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Category Archive: ‘Thinking of Buying?’

Did She Say Lower Prices?

sean

From PropertyRadar (ForeclosureRadar):

“Earlier this year we accurately predicted that 2014 would be a year of lower sales volume and flat prices because home prices rose too far too fast,” said Madeline Schnapp, Director of Economic Research for PropertyRadar.

“That’s exactly what’s happened and hopefully by next spring, prices will be more in line with what prospective homebuyers can afford.”

Read full report here:

https://www.propertyradar.com/reports/real-property-report-california-october-2014

Posted by on Nov 19, 2014 in Market Conditions, Thinking of Buying?, Thinking of Selling? | 3 comments

Housing Costs and the Future

In the last video, the presenter speculated that prices could go up 700% by year 2027, which would make homeownership all but impossible for regular folks.

Prices seem likely to rise over the long-term – what could keep a throttle on their gains?  Building more homes could slow down prices, and this week L.A. Mayor Eric Garcetti suggested a host of ideas and changes in order to achieve 100,000 new housing units by 2021:

http://www.latimes.com/business/realestate/la-fi-affordable-housing-20141107-story.html

The two best ideas?

1. The permitting of more granny flats is a viable solution for homeowners with larger lots.  An excerpt:

Dana Cuff, director of cityLAB at UCLA’s School of the Arts and Architecture, has spent years studying so-called backyard homes — or “granny flats” — that can house a renter, an in-law or a still-at-home 20-something. They exist all over town, often illegally, and regulations make them hard to build in many neighborhoods. Permitting more could go a long way toward helping L.A.’s housing shortage, Cuff said.

“There’s a half-million single family-houses in the city of Los Angeles,” she said. “If 10% of those added a granny flat, we’d be halfway [to Garcetti's goal]. And it’s free land.”

2. The lack of available land located within driving range of San Diego is a real problem.  If there was a concerted effort by governments to make it easier to change zoning from commercial/industrial to residential, they could unlock additional parcels for development – like this one:

http://www.cbs8.com/story/26788497/upscale-residential-development-proposed-in-place-of-wal-mart-in-scripps-ranch

It’s likely that any new developments would be higher density, which would provide an interesting choice for future homebuyers. Are you willing to live like sardines to get a new or newer home, or will older homes on bigger lots be preferred – and retain their value better?

Rob Dawg said in the beginning, “Forget all previous assumptions about real estate”.  With the cost of living on the rise, will the newer, smaller, and less expensive homes topple the traditional SFR as the preferred choice of tomorrow’s homebuyer?

Posted by on Nov 9, 2014 in Market Conditions, The Future, Thesis, Thinking of Buying?, Thinking of Selling? | 2 comments

Lowball Season

This is probably the least-likely time to get a lowball offer accepted in the history of the world, due to the lack of pressure on any seller – but for the next 2-3 weeks you might have a sliver of a chance.  Once we get into December, the next selling season will be within sight, so sellers will pack it in – either literally or mentally – and be reluctant to make any deal.  Then they will wait until end of summer before thinking their price might be wrong…again.

I haven’t had any luck lately – so this is just theory.  But these are the things I’m looking for on behalf of buyers looking to make a deal in November:

1.  Vacant houses that have been on the market 2+ months.  They need to be eating a mortgage payment to really be motivated, but anyone sitting on an empty house in November must be avoiding the thought of renting it.

2.  Homes that have been on the market for months - and have a mortgage balance around 70% to 80% of list price.  They don’t want to lower their price because they hope to get a decent chunk out of it, but the payment could be eating them alive.  There is a very small minority of sellers in this category, because banks are so lenient these days.  But those who are barely making their payments to keep their good credit might appreciate any offer at this point.

3.  Homes listed with great agents.  They know the score, and if they just had an offer they might be able to convince a motivated seller to make a deal.

4.  Fixers are prime candidates.  The sellers apparently don’t want to make improvements (or can’t), and you have ample evidence why they should consider a lower offer.

At least nine out of ten sellers and their listing agents will think you are crazy, but it’s worth a try.  To save time, I get the agent on the phone and feel them out first, and listen for any hesitation before they scoff at me.

Sellers shouldn’t take it personal – if you are comfortable just ignore any lowball offers and keep waiting for the market to head your way.  But for those who really want and need to sell, this is your chance to do so – and at least you won’t have to worry about what the market might do in 2015.

P.S. If this is a house you love, don’t risk a lowball offer.  If the sellers get offended, they will sell the house to anyone but you!

Posted by on Nov 1, 2014 in Jim's Take on the Market, Thinking of Buying? | 2 comments

Who’s Selling?

Yesterday we wondered if there was a possible threat of a baby-boomer liquidation sale in the coming years, and we had a load of comments – thanks for participating!.

Can we get a feel for what’s happening now?  Here’s a check of the 67 NSDCC houses that have sold between $750,000 and $1,000,000 in the last 30 days.

These are the years when the sellers purchased:

Years Purchased
Number of Sellers
1965-1980
8
1981-1990
4
1991-2000
12
2001-2007
23
2008+
20

Only a couple sold for less than the price they paid, and there were 3 short sales too (no REO listings).  The newer homes in Carmel Valley bolstered the more-recent stats too.

About 36% of the sellers bought their home prior to 2001, and are probably baby-boomers (or older). Most will at least be empty-nesters by now, and could be candidates for the ‘downsize and travel’ crowd. If their numbers increased, they would most likely be offering older fixers upon which flippers can feast, and eventually be sold to those looking for a substitute for new homes, which are in short supply.

Posted by on Oct 24, 2014 in Jim's Take on the Market, Market Conditions, North County Coastal, Thinking of Buying?, Thinking of Selling? | 16 comments

New Homes = Larger Premium

The higher-priced new homes help to accelerate the values of existing homes.  All sellers have to do is undercut the price of new tracts nearby - if there are any! HT to daytrip for sending this in from the latimes.com:

http://www.latimes.com/business/la-fi-new-home-prices-20141014-story.html#page=1

Southland new and resale house prices

Builders have piled in to pricey ZIP Codes — bidding up land costs there in the process — and polished their projects to a high gloss to woo wealthy buyers with cash or good credit.

“Builders have been focusing very heavily on the move-up market as opposed to entry level,” said Bradley Hunter, chief economist at housing research firm MetroStudy. “There’s a simple reason: That’s where the profits are.”

Meanwhile, projects aimed at the middle of the market remain scarce, and overall home building is off about 60% from a decade ago. The shortage of new lower-priced product is one factor making Southern California among the toughest housing markets in the country for middle-income families.

New homes have almost always sold at a premium. They come with bells and whistles — including energy-efficient appliances and often a warranty — that a decades-old house can’t match. But that premium has hit new highs this year.

In January, the gap between median-priced new and resale homes in Southern California peaked at $151,000, a 41% premium for a new house. And although it has eased a bit since, it has been larger than $100,000 in nine of the last 10 months, compared with an average of $38,000 over the last 25 years, according to CoreLogic’s figures. The same trend is playing out nationally, though in less dramatic fashion.

Higher-end home builders see this dynamic too, and they’re gobbling up what land is left. Luxury builder Toll Bros. acquired 3,200 lots in Southern California this year when it bought Shapell Homes, part of its plan to expand from its East Coast base into higher-growth markets. Now Toll is working on five new communities, from Santa Clarita to Carlsbad, in prime spots with good schools. It will start selling homes next year, said Jim Boyd, head of Toll’s California operations, and expects to do well.

“I think the market is pretty strong,” he said.

Read full article here:

http://www.latimes.com/business/la-fi-new-home-prices-20141014-story.html#page=1

Posted by on Oct 13, 2014 in Builders, Thinking of Buying? | 1 comment

Be Sharper on Price

Wendy Lari in her new home. After buying the home in Mission Viejo, husband Thomas Lari wanted to rent out the old family home of the past 12 years. But Wendy wanted to sell the old home so the family would have enough cash to fix up the new one. They reached a compromise: Give me 60 days to get it in escrow, said Wendy Lari. If it doesn't sell by then, we'll rent it out. The home went up on the market in late April for $850,000. As time began to run out, Wendy Lari decided she had to drop the price.

Nobody is dumping on price – just be reasonable. From the ocregister.com

http://www.ocregister.com/articles/price-637201-home-percent.html

Thomas and Wendy Lari made a pact.

Thomas wanted to rent out their old home. Wendy wanted to sell it so they’d have money to fix up their new one.  So he gave her two months to sell it. If she failed, they would become landlords.

In the end, she met the deadline – just barely. But it took two price chops totaling $15,000.

“I was a little bit disappointed,” Wendy Lari said of the final price of more than $800,000. “We knew that (our original price) wasn’t overly realistic, but we thought we’d give it a shot.”

Reality is setting in for home sellers across Orange County.

Rather than holding out for the big price gains seen a year ago, most sellers are cutting their prices to get their homes sold.

The average price cut for homes under $1 million was $15,500 this summer, according to figures from Brea housing consultant Pat Veling of Real Data Strategies. A year earlier, the typical price cut was under $3,000.

Put another way, buyers are paying 97 percent of sellers’ original asking prices this year, vs. 99 percent – almost full price – in the summer of 2013.

“It seems like 80 percent to 90 percent of the sales are reductions,” said Bart Smith, an agent with Evergreen Realty in Orange. “(Sellers are) overpricing them. They’re looking at listings and not at closed sales.”

Wendy Lari thought she was in the ballpark when she priced her home at $850,000 last April. A similar home in the area had sold for $844,000 two months earlier.

Time was running out to find a buyer when she got an offer for $828,000. That deal fell through.

But just as it did, a real estate agent made an offer equivalent to $835,000. The agent wanted to pay $814,500, but would forego her $20,000 commission. That deal closed.

“I was a little bit bummed, but it wasn’t horrible,” Wendy Lari said. “If you go in thinking that you’re going to get 3 percent to 4 percent more than the last sale, that’s not going to happen.”

She listed April 29, 2014 for $850,000, and opened escrow on July 2nd for $814,500 with no commission to buyer’s agent?  She didn’t give it away! (she had paid $460,000 in 2002).  P.S. the realtor who bought her home has it for rent on Zillow, asking $3,500/month.

Read full article here:

http://www.ocregister.com/articles/price-637201-home-percent.html

http://www.zillow.com/homedetails/27822-Trellis-Way-Laguna-Niguel-CA-92677/25552229_zpid/

Posted by on Oct 6, 2014 in Market Conditions, Thinking of Buying?, Thinking of Selling? | 4 comments

Truthful Home Reviews

The real estate industry favors sellers, and buyers are under-represented.  Here at the blog I’ve done my best to help educate buyers, and give you a fighting chance.  Here’s someone who wants to take it further:

http://blog.launch.co/blog/rfp-request-for-prototype-brutal-real-estate-reviews.html

An excerpt:

No one is fighting for the people buying houses. Everyone in the business is driven by one thing and one thing only: closing sales.

If houses get sold, brokers on both sides get paid and the world keeps spinning. Ads flow to listing sites, inspectors get paid, mortgage brokers get commissions and home improvements continue.

No one is incentivized to STOP you from buying a home.

No one is trying to PROTECT the buyer from making a bad decision (I know, brokers are supposed to … but they don’t get paid unless you buy!).

This becomes super apparent when you look at the descriptions of homes.

Everything is “charming” and a “compound” and “gorgeous” in the descriptions, but when you go see them they are “depressing” and “dark” and “small”!

So here’s a super simple idea: reviews that tell you, in brutally honest fashion, if you should move into this house or not.

If it’s a fair price.

If it’s a horrible block, if it has a bad landlord, or if the methadone clinic is hopping at 3pm when your daughter gets home from school!

Read full article here:

http://blog.launch.co/blog/rfp-request-for-prototype-brutal-real-estate-reviews.html

Posted by on Sep 3, 2014 in Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 11 comments