Lee Alley, Ph.D. RAPID CITY HOMES FOR SALE

We believe more strongly today that, on top of what's already happened, a perfect storm may be brewing in our local housing market. This is due to evidence of colliding structural forces.

Prices are way down nationally, steady locally. But the number of newly listed homes continues to plummet, both nationally and locally. Economists like to say that "price" is the variable that balances supply and demand. So far, home prices in the Rapid City/Black Hills area have remained steady. As the number of local sellers have declined due to market queeziness, the number of viable buyers ready to buy has also declined too due to the plugged and leaking pipeline of lenders. As a result, although our sales turnover volume is plummeting, prices are holding rather steady.

But, our premise is that if either the number of sellers or the number of buyers (but not both) changes significantly, or if the numbers of buyers and sellers trends in different directions simultaneously, then our current frail balance of market forces could yield an amplified price-reaction in the market to re-reconcile supply and demand.

According to the Wall Street Journal, the U.S. "months of inventory on hand" is climbing as the pace of sales is outstripped by new listings. But here in the Black Hills/Rapid City area, new listings are coming on line at a declining pace. We believe that if something occurs to elevate the number of buyers, even a small amount, it could reverse the local sense of a buyers' market. As the number of active listings declines, and the rate of incoming new listings declines, we could find ourselves in an oversold misalignment of supply/demand market forces.

This could take as little as, perhaps, an extension of the IRS' first time homebuyer credit, or sustained lower interest rates, or rising employment.

There is much talk of a second wave of foreclosure properties flooding the market due to unemployed middle class homeowners. But things just don't seem to allow for such a phenomenon here.

A growing number of 'expert' industry analysts are predicting that the U.S. housing market bottom will occur sometime between now and next spring. A contrarian would say that implies an excess of optimism, and therefore the real bottom may not come until latter 2010, or even later.

We believe the best time to buy may become even more disjoint from the best time to sell. In any case, our stance remains the same...the three traditionally most important factors in real estate (location, location, location) may be in line to be displaced by when, when, when.

What's your opinion?

Posted by Lee Alley, www.BHhomes.INFO, Rapid City, Black Hills, SD at 3:34 PM

Labels: Market Conditions

Consumers, beware! The rising tide of "greenwash" is about to drown the minority of homes and household furnishings that are, in fact, "green."

When you buy "pure" orange juice, the Federal Trade Commission requires certain criteria be met to use "pure." Same with EPA-certified automobile mileage claims, FDA-certified drug claims, and FCC-certified safety claims. But any one can stand in the street and claim " I have a green__(you name it)___". Truth in product labelling is critical to the healthy diffusion of new technological products that truly do meet public expectations. However, media advertisers, many hapless real estate agents, and a growing number of home builders are joining the careless stampede to label nearly every thing, (including oranges, red peppers and blue flax) as "green." Or "sustainable" or "energy efficient" or "environmentally friendly" or "low carbon footprint." And since the term "dual fuel" is playing so well for the auto industry, some builders are now labelling their homes as "dual fuel." (Well, come on, folks! You mean you built an on-grid house with city gas and electricity and didn't think to design it so Mother Nature could bathe it in passive-solar heated warmth? Why isn't solar already the "dual" fuel? Solar radiation is free, so why do your buyers need $20,000 in photovoltaics or miniature windmills to be dual?)

Recently I called a local Black Hills builder who advertised "green homes." I mentioned that I have been interested in solar building since earning a Ph.D. in engineering during the 1970's energy crisis, and I have been studying and researching it for decades. Therefore, as the only nationally certified EcoBroker in the Black Hills region, I wanted to buddy up with this home builder to present legitmate "green homes" and green-home education to home buyers. But when I asked him if I could drop by and learn what, exactly, made his homes "green" he coughed, mumbled and sputtered a few moments then said "no thanks."

This greenwashing epidemic has become such a deceptive driver in American commerce, confusing and harming consumers (and the environment), that the Federal Trade Commission has held hearings on the problem and considered restrictions on loose claims of "green." Hooray for the University of Oregon School of Communications for establishing the Greenwashing Index to help consumers and advertisers submit green advertising claims for nationwide scrutiny.

So, Green-home buyers, beware! Know why you want a green home, and what that means to you. Then set your own metrics of performance to evaluate green homes, the homes' support of your own green living, and the impact of you and your home on the environment. I love this topic and enjoy helping homebuyers and other agents learn how to deal legitimately with the green movement, so call me if you'd like to chat or need answers. In addition, there are a number of links and helpful green-home evaluation models and calculators on my web site.

Here's hoping you can find a home that will make your neighbors "green" with envy.

Posted by Lee Alley, www.BHhomes.INFO, Rapid City, Black Hills, SD at 5:36 PM

Labels: Find Your Next Home, Green Homes

We have an annual Electro-Technology Expo for real estate and home building people, sponsored by Black Hills Power and my Black Hills Home Builders Association. I went, expecting to get a lot of work done in the backs of the rooms on my wifi-connected PC. After all, how engrossing would a session on "Modern Water Heaters" be? Well that was a mistake. Session after session played the same refrain. It goes like this. The home is no longer a thing. It is many inter-dependent dynamically operating systems. While we sleep at night, or leave for work by day, that home is busy! Water heaters are no longer just for cooking water. Roof shingles are no longer just for deflecting rain. Shingles are now photovoltaic-impregnated electric co-generation systems. Even the ground under our home is no longer just dirt. It is now a geothermal heat exchange reservoir.

And, you know that dumb little clock-faced dial that used to run backward and tell meter-readers how much power you used last month? Not in the future. We're raising the IQ of these little gadgets about 1000%. "Smart Meters" in the future will help us collaborate with the power company to balance our mutually agreed goals for energy conservation, cost savings, household comfort, and environmental impact. Smart Metering will not only tell the power company how much we are using this moment, but what we're using it for, and even allow the power grid to enforce our agreed limits on usage.
On the one hand, I don't want Big Brother sniffing around my energy usage behaviors. But on the other hand, as long as I am connected to the electric utility's grid, I sure would like them to cooperate with me, in helping to spend less of my money and less of Mother Nature's resources. If you want to be independent and private, then go off-grid. (Which I hope to do in my next home.)

So, what financial meat is winding up in the Stimulus Package to implement promised incentives for us to "go green"? Plenty. My favorite is the plan to extend the tax credit for investments in green improvements. Also, the Clean Energy Tax Stimulus Act of 2008 is described as extending "the investment tax credit for eight more years for businesses."

And there is that whole underwhelming "green financing" thing that has been trying for years to get off the starting line. If our lenders won't loan money on that house insulated with straw bales, or on home improvements to retrofit a geothermal system, then it matters little how smart we think the technology is. But there are signs that the financial press, at least, is catching on to green financing. If you enjoy staying up at night to study green financing, then my web site offers some links to helpful reading.

The point is, we can do our part, and help the IRS do its part, if we become informed about what tax and stimulus incentives exist, and what new home-building technologies exist, to help us to "go green." We were down this road before, in Jimmy Carter's 1970's. But it was academic then. It's survival this time. It's time to get serious, and we have new serious homebuiding technologies to help us get there. But the technology won't come knocking on our door. We have to learn where to look and then take some risks and take some action to implement instead of just talking about it.

Posted by Lee Alley, www.BHhomes.INFO, Rapid City, Black Hills, SD at 7:06 PM

Labels: Financing, Green Homes

So. We're hearing a lot about how the great white Stimulus Package will stimulate green living and green buildings.

Let's get down to specifics. What provisions, exactly is this Stimulus Package going to include for true green spending and investments? (See my prior post on "Green-washing".) I have been tracking a lot of different parts of it. But CNN/News has done a fine job of summarizing. Here are some of the excerpts from CNN's synopsis:

• Conservation programs: ($24 billion House, $15 billion Senate) -Conservation is the biggest single part of the green plan. ...For example, $12 billion would go toward ... and low- and middle-income homes. Upgrades would include replacing windows and adding insulation.
  ... The House version allocates $300 million to fund rebates for people to buy new efficient appliances. These can save up to 30% more power than traditional models, according to the Alliance to Save Energy.
  
• Home conservation: $4.3 billion - Homeowners are eligible for a tax credit for part of the cost of various efficiency measures like replacing an old furnace or adding better insulated windows.
  
• Small-scale renewable tax credits: $1 billion - Currently, if you buy a small windmill for your backyard, a solar hot water heater or a geothermal heating system you can write off 30% of the cost on your federal tax bill, capped at $2,000 for the heating systems and $4,000 for the wind turbine. This bill removes those caps, although the 30% limit remains

"Consumer Alert:" Please remember that Green-washing is the rule not the exception. Set your own criteria and expectations, and confirm with hard evidence that what you expect is what others have gotten.

Posted by Lee Alley, www.BHhomes.INFO, Rapid City, Black Hills, SD at 8:52 PM

Labels: Financing, Green Homes

More news from President Obama and the U.S. Treasury on the new Making Home Affordable program. It is responding to a phenomenon that Treasury describes as falling prices of innocent homeowners near a foreclosure. ("Prices of homes near a foreclosure are declining as much as 9%.) If that happens, then an otherwise strong homeowner can go "underwater" and thereby end up in foreclosure as well. Treasury says this can become an accelerating downhill spiral dive for entire communities, then the nation.

The Program's stated purpose is "A Refinance Program for Responsible Homeowners Suffering From Falling Home Prices." It is what you'll hear as the "cram-down" bill, when referring to the mortgage industry's reaction to it. The U.S. Treasury's FAQ released this morning states that it will help reduce the loan obligations for 3 to 4 million homeowners, at a cost of about $75 billion. As I read it, it requires lenders to perform a "net present value" analysis on loans, and if the expected payments from a homeowner (who might otherwise be forced in to foreclosure) are greater if re-financed on easier terms, then the lender must go along (if certain other requirements are met).

If you have questions about this program or any of the others, feel free to give me a call. I'll be glad to help. -Lee

Posted by Lee Alley, www.BHhomes.INFO, Rapid City, Black Hills, SD at 7:58 AM

Labels: Financing