Real Estate Boom To End No Garage Construction Plan Ideas Holidays Holiday Homes In Cyprus Real Estate Homes On Market Taking Much Longer To Sell In Past Six Months Real Estate Scams Conditioning
The naysayers are proclaiming the end of the real estate boom once again. Once again, they are wrong.
Boom, Boom, Boom
In recent years, it’s impossible to turn on the television or read the headlines without seeing a warning of impending doom.Experts claims there is a housing bubble and it is about to burst. Should first-time and move-up homebuyers be concerned? No.
We keep hearing about the bursting bubble, yet the real estate market continues to boom. How can this be? Demographics are the primary reason.
The most significant and frequently mentioned demographic is the “Baby Boom” generation, which refers to children born in the years following World War II. Economic forecasting expert and author, Harry Dent, has written extensively about how property buying habits occur in a predictable fashion as a generation ages. From needing an apartment in college, to buying a starter home and eventually trading up to something larger, it is all cyclical. Since the Baby Boom generation is the largest so far, their impact has been far greater than the generations that preceded them.
Now that Boomers have moved into their top earning years, they continue to push the housing market to new levels. They are purchasing larger primary residences as well as vacation homes and investment properties. The statistics for 2004 reflect this trend, with 36% of home sales going toward second homes and 23% of sales going toward investment properties.
Demographic trends don’t end there:
Immigration – There has been a large influx of immigrants over the past three decades.
Children of Baby Boomers – This generation is now in their twenties and looking to purchase their first homes.
Retirees – While the demand for housing is expanding, the supply is decreasing. With advancements in medicine and treatments of disease, retirees are living longer. This means that they are occupying their homes for more years, which decreases the supply of homes available for purchase.
In addition to the demographic factors listed above, real estate has been a rewarding investment. Stocks and bonds have not performed as well as investors were used to, while real estate has exceeded expectations. In an uncertain world, people are more comfortable investing their money in property that will appreciate and can be lived in.
Don’t buy the hype about a bursting bubble. Three years have passed since the doom and gloom predictions started. The real estate marketing will continue to flourish.
Garage construction has taken off over the past few years. Many people that have homes have decided that they want to build onto it in one way, shape, or form. And a lot of these people have determined that a new garage would give them what they are looking for.
When you are looking to take on a garage construction project, you will first need to start out with a plan of the new structure. You can find a garage construction plan in a number of different places.
Deciding whether or not you are going to take on the garage construction project yourself is an important step as far as coming up with a plan is concerned. If you are going to build your own garage, you are going to have to draw up your own plans. But on the opposite end of things, if you are going to hire a contractor to take on your garage construction project, they will be able to supply you with a number of different plans.
But regardless of who is going to be doing the actual building, make sure that you have a detailed plan so that your project follows along as it is supposed to. Never make the mistake of thinking that you will simply build as the project goes along. Even though this may work out in the end, more times than not you will end up missing out on something that you need.
Finding a garage construction plan that suits your needs should be easy. The first thing that you will need to do is determine how much space you have, as well as how big you want your new garage to be. The good thing is that your options are endless. You could opt for a single car garage that offers nothing more than basic shelter, or you could decide to build a multi car unit with a storage space on top. This decision will be based on size as well as necessity.
Also, price is always a determining factor in any garage construction project. Obviously, the smaller the garage the less you will have to pay. And remember, by doing the job yourself you can save a lot of money on labor.
A garage construction project may be all you need to take the look and functionality of your home to the next level.
The advancement in the living standards, the increase in leisure time and the need to change environment from the daily distressing pressures has internationally caused an increasing demand in second/holiday homes. In this article we will refer to holiday homes for personal use and not specifically for investing purposes.
Cyprus is included in the international markets concerning holiday homes (for medium/high income buyers), with Spain on top of the list, Portugal second, Cyprus third, Malta fourth, with Croatia, Turkey and Bulgaria to follow as the new up coming markets. Greece is not included in the list concerning the purchase of this type houses, for numerous and various reasons, (it has only one international airport, short property supply, complicated title deeds, peculiar and perplexing legislations, almost compulsory false declaration i.e. an objective value instead of the real one etc, etc). In Cyprus the 20% of the overall property purchases comes from foreigners, however it represents the 70% of holiday home purchases in Cyprus.
The purchase of holiday homes in the areas of increased demand, in relation to foreigners/locals is analyzed as follows:
Free Famagusta – Protaras areas ( 50% Cypriots + 50% foreigners). Larnaca
area ( 20% Cypriots + 80% foreigners). Limassol (10 % Cypriots + 90% foreigners). Paphos district (5% Cypriots + 95% foreigners). In the mountainous resorts (Platres – Moniatis etc) the percentage is 60% Cypriots + 30% foreigners, while in other mountainous villages including those with traditional architecture (Lania, Lefkara, Kakopetria) the buyers are mainly foreigners, excluding expatriates.
What should you look for when buying a holiday home?
On average, the length of time required from real estate listing to contract has increased dramatically in the U.S. in the past six months, according to HouseHunt’s latest national “Current Market Conditions” homes for sale activity survey. Seventy-five percent of respondents said it is now taking more than 30 days. Of that figure, 30% said it is taking more than 60 days.
Three months ago, 52% of survey respondents said the average time on the market required for a home to sell was more than 30 days on the real estate market. Six months ago, only 35% said it was taking more than 30 days as buyer frenzy continued unabated.
“Current Market Conditions” 4th quarter survey also found:
Home sales prices remain firm. Currently, 82% say they are getting 95% or more of asking home prices. This compares with 80% in the third quarter and 90% in the second quarter of 2005.
Solid appreciation. One-half of all respondents report home price appreciation of 10% or more in the fourth quarter, year-to-year. This compares with 46% in the third quarter and 42% in the second quarter.
Multiple offers down. Currently, only 50% of respondents report multiple offers. This is down from 70% in the second and third quarters of this year.
Buyers-sellers demand nearly equal. A more balanced real estate market between buyers and sellers demand has emerged in many parts of the country. This compares with a 61-39% buyer ratio in the third quarter.
First-time buyers. Currently at 35%, this percentage has stayed about the same for the last six-nine months despite price and appreciation spikes on the East and West coasts and in Florida, Phoenix and Las Vegas. Greatest first-time buyer activity continues to be in the South and Midwest. Repeat and move-up buyer activity remains strong. Investor and second-home demand has slowed.
Inventory of unsold homes growing. Sixty-five percent said the trend is up in local real estate markets. Fifty-five percent report a good supply in all price ranges. Only 38% reported a good supply six months ago.
Market Growth. Overwhelmingly, survey respondents said job and population growth continues to fuel housing demand in local markets.
“Our latest random survey findings are consistent with both nationwide housing sales data and forecasts of top industry economists,” said Michael Bearden, President and CEO of HouseHunt, Inc. “Our strong economy and consumer demand made record homes for sale possible in 2005 despite destructive hurricanes, rising mortgage interest rates and higher energy costs. We’re optimistic that a sustainable, more balanced housing market will be the cornerstone of the U.S. economy in 2006.”
A sampling of individual survey results:
The conditioning process adopted by some agents is one reason for the bad reputation that real estate agents have in Australia. Conditioning has become part of the real estate market because many agents lie to property owners about the value of their property.
When valuing a property some real estate agents will quote a value in excess of the property’s true value in the belief that the owners will list their property with the agent that gives them the highest valuation.
A typical Australian real estate agent’s selling agreement will tie the property owner to that agent for 90-120 days. If the property is sold during this period the agent will earn their commission whatever the sale price.
Having secured the listing by over quoting the property’s value the agent knows that they must get the owner to accept a lower price for a sale to occur.
The conditioning process begins. The agent will ensure that plenty of “buyers” come to view the property; this activity is often interpreted by property owners as the agents earning their commission. However many of these buyers will have budgets below the asking price of the property, some may not even be buyers at all but friends of the agent!
The agent will start pointing out all the negative aspects of the home, talk of the market not being as strong as it was and giving feedback that the market feels that the property is over priced.
If the property owner elects to sell via auction the conditioning pressures are massively increased on auction day. Often the owner will be pressured into putting the property “on the market” despite the bidding being below the reserve price previously advised. Agents will claim that by putting the property on the market interested parties will raise their bids or even start bidding if they have not previously shown any interest. The logic for this argument is difficult to follow but one thing is certain, by putting the property on the market the real estate agent will get their commission
It is far easier for a real estate agent to persuade a vendor to accept a lower price than to extract a higher price from a buyer. The agent only has one party to focus on in the vendor but may have many buyers to try and convince. Through the listing agreement the vendor is tied to the real estate agent. Agents can treat vendors appallingly and the vendor has no option but to stay with that agent until the selling agreement expires. A buyer on the other hand can walk away at anytime.
The agent is typically entitled to their commission if the property is sold during the period of the sales agreement even if they have never met the purchaser. If the owner finds a buyer through their personal network the agent will still get their commission.
Unfortunately many agents who should be working for the vendor are in fact working for themselves.
Conditioning damages the value of your property
The conditioning process is not just stressful but can damage the value of your property.
Initially many vendors are reluctant to lower their asking price from the valuation that the agent provided to secure the listing. If after a period of time the property has not sold the owner may agree to lower the asking price.
But by now the property will have become stale. Buyers will know that the property has been around for a while without selling and will wonder what might be wrong. The property will have earned the reputation of being a lemon and the vendors may need to accept a price lower than the property’s true value in order to make a sale.
Commission does not guarantee agents will work to achieve higher prices
Many real estate agents will claim that the commission system means that the agent’s goal and the vendor’s goal are aligned as a higher sale price results in more commission for the agent. Simple mathematics and common sense show that this is often not the case.
Assuming a typical commission rate of 3% an agent who works hard to achieve and extra $10,000 for the vendor will earn an extra $300 commission. Yes this is an incentive for the agent to get a higher price but there is a risk that by pushing for the higher price they may lose the sale altogether and no sale means no commission.
It is better for the agent to sell the property at a lower price and move on to the next property than to invest the time in trying to achieve a higher price for the vendor.
For the vendor however the extra $10,000 is well worth the effort! The rate of return that the vendor receives for this extra effort is even more apparent when we consider the amount as an increase on equity rather than as an increase on the value of the property. Given that many homeowners do not own their home outright but with the assistance of a mortgage the repayment of the mortgage will reduce their proceeds from the sale.
For example a couple may be looking to sell their $300,000 property on which they owe $250,000 to their mortgage company. The equity that the couple have in the property is $50,000. If the property is sold for $10,000 less than it’s true value the couple’s equity has been reduced by 20%.
Poor performance from a financial adviser that reduced your investment return by 20% would be seen as unacceptable, but all too often real estate agents are able to get away with this kind of activity.
How to avoid being conditioned
By choosing to sell your home privately and having your property valued by a professional valuer you avoid the stress of conditioning.
Professional valuers have no incentive to inflate the value of your property as they earn an agreed fee irrespective of the valuation that they place on the property..
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