The Price vs Value of Farm Land

Some know the price of everything and the value of nothing. The farmers buying land know the value of an adjacent farm, and as to price, may say "damn the torpedoes and full speed ahead."
Where else can they park their cash that will do any good.

My unscientific research to date shows that some banks are lending only $4000 per acre on land around Adams County that may be selling for more than twice that much, so this is not a credit bubble. I have posted the Article below on Facebook using the Wall Street Journal's own link and have cut and pasted it here.

"A Bubble Down on the Farm? online.wsj.com
The big question mark hanging over the farm economy is whether a bubble is building in Midwest cropland. Prices have doubled over the past five years in states such as Nebraska and Indiana."...WSJ (I accessed the entire article via Google News. This link asked me to subscribe to WSJ.)

Unlike gold, land offers a return. I don't yet know if the ethanol market for corn out-weighs the increase in world population, or if one would substitute for the other should one collapse, but I don't see either going away any time soon. If weather patterns remain eratic, so will world food production, so edible crop prices should/could remain strong. If land for sale remains at the 1-2% of the total as suggested in the article, scarcity could hold up land prices as long as the neighbors have cash that needs a safe haven and no better alternatives are available. On the other hand, land futures are not traded on the stock market, so in the big city who really cares? There it is the commodity prices that matter.

The farm land market may be driven only by people who know the VALUE of something and don't care about price. That is the opposite of the Las Vegas bubble. Perhaps those who don't know the value of things should be afraid ... very afraid. It is almost 2012.

Seriously, I do wonder if the so-called "business cycles" that we came to know and love in the 20th century might be twisting like a strand of DNA.

I don't claim to know what will happen, but when the issue is mentioned on Google News, people are beginning to pay attention. Stay tuned.

Hedge Post Foundation

I am a new member of the Western Illinois Sustainable Agriculture Society and I recommend the purposes of the group, and others like it, to everyone who eats. If you have been wanting to grow food, but need land, call me. If you have an odd 5 acres that someone could grow something tasty on, call me. I would be happy to help you find the missing party. My purpose is just to help us grow a wider diversity of food and bring unused land back into production. I'm thinking lease or crop-share, etc. I am also interested in green construction and implementing renewable energy. For instance, the pond in the photo is fed by a spring and it serves as farm irrigation in dry weather. It could raise fish, cool a house, and create electricity all at the same time. When I get something more happening with it, I will post the photo's here. I plan to undertake these activities under a organization that may be called the Hedge Post Foundation, LLC. Eat well and prosper. GH

Photo of New Listing & our New Blog Address

Our Blog Address has changed to 217House.blogspot.com. "217" being the area code for Illinois.




The newest Rodemich and Sons listing at 3125 Rutledge Place, Quincy, Illinois, is listed $92,500. It is 1080 sq ft, was built in 1950, and is in a convenient location, great neighborhood near excellent schools.

In fact, in Quincy, most neighborhoods are pretty nice.
Best wishes,
Grant

My Buyers Just Bought This House ... already!

The ink isn't dry on my license yet and, with the help of Kent, my sponsoring broker, we have a house in escrow!
My buyers liked this one (see photo) near Adams and South 15th and plan to transform it.  We will post the "after" photo's here and I am sure the neighbors will be pleased. List price was $35,000 for 908 sq ft with full basement and a big lot in a nice neighborhood. That's $38/sq ft ... at list price.  I can't tell you what the sale price is until we close. If you were thinking about a Las Vegas investment, Quincy is better - call me.  We might not find another this low, but we might come close.

We also have a new listing at Rodemich - Photo to follow.  It is ready to rent if that suits you, at 3125 Rutledge place - 3 bed room ranch, 1080 sq ft, neat as a pin. Could rent between $700 and $1000.  Listed at $92,500 that puts a 10% ROI within reach.  2010 real estate taxes were $1632.44.  Email me with any questions.

So, put Quincy on your radar.  Low prices.  Good returns.  Low crime. Great quality of life.  I will add some links to this blog to aid your research as the days go by.  And, I hope to find some farm land to list and find some folks who want to buy.  They tell me food remains in demand worldwide.

In the meantime, good hunting!

We're Going Up The Country

The House Team is moving from bright neon to bright stars, from big Casinos to big weather,

from wide open desert to wide open farm land, and from big city to big country. We are going back to western Illinois to the place where we grew up and we are ready for the change. Our roots are deep in Adams County. We'll be the sixth generation to live on the home place and our kids will be the seventh. Even Bugsie Segal's kids can't say that about Vegas, and he invented the place.

We have had a great experience in Las Vegas and have thoroughly learned the real estate trade. As grandad said, don't learn the tricks of the trade, learn the trade, and we did. We also served hundreds of wonderful people who became our clients and friends over the past decade and who sent us their repeat business and referrals. We protected our clients from the wolves-in-sheep's-clothing, the sharks and barracudas that also inhabit Las Vegas in numbers way above normal. We built a team of house stagers, lenders, home inspectors, and fellow Realtors that served in an ethical, proactive fashion the needs of our clients. We have routinely been in the top 10% of each brokerage where we worked, including Century 21 Aadvantage Gold's Green Valley office when it was the top selling C21 office in the world for two consecutive years (and by chance my office manager there, Sandy Ford, was from Seehorn. You have to be from "back home" to know where that is.) And we never forgot the ethics learned practicing Law in Adams County years ago.

That is the experience we have earned and that we plan to deliver to new clients in Western Illinois once I pass the Illinois Real Estate License Exam and become licensed there later this fall, if all goes well.

And, if you have ever worried that a condo in a lifeless desert may not be the best hedge against what lies ahead, consider, not just a home in the country, but an investment in Illinois tillable land. Land prices have been rising along with cash rents. Land can't burn down, blow away or succumb to vandals. Population is increasing on this planet, everybody has to eat worldwide, and, they aren't making any more land. Think gloablly. Act locally ... Call me.

Home Inspections - More Important than Ever

There are two major sellers in Las Vegas. Banks and flippers. Both are loathe to give the buyer a Sellers Real Property Disclosure. Both usually require a notarized waiver of that form along with all buyer rights under Nevada Revised Statutes (NRS) 113. Nor do they know or care about utility costs, so the Nevada Energy Form must usually be waived as well. Also, in preparing the home to sell, they tend to literally paper, paint and caulk over structural problems and code violations that might bite the buyer later on. This makes your home inspector a very important part of the team.

I mention this because, in the ten deals I have closed or have ready to close so far in 2011, three buyers previously passed on houses that we had gotten into contract because major problems with the house were subsequently discovered by our home inspectors. That is 30% and that is a substantial number.

One house involved a poor roof design that left unvented chambers under the roof. These held moisture even in Las Vegas' low humidity and had caused the roof to sag and leak.
The other two involved unpermitted shoddy construction that could later create problems with a city government looking for fees wherever it can find them. Both of these also included water damage because the construction code had not been followed. We passed on the houses but somebody out there bought them!

Stay alert ... and good hunting.

Blood in the Bellagio Fountains ...so to speak

Now that's a visual image of Las Vegas real estate with blood in the water!
In the Las Vegas valley, the new construction homes being sold are smaller and cost less, Buck Wargo of the Las Vegas Sun has just reported. “The price per square foot (new construction - gh) fell to a new low of $91.17, which is 12.4 percent below the $104.05 square foot price in April 2010,” he says. 313 permits were issued in April, “34 percent fewer than April 2010. For the year, 1,141 permits have been issued, which puts the region on track to fall below the 3,776 issued in 2010.”
Read Buck Wargo’s entire article at http://www.vegasinc.com/news/2011/may/16/las-vegas-existing-home-sales-brisk-prices-continu/ (used with permission). It has some great data that MLS doesn’t capture.
Bottom line, Mr. Wargo concludes prices have fallen by about 14% since this time a year ago, MLS listings fell by 9% between March and April this year, and the median price of resale homes is currently about $107,000 and $70 and change/sq ft. The double dip we feared seems to have occurred. Question is, has it stopped dipping?
Emails from new home builders continue to tout very high realtor commissions – 6% at some builders recently. As I have mentioned before, when the market is strong, some builders almost quit paying commissions because they feel they don’t need the Realtors. But lately, as they did back when the crash unfolded, they are offering the moon.
On the street, some lenders don’t want to lend. I have had a recent transaction with conventional loan, fall out because, weeks into the work, and after losing the first house to problems discovered by our home inspector (as he should) and after the second house in contract had passed inspection, the lender cut the amount they had promised to lend and destroyed the deal, thank you. They handed us the ball, let us run with it, and then tackled us. At least I didn’t pick’em. Nationwide may be on your side, but the banking industry is a separate question.
If you need an ethical lender, I can recommend someone.
So, prices are very low, and could still go lower. Sales volume is huge. Listings are down, and if you exclude short sales as I recommend, inventory is tight! Over half of LV offers are cash. If you are not aggressive with your highest and best offer, don’t bother. This is Vegas. The world is shopping here right now. If you hedge on your offer with sale numbers so high, somebody else with cash probably wants it more than you. The fountains dance about every 20 minutes.
Good hunting.

Health Dept recommends Short Sale Innoculations

In the past thirty days, April 7 to Kentucky Derby Day of 2011, Las Vegas has closed 3074 single family homes. Of those, 744 or 24% were short sales. As a result some will say short sales are becoming a more significant portion of the market.
Yes, I admit that is true, if wearing two dead albatrosses around your neck is twice as much fun as wearing one.
The important facts for Realtors are that of 12,370 short sales during the time period 6754 were in escrow and only 5616 were available for sale. That gives you a closing ratio (744 out of 6754) of 11%, meaning only one in ten short sales in escrow in any given month actually close and MORE THAN half (6754 of 12370) of all short sales are perpetually in escrow. The descriptive word here also describes drinking soda though a straw.
For real transactions – bank-owned, flips and traditional – the same closing ratio is 78%. Of 9947 non-short sale single family homes on MLS in the same period, 6017 were available for sale and only 3930 were in escrow because they close!
Why is the short sale record so bad?
First of all, the banks have your best interests at heart. Second, of those few that closed, my experience suggests that most short sales have run through more than one buyer, perhaps several more. Ever hear of an agent who, once his client has a back up plan (short sale in contract) with a contingency (bank approval) that will NOT be removed for months, goes out and gets a real transaction?
What about Education … and Lawyers:
Well, haven’t they been offering SS classes ever since the crash? Haven’t attorneys chased the SS ambulance right into REALTOR® sales meetings? And haven’t the short sale stats tremendously improved since 2009 as a result? (no) Can results from the short sale training and results achieved by SS attorneys be confused with what comes out of the south end of a northbound bull? (yes)
Conclusion:
Save your money. Save your time. Short sales as they currently exist should be illegal.
Best wishes.

Market Hot for Low Priced Houses

I had clients make a cash offer on a nice bank owned house in the $120K range, 1700 sq ft, priced at $68/ft today.
They offered a couple thousand below list. $68/sq ft equals the minimum comparable sale in past few months.
Average sale price is $74. Max sale is $80/sq ft. The property is in the 502 ML area - West central part of the valley.
Here is the response from the listing agent today.

"Grant,
The sellers will not entertain any offers below list at this time. We currently have 12 offers on this property,
6 of which are cash, and all of which are above list.
Please reply with your best offer by 7 am tomorrow morning.
Thank you!
Alan " (with Realty Execs)

My clients response was, "that is crazy." They are correct, and that is Las Vegas.

If you are looking at the lowest priced listings you can find and they already match the lowest comparable sales,
then if you still want to offer less money, you may be delusional. First ask yourself why your offer will be successful and win out over every other buyer in Las Vegas. If you don't come up with a real good reason, you need to make a higher offer.

Good Hunting!
Grant

Resale Depreciation Map 2009 vs 2010

Short Sales a Loser for Bargain Hunters

In an email from Kristy Black at Fidelity National Title, under the heading, “SHORT SALES MAY BE A FORCE OF CHANGE IN THE EXISTING HOME MARKET” Steve Bottled and Larry Murphy suggest, “ Of the 3,785 existing home sales in January, short sales accounted for just 20%. But, short sales commanded the highest prices -- even more than non-distressed property. Given that approximately 70% of Las Vegas home mortgages are “under water,” this may be a signal that there could be a significantly higher proportion of short sales in the future. Such an action would be an impetus to pushing prices higher.”

I think they are WRONG. The few short sales that actually close are higher because, when the bank stepped in and raised the contract sale price to current median market value and also demanded cash from the seller, only 750 out of 12000 anteed up for reasons of their own.
The rest, having sufficient oxygen to their brain, wisely walked away.

Right now in the Las Vegas MLS, there are 12705 short sales either available or pending at this writing (ER, P or C status). So, short sales are 56.7% of all transactions. And 49% of all short sales, 6271, are in escrow – half of all short sales, more or less are ALWAYS in escrow, but, according to Bottled and Murphy, only 756 short sales closed in January – that is less than 6% of the total short sales out there and only 12% of the number of short sales actually in escrow.

Only 9688 properties in the same status (ER,P,C) are NOT short sales and of these 3638 (about 37.5%) are in escrow. Among non short sales, 2574 closed in the past thirty days. That is equal to 26% of the total and 70% of the number in escrow.

Bottom line, short sales don’t close and they aren’t the bargain everybody dreams they are. Lose-lose. Why? Because the banks only approve sales at a price well within the comparable sales regardless of the contract the buyer thinks they made with the short sale owner. When the bank steps in, the party is over and the bargain hunter leaves empty handed.

But never fear. Some of those short sales that went on to foreclosure a couple months ago are back on the market as REO’s and they can obviously be closed cheaper than they could as short sales! And, they close 70% of the time. Win–win.
The mantra is: Short sales bad. Non-short sales good. Repeat until calm ensues.
Good hunting.

What's All This?

From Mirasol in Mountain's Edge, I got an email saying they are "able to do new builds on the Santiago and Cordoba floor plans, and we have fully furnished models available as well. For your buyers we have a $20,000 incentive which they can apply to our standing inventory, fully furnished models, and new builds; in order to upgrade, use towards closing costs, and bring down the price! .... For the agents we have a $5,000 bonus (on top of a 3% commission) for any home that we go to contract with before the end of Feb. 2011!"

From Lennar "Register for Lennar's VIP AGENT CLUB to EARN A 5% BROKER CO-OP!*"

From a flipper, "5% Commission on these Great Deals!"

In the old days, I would be happy at the prospect. These days I wonder, what do they know that they think we don't know? As I have mentioned before in this Blog, when sellers offered big Co-op commissions and incentives, it was a bad omen.
My question is how bad and how soon?
If you plan to sell, sell now, or plan to hold.
If you plan to buy, buy for keeps and don't over extend.
What do you think?
Good Hunting.

The Rocky Bottom Boys

The Case-Shiller Index, released last Tuesday, showed Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, Portland, Seattle and Tampa, to name a few, had hit new bottoms, falling to the lowest levels since prices peaked in 2006 and 2007. Stan Humphries, chief economist at Zillow.com, a real estate information site said, “It is going to be a rocky bottom, where we bounce around," ...and after that, "it is likely that real estate appreciation won't keep up with inflation."
On the other hand:
RISMEDIA, January 18, 2011— reports that "Housing will see gradual improvements in activity this year as the nation’s economy and job market continue to move to higher ground, establishing momentum that will produce more considerable gains in 2012, according to economists who appeared at the NAHB International Builders’ Show in Orlando on January 12."
O brother, where art thou?
Everybody needs a house to live in. If you decide to buy one, make sure it is one you like. Good Hunting.

December 2010 Real estate Data from Fidelity

December 2010 SFR Volumes

December posted another strong month of SFR sales, with a total of 3117 units reported. This was a 12.2% increase over the Nov 2010 volume, which places 2010 as the second highest annual volume in the past 6 years, 34,434 SFR units vs, 38,127 units for 2009.

December 2010 SFR Average Sales Price

December posted an Average sales price of $163,736, this was a .7% increase from Nov 2010, and a .2% increase over Dec 2009. A very narrow SFR price range has continued consistently since Apr 2009.

Many factors continue to be at play for 2010 with both price and volume, such as the banks holding onto foreclosed properties for longer periods between acquisition and resale, lenders are becoming increasingly agreeable to short sale negotiation and of course the economy in Nevada. (Used with permission from Linda Sitko, Fidelity Natl Title)

Linda mentions lenders becoming more agreeable to short sales. As you know if you read my blog, I am a non-believer. When the short sale close ratio (16%) begins to approach the REO/traditional close ratio (above 70%), then we'll think the banks are getting cozy with short sales.

As for sales, more than 3000 in a month is a whole lot. It means multiple offers on all the good stuff. If you spotted it (on the internet) so did everybody else. That is why the average price crept up in Dec. When I get time, we'll check and see if the % of list price shows a drop in the acceptance of low ball offers.

That doesn't mean that prices can't fall as predicted. Nothing is certain.

Las Vegas Residential Volatility to Continue

This from RISMEDIA, January 18, 2011: Housing WILL see gradual improvements in activity this year as the nation’s economy and job market continue to move to higher ground, establishing momentum that WILL produce more considerable gains in 2012, according to economists who appeared at the NAHB International Builders’ Show in Orlando on January 12. (Capitol letters by GH. They are taking as big a chance as I am for sharing this!)
Compare and contrast with the following:
"During 2010, Las Vegas residential real estate inventories followed a path of ups and downs as sales volumes in the resale and new construction sectors were impacted by government intervention and pricing slid to new lows during the latest cycle. Pricing movements taking place during the past several years in the southern Nevada market have raised the region’s national profile. Unfortunately, the profile has been characterized by record-setting price depreciation and foreclosure activity in recent years, which followed opposite trends reported during the majority of the 2004 to 2006 timeframe when price point increases were atop the price appreciation rankings. Regardless of the metrics analyzed, there is one certainty – that there is no certainty." (Used with permission from Krysta Sitko, Assistant Vice President / Business Development, Fidelity National Title)

I concur with the latter. There is no certainty. What I truly wonder is whether the world economy is now moving off the recognized playing board and into unknown territory in which the business cycles relied upon in the past do not apply any more.
I know that right now Vegas real estate is very busy and I get the feeling that people are acting AS IF a recovery is coming. I think a new normal may be developing wherein buyers and investors are actively snapping up the good deals. I just don't know what is next. In any event, good hunting.

Short Sales re-visited again!

I used to think only 7% of short sales in escrow closed, but that has changed.
They are at last in double digits - the lowest of double digits.

Of 5949 short sales in escrow, Las Vegas closed 766 in the past 30 days. = 13% success rate. (this is better than it has been!) "Hey coach, put me in. I'm making 13% of my shots and I shoot like crazy!"

There are another 6300 short sales in ER (available) status in the Las Vegas valley.
Of 2828 NON-short sales in escrow, Las Vegas closed 2114 in the past 30 days = 75% success rate. Even Kobe rarely hits this percentage.

There are another 6244 NON-short sales available.
Short sales are half the market. There are three times as many shorts in escrow as non-shots, but there are only 1/4 as many short sale closings as regular closings.

My advice still is "take the high percentage shot" and bench the low percentage player.
Good Hunting.