudden – with no major change in pricing or mortgage rates or the broader economy – shoppers stopped shopping and started making offers.
“I’d like to know what buyers are thinking. Why did they start pulling the trigger now?” Thomas says. “It’s like we’ve gone from 5 miles per hour to 65 in a very short distance.”
Thus, the big question for Orange County’s housing market has gone from “When will it wake up?” to “How long can this surge last?”
Will February prove to be just a short-lived, unexpected rush of buyers wanting to start the year in a new home? Did folks get overly anxious about the possibility of potentially higher home prices or costlier mortgages later this year?
Or is this the market breakout where improved housing fundamentals, most notably a healthy job market, nudged buyers to act? Is there a growing flock that’s tired of renting or having roommates – parents or otherwise – and have joined the traditional hunt for home ownership?
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:
“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.
You have to hand it to Diana – she is the national spokesperson for RE news: