Housing market trends Archives - Page 7 of 7 - Real Estate News and Commentary

May 12, 2011July 26, 2019

Can timing the real estate market help you get a better deal?

If you’re trying to time the market before buying or selling your home, you may decide to wait a little longer after hearing the recent housing data; however, you could also change your mind when you consider some recent research.

First, a recent housing report released May 8th by Zillow.com indicates further erosion of home values. According to Zillow.com’s chief economist Stan Humphries, home values continue to slide nationwide – except for the metro areas of Honolulu, HI (there was a slight increase in home values in March 2011 compared to the same time last year) and Pittsburgh, PA (where home values have been determined to be flat for the time period) (Zillow.com).

Even the Washington, DC metropolitan appears to have taken a hit. According to Zillow.com, area home values declined 0.5% in March 2011 compared to February 2011; and declined 7% in March 2011 compared to March 2010.

Humphries further stated that housing demand continues to be “fundamentally weak;” while housing supply is and will continue to be affected by distressed properties due to higher than normal delinquency rates (which are expected to continue into the near future).

Given the less than rosy picture of the housing market, those doubting the long term value of home ownership may continue to wait out the market. But a recent research article by Anderson & Harris (2010. Timing the market: You don’t have to be perfect. Real Estate Issues 35, (3) (10): 42-42-50) may indicate that you don’t have to be perfect when timing your purchase and sale of your home.

Anderson & Harris studied various strategies of purchasing and selling commercial real estate to determine if there is a significant difference in return. Their strategy simulation provided these results: the typical “buy and hold strategy” over a thirty year period results in an annualized return of 8.18%; however, buying when a recession has ended with a predetermined sale period yields a wide range of return that ranged from 13.38% to 1.42% annualized total return. Alternatively, timing your purchase and sale with the overall peaks and valleys of the market could be more effective than trying to be exact; although they concede that peaks and valleys are realized in hindsight.

Although their data analyzed commercial real estate investor behavior, the results may have implications for the housing market. As the data suggests, attempting to exactly time your purchase and sale can yield a wide range of unpredictable results; while a long term strategy appears to be more stable. Additionally, they caution that market timing can also be affected by macroeconomic factors as well as your personal financial picture; which can reverse positive returns, even if your timing was perfect.

Anderson & Harris’ data may indicate that attempting to time your purchase may not yield the results you might expect; long term home ownership can be as good, if not better, than speculating on the exact bottom or top of the housing market. Likewise, home sellers waiting for the housing market to rebound before making a move may be missing an opportunity as well.

Obviously, you should consult financial professionals before making any financial decision; as well as consulting a Realtor® to assist you in analyzing local and neighborhood sale data. However, if you’re trying to time the housing market, consider a long term approach before making your decision.

by Dan Krell
© 2011

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

September 5, 2008October 5, 2019

Has the real estate market reached the turning point? (Market statistics and trends)

by Dan Krell

As indicated by the slight increase in the Consumer Confidence Index (ConferenceBoard.org), which edged up in August to 56.9, signs may point to a slightly improving economy. As consumer confidence increases, we may see home sales increase as well. Take for example the Mortgage Bankers Association reporting an increase in mortgage applications (8/27/2008 mortgagebankers.org), as well as the National Association of Realtors (Realtor.org) reporting that nationwide existing home sales have increased 3.1% in July (which is reported to be a five month high!).

Does this mean that the real estate market has turned a corner? Many remain cautious.

Other housing related reports are mixed, however. The NAR reports that although overall housing inventory (homes listed for sale) is up, single family home inventory has declined. The increased housing inventory is attributed to a sudden increase of condominium inventory.

Locally, Montgomery County single family home inventory has dropped slightly in July 2008, while sales have also dropped slightly in July from June 2008 sales (data reported by the Greater capital Area Association of Realtors). However, a few individual zip codes and neighborhoods continue to show signs of recovery by posting sales increases, price increases, or both (data derived from Metro Regional Information Systems, Inc.; MRIS.com). Neighborhoods hit hardest by foreclosures continue to lag behind in sales.

What do home buyers think? A recent Harris Interactive poll, commissioned by Move.com (news.move.com), reports that 81% of home buyers polled are anxious about the current housing market and feel there are barriers to their homeownership. However, of those polled, 44% of home buyers believe the real estate market will improve with a new president. Additionally, 41% of current homeowners polled plan to purchase a home again, 80% of all renters polled plan to purchase a home someday with 47% planning to purchase a home within the next five years.

Of those reporting barriers to homeownership, the top barriers reported were current home prices (31%), lack of down payment (28%), “lack of confidence in economy” (26%), and various personal and financial concerns. Although many polled report a barrier to home ownership, 78% of home buyers polled report that they were willing to save for down payments as well as compromise on various criteria they are searching for in their home (including neighborhood and local amenities).

So what can we expect? Lawrence Yun, NAR Chief Economist, was reported as saying in a NAR news release (8/25/2008) that home prices could increase in the few localized markets where sales have appreciably improved. He continued to say that many market area inventories remain high and will take time to shrink; however he reports that 2009 will be a more “balanced” market. He expects that “long term appreciation patterns” will eventually return.

According to MRIS’s “Trends in Housing” (mid-year 2008), foreclosures will continue to trouble the local market; the Washington, DC region’s foreclosure rate this past spring (131 per 10,000) has outpaced the national rate (87 per 10,000). However, expectations are that decreased inventory along with increased housing demand (due to job growth and relatively low interest rates) will increase market activity by early 2009. It is expected that close-in neighborhoods will see these signs of recovery first, shortly followed by the outer suburbs.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of September 1, 2008. Copyright © 2008 Dan Krell.

July 30, 2008October 5, 2019

Are Real Estate Concierge Services a Fad or the Next Trend?

by Dan Krell

Have you ever used a hotel concierge? It is sometimes amazing how some provide spot-on service and great advice about where to eat and the sights to see. Once only offered to wealthy clients, real estate concierge services are becoming more popular and offered to everyone as way to provide a value added service by real estate brokers and agents (who are now trying to scrape out extra market share in a quickly shrinking real estate market).

The origin of the concierge is rooted in serving others. According to Miriam-Webster.com, the word concierge is a French word derived from Latin meaning “fellow slave.” Although historical references agree that the origin of the concierge originated in medieval times as a royal trusted advisor, the described function differs from an officer of the royal court who executes justice to a member of the court who kept the room keys of visiting nobility (concierge is often referred as the French definition of “keeper of the keys”), while fulfilling the desires of the nobility.

Concierge services developed into an indispensible part of European culture. Concierge services were found everywhere, from apartment buildings to the government; the concierge only served those who lived or worked within their service areas. Modern concierge services are commonly found in hotels and spas; because they often obtain the hard to get items for guests, concierge services often have the reputation of obtaining the unobtainable.

Concierge services (sometimes known as errand services) are becoming more popular to save us time in our hectic lives. Real estate concierge services often range in services from preparing the home for sale to moving home owners to their new home. Some real estate concierge services offer expanded services where you can find just about any service in and out of the home! In fact, one prominent real estate concierge service that is provided by a real estate broker lists over one hundred services; incredibly, the list is described as being “a partial list!”

Home builders have also begun to offer concierge services. Additionally, home builders are adding the concierge services as a “premium service” built-in to communities as a way to lure home buyers to their communities.

Offering services other than real estate, these real estate concierge services are another attempt for real estate brokers and agents to be a “one stop shop” for home related services. Needless to say, the quality and level of service of real estate concierge services may vary. Many real estate concierge services enlist the services of highly regarded local professionals to provide their services, while some real estate concierge services only “recommend” professionals who are willing to pay for the privilege of having their service listed.

Taking Ben Franklin’s advice, “an ounce of prevention is worth a pound of cure,” it is good idea to investigate unknown service providers with local consumer advocacy groups. For example, the Montgomery County Office of Consumer Protection offers advice to consumers about some service specialties. Additionally, it is also a good idea to research the license status of service providers who are required to be licensed, certified, or insured. The Maryland Department of Labor, Licensing and Regulation Division of Occupational and Professional Licensing (www.dllr.state.md.us/pq) allows you to check the status of home improvement contractors, plumbers, electricians, and HVACR services (among other professionals).

May 7, 2008November 23, 2021

Urban Living Makes a Comeback!

by Dan Krell
Google+

As the real estate market struggles to find a foothold, many are already speculating on the next real estate boom. The next real estate boom will not be as widespread nor will it be all inclusive as the last market surge; however, some speculate that it will be a highly competitive market nonetheless. The next wave in real estate will be localized to the downtown districts and surrounding neighborhoods of urban centers as a result of the (seemingly) ever increasing fuel and commuting costs.

A 1998 Brookings Institute and Fannie Mae study projected that urban living will attract more residences to the downtown areas. The study projected growth through 2010 in twenty-four cities around the country and used a very conservative definition of downtown (usually the financial districts) and did not include the surrounding neighborhoods. It was projected that some cities will have modest growth while other cities will have explosive growth (Baltimore’s downtown population was projected to increase 5.8%, while Cleveland’s downtown population was projected to increase 228.1%).

The economics of energy is not only affecting grains and food prices, it is influencing real estate trends as well. The recent sharp increase in gas prices and road congestion are making many re-think their home location. Suburban home owners as well as home buyers are looking to move closer to their jobs and save possibly thousands of dollars per year. A National Association of Realtors study reported that 28% of home owners surveyed indicated that high fuel costs were a decision to sell their home, while 40% of home buyers surveyed indicated that high fuel and commuting costs offset the higher home prices closer to the city center. Based on the Washington Metropolitan Area Transit Authority cost calculator (WMATA.com), eliminating a drive of 15 miles round trip can save over $500 per month or $6,000 per year (the figure is based on the GSA reimbursement rate).

Not everyone who is moving “inward” is doing so for work. Many moving closer to downtown areas are expressing the desire to be able to walk to stores and entertainment, while others are drawn to the unique architecture of the older homes.

Local downtown areas have been undergoing urban renewal for years. Large renewal projects that include modern amenities have been designed to draw commercial activity as well as attract residences. With a vision of the future, builders have planned and designed high density developments as well as many mixed use (residential and commercial) urban projects to keep up with the anticipated demand for urban living.

Although not everyone wants to live close to the urban centers and downtown areas, home builders did get the message that many do want to live close to amenities. New suburban communities are designed around existing or new town centers that include shopping, entertainment and access to mass transportation (or are close to metro stations).

If you are considering moving closer to (any) downtown area, don’t let the home prices discourage you. If you consider your commuting costs (including gas, parking, time in traffic) from the suburbs as well as proximity to amenities, your urban home purchase may be more attractive.

May 7, 2008November 23, 2021

Todays Luxury Home Trends are Tomorrow’s Home Standards

by Dan Krell
Google+

What comes to mind when you think of a luxury home? When asked, many people first think a luxury home is a very large and expensive home. However, a luxury home does not have to be the largest or the most expensive home in the area; in fact a luxury home could be a townhome or condominium.

Although price alone does not signify a luxury home, luxury homes are more expensive than the average home. Regardless of price, luxury home ownership is on the rise. Consider the Joint Center for Housing Studies (Harvard University) report from 2004 indicating that homes costing over one million dollars are the fastest growing market segment in the country such that the United States Census Bureau had to change the top census category of home value from “$500,000 or more” in 1990 census to “$1,000,000 or more” in the 2000 census.

So what makes a home a “luxury home?” It is mostly about the home owner’s lifestyle, which is typically a combination of: personal expression, house amenities, construction quality, and physical location. A typical luxury home buyer will pay the price to create their perfect home and to make it express their lifestyle.

Lifestyles and homes have changed a lot over the years; consider that in the United States, the average home in the 1950’s was about 980 square feet while today the average home is over 2,400 square feet! As lifestyles change, trends in luxury home building will change to fit the luxury home buyers’ personality and routine. Most luxury home buyers are willing to pay more for a home in the perfect location with customized amenities.

Luxury homes usually have many state of the art amenities including the latest in appliances and recreation facilities. State of the art kitchens are usually standard in a luxury home. Current trends in high end kitchens include prep-kitchens inside the main kitchen so as to keep the main kitchen clean, as well as high tech appliances connected to the internet so you can either order groceries from your fridge or cook a turkey while at work (via phone commands). Additional luxury amenities include walk in closets (closet sizes rival the average bedroom) that are well appointed with center islands and dressing areas. Other amenities depend on the owner’s personal interests and hobbies. You might find these indoor facilities in a luxury home: theatre, basketball court, bowling alley, or swimming pool.

Luxury home construction is distinct from other construction because of the customization and materials used (such as exotic woods, imported marble, and custom fixtures). Luxury homes are now being designed for room flexibility and continuous room flow. The price of a luxury home is higher than the average home because of these design and construction features.

Do you like what you see in some of today’s “dream homes?” Today’s luxury home trends tend to become tomorrow’s norm. For example, the washer/dryer, dishwasher, air conditioning, microwave oven, granite counters, and stainless steel appliances (the list goes on) were once considered to be a luxury- but are now the norm in many homes: So, who knows? Maybe your next home will have that indoor basketball court!