29,000 Foot Peaks and 3,000 FSF Houses
What do 29,000 foot mountain peaks and 3,000 finished square foot ("FSF") houses have in common?
They don't exist. Or at least, almost never.*
When I see a house listed on MLS ("Multiple Listing Service") with 3,010 FSF (or 2,043 FSF, or similar), I'm immediately skeptical. My thought is, the Realtor knows that Buyers tend to look in discrete ranges -- like over 3,000 FSF, 2,000 to 2,500 FSF, etc. -- and tend to "stretch" sometimes to meet those cut-off's.
I can't prove it, but I'd guess that at least half the time, when a house on MLS just trips an obvious round number, in fact, it's real size is below it (sometimes, well below).
*I heard a story -- not sure if it's apocryphal or not -- that the surveyors who first measured Mount Everest came up with exactly 29,000 feet. However, because they thought that "headquarters" would automatically assume that they'd rounded, they changed the number to 29,029 feet.
Showing posts with label housing statistics. Show all posts
Showing posts with label housing statistics. Show all posts
Monday, April 6, 2009
Thursday, January 29, 2009
Dec. New Home Sales
New-Home Sales Down (Again)
According to the Commerce Department, sales of new, single-family homes decreased by 14.7% in December to a seasonally adjusted annual rate of 331,000.
Frankly, given the economy, accelerating layoffs, etc., it would have newsworthy if new-home sales hadn't dropped hard.
Silver linings? Not if you're a builder, a contractor, or a developer.
However, it's worth noting that 2008 now shapes up as the worst year for new housing since 1982. If 2009-2026 is half as prosperous as 1983-2000 turned out to be, things will be ok (heads up in 2027).
Second, prices stop falling when supply shrinks and demand grows.
Right now, policymakers are focused on goosing demand (lower interest rates, first-time Buyer tax credits, etc.). However, reducing the supply of new homes -- new construction is also down big -- serves to correct the market equally well.
According to the Commerce Department, sales of new, single-family homes decreased by 14.7% in December to a seasonally adjusted annual rate of 331,000.
Frankly, given the economy, accelerating layoffs, etc., it would have newsworthy if new-home sales hadn't dropped hard.
Silver linings? Not if you're a builder, a contractor, or a developer.
However, it's worth noting that 2008 now shapes up as the worst year for new housing since 1982. If 2009-2026 is half as prosperous as 1983-2000 turned out to be, things will be ok (heads up in 2027).
Second, prices stop falling when supply shrinks and demand grows.
Right now, policymakers are focused on goosing demand (lower interest rates, first-time Buyer tax credits, etc.). However, reducing the supply of new homes -- new construction is also down big -- serves to correct the market equally well.
Tuesday, January 27, 2009
Nov. - Dec. Housing Statistics
Foreclosures Explain Latest
Housing Price Drop
The most recent batch of housing statistics -- from S&P/Case-Shiller and NAR -- show that housing prices are continuing to fall nationally. Depending on how you slice and dice the market (sale pairs, top 20 markets vs. all markets, all homes vs. those under $417k, etc.), the year-over-year annual decline ranged from 13% to 18%. Nationally, the cumulative decline from the 2006 peak now is about 25%.
As a boots-on-the-ground realtor, mostly what I'm seeing is that the activity is at the low end of the market, specifically in foreclosures. Locally, lender-mediated transactions (foreclosures and short sales) now account for a staggering 40% of Twin Cities housing transactions.
What market-wide statistics obscure is that there's a disconnect in the pricing of foreclosures, and "traditional" sales.
Depending on the condition, foreclosed properties can sell for discounts of as much as 50%-75% from what they'd fetch in "mint," move-in condition. On top of run-of-the mill neglect and dated features, many foreclosed homes have freeze damage (busted pipes and radiators), no functioning heat, numerous code violations, and a trail of tax and third party liens. It's also the case that they are overwhelmingly concentrated in what were already lower-priced neighborhoods to begin with.
Compounding matters further (if that's possible), most banks won't lend on condemned homes (automatic with no heat). That means that prospective Buyers must hunt for a bank that will, or pay cash. Then, they must figure out how to finance all the aforementioned repairs and updates.
When everything is said and done, the home's purchase price can be little more than a down payment on all the post-closing expenses to come.
How much of a discount would you need to take on such a project??
At this point in the downturn, more and more transactions meeting the foregoing description are being mixed into -- and driving -- the housing statistics regularly being reported by the media.
If you separated the foreclosure sales from the non-foreclosure sales, you'd undoubtedly find that the former dropped much more than 17%, while the latter dropped much less.
P.S.: I discuss the "bifurcated market" phenomenon more fully in two other posts, "Housing's Wal-Mart Effect" and "A Tale of Two Markets."
Housing Price Drop
The most recent batch of housing statistics -- from S&P/Case-Shiller and NAR -- show that housing prices are continuing to fall nationally. Depending on how you slice and dice the market (sale pairs, top 20 markets vs. all markets, all homes vs. those under $417k, etc.), the year-over-year annual decline ranged from 13% to 18%. Nationally, the cumulative decline from the 2006 peak now is about 25%.
As a boots-on-the-ground realtor, mostly what I'm seeing is that the activity is at the low end of the market, specifically in foreclosures. Locally, lender-mediated transactions (foreclosures and short sales) now account for a staggering 40% of Twin Cities housing transactions.
What market-wide statistics obscure is that there's a disconnect in the pricing of foreclosures, and "traditional" sales.
Depending on the condition, foreclosed properties can sell for discounts of as much as 50%-75% from what they'd fetch in "mint," move-in condition. On top of run-of-the mill neglect and dated features, many foreclosed homes have freeze damage (busted pipes and radiators), no functioning heat, numerous code violations, and a trail of tax and third party liens. It's also the case that they are overwhelmingly concentrated in what were already lower-priced neighborhoods to begin with.
Compounding matters further (if that's possible), most banks won't lend on condemned homes (automatic with no heat). That means that prospective Buyers must hunt for a bank that will, or pay cash. Then, they must figure out how to finance all the aforementioned repairs and updates.
When everything is said and done, the home's purchase price can be little more than a down payment on all the post-closing expenses to come.
How much of a discount would you need to take on such a project??
At this point in the downturn, more and more transactions meeting the foregoing description are being mixed into -- and driving -- the housing statistics regularly being reported by the media.
If you separated the foreclosure sales from the non-foreclosure sales, you'd undoubtedly find that the former dropped much more than 17%, while the latter dropped much less.
P.S.: I discuss the "bifurcated market" phenomenon more fully in two other posts, "Housing's Wal-Mart Effect" and "A Tale of Two Markets."
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