Are We Experiencing
Deja Vu All Over Again?
Recently, I have been
receiving calls and e-mail from past clients, and friends, asking,
"Myrl, are we experiencing the same kind of real estate bust we did
in the early 1990s?" Or they inquire, "Is this deja vu
all over again?"
There is no question
we are in a cool down of the real estate market here in the Greater
Sacramento area, but let me explain to you what I think makes this cool
down, or correction, so different than the melt down we experienced in
the early 1990s.
In the late 1980s and throughout
much of 1990, there had been a very large run-up of prices on homes in
our area. Like what we've experienced in recent years as
well. Those of you, who have read a newsletter I sent out about a year
ago, will recall, one edition titled, "Are we in a Bubble, or a
Bulge?" We were beginning to understand the market was ripe
for a bit of a correction, a slow down, or something of that nature.
However, in the real estate
recession of the early 1990s, we had local issues going on, which
contributed greatly to the meltdown we experienced. Namely,
Sacramento had the closure of three military bases, which catapulted the
area into recession, and a housing bust.
It took time for us to rebuild our
economic equilibrium, but when we look around today, we see much more
diversification of our businesses, corporations, and job market, which contributes to our economy and financial well being.
Prior to 1990, much of our
economic well being, was hinged on our having the military bases, up and
At the end of 2006, I assisted several first time buyers,
as clients, and I was very much taken by the number of
available vacant properties, we were viewing, in the entry level housing
In researching further, I found that
in the case of many of these vacant properties, there were homeowners, who
had moved up, and into new homes. And these folks were now left with their entry home to sell. I see wonderful opportunities for first
time buyers of these homes.
Although none of us has a crystal
ball (or perhaps some do), I am increasingly, hearing experts and other
Realtors, project the housing market will become buoyant once again, in
the first quarter of this year. Others project improvement this
summer. So perhaps this is a wonderful window period of buyer
Housing Will Recover
in First Quarter, Realtors Say
By Kathleen M. Howley
Dec. 11 (Bloomberg) -- The worst of the U.S. housing slump is over, according to the National Association of Realtors.
Sales of previously owned U.S. homes will grow at an annual rate of 6.29 million in the first quarter, snapping five consecutive quarterly declines, the industry's largest trade group said today. New-home sales, about 15 percent of the market, won't recover until 2007's fourth quarter when transactions will grow to an annualized rate of 967,000 after bottoming at 944,000 in the third quarter, Chicago-based NAR said.
Falling mortgage rates have fueled hopes the housing market would rebound and bolster U.S. economic growth after demand slumped for most of 2006. Home sales and ancillary purchases such as furniture account for 23 percent of gross domestic product, according to the Joint Center for Housing Studies at Harvard University in Cambridge, Massachusetts.
(cont. from column 1)
"There's a consensus emerging that the beginning of the recovery is probably going to be 2007,'' Todd Vencil, an analyst at BB&T Capital Markets in Richmond, Virginia, said in a telephone interview.
"The spring selling season is going to be crucial in determining exactly when it begins.''
The so-called spring selling season ranges from March to June and is the time when more than half of all U.S. home resales occur. The busiest time for the new-home market starts earlier, in February, as it takes about six months to build a typical house and most families want to move before the school year starts in September.
The median price for a previously owned home probably will be $222,600 this year, up 1.4 percent from 2005, and $224,700 in 2007, a gain of 1 percent. The median price for a new house probably will fall 0.5 percent to $239,700 this year and gain 0.8 percent to $241,700 in 2007, Lereah said.
Freddie Mac, the No. 2 mortgage buyer, said last week the housing market probably will rebound in the fourth quarter of 2007. Fannie Mae, the largest mortgage buyer, doesn't expect home resales to gain until 2008's second quarter, according to its latest forecast, issued Nov. 15.
"Three to five years may pass before housing starts and home sales return to their peaks,'' John Lonski, chief economist for Moody's Investors Service, said in a telephone interview. Sales of existing homes probably will sink 7 or 8 percent in 2007, compared with this year and new home sales may fall 9 or 10 percent, he said.
Rates for a 30-year fixed mortgage likely will average 6.6 percent next year, the highest since 2001 when it was 7.2 percent, NAR said. The average rate this year will be 6.4 percent, the trade group said.
Fixed rates have been falling for most of the last four months since reaching a 2006 high of 6.8 percent during the week ended July 21, according to Freddie Mac data. The average U.S. rate for a 30-year fixed loan was 6.11 percent last week, the lowest since January, according to the No. 2 mortgage buyer.
"Buyers, especially first-time buyers, with the combined benefits of seller flexibility and an unexpected drop in mortgage interest rates, have a window of opportunity,'' David Lereah, NAR's chief economist, said in the statement.
"These conditions will persist in many areas until early spring when inventory supplies are likely to become more balanced.''
A year ago, NAR projected 2006 housing resales would be the second-best on record, at 6.84 million. Instead they fell to 6.47 million, the third-highest. Its year-ago forecast called for mortgage rates to gain in the second half of 2006 to average 6.6 percent. The average has been 6.4 percent so far in the second half of the year, according to Freddie Mac data.
To contact the reporter on this story: Kathleen M. Howley in Boston at firstname.lastname@example.org
Selling Your House With a Sex Offender Next Door
Real Estate Adviser
by Steve McLinden • Bankrate.com
[Question]: Dear Real Estate Adviser, How do you deal with the presence of a registered sex offender living next door when you put your home on the market?
(continued on next column)
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[Answer]: Dear C.B.,
That's a good question and one that's been the subject of some debate in recent years, particularly with the nationwide rollout over the last decade of Megan's Law, which mandates that states must have a mechanism to make personal information on released registered offenders available to the general public.
You do have a dilemma on your hands, as do the neighbors of an estimated half-million other registered sex offenders across the U.S. You're torn between withholding such information to protect your investment while potentially letting a family with kids or other vulnerable people unwittingly buy your house. Disclosing the cold fact of the offender's presence certainly could make your resale value and potential-buyers pool shrink.
Ethics aside, here are a few facts. A growing number of states -- but not a majority -- require disclosure of a known sex offender in the neighborhood. However, home sellers in most states are now required by law to alert buyers to the availability of law-enforcement database disclosing the locations of registered sex offenders, which puts the onus squarely on the buyer to do the research.
Your agent should be able to tell you what your state's laws are and how to best handle a sale. But realize that laws don't protect sellers or agents who make intentional misrepresentations. In other words, if you're asked whether a sex offender lives anywhere in the neighborhood and you say "no" when the answer is "yes," you're potentially liable.
The National Association of Realtors' position is that local law enforcement agencies, not real estate agents, should be the go-to sources for sex-offender information, stating that Realtors, "should not bear the responsibility of notifying home buyers when such offenders live in a neighborhood." But some state laws supersede that sentiment.
Additionally, many local government and developers have moved to keep such offenders out of their neighborhoods. A variety of lawsuits involving this action and disclosure issues like yours have not established a clear legal precedent.
As for the economic fallout of having a sex offender living in close proximity to a home, estimates vary greatly. A 2002 study by Wright State University professors James Larsen and Joseph Coleman found that homes situated within one-tenth of a mile of a sex offender sold for an average 17.4 percent less than similar houses elsewhere. Homes between one-and two-tenths of a mile away sold for 10.2 percent less, while those between two- and three-tenths of a mile sold for 9.3 percent less. But a more recent study by Columbia University's Leigh Linden and Jonah Rockoff released in April 2006 showed homes within one-tenth of a mile of a sex offender fell by only a 4 percent average (about $5,500) while homes farther away showed no decline. I can offer no explanation for this wide disparity.
Before you do anything, I would first check to make sure the information on the next-door offender is current. Many offenders move and don't register their new address or the offender Web sites are not updated as frequently as they should be. In some areas, up to 20 percent of the listings are inaccurate.
But there is no arguing that sex-offender information is out there and readily available to all buyers as part of their due diligence. Some school districts monitor offender registries and send out notices when offenders move to the community. Interested residents can then log onto the registry site to get the name and address of the newest offender. In other words, offenders can no longer hide, and they're there for the finding.
For concerned buyers, the Web site www.klaaskids.org has an extensive bank of information on state-by-state registration requirements and community notification laws. The National Sex Offender Public Registry, www.nsopr.gov, has offender listings for 41 states.
C.B., you're in a tough spot. Look to a good adviser, either an experienced Realtor or real estate attorney, to help guide you.
To ask a question of the Real Estate Adviser, go to the "Ask the Experts" page and select "buying, selling a home" as the topic.