Happy Thanksgiving
November 27, 2008
To my American readers, Happy Thanksgiving!
(To my Canadian readers, happy belated Thanksgiving. I celebrated with you last month when my very dear Vancouver-ite clients reminded me that y’all celebrate before we Yanks do.)
Some Thanksgiving quotes:
Daniel Webster, Second Speech on Foot’s Revolution, Jan 26, 1830:
I thank God, that if I am gifted with little of the spirit which is able to raise mortals to the skies, I have yet none – as I trust – of that other spirit which would draw angels down.
Frank Pittman, U.S. psychiatrist and family therapist. “How to Manage Mom and Dad,” Psychology Today (November/December 1994)
A family without a storyteller or two has no way to make sense out of their past and no way to get a sense of themselves.
Sydney Smith (1771-1845), Recipe for Salad, p. 383
Thank God for tea! What would the world do without tea?—how did it exist? I am glad I was not born before tea.
The best way to keep children home is to make the home atmosphere pleasant — and let the air out of the tires.
Help for Homeowners
November 25, 2008
Today’s Fed announcement marks another step towards getting the housing market un-slumped. Finally, Hank and Ben seem to be getting it: the world’s financial meltdown started in the US housing market and the solution should begin by focusing on housing.
Recently, mortgage industry heavyweights Countrywide (now Bank of America), JP Morgan and Citigroup announced a foreclosure moratorium to help struggling homeowners stay in their homes. Citi especially said their efforts would be aimed not only at homeowners behind in their payments, but those who’s credit profile reveals they might get behind.
Today’s new Fed housing stimulus package should make mortgages more affordable by pushing long-term mortgage interest rates down as much as a half-point. This should help new homebuyers jump into the market. (click the link for a breakdown of program details)
Some expect rates to fall to 5.50% soon. The National Association of Realtors (NAR) estimates that each 1-point drop in mortgage rates spurs 500,000 new home buyers into purchasing a home. NAR says it’ll keep pushing the Fed to enact programs and policies that will eventually get mortgage interest rates down to 4.50%, a rate not seen since well, not in my lifetime.
Here’s a chart of the history of mortgage rates, courtesy of my broker The Phoenix Real Estate Guy (see his post with many more charts here).
It’s interesting to compare the recent history to the truly historic data, based on a chart posted at The Financial Forecast Center. Seems like rates haven’t been at 5.50% since sometime in 2004, and haven’t been at 4.50% since about the late 1950′s.
Our housing problem is generally twofold – (1) too many homes for sale and more hitting the market daily due to swelling foreclosures, and (2) not enough buyer interest.
The Fed’s announcement today, combined with the foreclosure moratorium announced recently gives me real hope that the kinks might start working out soon.
Banks working to keep homeowners in their homes means less foreclosure homes going up for sale. The Fed making substantive moves to coax new homeowners into the marketplace means eating up some of the excess inventory of homes for sale.
This? Could be the beginning of real change.
Tune in tomorrow for a breakdown of the local Phoenix housing numbers, and how we’ll know we’ve begun to turn the corner towards recovery.
Staging Tips For Entryways
November 25, 2008
Staging is vital in making your home as appealing to potential buyers as possible. However, staging effectively can be a challenge in tract houses, which by nature are uninteresting square white boxes. Metro Phoenix is filled to bursting with tract housing, especially in the price ranges in reach of the average working family. Here’s a tip or two for making the entryway in an average house stand out.
Great Entryway!
Put up a really cushy, plush welcome mat. It should be thick enough and large enough that visitors to the house stop for a moment to notice the plushiness of the doormat. Slap a fresh coat of paint on your entryway door while you’re standing there admiring the new doormat.
If the front door has sidelight windows, clean them inside and out so they sparkle. The trick here is to make potential buyers stop for just a few seconds while they notice how lovely your exterior entryway is. If the outside is great, potential buyers will automatically think better of the inside.
Picture Number 1 is is an inviting outside entryway on a 1950′s brick ranch. Number 2? Not so much. The homes are the same size and about the same floorplan. Granted, someone in home number 1 spent a chunk of change to switch out the front room windows and add landscaping. But the entryway of home number 2 could have been made more appealing with a few simple steps.
Entry Needs Help
First, lose the mobile basketball hoop. It’s tacky. If your kids play with it every single day, you can leave it in the driveway. But at least take 3 minutes to move it out of the photo frame.
Second, go to Target, WallMart or Home Depot and spend $250 on a bench or some chairs for the front door. While there, grab a plastic planter pot and a fern. Better yet, grab a plant that’s flowering. It’ll provide extra punch in the photo. Reds and yellows show up extremely well in online photographs.
Finally, make sure your Realtor zooms in on the front door when taking the photo. Buyers aren’t buying your driveway, so it shouldn’t be the focus of the shot.
Tomorrow – how a little photo fixing can go a long way.
Pricing Houses is Like Buying a Used Car
November 24, 2008
Here’s a little piece of advice I give to sellers who are struggling to really hear and internalize the pricing advice I’ve given them. (Because in today’s market, it never fails that my advised listing price is less than the sellers hoped for.)
Think about buying a new car. Or a used car. Whatever. You go online, you do your research. You know that the car you really want to buy should cost about $30,000. Or whatever, use any number you like; I’m using $30k because it’s nice and round and easy and complicated math isn’t my bag.
So you’ve budgeted $30,000 for your new car. You’ve found out – online – that there are 2 dealerships nearby offering the exact car you want. One has listed the car at $35,000. The second dealer listed the same car at $50,000. Being the Age of Internet, you can see all this online, easily, without leaving your Barcalounger or changing out of your favorite plushy jammies.
Which dealer are you going to visit? No kidding Sherlock. You’re going to the dealer who’s offering the product at a mere $5,000 above the market value. You’ll make him an offer at $25,000, he’ll come back at $29,000 and you’ll ink the deal.
The hapless, helpless dealer who advertised his $30,000 product at $50,000? He doesn’t even get a look-see.
This is how it is when you’re pricing your home for sale. Don’t just “try it”. Don’t just “wait and see”. Price it right, from Day One, and you will see the rewards. You’ll be one of the 6% of homesellers who actually sell their homes in Metro Phoenix this year. Insist on overpricing? You might as well spend big bucks on one of those TV ads with the deep booming annoucer voice bellowing “Last Chance!” and “Won’t Last Long!” (because it will last long. And long is painful.)
Related Posts:
Sunday Stats
November 23, 2008
photo credit to MiamiAmia, via StockExchange.
Click here to see the entire Sunday Stats series, and for historical perspective.
Please Don’t Kill Your Realtor
November 22, 2008
On a break this weekend; reposting an oldie but goodie from September 2007. Picture credit to an unknown user at Stock.Exchange
Let’s say you’re a homeowner who needs to sell and you’ve invited several Realtors over to interview them. Many will Oooh and Aaaah, tell you how truly lovely your wall-to-wall orange shag carpeting is and assure you that you really can ask $15,000 more than the competition because you’ve got built-in cabinets in the garage.
Some gutsy Realtor might tell you that while your home has many thoughtful & useful upgrades, the market isn’t great just now. She’ll continue by suggesting that if you really must sell it’s important to price below the asking price of homes currently for sale, and also below the last sold comparable property. What that Realtor said was “price below sold comps.” What you’ll hear is “your home is worth less than your neighbors’ homes are.”
When you hear that, you’re going to experience an unpleasant mix of emotions. It’ll feel like someone just spat all over your hopes and dreams, told you that your home and your entire lifestlye isn’t worth as much as a tin shack on the beach in Guadalajara, called your children ugly and kicked the family dog while she did it.
You’re going to hate that Realtor. Instantly and irrationally, you’re going to wish bodily harm on that Realtor and imagine kicking her out your front door, action-movie style. How dare she imply that my house is worth less than the neighbor’s?!
If you are that home seller, I implore you to fight the urge to get all Dirty Harry on the Realtor who’s just told you the most truthful thing she can. Take a deep breath and remember the dynamics of a declining market.
In a declining market, housing prices fall. As a seller, time is not your friend. Homes that sell six months from now will sell for less than homes that sell this month. This has nothing whatsoever to do with your house, your lifestyle, your children, your intrinsic self-worth, your financial situation, or your need to net a certain amount on this sale so you can move on.
All things being equal, in a declining market houses priced below the most recent sold comps will sell quicker than those priced above the last sold comp. And because homes priced below the competition and the sold comps sell quicker, the sellers will net more money than sellers who overprice and sit on the market for months and months, taking incremental price drops while they chase their competition to the bottom.
Sellers, do yourselves a favor. As long as your gut tells you everything else about that Realtor is OK, hire the one who gathers up her courage and tells you to price beneath the last sold comps.
Donut Tour, Cave Creek Safeway
November 21, 2008
Only a few moments to post; I’ve been busy enough lately that I’m behind the 8 ball when it comes to posting.
To update the Donut Tour, I recently went to the Cave Creek Safeway. I was looking for a mid-day Starbucks pick-me-up when I spotted this:
Was I indulging my sweet tooth? Or was I doing double duty – creating a blog post while also helping a client by waiting for an appliance delivery? I’ll let readers judge me on that one.
Suffice it to say I grabbed 3 donuts and made for the exit. I chose a plain glazed, a choclate frosted and a cinnamon roll.
The cinnamon roll was the best, although it could have used a thicker glaze, and more of it. The cinnamon was just right, and there was spicy goodness in every layer. The glaze was too thin and not nearly enough of it was used. Overall though, a very good cinnamon roll.
The plain glazed was downright awful, I’m sorry to say. The donut itself was fine but the glaze had a plastick-y, fishy taste. Weird. I didn’t finish it. Glaze texture was just right and there was enough of it, but the flavor was just terrible.
The chocolate frosted mostly redeemed Safeway’s donut selection. The donut itself wasn’t quite as good as those at the Cave Creek Road Rainbow Donuts, but the chocolate frosting/glaze was perfection! I almost always want more chocolate on anything I eat, but this donut had enough to satisfy even my chocolate needs.
At at 69 cents per donut, they’re a great bargain. Just avoid those plain glazeds.
Next up: Rainbow Donuts on 7th Street. By invitation, no less. I was immensely flattered to receive a personal invitation to visit from the Manager of the store himself. He boasts about his coffee, so I’m going to check it out. Since I don’t move in the mornings without a good cuppa joe, I have high hopes!
Household Quickie – Square Muffins
November 19, 2008
Image courtesy of Kitchen Kraft.com
I found this item via my membership at eVite, the online invitation and party ideas scene. Square muffins are apparently all the rage with the party set and in-the-know home chefs. I dunno about that; will check it with my foodie friend Sarah.
In any case, eVite had some great ideas for other uses for square muffin pans.
1) individual brownies – no cutting
2) individual Thanksgiving stuffing portions – everyone gets a crunchy top
3) square muffins stand out in a crowd at potluck parties
If these sound like a good idea to you, you can order square muffin pans from Kitchen Krafts.
My favorite idea for using these square muffin pans (or any muffin tins for that matter) is to freeze unused wine. Wine cubes are a much easier way to get wine into soups, stews and stir frys than uncorking a new bottle every time you make a recipe that calls for a 1/2 cup of wine. What are you supposed to do with the rest of the bottle? Drink it every time? Cook with wine too often and before you know it you’ll have an addiction problem on your hands. Frozen wine cubes are a better idea.
Related Posts
SRP Rebates for Old Fridges
November 19, 2008
Hat tip to Aaron V for pointing out this program to me. SRP will come pick up your old fridge and haul it away, recycle up to 95% of it and send you a $30 check to boot. I think it applies to SRP customers only.
Here are some of the program details:
- SRP electricity customers are limited to recycling two appliances per account per year.
- Refrigerators and freezers must be 10 cu. ft. to 30 cu. ft. (interior measurement).
- Appliances must be on the SRP account premises, clean, empty and in working condition (plugged in) at the time of pickup.
- A $30 check will be mailed to your address within 30 days after pickup.
- Appliance recycling requests are reviewed on a first-come, first-served basis.
- SRP reserves the right to change or terminate this program without prior notice.
See further details on SRP’s Appliance Recylcying program here or call SRP at (602) 236-4225.
Related Post – Recycle When You Remodel with Stardust Building Supplies
Fannie and Freddie Not To Blame
November 18, 2008
As a follow up to my October 4 post, I present the following chart created using Federal Reserve data.
This chart is a screen capture of the original which appeared on the Mark Thoma’s blog The Economist’s View. See the original chart and post accompanying it.
Thoma has waaaay more understanding of this than I do. He’s got the nifty cool graphs and charts to back up what I tried to say on October 4.
Namely, Fannie and Freddie did not cause the foreclosure crisis. As the chart shows, The Two F’s got out of subprime loans in 2002 before things got really crazy. Watch the pink line – see how it dips sharply at the sime time the dotted light blue line makes a jump shot? That’s Fannie and Freddie getting the heck out of dodge, because the loans the market started demanding felt way too risky. The light blue line is “asset-backed securities issuers,” namely entitities like the investment banks that have failed so spectacularly of late.
The Two F’s were still giving out some loans more risky than their standard fare. But as Thoma explains (and my personal experience proves) Fannie and Freddie largely did 30-year fixed rate loans. They weren’t doing the “exotic” liar loans that have caused so much pain.
Thoma says, “There is no excuse for the actions of the management of Fannie and Freddie, and I’m not trying to defend them or their choices, but the idea that Fannie and Freddie caused the general credit crisis is wrong.” (emphasis mine).
By the way, I’m still browsing through Thoma’s blog, trying to study up on all the intricacies he and his colleagues discuss about economics in general and the housing/financial crisis in particular. It’s not for bare beginners, but is an excellent resource if you’ve done some reading on the basics elsewhere. Check it out!
Mama Said There’d Be Days Like This
November 17, 2008
Some days it’s hard not to be depressed, given my line of work. Some days the bad news in the media is overwhelming.
Some days it seems that I spend half my time working with buyers who want a big home in a “nice” neighborhood, in pristine move-in condition, and they want it for 50% of market value. The other half the time I seem to spend counseling sellers who are facing foreclosure, or contemplating taking a lowball offer from an investor who thinks “I’m paying cash” means an automatic price reduction of 30% off list. Trust me Mr. and Mrs. Cash Investor, even mortgages are green on closing day.
Some days I just want to scream at these types of buyers and sellers – “This whole awful mess is not my fault! Sellers, I did not create your problems, and Buyers I am not going to help you take advantage of a bad situation!”
But I hold my tongue and say nothing. I resort to charts and graphs with 5-year trend lines and historical averages. I whip out my now well-practiced speech, “An offer price of $25,000 under asking sounds reasonable to you Mr. Buyer, but to the Seller it sounds like 15% below the last comparable sale which closed one week ago. The market is falling but it’s not falling at 15% per week.”
All this tongue holding and cheek biting is resulting in heartburn. If I could just help a few more people be happy about their closing days, I’d feel better. Until then, I leave my readers with this vent. Tomorrow I’ll put away the soapbox and try to post something uplifting. Or at least not discouraging.
Sunday Stats (on Monday)
November 17, 2008
photo credit to MiamiAmia, via StockExchange.
Click here to see the entire Sunday Stats series, and for historical perspective.
I’ve added a new field this week, the Median Sold Price. This is the number at which half the sold home prices are higher than the stated median, and half the sold home prices are lower than the stated median.
To find the median, list all the sold prices in row from smallest to biggest. The number that’s exactly in the middle of the line is the median.
Median is much less volatile than average, and so more useful when comparing an already volatile housing market.
Think of it this way (big hat tip to Nobel prize winner and Princeton economist, Paul Krugman for this): if there are 50 people in your neighborhood bar and Bill Gates walks in, the average income of the people in the bar just skyrocketed. But the median income won’t have moved so much, because old Bill just gets added to the end of the line and counted as 1 in the string.
In any case, we’re still awash in red ink. Red represents a field that’s moved in a negative direction since last week. Negatives in our current market are: more inventory for sale, fewer homes going pending, fewer homes selling in the past 30 days, and/or a larger number for months of inventory.
I’m assuming we all want the housing market to get back to “normal” when I color code these charts. Normal is about 6 months of inventory on the market. We’re at 14. Not so healthy. Let’s see what next week brings.
Sheila Bair Stole My Homework!
November 15, 2008
Well, not really. But that headline might get you out of your feedreader.
Sheila Bair is way smarter than me by any measuring stick you can think of. But this week Bair endorsed a loan workout program that’s remarkably similar to a plan I proposed back in April.
Sheila: “The FDIC has initiated a systematic loan modification program at IndyMac Federal Bank to reduce first lien mortgage payments to as low as 31% of monthly income. Modifications are based on interest rate reductions, extension of terms, and principal forbearance. A loss share guarantee on redefaults of modified mortgages can provide the necessary incentive to modify mortgages on a sufficient scale, while leveraging available government funds to affect more mortgages than outright purchases of specific incentives for every modification.” (emphasis mine)
Me:
“…lenders [should] do the following: (1) write down principal, (2) lower interest rates and use fixed (not adjustable) rates, (3) lengthen loan terms, and (4) use the homeowners’ credit score from before they missed their first mortgage payment to calculate the refinance terms.”
and me in September 2007: Why is the 30 Year Mortgage Sacrosanct?
So Sheila, anytime you need to bounce some ideas around, gimme a call. ‘Kay?
Cramdowns
November 14, 2008
Here’s a thought for the day, courtesy of the recent Congressional hearings on the revised plans for spending the bailout money. Some folks are recommending that bankruptcy courts be allowed to renegotiate home mortgage terms. Chris Dodd, in particular, all but said “We’ll make this happen, even if we have to wait until the new Congress is in session.”
Bankruptcy courts can currently renegotiate the terms of a mortgage loan on a vacation home and on a boat. They cannot renegotiate the terms of a mortgage loan on a home that is the homeowner’s primary residence.
How is it OK to work out new loan terms on a person’s boat or second home but not their main residence? Doesn’t that seem just a little slanted in favor of the wealthy? Hmmmm?
I actually wish someone would come here and comment, and give me a reasonable explanation why this isn’t just a benefit for only people wealthy enough to own a second home or boat. In the spirit of the 52 to 48 folks, I’m ready to listen. Seriously.
My Boss Highlighted in National Media Outlet
November 13, 2008
Today my broker (my boss) Jay Thompson was featured in a short article at Inman.com, a source for all news related to the real estate industry.
Even if you don’t click over to the article, if you’re browsing this real estate blog, chances are you’d enjoy browsing some homes for sale online. I have a Search the MLS feature that’s free and doesn’t require registration. But Jay Thompson has a waaaaay cooler interface to the same data on his site, PhoenixRealEstateGuy.com.
Related Posts
Getting “good press” is always a great thing in real estate. You might be the most knowledgeable Realtor in the entire universe, but if nobody knows about you, you’re going to want for business. As my mentor once said, Realtors who don’t market themselves have really skinny kids.
Woot, woot, Thompson’s Realty agents!
