For some time now, we have attempted to shed light on the fact that pricing in today’s real estate market will be determined by the concept of ‘supply and demand’. If supply continues to increase and demand softens (or even remains constant) prices will continue to fall. Even the National Association of Realtors (NAR) has acknowledged this to be true.
The supply of inventory in the real estate industry is defined by the current months’ supply of homes that is available for sale. There are no steadfast rules that will apply to every category of housing. However, here is a great guideline by which to go:
1-4 months’ supply creates a sellers’ market where there are not enough homes to satisfy buyer demand. Appreciation is guaranteed.
5-6 months’ supply creates a balanced market where historically home values appreciate at a rate a little greater than inflation.
7-8 months’ supply creates a buyers’ market where the number of homes for sale exceeds the demand. Depreciation follows.
Where do we stand today?
According to NAR’s most recent Existing Sales Report, there is currently a 10.5 months’ supply of homes for sale. We can see, based on the guideline above, we are in a buyers’ market and that prices will continue to soften. The other statistic we must watch is the number of months’ of shadow inventory which will be coming to market.
CoreLogic just released their November report (which covers August). They estimate shadow inventory:
… by calculating the number of properties that are seriously delinquent (90 days or more), in foreclosure and real estate owned (REO) by lenders and that are not currently listed on multiple listing services (MLSs). Shadow inventory is typically not included in the official metrics of unsold inventory.
The report showed that shadow inventory jumped more than 10% in the last year, pushing total unsold inventory to 2.1 million houses.
That represents another 8 months of supply.
The Wall Street Journal reported that some analysts have said CoreLogic estimates look rather low.
Laurie Goodman, senior managing director at Amherst Securities Group, has warned that as many as seven million homes could end up in banks hands unless more aggressive modification regimes are put in place.
Barclays estimates that another 3.76 million homes are either in the foreclosure process or are at least 90 days delinquent but not yet in foreclosure.
Bottom Line
Most industry experts are projecting just that – an additional fall in prices of between 5-20%. Mark Fleming, chief economist for CoreLogic commented:
“The weak demand for housing is significantly increasing the risk of further price declines in the housing market. This is being exacerbated by a significant and growing shadow inventory that is likely to persist for some time due to the highly extended time-to-liquidation that servicers are currently experiencing.”
If you are thinking of selling, meet with a local real estate professional immediately. In most parts of the country, selling sooner may be better than later.
Tuesday, November 30, 2010
Monday, October 18, 2010
Five Principles of Home Staging
Home staging is economical and a well-proven benefit to Realtors and home owners alike. Here are some basic staging principles every home seller can use.
Become a Seller, Not a Dweller
Homeowners must make the mental shift necessary to become Sellers, not Dwellers. It is only then sellers are able to realize they own a commodity to be sold and no longer their home. The way we live in our homes is different than the way we sell our homes. With this mental shift in place, the next step in the process may begin.
Clean and De-clutter
De-cluttering is the first principle used in home staging. Clutter is defined as those items in a room that are not necessary for its function or beauty. Clutter can be too many books, knickknacks, or accessories. With staging, only key accessories and furniture remain. The property will immediately appear more spacious and well cared for.
Here are some tips to keep in mind as it applies to de-cluttering:
1.A buyer wants to purchase a move-in ready home. A house that is not clean implies deferred maintenance.2.A buyer is purchasing square footage. Clear the clutter to create the impression of more space.3.Let the light in; buyers are drawn to open, airy spaces.
Appeal to the Masses
With the de-cluttering process accomplished, the next phase is depersonalizing. The buyer will want to mentally personalize it and imagine living in the house when it becomes theirs. This includes using neutral tones throughout as well as general updates which will appeal to the largest segment of potential buyers.
Realtors no longer have the almost impossible task of telling homeowners their faux finished pink bathroom really needs a neutral tone of paint (put in before and after of pink bathroom) or their beloved collection of gargoyles will turn off potential buyers.
If You Can't See It, You Can't Sell It.
Curb appeal is everything. It's the first impression a potential buyer gets of the home. Remember, if you can’t see it you can’t sell it. The easiest and best way to determine what needs to be done to the outside of the home and the lawn is to walk across the street. Look objectively at what the home looks like from that vantage point. Then, take the following curb appeal test:
1. Are the gutters clean and in good repair?
2. How does the driveway look?
3. Do the shrubs need pruning?
4. Do the trees need trimming?
5. How do the flower beds look?
6. Is the walkway leading to the house inviting?
7. Does the lawn look clean and neat?
8. Are the house numbers clearly visible?
9. Does the entryway and front door make a great first impression?
10. Are toys, tools, hoses and any other distracting items put away?
Amie Hebert Chaney, a Home Staging Expert (HSE), says Home Staging is the art of preparing a home for market to give the best possible first impression to potential buyers, resulting in a quicker sale and higher profit. The intent behind home staging is for potential buyers to be able to see the home as theirs.
It is only after answering and addressing the above curb appeal issues that the seller will have passed the “curb appeal test.”
Maximize Strong Points; Minimize Shortcomings
Finally, it’s important to show off the home’s best features, while hiding its flaws. Showcase focal points such as fireplaces, wood floors, and expansive views and divert attention away from less attractive features by creating alternate interest.
If a home seller is willing to follow these simple steps – clean and de-clutter, depersonalize, increase curb appeal and maximize the home’s strong points - they greatly improve the chances of selling their home quicker and for top dollar.
Become a Seller, Not a Dweller
Homeowners must make the mental shift necessary to become Sellers, not Dwellers. It is only then sellers are able to realize they own a commodity to be sold and no longer their home. The way we live in our homes is different than the way we sell our homes. With this mental shift in place, the next step in the process may begin.
Clean and De-clutter
De-cluttering is the first principle used in home staging. Clutter is defined as those items in a room that are not necessary for its function or beauty. Clutter can be too many books, knickknacks, or accessories. With staging, only key accessories and furniture remain. The property will immediately appear more spacious and well cared for.
Here are some tips to keep in mind as it applies to de-cluttering:
1.A buyer wants to purchase a move-in ready home. A house that is not clean implies deferred maintenance.2.A buyer is purchasing square footage. Clear the clutter to create the impression of more space.3.Let the light in; buyers are drawn to open, airy spaces.
Appeal to the Masses
With the de-cluttering process accomplished, the next phase is depersonalizing. The buyer will want to mentally personalize it and imagine living in the house when it becomes theirs. This includes using neutral tones throughout as well as general updates which will appeal to the largest segment of potential buyers.
Realtors no longer have the almost impossible task of telling homeowners their faux finished pink bathroom really needs a neutral tone of paint (put in before and after of pink bathroom) or their beloved collection of gargoyles will turn off potential buyers.
If You Can't See It, You Can't Sell It.
Curb appeal is everything. It's the first impression a potential buyer gets of the home. Remember, if you can’t see it you can’t sell it. The easiest and best way to determine what needs to be done to the outside of the home and the lawn is to walk across the street. Look objectively at what the home looks like from that vantage point. Then, take the following curb appeal test:
1. Are the gutters clean and in good repair?
2. How does the driveway look?
3. Do the shrubs need pruning?
4. Do the trees need trimming?
5. How do the flower beds look?
6. Is the walkway leading to the house inviting?
7. Does the lawn look clean and neat?
8. Are the house numbers clearly visible?
9. Does the entryway and front door make a great first impression?
10. Are toys, tools, hoses and any other distracting items put away?
Amie Hebert Chaney, a Home Staging Expert (HSE), says Home Staging is the art of preparing a home for market to give the best possible first impression to potential buyers, resulting in a quicker sale and higher profit. The intent behind home staging is for potential buyers to be able to see the home as theirs.
It is only after answering and addressing the above curb appeal issues that the seller will have passed the “curb appeal test.”
Maximize Strong Points; Minimize Shortcomings
Finally, it’s important to show off the home’s best features, while hiding its flaws. Showcase focal points such as fireplaces, wood floors, and expansive views and divert attention away from less attractive features by creating alternate interest.
If a home seller is willing to follow these simple steps – clean and de-clutter, depersonalize, increase curb appeal and maximize the home’s strong points - they greatly improve the chances of selling their home quicker and for top dollar.
Thursday, June 24, 2010
Spruce up your home with these quick tips!
Maybe I’ve been watching too many “reality house-fixer” shows, but it seems like all those folks have unlimited budgets and unlimited time, and for some of us, it’s just not like that. You can easily spend $15,000 to $20,000 on things like re-plumbing and rewiring and end up living in the same house you had before you spent the money.
1. Paint everything in sight. Take down dated wallpaper and try to choose lighter colors. They make the rooms appear larger.
The odor and look of fresh paint is undeniably associated in our brains with the concept of clean. And that’s a great way to start your makeover. You can take on the task yourself or hire someone.
While painting a whole house by yourself can be a large project, you can break it into smaller pieces, maybe one room at a time. The smell of fresh paint is a real morale booster among buyers.
2. Clean the carpets throughout the house. If you have hardwood floors, get them cleaned and waxed.
No, it’s not quite the same as new, but the cost to have this maintenance done is likely less than a couple of hundred bucks. Again, you’ll see immediate improvement in the floor covering you have, and the results are gratifying.
Yes, you can rent a unit from the hardware store for $50, but it’s backbreaking work, and the truck-mounted equipment seems to provide the best results.
One hint: Ignore offers of upgrades like a layer of protective chemical for just another hundred bucks.
3. Wash all your windows, inside and out. Over the years, windows get dirty, and block out some of the light that should be coming into your house. And it’s just that light that makes you feel that a room is “bright and cheerful.” You’ll notice a difference right away.
These suggestions won’t solve systemic shortcomings in your house. But they will make it more pleasant to live in and more attractive to any visitor, whether a prospective buyer or not.
By John Adams - AJC
1. Paint everything in sight. Take down dated wallpaper and try to choose lighter colors. They make the rooms appear larger.
The odor and look of fresh paint is undeniably associated in our brains with the concept of clean. And that’s a great way to start your makeover. You can take on the task yourself or hire someone.
While painting a whole house by yourself can be a large project, you can break it into smaller pieces, maybe one room at a time. The smell of fresh paint is a real morale booster among buyers.
2. Clean the carpets throughout the house. If you have hardwood floors, get them cleaned and waxed.
No, it’s not quite the same as new, but the cost to have this maintenance done is likely less than a couple of hundred bucks. Again, you’ll see immediate improvement in the floor covering you have, and the results are gratifying.
Yes, you can rent a unit from the hardware store for $50, but it’s backbreaking work, and the truck-mounted equipment seems to provide the best results.
One hint: Ignore offers of upgrades like a layer of protective chemical for just another hundred bucks.
3. Wash all your windows, inside and out. Over the years, windows get dirty, and block out some of the light that should be coming into your house. And it’s just that light that makes you feel that a room is “bright and cheerful.” You’ll notice a difference right away.
These suggestions won’t solve systemic shortcomings in your house. But they will make it more pleasant to live in and more attractive to any visitor, whether a prospective buyer or not.
By John Adams - AJC
Thursday, March 4, 2010
What Do We See In The Shadows?
The economy is on the road to financial recovery. It will be a long and hard road, but we are on our way. There are many obstacles that could cause us to break down on this road. None is more important than the concept of "shadow inventory." What is that? These are homes which the banks are not foreclosing upon because they are trying to work out solutions with present homeowners or frankly they don’t want to flood the markets all at once and depress prices. How many homes are casting a shadow over the markets? Projections vary, but suffice to say that there are several million homes that will be foreclosed upon in the next two years. That is a lot of homes. It is also good news that at least one forecaster says that investor demand is so strong that home prices will not be affected by these homes coming upon the markets.
We keep saying this and it bears repeating. Real estate led us into recession and it must lead us into recovery. There are many factors that can help "soak" up shadow inventory. The weak dollar is increasing demand from foreign investors. The tax credit is bringing more first time buyers into the market and now move-up buyers as well. Low rates are keeping homes affordable, especially when compared to renting in many markets. Government efforts at modifications are also expected to keep many in their homes. Even builders are helping by bringing less homes to the market. Not one of these is by itself enough to absorb several million homes. But if we put all these factors together, it very well may happen as the John Burns Real Estate Consulting Company has indicated. Keep in mind that all the while the population of this Nation is rising. This means that sometime in the future, there will be growth in the real estate market and our economy. In the meantime, we will navigate the long and winding road.
We keep saying this and it bears repeating. Real estate led us into recession and it must lead us into recovery. There are many factors that can help "soak" up shadow inventory. The weak dollar is increasing demand from foreign investors. The tax credit is bringing more first time buyers into the market and now move-up buyers as well. Low rates are keeping homes affordable, especially when compared to renting in many markets. Government efforts at modifications are also expected to keep many in their homes. Even builders are helping by bringing less homes to the market. Not one of these is by itself enough to absorb several million homes. But if we put all these factors together, it very well may happen as the John Burns Real Estate Consulting Company has indicated. Keep in mind that all the while the population of this Nation is rising. This means that sometime in the future, there will be growth in the real estate market and our economy. In the meantime, we will navigate the long and winding road.
Subscribe to:
Posts (Atom)
