Adding a photograph to a listing can translate to a big price bump…
Turns out, a picture is worth thousands of dollars.
Adding at least one photo to a residential-real-estate listing increases the final sale price by up to 3.9%, says Ken H. Johnson, an associate professor of finance at Florida International University’s Hollo School of Real Estate. That can mean an extra $39,000 for a $1 million house.
“If I was selling, I would put every picture I could on the listing, at a ratio of four to five interior vs. one exterior,” says Prof. Johnson. “We’re talking about a few extra weeks in marketing time to get that 3% to 5% increase on a home. That’s a good trade.”
Roughly 85% of the 4,077 houses studied by Prof. Johnson and co-authors Christopher Cain and Justin Benefield included a photo. Interior pictures were more effective than exterior shots, adding a 3.9% price bump vs. 1.9%. Although adding just one photo can result in these gains, Prof. Johnson estimates that each additional photo adds about $150 to $200 to the final sale price.
But be prepared to wait for the payoff: Adding a photo increases the time to sell by 20.6%, meaning the house will stay on the market for an additional 16.5 days, on average, according to the study, “On the Relationship Between Property Price, Time-on-Market, and Photo Depictions in a Multiple Listing Service,” published in the Journal of Real Estate Finance and Economics in 2011.
That’s because photos give consumers more information to consider, slowing the decision-making process, Prof. Johnson says. “You’re getting an information overload. It’s like offering kids a bunch of candy, and they can’t decide which one to take,” he says. But photos also ease uncertainty. Consumers who have a clear idea of what they are buying are willing to pay more and are ultimately more satisfied with the sale.
Prof. Johnson’s research does not differentiate between professional photos and amateur shots, but says he thinks professionally shot photos are much more effective.
Debra Stotts, senior vice president and associate broker at Town Residential in New York City, recently had one of her listings at Trump World Tower at 845 United Nations Plaza reshot to better show off the design, size and views.
To do that, Manhattan-based photographer Michael Weinstein looked for what he calls the single “wow photo” to open the listing. Usually, it’s the living room, but in this case, Mr. Weinstein says he shot the dining room opening into the living room to emphasize spaciousness.
Mr. Weinstein, owner of MW Studio, shares some tips that homeowners and brokers can consider when working on listings. First, he takes into account which direction the windows face and when the natural light will best accentuate the space. Generally, earlier in the day gives a clear, bright light, while later in the day casts a warm glow.
He usually shoots from the corner of a room with a wide-angle zoom lens to depict the room at its largest. He also positions the camera to highlight the unique elements of a home, whether that’s floor-to-ceiling windows, generous hallways or an elegant foyer. Mr. Weinstein charges on a per shot basis at roughly $250 to $1,500 per real-estate shoot, depending on the number of photos used.
Evan Joseph, another Manhattan-based photographer, will sometimes use up to eight lenses in a single shoot. “I look for the camera angle that makes a room open up, maybe being closer to the windows or shooting upward. Sometimes you need to find the spot where the view is the most fantastic, and that spot might be in the middle of a room or on a couch,” he says. Mr. Joseph, owner of Evan Joseph Images, says he charges between $600 and $1,500 for high-end shoots of resale homes.
Both photographers agree natural light is best. But in the case of a cloudy day, Mr. Joseph comes to shoots armed with plenty of studio lighting. Mr. Weinstein skips the lighting but will occasionally turn on interior lamps to add warmth—though that can give the impression that a room is naturally dark.
For the most part, Mr. Weinstein says, touch-ups happen after the shoot with digital photo editing. A cloudy, overcast view can be brightened to show clear blue, sunny skies. Fireplaces are dressed up with fires. He also removes anything unsightly, like wires, scuff marks on walls, vents, even air-conditioners. He adjusts the color as well to accentuate certain features in the homes. “We’ll warm up the floors or warm up the colors of the walls. It’s very subtle, but it can be very effective,” he says.
Especially time-consuming is removing multiple or large elements, like scaffolding seen through a window or a delivery truck obscuring the front, Mr. Joseph says. “People think Photoshop has a magic ‘Remove This’ button, but you have to reimagine, re-create and reassemble the thing that I’m removing,” he says.
One broker notes that retouching shouldn’t misrepresent the space. “Even if a space needs a lot of work, I would show the flaws in the images so people know what they’re getting into,” says Patty LaRocco, senior vice president and associate broker at Town Residential.
Photos have to walk the fine line of showing off a space’s character without making the home seem too personalized, Ms. LaRocco says. “Materials, light and volume are really what I’m after,” she says.
How photos with property listings affect the sale price and time on market:
- 3.5% Increase in sale price when an online listing contains one or more photos.
- 3.9% Increase in sale price when a listing with only one photo shows an interior view.
- 1.9% Increase in sale price when a listing with only one photo shows an exterior view.
- 20.6% Rise in the time it takes to sell the property when a listing contains at least one photo.
- $150 to $200 Estimated increase to the sale price per additional photo.
Source: ‘On the Relationship Between Property Price, Time-on-Market, and Photo Depictions in a Multiple Listing Service,’ 2011, co-authored by Ken H. Johnson, an associate professor of finance at Florida International University’s Hollo School of Real Estate
They’ve got the money to buy trophy homes—but for now, they’d rather rent. Hoping to keep cash liquid while watching the direction of the market, more people are paying big sums for temporary digs.
When real-estate developer Don Peebles moved his family to Manhattan from Coral Gables, Fla., he decided to combine two adjacent ninth-floor apartments to create a 4,750-square-foot, seven-bedroom, nine-bathroom home with glass walls on the Upper West Side overlooking the Hudson River. His wife, Katrina, spent two months decorating the apartment with abstract paintings from their art collection, whimsical wallpaper in the kitchen and tufted couches in the living room.
Though the Peebleses invested significantly in their home, they don’t own it. Instead, they are paying $35,000 a month to lease it. Renting also gives them the flexibility change their minds about what neighborhood they want to live in if they decide to move. “Our primary residence doesn’t need to be an investment,” he says.
A growing number of people who can afford to buy trophy homes are instead opting for a more temporary solution: the trophy rental. Some renters say they want to avoid tying up their money in steep down payments and instead are investing their money in the financial markets or their own businesses. Still, they’re willing to spend tens of thousands of dollars a month on a rental to get the lifestyle they want.
As a result, the highest end of the rental market has seen significant growth. In New York, apartments and townhouses priced at $15,000 per month and up represented 1.3% of the market in December, up from 0.5% a year prior, according to Jonathan Miller, president of appraisal company Miller Samuel. Prices are rising quickly as well: the median price for the $15,000-and-up sector is up 23.1% from a year ago. The uptick in rentals mirrors an overall trend nationwide in which the rental vacancy rate fell to 4.5% in fourth quarter of 2012, down from 5.2% a year earlier, according to real-estate research firm Reis Inc. REIS +5.95% —and the lowest since 2001′s third quarter.
Astrid Pillay, a broker with Halstead in Manhattan, found two $35,000-a-month rental townhouses for clients in December and says another recently offered a seller $1 million for a two-year lease on a townhouse currently for sale. A number of her rental clients, she says, are recent sellers of trophy homes who have “just cashed out” and want to wait until the market dips again to buy. Other brokers say limited inventory of houses for sale has also helped the rental market. “At this price point, you’re not just going to settle for whatever is available,” says Noble Black, a broker with Corcoran.
New to the rental market in New York are three penthouses ranging in price from $30,000 a month to $50,000 a month in New York by Gehry, a new high-rise building in Lower Manhattan where one-bedrooms on high floors start at $5,500 per month. The largest unit in the building is a 3,800-square-foot, 76th-floor penthouse that includes a nearby studio apartment for nannies, maids or in-laws. Annual cost would top $600,000 a year.
In California, luxury rents are increasing by 5% to 10% each year, says Bill Witte, president of developer Related California. In San Francisco, where Related California has one luxury rental building and several in the works, rents are already 10% higher than their peak before the recession hit, he says. At the Paramount, the developer’s 40-story rental tower downtown, rents are now more than $4.50 a square foot, up from their prerecession peak of $4 a square foot. Related recently rented a 1,190-square-foot two-bedroom apartment there for $6,850 a month.
In San Francisco’s financial district, Millennium Tower, a 60-story high-rise where venture capitalist Tom Perkins owns a penthouse and retired quarterback Joe Montana rents two apartments, there’s a two-bedroom just under 2,300 square feet available for $15,000 a month.
In Los Angeles, billionaire developer Rick Caruso recently opened 8500 Burton Way, an 87-unit apartment building near Beverly Hills and just last week unveiled its crown jewel: a three-bedroom, fully furnished penthouse unit with a monthly rent of $40,000. Mr. Caruso put $2.1 million into building and decorating the unit—which includes custom-made macassar ebony bookshelves and Hèrmes wallpaper in the bathrooms—and says it is the priciest rental in Southern California. (A penthouse unit at 1221 Ocean Ave., a luxury building that overlooks the Pacific in Santa Monica where Britney Spears once lived, doesn’t even come close, at $27,000 a month).
In Miami, rentals that were going for $25,000 a month a year ago are now renting in the $40,000 range, says Greg Mirmelli, a principal and founder of GM Real Estate in Miami. A home on Sunset Island, for example, now rents for roughly $40,000, up from $30,000 two years ago.
Daniel de la Vega, a managing partner of One Sotheby’s Realty in Miami, says he’s got six listings for condos or homes above $30,000 a month or more, which are leasing much faster than usual, mostly to foreigners who will eventually buy something. A private gated home on the beach recently rented for $90,000 a month; it is also available for sale for $14.9 million.
The rise of the trophy rental comes as many Americans continue to abandon ownership in the wake of the country’s housing crisis and credit crunch. The U.S. homeownership rate was 65.3% in the third quarter of 2012, its lowest level since 1996, according to the Census Bureau. In the midst of the housing boom, in 2004, the homeownership rate reached 69.4%.
“We are definitely seeing gravitation toward higher leases,” says Billy Rose, president and co-founder of the Agency, a real-estate firm in Beverly Hills. “A lot of the private-equity guys we see who used to buy are choosing to rent places for $10,000 or $15,000 a month now because they would rather play the market than buy a house,” adds Mauricio Umansky, Mr. Rose’s partner and Agency co-founder.
Jonathan Moore, a 25-year-old entrepreneur, currently leases a two-bedroom at the Ritz-Carlton Residences at LA Live in downtown Los Angeles for $6,200 a month. Mr. Moore, who runs an alternative investment-management company called GCM Capital Management, says that right now he would rather keep his money in his business rather than plunk it down on a large down payment, especially when he doesn’t plan to stay in one place for more than five or 10 years. “I am an illiquid millionaire, so it would be hard for me to unwind my stake in my business,” he says. “But this way, I get all the benefits of being a homeowner, and all the luxury amenities, without the financial downsides.”
Renting, of course, does have its drawbacks. Renters may be subject to landlords raising fees or refusing to renew a lease, for example. With homeownership, “you have some security with respect to the ability to control your own destiny,” says Stuart Gabriel, the director of the UCLA Ziman Center for Real Estate. Still, ownership typically only makes economic sense for those looking for stay put for several years. Property values need to appreciate enough to cover closing costs and other fees. “You’re speculating on housing prices and included in that speculation is the cost of buying and selling, which can be substantial,” he says.
Real-estate brokers say their listings for the largest, most-expensive rental apartments tend to go very quickly—sometimes exceeding their asking prices. Bo Poulsen, a broker with Town Residential in New York, says he recently had four offers for a TriBeCa apartment asking $18,500 a month shortly after it hit the market. It ended up renting for $21,000. “That definitely was not happening a year ago,” he says.
According to real-estate tracker Streeteasy.com, the median amount of time a New York rental property above $15,000 a month spent on the market was 10 weeks, down from 12 weeks in 2011.
The relatively low inventory and high demand means unsolicited rental offers on for-sale properties have become commonplace. Restaurateur Jeffrey Chodorow recently received an offer of $75,000 a month to rent his 3,700-square-foot Manhattan condominium, which is on the market for $18.8 million, says his broker, Oren Alexander.
Limited availability of homes for sale is also driving buyers to the rental market. “If you want to live in a brand new apartment, there just isn’t anything available right now—every building is full,” says Gregg Lynn, a luxury broker at Sotheby’s International Realty in San Francisco. “You have to wait until 2015 for new construction.”
Some of the newest high-end rental buildings were originally designed as boom-era condominiums and converted when sales were slow. In many cases, owners opted to rent the units because they didn’t want to sell them at distressed prices.
In Hollywood, the Avenue was converted into rental apartments from condos when its backer fell into bankruptcy. The building now features $7,000- to $11,000-a-month penthouses with 25-foot ceilings. It is already 95% leased. “When we took over the project, it was a half-done busted condo deal,” says Rob Goodman, chief executive of Resmark Cos., which opened the Avenue.
Ken Kahan, founder of real-estate company California Landmark, is currently building three luxury rental buildings in Los Angeles. One of those projects, the bw in Brentwood, was originally designed as a condo project that Mr. Kahan converted to a rental development after the recession hit because it became too difficult to secure financing for condominiums.
The new demand for luxury rentals has spurred the expansion of several national companies, including AKA, which has rental buildings in New York, Philadelphia, Washington and London. Later this month, AKA is completing the finishing touches on a luxury rental in Beverly Hills, where furnished apartments under 2,000 square feet rent for $12,000 to $16,000 a month. That development offers amenities such as a 50-seat screening room and a private entrance to Spago, an upscale Beverly Hills restaurant that will also deliver room service to residents.
Related Cos., a major apartment developer, just launched their priciest rentals ever in New York in a Midtown building called One MiMA Tower. After seeing condos renting in another development for over $20,000 a month, “we thought, let’s go here because we can actually cater to this submarket that exists, but no has been addressing,” says Daria Salusbury, a senior vice president with the company who oversees leasing. The smallest units in One MiMA, junior one-bedrooms, start at $4,800 a month. Three-bedroom penthouses with 2,200 square feet are priced as high as $25,000 a month.
The company also broke ground last month on its long-stalled billion-dollar project on Grand Avenue in downtown Los Angeles. But rather than beginning with the planned first phase of the project, which involved building 390 condos in two structures, the company is instead building luxury rental apartments. “We knew we could take a run at a rental building with the rental market strengthening,” says Related California’s Mr. Witte, “whereas condo prices, while they are beginning to creep back up, aren’t high enough to justify new construction.”
Wealthy individuals are also getting into the game, buying condo units expressly to rent out as a steady investment vehicle. Last fall, the El Royale, a 56-unit Art Deco tower near Hollywood, sold for $29.5 million to investors looking for rental properties. At $527,000 per unit, it is one of the highest prices ever paid for an older building in Southern California. Likewise, the Frank in Venice sold last year for $56.7 million, or $810,000 per unit, one of the highest prices ever paid per unit in Los Angeles.
“The huge tenant demand for luxury rentals in coastal gateway markets has made them the most attractive real-estate investments right now,” says Ron Harris, who brokered both of those sales.
Corrections & Amplifications
An earlier version of this article stated that broker Astrid Pillay found two $35,000-a-month rental apartments for clients in December. The properties were townhouses.
NEW YORK – Jan. 31, 2013 – Twenty-one percent of the global Internet population uses Twitter actively on a monthly basis, elevating it to the fastest growing social network in the world, according to a report by GlobalWebIndex (GWI).
Twitter use has grown rapidly. The number of Twitter users grew 40 percent from the second quarter of 2012 to the fourth quarter of 2012, according to the report. Since July 2009, Twitter has grown 714 percent in active users. Twitter boasts 288 million monthly active users.
The most active Twitter users are in Hong Kong, followed by the United States (94 percent increase), Russia, China and Italy.
Why the sudden growth in Twitter?
GWI says that Twitter’s growth has been attributed to the growth in mobile Internet usage and mass media integration. TV, film, radio, sports and advertising provide more reason to use Twitter than other social networks.
Also, GWI attributes Twitter’s growth to its skyrocketing adoption among older adults. Over 55s are the fastest growing demographic on Twitter, growing 116 percent from the second quarter of last year to the fourth quarter of 2012. Active users among the 45- to 54-age-group also grew 81 percent in that period.
Many real estate professionals use Twitter to connect with prospects and peers in the business.
Source: “Twitter Ranked Fastest Growing Social Platform In The World,” Forbes (Jan. 29, 2013)
© Copyright 2013 INFORMATION, INC. Bethesda, MD
WASHINGTON – Jan. 31, 2013 – The Federal Housing Administration (FHA) announced a series of changes to be issued this week.
Commissioner Carol Galante calls the changes “essential and appropriate” as the administration tries to bolster its cash reserves in its Mutual Mortgage Insurance Fund (MMI Fund).
Changes to mortgage insurance premiums
FHA will increase the annual mortgage insurance premium (MIP) added onto most new mortgages by 10 basis points (0.10 percent). Premiums on FHA jumbo mortgages ($625,500 or larger) will go up by 5 basis points (0.05 percent). There are a few exceptions, such as some streamline refinance transactions.
In addition, most new FHA borrowers will pay the MIP for the life of their loan.
Previously, FHA automatically cancelled MIP on loans when the current principal balance reached 78 percent of the original principal balance. FHA’s Office of Risk Management and Regulatory Affairs says that cancellation has cost the MMI Fund billions of dollars in premium revenue on mortgages endorsed from 2010 through 2012.
Manual underwriting on higher-risk loans
If a buyer has a credit score below 620 and a total debt-to-income (DTI) ratio greater than 43 percent, FHA won’t allow lenders to automatically approve a loan request. Lenders must now manually underwrite these loans, document compensating factors that support their approval based on FHA guidelines.
Higher downpayment on loans above $625,500
FHA says it will raise the mandatory downpayment on jumbo loans from 3.5 to 5 percent. It will officially announce it soon in the Federal Register. FHA says the change will encourage more private lenders to participate in the housing finance market.
Home equity conversion mortgage consolidation
FHA will consolidate its Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed Rate HECM pricing options. This change will be effective for FHA case numbers assigned on or after April 1, 2013.
FHA loans after a foreclosure
FHA has a minimum waiting period of three years for a borrower who went through a foreclosure. However, the administration says it’s not that simple – a buyer must also reestablish good credit and qualify under other FHA loan guidelines.
“It has come to FHA’s attention that a few lenders are inappropriately advertising and soliciting borrowers with the false pretense that they can somehow ‘automatically’ qualify for an FHA-insured mortgage three years after their foreclosure,” FHA says in a release. “This is simply not true and such misleading advertising will not be tolerated.”
FHA says non-FHA lenders have also started advertising FHA mortgages. “FHA will work with other federal agencies to address such false advertising by non-FHA-approved entities,” according to the release.
© 2013 Florida Realtors®
NEW YORK – Jan. 31, 2013 – The supply of homes for sale has been shrinking for six months and shows no improvement this month – a bad sign for buyers.
Listings of existing homes for sale were down 14 percent year-over-year in the first two weeks of January, according to Realtor.com, which tracks 146 markets nationwide.
In Phoenix, where prices were up 24 percent in November from a year earlier, new listings through the first three weeks of January were the lowest in 13 years, says Mike Orr, real estate expert at the W.P. Carey School of Business at Arizona State University.
That means “prices need to go up more” to bring more sellers to market, Orr says.
Nationwide, the supply of existing homes for sale fell to 4.4 months in December, based on the current monthly sales pace, the National Association of Realtors® (NAR) says. That’s the lowest in more than seven years. A six-month supply is considered balanced between buyers and sellers.
Home prices in November were 7.4 percent higher on average than a year earlier, according to CoreLogic. Real estate experts had expected that rising prices would spur more sellers trapped by years of falling prices.
Instead, January’s listing data “is the same sad story,” says Glenn Kelman, CEO of online brokerage Redfin. If sellers don’t have to sell, “They’re holding on, thinking they’ll wait for prices to go up even more.”
Redfin’s data, covering 19 major markets, mostly in the West, show new listings down 29 percent the first two weeks of January vs. a year earlier.
Scarce sellers aren’t the only reason for shrinking supplies. There are fewer distressed properties for sale. Foreclosure sales were down 7 percent through the first nine months of last year from the same period in 2011, RealtyTrac says.
Meanwhile, demand is up. Existing home sales were up 9.2 percent last year, NAR’s preliminary data show. New home sales rose almost 20 percent in 2012, the government reported Friday, while supply fell to 4.9 months in December from 5.4 months a year before. New home construction is still weak. In each of the past three years, builders completed fewer than 500,000 single-family homes. That’s less than half the number built annually from 1993 to 2007, according to the Census Bureau.
Homebuilders would need to double production this year to alleviate the tight supply, estimates Lawrence Yun, NAR’s chief economist. That’s not likely.
Home supplies nationally will stay at about the five-month level much of the year, Yun predicts.
Some markets are far below that.
California’s supply of existing single-family homes for sale stood at 2.6 months in December, the California Association of Realtors says.
Whether the supply of homes for sale will expand to meet demand is a “big question for the market” in 2013, says Jed Kolko, economist for real estate website Trulia.
This year is also the first since the housing bust began that falling inventories are not necessarily a good thing, he says.
Listings may still swell in time for the busy spring selling season, says Stan Humphries, Zillow economist.
He says listing activity next month will be key. If it doesn’t pick up by then, the spring season is likely to bring a lot of price increases, he says.
© Copyright 2013 USA TODAY, a division of Gannett Co. Inc., Julie Schmit.
MELBOURNE, Fla. – Jan. 31, 2013 – Six Florida cities rank among the best places to buy foreclosures in 2013, according to a report by RealtyTrac.
Topping a list of 20 metropolitan areas is Palm Bay-Melbourne-Titusville, the Irvine, Calif.-based real estate data firm said.
RealtyTrac looked at four criteria in tallying the “best places”: the supply of foreclosure inventory; foreclosure sales as a percentage of all transactions; the average percentage discount on foreclosures; and the annual percentage change in foreclosure activity in 2012 compared with 2011.
Also among the top 20 metro areas for buying foreclosures are Lakeland (No. 5), Tampa (No. 6), Jacksonville (No.7), Orlando (No. 9) and Miami (No. 12), according to RealtyTrac report.
The No. 12 ranking for the metropolitan area of Miami, Fort Lauderdale and Pompano Beach was based on the area having a 29-month supply of foreclosures, with foreclosures accounting for 28.7 percent of all sales during 2012. The average price discount on a foreclosed home in the Miami-Fort Lauderdale-Pompano Beach area was 31 percent in 2012, when foreclosure activity rose 36 percent from a year earlier, RealtyTrac said.
“Markets with increasing foreclosure activity in 2012 took the first step in finally purging delayed distress left over from the bursting housing bubble,” Daren Blomquist, vice president at RealtyTrac, said in a statement. “Meanwhile, the underlying fundamentals in many of those markets are slowly improving, making it an opportune time to absorb additional foreclosure inventory this year – and that is particularly good news for buyers and investors hungry for more inventory to purchase in those markets.”
The greater Miami area ranked fifth among U.S. cities in foreclosure filings in 2012, with 3.71 percent, or one in every 27 housing units, receiving some type of foreclosure filing during 2012. That compares with a national average of 1.39 percent of housing units getting a foreclosure filing during that period.
Anthony Askowitz, a broker with RE/MAX Advance Realty II in Miami, said the reality of the foreclosure market is more nuanced than such statistics suggest.
“The inventory of foreclosures on the market is very low. It’s highly competitive right now for a foreclosure or a property put out as a quote ‘good deal,’” Askowitz said. “Multiple offers is the norm.”
Indeed, while the huge overhang of foreclosures has long been expected to constitute a downward pressure on home prices, robust demand for South Florida housing and a tight inventory of available homes for sale have so far trumped that force.
According to the latest Case-Shiller report released Tuesday, South Florida home prices rose 10 percent in November 2012 from a year earlier. That marked the 12th consecutive gain.
Copyright © 2013 The Miami Herald, Martha Brannigan. Distributed by MCT Information Services.