Prices nationwide rose nearly 6% last year — more than most ever expected, writes CNNMoney. While that has continued so far this year, leading builders to build again, prices in some places have risen faster than incomes. Eventually, they could fall back as homes become less affordable.
“If prices keeps going up at this rate for another six months, we will have a bubble, and people will get hurt,” Dean Baker, co-director of theCenter for Economic and Policy Research recently told Bloomberg.
Source: IMDb
Newlyweds Hugh Hefner and Crystal Harris may need to set a price limit for exchanging gifts. Shortly after Harris made her husband a homemade gift for his 87th birthday, the Playboy magazine founder dropped $4.995 million on a Hollywood Hills mansion for the 27-year-old Playmate.
The couple finally tied the knot in January. They’d been engaged for awhile, but Harris called off the wedding in 2011. Now the newlyweds have sealed the deal with their first real estate purchase. According toTMZ, Harris is a co-owner of the property.
The modern manse is constructed in a decidedly different style than the traditional and Tudor-esque architecture of the Playboy Mansion. The 5,917-square-foot home was built in 2011 with several modern amenities, as well as a view of the city lights. A gated entrance leads into a contemporary kitchen and up a floating wood staircase into a luxurious master bedroom and bath. Outside, a white-glass infinity pool and deck provide secluded relaxation while sliding doors out front provide open-air living space.
Hefner has lived in the famous Playboy Mansion for several years, but it may come as a surprise that the millionare doesn’t own it. According to details of the lease, filed with the SEC as an appendix to his employment agreement, Hefner pays rent for the 29-room house.
With the Playboy Bunny House (across the street from Hefner’s not-so-humble abode) recently listed for $11 million, time will tell whether Hefner decides to make the Hollywood Hills home is primary residence.
Hugh Hefner, Crystal Harris Own First Home as Husband & Wife | Zillow Blog.
Yesterday, the Teranet-National Bank National Composite House Price Index for Canada was released. It showed that 12-month home price inflation inCanada was down to 2.0%, the lowest level since November 2009. And given the huge amount of talk in Canada about a potential housing bubble, there is a worry that this is the beginning of a housing bust.
You can see from the chart provided by the house price index that there actually was a housing bust in Canada during the global financial crisis with year-on-year declines reaching 6%. What has separated Canada from other markets where there has been talk of a housing bubble is that Canada was able to reverse this trend and bring the year-on-year change to near record highs in 2010. SInce 2011 however, the pace of house price inflation has ebbed and the talk is now about renewed declines.
The talk of a bust is in part due to the soft numbers coming out of two principal bubble markets in Toronto and Vancouver. In Toronto, there has been massive condo overbuilding in the city center and especially along the Lake Ontario coast on Lake Shore Boulevard and Queens Quay where condos are now replacing former docklands. Anyone who has taken the Gardiner Expressway between western Toronto where and the city center in the last 5-7 years knows what I am talking about. There is a massive array of cranes building condos everywhere as this is “one of the largest waterfront revitalization projects ever undertaken in the world“. However, now sales of condos are plummeting in Toronto and condo leases are rising as owners are forced to become landlords. House prices in Toronto are still appreciating.
In Vancouver, house prices have been falling for some time now as are house transactions. According to the House Price Index, the year-on-year decline in prices is only 1.5%, however – though the decline is greater according to other measures. But this April marked the ninth consecutive month of price declines at a time when the Canadian economy is growing. That tells you that this market decline has not been precipitated by a decline in the broader economy as much as a combination of economic and internal market forces. Vancouver looks to have reached a top. Nearby Victoria is the only other major market that has falling prices nationally with prices now down 3.3% in the past year.
The question is what comes next. First, in the residential housing market, because transaction prices are huge compared to incomes, sales are lumpy because sellers often pull their listings rather than transact at a lower price. That means that consistently lower sales volume is the harbinger of declining prices and we are seeing a large drop in sales volume, particularly in Toronto and Vancouver. Second, the broader Canadian economy is still doing ok but there are troubling signs in the jobs market and in manufacturing data that suggest weakness. For example, the RBC Canadian Manufacturing Purchasing Managers’ Index ticked up in April to 50.1, barely above contraction, after a shock decline in March at 49.3. And the last six months of 2012 were the weakest since the financial crisis, just as they were weak in the US. Third, the Canadian government’s fiscal outlook is going to be a drag on growth and jobs according to the Canadian Parliamentary Budget Office. The PBO estimates that the 2013 budget alone will result in 14,000 job losses by 2016 and have a minor cumulative negative impact of 0.12% on GDP growth. Combining this with cost measures from 2012, gets you to 62,000 job losses by 2016. In sum, the economic and housing market-specific outlook is mixed and not supportive of continued high levels of house price inflation.
Another impediment here is household debt. As of the end of the last quarter, household debt in Canada had risen to a record165.0% of GDP, with the lion’s share of this debt coming from mortgages. The ratings agency Standard and Poor’s has said that because of the slowing of the jobs market and the modest fiscal drag, the next couple of years will be determined by Canadians’ decision to “spend or to save”. And given the high debt levels, we should expect household spending to be restrained. This is borne out in polls that show Canadian consumer confidence waning.
Could this mean a bust, though? No one in officialdom is talking that way but that is the concern. At a minimum, I believe we should count on monetary policy to be loose, not just to offset the fiscal drag but also as a safeguard against a bust.
Has house price deflation begun in Canada? | Credit Writedowns.
Over the last few days we’ve been tackling the problem of ‘not enough time to blog’ that many bloggers struggle with. I started by sharing 7 tips for busy bloggers on how to find time to blog and then had 14 of my blogging friends share a little about their blogging routines.
When I asked these 14 bloggers about their routines I also asked if they had any tips for other busy bloggers. I’m glad I did because collectively they give some great insight below.
Mortgage rates dipped for the fifth consecutive week, following a first-quarter economic-growth estimate that fell short of expectations.
Rates on 30-year fixed-rate mortgages averaged 3.35 percent with an average 0.7 point for the week ending May 2, down from 3.4 percent last week and 3.84 percent a year ago, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey. The drop put the 30-year rate not far above the record low of 3.31 percent seen during the week ending Nov. 21, 2012.
Rates on 15-year fixed-rate mortgages, 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans and 1-year Treasury-indexed ARMs also dipped. Source: Fannie Mae
In the hottest markets around the nation, “for sale by owner” signs are popping up in yards as penurious owners try their hands at selling their own homes. It’s another sign of recovery that’s raising echoes of the real estate boom seven years ago.
“In Silicon Valley we have returned to the market conditions where nearly everything sells as soon as it hits the MLS. This seems to cause two things to happen; the return of “quick buck agents” and FSBOs. The “quick buck agents” are those who get their license in a hot market hoping to make a few dollars off friends and family. They’re the ones who come and go with every boom market. The bigger concern is the FSBO,” blogged Los Altos broker Bryan Robertson on the Active Rain site two days ago.
Within hours several dozen Realtors chimed in.
“We are seeing a new wave of FSBO signs in 2013. With the return of the strong seller’s market, it’s just a fact. It’s just something new to work with again, when they had virtually disappeared in the past few years,” agreed Realtor Michelle Francis of Buckhead Atlanta.
“FSBO’s have made a comeback here in the Phoenix metro area, especially in the lower priced home market. When homes were bought at the bottom of the market and now want to be sold, some people can only sell for a small margin. Our market has not recovered in some areas enough to pay all the real estate costs for the seller. Therefore, he does a FSBO,” reports Associate Broker Barb Merrill.
“Bryan, I haven’t started seeing lots of them yet, but I expect to!” said Connie Harvey, a Nashville Realtor.
“It is much easier to sell a home on your own now…at one time Realtors pre-qualified the buyer now banks give them a letter of prequalification….with homes selling fast you can anticipate more and more FSBOs Of course once the negotiating starts the sellers lose their stomach for it in many cases, ” said Edward Gilmartin of Boston Homes.
“Had a FSBO call me today saying he was using the comps I GAVE HIM and go it alone. But.. Understand he would pay me 3% if I brought him a buyer. Imagine that……” said John McCormack of
Realtors report their strongest defense against sellers who go it alone are legal requirements that sellers disclose problems with their homes in writing or risk liability. “The number one thing sellers forget to do is provide proper disclosures. Even with all the advice out there, it’s unlikely a seller will prepare the documents to cover all the disclosures necessary. They might even be hiding something. This is one of many reasons why you need an agent,” said one. ” If you get sued for not disclosing something, you’re likely to lose out on any savings you might have achieved. It’s not worth the risk,” agreed another.
For sale by owner transactions, or FSBSs, reached an all-time low of 9 percent last year and in more than half of those, the seller already knew the buyer so a great deal of marketing was not necessary. In the seven year buyer’s market since the real estate crash in 2007, FSBOs have dropped like a rock, from a high of 14 percent of all transactions in 2004. Now however, reports from the across the nation suggest that there may be more FSBO yards displayed this spring buying season than in nearly a decade.
One way sellers can save on commissions today is to use a flat fee broker, who charges by the service provided rather than a percentage of the transaction.
According to the National Association of Realtors (NAR), more sellers are choosing to discounted agent services. The percentage of homes sold on a flat-fee basis rather than a commission grew from one to three percent. For the past few years, 20 percent of homes were sold by agencies that provided limited services such as listing on the MLS. The growth in flat-fee listings is coming from sellers need to go through brokers who are members of multiple listing services to get listed, but want to save on commissions by doing their own marketing.
On RealtyTrac last week, OurBroker Columnist Peter Miller argues that brokers are more important now than ever, even for the buy side of a transaction.
“When I first started in real estate, do-it-yourself transactions actually made some sense. Contract agreements ran one or two pages and real estate brokers did not have much training beyond what a reasonably informed member of the public might have. In fact, when I first began looking into real estate, I found it was possible to get a six-month temporary brokerage license, meaning you could buy and sell property for others with no training and no testing at all.
“Long ago the idea of buying and selling without a broker was both attractive and doable. That’s just not the recommendation I would make today. I now tell owners to list houses with successful professionals and I tell purchasers to find an experienced buyer broker as well as a good home inspector. With something as important as a home purchase getting such help in today’s world simply makes sense,” he wrote.
