Real Estate Investing

We sense it in my real estate office.  Traffic at open houses has picked up.  Phones are ringing.  Email inquiries have started coming in.  Friends and acquaintances are calling.  Maybe it’s the new guy in the White House.  Maybe it’s the $8000 tax credit for first time homebuyers.  Maybe it’s just spring. Whatever the reason, I can feel it in my bones.

The stock market likes it too!

Stocks have been rallying on optimism that the economy and financial markets are getting closer to stabilizing. In addition, many stocks have been hammered so heavily as to make them attractive to investors again.  Analysts say the advance is likely a bear market rally, rather than the start of something more substantial. However, even a bear market rally can stretch on for some time.

Both existing and new home sales rose in February - an unexpected gain that unfortunately isn’t expected to last.

Orders to U.S. factories for big-ticket manufactured goods and new homes sales both rose unexpectedly in February, but economists said the gains were unlikely to last as the recession persists.

… “The worst of the drop in (home) sales is over but a sustained recovery, still less price stability, is a way off still,” Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients.

On the local front, one of my listings finally had a showing.  An open house from the weekend resulted in a purchase and sales contract.  And I’m working with a buyer to show a condo later today.

I think consumer confidence really might be on the rise.  Maybe?

Actually, I’d really struggle if I lived a frugal life at all times.  People can be perceived as pretty crazy with the things they do to save money.  While saving money is a terrific objective, when you get to the point that you buy two-ply toilet paper and separate the plies to double the lifespan of one roll… well that’s a bit much for me.

A guest writer at beingfrugal.com wrote about how he went to far to be frugal.  He was put in a very difficult situation when he lost his home in 2007 and did what he had to do to survive, but at one point he realized that his frugal lifestyle had turned into an obsession.

I spent 2 months living in my office before a family member lent me a $1000 to help me put down a deposit on a small apartment. No more office living for me. About twice a week I was sleeping in my car anyway because it was easier than trying to hide my living presence in the office building.

But my manic frugality started to take a toll on me.  Every penny that left my pocket was painful. Even buying food, which I knew I needed to survive, made me feel ill.

His story is fascinating and he offers some wise advice on how to know when you’re being too frugal.

If you’re a homeowner, there are ways that you can be more frugal.  For example (and this should be common knowledge by now), by turning the thermostat down in the winter and up in the summer you’ll save some big bucks.  Make sure you turn off all lights in the room when not using them.  Turn off your power strips because there is an electric current just waiting to surge as soon as it’s needed (same goes with toasters, coffee pots, etc.).

Use coupons when you shop!  An agent in my office tells me her weekly groceries cost about $20.  She buys two newspapers on Sunday (from Walgreen’s because they’re only 50 cents each there) and uses the two sets of coupons for buy one get one free day.  She tried to teach me how she does it once, but to this day I don’t understand her little secrets for savings.

Explore the internet for sites that feature stories and tips about how to live frugally. There are some wonderful ideas available if you’re willing to spend the energy to take advantage of the suggestions.

Photo by me of the free items my friend got through her coupon expertise. She donated the products for my daughter’s baton fundraiser - a silent auction.

Although existing home sales gained 5 percent in February according to the National Association of Realtors - and reported by MSNBC.com - the slow down in home sales over the past six months may be breeding a new way to price homes when they are listed.

A friend of mine contacted me last week because she may be taking a job out-of-state.  Her home is already located in a neighborhood where few houses turn over… it’s not that they don’t sell, it’s that people don’t leave.  Because of this, it may be very challenging to come up with a fair market price point to list her home.  When I ran my numbers, I can justify listing it for between $180,000 and $280,000 - a price spread too wide to make me at all comfortable.  I don’t want her to sell it for too little, but also don’t want to price it so high that she can’t sell.

Clearly I’m going to have to call in the cavalry on this one.  I’m putting together a pricing team to go with me to review the property.  After we tour the inside of the home and walk the acreage, we’re going to separately crunch our own numbers.  Afterward, we’ll sit down at the conference table to defend our potential list price - our final number is the one I’ll share with my seller.

This type of scenario could become more commonplace as it gets harder to find comparable home sales since sales have been down.  I’m relieved to have a team of colleagues willing to help me out because certainly I won’t mind stepping in to help them as well.