The war mongers are itching for a new fight, and Aunt Bee is running the Fed. Mortgage rates could rise at any time – you’d be crazy to hold out longer to sell, in hopes of picking up what, an extra 5%?
Category Archive: ‘Market Conditions’
But it’s not happening yet.
Here are the NSDCC detached-home listings that hit the market between Feb. 15 and March 15 (and 2012 had one extra day due to leap year):
Greed and money are apparently taking a backseat to the utility value of a home, the comfort and convenience of not moving, and the weather!
The I-News is no exception:
Their comment section dissects the article pretty well, so let’s go straight to checking the sales in our own market.
The MLS and the tax rolls limit how many records you can search, so here is a comparison of NSDCC closed sales for the first two months of 2014:
Sales of SFRs, condos, and PUDs on tax rolls: 629
Detached and attached-home sales in MLS: 576
Percentage of sales in the MLS: 92%
You would think that sellers would insist on exposing their home to the maximum number of buyers. But there are always going to be non-MLS sales that occur for various reasons, including new homes, for-sale-by-owners, homes sold to occupying tenants and/or family members, plus investors and flippers.
Off-market sales create a sexy headline, but around here the vast majority of sellers want open-market exposure, via the MLS.
Though the agent said he would pursue it, I never heard from the FBI again.
Hat tip to daytrip for sending in this article from the nytimes.com:
“The I.G. report confirmed what’s been clear for quite a while — that the D.O.J. has never taken mortgage fraud seriously,” Professor Levitin said. “There is going to be no comeuppance for crimes committed during the financial crisis. This sets a really bad precedent for future crises because we’re seeing that there is going to be no deterrent effect of criminal law.”
“The report fits a pattern that is scary for a democracy, that there really are two levels of justice in this country, one for the people with power and money and one for everyone else. And that eats at the heart of what I think makes this country great.”
The focus here is on our local market, with an occasional look at overall numbers. Here’s a discussion on why real estate is poised for a good year:
Can you feel it? The frenzy, creeping in on you?
Those watching closely may have noticed how the market has ’picked up’ over the last week or two.
We’ve had more buyers than sellers for a while now, so that alone doesn’t constitute a frenzy. In a low-inventory environment, you should have multiple offers on every quality property.
It’s the velocity.
Here are signs of frenzy-building:
1. It’s been hot. A year ago, the frenzy was just becoming obvious – but at this point, the market has been hot for the 18 months.
Both buyers and sellers are expecting a frenzy now.
All three indicators from last month are pointing to more frenzy.
2. How fast listings go pending. With listing agents riding high on their horse, you typically see them play around for 7-10 days before a new listing gets marked pending. It seems like more listings are going pending faster – and it’s about the same as last year (though this year’s haven’t all closed):
|NSDCC 2/22 to 3/7|
3. The percentage-paid-over-list-price. It’s been standard to see homes sell for 5% to 10% over list price, but it can get crazier.
This was a fascinating – though extreme – example. A great-looking house with fantastic view, but it is right on La Costa Ave. and located in an area with terrible soil quality:
From the remarks: This property is for cash buyer, builder, or investor. Home has compaction and soil issues. Only shown to qualified buyers.
The soils problem must be serious, given their initial list price of $500,000. Yet it sold for $685,000 cash, or 37% over list price and closed in ten days.
It must have been worth it to someone, and probably worth close to that for many, but it is the percentage that gets me. With the problems, wouldn’t you try to buy it for 10% or 20% over list?
4. It’s March. The wait-and-see buyers haven’t had any indications of inventory flooding the street – in fact, we’ve had fewer new listings this year than last (between Jan. 1 and March 5th):
Buyers are getting antsy – for them, there aren’t any signs of relief.
It is a great time to sell – contact Jim the Realtor to get started today!
(858) 997-3801 cell or firstname.lastname@example.org.
Rich Toscano does a nice job dissecting the San Diego markets, and explaining the differences. An excerpt, plus one of five graphs from the VOSD:
Cheaper homes have done a lot better in the rebound, but they also suffered far worse during the crash. Here’s what happens when we start the graph at the bubble peak:
Read full article here, and donate if you can!
From the NAHB:
Preliminary data provided to NAHB by the Census Bureau on the characteristics of homes started in 2013 show the trend toward larger homes continued unabated last year, as did the share of new homes with 4+ bedrooms, 3+ full baths, 2-stories, or 3-car garages.
The average size of new homes started in 2013 was 2,679 square feet, about 150 square feet larger than in 2012 and the fourth consecutive annual increase since bottoming out at 2,362 square feet in 2009.
New homes started in 2013 were also more likely to have additional features: nearly half, 48%, had 4 or more bedrooms; 35% had 3 or more full bathrooms; 22% had a garage for at least 3 cars; and 60% were 2-stories.
The share of new homes started with these features has been increasing consistently for 3 or 4 years, and the most obvious question is “why?” Why are homes getting this BIG?
To get an answer, just take a look at WHO is buying new homes?
In an effort to simplify the nation’s unwieldy tax code, Rep. Dave Camp (R-Mich.) is socking it to homeowners.
His proposal as chairman of the House Ways & Means Committee, The Tax Reform Act of 2014, hits first-time home buyers, jumbo mortgage seekers, homeowners who have ratcheted up big gains in their primary residence, and even homeowners who are aiming to green their homes by making them more energy efficient. Of course, the proposals aren’t law – yet— but here’s where his plan would hit home. The context is streamlined individual income tax rates and an outsized standard deduction. But if you’re a homebody, you’re likely going to be paying more in taxes.
Drastic limit to mortgage interest deduction. Today you can deduct mortgage interest on up to $1.1 million in debt ($1 million in acquisition indebtedness and $100,000 in home equity debt) on a principal and second residence, but under Camp’s tax reform proposal that is reined in big time.
The maximum amount of indebtedness on which you could take the mortgage interest deduction would be $875,000 in 2015, $750,000 in 2016, $625,000 in 2017 and $500,000 in 2018 and later. Interest paid on home equity indebtedness would not be deductible after 2014. Special rules apply in the case of refinancing as long as you aren’t taking out a bigger mortgage.
Tightening of exclusion of gain from sale of principal residence. Camp’s proposal tightens the rules for excluding gain from the sale of your home. Currently you can exclude $250,000 ($500,000 for a couple) of gain if you’ve owned and used the residence as your principal residence for at least two of the five years before you sell.
The proposal changes the rules so that it only applies if you’ve used the residence as your principal residence for at least five of the eight years prior to the sale. It also limits the exclusion so it only applies once during any 5-year-period (up from 2 years). And it phases out the exclusion by one dollar for every dollar a taxpayer’s adjusted gross income exceeds $250,000 ($500,000 for a couple).
Read full article here:
There is an old-school habit in the home-selling business to give the seller a few days after the close of escrow to vacate. Back in the day it would accomodate the cashing of checks, and closing escrows upstream – but with today’s standard of wiring funds and concurrent closings, the extra time isn’t always needed.
But some listing agents still insist on 3-5 days of occupancy for their sellers after closing – many times without any written agreement. Usually it all goes fine, and they move out as planned – but I hate the potential liability for principals and agents alike.
Recently we had an example of what can happen when a seller doesn’t move.
An agent who works for me had a buyer who was getting their loan from an out-of-state mortgage lender (not recommended). There was a delay, and all parties agreed to a two-week extension.
As the two weeks was coming to an end, it became obvious that closing in time would be tight, and the seller was asked to sign another extension fot an extra week.
He goes ballistic, and tells his agent to cancel the transaction, and put the house back at the market – at a higher price! He thinks that, because the market is hot, he must have under-sold the property, and wants an additional $50,000.
The C.A.R. purchase contract says a seller must give a buyer a ‘Notice to Close Escrow’ that includes a time frame within which the buyer must close, or seller can cancel the deal.
He gave us one day to close escrow.
By this time, I am involved as broker/owner – all Klinge Realty agents know that I want to help determine our fate at the first whiff of a lawsuit.
I drive by the house and see that it is still occupied. If we can close in a day, we still have a problem. Miracles happen, loan docs get signed, and the lender goes to fund the loan the next day.
But the seller sends a letter to escrow demanding to stop the closing. Even though we complied with his wishes, he still wants more money.
Everyone consults lawyers, and we give him a ‘Notice to Close Escrow’ and allow three business days.
His lawyer convinces him that he has to close this deal, but there is no movement at the house. We are forced make a decision – either close with him still in the house, or cancel.
At this point, I haven’t met or talked to the seller – I’m discussing this with the manager of the other brokerage. He tells me that they had to throw in their whole commission to try and make this guy happy – and he still isn’t. But the message was clear – I’m on my own.
I do my best Jim Rockford impression and stake out the house.
When the seller comes back, I introduce myself and we discuss his troubles – he has work obligations. etc. The C.A.R. form used for these situations is the SIP, seller-in-possession, and I am very familiar with it because I insist it be used on any of these possessions-after-closings.
The form calls for a rent and security-deposit amounts, but no provision for what happens if the seller doesn’t move – and without a specific agreement, this guy may never move.
We agree to give him five days free rent, and no deposit. But I include a clause for holdover rent – if on Day Six the seller is still occupying, the rent is $500 per day.
Originally he objected, and suggested $200 per day. But the holdover rent needs to include a heavy penalty for not moving to ensure compliance – and it doesn’t cost him a thing, if he moves out as agreed.
I stick to my guns, and he agreed. He moved out on Day Five without fanfare, and buyers moved in.
But you have to add the holdover rent clause!