--H.L. Mencken, The Baltimore Evening Sun, July 26, 1920
Posted on 04/07/2012 9:10:58 PM PDT by Graybeard58
For homeowners planning to sell this year, condolences are in order.
With the median price hitting a new low since its 2007 peak, Realtors say a big chunk of today’s sellers are in the “have-to” camp as the home buying season is set to shift into higher gear.
For home buyers, it remains a dream market, and Realtors say they’ve seen a pick-up in activity as buyers look to take advantage of low interest rates and still-sinking prices.
Twenty-five-year-old Sandra Becerra closed in February on a three-bedroom, 1½-bath tri-level home in Burbank she snapped up for $145,000. She said it originally listed for $220,000 two years ago. She put 5 percent down and got a 30-year, fixed-rate FHA mortgage with a 3.875 percent interest rate.
“It’s basically a new house except for the frame,” Becerra said. “It has new doors, new siding, a new roof, new floors, new kitchen appliances, cabinets. Both bathrooms are all brand new. That’s why I went for it because I just thought it was such a great deal. I didn’t really want to pass it up. I think it’s a very, very good time to buy.”
Such bargains reflect the staggering price declines that are expected to continue to fall under the pressure of the still-growing number of foreclosures.
The median price of homes sold in the Chicago area fell 11.5 percent in February to $135,000 from a year earlier, excluding Leap Day sales. The price is the lowest since the Illinois Association of Realtors began keeping records in 2004. The median price in 2011 was down nearly 45 percent from the peak of $254,000.
“You have two basic people that are selling,” said Zeke Morris, operating principal and managing broker at Keller Williams Realty in Hyde Park. “One is folks that have owned in excess of 10 years and they can still have the ability to get out and make a reasonable return on their original investment. And then you have the other folks that are in some type of distress.”
About 70 percent of the sellers he has worked with in the past couple of years fall into that latter category, he said.
Among sales that took place in the Chicago area last year, 22 percent were bank-owned or in foreclosure, according to RealtyTrac. That’s an improvement from 2010, when 34 percent of sales fell into those categories and from 2009 when 40 percent did. But the dropoff last year is linked to a slowdown in foreclosures because of improper documentation, and the number is expected to rise this year because of a legal settlement with major banks.
This year, “more sales are going to be in the foreclosure and short-sale area,” said Loretto Alonzo, president of the Realtors association.
“The traditional seller, unless they have to sell their house, they’re still going to hold onto it because they don’t have the equity they need to move up into another house or they’re not just willing to accept the devaluation of the homes lately,” said Alonzo, broker owner of Century 21 Alonzo & Associates in La Grange Park. “They’re saying, ‘I will stay where I’m at’.”
Buyers, on the other hand, are coming into the market, and more deals are getting done. Home sales in the Chicago area jumped to the highest level for the month of February since 2008 as prices continued to fall, according to the Illinois Association of Realtors’ latest figures.
But that trend is expected to be short-lived. Geoffrey Hewings, director of the University of Illinois’ Regional Economics Applications Laboratory, has forecast that while sales will rise 11 to 30 percent year-over in March and April, they will fall 4 to 10 percent May through August.
As for median sales prices, he forecasts they’ll drop between roughly 8 to 12 percent from March through June and slide from about 4 to 7 percent in July and August, giving buyers more reason to enter the market as others have already done this year.
“Sales volume, the total contracts written, is up 67 percent in February of 2012 vs. February of 2011, pretty significant,” Bob Dohn, assistant manager at Coldwell Banker in Schaumburg, said of his office. “We’re seeing more and more activity. I’ve been busier than a one-armed paper hanger.”
Lauren Brunton landed a deal on a home through an estate sale after her attempt to make a short sale purchase on another property fell through when the seller backed out. The first-time home buyer closed this year on a two-bedroom, one-bath home in Itasca. The house was originally listed at $194,900 in mid-August, but she paid $142,000 for it. She was happy with the price and the 4.25 percent interest rate.
“I think it’s the right time to buy,” said Brunton, who visited about 15 houses. “There are a lot of houses up for sale, and it’s pretty vast in terms of the selection.”
I do not want to sell my house yet and am in a position to buy without having to sell first. The dilemma is, what to do with my house if I don't sell it right away, while waiting for a better sellers market. I do not want renters but that may be the way I have to go.
I'm advised that it's not good to just let a house sit vacant for very long. I guess I may have to let it sit until the ideal renter comes along.
Those property taxes keep coming too, whether anyone lives in it or not.
I am pricing my house to sell and will then buy. Buy low (low prices at low interest) and sell high-inflation is coming and real estate rides the train.
Yeah, buyers and lenders are always fired up about falling property values. /s
Thanks Graybeard58.
In June 2007 the Missus accepted an offer from a firm in Boca Raton. We listed our house in suburban Atlanta and accepted an offer in late July, closing in mid-August.
When we arrived in FL we could see that things were plummeting, so we leased a home (new, never titled, held by the developer who was caught with a half-sold subdivision when the music stopped).
We leased for far longer than first anticipated, finally purchasing a home in October 2011 (for $300K, the first owner paid $664K in April of 2006). In retrospect you can see in the Case-Shiller time series data that we accepted the offer on the Atlanta house in the peak month of prices there, and closed in the first month of price declines there. At the time the index was near 134, recently for Atlanta it has plummeted into the high 80’s - which equates to a price level last seen in late 1997(!)
As I look back to our old Atlanta neighborhood, the house we sold for $306K in August of 2007, would probably have to be priced today around $210K-$215K today.
What has been going on in Atlanta recently is not so clear. The unemployment rate there has not moved up, yet prices declined abruptly in the last 3 months of 2011 and in January of 2012. Perhaps some large-scale REO portfolios have been released onto the market. Georgia is a very fast foreclosure process state, so when lenders want to step on the accelerator - they get properties that add to the REO inventory in about 3-4 months (after initiation of the process). Here in Florida that is more like 3 years.
--H.L. Mencken, The Baltimore Evening Sun, July 26, 1920
Rent rates are climbing rapidly, and would provide a steady income until the crash comes; why not rent it out?
.
In the meanwhile we have theses “shoots” budding showing the stimulus is working. Prices keep on falling....its the stimulus at work giving the intended Obamian results, ~ wiping out the peoples equities. In the meanwhile, he is loading up their debt, government per capita debt.
Great math isn’t it?
FUBO
The world got flipped upside down when our economy was transformed to flippers instead of living in a home. The fact that your 'home' value goes down doesn't matter. The value of the house is only the price that someone is worth purchasing it for.
Renting is a great option in this economy. You don't have the mortgage albatross in case you need to move for work. Traveling and moving around the country to find a job is a must today. Also, you don't pay the local taxes, repairs, insurance, etc.
A vacant house falls apart faster than an occupied one. Various appliances and the plumbing do not do well when not used. Also, a minor leak goes undetected in an unoccupied house and turns into something serious.
If you look up the definition of "real property" and the related concept of ownership or "title" as it's called in real estate you will see that what we call "ownership" acutally fails that test. Perpetual property taxes prevent true ownership, especially at the levels we are being taxed today.
Government has DESTROYED the American Dream.
Yes you do pay the taxes and insurance. Unless your land lord is, well, either a very charitable person or an idiot.
These costs are factored into the monthly rent.
Yes, its factored into rent. But, it is easier to negotiate to a landlord with cash than a insurance company or your local govt.
just closed at 4.25%. Purchased at 1996 pricepoint. If you can buy, buy now. It won’t get any better and if the interest rates drop to 2% (very doubtful) you can always refi.
Got present RE rented just by talking to our immediate neighbors and letting them know, we would offer to their friends first, so they could control who their new neighbor would be. Prospective tenants were told we’d known all the neighbors for over 20 years and will remain in contact with them on a regular basis and the neighbors all knew each other. A relative is local phonenumber contact for propertymanager stuff like calling a plumber. A maildrop was set up with a local address to mail rent checks. If they didn’t like the idea that we’d be dropping by from time to time to visit our old neighbors, they were free to find somewhere else to rent. No need for them to know right now that we’re actually 300 miles away. If they last beyond the first six months, they’ll find out soon enough and it won’t matter cause they’ll be keepers. Pre-existing households versus new households formed by marriage, divorce, moves into state, etc, is predicted by some to reach critical mass circa 2014/5 in Calif; then we’ll see a seller’s market return and we’ll look at listing it. Your state mileage may vary.
The seller of the ranch we bought, btw, just bought 40 acres in Missouri. Ya’ll better hurry afore Missouri is sold out ! :)
The property tax rates in Texas are, frankly, deplorable. It's one of the reasons I will NEVER own property in Texas.
Yes, I understand there is no state income tax in that state, but nonetheless a high property tax rate is repellent to me.
It is as you say: It is never paid off.
The Second Foreclosure Tsunami Is Coming, And Is About To Kill Any Hopes Of A “Housing Bottom”
Here’s the simply math: there will be no housing bottom until the 9 million excess homes clear. Period. Until then it is a buyer’s market, even if said buyer is unable to obtain bank financing, as ultimately it will be the seller who is forced to monetize (or vacate if underwater) their home in a world of ever diminishing cashflows. The fear of the supply onslaught will only make the dumpage that much faster.
Courtesy of RealtyTrac we know how many homes were foreclosed upon in the period until November 2010, when robosigning became a prevalent, if short-lived issue, or roughly 330,000 a month. In the aftermath, this average has dropped to 227,000 a month: a roughly 100,000 difference in less foreclosures each month! Which means that in the deferred amount of foreclosures, over and above the already endogenous deterioration in home prices and declining household income, means that there is at least 1.6 million in homes that are just waiting for a green light to be foreclosed upon.
I guess its bloomberg vs zerohedge on this one:
California specific:
http://www.siteselection.com/issues/2012/mar/california.cfm
location, location, location :)
Farrah Fawcett’s Childhood Home on MarketZillow Blog
Date:March 12, 2012 | Author:Laura VecseyBefore she was one of “Charlie’s Angels,” blond beauty Farrah Fawcett was the daughter of an oil man in Corpus Christi, TX, where some of her hometown friends dubbed her “Drippy” just to have something catchy to go along with her evocative last name.
But a funky nickname could not detract from Fawcett’s obvious beauty and star power.
Now, three years after Fawcett died of cancer at age 62, her childhood home in southern Texas has hit the Corpus Christi real estate market for $215,000. Not a bad deal, considering that any prospective buyer would get the chance to live in the home of one of Corpus Christi’s beloved citizens and one of Hollywood’s most enduring symbols of sex appeal.
The 4-bedroom, 3-bathroom ranch has been given a nice facelift: New paint, tile, carpeting, lighting and bathroom fixtures throughout. It also boasts an updated kitchen and fresh landscaping and new driveway.
For Fawcett, there were plenty of bigger and more luxurious accommodations after her Texas childhood. In 2011, Fawcett’s 2-bedroom, 2-bathroom condo unit at The Wilshire in the Westwood real estate market of Los Angeles sold. Her former Bel-Air home on 3130 Antelo Place was also a California classic.
And then there was the fabulous Malibu beachfront house at 28124 Pacific Coast Highway shown in the YouTube video below, where scenes for “Charlie’s Angels” were filmed. Fawcett spent one full season on Charlie’s Angels before moving on to new acting roles and a new partner, Ryan O’Neal, whose Malibu house she moved to after leaving husband Lee Majors.
I took a bath on a house I lived in for 15 years (NW Chicago suburbs) because the property taxes are so high that no older midle class houses are selling in the area.
I was listening to a radio program yesterday which focused on real estate in the NYC area. The consensus was that prices there have hit bottom and are starting to rise.
Some regions were decimated - like CA, NV, and FL. Other areas were not as affected - like DC metro.
So the forecast is location related.
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