A special thanks to all the people that provided answers Dave Smith, Casey and Trisha Ross, Duncan Pollock, Daniel Gaitan, Toby Barnett, and Chadly from Agents Online!
We have recently asked several Realtors and real estate professionals around the country to answer a couple questions about the current real estate market that they serve. This is their perspective on the current housing market –
Dave Smith of Real Estate Blog Lab
Tucson, AZ
http://www.realestatebloglab.com/
Q: What city/market(s) and state do you serve?
A: Tucson, AZ
Q: Are you noticing an increase in homebuyer activity in your market (over the last 2 months)?
A: Yes, we are seeing more buyers and more sales in our market in the past two months.
Q: Do you think the real estate market has “bottomed out”? If not, when do you believe the real estate market will “bottom out”?
A: In Tucson I called bottom about a month ago. “Bottom” is a very broad term. If it is sales prices of homes only then we have a little way to go. But if it is overall cost to buy a home we have already bottomed out. Mortgage rates have gone up almost 1/2 a percent in our market in the past 40 days. Therefore, while the home prices might be going down, the cost of buying is going up. It is like looking to your right for a clear indicator while getting hit by a bus coming from the left.
Q: What factor do you think played the largest role in bursting the real estate “bubble” and why? e.g. Lending practices, oversupply, media attention
A: This answer lies in the reason for the bubble in the first place. “Fog a Spoon Get a Loan” was the motto over the past 3 years. That all stopped in Aug. 2007. While our Tucson bubble was moderated by three things, we still have seen only moderate retreating in the overall value of most Tucson homes. Again, this depends on where these homes are located and when the home was purchased.
The three things -
1. Prices were high enough in some areas that some couldn’t afford the interest payments. Can’t pay the interest, no loan.
2. HOA’s passed restrictions on investor properties. “If you want to buy here you have to live here.”
3. New Construction limited sales to only persons who were going to make the home their primary residence. You could buy just one property and you signed an agreement it wasn’t an investment property.
So when the Credit crunch hit the Mortgage industry in August last year you can see the direct correlation between closed sales and that event. They dropped like a rock. However, sale prices stayed where they were until January 2008, since then we have seen a gradual decline in the Average Sale Price each month. You can see that in the first post link above.
Casey and Trisha Ross
Welcome Home Realty
Avondale, AZ
Q: What city/market(s) and state do you serve?
A: We currently serve the Southwest area (Avondale, Goodyear, Litchfield Park and Buckeye) of the Phoenix Metropolitan area.
Q: Are you noticing an increase in homebuyer activity in your market (over the last 2 months)?
A: We have noticed an increase in buyer activity in the Southwest market over the last 12 months primarily in the residential resale market primarily in the bank-owned property sales.
Q: Do you think the real estate market has “bottomed out”? If not, when do you believe the real estate market will “bottom out”?
A: We do not believe the market has bottomed out quite yet. A fair amount of the decrease in home prices to date can be attributed to many real estate investors who simply had to walk away from investment properties as rising adjustable interest rates dictated. Because of the economy and job market, this may cause a second considerable wave of foreclosures stemming from adjustable rate mortgage increases and job losses/corporate cutbacks. Contingent upon the economy and federal aid to homeowners, the real estate market may not hit bottom in Arizona until the 3rd Quarter of 2009, possibly 1st quarter of 2010.
Q: What factor do you think played the largest role in bursting the real estate “bubble” and why? e.g. Lending practices, oversupply, media attention
A: The biggest factor that played the largest role in bursting the real estate bubble was irresponsible lending. Many homebuyers in order to qualify for homes were enticed into obtaining an adjustable rate mortgage that would far exceed their means to repay the loan. In some cases, stringent underwriting policies were simply not in place and/or adjusted and many no-doc loans were also offered to homebuyers.
Duncan Pollock
Ontario, Canada
http://www.duncanpollock.com
http://www.iciniagara.com
Q: What city/market(s) and state do you serve?
A: The Niagara Peninsula, Ontario – communities such as St. Catharine’s, Niagara Falls, Welland, Fort Erie, Port Colborne, Fonthill, Niagara-on-the-Lake, etc.
Q: Are you noticing an increase in homebuyer activity in your market (over the last 2 months)?
A: No noticeable change in buyer enquiries. Still sufficient to keep me busy (and I now act, as I’ve done for the last six years, as an Exclusive Buyer Broker).
Q: Do you think the real estate market has “bottomed out”? If not, when do you believe the real estate market will “bottom out”?
A: The Canadian market has NOT bottomed out, although major centres like Toronto and Vancouver aren’t as hot as they’ve been for the past two years or so. Prices are tending to be less easy to obtain – as opposed to a (frightening) pattern of multiple bids and sales above asking.
Q: What factor do you think played the largest role in bursting the real estate “bubble” and why? e.g. Lending practices, oversupply, media attention
A: Our bubble hasn’t, in fact, burst. However, the local media’s ongoing reports of the US subprime situation is probably making buyers, lenders, and, for that matter, the real estate industry less optimistic than they’ve been for some long time. In fact, there’s perhaps a more cautious attitude becoming apparent. It isn’t making deals harder to find, but most agents are having to tell clients that the US difficulties are not expected to flow over into Canada.
Daniel Gaitan
Trend Setter Realty
San Antonio, TX
http://www.searchsahomes.net/
Q: What city/market(s) and state do you serve?
A: San Antonio/Bexar County Texas
Q: Are you noticing an increase in homebuyer activity in your market (over the last 2 months)?
A: Yes, seems like some buyers have finally gotten off the fence.
Q: Do you think the real estate market has “bottomed out”? If not, when do you believe the real estate market will “bottom out”?
A: Well Real Estate markets are local, and I’m lucky here in San Antonio that we weren’t hit as hard as markets in states like California, Florida, etc.
Q: What factor do you think played the largest role in bursting the real estate “bubble” and why? e.g. Lending practices, oversupply, media attention
A: Lending Practices, Lenders were approving loans to anybody that had a pulse. People were purchasing homes they could never afford and now they are paying the price for it.
Toby Barnett
Barnett Associates Real Estate, LLC
http://www.barnettassociates.net/
Q: What city/market(s) and state do you serve?
A: Barnett Associates Real Estate, LLC serves the Snohomish County real estate market, just north of the Seattle metro area in Western Washington. The area is beautiful and scenic with the Puget Sound being back dropped by the Cascade and Olympic Mountains. It quite a wonder on a sunny day, yes there is sunshine in Washington contrary to popular belief, and it is impossible for me of thinking about living anywhere else.
The profile of Snohomish County real estate is pretty simple, mostly single family home that is 1,200-1,400 sq/ft, 3 bedrooms, 2 bathrooms and a 2 car garage on a 6,500-9,000 sq/ft lot priced around $280,000. Single family homes are still affordable, school districts are smaller and people feel like they have some space away from their neighbors versus living farther south in the Seattle metropolitan area.
Q: Are you noticing an increase in homebuyer activity in your market (over the last 2 months)?
A: Surprisingly yes. Our real estate market has been somewhat isolated from the national real estate fallout. Part of this isolation is due to a strong local economy backed by major employers like Boeing, the Navy (both located in Snohomish County) and Microsoft (King County). These last two months has shown an increase in buyer activity since prices have softened to a more favorable pricing point.
Q: Do you think the real estate market has “bottomed” out? If not, when do you believe the real estate market will “bottom out”?
A: I would like to think it has but the true honesty of the matter is I do not know. With many families across the nation still feeling the effects of adjusting mortgages and it could be sometime in 2009 before the bottom is reached. But concentrating on my local market, it seems to have stabilized with some signs of the market returning to normal levels.
Q: What factor do you think played the largest role in bursting the real estate “bubble” and why? e.g. Lending practices, oversupply, media attention.
A: I think a combination of items played a factor, loosing lending restrictions, massive supply and the media’s portrayal of doom and gloom.
Primarily the lending industry is to blame. As the industry strived to make everyone a homeowner it violated lending practices which has kept the industry stable. Buyers who could not qualify for conventional programs where offered creative financing options that allowed them to purchase and even more importantly purchase at the top of the buying range. Then when interest rates jumped families instantly could not afford the home they purchased.
At the same time new construction was going up faster than we could keep up with. Builders/developers where buying up lots, 5-15 acre parcel and subdividing, tying recently annexed with the hopes of selling fast for large gains. The price of a bare bones lot climbed about 30k in a short period which translates into higher priced new construction homes. In the resale side, we seen many families selling their home to cash in on the instant equity and either moving up or down in housing size. The number of resale’s coming on the market coupled with the new construction boom made the supply far out outstretched market demand.
The media did not help the situation either. Since the media has such a large influence on a massive audience what they publish or say has a major impact on people’s thought process. Example: when Jim Cramer announced on the Today Show not to buy a home you will lose money. That was about the worse thing for the industry even though there was some truth to it. After that point we felt the market absolutely stop. No calls, emails no nothing. It just stopped. Those types of publications can have a devastating effect on the national economy which is no good except the ratings of the media outlet.
The hopes are that we have can learn from these lessons and better foresee the outcomes of booms and busts. When the real estate industry takes a major impact its reaches stretch much farther than homeowners. From the lenders to the plumbers, everyone feels it.
Chadly
I don’t have an email address or a real name for that matter, but he was kind enough to take time to answer these questions so I decided to post them. If you would like to contact Chadly you can visit his Agents Online profile.
Q: What city/market(s) and state do you serve?
A: I am currently in Florence, SC.
Q: Are you noticing an increase in homebuyer activity in your market (over the last 2 months)?
A: My city has become a landing point for large companies. This has somewhat created a bubble and the major driver for new construction. Relocation is a strong force here.
Q: Do you think the real estate market has “bottomed” out? If not, when do you believe the real estate market will “bottom out”?
A: As far as the bubble goes, I believe it’s mainly media driven. There have been some bad lending practices also, but these things have been going on for years. I think it’s going to tough for anyone to call bottom in any market.
Q: What factor do you think played the largest role in bursting the real estate “bubble” and why? e.g. Lending practices, oversupply, media attention
A: From past experience every time someone tries, they always fail. If you were able to predict the bottom it could be very profitable, because once you hit the bottom the only place to go is up.
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I am an investor in the Philadelphia market and we are holding pretty strong. No major gains but in the low single digits. I am noticing more buyer activity with my houses that I am selling.
Jonathan Christopher of Short Sale Way
I am glad to hear that Jonathan. If we do another survey should I keep you in mind?
iam new to this business.. thanks for your article. it gives me more ideas.
Great stuff! I am all about anything that has to do with numbers and statistics esp when it comes to real estate. I’ve been researching Dallas Fort Worth Market very closely here lately and comparing to other markets that have come real close to bust. Thanks for information and keep me in mind for any future surveys.
Kenneth Cox, Dallas Broker
You’re welcome, Kenneth! But all the credit goes to the real estate professionals who took the time to share their views on their local markets with our readers.
We’ll be sure to take you up on your offer, as I’m sure you have much to share about the DFW market area.
It is always good to see how other markets compare in the industry. This was indeed a very comprehensive overview. I thank you for this.
There is so much talk about property right now with the global crunch and all, it is hard to keep track. Posts like yours certainly help to do this.
Way to go.
You mentioned HOA’s started requiring all units to be owner occupied.
This is the dumbest move that an HOA can make.
If you want to lower property values, this is the best way to do it. A vacant property and/or foreclosed property is way worse than having a few renters in the ‘hood. More sensible HOA’s place a limit of 25% on no. of units that can be rented out.
At the same time new construction was going up faster than we could keep up with. Builders/developers where buying up lots, 5-15 acre parcel and subdividing, tying recently annexed with the hopes of selling fast for large gains. The price of a bare bones lot climbed about 30k in a short period which translates into higher priced new construction homes. In the resale side, we seen many families selling their home to cash in on the instant equity and either moving up or down in housing size. The number of resale’s coming on the market coupled with the new construction boom made the supply far out outstretched market demand.
Its amazing to see how vastly different markets are. I read an article in the wall street journal saying that if you took out the 4 worst performing markets in the US over the last year, the market has actually just been flat.
Hopefully todays $15,000 tax break will help to get this moving