Archive for October, 2008
This evening I am just relaxing after a fantastic day in the sun down here in Sunny Christchurch. I cought up with a good friend of mine Brendan Burns who is running for the Labour Candidate Seat in the 2008 election for Christchurch Central. It was a cracker day and I think most of New Zealand experienced the same thing. Anyway I stumbled accross an article on 3 news online which speaks of the amount of people choosing to rent vs buying their own home. It says:
New figures have revealed a growing trend which shows more and more New Zealanders are choosing to rent their homes over buying them.
While many may be quick to point the finger at a slowing economy and the global credit crisis, it is a shift which has far deeper roots.
Andrew Schollum and Gemma Nissen are among one-third of New Zealanders who now rent their homes.
“We’re really fussy about the kind of house we want to live in,” Mr Schollum says. “And we can’t afford the type we want to live in. You know, can’t afford to buy it, but can afford to rent it.”
It has been revealed that the number of Kiwis choosing to rent property over buying has been consistently growing.
“The number of people renting has been increasing over the last five or six years,” Geoff Montogmery from the Department of Building and Housing says. “About a third of New Zealanders rent their homes and it is just a general change. We are aligning with the rest of the world where more people rend than own their homes.”
The Department of Building and Housing has been monitoring the shift and has seen close to a ten percent increase in the number of rental bonds paid over the last five years – which is good news for the property management sector.
“When the property market turns down Quinovic does very well out of it because people put their properties into the rental pool,” Stephen Dacome-Bird from Quinovic Property Management says. “When the property market picks up people start investing in property and Auinovic does very well out of it.”
However for home owners and prospective buyers the current climate is not so rosy.
Last week the Reserve Bank made the biggest cut to the official cash rate in New Zealand history in an attempt to stimulate the economy and help those with mortgages.
But despite the reprieve, the thought of the quarter-acre dream is more of a nightmare for some.
“We’d have a totally different life,” Mr Schollum says. “Like right here we can live in the centre of the city and we can do a lot of things really easily. That as well as having more disposable income means that our quality of life is much better.”
And Mr Schollum’s argument seems to be gathering momentum across the country.
To me this to some people is a justified argument as rents at the moment are cheaper than a mortgage and people have reason to not want to pay rent. But I just cant help but think going back to the line it says that because the rent is cheaper they have a better quality of life.
Is this a very short sighted thing to say, or is it just reality? Is the fact of life of what is happening causing the rich to get richer and the poor to get poorer. I think of it like this. If a third of us are renting our homes and this number is growing will supply for buying stop. Or is this just going to create opportunities for the investors to increase their portfolios to very large amounts.
It makes you think.
October 27 2008 | The Market | No Comments »
I have just been reading up while relaxing in the torrential rain of the west coast on whats actually happened in the world of housing markets and Their falls, and its dam intense. There is so much that is going on that no one person can truely grasp the whole scale of the crisis. But I come across this article and thought it brilliantly illustrated in simple terms what has happened and caused the housing market to crash.
Before the real estate market crash of 2008, there were the prophets. They spoke of a real estate balloon that was bound to burst and take down the real estate market as well as the economy. Even with all of this prophesying, many were taken by surprise when the once lucrative real estate market began to crumble.
So, what caused the collapse? The main culprit was the subprime lending market. When this market crashed, a large amount of companies faced foreclosure. Even the companies that did not foreclose suffered losses that amounted to billions of dollars.
You may have already heard news reports about the subprime market crash. If you are like most, however, you may not know what the crash meant to individual property owners. You may even have questions regarding how we got in this situation to begin with.
Over the past few years, subprime mortgages were the biggest trend in real estate lending. Buyers who were unable to qualify for conventional mortgages could obtain financing via a subprime mortgage. People who obtained these loans often had to pay high interest rates.
Lenders obtained the money to pay for these mortgages from a variety of sources. Many companies secured loans at low interest rates and then loaned that money out to buyers at a higher rate. Some of the money was borrowed from central banks.
While the housing market remained relatively stable, the ill consequences of these loans could not be seen clearly. In fact, the market was experiencing a surge in value that was unprecedented. This surge resulted in an unrealistic expectation of the future real estate market which in turn caused lenders to put even more money into funding mortgages that new homeowners could ill afford.
In 2005 and 2006, the last real boom was occurring in the real estate market. During this time, it was extremely easy to get a loan. Lenders thought that they would be able to make money from buyers even if they did not pay for the mortgage through the high interest rates they were charging and the ever-increasing value of real estate. But when interest rates started to rise, people stopped buying homes. Additionally, homeowners started failing to make payments due to the interest rate spike.
It became harder and harder for lenders to obtain funds to invest into mortgages. Buyers, now unable to qualify for a loan easily, began to stop looking for a home to purchase. Investors became wary, and underwriters started increasing the requirements to qualify for a loan. People who had adjustable rate mortgages sought desperately to decrease their skyrocketing monthly payments. But they could not qualify for a new, fixed loan under the strict guidelines. This only caused the number of foreclosures to rise dramatically resulting in the real estate market crash of 2008
The source of this article come from Sal Vannutini is the author of ” The 8 Power Profit Secrets To Making More Money With Less Risk In Real Estate, ” a free strategy report for investors. Get your complimentary copy at http://www.FastFixerUpperProfits.com today.
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October 25 2008 | The Market | 1 Comment »
This short post is really just to tell everyone I am alive and well. I am right now down on the Little Wanganui River catching Whitebait and relaxing. No phone, no email, no people – (hardly). It’s a time to reflect upon life as its been and have a bit of a laugh with the family. Sorry to those of you who have emailed me. I will respond next week when down in Christchurch. While down there I am going to be helping my friend Brendan Burns to get into parliament at the forthcoming elections in November.
Anyway The point of this post is more a symbolic message that I was thinking about when catching these whitebait that are trying so dam hard to get to the top of the river to spawn. If you look at the whitebait they are moving in shoals. You might see 3 or 4 shoals of them at any given time but they are all trying to get to the same place. They are all trying to get to the top of the river. I also looked out and thought look at all the hurdles or traps that these whitebait have to get through before they even get a chance of making it up the river.
I then looked at my own life and thought I am not much different to these whitebait. If I look at my lifeline as the windy river up to the mountains in my case the mountains could mean retirement or heaven (which ever come first). But I look at how my life has gone so far and I think how the whitebait story goes. I have a goal, I have a drive to make me reach my goal, and oh the hurdles and traps on the way are just everywhere. People trying to bring me down, events trying to stop me in my tracks, people trying to scare me onto a different path of life. It’s all there.
But I thought about the whitebait story a little further and into the field of Real Estate. Now everyone in the Real Estate industry has a common goal – whether to sell the house or buy the house you have that common goal. Real Estate agents no matter what the company what to make the sale – so there is a common goal. Just as the whitebait all Real Estate agents are striving for that goal, think of the agent as an individual whitebait. Now when you think about the shoal – that is the company that agent works under. And as I said above you can see numerous amounts of these shoals/companies moving up the river/goals at the same time. All companies do have the same goal. Some of them get trapped some of them go on to make it. Leadership and direction is important at a company level – not an individual level.
Along the way everyone in the sales process – the agent and the client will come accorss hurdles to get through. Some of them big some of them may just be a rapid. And some of them will catch you out and put a stop to the deal. But just as the whitebait they keep trying and keep coming. So if you do get stuck on a hurdle that throws you off don’t be too hard on yourself. The whitebait doesn’t. It just keeps going. It has a clear goal and it wants to make it. If we all had the determination of the whitebait we would all be very successful and happy in life.
I think that if you look at this whitebait story the main lesson I learnt it’s not just about you it’s about your team. No matter how strong you are and good you are if your team or company get caught you’re going to be caught with them. Translating this to Real Estate it is important to work with someone in a good team or company. A strong team or company will get you as a seller or buyer easily through the hurdles of the selling process and have a successful outcome.
October 24 2008 | Buyers and Sellers | 4 Comments »
Sellers around the country are finding it increasingly difficult to sell their homes. Two years ago sellers could put their homes on the market and slap a for sale sign in the yard, and buyers would inevitably come. As an agent in New Plymouth, I feel very fortunate to live in a city with a good real estate market compared to most other markets around the country. But, even in New Plymouth’s market, sellers are becoming frustrated with not being able to sell their homes. If you’ve listed your home with no success, you may want to consider
taking it off the market, even if it’s just for a short time.
How long has your home been listed? The time it takes to sell a home (Days on Market) depends on your local real estate market. In New Plymouth at present this is approx 51 days – up from 38 the previous year. This is only the average. But in any market, if it’s been listed for 9 or more months without any success, you should consider your options: take it off the market for a while, find another listing agent, or make a considerable price reduction.
How many showings per week does your home receive? Showings are also a market sensitive number. If your home is getting fewer showings than your competition is, it’s due to price or to marketing. (your agent can tell you this) Be sure to look over your marketing, make sure you show off your home’s best features. Sometimes replacing dark pictures or rewriting your remarks section can be an easy fix for getting more showings. Since there are so many homes on the market, buyers are having to do a lot of shopping (and eliminating) on the internet. So, make sure your home gets on buyers’ lists of homes to see!
Have you received any offers from buyers? Again, this depends on the market. But, a safe rule is if your home has been on the market for 9 months with no offers, it’s going to take some drastic changes to get an offer. After a home has sat on the market for a while, buyers often think there is something wrong with the home and won’t put in an offer to buy it. If you have received offers on your home and decided not to take them, then you may have learned that buyers are making low ball offers left and right in this market. There are a lot of unrealistic buyers who think they can negotiate 20% off a listing. As a seller, you have no control of the offers that you get. But, be reasonable. There are a lot of unrealistic sellers, too, who think they can get more for their homes than the statistics show. The main thing is be flexible and work with everything you get.
How badly do you need to sell? Of course you wouldn’t have listed your home if you didn’t need or want to sell it. But, do you absolutely need to sell or move right now? If so, and if you haven’t gotten any offers, you may want to consider renting out your home. A lot of sellers are choosing to rent their home out instead. It’s a lot easier to rent a home right now than it is to sell one. So, at least consider this option.
Is your home priced competitively? If you’ve reached the lowest point you want to go in your asking price with no success, you may want to list again later when the market has balanced out. If you look at the statistics, in most neighborhoods the very lowest priced homes are the ones that are being sold. Of course it depends on the neighborhood, but buyers are wanting a good deal in this market. Homes are going under contract everyday – but, they are only the homes that are priced competitively.
All of these factors depend on your real estate market. So, be sure to ask your listing agent how your home is doing compared to other homes for sale in the same price range and area. He or she should be able to provide you with statistics for recent sales and showings. This will give you a good idea of where you stand in the competition. And, if your home isn’t fairing well, it would probably be better to take it off the market for a while. Most real estate analysts think the market will show a significant change around the spring of 2009. So, don’t feel like you’d be taking your home off the market forever. But, if you can wait to list again in the next 8 to 12 months, real estate markets in most places are expected to pick up significantly by then. After all, this strong buyers’ market won’t last forever!
October 19 2008 | Sellers | 11 Comments »
Labour Day in New Zealand falls on the 4th Monday of October each year, as opposed to 1 May in Malaysia. And because Kiwis love long weekends, it’s great to have a break as we haven’t had a long weekend since Queen’s Birthday (which fell on 4th June this year — 1st Monday of June).
To the left are the founders of New Zealands first Labour Day
Labour Day in New Zealand commemorates the struggle for an eight-hour working day. Thanks to SamuelParnell, New Zealanders were one of the first in the world to claim the right.
Labour Day commemorates the struggle for an eight-hour working day. New Zealand workers were among the first in the world to claim this right when, in 1840, the carpenter Samuel Parnell on an eight-hour day in Wellington. Labour Day was first celebrated in New Zealand on 28 October 1890, when several thousand trade union members and supporters attended parades in the main centres. Government employees were given the day off to attend the parades.
The date, 28 October, marked the first anniversary of the establishment of the Maritime Council, an organisation of transport and mining unions. The fledgling union movement was decimated by defeat in a trans-Tasman Maritime Strike in late 1890 but, despite this, the first Labour Day was a huge success. In Wellington, the highlight was an appearance by the elderly Parnell, who died just a few weeks later. From the mid-1890s the union movement began to recover slowly under the Liberal government. The Liberals’ industrial conciliation and arbitration system, introduced in 1894, earned New Zealand a reputation of being a ‘working man’s paradise’ and a ‘country without strikes’.
Early Labour Day parades drew huge crowds in places such as Palmerston North and Napier as well as in Auckland, Wellington, Christchurch and Dunedin. Unionists and supporters marched behind colourful banners and ornate floats, and the parades were followed by popular picnics and sports events.
These parades also had a political purpose. Although workers in some industries had long enjoyed an eight-hour day, it was not a legal entitlement. Other workers, including seamen, farm labourers, and hotel, restaurant and shop employees, still worked much longer hours. Many also endured unpleasant and sometimes dangerous working conditions. Unionists wanted the Liberals to pass legislation enforcing an eight-hour day for all workers, but the government was reluctant to antagonise the business community.
What the Liberals did do was make Labour Day a holiday. The Labour Day Act of 1899 created a statutory public holiday on the second Wednesday in October, first celebrated in 1900. The holiday was ‘Mondayised’ in 1910, and since then it has been held on the fourth Monday in October.
In the first decade of the 20th century industrial unrest reappeared. The Liberal government was in decline, prices were rising and the Arbitration Court was seen as reluctant to raise wages. The more militant labour movement that emerged from around 1908 rejected the Liberals’ arbitration system and condemned the increasing commercialisation of Labour Day parades. Many floats advertised businesses as well as temperance organisations, theatres, circuses and patriotic causes. Some socialists promoted May Day (1 May) as an alternative celebration of workers’ struggles. Although unionists and their supporters continued to hold popular gatherings and sports events, by the 1920s Labour Day had begun to decline as a public spectacle. For most New Zealanders, it was now just another holiday.
October 16 2008 | Uncategorized | 2 Comments »
QV’s September statistics for the residential property market report a 5.8% decline in national property values over the past year (calculated over the three months ending September 2008 in comparison to the same period last year), down on the 4.5% decline reported in August. The average New Zealand sale price for September was $379,854.
“Indications last month that a more optimistic mood had come over the market have since evaporated” said Mark Dow of QV Valuations. “We are moving into an economic recession and there is plenty of speculation that things will get worse before they get better. Uncertainty about the impact of the global credit crisis, the usual lack of activity prior to an election, and significant tightening of lending policies by the banks is contributing to pessimism in the property market and there is little expectation of any spring resurgence. The requirement to have a significant deposit will take many first home buyers and investors out of the market, reducing demand and putting further downward pressure on prices” said Dow.
Across the Auckland area property values are down 7.0% compared to the same time last year, declining further from the -5.8% reported last month. Hamilton City’s values have slipped slightly to -8.8% and Tauranga to -7.6%. The Wellington area has also declined further to -5.4%, Christchurch to -7.1% and Dunedin to -8.5%.
Most of the main provincial North Island centres are showing further declines in year on year value compared to those reported last month. Whangarei has declined further to -6.6%, Rotorua -6.4%, Napier -4.4%, Hastings -7.0%, New Plymouth -7.0%, Wanganui -5.5%, and Palmerston North -9.4%. Gisborne is the only centre to improve slightly to -10.1% compared to the -10.4% reported last month. In the South Island, Nelson dropped further to -4.0%, Queenstown Lakes to -5.3%, and Invercargill to -1.6%.
What’s happening in Taranaki/Taupo/Wanganui?
The property market in from my perspective is rather interesting and by no means dull. I however am seeing many people sitting on the fence and waiting to see what happens due to current world events. We all know whats happeing in the economic world. The credit crunch, House Prices Falling, Finance companies going under, Banks Closing, Sharemarket drops, Government Bailouts, It all sounds scarey doesnt it. And the reality of the matter is it is. The world is in a tight situation financially and is likely to be for some time. But this doesnt mean that the world is ending.
My best and honest advise if your selling or buying property at the moment use an agent. I am seeing alot of the agents I work with going over and above the call of duty now to work and help people get deals done. They are making sure everything is in order before a deal closes and are following the process to the end. Its fairly tough out there for everybody but we are all in the same boat. Talk to your agents, they are right in the thick of the property market and if they are informed and are good agents I have no doubt they will provide you the best advise for your unique situation what ever that may be. But make sure you look at all your options. When you know all your options it will make the whole process alot easier. Noone likes seeing someone in a tight financial situation. We are here to help.
October 13 2008 | The Market | 4 Comments »
Well its not looking to flash out there at the moment in terms of the financial markets.
Just look at these graphs of the New Zealand Dollar against the American Dollar.
This is the last three weeks
This is the last 12 months
This trend is since 1990.
Well this is obviously great news for exporters that the dollar is dropping. What I am amazed about is the speed at which it is dropping. Over the last 18 years just visually looking it is the fastest drop yet. But on the other side the increases were very quick as well.
With whats happening in the global economy banks are starting to tighten their lending criteria. Most banks you go to now require a 20% deposit before they will even look at a loan aplication. For first time buyers this means that it is getting hard out there compared to the last few years. But you must admit the last few years people buying property have had a fairly sweet ride.
What do you think is going to happen next and do you think this drop in our dollar is going to effect the real estate market?
October 08 2008 | Uncategorized | 6 Comments »
After an enlightening rum with some fellow bloggers I think it is pertinent to mention one of the things that we all had a cry about and it is one of the things that we all agree that makes blogging and if done with passion will be just as important and will grow your blog just as much as the methods I mentioned in t
he post “How will Blogging Grow Your Business”.
The thing we are talking about is Commenting!
When you join up to any blog you have effectively entered into a community. A community of likeminded people who share the same view and the same passion as you do. And if you are active in this community blogging on your own blog or not you should participate and liven the blog up.
Think about it for a second. When I go to a blog and read an article on their I get information. BUT. If you go to a blog and there are many comments on their I always find myself reading the comments more than the article itself as the comments are really interesting sometimes and hearing people’s opinions and viewpoints on any topic are sometimes more beneficial than just reading the article itself. Think of it like having a fire that’s just starting up that doesn’t heat much, but by adding the comments your adding fuel to make it burn bright and when its burns bright it can then heat more. Thus being more useful.
How will this help your blog and your business. Well I go back to the title and explain from there. How to make blogging enjoyable? Well by commenting on other peoples blogs you give the blogger a greater sense that they are being noticed. There is a great sense of achievement when you get a comment on your blog from someone. If you have one I know you will agree. This will then motivate the blogger to do two things. Write more blogs and they will comment back on your blog and then participate more within the community as well. So this answers the second part, How to get the most from the experience?
One thing Kerry said to me is that she sometimes doesn’t comment because it doesn’t add value or it might sound silly. SO WHAT! Put it down anyway. Just do it!!!!! Adding value comes in many forms, whether this is by saying good post or by giving your opinion on the matter it all adds to the validity and quality of the blog. And guess what. If you have a blog or a website you can leave a link to your site in your name and this is links as I discussed in the previous post that will just grow your site you link.
I will basically conclude to say you must comment. If you want to help grow the blogs your participate in and establish yourself or just plain old say thanks. It goes a long way in growing the overall value of the blog. So comment away to your heart’s content. If you’ve read the post take 30 seconds to write something below in the little shaded box \/ down there \/
October 06 2008 | Uncategorized | 20 Comments »
I write this post to you as I just leave Otorohunga on a bus heading for Hamilton. Where I expect to spend a night and then head to the big apple and catch up with some old friends for a while.
Go public transport Yay! I havent actually been on a bus in a vry long time but when you dont have a car – well go figure. But the experience has actually been rather enlightening and I felt compelled to pull the laptop out, connect the vodem up and write about it. This is the first time I have really looked out the window and actually taken in the scenery as I truck up State Highway 3 from New Plymouth to Hamilton.
The scenery is just awesome. The rough land followed by rivers, farms, bush, tunnels its all just stunning. I think back to when I was in the Navy and touring around australia, south east asia and india and I realise that we have a truely unique country and we need to look after it. I think as New Zealanders living here we take this for granted. I dont know any ither place that has such green pastures and the amount of unspoilt land.
As an aside note about three minutes ago I got a text notification on some deals that went through today. There were three for today 1 of them mine. Thats good going, but whats more interesting is that two of them have been on the market for over a year.
Whitnessing this and actually working in the market on the floor there is a heck of alot of deals going through right now. There are people buying all over. And things that have been on the market for a long time are n ow being sold. This speaks for itself. Maybe there is a shift in buyers moods.
Anyway its hard to write on a moving bus so I will leave this to it now. I will have september stats up soon. I will be very interested to see them myself
October 02 2008 | Uncategorized | 6 Comments »
