Housing professionals like to say that residential real estate is all about location. I’ve heard from many Realtors that you have to look at individual markets when speaking about the country’s housing slump. Just because sales are bad and prices are dropping in much of Florida, it doesn’t mean that things are equally as bad in Chicago.

A recent story by James Hagerty in the Washington Post’s online Real Estate Journal says that’s changing. Even previously strong real estate markets are now suffering from the housing slump. You can read the story here.

According to the story, the housing slump has finally hit the Pacific Northwest and North Carolina, two markets that had largely been immune to the problems in the residential real estate market. The story even mentions that Manhattan might soon seen its own version of the housing slump.

There is some good news in the story, though. The markets in Boston and Denver are still going strong, for instance. And Dallas held steady, too.

But the overall theme of the story is a chilling one for those hoping that an end to the housing slump is near: Housing troubles are still spreading across the country. It looks like 2008 is going to be another tough year for the residential market.

Tags: Boston, Chicago, Dallas, Manhattan, North Carolina, Wall Street Journal

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Marketing experts encourage real estate agents to blog. A well-written blog, focused on local issues, they state, helps paint real estate agents as experts.

But a blog can also cause agents trouble. Just ask Lucas Lechuga, an agent with Esslinger-Wooten-Maxwell, a real estate brokerate in Coral Gables, Fla. Lechuga lost his job because of what he wrote on his blog. You can read the story, written by Patrick Danner of the Miami Herald, here.

Lechuga wrote on his blog that at least half of the buyers in a 635-unit condominium tower would default on their mortgage loans. He then wrote that the project’s developer had once declared banruptcy back in the 1980s.

Problem is, the developer never did declare bankruptcy. The developer filed a $25 million defamation lawsuit in Miami-Dade Circuit Court against Lechuga and Esslinger-Wooten-Maxwell. The brokerage firm quickly terminated its relationship with Lechuga.

How will the lawsuit play out? Who knows? The important point here’s that agents — anyone, really — who blog have to be mindful of what they put on their sites. We sometimes like to think of the Internet and blog sites as the one place where people can write about whatever is on their mind. But be careful, those words can come back to haunt you.

I’ve been thinking about this a lot lately, mostly because of a recent post I wrote about a couple suing their real estate agent over the price they paid on their home. The post generated a lot of comments. Most of them were extremely insightful. Some, though, crossed the line and couldn’t be printed. Those posts usually were filled with insults about the couple at the center of the story. It’s unfortunate, because the posts often contained good points along with the unneeded vitriole.

I sat on one of the posts for a few days before finally approving it this morning. The post, by a writer named “Tom,” was rude. But it also made good several valid points about the lawsuit. After debating, I finally decided that the good points outweighed some of the post’s more troubling comments. In an best world, “Tom” would have left out the insults and name-calling, and focused on his valid arguments. But, of course, this is far from an best world.

If you’ve a chance to read Tom’s comment, which you can find here, and let me know what you think.

Tags: blogging, Coral Gables, Esslinger-Wooten-Maxwell, lawsuit

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There’s a positive side to everything, right? Sara Lin, a writer for the The Wall Street Journal’s on the web edition, found something good about the current housing slump: It’s easier, and cheaper, to find contractors to either build a home or renovate one.

 You can read Lin’s story here. Basically, she writes that the housing slump has pushed down prices on lumber, drywall, labor and design fees. Carpetners, landscapers and general contractors are no longer busy, and are looking for work. Architects on concurring to small projects that they would never have considered during the height of the residential housing boom.

Lin writes that some people in the building industry are even advertising their services on construction sites.

It’s a far cry from just two years ago. I remember trying to find a contractor willing to renovate a restroom in our previous home. Speak about Mission Impossible! It wasn’t a big enough project for most contractors to touch. Those that were slightly interested told me I’d have to wait six to nine months before they’d be available.

We finally did find someone, after several weeks of phone calls, and he did a great job. Today, though, I could probably find a contractor willing to take on a water closet renovation in just two to three phone calls.

Oh, how times have changed.

Tags: building a new house, remodeling, renovation, Wall Street Journal

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Homebuilders’ confidence, as measured by their leading trade organization, the National Association of Home Builders, is way down. Turns out, there’s good reason for this.

According to this report from the Associated Press, the sales of new homes dropped by a record amount in 2007, while sales prices had their weakest showing in 16 years. If that’s not enough to shake builder confidence, what’s?

According to the AP story, sales of new homes dropped by 26.4 percent in 2007 t0 774,000. That is the highest year-to-year drop on record.

At the same time, the median selling price of a new home barely moved at all last year. New home prices inched up 0.2 percent in 2007 to $246,900.

Here’s more evidence, as if anyone really needed it, that our current housing slump is a serious one. Real estate professionals may be preaching that the slump is nearing its end. The evidence, though, doesn’t support this view.

Tags: Associated-Press, national-association-of-home-builders, new-home-sales

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Conor Dougherty wrote an interesting story for the Wall Street Journal’s RealEstateJournal.com last week. In it, Dougherty covered a new trend: Second-home buyers are drastically changing the nature of huge slices of rural America.

You can read the story here. The main thrust is that as affluent retirees and other wealthy buyers buy second homes on remote areas, they bring with them demand for interior-design studios, spas and organic supermarkets. These shops are now popping up in these areas. It’s a dramatic change. According to the Journal’s story, some residents of these areas think about this trend the most significant change to their areas since the interstate highways first came through.

Of course, such change has its good and bad sides. On the positive side, the new shops are a nice amenity for the residents of these rural areas. On the negative, the influx of wealthy second-home buyers can drive up property values so high that longtime residents of an area can no longer afford to live there.

On the whole, then, I’d say that negative outweighs the positives — at least for those longtime residents.

Tags: CareerJournal.com, rural areas, second homes, Wall Street Journal

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One of my current, and most-read posts, started me thinking: When something goes wrong with a residential real estate buy, who steps up to take the blame? Increasingly, the answer to that question seems to be ”no one.”

Last week, I wrote this post, about a couple suing their real estate agent after allegedly overpaying for their house. The couple claimed that their agent should have known that they were paying too much, and should have warned them against it.

The case is complicated. And it’s not clear whether the agent really did do anything wrong. But in a news story about the case, an expert witness for the agent did say something that bothered me: The witness stated that it was the couple’s duty to make sure they weren’t overpaying for their house, not the agent’s.

My question: Why? Why is the agent receiving a commission check from the sale of the house if the agent — who was representing the buyers in this transaction, not the sellers — if he wasn’t willing to make sure his clients weren’t spending too much money? Isn’t this the least amount of service we want from a real estate agent?

Unfortunately, this dodging of accountability seems to be rather common in the residential real estate business. I have my own example. My wife and I bought a nice tiny home in a suburb of Chicago about two years ago. Unfortunately, during heavy rain storms, our basement leaks, a lot. This wasn’t disclosed to us when we bought the home.

Who’s to blame? The sellers, sure, unless, by some astonishing coincidence the same basement that’s already flooded three times for me in two years never flooded once for them in 8-plus years. But what about our home inspector? We paid him to search the house for just this sort of thing before we bought. Unfortunately, when we called the inspector he denied accountability: He inspected our home during a dry time of the year. How was he supposed to know the basement leaked? Sounds lame to me, but that’s his excuse.

Next we tried our real estate attorney. Maybe he could help us retrieve some dollars from the sellers. He couldn’t. Trying to prove that the sellers knew the basement leaked would be too expensive and time-consuming, and there was no certainty that we’d win our case.

So there you’ve it: We’re stuck with a leaky basement that we’ve to pay to fix ourselves. The sellers who more than likely didn’t disclose the problem and the home inspector who didn’t find it are sailing along.

Where’s the accountability? Maybe if there was more of it, the general public wouldn’t have such a dim view of real estate professionals.

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The National Association of Realtors on Jan. 24 released the news that anyone trying to sell a home already knows: Housing sales were down in 2007.

The association released a year-end report showing that the owners sold more than 5.6 million existing homes in 2007. That’s the fifth-most homes ever sold in one year. However, it’s also a large drop from 2006. In that year, sellers sold more than 6.4 million existing homes.

The association also reported that the median sales price of existing homes was $218,900. That’s not good news for sellers, either: It represents a drop of 1.4 percent from the median price of $221,900 in 2006.

Most people would read this news as negative. I’m not so sure. Let’s look at pricing, for example. The median price of slightly over $218,000 is still high. During the real estate boom, housing prices in many areas of the country rose so high that many buyers could never hope to afford any home that was in decent shape or didn’t sit in a terrible location. Prices had risen too high, too quickly.

Hopefully, we are now returning to a real estate market that’s a stable one, one where homes continue to appreciate but at a slower, more realistic pace. If prices would have continued to increase as quickly as they’d during the first part of this decade, far too many residents would have been priced out of ownership.

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Forbes Magazine, one publication that truly adores its lists, recently released another one guaranteed to get people talking. This one highlights the 10 most costly cities for renters.

To no one’s surprise, New York City tops the list. The average monthly rent in the Huge Apple, according to Forbes, comes in at $2,922. San Francisco, also no surprise, comes in second with an average monthly rent of $1,904. Rounding out the top three is Boston at $1,658.

The remaining seven cities on the list are: San Jose, Calif., at $1,612; Los Angeles, $1,452; San Diego, $1,304; Washington D.C., $1,302; Miami, $1,080; Philadelphia, $1,014; and Chicago, $1010.

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Whose fault is it when a buyer pays far too much for a home? The buyer’s? Or the buyer’s real estate agent?

Marty Ummel, who in 2005 bought a home in San Diego for $1.2 million, is asking the legal system to decide.

Ummel and her husband are suing their real estate agent, Mike Little from RE/MAX. You can read about the case here, in an intriguing story written by David Streitfeld in the New York Times.

The Ummels bought suit after another real estate agent left a notice on their front door shortly after the couple moved into their new home. The notice pointed out that a house up the street had just sold for $105,000 less than what the Ummels had paid for their home. The house that sold was the same size as the one that the Ummels had bought. A second flier mentioned another nearby home of the same size that sold for $175,000 less.

The Ummels are claiming that Little pushed them into the sale, even though he should have known that the couple was paying too much for the home. The Ummels also accuse Little of exaggerating the positive features of the home.

Tiny, of course, denies this. One of the witnesses for the agent stated in a court deposition that the Ummels failed to do what’s expected of a “knowledgeable, sophisticated buyer” and are now looking for someone else to blame.

The case goes to court on Monday, Jan. 28. You can bet that real estate firms across the country will watch it carefully.

The sad truth is that buying a home is far more art than science, even with the help of a real estate agent. Determining exactly what a house is worth is a tough job. There’s no magic number that equals the completely correct price.

That being said, I find the statement of Little’s expert witness a bit insulting. Buyers hire agents in part to research current area housing sales to help make sure that they’re not drastically overpaying for a home. To say that this is really the job of the buyers makes tiny sense to me. If it is the job of the buyers to not overpay, then why is the real estate agent receiving such a large commission? Agents receive serious dollars whenever a home sale closes. They should be expected, at the least, to do everything in their power to make sure that their buyers don’t overpay.

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Here’s an interesting story from AOL’s money & finance page: While the residential housing market remains mired in a deep slump in the United Says, homes are selling quickly in Mexico.

According to the story, which you can read here, Mexico’s president, Felipe Calderon, has set a national goal of a million new mortgages a year by 2010. This looks like a reasonable goal: Just 6 percent of Mexico’s 25.7 million homes are financed with mortgages. (In the United Says, it’s far different: 67 percent of U.S. homes are financed with mortgage loans.)

The story goes on to say that the pent-up demand for mortgages allows lenders in Mexico to remain choosey, enforcing strict lending standards that have kept delinquency rates in Mexico below 4 percent in the third quarter of 2007. Delinquency rates during the same period in the United States hit 5.6 percent.

The story even states the real estate market’s upswing may slow emigration from Mexico as it generates millions in new jobs.

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