Category Archives: Real Estate News

Competing With “Investors” Has a Whole New Meaning Now

IMG_4403For people wanting to buy homes in which to live, “investors” have long been the bogeymen — the professionals with lots of cash in their pockets who sweep in, buy up properties, and either turn them into rentals or flip them for a profit.

They’re still in the picture, making buying a home difficult for ordinary buyers, especially in hot markets.

But percentage-wise, it’s looking like fewer and fewer of these investors may be professionals. This is alluded to by Bernice Ross in her article for Inman called “Ultra high net worth individuals want to work with real estate agents of their own caliber.” She describes a recent event called Luxury Connect, in which agents representing UHNWIs came together to discuss their specialized corner of the market. (Okay, I confess, I had no idea what UHNWIs means — it’s “ultra high net worth individuals.”)

At the event, Zillow’s Greg Schwartz said that, based upon a Zillow survey, 72% of high net worth individuals said they prefer real estate to the stock market as a “safe haven” for their investment. This is a reported 30% increase from five years ago. They may not be buying up scads of homes, but rather a second home for vacation or retirement — but they’re still adding to your competition as a home buyer.

Oh, and if you were picturing U.S.-based investors, that image needs revising, too. Many foreign-born investors are parking their cash in U.S. real estate, particularly in New York, Los Angeles, Miami, and San Francisco.

What else can I say, except that this seems like a good time to refer back to our earlier blog, “Don’t Let an Investor Buy the Home You Wanted!“?

Few Young People at Your Open House? There’s a Reason

Debt_collectors (2)Real estate agents have told me personally that that they’re seeing fewer young people than usual among the herds of interested home buyers, but now it’s official: A study by John Burns Real Estate Consulting found that the burden of student debt will reduce by 8% the number of homes expected to transact in 2014. (See the L.A. Times report, “Student loan debt curbs housing market by $83 billion, study says.”)

The basic problem is that, to put it semi-mathematically, a whole lot of young people owe at least $250 each month in student loans. With every $250 of debt reducing their home borrowing and purchasing power by $44,000, you can see why this swiftly puts many of them out of the running.

If you are in the process of selling your home, this doesn’t mean that no one will be out there to buy it. The real estate market is turning into a “seller’s market” (lots of interested buyers) in many parts of the United States, and some prospective buyers may have already been waiting for years to finally pay off their loans and buy their first home.

But this may necessitate a revision in selling strategy for some sellers, especially those selling “starter” homes. When preparing advertising material and deciding how to “stage” your home, the image of the young couple about to have children may have to be scrapped. Perhaps a retired couple looking to use a spare bedroom as an office is actually your most likely buyer.

Miami Real Estate Industry Willfully Blind to Sea Level Rise

fla hurricaneIt takes a writer from a British newspaper to point up the absurdity of human behavior in Miami, where despite obviously rising sea levels, “The local population is steadily increasing; land prices continue to surge; and building is progressing at a generous pace.” (See “Miami, the great world city, is drowning while the powers that be look away,” by Robin McKie, Friday 11 July 2014.)

Many Miami residents are apparently  living in a state of denial. And not just climate change denial, by the look of it. To deny climate change is, after all, primarily to deny that humans are the cause of changes in the environment.

No, in the case, we seem to be witnessing literal denial of what’s in front of people’s eyes: walls of seawater, increasingly regular flooding, shopkeepers who “keep plastic bags and rubber bands handy to wrap around their feet when they have to get to their cars through rising waters,” and homeowners who “have found that ground-floor spaces in garages are no longer safe to keep their cars.”

Yes, they’re building sea walls and other measures to hold back the waters, but scientists believe these measures will offer only short-term relief. And it’s not just a problem of occasional high waves. As McKie describes, Miami is “is built on a dome of porous limestone which is soaking up the rising seawater, slowly filling up the city’s foundations and then bubbling up through drains and pipes. Sewage is being forced upwards and fresh water polluted.”  Meanwhile, the cost of the stopgap measures is in the billions.

Just for fun, I took a look at some ads for Miami real estate, wondering whether the homes on higher ground would at least mention that fact — as would seem doubly important, given that the local architectural style seems to be one story, even if it’s a one-story sprawling mansion.

Nope, the real estate agents who write these ads have chosen to not breathe a word about threats from the elements. You might think the beach in Miami didn’t even exist. Most ads talk about local shopping, schools, and golf courses. Oh, but there was one that advertised, “All windows and doors hurricane proof. ”  So, at least one home seller in Miami is getting real! And getting out of town, I’ll bet.

Are You Ready for the World to Know Your House Is “Coming Soon?”

beesThe real estate world is buzzing with the news that the website Zillow is introducing a “coming soon” feature for houses advertised for sale. The traditional MLS doesn’t have such a feature (not yet, anyway). It will be open only to real estate agents who pay to advertise with Zillow. (Sorry, FSBOs, that leaves you out.)

So, up to 30 days before a house is actually available for sale, some sellers will be able to tell the world to start salivating over it.

My first thought is that this is like telling your party guests to wait on the front porch for an hour or two before you open the door. No longer do you have privacy when making those last cleanups (or even repairs), ripping out your weeds and feeble attempts at landscaping and replacing them with blooming flowers, or even putting up a fresh coat of paint.

No, the world will be watching. And if you’re in a hot market, believe me, they’ll be watching. Expect to see a procession of cars going by your house, cameras held out the window. (And those are the visitors who are sufficiently polite to stay off the property itself.)

Of course, my grumbling isn’t going to make this feature go away. If anything, it’s likely to become the norm. So, home sellers, get ready to be ready before you’re actually, you know, ready.

 

Luxury Homes Will Soon Be Less of a Bargain

House cornerOne of the fun things for buyers during the depressed real estate market was seeing almost unbelievably low prices on luxury homes.  (Who wanted to buy a castle with everyone in fear of a job loss or investment tumble next week?) Even if we couldn’t actually afford a mansion in the hills, we could peruse the listings without feeling like such a fantasy was completely and utterly crazy.

Unfortunately, buying a luxury home is swiftly returning to the realm of never-never land for the average buyer. According to the April, 2014 edition of Money magazine (“The sunny outlook for housing in upscale neighborhoods“), sales volume for expensive houses is on the upswing, the time it takes to sell is on the downswing in many parts of the U.S., and these factors will soon add up to price increases for high-end homes.

Sigh. You might console yourself by remembering that, even if you could afford the purchase price on a luxury home, other costs such as insurance, repairs, and of course home security might completely break your bank. See Nolo’s article, “How Much Does Owning a Home Really Cost?” for more on that.

Undisclosed Real Estate Secrets Have a Way of Getting Out!

arrowheadIt’s a wonder that home sellers and developers continue to try to sweep evidence of issues concerning the property’s condition under the rug — or, in the case of the Rose Lane development in Larkspur, under some new pavement. Word always seems to get out somehow. 

As recently reported by Peter Fimrite in the SFGate article “Indian artifact treasure trove paved over for Marin County homes,” developer Larkspur Land 8 Owner LLC, though following the letter of the law (the California Environmental Quality Act) managed to conveniently arrange to have all the contents of a 4,500-year-old “treasure trove” of Coast Miwok life carted off and buried in an undisclosed location. The artifacts included human remains, tools, musical instruments, harpoon tips, spears, throwing sticks, and more.

Although the actions were done with the input of archaeologists and the oversight of Indian tribal members, the plan conveniently allowed the developer to move ahead with building homes and cottages that will sell at a starting price point of over $1 million.

Fimrite quotes a tribal representative as defending their choice of what to do with the objects, saying, “If we determine that they are sacred objects, we will rebury them because in our tradition many of those artifacts, be they beads, charm stones or whatever, go with the person who died. …” Obviously there are some difficult issues to balance here regarding who has an interest in and decision-making right over ancient artifacts.

But this blog is about real estate, and one of the more interesting points made in the article was by consulting archaeologist Dwight Simons,  who said not only that, “”This was a site of considerable archaeological value,”  but “The developer was reluctant to have any publicity because, well – let’s face it — because of ‘Poltergeist’.”

Whoa. If you don’t remember the movie “Poltergeist,” it was about a family in a housing development whose daughter is terrorized by ghosts.

Well, the developer’s got plenty of publicity now. I searched the article in vain to find any indication of who actually spilled the beans.

Will the shock of what was done to the property reduce its value in buyers’ eyes? Hard to say — plenty of homebuyers are desperate to buy in the Bay Area, and might not think twice about this. So perhaps the developers’ main worry at this point is that new homeowners will start hearing strange noises in the night . . . .  in which case, they might want to see the “Home Defects, Damages, and Insurance” section of Nolo’s website.

Enclave of Sex Offenders a La “Arrested Development” = New Real Estate Reality?

FINGERPRINTRemember that episode of the popular TV series “Arrested Development,” where a member of the once-wealthy family tries to unload empty houses in their development by selling them to sex offenders?

If you laughed then, you now need to solemnly admire the show creators’ prophetic powers. According to Inman News’s reporting on this topic by Teke Wiggins, the increasing accessibility of data on where registered sex offenders live could ultimately “herd offenders into enclaves, depressing home values in some neighborhoods and scaring away families with children.”

Here’s a bit of the back story. All the relevant data – for-sale home listings on one hand, addresses of registered sex offenders on the other — has been available online (and as apps) for a while. (Federal legislation known as Megan’s Law mandates that each state collect information on registered sex offenders and make it publicly available, though many states specify that the public may access the information only for certain reasons, and not for others. California, for example, prohibits using the database for the purpose of denying housing.)

What’s new and different, however, is that various online services have begun merging all this data – although in some cases later “de-merging” it, as RealtyTrac (a major U.S. source of real estate listings) did, possibly in response to outcry from real estate agents and industry insiders as well as some legal issues. (See “RealtyTrac Wipes Hyperlocal Neighborhood Info From Listings.”)

You could look at RealtyTrac’s latest action cynically and say that the real estate industry doesn’t want to promote any feature, however snazzy, that puts “sex offender” warning flags right next to images of homes where prospective buyers might have hoped to raise children.

In the blandest economic terms, sex offenders in the neighborhood tend to depress home values. In fact, according to Wiggins’ article (“Sex offender data threatening home values, tarnishing neighborhoods and frustrating real estate agents”), knowing where a registered sex offender lived pushed down home values by 4% for those properties within a tenth of a mile of the offender’s house, in North Carolina’s Mecklenburg County. That data is from a study done by Jonah Rockoff, associate professor of finance and economics at Columbia Business School.

The direst of warnings came from real estate agent Steve Clarke who, reacting to RealtyTrac’s initial data merge, stated, “This could literally bring down property values all over the United States.”

Yikes. But doesn’t Clarke’s statement cut both ways? If the U.S. is littered with sex offenders, then shouldn’t home buyers simply realize that it’s nearly impossible to find an area where everyone is sane and harmless? You could move to a “sex-offender-free zone” and still find local folks convicted of various other crimes as well as crazy neighbors who have 25 cats.

I don’t mean to minimize the fear that a homebuyer, particularly a parent, might have when considering the prospect of living near someone with a history of sexual assault, rape, or other such offenses. But as Wiggins rightly points out, there’s a “potential for sex offender data to mislead and spook consumers.” He details a story in which neighbors were spreading the news that a local 17-year old was a sex offender – but it turned out that his offense was to have had sex – apparently consensual sex — with his 15-year-old girlfriend, after which the girl’s father pressed charges. (In some states, a conviction for consensual sex, that is, statutory rape, can result in a registration requirement.) The young man’s actions hardly seems like the sort that should inspire panic and bring down local home values.

Wiggins also notes that the accuracy of sex offender databases is questionable. Changes of address may not be entered into the database for some time, if at all. And offenders often fail to register.

After talking to some criminal law attorneys, I can add a few more reasons why prospective homebuyers shouldn’t stir themselves into a frenzy looking at sex offender maps:

  • A minority of sex offenders commit subsequent offenses. According to the Huffington Post, “Contrary to popular belief, as a group, sex offenders have the lowest rate of recidivism of all the crime categories.” (See “Sex Offenders: Recidivism, Re-Entry Policy and Facts.”)
  • Not everyone who is charged with a registerable sex offense will end up on the sex offender registery. A good defense attorney will do everything possible to avoid an outcome that requires registration, a life-long duty that will limit the client’s ability to get jobs and housing long after any jail time has been served. Particularly when the prosecution’s case is weak, clients will enter into plea bargains to lesser, non-registerable offenses, like assault.
  • The most common sex offenders are the people you might least suspect. According to the organization Parents for Megan’s Law, “Most child sexual abuse, up to 90%, occurs with someone a child has an established and trusting relationship with.” Friends, babysitters, family members, coaches, and others are commonly identified in studies and statistics of child sexual abuse.

Not all of the above news is exactly comforting. But it points to a larger truth: We can’t completely isolate ourselves or our children from danger – not in the homebuying process, nor anywhere else. The best bet for parents worrying about their children’s personal safety is to teach those children what to watch out for and encourage them to talk to parents or other adults about any inappropriate behavior.

Will a “Premiere Party” Help Sell Your Home?

mimosa iStock_000012039452XSmallThe trend-spotters at Oakland Magazine have been at work, with a recent article titled, “To Sell a Property, They Throw a Party.”

And not just any party: It’s a “premiere party” (usually for a luxury home in an affluent neighborhood), to which the real estate agent invites hundred of neighbors and other prospects.

They might serve champagne and hors d’oeuvres (will I ever be able to spell that without looking it up?) or perhaps chocolate chip cookies. They might create an art show with work from a local artist. One agent even commissioned a bagpipe player.

The odd thing is, most of the article discussed not what benefits parties like these offer the home seller, but what they can do for the selling agents, who — in the hot, hot, and already hotter Oakland market — find they’ve got to work hard to set themselves apart and attract clients. As one agent told writer Mike Rosen-Molina, “Listing agents are looking for tools that every agent might not have and ways to convince sellers to list their home with them.”

Okay, so do such parties really help sell your home? Especially given one agent’s acknowledgment that, “Buyers will see the home anyway; anyone looking won’t miss the property.”

The answer seems to be that such parties create a “buzz.” They get people talking, and create a sense that the property itself is an object of desire. And, while no agent quoted in the article came out and said this, buzz like this can lead to every seller’s dream: Offers over asking price, and possibly a bidding war.

 

 

Will This Year’s Real Estate April Fools’ Joke Be Tomorrow’s Listing Reality?

applesAnyone who didn’t read the “April 1″ dateline on Midwest Real Estate Data’s article called “MRED Makes Scents,” might have been shocked by this Illinois provider of multiple listing services’ announcement that it had “added a revolutionary new “Scent” field to all MRED property listings. The “Scent” field allows MRED agents to indicate the aromatic smell that prospective clients can anticipate when visiting their property.”

Meanwhile, just a couple of week’s ago — and not on April 1 — CNN came out with an article by Kieron Monk called, “Forget text messaging, the ‘oPhone’ lets you send smells.” That’s right, a new device (to be beta tested in July) will allow users to “mix and match aromas and then send their composition as a message, which will be recreated on a fellow user’s device.”

Just think, your real estate agent may someday send you a message saying, “You’ll love this house, just the place to bake a hot apple pie,” and then send you the corresponding aroma!

But is the oPhone going to be ready for the other most likely message? “It’s a fixer upper, but if we can pull up the cat-pee soaked carpets and give it a fresh coat of paint, I think you may have a bargain!”

Of course it will. The future is here.

Chances Are, You’re Buying Into an Underfunded HOA

condoThe financial troubles faced by homeowners’ associations — those being the governing bodies of many new-home or condo developments — have gotten worse over the last decade, according to Association Reserves, and as reported by Sandra Block in the April, 2014 edition of Kiplingers.

A disturbing 70% of them are “underfunded.” That means they don’t have enough cash in reserve to handle a major repair or an emergency that’s not covered by insurance.

And that could be very bad news for the homeowners buying in. An HOA isn’t some remote group that’s meant to take care of the homeowners in a planned community — it IS the homeowners in the planned community. When and if a major need for cash arises, it’s the homeowners who will be asked to pitch in and cover it, in the form of “special assessments.”

Did I say “asked” to pitch in? I meant “required.”  As described by Beth Ross in Nolo’s article on “When HOA Associations Can Impose Special Assessments,” “A well-run HOA also sets aside a portion of the periodic dues in a reserve fund. This fund is meant to pay for the costs of larger, infrequent expenditures, such as replacing worn-out patio furniture around a common pool, or putting a new roof on an aging clubhouse. . . . [but if the] HOA’s reserve fund is inadequately funded, . . . the HOA won’t have enough money when it comes time to make repairs, so — you guessed it — a special assessment will probably be on its way.”

As described in the same article, HOAs don’t have unlimited power to impose these assessments. But assuming they act within their legal limits, they do have power to penalize nonpayment — for example, by placing a lien or ultimately foreclosing on the homeowner’s property.

All of which is to say that it’s important to do your research BEFORE buying a home in a development. See the articles on the “Buying a New Home or One in a Development” page of Nolo’s website for more on this.