RealEstate.US: August 2007

Friday, August 31, 2007

A Closer Look at New Home Sales: August 2008

As I had noted before, in 2004 new home sales exhibited an interesting phenomena whereby the distribution of home sales, grouped by several price ranges, effectively flipped from what one might conclude to be logical and from the historical norm.

Prior to 2004, in general, the least expensive new homes sold the most numbers of units while the most expensive new homes sold the least numbers of units.

Not a very surprising result as one might easily conclude that the majority of new home buyers cannot, in general, afford the most expensive homes.

After 2004 though, the scenario exactly flipped in that the most expensive new homes easily outsold the least expensive homes.

Now, this could either be explained by the inflating of home prices during the boom, easy availability of bloated loans, home buying patterns, or a little bit of all of these events but no matter what the cause, it appears that the scenario is now in the process of flipping yet again.

Since the peak in 2005 new home sales have been falling among all price ranges but more recently there have been relative strength in the sales of lower priced home and a marked weakness in sales of the highest priced homes.

The interesting point here is that the flip that occurred in 2004 was likely an anomaly made possible by the boom which is likely to completely reverse in the coming years as the environment for home building settles back to a more historically normal scenario.

This re-flipping of new home sales may serve as a good indicator of the unwinding of the boom.

The first chart shows new home sales for the highest priced new homes, i.e. homes priced above $300,000 (click for larger version). Notice that since 2005 sales have been declining sharply.

The following chart shows both a "smoothed" and raw unadjusted number of new homes sold for four different price ranges (click for larger). Notice that the price ranges appear to be converging and likely flipping back to a more historical normal pattern.

Another way to visualize this issue is to view each price ranges market share of all new homes sold (click for larger version). Notice that back in 1999, over 40% of new homes were priced under $200,000 whereas now, new home sales for homes in this price range total less than 20%.

Gay Doctors in Orlando are Rare

By Jeff Adolph Special Interest Orlando is a city that has a rather profound gay population and yet when it comes to finding a gay doctor here it seems they are few and far between. Jordan a 39 year-old real...

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[Source: GayRealEstate USA]

Thursday, August 30, 2007

The Daily 2 - Thats A Lot Of Bull

Since when did holding a Bullish outlook mean that you lost all sense to recognize even the most obvious trend?

This whole housing decline has, unfortunately, been a very divisive issue with the typical dichotomy of a line in the sand and a camp (or camps) on either side.

Be they Bulls vs. Bears, Housing Heads vs. Bubble Heads, or Mortgage Debtors vs. Angry Renters, the housing decline has sparked endless heated debates with numerous justifications on either side for either optimism or pessimism.

Yet, at this point, there has got to be hardly a single argument against the notion that the nations housing markets are in tough shape.

One only needs to look at the continued declines to home sales and prices, the historic levels of inventory of available homes, as well as the latest events in the mortgage-credit markets to see that things are broadly bad.

Furthermore, taking a minute to pause and reflect on the somewhat circuitous route that the Bull-Bear debate has taken both corroborates the more accurate outlook as well as helps to dispel any hopes of a purported imminent bottoming and recovery of the housing market.

Back in 2005, any person (even reputable and notable economists) that even hinted at the idea that the housing boom was an irrational mania was sure to be labeled as a Chicken Little.

In 2006, we all had a much needed dose of reality but Bulls continued to downplay the severity of the turn in the housing cycle, preferring instead to handicap the arrival of the soon-to-be bottom.

This inability to accept the obvious resulted in at least two very widely reported yet wholly inaccurate instances of consensus amongst those of the Bullish persuasion, that the markets had, in fact, bottomed (once in September of 2006 and then again in February of 2007).

Now, almost two years after the first cracks started showing up in the housing mania and with what has been termed by the Federal Reserve as a crisis in the mortgage and financial markets, Bulls continue to remain exuberantly hopeful that the turnaround is on the way.

While refusing to acknowledge even the possibility of spillover effects on to the generally economy, even in light of the recent, clearly correlated, declines in retail sales as well as some highly publicized downward revisions to earnings guidance from notable national retailers, Bulls simply continue the trend that has served them so poorly.

Looking back at past housing busts its easy to see that, although the current bust is more widespread and many times more significant than past declines, its following a fairly typical course.

If things roughly follow along as they have in past busts, then we are in the very early stages of a correction that will, at the very least, be many years in the making and carry with it many of the same trials.

We have yet to see the complete effects caused by some of the most significant elements of fallout from this decline including the full brunt of the mortgage resets, higher interest rates and lower availability of mortgage debt, particularly Jumbo loans, and the effects of prolonged oversupply and accelerating price declines.

There is not a doubt in my mind that many years from now, the bust of this cycle will appear so obvious that it will be dumbfounding to recall that there was even a single spectator who actually believed that a V-shaped turnaround was always right around the next corner or that the health of the general economy was not in peril.

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[Source: Paper Economy - A US Real Estate Bubble Blog]

Wednesday, August 29, 2007

Reading Rates: MBA Application Survey August 29 2007

The Mortgage Bankers Association (MBA) publishes a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as application volume for both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage decreased marginally since last week and now stands at the near peak for the year at 6.41% while the purchase volume decreased 4.0% and the refinance volume decreased 4.2% compared to last weeks results.

Its important to note that the data is reported (and charted) weekly and that the rate data represents average interest rates, and the index data represents mortgage loan application volume for home purchases, home refinances and a composite of all loans.

The following chart shows how the principle and interest cost and estimated annual income required to cover the PITI (using the 29% rule of thumb) on a $400,000 loan has changed since January 2007.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages over the last number of weeks (click for larger version).

The following charts show the Purchase Index, Refinance Index and Market Composite Index since January 2007 (click for larger versions).

Special Tips for Selling Your Home During the Challenging 2007 Market

By Jeff Adolph Ask a Realtor For those trying to sell a home this summer, the real estate climate can feel unseasonably chilly. Truth be told, this is one of the most difficult selling environments in recent history, so if...

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[Source: GayRealEstate USA]

Office Condos: An overview of what they are and how they might work for you.

By Jeff Adolph Ask a Realtor The condominium concept emerged in the 1970s as a unique alternative to traditional apartment leasing and single family home ownership. At first the idea which involves partial ownership in a larger collective or...

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[Source: GayRealEstate USA]

Tuesday, August 28, 2007

Existing Home Sales Report: July 2007

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for July showing that the fall-off in demand for residential real estate is continuing and occurring uniformly across the nations housing markets.

Senior Economist Lawrence Yun is now suggesting that the weakness, if it were not for the mortgage-credit meltdown, home sales would probably be rising.

Home sales probably would be rising in the absence of the mortgage liquidity issues of the past two months, Some buyers with contracts have been scrambling when loan commitments did not materialize at the last moment, while other potential buyers are simply waiting for the mortgage market to stabilize.

Additionally, NAR President Pat Vredevoogd Combs continues to attempt to persuade potential buyers to ignore the obvious dramatic housing correction.

For buyers able to qualify for conventional financing, there are ample opportunities in the current market, Availability and pricing of conventional loans are reasonable, and FHA-insured mortgage applications have been rising as low- and moderate-income buyers seek alternatives to subprime loans. If buyers are in it for the long haul, now can be a good time to get into your home.

Looking at Julys Existing Home Sales report should only result in additional confirmation that the nations housing markets are continuing to experience weakness with EVERY region showing considerable declines to sales of BOTH single family and condos as well as significant increases to inventory and monthly supply.

Keep in mind that we are now seeing existing home sales declines on the back of last years fairly dramatic declines further indicating that the housing markets are not bottoming as many had been suggested last fall.

Below is a chart consolidating all the year-over-year changes reported by NAR in their July 2007 report.

Particularly notable are the following:

Sales are down significantly in EVERY region and for BOTH single family and condo.
ALL Inventory and Months Supply show significant increases on a year-over-year basis.

Robert Niebauer Update

By Jeff Adolph Foreclosures In November of 2006 I reported on Developer and Architect, Robert Niebauer's misfortune, which saw his reputation tarnished with a multitude of residential retirement projects left incomplete and abandoned. Reader and Wisconsin real estate agent, Rob...

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[Source: GayRealEstate USA]

Sunday, August 26, 2007

The Daily 2 - Pusherman

Silent life of crime
A man of odd circumstance,
A victim of ghetto demands.
Feed me money for style
And I'll let you trip for a while.
Insecure from the past,
How long can a good thing last?

Got to be mellow, y'all
Got to get mellow, now
Pusherman gettin' mellow, y'all

Heavy mind, every sign
Makin' money all the time
My LD and just me
For all junkies to see
Ghetto Prince is my thing
Makin' love's how I swing
I'm your Pusherman Curtis Mayfield

You have to admit, Chairman Bernanke is pretty cool

The commercial paper market stalls aint no thang Heres $30 billion just pay it back when you can

Financial markets continue to stumble as Wall Street junkies, strung out on yield and leverage, writhe desperately for their next hit Bernankes discount window is open for business and he dont mind your crap collateral.

Man Think of the power! Whats next? a good pistol whippin for PIMCOs Bill Gross?... Possibly

Although it does occur to me that there is only so much hustlin one pimp can do before he irreparably damages his street cred.

Like every good dealer, Bernankes clients are becoming more and more dependent and demanding of his services.

In trying to satisfy them all, hes clearly in jeopardy of over promising and overextending.

Plus, its not as if Bernanke doesnt have his own problems Hes dealin for the man!

The first sign of trouble and Senator Dodds got him in the office with Paulson

God only knows what went on in there but when they came out the Senator (and frail presidential candidate) clumsily grabbed some much needed limelight while Bernanke scurried away looking sort of busted.

So much for the independence of the Federal Reserve!

Oh well... I guess thats the price one pays for being SuperFly!

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[Source: Paper Economy - A US Real Estate Bubble Blog]

Saturday, August 25, 2007

Overnight real estate rates hit flat spot

Overnight real estate rates hit flat spot

30-year fixed rate at 6.17%; 10-year Treasury yield at 4.64%

Friday, August 24, 2007Inman News

Long-term mortgage interest rates were mostly unchanged Thursday, and the benchmark 10-year Treasury bond yield dipped to 4.64 percent.

The 30-year fixed-rate average held at 6.17 percent, and the 15-year fixed rate edged up to 5.79 percent.

The 1-year adjustable gained to 5.57 percent.

The 30-year Treasury bond yield was down to 4.94 percent.

Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

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The Blog Formerly Known As PaperMoney

It was brought to my attention earlier this week that by using the term PaperMoney, a duly reserved and registered service mark, I have been inadvertently infringing on the rights of its owner.

I can assure all my readers, as I have the owner, that I had no prior knowledge of the existence of an online eZine-style website baring the same name and that, had I known, I would have not chosen to use this term.

In order to remedy this situation and as a sign of respect and goodwill for the owner who registered this term long ago and has maintained continuous use ever since, I am today formally changing the name of this blog to PaperEconomy.

I am disappointed, to say the least, as the term PaperMoney was, to me, a perfect representation of my current sentiment and outlook for housing and the economy in general.

In fact, it literally occurred to me instantaneously when I decided to start my own blog on the housing bubble.

I felt it was just the right way of suggesting the ephemeral nature of unrealized wealth, a notion that seemed to suit the state of housing particularly well.

Maybe it was a bit snarky, but over the last 16 months I have grown to really see it has my own as I have with the blog itself.

Oh well you cant have everything.

To that end, the new name, PaperEconomy, is not too shabby either!

Its reminiscent of the prior name and even seems to broaden the original message a bit

As in:

at first I thought it was strong and resilient, then I realized it was a Paper Economy! (like Paper Tiger maybe?)

Or even:

this whole dammed economy is propped up on paper!

Well, that might be a bit over the top but you get the picture.

The key point here is that neither the blogger nor the blog has changed just the title.

So keep reading, we have a long long way to go in the housing decline and the story is only just beginning to heat up!

One final note

PLEASE UPDATE ALL YOUR WEB BROWSER LINKS TO:

http://www.papereconomy.com

Here are the new links to each service:

BNN - The Bubble News Network
The BubbleTimes
The Inventory Tracker Tool
The S&P/Case-Shiller/Futures Tool
The OFHEO Home Price Index Tool

(No need to update RSS news feeds or email subscription as the content itself will be updated automatically)

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[Source: Paper Economy - A US Real Estate Bubble Blog]

Friday, August 24, 2007

The Blog Formally Known As PaperMoney

Hillsborough County housing statistics and trends 2007-Tampa, Fl

I am posting the Tampa (Hillsborough County) MLS data for the first quarter of 2007. These statistics represent the % of change of the current quarter compared to the same quarter a year ago. Click on the link below and look for your zip code.
http://www.gtar.org/members/reports/gtarq1-07.pdf

For questions related to selling your home in the Tampa Bay area contact Rae Catanese, Prudential Tropical Realty-813-784-7744 or email: realtyrae@yahoo.com

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Find a Neighborhood in Tampa, Fl

Find a Neighborhood

Welcome to Find a Neighborhood. Your guide to obtaining neighborhood specific information including capital improvement projects, demographics, land use, maps, places of interest, association contacts, meetings, and more.

http://www.tampagov.net/appl_neighborhoods/default.aspx

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Selling Your Home in a Slumping Market-Tampa,FL

Selling Your Home in a Slumping Market

RISMEDIA, May 8, 2007-When your local housing market is in a free fall and you have to sell, what do you do? You want top dollar, you may also need to sell in a hurry, especially if moving day is right around the corner.

In a tight housing market, remember that you are competing with all of the other homes for sale in your neighborhood. The key to success is to make your home and the deal itself more attractive than what the competition is offering without giving away too much.

If you find yourself having to sell into a slow market, here are some tips to help you make your home more attractive and sweeten the deal to generate more interest in your home:

- Price it to the market, don't be greedy. Most sellers tend to set the price too high, thinking their home is worth more than it really is. Check the sales prices of comparable homes that recently sold the asking prices of comparable homes that are currently for sale in your neighborhood.

- Obtain an appraisal in advance, so you know what the house is officially worth (based on the appraiser's professional opinion).

- Use a seasoned Realtor, a veteran who has already experienced price wars in the housing market. According to the National Association of Realtors, a home sells on average for 16 percent more when the seller uses as certified Realtor.

- Have your home professionally inspected before showing it. Get everything repaired so lookers won't have an excuse not to buy.

- Have your home professionally staged. A professional stager can transform an empty or overly cluttered house into a warm and welcoming home.

- Don't move out before it sells, or if you have to move out, make sure you leave the home staged, so it looks lived-in. Vacant houses feel more like uninhabited caves than homes.

- Be willing to pay closing costs for the purchaser, up to 6%. A slow market is usually that way due to a slow economy. Buyers are strapped for cash and may need you to help in some way with the financing.

- Give your Realtor copies of all improvements to the home and any guarantees for anything like a new roof, furnace, or hot water tank.

- Make sure your Realtor is marketing your home on at least eight Internet sites, including Craig's List and Backpage.

- Realtor commissions are negotiable. Consider offering a higher commission to your Realtor as an added incentive

- Keep your home in ready-to-show condition at all times. Do not require a 24-hour notice.

- Focus on curb appeal and making a good first impression. You do not get a second chance to make a good first impression.

- Be open to negotiating on things like leaving furniture or appliances behind.

- Although you may be tempted to take the first offer that comes along, be careful. Not all offers are created equal.

Here are some warning signs to watch out for:

- Someone tells you to take your house off the market for a period of time, and in exchange, the person will pay you more than the asking price later. This is usually a sign that the person plans on using your home as part of a mortgage fraud scheme in which he obtains a loan for more than the house is worth, pays you a little more than what you were asking, and pockets the excess proceeds.

- A cash back at closing deal in which the person offers you more than the home is worth if you agree to kick back the extra money at closing.

- The buyer is not pre-approved for a mortgage loan. This person can tie up your home, preventing you from considering better offers.

- The person is offering no or very little Earnest Money Deposit. The lower the EMD, the more likely the deal will fall through.

- The prospective buyers make the purchase agreement contingent upon their home selling, and for that to happen, several other transactions must occur first. This is known as the domino effect, and you should avoid it, if possible.

You can successfully sell a home into a declining market and even profit from the sale, if you set realistic goals and work a little harder at it than your competitors. Just remember to work hard, stick to it, and avoid some of the common pitfalls described in this article.

For questions related to selling your home in the Tampa Bay area contact Rae Catanese, Prudential Tropical Realty-813-784-7744 or email: realtyrae@yahoo.com

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Survey reveals 49% of consumers say right now is the time to buy!

Tampa Bay Business Journal - August 17, 2007
by Michael Hinman
Staff Writer

More than half of the homeowners in the Tampa Bay region feel that this is as good a time as any to buy a new home, but getting them to buy is a different story.

Sales for existing homes continue to decline as much as 35 percent in the area while median prices are dropping just 6 percent according to the Florida Association of Realtors. However, a new survey from Attorney's Title Insurance Fund says many potential buyers are waiting to see how the currently volatile market will play out.

"I've had a couple of people tell me that they are going to wait to see what happens next year," said Rae Catanese, a real estate practitioner with Prudential Tropical Realty in South Tampa. "With as many homes that are on the market right now, I think there has just been too much bad publicity lately about the market and people are scared of the unknown."

Harris Interactive conducted the housing survey on behalf of the Insurance Fund in June, asking more than 1,400 homeowners in Florida their thoughts on the current housing market.

Some 49 percent in the Tampa area said right now is a good time to buy a house or condominium compared to 42 percent last year. However, just 25 percent of those respondents said they intend to buy a home themselves in the next two years.

"Before you get a big buyer's push, I think prices are going to have to drop more," said Kristopher Fernandez, a real estate attorney in Hyde Park.

A January report by the Greater Tampa Association of Realtors said available inventory in the area had doubled since the beginning of 2006 and that an increased inventory played into lower prices.

Buyers waiting for larger drops may be missing an opportunity. Lawrence Yun, a senior economist with the National Association of Realtors, said new construction has been drastically reduced, causing existing home median prices to actually rise nearly 2 percent nationwide by early next year.

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The Non-Bailout Bailout

Opinion - USATODAY.com

3 ways to help borrowers without bailing them out
The July foreclosure numbers that came out Tuesday are a sobering reminder of just how bad the nationwide mortgage crisis is becoming. Fueled in large part by shaky lending to people with less than perfect credit, foreclosure filings nearly doubled from a year ago and are running at an annual rate of more than 2 million.

Searchlight Crusade comments. Bitingly.

Buy Retirement Home Now, Move in Later-Tampa, Fl

Daily Real Estate News August 13, 2007

Buy Retirement Home Now, Move in Later

With prices in many areas at a low ebb like the Tampa Real Estate Market, it might make good financial sense for Baby Boomers to buy their retirement homes now, even if they're still years away from actually moving.

They can find renters who will pay the bills until they're ready to live there.

Heres some advice for people who are considering this strategy:

Shop carefully. It's best to buy a home that can be rented for a rate that, after tax considerations, will cover the mortgage, real estate taxes, and insurance.

Study up on housing trends. Ask the local or state planning department for demographic and economic data. The information can reveal facts that will influence whether or not to buy. For example, big companies going out of business or military base closings can be bad news.

Dont forget maintenance. Consider wholl take care of the house in the owners absence. Property managers charge 6 percent to 15 percent of the monthly rent. Family members may be willing to do the job for free, but they could be ill equipped to do the job if the don't have any experience.

Consider financing. Boomers with sufficient equity in their current homes can tap it to either buy their retirement home outright or secure a much lower mortgage rate compared with a loan at the rate often offered to buyers of investment property.

Source: The Washington Post, Belly L. Kass, Esq. (08/11/07)

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