All posts by price-reduced

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.


The Most Stressful Event in Life – PR006 Transcript



Tom, here.

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

You can go to the source of this information using the links available to you with the transcript of this episode.

What does Italy, France, and now the U.S. state of New Jersey have in common? They all have programs to help Seniors age in place, to be able to stay where they have often called home for many years. Irene, the company in New Jersey helping make this happen, is becoming a popular alternative to the Reverse Mortgage.

Malaysia joins a host of other countries such as New Zealand, Canada, and Australia to have restrictions or bans on selling to foreigners. Why? Foreign capital often pushes prices beyond the reach of local residents.

Did you hear about the International Monetary Fund warning? Kind of like a Tsunami warning if you are located near the coastline. What coastline? The figurative coastline that includes the many cities around the world where the wealthy have purchased high end homes and condos. Or like mountain climbers who are all tied together to prevent a single climber from falling. However, should several of those climbers fall at the same time, then none of those connected will escape the downfall.  Prices reduced in the Luxury Home markets of London, Beijing, and New York. So according to the warning, what is affecting just a few areas now will continue to spread to more cities around the world.

While lower end properties continue to decline in value, in Perth Australia, the high end market has gone contrary to that trend by having a 1.5% increase in value over the last quarter.

The Economist has a great article with graphs reflecting what housing prices have done in 22 cities around the world. Can you guess how much values in these cities have increased in real terms over the last five years?  The answer is:  34%

So, are prices leveling off and decreasing in the U.S. as in other parts of the world? As in all things real estate, it depends on where you live. Redfin did a study of six cities in the U.S. where you can still expect a bidding war. Can you name them? Here is a hint. Four of the six most competitive markets are in California.

What starts in California, doesn’t stay in California. In fact, due to the size of its real estate market, it has been said that California is a precursor of what will happen around the nation. Southern California, with increasing home values, has still seen an 11.8% drop in number of sales year over year. What price range saw a 21% decrease in number of sales?  $500,000. and below.

Learn why one million more people moved out of California than moved in along with information about its housing crisis and where people are going once they leave.

What is more stressful than a job interview? 40% of Americans say this is the most stressful event in their life. I can’t say for sure, but my guess is this 40% probably hasn’t given birth in their lifetime.

Other stats? Thirteen percent thought they overpaid yet only 10% had buyers remorse.

Here is a not too often thought about segment of the first time home buyer market. What segment is that you ask? How about those senior citizens in their 60’s, 70’s or even 80’s or 90’s who never bought a home. Learn what questions they may ask, such as “should I take out a 15 or 30 year loan.”

Speaking of seniors, do you know what other trend they are becoming a part of? How about the tiny house movement. Many don’t need the space they used to have and becoming mortgage free is a bonus.

Speaking of Seniors, what is happening in the Portland Oregon market? According to the Business Journal, when it comes to the assisted living boom, there are 1,000. units currently under construction in Portland and throughout the state of Oregon. View the many projects under construction.

Speaking of a hot real estate market. There is another kind of hot in Portland.

If you live in Portland or have just passed through, the city brings to mind rain and lots of green scenery. Some areas are more level and others hilly. But the temperature across town is the same isn’t it? Not according to an Oregon Live Article where it shows temperatures can vary by as much as 20 degrees from one neighborhood to another.

In the last few minutes you have been listening to this podcast, or reading the transcript, chances are you have been distracted one or more times.

Career Builders found that 75% of the employers they surveyed said they lost 2 or more hours of productivity a day due to distractions with 43% saying they lost 3 or more hours a day.

The reason? Three of the top four were smart phones, the internet, and social media.

How often is the average office worker interrupted? According to a UC Irvine study, the average work is interrupted or changes tasks every 3 minutes and 5 seconds. Recovery time after each interruption? 23 minutes and 15 seconds.

So it takes me about 7 ½ times as long to recover my focus as I spend on maintaining it.

Is that statistical proof that rather than working seven hours and getting a one hour lunch break, I should go home after working one highly focused hour because the same amount of work gets done either way? Right?

Acknowledging that interruptions cost us time is the first step on the road to recovery.

What are some of the solutions we can grab hold of?

An article on rescuetime.com says to “schedule your interruptions”. Even though it might not work to set your kids down for the “ you can only interrupt me from ten to noon talk”, setting time aside to anticipate and work on those challenges that cause many of your interruptions, before that happens, makes a lot of sense.

Accomplishing one task at a time and building your focus muscle is at the heart of a New York times article. Several recommendations are given as to programs or apps that are available to disconnect us from social or internet temptations. They basically “distract the distractors”.

Whether in real estate or in life, it is those things we let distract us, that stop us from getting the house that we want or achieving the goals we set.

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.


Which Housing Bubble Is About To Burst – PR005 Transcript



Tom, here.

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

The Transcript version contains links to all we talk about.

Many non-resident Foreigners are now banned from owning property in New Zealand. This has come as a response by Parliament to the Housing Crisis that has seen a 60% annual increase of values across New Zealand and an almost doubling of prices in Auckland over the last ten years.

The Australia real estate market finds prices being reduced in five of it’s eight capital cities. The ratio of housing prices to disposable income has increased from 2x around 1980 to about 5x now.

In 2008 as the U.S. was headed into a financial abyss, Canada moved along hardly missing a beat. Here is an article explaining some of the why behind the stability Canada experienced.

Contrast the previous article that talks about the 180 years Canada has avoided a financial crisis, with a BetterDwelling article referencing the view of Canada’s housing market from China. It pointed out that Canadians lead the race in G7 countries for debt to income ratios. It is currently at 165%, which is even higher than the US ratio of 147% at the time of the US Financial Crisis in 2008.

Some say the Canadian Real Estate Bubble is about to Burst. Learn why, including the fact that 47% of Canadian mortgages have interest rate resets coming next year.

Speaking about the U.S. real estate market.

If you wanted to invest in real estate but don’t like the day to day involvement and want more liquidity than outright ownership, you could consider a real estate investment trust or REIT. Even if you are only thinking about investing, you can still get great information about return on your investment and what the public’s attitude is toward various forms of real estate.

Seeking Alpha has a great article with all the charts and graphs the most data hungry of us would enjoy. It not only covers residential real estate but also such things as office, retail, industrial and self storage to name a few. Break out reports on individual sectors such as manufactured homes are referenced. Record high occupancy rates are one of the positive topics covered.

What else are people saying about the U.S. housing market? The Lombardi Letter focuses on higher interest rates, the slowing housing market, and builder’s that are starting to worry.

For an upbeat view of the U.S. Market, read this GordCollins article that discusses how over half of all U.S. home values have rebounded to pre 2007 levels, home sales increased by 9%, and it’s description that “the US housing market is stable and optimistic — backed by a strong economic forecast.”

So, what state is one of the most affordable to live in? Can you guess?

The answer is…West Virginia. The cost of living is 5.6% below the national average and the cost of housing is 38.5% below the national average. For first time home buyers by state, it ranked number 2. See where your state ranks.

Let’s take a brief look at the Portland Oregon and Vancouver Washington real estate market. In July, year over year, Vancouver and SW Washington saw an average sales price increase of 10.3% to $383,000. whereas the Portland Metro only had a 6.4% increase but a higher average at $442,800.

There is one other dramatic difference between the two states separated by the Columbia River. The Vancouver and South West Washington area has more proposed or
“not yet under construction” homes listed in the RMLS system than any of area it covers.

You can click on the links for more details than one cup of coffee will keep you awake for.

Just a reminder that behind all of this information and statistics are people. People who worked hard to be able to buy a house. People who struggle with the high cost of having a family. People who are retired and face an uncertain future.

There are also people who have equity and cash available when they sell, that they would not have been able to save any other way.

Real estate can be a small part of a persons life yet have the potential to be the ship that sinks their finances or the life boat that keeps them afloat.

I could usually tell when a “how to buy real estate and make a million dollars with none of your own money” seminar comes to town. There would be an uptick of people asking about property for sale, not taking the time to talk to a bank or to begin to understand not just the benefits of owning a home, but the cost of home ownership and the risks involved.

Why is that? What would cause thousands of people to flock together for an investment seminar? Or to stand in line, not to buy a house to live in, but to buy a house with the intent of reselling it upon closing?

As a real estate broker, I first got into real estate because I wanted to learn about buying and selling homes, about investments, so I understand the attraction.

What I am talking about though, is more of the “herd mentality”.

There is an old TV show called “Candid Camera” This video clip was taken in the 1960’s and shows us, in a comical way, the influence of group behavior with something as simple as the direction we are facing in an elevator. What direction would you face?

You can watch a similar, more current video clip from a TV show called Brain Games. If you were in a waiting room, waiting for an eye exam, would you stand up just because others in the room did?

If I was at a restaurant and it was on fire, I am all for everyone following the crowd, getting out of the building, and saving lives.

Here is my question.

Once local media publishes a few articles about how the real estate market is shifting, how it is no longer a seller’s market, and how prices are no longer going up, an interesting thing happens. The basic truth of a slowing market becomes a self fulfilling prophecy to everyone who reads the article. If the market is slowing maybe I should offer far less as a hedge against dropping prices. Should I wait to buy a house until prices become way more affordable. How far down will they drop?

The answer to these questions may be yes, or may be no. You should look at your individual situation and see what works best for you. If interest rates went up, how would that affect your buying power? One price range or area of town may not be impacted the same way as another. If you want to live in an area where major positive improvements are being done that will create more demand, would now be a better time to buy or not?

What about selling? You may feel the pressure to sell before prices decline too much. Maybe you should. On the other hand, there may be other factors affecting your life that are more important than which direction the real estate market is going.

Whether in real estate or in life, getting the facts and making informed decisions that work best for you, is the key.

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.


The French Rivera and Spaghetti – PR004 – Transcript



Tom, here.

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

You can also go more in depth by clicking on the links in this Episodes Transcript.

You have some money and are trying to decide where you might get the highest return on it if you buy a rental property. Now, where in the world would you go? What Country would you choose?

Can you guess who number one is? The Philippines with a 6.13% rental yield.

Canada comes in at number 17 with a rental yield of 3.9%. Learn about the other 23 cities from this Business Insider article.

When you think of the French Riviera, what comes to mind? Your last vacation? The Mediterranean Coastline? A movie set on the French Riviera? How about home ownership where 25% of the buyers are British, 20% French, and the balance from a host of other countries. This may be in part because France has no restrictions on foreign buyers other than the amount of time spent in their second home.

Want to buy a home in South America? How about Panama? Kent Davis is an agent in Panama and he has some excellent words of wisdom for you if you want to buy a home there. One piece of advise is the concept of time. That new construction home just might take a couple of years rather than the one to one and half years you are quoted. Who should you trust. How many ways can you be taken advantage of? Should you believe what you are told?

What are the most popular homes in the U.S. people bookmarked or saved during their searches? Trulia pulls back the curtain so you can learn more about these homes, whether the $71,534. home in Hunstville, Alabama or the $10,750,000. home in Washington D.C.

Prices Reduced in Sydney Australia by 4.5%. An article in Forbes explains why the Australian real estate market is declining, including the fact that 40% of all mortgages are interest only.

Let’s talk about real estate in the State of Montana.

You might consider the two ranches offered by Mort & Donna Fliescher for $50 million dollars. Of course only 7,000. acres of those acres are located in Montana.

Montana is the fourth largest State in the U.S. yet only has a little over a million people.

With good appreciation and mortgage delinqency rates two thirds of the national average, there is a lot to like here. With it’s “A” rated schools Bozeman is the top place in the state to live as well as one of the top 100 in the nation.

Billings, the largest city in Montana with a 2016 population of just over 110,000 has seen values increase 95.67% between the first quarter of 2000 and the first quarter of 2018.

Going west, what is happening in the Portland Oregon Vancouver Washington area?

A new record has been set for the most paid to buy a home in Portland’s Multnomah County . The Eastman-Shaver house in the west hills of Portland sold for close to $7,000,000. Learn more about this Mediterranean Style home. You might ask, “Just how much are the Property Taxes on this home?” The answer: A mere $65,000. per year.

Can you break a piece of raw spaghetti in two?

What typically happens?

When you bend the two ends and the piece of spaghetti snaps, it will in most cases break into three pieces.

Why?

That is the question first asked by physicist Richard Feynman and explained by two French physicists who received a Nobel Prize in 2005 for their theory.

The initial break would cause a “snap back” effect which would travel along the piece of spaghetti. It was how the spaghetti would fracture.

Two MIT students just became the first to be able to consistently break those pieces of spaghetti into two pieces after building upon the mathematical model of the French physicists.

What does spaghetti have to do with anything other than a great meal?

It could have a positive impact on a better understanding of steel struts used in buildings and bridges.

I think there is also an analogy here as it relates to real estate negotiations and personal disagreements.

We need to learn how to stop fracturing relationships and negotiations when we are at different ends of the proverbial piece of spaghetti.

We need to realize there is a point at which expectations snap and the negotiation process can be slowed down or abruptly ended.

It is only as we decide to stick together toward a common goal or understanding, that we are thrown into the pot of boiling water, become flexible in our attitude, and often come full circle so that the ends of the warm pot of spaghetti pieces are not so far apart.

How do we know when the spaghetti or negotiations are successful? I was always told to throw a piece against the wall and if it sticks, it is ready. I guess the same might be said for negotiations and interaction. When both parties have come together, softened their positions, and come to a mutually acceptable position that sticks, it is time to have some dinner.

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.