In ordinary markets, when prices are volatile, market players tend to shy away. This is one of the reasons why even the stock markets are very sensitive to price changes. In a report from businessinsider.com, the reverse is true in the housing market, as price volatility is actually an invitation to investors to join the party.
In a study conducted by James P. Smith, Zoe Oldfield, Richard Blundell and James Banks on the relative volatility of specific housing markets in the UK and the US, they surmised two major conclusions. The first being, individuals are more likely to purchase a home earlier in life in places that have high volatility in prices. The second being, people would move to a larger home in places that have high volatility in prices.
While this seems to go against common sense, the group said in their paper, “Typically, risk averse individuals will avoid risky assets as volatility increases. In this paper, we show that owner-occupied housing is an exception to that rule.”
The researchers discovered that people intuitively dive into the large waves price volatility creates in the housing market. In a report from sciencedaily.com, the willingness of these buyers to risk their money not only creates the fluctuations but also is directly related to the price volatility in the housing market.
According to research conducted by fellows from the University of Kansas, namely Associate Professor for Economics Shu Wu and fellow authors Joseph Fairchild of Bank of America and Jun Ma from the University of Alabama, the risk taking in a market place triggers the volatility.
Five hundred square feet might not sound like much, but as rents clearly show, in some markets that’s a coveted amount of real estate. In other places, it’s plenty of space to rest your head and grab a bite after a day in the woods or on the water. And in many areas, it’s the right size for a reasonable mortgage.
Here’s how it looks to live in 500 or fewer square feet around the country:
This studio offers rich living on a budget in Maui — complete with the use of two pools, two clubhouses, two Jacuzzis and two putting greens, all surrounded by lush landscaping.
More than 200 feet of lakeshore and a two-slip boat dock come with this cottage near the North Carolina-Virginia border. The home’s large windows offer views of the lake and 1-acre lot.
The great wide open beckons to whoever sleeps in this 468-square-foot cabin on the edge of a canyon between Aspen and Telluride. Situated on 40 acres amid mountains and valleys, the home features an aspen tongue-and-groove ceiling, built-in bookcases and electricity from charged batteries. There’s no bathroom, but a quaint outhouse was just built.
A new study scheduled to be published by the Journal of Housing Economics found that agents who take on too many listings sell them for about 3 percent less and it takes 129 percent longer to sell than agents with modest listing inventories.
The study looked at whether agents have an incentive to take on too many listings—at least from the point of view of their clients. Additional listings may represent additional broker commissions, but they also place greater claims on the broker’s time and energy, which in turn can have adverse sales performance consequences for their clients.
The dilution of agent effort and agency costs by very large numbers of listings adversely affects home prices and liquidity, concluded the study by economists Xun Bian, Bennie D. Waller, Geoffrey K. Turnbull, Scott A. Wentland.
‘It is clear from the results that there is a relationship between agent inventory and sales outcomes that sellers care most about: selling price and time on market. Greater agent inventory is associated with a slightly lower price and a significantly higher time on market,” wrote the authors.
While the adverse impact on price is modest, the effect of agent inventory on liquidity is substantial, the study found. The study found that adding 9 additional listings increases time on market by14%. A richer inventory measure taking into account distance-weighted overlapping listings yields a 26% effect on liquidity.
The study also compared sales of agent-owned homes versus homes owned by clients and found that agents generally sell their homes for approximately 1.6% more than client properties. Inventory competition increases the time on market by 26% for clients, but only 12% for agents. In sum, agent-owned homes still take longer to sell with additional inventory but not as long as client properties. This supports the theory that the inventory effect is driven primarily by agent incentives.
The legendary architect and his companion, the curator David Whitney, spent their weekends in the world’s most famous transparent box. Or did they?
Photo
Philip Johnson, left, with his partner, the art curator and collector David Whitney, photographed by Mariana Cook on the Glass House property in 1995.Credit
WHEN PHILIP JOHNSON’S Glass House in New Canaan, Conn., was featured in Life magazine soon after its completion in 1949, architects and designers downed martinis at the Oyster Bar, pondering the future of the International Style. But that probably wasn’t what most people were thinking about as they looked at the pictures. They likely leaned back in their Barcaloungers and wondered: How could he actually live in a clear box, without walls, without privacy, without any stuff?
The answer was that despite our indelible impression of Johnson, the owlish man in the dapper suit and those spectacles, spending his incredibly long life (he died at age 98 in 2005) in the 1,800-square-foot transparent rectangle, silhouetted against a backdrop of greenery that he called “expensive wallpaper,” he never really did live in the Glass House. At least not in the self-contained sense in which the rest of us occupy our homes.
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T’s design editor Tom Delavan tours the 49-acre estate with Henry Urbach, the house’s director.
Instead, the Glass House was merely the focal point of what eventually grew to be a veritable architectural theme park on 49 meticulously tended acres, comprising 14 structures, in which Johnson and David Whitney, the collector and curator who met him in 1960 and became his life partner, and who died just months after Johnson, enjoyed their impossibly glamorous weekend existence.
From the bunkerlike Brick House where Johnson often slept and the tiny, turreted, postmodern Library where he worked surrounded by architecture books, to Calluna Farms, the 1905 shingled farmhouse and the subterranean art gallery,also you can see here the art gallery collection. the collection of buildings formed Johnson’s idea of the perfect deconstructed home. When the Glass House compound, a National Trust for Historic Preservation site, reopens for tours in May after its usual winter break, the public will for the first time be able to visit two additional structures of the 14 — Calluna Farms and Grainger, the cozy 18th-century timber-frame house the couple used as a TV room — at last offering a more nuanced picture of what life really was like behind glass.
Philip Johnson’s “Glass House” refers ambiguously both to his iconic residence in New Canaan, Conn., and to the 49-acre property which comprised eight other buildings, including this house, called Grainger, which was used as a sitting room.Dean Kaufman
The world-famous Glass House, completed in 1949, was not the couple’s sole residence on the property. Dean Kaufman
The Sculpture Gallery, built in 1970, holds works from the likes of Frank Stella and Robert Morris. Dean Kaufman
The postmodern one-room Library, built in 1980, where Johnson often worked. Dean Kaufman
The Gehryesque Da Monsta gatehouse, completed in 1995. Dean Kaufman
The interior of Grainger, the 18th-century farmhouse used mostly for watching TV. Dean Kaufman
The entrance to the subterranean Painting Gallery. Dean Kaufman
Calluna Farms, the shingle-style farmhouse purchased by Johnson in 1981 to serve as Whitney’s residence. Dean Kaufman
The interior of Calluna Farms with its lace curtains and chairs designed by Prouvé, Le Corbusier and Thonet. Dean Kaufman
The bedroom in the Brick House, designed by Johnson in 1953, features vaulted ceilings, Fortuny-covered walls and a hand-woven carpet. Dean Kaufman
The Lincoln Kirstein Tower, a 30-foot folly on the property that Johnson used to climb. Dean Kaufman
A window by the artist Michael Heizer at the back of Grainger, facing the peony and iris garden. Dean Kaufman
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IN THE BEGINNING, there were two: the Glass House and the Brick House, both about 50 feet long and finished within months of each other in 1949 on a five-acre plot, with a 90-foot-wide grassy court separating them. History has downplayed the Brick House — from the outside it’s plain and it doesn’t fit well with the people-in-glass-houses narrative — but Johnson always knew it would be impossible to live entirely in the open, so he built a place to get some privacy.
The rest of the buildings came naturally, if gradually. The idea of having a slew of small houses for different activities, moods and seasons, complemented by decorative “follies,” was Johnson’s conception for the site from early on. He called it a “diary of an eccentric architect,” but it was also a sketchbook, an homage to architects past and present, and to friends like the dance impresario Lincoln Kirstein, after whom Johnson named one of the follies he built on the property, a 30-foot-high tower made of painted concrete blocks.
In contrast to their whirlwind weekday world in Manhattan, Johnson and Whitney saw life in New Canaan as perpetual camping, albeit of a luxurious, minimalist sort. Neither Grainger nor the 380-square-foot Library has a bathroom, though both are air-conditioned, unlike the Glass House, which relies on cross ventilation. It originally had heating pipes in the ceiling and the floor, but the ceiling pipes reportedly froze early on and were never adequately repaired. To compensate, on particularly cold winter days the temperature of the water flowing through the radiant heated floors was turned up to nearly 200 degrees. “You couldn’t go in there with bare feet,” Port Draper, the contractor who maintained the house for many years, recalled in The Times in 2007. Johnson was unbothered by the house’s leaks, a problem endemic to a flat roof. Frank Lloyd Wright once referred to one of his houses as a “two-bucket house,” according to Robert A. M. Stern, to which Johnson gaily replied, “Oh, that’s nothing, Frank. Mine’s a four-bucket house. One in each corner.”
While the Glass House was designed with areas for dining, living and sleeping, loosely divided by low cabinetry and a brick cylinder holding the chimney and bathroom, it functioned more as a living space, an occasional office for Johnson and a place to throw parties (lots of them, attended in the early years by a coterie of young Yale architecture students, and later by the likes of Richard Meier, Frank Gehry, Fran Lebowitz and Agnes Gund). The house was astonishingly tchotchke-free. “I don’t think clutter was allowed,” the painter Jasper Johns, a friend of both men, once said. “One was always aware of their ruthless elegance.”
The palatial Upper East Side penthouse that Joan Rivers called home for the last 25 years is now on the market. The queen of comedy died in September, leaving a void not only in the entertainment industry, but also her condo board, where she served as the president. Rivers loved her gilded apartment—she described the decor as “Louis XIV meets Fred and Ginger“—and told theTimes in 2012 that she had only listed it to “placate [her] business manager.” The apartment first hit the market in 2009 for $25 million, and was last listed in 2013 for $29.5 million. After her death, the condo was transferred to her daughter Melissa, who has now put it back on the market for $28 million. The triplex home measures 5,100 square feet and features four bedrooms, five fireplaces, and opulent things like “gilded antique boisserie paneling and columns.”
Freddie Mac today released its newly updated Multi-Indicator Market Index® (MiMi®) showing the U.S. housing market continuing to stabilize at the national level for the third consecutive month. Thirty-four of the 50 states, plus the District of Columbia, and 37 of the 50 metros, are now showing an improving three month trend.
News Facts:
The national MiMi value stands at 74.7, indicating a weak housing market overall but showing a slight improvement (+0.35%) from October to November and a positive 3-month trend of (+1.07%). On a year-over-year basis, the U.S. housing market has improved (+3.94%). The nation’s all-time MiMi high of 122.5 was June 2006; its low was 60.3 in September 2011, when the housing market was at its weakest. Since that time, the housing market has made a 23.9 percent rebound.
Fifteen of the 50 states plus the District of Columbia have MiMi values in a stable range, with North Dakota (95.8) the District of Columbia (94.3), Montana (91.4), Wyoming (91.2), and Hawaii (89.1) ranking in the top five.
Eight of the 50 metro areas have MiMi values in a stable range, with San Antonio (89.5), Austin (87.0), Houston (85.3), Los Angeles (84.1) and Salt Lake City (83.6), ranking in the top five.
The most improving states month-over-month were Georgia (+1.32%), North Carolina (+1.28%), Michigan (+1.27%), Maryland (+1.14%) and Delaware (+1.12%) On a year-over-year basis, the most improving states were Nevada (+17.45%), Illinois (+10.15%), Rhode Island (9.65%) Colorado (+8.63%) and Ohio (+8.45%)
The most improving metro areas month-over-month were Atlanta (+1.64), Detroit (+1.40%), Charlotte (+1.35%), Birmingham (+1.32%) and Cleveland (1.20%). On a year-over-year basis the most improving metro areas were Las Vegas (+20.14%), Chicago (+12.37%), Denver (+10.68%), Miami, (+10.57%), and Providence (+9.45%).
In November, 34 of the 50 states and 37 of the 50 metros were showing an improving three month trend. The same time last year, 34 states plus the District of Columbia, and 41 of the top 50 metro areas were showing an improving three month trend.
Quote attributable to Freddie Mac Deputy Chief Economist Len Kiefer:
“Housing markets are stabilizing. Low mortgage rates help to keep affordability in-check across many markets. Labor markets are strengthening, but generally have room for improvement. We’re keeping an eye on markets with deep ties to energy. We’ve noticed some deterioration on a month-over-month basis in some of these energy markets, especially smaller markets with less diversified economies. Overall MiMi has improved for the third consecutive month showing housing markets are getting back on track.”
The 2015 MiMi release calendar is available online.
MiMi monitors and measures the stability of the nation’s housing market, as well as the housing markets of all 50 states, the District of Columbia, and the top 50 metro markets. MiMi combines proprietary Freddie Mac data with current local market data to assess where each single-family housing market is relative to its own long-term stable range by looking at home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), proportion of on-time mortgage payments in each market, and the local employment picture. The four indicators are combined to create a composite MiMi value for each market. Monthly, MiMi uses this data to show, at a glance, where each market stands relative to its own stable range of housing activity. MiMi also indicates how each market is trending, whether it is moving closer to, or further away from, its stable range. A market can fall outside its stable range by being too weak to generate enough demand for a well-balanced housing market or by overheating to an unsustainable level of activity.
The hottest trend in real estate these days is carving out some space for your in-laws, the Wall Street Journal says.
And it has the potential to lift your home value as much as 60 percent.
Known informally as “in-law suites” or “granny flats” and formally as “accessory dwelling units” (ADUs), these little homes, usually somewhere between 300 and 800 square feet, are going up in backyards across the country. The multigenerational living trend has been picking up steam through the Great Recession, both as millennials return to their parents’ homes and as boomers (and their parents) age.
To skirt zoning rules, in-law units often lack stoves. Click photo for a slideshow.
The main obstacle is zoning. Cities generally restrict the number of residences that can exist on a property. But often there are ways around that, if the structure is short enough, and/or if it’s small enough in proportion to the property. In such cases, it’s viewed not as a residence but as more of an outbuilding, skirting neighborhood restrictions.
Strangely — and perhaps highlighting the dated way many of these zoning laws regulate residences — the stove is frequently the dividing line over whether or not a structure is considered a home or not. So some developers add in small kitchenettes, but not stoves, simply because of zoning.
Kevin Casey, the CEO of New Avenue Homes, has been helping homeowners build these backyard cottages for about five years using his project planning software. “It’s not a cultural shift; it’s a reversion to the norm,” he says. “If you go to Europe or Asia, this is what it’s like. This is the way families have been living for centuries.”
Despite the benefits, there are many design and regulatory issues to contend with, says Seattle-based architect Ross Chapin, who designs what he calls “right-sized homes” as well as these cottages.
Eight years after heading into the tank, the housing market is finally nearing normal. Come 2015, sales of existing homes are likely to match or top the average for 1999-2002, before home buying mania seized the U.S. A strong rental market already has the construction of multifamily dwellings back to that historical norm.
The big exception is new single-family homes. Both construction and sales of them are running at just 50% of their pre-bubble levels, and they won’t regain those norms until at least 2017. Demand is lagging for a couple of reasons: New homes tend to be more expensive than older ones, limiting the pool of buyers with the credit to buy them. And a paucity of first-time buyers means fewer owners of existing homes are able to sell and move up to a larger, more costly home.
But supply is also a constraint. Builders can’t keep up even with the currently muted level of demand. These days, a new home typically sits on the market for just three months versus the four or five of the past. There aren’t enough skilled tradesmen: carpenters, framers and others who left the field in droves when the bubble burst. There are too few build-ready lots. It takes 15-36 months to prepare sites—building roads, water and sewer lines, bringing in electricity and so on, plus clearing regulatory hurdles. In some localities, jumping through the regulatory hoops alone can take up to seven years. Making matters worse, many lenders—gun-shy after the steep plunge in housing prices—have been loath to lend for development of raw land. So only builders with deep pockets are able to create new subdivisions. Though all these pressures are easing, it will take time for them to disappear.
Meanwhile, for the housing market as a whole, several positives are at work: Credit is getting easier. Half of mortgage lenders surveyed expect improved access to credit for lower prime borrowers (FICO scores of 620 to 720) over the next six months. Lenders are becoming more comfortable with the standards for loans that can be off-loaded to Fannie Mae or Freddie Mac, soothing their concerns. (Parallel rules for mortgages that can be securitized and sold will kick in next year.) So there’s more flexibility on debt-to-income ratios, and minimum down payments are sliding from 5% to 3% for Fannie- and Freddie-conforming loans, for example.
Of course, compared with the boom years, mortgages are still much harder to obtain. About half of mortgages still go to borrowers with FICO scores above 740. Though that’s better than the 60% such borrowers accounted for in 2013, it’s far more restrictive than in the early 2000s, when the average borrower score was 680. The Federal Reserve’s July 2014 Senior Loan Officer Opinion Survey on Bank Lending Practices indicated that half of mortgage loan officers considered conditions still to be tighter than average.
Also helping are higher incomes and employment; more consumers can afford purchases. In addition, there are a million more potential home buyers than usual—a backlog of young adults still living with their parents but eager to strike out on their own as soon as possible. Mortgage rates will remain modest, despite a likely slow climb over the coming year. Read more at http://www.kiplinger.com/article/business/T019-C021-S010-housing-market-outlook-slowing-improvement-in-2015.html#qHcvjiQCoIuEtUY7.99
Fredie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates moving higher for the second consecutive week amid better than expected economic data. This 30-year fixed-rate mortgage also rose above 4 percent for the first time in three weeks.
News Facts
30-year fixed-rate mortgage (FRM) averaged 4.02 percent with an average 0.5 point for the week ending November 6, 2014, up from last week when it averaged 3.98 percent. A year ago at this time, the 30-year FRM averaged 4.16 percent.
15-year FRM this week averaged 3.21 percent with an average 0.5 point, up from last week when it averaged 3.13 percent. A year ago at this time, the 15-year FRM averaged 3.27 percent.
1-year Treasury-indexed ARM averaged 2.45 percent this week with an average 0.4 point, up from last week when it averaged 2.43 percent. At this time last year, the 1-year ARM averaged 2.61 percent.
Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following links for theRegional and National Mortgage Rate Details and Definitions. Borrowers may still pay closing costs which are not included in the survey.
Quotes Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.
“Mortgage rates continued to rise this week with the 30-year fixed-rate mortgage eclipsing the 4 percent mark. The rate increases coincide with real GDP beating consensus expectations of 3.0 percent growth by growing at an annualized rate of 3.5 percent in the third quarter. The ISM Manufacturing Index also beat expectations registering 59 in October, up from September’s reading of 56.6.”
Luxury home sales in the Chicago area are thriving in 2014. Home sales for the $1 million-plus segment of homes in the seven-county Chicago metro area are up 8% over 2013, according to the RE/MAX Luxury Report on Metro Chicago Real Estate.
In the first three quarters of 2014, there were 1,675 total units sold at $1 million or more in Chicago, with a median sales price of $1,350,000, which is up 3% compared to the same period in 2013.
During the third quarter, sales of luxury homes totaled 736 units, a 13% increase over the same quarter of last year, the RE/MAX report states. The median sales price for luxury properties rose 3% in the third quarter to $1,340,000.
The average time on the market for luxury properties sold during the first nine months of this year in the seven-county Chicago metropolitan area was 130 days, down from an average of 166 days in 2013.
Average market time during the third quarter was 123 days, down from 132 days in 2013.
In the City of Chicago itself, luxury sales were up 13% to 763 units through the first nine months of 2014, while the median sales price for the period was $1,400,000, up 2%.
During the third quarter, sales of $1 million or more totaled 320 units in the city, up from 270 in 2013, representing a 19% gain. The median sales price for the third quarter was $1,425,000, up 6% from the same quarter of 2013.
Sales activity in the first nine months of 2014 increased in each of the three neighborhoods that dominate Chicago’s luxury attached-home (condominiums, townhouses or co-ops) market. The Loop saw sales rise to 51 units from 44 the prior year.
In Lincoln Park, sales rose to 60 units from 33, and the Near North Side had 219 sales, up from 199. The median sales price was $1.25 million in Lincoln Park and $1.4 million in both the Loop and Near North Side.
