NAR Forecasts Housing Downturn to Continue in 2008
February 9, 2008 | Filed Under Real Estate News, Real Estate Trends and Statistics | Leave a Comment
Sales activity in the housing market will continue to be soft in the months ahead but should gradually improve during the second half of 2008, especially if loan limits are increased, NAR reports in its latest forecast. Sales of existing homes are projected to be at a pace of 4.9 million in the first half of the year and rise to 5.8 million in the second half before leveling off to 5.60 million for all of 2009. Existing-home sales totaled 5.65 million in 2007. Existing-home prices are expected to fall 1.2 percent in 2008 to $216,300 and rise 3.2 percent to $223,200 in 2009. National median existing-home prices fell 1.4 percent in 2007.
NAR also projects new-home sales to decline 17.7 percent in 2008 to 637,000 and then climb 7.6 percent to 685,000 in 2009. The median price of new homes is expected to fall 4.3 percent to $236,300 in 2008 and then increase 5.0 percent in 2009.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, slipped 1.5 percent compared to the prior month and was 24.2 percent below December 2006. The index rose in the Midwest by 3.4 percent but was 17.3 percent below a year ago. But the index fell in the other three regions. In the South, it fell 3.0 percent in December (27.0 percent below a year ago); in the Northeast, it slipped 1.7 percent (26.0 percent below December 2006); and in the West, it fell 3.1 percent (24.1 percent below a year ago).
Lawrence Yun, NAR’s chief economist, says higher loan limits for conventional mortgages could have a positive impact on sales. “If higher limits are enacted very quickly, we’ll see a faster and more meaningful recovery by expanding safe, affordable financing in high-cost areas — that, in turn, would help to stimulate overall economic activity.”
On low-balling. News from the front.
February 6, 2008 | Filed Under Real Estate Trends and Statistics, Real Estate Investment, Boston Condos, Boston Real Estate | 1 Comment
As a real estate professional watching the Suze Orman show the other night, I was disturbed to hear Suze encouraging buyers to put in low-ball offers due to the market. Now, I usually agree with most of what Suze has to say, but real estate is local and she often seems to forget that.
As a Boston real estate agent living everyday on the front lines of Boston’s real estate market, my perspective is somewhat different. First off, the Boston market has seen a slowdown, but even though fewer properties are selling, the median price continues to rise in Boston’s prime neighborhoods. Sellers also understand that if they really want to sell, they will need to price their home competitively and make sure it “shows” well. By offering a low-ball of 10-20 percent on a correctly priced home, the buyer is doing a disservice to his or herself and is most likely to get a flat “NO”. The buyer will need to either wait a good three months or come back with a higher price…a negative negotiating position. You don’t want to move twice while the other party hasn’t budged; it shows your cards.
I have seen buyer after buyer lose properties this way in the past few months. I have seen buyers shocked as their bid is not only rejected, but another competing bid is accepted within days. In order to understand if a low-ball offer is a good idea, speak with your buyer’s agent. If he or she is an Accredited Buyer’s Representative, the agent should be able to tell you if the home is competitively priced for the value, or if it is a good idea to low-ball.
Boston Real Estate Market Seen As Better Off Than Nation’s
January 27, 2008 | Filed Under Real Estate News, Real Estate Trends and Statistics, Boston Real Estate | Leave a Comment
Boston seems to be better positioned for recovery than other parts of the country. At least that is what was portrayed at a dinner hosted by the Builders Association of Greater Boston last Wednesday and reported by Banker and Tradesman. Boston’s low unemployment and steady income growth will help the local housing market rebound, predicted Robert Denk, an economist with the National Association of Home Builders.
States such as California and Florida, as well as cities such as Las Vegas and Phoenix saw extreme price growth in a short amount of time. “These are markets that are riddled with thse bad (sub-prime) loans. They’re going to cause trouble in teh market,” said Denk. He also added that “Boston, in particular, (doesn’t) have these problems.”
The national headlines may not apply specifically to the Boston real estate market, as we have seen in recent months. Every market is different and, though national trends are important, local trends tend to be more meaningful.
Cash-flow investments
October 25, 2007 | Filed Under Real Estate Trends and Statistics, Real Estate Investment, Mortgage and Finance | 3 Comments
So you want to invest in real estate. You want to buy a condo and rent it out for a decent cash-flow, say 7%-10% return on investment (down payment) per year, after all expenses of course. You have heard all over the media that it’s a buyer’s market and foreclosures are up; so why can’t you find a condo with positive cash-flow?
The large majority of properties currently on the market, even in the student saturated neighborhoods of Allston and
Real Estate Company is Closing - Victim of Housing Slump
September 27, 2007 | Filed Under Real Estate Trends and Statistics | 1 Comment
Newsday.com reports today that a real estate company in West Long Beach, NJ is closing due to the housing market and cannot operate anymore.
Here is the full article:
WEST LONG BRANCH, N.J. - Foxtons is closing because of the slumping housing market.
The West Long Branch-based real estate company says it’s contemplating bankruptcy protection for an orderly shutdown.
It will lay off 350 of its 380 workers and intends to keep 4,400 listings on the market.
Senior vice president John Blomquist tells The Asbury Park Press the company no longer has the liquidity to operate as a going concern.
Foxtons was founded in 1999 on the principle that consumers shouldn’t pay a 6 percent commission. Agents were paid salaries and customers were charged 2 percent.
The company was sold in 2004 and eventually commissions were raised to motivate agents to show Foxtons’ homes.
A private-equity firm bought it in May.
…I don’t see it happening in Boston in the near future.
Source: Newsday.com: Real estate company closing, victim of housing slump
MAR’s August 2007 Housing Release
September 25, 2007 | Filed Under Real Estate Trends and Statistics, Boston Condos, Boston Real Estate | 1 Comment
The Massachusetts Association of REALTORS® (MAR) reported today that the number of single-family homes sold in August is up 6.6 percent compared to the same time last year, with median sales prices up slightly. Sales of condominiums were up 3.4 percent, with median sales prices up 4.8 percent.
“It is definitely a positive sign to see two consecutive months of year-over-year sales gains to end the summer,” said MAR President
There were 4,700 detached single-family homes sold this August, a 6.6 percent increase over the 4,411 homes sold the same time last year. On a month-to-month basis, there was a 7.7 percent increase compared to the 4,363 homes sold this past July.
The median selling price for single-family homes in August was $357,000, an increase of 1.4 percent compared to $352,000 in August 2006. On a month-to-month basis, the August median selling price is down 2.4% percent compared to July.
The condominium market continues to remain steady with 2,235 units sold this August, a 3.4 percent increase over the same time last year. On a month-to-month basis, condominium sales were up 15.6 percent compared to 1,933 units sold this past July.
The median selling price for condominiums is $291,250 in August, up 4.8 percent over the same time last year ($278,000 in August 2006). Compared to this past July, the median selling price of a condominium is down 0.8 percent (from $293,500). The August median selling price is the third highest level since MAR began tracking median selling prices in 2002.
Inventory and Days on Market:
The inventory of residential properties (detached single-family homes and condos) on the market as of August 31, 2007 decreased 18 percent compared to the same time last year (from 64,735 listings in 2006 to 52,989 listings in 2007). At the current sales pace, this represents approximately 7.9 months of supply, a decrease from 9.9 months of supply in August 2006. This is the seventh straight month that year-over-year inventory levels have gone down. On a month-to-month basis, the average months of supply went down from 8.6 months of supply in July 2007.
The inventory of single-family homes fell 16.0 percent from August 2006 levels (43,928 listings in 2006 to 36,846 listings in 2007) which translates into 8.2 months of supply in August 2007. This is down from 10.0 months of supply the same time last year, and down from 8.6 months of supply in July 2007.
Inventory continues to drop in the condominium market as well. August inventory went down 22 percent to 7.4 months of supply, a decrease from 9.6 months in August 2006 (20,807 listings in 2006 to 16,143 listings in 2007) and down from 8.6 months this past July. It is considered a balanced market when there is between 7.5 and 8.5 months of available housing supply.
Detached single-family homes stayed on the market an average of 127 days in August 2007 compared to an average of 114 days in August 2006, while condos stayed on the market an average of 124 days compared to 106 days in August 2006.
Sales and price data from the MAR report reflects transactions occurring through REALTOR®-affiliated multiple listing services in the Commonwealth, and account for approximately 80 percent of all real estate sales in
Rent Control Rejected Again in Boston
August 9, 2007 | Filed Under Real Estate Trends and Statistics, Uncategorized | Leave a Comment
The Boston City Council voted to reject a new system of rent control in Boston. The bill would have given tenant activists the ability to collectively organize and negotiate while requiring owners to open their buildings to provide the activists with the ability to leaflet and solicit tenants in their own homes. It would have also required owners to meet with each tenant activist group at least twice a year for a maximum of six hours each meeting. If the owner would have failed to meet the activists, he or she may have been prohibited from obtaining any future permits from the city. The action was opposed by both the Boston Herald and the Boston Globe, as well as by the Greater Boston Real Estate Board.
My take: I can’t even believe rent control is still being discussed. Is there a problem of affordable housing in Boston? Absolutely. Is rent control EVER the answer? Absolutely not.
Real Estate is one of they only fields left where Joe Shmoe can use Adam Smith’s “invisible hand” to build wealth. When the free market is left to its own devices, neighborhoods flourish because owners care. Nicer units in nicer neighborhoods command higher rent, so owners invest in their assets rather than letting them decay. Rent control interferes with the natural ebb and flow of supply and demand…and that is just something that shouldn’t be messed with. It has failed so many times; at least it looks like some people are learning. Rent control is a good political sound-bite, but it is a long-term disaster.
The answer to the affordable housing problems in Boston is in affordable housing programs ordained by the city, such as the Leading the Way and Leading the Way II programs. New buildings must include affordable housing units, that must be re-sold or re-rented as affordable housing units. These programs should be expanded and new programs explored. We need to invest in something that works, not and economic time-bomb.
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