Unstructured: Editor's Blog of AOL Real Estate
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- First-Time Buyer Questions
Do you think that you have to have two full-time incomes in order to afford a home these days? Would you look at alternative sources of income, such as renting out a room or take a second job in order to keep up with rising housing costs?
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Are you worried that some senior citizens may not be able to afford to keep their home as prices for utilities rise?
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Mon, 25 Feb 2008 19:18:35 GMT - Trulia Trends: Where Foreclosures Are Worst, How's Cali Doing, Etc.
February Editition of Trulia Trends
Warning: PDF
Trulia does an excellent job putting the foreclosure situation in perspective by region. As they say, REO properties (which are being sold by banks) are basically the same price in the Mid-Atlantic and Southern regions as the normal existing home listings are. In the Midwest, the REO properties are essentially being dumped at 25-30% discount, so it makes sense for owners in those areas to hang on for a year or so if they can. At the same time, those homes are the cheapest in the country, so hopefully the mortgage payments are the least onerous.
By comparison, when you look at foreclosures in California, you see that in Bakersfield, REO properties are also basically the same price as regular listings. In Stockton, which is often talked about as the center of the foreclosure "crisis" they are only 3 percent less. But in LA, the difference is more like 30 percent. You could argue that the prices in Stockton are already depressed enough, but for those looking to get a bargain, the REO properties in LA and San Fran are available at a much deeper discount than in these peripheral areas. Even in San Diego, which is a very desirable location, the difference in price is just under 20 percent.
Finally, Trulia looks for markets that are showing signs of recovery. Albuquerque, Queens, Tulsa, Memphis and St Louis are the five that are called out as either being flat or up 5-10% in recent months. Memphis, St Louis and Tulsa, as cities in the Midwest, probably never experienced the kind of housing boom that you saw on the coasts. New York continues to be a hot market as stock brokers and other financiers get their annual bonuses, and Queens, Brooklyn and the Bronx are the areas where you a young professional can still get a deal compared to Manhattan. From what I understand, Albuquerque is being touted as a highly affordable retirement location, so you could see that city doing slightly better than Phoenix or Reno which are more overbuilt.
Things to think about it. Have a great weekend.
Fri, 22 Feb 2008 21:55:13 GMT - Geography of Recession
Economist: Who's Hot, Who's Not for Unemployment
Thought this chart did a great job of explaining some of the reasons why some housing markets are doing so poorly while others probably don't have a whole lot to worry about in the long term.
With employment above 5 percent in places like Michigan and Nevada, those housing markets are probably not going to bounce back any time soon. But with employment below 4 percent in states such as Utah and (ahem) Virginia and Maryland, there's probably little reason to panic. In fact, Forbes just listed Richmond, Va., as one of the best cities for bargain hunters, with one of the lowest foreclosure rates in the country. Number one on the list is Salt Lake City.
At the same time, this Zillow survey on seller expectations has been getting a lot of attention. While you could argue that homeowners in the West are the most out of touch with their valuations, which Zillow has going down 8 percent, they are also the most in touch, with 34 percent of owners acknowledging that their valuation has gone down, the highest in the country. The number that say their valuations have stayed the same is also the lowest. What if the 36 percent live in Washington State, Utah and other states where valuations haven't gone down as much?
If anything, the South seems the most upside down. You see that Zillow has their valuations falling 4 percent, second worst in the country, but 37 percent of southerners think that their valuation has risen and only 21 percent think their valuations have gone down. In the Northeast, Yankee owners seem to be staying put, with 47 percent of owners thinking their valuation has basically stayed the same. But according to the Economist, with unemployment above 5 percent in Maine and Connecituct, the Northeast as a region is hardly impervious to the bust cycle.
The one market that really stands out to me is Charlotte, which is right between NC and SC, where unemployment is fairly high. But homes are considered to be so affordable by East Coast standards, even if they went down by 5 or 10 percent, it wouldn't be that bad in terms of total dollar amounts compared to losing 30 percent of the value of your million-dollar home in California.
Wed, 13 Feb 2008 18:23:09 GMT - Real Estate Sites Stay Hot, Despite Cooling Market
NYTimes: Redfin, Trulia, Zillow Do Well Despite Downturn
This is the #1 most e-mailed Technology article today, although it's kind of a no-duh perspective.
Redfin helps people buy and sell their homes at a discount, offering a two percent rebate to buyers, so particularly when you aren't sure whether markets are going up or down, why not try to save yourself a few percentage points.
Zillow also gives people a certain level of comfort, helping them get some indication of what a home might be worth, without having a real estate agent do a competitive marketing analysis for them (after they sign a contract of course.) Sort of a real estate second opinion. Particularly if you are thinking about selling, you should watch your Zestimate like a hawk.
Trulia is a great search experience and comes across a little hipper than something like Realtor.com, which Gen Y users may not yet be aware of.
At the same time, we are coming into the peak buying and selling season on the east coast, so business and technology writers are going to be looking for stories in this volatile market.
Mon, 28 Jan 2008 19:43:55 GMT - Existing Home Sales Dip in December
Median Home Price Falls to $217,000
"The National Association of Realtors reported that sales of single-family homes and condominiums dropped by 2.2 percent in December to a seasonally adjusted annual rate of 4.89 million units."
The good news: "The inventory of unsold homes dropped by 7.4 percent, raising hopes that backlogs that had hit record levels were starting to be reduced, a key factor necessary to prompt a rebound in the market."
7.4 percent is the equivalent of about 1/14th of all homes dropping out of the inventory (whether they were sold or just pulled from the market). So if that pace keeps up for a few months, prices should at least stabilize if not start to pick up.
At least here in D.C., there are a few first time home buyers dipping their toes into the water after waiting out all of last year's bad news.
With an apparently stimulus package also being announced today and interest rates no doubt dropping after the rate cut, most Americans will hopefully more or less ignore this weak December data and see how quickly sales do or don't pick up this spring buying season.
Thu, 24 Jan 2008 19:21:05 GMT - Buyers Sue Former Agent
Feeling Misled on Price, Buyers Sue Former Agent
This is currently the #1 most emailed story on nytimes.com, even on a day when the stock market is crashing. That may speak to most Americans being more concerned about their home valuations than the ups and downs of the stock market. (Login Required)
"Ms. Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission."
"Mr. Little also worked as a mortgage broker. The Ummels say he encouraged them to get their loan through him. Mr. Little ordered an appraisal of the house but did not respond to the couple’s requests to see it, the suit charges."
This is where this case does seem a little shady. It seems unusual that the agent is also acting as the mortgage broker, where he has a doubly vested interest in pushing the deal through. Just for the sake of propriety, you would think most agents would not also want to be the point person on brokering the mortgage.
It's not that unusual for an agent to get sued, but will be interesting to see what juries think in cases like this, where the agent may or may not have done anything wrong by the letter of the law, but you have a middle-aged couple who feels they were taken advantage of.
Tue, 22 Jan 2008 16:35:59 GMT - Fed Study Suggests Prices Way Out of Line With Rents
Prices Will Have to Fall to Be Inline With Rents
While this may seems like a real doomsday headline, you have to consider that there is some inherent value in owning your home versus renting it, where your landlord can evict you at any time, and there's no value in doing any improvements or any maintenance. There are also tax advantages and appreciation.
But given all that, renting versus owning is usually held up as sort of the "price versus earnings" ratio that is popular with the stock market. Starting in 1996, home prices rose much more rapidly than rents. This study is saying that if rents rise 4% each year for the next five years and home prices drop 15% in value, we'll get back to the 1996 ratio.
If rents rise faster than that, then it would take less than five years. It's not unusual for rents to rise 5% per year, so if we keep seeing population growth like we're seeing, 4% may be a little conservative.
Others would argue that prices have already dropped 5-10 percent in a lot of areas, so it's really a question of are they going to drop even more, or are they going to start to bounce back?
If rates go down another full percentage point this year, then buying is going to look really good compared to renting, so by the time the elections are over, a lot of markets should be bouncing back, not dropping 15%.
Tue, 08 Jan 2008 20:16:16 GMT - Prefabs Are Fab
From NYTimes: MoMa Plans Prefab Home Expo
"The Museum of Modern Art has commissioned five architects to erect their own prefab dwellings in a vacant lot on West 53rd Street, adjacent to the museum. Whittled down from a pool of about 400, the five architects are participating in “Home Delivery: Fabricating the Modern Dwelling,” an exhibition opening in July."
There is always a lot of interest in prefab homes whenever we do something on AOL Real Estate on this topic. Seems like a very affordable option for people who have bought land and are looking for how to keep their costs low as they build.
They are also very popular in Europe.
Tue, 08 Jan 2008 20:01:29 GMT - Pantone Unveils New Color: Iris Blue
From NYTimes: Pantone's Color for 2008, Shade of Blue
Many people are oblivious to the fact that a company called Pantone comes out with new colors every year with specific numbers. This is used for paints and other products, like remember all those orange Hummers and other SUVs?
Nothing particularly awe inspiring, but expect to see couches, throw pillows and other decorative knickknacks coming to a store near you in this "hot" color.
Thu, 20 Dec 2007 21:09:35 GMT - Fed Proposes New Mortgage Restrictions
Fed Would Require Escrow, Documentation; Ban Prepayments
Obviously the federal government feels obligated to take steps to restore confidence in U.S. lenders. However, requiring escrow accounts, which is really just paying a lender to manage your property taxes and your homeowner's insurance instead of doing it yourself, and requiring borrowers to document their income before they are allowed to borrow, don't seem like the way to do it.
For example, most lenders want to see two to three years of income documentation, and if you have changed jobs in that period, that counts against you.
Escrow accounts just take a few hundred bucks out of your pocket and put it into a non-interest bearing account until you need to pay your property taxes or your insurance premium. So, much like income taxes, you are losing the 3-5% you could be making on a savings account.
This is why we have the category of "subprime" mortgages; you should still be able to get a loan without documenting your income or without having escrow accounts. If the lenders want to charge you a half a point for that, that's their business, but don't outlaw it.
Tue, 18 Dec 2007 15:38:11 GMT
