The non-seasonally-adjusted Case-Shiller Index for San Diego rose again in October:
Oct. 2011: 152.86
Sep. 2012; 160.09
Oct. 2012: 162.10
It was the ninth monthly increase in a row, and the year-over-year improvement of +6% is the biggest we’ve seen lately.
Those thinking of selling in early-2013 have to be licking their chops. But wait until they see the next Case-Shiller reading, which will be released on January 29th, the week of the Super Bowl.
The Case-Shiller Index is a three-month weighed average, and we already know that September and October’s readings were well above those from 2012. But November’s stats blew away the field – Dataquick reported that the San Diego Y-O-Y average $/sf rose10.6% in November.
The CSI does purge some of the most vital data (flippers turning in less than six months, etc.) but with our November sales and pricing both substantially improved over the previous month, the next Case-Shiller reading should provide great banter for Super Bowl parties throughout the county.
As a result, expect that grossly-overpriced listings will be hitting the market in February. If the current buyer discipline stays on track, we will experience a sparse beginning to the selling season. See the graphs in the right-hand column. >>>>
Realtors will be falling back on the only closing line they have ever known, “buy now or be priced out forever” and some uneducated buyers could get sucked in and pay too much if they only read the soundbites.
Can we count on our leaders to direct us? Here is a quote from the UT, in response to San Diego having the second-highest gain the country:
“Phoenix went through a real difficult time where their values really, really went down, but it’s certainly been rebounding” said Donna Sanfilippo, president of the San Diego Association of Realtors. “San Diego, being a steadier market, placing No. 2 in rebounding shows that we’re leading our area after what has been a couple of rough years.”
…we’re leading our area??
Expect more of the same from NAR and CAR too – vague innuendos that won’t say it directly, but imply that everything is fine, go ahead and buy. But based on the graphs, it doesn’t look like buyers are going for it, so the early-spring sales are likely to be very disappointing.
Once you accept that every house needs at least $25,000 of repairs and improvements, select the house with a premium location and minimal expenses. ProfHoff and her husband Tom took four years to find the right house, so shopping hard for another six months to pay the right price, for the right upgrades, was nothing:
Hat tip to GW for sending in this story about realtors using videos:
Carefully chosen words and detailed descriptions can help tell the story of a real estate listing, especially a multi-million dollar one.
But moving pictures are where it’s at for certain luxury agents who are experimenting with ways to set their properties apart from the others.
Local agent Laura Barry, of Barry Estates, is among those agents making either mini movies and music videos to promote their listings and themselves. Barry recently produced a four-minute film, complete with a story line and actors, to promote a Rancho Santa Fe estate that’s listed for $3.5 million to $3.9 million. It’s been on the market for about six months.
“…Our whole industry has come from print media to virtual tour and it needed to evolve into something movie quality,” says Laura Barry in her promotional video. “There’s no way to capture the essence of these beautiful estates unless you have real people and you get to see how they live in them and you get to feel the warmth and energy. And movie quality is the closest way that you can do that without actually being in the home with the owners.”
Barry’s movie ad, available on YouTube, follows a couple who has been separated by distance and time for unknown reasons. As the male lead makes his way back to his significant other, the camera follows the female lead through the Rancho Santa Fe home, from bedroom to kitchen to pool area.
The film ends with the couple embracing in front of the true star, the property, at 4615 Via Lechusa.
No sales have resulted from the video yet, but Barry has gotten calls from architects and others who were intrigued by the mini-film and want to know more about her company and other listings, she said.
She plans to shoot another movie for another property but has no intention of abandoning other means of marketing, from print to virtual tours. She hopes the diversity of techniques will help her reach a wide range of potential clients.
“People are like 31 flavors,” Barry said. “There are 50 percent of people who go to chocolate and vanilla. And the other 50 percent don’t know where to go.”
Other luxury agents have also gone more creative routes to market their listings and themselves.
Take Josh Altman, one of the starts of real estate reality show Million Dollar Listing. He released a self-mocking rap video named “I Sell the Dream” in August that featured these lyrics: “And have you heard/I work off commission; do the math, you nerd/Press a button: waterfalls/Tennis court: tennis balls.”
Around that same time, a property owner in Malibu went the Hollywood route, hiring movie director Graham Henman to make a short titled “The Spider and the Fly.” AOL Real estate reported that the video was sent out to would-be buyers via iPads.
Reader Sebastian asked about how appraisals were coming in these days, and this house was a good example. In the previous three months, there had been five sales with prices that increased by 14%, and the bigger house next door had just closed for $350,000 on a fraudulent short sale. We had listed on November 2nd for $399,000, based on these model matches:
$360,000 – July, 2012
$350,000 – August, 2012
$380,000 – September, 2012
$390,000 – September, 2012
$399,000 – October, 2012 (short sale in progress)
In an effort to provide full transparency to the six interested parties, I conducted the bidding war on the premises so the buyers could see the process take place, and be encouraged to pay more! When the bidding stopped at $411,500, most were skeptical that I could get the appraisal to come in. One of the losing agents even scoffed, “We know the comps”.
But it appraised for the full $411,500!
My notes on getting appraisals to come in at the right price:
1. Meet the appraiser.
I want to show proper respect, and hopefully influence the outcome – both are done best in person. I think appraisers appreciate it too, because they are used to meeting an assistant or the sellers themselves.
2. Be on time.
The appraisers don’t get paid a lot of money, and have to complete multiple appraisals per day to make a good living. To do so, they need to stay on schedule – don’t screw that up! The appraised value is a subjective opinion, and every ingredient could play a role in how it turns out.
3. Bring good comps.
Not as easy as it sounds, and must be kept within the guidelines. They need three sales closed within the last six months that are within a 1-mile radius and whose square footage is within 10% of the subject property. If I don’t have those, the next best choices are going outside of the 1-mile radius, then smaller houses, then pendings. But I have to have enough to make a good case – if you show up with nothing, or a weak case, you are leaving it up to the appraiser.
4. The Good-Bye.
Appraisers don’t like it when you ask them point-blank, “Are you going to bring it in at value?”, because they don’t know yet. They have to review the comps, and complete their adjustments to calculate the appraised value. But I want to make sure we are seeing it the same way too, so instead I’ll ask a vague question, like”Do you think everything looks ok?”. If there is hesitation, then I know I have to go further with explaining the comps, because once the appraiser leaves, you aren’t going to get a second chance. Once they turn in their appraisal, they aren’t going to change it.
Then and Now. Back in the heyday, my buyers went to Countrywide, who hired the same appraiser for every loan. We were all friends, and he brought in every single appraisal at value, even when prices were going up 10% to 20% per year. It wasn’t a spoken conspiracy, it was just business – we needed an appraisal for every loan, and he kept bringing them in. Of course you’d keep using him.
But now the system has been changed. Lenders have to request an appraisal through third-party out-sourcers, who then send a random appraiser. No wonder realtors complain about appraisals now, we had it good before!
The main reason for appraisal problems today is that the realtors take them too lightly and don’t help the appraiser with good comps – then complain that they got screwed.
When I’m representing sellers, my appraisals come in right – I haven’t missed one yet.
But I just had an appraisal come in low on a buyer-side transaction. It was the escrow where the sellers had their second mortgage dismissed by BofA after the short-sale had been approved, which meant they had proceeds coming instead. In the beginning, the listing agent had told me that the real estate business wasn’t working out for him, and he had taken another job. The house needed work, so we made a repair request even though it was a short-sale and the agent had better things to do, like get back to tending bar. So the sellers refused to do any repairs, even though BofA had dropped about $50,000 in their lap.
The appraiser called the listing agent,. but the house was vacant and usually the appraisers have a lockbox key so I don’t think the listing agent met him. Sure enough, the appraisal comes in $10,000 low, and because they sellers had put up such a fight about repairs, I told my buyers to expect the same when we ask them to lower the price. But the listing agent jumped to attention, and said, “If the appraisal came in low, then we have to lower the price”. Though it is usually a negotiable item, in this case my buyers got a $10,000 windfall, thanks to the incompetent listing agent.
P.S. Another representative from Bank of America said that when they dismiss a second trust deed on an existing escrow, the sellers get no proceeds. But we think in this case that the escrow officer might have missed the fine print, because the sellers and listing agent didn’t complain at the end.
P.S.S. Unlike during the heyday when everyone went to Countrywide, today buyers like to select their own lender. It doesn’t really matter about selecting an appraiser, because they are all at random and each sale has a different one. But one of these days an appraisal will come in at the right price, the buyers will release their contingencies on Day 17, and then the bank’s underwriter (who makes the final approval before funding), is going to challenge the appraisal.
This is a big problem waiting to happen, because if the underwriter won’t sign off and the deal dies, the buyers are going to lose their deposit. I haven’t heard of it happening yet, but it will.
Bank of America Corp. has amassed $64 billion of mortgages that are at least six months delinquent and have yet to enter foreclosure, more than twice the amount held by its four largest competitors combined.
The loans are monitored as part of February’s $25 billion settlement between the top five U.S. lenders and state attorneys general over allegations of abusive foreclosure practices. Bank of America’s stockpile of deteriorating debt is mostly from its 2008 acquisition of Countrywide Financial Corp., once the nation’s largest mortgage provider. Wells Fargo & Co., the biggest U.S. servicer, has $15.3 billion of such unpaid loans.
The data, published last month by the monitor of the settlement, highlight Bank of America’s vast backlog of delinquencies, and the years it will take to work through them as borrowers fall further behind and losses mount for investors in mortgage-backed securities. While the Charlotte, North Carolina-based bank has begun modifications for many of its 275,000 homeowners at least 180 days behind as of Sept. 30, some will join the already clogged U.S. foreclosure pipeline.
“There’s just a long tail to work out all of these loans, which are severely delinquent at this point,” said Marty Mosby, an analyst with Guggenheim Securities LLC in Memphis, Tennessee.“It just shows the amount of work that’s still left to do.”
Delays in processing the loans add to the expenses borne by investors because maintenance, property taxes and other costs add up. While rising prices may make the mortgage-backed securities more valuable, servicers can be forced to come up with cash to cover interest payments from the delinquent loans and modifications become more difficult to accomplish as the borrower’s unpaid debt grows.
Bank of America’s portfolio of loans that are at least six months old and not in foreclosure accounts for 3.3 percent of all of the mortgages it services. Citigroup Inc. has 1.1 percent of its loans in that category and Ally Financial Inc., Wells Fargo and JPMorgan Chase & Co. each have less than 1 percent.
Bank of America has about 930,000 loans that are at least 60 days delinquent, down from 1.5 million from the peak in January 2010, Chief Executive Officer Brian Moynihan, 53, said during a Dec. 14 event at the Brookings Institution in Washington.
Sales of existing homes beat expectations in November, with Realtors reporting a surprisingly modest effect in the Northeast from Superstorm Sandy.
An even bigger surprise was a huge gain in activity among higher-end homes. Sales of homes priced above $750,000 jumped 50 percent from a year ago, as sales of the lowest-end homes (largely distressed) fell 4 percent, according to the National Association of Realtors.
The change in the mix of homes selling pushed the median home price nationally (median defined as half selling higher and half selling lower) to $180,600, a 10.1 percent increase from November of 2011. This is a far higher jump than other so-called “repeat” sales indices have shown, because a median measure does not compare the sale prices of homes selling now to similar homes selling a year ago, but the median of all sale prices nationally, which is skewed to which types of homes are selling. Still, the shift to more activity in higher price ranges is important.
“An increase in the median price has a direct effect on the economy and economic growth,” noted the Realtors’ chief economist Lawrence Yun. That is because more income is generated in the sale of a higher-priced homes. Realtors get larger commissions, mortgage lenders charge higher fees, interest payments on mortgages are higher; even secondary expenditures like lawn care and home improvements are higher on a higher-priced home, either due to its size or the income and spending ability of its buyer.
The shift in the mix is due to more owner-occupants buying move up homes, and fewer investors buying distressed properties. Some claim wealthier buyers are selling fast now so they don’t get hit with higher capital gains taxes, a possible result of so-called “fiscal cliff” negotiations, but the likely driver of these sales is more simple: Improvement in the overall housing market, the economy and consumer sentiment.
"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. more "
by gary t moyer
"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. more "
"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. more "
"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. more "
"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 more "
"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... more "
by Ann Romanello
"Jim educated us, helped us find the perfect house, and then negotiated us a great deal. I would hate to be sitting across the negotiating table from ... more "
"Jim is thorough and will be brutally honest about the homes he shows you. He provides great service and follows through until the very end and even ... more "
"I highly recommend Jim as a buyer’s agent. Working with Jim, we closed this week on a San Diego condo. Jim prepared a list of comparable sales to ... more "