Monthly Archives: September 2018

Where Prices Dropped $70K in 3 Months – PR009 Transcript



 

Tom, here.

This is Price-Reduced.com where we talk a lot about real estate and a little about life.

Is your real estate agent famous? A media personality? Have they made the easy, or not so easy transition from acting, tv or movies to the real estate profession? If you are a Kiwi, a New Zealander, then you would recognize the names of Jayne Kiely or Shane Cortese. For those who don’t, you can still enjoy reading about their transition into real estate as described by the New Zealand website, Stuff.

You might also enjoy what the Wall Street Journal says about media personalities in the U.S. who chose real estate as a second career.

Where might be the best place in Europe to buy some real estate and call it home? Workers in this city are seeing their wages go up and its population is on an upward trend. Businesses are excited about the cost per employee for office space about 25% of what it is in New York just under 32% of that same space in London. What City is that you say? If you guessed Berlin, you were right!

No Real Estate Bubble here. Where is that you say? If you want to do a brain exercise, think a little, read this article recently republished in the “Slovak Spectator.” Learn about rising real estate prices in the Czech Republic and Slovakia and why it appears they are not in a housing bubble.

Contrast that to the Swiss National Bank warning that higher home costs and an uptick in vacancy rates may cause the real estate market to tumble should interest rates start to climb.

How is technology affecting the Commercial Real Estate Market and lending practices? Another Forbes article suggests that poor scanning and data input for multiple units may become a thing of the past with improving technology that may save thousands of hours.

Also soon to come is an automated valuation system on the commercial side similar to the U.S. residential models like Zillow, Corelogic, and House Canary.

Do you know how close a person who flips homes for a living, lives from the houses they flip? A recent article in Forbes says it is 25 miles or less. You might call your local house flipper, a neighborhood expert.

When Realtor.com and Money Magazine got together what do you think they came up with? How about the 50 “Best Places to Live in the America”. They only looked at cities with populations of 50,000 or more, among other criteria. I will pick a state and you see if you can guess the best place to live in that state.

Number twenty on the list is located adjacent to Washington DC and is in Maryland. In 2013, 83.5% of its twenty five and older population had a Bachelors Degree. The Walter Reed National Military Medical Center is also located in this city, which, as you probably know by now, is Bethesda.

Number thirty nine on this list is located in the Pacific Northwest and is Oregon’s fifth largest city. It has businesses such as Intel, Nike, Reeser’s Fine Food, and Epson Portland within its borders. It is the Washington County seat. The city is Hillsboro.

The number one city is located in a State bigger than the United Kingdom, Japan, Spain, or France. It is Frisco Texas.

Where do we see prices reduced and how much?

Let’s look at Seattle Washington. The median home price of $760,000. is a $70,000. drop from where it was three months ago. For those who recently purchased, that hurts. For those who bought around 2012, their homes value has doubled. Beats having that second job to increase your net worth.

What are condos doing? Be glad you don’t live in north King County where the median Condo price has declined 40.5%

See graphs, charts, and additional information put together by the Seattle Times.

As mortgage rates continue to rise, albeit slowly, how will this affect you as a borrower and what are rates expected to do over the next couple of years? Realtor.com does a great job of putting things in perspective as we look back to an 18.63% interest rate in 1981, current rates of about 4.65% and projected rates of 5.5% to 6% in the next two years. Remember that even small increases in interest rates can add up over the length of a thirty year mortgage.  Maybe now is the time to buy?

In 1997 Fred Foldvary, Ph.D. predicated what some called the 2008 Depression. The question is, would his prediction of the next Depression coming in 2026 be tossed out as a scare tactic and not worth a grain of sale? Or should his warning be something that causes self examination and preparedness whether the coming downturn is mild or massive. You decide after reading about “The Depression of 2026“.

“Why Not” Thinking

Life is full of challenges. Sometimes we can’t think outside of the box because we can’t get out of that darn thing. We feel trapped or stuck.

The Laconia Daily Sun has a great article about Cara Brookins who was a single mom with four kids. She needed a place to live but finances were somewhat limiting. She was able to secure a loan for a lot and building materials but she had to provide the labor and her building experience was basically, none.

What would you do? Four kids. Full time job. No experience. Nine month deadline to have that home completed.

Imagine all of the reasons this could not, and certainly would not work.

Ah, but add determination, focus, a lot of work and “Why Not Thinking”, along with a little help and of course, YouTube videos and what do you end up with?

A tiny house? Not quite. Try a 3,500. square foot 5 bedroom home with a 3 car garage. This is a must read article!

Whether in real estate, or in life, it is easy to see all of the reasons why we cannot do something. Why something will not work. Why our goals are unreasonably big.

Maybe it is time we decided to try some “Why Not” Thinking.

Thank you for listening to Price-Reduced.com and always remember, financially speaking, “When it comes to real estate, the best time to buy or sell, is when you don’t have to.


Why You Can’t See It – PR008 – Transcript



 

Tom, here.

This is Price-Reduced.com where we talk a lot about real estate and a little about life.

For you visual learners, you can go to price-reduced.com and click on the “transcript” category on the right side to read today’s episode. You auditory learners might go there  just to learn more by clicking on the links.

Where in the world would you expect to find the world’s largest shopping mall and biggest Chinatown, not to mention the tallest building in the world? How tall is tall? 828 meters which is 2716.54 feet. As you math wizards know, that is just over ½ mile tall.

Learn more about the City of Dubai as it is now, with rising prices, and as it will appear in 2020 for the upcoming World Expo.

Do you know where prices have increased 30% over the last year? In the Cayman Islands of course. Thinking of selling your place in the Cayman Islands? The Cayman Islands Real Estate Brokers Association has posted the Commission rates charged by their members.

Heading north on the other side of Cuba and closer to Miami, China Construction America built the $3.5B Baha Mar Resort in the Bahamas and is working on a $2.1B contract for highway construction in Argentina.

Speaking of South America, Geoffrey McRae wrote an article on South American Land Prices, including Bolivia, Paraguay, Uruguay, Argentina, and Brazil. He discusses land cost, risk, return, taxes, and laws regarding foreign investors.

Expatistan is a website where you can compare the cost of living in Latin America by looking at their map or going down the page to a list of fifty different cities which uses Prague as the baseline. For example Buenos Aires Argentina has a score of 60 whereas the Cayman Islands has a score of 246.

Just so you know, the Expatistan website doesn’t stop there. Their website says they get information from 227 countries covering 2300 cities. If I wanted to compare Paris France to what the cost of living is in Portland Oregon, this website has a category for food, housing, clothes, transportation, personal care, and entertainment. It would cost about 9% more to live in Paris than Portland, however Personal Care products would cost 50% less in Paris. Dream a little. Where would you move to?

Do you know what U.S. age group gained the most in net worth, mostly through home ownership, since the crash of 2007? The same group that lost the most during that time. Learn more from this MarketWatch article in regard to what those born between 1965 and 1980, known as Generation X, have gone through. It also includes a great graphic from the PEW Research Center comparing Gen X, Millennials, and Baby Boomers.

The National Association of Realtors is a great resource for real estate stats in the U.S. They have an article entitled “Metropolitan Median Area Prices and Affordability”. Included is a map which has balloon markers for many metropolitan areas. If you click on a balloon it will tell you the median price for that area and percentage change, in value, over the last year.

They also have a link to an alphabetical list of hundreds of cities and their metropolitan areas. They show how much income you would need to qualify for a median priced home in that area with a 5%, 10%, and 20% down payment loan. In Urban Honolulu Hawaii with 5% down, you would need to earn $189,899. In San Jose California you have to earn $ 335,524. and in Decatur Illinois it would take $23,140.

Want to know what the price reduced picture is like across the U.S.? According to Zillow 14% of all U.S. homes for sale in June reduced their prices. In San Diego it was 20% of all homes had prices reduced in June compared to only 12% the same time last year.

Price reductions or not, the average U.S. homeowner saw their homes value rise 8.3% over the last year.

If you want short updates on the U.S. economy and other interesting facts, sign up to receive email updates from “The Bowtie Economist”, Elliot Eisenberg, PhD. He calls his updates “70 Words on the Economy. Daily

I Don’t See It

I may be looking for something and my wife, Patti will say “it’s in the closet.” Well, it may be but I sure don’t see it.

Or when I ask where something I want for lunch is, she will say “in the refrigerator.” Now, I would like to think my eyesight is good enough and my concentration long enough, that I could find what I was looking for. Some days I am equal to the task. Other days those items seem to be using a cloaking device to make them invisible.

So, what is really happening? Why can’t you see it either?

The New York Times has a great article that talks about “Why we miss things right in front of us”. It is engaging and interactive so be sure to read it.

Sources of Insight does a good job of sharing the keys points of Tony Robbin’s Unlimited Power: The New Science of Personal Achievements Book. It goes over the concept of “schotoma” which literally means “blind spot”. Because we know, or believe something is not going to be found where we are looking, we don’t see it, even if it is sitting right in front of us.

A variation of that is called “Functional Fixedness” which was proposed by Karl Duncker in the 1930’s and discussed in the Harvard Business Review. We see an object based on its common use, not how we could creatively use that object in other ways. When the Titanic ran into the iceberg, did you know there was a way more passengers could have survived. Floating nearby the sinking Titanic was an object estimated to be between 200 and 400 feet long. A gigantic, or you might say, Titanic sized life boat. If it was available to use, why wasn’t it? Who would think to use the very object that the Titanic ran into, and was causing it to sink, as an object of safety rather than danger.

Whether in real estate or in life, we need to recognize we will have blind spots, things we don’t see or pick up on. We also need to recognize that the thing that is causing us such great pain or danger, may actually also be the life raft that provides us safety or life changing benefits down the road.

The sometimes painful path to home ownership can lead to a roof over our heads and become a source of financial security with the passage of time.

Thank you for listening to Price-Reduced.com and always remember, financially speaking, “When it comes to real estate, the best time to buy or sell, is when you don’t have to.


Scam Affecting 150 Countries and 50 U.S. States – PR007 Transcript



Tom, here.

This is Price-Reduced.com where we talk a lot about real estate and a little about life.

If it is easier for you to learn by reading you can go to price-reduced.com and click on the right hand side where it says “transcript”.

As we talk about various areas of the world, even if you don’t live there, the probability is that your real estate market is going through, headed toward, or has just been through a section of the market swing reflected in other neighborhoods and cities. This should shed some light on your particular marketplace.

Ever wonder how much real estate there is in the world? What it is worth? In 2016 it was estimated to be $217 Trillion with 75% of it residential real estate. At the end of 2017 it was estimated to be $280.6 trillion dollars. And the new leader in total largest share of world residential value, up 16% from last year? The answer is: China. If you look to commercial real estate it is the U.S., China, Japan, Germany, and then the U.K.

Ever wonder what country has the worlds largest real estate brand? How about 9 of the 10 largest brands? Once again, it is China.

Portland Oregon had a 12 story wood building in the planning stages which would have made it the tallest of its kind in the U.S. Plans are for the moment, on hold. However, framing is done and Norway continues working on the tallest wood building in the world at 18 stories.

Prices Reduced in the U.K. A recent article is entitled “UK Housing Prices Falling at Fastest Rate Since 2009 Crisis” The author talks about the “Silver Lining” Perspective is everything whether talking about housing prices in the UK or anywhere else in the world. As the author points out, declining prices mean more affordability for home buyers. Declining prices will directly affect those wanting to sell an asset that is most probably the biggest asset they have. Possible their life savings as reflected in the home or flat they own. Although the .2% of value reduction in one month isn’t dramatic, some are saying prices could be reduced as much as 12% before bottom is reached. At an average price of $386,000. A 12% drop could cost homeowners $46,320. That is a lot of money if one had to try and save that much by taking a little out of each pay check. However, if you were fortunate enough to have bought during the low point of the real estate cycle close to ten years ago, you will have found your home’s value has increased by 50%. How is that for a Positive Perspective?

What returned 2 Billion Dollars over 2 years? In fact between October 2013 and May 2018 the total is 12.5 Billion Dollars. Ever heard of BEC’s? That is the acronym for “Business Email Compromise”. A variation of that is called “Email Account Compromise” or EAC. Management and financial officers are tricked into transferring company funds to an entity they think is a trusted business partner or company they might regularly do business with. How prevalent is this? It has occurred in over 150 countries and 50 states in the U.S.

Well you say, I am not a corporate executive or at least I am not the Financial Officer involved with wiring funds. So what does that have to do with me?

Have you bought or sold a house that has not closed yet?  Do you plan on buying or selling a home in the next couple of years? Are you helping someone buy or sell a home or rental property?

The latest adaption of the Business Email Scam has increased 14 fold in the last year and involves you as a buyer wiring funds to close to an escrow company or attorney. That call or email you received with a last minute change of wiring instructions could very well be the most devastating phone call or email you ever receive.

You can read this account of someone named Tom (not me) and what he went through as closing day approached.

So be forewarned, not fooled, when it comes to your next real estate transaction.

What is happening in the US state of Alaska? What segment of their population grew 27% beween 2012 and 2017? This is in contrast to the other segments that had slightly decreasing populations. It is the 65 years old and older crowd. Two Alaskan realtors have suggestions on how to help Seniors with their housing needs.

The housing shortage affecting Alaska is very pronounced in Anchorage where about half as many duplexes were built in the first half of this year compared to last. The number of new multifamily units is drastically worse with 153 permitted last year and zero, yes, zero permitted so far this year.

Another possible factor in the Anchorage housing shortage is that it is one of the Top 100 cities to live in. Anchorage is the place to be with its mountains, lakes, and 250 miles of trails along with the largest area for parks per capita of any city in the U.S. It has a strong economy and is within driving range of 60 glaciers.

The Anchorage School District is home to students that speak 100 different languages. Sounds like Anchorage is prepared to impact many parts of the world no matter what language is spoken.

Are many people buying and flipping houses? There are five zip codes where in the first quarter of 2018 more than 30% of the homes for sale are those being flipped. One of those is the 90047 zip code in Los Angeles. See charts, graphs, and learn about the other 4 in an article by AttomData.

If you live in the Portland Oregon Vancouver Washington area, and you flip houses, how is that segment of the real estate industry doing? In episode 2 we mentioned an article by WalletHub. Looking back at that article which ranks cities by quality of life, remodeling costs, market potential, and a total score, Portland is listed number 149 out of 172 and Vancouver Washington is number 135. That may give you some hard data on why you are having a hard time buying houses to fix up and resell.

There is an article entitled “The New Science of Seeing Around Corners”. It is about a computer vision scientist and his colleague at MIT who take images, sometimes one thousand times dimmer than normal, usually undetectable to the human eye and they bring out or make the undetectable, detectable, The invisible. Visible.

They took a photo of a houseplant and from that photo were able to give a 3D representation of the objects in the room where the plant was located.

This seeing around corners research is also called “non-line-of-sight imaging”.

At Stanford they have recently used laser beams and computer technology to see objects around corners. One of the obvious applications is driverless cars.

Wire Fraud. A big red flag, yet sometimes hidden from the obvious, around the corner of our awareness. Yet looking carefully at small things such as an email address containing a number “1” that looks like the lowercase letter “l”, can save you from the loss of hundreds of thousands of dollars.

Whether in real estate or in life, it is often that which is not so obvious, which might take research or thought, that will help us avoid disaster or recognize great opportunities that others miss.

Thank you for listening to Price-Reduced.com and always remember, financially speaking, “When it comes to real estate, the best time to buy or sell, is when you don’t have to.