Existing Home Sales Outlook from NAR

Here is the Existing Home Sales Outlook from the National Association of REALTORS chief economist as released in April.

Little change is expected in existing-home sales over the next few months, before improving notably during the second half of the year, according to the latest forecast by the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said the market will come into clearer focus this summer. “Existing home sales could start to show a sustained increase within a few months, unless there are some additional economic problems or excessive inflationary pressure,” he said. “We’re looking for essentially stable sales in the near term, before higher mortgage loan limits translate into more sales in high-cost markets. The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met.”

It's Official from NAR - One out of every 3!

WASHINGTON, March 28, 2008 -
The combined total of vacation- and investment-home sales declined with the overall market in 2007, but still accounted for 33 percent of all existing- and new-home sales, which is close to historic norms, according to the National Association of Realtors®.
The market share of homes purchased for investment last year was 21 percent, down from 22 percent in 2006, while another 12 percent were vacation homes, compared with a 14 percent market share in 2006. The total share of second homes declined from 36 percent of transactions in 2006.
NAR’s annual Investment and Vacation Home Buyers Survey shows vacation-home sales dropped 30.6 percent to 740,000 in 2007 from a record 1.07 million in 2006, while investment-home sales fell 18.1 percent to 1.35 million last year from 1.65 million in 2006. At the same time, primary residence sales declined 10.0 percent to 4.34 million in 2007 from 4.82 million in 2006.
Lawrence Yun, NAR chief economist, said the findings suggest different cycles for each of the sectors over the past two years. “Investment-home sales declined sharply in 2006 as speculators disappeared, leaving the market to serious buyers, with the pattern continuing in 2007,” he said. “Vacation-home sales rose to a new record in 2006 because there was a pent-up demand from buyers who couldn’t find a property as a result of tight supplies in preceding years.”
The overall sales decline in 2007 resulted from a combination of factors. “Certainly, second homes are discretionary purchases and there is a natural tendency to pull back from big-ticket items in periods of uncertainty,” Yun said. “The other factor is the disruption in the mortgage market, with a significant tightening of credit during the second half of 2007. Some buyers simply adopted a wait-and-see attitude.” Yun said lifestyle factors and strong demographics remain positive for the vacation home market. “Investment considerations are secondary for vacation-home buyers, so there is some dormant underlying demand,” he said. “A peak of population is moving through the prime years for buying recreational property. It is welcoming to see investment sales returning to pre-boom sales activity.”

Fewer less professionals - a negative positive

This from the National Association of REALTORS. Seemingly bad news which is really good news, and why IT IS IMPORTANT IN MEXICO TO USE ONLY AMPI & NAR PROFESSIONALS!

Way Too Many REALTORS®?
By NAR Chief Economist Lawrence Yun

NAR membership figures have finally begun to fall. Whew!!!

The number of REALTORS® grew from 750,000 at the turn of this decade to close to 1,370,000 as recently as August 2007. That is an addition of 83 percent in short seven years. From 1980 to 2000, membership figures bounced around in the narrow band of 620,000 to 820,000.

Such a rapid increase in membership is not necessarily healthy. How many of the new members have ever seen a down market aside from the last two years? How many understand the importance of repeat and referral business and not just a single transaction?

Given that about ½ million REALTORS® have less than 5 years of experience, sloppiness in some transactions no doubt exists. A complaint I hear quite frequently from REALTORS® is about the second-rate conduct of some of their fellow new members.

Every attempt by state and local REALTOR® associations to further raise professional standards gets knocked down by government regulators as hindering competition. NAR has made efforts to strengthen professional standards and the code of ethics but has been careful, knowing that the Department of Justice and Federal Trade Commission will be breathing down our neck.

Fortunately though, consumers are smart and can navigate through in finding the right REALTOR®. When asked, 68 percent of recent homebuyers said they would definitely use their REALTOR® again or recommend their REALTOR® to others. An additional 19 percent said probably use again. For home sellers, the figures were 62 percent definitely and 19 percent probably.

The vast majority of REALTORS® are, therefore, serving their clients in the most professional way, and understands that consumer interest is their interest.
Business seems brutally competitive at times. With sales activity trending at 10-year lows in recent months, that is all the more accurate. Still, business is entrepreneurial and that means there are a multitude of business models and widely varying levels of professionalism among members.

Entrepreneurial businesses tend to follow the 80-20 rule of 80 percent of the business activity being conducted by 20 percent of the people. In real estate, a similar type of figures show that top 20 percent of REALTORS® earned a median income of $175,000 while the bottom 20 percent earned less than $10,000. The figures are from NAR's survey of members and reflect business activity in 2006.

With home sales having fallen 13 percent in 2007, the competition is no doubt more intense. The membership figure is now turning sharply lower. Perhaps this is what is needed to boost the overall professionalism of members. Fewer REALTORS® also mean more business opportunities for the remaining REALTORS®.

Los Cabos real estate still strong

Tales of doom emanate from throughout the U.S. real estate markets, and yet the Cabo experience is still a highly prized commodity. While the number of total real estate sales in Los Cabos is down somewhat, business is still strong in the favored sectors of premium beachfront developments, view condominiums, and developer parcels for resort and upscale projects.
And, as the dollar continues to fall against world currencies, more and more of the well managed and balanced individual investment portfolios are recognizing the safety and growth potential of safe, secure and accessable vacation and retirement destinations like Los Cabos.
I would like to hear the thoughts of others who are inclined to follow the sun, and invest in paradise. Post your thoughts or drop me an e-mail at: West@CaboRealty.com

Lending leverage tighter

The following is from today's report from the National Association of REALTORS:

Daily Real Estate News

March 12, 2008 Lending Standards Will Stay Tight

The loan a borrower qualifies for on Monday is likely to be out of reach on Tuesday because lenders are changing the rules hourly, industry observers say.
For those who can meet the rapidly changing lending standards, the plan announced Tuesday by the Federal Reserve to loosen credit by providing $200 billion to the financial services sector should make plenty of money available at lower interest rates, says David Wyss, chief economist at Standard & Poor’s.
Last year a borrower could get complete financing on a $300,000 home with a mortgage alone or in combination with a home equity loan or line of credit.
Today, that same borrower likely needs $60,000 for a down payment, plus a credit score higher than 680."Credit is the gateway right now," says Dan Green, a certified mortgage planning specialist and author of TheMortgageReports.com.
"Weak credit is cost prohibitive."
Source: The Associated Press (03/11/2008)

International Luxury Market - excerpts from the National Assoc. of Realtors

Importance of Luxury Home Market Trends to the Rest of Us

The global luxury residential market has been largely unaffected by the real estate slowdown. Knight Frank's 2007 Annual Wealth Report looks at the behavior and attitudes of high net worth individuals (HNWIs) as they relate to the residential property market. HNWIs view their residential portfolio as an opportunity for lifestyle enjoyment, individuality and exclusivity.
They are aggressive investors and differ from other investors in their attitude toward risk and reward. HNWIs have a higher than average weighting in residential property and their portfolio is internationally diverse.
They are happy to invest in emerging economies and are open-minded to alternative investment locations. The report names three key drivers of HNWIs in the purchase of a prime residence or a second home: Time Poverty (convenience and accessibility), Luxury and Prestige. These drivers keep HNWIs pushing at the edge of the market, as they seek to keep ahead of the market either by bidding up prices to retain exclusivity or by exploring new markets.
History shows that where this market niche goes in terms of location and property types, the rest of the market will follow. The study was primarily conducted with UK residents resulting in a somewhat UK/European bent to the report (valuable to brokers serving these investors), but many of the trends outlined are likely applicable to all HNWIs, e.g., the importance of tax issues as they relate to property. The report concludes with trends to watch.

Fred Hall Fishing and Boat Show

Just finished working the Cabo Realty booth at the March 2008 Fred Hall Fishing and Boat show in Long Beach California. Even though attendance was off a little compared to last year it was a great success. The people stopping by were great! It was also nice to see so many of our Cabo friends and neighbors stopping by. Also amazing was all the excitement and interest hovering around our new project Santa Amelia. With 2.3 billon USD committed in just one of the four new projects in the East cape, its an exciting time for the East Cape's future! If you have ever considered owning Real estate in Mexico there has never been a better time to check it out. With all the development committed in the East Cape it could not be a better time. If you have ever wished you had bought real estate in Cabo San Lucas just few years ago then don't let this opportunity go by without checking out the East Cape. With the four major developments taking place today in the East cape, the opportunity is today. Please check out the web site http://www.theeastcape.com/ or http://www.caborealty.com/ There you will find information on owning real estate in Mexico. We are not talking about leasing or timeshare but ownership! Purchasing in Mexico is very safe as long as you use a little common sense and a Real Estate Professional. Check out the credentials of the person you are working with and remember Stwart Title and Fidelity Title companies offer title insurance in Mexico. You wouldn't buy R.E in the US without it. Our family of agents at Cabo Realty have extensive experience and credentials like CIPS, RSPS, ABR, GRI TRC etc; so check us out. I would encourage you to please feel free to ask us questions.

We are here to help you live your dreams.

Anyone go to the show and if so what did you think of the show and did you get a chance to stop by our booth? If you attended the show, what did you think of the Contender and Everglades boats? And last but not least did you get a chance to stop by and see Guy Harvey and get a copy of his personally autographed book?

three bedroom condo Villa Estancia

Have you seen the beautiful three bedroom four bath beach view condo at villa la Estancia, Cabo San Lucas, Baja California Sur, Mexico. please visit the pictures at www.caborealty.com see features properties. How about the fishing in Cabo! Went out on the "Eagle one" with my son and had five Strip Marlin. Anyone have a story about their fishing trip in the East Cape or Cabo San Lucas?

Long Beach Fishing and Boat show

The Cabo Realty booth at the Fred Hall show is fantastic! Lots of people dropping by to talk fishing. Lets blog about the great fishing in Cabo and the Famous East Cape. Does anyone have a favorite boat or captain they like to fish?

Supply and Demand

Our friend and long-time REALTOR, Cathy Reusch in Springhouse, PA posted this on her website www.CathySells.net:

Supply and Demand
When the supply of available houses is greater than the supply of buyers, appreciation may slow and prices may even fall, as happened in the early eighties and the early to mid-nineties.
If you are lucky enough to purchase a home during a slow period, you can be reasonably certain the economy will begin to show strength again. At times, real estate values may even surge drastically. In many regions of the country, this is precisely what occurred in the late eighties and nineties.

Q & A about ownership in Mexico

QUESTIONS AND ANSWERS
Q: I've always heard that foreigners can't buy coastal property in Mexico, is that true?
No. While it was once true, times have changed. Prior to 1973, foreigners were not allowed to hold legal title or exercise direct rights to real property in an area within 64 miles of Mexico's borders and 32 miles of its coasts. But laws passed in 1973 and1993 have made it possible for foreigners, foreign firms and Mexican firms with foreign participation to acquire interests in coastal real estate through a bank trust (Fideicomiso).
Q: Who is involved in this bank trust?
Three parties. The seller of the property is the Trustor. The bank is the Trustee. (Fiduciario), and the buyer, or Beneficiary (Fideicomisario).
Q: How does the trust function?
Title to the property is transferred to a trust with a Mexican bank acting as Trustee. The Trust Agreement is formalized by the issuance of a permit from the Mexican Ministry of Foreign Affairs. The lot or home buyer is designated as Beneficiary in the Trust and the beneficiary rights are recorded in the public record by a Notary Public.
Q: What are my rights as a buyer?
The trust is a legal substitute for fee simple ownership, but in this case, the Trustee is the legal holder of the property. As Beneficiary, you have the right to sell your property without restriction. You may also transfer your rights to a third party, or pass it on to named heirs.
Q: Is the trust renewable?
Yes. According to the Foreign Investment Law passed in 1993, trusts can be renewed for an indefinite number of successive 50 year periods. In effect they run in perpetuity.
Q: If at a later date, I decide to sell my property can anyone buy it?
Yes. If the buyer is also a foreigner, you simply assign beneficial rights. If the new buyer is a Mexican National, you can instruct the bank to endorse the title in favor of the buyer.
Q: If the buyers is a foreigner, is his interest limited to the balance of my 50 year trust?
No. Upon application, a foreigner automatically receives his own renewal 50 year permit. This, however, is not mandatory.
Q: Do many foreigners currently own coastal property in Mexico?
Yes. Today thousands of foreign owners enjoy their ocean side resort property; many have benefited from the appreciation of their property