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The house in Fitzroy North that sold for $4.2 million on the weekend. Photo: Craig Abraham

PROFESSIONALS are paying top dollar to stay in the inner suburbs, with recent prices in North Fitzroy and Richmond approaching the hefty sums commanded in the private school belt of the leafy eastern suburbs.

A couple paid $4.2 million at auction on Saturday to buy into North Fitzroy’s dress circle, Alfred Crescent, opposite the Edinburgh Gardens.

It is the latest in a string of $3 million-plus prices achieved in the suburb since December last year – 112 McKean Street fetched $3.03 million in March; 259 Scotchmer Street sold for $3.18 million last December and others have sold off-market, also at those prices.

Nelson Alexander director Arch Staver, who auctioned those properties and 39 Alfred Crescent over the weekend, believes scarcity is driving performance at the top end.

”The money’s always been there, but the houses themselves have not. All of these houses have been held for quite some time,” Mr Staver said. ”People who might look at Hawthorn, Canterbury or Kew are not there just for the schools but for the bigger houses on bigger blocks.”

Nearly 300 people turned out for the Alfred Crescent auction.

Mr Staver started it off with a vendor bid of $3 million, but four genuine bidders quickly entered the fray and more than 150 bids were made for the free-standing Victorian house.

It sits on a large, 720-square-metre block and last sold in 1993 for $725,000.

Jellis Craig director Craig Shearn, who also sells at the top end in North Fitzroy and Clifton Hill, said there were as many professionals in the inner suburbs as there were in the east and they no longer wanted to move when their children get older.

”There’s so much happening here as well – the access to art and culture and restaurants – that people don’t want to move away,” Mr Shearn said.

He sold an unrenovated property at 17 North Terrace last weekend for $2.52 million. On a 720-square-metre block, the house had been in the same family since it was built in 1923.

”There’s got to be some sort of opportunity factor at work too in the sales on Alfred Crescent and North Terrace. It doesn’t just come down to what people can afford to pay but what they are prepared to pay for the opportunity,” he said.

Advantage buyer’s advocate Frank Valentic has acted for several clients at these auctions who are looking for family-sized properties and blocks and do not want to move.

”People don’t want to move to the eastern suburbs. They want to stay close to the good schools here and the shops,” Mr Valentic said.

While Richmond Hill has always been a favourite, the recent sale of 41 Erin Street reached new heights.

The double-fronted, double-storey property is believed to have sold for more than $3.55 million and was marketed by Toorak and Malvern stalwarts Kay Burton and Abercromby’s, who have moved deeper into the inner suburbs along with RT Edgar and Bennison Mackinnon.

Kay Burton agent Gowan Stubbings, who refused to confirm the price, said buyers were not as ”suburb specific” any more.

”It’s more about the house. We’re getting houses that are special rather than the run-of-the-mill Richmond properties because we can bring in a different audience or list of buyers,” Mr Stubbings said.

The auction clearance rate was steady at 62 per cent from 529 reported results.

Ilyce Glink Samuel Tamkin

Real Estate Matters, Tribune Media Services

10:55 a.m. CDT, May 20, 2012

A real estate agent near California’s Silicon Valley seeks sellers by combing property records for people who’ve owned their houses for at least 40 years. A Denver-area broker offers half his commission for a listing, while a counterpart in South Florida hosts happy hour gatherings at bars to loosen up homeowners reluctant to sell.

Real estate agents, who spent the six-year U.S. housing collapse coaxing buyers off the fence, are now hunting for sellers as home inventories hover near lows last seen in 2005. A scarcity of properties signals the housing market’s uneven recovery as purchasers trying to take advantage of record affordability run up against homeowners choosing to stay put in properties that aren’t worth as much as they owe.

“It’s a sign of transition from a slow slide down to what hopefully will be a solidly improving market,” Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School, said in a telephone interview. “We’re not going to have a healthy market until we can have move-up buyers purchase homes and not simply stay in place.”

The number of homes listed for sale in the U.S. fell 22 percent to 2.37 million in March from a year earlier, according to the National Association of Realtors. That’s a 6.3-month supply at the current sales pace, which is considered by the association to be a balance between buyers and sellers. In April, inventories fell to less than a three-month supply in markets including San Francisco, Silicon Valley, Denver, Phoenix, San Diego, Los Angeles, northern Virginia and Seattle, according to online brokerage Redfin.

Lack of Sellers

“The places where the market is most competitive — like Washington, D.C., Phoenix and San Francisco — are where sales volume is actually declining,” Glenn Kelman, Redfin chief executive officer, said in a telephone interview from Seattle, where his company’s based. “The limiting factor on sales volume isn’t a lack of buyers. It’s a lack of sellers.”

Silicon Valley homes were on the market for a median 49 days in April, down 29 percent from a year earlier, according to Altos Research LLC. That compares with a median 107 days in 30 metropolitan areas tracked by the Mountain View, Calif.- based real estate data company.

Phyllis McArthur, a Realtor in San Mateo, Calif., sent letters to 18 homeowners who bought their properties more than four decades ago, asking if they were willing to sell to families who want to put their children in the school system.

“I got a call back from one gentleman who said, ‘They’ll have to carry me out feet first,’ ” McArthur said. “I said to him, jokingly, ‘When you feel yourself slipping away, will you call me?’ ”

Record Affordability

A housing affordability index that’s based on a combination of resale prices, household income and mortgage rates reached an all-time high in the first quarter, the National Association of Realtors reported. The index shows that a family with the median income of almost $61,000 could afford a $325,500 house, which is more than double the median existing single-family home price of $158,100 in the U.S.

Finding a seller takes work. The average person who bought in the last decade would lose money on a sale, because home prices have plunged to October 2002 levels, the SP/Case-Shiller index of home prices in 20 U.S. cities shows. About 11.1 million homeowners have negative equity, or owe more on their mortgages than their homes are worth, which limits their mobility, according to a March 1 report by real estate data provider CoreLogic Inc.

Prices haven’t recovered even as demand rises. Existing home sales this year through March were the highest for a first quarter since 2007, the National Association of Realtors reported on May 9. The median price in 146 metropolitan areas tracked by the group fell 0.4 percent from a year earlier to $158,100.

Time to Buy

While it’s unclear when prices will increase, rising rents and record-low interest rates make now a good time to buy, Mark Kiesel, a Pacific Investment Management Co. managing director, said in a May 4 research note about his decision to become an owner again six years after selling his last house at the peak of the market in 2006.

The inventory has tightened as investors, drawn by bargain prices and rising rents, bought 22 percent of homes sold in the first quarter, according to the National Association of Realtors. That’s up from 21 percent of deals a year earlier.

Most home sellers list only if they must move because of financial distress, a new job or a lifestyle change, such as divorce, death, growing children or an empty nest, said Cari Linn, president of the Minneapolis Area Association of Realtors.

Letters to Homeowners

Linn sent letters last month to 28 owners in a town house development in Eagan, about 15 miles south of Minneapolis, where one of her clients was looking for a house, a prospecting technique she has used rarely since becoming a Realtor in 1982. She received responses from owners of two units, neither of which her client wanted.

Fewer bank-owned homes are coming to market as lenders comply with terms of a $25 billion February settlement to resolve allegations that the five-largest loan servicers seized homes without proper documentation. In the first quarter, foreclosure filings in the U.S. fell to the lowest level since 2007, RealtyTrac Inc. said last month.

Resales of foreclosures by Fannie Mae and Freddie Mac, the government-sponsored mortgage buyers, fell to 77,104 homes in the first quarter, down 18 percent from a year earlier, according to company filings.

Seemingly Vast Iceberg

In Florida, the state with the largest share of homes in the foreclosure pipeline, median prices are rising and transactions have declined for bank-owned homes. That defies predictions the state would face a flood of distressed properties, according to John Tuccillo, chief economist for the Florida Association of Realtors.

Another source of supply, the inventory of new homes, fell to 144,000 in March, the fewest on records dating to 1963, the Commerce Department reported April 24. Homebuilders, still reeling from the construction and land-buying spree of the past decade, have cut the number of so-called spec homes, which are built without a buyer already lined up. PulteGroup Inc., the largest U.S. builder by revenue, reduced its inventory of such homes to 1,039 as of March 31, down 30 percent from the end of last year.

Stronger Market Position

As sellers sit on the sidelines, bidding wars are flaring up in Denver, Miami, Minneapolis, Phoenix, Seattle and Washington, where bargain hunters, sensing a market bottom, have stepped up shopping.

“The sellers are not willing to move because they don’t perceive that their house today is worth as much as it might be a year from now,” Jay Brinkmann, chief economist for the Washington-based Mortgage Bankers Association, said in an interview.

Stressed Shoppers

Troy Springston of Denver sent an email to more than 6,000 fellow agents on May 1 asking for homes yet to be listed for sale and offering half his commission for a deal reached by May 11 for the couple he represents. His clients, who have a baby on the way, were scheduled to complete the sale of their current house that day and couldn’t find the right property to buy for less than $125,000, Springston said. They arranged an extension of the move-out date to May 18 because they hadn’t yet found a home to buy, he said.

In Florida’s Miami-Dade County, the number of listings fell 35 percent in April from a year earlier, to a 5.7-month supply, according to Esslinger Wooten Maxwell Inc., a Coral Gables, Fla.-based brokerage owned by Berkshire Hathaway Inc. In neighboring Broward County, the inventory fell 31 percent to a 4.2-month supply, Esslinger Wooten said.

Monthly Happy Hours

Patti Reid, an Esslinger Wooten agent, hosts monthly happy hours at bars in central Broward County near the city of Davie, where she owns a house. She invites empty-nesters who might be interested in selling a single-family home and buying a condominium near the coast. The parties have helped Reid find four homes to sell, all of which landed buyers within a week.

Phoenix Listings Fall

In the Phoenix area, listings fell 64 percent in March from a year earlier, according to an April 25 report by Michael Orr, director of the Center for Real Estate Theory and Practice at Arizona State University. Properties marketed by traditional sellers dropped 31 percent while distressed listings — including foreclosures and short sales, in which lenders accept prices lower than the mortgage balance — plunged 81 percent.

“It’s hard to convey how difficult it is to find and buy a home that’s under $150,000,” Orr said in a telephone interview. “We’ve got a two-week supply.”

Absentee owners, including investors and vacation-home buyers, purchased 46 percent of Phoenix area houses in March, paying a median $116,900, up from $100,000 a year earlier, according to a May 4 report by DataQuick.

The inventory of homes in Minnesota’s Twin Cities area sank 29 percent in April from a year earlier to 17,312 listings, a 4.6-month supply, the Minneapolis Area Association of Realtors reported May 10. For homes with an asking price below $120,000 — those most attractive to investors and first-time buyers — the supply shrank to 3.1 months in April from 7.6 months a year earlier as the inventory fell 43 percent to 3,802 listings.

Near Good Schools

The shortage seems magnified because move-up buyers are looking in the “safe zone,” near good schools, for three- bedroom, two-bath houses priced at less than $250,000, said Travis Callstrom, an agent with Re/Max Advantage Plus in the Minnetonka, about 12 miles west of Minneapolis.

“It’s like the shoe store where everyone wants the size 7,” said Callstrom, who sold about 125 houses last year with his partner, Laura Scott. “That’s the one they run out of first.”

Discouraged Sellers

That’s an indication that sellers in those markets are becoming discouraged, akin to a decline in the unemployment rate when job seekers lose heart, said Jed Kolko, chief economist for Trulia Inc., a San Francisco-based real estate information service.

In recovering markets, owners need to be persuaded that it’s worth taking a step back by selling for less so they can take two steps forward to buy more, said Greg Anderson, the broker at Re/Max Advisors West in Chaska, Minn. It’s the same as selling a stock at a loss to buy shares of a growing company, he said.

“It’s an old real estate adage: You always buy up in a down market,” Anderson said. “If you buy up in a down market, you make money on arbitrage.”

Twice the Size

His clients Steve and Lee Ann O’Sell sold their home of 18 years in March for $200,000, about $60,000 less than it would have fetched in 2006.

When it took only eight days to find a buyer, Lee Ann O’Sell worried the asking price was too low.

Waiting for a higher offer might have allowed another buyer to grab the house they wanted to buy, Steve O’Sell said.

The O’Sells paid $450,000 for a 4,124-square-foot home, almost twice the size of the old one, with individual bedrooms for each of their three children and a golf course outside the backyard where they can walk their two dogs when the course isn’t busy.

“It’s a major, major upgrade,” Steve O’Sell, a salesman for Blue Cross Blue Shield of Minnesota, said as he sat in his living room overlooking the second hole of the Chaska Town Course. “Two or three years ago, it would never have crossed our minds as a possibility.”

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Q. We are an unmarried couple who are in the process of buying our first home. My credit is not so hot, so my friend will be assuming the mortgage while I put up the 20 percent down payment and half of the closing costs. We intend to share equally all mortgage, taxes, insurance, repairs, etc. What is the best way for us to take title to the house? What will happen if we marry at some future time?

A. You missed what is perhaps the most important question of all: What happens if you choose to break up? For this, you should see a lawyer whose specialty is family law. You can then consider all of the possibilities for the dissolution of the joint ownership. However, joint ownership is very tricky unless you are married or in a business partnership. As a result, I cannot recommend it except in those situations. You should consider the possibility of her owning the property with your contributions to be considered as rent. Here, too, a lawyer is essential. I hope you take the time to consider all these possibilities together with others if you choose a form of co-ownership. Will you want rights of survivorship? What happens if one of you loses a job or becomes ill or disabled? There are no easy answers to your question.

Write Harry Gross c/o the Daily News, 400 N. Broad St., Philadelphia, PA 19130. Harry urges all his readers to give blood — contact the American Red Cross at 1-800-Red Cross.

By
Richard Dyson And Jo Thornhill

PUBLISHED:

15:56 EST, 19 May 2012

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UPDATED:

15:56 EST, 19 May 2012

‘Lucky’: Christine and John Watson, with Bonnie, left, and Ruby, got the
asking price for their spacious French home in Poilhes on the Canal du Midi

Britons are switching record sums between pounds and euros as fears grow over the future of the single currency and the safety of Continental banks.

But while hundreds of thousands of people are bringing money back to sterling accounts in British banks, many others are doing the opposite.

They are buying euros, often with an eye to purchasing savagely discounted properties on the Continent, or refurbishing the properties that they already own.

Among the uncertainty and panic, reports are emerging of desirable properties in Greece and elsewhere selling for half the price of just three months ago.

Mark Bodega of foreign exchange firm HiFX in Windsor, Berkshire, says euro-to-sterling transactions are almost treble their usual level ‘in spite of the euro’s recent weakening’. He says: ‘Fear is clearly driving these transactions.’

But the traffic is far from one-way. Rival forex firm MoneyCorp says that while euro-to-sterling deals have doubled in the past month, transactions the other way have mushroomed even more.

‘The majority of transactions between the currencies is still sterling buying euros,’ says MoneyCorp’s David Kerns. ‘Britons are as much as ever in love with the idea of buying a home in France or Italy and this turmoil is providing an extra enticement.’

Euro-to-sterling transactions at Caxton FX, a low-cost forex firm popular with British owners of homes in eurozone countries, were last week running at three times regular levels. ‘A proportion of clients are definitely set on bringing money back to Britain,’ says managing director James Hickman.

‘This is partly due to nervousness about the security of European banks – people just don’t feel comfortable.’

But Hickman says Caxton is processing floods of transactions in the opposite direction as wealthy Britons order millions of euros. ‘It’s a double benefit for people wanting to own properties in the eurozone,’ he says. ‘The currency is getting cheaper, and so are the properties.’

The British-based owners of an estimated 1.1 million properties in the eurozone, who need to transfer money regularly to cover the cost of their holiday homes, are also pushing more cash abroad at today’s lower euro rates, Hickman says.

Elisabeth Dobson of World First, another London-based forex specialist, says people are making greater use of ‘forward contracts’ to hedge against further volatility. This can protect future transactions in either direction. ‘Those trying to sell property in the eurozone are more anxious and we have seen a rise in people wanting to buy forward contracts at today’s rates,’ she says.

‘It gives consumers peace of mind that when their property is sold they can transfer their euros into sterling at today’s rates, even if that doesn’t happen for another year.’

Retired Ministry of Defence civil servant John Watson, 76, and his wife Christine, 72, sold their home in southern France in February after becoming concerned about the situation in the eurozone. They had lived in France for nine years.

They sold their four-bedroom detached house with swimming pool and workroom for 280,000 euros, netting them just over £234,000. By contrast, converting the same sum at Friday’s price would have left them with £10,000 less at £224,098.

‘We had been thinking about coming home for two years,’ says John. ‘We are both getting older and we want to be nearer our children.

‘We had been watching the value of the euro decline so we bit the bullet. I think we were lucky. We sold quickly and at the asking price. If we had not sold at that time, we’d be much worse off.’

John and Christine, who are living in Corby, Northamptonshire, with their standard poodles Ruby and Bonnie, say many of their expat friends still in France are not overly concerned.

But John says he is aware of some panic. ‘One couple we knew sold their gite and put all the cash into Australian dollars, such was their fear about the eurozone,’ he says.

All firms report big increases in calls from clients seeking advice. Hickman says: ‘The most common question of all is, ‘‘Will a Greek exit from the euro trigger an entire currency breakdown?’’ ’

And the answer? ‘We tell them that while we believe Greece will eventually exit, we expect the process to be relatively orderly, and that other countries will not follow,’ he says.

This is a growing consensus among economists and market-watchers. No one knows how much chaos would result from an exit, if it happened – but the prospect has caused the price of properties in Greece and elsewhere to fall.

Spyros Mantzos of estate agent A Property In Greece in Chislehurst, Kent, says: ‘A fall in values of up to 40 per cent since February means British buyers can get in at almost half price, if you factor in the stronger pound.

‘Investors are snapping up properties for bargain prices. Interest today is double the level of last year. Greece is now decidedly cheap.’ Top locations remain Crete and Corfu.

Les Calvert of international online estate agent property-abroad.com in Hartlepool, County Durham, says: ‘Over the past month we have seen interest soar, with Greece pushing up into the top five. A month ago it was not even in the top ten. It’s a buyer’s market.’

But Simon Conn, an overseas property and mortgage specialist consultant in Hove, East Sussex, says: ‘Banks are still lending in Italy and Spain, but no lender will offer on a property in Greece. That means cash buyers only.’

Lynnette Reynolds, 55, and husband Paul, 57, from Bristol, are among those taking advantage of the favourable euro exchange rate. Last week they converted £125,000 into euros at a rate of 1.24 to buy a two-bedroom 19th Century cottage in Brittany.

They are close to completing, but Lynnette and Paul, who work as child-minders following his redundancy from his job as a research scientist at the University of Bristol, were worried about exchange rate fluctuations so they bought a forward contract through World First to lock into the rate when it hit 1.24 last week.

Lynnette says: ‘The rate could go higher, but we are cautious people and didn’t want to wait in case sterling started to fall in value. As it turned out, we are better off than if we had bought the euros the week before.’

Additional reporting  by Toby Walne

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