Asheville Mountain Real Estate Blog

Asheville, NC real estate for sale. Information for buyers, sellers and mountain homeowners, without pressure. Rich content for those who are far away about what it is like to live here through the generous use of media. And some nostalgia with our, "Baby Boomers' Fun Stuff", Thanks for stopping by.

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A small, highly personalized real estate firm specializing in mountain homes and land in greater Asheville.

Friday, February 23, 2007

Plato on Housing Markets: "The excessive increase of anything causes a reaction in the opposite direction"

Making Honest Sense of Housing Stats

02/24/07

Where do buyers and sellers get reliable housing advice in one of the great decisions they will make in all of their lives? It is difficult these days to find objective online information about trends in the housing market. Everyone has an agenda in their reporting, and as such things can be confusing.

There are umpteen housing blogs who favor an interpretation that is akin to economic Armageddon. The competing voices largely come from realtors, lenders and their organizations, who also have an agenda. This group says something like, "the market has stabilized, it's a good time to buy". Both sides use omission and spin to reach their conclusions. I'll go with Plato, back to some good old sixth grade concepts for my own analysis, thank you.

Forming an Opinion: Advice From an Old Futures Trader
In any market, for any commodity, the first factors to look for are in the law of supply and demand, which Plato certainly grasped. Futures traders, ( I traded oil markets for ten years), call these factors, the fundamentals. This is an unimaginative, though descriptive term about what it looks at. No amount of psychological frenzy can trump supply and demand in the long run. The fundamentals are thus friend and guide.

For housing markets, on the supply side, we need to be concerned about inventory levels, and the rates of input. This will allow us to ponder the minds of sellers and future inventory levels. We can then start to decide if the market is soft, if it has bottomed out, or any other configuration.

For sellers then, we will examine current inventories, and also two measures of seller activity. One is the number of new residential permits issued, and the other is the number of houses where construction actually began , commonly known as "housing starts". On the demand side, we need to know current prices, and glimpse a look into buyers' minds by tracking new mortgage applications.

These measures are a pretty good first look at the fundamentals of housing markets and answer a multitude of questions that play directly into the law of supply and demand. How many homes are for sale? Is that number rising or falling? Is that number high or low for this time of year? Are sellers and builders entering or exiting the market? What are the prices and how do these compare historically? Are buyers entering or standing on the sidelines? The collection of answers to these questions will give any buyer or seller a basis from which to act, without being influenced by anyone's agenda.

Today's Agenda Free Opinion

Looking at the most recent data available, here is how housing stats stack up:

Supply Factors

Inventory: Inventories grew dramatically in the first 10 months of 2006 as buyers retreated and sellers were committed. For Dec 2006, there were 3.508 million homes for sale. This is a 6.8 month supply. Inventories have fallen from a high of 3.861 million in July 2006, a decline of 9.1%, and have fallen from a high of 7.4 months supply in Oct 2006.

New Permits: Jan 2006 saw 1.568 million new permits, a decline of 28.6% vs. Jan 2006. Sellers/builders remain in stiff retreat.

Housing Starts: Jan 2006 saw 1.408 million starts, this is 14.3% less than Dec 2006 and 37.8% below Jan 2006. That inventories are drastically seeking to halt price erosion is obvious on all fronts.

Demand Factors
Current Prices: Selling prices have obviously fallen in reaction to the huge mid 2006 inventories. For Dec 2006, the average selling price was 269K, down from a high in June 2006 of 276K, and are once again about equal to the Dec 2005 price of 268K, a decline of 2.6%.

Mortgage Applications: These are reported weekly by The Mortgage Bankers Association, so the sheer frequency relative to other housing indexes can build confusion. Since Dec 2006 reports have fluctuated. Since the report of Dec 30, 2006, there have been five weeks where applications increased and four weeks of decreases.

No Nonsense Conclusion: This is a classic situation of a market that is unsure and is testing a potential bottom. Fundamental indicators on the supply side show significant declines in inventories and in selling prices. This is no surprise to Plato, and buyers should be watching this closely.

At the same time, an increase in new buyers has only modestly been observed to this point. In futures trading jargon, we are looking for a confirmation of the market's reversal. Personally, if I saw a couple of more reports with falling inventories with an increase in mortgage activity, I would take that as confirmation, and a signal to buy.

Tom Ploski is a former futures and cash trader in commodity markets, please feel free to visit us at The Black Bear Realty Home Page.


Filed Under: National Market News, Tips for Buyers, Tips for Sellers


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Monday, February 19, 2007

Monitoring Your Second Home From Home
02/19/07

Here is a pertinent topic for owners of second homes. The NY Times recently, (02/07/07), ran an article on some of the latest wireless and broadband developments for monitoring a home from a distance. I personally found the substance of the column to be a little lacking, but it did provide the names of a few firms who are vying for a place in this market, so I took the opportunity to visit their websites.

I must offer the disclaimer that I have NO experience whatsoever with such devices or entities. I do however have a pretty good grasp of what kinds of features would make a good product for absent resort home owners in the Wolf Laurel area.

Crime is not a big factor here. Most of the developments in our area are close knit, or have a 24 hour gated entrance. So your vacant home is never really alone. This does not mean that one should not be concerned with traditional security features such as motion detectors, video cameras smoke, window and door alarms. Most firms emphasize these features.

The bigger issues for me would be to know that my heating system was functioning correctly during winter storms, or if the power was still on during that ice storm and thus, that my home was safe from damage. In the age of the internet, all of these things are possible by simply logging on. It is even possible to reset thermostats, or change the schedule of lighting from afar.

The range of features offered in the 21st century is pretty large. Some of the websites I toured even offer the ability to view CD or DVD covers so that night time entertainment can be scheduled when you arrive for that week away from home. Here are a few firms in the business.
(Repeat Disclaimer: This is NOT an endorsement, and there is no substitute for your own personal research.)

icontrol.com
control4
wilife
ucontrol
ADT

Tom Ploski
Black Bear Realty, Inc. We specialize in second homes, vacation homes, golf course and ski slope communites.

Filed Under: Tips for Buyers, Tips for Mountain Home Owners



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Periodic Feature: Baby Boomer Fun Stuff

02/19/07
Growing up, I was a big fan of what we then called "soul music". We did a lot of dancing at high school functions, and I would imagine your experiences were similar.
2007 marks the 50th anniversary of the founding of Stax/Volt records, the label of Sam and Dave, Wilson Pickett, and the late Otis Redding.

Here is a live performance from The Paris Olympia in 1967, (Time 4:15), of the musicians who backed nearly all of those hits, Booker T and the MG's, with their 1962 solo classic "Green Onions".

ENJOY!



(Youtube/Google removes clips from time to time for copyright issues. If this clip is missing, then: Lots More Stax/Volt, and Booker T performances at this link.

The Players: Organ, Booker T Jones, Bass, Donald "Duck" Dunn, Guitar, Steve Cropper, and Drums, the late Al Jackson jr.

Dunn, Cropper, and the sound of Stax records went on of course to be featured in The Blues Brothers films.


Tom Ploski
Black Bear Realty, Inc.
Mountain Vacation Homes and Land Near Asheville, NC


Filed Under: Baby Boomer Fun Stuff


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Thursday, February 15, 2007

A Closer Look at Home Valuation Sites Like Zillow or HomeGain in a Resort Micro- Market
02/15/07

It is not news that the Internet has skyrocketed as a tool for buying and selling homes in the past decade. 80% of buyers now use the web as a search tool. In resort home markets, such as Wolf Laurel, where buyers are likely to be shopping from remote primary residences, the numbers are even higher.

This development has helped to launch a bevy of venture capital supported, web based valuation sites. These portals all make claims for buyers and sellers which roughly equate to the ability to find a "home's true value". My summary position on this would be a simple "user beware", or to use the Latin, caveat criminator.

USA Today recently, (02/09/07), reviewed 10 such sites in an article here. Certainly, scroll down for the site by site analysis, but there are a couple of of general conclusions that can be quickly observed and logged into memory which cast doubt on the claim of "true value".

First, It is a gigantic task for these portal sites to maintain a database that comes close to getting the user any kind of a real value on their own home, or market values in general. This is especially true in a resort micro market such as Wolf Laurel. As I browsed the sites myself, I often encountered trouble finding homes in our zip code. I was unable to find even my own home in listings, let alone comparable homes within our subdivision. In short, no site can hope to maintain a database that is adequate to measure a home's "true value".

Small wonder that, as, Broderick Perkins wrote a year ago in Real Home Value Not Found Online:
The real danger said Appraisal Institute president Richard Powers, "... is that someone will make a real estate decision based on the site rather than getting someone to perform an actual appraisal. A free Internet valuation might be adequate if you want a quick estimate, but when making decisions about your largest investment, there is no substitute for an appraisal."
USA Today noted a 35% to 99% range in accuracy in some cases, while Perkins points out a range in valuation of +/- $349,000 on a subject house in California. Bottom line is that buyers and sellers should talk to a realtor from the area in order to truly have any data. Soundslike a commercial, but is true nonetheless.

The second problem with these sites appears to stem from the kinds of partnerships involved. Corporations such as E-Loan, Keller-Williams, and a list of the usual big money real estate suspects favor their own data/listings, and in a number of cases require registration in order to see results, or even photo galleries. One wonders what purposes the registration information might serve.

For Buyers: My Own Site by Site Rundown
AOL Real Estate:Cumbersome search which turned up 369 properties with "waterfront" as my criteria. This is not possible in a mountain county ranging from 1400' to 5500' above sea level. I was unable to refine the search to "Wolf Laurel" after a reasonable number of attempts.

Homes dot Com:Returned only 6 homes for sale in this zip code, there are 35 at the moment in this subdivision alone.

HomeGain:I had to go about 5 pages inside the site to even get the function to search Mars Hill, NC, and the results had a mere 22 listings.

Yahoo Real Estate:A pretty good first page, better than most. My criteria was "28754" returning the message:
There are 354 properties in your area. At least 84 matched your criteria.
I tried to view photos on a home nearby and was asked to register, just to see them. I declined, as I imagine more than 90% of users would do. Buyers wish to retain their identities until they are good and ready to do otherwise.

Zillow:Returned only 51 results for this zip code, far from adequate.

Zip Realty dot Com:Brought me several pages inside before my search could begin, and when I clcicked on NC, I was transported HERE, to HomeGain!

caveat criminator indeed!
There is obviously a good amount of money being thrown at these kinds of valuation start ups. One needs to look no farther than national television advertisements to see this. However, money does not ensure the kind of accuracy that buyers or sellers could get from, well, someone who is actually there.

Tom Ploski
Please feel free to visit us at The Black Bear Realty Home Page.

Filed Under: Tips for Sellers, Tips for Buyers, and Wolf Laurel


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