Courtesy of the California Association of Realtors
Suze Orman changes homebuying advice
Now that we are seeing a rebound in the housing market, it is time for a new home buying strategy says Suze Orman. “Financial advice needs to change according to what is happening in the economy,” she says.
In today’s economy, with interest rates still low, relatively speaking, and home prices leveling out, Orman says potential homebuyers no longer need to make a down payment of 20 percent. “I’m fine if you can get a mortgage with 10 percent down,” says Orman. In addition, she still maintains that:
• You get a 30- or 15-year fixed mortgage
• You qualify for a 4 percent to 4.5 percent interest rate
•Your mortgage payment, property tax, insurance and PMI (private mortgage insurance), is equal to or less than your current rent
•Your job is secure
These rules shouldn’t be too hard to follow. Over the last three months, interest rates for a 30-year fixed mortgage have been hovering around 4.5 percent and the rates for a 15-year fixed mortgage around 3.6 percent.
Home prices are also expected to stabilize more so because investors, who have been driving up the home bidding, are expected to exit the market soon. According to a survey by ORC International, 48 percent of investors plan to curtail home purchases. (See Analysis: Waning investor demand opens door for first-time U.S. homebuyers)
While this is one of the best times to re-enter the market or get into the market, Orman says you must still be wise and make sure you have an eight-month emergency fund in case “something happens and you don’t have money coming in.”
See what else Suze Orman has to say every Saturday at 9 p.m. EDT on CNBC.
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In the South Bay, they’re called “off market.”
(….and Lynne Lear is an Off Market Specialist!)
Here is what the New York Times has to say about it!
For Your Ears Only
In New York and other big cities,
homes are selling as ‘whisper listings,’
without ever being put on the market.
September 22, 2013
No open houses, no advertising and not a single online photo. And yet a $27 million town house on the Upper East Side and an $850,000 two-bedroom co-op in Lower Manhattan had no problem finding buyers in the past six months. Neither home was listed on the open market.
Off-market deals, known as whisper listings, have long been the purview of the ultra-high-end market. Certain properties, often with price tags of $20 million or more, are shopped with a shroud of mystery among a small circle of well-connected agents instead of being put on the market for the world to see.
Now this hush-hush approach has spread to many price points, including apartments below $1 million, as sellers realize the advantage they have, thanks to the lack of apartments available for sale in Manhattan.
“Sellers feel cocky. Sellers feel like they have the ball,” said Brian K. Lewis, an associate broker at Halstead Property who in the last six months has taken on seven whisper listings from clients who do not want to list their apartments, but are willing to entertain offers. These range from a two-bedroom for $1.295 million on the Upper West Side to a downtown loft for $12 million. “In an improving economy with no inventory, they have the asset people want.”
The number of apartments for sale in Manhattan at the end of August was at its lowest level in at least 13 years, according to Miller Samuel, the appraisal firm. The shortage has forced real estate agents to use aggressive tactics to drum up inventory, from trolling through expired listings in the hopes of reviving a dead deal to sending letters to owners in choice buildings to try to persuade them to sell.
No one knows how many properties are sold through a well-placed word, but off-market tactics appear to be on the rise in major markets where there is a scarcity of inventory, including San Francisco, Los Angeles and Miami.
“There’s more of it now than ever before,” said Shaun Osher, the chief executive of the brokerage firm CORE in New York, noting he has a database of about 50 apartments owned by people willing to sell given the right circumstances. “We as brokers know everything is always for sale at a price.”
Plenty of circumstances arise in which it makes sense to keep a listing out of the limelight, ranging from celebrities who don’t want to read about their property transactions in the tabloids to sellers who would rather not upset tenants prematurely. Some sellers hope to avoid the hassle involved in getting a property in shape to show. Others don’t want a lot of people traipsing through.
In March, for example, a five-bedroom town house at 12 East 76th Street on the Upper East Side sold for $27 million in a whisper sale without any wear and tear to the carpets. The place traded after just three viewings.
Yet most brokerage firms are of two minds about off-market deals. On the buy-side, they are largely for it. After all, quietly gaining access to an off-market listing means less competition in a market where open houses often provoke a stampede. Uncovering a whisper sale — by say, chatting up the doorman — for a client unable to find something on the open market ultimately benefits that buyer.
On the sell-side, brokerage firms tend to discourage whisper listings. For one, the secretive nature of whisper listings means some brokers will inevitably be shut out of a possible deal. Moreover, sellers hoping for a quick full-price sale through a whisper listing, they say, limit the buyer pool and thus, their chance of getting the highest possible price.
“The seller is always going to be best served by making sure the property is exposed to the widest possible marketplace,” said Frederick Peters, the president of Warburg Realty.
In addition, a whisper campaign can be a tall order. “It’s sort of like saying, achieve this great price and do all of this but don’t tell anybody about it,” said Hall F. Willkie, the president of Brown Harris Stevens.
Finally, if discretion doesn’t move the merchandise, brokers can end up doing a lot of work for nothing.
In a whisper campaign, the broker frequently has no signed contract with the seller, a scenario commonly referred to as a “pocket listing.” When there is a contract, it often mandates a quiet sale. If the broker finds a buyer, he or she often collects both sides of the commission.
The 28% surge in Southern California’s median home price in June sets a record, exceeding any month during the housing bubble last decade.
By Andrew Khouri and Alejandro Lazo
Los Angeles Times
July 17, 2013, 6:23 p.m.
The housing recovery is looking more like another housing boom, with prices rising at a record pace.
The median home price in Southern California surged a stunning 28% in June compared with a year earlier — outpacing any month during last decade’s housing bubble. The gain puts the median at $385,000, up from $300,000 last June.
Some experts warn that prices, driven by short supply, should cool off soon. Investors who have flooded the region with cash purchases will probably retreat, they say, as a fresh supply of sellers and builders moves in. But others see nothing but higher prices ahead, with supply staying tight and buyers scrambling to close deals before the window of affordability slams shut.
Syd Leibovitch, founder and president of Rodeo Realty in Beverly Hills, said he expects prices to double from their bottom last year.
“You have a lot of room to run,” Leibovitch said. “Because historically, they always double in these cycles, and then they drop back a bit.”
For now, many home shoppers are tendering ever-higher offers in cutthroat bidding wars.
“They are following the fiddler,” said real estate agent Amber Dolle. “They are hearing that there is this huge panic to get into a home.”
The Southland’s recovery began last April, when the median home price rose 3.6% year-over-year, to hit $290,000. The recent increases now represent gains on top of last year’s increases, rather than rebounds from historic lows. And yet the percentages have continued to grow since crossing the 20% threshold in January of this year.
June’s increase is the highest percentage gain recorded by DataQuick since the firm started measuring year-over-year price changes in 1989. The current median is, however, still well below the peak of $505,000 reached in 2007, just before the crash.
The reality for buyers is financially and emotionally draining. Jessica Wilde and her husband Guy wrote a heartfelt letter to the seller of a Covina house, pleading the owner to choose them over an investor. They ultimately won the bidding war — if you define winning as paying $411,000 for a home listed at $360,000.
“I saw it one time for 30 minutes,” Wilde said. “When would you ever buy something that expensive, and see it for 30 minutes?”
Such scenarios are giving rise to increasingly optimistic predictions of future home price gains. Hedge fund titan John Paulson — who made a fortune betting against the housing market before the crash — now says he’s bullish on housing.
“It’s more or less seven years — seven years up, seven years down — very similar to the Bible,” Paulson said Wednesday during a conference presented by CNBC and Institutional Investor. “I think we are just at the beginning of the recovery. I would expect this recovery to continue for at least the next four, possibly seven, years.”
Southland buyers purchased 21,608 new and resale houses and condos last month, a 2.1% drop from June of last year, and a 6.2% decline from May, an indicator of tight supply. That’s the first time sales have declined over the year since September.
Absentee buyers — usually investors — continue to see bargains even with the rapid rise in prices. Their purchases accounted for 28.7% of homes sold, DataQuick reported. Cash buyers made up 30.2%. Both those percentages were declines from May, but still far above historical averages.
Glenn Kelman, chief executive of online brokerage Redfin.com, is in the camp of those who predict the market will chill during the second half of the year.
“The smart money has left the building,” he said. “There is not as much investor activity, as the investors have really tired of competing with regular home buyers. And what we have seen in the last few weeks has been a significant slowdown in demand.”
Richard Green, director of USC’s Lusk Center for Real Estate, said buying a home is no longer a “slam dunk,” given the rise in prices and interest rates, which have jumped a full percentage point since May to about 4.5%. Potential home buyers aren’t seeing their personal incomes grow enough to support such eye-popping home price gains, Green said.
“This has just got to stop pretty soon, and I think fall is probably when it will happen,” Green said. “People shouldn’t expect this to continue for very long. If that is the basis they are buying something — they shouldn’t.”
Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate, dismissed any notion that the market is headed for another bubble.