Monthly Archives: July 2007

Fee-for-service real estate, not fee-for-research (yet)

Chipin_073107_2
We’re a bit embarrassed about asking our clients and others to ChipIn
to pay for our attendance at a real estate technology conference
, but
as one of nation’s first and leading fee-for-service real estate
consulting firms the slow housing market has reduced cash flow at The Real Estate Cafe. We
haven’t charged for access to cutting edge market research in the past,
but we may be forced to experiment with "fee-for-research" in the
future.

To date, we’ve done the opposite — we’ve paid clients to add content to our Real Estate Bubble Map!  Their collective efforts helped us earn Platial.com’s "Best Real Estate Map" Award for 2006, and the map was featured in an international conference on the future of journalism. 

Visit our map of homes selling for below assessed value in Greater Boston to learn more about our "Tipping policy."

TRAVEL ALERT:  Our plane to San Francisco leaves in three hours, so we’re offering new and existing clients a variety of financial incentives — like signing bonuses and reduced hourly rates from our normal menu of fees & rebates — to help pay for travel expenses.  Call 617-661-4046 for more details.

Posted in "We" companies, Fee-for-service, Inside The Real Estate Cafe, Mapping, Savings & Rebates, Tech Trends

Divorce sale

Posted in Uncategorized

Will social networking make “negative cycle” more vicious?

Economy.com’s Mark Zandi is no zealot, so if he is using terms like this "negative cycle" homebuyers ought to take note:

"There is a substantial risk that the mortgage market will devolve into
a self-reinforcing negative cycle," Zandi said in a release this
morning. "Mounting credit problems could beget more restrictive
underwriting standards, which would weigh heavily on the fragile
housing market as potential borrowers become unable to obtain credit,
and existing borrowers facing large payment resets are unable to
refinance. Foreclosures would mount, leading to weaker house prices,
falling homeowners’ equity and even more substantial credit problems.
The cycle repeats with more intensity and the mortgage market
corrections unravel into a crash."

Thanks to the Boston.com’s new real estate blog for posting the quote above.  We discussed the same worse-case scenario yesterday with NECN, but used the word — "vicious cycle" — an economic term some might substitute for the "negative cycle" above. 

My question is whether social networking and unfiltered consumer
access to real estate data make the downcycle more vicious?"  Not
through lack of civility, but data transparency that allows home buyers to
make more informed decisions, putting further downward pressure on prices.  To see what I mean, visit our new MLS access which allows users to easily compare asking prices to price trends and more on Zillow.com.

Here’s what we wrote two years ago about the coming negative cycle before Economy.com issued it’s warning today:  From froth to foreclosures:  You ain’t seen nothing
yet
!"

When the market really cools, things will get worse, potentially
much worse.  A recent New York Times article called the magnitude of
interest-only and adjustable rate mortgages "The Trillion-Dollar Bet" because "$1 trillion of the nation’s mortgage
debt – or about 12 percent of it – [will] switch to adjustable payments in 2007."  Will foreclosures spike then?

An upcoming article in the July / August 2005 issue of The Atlantic Monthly, entitled "Countdown to a Meltdown,
speculates that the situation could become so bad that "repossession
riots" will occur in some areas.  Do you think that fictitious forecast
is irresponsible fear mongering, or foreshadowing a falling market that
will make current home buyers look foolish; or worse, candidates for
foreclosure in the future?

Cross-posted in the forum of The Real Estate Cafe’s social networking site.  Please join the discussion with other home buyers and sellers there.

Posted in Foreclosures, Housing forecasts, Market trends, Price trends, Real Estate Bubble, Social Networking, Timing the market

Market correction in 2009? Watch NECN video & use this new tool

Responding quickly to today’s front page story in the New York Times (Home Lender’s Woes Fuel Market’s Decline) and over 200 similar stories on Google News, New England Cable News quickly invited The Real Estate Cafe to present the local home buyers’ perspective on national headlines which reveal the lowest home sales in five years.  The three minute video clip is worth watching, even if there is a lot more to say about why Countrywide’s CEO told reporters that home prices were falling “almost like never before, with the exception of the Great Depression" and that "the
housing sector would continue to suffer until sometime in 2008 and not
begin recovering until 2009."

As we told NECN, and as documented on our Real Estate Bubble Map, people don’t realize how long it takes for housing markets to correct. It’s not four months, it’s not fourteen months, it can be four years as was the case in the last down cycle in Greater Boston:

Past housing price corrections:
Price decline: 13%
Duration: 3.5 years (14 quarters)
Period: 1989Q1-1993Q1
Overvaluation prior to price correction: 37%
Valuation peak: 1987Q1

If you are one of the many home buyers across Massachusetts watching housing prices fall and plotting your home buying strategies for the second half of 2007 or beyond, The Real Estate Cafe invites you to test our new map-based MLS search.  Each MLS listing is linked to Zillow so you can identify price trends, compare the asking price to recent sales, and identify other possible home buying opportunities nearby, even if they are NOT listed in the MLS.  If you are trying to time the market, you can even sort listings by how long they have been on the market to help identify "motivated sellers."

Cross-posted on The Real Estate Cafe’s social networking site.  Please join the discussion with other home buyers and sellers there.

Posted in Market trends, Price trends, Real Estate Bubble, Timing the market

Outsmarting the shrinking inventory

June’s sales reports, released by the Massachusetts Association ofRealtors and The Warren Group, should pretty much squash any lingeringoptimism about a 2007 recovery. Oddly, though, inventories of homes for sale have shrunkdramatically, which isn’t what you’d expect in a downswing.

Posted in Extreme Househunting

For Sale By Owner: Are real estate agents really necessary?

http://sfgate.com/cgi-bin/article.cgi?f=/g/a/2007/07/13/carollloyd.DTL

Posted in FSBO: For Sale By Owner

Redfin’s conflict of interest

Redfin rebates a portion of its commission
back to home buyers in exchange for buyers doing most of the research
themselves, and on the sell-side offers to list homes for a flat rate.
The company claims to have saved home buyers nearly $6 million in
commissions since its last round of financing in May 2006.

Critics within the industry say that this type of business model in
which consumers do much of the work themselves in exchange for a
discount comes at the expense of the agent working the opposite side of
the deal. In addition to Redfin, many companies have begun offering
discounted commissions to consumers who prefer to handle some aspects
of the sale without the help of an agent.

Posted in Uncategorized
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