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Most recent articles

Incessant Bubble Talk

bubble talkWe keep seeing more bubble-bursting articles being published – and the perception may be more important than the reality if consumers are addicted to soundbites and read no further.

This article promises proof that the bubble is about to burst:

http://www.housingwire.com/blogs/1-rewired/post/29669-heres-proof-the-housing-bubble-is-about-to-burst

But there is no proof in the article, just more speculation from an ivory-tower type who rattles off the same tired speculations, including lagging incomes, unaffordability, FHA, blah, blah, blah.

Regurgitating the same old beliefs ignores the reality – the market is driven by the affluent. Because listing agents give preference to cash buyers, the rich folks have a distinct advantage, and they have been gobbling up investment properties and most of the quality homes in which to live.

I am really sick of this old adage – from the article:

Without housing affordability there cannot be a rise in first-time buyer participation.

Without the entrance of first-time buyers, those wishing (or hoping) to move up to a larger home or relocate into other neighborhoods will not be able to so, at least not readily. This can produce a cascade effect on housing prices, starting to drive them downward to reflect a decrease in demand.

There are many first-timers buying homes – they pay cash, or have a big down payment so they can compete.  Besides, first-timers aren’t the only buyers interested in the cheaper stock – BlackRock and other investors are happy to buy up all of the cheaper homes so those sellers can move up.

Here’s another from the same article:

If housing prices begin to fall, wouldn’t one expect the investors to at least consider dumping homes onto the market to minimize potential losses? If they did so, the aforementioned cascade-effect would drive prices down even further.

This is the new normal, where we have learned that unless sellers can get top dollar, they aren’t interested in selling.  Investors have already gained 10% to 30% appreciation, if they lost some or all of that, they wouldn’t dump at any cost – they’d wait until next time.

The new lesson has been learned right before our eyes – don’t dump properties; instead let’s resort to any other means necessary, including bending the foreclosure and accounting rules.  Ben Bernanke said as much here:

http://www.bubbleinfo.com/2014/03/03/bernanke-stopped-the-flood/

The general public needs to become wise to these gyrations.  The fix is in, and the new normal is unlike anything we have ever seen or imagined.  Wall Street will conspire with BigGov to ensure that there is a floor – and you might as well get your share while you can.

The media insists on scary headlines, rather than exploring the truth - and they wouldn’t mind if we did pop another bubble, whether we need to or not.

Don’t believe anything you read, and only half of what you see!

Posted by on Apr 15, 2014 in Jim's Take on the Market, Market Buzz | 19 comments

Escalation Clause

escalationIn the spirit of fair play, this isn’t right.  But in a market where buyers get tired of losing, you can’t blame them for trying alternatives.  Agents should have a standard policy/strategy on how to handle the escalation clause – get good help!

From the Boston Globe:

http://www.bostonglobe.com/business/2014/04/13/buyers-turn-new-bidding-tactic-hot-home-market/7fWqb00kcwY9Zaq0NgE3TK/story.html

Katrine and Stephen Campbell were up against stiff competition from 10 other bidders for the Reading home they wanted to buy. So the couple tried an aggressive strategy to give them an edge: Instead of making a specific offer, they promised to top whatever turned out to be the high bid by an additional $5,000.

The increasingly popular tactic, known as an escalation clause, worked. The Campbells bought the four-bedroom house late last year for $597,000 — or $18,000 above the original list price, including the extra $5,000.

“We must have looked at 50 places before making a bid on a house,” said Katrine Campbell. “We made only one offer — and we got it. The escalation clause gave us an edge.”

In a sign of how competitive the Boston-area housing market has become, the maneuver is becoming part of the area’s bidding war landscape, brokers and other real estate executives say. Some report there hasn’t been this much escalation clause activity since the last house-buying frenzy 10 years ago.

There are several kinds of escalation clauses, but all involve an agreement to top the high bid on a home by a set amount of money — often $5,000, and sometimes more.

Potential buyers who offer such arrangements usually insist on a brief amount of time, an hour or less, to follow through or to back out once a top bid has been established.

Skeptics say the clauses are potentially risky and a needless ploy that could backfire by alienating some sellers. It can also lead to disputes about whether buyers or sellers have complied with escalation clause terms, they say.

“It’s a tactic that’s not going to appeal to everyone,” said Peter Ruffini, a regional vice president at Jack Conway Realty in Norwell and president of the Massachusetts Association of Realtors.

“It sounds a little risky to me. It sounds sort of like issuing a blank check to sellers.”

Read More

Posted by on Apr 15, 2014 in Ethics, Frenzy, Market Buzz, Market Conditions | 4 comments

Blood Moon

Turn your gaze to the stars tonight for an eerie and spectacular view of the “blood moon.” At 12:53 a.m. ET, the Earth will begin to position itself between the sun and the moon for the first of a series of four total eclipses to conclude in September 2015.

The phenomenon is known as a tetrad, in which the moon is completely covered by the earth’s umbral shadow for four eclipses in a row, as opposed to only partial eclipses that fall in the outer penumbra. But rather than succumbing to complete darkness, the moon will glow red as it receives the refracted light that spills over the Earth’s circumference.

The series is a rare occurrence in history, with large spans of time, such as the 300 years between 1600 and 1900, witnessing none. But the 21st century will be more promising, according to Fred Espenak, who works for NASA’s Goddard Space Flight Center and specializes in eclipse predictions.

“Frequency sort of goes through 585-year cycles,” the astrophysicist explains. “So you go through centuries where you don’t have any, and centuries where you have a number of them.”

The next tetrad will begin in 2032.

http://abcnews.go.com/Technology/miss-rare-blood-moon-lunar-eclipse-tonight/story?id=23316736

Here’s how it looks from our house, taken by Natalie between homeworks!

2014-04-15 01.29.16

2014-04-15 01.34.44

1:10am, with the eclipse starting to wind down:

1:30am

1:30am.  The blue star is Spica, the brightest star in the constellation Virgo, and the 15th brightest star in the night sky. It is a blue giant and a variable star of the Beta Cephei type located 260 light years from Earth.

2014-04-15 02.44.09

Reader JQ sent this in, taken from his house:

blood moon

Posted by on Apr 15, 2014 in Local Flavor | 0 comments

H-Tracker Back on Track

The Department of Numbers, aka Housing Tracker, did correct their local San Diego inventory count this week.

http://www.deptofnumbers.com/asking-prices/california/san-diego/

Previously they were always higher than the MLS, and we thought it was due to them adding FSBOs, new-builds, or whatever else is for sale but not on the MLS.

But they are tracking the MLS very closely now – today’s MLS count is 6,697:

dept o numbers

The asking-price trend looks about right too – sellers’ optimism is increasing - but their corrected asking-price numbers today (all much higher) are going to skew the trend lines for the next couple of weeks.  They were a little behind previously:

dept o numbers asking prices

Get good help!

Posted by on Apr 14, 2014 in Sales and Price Check | 1 comment

Inventory Watch – Prime Time

We are heading into the best part of the selling season, and once we get past tax day and Easter it should be full steam ahead for about two months. New listings have increased by about 20% in the last two weeks, and buyers have responded with additional pendings (scroll to bottom).

North SD County’s Coastal Region (La Jolla-to-Carlsbad)

The UNDER-$800,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
November 25
95
$376/sf
47
1,988sf
December 2
79
$371/sf
50
2,047sf
December 9
72
$383/sf
43
1,954sf
December 16
81
$378/sf
42
1,948sf
December 23
77
$374/sf
49
1,937sf
December 30
76
$373/sf
51
1,950sf
January 6
74
$370/sf
49
1,995sf
January 13
71
$381/sf
44
1,921sf
January 20
72
$384/sf
41
1,877sf
January 27
75
$399/sf
40
1,891sf
February 3
78
$409/sf
41
1,876sf
February 10
82
$395/sf
38
1,927sf
February 17
85
$387/sf
35
1,929sf
February 24
90
$383/sf
37
2,008sf
March 3
82
$397/sf
39
1,942sf
March 10
88
$377/sf
37
2,008sf
March 17
89
$366/sf
34
2,038sf
March 24
79
$369/sf
34
2,031sf
March 31
78
$367/sf
39
2,069sf
April 7
87
$373/sf
32
2,054sf
April 14
97
$380/sf
31
2,000sf

The $800,000 – $1,400,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
November 25
245
$448/sf
61
2,856sf
December 2
239
$448/sf
64
2,851sf
December 9
226
$461/sf
65
2,812sf
December 16
211
$464/sf
66
2,794sf
December 23
197
$453/sf
73
2,813sf
December 30
173
$450/sf
78
2,821sf
January 6
170
$470/sf
65
2,757sf
January 13
168
$463/sf
59
2,764sf
January 20
174
$444/sf
51
2,882sf
January 27
166
$435/sf
52
2,902sf
February 3
165
$441/sf
53
2,857sf
February 10
175
$443/sf
51
2,852sf
February 17
180
$447/sf
50
2,803sf
February 24
188
$438/sf
44
2,846sf
March 3
202
$421/sf
44
2,936sf
March 10
215
$431/sf
41
2,854sf
March 17
223
$421/sf
42
2,918sf
March 24
217
$419/sf
42
2,941sf
March 31
223
$425/sf
44
2,887sf
April 7
224
$428/sf
44
2,881sf
April 14
233
$429/sf
44
2,892sf

Read More

Posted by on Apr 14, 2014 in Inventory, Jim's Take on the Market | 0 comments