Overseas Chinese Web Guide

Tag: Real Estate

  • The Meaning of Gasoline Prices

    Five months ago, I had to pay $4.55 per gallon for regular unleaded at the local Valero gasoline station. At the time, gasoline prices were just 10% away from hitting the $5.00 per gallon mark. So, if I was offered a bet on whether gasoline prices would be over $5.00 or under $2.50 in five months, guess which way I would have wagered? However, here we are in the middle of November and regular unleaded is $2.35 per gallon. So, what does this all mean?

    Right now, I am not sure. Was it oil speculators that previously drove up the price of gasoline? Or, is the economy that badly off to dry up demand for gasoline? In some parts of the Bay Area, the signs of the real estate deflation are obvious. However, in other cities, housing prices remain pricey. I always thought demand for gasoline was relatively inelastic. Everyone has to drive, right? However, if the demand for gasoline is true off kilter, then we are all headed for trouble times, regardless of which neighborhood we live in.

  • Real Estate Bubble Signs

    For those who were waiting for the real estate bubble to pop, the time has come. I recently glanced at some home listings from one ZIP code in San Jose, California. The listings told it all.

    • Short Sale Subject to Lender’s Approval
    • This is a short sale.
    • Price and commission are subject to lenders approval.
    • To be sold as is.
    • This is a short sale listing.
    • Probable short sale.
    • Price just reduced.
    • Short sale price.
    • Terms and commissions are subject to lenders approval.
    • Bank owned home.
    • Short sale approved.
    • REO/Bank owned.
    • Terrific bank owned home.
    • Bank owned REO property sold as is
    • Bank owned oportunity.

  • Real Estate Bubble

    Back in 2001, a person told me that the San Francisco Bay Area real estate market was appreciating too quickly. With thoughts of the dot.com stock deflation fresh in mind, he told me that he had sold his house to lock-in his gains and will be buying a new house once the real estate bubble popped. Well, seven years later, the bloom is off the rose. However, prices still have a ways to go before they are even close to 2001 levels.

  • The Price of a Luxury Home

    And luxury homes — properties listed for more than $3.5 million…

    BusinessWeek just made me laugh. The above quote was from In Silicon Valley, Real Estate Remains Strong. I think a luxury house is one that costs twice as much as the one you currently live in.

  • Interest Rate Cut

    The Fed’s second interest rate cut in just over a week really confused me. Instead of being merely aggressive, it appeared a bit desperate. Perhaps, the national economy is faring much worse than I had believed. The problem for home owners and real estate investors is that our perspective is often local. Easy to tell how we are doing, but difficult to see clearly how others are doing. So long as we have a roof over our heads and a steady job, any recession does not seem too bad.

    If you live in an area tha has not been affected by the sub-prime crises, you might be thinking that your area is different. However, it is difficult living on an island and eventually what happens to others may also happen to us. Make sure you have sufficient savings to ride out this storm.

  • Below Market Housing: Buy Low, Sell Low

    Would you believe that you can find a place in Palo Alto for under $100,000? Yes, it’s true. Under the Below Market Rate Program, a buyer purchased a 2 bedroom 1-1/2 bath residence for $98,800 back in April 2007. However, to be a qualified buyer, you must meet the Palo Alto Housing Corporation’s income and asset limits. So, what’s the catch?

    With a deal this good, you have to join a long waiting list. Palo Alto Housing Corporation estimates a wait of 5 to 10 years or more for people currently seeking to join the wait list. If you are fortunate to be given the opportunity to purchase a residence under this program, well, there’s good news and bad news.

    The good news is that if you finance with a 30-year fixed-rate mortgage, you can lock down your housing costs. You won’t be subject to changes in the general housing market, including interest rate fluctuations or annual increases in rent. The bad news is that unless you manage to dramatically improve your finances, you will not be moving out anytime soon. If you ever have to move, you do not benefit from the current market rate of housing in Palo Alto. Instead, you must sell to another Below Market Rate buyer at a price indexed to the Consumer Price Index (CPI). Buy low, sell low.

  • Location, Location, Location

    los-angeles-traffic.jpgThe problem with living in a desirable location is that everyone else wants to live there as well. Of course, when you visit open houses on the weekend, everything looks great because you never see the grinding traffic that slows down all surrounding commute lanes during the weekday. So, if you are thinking of moving to a new location, check out traffic conditions on Google Maps during your typical commuting hours and see if the drive to and from your new house to work is even manageable.

  • Home Price Comparison

    coldwell-banker.jpgIf you are thinking about immigrating to the United States or moving within the United States, you are probably aware that housing prices vary from region to region. Fortunately, Coldwell Banker offers a Home Price Comparison Index, which allows you to see what an equivalent house in 4 different regions will cost. First, set the market value of house in a region you are familiar with. Then, select three other markets.

    Coldwell Banker told met that a $1,000,000 house in Palo Alto, CA is similar to a $438,000 house in Queens, NY, a $187,000 house in Phoenix, AZ and a $218,000 house in Las Vegas, NV.

  • Real Estate Investment

    One of the basic concepts of economics is scarcity. And, one of the scarcest assets is land, especially in the coastal communities of California. Through outsourcing and international trade, we are now able to tap into an international distribution network of manufactured goods. A factory in China can produce more clothes, more shoes, more computers and more flat screen televisions, each better and cheaper than the generation before it. But, that same factory cannot produce more land for Californians. As a result, construction companies are building new housing further from existing communities, or finding infill in urban areas to repurpose existing buildings or lands for new houses.

    For areas rich in job opportunities, the housing market has proven to be extremely challenging – especially for buyers – in the past few years as median home prices have climbed upwards often seemingly at an astronomical pace. Sometimes, so much so as to evoke the “bubble” term reminiscent of the dot.com heydays. But, real estate is different. Sure, housing prices are governed by supply and demand just like stocks, but while you can issue new stocks, you cannot produce more land. That is the fundamental difference.

    For those seeking to invest in real estate, the Vanguard REIT Index Fund offers investors a low-cost means (i.e., 0.24% expense ratio as of Jan 31, 2004) to participate in the real estate market without the hassles of managing the property itself. For those who are able to provide a larger commitment in terms of time and effort, buying a second condo, home or even an apartment complex offers the next step up. Alternatively, if you can afford it, when you are ready to move into a new house, rent out your existing condo or home instead of selling it. This offers you the advantage of renting out a place with which you are familiar.

    More Resources

  • Location, Location, Location

    A home is more than just a place to live. Purchased wisely, a new home offers its owners a path to financial security. For those wise – or fortunate – enough to own some real estate that has appreciated significantly in value, the benefits of homeownership are self-evident. However, if you’re still hunting for your first house, how can you tell a hidden gem from a disaster waiting to happen?

    The first step before making this – or any other significant financial investment – is to get educated. If you’ve already interviewed some real estate agents, attended real estate classes at the local community center or read some real estate investment books, you’ve likely come across the cardinal rules for evaluating your next home: “location, location and location.”

    Why is location so important? Because location is the one thing that cannot be changed. Kitchens and bathrooms may be updated. Walls may be re-painted. Older windows may be replaced with newer dual-pane windows. Even a second story or another room may potentially be added. However, if a house sits on a busy street or next to an industrial area, your options are limited. Inevitably, all houses require certain compromises – whether it’s the location, layout or even the purchase price. Just make sure that you can live with any problems or that you can affordably fix those that you cannot live with.

    More Resources

    • Real Estate – Resource Center. From Nolo Press
    • Buying a Home Offers information for first-time homebuyers. From the U.S. Department of Housing and Urban Development.
    • REALTOR.com Search for homes, condos, townhouses and land in the multiple listing service (MLS).
    • MLSlistings Search for residential and commercial property in the Santa Clara, San Mateo, Santa Cruz, Monterey and San Benito counties.
    • mls.ca Search for Canadian property listings and data.