The Orange County Association of Realtors has published a report saying that 2013 has the lowest number of new listings in the last three years. My neighborhood is a perfect example.
When I bought my home two years ago, there was at least one if not two, three or four signs planted in the front yards on every street. This year you have to go several blocks to find a single home for sale. What gives?
There are several things going on. First is uncertainty with the economy. Simply put, people are still hesitant to sell and move up. The average time in a home is increasing. Next the slight rise in home values has slowed the foreclosure and short sale market just a bit. One of the agents in our office is still moving a noticeable number of short sales, but he is putting a lot of miles on his car to do it now.
Loans are also harder to come by as VA and FHA loan limits were reduced. This increased the number of homes requiring a traditional 20% or 30% down payment.
So what does this mean to you? If you are thinking of selling, it means you will likely get a much more reasonable price in a reasonable amount of time this year than you would have since 2006. If you are considering selling, call me and we can talk more about what is happening.
If you are thinking of moving up, now might be the right time. All indications are that home loans won't get much lower interest rates for many years, and locking in your property taxes at the lower values will pay off if you stay in your next home for any amount of time.
If you are trying to buy, you are in a different boat. The "good deals" go very fast. Waterfronts in Huntington Harbor under $2 Million were plentiful two years ago and average days on market was nearly 300. Now, if they aren't a tear down, they sell in days when priced right. I have several buyers who have cash that we can't find a deal for. A couple of homes that I felt were a little overpriced and have been on the market over two years have just gone into escrow. It is a tough time to be a buyer, especially an investor buyer.
Newport Beach, Costa Mesa, Seal Beach, Garden Grove and Fountain Valley are all seeing the same trends as Huntington Beach. This isn't just a waterfront property issue, it is across all of Orange County.
As a Realtor, our jobs are changing yet again. There has been some major changes to the laws, lending and paperwork, creating more work for us. What little we might save on advertising because a property sells quicker is spent advertising to find listings. Agents are all over each other trying to get the next listing.
At the same time buyers agents have to work a lot harder to find a property that fits their clients needs. Gone are the days of 30 or 40 homes fitting the size, price and location a buyer wants. It might take several months now of looking to find even one that fits the buyers wish list. This week one came up that was close for an out of town buyer and before I could get them in the house, the seller had accepted an offer.
If you are thinking of buying or selling a home along the coast in Orange County, please give me a call. If you know someone who is interested in buying or selling a home, please pass on my name and number.
Scott Bourquin
Keller-Williams
www.socalbeachrealtor.com
dre# 0191198
714-594-SELL (7355)
Showing posts with label vacation rentals. Show all posts
Showing posts with label vacation rentals. Show all posts
Thursday, February 21, 2013
Wednesday, May 23, 2012
Waterfront Auction Ends Today
The current real estate market can have some real interesting deals happen. In the go-go days of 2004-2006, super luxury and unique homes were auctioned off quickly and easily. Today many auctions don't even attract a buyer if the home is over $1MM. Other times the banks are putting such a high reserve that nothing happens.
I am not talking about the foreclosure auctions on the courthouse steps, rather I am talking about the big auction houses online and offline. Last year I was the high bidder on several properties with bids under $50,000 and the banks wouldn't let me have them. That was my first clue the market was turning, or at least the banks thought they could stop the dive by not letting homes go so cheap. I don't know why they stopped taking any bid but they did, and it has been that way ever since for homes that are a FHA qualifying prices.
When you break $1 Million though, the rules are still all over the board. Family greed and squabbles do funny things at estate auctions. For probate, the courts are just telling the trustees to sell, and I am seeing some movement in those markets. Even the short sales of homes over $800,000 have seen a decrease in the average closing times. So where does that leave us today?
In Corona Del Mar California I have been watching a certain auction with a keen sense of interest. Originally the property was listed at $14 Million, then over time lowered to $9.9 Million. As an agent in the area $9.9 Million was a good starting point but it had been on the market so long the buyers just weren't interested for whatever reason.
The trustee decided to send it to Auction. The property is one of the few original ocean front homes left in Southern California that hasn't been knocked down. Walking the property I could clearly envision a new Tuscan style home featuring a subterranean garage. I started emailing all of my clients who might consider such a project. No interest at all. One said "That isn't where the money is going." Now I knew this would be interesting. That came from a pretty savvy investor.
After really walking the property, and noticing all of the little details. Details like the kitchen with the polished concrete floor still scarred by the tile squares, and the white washed wood vaulted ceiling in the master, and the 1960's style electrical light dimmers with clear switch plates, my wife looks at me and says "I could live here just like this." With the opening price of $5.5 Million, it was clearly out of this weeks budget so I knew it wasn't going to happen at this auction. I put a couple more feelers out to my friends who could write a check like this while I was admiring the view from the back yard.
My wife is always the romantic when it comes to homes and real estate. I am generally more business. Somehow I started to picture myself sitting in a wicker style chair writing my next book on the back lawn overlooking the Pacific. I wrote my first book sitting on a balcony of my Texas McMansion overlooking a lagoon pool with a tropical garden as the backdrop. How much cooler would it be to be sitting on a cliff above the Pacific writing that next book that is swirling around my head.
As I checked in this morning, the property was just approaching $6.0MM. As an investor, that is still a bargain with a lot of room to make money. As I write this there are just over 10 hours to go so I am interested to see if this is like poker and the two real bidders are waiting in the wings to make a snipe attempt at the end or if some lucky person is going to get a once in a lifetime buy on this land.
If I could just get that big advance for the next book or find a .05% interest only 5 year loan, I would buy it for $6.0MM and worry about it later, and that just isn't how I do business, there is something romantic about this property.
If you want to see it or bid on it in the next 10 hours, call me.
I am not talking about the foreclosure auctions on the courthouse steps, rather I am talking about the big auction houses online and offline. Last year I was the high bidder on several properties with bids under $50,000 and the banks wouldn't let me have them. That was my first clue the market was turning, or at least the banks thought they could stop the dive by not letting homes go so cheap. I don't know why they stopped taking any bid but they did, and it has been that way ever since for homes that are a FHA qualifying prices.
When you break $1 Million though, the rules are still all over the board. Family greed and squabbles do funny things at estate auctions. For probate, the courts are just telling the trustees to sell, and I am seeing some movement in those markets. Even the short sales of homes over $800,000 have seen a decrease in the average closing times. So where does that leave us today?
In Corona Del Mar California I have been watching a certain auction with a keen sense of interest. Originally the property was listed at $14 Million, then over time lowered to $9.9 Million. As an agent in the area $9.9 Million was a good starting point but it had been on the market so long the buyers just weren't interested for whatever reason.
The trustee decided to send it to Auction. The property is one of the few original ocean front homes left in Southern California that hasn't been knocked down. Walking the property I could clearly envision a new Tuscan style home featuring a subterranean garage. I started emailing all of my clients who might consider such a project. No interest at all. One said "That isn't where the money is going." Now I knew this would be interesting. That came from a pretty savvy investor.
After really walking the property, and noticing all of the little details. Details like the kitchen with the polished concrete floor still scarred by the tile squares, and the white washed wood vaulted ceiling in the master, and the 1960's style electrical light dimmers with clear switch plates, my wife looks at me and says "I could live here just like this." With the opening price of $5.5 Million, it was clearly out of this weeks budget so I knew it wasn't going to happen at this auction. I put a couple more feelers out to my friends who could write a check like this while I was admiring the view from the back yard.
My wife is always the romantic when it comes to homes and real estate. I am generally more business. Somehow I started to picture myself sitting in a wicker style chair writing my next book on the back lawn overlooking the Pacific. I wrote my first book sitting on a balcony of my Texas McMansion overlooking a lagoon pool with a tropical garden as the backdrop. How much cooler would it be to be sitting on a cliff above the Pacific writing that next book that is swirling around my head.
As I checked in this morning, the property was just approaching $6.0MM. As an investor, that is still a bargain with a lot of room to make money. As I write this there are just over 10 hours to go so I am interested to see if this is like poker and the two real bidders are waiting in the wings to make a snipe attempt at the end or if some lucky person is going to get a once in a lifetime buy on this land.
If I could just get that big advance for the next book or find a .05% interest only 5 year loan, I would buy it for $6.0MM and worry about it later, and that just isn't how I do business, there is something romantic about this property.
If you want to see it or bid on it in the next 10 hours, call me.
Monday, May 7, 2012
Rental Real Estate
I am sitting here in Maui enjoying a condo just across from the beach. The condo is one of hundreds that are here on the islands which are available by the week. A well run vacation rental can be a great money maker that lets you have a condo or a house in a great location for up to 14 days a year basically for free.
Basically there are a couple of things to keep in mind, both have to do with 14 days. The first is how often it is rented each year. If you rent your property for more than 14 days each year, it triggers tax rules for rental property. If you use it 14 days each year or less yourself then you get the better deductions like depreciation if you want them.
There are another set of local rules that have to do with sales taxes and hotel taxes. Hawaii is considering legislation to force vacation rental owners to use a local property manager because they believe the mainland owners are renting properties and not paying taxes.
Nothing good can come of this. The assumption is that more people are cheating than following the rules. If that is the case then maybe the rules should be reviewed. As an agent, forcing owners to use a local property manager only will increase the cost and decrease the benefit of owning a vacation rental. Generally these increased costs drive down value. Driving down value drives down price. When you drive down price, you drive down property taxes and real estate sales commissions.
All of this sounds counter productive to long term revenue generation which is what Hawaii is really looking for isn't it?
This is a case where I don't know the good answer. The hotel industry of course wants a fair playing field and if they have to pay a hotel tax, then the condo owners should pay some taxes too. I get that.
The reality is that the income from the tourism, food, drink, souvenir and tour sales is money they don't want to lose either. If Hawaii is going to force the owners to use a local property manager, then they may need to cap the rates much like many areas do for Taxi cab drivers or smog check stations. Say some fixed cost of $20 per rental when the owner finds the renter? How much more work could collecting the checks be for the property manager than smoking an old car?
Your thoughts?
Basically there are a couple of things to keep in mind, both have to do with 14 days. The first is how often it is rented each year. If you rent your property for more than 14 days each year, it triggers tax rules for rental property. If you use it 14 days each year or less yourself then you get the better deductions like depreciation if you want them.
There are another set of local rules that have to do with sales taxes and hotel taxes. Hawaii is considering legislation to force vacation rental owners to use a local property manager because they believe the mainland owners are renting properties and not paying taxes.
Nothing good can come of this. The assumption is that more people are cheating than following the rules. If that is the case then maybe the rules should be reviewed. As an agent, forcing owners to use a local property manager only will increase the cost and decrease the benefit of owning a vacation rental. Generally these increased costs drive down value. Driving down value drives down price. When you drive down price, you drive down property taxes and real estate sales commissions.
All of this sounds counter productive to long term revenue generation which is what Hawaii is really looking for isn't it?
This is a case where I don't know the good answer. The hotel industry of course wants a fair playing field and if they have to pay a hotel tax, then the condo owners should pay some taxes too. I get that.
The reality is that the income from the tourism, food, drink, souvenir and tour sales is money they don't want to lose either. If Hawaii is going to force the owners to use a local property manager, then they may need to cap the rates much like many areas do for Taxi cab drivers or smog check stations. Say some fixed cost of $20 per rental when the owner finds the renter? How much more work could collecting the checks be for the property manager than smoking an old car?
Your thoughts?
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