It’s supposed to be a buyer’s market. Yet, for parents determined to buy in areas associated with top schools, those bargains may be harder to come by. When housing markets go south, “areas with exceptional schools tend to hold their value better than the market overall,” says Michael Sklarz, president of Collateral Analytics, a Honolulu-based firm that specializes in real estate data analysis.
Home prices have dropped in areas with good schools, but the declines are typically nowhere near the levels in their surrounding metro areas. In Irvine, Calif., a city that regularly gets national attention for its quality schools, average price per square foot has fallen 18% since its 2006 peak, but prices in the greater metro area surrounding Irvine fell 33%. In the brainy town of Andover, Mass., prices are down just 4%, versus more than 16% for the Boston metro division.
State assessments, independent ratings from websites like GreatSchools and Education.com and annual magazine rankings of America’s top high schools have not only made it easy for parents to factor school test scores and parent-teacher ratios into their buying decisions, they’ve cemented the relationship between home prices and school quality.
When Florida rolled out its statewide grading system in 1999, the real estate market took note. According to research by David Figlio, who is now a professor of education, social policy and economics at Northwestern University, an A-rated school in Gainesville added about $10,000 to the value of a home there versus a B school. Once a school is graded, the gap often grows. Strong ratings lead to better community support, which in turn leads to better schools. Today, the difference between an A school and B school might easily be $50,000 on a $300,000 house, he says.
That phenomenon isn’t lost on residents of Bellevue, Wash., a Seattle suburb that is home to some of the best schools in the state. “I don’t think there’s ever been a school levy on the ballot here that’s been turned down,” says broker Michael Orbino. Even residents who don’t have school-age children tend to stand behind the schools. It’s not altruism; it’s economics. All things being equal, homes in the Bellevue school district fetch as much as a 15% premium to those just outside of it, he says.
“But there’s more to it than that,” says Mr. Orbino. “Because the land is worth so much more in Bellevue, builders tend to build more expensive homes here,” making the school district that much more expensive to begin with. By Mr. Orbino’s estimate, the prices for single-family homes are down about 10% since the market peak. “But it isn’t a catch-all,” he says. Prices for ultra-luxury homes and condos, which generally aren’t influenced by schools, are down 30% to 40%, he says. So while prices per square foot in Bellevue have fallen slightly more than the Seattle market overall, prices for more family-friendly abodes haven’t necessarily seen the same declines.
Investopedia defines a Double Dip as: “When gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession.”
Let’s apply that to the real estate market.
Would 3-5 months of steady negative Y-O-Y numbers and heading for previous lows be considered double-dip-ish? If we hit previous lows, or lower, we’re double-dipping!
It’s all local, but here are the SD County detached numbers so you can see what it’ll take to double-dip. Sales tend to taper off around the holidays, so there is some seasonality to the numbers.
To be in double-dip territory, the SD County detached sales around year-end would be approaching those of late-2007 and early-2008, when they were under 1,000 per month for five out of six months (see below):
The pricing low spot was $209/sf, in March, 2009 (see below). If we get into the low-$200/sf range again, we’ll be in the dip-a-roo zone. If you want to apply it to your local area, compare to comps from the early-2009 era.
If both sales and pricing do the double-dip, we’ll call it full collapse.
Of the two, sales are the leading indicator.
This month’s sales look like they are going to be down substantially, there are only 1,308 detached closings so far with three business days to go (plus late-reporters). But those are averaging $262/sf, which is 25% higher than last year’s low.
There were 1,711 sales in June, 2007, and 1,748 in June, 2008 – the recent low spots for that month. With the federal tax-credit wrapping up, we should exceed those, but not by much.
SACRAMENTO, June 23, 2010 – The California Housing Finance Agency (CalHFA) announced today that the U.S. Treasury Department has approved the Agency’s plan to use nearly $700 million in federal funding to help California families struggling to pay their mortgages. The plan is focused on assisting moderate income families, as well as military personnel, stay in their homes when possible and leveraging additional contributions from lenders and mortgage servicers.
“California’s twin problems of unemployment and declining real estate values have created a homeownership crisis for many of today’s California families,” said Steven Spears, Executive Director of CalHFA. “We will use these funds to help as many families as possible remain in their homes and, in so doing, stabilize neighborhoods that have been severely impacted by foreclosures.
Mr. Spears said that the plan includes three mortgage assistance programs as well as a separate program that will provide transition assistance to borrowers who simply cannot afford to stay in their homes after exhausting all other options.
The following programs have a goal of dollar-for-dollar contributions from participating lenders:
Mortgage assistance for unemployed homeowners who are in imminent danger of defaulting on their home loans.
Funds to help borrowers become current on their delinquent mortgages, with lenders matching any federal assistance.
Principal reductions for eligible borrowers with negative equity to prevent avoidable foreclosures and promote sustainable homeownership.
A fourth program offers transition assistance for families who decide that they are unable to financially afford a home and need assistance transitioning to other housing. This program would be used in conjunction with a short sale or deed-in-lieu of foreclosure.
Sellers, and their listing agents, have been manufacturing the double-dip experience.
Because the local real estate market had the illusion of being “healthier”, they figured it was time to push their list price to see what the market would bear. A few got lucky and sold too, but the backlog has been building all year, especially on the higher-end.
Buyers are paying close attention though, and you can see it in the trends below on the housingtracker.net graphs. Look at the last year, the only part that might matter to buyers.
Let’s be specific too – in the upper tier the graph shows that the median asking price was going down dramatically the second half of 2009, which could indicate that prices were actually going down, or that the mix of active listings was adjusting. A review of the mix didn’t show any remarkable differences, so most of the decline must have been due to actual price reductions:
Look what’s happened since February, when sellers started getting (overly) confident again. The collusion of higher pricing didn’t impress the buyers, and inventory has increased 30% since January, meaning that the number of wrongly-priced homes is rising:
Once the sellers (and their listing agents) who want/need to sell, begin to run out of hope and start lowering their price, it’s going to look and feel like the double dip.
A second note: The inventory between May, 2009 and January, 2010 was practically flatlined, in a tight range of 11,500 to 12,013. With list pricing adjusting steadily downward in the upper tier, we had fairly stable market, with listings exiting the system at an almost identical pace as they were coming on. A good indicator to watch for the trend of pricing accuracy.
Hat tip to Rick for sending this along, from theWaPo:
TORONTO — When he bought a home last week with a 40 percent down payment, lawyer Kevin Fritz didn’t see the transaction as particularly relevant to the debate over global financial stability.
But consider: With U.S. home sales and prices still shaky, Fritz bought in a Canadian market that already has rebounded beyond pre-crisis levels. Without the key tax advantages available to U.S. home buyers, he amassed as much as possible for the down payment, and he expects to pay off his 15-year mortgage with the same bank that gave him the loan — a rarity in the United States, where finance companies typically resell mortgages.
“Canadians are debt-averse,” said Fritz, an attitude that’s part cultural and part shaped by banking practices and regulations designed to keep people out of homes unless they can clearly afford them. “People here don’t leverage.”
Canadian tax law is neutral: Interest on mortgage payments is not deductible, a fact that encourages home buyers to make larger down payments and avoid withdrawing equity. The banks themselves expect to hold on to the mortgages they make and collect the interest. Most loans allow interest rates to be reset after five years, and most also carry prepayment penalties — rare in the United States.
Shiller starts at 1:45 of this video, and lays out two historical examples to counter the 2% to 3% improvements predicted by most professional forecasters:
Let’s look at the most recent stats for North SD County Coastal detached homes, under $800,000:
The solds are those that closed between May 24 and June 23, and include the double-dippers, those that could have qualified for both the state and federal tax credit. The actives-to-pendings ratio was most noteworthy, given that those not closed by now could miss out on both tax credits, yet it’s still better than 2 to 1.
Over $800,000 (ineligible for federal tax credit)
The above-$800,000 market is where the insanity continues, though the demand has been stronger than last year, comparatively. The silly season should be wrapping up over the next couple of weeks, and those sellers who really want/need to sell, will have to get off their price if they want to close this year.
NEW YORK (CNNMoney.com) — More than 1,200 prison inmates, including 241 serving life sentences, defrauded the government of $9.1 million in tax credits reserved for first-time homebuyers, according to a Treasury Department report released Wednesday.
Treasury’s inspector general also found that thousands of people filed multiple claims or made claims outside the allotted time period. In all, more than $28 million was improperly doled out. The Internal Revenue Service program at issue is meant to stimulate the housing market by giving tax credits of as much as $8,000 to qualifying first-time home buyers.
“Additional controls are necessary to address erroneous claims for the credit,” the report stated. “Further, fraudulent and questionable claims processed prior to implementation of controls will need follow-up action by the IRS.”
According to the report, 4,608 state and federal inmates filed for these tax credits, and that fraudulent refunds were doled out to 1,295 of them. The inspector general’s report said the most “egregious” fraudsters were 715 prison lifers, including 174 who filed with the help of paid preparers. From this group, 241 lifers were awarded $1.7 million. The problem was particularly bad in Florida: 61% of the lifers who got credits were incarcerated in the Sunshine State.
The homebuyer tax credit program was very specific about the time period in which homebuyers were allowed to participate, though this rule seems to be the most widely violated. The credit was for home purchases that happened after April 8, 2008, with a cut-off date that was eventually extended to May 1, 2010.
The report found that the IRS awarded $17.6 million to 2,555 filers who had bought their homes before the credit program kicked in.
The inspector general also identified 206 filers who claimed the credit for multiple addresses; these fraudulent filers were awarded a total of $1.4 million.
The report also found that improper filers included 34 employees of the IRS. This is in addition to 53 IRS employees that the inspector general identified last year as improper filers.
Jim the Realtor is legit - I interviewed three brokers; he said list price should be $100,000 higher than the other two brokers; listed it with him and had all cash (no financing) offer in two days, five day contingency period, closing in two weeks - and it closed at his recommended list price. I could not recommend anyone more than I recommend Jim the Realtor.
When we moved to San Diego in 2005 we rented a big house on Mt. Soledad (La Jolla) with 180 degree ocean views for the same payment as a mortgage on a dump in Chula Vista. Clearly something was wrong. Yet, the media was full of the usual happy-talk nonsense, so I was glad to find Jim's blog. I've followed his honest assessments and data since.
We decided to sell and move to AZ at Thanksgiving. Dec. 1st we met with Jim to sell our home. We closed today (29 days later). Jim orchestrated a feeding frenzy -- we had 25 showings in 2-1/2 days, multiple offers, and sold for well over asking price. I'd say he earned his commission! We have owned and sold homes in 5 different States always using experienced, productive, full-time realtors. Jim outshines them all.
You don't decide to sell and close 29 days later over Christmas (with COVID lockdown) without some miracles. Donna was amazing at performing lots of those miracles and ensuring that everything was done right and on time. They are a terrific team with a very responsive and professional network.
Where do we begin..2020 has been a year for everyone. When COVID hit and shut down both my husband and my businesses, we were left with a mortgage and very little income coming in. We were stressed, scared and felt stuck. We made the hard decision to sell our home and move out of state. We contacted the Klinges' and spent a good hour going over what we hoped we could accomplish. Jim and Donna came over with comps in hand and suggestions on improvements to get our house ready for the market. It was overwhelming to think about, but Donna was there and one step ahead in every scenario. Basically we just approved what they suggested and Donna handled literally everything. We placed our house on the market and within the first day we had multiple offers well above asking price! We couldn't believe it. We were overjoyed! Jim countered the offers to weed through them, and everyone came back with way more. It was amazing, and we are ?? sure it was because of the staging and repairs the Klinges suggested we do.
Due to unforeseen dishonesty from the buyers lender, we hit a big hurdle when trying to close. We had already moved out of state and were shocked when three days before closing the lender dropped a bombshell on the buyers and us. However, Jim and Donna handled it like veterans, not afraid to play hard ball and represent their clients. After a few phone calls with us, and several between Donna and the lender, they had a plan B-Z to make sure we were taken care of. In the end we closed with even more money than we ever thought possible and with very little work from us. The Klinges handled this entire "2020" worthy event with the utmost professionalism and did everything in their power to not only make this as smooth as possible for us, but we also walked away with more money from the sale of the house than we ever hoped for. After working with Jim and Donna, you don't ever use anyone else. They are hands down the best team to represent you in any scenario.
Working with Klinge Realty Group was a great experience! They are very responsive, professional and knowledgable about the real estate market! I would definitely recommend Klinge Realty Group.
Jim and Donna Klinge made the sale of our condo extraordinarily easy. They know the market and gave us sound advice backed by details and very considerable experience, reflected both in the initial pricing and subsequent negotiations. They work together as a team and are always available to talk. We had a few challenges with our property and they were able to coordinate the resolution to everything, including items that I would not think would ordinarily be their responsibility to handle. They made the whole process effortless on our part. They are folks with high integrity and we cannot recommend them highly enough.
Review for Member: Donna Klinge
I cannot believe there are no reviews of Donna yet, ugh!! She is the secret sauce of the Jim Klinge/Donna Klinge combo! I will touch on Jim here, but Donna is why I'm so totally loyal to these two (no offense to Jim :)).
I consider myself a rather savvy buyer/seller. I've bought/sold 7 times in about 15 years. On the buy side, Jim is the PERFECT combo of: completely digitally savvy (he will pull data all day long until you feel comfortable with your chosen house, area, school district, anticipated appreciation rate...anything!), he's super well respected and known in the area by other agents, an amazingly cool but strategic negotiator, is totally devoid of desperation for a sale/commission, and more.
Then once you get into contract phase, Donna literally handles every last and final detail in a concierge-like manner -- totally shielding you from the daily back and forth, noodling and annoyances of the buyer's requests. She solves it ALL; it's miraculous what that woman accomplishes over and above what is even expected in a buy/sell transaction.
On the sell side, Jim and Donna do the same, but even moreso. Donna in particular truly takes everything off your plate: she'll manage getting the house painted, the carpets replaced, she'll go on site (as she Jim both did for me when selling our rental properties) to work with the renters and make sure the house is ready to show -- freeing me to have to take time off of work to do so. They work with A+ integrity, too, so you know you are serving all parties fairly and lawfully throughout.
A home purchase/sale is the most considered you'll ever make. HIRE A SAVVY AGENT, not a friend!, and get what you need out of the transaction. Jim and Donna are our agents for life.
Jim and Donna Klinge are by far the most professional, personable and responsive realtors I have ever worked with. They provide VIP concierge level service in every area of the process of selling your home. My home was marketed so successfully that we received an offer the day after our first and only open house. Thanks to Jim's pricing and negotiating, our house is now the highest sold in our community. Jim's vast experience means he has worked with several realtors and knows the market all over north county. Donna is AMAZING in processing everything in the transaction. She scheduled trades people to work on the house in preparation for the sale as well as the repairs needed before closing. She communicated clearly every step of the way about what would be happening. She took the weight off my shoulders for the whole process. I will always use Jim and Donna for my future real estate needs and I whole heartedly recommend them to anyone buying or selling a home.
Jim and the team at Klinge Reality are without a doubt the best in the business! Not only was Jim helpful and extremely knowledgeable, he was patient and determined to help me find my first home. Jim and his team have been in the business for many years, and it shows. Jim is a wealth of knowledge and was my biggest proponent despite the temperature of the competitive market. I ended up getting the perfect property in my dream neighborhood all thanks to Jim. From the day my offer was accepted, Donna was a real lifesaver. She was extremely helpful, responsive, and knowledgeable when it came to every minute detail, and held my hand through the process. As a first time home buyer I had no idea what the process would entail, but Donna curtailed every concern I came across and made the escrow process feel seamless. Jim and Donna provided me the best home buying experience, and I am very grateful for all they did for me. It was truly a pleasure to work with Jim and Donna and I am already looking forward to the next time we work together!
Review for Member: Richard Morgan
Richard is an amazing realtor! He has high integrity and genuinely cares about his clients and their needs. Richard paid close attention to what I was seeking in a home and was very patient in our search to find it. I would highly recommend Richard and will use him for future transactions. Truly a different kind of realtor experience!
Could not be happier with my experience with Jim and his team. He helped me sell a very unique and challenging property. Throughout the entire process he was always available, honest, transparent, trustworthy, and always put my interests as a seller first. A (rare) true professional! During close of escrow Jim went above and beyond to complete the deal. It would not have been possible without his experience, fantastic team, and pure dedication. Highly recommended!
Thanks Jim and Donna Klinge!