I was visiting my daugher in Chapel Hill last Sunday for Father’s Day and saw an article in her Raleigh News and Observer that caught my eye. It’s a column by Amy Hoak of MarketWatch on why mortgage rates are so low. It offers a good fundamental explanation of why we’re seeing such low rates and gives some idea of what may change that in the future. It also has some additional interesting info quoted from Clear Capital such as, “Clear Capital recently reported that national home prices were up only 0.1% in the second quarter, from the year-early period. That’s far from the 3% to 4% appreciation expected in a healthy market.” They go on to say that this is a first in quite some time, but still a necessary first step.
If you’re interested in the state of the real estate market both in terms of interest rates and home prices, I’d recommend you take a few minutes to read this well-written article HERE.
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I went to Raleigh this week to attend a meeting of the board of the NC Association of Realtors. During our session, the current NCAR President, Lou Baldwin, made the observation that earlier in the year, billionaire Warren Buffett made a comment that got everyone’s attention. While being interviewed on CNBC in late February, he said that he’d buy up a couple hundred thousand single family homes if it were practical for him to do so. He went on to say, ”If held for a long period of time and purchased at low rates, Buffett says houses are even better than stocks.” If you’d like to see the report on the interview, go HERE.
From this, I still don’t advocate owning your primary home mainly as an investment. You should own a home because you want the freedom to do what you choose on your property and you’d prefer to not pay rent that retains no equity in the property. However, Buffett’s comments do suggest that he sees a clear path to improvement in the housing market in terms of valuations and prices. The only question is how long that will take. With interest rates and prices being at historically low levels, anyone who is contemplating a move should be looking seriously at getting it done, provided you have a reasonable credit history and stable employment.
In another interview, Buffett also said that people should not try to buy the home of their dreams. Rather, they should aim to buy the home they can afford. Seems like Mr. Buffett’s logic always rings true to practical thinking. That’s why I enjoy reading about his pronouncements.
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I’ve recently seen lots of reports from various national real estate observers talking about home prices going up in some areas of the country. That’s good news because from a national perspective, the housing industry is a bellweather for the rest of our economy. When things start looking up in the housing industry, the rest of the economy is likely to follow.
However, we’ve got to maintain some perspective here. If you’re buying or selling locally, you’ve got to resist the temptation of applying these nationwide results to your own local situation. Looking at our own MLS area which is Mecklenburg and part or all of the surrounding counties, our sales volume is up 15% from last April. Sounds great, doesn’t it? Trouble is, that April of 2011 was down 15% on closings from April 2010. So, we’re right around where we were two years ago.
I like to look at comparative average price per square foot as a better actionable number for buyers and sellers. We can use our system to get those numbers for fairly small areas. Looking at just Iredell and Mecklenbur counties, here are charts that show those figures.
Iredell April 2012 Ave Price per Sq. Ft.
Mecklenburg Ave Price per Sq. Ft.
I think you can see that we can’t run out and start raising prices on the basis of these numbers. At best, you might say we’re bouncing around on a bottom regarding prices. Hopefully this information, along with some better news about comsumer confidence, will get us moving more strongly in the right direction here in the Piedmont Carolinas.
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I withdrew one of my Iredell County listings today by mutual agreement with my seller clients. We had put the house on the market last spring, and priced it according to what little history was available in the community for similar houses. We agreed that if the house didn’t get some showings, the sellers would agree to lower their list price. Time passed, and we did get a few showings, but no offers. It tried to get them to reduce their price to get more traffic through the house, but they felt at that point that they couldn’t do it. In the meantime, houses in their neighborhood were being sold as foreclosures or short sales for much lower prices than what we would have previously expected. Those sales have pulled the “comps” down to the point where our listing was getting no attention whatsoever. The sellers don’t have to move and decided to just pull the house off the market and wait for better times. I cautioned them that per the economic gurus’ recent statements, those good times will be several years into the future. One economist said yesterday that the glut of foreclosures will not be absorbed by the market until sometime in 2013. Of course, things can happen that the economists don’t foresee that could improve the picture sooner than that, and I hope they will. I’ve seen that happen in the past, but it’s not something you can count on. Real estate sales prices in our area continue to be soft and continue to drop in some areas. If you don’t get ahead of that curve with your list price, the market will ignore you. It’s a tough lesson, but true.
This is a time when sellers who need to sell and are able to sell can find buyers, but at much lower prices than in the past. If they do that and then become buyers of their next home, they can come out “smelling like a rose” because they’ll buy the next house at a similarly low price and at 50 year low interest rates. If you don’t need to sell or the numbers don’t work for your sale, then you may as well stand pat. It serves no value to the seller or the listing agent to try to market a property that is priced above market. Marketing has its limits, and no amount of marketing will cause a person to pay a too-high price when there are better valued alternatives available.
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Posted in Catawba County, Charlotte, Cornelius, Davidson, Denver, General Real Estate Market, Iredell County, Lake Norman, Lincoln County, Mecklenburg County, Mooresville, Mount Mourne, Real Estate, Rowan County, Statesville, Troutman, tagged home prices, home sales, housing market, Lake Norman on February 15, 2010 |
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Time for the monthly bunch of numbers from our local Carolina Multiple Listing Service which includes Mecklenburg and surrounding counties. These numbers can give you an idea of the time it takes to sell a house and how the prices are trending. There is still a bit of a mixed bag, but overall, things do seem to be looking up a bit. To see what’s been happening nationwide, HERE is a link to a fairly positive RIS Media article on nationwide sales in the fourth quarter. We keep an eye on this because of the impact on people who live elsewhere who want to move to the Lake Norman area (and there are still lots of them). Their ability to move is tied to their ability to sell their houses where they are now.
Of reported home sales that closed from January 6 through February 5, 2010, 47 percent closed in 121 days or more; 16.2 percent closed between 91 and 120 days; 17.9 percent closed between 61 and 90 days; and 18.9 percent closed in 60 days or fewer
January 10 compared to January 09: List to Close 3.1 days in January 10 over January 09
January 10 compared to December 09: List to Close 5.3 days in January 10 over December 09
Of reported home sales that closed from January 6 through February 5, 2010, 37 percent were under contract in 121 days or more; 13 percent were under contract between 91 and 120 days; 13 percent closed between 61 and 90 days; and 37 percent were under contract in 60 days or fewer
- Average list price of solds
January 10 – $229,214
January 10 compared to January 09 – avg list price in January 10 increased by 9.3 percent from January of 09
January 10 compared to December 09 – avg list price in January 10 decreased by 4.1 percent over December 09
January 10 – $200,592
January 10 compared to January 09– avg sales price in January 10 increased 6.1 percent from January 09
January 10 compared to December 09 – avg sales price in January 10 decreased 5.2 percent over
December of 09
- Residential contracts reported
January 10 – 1,833
January 10 compared to January 09 – January 10 contracts reported decreased . 4 percent over January 09
January 10 compared to December 09 – January 10 contracts reported increased 25 percent over December 09
- Residential closings reported
January 10 – 1,363
January 10 compared to January 09 – January 10 closings reported increased 8.3 percent over January 09
January 10 compared to December 09 – January 10 closings reported decreased 10.7 percent from December 09
You can get more local sales data from the www.carolinahome.com website under the Community Data tab. Let me know if you’d like me to run some stats for your specific neighborhood.
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Posted in Finance, General Real Estate Market, Real Estate, tagged $6, $8000 tax credit, 500 tax credit, home prices, home pricing, home sales, Home Sellers, home selling, mortgages, tax credit on November 19, 2009 |
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The good news is that there are buyers out there, especially since the passage of the expanded home buyer tax credit which now offers a tax credit for current homeowners who want to sell their home and buy another primary home (see details HERE).
The problem is that some of those people thinking of selling their home don’t understand how home purchases and mortgages work. That causes them to be tempted to price their home too high when they list it. I call this the “waiting for someone to show up with more money than brains” syndrome. Fact is, that just will delay the sale of the property, if it sells at all. If the case of the tax credit, not selling soon enough means you’ll lose the tax credit because of the time limits. There are two main reasons for this.
- Most buyers will be working with a “Buyer’s Agent,” an agent whose responsibility is to help the buyer find the best property at the best price. No, they won’t try to jack up the sale price just to get a few more dollars in commission. First, they have a fiduciary duty to their buyer client to help them get the best deal. The second reason for this is tied to the point below.
- Unless a buyer is going to make the purchase with all cash, then there is a lender involved. If you think about it, at closing, the lender owns most of the house, with the buyer having equity equal to their down payment. The lender sends their appraiser (who actually works on behalf of the lender. not the buyer) to appraise the value of the house relative to the local market. If the house does not appraise at a value at or above the contract price, then the lender will refuse the loan unless the buyer is willing to make up the difference. The lender does not want to be stuck with a big loan on a property that was over-priced, in case the borrower defaults on the loan. So, to go back to point #1, the buyer’s agent will advise the buyer not to agree to pay too much because the lender will refuse the loan in most cases.
So, like I said, there’s just no point in listing too high. When agents are looking at sold properties on the MLS, we can see the entire history of a property’s listing. It is not unusual to see properties that sold 10, 15, or 20% below their original listing price, and see that the seller kept dropping the price for a year or two, always being behind the curve of price changes, until they finally got desperate and set the price in line with the market, when it then sold. Some of them waited too late and were forced into a short sale or foreclosure.
Pricing it right with the current market will get it done and cause much less stress on the seller. By the way, I can help you set a proper listing price based on research I do on recent sales and current competition.
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…Speaking of real estate prices (see yesterday’s post), real estate professionals have always said that one of the key factors in a home’s price is location. Still, since most people spend most of their time in only one location, this fact can be hard to grasp. Well, Coldwell Banker recently released a study of the cost of an average four bedroom “move up” home in different locations around the country. The numbers are striking. They range from $112,675 in Grayling, Michigan to $2,125,000 in La Jolla, California. Talk about hard to grasp! Talk about location, location, location! This compares physically similar 2,200 square foot, 4 bedroom homes! You can see the press release HERE which includes charts of many of the locations studied and a link to all the data.
If you’d like to see how the value of your home compares to other locations, you can do that with Coldwell Banker’s Home Price Comparison Index tool HERE. It’s a pretty cool tool. You ought to check it out. If you’re planning to move from your current area, this can be very useful to get an idea of what you’ll have to pay for a similar home.
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Posted in Catawba County, Finance, General Real Estate Market, Iredell County, Lake Norman, Lincoln County, Mecklenburg County, Real Estate, Rowan County, tagged average home prices, home prices on October 1, 2009 |
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When you see published reports of average house sales prices in the media, it’s good to keep in mind that there is always a seasonal component to the ups and downs of average house prices. HERE is a recent Charlotte Observer article on the monthly S&P/ Case-Shiller Home Price Index report telling of some ups and downs depending on how you choose to look at it. Below, you can see the average prices for the top of the season for the last three years in our Charlotte Region MLS. The peak price is in red and is in June for all three years.
2009- April – $201,352; May – $199,243; June – $218,728; July – $212,977; August – $209,245
2008- April – $221,497; May – $223,946; June – $233,670; July – $230,632; August – $230,472
2007- April – $225,748; May – $232,747; June – $248,048; July – $239,172; August $241,323
It’s also good to remember that whatever is happening to the potential sales price of your house at any time is likely happening to other houses in the same market. So, if you’ve thought about trying to time the market to sell, remember that if you wait until next year hoping to sell for more, you’re also likely to pay more for your next house. In any market, if you’re selling one and buying another, the main thing that matters is what is the difference in your sale price vs. your next purchase price.
I’m just saying….
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