After posting yesterday on selling homes quickly in a slow market, I stumbled across some more good points relating to this subject. Two of the most important things to consider when evaluating a deal are what you are going to pay for the property and what you are going to be able to sell the property for after rehab.

If you refer back to yesterday’s post you will see the first point mentioned in both of these notes is making sure you do solid market or “comp� analysis and price the property appropriately.

Rules for Selling Fast in a Slow Market

Anyone looking for advice on how to close a deal in a tough market might get some inspiration from William Bronchick and Ray Cooper, authors of How To Sell A House Fast In A Slow Real Estate Market(2008: John A. Wiley & Sons).

Here are some of their ideas:

Position the house in the right price range. Buyers search by price range. Positioning a property in the middle of the range increases the likelihood people will see it.

Have information available. Deals fall apart when the buyer has unanswered questions. Work with the seller to have key information available, including cost of utilities and taxes, neighborhood liens and covenants, and an evaluation of the schools.

Put out a good flier. People are much more likely to read the flier than they are to call the number on the “For Sale� sign.

Market to the neighbors. Market to people who have just listed their own homes in the same areas. Chances are they like the neighborhood and could be persuaded to stay in the area by the right property.

Talk to the seller about offering creative financing. For many people these days finding money is the biggest stumbling block.

In this market holding out for a better offer is a big mistake.

Source: Forbes, William Bronchick and Ray Cooper (10/21/08)

Posted by Carter Brown

Despite what you have heard, rehabbing properties and selling them at a profit in this crazy market does work. You need to make sure the numbers on deal work, you do your research and, perhaps most importantly, you need to have a strategy for getting the property sold and sold quickly.

Below is a short note I came across that mentions some good points on how to get properties sold quickly in a slow market.

Here are some tips from real estate professionals who now have a couple of years experience selling homes quickly in slow-moving markets:

Be the best buy on the block. “Run an accurate market analysis for the last six months and price the property accordingly,� says Alex Harb, a practitioner in Orlando, Fla.

Schedule your discounts. If someone has to sell in say, six weeks, start with a 10 percent or 15 percent discount from the comparables and then reduce the property another 5 percent to 10 percent each week.

Clean-up time. Scrub the house until it shines. Paint anything that needs it, and manicure the lawn.

Don’t sound desperate. When a buyer asks why the house is for sale, an effective response is, “I have a new opportunity in another city.� This answer sounds hopeful while selling in the midst of a divorce or other emotionally difficult time which otherwise could make the buyer leery about the home.

Offer to hold the mortgage. If a seller can live without the proceeds from a sale, a seller-financing arrangement may make sense. This helps those who can’t qualify conventionally and increases the pool of buyers.

Source: TheStreet.com, John Morell (10/27/2008)

Posted by Carter Brown

With so much gloom and doom in today’s real estate market, I always make sure to highlight positive notes and thoughts about the real estate market. One of the key numbers or indicators we watch is how many homes are actually being sold. This note points out that September home sales marked the first time we’ve seen a year-over-year increase since November of 2005.

I often get frustrated when I read articles that simply relate what’s going on in the national real estate market. National real estate indicators don’t do me much good if they don’t accurately portray what is going on in my market. So, I’ve included a regional breakdown of home sales across the country.

NAR: Home Sales Rise as Affordability Improves

Existing-home sales increased last month as buyers responded to improved housing affordability conditions, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August. Home sales are 1.4 percent higher than the 5.11 million-unit pace in September 2007.

Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains.

“The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri, and Rhode Island,� he says. “The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike.�

NAR President Richard F. Gaylord says low home prices and low interest rates have helped attract buyers.

“This is the first time since November 2005 that home sales have been above year-ago levels,� Gaylord says. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future.�

By Region

Here’s a breakdown across the country of existing-home sales in September:

• West: home sales in the West jumped 16.8 percent to an annual rate of 1.25 million in September, and are 34.4 percent higher than September 2007. Median price: $253,600, down 18.5 percent from a year ago.

• Midwest: sales increased 4.4 percent to an annual pace of 1.19 million in September, but are 2.5 percent below a year ago. Median price: $152,500, which is 7.9 percent lower than September 2007.

• South: sales rose 2.2 percent in September to a pace of 1.9 million but remain 7.8 percent below September 2007. Median price:$167,200, down 4.1 percent from a year ago.

• Northeast: sales slipped 1.2 percent to an annual pace of 840,000 in September, and are 7.7 percent lower than a year ago. Median price: $246,800, down 5.4 percent from September 2007.

Source: NAR

Posted by Carter Brown

Thia article discussed the relationahip between housing starts for single family homes and those for multi-family units. The multi-family market is much healthier than the single family home market.

Multifamily Housing Starts in 3Q Do Not Fall as Precipitously as Single-Family’s

Published: October 22, 2008

By Anuradha Kher, Online News Editor for Multi-Housing News

New York–While single-family housing starts tumbled a whopping 12 percent to an annual rate of 544,000—the lowest since February 1982 and the fourth-lowest ever—third-quarter multifamily housing starts remained relatively high at 273,000, as compared to its low of 162,000, recorded in 1993, based on the Commerce Department’s latest report.

Multifamily housing starts (including two to four-unit projects and five plus-unit projects) have been falling since mid-year but haven’t yet seen the drop witnessed after the savings and loan crisis in the early 90s. The number of multifamily starts in June stood at 426,000, went down to 305,000 in July and further down to 254,000 in August.

“The multifamily housing starts, permits and completion numbers have been bouncing around on a month-to-month basis and I try not to get fooled by this variation,� NMHC Chief Economist Mark Obrinsky tells MHN. “Having said that, the three-month average has been tapering off.

Although I haven’t seen a number quite this low for a while now, I’d like to wait and see for more numbers come in before I can call it a trend. This is not nearly as bad as the drop after the recession in the early ’90s, which was followed by the savings and loan crisis.â€?

However, Obrinsky does believe that we are in a recession right now and things are going to get worse before they get better. “As the economy gets tougher, people will start doubling and tripling up in homes, and move in with their families. For the short term, this would mean fewer renters. But once the economy starts recovering, which I believe will most likely
happen in 2010, demographics will be in favor of apartments and the our industry will have to ramp up at that time,� explains Obrinsky.

For Dan Fasulo, managing director of the research firm, Real Capital Analytics, the numbers show a definite downward trend. “For all practical purposes, development has stopped in this country. With debt markets seized up, developers are having a hard time getting financing. The projects under construction will be completed, but I don’t see too many new projects coming in through the pipeline,â€? Fasulo tells MHN. However, he agrees with Obrinsky’s observation that things are not nearly as bad this time around as they were after the savings and loan crisis. “There was so much excess oversupply and overbuilding in the multifamily industry in the late ’80s that after the 1991 recession, it took an entire decade for things to get back to normal. This time, there are certain troubled markets that are seeing excess supply, but many other markets are doing just fine,â€? says Fasulo. Also, he says there is money on the sidelines right now and this was not the case in the 1990s.

As result, Fasulo believes, when the market does start recovering, it will be relatively easier to get back to normal. “Of course, it will be a market-by-market scenario. For example, I would not want to be a developer in Michigan. I think, going forward, investors will need to do market-by-market and asset-by-asset research for their investments,� he
concludes.

Commercial Real Estate Debt Still Expanding

From FeedBlitz – 10/1/08

The CMBS market may be frozen, but the level of outstanding commercial real estate debt continued to expand during the second quarter.

Commercial and multifamily mortgage debt outstanding rose 1.5% in the second quarter, to $3.44 trillion, the Mortgage Bankers Association reports, based on an analysis of the Federal Reserve Board Flow of Funds data.

Amid the current credit crunch turmoil, commercial and multifamily mortgage debt outstanding gained $51.3 billion from the first quarter of 2008. Multifamily mortgage debt outstanding alone grew to $875 billion, an increase of $16.3 billion or 1.9% from first quarter levels.

“Despite the persistent credit crunch, investors increased their holdings of commercial/multifamily mortgages in the second quarter,� says Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “The only major investor group to see a decline in their holdings was the commercial mortgage-backed securities (CMBS) market, which has been most profoundly affected by the credit crunch. Other investor groups including commercial banks, life insurance companies, thrifts and the government-sponsored enterprises (GSEs) increased their holdings over the quarter.�

Bailout Will Take Time to Have Impact

Published: October 07, 2008

By Anuradha Kher, Online News Editor, Multi-Housing News

New York–Days after the $700 billion financial bailout package was signed into law, the stock market continued to tumble. In the longest losing streak since January, U.S. stocks fell for a fifth day today.

Meanwhile, the Fed is now considering new actions to do some more damage control in the financial system. The Fed said in a statement this morning that it would begin to buy large amounts of short-term debt in an effort to stimulate the frozen credit markets. In addition, Chairman Ben Bernanke today hinted strongly that the Fed’s Board of Governors would probably lower interest rates at its next meeting, on Oct. 28 and Oct. 29, at least for the long term.

“There is no question that the market is moving sideways right now,� Lisa Maysonet, executive vice president, Prudential Douglas Elliman and founder, Group Maysonet, tells MHN. “But people on Wall Street have seen this coming for months, so it’s not a shock or a flood for them. The market has slowly been eroding, which is a natural healthy way of correcting itself. The tide comes and the tide goes.�

While many real estate developers complain that credit has all but disappeared, Maysonet is looking at the situation more positively.

“Our multi-housing inventory is down 8 percent from the last year. There is a glut of new development coming on the market and it remains to be seen how that will be absorbed. But basically, there are some indicators that are down and some that are up,� says Maysonet. She adds that for now, the multi-housing real estate market is pretty resilient. Activity is definitely down, 26 percent or so, condos are taking longer to sell, but there is still a lot of activity. Foreign buyers are still interested in New York.

“There is no doubt that people are affected psychologically by what’s going on in the stock market,� she says. But we need to keep in mind that “things are in the process of moving from crazy to normal and they are not as bad as they are made to look. Everything will work itself out. The financial bailout is like medicine and it will take time to make some impact,� explains Maysonet.

Looking for a place to invest out of your area or perhaps you live in a good area to invest and need a friendly reminder. Below is a list of affordable communities where housing has remained relatively stable and where future job growth looks promising.

It was interesting for me to find this list because a handful of these areas are where I am recommending people research when contemplating a move or looking for a good market for investing. I still truly believe there are good deals to be had in any market, and I always recommend people start their research and due diligence in their local market. Oftentimes people start looking in other markets while great deals are passing them by in their own back yard.

Cities Where Your Dollar Goes Furthest

Money goes further some places in the United States than it does in others.

Housing, in particular, has remained most affordable in the South and the Midwest. That’s because of less stringent building, an abundance of land and growing populations in the South, says Daniel McCue, a research analyst at Harvard’s Joint Center for Housing Studies.

To determine the cities that offer the best quality of life for the least amount of money, Forbes magazine calculated the ratios between a city’s median home price and its median household income. It also factored in projected job growth. And it compared median income to Moody’s Economy.com’s cost of living index.

Here are the 10 cities that it found to offer the best value, and the cities that it believes offers the worst value.

Cities Where Residents Get the Most for Their Money
1. Austin, Texas
2. San Antonio, Texas
3. Indianapolis, Ind.
4. Houston, Texas
5. Charlotte, N.C.
6. Columbus, Ohio
7. Dallas
8. Minneapolis/St. Paul
9. Denver
10. Portland, Ore.

Source: Forbes, Abha Bhattarai (10/10/2008

Posted by Carter Brown

I came across this note and wanted to highlight two important points. First is on housing inventory, or the number of homes for sale on the market. This is an indicator you want to keep your eye on over the next few months. This number has increased dramatically with the housing and economic slowdown and will be one of the indicators that signals strength coming back into the housing market. This note mentions the number of homes on the market decreased in September. While that is a good sign, we need a few months of continued contraction in that number before it becomes meaningful.

Secondly, I wanted to highlight Barclays Capital’s estimate of 811,000 bank-owned homes on the market. These banks have to do something with these properties and it has created a great place to be searching for and sourcing deals.

Housing Inventory Tightens in September

The number of homes for sale in the 28 markets tracked by online real estate company ZipRealty fell 1.6 percent in September.

Overall, the September inventory is down 7 percent from a year ago in the Zip Realty-tracked metro markets. Zip’s accounting includes only homes listed in multiple-listing services and many foreclosed homes aren’t included in those databases.

Barclays Capital estimates there are 811,000 bank-owned homes in the U.S., up from 129,000 two years ago, and predicts that the total will rise 60 percent before peaking late next year.

Source: The Wall Street Journal, James R. Hagerty (10/09/2008)

Posted by Carter Brown