Friday, June 24, 2011

From Today's Headlines You Can't Tell What's Up


One of the things that always made me smile as a young newspaperman at one of the Dow Jones daily newspapers was spending time in the “composing room” where the compositors set the type for that day's paper. Back then the type was lead and set generally by Linotype machines. The composing room was always hot and sometimes smokey—remember they used molten lead to make the page castings, and it was noisy as each letter in the entire newspaper had to be properly placed and “locked in”. And of course all the type was set in reverse so it would print correctly, which made it hard to read.

The compositors also set the headlines and depending on their size, most of the headlines were set by hand using individual letters which were usually put away after the paper was printed and saved until either the type was needed and reset or reused. There were some “standing heads” that managed to be used over and over, some were benign, like “Church News” and “High School Honors Scholars”, but there were others that were just as useful, like “Mayor Indited” or “Tax Increase Debated”. These are also headlines that can be used over and over.

And so it is with real estate today. The following “standing heads” are real and all from this week, they not only contradict one another, but also taken as a group confuse the reader and misstate what is really happening.

Monthly Home Prices Improve April home prices have improved over March...

Existing Home Sales Decline Existing-home sales were down in May as temporary factors and financing problems weighed on the market, according to...

Fannie Mae: Growth slowing but not stalled For 2011, expect 2.5% growth, down from 2.9% in previous forecast and more than a full point below January prediction...


Existing home, condo sales up in May Home sales rose 3% compared to May 2010; condos up 17%. NAR: National sales down 3.8% due to market constraints.


New home sales fell in May Down 2.1% to seasonally adjusted rate of 319,000; median price up 2.6% from April to $222,600


Home Ownership Rates Decline U.S. Home ownership rates have declined and will undoubtedly go lower ...

Lenders repossessed fewer homes in May A slower housing market, bank delays and paperwork problems led to 33% drop compared to May 2010

All-cash buyers scooping up homes Cash continues to be king. NAR reports that 30% of May home sales went to cash buyers


Mortgage Applications Decrease Applications for home mortgages decreased 0.4 percent from one week earlier

FHFA House Price Index rises 0.8% in April It was the first month-to-month price increase since May 2010.

Man, it's no wonder the real estate market is stalled, nobody knows what's going on. The news is good, then bad, then good, then bad. And while it's no secret that the market has been very weak, it's also not totally dead. I offer below a chart that is created by the Englewood Area Board of Realtors, (from data they get from www.myfloridamls.com). The bars show the number of new listings/pending listings/and sold listings for the week, the taller bars are for the week of May 29-June 4, the shorter bars are for June 5-11.
One the one hand, things are not selling as well this year as last. On the other hand, everything is much cheaper and in Englewood we did close 29 homes last week and 42 the week before, meaning that business is slow, but not stopped. I personally had clients make 4 cash offers on homes last week, time will tell if any are successful and will finally close. If they are accepted they will make their way into the middle “pending” bars on the chart for next week. I'm hoping...

Dane Hahn is a real estate professional in New Hampshire with The Gove Group, in Florida with Tarpon Coast Realty, with offices in Boca Grande, Englewood and Sarasota. He can be reached at dane.hahn@gmail.com or by phone at 941-681-0312; or on the web at http://www.danesellsflorida.com/








Saturday, June 18, 2011

Desperate Times Bring Desperate Scams



As I watch the real estate market floundering along at it's bottom, and wonder just when we will return to what I will loosely call the “New Normal”, I am reminded that hard times like these bring out the scam artists. This week I have enjoyed a few scam emails from who knows where, suggesting that I might be a possible beneficiary of a diseased wealthy individual.

One says in part, “Hello, I am Mr. Ahmed Khizer Khan , a citizen of United Arab Emirates and I also work with a well known bank here in the U. A .E . I have in my bank the existence of a big amount of money that belongs to a customer, Mr. Daniel HOWLAND. The fund is now without any claim because Mr. Daniel died in a deadly earthquake in China in 2008.I want your cooperation so as to make the bank send you the fund as the present beneficiary.” Well, this makes me smile, and click the “junk” key—but sometimes people fall for this stuff, thinking there might be something out there for nothing.

That same day I received a warning from the Board of Realtors saying they were investigating a local real estate scam where a Realtor was asked—by email—to list a property. This is very common, and Realtors get these requests all the time. In this case the Realtor wrote a listing contract and a comparative market analysis, sent it off to the seller where it was signed and returned. Luckily the agent sent the “hard copy” to the address on the county tax card. When the actual owner received the listing contract they immediately called the agent and said they had not contacted anyone and were not selling their home.

And then from a real estate seller came this item, he had a home with 12 acres for sale for $389,000. As he tells the story he got an email from a guy named Victor. He wrote me and said, “I saw your ad on eBay and want to find out more about that property. Could you tell me more? My wife and I love it, this is just what my family and I have been looking for.”

Over the course of a month they wrote back and forth, and finally he said, “Okay, here’s what I’d like to do. I want to put half of the money down on the property, and then I’ll send my wife and children over with the other half. We’re in Liberia, and right now this is a war zone, and I’m really afraid my wife and children might get hurt. I’m really scared for their lives, and I want to get them over there.”
A week later, after talking to his bank, the buyer wrote: “Okay, here’s what my bank told me. What you need to do is open up an offshore bank account in your name. It’s going to cost $5,000. I have a friend in the States who will give you the money to open up the account, so you don’t have to use your own money. My friend is in Florida, he will send a check to you.”

About a week later, the check came. It was a bank check, from a bank in Florida.
Now our guy tells me he thinks this is a scam, but wants to see how far this will go. Immediately he took the check to the bank and said, “I want to open up a brand new account.” He did that, because he wasn’t sure if the check was real, and the deal could still be real. But if it is a scam he wanted to know how it works? He wondered., “Do they suck money from my account or something like that, once I open an account?”
The check is beautiful, he says, it’s an actual check from Florida, it’s got the watermarks on it, it’s perfect. I put it in the account and I asked them, “If I put this in an account, when can I write against it?” She said, “Two days.” I said, “When will you know this is could be a bad check?” She said, “Probably about ten or fifteen days.” They said that if the check bounces, I would be responsible for the amount. The next day I get this email: “Immediately send the $5,000 and open up the offshore account. Here’s the guy you’re going to send it to.”
So the scam is that they give you a fraudulent check, a fake check, and then they ask you for part of that check to be sent by wire transfer to them, so that money comes out of your account. Then ten days later, boom! You’re responsible for that check and whatever money you sent to the offshore bank. The real estate had nothing to do with anything--it could as easily have been a car or boat that was for sale.
I'm not saying that all the good deals and exciting opportunities out there are scams, but given the state of the economy, it's worth being skeptical until you know something is true—I'm just saying.
Dane Hahn is a real estate professional in New Hampshire and Florida. You can reach him at dane.hahn@gmail.com or by phone at 941-681-0312 or 603-566-5460

Saturday, June 11, 2011

A Good Skier Knows When to Fall.

This week the economic news seems to be all bad. None dare call it a depression, and nobody knows how to break the cycle. So they call it “The Great Recession”.  Really.

But finally—on one of the talking head television shows—the guest had an idea that I have supported for some time; he explained that if you are skiing and start to fall, just fall, then pick yourself up. If you try not to fall you will likely sprain something, pull something else, or ski off the trail and ultimately have a horrible fall. He said when the economy started to fail we should have let the banks and auto manufacturers fall. It's too late now to help the banks in a meaningful way, but they ought to suck up their residential losses and get on with their lives. I say bravo, let the banks begin to do what's right.

You may recall a few weeks back when I called for the low priced (under water) foreclosure homes to be removed from the market—forever, just like the cash for clunkers removed the used cars forever. My suggestion was to burn them down, and resell the lots to builders. Then to offer a special financing for the homes that the builders would create as replacements.

From all corners you now hear a common forecast saying we are facing a double dip in our economy. I want to reiterate that my only favorite double dip comes in a sugar cone. But the economic issues we are facing and the probable “double dip” in our economy will doubtless cause us all additional pain, which if we had dealt with up front, would be over by now. So because our lawmakers tried to cushion the crash—we skied off the trail into the rocks and the woods.

The forecasts of our economic growth have been trimmed (even more) in recent weeks, as have contracting employment numbers, with a similar performance (or lack thereof) from the consumer in regard to spending. Generally Americans are suffering, albeit quietly. We are suffering at work, at the grocery and at the gas pump. And not surprisingly these topics with only a couple of others will be the key political topics that will form the platform of both parties in the upcoming election campaigns.

We all need answers. Will we increase the debt ceiling? Will the U.S. temporarily default on its trillions of debt? Will we get the kind of future spending restraint Conservatives are demanding, in exchange for their votes to support the Democrats desire to increase the debt ceiling? Will we ever trim those well known entitlements? Will both parties deal with long-term deficit reduction? Who dares to throw the elderly under the bus? Are we really doing anything for our kids, or is all this a thinly veiled effort to get re-elected by appealing to special interest groups?

I can only hope that when Washington finds it has an empty bank account—but still has a pack of unused checks--they will NOW realistically evaluate the situation, and put away the checks until there are sufficient funds.

Here's where I have real concerns: I am tired of lowering prices on our house listings. I want these homes to start selling again, and yet from all corners I get questions. Will home prices continue to decline? Will the stock market suffer a major setback? Will the massive and top-heavy health care bill place event greater burdens and mandates on American businesses and households? Will the never-ending growth of new government rules & regulations ever slow? Pardon me while I throw up.

May’s dismal jobs report was the weakest of the past eight months, adding to a multitude of softer-than-expected economic data points in recent weeks. The gain of only 54,000 net new jobs was one-third of expectations and one-fourth that of the prior three-month average. And oddly about a half of the newest jobs are at McDonald's. Adding insult to injury, job gains of the two prior months were revised down by 39,000 jobs. Bet you didn't see that on the 6 o'clock news.

The Consumer Price Index rose 3.2% during the most recent 12-month period. Sharply higher prices for gasoline and basic food stuffs have strained household budgets, in both the U.S. and around the world.
It seems clear that the federal fund rate, now in place for 30 months and the lowest level ever, will likely remain unchanged until the end of the year, if not longer.

And yet the pain continues. Average home values have declined for eight straight months and are now back to where they were nine years ago…2002. Nationally average home prices are down one-third from their 2006 peak. Lower-priced homes have fallen further than high-end homes. Most forecasters see modest additional pain over the balance of the year, with price stability likely in late 2011 or early 2012.

With 30-year fixed-rate conventional mortgage loans at their lowest level of the year, and very close to their lowest level in 50 years, one might think mortgage activity would be brisk. But no. The combination of wary lenders with stringent qualifying levels (high credit scores, large down payments), declining home prices, meager job creation, weak confidence levels, and available rentals in many cases, has led mortgage demand to its lowest level in 13 years.

My opinion: this is as close to the bottom of the market most of us will ever see. Expect the cost of homes and funds to creep up only a tiny bit over the next six months, and then strengthen as we approach the 2012 election.

Dane Hahn is a real estate professional at Tarpon Coast Realty with offices in Englewood, Sarasota and Boca Grande. You can contact him at dane.hahn@gmail.com or by telephone at 941-681-0312. See him on the web at http://www.danesellsflorida.com/

Sunday, June 5, 2011

Like Sand Through the Hourglass, Your Home's Value is Going Away.

Honey, I shrank the house, and the bank account!

And I gotta say, I'm not so happy about it. This time of year when I think of a double dip, I want it to be ice cream.

After rebounding briefly last year, national home prices have sagged to another low in what housing experts and television's “talking heads” are calling an economic double dip.

Notwithstanding the Administration's rose colored glasses; and Presidential promises that things are “just about all better, and certainly on the right track”, home prices have fallen for the last 8 months. The Case-Shiller Home Price Index reveals that home prices in major metro areas are back to mid-2002 levels, with no end to the declines in sight.

The Home Price Index dropped 4.2 percent in the first quarter of 2011 after having fallen 3.6 percent in the final quarter of 2010.

Excess supply has persisted since the construction boom earlier last decade that culminated when home prices collapsed in 2006. We may be sitting on 9 to 10 months worth of housing supply. A normal market would have about five months of supply. There are not many people with the money or the ability to borrow enough money to buy a house. What we have is weak demand, and a lot of supply, and that probably means house prices will continue falling.

Also contributing to the excess supply is the large number of foreclosures in the real estate market. Last year, a record 2.9 million properties received foreclosure notices. New lending standards have gotten fairly tight. And on top of that, appraisers have to be careful how they appraise homes for mortgage loans. Especially if you're in an environment of falling prices. Banks are concerned that the collateral value in 16 months may not be what it is expected to be. Meaning if your new home loses value, the bank may not want it on their books as a loan they made.

Is there any good news in this weeks financial repolrts? Well, yes, and no. It's bad news as you watch the value of your house go down some more, but good news sensing that the end of the downward spiral is expected to bottom out in the 2nd half of this year. It's bad news that the resale value of your house will not likely recover for some time, but good news that if you are planning to be in the house for 5 years or more, you will probably come out even, or maybe a little better than even.

Why, someday we may all look back at this and laugh.

And how about this, all the politicians seem to move to Washington, and Washington, D.C., was the only city in which home prices increased on a monthly and annual basis – by a modest 1.1 percent and 4.3 percent respectively. Why doesn't that surprise me?

While last year saw anemic signs of an economic recovery, the most recent data do not point to renewed gains. And many cities have seen both a drop in housing prices and high unemployment. Housing data is an important indicator of the health of the economy in part because homes are often the most important assets of most households.

Because home prices have effectively collapsed, peoples' net worth is in awful shape at the moment. It will take a lot to improve their balance sheets through saving and income growth. Personal incomes rose 0.4 percent in March while personal consumption rose by 0.4 percent, leaving the personal savings rate unchanged at 4.9 percent. But with the high unemployment, American consumers are not in great shape at all, and the increase in gas prices have not really helped them. Mark my words, these and only a few other topics will be the key talking points for the 2012 elections.

Dane Hahn is a real estate professional with Tarpon Coast Realty in Englewood, Sarasota and Boca Grande. He will answer your questions at dane.hahn@gmail.com, or by phone at 941-681-0312. You can see him on the web at http://www.myfloridahomesmls.com/danehahn