‘Shadow Market’ Clouds Housing Recovery

Figures from the Florida Association of Realtors® show that South Florida’s median home prices have stabilized over the past several months and sales are up year-over-year as the number of properties on the market shrinks. But an analysis of the so-called shadow market done for The Miami Herald suggests the number of homes and condos in the pipeline to come on the market in South Florida is nearly five times larger than all residential properties currently listed for sale by Realtors®. LPS Applied Analytics, a firm that supplies loan data to the federal government, did the analysis on the shadow market, which refers to properties that will eventually be listed for sale — because they are about to enter foreclosure, are in foreclosure or are already owned by banks. In September, new buyers and investors continued to eat away at the mass of existing homes for sale at a steady pace. But for every home sold in Miami-Dade, lenders took back almost four through foreclosure auction, according to LPS data. In Broward, for every sale, banks took back six properties, according to LPS’ analysis, which uses sales information from the public record, not Realtor® data that captures only sales through agents. “If you look at markets across the U.S., the Miami area has some of the largest foreclosure numbers,” said Ken Thomas, a Miami-based banking analyst and economist. “In addition to that, there was a lot of overbuilding.” However, he said he expected prices to fall no more than 20% on average. (www.miamiherald.com)
Miami Herald (10/24/09); Monica Hatcher

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Fed Survey: Housing, Manufacturing Drive Recovery

Improvements in housing and manufacturing are driving the early stages of the economic recovery, according to the Federal Reserve’s Beige Book survey released on Oct. 21. The $8,000 credit for first-time home buyers boosted the housing sector. There’s been concern among private economists and some lawmakers that recent gains in housing will fizzle out when the credit ends on Nov. 30. Meanwhile, factories increased production as businesses restocked depleted inventories. Both housing and manufacturing continued a “pattern of improvement that emerged over the summer,” the Fed observed. By contrast, the Fed said the weakest link in the recovery was commercial real estate. Conditions were described as “either weak or deteriorating” across all 12 regions surveyed. (www.ap.org)
Associated Press (10/22/09); Jeannine Aversa

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Tax Credit Boosts Duluth Housing Market

While overall home sales in the Duluth, Minn., area have slipped 4% in the first nine months of 2009 compared to 2008, sales of homes priced less than $150,000 are up 9%, said Mike Peller, president of the Duluth Area of Realtors®. In contrast, sales of homes priced more than $250,000 went into a 20% freefall. “The bright spot has been under $150,000, and that is because of the first-time home buyer tax credit,” Peller said. Kathleen Busche, a licensed broker at Edmonds in Duluth, said the tax credit has led to a bevy of positive repercussions in the Duluth real estate market — mainly keeping prices steady and not leading to inflation. “I have not seen values go up, and that was one of the things that I thought was a little concerning,” said Busche, who has 16 years of real estate experience. “I have not seen market inflation at all. I recognized that could have been a possibility because when you have that many more people in the market, it could push values. If we’ve seen anything, it has stabilized that first-time home buyer market,” she said. “If we hadn’t seen these first-time home buyers right now, we could have seen a drop in those prices.” Busche said the tax credit has also had a trickle-up effect. “The other layer which shows that the stimulus piece is working is that not only are first-time home buyers getting into the market, but that person that wants to move onto their second house,” said. “I’m seeing movement there. People are saying, ‘I can sell my house now because the first-time home buyers are out there now. I can sell my house and go into my second home.” (www.duluthnewstribune.com)
Duluth News Tribune (10/26/09); Andy Greder

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The Story Seller

Barb Schwarz, a real estate broker from Seattle, claims she was the first home stager, in the 1970s. (She founded the International Association of Home Staging Professionals and the online Staging University.) Since then, thousands of stagers have offered their services to home sellers and their brokers, promising that their touches will help a house move, even in the worst markets. Some stagers charge mere hundreds of dollars and offer helpful hints, like “take down that picture” or “reposition that sofa.” Others will, for thousands of dollars, prescribe a full makeover with advice on what color to repaint the walls, what shrubs to uproot and what to plant and what new bathroom fixtures will appeal to today’s discerning buyer; they will even subcontract the work for the seller, hiring painters and gardeners, renting tables and beds. Working in exclusive enclaves like Brentwood and Beverly Hills in Los Angeles, one of the grandes dames of the business is Meredith Baer, who began just before the late, great real estate bubble, in a region where developers, building fast and big, often needed enough furniture to make 9,000 empty square feet seem cozy and lived in. She has no training in real estate, interior design, construction, art, architecture, fabrics, carpentry or urban planning. She often doesn’t know what designer is responsible for a chair she owns or what period an antique comes from. But she has brains, energy and a rather startling degree of luck. Since starting in 1998, she says, her business has doubled every year except for the current one. Baer estimates that about 90% of her staging is in new homes, either built on spec or extensively rehabilitated by the investor. Her furniture currently sits in about 130 houses, and her dozen designers will stage more than 300 houses in 2009. (www.nytimes.com)
New York Times (10/25/09); Mark Oppenheimer

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Style Over Subidivision

On the outside, the 5,000-square-foot house Raji Radhakrishnan shares with her family of four is a typical large brick Georgian. It looks like many houses in Brambleton, a planned community in Loudon County, Va., and like many in other subdivisions in Maryland and Northern Virginia. But inside, this house transcends suburban conformity. The 37-year-old designer has made the standard open-plan living area into something modern. She has added architectural heft with thick plaster moldings, steel brackets plus upgraded hardware and fixtures in the bathrooms and kitchen. She dumped the standard tile fireplace surround for one she created of perforated steel and added a faux finish to the plain wood mantel. In 2003, her family moved to Brambleton. The year before, they had bought a lot and plans for a two-story house with large public spaces and private retreats. Radhakrishnan worked with builders to adjust the design. “When I started telling them all the things I wanted to change, they started scratching their heads,” she said. “I had like 30 changes to the model; they could do only two.” She said no thanks to builder’s-grade hardware, standard appliances and light fixtures, installing ones she’d selected. Her house became a showplace, and her new firm, Raji RM & Associates, was attracting attention. (www.washingtonpost.com)
Washington Post (10/22/09); Jura Koncius

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Stoves Gain Popularity as Economical and Environmentally-Friendly Heaters

Stoves as secondary heating sources are growing in popularity, and they come in two basic varieties: wood stoves and pellet stoves. Some proponents say the stoves can be more environmentally friendly and help cut energy costs; other experts say that varies from household to household. Traditional wood-burning stoves enjoy stronger sales, but pellet stoves, which burn compressed sawdust, may be gaining on them, according to the Hearth, Patio and Barbecue Association, a manufacturers trade group. Shipments of woods stoves and wood fireplace inserts rose 81% in 2008, the association said. Pellet stoves and pellet fireplace inserts increased 161% that year. About half of all households nationwide depend on natural gas for heating, according to the U.S. Energy Information Administration. The agency recently forecast that heating fuels this winter — including natural gas, propane, oil and electric — should be down. Based on today’s costs, Bob Markovich, the home and yard editor at Consumer Reports magazine, said that burning pellets costs about 15% less than oil and 40% less than electric heat but about 25% more than natural gas. Wood stoves can be a bargain for people near rural areas where wood is cheap or free. (www.washingtonpost.com)
Washington Post (10/24/09); Caryn Rousseau

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