4 Things You Should Know About Online Real Estate Listings

Online listing have transformed the way we shop for homes. While listing sites make the home buying process more convenient, they also have their flaws. Here are a few things you should know about listing sites before you buy a home.

The Listings Are Not Always Accurate

Criss-crossing the city to see a handful of properties is not the most efficient way to find your dream home. Which is why buyers love listing — they can provide a wealth of information at a quick glance. A typical listing will tell you the lot size, square footage, how many bedrooms, and the year the home was built, along with many other details. The problem is that this information isn’t always correct. You might spend an afternoon chasing down a prospective home, only to find out that an offer was accepted several days ago and it’s no longer on the market. Or you might find out during a tour that the square footage was listed incorrectly and the home is significantly smaller than you expected. When you’re house hunting, it’s important to ask questions, even if you think you know the answer. Don’t let the details in an online listing prevent you from performing your due-diligence.

There’s No Substitute for Actually Seeing a Home

The centerpiece of any home listing is the photo slideshow. Buyers will spend hours flicking through these pictures trying to find a place they can fall in love with. Real estate agents know how important these pictures are, and that’s why the best agents will hire a professional photographer to show off the property. They’ll use wide-angle lens to make the place feel spacious, studio lighting to make it bright, and color correction to give it vibrancy. But these photos can be misleading. As a buyer, you might waste a lot of time pursuing a looker that ends up being a dud in person. And by focusing all of your attention on the homes with the best looking pictures, you might end up missing a great deal on a property that didn’t invest in a good photographer.

The Price Isn’t Right

Online tools have made life easier for real estate agents. Buyers today are better informed and better able to explain what they are looking for. But these sites can also drive agents crazy, especially when they feed buyers and sellers wrong information. Many sites provide an online estimate of a property’s value, which they base on recent sales data and tax assessments. Unfortunately, these estimates are often inaccurate, especially when they fail to take into account things like a major remodel or recent fluctuations in neighborhood real estate prices. Despite the inaccuracy, sellers can get attached to these estimates, and refuse to budge on price, even if a weak housing market tells them otherwise. On the other hand, buyers who rely on this figure might put in a lowball offer that wastes everyone’s time. If you’re a homeowner and you feel like the current estimate is too low, you can reach out to companies like Zillow and Redfin to correct the facts about your home in order to improve the company’s estimated price. And if you’re a buyer, keep in mind that these are just estimates — the market will decide what the home is worth.

Real Estate Isn’t Easy

Online listings lure people into thinking that real estate is easy. But buying a home is not like ordering a new pair of shoes off of Zappos. It’s hard work. Sure, you can spend your days looking at listings, and your weekends visiting open houses, but finding the right place to live is just a small part of the process. You’ll need to come up with a downpayment, get pre-approved for a mortgage, find an agent that you can work with, fill out stacks of paperwork, get a home inspection, and finally close on the home. Checking the online listings during your lunch break is a fine way to kick off the process, but once you’ve made the decision to actually buy a home, be ready to treat it like a full-time job for the next several months.

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California Home Gains Forecast to Run at Least 2 More Years

California home prices should continue to rise in the next two years, extending the state’s housing gains to a six-year winning streak, according to a new forecast by Wells Fargo Bank.

Bank economists see the CoreLogic median selling price for the state finishing 2015 up 6.5 percent vs. a year ago; then rising 5.8 percent next year and up 5.5 percent in 2017. This index rose 13.4 percent in 2012, 20.5 percent in 2013 and 7.6 percent last year.

“Modestly higher interest rates should not present much of a direct challenge for the state, but with home prices rising and mortgage markets far less flexible than in the past, home sales might come under pressure if mortgage rates rise too quickly. That does not appear to be an immediate risk,” the forecast says. “Interest rates look like they will remain low for even longer than thought previously, which should allow the housing recovery to gain further momentum.”

Pushing home prices higher is the fact that California’s economy is outperforming the nation.

“We look for the Golden State to again add close to a half million net new jobs this year, which is a pace 1.5 times that of the nation as whole,” says the forecast. “Stronger growth is creating some strains, however. About 20 percent of the state’s new jobs have been created in the high-paying technology and life sciences industry.

“Hiring has also picked up in other higher-paying sectors, including construction, manufacturing, health care and logistics,” the report continues. “California, however, has also added plenty of lower-paying jobs as well, and many of these low-paying jobs are being created in the same geographic areas where higher-paying jobs are being added. These wage discrepancies have made finding affordable housing an even greater challenge than in the past.”

The California Association of Realtors last week predicted that the median price of a California existing, detached house will rise 3.2 percent to $491,300 in 2016. Its house price index rose 9.8 percent in 2014 and 6.5 percent so far this year.

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No Market Correction 'Anytime Soon'

Demand for Orange County homes, as defined by market watcher Steve Thomas, is at a nine-month low.

But don’t worry, it’s just part of another seasonal, post-summer slowdown, notes Thomas in his biweekly ReportsOnHousing.

There have been 2,537 new pending sales opened in the last 30 days, as of last Thursday. That’s down 4 percent in two weeks and the lowest since January. But this has been a relatively strong year for housing, with this count of new escrows up 10 percent from a year ago, Thomas notes.

Sellers are losing interest, too. For-sale inventory on the brokers’ listing network was 6,959 on Thursday, down 1 percent in two weeks and off 9 percent in a year. Inventory was above 7,000 for only two months in 2015 vs. five-and-a-half months in 2014.

“Buyers often mistaken this slower season as the beginning of a major market slowdown, one that will ultimately lead to a price correction,” Thomas writes. “Current data and trends simply do not support a housing correction anytime soon.”

Thomas calculates “market time” a measurement that shows how long it would theoretically take to sell all inventory of listed homes at the pace of new escrows being opened. Last Thursday, market time was 82 days – up from 54 days amid the traditional strong spring shopping season in April. But a year ago, market time was 100 days.

Thomas describes current conditions by no means a buyer’s market rather “a slight seller’s market, one where sellers can call more of the shots when it comes to the terms of a contract.”

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OC Houses Rank As Nation's 3rd Most Expensive

Orange County again has the nation’s third highest median selling price for single-family homes, according to National Association of Realtors data.

Orange County’s second quarter median price was $713,200, up 3 percent in a year. Orange County has ranked third since last year, when it jumped out of fourth place past Honolulu.

The nation’s priciest single-family homes are found in Silicon Valley, where the median hit $980,000 in the second quarter, up 9 percent in a year.

San Francisco was next at $841,600, up 9 percent in a year. Honolulu was fourth behind Orange County at $698,600, up 3 percent in a year. Another California market, San Diego, was fifth at $547,800 up 9 percent in a year.

Some may quibble with this ranking, as the high-cost New York metropolitan area ranks only sixth with a median price of $473,200, up 2 percent in a year. But the Realtors don’t track the pricey co-op apartment living that dominates the city real estate market. Plus, the metro area does include many relatively affordable homes in the distant suburbs.

No matter the ranking, all these markets look expensive compared to the rest of the nation. The U.S. median price was $229,400, up 8.2 percent in a year.

If you’re thinking about affordable markets with momentum, data from 2015’s second quarter tells you to look to the south and east.

The biggest percentage winners year-over-year were three towns in Florida. Palm Bay-Melbourne-Titusville had the largest gain, up 20 percent in a year to $165,000. Port St. Lucie was up 20 percent to $184,000. And Sebastian-Vero Beach rose 19 percent to $191,000.

Two North Carolina markets were next. Raleigh was up 17 percent to $247,900, followed by Greensboro-High Point – up 16.3 percent to $159,800. Gulfport-Biloxi, Miss. was sixth, with an increase of 16.2 percent to $131,300.

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Will Wall Street Turmoil Affect the Southern California Housing Market?

Seven years ago when the housing bubble burst, it nearly took down Wall Street and the entire U.S. economy.

This week, the concern was the reverse: That the prospect of an extended dive in the stock market, or even continued volatility, might spook buyers and sellers in Southern California's housing market — just as it has finally normalized after a bust-and-boom cycle.

Blaring headlines about the three-digit swings in the Dow Jones industrial average weighed on buyers such as Christian Lander, a television writer and author, who put an offer on a Glendale house last week, before the stock market started falling. He's proceeding as planned, because he's investing for the long term and doesn't want to react to fluctuations in the market.

But Lander worries that other buyers may take a different view — because he's a seller too, looking to unload his two-bedroom condo in Koreatown.

 

"I am just hoping it won't freak people out that this is a bad time to buy," he said.

So far Lander's decision to press ahead is typical of what local real estate agents and mortgage brokers say they have seen in the housing market, though the unease already has prompted some price cuts. But if the Wall Street gyrations continue for a prolonged period, say for weeks, economists believe that the uncertainty could cause a shift in housing market sentiment.

And there's another threat: Much of the blame for the stock market turmoil has been on the weakening economy in China, where investors flush with cash have become the largest source of overseas buyers for Southern California residential real estate.

"One or two days makes people nervous and glued to the TV, but it doesn't necessarily change a life-altering purchase such as a home," said Lindsey Piegza, chief economist at Stifel Fixed Income. "If there's ongoing uncertainty, consumers will pull back."

George Pagano, a real estate agent with Immel Team Luxury Real Estate who specializes in coastal south Orange County, said his buyers are assuming that the stock drop-off is temporary and are not changing their intentions.

But some sellers have been more willing to trim their asking prices from levels he considered unrealistic. This week, the owners of a five-bedroom house in Laguna Niguel reduced their asking price by $505,000, down to $3.9 million.

"They are taking our advice to lower their expectations," he said.

Laguna Niguel mortgage broker Jeff Lazerson said he hasn't heard from worried borrowers, but he dislikes the volatility and is hoping that the stock market doesn't go into a steep decline.

"The best things in real estate are no whipsaws — slow and steady growth and there are no distractions for the consumer," he said.

The recent drops in the stock market have been largely driven by concerns over China's slowing economy, worries that have been heightened by a sharp sell-off in that country's stock market and a devaluation of its currency.

Economists said slowing growth abroad could go two ways. It could sap demand from markets such as Irvine and the San Gabriel Valley, which Chinese families have poured into in recent years, seeking good school districts and a safe place to park their cash. Or it could increase investments as wealthy individuals look to get their money out of China and into the U.S.

John Burns, an Irvine consultant for home-building companies, said one of his clients has seen fewer Chinese buyers shopping for homes at its Southern California communities over the last month. And another client told him that a buyer canceled a deal recently because of the buyer's losses in the Chinese stock market.

"Clearly, there is some uncertainty out there," he said.

Tom Berge Jr., president of the West San Gabriel Valley Assn. of Realtors, has had a different experience. He said three or four Chinese business owners looking to invest in homes have raised concerns to him over economic turmoil in China. But it wasn't because they might no longer be able to afford local real estate.

"Their fear is the government is going to limit the money that can freely move out of China," he said.

Christopher Thornberg, founding partner of Beacon Economics, believes that slowing growth abroad won't slow investment because Chinese residents will become more inclined to move money into what they consider a safe investment.

"If anything, this is only going to intensify the push to get money out of China," he said.

The volatility on Wall Street comes just as home buyers were growing more confident. In July, home sales in Southern California hit a nine-year high and prices rose 5.5% from a year earlier to a median price of $438,000 as the U.S. economy continued its long recovery in a low-interest-rate environment.

Scott Laurie, chief executive of Olson Homes, said he's encouraged by strong job growth within California, so his Seal Beach development company is moving ahead with at least eight new single-family and town-home communities on which it plans to break ground next year.

"A [stock market] correction of 10% to 20% doesn't change that," he said. "We have a full pipeline in place for next year. We are pretty bullish."

Stuart Gabriel, director of UCLA's Ziman Center for Real Estate, is also bullish on housing.

He said the stock market volatility shouldn't change the housing market's upward trajectory, noting the recent drops in the stock market have been driven by worries over economies abroad while the fundamentals of the U.S. economy remain strong.

"At this moment demand for housing remains roughly intact," Gabriel said. "There is nothing about what we're seeing in the last few days that would change that assessment."

Indeed, by the end of the week, the stock market had calmed, with the Dow recovering substantial ground. Still, few people on Wall Street think that all the turbulence is a thing of the past.

Michael Novati, a 28-year-old technology worker in San Francisco, said he wasn't letting the market volatility affect his plans to buy a condo on L.A.'s Westside as an investment and a home for his brother.

Novati has been looking for six months, and during that stretch his biggest obstacle has been his desire to find just the right condo in a market with very limited options. That remained his biggest issue as he forged ahead this week despite all the unnerving news.

"You got to suck it up" and think about the long term, he said.

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