There was some discussion in the comments two posts back on how much it cost to finish off a new house with all the extras; window coverings, landscape, etc.
But once you get the house ready to occupy, there is another cost to consider – furnishings.
Most buyers have adequate stuff for their old joint, but most are buying a somewhat larger or nicer home, and will fall a little short when outfitting the new home with the existing furniture on hand.
The rule-of-thumb is that you can add a zero to your new square footage to estimate your initial expenses on additional furniture.
If you buy a 3,000sf house, you’ll probably expect to spend $30,000 over the first year or two on new furnishings, +/- depending on tastes, budget, and who is in charge.
If you go the econo-route, you can save some money, especially if you can use some of the furniture coming from when the guy was living single:
Real estate brokers who have long complained about the time it takes to complete a short sale now have two U.S. congressmen in their corner who are sponsoring a bill that would require lenders to respond to consumer short sale requests within 45 days.
Lenders have been pushing more short sales as the industry recognizes them as a viable alternative to foreclosure. Short sales in the U.S. have tripled since 2008, according to data analyzer CoreLogic.
At the government-sponsored enterprises (GSEs), short sale volume in the second quarter was up more than 150% from volume in 2Q09, according to the Federal Housing Finance Agency’s “Foreclosure Prevention & Refinance Report.”
The National Association of Realtors (NAR) is supporting the bill, H.R. 6133, “Prompt Decision for Qualification of Short Sale Act of 2010.” It was filed Sept. 15 by U.S. Reps. Robert Andrews (D-N.J.) and Tom Rooney (R-Fla.). The bill was referred to the House Committee on Financial Services on Wednesday.
REO Insider is currently running a survey asking readers about the longest time that it has taken to complete a short sale. So far, 81% of respondents have said it takes more than 91 days, with 44% of those saying it takes 91-180 days.
There are two reasons this tract has done so well:
1. Angela is a great salesperson.
2. The uncertainty with resales. At least here you can walk in and buy a house today.
I tried to help some people buy a house off the foreclosure list who got pretty frustrated. The defaulter wouldn’t commit to a short-sale, then filed for bankruptcy to delay his departure further – another deadbeat who has lived for free for more than a year.
The buyers had had enough, and were on the list to buy a new one at this tract. It wasn’t as suitable, but heck, at least you could buy it and move in!
After some filler in the beginning, you’ll see a good example of how the “haves” are acting.
They prefer the quality locations, which is understandable (and recommended!). This building had been renovated by the seller, so that saves some time and money. In the off-season, you could probably get $3,000 or so in rents, but you’d be hard-pressed to call this a normal investment property bought for cash flow.
Nobody watching this would have paid the $1,250,000 peak price, but how many would have paid the current price? Yet after 32 days on market, a buyer came along and PAID CASH:
P.S. This same property sold for $680,000 in 2002.
“Jim, let me challenge you, if I may. You’ll have a daughter graduating college in a few years. She’ll get a job and soon look to buy a house. The market will be looking to her and her friends for stability. Will they be able to afford something in North County with 20% down at or above today’s prices?”
I doubt it, at least in areas where she would want to live.
I think she, like many, would rather rent in a preferred area, than buy a home in area that she perceives as less desirable. Homebuyers used to consider compromising on location, because it was only temporary – they could move up in a few years using their appreciation gain.
Not any more.
Without move-up buyers, we’re left with three types of buyers:
1. Owner-occupiers
2. Flippers
3. Long-term investors
All three categories mean big money in North SD County Coastal. Either you have a big down payment, and/or income to qualify for a rather large monthly nut.
Every day we see people comment here that, “it has to come down, JIM!”.
Yet, it’s been a few years now, and the Big Collapse hasn’t happened around here. I’d call it more a return to 2003-2004, which if holds up will still be completely detached from fundamentals, and happening in a full-doc-qualifying only environment – leaving out virtually all potential self-employed buyers.
The battle being waged in North SD County Coastal is between the haves, and the have-nots.
So far, there have been enough “haves” spending what it takes to buy a house in NSDCC that the market has been kept afloat. Here are two charts for detached sales from La Jolla to Carlsbad:
2010
# of sales
$$-per-sf
Jan
137
$368/sf
Feb
143
$376/sf
Mar
216
$395/sf
Apr
230
$375/sf
May
248
$389/sf
Jun
256
$385/sf
Jul
223
$361/sf
Aug
207
$368/sf
How does last month compare with previous Augusts?
Aug-Yr
# of sales
$$-per-sf
2002
304
$315/sf
2003
436
$346/sf
2004
293
$439/sf
2005
281
$473/sf
2006
234
$473/sf
2007
246
$463/sf
2008
183
$405/sf
2009
215
$373/sf
2010
207
$368/sf
Given the on-going commotion world-wide, these look remarkably stable to me.
The “have-nots” are hoping that the “haves” run out of gas, and only time will tell. In an area whose population is roughly 275,000, I’m pretty sure we’ll find 200-300 buyers per month for the foreseeable future – at some price. The trend will likely be downward, but at a very disappointing pace for most buyers.
I tell sellers to price their listing aggressively to elicit offers from all the hungry buyers looking for a deal, and start a bidding war. Instead, almost all prefer the old-fashioned way and list with a higher price, expecting to come down later once the listing becomes stale and the buyers have forgotten all about you. Here’s another example of how beautifully the former works.
There were seven all-cash offers submitted on the roach, and there could have been another 4-5 but I was telling agents how high they’d have to come in to win. Bank of America requested the highest-and-best offer from each, which sent the bidding even higher.
Congraulations to Gav, the closest guesser! Hopefully the Padres make the playoffs!
Here’s a link to the list of guesses, and the previous youtube that shows the interior:
The mainstream media, hungry to proliferate the most negative news possible, is struggling to see an actual housing double dip. So cnbc.com has decided to just go ahead and call the “double dip“.
Here are excerpts:
Sellers on the market today have cut $29 billion off their collective home equity. (they didn’t lose equity, their list prices were too high!)
They say today’s buyers are only looking for great deals, so if you price the home at its actual value, nobody’s interested. You have to go below. (huh?)
Some of you responding on the blog yesterdaysaid that your markets are just fine, even seeing competition in offers again; I’m sure this is true in many local areas. The trouble is that those areas are in the vast minority. Unless we see a marked, widespread increase in home sales over the next several months, prices will go from flat to down once again.
The last sentence is old-school, and today’s market environment is going to continue to baffle those who can’t shake off the past.
1. To begin with, we don’t have an accurate way to measure pricing when some houses/areas sell for more, and some sell for less. The Case-Shiller is too general and vague for me. But that’s not stopping Diana from talking her book, insisting that prices will be going down.
2. Regarding her last line, in today’s world we CAN have sales can go down and not affect pricing. Why? Because no one HAS to move. If you are in distress, you can stop making your mortgage payment and stay for a year or two. Back in the day when banks would foreclose on you, it was different – we had regular market clearing. Not now.
3. If the housing market got worse, the government will create a new basket of cheese.
Considering Dataquick’s report yesterday on the August sales, our market is looking pretty good. When all we’ve been hearing about is the lack of demand, in San Diego County it seems there were plenty of sellers who were able to get their price right:
The housing double dip, and for that matter, ALL real estate market conditions should be discussed on a case-by-case basis. It’s local!
Lately, homebuyers have been taking a more conservative, less-flashy approach with regards to their housing choices. Part of that choice has to do with expenses; who wants to heat, cool, maintain, and furnish more than they really need?
We saw the 10,000 sf launch pad yesterday that has been listed for around $5 million, but not selling, and some viewers may have wondered about my $1.9 number. It was partly due to the unconventional look, but it was also because you can buy 5,000sf around the Del Mar Mesa area for less than $1,900,000 – I’ve sold two myself.
Are there a lot of buyers today who really need more than 5,000 sf in today’s environment?
Are they willing to pay for more than they need?
Buyers are willing to take the extra room, if they can get it for free, or for a discounted rate. We’ll see what happens on the SpaceStation, but for an idea of how recent buyers have spent that type of money, take a look at the youtube video below. The second house in the video will be the primary comp used to price the SpaceStation, and as a result, my guess is that they’ll list it for around $2,995,000 – and it’ll sell because the buyer will feel like he got the extra square footage for free:
P.S. You’ll hear how I don’t always film these in order!
Hat tip to the reader who sent in this official warning notice from the Commissioner of the DRE regarding buyers being forced to pay the listing agent’s short-sale negotiator.
An excerpt:
Unfortunately, Short Sale fraud is growing, and it too often seems that licensees and those counseling licensees may wrongly conclude that unlawful or questionable practices “cannot be bad” because “everyone is doing it.” Licensees must understand that fraudulent and unlawful practices will invite disciplinary action by the DRE an possible civil and criminal liability.
This DRE Short Sales update is written on the growing, questionable, and sometimes unlawful practice of short sale negotiators (“SSN”) requiring Buyers to pay the SSN’s fee.
It also mentions that a SS negotiator must be a licensed broker, which many are not. Click below:
