Do Price Reductions Signal DEPRECIATION?
Price reductions do not signal depreciation… yet.. and they won’t until we see people actually sell their homes for less than what they paid for them.Read More
Goldman Sachs Still Buying Homes; Rates Dropped The Most In 2 Years Last Week – Why?
Goldman Sachs-Backed Funds Bought Entire Housing Development I saw this recent New York Post article on Twitter yesterday and thought it would be another nice share for any potential buyers who might have cold feet. TLDR: Two Goldman-backed ventures just spent $45 million to buy up an entire housing development in Florida. The big funds […]Read More
Is The Fed Trying to Tank The Housing Market – Or Just Slow It Down?
Agents in many of the markets we work in are telling us that they are now finally seeing a slowdown in the market. One agent who lists high-end homes in the Bay Area told me that he “used to tell sellers to remodel their kitchens, update flooring, repaint walls, and spruce up landscaping before listing […]Read More
How To Finance In-Law Units; Flight To Safety Again
CA recently passed a bill (SB9) that eases zoning restrictions and makes it far easier for homeowners to add extra units to their properties. These units are known as Accessory Dwelling Units (ADUs), Granny Units, or In-Law Units. Per the WSJ, there are some 2.5 million single-family homes in California that are eligible to have […]Read More
China’s Massive Housing Bubble? Will It Affect Us?
160 Million Units For Sale In China (vs. 3 Million In The U.S.) China has somewhere between 55 to 65 million unoccupied properties, depending on the source, and an additional 93 million units under construction. Famous financier, Hugh Hendry, was on this Rebel Capitalist Podcast in December discussing China’s extremely precarious property market – and […]Read More
Don’t Waive Contingencies For Condo Purchases – 12 Condo Considerations
We sometimes have very strong buyers waive contingencies when they make offers on condos. But, no matter how strong a buyer might be from a credit, asset, and income perspective, deals can still readily die if the condo or the Homeowners’ Associations don’t pass muster. For example, litigation, too much commercial use, ownership concentrations, and […]Read More
Housing Inventory Crisis! How Bad Is It?
Picture yourself walking into your local Whole Foods and seeing 2/3 of the shelves entirely empty. That is exactly the state of the single-family residential real estate market today, according to Jason Hartman, a true expert when it comes to residential real estate. Mr. Hartman was recently on the Rebel Capitalist YouTube show making this […]Read More
Zillow Exits iBuying & Proves ALL Is Right With the World
BETTING ON CANADA! In the 2010 Olympics, Canada played the U.S. for the gold medal in hockey – and I upset a hockey fan and friend by betting on Canada. My bet on Canada was really a bet on “efficient markets” because Canada’s team had a larger aggregate payroll in the NHL. So, efficient markets […]Read More
2 Reasons the Current Realtor/Agent Model Is Here to Stay (And Won’t Be Replaced by Tech)
BOUGHT CAR ON INTERNET IN MINUTES – IN 1999 (BUT NOT NOW) In 1999, I needed a new car and a friend of mine (a “car guy”) suggested I buy a Lexus GS400 – and he gave me all of the specs. I typed all of the specs into a car-buying website that was available […]Read More
The Real Reason Zillow Stopped Buying Homes & Why It’s Good For Housing
Zillow announced yesterday that they are no longer buying homes (through the end of the year). It was all over the headlines, and numerous people sent me links to the announcement. At first, I thought: “oh, no… I wonder if their algorithms are predicting a softer housing market…” But then I started to see links […]Read More
Conventional vs. Conforming vs. Government vs. Jumbo Loans; Bias For Action
CINNABON STORY – BIAS FOR ACTION I heard this story on a podcast a few months back and just had to share it. When Cinnabon first started, they could only afford to lease very small spaces that required them to place their ovens in front; as a result, passersby could easily smell the aroma when […]Read More
Real Estate Commissions; Antitrust; Follow The Money; OPEC; Why It’s A Moot Point
OPEC BRINGS AMERICA TO ITS KNEES! OPEC is probably the most famous “cartel” of all time b/c it effectively brought America to its knees in the 1970s with its oil embargo and price floors. OPEC or the Organization of Petroleum Exporting Countries was founded in 1960 and by the 1970s it had so much power, […]Read More
Housing Inventory Shortages – Is Help On The Way?
INVENTORY SHORTAGE – WILL THERE BE RELIEF? Homebuyers nationwide are facing severe housing inventory shortages while median home prices continue to rise. Pundits are weighing in on whether relief is on the way or not. Ken McElroy says relief is on the way. In this four-minute video, real estate guru Ken McElroy points out why […]Read More
Listing Agents Speak! (About Representing BOTH Buyers & Sellers/Dual Agency)
On Friday, I blogged about Buyers Working Directly with Listing Agents Instead of Using a Buyers Agent, and I received a surprising amount of feedback. What was even more surprising though was that most of the feedback was from listing agents as opposed to buyers agents – and all of them were opposed to dual […]Read More
Divorces Continue To Surge! How They Impact Mortgages And Real Estate
COVID changed everything – including marriage, as many couples realized they didn’t like each other when they had to actually spend time together. 😊 Even Bill Gates is getting a divorce, as we learned recently. I am sure being cooped up in a 66,000 square foot house with another person is enough to drive any […]Read More
The Other Reason Housing Inventory Is So Low (Not What You Think)
In the 1970s, when inflation was out of control, the press was always looking for scapegoats to blame like “middlemen” and “greedy businessmen” when the cause was really at the feet of Fed and Government policy. That is largely the situation today with respect to housing, as Fed and Government Policy – intended to help […]Read More
Low Rates Make Real Estate Investing And Airbnb More Viable
My wife Heejin is looking at an investment property in Plano, Texas that will sell for about $510,000. It also has a tenant in it who is paying $3,700 per month. With 25% down, the PITI is around $2,600 – assuming a no-points loan in the 3.25% range. Note that investors can put 20% down […]Read More
Getting The “Best Deal” Cost Client $300,000; It’s %’s; Putting Money Where Your Mouth Is
In 2010, we had a client shopping for homes in what was and still is one of the hottest markets in the entire country – “the Rockridge” neighborhood in Oakland, CA. He was well-qualified with ample cash and low debt ratios, but he was determined to get the best deal possible; he was convinced that […]Read More
“America’s Largest Landlord Adds $1 Billion For Its House Hunt” Why It Matters, And It Does!
The title of today’s blog was lifted directly from this WSJ article. I blogged last week about why inventory levels are so low. One of the reasons was investors buying up properties en masse, and today’s WSJ article is case and point. Per the WSJ: “Real-estate investors have a mountain of money looking for a […]Read More
Condos Not Always “Cheaper” Than Single-Family Residences; Condo Questions To Ask
I read recently that the median single-family home price in Marin County, California is almost $500,000 more than the median condo price. So, condos are way cheaper, right? Not always, and here’s why. HOA DUES HOA dues are significantly higher nowadays for a variety of reasons (more liabilities; more maintenance needs for older buildings; more […]Read More
Why Home Prices Did Not Crash With 15% Unemployment? Planet Money Explains
After the COVID-19 crisis was in full force, I wrote several blogs in March and April pointing out why I thought housing prices would not crash as a result of the crisis. In response, numerous agents emailed or called me to suggest that I was being too optimistic and potentially misleading people. So, was I […]Read More
Capital Gains Taxes On Real Estate
CAPITAL GAINS 101 The IRS and many states collect capital gains taxes on the difference between what someone pays for an asset (their “basis”) vs what they sell it for. This tax applies to most assets such as stocks, cars, boats and of course real estate. EXCLUSION AMOUNTS The IRS allows property-sellers to ignore capital […]Read More
What’s Up With Compass Real Estate? Hype vs. Reality?
NYU Professor, Scott Galloway, recently released a fascinating six-minute video about Compass Real Estate. Galloway was the one who recently illuminated WeWork’s glaring weaknesses, so he looked into other SoftBank investments to see if they had similar issues, and he focused on Compass. Because I have been utterly fascinated by Compass’ fast expansion, and because […]Read More
Condo Spot Approvals (again), Reserves, Time-Frames; Rate Volatility
RATE VOLATILITY On Monday, a top producing loan officer/friend told me over dinner how much he loves the lack of volatility in the current rate environment. He explained that it allows him to float (not lock in rates) for many of his borrowers until he has the time and capacity to process their loans. But […]Read More
Will a Recession Tank Housing Prices? Probably Not…
I know numerous people who are anxiously waiting for the next recession b/c they expect housing prices to tank. They can’t wait to swoop in and find bargains like the many that were available after the 2008 meltdown. BUT, according to Appraisal-Blogger-Extraordinaire, Ryan Lundquist, housing prices don’t always “correct” or decrease during recessions. Prices often […]Read More
Tenacity & Focus vs. Training, Seminars, Self-Help, Organizing, Inputting, & Fixing Your Business
Of all the agents we work with (over 800 and counting), one of the most successful, by far, is a buyer’s agent on a very successful team. She is successful via every major metric – units, total volume, and income. What makes her so successful though is simply her tenacity and focus. She does not […]Read More
Leverage Your Database Before Amazon Does; Amazon Teams Up With Realogy
Most readers have probably heard this already but Amazon is teaming up with Realogy to match homebuyers with real estate agents through a program called TurnKey. This is a huge deal b/c of the size of the partners. Amazon is the world’s largest retailer and Realogy, which owns NRT, Better Homes, Century 21, Coldwell Banker, […]Read More
New Condo Complexes/Phases Do NOT Have to Be Complete
Many loan officers and real estate agents mistakenly believe that condo projects and/or phases within a project must be complete before units within them are eligible for mortgage financing. We, however, have an investor that offers new construction condo financing as long as only the building containing the unit is complete. Again – neither the […]Read More
How Much Do HOA Dues Zap Purchasing Power?
We recently had a buyer who desperately wanted to qualify for a condo purchase but could not because the HOA dues were $800 per month! This prompted me to remind agents and buyers alike of just how much purchasing power HOA dues extract from buyers. In the above situation, $800 of HOA dues equates to […]Read More
House Flipping Back to 2006 Levels; Worried?
I get several calls or texts every week by someone offering to buy a condo we own in Scottsdale. What is particularly interesting to me is that the offers come from dialers at large call centers that house-flipping firms have set up to make nonstop calls. In other words, house flipping is a big business […]Read More
Too Busy for Big Houses! Too Old & Too Dated Too
I hike for five or six miles every weekend in the hills around one of the Bay Area’s most high-end housing developments. The homes are huge, stunning and fun to see, but the best part is the extremely elaborate backyards with vineyards, gazebos, massive pools, outdoor kitchens, terraces, fruit trees, playsets, sport courts, and immaculate […]Read More
Important Condo Considerations
Below are twelve things buyers and agents should consider if they plan to finance the purchase of a condo. I repeat these items from time to time b/c they are so important and b/c we continue to add so many people to our blog distribution list. Concentration Rule. No single entity/person can own over 20% […]Read More
Marketing & Lead Gen – “There Is No One Thing”
We work with a Keller Williams agent who closed 140 transactions last year (over $100 million in sales). When people ask her what she does to generate so much business, she always says: “There’s No One Thing.” Her comment always amuses me too b/c the namesake of her brokerage (Gary Keller) wrote a famous book […]Read More
Avoid Waiting To Buy A Home in California
The right time to buy a house is now! With rates continuing to rise and the California housing inventory that shrinks each day, the time to get into the market is now. Here are some reasons why buyers should consider buying now to avoid the cost of waiting. Rates have officially hit a 7-year high. […]Read More
Condos Must Be FHA & VA Approved; Townhomes & PUDs Don’t Need FHA/VA Approval
We are asked this so often that we thought it warranted a reminder. An entire condominium (condo) complex needs to be FHA or VA approved before a unit within the complex is eligible for FHA or VA financing. Townhomes and PUDs (Planned Unit Developments) do not need to be FHA or VA approved, even if […]Read More
Is Inflation Back? Houses Are An Inflation Hedge!
INFLATION RAVAGED THE 1970s The only thing that ravaged the 1970s more than the bad music, hair and clothes was the high rate of inflation. High inflation rates hurt economies b/c they create uncertainty, increase interest rates and decrease purchasing power and economic investment, among other things. Inflation is primarily a result of the Fed […]Read More
Are 2 Kitchens Allowed? Garage Conversions? Friendly CPAs
2 KITCHENS ARE USUALLY NOT ALLOWED This question comes up often, so we thought we’d revisit it. Lenders will usually lend against a property with two kitchens IF both kitchens have permits. If one of the kitchens is not permitted (also known as unwarranted), lenders will usually not lend against the property, primarily because the […]Read More
Lenders & Vendors = Reflection On You More Than You Realize
I was chatting with some very successful Redfin agents recently and I learned just how important strong vendor and lender relationships are. As most people know, Redfin agents do not work for commission, but instead get paid a salary and bonuses based primarily on “customer satisfaction.” Customer satisfaction is measured by the results of an […]Read More
Clean Purchase Contracts; No Reports/Inspections; All Addenda
We received a purchase contract last week, and immediately emailed our confirmation of terms request to the Realtor and then ordered our rush appraisal, as per usual. Four days later, we received the appraisal at the contract price of $830,000. Yaaaayyy, right? Wrong. The Realtor forgot to send us the addendum indicating the price was […]Read More
Condos – Three Numbers To Know
If you’re looking at a Condo, there are three numbers to know: 1) % of owners delinquent with HOA Dues: Less than 15% of owners must be less than 60 days late. This number is often an issue after market corrections b/c people are more likely to walk away from condos (and stop paying HOA […]Read More
Reasons Why Inventory Is So Low
When my boys and I go back to South Dakota to hunt pheasants, one of the most interesting things to observe (besides the massive cultural chasm between the Bay Area and rural America) is the real estate market. In some parts of South Dakota, the inventory and the “days on market” are almost infinite b/c […]Read More
Recipe for New Real Estate Agents to Follow?
Heejin sat on a panel last night at a Realtor event, giving advice to Realtors. This is humorous in light of the fact that she is and always will be a lender. It makes sense, however, when you consider that she has worked closely with hundreds (if not thousands) of Realtors over the years and […]Read More
Motorcycle Falls Off Wall; Fixing Houses; Appraisal Fails
When I was in college my roommate and I hung a motorcycle on a wall b/c we loved motorcycles and b/c we thought it was “artful” and amusing. My two roommates who didn’t love motorcycles found it neither artful nor amusing, particularly when the wall started to sag. And sure enough, after a month or […]Read More
Have Housing Prices Peaked? Probably Not, After Inflation
Many people mistakenly believe housing prices have surged out of control in recent years and may have peaked. The reality is that in most areas they are only back to the levels they hit previously in 2006. More importantly, if we adjust for inflation since 2006, housing prices are actually 16% below their 2006 peaks […]Read More
Appraisals with “Adverse External” Influences; Big Deal Lately
We are having more issues lately with properties that have “adverse external influences.” Adverse external influences are structures or entities near a property that negatively affect its value. Adverse influences include freeways, busy arterial through-streets, railroads, BART or mass transit trains, cemeteries, schools, and commercial buildings or establishments. Realtors involved in transactions with external influences often under-estimate […]Read More
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