Archive for October, 2008
Are Homeowners Clueless About Their Home’s Value?
October 30th, 2008 categories: Real Estate Market
According to a recent survey by Zillow.com, the worst place in the world to find out how much your home is worth, only 51% of homeowners surveyed think that their home lost value in the last year.
32% thought the value of their home increased
17 % thought the value of their home stayed about the same
The author seemed stunned by this, remarking:
“There’s no doubt we’ve been deluged with depressing economic and housing news over the past few months. Every day is a new headline, every channel has a new pundit and the recession debate has shifted from “if” to “how long.”
I thought we were headed for a full-fledged depression? Nevermind. Zillow seems to think people must be pollyannish or have tissue in their ears while listening to the constant media attention on faltering home prices, subprime mortgages and bailouts. Even the title of their article analyzing the survey says a lot - “Strangely, “Not My House” Sentiment Continues, Albeit a Smaller Group.” So, if you think your home isn’t worth less than it was last year you’re a weirdo?
I have this expert analysis:
The survey doesn’t really account for why people think the value of their home may have increased. If you asked me, I would say “yes, my home increased in value because I just remodeled a bathroom and did some major landscaping.” People may in fact be justified in thinking their home has increased in value because of significant upgrades, renovations or improvements.
There may be another explanation. Their home may actually be in a market where home values are steady or in a market segment where there is demand for housing.
And yet one more, from GregC who commented on the article:
“Perhaps this is because for the vast majority of homeowners in the country the value of their home TO THEM has not changed.
It is still generating the imputed rent of a place to live and enjoy with their families. Perhaps they do take the long range view that their home has neither lost of gained value - to them - until they cash it out.”
Sure, there are sellers out there clinging to 2007 prices but as the market slows, we’ll find out who the motivated sellers are and aren’t. They’ll be the ones with the sold sign dangling from the white post in their front yard.
One last snipe against Zillow. I can’t trust anyone who can’t add. In the figure that breaks down the data by region and puts the figures into a pie chart, the Northeast’s pie chart doesn’t add up to 100%. According to the chart, 45% of people surveyed in the Northeast thought their home decreased in value, 23% thought it increased and 19% thought it stayed the same. 45+23+19=87. And I only scored a 575 on my math SATs.
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Home Buyers to Sellers in Connecticut- That Ship Has Sailed
October 27th, 2008 categories: Central Connecticut News & Information, Home Buyers, Home Sellers
Home buyers are communicating to home sellers loudly and clearly - don’t accept my offer and I will move on. And when you finally adjust your price to where it should be or should have been, I will have found another home I like just as much and a seller who is willing to work with me.
Case in point: A client put in an offer earlier this year on a home in the Farmington Valley. The offer was 13% below the asking price but we had solid comparables to back up our offer. The house was overpriced by more than 10%.
After some negotiation, the buyer was actually willing to overpay for the property slightly but the seller was unwilling to come down on the price by more than $10,000. Another $3,000 off the price and they would have sealed the deal.
My buyer client walked. Or, in keeping with my theme, sailed their boat to a different port.
Flash forward 4 weeks. I get a call from the listing agent who tells me that the sellers have reduced their price by $10,000. They will likely end up selling it for less than what my buyer was willing to pay for it, if they sell at all.
Unfortunately, her clients missed the boat (sorry, I can’t help myself). My client already put in an offer on another property and is closing soon.
The seller made two classic mistakes: they overpriced the house and were unwilling to negotiate with a real buyer.
Overpricing
A home seller’s best opportunity to sell is within the first three weeks a home is listed. The best offers by the most qualified buyers typically come at this point.
After that, you most likely have to play catch up with the market. In this case, we are in a slightly declining market (we are not Florida or California) and sellers, with their agent’s advice, should anticipate the market.
Furthermore, you risk other homes selling for less, driving down the value of your home, or worsening economic or credit problems.
The example I used above is still overpriced by at least $7,000. The sellers haven’t learned their lesson yet.
Unwilling to Negotiate With Real Buyers
A real buyer comes to a seller with a decent deposit, some money down (preferably) and a mortgage pre-approval (even better, a Buyer’s Edge Approval from McCue Mortgage which is only subject to appraisal and a sales contract). They are actually qualified and want to buy your house! What a combination.
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Everyone’s Talking About Real Estate Prices - West Hartford High End
October 23rd, 2008 categories: Real Estate Listings, Real Estate Market
I was talking to my hairdresser, Lori Henry, about real estate last week. Not only is she an expert at cutting (and I’ll admit, coloring) my hair, Lori is a business woman and all around smart cookie.
She asked me about business and we started talking about housing prices. She’s noticed how high-end homes are selling for much less than they were a year or two ago, even in desirable West Hartford.
I found some examples in West Hartford:
16 Berwyn Road (5 bed. 2.2 bath, 3034 sf) sold for $649,900 in June 2007.
47 Berwyn Road (5 bed. 2.1 bath, 2945 sf) sold for $615,000 in June 2008.
26 Chestnut Hill Road sold for $505,000 in August 2007 and is currently on the market for $500,000.
3 Fawn Brook sold for $1,170,000 in August 2007 and is currently on the market for $980,000.
6 Stratford Road sold for $533,000 in October 2007 and sold in July 2008 for $530,000 (also had an unknown amount of seller concessions).
Now, these examples don’t demonstrate a huge reduction in values but show a downward trend. These prices show that if you’re a buyer, you need offer less than what recent comparable sales tell you the value of the property is and that if you’re a seller, you also need to price your home below recent comparable sales.
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File Under “No Duh” - PMI Risk Index Predicts Housing Price Declines
October 21st, 2008 categories: Real Estate Market
According to the quarterly report released in October 2008 by the PMI Group (the private mortgage insurance people) which measures the probability that an area’s housing prices will decline in the next two years,
“increases in foreclosures and unemployment have significantly heightened the risk of future home price declines.”
Furthermore, the report compares metropolitan statistical areas (MSAs) and the news continues to be bad for California and Florida.
“The highest risk of future price declines remains in Fort Lauderdale-Pompano Beach-Deerfield Beach, FL (99.5 percent), Riverside-San Bernardino-Ontario, CA (99.5 percent), Orlando-Kissimmee, FL (99.4 percent), Miami-Miami Beach-Kendall, FL (99.3 percent), Tampa-St. Petersberg-Clearwater, FL (99 percent).
The areas with the lowest risk of price declines — less than one percent — are in Fort Worth-Arlington, TX, Dallas-Plano-Irving, TX, Houston-Sugar Land-Baytown, TX and Pittsburgh, PA.”
How did Connecticut cities fare?
Not too bad actually, with the exception of Eastern CT.
Bridgeport/Norwalk/Stamford - Minimal Risk or 5 percent
Hartford/West Hartford/East Hartford - Minimal Risk or 1.9 percent
New Haven/Milford - Minimal Risk or 8.8 percent
Norwich/New London - Low Risk or 14.1 percent
To see the entire report, visit the PMI site.
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Connecticut Cities Avoid List of Forbes Next Foreclosure Capitals
October 20th, 2008 categories: Home Buyers, Home Sellers, Investors/Landlords, Real Estate Market
Forbes.com just released their predictions for the next round of cities to be hardest hit by foreclosures. Move over Stockton - hello, Jacksonville.
The good news is that no city in Connecticut is on the list - the bad news is that such a list exists.
The cities named are:
1. Jacksonville, FL
2. Fresno, CA
3. Naples, FL
4. Miami, FL
5. Orlando, FL
6. Santa Cruz, CA
7. Merced, CA
8. Oxnard, CA
9. Deltona, FL
10. Santa Barbara, CA
RealtyTrac.com ranks the Top 100 metro areas for foreclosures in the 2nd quarter of 2008 as New Haven/Milford rank #57, Stamford/Norwalk/Bridgeport is #64 and Hartford is #74.
For August of 2008, CT ranks as the 17th top (worst) state for foreclosures.
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