New numbers from the National Association of Realtors seem to suggest that the US real estate market has turned the corner. Sales of homes and condos for April 2010 were 22.8% higher than for the same period last year while median prices rose in almost 60% of US metropolitan markets. Lawrence Yun, the frequently optimistic chief economist for the NAR said, "The housing price correction appears essentially over."
While admitting that April's strong numbers were likely influenced by an expiring $8000 Federal tax credit and acknowledging that "there will be some fallback" in the next few months, Yun cited near record low interest rates (around 5% for a 30 year fixed rate loan), growing buyer confidence and an improving economy in calling for a turnaround.
To counter the expiring Federal credit, California is offering $200 million in tax credits to first time buyers or buyers of new homes. The credit, up to $10,000 or 5% of the purchase price whichever is less, only apply to purchases of principal residences. Qualifying properties include condos, mobile homes, and single family residences but not homes constructed by taxpayers.
Still, mortgage delinquency rates continue to weigh on real estate price gains. Figures released by the Mortgage Bankers Association last week show that the number of delinquent mortgages across the country has not declined much in the last year. This could portend a steady stream of foreclosures.
In a news release the MBA's chief economist, Jay Brinkmann, offered tepid encouragement,"If mortgage delinquencies are not yet clearly improving, it also appears they are not getting worse." On the up side according to Brinkman, California's mortgage picture, once among the bleakest, is now getting brighter.
Friday, May 28, 2010
Thursday, May 13, 2010
SOMETHING AFFORDABLE
I'd never abandoned clients before but I was going to now. "Get out!" I said puffing myself up like Arnold Schwartzenegger in The Terminator. "And take Scooter with you."
I wanted to see the look on their faces when it registered that I retained some measure of self respect, that I wasn't going to cling pathetically to the slim possibility of making a sale. At any cost.
"But...," Mrs. Brown pleaded, "Couldn't you at least take us back to our car?"
"Now!" I ordered pulling abruptly to the curb and stomping on the brakes.
"Harold!" Mrs. Brown, thinking about the long walk back to my office, the humiliation, begged for her husband to intercede.
"Listen, I admit things could have gone better back there but really, there wasn't any serious damage and we'll replace the stuffed pigeon. Won't we Helen."
Helen nodded but doubt clouded her face as she imagined the replacement's actual cost.
"I found this," Burton said sheepishly as he passed a video game cartridge over the seat.
"What a nice thing to do, Burty," Mrs. Brown said. "I'm sure the owner's children will be very glad you found this." She gave her young son a big hug.
"Why don't we take you to lunch," Mr. Brown suggested, all business suddenly. "I'd like to discuss financing with you." He turned to his family in the back seat. "How's lunch sound gang? Who wants a Big Mac?"
Jenny and Burton cheered. Mrs. Brown pulled herself between the front seats and looked up at me with large spaniel eyes. "Big Mac?" she prompted with a nod and a grin.
I wanted to see them in my rear view mirror standing there, chastened as I pulled away, but...
It all started ordinarily enough. The well traveled tan Suburban lurched into our lot and a teen aged boy and girl spilled out looking green and road sick. Mr. Brown, a balding man with an American paunch, strode in carrying one of our real estate guides. Mrs. Brown, her treated blond hair a frizzy cloud, made a bee line for the bathroom. They wanted to see houses. Big pricey houses.
It had been a slow morning and my antennae were down. Thinking back on it now their manner had been too casual, too offhanded. But, as I said, it had been slow and you never know.
Mr. Brown asked if we could take my car since theirs was stuffed with bikes, fishing gear, and luggage. And did I mind if Scooter rode along. Scooter was what I'd call a yappy dog, "lively", I believe the Browns put it. A small foreign short hair bred for rodent work.
I haven't always disliked dogs. We had dogs when I was a boy. Dim witted, affectionate labs. But after living in Mammoth in a home with the only lawn in a five block radius I developed an aversion. But I wanted to bond with my clients so I told them Scooter could ride in the back of my Subaru Outback wagon.
We looked at a couple of houses without incident. Jenny, maybe fifteen and Burton thirteen traipsed behind us acting bored and exhausted as I expected they would. These were nice mountain homes but without family features like a back yard or game room.
Finally, I pulled into the driveway of the property I'd been saving. There was a large yard in back with swings and the yard bordered a deep pine woods. The kids bounded out of the car before I'd come to a stop. Scooter shot over the back seat after them.
"Well, it looks like the kids have cast their vote," I said.
Opening onto the back yard was a family room with a pool table, large screen TV and Nintendo. I showed the Browns the two downstairs bedrooms with a Jack and Jill bath and then took them upstairs to the living quarters. Personal treasures of the owners decorated dressers, coffee tables and the fireplace mantle.
Mr. Brown tested the couch. Mrs. Brown examined the kitchen. We heard giggling downstairs as the kids came in and began to shoot pool. The Browns looked relieved that their children had found entertainment.
"Look Harold they have Lennox china. Did you say this was a second home?" Mrs. Brown was going through the cupboards one by one.
"Yes, the owners only use it a couple weeks a year." Agents love to see their clients settle in, get comfortable, start to decorate. It was an $800,000 home after all and automatically I began to calculate my commission.
Mr. Brown had turned on the TV and was clicking through the channels. He stopped at Oprah. There was a transexual on. It appeared that she'd discovered she was a lesbian. Mrs. Brown headed for the master bedroom. Outside Scooter had treed a cat and was circling the trunk barking wildly.
"My word, have you ever seen so many shoes?" Mrs. Brown called from the master closet.
On Oprah the transexual was in tears. A lesbian! If she'd just stayed a man. There would have been so many more possibilities. "Gee whiz," Mr. Brown got up and located a beer in the fridge. Downstairs the kids were fighting over a video game.
"I got you again," I could hear Burton say. "This isn't even fun."
"My button got stuck," Jenny screamed. "I couldn't move."
"Liar, liar, pants on fire."
"It sticks. You try to win with this controller."
"Harry, come here. I think they have a bidet," Mrs. Brown called from the master suite.
"A bidet?…in a minute. I want to see if this person gets a date." I heard the master bathroom door close quietly.
"See you're dead. It doesn't matter. You're just a dumb girl. Girls can't play video games."
"I hate you!" Jenny screamed. I heard the game controller smash against a wall.
"Nice going, Jenny," Burton yelled.
Just then the doorbell rang. I ran downstairs to answer it. It was an animal control officer looking put out. I ran back upstairs to get Mr. Brown. "Have one of the kids bring Scooter in," he said without taking his eyes off the TV. Then yelling, "Burty can't you hear Scooter barking." I went back downstairs. The officer had his ticket book out.
"I'm a REALTOR®. I'm just showing the house," I said. "These folks are from out of town."
"Well you're not. Should have told them about the leash law. You can settle up with them."
"Come on. I'm not a dog fan myself. You could gas this one for all I care. Besides, one of the kids is fetching the animal now. We'll keep him inside." In fact no one was doing anything and Scooter was still barking and circling.
The officer looked at me. "So, you're the agent?" I nodded. "Well you're all a pack of liars far as I'm concerned. An agent ripped me off when I bought my house. Told me the roof would be fixed and nothing happened. Never returns my phone calls now. Leaks like hell. Going to cost me two grand not counting the carpet. And furniture."
"I'm sorry you had a bad experience. But that wasn't me. Besides, you should have some legal recourse. If there was an agreement to fix the roof the seller will have to pay. It's the law."
"So is this," he said. "Now you want to give me your name or do I have to call in your plates?"
I stuffed the ticket in my pocket and slunk back upstairs. Mr. Brown had helped himself to another beer and was snacking on some peanuts.
"Look," Mr. Brown jumped up and pointed at the screen. "I told you she'd get a date!" He munched his peanuts excitedly. "And a nice looking college girl, too."
"That's really something," I muttered.
Harold drained his beer and slammed the empty can down on the lamp table knocking a stuffed California quail onto the floor. The brittle thin legs snapped in two.
"Oops, damn pigeon." He tried to shove the parts back together. Feathers settled on the carpet "Helen, we ought to go." He held the bird parts and two empty beer cans out to me. "Helen!"
Helen emerged from the bedroom looking refreshed. "This is a very nice home, don't you think Harold? What happened to the bird?"
"Accident," Harold said. "Was this the last place you had for us? Burty, Jenny, we're leaving."
"Yeah."
"Kind of expensive don't you think."
"Well we're in a strengthening market, and if you consider the National Forest location…"
"Saddle up troopers," he yelled.
"…it's actually quite a bargain." But my heart was no longer in it.
The kids were still fighting as they climbed into the car. Scooter had rolled in something and Helen and Harold were busy chatting about the horse back ride they'd scheduled for the afternoon. Finally, Harold turned to me. "Be sure to give me your card. You know what we're looking for so stay in touch."
"I'm not sure I do, really. Four bedrooms, 3 baths with a family room?" I gestured to the home we'd just seen.
"Great!"
Driving back through The Village with all the windows down I had my Arnold moment. I just snapped. I pulled to the curb and braked so hard everyone slammed against their seat belts. "Get out!" I wanted to see them in my rear view mirror huddled on the sidewalk, chastened as I pulled away.
No one moved.
One summer I lived in Tangier, Morocco in a small apartment a friend of my brother's had found for me. It was in the medina, the old quarter, and not far from the friend's antique and curio shop. I used to hang out in the shop and watch Majid work the tourists fresh off of the cruise ships anchoring in the bay. He had an infallible sense of who was really shopping and who was merely playing at haggling. Majid would cleverly outrage the pretenders and expertly negotiate with the buyers.
Finally, one by one the Browns got out of the car. Scooter jumped down from behind the back seat and slunk onto the sidewalk, his tail tucked.
Before closing the door Harold leaned in, "We're just looking for something affordable," he said. "Is that so bad?"
No one told me selling real estate was going to be easy. Or even enjoyable. You take whoever walks through the door. You do your best. Sometimes you make a sale. Sometimes you get a Big Mac. I didn't talk about financing with the Browns. We didn't talk about much of anything.
I wanted to see the look on their faces when it registered that I retained some measure of self respect, that I wasn't going to cling pathetically to the slim possibility of making a sale. At any cost.
"But...," Mrs. Brown pleaded, "Couldn't you at least take us back to our car?"
"Now!" I ordered pulling abruptly to the curb and stomping on the brakes.
"Harold!" Mrs. Brown, thinking about the long walk back to my office, the humiliation, begged for her husband to intercede.
"Listen, I admit things could have gone better back there but really, there wasn't any serious damage and we'll replace the stuffed pigeon. Won't we Helen."
Helen nodded but doubt clouded her face as she imagined the replacement's actual cost.
"I found this," Burton said sheepishly as he passed a video game cartridge over the seat.
"What a nice thing to do, Burty," Mrs. Brown said. "I'm sure the owner's children will be very glad you found this." She gave her young son a big hug.
"Why don't we take you to lunch," Mr. Brown suggested, all business suddenly. "I'd like to discuss financing with you." He turned to his family in the back seat. "How's lunch sound gang? Who wants a Big Mac?"
Jenny and Burton cheered. Mrs. Brown pulled herself between the front seats and looked up at me with large spaniel eyes. "Big Mac?" she prompted with a nod and a grin.
I wanted to see them in my rear view mirror standing there, chastened as I pulled away, but...
It all started ordinarily enough. The well traveled tan Suburban lurched into our lot and a teen aged boy and girl spilled out looking green and road sick. Mr. Brown, a balding man with an American paunch, strode in carrying one of our real estate guides. Mrs. Brown, her treated blond hair a frizzy cloud, made a bee line for the bathroom. They wanted to see houses. Big pricey houses.
It had been a slow morning and my antennae were down. Thinking back on it now their manner had been too casual, too offhanded. But, as I said, it had been slow and you never know.
Mr. Brown asked if we could take my car since theirs was stuffed with bikes, fishing gear, and luggage. And did I mind if Scooter rode along. Scooter was what I'd call a yappy dog, "lively", I believe the Browns put it. A small foreign short hair bred for rodent work.
I haven't always disliked dogs. We had dogs when I was a boy. Dim witted, affectionate labs. But after living in Mammoth in a home with the only lawn in a five block radius I developed an aversion. But I wanted to bond with my clients so I told them Scooter could ride in the back of my Subaru Outback wagon.
We looked at a couple of houses without incident. Jenny, maybe fifteen and Burton thirteen traipsed behind us acting bored and exhausted as I expected they would. These were nice mountain homes but without family features like a back yard or game room.
Finally, I pulled into the driveway of the property I'd been saving. There was a large yard in back with swings and the yard bordered a deep pine woods. The kids bounded out of the car before I'd come to a stop. Scooter shot over the back seat after them.
"Well, it looks like the kids have cast their vote," I said.
Opening onto the back yard was a family room with a pool table, large screen TV and Nintendo. I showed the Browns the two downstairs bedrooms with a Jack and Jill bath and then took them upstairs to the living quarters. Personal treasures of the owners decorated dressers, coffee tables and the fireplace mantle.
Mr. Brown tested the couch. Mrs. Brown examined the kitchen. We heard giggling downstairs as the kids came in and began to shoot pool. The Browns looked relieved that their children had found entertainment.
"Look Harold they have Lennox china. Did you say this was a second home?" Mrs. Brown was going through the cupboards one by one.
"Yes, the owners only use it a couple weeks a year." Agents love to see their clients settle in, get comfortable, start to decorate. It was an $800,000 home after all and automatically I began to calculate my commission.
Mr. Brown had turned on the TV and was clicking through the channels. He stopped at Oprah. There was a transexual on. It appeared that she'd discovered she was a lesbian. Mrs. Brown headed for the master bedroom. Outside Scooter had treed a cat and was circling the trunk barking wildly.
"My word, have you ever seen so many shoes?" Mrs. Brown called from the master closet.
On Oprah the transexual was in tears. A lesbian! If she'd just stayed a man. There would have been so many more possibilities. "Gee whiz," Mr. Brown got up and located a beer in the fridge. Downstairs the kids were fighting over a video game.
"I got you again," I could hear Burton say. "This isn't even fun."
"My button got stuck," Jenny screamed. "I couldn't move."
"Liar, liar, pants on fire."
"It sticks. You try to win with this controller."
"Harry, come here. I think they have a bidet," Mrs. Brown called from the master suite.
"A bidet?…in a minute. I want to see if this person gets a date." I heard the master bathroom door close quietly.
"See you're dead. It doesn't matter. You're just a dumb girl. Girls can't play video games."
"I hate you!" Jenny screamed. I heard the game controller smash against a wall.
"Nice going, Jenny," Burton yelled.
Just then the doorbell rang. I ran downstairs to answer it. It was an animal control officer looking put out. I ran back upstairs to get Mr. Brown. "Have one of the kids bring Scooter in," he said without taking his eyes off the TV. Then yelling, "Burty can't you hear Scooter barking." I went back downstairs. The officer had his ticket book out.
"I'm a REALTOR®. I'm just showing the house," I said. "These folks are from out of town."
"Well you're not. Should have told them about the leash law. You can settle up with them."
"Come on. I'm not a dog fan myself. You could gas this one for all I care. Besides, one of the kids is fetching the animal now. We'll keep him inside." In fact no one was doing anything and Scooter was still barking and circling.
The officer looked at me. "So, you're the agent?" I nodded. "Well you're all a pack of liars far as I'm concerned. An agent ripped me off when I bought my house. Told me the roof would be fixed and nothing happened. Never returns my phone calls now. Leaks like hell. Going to cost me two grand not counting the carpet. And furniture."
"I'm sorry you had a bad experience. But that wasn't me. Besides, you should have some legal recourse. If there was an agreement to fix the roof the seller will have to pay. It's the law."
"So is this," he said. "Now you want to give me your name or do I have to call in your plates?"
I stuffed the ticket in my pocket and slunk back upstairs. Mr. Brown had helped himself to another beer and was snacking on some peanuts.
"Look," Mr. Brown jumped up and pointed at the screen. "I told you she'd get a date!" He munched his peanuts excitedly. "And a nice looking college girl, too."
"That's really something," I muttered.
Harold drained his beer and slammed the empty can down on the lamp table knocking a stuffed California quail onto the floor. The brittle thin legs snapped in two.
"Oops, damn pigeon." He tried to shove the parts back together. Feathers settled on the carpet "Helen, we ought to go." He held the bird parts and two empty beer cans out to me. "Helen!"
Helen emerged from the bedroom looking refreshed. "This is a very nice home, don't you think Harold? What happened to the bird?"
"Accident," Harold said. "Was this the last place you had for us? Burty, Jenny, we're leaving."
"Yeah."
"Kind of expensive don't you think."
"Well we're in a strengthening market, and if you consider the National Forest location…"
"Saddle up troopers," he yelled.
"…it's actually quite a bargain." But my heart was no longer in it.
The kids were still fighting as they climbed into the car. Scooter had rolled in something and Helen and Harold were busy chatting about the horse back ride they'd scheduled for the afternoon. Finally, Harold turned to me. "Be sure to give me your card. You know what we're looking for so stay in touch."
"I'm not sure I do, really. Four bedrooms, 3 baths with a family room?" I gestured to the home we'd just seen.
"Great!"
Driving back through The Village with all the windows down I had my Arnold moment. I just snapped. I pulled to the curb and braked so hard everyone slammed against their seat belts. "Get out!" I wanted to see them in my rear view mirror huddled on the sidewalk, chastened as I pulled away.
No one moved.
One summer I lived in Tangier, Morocco in a small apartment a friend of my brother's had found for me. It was in the medina, the old quarter, and not far from the friend's antique and curio shop. I used to hang out in the shop and watch Majid work the tourists fresh off of the cruise ships anchoring in the bay. He had an infallible sense of who was really shopping and who was merely playing at haggling. Majid would cleverly outrage the pretenders and expertly negotiate with the buyers.
Finally, one by one the Browns got out of the car. Scooter jumped down from behind the back seat and slunk onto the sidewalk, his tail tucked.
Before closing the door Harold leaned in, "We're just looking for something affordable," he said. "Is that so bad?"
No one told me selling real estate was going to be easy. Or even enjoyable. You take whoever walks through the door. You do your best. Sometimes you make a sale. Sometimes you get a Big Mac. I didn't talk about financing with the Browns. We didn't talk about much of anything.
Wednesday, May 12, 2010
HEDGE FUND GIANT SAYS, "BUY!"
John Paulson, the hedge fund manager who pulled down nearly $4 billion by making bets against the housing market in 2007, has turned bullish on real estate. In a May 10 online article for Market Watch, Alistair Barr wrote that Paulson is calling for appreciation of 3% to 5% in home prices this year and another 8% to 12% in 2011.
"My advice to all Americans—if you don't own a home today now's the time to buy one," Paulson said. "If you already own one, now's the time to buy another one. If you already own two, it's time to help your children buy a home."
The comments were made in a conference call Monday to investors in his $34 billion Paulson and Company hedge funds. Paulson noted that when incomes, mortgage rates and median prices are considered, homes are at their most affordable levels in 50 years. He cited the 290,000 jobs added to payrolls last month, low mortgage rates and rising corporate profits in predicting 4-5% GDP growth in 2011 and a sharp V shaped economic recovery.
Data released by the National Association of Realtors last week support Paulson's optimism. Home prices rose in most U.S. cities in the first quarter, loan delinquencies declined and the number of pending sales were up 21.1% over March of 2009.
Of course, the future is never entirely clear and not everyone is so sanguine. Many point out that first time home buyer Federal tax credits, which expired last month, likely skewed sales figures higher. And troubled mortgage behemoths Freddie Mac and Fannie Mae both expect housing to show weakness through the rest of 2010. Still, as John Paulson's success illustrates, those who anticipate the market may reap big rewards.
"My advice to all Americans—if you don't own a home today now's the time to buy one," Paulson said. "If you already own one, now's the time to buy another one. If you already own two, it's time to help your children buy a home."
The comments were made in a conference call Monday to investors in his $34 billion Paulson and Company hedge funds. Paulson noted that when incomes, mortgage rates and median prices are considered, homes are at their most affordable levels in 50 years. He cited the 290,000 jobs added to payrolls last month, low mortgage rates and rising corporate profits in predicting 4-5% GDP growth in 2011 and a sharp V shaped economic recovery.
Data released by the National Association of Realtors last week support Paulson's optimism. Home prices rose in most U.S. cities in the first quarter, loan delinquencies declined and the number of pending sales were up 21.1% over March of 2009.
Of course, the future is never entirely clear and not everyone is so sanguine. Many point out that first time home buyer Federal tax credits, which expired last month, likely skewed sales figures higher. And troubled mortgage behemoths Freddie Mac and Fannie Mae both expect housing to show weakness through the rest of 2010. Still, as John Paulson's success illustrates, those who anticipate the market may reap big rewards.
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