Thursday, September 4, 2014

Mortgage rates hit 2014 low

mortgage rate chart

Mortgage rates have dropped to their lowest level in over a year.

The average rate for a 30-year loan now stands at 4.1%, according to Freddie Mac. That matched its lowest level since June 2013, when it stood at 3.93%. The average 15-year fixed was 3.23%.

Related: Best housing markets for Millennials

The government's stimulus program has helped keep borrowing costs down. The Federal Reserve has been purchasing Treasury Bonds and mortgaged-backed securities for years, providing a steady market for mortgages.

But the Fed has cut back on its purchases, and plans to end the buying program entirely in October, reducing demand for mortgage bonds. That should eventually cause rates to climb.

Low mortgage rates and home prices that are climbing more slowly should boost the housing market, said to Keith Gumbinger, spokesman for HSH.com, a mortgage information company.

"That should provide a solid foundation for home sales this fall," he said.

Related: Buy vs. rent: What you'll pay in 10 big cities

It was a strong summer.

Sales of existing homes rose 2.4% in July to an annualized rate of 5.15 million homes, according to a different report released Thursday by the National Association of Realtors

Stronger job growth has boosted the market, according to NAR's chief economist, Lawrence Yun, and a larger inventory of homes on the market give buyers more to choose from.

"That's making prospective buyers less hesitant about entering the market," he said. 

Tuesday, September 2, 2014

In some housing markets, all-cash deals still rule

institutional home buyers All-cash deals made up 38% of all home sales in the second quarter, according to RealtyTrac.
NEW YORK (CNNMoney)

Buying a home? You still have to compete against the big money bringing all-cash. But it's getting a little easier.

All-cash deals made up 38% of all home sales in the second quarter, according to RealtyTrac, down from 42% in the prior quarter.

One reason is that big institutional buyers, those buying at least 10 homes a year, are finding fewer deals.

They accounted for 4.7% of all homes sold, down from a peak of 6% in 2013.

Related: Best cities for Millennial buyers

As the housing market recovered, these investors were buying up homes in deeply troubled markets, like Phoenix and Las Vegas.

Those bulk buys helped to reverse the slide in home prices.

But now, home prices are up more than 20% from their 2012 lows.

This has created a "classic good news/bad news scenario" for the housing market, said Daren Blomquist, a spokesman for RealtyTrac.

Related: Most stressed out cities

The good news is that first-time homebuyers have more of a shot. The bad news is that some of them may already be "priced out of the market," said Blomquist.

Cash buyers are much more attractive to sellers because they know the investors are able to act quickly and that the sale will almost certainly go through.

There are still plenty of markets where cash rules.

Calculator: Was my home a good investment?

In Las Vegas, a recent spike in defaults has sparked an increase in cash sales to more than 50% of all home sales. Detroit, Kansas City, Cleveland and Philadelphia all had at least 45% of sales in cash.

Cities attractive to foreign investors are also seeing a lot of cash exchange hands. In the Miami metro area, with its huge demand from Latin Americans, a whopping 64% of sales were all cash. Other Florida cities like Orlando, Cape Coral, Sarasota and Tampa scored nearly as high. In New York, 48% of sales were cash. 

Wednesday, August 27, 2014

'50 Shades of Grey' apartment building red hot

fifty shades escalaThe view from the living room of the biggest penthouse in the Escala apartment building in Seattle. 'Fifty 

The "Fifty Shades of Grey" books have made British author E.L. James very rich. They have also made a certain Seattle apartment building red hot.

Ever since the trailer for the "Fifty Shades of Grey" movie came out last month, Erik Mehr's phone has been ringing a lot.

Mehr is the real estate broker for the "Fifty Shades apartment."

Yes, the upscale apartment building in Seattle where fictional billionaire Christian Grey lives -- and does lots of kinky things -- actually exists. It's called Escala.

Related: 'Fifty Shades of Grey' trailer

It's overwhelmingly women ages 19 to 50 that call Mehr's firm, begging to spend a night or two in the famous penthouse or, at least, get their photo somewhere in the building.

"Our silly phone calls have spiked again where people want to rent the room," Mehr told CNNMoney. "I don't think they realize that this is a condominium building that residents live in and there is no red room."

E.L. James heard about Escala, which was completed in 2009, and wove it into her story, although she did take a number of liberties. For example, there isn't a helicopter landing pad on the roof.

Related: Live in a multi-million dollar homes for $2,500

Escala had to increase its security measures since the first book came out in 2011 and fans became a little too eager to get close to "the apartment."

The most expensive penthouse at Escala doesn't have a red room. A family from Oregon bought it in 2013 for $6.2 million.

But the building does have some famous people with ties to the building. Escala has had as many as three Major League Baseball players as residents. San Francisco Giants pitcher Tim Lincecum owned one of the "sub penthouses," but he sold it earlier this year.

Related: Best hotels of 2014

While the "Fifty Shades" trilogy and movie have caused some headaches for Escala residents, there have also been perks.

E.L. James gave a private book signing to building residents, according to Mehr, and the film crew took shots of Escala's exterior (with the owners' consent) that are likely to appear in the movie.

But the greatest benefit of all has been the skyrocketing home values since the book's release.

According to real estate website Zillow (Z), the median sales price for a Seattle condo has risen about 10% since 2010. The median sales price for Escala apartments, however, have surged over 75%.

Related: Was my home a good investment?

Only six apartments remain unsold in the building. Most are going for around a million.

Still, Mehr attributes the phenomenal rise more to the improving economy and Seattle's rising popularity than the book.

"Most of the unit owners are like you may expect -- they're business people or a bit older, so the book wasn't on their radar," says Mehr. "For the most part, they would rather downplay where they live."

But it's notable that much of the price jump occurred since the first "Fifty Shades of Grey" book came out in the spring of 2012. The median sale price rose 62% since then, according to Zillow.

That's the kind of economics ruthless businessman Christian Grey would likely approve of. 

Saturday, August 23, 2014

Zillow buys Trulia for $3.5 billion

By Les Christie  @CNNMoney July 28, 2014: 3:03 PM ET

The two biggest names in online house hunting -- Zillow and Trulia - are joining forces in a stock deal valued at $3.5 billion.

Trulia shares jumped 12% on the news that it's selling to Zillow.

Zillow will continue to operate two separate websites, where consumers can search listings of homes for sale. Zillow and Trulia together attract more than 130 million visitors a month.

Both companies post detailed listings of homes for sale, and charge agents to post their names alongside their listings. Some agent teams spend $20,000 a month with Zillow, Trulia, or both.

Still the websites' revenue only add up to about 4% of the $12 billion the real estate industry spends on marketing via newspaper and television ads, billboards, direct mail and the like. Zillow CEO Spencer Rascoff sees an opportunity to capture more of those marketing dollars via mobile.

"Mobile is becoming the medium of choice for home shopping," said Rascoff.

Trulia's current CEO Pete Flint will continue to head Trulia's operations and report to Rascoff.

Related: Chinese homebuyers are flocking to these states

The two real estate portals have transformed the housing market over the past decade by making information that was once only available through realtors easily accessible to consumers. The sites have made the home buying process much more transparent and stripped real estate brokers of their traditional role of gatekeepers of information.

Zillow, for instance, has its own home value algorithm called Zestimates. Trulia offers extensive rankings on crime, public transit and schools.

Zillow CEO: Why Trulia is worth it

The ultimate fear: Zillow and Trulia could make brokers irrelevant.

The new Zillow will still have plenty of competition from other sites such as Realtor.com, Homes.com as well as from Coldwell Banker, Re/Max, Century 21 and other real estate brokers.

But it will give the combined company the leverage to charge realtors more, said Steve Murray, editor at Real Trends a real estate communications and consulting company.

Related: Mansions for under $1 million

Related: Best places for vacation home deals 

Monday, July 21, 2014

Shopping for million-dollar homes comes with perks

Jack Cotton, a realtor in Cape Cod, Mass., will take potential buyers out on his powerboat. He works with properties on the high end, which he defines as the top 10% of the market.

"That's kind of our secret weapon," he said of his boat. His clients enjoy cruises of the nearby inland waterways to "experience the lifestyle of being here."

He mentioned his counterparts in Colorado will take their clients out skiing, and Manhattan realtors take potential buyers out in limos.

Ken DeLeon, a realtor in Atherton, Calif., the highest-earning zip code in California, recently took delivery of his own private plane. He uses it to give buyers -- particularly overseas investors -- aerial views of what could essentially be their next backyard.

deleon planeCalifornia real estate agent Ken DeLeon speaks to clients in front of his new private plane.

But a plane isn't the only way to give clients a birds-eye view of a property.

Realtors are now using drones, and drone technology, as a way to stay on top.

"The high-end market is very competitive," said Colette Harron, a real estate agent in Essex, Conn. "So whatever it takes." Her company recently used photographs taken by a drone to showcase a large, multimillion-dollar home in Connecticut. The drone was able to capture the stunning water views of nearby Long Island Sound.

Related: World's coolest superyachts

Buyers in the well-heeled River Oaks neighborhood of Houston are offered something new from builder Al Ross, who's putting up several large houses in the $4 million to $5 million range.

He includes a personal concierge service with each home. Good for one year, the service includes seasonal flower and plant renewal, cleaning of the home's exterior and gutters, touch-ups to walls that are scuffed or scraped, and other services.

Clients "want to know that you are there for them when they need you," Ross said.

Each home also comes with a three-year warranty on its construction. If anything breaks, he'll fix it, no questions asked. "It's no different than buying a very luxurious car," he said. "You expect everything to function properly."

high end real estate boatPicnic, anyone? Realtor Jack Cotton said boating is part of the lifestyle in Cape Cod, Mass.

For others, selling a high-end property is about creating an experience, and making a buyer understand the lifestyle that comes with a certain property.

Los Angeles realtor Eric Lavey used to produce sleek, narrative-driven videos with professional actors that gave potential homeowners the ability to see what life might look like in the properties he markets, which usually go from $10 million and up.

Now, he says, the market is so hot he doesn't have the time to create videos, and instead focuses on getting his clients properties with the two must-haves for his area: views, and a substantial master bathroom.

Related: America's top-earning zip codes

But wooing the potential buyer may take more than that.

Michael Meier at the Meier Group in New York City goes truly over the top when it comes to imagining a certain lifestyle. In a recent shoot for a downtown loft, he added a scantily-clad lingerie model to the scene. In one shot, she relaxed in bed with two male models.

"People dress themselves in jewelry to make them look good. I dress homes in beautiful people to make them look good," Meier said of the shoot, in a recent video on his website.

Related: Crazy requests for the luxury concierge

Meanwhile, Cape Cod realtor Jack Cotton said he doesn't believe in staging for the high-end buyer because "it's not real, it's contrived, it's pretend ... people in the high end don't want to be played," he said. "They want the truth." He doesn't even believe in the old trick of baking cookies before a home's showing.

He contends that it all comes down to knowing the buyer.

"You have to adapt to the market that you're in," he said.