Archive for the ‘Lake Tahoe Real Estate’ Category
By DAVID WEIDNER
MarketWatch’s David Weidner checks in on Mean Street to point out that changes in the economy’s housing sector indicate it’s time for prospective homeowners to sign on the dotted line.
Warren Buffett <https://www.outlookmail.com/exchweb/bin/redir.asp?URL=http://topics.wsj.com/person/b/warren-buffett/641> famously once said: “Be fearful when others are greedy, be greedy when others are fearful.”
And if you’re not instinctively scared of the housing market, then global warming, saturated fat, running with scissors and the bogeyman probably aren’t keeping you awake at night, either.
The fact that everyone is scared to dabble in-much less commit to-housing makes it a close-to-perfect investment based on Mr. Buffett’s principle. But buying real estate is a good long-term investment for many more reasons, some of which have only become apparent in recent weeks.
The most striking: Housing prices rose sharply from April to May. The S&P/Case-Shiller Index rose 2.2% in 20 of the nation’s big cities. Prices shot up more than 3% in Chicago, Atlanta, San Francisco and Minneapolis. Even Detroit’s housing market scored again, inching up by 0.4%.
Nationally, the increase was the first in seven months. More importantly, the increase matched other data and empirical evidence this spring that foreclosures slowed and inventories were shrinking. Simple economics suggests that as the supply of distressed property slows, buyers will be forced into higher-price properties.
In addition, interest rates on 30-year fixed mortgages have tumbled below 3.5%. For those who can get credit, these aren’t just historically low rates; they are one-sided deals tilted toward borrowers.
Other good signs: Housing starts rose 6.9% in June. Home-building stocks are on the rise, with the Philadelphia Housing Sector Index up 27% so far this year. And for those who can invest in property, rents continue their ascent. Prices are at a 10-year high, with the median unit renting for $710 a month. Real-estate website Trulia found that it is cheaper to buy than rent in each of the nation’s 100 biggest metropolitan areas.
In other words, if you can buy a home today, you can save the difference it would cost you to rent even if you stay in the home just five years. If you can buy a property and rent it, it is almost certain that the rent will cover the cost of the financing-and the property will appreciate.
Here’s where the fear comes in. From 30% to 50% of existing mortgages in the U.S. market are underwater, depending on the estimate. That means many borrowers are trapped in their homes and loans. They either can keep paying and hope prices will improve or walk away, putting downward pressure on home prices.
Foreclosure rates have leveled off, but market analysts believe an increase is likely.
Here’s why. Since the financial crisis, 3.7 million homes have been foreclosed on, but an additional 1.4 million remain in the national foreclosure inventory, according to CoreLogic, a real-estate research firm.
Finally, a housing recovery won’t happen, or could be snuffed out, by a rotten economy. There’s never been significant growth in housing with high unemployment. And as Dow Jones’s Kathleen Madigan noted, “Potential buyers must feel secure with their job prospects before they commit to long-term mortgages. Higher loan standards mean banks want to see an applicant’s solid income history before lending.”
There is plenty to be afraid of when it comes to home buying. But in the current investing climate, housing presents an attractive long-term investment that should hold steady or even have upside surprise in the short term.
Fixed-income yields have fallen to historic lows, and the stock market has traded in a range, rising and falling skittishly on jobs, growth data and the news from Europe.
Recently, I was forced to choose between renting and buying. I decided to buy because it offered immediate monthly savings compared to renting, not to mention a mortgage-interest deduction.
So this is at least one case where I’m putting my money where my keyboard is.
Mr. Buffett would remind us that investments of any kind are not without risk. Each should be considered with the investor’s time horizon and appetites. But he also has acknowledged that real estate is especially attractive when financing is cheap, there is pent-up demand and prices have been driven down by a spooked market. Put another way, it’s time to be greedy.
Write to David Weidner at david.weidner@dowjones.com <mailto:david.weidner@dowjones.com>
Share this: Lynn Richardson, Your Friend in High Places
An analysis of real estate activity in the Tahoe-Truckee area conducted by Coldwell Banker found the following:
For the Truckee, North Lake Tahoe, Alpine, Squaw and Donner Summit Areas combined the median home sales price in January 2012 was $331,500. This is a decrease of 13.8% from the $384,500 median price of January 2011. Meanwhile, the number of sales increased 10% between January 2011 and January 2012. New listings which came on the market in January 2012 were down 23.4% from January 2011. In fact with overall housing inventory for sale down 11% from January 2011, it’s the lowest inventory of properties for sale since February 2009.
Just in Truckee the median sales price in January 2011 was $400,000, while in January 2012 it declined 4.4% to $382,500. The inventory of properties on the market decreased 15.5% from January 2011 to January 2012, again leading to the lowest inventory of properties on the market since February 2009.
Want more of the numbers and even some cool graphs? Drop me a line and I can send it out to you. I can also provide you with a customized report just for your area and would be happy to discuss in detail what all this means to your particular situation.
Beyond the numbers: The thing about markets-whether we are talking about the stock market or the real estate market is that you don’t really have any idea when you have hit bottom, until the market has already started going up and you are no longer at the bottom. You just have to look at what is going on and anticipate what might happen in the future.
Over the last year prices have continued to decline, while sales were going up. This means that after several years of kicking and screaming, sellers finally came to the realization that if they wanted to sell they had to reduce their prices. Once those prices were reduced, previously reluctant buyers came into the market and started snatching up the best deals. Now well-priced properties sell quickly. In fact some of the good deals have received multiple offers, while properties which were not perceived to be such great deals have remained on the market for long periods without selling.
What does this mean for you as a seller? A low inventory means less competition for the buyers that are out there. Why would you want to compete against twenty similar homes when you can compete against only five? For some reason there is a fallacy that you should wait until summer to put your house on the market, instead of putting it on in the winter. Why? The reality is that there are buyers looking for houses all year round. More sales happen in the summer, because the inventory is low in the winter and buyers just cannot find the right house. If they could find the house and price that they want in the winter, they would buy it. If you put your house on the market in the winter or early spring YOU WILL HAVE LESS COMPETITION FOR BUYERS THEN YOU WILL HAVE IN THE SUMMER. When you do put your house on the market: Price it right. You want to strike while the iron is hot. If your house is the only one like it on the market and your price it too high, it will languish on the market until several other similar homes come on the market and then you will have to compete against them. Not good.
Are you thinking of buying? There are some great deals out there, but some of you are still concerned that prices have not reached bottom yet. Remember, you do not know that the market has bottomed out until it has already started to go up. Interest rates are still incredibly low (but may go up if the economy and the real estate market heats up) and while the inventory of houses is lower than it has been in three years, be patient because new houses come on the market regularly. If you do find the house you want at a good price, be sure you are prepared to pull the trigger by having your finances in order in advance.
So there you have it. Hope to hear from you soon.
Share this: Lynn Richardson, Your Friend in High Places
Snow Envy! 
Truckee/North Tahoe Sales By Year 2011 2010
Total Sales 1217 1136
Single Family Residences 956 866
Condos 261 270
Average Sales Price $535,834 $640,727
Median Sales Price $397,700 $430,000
Truckee Only Sales
Single Family Residences 582 506
Average Sales Price $541,833 $591,609
Median Sales Price $435,000 $472,000
Beyond the numbers:
There was a slight increase in total sales, and a substantial decrease in the average and median prices of properties sold from 2010 to 2011.
There were 186 short sales and 206 REO sales in 2011…thus 32% of the sold properties were considered “distressed sales.”
66% of the sales were under $500,000, compared to 60% under $ 500,000 in 2010.
At the end of 2011, there were 854 listings on the market. Given the current level of inventory, and the speed at which houses are currently selling, there is roughly six months of inventory available—assuming no new listings come on the market. And we can probably assume that not only will more properties come on the market, but that as spring and summer roll around the total number of properties on the market will increase.
What does it mean for you:
If you are a seller: Houses are selling, because the prices have been driven down to a point where buyers now feel like they are getting a deal. With about 1/3 of all sales being short sales or properties owned by banks, there is significant downward pressure on prices. This will probably continue until the inventory of total homes on the market is significantly reduced, and the percentage of those sales that are distressed drops as well. Most experts believe that will not be happening in the next year.
What is selling? The lower priced the better. In fact, in the lowest price ranges there is quite a bit of activity with competitive properties sometimes garnering multiple offers and/or offers over the list price. Properties in the medium and higher price ranges are selling more slowly, with more downward pressure on prices.
If you are a buyer: Great deals are out there, but in many cases the deal is already reflected in the listing price, especially for lower priced homes. If you are interested in an REO or short sale purchase, while there is potential to get a deal, there also may be heartache and headache involved in the process. Patience and flexibility will be required. If you find a house that fits you and it is priced right-act accordingly by putting in a strong offer now.
If you are considering an investment you need someone who really understands the complications of the local market. I have been active in the Truckee-Tahoe real estate market for over 25 years, in good times and bad, from roaring markets to whatever it is we have now. I keep up to date and communicate with my clients on a regular basis. If you need help, give me a call.
Are you a procrastinator? Well, you may have lucked out this winter. Even if you haven’t gotten around to winterizing your house yet, the lack of snow may have given you a second chance. Check back to my November 1st blog and review the “10 Things to Do before winter.” Even if you don’t get your house winterized, perhaps just making an effort to do so will make it snow…while you are at it would you please do your part by washing your car, taking your snow tires off, and making plans for a big outdoor event…that should make it snow.
Sales Information is based on sales reported to the Tahoe Sierra Multiple Listing Service and Coldwell Banker. The median priced sale is the price where half the sales were more expensive and half the sales were less expensive.
Share this: Lynn Richardson, Your Friend in High Places
YOUR FRIEND IN HIGH PLACES 