Everyone seems to be interested in real estate, mainly because you can make a lot of money without too much education.
In other words, you can make the same money doctors and lawyers make without going to school for a decade.
But “do real estate agents make good money?”
Some would argue yes and some would say no, but like anything else, it really depends.
The big difference between real estate agents and doctors and lawyers, aside from the obvious, is that the pay is based on commission and performance, and not a salary.
So a real estate agent will only make good money if they work hard and make sales; doctors and lawyers, on the other hand, tend to make big money more consistently.
I forget where I heard this, but there was some statistic about real estate agents and their sales figures over a year.
It said the average real estate agent sold just a single property in a year, so clearly there were a lot of agents out there making not very good money, if any at all.
Of course, the numbers are likely dragged down by those who register as real estate agents but never follow through, or those that simply do it as a side job.
If you work hard and dedicate yourself, you can make very good money, as real estate commission is typically 5-6% of the sales or purchase price.
On a $500,000 property, that’s $25,000 to $30,000, so it’s not a bad haul.
Of course, that figure is generally split between the buying agent and selling agent, unless you’re both.
Then there is the split taken by the office you work for, and any other costs, which reduces your actual pay even more, though there are 100% commission programs as well.
This post was written on July 9, 2009
You know it’s bad news when the home builders are pessimistic…
Sales of newly built, single-family homes declined less a percent to a seasonally adjusted 342,000 units last month, but were off more than 30 percent from a year ago, according to the Commerce Department.
That’s obviously not good news, but even worse given the fact that May is typically a strong month.
“In the midst of the prime home buying season, builders report that a number of factors are limiting new-home sales,” said Joe Robson, chairman of the National Association of Home Builders, in a statement.
“These include consumer concerns about job security, potential buyers’ inability to sell their existing homes, and problems with appraisals coming in too low.”
“The latter issue is directly related to the use of distressed properties (foreclosures and short sales) as comps, which disproportionately impacts assessed values of nearby homes.”
NAHB Chief Economist David Crowe added that the housing recovery is going to “be a slow one,” as we’re still looking for a bottom.
The only ounce of semi-good news is that inventories of unsold new homes slipped for the 25th consecutive month, meaning eventually real estate supply and demand will be in sync, leading to an eventual recovery.
Home builders have been hit especially hard, as many of the newer developments are filled with foreclosures, bank-owned properties, and unbuilt or abandoned lots.
This post was written on June 25, 2009
Having a super expensive home is generally viewed as a good thing, but the priciest homes in the nation may also take the longest time to recover.
A pair of JPMorgan Chase analysts believe homes priced over $1 million won’t find a bottom until 2012, largely because the supply of such homes is increasing thanks to a lack of buyers.
Fueling this lack of demand is a scarcity of jumbo loan financing and tighter lending standards; interest-only loans and option arms aren’t around anymore to keep monthly mortgage payments down.
Those types of loans also drove home prices higher during the peak years of 2006 and 2007 as everyone tried to get in on the action, thus creating the housing bubble.
As a result, these million dollar homes will likely experience peak-to-trough home price declines in excess of 60 percent, compared to the 40 percent loss expected for homes at all price levels.
California is expected to be hardest-hit, as it has the highest concentration of million-dollar homes, many of which were financed with high-risk mortgages.
The analysts believe home prices will bottom out in 2011, though many doubt we’ll see any type of home price resurgence for quite some time.
In fact, years of flat home prices could be in store as the economy rebuilds itself.
This post was written on June 17, 2009
New York metro area home prices are expected to fall another 40.6 percent from the first quarter of 2009, according to Deutsche Bank.
It’s actually an improvement from an earlier prediction, when home prices were slated to fall 47.4 percent, but it’s certainly not good news for New York residents, at least those that currently own homes.
Median homes prices in the New York metro fell to $446,000 during the first quarter, down 19 percent from a peak of $552,000 set in the second quarter of 2007.
Overall, Deutsche Bank expects a peak-to-trough decline of 52.1 percent.
The good news is home price affordability could slip to levels last seen in the late 1990s, though the bank analysts are using a five percent mortgage rate to come up with those numbers.
Mortgage rates have since risen to about 5.50 percent, so it’s questionable how affordable home prices will actually be.
Then there’s the fact that the median home price is skewed because mainly lower-priced, distressed properties are selling, whereas high-end stuff is still largely off the market or simply not selling as frequently.
This post was written on June 16, 2009
The housing outlook, which seemed to be on the up and up thanks to record low interest rates and a more promising homebuyer tax credit, took a step backwards in the latest home builder survey.
“The outlook for home sales has improved somewhat in recent months, due largely to implementation of the first-time home buyer tax credit and gains in housing affordability,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.
“However, looking forward, home builders are facing a few headwinds, including expiration of the tax credit at the end of November; a recent upturn in interest rates; and especially the continuing lack of credit for housing production loans.”
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) gauge of both current home sales and prospective buyers held steady, while expectations for the next six months declined.
“As expected, the housing market continues to bump along trying to find a bottom,” said NAHB Chief Economist David Crowe.
“Meanwhile, builders are taking their cue from consumers, who remain uncertain about the economy and their own situation. Builders are also finding it difficult to complete a sale because customers cannot sell their existing homes.”
The sale of an existing home is definitely throwing a wrench in the deal, as millions of homeowners are currently underwater on their mortgages, meaning they owe much more than the actual property is worth.
That could force many would-be buyers to stay put for years to come, unless they choose to default on their present mortgages.
Then there is the issue of appraisals coming in low, which is proving to make the home buying process more costly and time consuming.
This post was written on June 15, 2009
Nearly one in four homes currently listed for sale in the United States have had their listing price slashed, totaling a whopping $27.4 billion in reductions, according to Trulia.
On average, listed homes have seen price reductions of 10.6 percent, though certain metropolitan areas have experienced much larger price cuts.
Detroit homeowners have slashed prices by an average of 23 percent, while Las Vegas and Miami homeowners are cutting prices by about 15 percent.
In the city of Jacksonville, 36 percent of all homeowners have slashed their home selling prices, followed by Tucson, Boston and Los Angeles, where a third of homeowners have cut prices.
This really tells you how inflated these regions were during the housing boom; it’s harder to tell if you’re really getting a good deal now, as prices have simply sunk back to levels from about five years ago.
“Summer time is the peak season for buying and selling, and with some of the lowest prices in the last decade, we expect to it be a busy season,” said Pete Flint, Trulia co-founder and CEO.
“Everyone wants to think they are getting the best deal available and price reductions are helping to spark a renewed interest in the U.S. real estate market.”
Personally, when I see a “price reduced” sign, I simply think the homeowner was originally asking too much and had trouble selling the property, or attempting to create the illusion of a discount.
To me, it means wait that much longer for a better deal elsewhere, or for another price reduction on the property. See my page on is now a good time to buy a house?
This post was written on June 9, 2009
Here’s a sliver of good news, though it needs to be taken with a big grain of salt, or perhaps some sawdust.
New home inventory slipped to its lowest point since May 2001, according to government figures highlighted by the National Association of Homebuilders.
The inventory of new houses for sale declined 4.2 percent to 297,000 units in April, which puts current inventory at a 10.1-month supply at the present sales pace.
Meanwhile, sales of newly built, single-family homes inched up a tiny 0.3 percent to a seasonally adjusted annual rate of 352,000 units during the month from March.
“The fact that the new-homes inventory is now below the 300,000 mark shows that builders have made substantial progress in winnowing down their backlogs to a much more comfortable level,” noted Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Oklahoma.
“This continued reduction in the new-homes inventory helps bring supply in line with demand, which is an important step toward the market’s recovery. We can expect the pace of new home sales to bounce along the bottom a bit before picking back up towards the end of this quarter,” added NAHB Chief Economist David Crowe.
Unfortunately, home builders have left behind scores of large dirt lots and unfinished homes next to newly constructed homes, making nearby properties less attractive for would-be buyers.
And many of the homes that have been sold in these communities are back in foreclosure, wreaking even more havoc on neighboring home prices.
This post was written on June 1, 2009
Nearly one in four homeowners (24 percent) don’t have any savings to cover expenses such as their monthly mortgage payment should they lose their jobs, according to a survey conducted by Wells Fargo.
At the same time, job stability worries increased from 21 percent to 29 percent, with respondents indicating it their number one concern.
The good news is 60 percent of respondents, versus an earlier 53 percent, have a strong desire to reduce debt, while more than half want to pay down debt faster.
Unfortunately, less than a quarter have increased their savings, though 37 percent said they paid down debt and 12 percent paid off all their balances in the past year.
To compensate for costly expenses, more than a third of homeowners have had a friend or family member move in, while 42 percent are spending less on their children (ouch).
Half of all homeowners surveyed had an average of $10,000 or more in debt, which is significantly higher than that reported in previous quarters.
This could be a result of falling home prices; most homeowners can no longer rely on home price appreciation and the associated cash-out to cover expenditures.
Millions of credit cards have also seen their credit lines slashed or closed, forcing homeowners to budget to survive.
Hopefully homeowners will come to terms with the new reality of tight credit, as it doesn’t seem things will turn around anytime soon.
Sadly, this reality will likely lead to more foreclosures and distress in the housing market before things turn around.
The silver lining is lower home prices for those looking to buy a property.
This post was written on May 20, 2009
So-called shadow inventory, which is essentially the stock of homes that would come onto the market assuming things turn around, could keep home prices down a lot longer.
Supply is already a concern, given the lack of buyers and the number of homes currently on the market, but if banks and individual homeowners begin unloading their properties at the first sign of a recovery, it could exacerbate matters.
“With almost a third of homeowners poised to jump into the market at the first sign of stabilization, this could create a steady stream of new inventory adding to already record-high inventory levels, thus keeping downward pressure on home prices,” said Zillow vice president of data and analytics Dr. Stan Humphries, in a statement.
Interestingly, only 60 percent of current homeowners believe their property has lost value during the past 12 months, while in reality it’s closer to 80 percent.
Another 18 percent felt their own home gained value in the past 12 months, and 22 percent think the value remained unchanged.
Homeowners seem to be coming to terms with reality, though 74 percent believe their home will not decline in value in the next six months, effectively calling a housing bottom.
“While homeowners are now more realistic when looking backward, they are still pretty starry-eyed when looking forward with three out of four homeowners believing that their own homes’ prices will increase or be flat over the next six months,” added Humphries.
“Unfortunately, there are few markets we expect to perform this well.”
(photo: karindalziel)
This post was written on May 14, 2009
First-time homebuyers accounted for half of all existing-home purchases during the first quarter, according to the National Association of Realtors.
And those sales don’t reflect the impact of the homebuyer tax credit, which could boost sales by another 100,000 units or more this year.
“Close to 455,000 buyers purchased their first home during the first quarter, and those are likely just the first wave of new buyers coming into the market – they’re critical for a housing recovery,” said NAR chief economist Lawrence Yun.
Unfortunately, the median sales price continues to slide, falling 13.8 percent from a year ago to $169,000.
Amazingly, the median home price has increased 21.1 percent in the Cumberland area of Maryland and West Virginia from to a year ago.
However, the national drop is probably exaggerated thanks to a large proportion of distressed sales (nearly half of all sales in the first quarter), which tend to sell for 20 percent below market.
“In areas with the biggest price declines, we also see much higher levels of distressed sales which are distorting the data,” Yun said.
“We are very much in a bifurcated market with sharp differences between foreclosures and short sales on one hand, and traditional homes on the other.”
Illustrating that point is the fact that home sales were up 116.8 percent from a year ago in hard-hit Nevada, 80.6 percent in California, and 50 percent in Arizona.
The rate of existing-home sales nationwide in the first quarter was down 3.2 percent from the fourth quarter and 6.8 percent from the first quarter of 2008.
Prices still look to be coming down, but as evidenced from the data above, it really varies by local market.
This post was written on May 13, 2009