US HOUSING MARKET
Live in Seattle? If you own your home, chances are you're celebrating.
That's because the city's median home price in the first quarter of this year hit $380,200, an increase of 12.3% from a year earlier, according to data from the National Association of Realtors (NAR). Median home prices in the Pacific Northwest as a whole soared; in Portland, Ore., prices jumped 8.9%, and in Salem, Ore., they grew 15.6%.
Southern metros also boasted gains. In San Antonio, prices went up 11.2%, and Austin, Tex., prices climbed 5.4%. Charlotte, N.C., and Raleigh, N.C., rose 6.4% and 6.3%, and Richmond, Va., and Norfolk, Va., improved 6.2% and 5.9%.
"What we're seeing now are the areas which still have a strong economy, but didn't have the overheated prices [during the housing boom], are the ones holding on strong now," says Kermit Baker, a senior research fellow at Harvard University's Joint Center for Housing Studies.
In the Northeast, the New York City metropolitan area turned in a steady 1% growth rate, and smaller metros like Albany, N.Y.; Trenton, N.J.; and Allentown Pa.--which improved by 6.3%, 7.1% and 5.8% respectively--helped overcome Boston's continuing slump to lift the Northeast to a 1.2% overall price growth, making it the only region in the black.
Now the bad news.
Cloudy Skies Median home prices in Florida are down, according to NAR: Tampa by 2%, and Sarasota, Palm Bay and Daytona by an average of 9%. Overall, Florida prices plunged 25%, making the Sunshine State not so sunny. Miami, however, which had been hamstrung early in the housing downturn, improved by 2%. The rally may be tenuous however, as 23% of Miami housing loans are subprime, according to First American LoanPerformance, a mortgage data provider.
"We've had 30 subprime lenders go under, which leads to a tightening of credit," says Jonathan Miller, president of Miller Samuel, a New York-based real estate appraisal and consultancy firm of lenders nationwide. "That adds one more barrier to transactions, something that couldn't have come at a more delicate time for the housing market. On a national level, there are a lot of markets which are going to have some problems."
The Gulf Coast, where home prices had roared back at a double-digit clip the year following Hurricane Katrina, is one such market. Biloxi, Miss., grew by 15.7%, and Baton Rouge, La., by 9.7%, but the subprime hammer came down on New Orleans, where a 20% delinquency rate on subprime loans contributed to an 11% drop in home values, the NAR reports.
Worse News To Come? For many markets, things may get worse before they get better. Nationwide, prices fell by 6.6%, a number that makes sense at this point in the housing cycle, experts say.
"When housing prices slip, nothing really changes until you try to sell, which is what we've had happen in the last couple of months," says Miller. "I don't think the housing slowdown has fully hit the national economy yet."
Overexpansion was a problem for most metro areas. Homeowner vacancy rates stood at 2.8% in the first quarter of this year, a statistically significant rise from the 2.1% rate a year ago and the 1.7% average between 1995 and 2005, according to the U.S. Census Bureau.
Those high inventory numbers flatten prices and make new development less lucrative.
"It's becoming more difficult to put together financing for new development projects," says Miller. "That'll actually provide some constraint on supply, but that's a couple years down the road. You figure the lead on new development is probably two years, so it's going to be a couple years before units stop coming off the conveyor belt."
Moving forward, there is concern surrounding the strength of the national macro economy. In the first quarter of 2007, growth came in at a disappointing 1.3%--hampered by 4% inflation--but the Federal Reserve predicts growth between 2.5% and 3% for the remainder of 2007.
"We do have a massive inventory correction, which will happen a lot easier and a lot less painfully if it continues to happen during an economic expansion," says Baker. "The fear is now that even though the direct housing hit was absorbed, the indirect hit could be serious too. We're into that now, but it doesn't look like it's enough to throw the economy into recession."
Some might disagree. Fears about the ripple effect of the housing market have traders particularly bearish.
The S&P/Case-Shiller housing futures market on the Chicago Mercantile Exchange (nyse: CME - news - people ) is based on repeat sales of homes across 10 markets ranging from Boston to San Diego. There, traders are betting on a 4.5% decline from now until next year.
"There's a limitation to the futures market, because it only trades one year forward," says Fritz Siebel, a broker with Traditional Financial Services, the largest trader of housing futures. "For 2007 to 2008, the market doesn't look good, but it doesn't mean there's not a bottom around the corner."
Source: Matt Woolsey, Forbes.com
Thursday, May 17, 2007
Tuesday, May 15, 2007
Buyer's agency
Making an attractive home-purchase offer
Buyer's agent can be an invaluable tool
It's easy to assume that negotiating is adversarial. You, the buyer, are on one side -- the side that wants to buy a property for the lowest price possible. The opposition on the other side is the seller who wants to sell for the highest price possible. You're locked in a tug of war to see which side will win.
It's more productive to look at a negotiation as a problem-solving process. You and the seller may have different ideas about what price the property should sell for. However, you're united in a common goal of consummating a deal. The challenge is to resolve your differences through a process of give and take until you either reach your common goal, or decide to go your separate ways.
Of course, you have to arrive at a mutually agreeable selling price for a sale to go through. Sometimes this will happen quickly; sometimes it's a drawn-out process that can last over days or even weeks.
HOUSE HUNTING TIP: Patience can be your ally. Sometimes rushing the process can quicken its demise. In fact, you may be better off waiting before starting the process if you think that the asking price is too high.
For the first time in years, we are in a market where some home sellers -- typically those who bought recently -- won't be able to sell their home for a profit. But, they may need to test the market to be sure.
If this is the case, the best negotiating strategy may be to offer nothing until the sellers are close to reducing their asking price. There can be a benefit to making an offer just before a price reduction is made. If you wait until the price is lowered, you could end up paying a higher price if other buyers suddenly become interested.
In order to make sure you know that the sellers are contemplating reducing the price, ask your real estate agent to talk to the sellers' agent and make sure that the sellers are made aware of your interest. Don't be bashful about the fact that you are interested, but not at the current price. This way, you may receive a call when the sellers decide they'd like to see an offer from you.
When you make an offer and there's no competition from other buyers, your initial offer price should leave you room to move up in price. But, it should not be so low that it's insulting to the seller. Otherwise he or she might not respond at all. An offer that's much lower than the market would give the seller the impression that you can't afford more, so there's no point in issuing a counteroffer.
Buyers often think that if they start too high initially, they'll end up paying too much. Your initial offer price should be good enough to entice the seller into a dialogue. It's a price to get the ball rolling. From there, you can move up in small increments, if necessary.
Don't get so caught up in negotiating the price that you overlook other opportunities for consensus building. Most good negotiations have a sense of fairness about them. During the process of your negotiation, you and your agent should brainstorm all the possible ways that you can accommodate the sellers.
Do they need a quick close? If so, they might be willing to give more on price for a speedy close. However, you might want to hold up offering this information at the beginning of the dialogue. That way, you have something more of value that you can offer the sellers in exchange for a further price concession.
THE CLOSING: When you get close on price, offering to split the difference can put a seal on the deal.
By Dian Hymer, Inman News
Buyer's agent can be an invaluable tool
It's easy to assume that negotiating is adversarial. You, the buyer, are on one side -- the side that wants to buy a property for the lowest price possible. The opposition on the other side is the seller who wants to sell for the highest price possible. You're locked in a tug of war to see which side will win.
It's more productive to look at a negotiation as a problem-solving process. You and the seller may have different ideas about what price the property should sell for. However, you're united in a common goal of consummating a deal. The challenge is to resolve your differences through a process of give and take until you either reach your common goal, or decide to go your separate ways.
Of course, you have to arrive at a mutually agreeable selling price for a sale to go through. Sometimes this will happen quickly; sometimes it's a drawn-out process that can last over days or even weeks.
HOUSE HUNTING TIP: Patience can be your ally. Sometimes rushing the process can quicken its demise. In fact, you may be better off waiting before starting the process if you think that the asking price is too high.
For the first time in years, we are in a market where some home sellers -- typically those who bought recently -- won't be able to sell their home for a profit. But, they may need to test the market to be sure.
If this is the case, the best negotiating strategy may be to offer nothing until the sellers are close to reducing their asking price. There can be a benefit to making an offer just before a price reduction is made. If you wait until the price is lowered, you could end up paying a higher price if other buyers suddenly become interested.
In order to make sure you know that the sellers are contemplating reducing the price, ask your real estate agent to talk to the sellers' agent and make sure that the sellers are made aware of your interest. Don't be bashful about the fact that you are interested, but not at the current price. This way, you may receive a call when the sellers decide they'd like to see an offer from you.
When you make an offer and there's no competition from other buyers, your initial offer price should leave you room to move up in price. But, it should not be so low that it's insulting to the seller. Otherwise he or she might not respond at all. An offer that's much lower than the market would give the seller the impression that you can't afford more, so there's no point in issuing a counteroffer.
Buyers often think that if they start too high initially, they'll end up paying too much. Your initial offer price should be good enough to entice the seller into a dialogue. It's a price to get the ball rolling. From there, you can move up in small increments, if necessary.
Don't get so caught up in negotiating the price that you overlook other opportunities for consensus building. Most good negotiations have a sense of fairness about them. During the process of your negotiation, you and your agent should brainstorm all the possible ways that you can accommodate the sellers.
Do they need a quick close? If so, they might be willing to give more on price for a speedy close. However, you might want to hold up offering this information at the beginning of the dialogue. That way, you have something more of value that you can offer the sellers in exchange for a further price concession.
THE CLOSING: When you get close on price, offering to split the difference can put a seal on the deal.
By Dian Hymer, Inman News
Saturday, May 5, 2007
Active-adult communities
Active-adult communities sell a dream
Older baby boomers find new ways to live, learn
One of the attractions on a recent day at Seasons at Laurel Canyon was an exhibition tennis match.
Donna and Curtis Finney are swept up in a social whirl where "everybody wants to meet everybody, and everybody loves everybody," said Curtis, 59.
With hundreds of retirees and early baby boomers now moving into metro Atlanta's new active-adult communities and even more communities like them on the drawing board, a new blueprint for life after 55 is taking shape.
Active-adult communities are suburban subdivisions whose residents must be 55 or older. Typically, these developments contain such home designs as master suites on main floors, and optional services, such as housekeeping and lawn maintenance, that appeal to people who want to spend less time with taxing chores. These communities also offer coordinated leisure activities geared to social interaction and physical fitness.
The prototypical active-adult buyer is swapping decades of equity and savings to realize pent-up dreams. With life expectancy increasing and baby boomers set to enjoy a healthier retirement span than any previous generation — not to mention the largest intergenerational transfer of inherited wealth — developers are probing their habits and appealing to their preferences to capture housing and leisure dollars.
"What we try to do is create a lifestyle," said Bob Rademacher, Atlanta division executive for Levitt & Sons, the developer of Seasons. "It's how you're going to live. Once you've decided that [lifestyle] fits you, we can find you a house."
The first phase of Pulte/Del Webb's the Village at Deaton Creek in Hall County is 80 percent sold in 12 months and, despite a slumping market for other types of housing, sales remain brisk.
According to real estate database Metrostudy, Deaton Creek was the top-selling active-adult community in a metro Atlanta market that currently contains a 5.2-month supply of unsold new homes. More than half those homes fall into the same price range as the homes in the Village at Deaton Creek.
Jan Cooper, vice president of operations in Georgia for Pulte/Del Webb, the nation's largest builder of active-adult communities, said the Village is experiencing 25 to 30 closings per month.
"It's doing what we anticipated it would do," Cooper said. "We based a lot of our demand on the local population."
As with the Village at Deaton Creek, Pulte/Del Webb's Sun City will kick off its sales with a series of "lifestyle seminars" at the Georgia International Convention Center in College Park, May 24-26.
Currently, the company's lead bank contains 11,000 names, said David Vitek, president of Pulte/Del Webb's south Georgia division. Sales at Deaton Creek were launched with lifestyle seminars at nearby Château Élan last year.
Plans also are under way for a third Pulte/Del Webb active-adult community in Greensboro, east of Atlanta on Lake Oconee.
The national home sales slowdown has affected active-adult sales slightly, but that segment is feeling less of the pinch than other sectors of Pulte's market, said Dave Schreiner, national vice president for active-adult business development at Pulte/Del Webb.
"Interest in our [active-adult] communities, judged by the level of traffic and lead generation, has stayed very high, and we're not seeing any signs of interest waning," Schreiner said.
Florida 'halfbacks'
Cooper said a majority of the Village's residents moved from other parts of the Atlanta area.
A few of the new residents are retirees from the Snow Belt and a few are "halfbacks," people who retired to Florida but came back a little farther north to escape high housing prices, skyrocketing insurance costs and hostile weather.
The Finneys, who previously lived in Gwinnett County, considered retiring to a Del Webb community in Florida but changed their minds when they learned of the plans for Deaton Creek.
Their decision was confirmed while they were visiting friends near Orlando in February, when a line of tornadoes devastated the community where they were staying.
"Atlanta and the Southeast generally are a very bright spot for us right now," Schreiner said.
Rademacher of Levitt & Sons said the new active-adult strategy is to bring these lifestyle communities closer to the urban centers where retirees spent their careers and family life, maintaining established connections. Earlier lifestyle developments concentrated around resort areas, but now companies like Levitt and Del Webb are bringing the resort sensibility within easy reach.
"Now, it's around the corner and it's local," Rademacher said.
Same stage of life
Uniformly, the new residents of metro Atlanta's active-adult communities said they were attracted to their developments by the prospect of spending time with people at the same stage of life. That sort of self-selection is common.
But how they're spending that time is changing previous images of grizzled geezers in rocking chairs. Contemporary retirees are more likely to rock with their guitars or climb over rocks with rappelling gear.
Cooper said more than 20 interest clubs have already formed among the residents of the Village at Deaton Creek, including a singles club.
The Village's line dancing club is already rehearsing for a performance at the grand opening of the community's clubhouse later this year.
Jim and Nancy Davidson are recent additions to the Village, having moved from their home in Lawrenceville at the end of March. The Davidsons have friends who live happily in Del Webb communities in other parts of the country, and they decided several years ago that the active-adult concept suited their vision of how to live after retirement.
"We knew this is what we wanted. It was just a matter of where to do it," said Nancy.
So far, Jim, 65, and Nancy, 61, have joined the Village book club, walking club and a bunco card group. They attend luncheons and the endless variety of community seasonal celebrations, such as the upcoming Cinco de Mayo party on Saturday.
And they are looking forward to the clubhouse opening, when even more activity opportunities will open up.
"The activities are almost unlimited," Nancy said. "If they don't have it, just ask and they'll start it for you."
In addition to the outdoor leisure pool and the indoor lap pool, the clubhouse will contain 8,000 square feet of space devoted to fitness including yoga and tai chi as well as a billiard room.
The full-time activities director is coordinating group trips to Braves games and the Georgia Aquarium. Plans for a residents group tour of Australia next year are under way.
Quick friendships
Pulte/Del Webb's Vitek is directing the development of Georgia's first Sun City community in Spalding County. The 3,400-homesite community — roughly half the size of the mammoth Sun City Anthem near Las Vegas — will include a 38,000-square-foot amenity center, a championship golf course and a softball field.
At other Sun City communities, Vitek said, the well-drilled softball teams "are so competitive that they end up playing in the local leagues."
For the new residents of Seasons at Laurel Canyon, a Levitt & Sons community near Canton, community life started in the sales office, long before the moving vans arrived.
Judy and Charlie Dollar, formerly Cobb County residents, encountered a number of their future neighbors as they worked out the details of their new houses. "By the time we moved in, it was like old home week," said Judy, 66.
Bruce Morgan, 60, moved to Seasons from Athens after his daughter graduated from the University of Georgia.
"I loved Athens, but [the neighborhood] was a much younger group of people," Morgan said. Finding companions for social activities was difficult during the day, or even on weeknights when parents were helping kids with homework.
But Seasons has put him into a whole swirl of activity he can join according to his own schedule and preferences.
He started with tennis lessons, even though he's never played seriously before.
"It's like we're 13 years old again and starting all over," Morgan said.
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