Archive
Check out US Home Prices Could Still Fall a Lot More: Shiller – CNBC
Check out Real Estate: Can Lack of Inventory Save Housing? — CNBC Realty Check
Warren Buffett Sees Housing Coming Back
In Warren Buffett’s annual letter, released the other day, the billionaire “money will always flow toward opportunity, and there is an abundance of that in America.” He adds, “Now, as in 1776, 1861, 1932, and 1941, America’s best days lie ahead.”
Specifically on house, Mr. Buffett says, “A housing recovery will probably begin within a year of so. In any event, it is certain to occur at some point,” and Berkshire has been preparing with capital investment.
Real Estate Rebound in the Northwoods?
Don’t look now but some things are starting to show some pretty good signs of a bounce back in sales. For those of you who did not see the news report by channel 12 the other night, it showed that home sales in Wisconsin were down 7.5%, yet the Northern Region was up 4.6%. Specifically, Oneida County sales were up 14.7% and Vilas County sales were up 19% in 2010.
One thing that was not distinguished in the story was the difference between sales and sale prices. When we hear a story based on a set of numbers (like sales in this story) it is easy to draw conclusions that are incomplete. Some might think this means the prices are well on their way back and many people will confuse sales with sale prices. Sale is one piece of the picture we need to look at but not the entire picture. When we only look at a piece of a picture and try to draw a conclusion, you might not know what you are looking at or worse, think you are looking at something you are not. When we look at sales for single family homes and condominiums in the Northwoods we see that the average sales price for 2010 was roughly $172,000 vs. $165,000 in 2009. This is a 4.2% increase. As we look at the Median (taking the middle number of a series of numbers.), we see that in 2010 the Median number was roughly $132,000 vs. $125,000 in 2009. A 5.6% increase. These are very valuable pieces of information that show that sales prices are moving forward in the Northwoods, despite the fact that they are not moving as fast as sales.
You may have seen the last couple of interviews with Diana Olick (from Realty Check) on CNBC that I posted on the Eliason Realty blog recently. She pointed out there were signs showing sales were starting to pick up nationally, despite the fact that prices don’t appear to be recovering. She was not surprised by this at all. In fact, she seemed to have expected it. She reminded all of us that “sales and prices are directly related and . . . sales always lead prices”. She states that during the boom, sales started going down and prices were still going up. She reported then that this was unsustainable. She also said that the sales will lead the prices when it comes to recovering. Nationally, prices are still going down slightly, but sales have started to go up. For three months straight there have been increases in both pending and existing sales. With this in mind, Diana says “maybe it’s the beginning of the curb and maybe it is time to get back in. You will never time the exact bottom of the market.” Continued increases in sales numbers will make her believe in this position even more so.
So here are some more pieces of the picture, but it is still not complete. We need to see what is going to happen to foreclosures. We also have to realize, as I have said many times before, that Real Estate is always a local market. So how do Diana’s comments apply to real estate in the Northwoods?
All expectations are that foreclosures will be similar to slightly higher in 2011 nation wide than they were in 2010. Yet, locally, in the Northwoods I don’t know that we are expecting foreclosures to go up in 2011. I have spoken to a couple of bankers about this. They are expecting foreclosures to go down on their books in 2011. One of the bankers I spoke to also said they feel the Northwoods does not see the high highs or the low lows that other places get. With this in mind, he said our unemployment and foreclosures have been better than the rest of Wisconsin and the nation. So, we feel that the Northwoods foreclosures will be no worse than or similar to 2010, we have to take that as a positive sign with the rest of the data we are collecting.
In addition, there are some signs there is a lot of money on the sideline. Nationally we heard that 58% of the people don’t feel real estate will rebound until 2012. 20% feel it will not be until 2015. Only 10% feel there will be a rebound begun in 2011. On www.EliasonRealty.com last week we asked what 2011 will bring to the Northwoods real estate market. Over 55 people participated here were the results.
- 32% felt the prices were going to be flat
- 23% felt declines of 3% – 9% were likely
- 38% felt the declines would be 10% or greater
- Only 7% of the people felt there would be 3% gain or greater
So what does all of this negativity mean? It certainly seems to indicate that the confidence is not there to get people “off the fence” to buy real estate just yet. It may sound strange but this can be a huge positive. When everyone is negative, that means few people are buying. This means there are far less buyers than sellers and prices are going to have to go down to generate sales. When this happens in the stock market, typically the bottom is often signaled by a time when there is significant negative confidence (tops are also found at times when there is significant positive confidence).
With all of this in mind, what do I think? This is what I said in my Market Report in early 2010.
“I believe we will continue to see the volume and units of real estate sold continue to increase over that time. So won’t that push prices higher as well? Eventually it will. Despite the positive moves so far in 2010 and the fact that I believe these trends will continue, I believe we will see this buyers market continue at least through the spring of 2011. This is because I believe prices will have trouble getting good traction until we are able to reduce the inventory of properties.”
I predict 2011 will mark the bottom of the Northwoods Real Estate prices. That is a big prediction. I realize trying to call a bottom is very hard. Yet, everything I am seeing says that 2011 will likely push out the majority of pressures that are pushing our market down. The recovery will not be quick from here and won’t see 10% appreciation on prices year after year from this point on. I suspect the Northwoods will show 2% – 5% price increases off of the Median and Mean averages and that sales have 10% – 15% increases in 2011.
Check out Housing Turnaround or Double-Dip? – CNBC.com
Welcome to 2011
Eliason Realty would like to welcome everyone into the New Year and wish you a excellent 2011. As far as the Northwoods real estate market goes, 2010 was slightly better than 2009. We here are expecting 2011 to end up being similar to slightly higher than 2010 for our sales volume. Yet, the difference we see is 2011 is that this could be the year the market stabilizes a bottom for the Northwoods. We expect foreclosures to be similar to slightly higher but believe as this year weeds through the worst of it, confidence will start to rise. People will see the light at the end of the tunnel and the turn will finally begin.
We realize that real estate is largely a local market, but below are a couple of recent articles from CNBC on the latest National and big city reports.
CASE-SHILLER COMPOSITE INDEX
U.S. single-family home prices fell for a fourth straight month in October pressured by a supply glut, home foreclosures and high unemployment, data from a closely watched survey showed Tuesday.
The Standard & Poor’s/Case-Shiller composite index of 20 metropolitan areas declined 1.0 percent in October from September on a seasonally adjusted basis, a much steeper drop than the 0.6 percent fall expected by economists.
The decline built on a revised decrease of 1.0 percent in September and took prices down 0.8 percent from year-ago levels. It was the first year-on-year drop in the index since January.
The housing market has been struggling since home buyer tax credits expired earlier this year. To take advantage of the tax credits, buyers had to sign purchase contracts by April 30.
“The (housing) double dip is almost here, as six cities set new lows for the period since 2006 peaks. There is no good news in October’s report,” said David Blitzer, chairman of the index committee at S&P.
Eighteen of the 20 cities showed weaker year-on-year readings in October and all 20 cities showed monthly price declines.
Unadjusted for seasonal impact, the 20-city index fell 1.3 percent in October after a 0.8 percent decline in September.
NEW CONSTRUCTION
Despite the fact that sales of newly constructed home bumped up 5.5 percent in November, month to month, one analyst was prompted to call it, “Another Miserable Report.”
Patrick Newport over at IHS Global Insight noted that while the seasonal adjustments pushed the numbers up, in reality November’s actual sales volume was the lowest ever recorded.
Even the National Association of Home Builders couldn’t muster much enthusiasm. “The gain represents a partial bounce-back from a near-record low, downwardly revised number of new-home sales in October,” went their release.
“While builders continue to face a great deal of competition from short-sale and foreclosure properties, the improvement registered in new-home sales in November is a good sign,” said Bob Jones, chairman of the National Association of Home Builders.
Still, the builders are concerned about lack of credit to build new homes. They claim that when demand surges, they will not have product to offer. This even as the Commerce Department reported an 8.2 month supply of newly constructed homes at the current sales pace, but the current sales pace is pretty awful.
As we came to the end of 2010, I was asked to do all kinds of prediction pieces, which I dutifully did. Neither I, nor anyone who studies housing, can make any promises in this market. There is simply no historical context with which to judge.
“Inventory management continues to improve. The number of new homes for sale fell to the lowest level since 1968.,” notes Newport. “And though the turnover rate—the median time it takes to sell a new home—inched up 0.1 month, to 8.2 months, this is a vast improvement over March 2010, when the turnover rate hit an all-time high of 14.4 months.”
As we came to the end of 2010, I was asked to do all kinds of prediction pieces, which I dutifully did. We picked some stocks, looked at sectors and geographic regions, and noted the headwinds.
Neither I, nor anyone who studies housing, can make any promises in this market. There is simply no historical context with which to judge.
I continue to believe that while we can argue ’til we’re blue about credit, government incentives, fraud and blame, the fate of the housing market lies in confidence. The minute Americans see a real reason for hope, a lift from the bottom—and a potential for profit— housing will come roaring back.
Interest Rates – Where To Now?
Experts see Real Estate at the bottom right now…
Daily Real Estate News |
Housing Experts Say Real Estate is Recovering
Some of the nation’s top economists believe the housing market has turned and better days are on the way for the housing industry.
Increases in jobs, credit, and affordable homes will overcome impediments such as rising interest rates, and the expiration of the Federal stimulus program to push the housing market toward recovery, says Dean Maki, chief U.S. economist for Barclays Capital.
“I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” says Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College.
“The underlying trend is turning positive,” says Bruce Kasman, chief economist at JPMorgan Chase & Co.
Source: Bloomberg, Kathleen M. Howley and Rich Miller (03/15/2010)
Daily Real Estate News |
Analysts Say Rates Should Remain Low
Projections about where credit rates will go in the next year vary widely, but most mortgage analysts think the effect of the Federal Reserve’s move away from the market won’t be dramatic.
Analysts at Credit Suisse and FTN Financial Capital Markets predict that mortgage rates will stay between 5 percent and 5.25 percent for the rest of the year. Moody’s Economy.com projects about 5.7 percent, and Barclays Capital says 6 percent.
“There is a lot of private money on the sidelines waiting to buy mortgage securities once the Fed stops gobbling most of them up,” says Laurie Goodman, senior managing director at mortgage-bond trader Amherst Securities Group.
Source: The Wall Street Journal, James R. Hagerty (03/13/2010)
Great Opportunities!!
Well, we usually blog about more general topics, but this time I am going to make an exception. The reason is that there are a couple of opportunities on the market right now that I can comfortably say are the type of opportunities I believe people will look back 5, 10, 20 years from now and say “Wow, I should have jumped on that deal.”
The first opportunity is on Big St. Germain Lake. There is a seller who has a series of three excellent properties that are impeccably maintained with breathtaking views and they offer level, sand frontage. The seller and his family have not been using the properties as much as they use to and because of this, the seller has recently reduced the price of these to make sure he sells at least one of them this fall. These are the types of properties that people were fighting to even find available a few years ago. Now you can take advantage of the market to not only own these great properties, but you can get them at a great price. In addition, the seller is willing to throw in significant personal property to make the sale happen in the next few weeks. MLS#’s 103881, 102587, 102582.
The second opportunity is at The Wild Eagle Lodge on the Eagle River Chain of Lakes. Despite the market conditions, these properties have continued to sell over the last two and a half years since they have been offered (38 units sold). The reasons are simple. They are priced right (a great value as the lowest priced condominiums on great frontage, on a good lake, as a new development). The 2,000’ of level, sand frontage on 19 acres is not matched anywhere. The amenities are not matched anywhere, offering an indoor pool, tennis court, sauna, large hot tub, on-site lounge, choice swimming beach, and much more. The optional rental program gives buyers an opportunity for some income while they are not using the property (if they would like). The units themselves come fully furnished, well designed, and are ideal for buyers to use as their Northwoods getaway. BUT here is why ‘now’ is likely the best time you will ever find to buy at Wild Eagle Lodge. Recently, we have developed a financing agreement with River Valley Bank where they are going to be able to offer 4.68% financing with as little as 5% down for qualified buyers. In addition, Wild Eagle Lodge is offering 2 years association dues paid for by the seller. (Note: the financing offer is only going to be available for a very limited time, is subject to change, includes seller concessions and buyers must qualify. Please call LeeAnn Erickson at River Valley Bank for more details at 715-358-3434. The 4.68% is a 5yr ARM, amortized over 30 years.)
If you have considered purchasing a Northwoods getaway, you have to consider one of these truly Hot Deals that are available right now.
Eliason Realty of the North Blog 