real estate Archives - Page 56 of 86 - Real Estate News and Commentary

August 13, 2014November 23, 2021

Making sense of real estate market indicators

It used to be easy to figure out the strength of the real estate market, all you had to do was look at reported housing indices and it all made sense. Statistics were often verified and corresponded to other indices as well. However, since the financial crisis, there seems to be a disconnect between national and local housing indicators; gauging the market has become confusing – understanding what the indices measure and imply is often tricky.

Obviously, the best gauge to the health of the housing market is measuring existing home sales. Existing home sales is reported nationally and locally. The figure is important because it is a direct measure of the number (volume) of home sales during a given time period (usually monthly). National sales figures are often samples of MLS data, while local data are actual (raw) numbers. The statistic is used to chart annual sales trends; as well as a relative comparison to the same period during previous years.

Some have talked about the strength of luxury home sales as an indicator of the housing market. However, during a weak economy is weak, mid and low tier home sales tend to decrease; while upper bracket and luxury sales remain relatively strong. This bifurcation, where two distinct markets are derived from one, has emerged twice since the financial crisis; most recently earlier this year.

The National Association of Realtors® reports the Pending Home Sale Index, which is basically the number of homes that go under contract (pending sale) during a specific period. Pending sales are sometimes called a “forward looking” statistic because it is used to estimate how many homes will have sold for the year. Local pending sales are reported as a raw number of homes under contract. The statistic can be misleading because contracts fall apart for a number of reasons and may be one explanation as to why pending sales and existing sales may not correspond. Although the figure is not always indicative of actual sales, the figure is important because it reveals home buyer activity.

Another statistic relied on by many to determine the strength of the housing market are the home price indices (yes there is more than one). There are a number of national home price indices, and each has their own discrete methodology of measuring home sale prices. Some indices collect MLS data samples, while others use reported mortgage data. Average home sale prices help determine affordability, which can be an indication of buyers’ potential ability to purchase a home.

Some analysts talk about mortgage interest rates for much of the same reason one might follow home sale prices – to project home buyer affordability. The rationale is that the lower the interest the more affordable homes are and increase buyer activity.

Analysts also use new homes statistics to describe the strength of the real estate market. Included in this subset of housing data are new home sales and new home starts. New home starts is typically derived from the number of permits filed to build homes. Besides being a forward looking projection of new homes sales, economists follow new home starts figures closely because it can project construction employment as well.

Housing indices can be inconsistent. And while positive statistics may be reported nationally, it doesn’t necessarily correspond to the local market. Your real estate agent can provide insight to local sales trends and expected projections.

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

August 6, 2014November 23, 2021

Millennials, home buying, and tiny houses

Many analysts are trying to provide answers for this year’s disappointing home sales volume. One factor that has been maintained is the lack of participation from young home buyers, which may be supported by statistics compiled by the National Association of Realtors®. Highlights from the National Association of Realtors® 2013 Profile of Home Buyers and Sellers cites the median age of home buyers was 42 years old (increased from the median age of 39 reported in 2008, when three-fifths of all home buyers were under 45); and the median age of the first time home buyer was 31 (increased from the median age of 30 in 2008, when 54% of first time home buyers were reported to be between the ages of 25 and 34).

Millennials, typically described to be between the ages of 18 and 34, have recently been the focus of much financial analysis. There is a consensus that millennial economic participation has been impacted by employment and a challenging job market. Along with a burdening student loan debt, many millennials have decided to delay family formation; not to mention forgoing home purchases for rentals and moving back with mom and dad.

David Jacobson, in his A July 16^th Money article “10 Things Millennials Won’t Spend Money On” (time.com/money) described millennials as a financially savvy group who, like the generation of the Great Depression, has learned from the Great Recession. When it comes to housing, Jacobson states that it is not a lack of desire for homeownership, but rather just a matter of affordability. He cites a Harvard Joint Center for Housing Studies finding indicating that homeownership fell 12% among those younger than 35 during the period between 2006 and 2011; and an additional 2 million are living with their parents. Even though he describes improving economic conditions, Jacobson attributes the prohibitive cost of housing to the combination of economic challenges along with recent changes to the mortgage industry.

Emily Parkhurst, the Digital Managing Editor of the Puget Sound Business Journal, provides additional insight in an August 1^st blog post (Zillow data shows millennials don’t buy houses). Identifying herself as a millennial by saying “I’m that 32 year old non-homeowner they’re talking about…” she shares her frustrating experience with selling her husband’s condo with an underwater mortgage. Having purchased the condo before their marriage, and then having to make job related moves, they tried selling it via short sale and then trying a deed-in-lieu; but after more than three years, she states, “It’s been an insane back-and-forth with no promise of resolution any time soon. Why would I ever sign up for the possibility of that again?”

Although homeownership may still be a challenge for many, including millennials; the “Tiny House Movement” may be viewed as an affordable alternative to traditional housing. Another take on manufactured housing (mobile and double-wide homes), the Tiny House Movement was described by Randy Stearns of TIME (Tiny Houses With Big Ambitions; May 29, 2014) as “…efforts by architects, activists and frugal home owners to craft beautiful, highly functional houses of 1,000 square feet or less (some as small as 80 square feet).”

Maybe the Tiny House may not solve all of the problems in the real estate industry, but the concept of mobile, tiny efficient housing seems to be catching on not only with those who are downsizing – but also as mobile apartments for millennials.

July 30, 2014November 23, 2021

The anonymity of the internet has made real estate more personal

It might not be a revelation that the initial news about Zillow’s acquisition of Trulia reverberated among the analysts as a game changer for the real estate industry. But you might be surprised that some commentaries, such as Brad Stone’s of BloomburgBusinessWeek.com (How a Zillow-Trulia Merger Could Finally Change the Business of Real Estate), expressed that the transaction of buying and selling homes has not really changed since the inception of these internet giants.

Compared to 2013, decreased sales volume has made 2014 a challenging year for many in the real estate industry. And contrary to what some believe, the Trulia acquisition may not necessarily be a sign of strength; but rather, it may be sign of continued weakness in the industry. Tim Logan comments on the acquisition in his July 28^th Los Angeles Times article (Zillow deal to buy Trulia creates real estate digital ad juggernaut), “Neither is yet profitable separately, but they hope to save $100 million a year by joining forces and cutting duplicative costs.”

Regardless of the economics behind the acquisition, the significance of Zillow and Trulia (and other similar websites) cannot be underestimated. And although many believed these sites were to have changed the real estate industry in a manner similar to how the internet changed the travel and retail industries; Zillow and Trulia have been leaders in transforming the home buyer and seller experience. And instead of minimizing the importance of the real estate agent; MLS aggregators have become facilitators and part of the home buying/selling process by packaging syndicated MLS feeds and other related information to consumers in a convenient and eloquent way through the internet, while selling services to real estate professionals vis-à-vis subscriptions and advertising.

The general process of buying and selling a home is still somewhat the same as it has been for decades. Before internet access became prevalent, real estate agents mostly met with their clients in person to review available home listings, discuss financing and other related matters. Although many used the technology of the day (fax machine and telephone), the preferred meeting was face-to-face. As the internet flourished, technology adopters were able to correspond with clients via email, text messages, and Skype. And as the technology evolved, so too did the daily business of real estate. Searching for homes became increasingly streamlined, and the flow of documents became more efficient.

Some have made the argument that the internet and related technologies may have been an enabler of the real estate bubble of the early to mid 2000’s. However, the reality may be that the real estate bubble facilitated the growth of real estate aggregators and the use of internet technologies. The proliferation of information at that time, along with the effective use of new technologies, fed house hungry buyers who wanted to be the first to know about a home for sale before other buyers. Internet and cell phone applications were developed to automatically send listing alerts to buyers’ emails and cell phones (technology that is commonly used today and even useful in hot markets where homes sell quickly).

Buying and selling a home is still a personal business. Instead of eliminating the real estate agent; websites such as Zillow and Trulia may have forced the agent to evolve from the information gate keeper to the local real estate expert who can interpret information for clients into meaningful data that can be used to facilitate the buying and selling of homes.

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of July 28, 2014 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.

July 24, 2014December 13, 2022

When selling a home – pictures more important than descriptions

The maxim “beauty is in the eye of the beholder” seems to be applied universally. But the meaning that different people are attracted to different characteristics may be also applied when viewing homes online. Recent research confirms how visual cues can either increase or put off a home buyer’s interest in your home.

Seiler, Madhavan, & Liechty’s 2012 ground breaking research on home buyers’ attention to visual cues deviates from the usual valuation models that focus on the perception of a home’s features (Seiler, Madhavan, & Liechty. (2012). Ocular tracking and the behavioral effects of negative externalities on perceived property values. Journal of Housing Research, 21(2), 123-137). Their study used ocular tracking technology to follow the eye movements of people viewing internet home listings. They found that people tend to spend more time viewing a home’s photos than reading about the property’s features, agent comments and other information; study participants viewed photos 60% of the time.

They concluded that the “percentage of time a person spends looking at the photo of the home” is more indicative of a person’s interest in a home than reading about the property’s characteristics or reading the agent’s descriptions; and it could be inferred that the longer a person looks at a home’s pictures, the more they might be interested in viewing it in person. As a result, the authors recommend that “real estate agents exercise great care when taking good photos of the property before listing a residence for sale.”

Additionally, the study reported some interesting findings about a home’s value relative to negatively perceived features. Negative features that can be changed easily and inexpensively (such as carpets or paint) were not viewed by the study’s participants as a reason to significantly discount a home’s value; however, viewing negative external features that cannot be changed (such proximity to transmission lines or cell towers) is perceived to lower a home’s value.

The study’s findings about visual cues seems consistent with a 2008 Realtor® Magazine article (“How Photos Help Sell Homes”; realtor.org) which indicated that a home’s days on market is drastically reduced when there are multiple quality photos: “A property with a single photo spent 70 days on the market (DOM) on average, while DOM fell to 40 with six photos, 36 with 16 to 19 photos, and 32 with 20 photos…” The same article also reports that your home will probably sell for more if your agent posts multiple quality photos compared to posting only one photo; “listings with one photo sold for 91.2 percent of the original price, while homes with six or more sold for 95 percent of the original price…”

So it seems that Seiler, Madhavan, & Liechty’s findings confirm the conventional wisdom to make your home look its best prior to listing it, as well as well as having the best quality photos posted to your listing. If you’re planning a home sale, consider asking about and comparing agents’ marketing concepts – including photos and video. It is customary for many agents to hire a third party to take and post pictures for the MLS listing and virtual tour. However, even though the posted pictures are high resolution, many MLS photos are distorted and/or do not depict the best viewpoint. To increase interest in your home – ensure that your hi-res photos are high quality by using the proper perspective and highlights the home’s features.

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of July 21, 2014 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.

July 16, 2014November 23, 2021

Reality TV and real estate – is the genre shaping buyer and seller expectations?

Reality TV has been a part of our culture since the 1990’s, and chances are that you’ve watched Reality programming at some time. Reality TV has benefited from the booming housing market of the early to mid 2000’s, when the number of real estate reality shows grew exponentially. Today, real estate related reality TV is prevalent, and you could probably catch one at almost any time of day.

What is it about reality TV, or more specifically – real estate reality TV, that draws us in like a moth to the light? Matthew Wilkinson and Paul Clark suggest in their research (2014. Pay No Attention To The Man Behind The Curtain: The Rejection Of Artifice And The Culture Of Choice. ASBBS E – Journal,10(1),132-143) that our affinity to reality programming is our culture’s desire for “fluid, ambiguous, and amorphous experiences.” And before I embark on their philosophical explanation based on “postmodernism” and its implications, it apparently boils down to our search for “authenticity” and the notion of participation.

Alternatively, Alex Weprin reveals that there is a feeling among programming executives that audiences have become bored by “forced, trite reality shows” and are attracted to TV shows that “feel more ‘real.’” But there’s a limit to “authenticity,” even in reality shows. Weprin quotes Animal Planet President and General Manager Marjorie Kaplan, saying “I don’t know that every nonfiction show is going to be authentic; clearly there is room for wonderfully inauthentic reality TV that we all watch and wink and nod and know is contrived….” (Jan 10, 2010. Cablers target laughs, authenticity, geeks. Broadcasting & Cable).

And why not? “Reality” TV is an escape from monotony and lets us perceive we are participants; real estate reality programming helps us imagine how our homes, our lifestyles could be different. Since the airing of MTV Cribs, we imagined how we could live like celebrities. Home renovation, real estate investing, buying foreclosures, house flipping, luxury homes, and home shopping: there is no lack of real estate related subjects on TV today – and they all seem to make it all look easy and exciting.

But there is a concern by some in the real estate industry that reality TV is doing more than entertaining viewers, it is also shaping consumer expectation. The real estate related reality format is typically a condensed version of the process that highlights only parts of the consumer experience; the portrayed drama in this sub-genre can range from the very subtle to the outrageous.

A recent Realtor® Magazine article highlights professionals’ thoughts on the matter (June 16, 2014. Reality TV Skewing Home Remodeling Picture?); and the consensus is that some consumers demand a similar experience to what they see on TV. Some real estate agents have also expressed concerns about home buyers and sellers whose expectations are not realistic; they want more in an abbreviated span, losing perspective on the elements and time that the home buying and selling process requires.

Maybe the entire genre is misconceived; maybe real estate Reality TV should be more realistic, where the drama is drawn out over weeks and months documenting the excitement and tedium of the real estate transaction. But then again, maybe T. S. Eliot was correct in the characterization (Burnt Norton): “…humankind cannot bear very much reality.” TV may not be genuine about being real, as much as it is about entertainment value.

Protected by Copyscape Web Plagiarism Detector