Prices in high-end neighborhoods in and around Phoenix are still dropping, but many of the foreclosures in harder-hit areas have moved through the system, leaving homebuyers with little to choose from. Even new construction, which is finally picking up, cannot keep up with the pace of demand. One suburban home, a foreclosed property, had 84 offers before the bank closed off further ones. This illustrates how a glut of short sales and foreclosures can hold down prices, and what can happen when the flow of such properties ends.
Showing posts with label new york times. Show all posts
Showing posts with label new york times. Show all posts
Thursday, June 21, 2012
Bidding Wars in Phoenix
Everyone knows that certain parts of the country--the ones that were growing quickly--took the biggest hit in the recent downturn. Arizona and Nevada, along with Florida, are always mentioned as places with thousands of homes for sale at drastically reduced prices. Now, things are changing, even in those states. Today's New York Times has an article about the return of bidding wars to Phoenix. The story points out that this is not necessarily because prices would have risen on their own, but because the supply is finally drying up, and there is more demand for what's left. That sounds like a normal explanation of supply and demand to me!
Wednesday, June 13, 2012
Women's Pay
There is a very interesting article in this morning's New York Times about the slowing of equal pay for women in the work force. The gap between men's pay and women's decreased steadily for several decades, but has now stopped, as has the entrance of more women into the workforce. There are many reasons for the persistent discrepancy, with about 9%, according to one study, being due to discrimination.
It's different in real estate. We're the original "equal pay for equal work" profession. Even when women were discriminated against in sales situations, we still paid the same amount to women for the sales they had. It may be surprising to some to know that women were once the minority in the real estate agent pool, because that dynamic has shifted completely. In fact, one of the major factors in that shift is the fact that women could go into real estate without having to work next to a man who was getting paid more for the same work. In addition, child care, which was cited in today's article as still being the cause of some of the remaining pay differential, is less of an issue in real estate, where the hours and days are flexible.
There is a downside to real estate pay, of course. You only get paid when something sells or leases. Agents receive a commission at the closing or signing, and a 1099 at the end of the year, so they are responsible for many of their own expenses and taxes. We "eat what we kill", from a compensation point of view, so not everyone can afford to enter this field, because you have to spend money while you are getting up to speed. But it's nice to know that, when you do succeed, you won't be dependent upon someone else to decide what you will earn. When you combine that with the flexibility, variety, and the satisfaction of being your own boss, we expect to see a lot more younger people--both men and women--turn to real estate as a career.
It's different in real estate. We're the original "equal pay for equal work" profession. Even when women were discriminated against in sales situations, we still paid the same amount to women for the sales they had. It may be surprising to some to know that women were once the minority in the real estate agent pool, because that dynamic has shifted completely. In fact, one of the major factors in that shift is the fact that women could go into real estate without having to work next to a man who was getting paid more for the same work. In addition, child care, which was cited in today's article as still being the cause of some of the remaining pay differential, is less of an issue in real estate, where the hours and days are flexible.
There is a downside to real estate pay, of course. You only get paid when something sells or leases. Agents receive a commission at the closing or signing, and a 1099 at the end of the year, so they are responsible for many of their own expenses and taxes. We "eat what we kill", from a compensation point of view, so not everyone can afford to enter this field, because you have to spend money while you are getting up to speed. But it's nice to know that, when you do succeed, you won't be dependent upon someone else to decide what you will earn. When you combine that with the flexibility, variety, and the satisfaction of being your own boss, we expect to see a lot more younger people--both men and women--turn to real estate as a career.
Monday, February 13, 2012
Rent or Buy Decisions Now
The New York Times recently had a real estate section cover story about how both sales prices and rental rates were out of sight for many areas of NYC. There didn't seem to be a good choice for someone looking to move to make. Here, we see things as being different. Rentals in our region are increasingly scarce. New Haven has the lowest apartment vacancy rate in the country. In addition, we haven't seen the wave of foreclosures that people think may be coming in our state. If or when it does, that will mean that large numbers of people will go from being owners to being renters, for at least the seven years that they will need to wait before they can borrow again. Where are they all going to go?
On the other side of the equation, prices for homes are low. Very low. And so are mortgage rates. That makes it a good time to buy, if you believe that prices are going to rise. In that regard, we got some help from a Trulia article, albeit a backhanded compliment. Greater New Haven was listed among the ten cities where the number of people looking to move out most exceeds the number of people looking to move in. It also predicted that prices would go down a couple of percent by the third quarter of this year. BUT, it went on to say that price increases would average 5.3% per year through 2016, meaning that someone who buys a home and plans to hold onto it for five years, whether living in it or renting it out, will be likely to get quite a bit more for it when he or she goes to sell.
That seems to me to make the rent versus buy decision pretty simple around here. It's the time to buy.
On the other side of the equation, prices for homes are low. Very low. And so are mortgage rates. That makes it a good time to buy, if you believe that prices are going to rise. In that regard, we got some help from a Trulia article, albeit a backhanded compliment. Greater New Haven was listed among the ten cities where the number of people looking to move out most exceeds the number of people looking to move in. It also predicted that prices would go down a couple of percent by the third quarter of this year. BUT, it went on to say that price increases would average 5.3% per year through 2016, meaning that someone who buys a home and plans to hold onto it for five years, whether living in it or renting it out, will be likely to get quite a bit more for it when he or she goes to sell.
That seems to me to make the rent versus buy decision pretty simple around here. It's the time to buy.
Monday, January 23, 2012
More Good News
Paul Krugman just wrote in the New York Times that we may be in a "virtuous cycle" instead of a vicious cycle. That is, he sees the economy improving, leading housing statistics to improve, leading to a further improvement in the economy. It's about time, but it's very welcome.
We've always know that FDR was right: The biggest thing we have to fear is fear itself. Once people are afraid that they may lose their jobs, their benefits, or their overtime, they cut back on their expenditures, giving their employers less income and leading to cutbacks. That's where we've been for a few years now.
Krugman makes the point that the Europeans have neglected to deal with the basic problems in their economies, whereas here we did let interest rates go down and we did let our housing bubble deflate. That leaves the US in a position to improve now, and all the signs are there. So that's something to cheer about, and hope that the virtuous cycle continues.
We've always know that FDR was right: The biggest thing we have to fear is fear itself. Once people are afraid that they may lose their jobs, their benefits, or their overtime, they cut back on their expenditures, giving their employers less income and leading to cutbacks. That's where we've been for a few years now.
Krugman makes the point that the Europeans have neglected to deal with the basic problems in their economies, whereas here we did let interest rates go down and we did let our housing bubble deflate. That leaves the US in a position to improve now, and all the signs are there. So that's something to cheer about, and hope that the virtuous cycle continues.
Tuesday, December 13, 2011
Where Retail Goes, Will Real Estate Follow?
Retailers seem very happy with sales so far this holiday season. Even booksellers, according to today's New York Times, have been seeing big increases. Given the lackluster sales in the past few seasons, this seems to indicate that consumers have loosened their purse strings.
What does that mean for real estate? While the fact that someone will buy a book doesn't necessarily mean that they will buy a house, the fact that someone won't buy a book almost certainly means that they will not make a large purchase like a house. So it's a prerequisite that consumers have to feel more confidence before the real estate market will improve. Hopefully, we're almost there. Given the historic low interest rates, it's hard to believe that we haven't gotten there already. Perhaps the start of a new year will push us over into a seller's market, or at least into a balanced one.
What does that mean for real estate? While the fact that someone will buy a book doesn't necessarily mean that they will buy a house, the fact that someone won't buy a book almost certainly means that they will not make a large purchase like a house. So it's a prerequisite that consumers have to feel more confidence before the real estate market will improve. Hopefully, we're almost there. Given the historic low interest rates, it's hard to believe that we haven't gotten there already. Perhaps the start of a new year will push us over into a seller's market, or at least into a balanced one.
Monday, July 4, 2011
Be Patriotic--Buy Some Real Estate
Happy Fourth of July! The front page of last Thursday's New York Times showed the results of a poll of Americans regarding their feelings about real estate. Not surprisingly, it indicated that a big majority of those polled believe that owning real estate is still the American dream, and that it would be their choice, even though those same people were more divided as to the safety of such an investment.
It used to be that almost everyone believed that buying a house was the best and safest thing to do with their money. Their faith in the second half of that statement has been shaken by the recent financial crisis, but the first half is undeniably still true. Even those who do not own homes believe in the mortgage deduction's importance, and hope that the primacy of real estate will remain steady.
That's good news for the future of the economy. While we realize that there is still work to be done in convincing people to put down their deposits and buy, it's clear that they wish to be convinced to act. It also seems true that they would be happy to find reasons to do so. When that's the case, it's important to find ways to get people off the fence. Once those who are not absolutely required to sell begin to do so, others will follow. The consumer confidence necessary for that isn't there right now. It's up to government, unfortunately, to find a way to make that so. Jobs have to be created, and the future needs to look a little brighter. But the underpinnings are there. The beliefs remain.
So this Fourth of July, while you are watching the fireworks and soaking up the sun, make plans to get out there soon and buy some real estate. It's the patriotic thing to do!
It used to be that almost everyone believed that buying a house was the best and safest thing to do with their money. Their faith in the second half of that statement has been shaken by the recent financial crisis, but the first half is undeniably still true. Even those who do not own homes believe in the mortgage deduction's importance, and hope that the primacy of real estate will remain steady.
That's good news for the future of the economy. While we realize that there is still work to be done in convincing people to put down their deposits and buy, it's clear that they wish to be convinced to act. It also seems true that they would be happy to find reasons to do so. When that's the case, it's important to find ways to get people off the fence. Once those who are not absolutely required to sell begin to do so, others will follow. The consumer confidence necessary for that isn't there right now. It's up to government, unfortunately, to find a way to make that so. Jobs have to be created, and the future needs to look a little brighter. But the underpinnings are there. The beliefs remain.
So this Fourth of July, while you are watching the fireworks and soaking up the sun, make plans to get out there soon and buy some real estate. It's the patriotic thing to do!
Tuesday, February 22, 2011
Adding Value to Luxury Listings
Today's New York Times had an amusing but informative article today about things people have done to raise the prices on their properties. Perhaps the most extreme example was a seller who regrouted the bathroom tile and added $100,000 to the estimated value of the listing, on the theory that cracked and dirty grouting would tend to make buyers think that they would need to do a major bathroom renovation. Another broker told of a client who changed the kitchen cabinets and repainted, thereby getting an offer $100,000 higher than the broker had anticipated.
Most of the examples involved big dollars, but obvious pointers: Get rid of the clutter. Clean the rugs. If you are a landlord, put in new appliances. Replace towels and bath mats with fluffy new ones. Improve the lighting. We all know these things, but it's sometimes hard to think objectively about a place we've lived, especially when the expense incurred will benefit the new owner and not ourselves. It's worth doing things that improve either curb appeal or the initial impact during a showing. Last week's Times real estate section even talked about a new trend of using pets (well behaved and freshly groomed) to make open houses more homey. Who knows? Fido might even replace the tried-and-true cookie baking, to fill the home with a delicious aroma.
The best story, however, was the last example in the article. One broker tells her clients to go out and buy 25 pairs of expensive designer shoes, which will pay for themselves in a higher sales price, as "people want to step into your life". Isn't that like the closet envy scene in the first Sex and the City movie? Well, if it works, what woman wouldn't want two dozen new pairs of great shoes?
Most of the examples involved big dollars, but obvious pointers: Get rid of the clutter. Clean the rugs. If you are a landlord, put in new appliances. Replace towels and bath mats with fluffy new ones. Improve the lighting. We all know these things, but it's sometimes hard to think objectively about a place we've lived, especially when the expense incurred will benefit the new owner and not ourselves. It's worth doing things that improve either curb appeal or the initial impact during a showing. Last week's Times real estate section even talked about a new trend of using pets (well behaved and freshly groomed) to make open houses more homey. Who knows? Fido might even replace the tried-and-true cookie baking, to fill the home with a delicious aroma.
The best story, however, was the last example in the article. One broker tells her clients to go out and buy 25 pairs of expensive designer shoes, which will pay for themselves in a higher sales price, as "people want to step into your life". Isn't that like the closet envy scene in the first Sex and the City movie? Well, if it works, what woman wouldn't want two dozen new pairs of great shoes?
Monday, November 16, 2009
More Confirmation on Pricing
The lead article in yesterday's New York Times Real Estate section confirmed yet again what real estate practitioners know, but are often unable to convey persuasively to others. It gave examples of sellers who priced their units aggressively in today's market, and kept lowering the prices without success. It contrasted that with sellers who priced so as to seem to be a "good deal", and told about the bidding wars that have been taking place in such cases.
Underlying this phenomenon is a change in the marketplace from the past: Now buyers, who get more information through the Internet and by looking at more places before buying, are more educated about prices than they used to be. They can tell when something is priced to sell, and they know that they have to move quickly. They also know that, often, there will be multiple offers; therefore, if they want to get the property, they may have to bid over the asking price.
This has happened to us so many times that we can all attest to its effectiveness. We cannot, however, seem to convince sellers that they will actually receive higher offers by pricing the property lower. It's not unlike the psychology of pricing store items at sale prices, to stimulate demand and encourage prompt purchases. Of course, the seller can always reject an offer, if it does not meet his or her specifications. The point is to get offers, particularly to get enough offers to assure that fair market value is established.
Separating oneself from the pack is key in this market. Unfortunately for our business, pricing aggressively does that!
Underlying this phenomenon is a change in the marketplace from the past: Now buyers, who get more information through the Internet and by looking at more places before buying, are more educated about prices than they used to be. They can tell when something is priced to sell, and they know that they have to move quickly. They also know that, often, there will be multiple offers; therefore, if they want to get the property, they may have to bid over the asking price.
This has happened to us so many times that we can all attest to its effectiveness. We cannot, however, seem to convince sellers that they will actually receive higher offers by pricing the property lower. It's not unlike the psychology of pricing store items at sale prices, to stimulate demand and encourage prompt purchases. Of course, the seller can always reject an offer, if it does not meet his or her specifications. The point is to get offers, particularly to get enough offers to assure that fair market value is established.
Separating oneself from the pack is key in this market. Unfortunately for our business, pricing aggressively does that!
Thursday, August 27, 2009
More Good News
The New York Times yesterday had the most positive article on real estate activity that I've seen there in many, many months. My interpretation was that the dreaded "W" or "L" recoveries may be replaced by a more robust resurgence. The "capital letter" recoveries suppose that the recent upticks in real estate and the stock market will be followed by either a second downturn (as happened in the Great Depression) or a period characterized by bumping along the bottom of the economic cycle.
Those who are now more optimistic seem to think that all the stimuli provided by the government will boost real estate sales to levels that are more than were expected. It may be that the stimuli are even too great, or incorrectly aimed, but they may do their job anyway. As most experts will admit, the effect of psychological factors in economics is far greater than its mathematical bases would predict. We have all known for a long time now that there is a crisis of confidence in our country, and that something would have to happen to get us off the fence, and spending again.
I still submit that it's the weather. It's a good an explanation as anything else.
Those who are now more optimistic seem to think that all the stimuli provided by the government will boost real estate sales to levels that are more than were expected. It may be that the stimuli are even too great, or incorrectly aimed, but they may do their job anyway. As most experts will admit, the effect of psychological factors in economics is far greater than its mathematical bases would predict. We have all known for a long time now that there is a crisis of confidence in our country, and that something would have to happen to get us off the fence, and spending again.
I still submit that it's the weather. It's a good an explanation as anything else.
Thursday, May 28, 2009
National Statistics
In trying to make sense of national statistics on real estate sales, I have been reading a number of different sources. One I received today was from a friend with a real estate company in Madison, Wisconsin. He sent a link to the Fannie Mae/Freddie Mac numbers, which include all resales with conforming loans, and are divided by state and by quarter. These are different from the Case-Shiller numbers, which only cover 20 metropolitan areas. The numbers for CT in the Fannie Mae index indicate that prices fell most sharply last year, and that overall prices have fallen about 15% in total. The numbers for the latest quarter indicate that prices have levelled off for now.
These figures agree pretty well with what the New York Times reported this morning. The article in the Times said that prices in the past month actually crept up from the month before. That could be because of the mix of properties sold, but it does indicate that some people who were on the fence have jumped back into the market.
The third source, the Commercial Record, shows town by town variations in what has sold this year versus last. Again, it shows increased activity lately, although the first quarter was pretty dismal.
Whichever measurement we use, it seems to corroborate that we have at least and at last hit bottom, and are looking forward to heading up!
These figures agree pretty well with what the New York Times reported this morning. The article in the Times said that prices in the past month actually crept up from the month before. That could be because of the mix of properties sold, but it does indicate that some people who were on the fence have jumped back into the market.
The third source, the Commercial Record, shows town by town variations in what has sold this year versus last. Again, it shows increased activity lately, although the first quarter was pretty dismal.
Whichever measurement we use, it seems to corroborate that we have at least and at last hit bottom, and are looking forward to heading up!
Sunday, March 1, 2009
Optimism
Well, I felt a little ashamed as I read the front page article in today's New Haven Register Business section. I guess I'm more pessimistic than others about the Obama recovery plan, and let's hope I'm wrong. After all, the whole point is to make people WANT to buy; it doesn't even really matter whether or not the incentives even make sense. I also read in the New York Times today that most who listened to the President's speech last Tuesday were left with a positive impression of the government's current handling of the economy. That's good news.
I suppose I should be forgiven for being more down than most, since real estate would be at the bottom of anyone's list of thriving industries right now. However, in the end it doesn't matter what I think--it only matters whether others are spurred to action by the program. I have been saying that I think first-time homebuyers are the ones who least need incentives, since they have no history with which to compare today's conditions. In addition, they don't have houses to sell before they can buy. One could look at it another way, though: If those at the beginning of the chain go out and buy property, everyone further along can then sell and buy another property themselves.
As many have said, much of the current crisis comes from a lack of consumer confidence, which is now at its lowest rate since measurement began in 1967. Every recovery scenario depends upon getting that number up, since economics turns out to be more related to what people think in many cases than to what the graphs say. Most of us realize that a great deal hinges on jobs, since almost no one will buy what they don't need if they think they might not have a job in the near future. Convincing people that jobs will be preserved and created is key, and, unfortunately, can't be done in one location or in one sector of the economy.
The next few weeks, which take us into the traditional spring buying and selling season, will be critical for any hope of a real estate recovery this year. I'm keeping my fingers crossed, but you shouldn't bother doing that--just go out and buy some property!
I suppose I should be forgiven for being more down than most, since real estate would be at the bottom of anyone's list of thriving industries right now. However, in the end it doesn't matter what I think--it only matters whether others are spurred to action by the program. I have been saying that I think first-time homebuyers are the ones who least need incentives, since they have no history with which to compare today's conditions. In addition, they don't have houses to sell before they can buy. One could look at it another way, though: If those at the beginning of the chain go out and buy property, everyone further along can then sell and buy another property themselves.
As many have said, much of the current crisis comes from a lack of consumer confidence, which is now at its lowest rate since measurement began in 1967. Every recovery scenario depends upon getting that number up, since economics turns out to be more related to what people think in many cases than to what the graphs say. Most of us realize that a great deal hinges on jobs, since almost no one will buy what they don't need if they think they might not have a job in the near future. Convincing people that jobs will be preserved and created is key, and, unfortunately, can't be done in one location or in one sector of the economy.
The next few weeks, which take us into the traditional spring buying and selling season, will be critical for any hope of a real estate recovery this year. I'm keeping my fingers crossed, but you shouldn't bother doing that--just go out and buy some property!
Sunday, December 28, 2008
2009 Can't Come Too Soon
We real estaters are eagerly awaiting the drop of the ball in Times Square, so that the page can turn from 2008 to 2009, when we fervently hope that consumers will start buying real estate again. On my run this morning, I was explaining to one of my friends that it DOES make sense to trade up, since he will save more on the new house than he will "lose" selling the old one in this market. When will people stop putting their lives on hold? Of course, I'm biased.
I've been thinking a lot about consumer behavior over the past few days. We went to see Frost/Nixon in the Connecticut Post Mall, and discovered that the world is indeed still flocking to malls, or at least they were there, searching for bargains, on the day after Christmas. Movies seem to be attracting crowds, as we've seen on our movie binge after Christmas. In addition to Frost/Nixon, we saw Milk and Doubt. Of the three, Milk stands out as an amazing film; of course, I did see the play versions of the other two, so the suspense wasn't there. We saw all those movies after seeing several plays in a row at the start of the month. We loved A Civil War Christmas at Long Wharf Theatre, Rough Crossing at Yale Rep, and Mamma Mia at the Shubert, plus I also enjoyed Sister's Christmas Catechism at Long Wharf. It's amazing to be able to live in a small city like New Haven and see such a broad diversity of great theater. A Civil War Christmas, in particular, I expect to see popping up all over the country in the next few years--but we saw it here first!
According to other friends, liquor is selling, beauty salons are doing well, and restaurants seem to be holding their own. The last fact really puzzles me, and maybe it's not true. It seems as though eating out would be the first luxury to go, before you stop buying cars and clothes. I went into a clothing chain store yesterday, and the clothes seem to be selling for less than the cloth alone would cost. I'm glad that all you need to run is a pair of sneakers!
I've been thinking a lot about consumer behavior over the past few days. We went to see Frost/Nixon in the Connecticut Post Mall, and discovered that the world is indeed still flocking to malls, or at least they were there, searching for bargains, on the day after Christmas. Movies seem to be attracting crowds, as we've seen on our movie binge after Christmas. In addition to Frost/Nixon, we saw Milk and Doubt. Of the three, Milk stands out as an amazing film; of course, I did see the play versions of the other two, so the suspense wasn't there. We saw all those movies after seeing several plays in a row at the start of the month. We loved A Civil War Christmas at Long Wharf Theatre, Rough Crossing at Yale Rep, and Mamma Mia at the Shubert, plus I also enjoyed Sister's Christmas Catechism at Long Wharf. It's amazing to be able to live in a small city like New Haven and see such a broad diversity of great theater. A Civil War Christmas, in particular, I expect to see popping up all over the country in the next few years--but we saw it here first!
According to other friends, liquor is selling, beauty salons are doing well, and restaurants seem to be holding their own. The last fact really puzzles me, and maybe it's not true. It seems as though eating out would be the first luxury to go, before you stop buying cars and clothes. I went into a clothing chain store yesterday, and the clothes seem to be selling for less than the cloth alone would cost. I'm glad that all you need to run is a pair of sneakers!
Tuesday, December 23, 2008
OK, Enough Snow!
Well, we were waiting for the snow and we got it! Once the snow started on Friday, it came down so fast that going home was an adventure. I tried to dig out the car closest to the bottom of the driveway so I could go to yoga on Saturday morning, but couldn't do it. Saturday night, all four of us took that bottom car to a party in Norwalk, and ended up pushing it off the driveway at midnight that night. Sunday was another day when none of us went anywhere; there is a downside to living in the highest-up house on Long Island Sound in Connecticut! We're 85 feet above sea level, and the water is right at the bottom of our driveway. If we miss the road by much, we're toast. Our plowing company had gone out of business since last winter, but hadn't bothered to tell us, so a BIG thank you to George Sanders of West Lake Landscaping, who saved the day (or night) by plowing us out on Saturday night. In the interim, we missed a couple of parties, but no days of work. Nature becomes much more important when you live so close to the water. When it's not snow or ice, it's flooding on Old Quarry Road or Route 146.
All that ice means that I haven't been running, either. I can't wait to get out there again! I'm just too clumsy to take the risk of falling. All those Christmas cookies and no exercise is not a good combination, though.
Our New York Times did come on all those days, however, and I got to read about Carl Icahn's suit against Realogy. Realogy is the parent corporation of Coldwell Banker, C21, Sotheby's, ERA, and CB Commercial. They have a LOT of debt, and they were trying to restructure by replacing the debt people already held with less debt of a higher caliber. Carl Icahn didn't like that, and the court agreed with him. It may be tough to be an independent company in this market, but at least we don't have billions of dollars of debt. Now they're looking for another way to restructure. Maybe they'll start by spending only what they have to spend--there's a novel idea!
All that ice means that I haven't been running, either. I can't wait to get out there again! I'm just too clumsy to take the risk of falling. All those Christmas cookies and no exercise is not a good combination, though.
Our New York Times did come on all those days, however, and I got to read about Carl Icahn's suit against Realogy. Realogy is the parent corporation of Coldwell Banker, C21, Sotheby's, ERA, and CB Commercial. They have a LOT of debt, and they were trying to restructure by replacing the debt people already held with less debt of a higher caliber. Carl Icahn didn't like that, and the court agreed with him. It may be tough to be an independent company in this market, but at least we don't have billions of dollars of debt. Now they're looking for another way to restructure. Maybe they'll start by spending only what they have to spend--there's a novel idea!
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