Archives

Now the interesting thing is a new survey came out, which apparently is also going to be a quarterly survey, released by the Urban Land Institute. They had 38 economists and experts come together did the same thing mashed all their answers together. Now they have a slightly different feel of where price is going to be.  They just think they’re going to be flat in 2012, not go down .72 percent, but that’s pretty close. In 2013 they think that price is going to go up two percent not the 1.39 the other experts thought. And in 2014 they think it’s going to go up about one percent more than what the other experts think. But the important thing here, the thing that we have to understand here, is everyone’s projecting this year price is going to remain flat. We can’t let prices go crazy because then the only houses that will sell are the distressed properties. We have to get the non-distressed properties priced correctly.  ~ Thank KCM Crew

I often say I don’t want you to sell any house for a dollar less than what it’s worth. But what we can’t do is keep on hoping it’s going to sell for $30,000.00 more than it’s worth. We have to get them priced right because we have two different things going here. We have to sell every house twice. We can tease the homeowner on that. We have to sell your house twice but the good news is I’m only going to charge you one commission. The first person we have to sell the house to, very obviously, is the buyer. The second person that we have to sell the house to is the bank when the appraiser comes out. And on the last post you can see even though it ticked down a bit in February the number of contract contract failures and most of them according to NAR occurred because mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price. So when we’re trying to sell to the bank, there are an awful lot of deals that don’t get through the bank or don’t get the bank the bank I should say because the appraisal didn’t come in right.  We have to price properties correctly right now and help those people move on with their lives. We have to let them understand that as these distressed properties come to market, it’s going to prevent them from jumping up in price. And even if they do find a buyer that might pay more than the house is worth, they have to then go through the appraisal process and prove to the bank that somebody should pay more than what it’s worth. Those are key issues right now, really key issues. We have to be on top of that. Demand is increasing dramatically. That doesn’t mean prices are going up. We have to clear through the inventory that exists out there right now before we can say yes it’s going to have a positive impact on pricing.  Let’s take a look exactly what experts say. The Home Price Expectation Survey  came out a couple weeks ago. This is what the 104 leading experts in the country believe. They surveyed 104, mashed their answers together, and this is where they think pricing is going. This year they think that as a nation it’s going to fall about one percent; pretty much flat. You can see where they’re projecting from 2013, 2014, 2015, and 2016. There’s 104 of the leading experts in the country were surveyed and all of their answers were meshed together. That’s what they came up with. ~ Thanks KCM Crew

As more houses are distressed sales, as a percentage of more houses are distressed sales, that’s going to put downward pressure on prices  in two different ways. Remember that the first way it’s going to put  downward pressure on pricing is the fact that it’s going to take some of the buyers. Some buyers that would buy a non-distressed property are now going to buy a distressed property because they’re getting a discount or they perceive they’re getting a discount. The second way it’s going to impact non-distressed properties is the more distressed properties that sell the more they’ll be used in appraisals. So don’t allow the sellers because they see all of this activity to think that they can now price the house $50,000.00 more.

Almost a million foreclosures are going to come to market this year; 500,000 short sales. That’s going to go ahead and press down pricing. It’s at least going to keep it flat, and we’ll get into a second what experts think on that. And some people are saying well all of this is going to go to the REO it’s a rental program. The government is coming out and going to rent all these real estate owned; these foreclosures.  Again, what’s guesstimated is only 100,000 and thank God it’s 100,000. But only 100,000 of the 2.6 million that exist out there, that’s they think is going to be cleared this year, will be cleared through that program.  We’re still going to be faced with distressed properties and distressed properties put downward pressure on prices. And we can see now that we’ve bottomed out. This is the percentage of of all properties that the distressed property sales make up. And we can see that it started to fall down in October and now it’s starting to pick up again.  I think as we move forward we’re going to closer to that 40 percent mark over the next couple of months. It’ll be interesting to look at that.

Here’s a chart from “Housing Wire”. It actually came from a JPMorgan study. This is what they project is going to happen in 2012. An additional 900 to one million foreclosures are going to come to market and be sold, short sales about a half a million, principle reductions for the interest about a half a million, have modifications, 360,000, other modifications 270. The REO to rental program they estimate will push out maybe 100,000 homes. I want you to look at each one of those numbers. That’s going to have an impact on pricing. So when people start seeing the demand’s really picking up, when they see more people at their neighbor’s open house, when they see sold signs going up in their neighborhood they might think that that gives them the liberty to raise their price. Let them know it’s not called the demand curve it’s called the supply and demand curve. – Thanks KCM Crew

In this chart you see the number of houses they took back, actually completed the foreclosure on, dramatically dropped. But the number of houses they put into the foreclosure process didn’t. Now the good news is the last quarter dropped some and that’s great news because I think as we move forward we’re coming out of this foreclosure mess. We’ll have less of a mess each month we move further. They’ll be less future foreclosures but there’s still a big difference between these orange lines and the red lines from the previous post. There’s still a whole bunch of inventory in the process of foreclosure. And again the National Mortgage Settlement gave the banks the roadmap on how to close on those houses without getting penalized.

This is the number of completed foreclosures from the fourth quarter of 2009 through the fourth quarter of 2011; the last quarter available. It just came out. The numbers just cam out. We can see that completed foreclosures are climbing, climbing, climbing. Then after the attorney general warned the banks wait a second you’re robo-signing these. You’re not filling out the paperwork properly. You’re not crossing every T. You’re not dotting every I. We’re going to punish you for that. Once that announcement was made the banks pulled back on how many houses they completed the foreclosure on. And we can see what took place after that. The third quarter of 2010 was the last quarter that skyrocketed with completed foreclosures. After that only if they knew they could do it did they foreclose on the houses and we see how much the lines dropped. – Thanks KCM Crew

Let’s take a look at the month’s inventory for homes for sale.  What we can see here is that it ticked up a little bit last month but it’s been dropping for almost a year now.  So a lot of people are getting very excited. Demand is way up, inventory is coming back to historic numbers, a normal number, so that should have an impact on pricing. What we have to realize again is there’s more inventory coming. That inventory that’s been delayed by the court systems, distressed properties, whether they be foreclosures or short sales, will start coming to market.  Thanks KCM Crews

We need to make sure that every single person that wants to buy a house is ready, willing, and able, and should buy a house, does buy a house. We have to drive this market back because still even though demand is very, very strong pricing is not determined by demand alone. It’s determined by supply and demand.

Here’s a list year to year how many short sales are completed in this country. And we can see every year more and more short sales get completed.  So you might be thinking back a couple years when it was almost impossible to get a short sale through. But this year, people are projecting over 500,000 short sales will be completed.  So there’s a tremendous demand right now, tremendous demand. Thanks KCM Crew