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April 17, 2014December 13, 2022

Luxury real estate reaches new highs

Some of the most significant real estate sales of the year occurred in the last two weeks. The first is the home known as Fleur de Lys; Realtor.com reported on April 4^th that the Los Angeles mansion-estate that was described as “unsellable” – sold for LA record $102 Million. The home’s former owner was Suzanne Saperstein, socialite and philanthropist who’s seemingly public divorce from billionaire ex-husband David Saperstein appeared to capture the attention of the country when papers were filed in 2005.

Styled after Versailles, the 100 room mansion was originally listed in 2007 for a then record of $125 Million. However, the on and off again listing made some experts believe that the home would not fetch the asking price. But in the end, a bidding war ensued between several buyers, with the winner purchasing the home for the area record amount.

Although the sale of Fleur de Lys was news when it sold, it now takes a back seat to the highest priced publicly listed sale of a single family home in the country. Realtor.com reported on April 14^th that the Connecticut estate, Copper Beech Farm, sold for a record $120 Million. The home was the former residence of one of the founders of what would become U.S. Steel, and originally listed for $190 Million. The 15,000sf waterfront property is situated on 50 acres; and boasts luxury features such as: hand carved fireplaces; soaring ceilings (with intricate artwork); the dining room features columns, oak paneling, and a tracery ceiling; the solarium is lined in detailed glass.

Although the high priced home is touted for its record sale price, a July 2013 NY Times article (Burdened Estate Bears Monumental Price Tag, and Many Mortgages) reported that the most expensive home ever publicly listed for sale was also “one of the most heavily mortgaged homes in American history;” however, the article stated that the amounts owed were not of public record, and additional properties were reportedly sold to repay the loans.

This significant listing isn’t a pyramid, nor is it a house of cards. You might not even know that the former owner of this “butter-colored stucco house with the slate roof and second-story balustrades” was the infamous man for whom the financial scheme was named. Yes, Charles Ponzi’s home is listed for sale. Maybe the sale would have been significant on a number of levels if the home were listed 4-5 years ago; however, the stately colonial’s listing is still significant nonetheless.

The Boston Globe reported on April 4^th (Charles Ponzi’s former home up for Sale) that the Lexington MA home only changed owners three times since it was built in 1913; prior to the current listing, each sale was private. What makes this sale significant is that it is the first time the home’s sale is being listed publicly. Although the home was to be a symbol of Ponzi’s achievements and status; ironically, Ponzi’s ownership was only a six week stretch prior to his arrest in 1920. Maybe the new owner might be someone who is interested in the home’s history; however, the home is described as a “Colonial Revival mansion with 16 rooms and a charming 4 room carriage house…restored,” and of course hyped as the former residence of Charles Ponzi.

by Dan Krell
© 2014

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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 April 14, 2014 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.

April 11, 2014July 3, 2019

Housing recovery is cliché

The word “recovery” has been used a lot over the last five years. So much so, it seems as if the term is automatically associated with anything written about real estate and housing. But, maybe it’s time for a shift in our perception and expectations.

If you look up the definition of recovery, you might find: “re·cov·ery – noun \ri-ˈkə-və-rē,\ : the act or process of returning to a normal state (after a period of difficulty).” It might make sense to refer to the housing market as still recovering, and in the process of returning to normal; but then again, who’s to say that the home price and market activity peaks realized during 2005 – 2006 was normal?

A number of research papers (such as Reinhart & Rogoff’s The Aftermath of Financial Crises) were produced to discuss how the recovery from the Great Recession would take shape. Although there is not a clear consensus, many concluded that a recovery after a financial crisis is much longer in duration than recoveries from non-crisis recessions. However, some claim that may not be the case because the comparisons to other financial crises around the globe are not analogous the U.S. financial system.

Regardless, maybe the use of the term “recovery” is, after five years, cliché. Niraj Chokshi seemed to allude to this in his November 2013 article on Washingtonpost.com, “What housing recovery? Home values and ownership are down post-recession.” Chokshi pointed out that home ownership and home values have not even recovered to the levels of the three years during the recession (2007-2009).

But then again, it could be that there is a journalistic license to use “recovery” when referring to housing; because there is an expectation for the real estate market to return to the peaks it experienced in the last decade. An April 7^th National Association of Home Builders (nahb.org) press release of the NAHB/First American Leading Markets Index was titled, “Latest NAHB Index Reading Shows Recovery Continues to Spread;” highlighted that there are 59 of 350 metro areas that “returned to or exceeded” their normal market levels. However, “market levels” are based on a metro area’s employment, home prices, and single family home permits (it is unclear if the labor participation rate, which is the labor force as a percent of the civilian noninstitutional population, is included in the employment data).

Talking about a recovery is no longer acceptable for home buyers and sellers planning their futures; rather it is more appropriate to again talk about relative market conditions. Considering that references to a recovery that is extending into a fifth year seems distant and confusing; the dramatic changes that the industry underwent after the recession makes it almost inconceivable for the marketplace to return to the exact state that existed prior to 2007. Relative market conditions are more meaningful to home buyers and sellers, specifically when they are deciding listing and offer prices.

Although the National Association of Reltors® Existing Home-Sales stats are due out April 22nd, and Pending Home Sales Index due April 28th; Wells Fargo Housing Chartbook: March 2014 (April 9, 2014) states, “Although we still see conditions improving in 2014 and 2015, the road back to normal will, in all likelihood, remain a long one…” and outlines a “Brave New Housing World.”

With that in mind, a look at local market conditions; March 2014 year-over-year Montgomery County MD home sale statistics for single family homes as reported by the Greater Capital Association of Realtors® (gcaar.com) indicated: total active listings increased 27.5%; contracts (e.g., pending sales) decreased 7.4%; and settlements (e.g., sales) decreased 12.6%. Additionally, the March 2014 county average single family home sale price of $562,157 is less than the county average SFH price of $573,281 reported for March 2013.

by Dan Krell
©2014

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.

April 3, 2014November 23, 2021

House shopping strategies without using MLS

The low housing inventory is discouraging many home buyers. Low inventory along with increasing home prices and buyer competition can make shopping for a home today a frustrating endeavor. If you’re a serious home buyer, there may be other strategies to finding homes for sale other than those listed in the multiple list system (MLS).

The “For Sale by Owner” sign in the yard is a tell tale sign; however did you know that many FSBO’s can be found listed in the MLS? These are listed through brokers who are paid a flat fee as an MLS listing placement service. And although most are listed online, not all FSBO’s are found in the MLS. You can also find FSBO’s on numerous “by-owner” sites, as well as Zillow, Trulia, or Craigslist.

Listservs and internet groups are another way to find non-MLS homes for sale; however, neighborhood groups often restrict membership to residents. Leveraging your personal and social networks by announcing your search for the non-MLS home for sale will most likely prompt them to inform you about what they have heard through their networks and neighborhood listservs/groups.

The National Association of Realtors® 2013 Profile of Home Buyers and Sellers (realtor.org) indicates that 92% of buyers search the internet. Besides FSBO’s; online services such as Zillow, Trulia, Craigslist, also list foreclosures auctions, pre-foreclosures, and of course broker listings too. The internet is also where scammers are lurking, waiting to prey on you. Be wary about phone numbers that are out of the area; experts agree that you can avoid most scams if you deal with local individuals with whom you can meet in person.

Buying a foreclosure is often suggested as an avenue to buy a non-MLS home. Although most bank-owned homes become listed in the MLS, you have the opportunity to purchase a home at the foreclosure auction. If you’re an auction novice, seek out a real estate professional to assist you; homes are purchased “as-is” and you usually do not have the opportunity to inspect the interior. Mistakes that are often made by inexperienced auction bidders include misunderstanding the terms of the auction, overestimating home values on those they bid, as well as getting carried away and over bidding. Pre-foreclosures are often listed in the MLS as short sales; however, it is necessary to be aware of local laws (such as the Maryland Protection of Homeowners in Foreclosure Act) when approaching distressed home owners who have not listed their home for sale.

Searching through expired and withdrawn MLS listings is another way to find eager home sellers. Your real estate agent can provide you with such a list; however, it is not easy and you may quickly discover the reasons why many of these homes did not sell.

Even though, many alternate strategies for finding a non-MLS home for sale can be achieved without a real estate agent you should consider hiring an agent; besides representing you and assisting in structuring and facilitating the transaction, it is also common for agents to use these strategies to search on behalf of their busy clients.

A down side of the search for the non-MLS home for sale is that instead of competing with other home buyers, you’re competing with many real estate agents; not just those agents representing home buyers, but also the many agents searching for their next MLS listing.

by Dan Krell ©
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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 March 31, 2014 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.

March 26, 2014July 3, 2019

Real estate, climate change, and data-porn

The National Association of Realtors® (realtor.org) March 20^th news release reported that February home sales remained subdued because of rising home prices and severe winter weather. The decline in existing home sales was just 0.4% from January, but was 7.1% lower than last February’s figures. NAR chief economist Lawrence Yun stated that home sales declines were due to “weather disruptions, limited inventory, increasingly restrictive mortgage underwriting, and decreasing housing affordability.” And although it may sound bad, Yun actually has a rosy outlook saying, “…Some transactions are simply being delayed, so there should be some improvement in the months ahead. With an expected pickup in job creation, home sales should trend up modestly over the course of the year.”

So, if a snow filled and cold February is to blame for poor home sales, was Snowmagedden and Snowzilla the reason for increased home sales during February 2010? Of course not. And although home sales increased 5.1% year-over-year here in Montgomery County MD during February 2010, it was mostly due to increased home buyer demand that some speculate was due in part to the availability of first time home buyer tax credits. Additionally, RealtorMag reported that Southern California December home sales dropped about 21% month-over-month, and were down about 9% in compared to the same period in 2012.

As home sales are trending lower, it’s reasonable to look for reasons why demand is soft; but can weather be the main reason to keep potential home buyers at home? Probably not. Consumer demand is a robust force that is multifaceted, and can even prevail over seemingly difficult circumstances. Consumer demand can even trump weather, as was the case during the winter of 2010.

Consumer demand can even be resilient in the face of the speculative effects of global warming. A November 2013 RealtyToday article (The Looming Global Warming Catastrophe and its Effect on Real Estate; realtytoday.com) discusses how home buyer demand for coastal property has remained strong even as increased claims that climate change will make these areas uninhabitable.

Housing data cause and effect is only conjecture unless it is directly observed. To make sense of the “data-porn” that is excessively presented in the media, often without proper or erroneous explanation; economic writer Ben Casselman offers three rules to figure out what the media is saying (Three Rules to Make Sure Economic Data Aren’t Bunk; fivethirtyeight.com): Question the data; Know what is measured; and Look outside the data. Casselman states, “The first two rules have to do with questioning the numbers — what they’re measuring, how they’re measuring it, and how reliable those measurements are. But when a claim passes both those tests, it’s worth looking beyond the data for confirmation.”

Keeping these rules in mind, could the winter slowdown be the result of cold weather, or is it something else? Sure, cold weather may have marginal effects on home buyer behavior and demand; however, weather does not typically affect extended periods of consumer behavior unless weather events are catastrophic. The current data may be indicative of a housing market that is returning to the distinct seasonal activity that we have been used to for many years prior to the “go-go” market and subsequent recovery years.

However, other factors referenced by Dr. Yun, such as increased home prices and tougher mortgage standards, are more likely to be the reasons for subdued home sales. And as the year progresses, these factors may emerge to be significant issues for home buyers.

by Dan Krell
© 2014

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.

March 14, 2014July 11, 2019

The pros and cons of smart home tech

Decades of futurists dreamed about and designed their vision of a “smart home” intended to make living easier and more comfortable. The 1933 World’s Fair envisioned that all homes would have helicopter pads; the 1962 World’s Fair highlights an electronic central brain in the home; the 1964 World’s Fair was about computerizing the home with time saving appliances. And of course, who can forget Disney’s “House of Tomorrow?”

Retro-futurism seems almost cartoonish today, much like watching an episode of the Jetson’s. However, like the retro-futuristic home, today’s smart home is meant to make life easier. Filled with devices and appliances that are connected to the internet, remote access to your home’s systems and appliances is becoming increasingly commonplace. There is an increasing ability for you to control your home, even when you are not there. You can remotely monitor cameras in your home, change thermostat settings, and even program the DVR.

Realtor Magazine (Homes Are Getting Smarter, More Connected; January 09, 2014) reported that smart home tech is a growing sector showcased at the annual Consumer Electronics Show. Besides the growing number of devices that can be remotely controlled, there is also a trend for appliances to send text messages and email. Although smart home technology today is about producing individual gadgets that are programmable and controlled by smart phone apps, it appears that there is a trend toward integrating devices as well. As smart home technology advances, home appliances and systems will be integrated with each other allowing them to communicate with each other; which expected to make the home function more efficiently.

All this technology is great, but there appears to be a downside as well. Although there have been warnings about hacking smart home devices for a number of years, the recent report of hacked smart refrigerators that sent spam has attracted and focused attention on the hackers’ ability to take control of a smart home (phys.org/news/2014-01-cyberattack-hacked-refrigerator.html). A Forbes article published July 2013 (When ‘Smart Homes’ Get Hacked: I Haunted A Complete Stranger’s House Via The Internet) discussed the ease of identifying and gaining access to smart home devices via the internet. Security specialist indicated that they were able to access and control smart devices (such as lighting, thermostats, garage doors, and security systems); more importantly, they were able to access personal data (including names) and device IP addresses from these devices as well. The consensus among security specialists about protection from such intrusions is to basically stay “unplugged.”

While we wait for the perfect smart home, we can continue dreaming of the home of the future. “1999 A.D.” (A 1967 Ford-Philco production; the video featuring Wink Martindale is posted above) is one of the best retro-future depictions of a home that incorporates technology considered to be state-of-the-art by today’s standards, as well as technology that we have yet to perfect. Central to the home is a computer that collects and maintains information from all home devices, including biometric data that is sent to the medical center for analysis. 3D television, a “home post office” (email), push button meals, and shopping from a home computer is standard in this home. As technology advances, there seems to be a post-modern sentiment exclaimed in the video that may ring true, “…if the computerized life extracts a pound of flesh, it has some interesting rewards…”

By Dan Krell
Copyright © 2014

Original published at https://dankrell.com/blog/2014/03/14/the-pros-and-cons-of-smart-home-tech/

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.