10 Films on Housing Crisis

This article features ten films that document the housing crisis and discrimination in America, with a bonus eleventh film that includes a certain part-time blogger:

https://heathersquire.com/2019/03/01/10-films-to-help-you-wrap-your-head-around-the-housing-crisis/amp/

Here is one of the ten:

Our film ‘Owned’ will debut publicly on June 4th. If you’d like to pre-order a viewing, click here:

https://itunes.apple.com/us/movie/owned-a-tale-of-two-americas/id1459949822

Yes, I resent being called an eccentric Orange County realtor – this is San Diego!

I-Buyer Example

Will the ibuyers succeed?

Sure, they offer convenience, but the reason it works is because it’s so vague – sellers will never know the money difference between selling to an ibuyer or an open-market sale. The trendy-hip, sell-with-a-click factor could lure sellers into giving up an extra 5% or so without ever realizing it.

(pay 3% more in ibuyer fees and then sell for less than open-market sale)

Hat tip to reader ‘just some guy’ for sending in the article:

https://www.nytimes.com/2019/05/07/business/economy/ibuying-real-estate.html

An excerpt:

When Dora Cagnetto decided to sell her townhouse in Phoenix this year, a real estate agent told her that she could get around $375,000 for it. Maybe $390,000. But she would have to replace the carpet and paint the walls. At 68 years old and recently retired, she thought it sounded like a lot of work.

One evening, after the carpet had been ripped up, Ms. Cagnetto saw an online ad for Zillow Offers. Zillow, better known for telling people what their homes are worth, would buy her home itself. She uploaded some photos and got back an offer: $382,000, minus a fee for Zillow. No repair work or open houses necessary. And Zillow paid cash.

Ms. Cagnetto estimated she effectively paid $10,000 to $15,000 for the privilege of turning over to Zillow the job of replacing the carpet and the bathroom countertops and doing other light repair work.

“My son, he’s like, ‘Well, oh, I could have done that,’ and maybe he would have saved a little money,” Ms. Cagnetto said. “But to me it was like, I don’t want to do that. I don’t want to hire somebody to do that, I don’t want to put carpeting in, I don’t want to paint these walls.”

The Phoenix area has become a hub of the iBuying phenomenon. With its relatively new housing stock and miles of buff-colored subdivisions, the market is affordable, uniform in look and steadily growing.

Whether iBuying works outside markets like Phoenix and Las Vegas is an open question. The model has yet to break into the Northeast, where the housing stock is older, the weather drives up maintenance costs and there are fewer of the kind of cookie-cutter subdivisions that the industry’s algorithms assess best. Prices are higher, too, making mistakes costlier for the companies.

 

The Fight

We have random off-market sales and ibuyer-manipulated sales.

Are those legitimate comps? How will we know the true values?

The most beneficial system is to expose all properties to the open-market, and let every ready, willing, and able buyer take their shot – with proper representation helping them along the way.

I’m open to other agent compensations, but buyers deserve to get good help.

P.S. If you stuff six keys in a lockbox, don’t be surprised if it doesn’t open.

NSDCC Sales, Jan-Apr

The first third of 2019 has been better than expected. Sales are only 6% below the average for the last five years, and the median sales price hasn’t dropped much:

NSDCC Sales, January – April

Year
# of Sales
Median SP
Median DOM
# of Listings
2015
920
$1,130,000
25
1,811
2016
880
$1,124,500
24
1,978
2017
886
$1,200,000
20
1,782
2018
847
$1,316,000
17
1,702
2019
797
$1,300,000
25
1,760

A few more listings this year, but no flood, and limiting sales somewhat just because of the lack of choice. The tight supply keeps everything in check – price swings aren’t as obvious either.

Industry Titans in San Diego

Well I was probably wrong on Sunday about the Robert Reffkin appearance meaning something else. I didn’t realize that there was a big conference scheduled for today at the Loews Coronado Bay Resort.

It wasn’t a realtor conference; instead it was the industry titans getting together.

Some of the highlights posted on twitter:

Robert Reffkin, CEO of Compass:

“You need to be a platform or you’re going to compete against one.”

“Agents need brokers less and less.”

“Number one thing agents want is their brand to be central to their marketing.”

“Agents want simplicity & harmony; NOT hassle of disparate systems.”

“I don’t think you should be loyal to your manager. You should be loyal to your family, your passion…Agents loyalty to you will come from your ability to grow their business”

Rich Barton, CEO of Zillow:

“When you make transactions quicker and easier – people do them more.”

“I’m being disrupted by the VC funded, starry eyed innovators in the industry. We have to get from supplying the information to supplying the transaction.”

“We are moving from online real estate 1.0 to online real estate 2.0”

“My return is also about bringing a start up mentality to the company”

Gary Keller, Keller Williams:

“The future of real estate is going to be built on big data and AI”

“The most important trend happening in real estate right now is TECHNOLOGY”

“Agents have spent close to a billion dollars in technology outside KW.”

“The industry was hijacked”

“If agents want to get paid, they have to use KW tech stack.”

“It’s the revisiting of the idea of if I cant sell your home I’ll buy it.” (ibuyer)

“No competitive advantage to cobbled together systems.”

“Agent websites are going away. Broker website are going away”

James Dwiggins:

“Buyers and sellers don’t want to see a billboard for an agent in the yard”

And then you have Glenn Kelman from Redfin:

https://twitter.com/LauraMonroe/status/1125847624605552641

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

How much of the market will ibuyers be able to take?

“Less than a quarter”, Rich Barton

“5% – 15%”, Gary Keller

“It’s going to cause massive confusion” – Gary Keller

Is This It?

More data released today on pricing trends, and though San Diego didn’t make this chart, we’re probably in the normal range with Los Angeles because our Case-Shiller indicies have been similar (+1.8% vs +1.1% YoY in SD).  Interesting that they call San Francisco ‘undervalued’.

Both the HPI and the Case-Shiller Index were the February readings.  There is optimism that YoY pricing will pick up as the selling season rolls on, but they are predicting that prices will decline from March to April, which is unusual:

Looking ahead, after some initial moderation in early 2019, the CoreLogic HPI Forecast indicates home prices will begin to pick up and increase by 4.8% on a year-over-year basis from March 2019 to March 2020. On a month-over-month basis, home prices are expected to decrease by 0.3% from March 2019 to April 2019. The CoreLogic HPI Forecast is a projection of home prices calculated using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.

These guys don’t make their data public. Using the Case-Shiller Index instead, we see that the last time we had a drop between March and April was in 2009, at the bottom:

Zillow is predicting virtually-flat MoM results too.

Flat pricing during the prime selling season, and after we had six months of declines at the end of 2018?  Could this be where we top out, exactly ten years later?

If you’re thinking of selling, contact me today!

Link to Press Release

Before and After Remodel

A great comparison of before and after photos on this simple remodel:

Link to Article with photos

Sellers don’t want to spend the money or go to the hassle of remodeling unless they have assurance that it will be worth it.  With the market steering further away from fixers, a thorough remodel at least helps a seller being overly-penalized.  If buyers have to do the remodel themselves, they will add their pain and suffering to their expected repair bill, and want to deduct 150% to 200% of actual costs to compensate.

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