Hat tip to HB John for alerting us to the story on Ben’s Blog about the Chinese investors in America buying up U.S. real estate:
It is just one story, but it talks about Chinese buying U.S. REITs, and also sending their kids here, who then marry an American – making it easier to buy U.S. real estate. Worth a read.
Some depth to our story – even when making all-cash offers, it’s not easy:
Prices of U.S. single-family homes rose for the second consecutive month in June, adding to evidence that the three-year housing slump is easing, Standard & Poor’s reported on Tuesday.
The S&P/Case-Shiller composite indexes of 10 and 20 metropolitan areas both rose 1.4 percent in June from May, almost three times the 0.5 percent increases of the month before. May’s increases were the first in nearly three years.
S&P also said its U.S. National Home Price Index recorded a 14.9 percent decline for the second quarter, compared with a 19.1 percent year-over-year drop in the first quarter.
Compared with the first quarter, though, prices rose by 2.9 percent, marking the first such increase in three years.
Don’t get too excited, San Diego’s June number was 146.09, a measly 0.67% increase from May’s 145.12 – we’re all the way back to March’s number!
Take it all with a grain of salt, with emphasis on the local numbers. Like these from Altos Research:
Sellers gravitate towards the good news only – expect that their confidence will be artificially inflated, like a lot of other things.
Places like Oceanside may be hot with FHA/VA buyers, causing some wild blog stories, but looking at these graphs, there doesn’t appear to be much pricing pressure in Carlsbad (or other similar areas). The shorter-term will have some spikes, but the 90-day is the trend.
We might see a flurry or two, here and there, but it would take a consistent string of months’ or years’ worth of improvement before many will be impressed.
People with bigger down payments are choosier, which keeps a lid on pricing.
In April, 2009, the ABC News Nightline show followed as we looked at buying some fixers in Oceanside (links are in the right column under REAL ESTATE VIDEOS). Here is a follow-up:
Thanks to IW for sending along this link to Barry’s coverage of NAR statistics:
I don’t give a hoot about NAR statistics either, because all that matters is your local market.
Let’s look at the Carlsbad-to-Carmel Valley Detached market stats for July:
|Year||# of Sales||Avg. $/sf|
Tread very carefully – sales are the leading indicator.
More foreclosures in the higher-end market:
Thats right, folks..
Dont touch that dial
Well, I am the slime from your video
Oozin along on your livinroom floor
I am the slime from your video
Cant stop the slime, people, lookit me go
From the WP Writers Group via the U-T:
Here’s a quick overview: Though Congress technically is on its summer break, most members of the Senate and House use part of the August recess to meet with and listen to constituents back in their home districts.
This year, the two biggest housing trade groups — the 1.2 million-member National Association of Realtors and the National Association of Home Builders — are spending the month mounting unusually intense grass-roots lobbying campaigns to make the case for extending the credit, and maybe even expanding it.
On a national basis, according to economists at the National Association of Realtors, anywhere from 300,000 to 350,000 additional sales of houses will be stimulated this year by the credit. Each home sale generates approximately $63,000 in downstream “ripple effects” elsewhere in the economy, they say — sales of furnishings, appliances, lawn mowers, landscaping, renovation materials, plus moving expenses.
If you accept the numbers — and some analysts consider them a stretch — this means the housing credit provides a powerful, immediate stimulus bang for the buck. Failure to extend what may be one of the most effective pieces of the Obama administration’s 2009 stimulus legislation would cost jobs, economic growth and tax revenues, the housing groups argue.
There are some early signs Congress may be getting the message. Bills already are pending in both houses to extend the credit for another year.
Senate Majority Leader Harry M. Reid, D-Nev., whose state has been among the worst hit by the housing bust, reportedly now favors an extension of the credit. He was quoted to that effect by the Las Vegas Sun on Aug. 5, adding, “It’s something we can get done.”
Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee and in a tight race for re-election next year, is co-sponsoring a bill with Georgia Republican Johnny Isakson that would raise the credit amount to a maximum of $15,000. Meanwhile, both the Realtors and the builders are pushing not only for extension of the credit, but for broadening it to cover all home purchases in 2010.
In the end, however, given the political economics of the housing credit, the odds favor some sort of extension, probably later rather than sooner. Don’t bank on a bigger credit, however, or broadening the concept to cover all purchasers next year.
From today’s U-T on the underwatered:
In the meantime, many owners refinanced when interest rates hit historic lows earlier this year, and others with problem loans will increasingly work out solutions with their lenders, said David Cabot, who oversees Prudential California Realty offices throughout Southern California.
“Most people, if they still have a job — and 88 percent do — and can afford to make the payment .?.?. aren’t going to move” just because their home has lost value, he said.
Cabot added that if they do, countless investors are standing in the wings to pick up the heavily discounted properties.
“We have lists and lists of people that, if we could give them 100 short sales, they would buy them all with cash,” he said.
David and I go back to the 1980s when we worked in the same office, and we’re on friendly terms. But even if I didn’t know him, I’d back him up on his quote in bold, at least to his point of there being a lot of big money in play.
We’ve seen it all year that today’s buyers are using all-cash, or big down payments to fund their purchases. Here is a summary of the down payment amounts used by the 73 buyers who bought a house in Carlsbad or Carmel Valley since August 1, 2009:
|DP Amt.||# of Buyers|
Almost half of the buyers used a down payment of 30% or more, which I think most people would consider a well-capitalized purchase, and hopefully a sign of people planning to stay a while. If it continues, it would bring real stability to the market, once we get cleared out.
The all-cash buyers bought houses for $245,000, $525,000, $1.4, $1.75, and $2.3. There were nine FHA loans.
We’ve been hearing about how the real estate market has hit bottom from a variety of sources, this today from the White House:
WASHINGTON (Reuters) – The U.S. housing market appears to be bottoming out, White House spokesman Robert Gibbs said on Friday after an industry survey showed sales of previously owned U.S. homes jumped 7.2 percent in July.
The White House, meaning your president, is telling you that the market “appears to be bottoming out”. All cheerleaders and media outlets are pushing the positive spin – could it work? Will it work?
Most potential homebuyers who are actively looking at houses aren’t going to read any further – because they are already willing to buy if they can just find the right house.
But will improving headlines cause them pay more for it?
I don’t think so.
The positive spin might get buyers (and definitely sellers) more excited, and bring in from the sidelines some new potential buyers, but I think the spin is a turnoff.
People don’t trust the spin-masters, and they tell themselves that they aren’t going to get fooled. Expect that the majority of potential buyers are going to stand pat, and be more willing to wait, rather than pay too much.
Keep your eye on the better statistics, and ignore anything you read in the mainstream media.
Compare the number of detached listings, and vs. those in some stage of foreclosure:
|Town or Area||Zip Code||ACT||PEND||SOLD July 08/09||F/C List|
We do need to make up some new measuring sticks though.
More foreclosures than actives = trouble?
Foreclosures more than 5x last month’s sales?
Foreclosures in triple digits?
Let’s use 92010 as a guide, because it’s probably been the healthiest of the bunch.
If you have more pendings than actives, Y-O-Y sales are higher, and your foreclosures are about 3x actives, your favorite zip is doing OK.
My baseball coach used to say, don’t believe anything you hear, and only half of what you see!