Pick your favorite news source and odds are it’s promoting a story of a housing recovery this Spring. Another not-too-risky bet is that it called the drop in house values and the slowdown in sales the “correction” of a bubble.

But it can’t go both ways. If the crash was a correction, then prices headed back where they were is re-inflating a bubble. Using terms that conflict with themselves is just one symptom of the news media repeating press releases undigested.

And there are strong forces pushing a ‘recovery’ in housing prices:

  • record low interest rates,
  • diverting of homes that would hit the market to >100% LTV refi programs,
  • delayed foreclosures eased by government bailouts of banks,
  • low-downpayment government-insured loans that the open market won’t offer,
  • REO to rental funds buying now to rent and then sell/IPO in a few years in anticipation of higher prices,
  • Cities including South Bend spending millions to demolish abandoned homes
  • And the drumbeat of “buy now or pay more later” that I thought disappeared in 2008.

But the most problematic element is that, after the most catastrophic housing market in 30 years or more, thinking has not changed. A rational view of the housing market is that any change benefits someone and hurts a different group:

  • Prices go up? —-> good for owners, bad for buyers.
  • Prices go down? —-> good for new buyers, bad for sellers.
  • Prices are stable? —> good for communities, banks, and long term investors, bad for flippers.
  • Prices fluctuate wildly —> good for quick turn traders, bad for most everyone else.

The unspoken idea that constant appreciation of real estate prices is to be desired and is a positive outcome is driven by groups who benefit from rising prices; banks, real estate agents and established homeowners.

Early Spring sales in 2013 are not wildly better than in recent years. February sales volume is down 2013 compared to 2012. Even if they were up, it pays to be cautious making 30 year decisions on two months data and to ignore anything the mass media reports on real estate. There is probably no market more manipulated than the housing market, and it pays to think your decisions through carefully after getting advice from someone who knows the relevant area -think blocks not cities.

Here are the numbers from the Greater South Bend – Mishawaka MLS for sales 9/1/2012 – 2/28/2013. That bring us up to date on this blog.

  • September 2012: 254 sales for ~26.9 million in volume
  • October 2012: 270 sales for ~28.5 million in volume
  • November 2012: 241 sales for ~30 million in volume
  • December 2012: 206 sales for ~24.5 million in volume
  • January 2013: 163 sales for ~15.3 million in volume
  • February 2013: 181 sales for ~14.8 million in volume

Here are the graphs:

All sales prices at a glance, coded by type of financing:

Sales-Sept2012-Feb2013-Scatter [320x200]


For clarity, the same graph excluding the 28 sales over $350k:

Scatter-9_12-2_13-to-350k [320x200]


For context,  the long term sales graph:


Long-Term-Sales-Graph [320x200]


And that same graph showing only Q1 for 2008-13

Q1-sales-2008-13 [320x200]


So if the market overall is still anemic, where is the media finding stories of homes selling in days with multiple offers? They are finding the markets with an undersupply of homes for sale, those lacking a Realtor’s “inventory.” And it’s true, there are spaces where it is good to be a seller right now. In Granger, if you have a decent house without any major flaws (on a highway, under a power transmission tower, with a failed septic system, etc) that is in the $250-300k range, you’ll probably sell it.  Here’s my reasoning:

Granger easily supports that price point (graph below does not show the few sales over $1m, but does use them in calculating the trendline)

46530-sales-long-term [320x200]


And sales in zipcode 46530 at the 250-300k price point have decreased from the boom, but seem to be on stable footing

46530-sales-250-300 [320x200]

  • 2008: 48 sales
  • 2009: 34 sales
  • 2010: 39 sales
  • 2011: 44 sales
  • 2012: 55 sales

So, it’s uncertain but reasonable to guess that  about 44 will sell in 2013 (the average of the post boom figures). And there are 21 for sale today, with 2 closed sales this year and 4 pending sales. That’s 17 short of expected sales. More buyers looking for a type of house than sellers selling that type of house = few days on the market and selling near list prices.

But that setup is particular to specific niche markets. If you are selling a farmhouse on 5 acres or a townhouse near Notre Dame or 1920’s house in South Bend you might as well use stats from San Francisco as those from Granger.

If you’re buying or selling or just trying to better understand real estate, don’t follow the TV news. You won’t get good information in a 30 second segment put together by a reporter contracted to produce ten stories a week. And it won’t be specific to your situation. Do your homework, or hire someone to do it for you. The real estate market is no longer moving as a single block. It is fractured so that some markets lack inventory and some lack buyers.

More frequent posting to commence. Have questions? Need advice? Hit the comments or find me with your favored messaging system, http://www.realst8.com/contact-us/




Irish Crossings Nears Completion

by Nick Molnar on September 21, 2012

Buying a South Bend condo can be a difficult investment choice.

You can buy in an older complex. Most of these are in “B” locations a bit further from Notre Dame, and several are starting to have maintenance concerns. Many of the units need updating. On the plus side, the price can be very attractive.

Or you can buy in a newer complex. These are mostly in prime locations walking distance to Notre Dame, restaurants and shops. They are generally larger, have modern floorplans and finishes, and have better parking. But they cost more, often 2-4 times the price of the older condos.

In itself, that is a straightforward decision – pay more and you get more – and the newer condos and townhomes have mostly been winning the last five or six years.

But there is another concern that comes with the new condos – build-out hassles and risk of buying into a development that later stalls.

Build-out hassles are clear with a moment’s thought. Construction is noisy. It’s dusty and dirty. It requires lots of traffic, lots of trucks and leaves lots of trash. It’s generally not an environment in which you want to spend time.

But failed, slowed or stalled developments are a less obvious risk. Once you buy a townhouse or condo, you are tied to that development. If sales slow several things can happen:

  • The developer might change the plans for future buildings or phases. If the new units are significantly smaller or less expensive than your unit or they clash with the existing units, that could change the personality of the community, and the price of your condo.
  • The developer could drop prices on future units to spur sales. This drops the value of your condo below the amount you paid for it.
  • The developer could fold and fail to complete the project. This is the worst result because it could make your condo essentially unsellable. It will take time for the bank who financed the project to take the property back and to sell it. The future buyer will have different plans for the project. Those likely include making future buildings rentals, leaving you owning a condo in an apartment complex that is very difficult to sell.

South Bend has seen more than a few condo projects fizzle, flop or fail to get off the ground. A partial list would include:

  • The Notre Dame Avenue Townhomes
  • Legacy Square
  • Gameday Hall of Fame
  • The JMS Conversion
  • Colfax Place
  • Keenan Court
  • The North Douglas condos

So that is the downside risk to buying a new construction condo in South Bend.

But there are several ways to minimize risk when buying a new South Bend condo or townhouse.

  • Choosing a community with popular features and an attractive location can help ensure you buy in a winning complex.
  • Finding a community with the best selling floorplans can help ensure you buy a property that will have continued demand when it’s time to resell. To date, multi-level townhouse properties have sold better than other styles.
  • Choosing a community with a good history of sales at or above the price you’ll pay is a good sign there is demand for the properties at/above the price you’ll pay.
  • But the simplest and surest way to be sure you’re buying into a successful community is to buy after it’s nearly complete. If you buy the last, or one of the last properties competed in a community, you know exactly what you are getting. You can get the sold prices on the other units. You can be sure the plans aren’t changing after you buy. And you can talk to other people who have bought in the community and see if they are happy or have complaints.

Irish Crossings has hit the point where it is a compelling buy compared to other communities. In fact, Irish Crossings is the most successful residential real estate development in South Bend, or anywhere within 10 miles on Notre Dame, in the last 5 years. Of the 78 properties in the community, 76 have been built and sold, for more than $30 million altogether.

The final two townhomes in the community are now being completed and listed for sale. It’s an opportunity to buy one of the last units at Irish Crossings and a good way to buy a known commodity and limit your risk if you’re buying a Notre Dame townhouse.

Full disclosure, I am the listing agent on these last two townhomes.  You can find more details about them here: http://irishcrossingstownhomes.com.


South Bend Real Estate Report: Through August 31, 2012

by Nick Molnar on September 14, 2012

Here are sales statistics for sales through the Greater South Bend-Mishawaka MLS through the end of August 2012.


And for clarity, here they are removing the years before 2008.


All the sales 1/1/2012 – 8/31/2012 at a glance


and those sales by financing terms:



Here’s a snapshot of the foreclosure market in St. Joseph County (primarily South Bend / Mishawaka / Granger) for the first quarter of 2012.

There were 131 such foreclosures sold, but just 12 at $100k+. Here are all the recorded sales prices:

Click on the images below for interactive maps with details. You’ll need to zoom in to South Bend as a few addresses mapped incorrectly. You can ignore the markers out of the state. Once you are in the area, you can click the icons for addresses, prices and links to details of homes for sale.


There were 131 sales of foreclosed homes recorded in the area’s MLS between January 1 and March 31.
There were 106 foreclosed homes listed for sale in the area’s MLS when I pulled the data on April 19.

Foreclosures in St. Joseph County that sold Jan 1 – March 31 and all foreclosures listed for sale


Only those over $50k

36 foreclosures sold over $50k in St. Joseph County January 1 – March 31 and 43 foreclosures are listed for sale at $50k+


If you’re looking to buy a South Bend area house at a price over $100k, you won’t find many foreclosed options, just 24 are listed for sale at the time I write this. If you’re willing to deal with the uncertainty and slow responses that are part of buying a short sale you’ll find more choices by including those in your search – there are 107 short sales for sale now and 28 of them are priced at $100k+.

And there are well-priced homes included in homes that are neither foreclosures nor short sales. There are 946 houses for sale over $100k in the county right now. Limiting your search to the five or six percent of these homes that are short sales or foreclosures may not be the best way to get a good buy. It may take filtering out some overpriced homes, and even writing some low offers, but considering all types of housing is a smart choice before you buy.




South Bend Real Estate Report: March 2012

by Nick Molnar on April 6, 2012

“Real estate sales are up!”,  “The Spring Market has arrived!”,  “The Economy is on track for a recovery!” Every year about this time I see these breathless headlines, roll my eyes, and run through the news story or article cataloging what significant details the author missed – the change to tax policy or qualified mortgages, that foreclosures aren’t down because fewer homeowners are delinquent but are on hold while banks sort out the paperwork –  and the lack of or misrepresentation of the source data. But this year, in this market, sales spiked considerably in March, and it seems to be a genuine bounce.

In March 2012, in the Greater South Bend – Mishawaka MLS (search it here), there are records for 273 sales that add up to about $29.2 million. For comparison, March 2011 records show 201 sales for about $20.4 million. Those are increases of about 36% by number and 43% by dollars. They are more in line with what April/May sales were last year. So the question becomes “Is this the start of a more lively market than the past few years or could it be that the regular Spring bounce has started earlier this year since the weather broker sooner?” It’s going to take a few months to know.  Remember that it is not smart to base major financial decisions on one month’s data.

Here is the long term graph showing sales volume month by month back to 2001:


It was a good month for high end homes within the city of South Bend. The most expensive sales in St. Joseph County generally tend to be in Granger, with a few high dollar sales in Mishawaka, South Bend, or other areas rounding out the mix. But in March the the 3 highest dollar sales, and 4 of the 5 priciest homes sold were in South Bend, in Deer Run, on Notre Dame Avenue, and in Ridgedale/Twyckenham Hills:

Here are all the March 2012 sales prices at a glance:

March saw 5  sales close at $500k+ bringing the number of sales over the half million dollar point to 9 for the first quarter of 2012. In the first quarter of 2011 there was just one sale at this price point and in 2010 there were 3.

More sales and more high price sales is a good sign for sellers. But it’s too early to draw conclusions from this as there are still many problems impacting housing markets. I’ll stop at the statistics here. If you want my predictions or advice, you’ll have to call me to talk.