Pricing Disagreement: What Is a Home Worth?
Homebuyers and the real estate professionals they choose to sell their homes don’t always agree over what the property is worth, and many buyers think both of them are setting prices too high, according to a survey by HomeGain.com Inc.
The survey found that 63 percent of homeowners believe the price their practitioner recommended is too low. About 45 percent of sellers think prices should be 20 percent to 30 percent higher, while 14 percent believe their home should be priced a whopping 30 percent higher.
Meanwhile, 21 percent of homebuyers say the homes they are considering are overpriced by up to 10 percent; 32 percent say prices are 10 percent to 20 percent too high; and 6 percent say homes are more than 21 percent over priced. Only 18 percent believe homes are priced fairly.
“Homeowners know that prices have fallen, but that somehow doesn’t apply to them because they have ‘upgraded vinyl’” or something, Pamela Frey-Primiani of Keller Williams Realty in Sicklerville, N.J., says. “Sellers have got to be realistic in their expectations. An overpriced home in these times does nothing — no showings, no offers, just whining from sellers that it’s all someone else’s fault that the home hasn’t sold.”
Source: HomeGain.com Inc. (03/05/2009)
6 Tips for Home Owners Who Turn Into Landlords
Home owners who decide to rent out their properties have to stop thinking of themselves as home owners and instead consider themselves as running a small business, experts say.
Thinking like a businessperson means focusing on the monthly cost of maintenance, mortgage and taxes, as well as being aware of landlord-tenant regulations and avoiding liabilities.
Here are key issues to consider:
- Set a fair rent. Setting the right price will make it more likely that a landlord will be able to keep the place rented.
- Understand landlord-tenant rules. Running afoul of landlord-tenant regulations and rules regarding security deposits can be costly.
- Screen applicants. Eliminating potential tenants who can’t pay or who won’t take care of the property is very important.
- Lay out the rules in a lease. Widely available sample leases can help. If you have questions, ask an attorney.
- Consider a property manager. Despite the expense, turning the job over to experts can help a landlord come out ahead.
- Talk to the condo association. If the property is a condominium, be prepared to deal with a host of regulations.
Source: The Washington Post, Renae Merle (02/28/2009)
Green Building: Housing’s Few Bright Spots
Energy-efficient home manufacturing could be one of the few industries to grow and thrive in the present economy, according to the U.S. Green Building Council (USGBC).
Consumers are looking for dwellings that are both affordable and sustainable, while manufacturers are eager to reduce production costs as well as reliance on foreign energy.
In Turner Construction Company’s survey of real estate developers, agents, brokers, builders, and other industry experts, 83 percent said they would be “extremely” or “likely” to pursue the USGBC’s LEED certification for upcoming building projects, despite the credit freeze.
Findings from other studies conducted over the past year include:
- Seven in 10 home buyers are likely to buy an energy-efficient home in an economic downturn.
- More than 80 percent of commercial builders will invest in green building practices this year.
- 60 percent of commercial developers provide seminars to tenants to show them how to reduce costs and maximize efficiency.
America’s Best and Worst Housing Markets
As the housing downturn wears on, some cities are stabilizing and some
aren’t.
In Las Vegas, the weakest market in the country, prices continue to drop.
“I don’t know what those guys were drinking when they thought all this building made sense. If it does work out soon, then there’s some force out there in the universe that I’m not aware of,” Steve Cesinger, chief financial officer at Dewberry Capital, an Atlanta-based real estate investment firm.
Forbes magazine analyzed monthly declines as well as year-over-year declines in home prices. It also looked at how many months of equity homeowners have lost. With these figures in mind, it determined the 10 best and the 10 worst U.S. housing markets. Here they are::
10 Best
New York City
Washington, DC
Charlotte, N.C.
Portland, Ore
San Diego
Denver
Boston
Dallas
Los Angeles
Seattle
10 Worst
Las Vegas
Phoenix
Detroit
Minneapolis
San Francisco
Chicago
Cleveland
Atlanta
Tampa
Miami
Source: Forbes: Matt Woolsey (02/24/2005)
10 Most Affordable Cities to Buy a Home
More people can afford a house today than in at least five years, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.
A family earning the national median income of $61,500 a year would be able to buy more than 60 percent of all homes sold in the last three months of 2008 by committing less than 28 percent of their total income toward paying the mortgage, the report found.
That figure is up 56.1 percent from the third quarter of 2008 and up 46.6 percent from what it was at the end of 2007.
According to the Index, the most affordable cities and their median prices are:
- Indianapolis, Ind., $103,000
- Warren, Mich. $125,000
- Youngstown, Ohio, $73,000
- Detroit, Mich., $90,000
- Grand Rapids, Mich. $102,000
- Syracuse, N.Y., $88,000
- Dayton, Ohio, $90,000
- Akron, Ohio, $90,000
- Cleveland, Ohio, $100,000
- Scranton, Pa., $85,000
Source: CNN, Les Christie (02/19/2009)
11 Markets With Highest Home Appreciations
Not all U.S. housing markets went south last year. First American CoreLogic Inc., in its latest study, identified the best-performing markets in the U.S. for 2008.
In many cases, the markets that made the list are areas that never enjoyed significant increases in value over the last decade — but neither did they lose value over the last three years.
Nationwide, American CoreLogic, which predicts loan performance for banks, reported housing prices were down 11.1 percent last year. It predicts that home values will continue to decline through 2010.
In the fourth quarter of 2008, the report found that home price declines accelerated in some states where home values previously had been fairly stable, including Maine, Pennsylvania, Arkansas, Oregon and Rhode Island.
“The geographic breadth of price declines rapidly expanded in the second half of 2008, which means that housing wealth losses are broadening across much of the country,” says Mark Fleming, Chief Economist for First American CoreLogic.
The 11 cities with the highest home price appreciation in 2008 are:
- Cedar Rapids, Iowa: 8.83 percent
- Binghamton, N.Y.: 7.78 percent
- Amsterdam, N.Y.: 7.89 percent
- Malone, N.Y.: 7.60 percent
- Bay City, Mich.: 6.87 percent
- College Station-Bryan: 6.78 percent
- Rocky Mount, N.C.: 6.69 percent
- Auburn, N.Y.: 6.51 percent
- Lebanon, Pa.: 6.41 percent
- Elmira, N.Y.: 6.28 percent
- Johnstown, Pa.: 6.20 percent
Source: First American CoreLogic Inc. (02/18/2009)
Curb Appeal is Key in This Market
Curb appeal remains the standard. If a house doesn’t have it, the property is likely to languish on the market.
A Michigan State University study estimated that good landscaping adds 6 percent to 11 percent to the eventual sales price of a home.
It doesn’t take a ton of cash to get curb appeal. Often a little bit of elbow grease will do the trick.
Here are the basics:
- Front yard and porch. Mow the grass and keep it green. Keep the porch immaculate – no dirt or bugs.
- Mulch all the beds. Flowers and shrubs help, but if the owner can’t afford anything else, mulch will do the trick.
- Paint will pay off. Covering everything with a fresh coat of paint – preferably a neutral color – will help the house sell. Freshening up the front door is particularly important.
Source: San Antonio Express-News, Jennifer Hiller (02/15/2009)
Is a Stimulus for Housing Next?
Sources say the Obama administration’s housing plan, to be unveiled Feb. 18, will allow bankruptcy judges to modify mortgages and will use Fannie Mae and Freddie Mac to refinance borrowers who owe more than their homes are worth but are current on their payments.
It also will reduce loan payments for struggling home owners through lower interest rates or longer loan terms, with the government possibly giving lenders a subsidy of $800 to $1,000 per loan to minimize losses.
Home owners could be forced to ultimately repay the difference between their original and reduced payments–a provision meant to keep borrowers from defaulting for the purpose of qualifying for assistance, and the administration also wants Fannie Mae and Freddie Mac to adopt national loan modification standards.
Source: The Wall Street Journal, Deborah Solomon (02/18/09)
Despite Market, Many Choose Real Estate Career
Despite challenges facing the real estate business, the state of New York administered more than 700 licensing exams to aspiring real estate professionals in December 2008.
“We’ve been much busier than we thought we’d be,” said Stephanie Barron, a manager at the New York Real Estate Institute, which offers licensing classes.
Although 25 percent fewer sat for the exam in December 2008 than in December 2007.
Recruiters for New York City real estate firms say that a new associate can expect to earn about $50,000 a year, but getting started can be a challenge and newcomers may take weeks to close their first deal.
“Someone coming into the biz, who is going to focus on sales from day one, should have at least a six-month nest egg, and it would probably be better to have more than that,” said Stephen Love, who directs recruiting at Ardor New York Real Estate.
Source: The New York Times, Michael M. Grynbaum (02/13/2009)
Metro Home Prices Down on Distressed Sales
Most metropolitan area median home prices, impacted by distressed sales, trended down in the fourth quarter from a year earlier. At the same time, existing-home sales rose in only six states from the fourth quarter of 2007, according to the latest survey by the NATIONAL ASSOCIATION OF REALTORS ®.
In the fourth quarter, 134 out of 153 metropolitan statistical areas showed declines in median existing single-family home prices from the same period in 2007, pulled down by active sales at the lower end that were driven by foreclosures. One area was unchanged and 18 metros reported price gains. NAR’s track of metro area home prices dates back to 1979.
Distressed sales – foreclosures and short sales – accounted for 45 percent of transactions in the fourth quarter, dragging down the national median existing single-family price to $180,100, which is 12.4 percent below the fourth quarter of 2007 when conditions were more balanced; the median is where half sold for more and half sold for less.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said homes and neighborhoods minimally impacted by foreclosures have moderate prices changes. “Distressed home sales have risen from about 38 percent of transactions in the third quarter, meaning people are responding to discounted prices and are slowly absorbing the excess inventory. Buyers clearly see value in today’s pricing,” he said.
“It has never been more important than now to work with local professionals to properly gauge local neighborhood conditions because foreclosures are heavily skewing the broader home price figures to be much lower. Big discounts are not occurring in neighborhoods with few foreclosures. A REALTOR® who is knowledgeable about local conditions can counsel consumers in making sound long-term housing decisions,” McMillan said.
Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate2 of 4.70 million units in the fourth quarter, down 6.4 percent from 5.02 million units in the third quarter, and are 5.9 percent below the 5.00 million-unit pace in the fourth quarter of 2007.
Lawrence Yun, NAR chief economist, said the market is clearly depressed from job losses and consumer concerns about the economy. “Assuming housing provisions in the economic stimulus package are quickly enacted and provide enough encouragement for home buyers, we could see a quick lift in home sales for the critical spring home-buying season,” he said.
“If that occurs, we could see home prices begin to stabilize in many metro areas later this year as supply and demand begin to return to balance, which would greatly benefit the overall economy,” Yun said.
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to 5.86 percent in the fourth quarter from 6.32 percent in the third quarter; the rate was 6.23 percent in the fourth quarter of 2007.
The largest sales gain in the fourth quarter from a year earlier was in Nevada, up 133.7 percent, followed by California which rose 84.7 percent, Arizona, up 42.6 percent, and Florida with a 12.5 percent increase.
“Once again, we see a pattern of strong sales gains, particularly in lower price homes, in areas with price declines resulting from foreclosures,” Yun said. “For example, in California and Florida, where distressed sales accounted for roughly two-third of all sales, the median price fell by much more as lower priced home sales far outpaced higher priced sales.”
Areas with the steepest declines in single-family home prices, more than 30 percent below the fourth quarter of 2007, include Las Vegas-Paradise, seven metro areas in California, Phoenix-Mesa-Scottsdale, and three metros in Florida. “Clearly these areas are attracting bargain hunters,” Yun added.
The largest single-family home price increase in the fourth quarter was in the Beaumont-Port Arthur area of Texas, where the median price of $132,600 rose 16.7 percent from a year ago. Next was the Bloomington-Normal, Ill., area at $159,300, up 9.6 percent from the fourth quarter of 2007, followed by Dover, Del., where the median price increased 6.5 percent to $212,500.
Median fourth-quarter metro area single-family home prices ranged from an affordable $43,900 in the Saginaw-Saginaw Township North area of Michigan to $610,000 in Honolulu. The second most expensive area was the San Jose-Sunnyvale-Santa Clara area of California, at $525,000, followed by San Francisco-Oakland-Fremont at $487,100.
Other affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $61,700 and Toledo, Ohio, at $75,600.
In the condo sector, metro area condominium and cooperative prices – covering changes in 56 metro areas – showed the national median existing-condo price was $186,000 in the fourth quarter, down 15.8 percent from the fourth quarter of 2007. Eight metros showed annual increases in the median condo price and 48 areas had declines.
The strongest condo price increases were in the Dallas-Fort Worth-Arlington area at $149,500, up 14.1 percent, followed by Toledo, where the median condo price of $153,900 rose 11.4 percent from the fourth quarter of 2007, and the Philadelphia-Camden-Wilmington area at $210,200, up 10.2 percent.
Metro area median existing-condo prices in the fourth quarter ranged from $88,500 in the Palm Bay-Melbourne-Titusville area of Florida to $391,900 in San Francisco-Oakland-Fremont. The second most expensive condo market reported was Honolulu at $315,600, followed by the New York-Wayne-White Plains area of New York and New Jersey at $292,600.
Other affordable condo markets include Las Vegas-Paradise at $91,200 in the fourth quarter, and the Sacramento–Arden-Arcade-Roseville area at $94,700.
Regionally, existing-home sales in the Northeast fell 11.9 percent in the fourth quarter to a pace of 760,000 units and are 13.9 percent below a year ago.
The median existing single-family home price in the Northeast declined 4.7 percent to $248,800 in the fourth quarter from the same period in 2007. The best gain in the region was in Pittsfield, Mass., where the median price of $206,000 rose 1.7 percent from the fourth quarter of 2007, followed by Reading, Penn., at $155,100, up 1.0 percent, and Buffalo-Niagara Falls, N.Y., where the price rose 0.8 percent to $106,200.
In the Midwest, existing-home sales dropped 9.3 percent in the fourth quarter to a pace of 1.04 million and are 12.4 percent below a year ago.
The median existing single-family home price in the Midwest fell 10.6 percent to $139,500 in the fourth quarter from the same period in 2007. After Bloomington-Normal, the next strongest metro price increase in the region was in Bismarck, N.D., where the median price of $164,300 was 6.0 percent higher than a year ago, followed by Decatur, Ill., at $79,300, up 5.9 percent, and the Wichita, Kan., area, at $118,200, up 3.9 percent.
In the South, existing-home sales declined 7.3 percent in the fourth quarter to an annual rate of 1.73 million and are 13.4 percent lower than the same period in 2007.
The median existing single-family home price in the South was $158,300 in the fourth quarter, down 7.5 percent from a year earlier. After Beaumont-Port Arthur and Dover, the strongest price increase in the region was in El Paso, Texas, with a 5.3 percent gain to $140,700, followed by Jackson, Miss., at $126,600, up 4.7 percent.
Existing-home sales in the West rose 2.6 percent in the fourth quarter to an annual rate of 1.17 million and are 26.5 percent above a year ago.
The median existing single-family home price in the West was $243,200 in the fourth quarter, which is 25.1 percent below the fourth quarter of 2007. With a strong prevalence of distressed homes selling at discounted prices in the West, there were no reported metro areas in the region showing median price gains from a year earlier.
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Highers Group Realty
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Email: nancy@highersgrouprealty.com