Friday, October 26, 2012
Thursday, October 25, 2012
Hot At The Top
Here’s a post from Alain Pinel, Sr. Vice President / Managing Officer at Intero Real Estate Services, Inc. We occassionally post information Alain provides about the Luxury Real Estate Market. Not everyone will be able to take action in this area but it’s interesting information.
Susan & Rick
The high end is going strong. Thank you. Nice to see that it is, again, the locomotive pulling the market and driving prices in the right direction. When I make such a statement, I realize that some readers in much of the country must be questioning my sanity. After all, in most areas, it is not the high end but affordability and a shrinking portion of the distressed sales relative to the entire market which are the key factors of the business momentum we have been observing all year.
So let me define “high end.” The expression, in my vocabulary, does not mean the top 10 or 20% of the price pyramid in any market area. It means only the top luxury tier of ONLY those towns or districts all over the US which are commonly recognized and referred to as “high end markets”. I.O.W., the location defines the high end, not just the price point. To be sure, those upscale locations are not many on the map.
The luxury market has been very slow to come alive this year. Today, it is vibrant. Hopefully nobody in Washington is going to make waves and mess up with this long awaited momentum.
A friend of mine, Jurgen Weller, was reminding me that the low cost of mortgage money has a lot to do with the high end resurgence; at least as much as its beneficial impact in all price segments. True, although at the top end of the market, cash is king. Traditional financing is seldom used. Too bad in a way, since it is always smart to leverage other people’s money rather than dig into our own cash register.
Jurgen’s point is as follows: the cost of financing a million dollar over 30 years has dropped $571,000 since 2008, only four years ago! Enough, as he puts it, to send two kids to Harvard Business School for 4 years and keep some change to feed them when they come home. Of course, by then, the parents would be long gone since I have yet to see a human being who would live in a house long enough to fully amortize the loan!
In any case, sales in the multimillion dollar range are going up, up and up. In the most exclusive areas, the incremental improvement at the top far exceeds the price and unit sales improvement registered over the first 9 months in a lower price range. In fact, the higher you go on the price ladder, the higher the jump relative to the same period of last year.
Take a look at pricey San Mateo County in the hot Silicon Valley:
By Alain Pinel
Sr. Vice President / Managing Officer
Intero Real Estate Services, Inc.
Susan & Rick
The high end is going strong. Thank you. Nice to see that it is, again, the locomotive pulling the market and driving prices in the right direction. When I make such a statement, I realize that some readers in much of the country must be questioning my sanity. After all, in most areas, it is not the high end but affordability and a shrinking portion of the distressed sales relative to the entire market which are the key factors of the business momentum we have been observing all year.
So let me define “high end.” The expression, in my vocabulary, does not mean the top 10 or 20% of the price pyramid in any market area. It means only the top luxury tier of ONLY those towns or districts all over the US which are commonly recognized and referred to as “high end markets”. I.O.W., the location defines the high end, not just the price point. To be sure, those upscale locations are not many on the map.
The luxury market has been very slow to come alive this year. Today, it is vibrant. Hopefully nobody in Washington is going to make waves and mess up with this long awaited momentum.
A friend of mine, Jurgen Weller, was reminding me that the low cost of mortgage money has a lot to do with the high end resurgence; at least as much as its beneficial impact in all price segments. True, although at the top end of the market, cash is king. Traditional financing is seldom used. Too bad in a way, since it is always smart to leverage other people’s money rather than dig into our own cash register.
Jurgen’s point is as follows: the cost of financing a million dollar over 30 years has dropped $571,000 since 2008, only four years ago! Enough, as he puts it, to send two kids to Harvard Business School for 4 years and keep some change to feed them when they come home. Of course, by then, the parents would be long gone since I have yet to see a human being who would live in a house long enough to fully amortize the loan!
In any case, sales in the multimillion dollar range are going up, up and up. In the most exclusive areas, the incremental improvement at the top far exceeds the price and unit sales improvement registered over the first 9 months in a lower price range. In fact, the higher you go on the price ladder, the higher the jump relative to the same period of last year.
Take a look at pricey San Mateo County in the hot Silicon Valley:
- From 1 to 3M, sales are up 12.5% and the average sale price is up 1.8%
- From 3 to 5M, sales are up 14% and the Avg SP is up 2.8%
- Over $5M, sales are up…29% and the Avg SP is up…25.6%! And those stats only pertain to what is actually reported through the MLS; it could be even more dramatic since, as we know, easily a third of the luxury listings escape the MLS and are listed, known, shown and sold by the local market top guns.
By Alain Pinel
Sr. Vice President / Managing Officer
Intero Real Estate Services, Inc.
Wednesday, October 24, 2012
A Tale of Two Banks and House Flippers
We regularly share information from our President & CEO at Intero Real Estate Services, Inc. We hope you find the information informative and useful. This week Gino has an several items to bring you up to date about.
Susan & Rick
In housing rebound news this past week we saw a handful of positive indicators pop up: the nation’s largest housing lender reported a strong gain in earnings, another big bank phones in record mortgage production revenue, and flipping appears to be back in vogue.
Wells Fargo’s earnings release this month beat expectations, giving new data to the housing rebound. So far, most of the data showing a positive uptick has been in home sales, home values and a slowdown in foreclosures.
Wells Fargo reported third-quarter earnings of $4.94 billion, or 88 cents a share, beating estimates of 87 cents. Revenue was $21.2 billion. Mortgage lending added $11.9 billion in core loans during the quarter, the bank reported. However, Wells Fargo also noted that new pressure on interest rate-based earnings, and analysts will continue to watch the balance between increasing core loans and decreasing earnings from interest.
Meanwhile, JPMorgan Chase, also reported a successful quarter with record third-quarter net income of $5.7 billion, and record mortgage production revenue (excluding repurchase losses) rose to a record $1.8 billion, up 36% from the previous year.
JPMorgan said mortgage loan originations were $47.3 billion, up 29% from the prior year and 8% from the previous quarter. Mortgage loan application volume was $73.2 billion, up 26% from last year and 9% from the previous quarter. About 75% of the production volume was from refinances, and the rest from purchases.
Finally, flipping appears to be back in vogue. The act of buying houses, fixing them up and selling at a profit was big and profitable to most investors during the housing boom. But we haven’t heard much of it since the peak and recession.
That seems to be changing, according to RealtyTrac data recently reported in the Washington Post. The number of flips rose 25% during the first half of 2012 compared to the same period last year, and the gross profit on each property averaged $29,342. Of course, average profits for flipping really vary by market and depend heavily on the trend in local house prices.
The hottest markets for flipping are Phoenix, Las Vegas, Miami and Atlanta – coincidentally the same markets that suffered immensely during the recession and housing downturn. Since prices have fallen substantially from their high point in these markets and now seem to be trending up again, investors are once again attracted to the potential for profit.
Now’s a good time to look outside home sales and values for market indicators as we try to gauge which markets are healthy, which are hot and which are still slipping to their bottom. Mortgage lenders have insight here as we see with Wells Fargo and JPMorgan. Tightened lending conditions were a sticky issue in the first few years of the recession, but it seems to have improved substantially.
Get ready for an exciting 2013!
By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.
Susan & Rick
In housing rebound news this past week we saw a handful of positive indicators pop up: the nation’s largest housing lender reported a strong gain in earnings, another big bank phones in record mortgage production revenue, and flipping appears to be back in vogue.Wells Fargo’s earnings release this month beat expectations, giving new data to the housing rebound. So far, most of the data showing a positive uptick has been in home sales, home values and a slowdown in foreclosures.
Wells Fargo reported third-quarter earnings of $4.94 billion, or 88 cents a share, beating estimates of 87 cents. Revenue was $21.2 billion. Mortgage lending added $11.9 billion in core loans during the quarter, the bank reported. However, Wells Fargo also noted that new pressure on interest rate-based earnings, and analysts will continue to watch the balance between increasing core loans and decreasing earnings from interest.
Meanwhile, JPMorgan Chase, also reported a successful quarter with record third-quarter net income of $5.7 billion, and record mortgage production revenue (excluding repurchase losses) rose to a record $1.8 billion, up 36% from the previous year.
JPMorgan said mortgage loan originations were $47.3 billion, up 29% from the prior year and 8% from the previous quarter. Mortgage loan application volume was $73.2 billion, up 26% from last year and 9% from the previous quarter. About 75% of the production volume was from refinances, and the rest from purchases.
Finally, flipping appears to be back in vogue. The act of buying houses, fixing them up and selling at a profit was big and profitable to most investors during the housing boom. But we haven’t heard much of it since the peak and recession.
That seems to be changing, according to RealtyTrac data recently reported in the Washington Post. The number of flips rose 25% during the first half of 2012 compared to the same period last year, and the gross profit on each property averaged $29,342. Of course, average profits for flipping really vary by market and depend heavily on the trend in local house prices.
The hottest markets for flipping are Phoenix, Las Vegas, Miami and Atlanta – coincidentally the same markets that suffered immensely during the recession and housing downturn. Since prices have fallen substantially from their high point in these markets and now seem to be trending up again, investors are once again attracted to the potential for profit.
Now’s a good time to look outside home sales and values for market indicators as we try to gauge which markets are healthy, which are hot and which are still slipping to their bottom. Mortgage lenders have insight here as we see with Wells Fargo and JPMorgan. Tightened lending conditions were a sticky issue in the first few years of the recession, but it seems to have improved substantially.
Get ready for an exciting 2013!
By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.
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