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More on August Sales

Dataquick released the August sales yesterday, and at first glance you might think we should be looking for lifeboats – this is the second month in a row that Dataquick has reported SD sales dropping more than 18%:

aug 14

But August, 2013 was probably the last month that buyers were able to lock in a mortgage rate in the 3s, before rates jumped at the end of June.

If you look at San Diego’s 2014 monthly sales, they look consistent and remarkably strong considering that prices have been going up every month.  Here are the MLS counts for all property types in the county:

Jan = 2,116

Feb = 2,271

Mar = 2,778

Apr = 3,321

May = 3,255

Jun = 3,182

Jul = 3,043

Aug = 2,806

If sales fall off the next few months, the blame will be on the holidays, and sellers will expect a vibrant selling season again next spring.

Posted by on Sep 12, 2014 in Sales and Price Check | 8 comments

Robot Real Estate


Here’s another company who intends to disrupt traditional real estate:

A few thoughts:

1. They have launched their transaction management business in San Diego.  But they’ve been having trouble with their website this week, and you have to register just to take a look.  With Zillow and others giving you free and anonymous access, consumers expect to roam around before committing their email address.  Specifically, buyers and sellers will want to see the homes-for-sale inventory.

2.  Timing is everything.  If they could have caught the early frenzy when there wasn’t as much scrutiny of pricing, consumers would have been more willing to take a chance on a new-fangled system.  People will still be curious, but pricing is the issue with all for-sale-by-owners.  They aren’t as motivated, and without any guidance, they will price high.  But buyers today don’t know if prices are going up or down, and they will want to be conservative about price – creating a significant gap from the start.  The chances of buyers and sellers coming together on price today - even with an agent – aren’t that good.

3.  Her first pitch is for participants to save the commission.  But only one party can save the commission, not both.  For sellers to save the commission, their price has to be so attractive that buyers pay the full price.  But buyers want to save the commission too, so they subtract 6% from the seller’s price just to get started.

4.  She dwells on the fact that her service is free to get around RESPA.  Two points: A) They are appealing to the money-savers, who aren’t going to tolerate paying higher fees for the other services provided.  B) When a customer has a problem or concern, and they can’t get help from her – who is going to make the deal?

5. She does concede that consumers may need an agent, and if so, they can find one and work out a pay structure on the side.  But she is missing the big game-changer that a new-fangled company could provide: realtor help if/when needed, at a reasonable cost.  Consumers don’t mind paying a reasonable fee to get adequate help, and if she just provided that one last step she might pull it off.  But instead, she chides the industry with her snarky comments like she is a ‘recovering realtor’, which alienates realtors everywhere.

6. She said that she was a realtor for ten years, but the BRE says that she obtained her California real estate salesperson’s license in 2007 – who knows, maybe she had a license in another state?  According to the San Diego MLS, she has sold 40 homes in her life, which means she hasn’t handled a big sales pipeline.  A company built on skimming fees needs to generate a large volume of sales, and they are trusting that a computer can do the job that they have never done themselves.

7. The ‘scorched-earth’ mentality means game-on.  Note that she wouldn’t name the title and escrow company yet – why?  Because that title and escrow company already has a book of business with traditional realtors, and they are probably concerned about alienating them.  The mortgage company, Prime Lending, is crazy to think that being associated with this effort won’t affect their normal realtor business, and likewise for whoever the other affiliates are.

Other attempts to disintermediate the real estate business have stumbled.  The old IPayOne was probably the best combination, because they did provide realtor help when needed but they skimped on quality and eventually closed down.  Redfin has been around for years now; has name recognition, a great website, discounted commissions, and 44 team members in SD - yet according to the MLS, they only have a 1.6% market share this year.  Why?

Because the consumers’ perception of realtors tells them to go with someone else 98.4% of the time.

The company that will bust the real estate cartel is the one that provides great-quality help for less cost.  But if that happened, traditional realtors could adjust their commissions accordingly, and then it’s a nothing-burger.

Posted by on Sep 11, 2014 in Commission War, Jim's Take on the Market, Listing Agent Practices, The Future | 5 comments

FHA Selling Loans in Default

From the – thanks daytrip:

An excerpt:

The protests over the FHA Distressed Asset Stabilization Program are the latest ripple in the wake of the foreclosure crisis, which has seen growing concern about the “Wall Street-ization” of the housing market.

A handful of large real estate trusts and investment firms have scooped up an estimated 200,000 bargain-rate houses in the last two years — in some cases elbowing first-time home buyers out of the way — and turned them into rental properties.

Some of these firms are now buying the loans, getting potential rental properties even before they are in foreclosure. Other buyers aim to profit by collecting mortgage payments or by selling the homes after they foreclose.

From the FHA’s perspective, the program is working, said Carol Galante, the agency’s commissioner.

“We really do consider the DASP to be quite successful in accomplishing what it set out to do,” she said. “That was to achieve significant cost savings for [the FHA] and at the same time offer borrowers a final opportunity to avoid foreclosure.”

Many of the loans that are being sold haven’t had payments on them in two or three years, Galante notes, and they’ve run out of options for being reworked by the FHA. But a new owner may be able to restructure them or reduce principle payments to help borrowers, she said.

Of the 38,000 loans that had been sold before July 2013, about half are still being worked out, according to data released last week by HUD. In about 5% of cases, borrowers are back on schedule making payments. Most of the rest ended either in a foreclosure or short sale or were flipped to another investor and are no longer being tracked.

The program has some successes, said Sarah Edelman, a policy analyst at the Center for American Progress.

About one-fifth of the loans are in “neighborhood stabilization” loan pools, which are geographically concentrated and carry higher workout requirements. Nearly 24% of them are being paid on time. And among the relatively small slice that were sold to nonprofit lenders that partner with community housing groups, the success rate tops 35%.

“This program shows a lot of potential,” Edelman said. “FHA really has an opportunity to build on its strengths.”

Posted by on Sep 10, 2014 in Mortgage News | 0 comments

Carlsbad’s Downtown Plan


From the

CARLSBAD — Carlsbad is set to host a series of events beginning Wednesday asking the public to share their ideas for future development in the Village and Barrio neighborhoods.

The city is preparing a new master plan for the downtown area that will set guidelines for development. Officials said they hope the master plan will connect business, entertainment and residential districts into one comprehensive area. The Village and Barrio are Carlsbad’s oldest neighborhoods, located along the coast between the Buena Vista Lagoon and Tamarack Avenue and come together along Oak Avenue.

Earlier this year, the city hired Dover, Kohl & Partners, a Florida-based firm, to draft the plan.

The firm will hold several events over the coming week, including two hands-on design sessions, walk-in technical meetings with the design team, an open house and a work-in-progress presentation.

“We’re reaching out very broadly and inviting everyone to come,” said Jason King, senior project director with the firm.

Read More

Posted by on Sep 10, 2014 in Local Flavor | 6 comments