01.24.2007 - Wednesday Open Thread
This is your open thread for Wednesday, January 24, 2007. Please post random links and off-topic discussions here.
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16 comments:
Aubrey Cohen provides the latest numbers run-down.
What I found new and interesting was the difference between list price and sales price for SFH.
Median list: $520,797
Median sales: $425,000
Can that be right? Sellers were too optimistic in what they would get by almost a quarter?
Realtors and escrow, is that what you are seeing, or is this a statistical anomaly of the median, or just plain wrong?
Hah! Yeah, biliruben (mis-spelled I might add) was just something I happened to be drunkenly looking up for a friend with a sick kid in the wee hours of the morning, way back in the dawn of time when I first stumbled upon, then posted on my first message board. It stuck.
Yeah, I'm a statistician (at least that's my job description, though not my training) myself, and understand the pros and cons of the median. I can see how, depending on the cross-section of houses sold, it could be misleading. I just don't think it should be THAT misleading.
I'm just wondering if you are seeing that sort of discrepancy in the list vs. sold prices on the ground. Are you seeing a bunch of houses going for 100K under list? Or maybe you don't have occasion to notice the list?
Ah... good explanation, CRichard. That makes sense.
OOPS, I meant to comment under a more current account.
Geordie,
Thanks for your question. Unfortunately I don't really have an opinion on what's going on outside the greater Seattle area. I simply haven't been following the situation, nor have I taken the time to find and compile the raw data for areas such as Leavenworth and the like. I wouldn't really feel comfortable saying whether a given city elsewhere in the state is at risk of price declines or not without first looking at the data.
For the Seattle area (King County mostly) I have analyzed all sorts of data that has almost unanimously confirmed what I suspected when I started this blog, which is that home prices in King County are not supported by true "fundamentals" such as population and incomes, but rather are the result of loose lending standards, low interest rates, and mass psychology.
Whether that is true for nearby markets is a question best left to those that wish to take the time to analyze the same data for those markets.
Sorry to go back to an old issue beaten to death, but a place I was watching relisted with a new MLS 2007 number. Same exact listing as before, same agent, same pictures, same description. Same PRICE. Maybe rather than try the 'just listed' fakery why not try lowering the inflated price Agent Teresa Matches?
Funniest part is that both listings are active.
That kind of false advertising (days on market=1!) is bound to bounce back at you, at a minimum through karma.
See MLS 27013043, 26189273
Tim, any ideas on how one might determine if a vacation home area is experiencing a bubble? It seems that a lot of the number one might use to examine the Seattle area would not apply:
- job growth: unimportant if people go there to get away from job
- income: The market is selected for people with large incomes across a very wide area (several states for some vacation areas).
- land use resitrictions: this actually sounds like something that might happen in a place where natural surroundings is the reason people buy.
I suppose one might look at the cost to rent versus the cost of ownership. Certainly there is no bubble if you can buy a vacation home and rent it out for less than the monthly payments.
I was up in McCall, ID over New Years.
There is a new Whistler-esque resort called Tamarack going in across the valley from my Dad's house.
We were invited to a New Years party full of Realtors, developers, brokers etc... Not one person actually made anything there except my dad. Everyone else just skimming money off of everyone else.
They were all trying to sell land, a house or a mortgage to the hedge fund manager there with a big dollar sign on his forehead. Too funny.
Anyway, I cornered one of the realtors. Of the several hundred, million $ plus homes and condos that have been sold, three have the people who bought them living in them. Three.
Mostly they are selling to either the super-rich who can afford to drop a couple mil on a second home, or mostly, to investors.
That's the way to tell if there is a bubble in a vacation spot.
Look at Chelan, no strike that. Look at anyplace, any place. Suncadia Crashcadia Cascadia.
"Not one person actually made anything there except my dad. Everyone else just skimming money off of everyone else."
I like the way you put this, Biliruben. A friend recently quit school to become a "techincal recruiter," and she couldn't understand why I was disgusted with her choice.
We're in the middle of dot com 2.0 -- everyone has a scheme; everyone has a plan to get rich overnight. I'll know it's over when otherwise unproductive people are once again paid what they're worth....
Hey guys,
I just had to pass along this little story. Sadly, this is an actual account...
My wife and I rent a house (built late 2005, 2200sf, decent Renton neighborhood but by no means great) for about $1750/mo. Our landlord gave us the option to buy for $550k. She had purchased it for $440k per the King County records, so she was looking to make a cool $100k for doing, well, nothing. We passed and signed a 1 year lease.
Well the lease is about up so I said we would like to re-up. She declined, saying she wants to sell the house. However, we could still buy it for the low,low price of $550k. Oh by the way, she's a mortgage broker and could "keep us around $1800/mo" for payments, including taxes and insurance. Obviously my 'smells fishy' meter went off and I wrote back asking how exactly she was doing this math. Even at a 50yr fixed with 20% down doesn't drop the mortgage alone below $2500/mo. The answer? Neg-am of course. The greater fool theory comes home to roost...
hmm... maybe you can get her to give you $25,000 cash back too?
Man, what a beautiful night out there!
Chemo sabe, Let's see estimate how much your landlord really stands to make.
Assume she put zero down and financed interest only.
$440k at 6% comes to $2200/month.
1% taxes run at $4400.
You were renting at $1750 for 12 months.
I'm going to guess that one of those months went to Windermere or another agency that finds renters.
I'm also going to assume that she had one month with no tenant.
11*1750 - 13*2200 - 4400 = -11150
She is asking for $550k. Based on the posts above, lets assume she gets around 85% of that = $470k. That nets her around $20k after holding costs.
If her buyer has an agent that drops to $6k.
If she has a sellers agent that drops to -$8k. She cannot use an agent to sell her house.
Every month that she is trying to sell while it is empty she loses $2500 on mortgage and taxes. If she sells three months more quickly using an agent then she comes out ahead.
Because it is not her primary residence, she has to pay taxes on the gains. Let's assume she is in the 28% bracket. Her $6k potential profit becomes $4k.
$4k gain against the risk of a $100k loss if the market turned south at the wrong time. That sounds stressful to me.
I think you should negotiate a month to month when your lease is up. Offer to pay $1250 a month and you both have the option to move out with 30 days notice. When she balks, show her data on increasing inventory and remind her that it will cut her burn rate in half if she makes the deal. While she thinks about this, ask her why she is selling if real estate prices are going to keep going up.
harboo,
"both listings are active" means it is listed in two "areas". An agent cannot do that without the mls entering the second listing.
Agents use area code numbers like 520, 600, 710. If your house is right on the line, or very close to the line, the mls will let you list it in both areas.
It doesn't make any sense when you look at it on a public site. But if you have a home for sale in area 600, you don't want agents to miss it if they are searching in a contiguous area a block away.
Many agents search property by area number, though I think that is getting pretty outdated since we can do map and radius searches.
It also inflates the stats when homes are listed twice.
This area code feature is becoming less and less useful and more and more confusing on the public side.
Thanks for the response Ardell. I really enjoy reading the back and forth on this and the RC blog.
I still think it would be more appropriate if it was listed in multiple areas at first, rather than have two similar listings floating around making and making a later second listing.
I still go back to this: what is described on the listing (from the MLS feed I guess) is 1 day on market. This is clearly false and while it is not the biggest issue in the world it still smells bad, especially when there is big money to trade hands at the end of the deal. If that information is going to be put out there, it should be as accurate as possible. Right now it is often way off, and sometimes downright deceptive. This is wrong and Realators should do a better job of policing themselves or someone is going to step in a do it for them, or step around them completely.
harboo,
More than likely, the mls has the correct days on market and the site you are looking at is showing it differently.
Tell me which site you are using and I will spot check some of them. Better yet, email me the property you are talking about and the site on which you are viewing it and I will check it out from both inside and out.
A lot of that "new on market" language is boilerplate for the site, and not in mls at all. MLS only says "new on market" if it is in the marketing remarks.
There is no "new on market" tag in the mls.
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