In spite of efforts to buy up securities to keep mortgage rates low, those rates are a-climbin’ up to 5.59 percent this week.
Is this promising? Not very much.
Archive for the 'Market Conditions' Category
In many parts of the country, there’s a palpable sense of relief these days. In places like Los Angeles and San Diego, home sales activity is on the rise, and prices, while maybe not on the increase, are not dropping like a stone .
So have we hit bottom yet?
The answer may be yes. But after the first bottom, according to Zillow, there may be other bottoms to come. That’s because an awful lot of us have been holding off on putting our homes on the market. But the moment there is a glimmer of light, almost one-third of homeowners (31 percent) told Zillow that they would throw their homes on the market within a year. In short, quite a few of us are itching to move and the only thing holding us back is the prospect of having to pay the bank tens of thousands of dollars at closing.
However, there’s something the Zillow survey seems to have missed. Almost 70 percent of homeowners said they were NOT likely to sell their homes within a year if the market were to improve. Add to this the fact that many of the home sellers will also be home buyers. Like it or not, homeowning will always have a special allure to most Americans. Call me optimistic, but I think the idea of a “shadow inventory” may be more of a fear than a reality. Many of us in a slower economy may have fewer places to go these days, and fewer reasons to move.
Which means to me that the bottom we may be hitting in many areas is the actual bottom. Now wouldn’t that be a relief
A recent poll of economists concludes that the recession will end by the end of the year, according to NPR. Since there is no trigger of growth, however, the economy will remain sluggish well into 2010. What do you think is going to be the leading industry that will take us out of the recession?
Read more about it here.
Here we are at the end of May, enjoying one of the biggest slumps in housing since the Depression. Hope everybody had a great weekend!
Among the blooming flowers and singing birds have been the last gasp of heavy layoffs and an expected drop in home values, but Torsten Slok from New York City’s Deutsche Bank is saying the drop has “improved affordability and…is key to the housing market’s recovery.”
As my angry old neighbor tells me weekly, “common sense is universal.” Let’s follow his lead and start smiling about this increasingly afforable market. Heck, in my neck of the woods, rent has dropped to the point where Manhattan is…affordable! That’s right: those of us who are still employed can actually live remotely close to where we work! Huzzah!
Similarly, reasonably priced condos are abound. Combined with low interest rates and a decent credit score, those among the employed can enjoy the kind of bargains that might just bring us back to normal by next spring.
Patience, Grasshopper.
Watching Corporation the second time around made me wince a little when I read this article, where REIT holders are wincing at what now seems to be the dumbest real estate/business structure ever: owning what you have. Similar corporations like Walgreens and Sears are keeping stockholders happy with an apparently successful structure, where they own about 20% of their real estate. It seems that owning your big-box store just isn’t the investment it used to be.
Target seems to be ready to restructure the Target REIT to make it a little more er, profitable for stockholders. Something that’s tough to do these days, regardless of the sinking pit that commercial real estate is in. “Lease” is the new operative word, and everyone is jumping on board.
The age old debate of which came first, the chicken or the egg, has never been actually decided. And in the real estate market, I’ve always wondered, what comes first, the purchases or the press? (Today, I guess it really doesn’t matter — I just hope they continue to feed off each other until we’re out of this festering economic mess. )
Case in point. The most recent headlines tell us that things are on the mend, and it’s occurring across the nation. In Orlando, there is a surge in sales of lower priced homes, in Santa Clara, April stats showed an increase in activity, and in Fort Worth, signs of healing are starting to show. Of course, some areas are still slow to pick up, but there is hope that they simply lag behind. For example, in Oneida County, New York, sales are still down, but spirits are high.
Keep it coming. Keep it coming, press people. Focus on the positives and let’s hope that we can create a bandwagon that potential homebuyers will be eager to jump on to. It seems that new buyers are finally taking the plunge. Momentum provided by a perfect storm of big tax credits, ultra low interest rates, motivated sellers and inventory extraordinaire are causing lower priced condos and houses to actually sell again.
Is this enough to call it over? Probably not, but it is certainly a good first step, and an upturn in the real estate market is likely to generate some momentum that can potentially affect other key economic indicators, including the job market, the stock market, retail sales and travel and tourism. I for one, am quite happy to see that this new media attitude and regardless of whether the purchases or the press came first — keep it moving, people!
Fact: the Federal Reserve just extended the Term Asset-Backed Security Loans Facility, otherwise known as TALF, to include commercial mortgage-backed securities as collateral. The length of the TALF program is also extended from three to five years.
Repercussion: The Real Estate Roundtable is ecstatic about the potential for a more liquid market. This will help prevent otherwise inevitable loan defaults, and help sell “distressed properties,” according to the AP.
This also means that securities will be owned by smaller numbers of investors, and they will most likely be overseas.
It’s clear that this will stimulate the market for the short-term, but isn’t it the structured investment vehicles like this that got us into a mortgage mess in the first place? Are we creating another investment bubble that could burst down the road?
Is it just our imagination, or are open houses becoming more serious affairs than in years past?
We’ve been out and about this spring and we’ve noticed something about open houses: they’re more somber, business-like, efficient. Gone are the chocolate chip cookies. Gone are the scented candles. Brokers don’t even seem to be in the mood to chat us up anymore.
What’s going on? Has a moribund housing market brought brokers back down to earth? Is it that brokers can no longer afford to spring for cookies? Or have brokers just given up? Oddly enough, the open houses that we’ve been to this year have been well attended. But brokers no longer seem so intent on finding out which broker we’re working with and getting us to sign the sign-in sheet. We think they’re a little depressed.
But there’s an up side to all this. The new open house austerity feels relaxing to buyers. During the boom years, open houses seemed like high-stake affairs where a house could get sold in a day (if not an hour). Bidding wars were common. Buyers and brokers both were tied up in knots. These days, no one has big expectations of a quick sale. So forget the scented candles and cookies. These days, it’s the essentials that count — the right price, the right location, a well-maintained home. And that’s just the way it should be.
Is the American ideal of the single-family home going the way of trans-fat, plastic bags and the Hummer?
In New England at least, something seems to be driving up the value of condos relative to that of single-family homes. So far this year, the median single-family home price in Massachusetts is about $34,000 more than the median condo price, according to the Warren Group, which specializes in analyzing market data in Massachusetts, Rhode Island and Connecticut. Compare that to 2005 when the median price for a single-family home was $72,000 more than a condo.
The data involves just a few recent years, is highly local and still pretty sketchy, but if this really IS a trend, why is it happening?
Certainly New England is different from other areas of the country, like Florida, where speculative condos flooded the market before everything crashed. In New England things have been more restrained. Speculative building was held in check by the area’s topography, geography and zoning laws. But what else? Here are a few guesses:
- As more first-time buyers enter the market, they buy lower-cost condos first, boosting prices of condos relative to that of single-family homes.
- In the Boston area, foreclosures seem to be concentrated in outlying suburban areas with more single-family homes. Alternatively, dense and fashionable urban areas located close to universities and public transportation —areas usually consisting of condos — have retained value and experienced fewer foreclosures, keeping prices higher.
But does the New England experience suggest anything about the future of condos in general?
Maybe. A growing senior population in the market for a maintenance-free life, may eventually boost condo sales and prices relative to single-family homes across the country. A growing immigrant population used to tighter living quarters, urban life, and multi-family dwellings, may also boost demand for condos. Certainly young professionals may prefer condos in the city if they can avoid a long commute.
What’s happening with condos in your neck of the woods? Could the condominium replace the single-family home as the housing option of choice?
When all the dust has settled in the housing market and the last at-risk home has finally fallen to foreclosure, the real estate market as we have known it will have changed.
And one of the biggest changes: renters will finally get a little respect.
Already the signs of a renting revolution are in the air. Last year, a survey by The National Apartment Association found that 67 percent of renters had no immediate plans to buy a home. In fact, according to the NAA, occupancy rates in rental housing last year saw the largest annual increase since 1965. There are now more rental housing units across the country then ever — about 34.7 million units sheltering about 83 million people.
“We’re seeing more dramatic growth in renters and a decline in the number of owners,” William C. Apgar, of the Joint Center for Housing Studies at Harvard University told the Post Chronicle. “People are beginning to understand that homeownership can be a very risky venture.”
According to census data, about 67.8 percent of Americans owned their own homes in 2008, compared to a record high of 69.1 percent two years ago. Economists and housing experts predict that once we’ve pulled out of troubled economic times, only about 50 percent of us will own our own homes. In support of this prediction, census data showed that 32.3 percent of Americans were renting homes last year, up from 30.9 in 2005.
As more of us happily turn to lifetime renting, the experience of renting is likely to change dramatically.
Right now, according to Eric Belsky, the executive director of Harvard’s Joint Center for Housing Studies, America’s rental properties are in a sad state — increasingly unaffordable, rundown, and concentrated in blighted neighborhoods. But as more Americans rent for longer and longer periods of time, they will no longer settle for second-rate product. Tomorrow’s renters will demand high-quality properties with the amenities and updates that they would expect of an owned home. Forget cheap carpets and formica countertops. More renters will rent in upscale neighborhoods, and more will expect the sorts of updates that are more common in owned homes — hardwood floors and granite countertops, for instance. More landlords may permit renovation and changes to their property, including painting walls colors and hanging pictures. Some renters may even seek longer-term Euro-style leases of three-to-five years, with the ability to bring their own modular kitchen along to their new digs. Expect new lease options and a much wider assortment of housing choices. Look for landlords to put a new priority on maintaining their properties in an effort to compete for better tenants who will be looking for better product.
In the very near future, renting may be a far more empowering and attractive experience than it is today.
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