Mar. 30: Luxury condo demand slowing; builder lot status; home inventory software

Rob Chrisman

Rob Chrisman began his career in mortgage banking – primarily capital markets – 31 years ago in 1985 with First California Mortgage, assisting in Secondary Marketing until 1988, when he joined Tuttle & Co., a leading mortgage pipeline risk management firm. He was an account manager and partner at Tuttle & Co. until 1996, when he moved to Scotland with his family for 9 months. See more

Prices continue to defy gravity in New York City, however the demand for luxury condos is beginning to wane. 423 Park Avenue, now home of the tallest residential building in the Western Hemisphere, has 141 apartments for sale and luxury buyers are beginning to fade as foreign money is hesitant. Yet Manhattan is dotted with cranes, largely building high-end condos.

 

Homebuilder Lennar reported better than expected earnings this morning. EPS is the highest third quarter number since 2006. Average selling prices increased 12% to $365,000 while new orders increased 10% in units and 15% in dollar volume.

 

C’s and D’s are good enough:

 

Prime land, in the center of core markets are more or less built out. With a scarcity of home available on the market, prime land in use, builders are forging ahead into lots that have been otherwise forgotten up until now. Submarkets situated in far out locations and infill properties are being developed out of necessity.

 

Builders in states like North Carolina, Colorado, New Mexico and Nevada are planning developments on C and D grade lots. In these areas, living a bit on the outskirts with extra commute time will be an adjustment. As the market evolves, potential homeowners will by necessity, need to rethink their location, location, location mindset. Oddly enough, affordable housing is coming at a different kind of price, convenience. But, the extra drive time of 15 minutes or so could save a buyer $50,000 on a starter home.

 

Builders know with the exception of age-based communities, first on every builder’s list is good schools. Based on the lack of opportunity for building close to an established community, some companies are creating all-inclusive developments. In order to accomplish these benchmarks, some planned developments are adding private schools or helping to facilitate new public schools as part of their offerings. As an example, Meridiana, is a 2,700-acre master-planned community about 30 minutes outside of Houston. Rise Communities in Katy, Texas has donated a $1 million tract of land to the local school system for a new elementary school, which is slated to open in August 2016. Middle and high schools will follow, along with a $1 million outdoor learning environment that was planned with the help of a local university professor. The company also is funding 55% of the costs for a new highway interchange and added transportation services into its development to carry residents to and from local employers.

 

Leaving the comfort zone and moving toward the riskier submarket sectors is more than just an investment in money. Developers and builders are leery and rightfully so. But affordable starter homes need to be established if there is to be a spark ignited sending first-timers into the real estate market.

 

Add another mile:

 

In all of the ways in which you go that extra mile for your clients, have you considered discussing the benefit of creating a home inventory with your new homeowners? Homeowners insurance would likely cover the house, but without a comprehensive list of belongings, they’d have to rely on memory to determine what else was damaged or destroyed. Not only will a list prevent them from forgetting important valuables, but it can also streamline the claim filing process. There really isn’t a more convenient time to inventory possessions than as homeowners begin to fill an empty home with belongings.

 

There are a lot of options for cataloging. As the realtor, you can share information on home inventory apps for their phone, organizational apps like Evernote, and, of course, the trusty Excel spreadsheet. There are also print out a ready-made checklist to use with a clipboard as they walk through their home.

 

As items are unpacked and placed, their phone can be used to take photos and video of everything, including serial numbers of electronics and appliances. Remind your client to back up the inventory so the information is accessible even if gaining entry into their home is impossible. Store a second set of any hard copies elsewhere, like in a safe deposit box or at a friend’s house.

 

A home inventory conversation can also be a smooth transition into a helpful reminder to double-check insurance coverages. Insurance coverage has limits but many people don’t take the time to understand what is and isn’t covered and mistakenly assume insurance will pay for any type of damage. According to a Bankrate survey, 19 percent of homeowners were unaware that flooding is not covered by regular homeowner’s insurance. There are in fact are other types of damage that are excluded from most policies as well. If your borrower takes the initiative to discuss what their insurance coverage protects, it can save a lot of heartache if something does go wrong. A helpful suggestion such as this will only strengthen the relationship with your client.

 

 

I went to the bank and went over my savings. I found out I have all the money that I’ll ever need…If I die tomorrow.

–Henny Youngman

 

 

Rob

 

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