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The Crossland Team
Sylvia Crossland, Broker Steve Crossland, MPM (512) 301-5811 |
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Austin Realtors continue to disappoint me
December 24, 2008
I just finished entering the last listing we’ll take this year (that I know of) into the Austin MLS. I know, it’s Christmas Eve, but I’m all done shopping and don’t have anything better to do before we have a house full of relatives later tonight.
Anyway, we signed the listing agreement earlier this month, but had to wait for the tenants to move out, then get the home cleaned and touchup painted, then get our stager in and then the virtual tour people. Now that it’s in “model home” showing condition and ready to sell, I’ve entered it into the MLS. It’s really not a good idea to enter a listing before it’s 100% ready for the market, and we try never to do so.
After I enter a new listing, I always do an MLS search for the subdivision and take a look at how our listing sits among the competition with regard to price and presentation - to see it as other agents will see it in a search result. Let’s take a look at how we stand up against the competition on this one.
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Austin Real Estate Market Update - Nov 2008 Sales
December 22, 2008
The sales volume in Austin fell of a cliff for November, with only 914 sales of single family homes. That represents a 43% decline in the number of homes sold. The number of “Not Solds” (expired or withdrawn) took a big jump also, to 62% of all listings that departed the Austin MLS in November. If you remember last month’s market update, I predicted the Not Solds will hit 70% in December 2008. November stats haven’t changed my mind.
Let’s look at the breakdown of Austin single family home sales for November 2008:
• Number of homes sold is down 43% (was down 28% last month) from 1,594 Nov 2007 to 914 Nov 2008.
• Average list prices in Austin were down 5.29% over the same month last year to $250,609. This means sellers/agent are doing a better job of pricing the home correctly out of the gate.
• Average sold prices in Austin were down 6.17% over the same month last year to $238,072 from $253,718 a year ago. So, list prices are down 5% but sold prices are down 6%, which tells me sellers are still chasing the market down.
• Median sold price was down 1.87% to $185,000. Last year in Nov it was $188,527. Median prices had been holding their own each month this year, so the downturn in this particular metric is something new.
• Average List to Sold price ratio is 95.00%, down from 95.89% the same month last year, again demonstrating that sellers are still chasing the market down.
• Avg sold price per square foot is down 7.41% to $109 compared to $118 a year ago in November. This is a huge drop.
• Avg days on market is up 12 days (18.75%) from 64 last year to 76 this November.
• Median days on market is up 11 days (24%) from 45 days last year to 56 this year.
• Number of “Not Sold” (exp or withdrawn) is up 43% over the same month last year, to 63% of all removed listings compared to 46% for the same month last year.
None of this is favorable if what we want is a normal, rising market, but in the context of elswhere in the country, it’s actually pretty good.
The stats outlined above are shown in the chart below.
| Austin Real Estate Sales Market Update - Nov 2008 Sales | ||||
| Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data | ||||
| Oct 2008 | Nov 2008 | Nov 2007 | Yr % Change | |
| # Sold | 1249 | 914 | 1594 | -42.66% |
| Avg List | $258,869 | $250,609 | $264,601 | -5.29% |
| Med List | $199,900 | $192,000 | $195,955 | -2.02% |
| Avg Sold | $247,383 | $238,072 | $253,718 | -6.17% |
| Med Sold | $195,500 | $185,000 | $188,527 | -1.87% |
| Sold/List % | 95.56% | 95.00% | 95.89% | -0.93% |
| Avg SQFT | 2160 | 2180 | 2151 | 1.35% |
| Med SQFT | 1988 | 1984 | 1952 | 1.64% |
| Avg $ SQFT | $114.53 | $109.21 | $117.95 | -7.41% |
| Avg DOM | 69 | 76 | 64 | 18.75% |
| Median DOM | 50 | 56 | 45 | 24.44% |
| # Expired | 667 | 662 | 558 | 18.64% |
| # Withdrawn | 1068 | 833 | 810 | 2.84% |
| Not Sold | 1735 | 1495 | 1368 | 9.28% |
| Not Sold % | 58.14% | 62.06% | 46.19% | 34.37% |
So, are these grim numbers cause for alarm? Not at all, and here’s why.
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Dotzour’s 4 stage plan to fix America’s housing problem
December 22, 2008
Texas AM economist Mark Doutzer Dotzour has a new video outlining his 4 stage plan to fix America’s housing problems. Regular readers know Dotzour is my favorite economist on these issues, not to mention a funny speaker if you ever get to see him in person.
He breaks it down like this; at its essence, the housing crisis at present is a supply and demand problem. There are too many empty homes and not enough demand. He proposes:
1) Curtail the supply, especially new home construction.
2) Slow foreclosures.
3) Increase demand, particularly by incintivizing qualified investors.
4) Lower interest rates (this has already started to happen)
You can watch the video at this link. It’s about 7 minutes long. Or you can read the transcript below.
Bold Government Can Solve America’s Housing Crisis
by Mark Dotzour, Chief Economist, Director of Research
Real Estate Center at Texas A&M UniversityAmerica’s housing market problem is fairly simple. Somewhere between one and two million vacant
homes need tenants.In some communities, vacant homes are not being cared for, deteriorating the quality of the
surrounding neighborhoods. This is causing further price declines, which lead to more foreclosures. The
fact is supply is running far ahead of demand. What has to happen for the national housing market to
stop falling?We need to decrease supply and increase demand. This can be done in four stages.
Stage One
First, we must curtail the supply of new homes in the market. Virtually everyone agrees that falling
home prices are at the center of the current economic and financial crisis in our country. Why are new
homes still being built in cities where prices are collapsing and foreclosures are skyrocketing? Even in
places like Detroit and Sacramento where foreclosures are at the highest levels, thousands of new
homes are still being built.
Yuppy in Beamer is Butt of East Austin Joke
December 20, 2008
I stopped in Sam’s BBQ on East 12th street today for a late lunch. Sam’s is a gritty Austin BBQ joint in the heart of East Austin. I still had an hour to kill before picking my daughter up from Kid’s Acting on E. MLK and I was hungry, so I stopped in. I ate some great BBQ, drank some iced tea, read the newspaper, and watched some of the Longhorn’s basketball game while there.
As I departed, just before 3PM, a large group of about 8 or 10 Hispanic men were eating on the outside patio. As I started across 12th Street to my truck, a late model BMW with a mountain bike mounted on top, and being driven by a young Anglo man, turned into Sam’s BBQ driveway.
At that moment, one of the men barked, in a voice that could have been Cheech Marin’s, “there goes the neighborhood”. This was followed by boisterous laughter, me included. I gave the guy a lookback and a big grin with one of those “dude nods” of acknowledgment, that silently says “good one, man”.
The timing of the remark and the accompanying upscale imagery was impeccable. But contained in that 4 word wisecrack was a succinct commentary on the gentrification of East Austin.
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Today is Drop Dead Day for Many Austin Realtors
December 15, 2008
Today is the deadline for Austin Realtors to pay annual board dues. It cost $347 to remain in business as an Austin Realtor for 2009. That may not sound like much, but many agents don’t have the money, and they don’t have any listings or active buyers. For some, it’s a very depressing decision to make - stick with it or give up. Many of course do give up, which is probably the best decision.
Looking at the dues I’ve paid into the Austin Board of Realtor and the MLS for 2008, the total is $1,133.50 in ongoing dues and fees. So agents who do pay the $347 due today, will have to cough up another $393.25 in Feb, and that amount again 6 months later.
The thinning out of agents is healthy for our industry. Those who monkey around doing a deal or two a year part time really shouldn’t be practicing real estate, in my opinion. I don’t see how anyone can maintain an appropriate level of expertise and knowledge if they are not in the mix day in and day out, closing sales, dealing with problems, helping people and learning. And that means that the people they do help are not receiving a level of perspective and knowledge that busy, experienced agents can provide.
So, while I don’t wish ill will for anyone, a lot of Austin Realtors won’t pay their dues today, and good riddance to them. They need to go find something they can approach with more passion and success. This business isn’t for everyone. In fact, given the failure rate of Realtors nationwide, year after year, good markets and bad, it’s a business for very few.
Why do so many fail?
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NY Times article on why now may be the best time to buy a first home
December 10, 2008
An article in the Dec 6th NY Times (page B1 of the New York edition) does a good job of outlining why the present, not the future, may be the best time for new home owners to get off the sidelines and buy a house.
Here are a few quotes from the article:
Five or 10 years from now, when the financial crisis has ended and housing prices are up smartly once more, we will look in the rearview mirror and realize that we missed a golden age for first-time home buyers. Then, everyone who sat on their down payment savings accounts for a few years too long will kick themselves for not taking advantage of what may turn out to be the buying opportunity of a lifetime for those who can qualify for a mortgage.
Unfortunately, we do not know when this golden age will begin, because we will be able to identify a bottom to the housing market only with the benefit of hindsight. But as it does with the stock market, the moment will probably arrive when everyone is feeling the most pessimistic.
This is how Sylvia and I feel about the late 1980’s and early 1990s in Austin. Back then, when there was still carnage in the streets from the combination of the Texas Oil Bust, the 1986 Reagan tax law changes and the collapse of the Savings and Loan Industry, RTC and HUD homes could be picked up for $30K all over Austin. I looked at a home on a cherry lot next to Stacy Park in Travis Heights that sold for $50K in 1989. I still remember the seller’s ad in the paper, which started with “Blind or Stupid?”. I was the latter. Seller was offering owner financing at 7%. That lot alone is worth $500K today. We didn’t buy anything back then because we didn’t know any better. We were not forward looking.
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Modifying Mortgages Isn’t Working
December 9, 2008
Was just reading the following in my Realtor email news update:
From: Daily Real Estate News - December 9, 2008
Just because their mortgage was modified doesn’t mean that a troubled home owner is out of the woods yet.More than half of loans modified during the first three months of 2008 were again 30 days delinquent just six months after the terms of the loans were changed, reports John C. Dugan, comptroller of the currency. After eight months, 58 percent of the home owners were delinquent again.
Is anyone surprised? This would be like me showing up at eviction court and telling my tenant “You know what” I’m going to give you a break. Let’s forget the amount you are behind and lower your rent $100/mo. Will that help?” I can promise you I’d be back at eviction court within 6 months, if not sooner.
These mortgage bailouts will be no different. This is not to say I don’t have sympathy for the home owners caught up in this, or the communities that are being racked by foreclosures, but the government’s ham handed bailout efforts seems only to be postponing the default, not preventing it. The buyers who got in over their heads should be the primary recipients of the consequences of their poor decisionmaking, not tax payers at large.
My solution? Let the foreclosures happen and let’s clear the deck of these bad loans and unqualified home owners.
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Housing prices fall below replacement costs, with further to go
December 4, 2008
This article below came in my Daily Real Estate email news today. Says that housing prices in many places are now below replacement costs, meaning you can buy an existing home for less than it would cost you to build one.
Then, in the same newsletter, another article (also below) saying that prices have further to fall. Wow. Of course Austin, except for specific exceptions, is not an area where housing prices have plunged because we had no huge price runup that need undoing.
Daily Real Estate News | December 4, 2008
Housing Prices Fall Below Replacement Costs
Housing consultancy Global Insight reports that nationwide, housing prices are now 3.8 percent undervalued, based on total market value. It says values fell at a faster pace in the third quarter after stabilizing earlier in the year.According to Global Insight’s calculations, prices are now 6.5 percent below their 2007 peak. They fell at a 6.9 percent annual pace affecting 241 of the 330 metropolitan areas analyzed by Global Insight. That’s up from 150 metro areas affected in the second quarter.
Contraction is most severe in the Southeast and Southwest with only the Pacific Northwest remaining overvalued, Global Insight says.
Home prices fell more than 10 percent in the third quarter in nine central California communities. The Central Valley communities of Merced, Stockton, and Modesto have seen property values fall to less than half their 2005 value. Twenty-nine metro areas in California, Florida, and Nevada – at one time among the most overvalued – have seen price declines in excess of 30 percent. Similar steep price drops are occurring in Michigan, northeast Ohio, the southern metro areas from Charlotte to Atlanta, as well as in New England.
“Weak economic conditions and wary consumers continue to hold the housing market back. Although many areas are seeing home sales increase, it is largely due to foreclosure homes being snapped up at significantly discounted prices. As the inventory of these homes is removed from the market, prices will remain on a downward path,” predicts Jeannine Cataldi, senior economist and manager of Global Insight’s Regional Real Estate Service.
Then, in the same newsletter, we have the following:
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The Difference Between a Functionary Agent and a Fiduciary Realtor
November 29, 2008
Every now and then I wander into some online Realtor Forums to share and trade ideas, see how markets are doing in other places, and see if I can answer questions or learn something new. The most disturbing thing I come across regularly is the misguided mindset of so many Realtors about their role as an agent. Most recently, this came up again around the issue of real estate inspections and whether or not we as agents should recommend specific inspectors to our buyers.
One agent posted “I offer them the Yellow Pages or to use a recommendation from a friend” to find an inspector. God help us all.
Why would a professional real estate agent hold this lame position? First, her Broker’s attorney may insist upon it. It’s a risk avoidance issue. Agents accept greater risk when we put ourselves on the line with specific recommendations for inspectors, lenders, vendors, etc. I understand that viewpoint, but I think it’s a copout. What it says is that the agent is more important than the client. That it’s more important for the agent to protect herself legally than to provide better than mediocre service. Whose interest is being served by that, and what does it say about the agent who follows this approach? It says that you the client are not very important.
Sylvia and I do recommend specific inspectors to our buyers, and we absolutely DON’T want our buyers randomly picking inspectors from the Yellow Pages. I also attend the inspection and estimate the repair costs of items noted on the inspection report. I then advise and educate the buyer about which items are normal and expected versus items for which we should seek remedy or cost offsets from the seller.
In other words, I’m in it up to my elbows with the buyer during the inspection process. What am I supposed to do - hide out in a coffee shop during the inspection and tell my buyer to call around for some bids if he wants to know how much a new water heater and a roof repair will cost?
Most competent real estate attorneys will tell me I shouldn’t be this involved. But I think the risk and liability in mine and Sylvia’s transactions is reduced by our greater involvement, not the other way around. So I don’t listen to the attorneys because I have no desire to be a “do nothing” Realtor who avoids questions and doesn’t provide information for fear of being sued. I instead choose to provide a high level of service to our clients. I choose to be a “Fiduciary” instead of a “Functionary”.
This difference between a Fiduciary and a Functionary is spelled out on pages 96 and 97 of The Millionaire Real Estate Agent book.
The chart below outlines the differences.
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Mortgage Rates Plunge Below 5% - But Does it Help Investors?
November 26, 2008
From my Daily Realtor news feed:
Mortgage rates declined Tuesday after the Federal Reserve said it would spend $600 billion to support the mortgage securities market.
Rates fell to 4 7/8 percent, a 1 1/8 percentage point decline. David Beadle, president of BestInfo, said it was the sharpest one-day decline since 1988.
“I hope that the effect is that it brings more investors home to investing in housing,” said Alfred DelliBovi, president of the Federal Home Loan Bank of New York. “[Investors] have had a sense in the markets that anything connected with a mortgage is bad” even though most people pay their home loans, he said.
This is great news for buyers, but I have a news flash for Albert, who says “I hope that the effect is that it brings more investors home to investing in housing”.
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