Real Estate

From press release to newsprint

2008-08-19T11:12:55-06:00

The Idaho Statesman ran a story yesterday asking suggesting the housing sales numbers might indicate a bottoming out of the market. There are several problems with this sort of story. From start to finish the story bears a strong resemblance to the blogs about Boise real estate which have been trumpeting the return of a healthy market for at least as many months as the market has been in a spiral.

Though it wasn't in blog form I remember being told nearly nine months ago by an agent how prices had "recovered" and sellers were getting asking price and higher for their places. The message then was that we needed to act quickly and buy now. Oddly those same houses, still on the market, are now priced lower than they were last winter. In the last month Boise has been struck by the loss of several hundred jobs. Although some of those jobs will actually be cut over the next few months it is still a blow to confidence in consumer's minds. Yet the article in the paper would have you believe that a 3% decrease in available housing is a significant indicator of a bottom in the market.

Although these market forces don't garner a mention in the story, or undoubtedly in the press release it was based on, there are some real numbers that should have been in the story. The big one is foreclosures and banked-owned properties. Certainly in our neighborhood there has been a greater than 3% decrease in the number of homes on the realtors MLS. That's because more than 3% of the homes are that were on the market in July 2007, and were listed in the MLS are no longer. Some are banked owned and listed as for sale by owners, others are being foreclosed and set for auction. None, however, have made really made the number of available houses on the market decrease.

What would have made for a good story and a responsible piece of journalism is a story about how the MLS numbers might change but are becoming less indicative of the market as sellers are forced to find alternative routes to handling their property. How many unwilling landlords have properties rented to cover some portion of the mortgage? How many buyers have decided that they simply can't afford to buy gas for a real estate agent's Hummer and are selling on their own? If the market is picking up why is the 2009 Parade of Homes going to be free when the 2008 version charged admission? Those would have been much more interesting than reprinting the real estate association's press release.

Real Estate Bust

2008-05-18T20:30:05-06:00

Nary a day passes without some prognostication by our local realtor bloggers saying everything has turned around and the market is headed back up. What is most surprising about these is not that there are sales people who believe that they can still sell snake-oil but that there are sales people who haven't taken the time to understand that 2008 is not 2006 or 1989. Consumers are better informed and have access to more information than at any point in the past.

What is most surprising is that some of the very same folks who are trying to high-pressure customers into buying now are doing so online. In the very same environment that gives consumers access to the actual information about what is going on. Real estate sales people can say "the market is turning" till they are blue in their faces but we'll still know that the rate of foreclosures is increasing. We'll still see the new house each week that is bank owned on our streets.

When will somebody who wants to make a killing in real estate really get it right? Another recent example of how real estate sales people are stuck in a bygone era happened when I stopped in an open house this afternoon. I was told that leases were "prohibited" by the CC&R's for a community. Of course such a restriction struck me as completely unreasonable. Walking through one of the houses I took a moment to look at the CC&R's lying on the kitchen counter. Flipping through the book to the lease section revealed that there were no restrictions on leasing. There was a restriction on posting "For Lease" signs on the property and provisions that made clear where the responsibility lay in the event of a violation of the community association rules. So although a lease is permissible and although the owner of the building might be interested in such an arrangement the sales person was interested only in enriching themselves.

CC&R's that are bad for the environment

2008-04-23T23:57:04-06:00

Having looked at houses over the years I've seen some really bad CC&R's. But some go beyond being annoying to being downright harmful to the planet. Take for example this except from the Shamrock West website pointing out the most commonly violated CC&R's:

SECTION 9 – LIGHT POLE
“Each home is REQUIRED to have a photo-sensitive pole light installed in the front yard within (10) feet of the property line, designed to switch on automatically at sunset and off at sunrise with a minimum bulb power of 40 watts.”

So not only does this contribute to unnecessary light pollution, but it wastes energy. Living in the next neighborhood over we don't have this silly rule. And the neighborhood is much nicer for it. Sadly most new development CC&R's I've looked at lately have these same clauses requiring residents to waste energy.

The second third of life

2008-04-05T16:41:23-06:00

Singing Phil Vassar's song Tim McGraw tells us:

I think I'll take a moment, celebrate my age
The ending of an era and the turning of a page
Now it's time to focus in on where I go from here
Lord have mercy on my next thirty years

I'm measuring not in 30-year spans but in a third of life spans. Having just put up the score card on the first third it is time to turn to the second third. My family was very nice and procured some long-desired toys that will help focus my next third on staying in better shape. The Cannondale parking area now has another member. Sadly, it is also the first Cannondale that I have owned which does not bear the "Made in USA" label. The last Cannondales I purchased came with a manual declaring their proud factory and a video telling the company's tale. Granted the video was a VHS tape which I would have to hunt for a way to play now days but it remains a sad marker on the changing of the times and I contributed to it. Cannondale and Trek among others do still make bikes in the USA but they are the higher end bikes.

Being busy is a good thing. Having made the transition to working for myself being busy is great as it means there are clients who are paying for work to be done. Of course at the same time being "out sick" is not the option it was when one had "sick leave" and vacations are "times where I'm not paid" instead of purely relaxing. It is all to easy to be completely consumed in work in this environment. However, one of the things that I have neglected is spending enough time at the gym and in other pursuits away from work. It is easy to believe that if I work ten hours a day that somehow working 20 hours a day would be twice of good. Of course it isn't. Any productivity will tell you so. One of the great reminders of these new toys is just what good thinking and helpful ideas come from the "rest of life" that get lost in the work-a-holic world.

As a quick example it was while I was out getting feed for the horses and listening to Marketplace on the radio when it finally hit me. The big deception that the local Boise media has been spoon feeding consumers about the Real Estate market. Sure we're used to real estate agents who try to spin the market into some reason to be buying. It's appalling just how many agents are telling the "it's not very bad here" tale. Yet talk to anybody in the business, contractors, builders etc. and you get a very different story. The real issue, which I'll be writing more about soon, is gaming the system with relistings. Relisting a property is the practice of taking it off the market and putting it back on so that some unknowing dope of a buyer will think "this has only been on the market for 45 days" when it has been sitting for months or even a year or more. The Real Estate associations here turn a blind eye to this practice and blithely report the number of days that a house was listed before it sold.

Markets have changed. In a normal market relisting is a gimmick that might help with a sale. If a buyer has a decent agent it won't do much as the buyer will be told what the game is. In this market, however, there are developers with houses sitting and sitting. Things aren't selling. Not in the 45-days or 70-days that the news tells us the real estate people provide. The massive numbers of relistings are serving to provide a falsely positive picture of the market in the Boise area.

Some areas of the country, according to the Marketplace story, do more to prevent this practice. Here, however, the game is being used to deceive the public into believing things aren't as bad as they really are. So not there's one more thing on the to-do list which is going to take some digging to put together.