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Craig Schaid's Blog

By Craig Schaid | Agent in Pike Road, AL
  • Shiller Says Chances are Home Prices Will Fall Somewhat Again in 2012

    Posted Under: Market Conditions in Los Angeles, Home Selling in Los Angeles, Agent2Agent in Los Angeles  |  January 31, 2012 6:50 AM  |  1,431 views  |  1 comment

    Robert Shiller, the Yale professor whose name adorns the S&P/Case Shiller Price Index, says that the odds favor a continued slide in home prices in 2012 though at a lesser rate than the last several years.  He also said that among the causes is the continued ultra low interest rate environment outlined by the Federal Reserve last week.  He said that home buyers, equipped with the knowledge that mortgage rates will likely stay at the current levels will lack any large motivation to bury a purchase and may well stay on the sidelines until rates begin to rise.

  • Rising Public Comment About Listing Syndicators

    Posted Under: Market Conditions in Los Angeles, Home Selling in Los Angeles, Agent2Agent in Los Angeles  |  January 31, 2012 6:49 AM  |  1,348 views  |  1 comment

    On the heels of the announcement by Edina Realty that it was pulling its listings from several popular listing syndicators. this past week saw several additional public comments.  First the leaders of VHT issued a post that called on brokerage firms to more closely monitor the manner in which their listings are marketed by these popular sites.  A new video from a brokerage principal from San Diego went viral late last week announcing his intent to pull his listings from several sites.  While the brokerage is not among the nation's largest, the message was clearly stated and very articulate in laying out his views.  From our view point it was among the best talks we heard laying the reasons that are only voiced behind closed doors thus far.  This had led to additional posts, pro and con, about the issue of how listings are being handled by the syndicators.

     

    Regardless of whether you agree with these leaders or not, it is clear that it is an issue that is just now being heard more frequently and from a growing number of brokerage firms, local, regional and national.
  • Group Aims to Standardize Terminology on MLSs

    Posted Under: Tech Tips in Los Angeles, Agent2Agent in Los Angeles  |  January 29, 2012 10:02 AM  |  650 views  |  No comments

    With more than 900 multiple listing services across the country, data and terminology used to describe homes for sale can differ considerably. The most common differences center around how the number of bathrooms is counted, number of bedrooms, square footage, and even days on the market. 

    As such, one group is aiming to make the terminology on MLSs more consistent nationwide by introducing a Data Dictionary, which would create common vocabulary for fields used in the MLS that describe properties, Inman News reports. The Real Estate Standards Organization is to meet in April to consider the adoption of a Data Dictionary. However, the group acknowledges it will be a challenge to unify all of the data fields that are directly related to MLS rules and among 900 MLSs.

    Yet, the Data Dictionary aims to provide definitions for fields in MLS entries to help create more consistency in reporting. 

    "We have (more than) 900 MLSs (and they) all describe the data in a little bit different way," Rebecca Jensen, chairperson for the RESO board and CEO for the UtahRealEstate.com MLS, told Inman News. "We just need a common way to describe it."

    For example, the Data Dictionary proposes breaking down the number of bathrooms into separate fields to bring about more consistency and clarity in reporting, such as with baths total; baths full; baths half; baths three-quarter; and baths one-quarter.

  • Great Read: The Housing Market Came Back. Now What?

    Posted Under: Market Conditions in Los Angeles, Agent2Agent in Los Angeles  |  January 16, 2012 8:23 AM  |  510 views  |  No comments

    For five years, we’ve heard agents and managers say they were “waiting for the market to come back.” Well, it has, but funny, it doesn’t look anything like they expected. Now what?

    For five years, we (and others) have argued the housing market wasn’t just entering a downward curve of the business cycle, but experiencing a fundamental transformation. Sure, a recession brought on by overspending and over lending has hastened the change, but real estate was destined to look differently by now because of many other long term factors. Demographics were altering the kind of homes needed, and the timeframe for buying the first, second and third times. Inflation, notably in energy, foodstuffs, healthcare and college tuition has been reshaping the credit position of consumers for almost twenty years. Technology, and a run up in agent commissions, office space and marketing costs, nibbled the profit margin of brokerage to historic lows.

    Add it all up and the housing industry was destined to look different by today even if credit bubble hadn’t burst.

    Still, there persisted a nostalgia (or delusion) amongst many real estate practitioners that the market would someday “return” to normal. True, many of those agents and brokers have left the industry while waiting for the return. But plenty of wishful thinkers remained  convinced that someday, “the market would come back” and they would be back on easy street.

    Well, they were right on the first part. The market has come back. But surprise, surprise, it’s not Easy Street but Rocky Road that must still be travelled.

    Let’s run the numbers: According to recent data, the housing market has returned to many “pre- and near-bubble levels. Inventory has fallen to mid-2005 levels as of December 2011, continuing a trend of less homes for sale month-over-month. Certainly, there are many foreclosures waiting to push that number up in 2012, but even in the states that have the most pending-foreclosure inventory, the bring-to-market rate will be slow as courts, banks, politicians and industry lobbyists slow up the process. That should help manage further price decline rates. In New York, it is estimated that it will take the courts 8-10 years of bureaucratic process to clear the foreclosures. So the impact of foreclosures might be considered a new fundamental market feature, not a short-term business trend. Nationwide, the overall months supply of homes, at 7 months, basically continues to fall.

    Likewise, home prices, while down from bubble days, are back on track. Case-Schiller puts average sales price right about mid-2003 levels, which were at 16-year highs. If you chop the bubble out of the graph, today’s home prices are right where they should be, given multi-decade tends, and a severe global recession.

    Some people might argue that while price is “back” it is still headed lower; that’s possible, and likely, in the states with lots of foreclosures yet to come. But that’s a concentrated set of markets, and many areas are experiencing flat or slight upticks in prices as natural equilibriums in supply and demand, as well as slight improvements in employment numbers have occurred. Appreciation is occurring in many places, too, such as the new energy-boom states and farm land regions, as food inflation and new technology create hotspots of growth. Still, it’s important to remember that even if we dropped back to pre-2000 levels in housing, they would all be “up” in the long-term trend of things.

    Of course, the challenge for the housing industry isn’t that the market metrics are back to their slow, steady incline. It is that the fundamentals of that incline have changed. While plenty of single family homes are being sold, the credit conditions of those sales are significantly different. More all-cash deals and strict credit conditions require real estate brokers to be far better at pre-qualifying their customers and hyper-targeting their marketing efforts. Increasing demand in rentals has created opportunity for some brokers, but too few have prepared their organizations to efficiently (and profitably) handle the rental boom that is brewing. They might catch up, but they are losing out on the cash flow today.

    The good news is that a lot of brokers did prepare for the return. They spent the last five years radically rewriting their playbook. Many killed newspaper marketing for good; others reinvested that money into building fantastic video marketing channels. At least half of real estate agents, according to NAR numbers, have decided that social media is a great way to keep up with friends and family that can send them referrals. Brokers have taken control of their data (and its costs), refocused on target marketing, and eliminated redundant “lead generation” fees on their own listings. Some have even done the hardest work of all: closing expensive offices scattered across town, and invited expensive non-producing agents to go be non-productive somewhere else.

    The question today is: now what? Where are we going now that the market has “come back” to pre-boom levels? There are many indicators already in the market. Brokerages are learning how to handle downward pressure on margins with new technology and techniques to move property faster (staging, auctions, video marketing). Agents are improving their skills with qualifying consumers and walking away from tire-kickers. Consumers themselves have come to terms with market and equity realities, and moved away from the investment-speak of housing towards a utility-value model, reflected in smaller homes with smaller mortgages.

    The housing market is returning to a healthy state – albeit one that looks radically different than it did during the boom. In every market, there are plenty of consumers getting good deals, and brokers producing solid profits. Changes in the core sales, marketing and management practices of the business have absorbed many of the lessons of  the recession and are ready for the next business cycle. Now its time to look at new challenges, in profitability, performance and predictability, that consumers want from the brokerage industry.

    The market is back. Now it’s time to decide what we’re going to do with it.

    Now, things are really going to get fun!

  • Freddie Mac's Winter REO Sales Promo Pays Extra to Selling Agents

    Posted Under: Home Buying in Los Angeles, Home Selling in Los Angeles, Agent2Agent in Los Angeles  |  December 12, 2011 10:16 AM  |  852 views  |  No comments

    Freddie Mac has announced the launch of a nationwide winter sales promotion to move its inventory of foreclosed homes and put them back into the hands of responsible homeowners purchasing a primary residence.

    HomeSteps, the GSE’s REO sales division, will pay selling agents a $1,000 bonus for offers received on Freddie Mac-owned homes in select locations.

    Initial offers must be received between November 15, 2011 and January 31, 2012 with escrow closed on or before March 15, 2012. The offer is valid only on HomeSteps homes sold to owner-occupant buyers.

    Selling agent bonuses will be offered on HomeSteps sales in the District of Columbia and the following 28 states: Colorado, Connecticut, Delaware, Iowa, Idaho, Illinois, Indiana, Massachusetts, Maryland, Maine, Michigan, Minnesota, Montana, North Dakota, Nebraska, New

    Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, South Dakota, Utah, Virginia, Vermont, Wisconsin, West Virginia, and Wyoming.

    The GSE is also extending additional incentives to its owner-occupant buyers. Throughout the winter sales promotion, HomeSteps will pay up to 3 percent of the final sales price towards the buyer’s closing costs.

    Some HomeSteps homes are also eligible for a two-year Home Protect limited warranty that covers electrical, plumbing, air conditioning, heating, and other major systems and appliances. Home Protect also provides discounts of up to 30 percent on appliance purchases.

    Freddie Mac held 59,596 single-family REO homes as of the end of September. According to the company, its HomeSteps properties accounted for about 4.4 percent of the nation’s inventory of foreclosed homes as of September 30, 2011.

    The GSE says the pace of REO acquisitions remains slow due to continued delays in the foreclosure process – delays the company expects will continue into 2012. Freddie Mac acquired 24,385 REO homes through foreclosure during the third quarter of this year.

    Currently, the GSE is selling more homes than it’s taking in. REO sales totaled 25,387 over the third quarter period.

    Seventy-percent percent of HomeSteps homes are purchased by buyers intending to live in the homes as owner-occupants. Freddie Mac says its REOs sell for an average of 94 percent of the estimated market price.

  • NAR, Fannie and MBA Issue Forecasts for 2012 and Deficit Commission Appears to be Failing

    Posted Under: Market Conditions in Los Angeles, Agent2Agent in Los Angeles  |  November 22, 2011 9:57 AM  |  653 views  |  No comments

    This past week NAR, Fannie Mae and MBA issued their forecasts for unit sales and prices for 2012.  Needless to say NAR is most bullish on unit sales while not so much on pricing.  None of the three are guessing (educated of course) that we will have any real recovery next year from this years flat home sales results.  We don’t disagree.

    However, we think any surprises will be on the upside.  The private sector is back to adding jobs even though the Federal, state and local governments will be shedding them.  The upside is two fold. 

    One is the real possibility of an increase in the mortgage rate may well cause buyers to get off the sideline.  Secondly, in the pursuit of yield and safety we believe it is possible that institutional money may start to move into U.S residential real estate as a new investment class.  Not just multi-family but single family as well.  The price-to-rental income ratios are quite favorable in many markets and there are many who have assembled significant portfolios of such properties.

    With the failure of the Deficit Commission (the special committee that was asked to come up with trillions of cuts to avoid across the board automatic cuts) seeming to fail, rates may be headed up as others join in the move to downgrade United States debt.  While we are not in the category of Greece or Italy yet, the signs that the Federal and many state governments are not yet ready to address their over spending, rates on all kinds of debt may be set to rise.  Historically a short rise in debt has caused buyers to move to lock in low rates.  This is particularly true when one considers not only the low cost of 4 percent mortgages, but the fact that one pays off principal (and builds equity faster) at 4 percent than they do at 6 percent.

    Unit sales were up on a year-over-year basis in October for the fourth month in a row.  Prices are still declining.  But the unit sales rate has exceeded the decline in prices for four months in a row.  There is a possibility that will continue.
  • Freddie Mac's Winter REO Sales Promo Pays Extra to Selling Agents

    Posted Under: Market Conditions in Los Angeles, Agent2Agent in Los Angeles  |  November 19, 2011 9:53 AM  |  845 views  |  3 comments

    Freddie Mac has announced the launch of a nationwide winter sales promotion to move its inventory of foreclosed homes and put them back into the hands of responsible homeowners purchasing a primary residence.

    HomeSteps, the GSE’s REO sales division, will pay selling agents a $1,000 bonus for offers received on Freddie Mac-owned homes in select locations.

    Initial offers must be received between November 15, 2011 and January 31, 2012 with escrow closed on or before March 15, 2012. The offer is valid only on HomeSteps homes sold to owner-occupant buyers.

    Selling agent bonuses will be offered on HomeSteps sales in the District of Columbia and the following 28 states: Colorado, Connecticut, Delaware, Iowa, Idaho, Illinois, Indiana, Massachusetts, Maryland, Maine, Michigan, Minnesota, Montana, North Dakota, Nebraska, New

    Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, South Dakota, Utah, Virginia, Vermont, Wisconsin, West Virginia, and Wyoming.

    The GSE is also extending additional incentives to its owner-occupant buyers. Throughout the winter sales promotion, HomeSteps will pay up to 3 percent of the final sales price towards the buyer’s closing costs.

    Some HomeSteps homes are also eligible for a two-year Home Protect limited warranty that covers electrical, plumbing, air conditioning, heating, and other major systems and appliances. Home Protect also provides discounts of up to 30 percent on appliance purchases.

    Freddie Mac held 59,596 single-family REO homes as of the end of September. According to the company, its HomeSteps properties accounted for about 4.4 percent of the nation’s inventory of foreclosed homes as of September 30, 2011.

    The GSE says the pace of REO acquisitions remains slow due to continued delays in the foreclosure process – delays the company expects will continue into 2012. Freddie Mac acquired 24,385 REO homes through foreclosure during the third quarter of this year.

    Currently, the GSE is selling more homes than it’s taking in. REO sales totaled 25,387 over the third quarter period.

    Seventy-percent percent of HomeSteps homes are purchased by buyers intending to live in the homes as owner-occupants. Freddie Mac says its REOs sell for an average of 94 percent of the estimated market price.

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