Warren Buffett Betting on Housing in 2012

By Nathaniel Popper

February 27, 2012, 8:37 a.m.

Reporting from New York— 

The U.S. housing market disappointed Warren Buffett last year, but he hasn't given up hope.

Buffett said in his annual shareholder letter, posted this weekend, that he was "dead wrong" when he predicted last year that the rebound in U.S. home prices would begin within a year.

This year, though, he's betting again that the housing market will recover, and for an interesting reason: hormones.

As Buffett explains it, the housing market is currently depressed because young Americans have stayed at home rather than going out and setting up their own households.

"People may postpone hitching up during uncertain times, but eventually hormones take over," Buffett wrote in the letter to shareholders in his investment company Berkshire Hathaway. "And while 'doubling-up' may be the initial reaction of some during a recession, living with in-laws can quickly lose its allure."

That is not the entirety of his argument. He also says that currently home builders are not creating enough new supply. As a result the excess inventory that built up after the financial crisis is slowly disappearing, paving the way for new demand.

During an appearance on CNBC this morning, Buffett said he would buy up millions of U.S. homes if it were possible.

Data out this morning seemed to support Buffett's contention. The National Assn. of Realtors announced that the number of people buying used homes in January rose to a 21-month high.

As usual, the annual letter was an opportunity for Buffett to provide a candid assessment of Berkshire Hathaway's wins and losses, most of which were in the volatile energy sector. He said his entire $2-billion investment in a Texas utility company may be wiped out unless natural gas prices rise substantially.

"In tennis parlance, this was a major unforced error by your chairman," he wrote.

Buffett also used the letter to reveal that he has chosen a CEO to succeed him at Berkshire Hathaway -- he just refused to provide the identity of that person.

Berkshire's class B stock was down 0.6% in early trading this morning.

6 Ways to Turn Off Your Home's Buyer (or Seller!)

By Tara-Nicholle Nelson | Broker in San Francisco, CA

In the wild world of dating, when you encounter a “turn-off,” you can just pack it in and not to go on another date with that guy or gal again. But turnoffs can be much more detrimental when they come up in the realm of your real estate goals. Indeed, turn a buyer off, dear sellers, and you risk not selling your home - period - or getting a lower price than you might have otherwise.

And, contrary to what you might assume, the same goes for buyers. Even in today’s ‘buyer’s markets,’ multiple offers do happen. And even in cases when you’re the only buyer on the scene, having a cooperative seller goes a long way toward everything from getting access to the place for inspections to getting a price reduction when the appraisal comes in low. Thus, the potential still exists for buyers to turn sellers off, and risk having their dream home slip right through their fingers.

As you proceed on your quest for drama-free real estate, factor in these frequently occurring gaffes that turn off buyers and sellers, and my tips for avoiding them.

Top 3 Ways to Turn a Buyer Off:  If you’re a seller courting buyers, here are 3 faux-pas to avoid:

1. Hanging out when buyers are viewing your home: Buyers stalk properties online and off, checking obsessively for price reductions and the like.  But buyer-side home stalking is unobtrusive to sellers. On the other hand, buyers can feel personally stalked and stifled in their ability to fully explore or verbally process their impressions of a home when you, seller, hang out inside your home while it’s being shown.

As soon as a buyer sees you in the house, it instantly becomes much more difficult for them to”
(a) envision themselves living there (it’s your house, after all),
(b) be comfortable opening up drawers, closet doors, etc., and
(c) express their thoughts about how this house might be exactly what they’re looking for, if they can knock out that wall and get rid of those cukoo murals you so lovingly painted in your children’s rooms.

Sellers: If you want to sell your home, it’s best to not be around when buyers are looking. Give them some breathing space and a chance to truly walk around and consider what they like and/or dislike about your home without lurking and looming (and, let’s be real - eavesdropping) nearby.

2. Showing a messy house: Life gets hectic, and it’s easy for things like laundry, dishes and other house cleaning tasks to fall by the wayside. It’s also difficult to keep the home in which you and your 4 kids, 3 gerbils and 2 Labrador Retrievers live perfectly spotless for months at a time, while you’re waiting for an offer. But when you decide that you’re going to sell your home, it’s imperative that you make a pact and a plan with yourself and your family that the place will be in tip-top shape when buyers come knocking.

Remember: your home is competing with dozens of others, as well as with buyer’s HGTV-infused visions of what their next home should look like, so first impressions really count.

Sellers: Stuffing the closet is not the answer. (Buyers will be opening that closet door, after all.) Pack up your personals like you were moving (best case: you are), and put all but the essentials in storage, if needed. Get the carpets cleaned, do the dishes, make the beds, mow the lawn, dust, sweep and mop. Ask your agent to give you a gut check on whether your idea of clean is clean enough (better yet - ask them for the number of a house cleaner who you can engage to get the job done to showable standards).

This might all seem obvious, but agents and buyers alike are constantly amazed at the condition of some of the homes they walk into. Take my word for it; I’ll spare you the ‘ewww’-inducing stories.

3. Overpricing your home: Buyers already have lots to do before making the largest purchase of their lives. They have to wrangle their finances into order, jump hoops to qualify for a loan, collect the cash for down payment and closing costs, and invest sometimes hundreds of hours into market research and house hunting. With all of this already on their plates, the prospect of trying to negotiate down a crazily high asking price is just too much work (and too outside their comfort zones) for most buyers to deal with. The average buyer won’t even bother looking at your home if the asking price is clearly high and off base compared with other similar, nearby homes for sale; they’d rather sit tight and wait .

Sellers: Price to sell from the beginning. Work with your agent to determine a price that is supported by the data on how much nearby homes have recently sold for. You’ll save yourself a lot of time and anguish and get a lot more legitimate bites from serious, qualified buyers.

Top 3 Ways to Turn a Seller Off:  Buyers, if you want a home’s seller to play ball, best practice is to avoid these 3 pitfalls:

1. Unjustified, extreme lowball offers: It’s no secret that buyers have the upper hand in many markets right now. (To be clear, I said ‘many’ - not ‘every’ - your agent can help you understand what the dynamics are in your market.) But let’s be realistic, here. No seller can afford to give away their home at a price far below what it’s worth on today’s market. Lowballing a seller at a price far below the recent sales prices of similar homes in the neighborhood on the ‘let’s-take-a-stab’ plan, is highly likely to turn them off.  And that, in turn, will cause the seller to view your offer - and you - as disrespectful and wasteful of their time.

Not only will they turn down your offer, but they may not even bother with a counteroffer, rendering your efforts at securing that particular home dead in the water.

Buyers: Review the recent sale prices of similar homes in the neighborhood (aka “comps”) with your agent before you make your offer. Also, ask them to help you factor in other market data, like the average list price-to-sale price ratio and the average number of days neighborhood homes stay on the market. It’s all right to come in lower than asking, if the market data supports such an offer; just be sure your offer is based on reality - and not your fantastical hallucination about scoring the bargain of the millennium.

2. Buyer-side mortgage fails: Plenty of employed buyers with decent credit and cash in the bank have been turned down for a mortgage these past few years. That means buyers can’t assume (a) that they’ll be approved for the amount of loan they need to buy the house they want, or (b) that they’ll be approved for a loan at all. Your inability to get approved for a home loan can create all sorts of problems not just for you, but also for your home’s seller. The average seller’s  worst case scenario is that  they accept your offer only to find out a few weeks, or months, later that you can’t get the loan you need to close the deal.

Buyers: It’s not overkill to start working with a mortgage professional as far as six months or a year in advance of starting your house hunt to get pre-approved for a loan. Make sure you get a clear understanding of the amount you qualify for, then work with your real estate agent from there to determine the price range you should house hunt in. And whatever you do - don’t buy a new car, open new credit cards or even change your line of work before your escrow closes, unless you consult closely with your mortgage professional before you make that move.

Tip for Sellers: Work with your agent to vet buyers before you sign a contract. Factor in their down payment and earnest money deposit, and feel free to counteroffer these items, not just the offer price. It’s not overkill to have your agent contact the buyer’s mortgage broker to see how reliable the buyer’s pre-approval really is.

3. Bashing the seller’s home: Home bashing happens when buyers start bad-mouthing (aka “trash talking”) the place and/or the neighborhood in hopes of getting a lower asking price. Examples: pointing out all the foreclosures in the area, saying the house down the street just sold for much lower than the asking price on this house, saying you’ll need to rip out the entire kitchen before you even consider moving in - saying any of these things to a seller who happens to be at home during the showing or the inspection is probably one of the fastest ways to turn them all the way off.

Buyers: Bad-mouthing a house or neighborhood won’t work to get you a lower price. Instead, it only serves to irritate the seller and motivate them to come up with all sorts of reasons why they shouldn’t sell their home to you! Remember: homes hold incredible emotional experiences for owners. Make an offer you’re comfortable with and keep the negative comments to yourself.

If there are legitimate, factual reasons underlying your decision to make an offer at a price the seller might see as a lowball, ask your agent to respectfully communicate those facts to the seller’s agent.

Buyers, sellers, agents: What are the biggest turnoffs you’ve encountered during home buying or selling?

List of Improving Housing Markets Expands to Nearly 100

Posted By Susanne On February 9, 2012 @ 4:19 pm In Business Outlook, Consumer News and Advice, Finance and Economy, Home Owner News, Real Estate Trends, Today's Marketplace, Today's Top Story
 ^[1]The list of housing markets showing measurable improvement expanded by 29 metros in February to include a total of 98 entries on the National Association of Home Builders/First American Improving Markets Index (IMI), released recently. 


Thirty-six states are now represented by at least one market on the list.

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. 

The February index adds some metropolitan areas that have been particularly weak; this is due to the fact that the IMI measures improvement from a bottom, and some of the hardest hit markets are showing signs of coming off of extreme lows. 

Keeping this in mind, notable new entrants to list in February include Miami, Fla; Boston; Detroit; Kansas City, Mo.; Portland, Ore.; Memphis, Tenn.; and Salt Lake City.

“The number of improving housing markets has risen for six consecutive months, and 36 states now have at least one metropolitan area on the list,” notes NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “This indicates that despite the many challenges that continue to drag on a housing recovery— including the tight lending environment for builders and buyers—improving conditions are slowly but surely spreading from one housing market to the next.”

“While many of the markets on the February IMI are far from fully recovered, the index points out where employment, home prices and housing production are no longer retreating and have held above their lowest recession troughs for six months or more,” said NAHB Chief Economist David Crowe. “This is a sign that a large cross section of the country is starting to turn the corner as local economic conditions stabilize.”

“The fact that there are nearly 100 markets now on the improving list shows that the momentum is building for a housing recovery and that more buyers and sellers are starting to feel confident enough to return to the market,” says Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. 

The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.

Seven markets dropped from the NAHB/First American Improving Markets Index in February as they experienced softening house prices. These metros include San Jose, Calif.; Washington, D.C.; Kankakee, Ill.; New Orleans; Worcester, Mass.; Jackson, Miss.; and Sherman, Texas.

For more information, visit www.nahb.org/imi ^[2].

Article printed from RISMedia: http://rismedia.com


URL to article: http://rismedia.com/2012-02-09/list-of-improving-housing-markets-expands-to-nearly-100-2/


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6 tips for timing a real estate purchase

How fence-sitters can get a jump on the competition

By Dian Hymer / Inman News®

In mid-June, interest rates on home loans were lower than they were a year ago. However, this failed to ignite the housing market. Many buyers and homeowners would like to make a move, but some find it impossible to make a decision. They are commonly referred to as fence-sitters, poised to make a move when the time seems right.December 28, 2011

The housing market is unlikely to turn around soon, but this doesn't mean that now is not a good time to buy or sell. It depends on your personal situation and market conditions in the area where you plan to buy or sell.

Become an expert on your local market. Knowing a good deal when you see it or what price to ask if you decide to sell depends on having a good understanding of how much properties are selling for in your neighborhood.

While you're trying to decide what to do, line up a team that can help you accomplish your goal when you decide to move ahead. You can do this by researching online, attending open houses in the area and asking a real estate agent to keep you on top of market fluctuations.

Your decision to buy should be based on your personal financial situation, not on the national or global economy. For example, if you bought during the bubble market and are now getting divorced, you'll probably sell for less than you paid.

But, if the house is too expensive for one to support, it may be cheaper in the long run to cut your losses and sell now. No one knows how long the housing downturn will last. Prices could move lower before rebounding. This is not an ordinary recession.

HOUSE-HUNTING TIP: Don't get caught up following the herd. Just because most people in your area aren't buying or are having difficulty selling doesn't mean that you shouldn't make a move. Just make sure if you're a buyer that you have job security, a relatively healthy economy in your local area and a plan to stay put for at least 10 years.

The housing market will be volatile going forward. Good economic news will help fence-sitters make the decision to get serious about moving. Bad news of any sort can cause the market to stall. To take advantage of the upticks in the market, you need to be prepared in advance.

Find a good local real estate agent to work with who understands your needs, and wait to buy or sell until the time is right for you. It could take you a year or so to make the final decision. Some agents don't have the patience to stick it out.

Select an agent who will educate you about the market and the idiosyncrasies of the home-sale business in your area. Ask to be kept informed about sales in the area. Many agents are set up to do this electronically, which is an easy way to keep you informed without taking up a lot of the agent's time.

One of the most difficult aspects of the current home-sale business is financing the transaction. Find a loan agent or mortgage broker who is a real professional, has been in the business for years and who understands what current underwriters will require from you to process your loan.

Assemble all the financial documents you'll need for loan approval even before you start looking. Ask your agent or broker to have your loan package previewed by an underwriter so that you know beforehand if there are any problems.

THE CLOSING: Remedy these in advance so that they don't cause last-minute delays in closing.

Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide."

Tri-Cities comes in second for housing market recovery

By Kristi Pihl, Herald staff writer

Tri-City home prices are expected to grow by 3.4 percent this year, ranking the area second in the nation for best recovery in the housing market.

The recent rating by the Housing Predictor, an independent real estate market forecaster, is more evidence of how well the Tri-City economy is doing, said Rene Dahlgren, Home Builders Association of Tri-Cities director of government affairs.

Housing Predictor said the only housing market expected to see more growth in home prices is El Paso, Texas, which is expected to see a 3.7 price increase.

It's hardly the first time the Tri-Cities has made lists of best housing markets, Dahlgren said.

In February, the Tri-Cities was named the fifth best housing market, according to Builder Magazine. In 2010, the Tri-Cities was fifth on the list of best performing large cities based on job and salary growth as rated by the Milken Institute, and ranked first out of 372 areas for employment growth in the last five years by Garner Economics.

And despite looming layoffs at Hanford, Dahlgren said they hope the market will remain strong and that the economic slump will be less than in the past.

"We've definitely come a long ways in diversifying our economy," she said.

Having a strong housing market is a good indicator of whether the economy is going well because that means people are willing and able to invest in real estate, Dahlgren said.

In 2011, 890 single-family homes received building permits as of July, according to the Home Builders Association of Tri-Cities. Pasco had the most new home permits, at 321, while Kennewick had 192 and Richland 175. West Richland issued permits for 80 new homes.

Read more: http://www.tri-cityherald.com/2011/09/10/1637924/tri-cities-comes-in-second-for.html#storylink=mirelated#ixzz1cz9A69qE

Tri-City housing market rated at No. 17 by magazine

By Kristi Pihl, Tri-City Herald

The Tri-Cities is expected to have one of the top 20 healthiest housing markets in the nation next year.

The Tri-Cities, at No. 17, was the only metropolitan area in the Northwest to make the list created by Builder Magazine and Hanley Wood Market Intelligence.

The healthiest of the 100 largest markets nationwide were determined using home prices, employment, population projections, unemployment rates and median household incomes, said Jonathan Smoke, executive director of research for the real estate research firm.

The Tri-Cities does well in all categories, and each is expected to improve in 2012, he said. For example, the area's home prices are expected to grow by about 3.8 percent next year.

The Tri-Cities might be one of the smaller markets to make the top 20 list, but the area's economy has been relatively strong during the national housing downturn and recession, Smoke said.

Already, construction permits in the Tri-Cities have been rebounding for more than a year.

The area also has an above-average number of high paying jobs, combined with relatively affordable housing, Smoke said.

And the Tri-City home ownership rate is higher than the national average, he said. It increased to 69.5 percent in July, while nationally the rate is 66 percent and has been declining each year.

The Tri-Cities is the most affordable metropolitan area in the state, said Paul Roy, president of the Tri-City Association of Realtors.

Housing affordability means it has made more sense for families moving to the Tri-Cities in the past decade to buy homes rather than to rent, he said.

An increasing home ownership rate combined with a growing number of households creates a demand for homes, Storm said.

Roy said August and September were disappointing in terms of home sales in the Tri-Cities. Consumer confidence is low, but he expects that confidence to improve.

Through September this year, 2,145 homes were sold in the Tri-Cities, according to a report by Coldwell Banker Tomlinson Associated Brokers of Kennewick.

An average of almost eight homes were sold each day so far in 2011, compared with about nine homes sold a day on average in 2009 and 2010, according to the report.

Roy said October sales should end up better than the same month last year.

There is about eight months of inventory for sale because of fewer sales and more listings, he said. But he expects that anomaly will correct itself after winter.

Inventory is based on the sales pace in the past, he said. And if things pick up to 2008, 2009 or 2010 levels, the housing inventory will be just right.

The Tri-Cities is estimated to have 1,244 new homes issued building permits this year and 1,099 in 2012, according to Builder Magazine's report.

Rene Dahlgren, director of government affairs for the Home Builders Association of Tri-Cities, said builders expect to see a similar number of permits for new single-family homes next year as this year.

As of September, 1,089 permits for new single-family homes were issued in the Tri-Cities, and about 1,300 total are expected by the end of the year, according to the association.

Dahlgren said that is sustainable and keeps builders relatively busy. But they would like to see some growth.

Unlike the rest of the state, the Tri-City home market has maintained its stability, she said.

-- Kristi Pihl: 582-1512; kpihl@tricityherald.com

Read more: http://www.tri-cityherald.com/2011/10/28/1696277/tri-city-housing-market-rated.html#storylink=mirelated#ixzz1cz7vRtUZ

Housing market does well, despite Hanford layoffs

By Kristi Pihl, Tri-City Herald

Thomas Masterson, owner of T.R. Masterson Construction of Washington, stands in front of his latest project, the Canyon Crest Apartments in Richland. He doesn’t expect the recent layoffs at Hanford to affect the demand for Tri-City apartments. See story below.

RICHLAND — Richland's Canyon Crest Apartments are starting to fill with residents, even though the 30-unit complex isn't expected to open until the end of November.

Thomas Masterson of T.R. Masterson Construction doesn't expect the recent Hanford layoffs to slow demand for his new apartments.

"We couldn't be happier," said Masterson.

The $1.96 billion in stimulus money from the American Recovery and Reinvestment Act, which pumped up jobs at the Hanford nuclear reservation in the past two and a half years, is mostly spent now.

But despite almost 2,000 layoffs so far at Hanford and up to another 1,060 possible by fall, many apartment owners and homebuilders remain optimistic about the Tri-City housing market.

"People have to live someplace," said Masterson, a builder for 35 years.

Hanford helped keep the Tri-City housing market healthy while the recession beat up housing markets in many other parts of the nation.

Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, said he doesn't see the same thing happening here.

With the stimulus money spent, Crellin said he expects some softening, with fewer home sales and some declines in prices. But there isn't likely to be the plummeting prices other regions have seen.

The Tri-Cities is on a different cycle than the rest of the state, he said.

Rick White, Pasco's economic and community development director, agreed, saying he expects to see a minor dip in the housing market that will even out over time.

Interest rates are at record lows, possibly helping to counteract the impact of the Hanford cuts, he said.

Pasco isn't seeing much of a slowdown in home construction. The city ended September with 402 new permits for single-family homes -- just 41 fewer than at the same time last year.

Katie Wilson, assistant manager at The Crossings at Chapel Hill in Pasco, said they expect the Hanford layoffs will mean more of their 228 apartments will soon be available. But the demand for apartments remains high.

The Tri-Cities' apartment market has been operating at an almost unprecedented vacancy rate of 1 percent to 2 percent for a couple of years, said Crellin.

Last month in Kennewick and Pasco, 97 percent of apartments were occupied, while in Richland, there was 95 percent occupancy, according to the survey completed by Kennewick's Crown Property Management.

The layoffs could help the market return to a more sustainable 5 percent vacancy rate as workers who came specifically for stimulus-funded jobs move, Crellin said.

Most property managers consider a 5 percent vacancy rate ideal because it gives managers a chance to keep up on maintenance, he said.

Typically, new apartment construction eases rental shortages, but tight lending because of the national economy means that hasn't happened in the Tri-Cities, he said.

Even in the early '80s, when about 10,400 people lost their jobs, Masterson said his Kennewick company kept going for several years building custom homes. Although the volume was down, homes still were needed.

Similarly, just this month ground was broken on a new 5,000-home planned community called Badger Mountain South.

Paul Roy, president of the Tri-City Association of Realtors, said he is more worried about "perceptions" than the actual economy.

If consumer confidence is low, people are more hesitant to make financial commitments, he said. And because consumers are responsible for about 70 percent of the economy, he said it's a self-fulfilling prophecy if they stop spending.

Still, Roy said believes the Tri-Cities will end the year with a similar number of home sales to last year.

During the last major round of Hanford layoffs in 1995, when about 5,400 jobs were cut, people still were buying homes, he said. Sales took a temporary dip before picking up again.

And the Tri-City population is continuing to grow, Roy said.

Contributing to that growth are retirees moving here from other areas because of the affordable cost of living, mild weather and good services, he said.

"What we can't lose track of is that we are selling houses every day in the Tri-Cities," Roy said.

-- Kristi Pihl: 509-582-1512; kpihl@tricityherald.com

Read more: http://www.tri-cityherald.com/2011/10/18/1683490/housing-market-does-well-despite.html#ixzz1cz6Jnh2e