Where Buyers are Picking Up Housing Bargains
Smart investors in all parts of the country are picking up fabulous housing bargains.
Bill Leon, president of Florida’s Broward (County) Real Estate Investors Association, has been buying and selling investment property for years, but he thinks today’s deals are unprecedented. “People are afraid not to sell because they don’t know where the bottom of the market is,” he says.
David Dweck, a hard-money lender, believes the best buys are in what he calls “workforce housing,” aging bungalows on small lots. They are selling for as little as 10 cents on the dollar compared to what they were going for in 2006, he says, then fixed up and resold or rented quickly.
“People have been beaten down by fear, negativity, constant media bombardment,” says Dweck. “There is a silver lining. The future looks bright.”
Sheresa Pompay, an associate with Hunt Real Estate ERA in Chandler, Ariz., says bad publicity is good for real estate investors. “I love the people who read about all the gloom and doom, because they stay on the sidelines and go, ‘It hasn’t hit bottom.’ Whatever. By the time everyone jumps back in, we’ll be out and doing something else.”
Fortune magazine predicts that these will be the 10 worst-performing real-estate markets – and the best places for finding bargains – in 2009:
Los Angeles, down -24.9 percent
Stockton, Calif., -24.7 percent
Riverside, Calif. -23.3 percent
Miami-Miami Beach, -22.8 percent
Sacramento, -22.2 percent
Santa Ana-Anaheim, Calif., -22 percent
Fresno, Calif., -21.6 percent
San Diego, Calif., 21.1 percent
Bakersfield, Calif., -20.9 percent
Washington, D.C., -19.9 percent
Source: Fortune, David Whitford (12/23/2008)
Inspector’s Advice: Disclose Everything
Building inspector and syndicated columnist Barry Stone urges real estate sales professionals to be forthright about a property’s shortcomings. Taking a laissez-faire approach can increase a practitioner’s liability if something goes awry after the sale has closed.
He particularly urges brokers to insist that associates be proactive about haveing properties professional inspected.
“The message should be: ‘This brokerage cannot afford disclosure-related lawsuits. If you work for this company, you must recommend only the most thorough home inspectors available. Here is the list of inspectors we have found to be the most qualified,’” Stone says.
Source: Access Media Group, Barry Stone (12/27/2008)
It’s a Dirty Job, But Someone’s Got to Do It
So-called “trash-out” businesses that clean up foreclosed homes are a big growth industry.
While there are no official numbers on how many trash-out businesses have opened, a Internet search turns up hundreds of listings, and Entrepreneur Magazine put foreclosure cleaner Cyprexx Services of Brandon, Fla., on its 2008 “Hot 100 Fastest Growing Businesses” list.
Clean-out servicers estimate that it costs about $2,000 to clean out a foreclosed home–more if the departing residents did a substantial amount of damage.
Cassandra Black of Foreclosure Cleanup in Riverdale, Ga., cleans out about 12 homes a month. She says 90 percent of her business comes from real estate practitioners.
With 575,090 loans nationwide entering the foreclosure process during the third quarter, the business is likely to get better before it gets worse.
Source: USA Today, Stephanie Frith (12/30/2008)
Want to Be Neighbors With Sarah Palin?
A December 2008 survey of more than 2,000 U.S. adults reveals which pop culture celebrities and politicians Americans think would make the most appealing neighbors … and who isn’t welcome anywhere near the backyard.
The survey, conducted by Harris Interactive for real estate Web site Zillow.com, found that U.S. adults would most like to be neighbors with Sarah Palin (14 percent), followed closely by Oprah Winfrey (13 percent).
Paparazzi magnets apparently don’t make the best neighbors, as only 2 percent of U.S. adults would like to be neighbors with David and Victoria “Posh” Beckham in the coming year.
It also seems age and gender play a prominent role in neighbor preferences:
- Among adult men, Sarah Palin is the most desired neighbor (17 percent), while 17 percent of adult women said that Oprah Winfrey was the most desired neighbor, ahead of Palin (12 percent).
- Among 18-34 year old men, Michael Phelps tops the list as the most desirable neighbor (17 percent). In comparison, only 9 percent of 18-34 year old women thought the gold medal Olympian would make a desirable neighbor.
- The gender gap reveals that among 45-54 year old women; 21 percent voted for Oprah, compared to only 6 percent of their male counterparts.
Worst Neighbors of 2008
Britney Spears, the trouble-prone pop star, was voted the worst celebrity neighbor in 2008, according to one in five (19 percent) U.S. adults. However, Spears’ reputation has improved over the past 12 months. In 2007, 21 percent voted Britney the worst neighbor.
Rosie O’Donnell was a close second in 2008, with 18 percent of the votes, compared with 14 percent in 2007. Rounding out the top 5 worst list is Joe the Plumber (8 percent) Lindsay Lohan (7 percent) and Adam “Pacman” Jones (6 percent).
Housing in 2009: Up as Well as Down
Overall housing news in 2009 could continue to be grim if – as predicted – a flood of Alt-A and option adjustable-rate mortgages reset and push homeowners with previously strong financial situations into foreclosure.
“We’re in the middle of the game here,” said Joseph Seneca, professor of economics at Rutgers University in New Jersey. “There’s significant further unwinding to come. We’re in a downward spiral with job losses that is reinforcing the weakness in the consumer markets, particularly in the largest investment the consumer makes, in his home.”
Seneca says the government’s aggressive efforts to stabilize housing are helping, but housing won’t really recover until prices fall so far that large numbers of buyers jump back into the game.
In the meantime, the price of housing is increasing in some areas that are immune to the economic slowdown. These areas include the energy-producing states of North Dakota, South Dakota, Okalahoma, Alaska and Montana. Washington, D.C. with its host of government and defense jobs is doing well. Boston, San Diego and Orange County, Calif., where prices have dropped enough to increase affordability significantly, are also seeing price increases.
Source: Business Week, Prashant Gopal (12/24/2008)
Forbes Calls These Cities a Bore
There are some big cities in the United States that nobody ever talks about. Forbes magazine says it’s because they are boring.
We won’t make that judgment. But Forbes says that these are cities that many had never heard of until now.
Many of these cities grew quickly because of the housing boom and lie just beyond more established locales. Now that the boom is over, these cities are getting noticed because of high foreclosure rates.
Here’s Forbes’ list of the most boring—or ignored—cities and their populations.
- Chula Vista, Calif. Population: 217,478
- Hialeah, Fla.: 212,217
- Mesa, Ariz.: 452,933
- North Las Vegas, Nev.: 212,114
- Chandler, Ariz.: 246,399
- Santa Ana, Calif.: 339,555
- Bakersfield, Calif.: 315,837
- Aurora, Colo.: 311,794
- Gilbert, Ariz.: 207,550
- Henderson, Nev.: 249,386
Source: Forbes, Joshua Zumbrun (12/10/08)
Where Prices Have Increased the Most in 2008
U.S. Home values declined an average of 8.4 percent in the first three periods of 2008, down $2 trillion in total value, according to Zillow.com Real Estate Market Report, released this week.
Thirty of the 163 metropolitan statistical areas covered by Zillow, either showed gains in the median value of homes in the area or values stabilized.
Here are the 10 areas where values increased and declined the most.
Places Where Values Increased the Most
- Ithaca, N.Y., 5.6%
- State College, Pa., 4%
- Jacksonville, N.C., 3.9%
- Winston-Salem, N.C., 3.4%
- Bay City, Mi., 3.2%
- Rochester, N.Y. 3.1%
- Greenville, S. C., 2.8%
- Anderson, S.C. 2.7%
- Burlington, N.C., 2.6%
- Spartanburg, S.C., 2.0%
Places Where Values Decreased the Most
- Las Vegas-Paradise, Nev., -24.6%
- Bakersfield, Calif., -24.9%
- Madera, Calif., -26.2%
- Gainesville, Ga., -26.4%
- Riverside-San Bernardino-Ontario, Calif., -30.4%
- Modesto, Calif., -31%
- Salinas, Calif., -32.4%
- Merced, Calif., -32.5%
- Vallejo-Fairfield, Calif., -33.2%
- Stockton, Calif., -35.5%
Ten Real Estate Predictions for 2009
2009 is likely to be a year of continuing adjustment to a changing real estate marketplace. Prepare yourself and your business with these predictions from HGTV’s FrontDoor.com Web site.
- Sellers will continue to face falling home values in the new year because they’ll be competing with banks and builders who are slashing prices to sell off the still-huge inventory of foreclosures and new homes.
- The Obama administration will act on its plan to crack down on abusive lending practices.
- Mortgage holders in danger of losing their homes will receive more assistance from a variety of programs since the Senate’s Joint Economic Committee has predicted two million foreclosures in 2009.
- Banks’ restructuring should bring increasing calm, making loan modifications and short sales easier to obtain. Eventually this will lead to a decrease in the number of bank-owned properties on the market.
- Mortgage applications will continue to receive a comprehensive review, requiring borrowers to provide extensive income and debt documentation. Those with the best credit will get the best rates.
- The foreclosure crisis has created wiser consumers, with a deeper understanding of real estate, mortgages, and credit enabling better decision-making going forward.
- Green is good with increasing numbers of buyers opting for smaller homes that are within walking distance of school and work.
- Buyers and sellers will be more and more tech savvy, relying on tools like video, webcasts, and mobile search. Consumers and practitioners will benefit from being ahead of the curve.
- Prices will be low as will interest rates, creating great buying opportunities, and likely, inspiring reluctant buyers to make their move.
- The recession will end and buyers will regain confidence in the market.
Source: Frontdoor.com (12/03/2008)
Business Picks Up Where Prices Have Tumbled
Sales are picking up in markets where prices are deflated, but the business is different than it was before the bubble burst, observers say.
The housing market in deflated markets–like Arizona, California, Florida, and Nebraska–are beginning to show signs of a rebound. Analysts say that prices have fallen to the point that those with average salaries can afford to buy once again.
“The buyers are returning,” says Lawrence Yun, National Association of Realtors chief economist. “And in such a strong way that, now, we are hearing in some cases there is multiple bidding, which hints that maybe pricing is reaching a bottom point. But inventory remains high.”
In California’s San Joaquin County, sales in September and October reached sales levels about equal to business at the height of the boom in 2005, says DataQuick, which provides property data.
But new buyers are primarily first-timers and investors looking to cash in. Local practitioners say the buyers are primarily local residents who have cash to spend.
“It’s the couple down the street that has a nice nest egg and who wants to put it into something that will give them a good return,” says Bev Marlow, head of the Central Valley Association of REALTORS®.
Source: The Christian Science Monitor, Ben Arnoldy (12/16/08)
Small Is Beautiful to Renters and Buyers
Teeny-tiny housing is increasingly appealing to buyers and renters, especially when there are spacious common areas packed with amenities. Apartments as small as 264 square feet are a big draw in Legacy Village in Plano, Texas.
Developers point to these issues as drivers in the trend:
- No money. The smaller the place, the cheaper the monthly rent or mortgage. People who don’t have money find low prices appealing.
- Small is green. Smaller units consume less space, water and energy.
- Urban renaissance. “People love the social interaction associated with density,” said Steve Patterson, CEO of Florida-based Zom, developer of rental housing from Texas to the Mid-Atlantic.
The trend is here to stay, said Michael Newman, president and CEO of Golub & Co., an international real estate development and investment firm. “In this economy, people still want to be in cool places, and they’ll trade down size for location,” Newman said.
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