SubscribeDow Above 10,000 For The First Time in a Year – Housing Prediction to Come True?
October 14, 2009
The Dow Closed Above the magic 10,000 mark for the first time in over a year, meaning that our 401(k)’s should be back from being 201(k)’s, and that it is time to test my response to the question “What will it take for the housing market to come back?”
I have been saying “Dow over 10,000″, with the logic that a great deal of our local wealth was held in stock on various mutual and hedge funds, and so stocks rebounding to near 2007/2008 levels would return that wealth to our stock accounts, with a little consumer optimism coming along for the ride.
While I never claimed to be Carnac the Magnificent, let’s see how the market has been responding to the rise of the Dow over the last month or so.
Strike 1: The median price of a home for sale in Palo Alto is about $200K lower than a year ago.
Strike 2: My theory that homes in the top 25% of the market are more sensitive to swings in wealth, IPO activity and stock values seems to have sprung a leak as well. The top of the market was on an upswing a year ago, and prices have dropped a bit over the last couple of weeks.
I’m going to quit while I’m ahead, but will defend my prognostication with the observation that the mix of homes can cause the median to bounce around a bit as well.
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Thanks for reading, and I hope you are well diversified.
The Market Report – June 2009
June 5, 2009
I send my clients a monthly market update and thought I’d share it with the blogosphere. If you agree and think that I’m a genius, please comment below. If you disagree and think I’m an idiot, keep your thougths to yourself. You can send me an email to subscribe to your city of interest (Atherton, Los Altos, Los Altos Hills, Menlo Park, Mountain View, or Palo Alto), and I’ll add you to my monthly update list. The commentary is as of June 1, 2009, that data is real-time.
May brought a ray of light into the local real estate market, as consumers, boosted by the rising stock market and low interest rates, began buying up homes on the market. Both Pending Sales and Pending Prices are up (see attached chart for a historical comparison), absorption numbers have outpaced new inventory both statewide and locally, and multiple offers on homes in Los Altos and Palo Alto have come back into play. At the low end, investors are superheating the Santa Clara and San Jose markets for single-family homes under $500,000, with many bank owned properties getting 20 – 30 mostly cash or all cash offers.
In general, prices are at about 2004 levels, and interest rates continue to hover near historic lows, with conforming loans under 5% for 30 years, and Jumbo loans staying around 6%. The big question on everyone’s’ mind is, “How long will this last?”
This past week we saw rates on the 10 year bond jump 0.5%, putting upward pressure on mortgage rates, which responded by rising for the different conforming loans. To get some additional input on whether this is short-term volatility or a longer term trend, I called my favorite mortgage bankers, who all had the same opinion, and all disagree (with all due respect) with Fed Chairman Bernanke that we will be out of the woods by the end of 2009.
The abridged version is that the government is subsidizing rates on loans backed by Fannie Mae and Freddie Mac (who are backed by taxpayers), so long-term mortgage rates are unsustainably low. The funds being used to subsidize these loans are finite, and limited, so there is upward pressure on the various conforming rates to rise to the real market rate of 6% as we are seeing in the Jumbo market.
Unusually, BOTH Buyers and Sellers are facing threats from market forces, creating compelling arguments to act now:
Sellers:
- Rising interest rates cut the purchasing power of Buyers, reducing the pool of potential Buyers for a given property
- The threat of rising unemployment and continuing slowing of the economy reduces consumer confidence and spending, especially on big-ticket items like cars and houses
- The current tax incentives for buying homes are limited to 2009. Reduced government from taxes due to lower incomes and corporate earnings makes it less likely that these are extended in 2010.
Buyers:
- That unemployment thing
- Qualifying for mortgages is getting more difficult, and the regulation of the process has tightened, adding new hurdles to the underwriting and appraisal process as the market overcorrects for the Wild West of the last few years.
- Rising rates cut purchasing power
Wow, kind of heavy stuff for a Friday. The good news is that summer is less than 3 weeks away!
On to the numbers:
Atherton:
Currently, the Median Price of a Single Family Home in Atherton is $3,996,500 with a range of $899,000 to 16,800,000. 48% (versus 41% last month) of the homes in Atherton have had price reductions, as Sellers are accepting that the market has shifted, and the average number of Days on Market has risen to 133 days from 114 last month, meaning that we should see more price reductions as the market searches for equilibrium.
Los Altos:
Currently, the Median Price of a Single Family Home in Los Altos is $1,999,900. 36% (up from 32% last month) of the homes in Los Altos have had price reductions, as Sellers are learning that the market has shifted, and the average number of Days on Market has dropped slightly to 98 days versus 96 last month.
Los Altos Hills:
Currently, the Median Price of a Single Family Home in Los Altos Hills is $3,146,500. 36% (up from 23% last month) of the homes in Los Altos Hills have had price reductions, as Sellers are learning that the market has shifted, and the average number of Days on Market has dropped to 173 days versus 187 last month.
Menlo Park:
Currently, the Median Price of a Single Family Home in Menlo Park is $1,447,000. 38% (versus 37% last month) of the homes in Menlo Park have had price reductions, as Sellers are resisting that the market has shifted, and the average number of Days on Market has risen to 127 days from 116 last month.
Mountain View:
Currently, the Median Price of a Single Family Home in Mountain View is $899,000. 55% (versus 38% last month) of the homes in Mountain View have had price reductions, as Sellers are learning that the market has shifted, and the average number of Days on Market has decreased to 121 days from 127 last month.
Palo Alto:
Currently, the Median Price of a Single Family Home in Palo Alto is $1,595,000. 41% (versus 43% last month) of the homes in Palo Alto have had price reductions, as Sellers are resisting accepting that the market has shifted, and the average number of Days on Market has risen to 99 days from 94 last month.
Sorry, If You Build It, They Are Not Coming
May 12, 2008
(photo credit: mop squad)
Kevin Costner was hot 20 years ago in Field of Dreams. So was that comment “If you build it, they will come.” I received a fantastic comment from a home buyer today for my previous post How Listing Agents Unintentionally Sabotage Their Own Staged Listings:
- Danica Says:
May 12th, 2008 at 10:51 am That is so true. As a potential buyer, I have been frustrated many times by Craigslist ads that have no picture. There are a ton of houses out there, and I’m trying to weed out the ones I don’t want to look at – it’s really impossible without a picture.I’ve seen so many places, staged or unstaged, that sounded great on paper and then turned out to be hideous-to-unlivable in person.More importantly, even though online listings at a place like Craigslist are free and offer almost unlimited space, a lot of sellers just put up one or two sentences and no pictures – and to me that says “I don’t have it together enough to actually market this house.”And my experience has been that often, that means they don’t know how to deal with the paperwork, or with my questions, or even with basic social skills.I guess in a way it’s helpful to see a boring, picture-less, one-line house ad – because it tells me I don’t want to deal with that seller. But it’s still hilariously frustrating to see an ad online that says something like, “2 BR 1.5 BA NICE!!! MUST SEE CALL JAMES SMITH REALTOR 555-1414!”
This is a brilliant comment, it just goes to show that with that in this fast changing real estate market, our buyers’ behaviors have changed. The old attitude of “If you list it, they will come” no longer works. That worked in the movie Field of Dreams for Kevin Costner but guess what? Kevin Costner is OLD news now. That phrase was coined 20 years ago, so is that attitude. It’s freaking 20 years old. Shouldn’t we move on with the times?
A savvy marketer knows that today’s consumers are so de-sensitized by advertisements that they need more interactive and user-friendly contents [Note: "content," NOT "ads."] to make an educated decision before buying. You can see that through the fast rising numbers of business blogs and web 2.0 services. People want interaction, not sales agenda ramming down their throats.
Also, today’s agents no longer holds monopoly to MLS information. Internet has made today’s buyers more savvy, shrewed, efficient and much more likely to start their buying process without agents. Additionally, if the consumers cannot be satisfied by you, it’s very easy for them to go elsewhere. To be able to work in a competitive market, as a listing agent or FSBO (For Sale By Owners), you will need to get on with the time to provide a comprehensive and user-friendly marketing package.
To do so, here are a few tips as pointed out by Danika, our lovely buyer:
*Online presence is KEY. Staging the property will instantly make the home show-ready online. Once you have staged, having big & high quality photos is a must.
*Don’t just do 1 photo, if you are allowed to post 10, why not do 10?
*Place ONLY good quality photos that will entice buyers’ appetite. Photos like featuring the local eateries or parking lots are not really adding anything to your listing.
*Be creative, not boring and cookie cutter in your listing descriptions. “2Br for sale” is kind of a duh since anyone can read it from the sheet. Why not say something more descriptive that showcase the unique selling points of your listing?
*MOST IMPORTANT: Provide reasonable expectations for buyers. If your listing sounds like the “IT” property to buy and buyers walked into an ill-maintained home, they will turn around and leave immediately because you have wasted their time. If the house is staged, keep it staged while you sell. If you property was already on market then staged, showcase the staged photos online and on flyers and take out the old unstaged photos.
Happy selling!
Cheers,
Cindy
What Eliot Spitzer Can Teach You About Listing Photos
March 17, 2008
Unlike Hollywood, sex scandal is not a career launcher for politicians like Eliot Spitzer, now former New York Governor and someone who had single-handedly tanked his own career.
First of all, he is no Paris Hilton. People don’t want to link him with a sex scandal. Second of all, there is a drastic difference between his political image & persona comparing to his exposed image, unlike Paris Hilton who has at least been very consistent in her image as a party girl. So it was not a huge shock that Paris made a sex tape somewhere.
Eliot Spitzer, right, apologised to his family for “private failings” [AFP]
What does Spitzer have to do with Real Estate & Listing Photos?
Like someone in the limelight, your listing needs to present a consistent image front and back, inside and out. In a competitive market, your buyers are critical and they will be picking your listing apart. Also with the ease of internet shopping, it is very easy to overlook your listing while someone else’s looks much nicer and easier on the eye.
I see many MLS photos that present an inconsistent story that does not tell the story of the house.
Let’s look at some real MLS photos I recently pulled off the web:
It’s too dark to see anything. How big is the room, what is the purpose of this room, can you see? The room also has the “Titanic Effect” where everything is tilted to one side.
What’s the selling point of this kitchen? More importantly, where is the counter? Does this image say “I am a good seller who takes care of my house?”
Ah I get it, your listing has a floor.
What an interesting splash pattern on the floor, was there a dead body?
Am I looking at your floral arrangements or at your house?
Are you trying to sell me this house or this giant cabinet? I see I can fit, oh just about 1/3 of the bed into the room.
Are you advertising for your listings or its neighborhood vendors? Shockingly I see this very often in MLS photos where people show signs of local shops, etc. where there are less than 10 pictures of the home itself. In real estate photos, quantity does NOT equal to quality. As buyers, we want to see quality photos that represent the home well.
Are we selling the seller’s interesting collections or the house?
Now you see why photos are important? The MLS photos is a tool for you to tell the story of the house that you are selling. Leverage it well will bring you success in driving traffic to the open house and showing. We all know a photo is worth a 1,000 words, so let your pictures do the talking.
As the listing agent, you have a tremendous power and control over how you can present and market your listing in the best light. After all, presenting a listing is like presenting your single friend to the dating market — your single friend is gotta look good out there! So let’s make a pack together: us stagers will provide the nice staged home effects ready for show and you the agents will present wonderful and well-shot photographs on the MLS!
Happy selling,
Cindy
Rain or Shine — What’s your preference? Depends if You’re a Buyer or Seller…
January 26, 2007
After a long spell of unseasonal sunshine, it looks like the rain may be back. The forecast for this weekend gives us nearly 50/50 odds of being rained out.
Here’s the question — if you’re active in the market right now, which would you prefer: rain or shine? I’d say it depends if you’re a buyer or seller.
If you’re a seller, you definitely want good weather. Bright sunshine and balmy weather triggers the release of home buying pheromones and gets you lots of weekend open house traffic. The more interest in your home, the better.
If you’re a buyer, especially a really committed one, you definitely want bad weather. Cloudy, overcast days, and preferably rain definitely dampens home buyer enthusiasm and reduces competition for that home you’re after.
This may explain the unusually early spring buying season we’ve been experiencing. We often get Seattle-type weather this time of year, with week after endless week of drizzing rain. As soon as the rain stops, the spring buying season starts. Last year the rain stopped late, and so the buyers came out late too. This year the rain stopped early — or so we thought — and the last two weeks have seen pretty frantic activity.
If my theory is right, and this rain persists, the market may taper off and wait until the rain really ends for the season.
