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April 26, 2006 at 5:08 AM in reply to: NBC SanDiego is asking for your feedback on the 19,200 inventory level #24586
powayseller
ParticipantWhat I wrote makes no sense at all. Let me try again.
A new payment structure would consist of hiring a buyers’ agent on a fee basis. A seller, who uses the “old” 5% commission system, does pay the commission for the buyer’s agent. But then the buyer would expect his agent’s half of the 5% commission to be rebated to him (the buyer), and only pays the realtor for the actual service provided. This is almost a system used by ZipRealty. Their agent rebates the buyer some percentage at closing.
Realtor salary would get downward pressure. As they do less, they earn less. This may be a welcome change for realtors, who currently spend so much time on marketing their services and driving clients around, neither of which directly benefits their paycheck.
ParticipantOutsourcing is putting downward pressure on white collar jobs, while illegal immigration is putting downard pressue on blue collar jobs. The “jobs Americans won’t do” cliche is totally bogus. What happened is that the illegals have depressed wages so much, that Americans are not willing to work for that wage. If you pay someone the market wage, you will get plenty of applicants. Econ101. The point is that wages are stagnant or declining, and there is no reason to think they will go up. Real hourly wages are the leading indicator of consumer spending, and I assume, for home purchases as well. Until wages go up, people can’t pay more for housing, regardless of how loose the lenders want to get.
ParticipantThis is purely anecdotal, but I think my piano teacher’s wife, a realtor, is falling on hard times. The piano teacher used to refuse weekend lessons. Today he told me he is now teaching on Saturdays!!! Thus, he is taking more students, or having to work Saturdays to get students who are not available during the week. To me, this indicates they need the extra income.
One more thing: they bought a new house last summer. I can only guess it was bigger than the previous house, since her commissions had been so lucrative for many years.
Participant#3 is a great point. I have no answer. How would the realtor’s role as consultant benefit the buyer? Sellers are not going to lower their price when a realtor’s fee goes down. I’ve heard of realtors who give buyers a rebate. Perhaps a consultant-realtor will give me his/her commission back as a rebate, and I only pay for the services I used.
ParticipantWell, sdr, I hope you will do well. There will always be folks buying and selling homes, and there will always be a need for realtors, although the business model will change to more of a consulting role. It’s a change I would welcome too. I will use a realtor for my next purchase, and hope to do it on a fee per service basis.
The main problem is getting sellers to be realistic. Why doesn’t the NAR run a campaign to manage seller expectations? Their whole “spiel” of “housing will go up 5-10% this year” set up seller expectations for continued gains. So their goal of keeping the market going has backfired. The NAR needs to reevaluate their advertising. Until sellers understand the market has changed, transactions will be reduced, and realtors won’t get paid. Put some pressure on the NAR to educate the public!
ParticipantI agree with you Carolyn. This bubble is bursting because the consumer just can’t qualify for these high loans. I think the County Assessor lists sales prices, and several years ago there was a site advertised on TV, where I snooped around and looked up neighbors’ prices.
I also don’t think that seeing a previous sales price has much to do with what sellers will offer. In a rapidly rising market, it didn’t matter what the previous price was. You pay market price, regardless of what the seller paid! You may not like it, but if the seller can get a 20% markup in 2 months because that’s the market rate, and you don’t offer it, then someone else will offer that price.
I experienced this myself, when we moved here in 1999. I looked at homes which had sold for 20-30% less just a year ago, and thought, “I’m not going to give this seller such a huge profit margin!” So we didn’t buy, and the market kept going up, and eventually we had to accept that sellers were getting rich off us and made an offer. The house we bought was marked up 30% vs. its last price just 2-3 years prior.
There is no turning back. The leading indicators are in place. Even if interest rates had not moved up, these LEADING indicators are showing us that the market is turning:
inventory is up,
DOM is up
building permits are down.It doesn’t matter that construction hiring is up, median price is up, etc. All of these are LAGGING indicators. Construction hiring is up as builder scramble to finish projects, or they hire to build out their record high permits they got in January. But new permits are down, and construction employment will follow.
April 25, 2006 at 9:23 AM in reply to: Housing Bubble Caused by Overly Agressive Banks – John Talbott #24560ParticipantSell Now, John Talbott, Chapter 7.
ParticipantExcellent points! If we had more data at our hands, we could use realtors as consultants to complete the transactions.
Realtors get paid so much to be compensated for the great amount of time that goes into marketing their business, advertising their listings, and driving clients to homes.
A realtor should be paid hourly or by the job like a CPA, a professional engineer, or an attorney. They can charge a fee for listing your home, a fee for handling the trsnsaction, a fee for giving you a sales analysis. Then you decide how much you want to spend on advertising your home.
Realty-A-La-Carte.
ParticipantI think zillow got in over their head with posting appraisals (or guesstimates). They’re right on if a house hasn’t been remodeled, otherwise they’re way off. Since their appraisal figure is so prominently posted, their divergence from reality makes them look bad. That’s what I don’t like about them. But good point – we can still use the site to check on prior sales.
ParticipantWe moved to Poway for the schools, as do most parents. You can also find good schools in LaJolla and other coastal cities (google San Diego API or SAT), but we couldn’t afford to buy a house there. You also have to deal with overcast and cold weather if you live near the beach.
Some parents do choose private schools, but plenty of rich families send their kids to the public schools. We have a Montessori preschool, so there’s something also for the little one.
Poway residents passed Proposition U, a $200 million bond measure to update our aging schools, a couple years ago, and all 3 of my kids’ schools are currently being remodeled. It’s about time. The schools are crowded; we have about 30-50% more students at each school than they were built to handle. I don’t know if this is unique to Poway, though.
We found our rental by checking the San Diego Union Tribune, craiglist, and getting MLS for-rent listings from our realtor. In December, there were many options, and rents were a little over $1/sq ft.
4S Ranch has very small yards, and the houses are too close for my liking. But many families do like the area, and I checked some rentals there.
Powy is the City in the Country, with horse property sprinkled throughout. Built up by mid-1980’s, the city has more open space acres than any other city in the County. I can’t remember the exact numbers now, but I think Poway has 13,000 preserved acres, while the other 18 cities in the County have only 20,000 acres. Because they do not allow developers in Poway, the city has remained stagnant in size, and traffic is not a problem. The only construction going on is infill type of stuff.
ParticipantYou raise some valid counterpoints. If wages go up, then house prices wouldn’t have as far to fall to revert to the mean. However, wages in this country have been stagnant for over 10 years. Outsourcing and illegal immigration have put downward pressure on wages. Ex: wages for Computer Engineers are down over 10% in the last few years. And this is happening despite high inflation (I know, CPI is low, but I don’t buy it).
So I respectfully disagree, and maintain that housing prices will fall, and wages will continue to stay stagnant or fall in real terms.
ParticipantYes, I’ve heard stories of sellers who regretted not taking an offer, because they wait many months for the next offer. You guys are in a good position, to keep shopping for the best deal. Eventually you’ll find a seller who’s more motivated. Maybe in 3 months, this house will still be there, and they’ll have chased the market down.
ParticipantWe bought the property in Spring 2000, just at the beginning of the bubble. Our house burned in the Cedar fire, and we rebuilt, from Oct 2004-Sept 2005.
ParticipantI recommend that anyone who either wants to take profits, or who still has a mortgage, Sells Now.
I am puzzled by the people who say renting is not advisable. I wrote a long post about the advantages of renting. I have 3 children, and my entire family loves our rental house. We live in a great neighborhood, they attend the same schools as before the move, the house is cozy and at 2100 sq ft big enough for us. We are painting this summer, and going 50/50 with the landlord on installing an A/C. We plan to be here 4-5 years.
I know this might make some people mad at me, but I’m used to that, so here it goes: women who prefer losing $200K-$500K equity just because they want to “own” rather than “rent” are fools. Usually it comes down to wanting to be able to paint. Go ahead, paint your rental. Geez…. Put in a garden. I just had some curtains made for my rental.
Anyway, it’s obvious to anyone with a slight knowledge of economics and commons sense (all excesses correct), that housing will revert to the mean.
The only reason to stay in a house in San Diego, would be if it’s paid off, and you cannot afford the rent, or you like having no rent/mortgage. Taking profits is always a great alternative.
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