Category: Real Estate

House Valuation Its Importance and How It Is Done

re13Independent house valuation is one method which is being adopted by those who are willing to buy or sell a house. This is one method, which gives them a clear and comprehensive idea about the value of the property with regards to the market rate. Most of the people are not aware about the technicalities that go in when it comes to house value assessment; however, most of them know that is an important thing to do while buying or selling a property. When it comes to know the value of properties, there are numerous aspects which need to be considered. In the following sections, an insight will be presented on house valuation.

Income Method – What is it?

This is one method which is used for the property valuation. Here the total worth of a property is being estimated based on the revenue potential. The income which is calculated can either be generated as rental income or from re-selling the property. This is quite a complicated method; however, it is quite frequently being used by the investors when they are to fix a value on a property or when it comes to assessing the profitability of their investment in the days to come.

Certain assumptions need to be made and one needs to rely on them in order to come to an accurate conclusion using the income method. Here are the assumptions that are required to be made:

• Property Resale Value: This includes assuming the value which the property is likely to yield if it is being resold. Various factors need to be taken into consideration while assessing the resale value of a property.

• Income which is likely to be generated from Rent: This is another area which needs to be assessed. As mentioned, income from rent plays an important role while using the income method for property valuation.

How a Property’s Value is being calculated?

In order to get a better idea about the Independent house valuation, there are various assumptions and considerations which are needed to be made. This type of valuation comes into the picture when the generated income is set against the invested capital in order to find out how much profit can be generated by re-selling the property. One very common method which is being used to estimate the profit which is likely to be generated is by comparing the value of the property in question with the same type of capital expenditure or investment of similar nature.

Calculating the risk factors are perhaps the most difficult thing to do when it comes to ascertaining the value of a property. Though some sort of idea can be gained by having a look at the past market trends; however, it is very difficult to predict the nature of the property market in the days to come. Hence, it is wise to take the help of the valuation experts to know the actual worth of your property.

Apartment or House

re19Apartment is defined as, a set of rooms which have all the facilities like a house. The major types of apartment are studio apartment, bedroom apartment, duplex, lofts, garden apartment. If I was asked where I would I prefer to live in a traditional house or in a modern apartment building, I think, I would hesitate to answer. This question, from my point of view, is a controversial one. In the following paragraphs I will analyze both these options and present my view.

It’s everyone’s dream to have a comfortable place to live. As the majority of people say, I want to get an attractive house someday, but unluckily it is not so easy to get because it is very costly. But there are several differences between owning a house and renting an apartment. The first difference is the noise. If you are renting an apartment and you are a noisy person, it is very painful for the rest of the people who live with you. For example if you are always playing melodic instruments, listening to loud music and cleaning the house with noisy machines you are really troubling the other people and I’m sure that you wouldn’t want to be in their place. But also, in a lot of cases the noise depends on if the owner permits it or not. In contrast, owning a house is more comfortable if you are a noisy person because you are the owner and responsible for all the things of your house and you don’t have to care of disturbing someone. For example, if you are the owner of the house you are free to even have a noisy party or whatever you want because it is your house. The second and most important difference for me is about the policy. When you live in an apartment, you have to comply with the owner’s policy. For example, you have to ask for him or her if you are free to have visitors, pets, parties, etc. On the other hand, when you rent an apartment, you are not as free as you are when you are the owner of a house to do whatever you want. In contrast, owning a house permits you to be free without caring that someone is dissatisfied with your ideas and decisions about your house. In this case you can paint your house, buy a big tape recorder or do all the things that you want. In conclusion, I prefer owning a house that is better than renting an apartment because I can be free to do whatever I want, without policy and it gives me more sovereignty and relieve.

From the one side, living in a modern apartment building brings many paybacks. First of all, it is cheaper than living in a traditional house and paying different kinds of fees I am not familiar with. For instance, my buddy, who recently bought a new house for his family, told me that it is much easier to live in an apartment and I tend to believe him when I see his bills.

Six Characteristics of a Good Note

re18The six critical factors to be aware of when buying or creating a real estate-backed note include the buyer/borrower, the collateral, the down payment, the terms of the note itself, seasoning and the associated paperwork. We’ll go through these one at a time.

The most important of these is the person buying the property and getting a loan from the seller. Most seller-financed loans are created for people with a credit score of 600 or greater, although most banks have a 620 minimum. Just like with banks, the better your score, the better the interest rate you can get.

If you are creating a note you can protect yourself from an applicant with poor credit by getting a larger down payment and charging a higher interest rate. These are things a note buyer will look for when considering the purchase of a loan.

The second thing to analyze is the property being offered as collateral. A pretty 3-bedroom home in a nice suburb would be worth more than a single-wide on 35 acres, 20 miles from the nearest grocery store. A well-built apartment building would be worth more than 50 acres of dirt.

When buying a note you must affirm that the property is correctly valued. If you get that number wrong, the whole deal starts off on shaky ground. While you may want to check a home’s value on Zillow, or Trulia, or eppraisal.com, your most accurate number will come in a BPO (Broker’s Price Opinion) created by a local realtor who has actually driven out to see the property. Sold comps and listing comps will be more accurate than anything produced by a software package like Zillow.

The third factor to consider is the down payment. Consider two people who each by a house worth $50,000. One puts down $800 and the other puts down $5,000 (10%). The note that has the great down payment will be worth more than the other if everything else is equivalent. If a buyer has enough “skin in the game” they will be more likely to make paying their mortgage a top priority since they have more to lose if they default.

The fourth thing to look at are the terms of the loan. What is the interest rate? Currently, a rate between 8 and 10% is pretty common in the seller-financed world. Much above that will make it difficult to pay. A note with a rate of 5 or 6% may pay too little to make it attractive to an investor who will be forced to deeply discount their offer to get their required yield.

The payback period can also affect the perceived value of a note. Generally, a short amortization period is more attractive because an investor will get her money back quicker.

If a note has a provision to collect escrows for taxes and insurance, that should bring a better price when sold than one that doesn’t. In the latter case the lender is counting on the buyer to set aside funds to take care of these payments, but that’s asking for a lot of self-discipline from someone who has shown via their credit score that they may not have much.

If the buyer can’t make the insurance payments, you as the investor may have to attach forced-place insurance, an expensive option to keep yourself covered.

Property taxes will be collected eventually and generally have a lien position ahead of the first mortgage. Non-payment over a period of years can lead to the loss of the property at a tax sale.

The last thing to look at on the note itself is the overall payment. An investor making an offer to buy a loan will want to feel comfortable that the buyer can afford to make the payments and still have enough left over for all their remaining living expenses. Also, if local rental rates are higher than their mortgage payment, that’s another incentive for the buyer to keep up their obligation to pay on time.

The fifth factor is called seasoning. That’s simply the amount of time the borrower has been making payments. A note buyer will offer more for a note with three years of seasoning than one where the new owner has only made three payments. A good track record gives an investor confidence that payments will continue being made on time and can even offset the negative affect of a low credit score.

Sixth and last, all the ancillary paperwork contributes to the overall value of a note. Here’s a list of documents to ask for from the note seller: title policy, tax certificate, mortgage or deed of trust, the allonge (showing the transfers of the loan), the mortgage transfers, credit report, payment history and original application including the social security number of the borrower. If you are creating a seller-financed note, having all these documents will keep the value of your note as high as possible.

Sparkling Future For Estate Agency

Real estate agent shaking hands with new property owners
Real estate agent shaking hands with new property owners

These days the growth factors have been taking a very vast and quick turn which is entirely leaps and bounds and coping with these immediate changes is something very challenging for the different industries. Every industry has its own setup and this may move according to the demands made and the changes evolving. The technology industry needs a very quick response if a business needs to be in the market for a future intent. However, the property and estate agent industry has now been on a steady position and there are bright chances for it to remain income generating in the future. On the other hand, the internet service providers which used to offer the card system have become extinct.

When it comes to focusing on the real estate business specifically one may expect the brightness of future for a number of reasons a few of these reasons may include the following:

Boom of Residential Spaces

These days at every point what we see is the construction of a new residential space which may be a bungalow or a huge building. The population is increasing day by day and with this the demand of residential properties is also increasing with the same pace. Therefore the future of estate agencies here may prove being a very outstanding one because when it comes to the sales and purchases of these residential spaces there is a major chance of the business of real estate to take a boom. The relation between the real estate and the residential properties is a direct one because people need a home for shelter and real estate may give a perfect deal.

Trend of Shopping Malls

Another very commonly increased concept all over the world is the prevailing concept of shopping malls. Previously people accustomed to run after the differed shops in different corners but with the passage of time these malls are taking very significant place in the lives of every individual. In this regard, the development of malls may leave out numerous shops and stores on individual basis which may need a selling agent and here the role of the real estate is something essential. Many builders may approach different agents for the purpose of either purchasing the individual shops left out or the builders working over the mall projects may move towards real estate agents for huge lands. In every case, the future of the real estate agency is a brighter one.

4 Things That Will Help Fetch the Right Resale Value for Your Property

re16So, you have decided to part with your home. Wondering how to get the best deal that will justify holding it is an investment property until now. Before you put up a notice for sale, or start passing the news to your near and dear, consider the fact that the reality market is some parts of the country has been sluggish.

Hence, it is worthwhile to put in a little bit of effort that will make your property look a lot more attractive to potential buyers. Here are some expert tips that will help enhance the resale value of your home by tens of thousands if not few lakhs.

Pep up the exteriors

As soon as a home is bought, homeowners spend time, money and energy in designing the interiors to their whims and fancy. What they miss to see is that, the exteriors play a major role in creating an impression in the minds of a potential buyer than the interior. It is the exterior that is first seen before they take a walkthrough of the interiors. Hence, pay attention to pepping up your exteriors in equal measure to the interiors to get a better resale value.

Creating additional space

An extra room is fine, but what if it serves no purpose? Moreover, what if that extra room does not fit into the ergonomic layout of the home properly? Instead, think of ways to increase the space inside the home. There are plenty of architect firms with interior designers and vasthu consultants who help altering the physical dimensions of any home to make it appear spacious and airy. A spacious home will fetch a higher resale price than one which boasts about a tiny and ill-fitting extra room.

Setting right minor repairs

Like drops of water that collect together to form a messy puddle, a number of unattended minor repairs can wash away a significant portion of your property’s resale value. A prospective buyer will be more interested in knowing the present physical condition and the expected longevity of the house before making a final decision.

The scene of leaking walls, falling patches and plumbing problems can definitely take a hit on the property’s sale worthiness. Hence, make sure all minor repairs are attended to on a regular basis.

Keep a cushion for price negotiation

Indians are ruthless negotiators. We love to bargain for the best deal in every transaction. Especially when it is about buying a new home expect the negotiation process to be fiercer than what you can imagine. Hence, make sure you price your property with some cushion for reduction during the negotiation process.

You might want to take into consideration the existing market rate of similar properties and how the deals have ended before fixing the price or agreeing to the price offered by the buyer.

The resale value for a property is highly dependent on various factors. Location, floor space, number of rooms and furnishings all play a major role in determining the resale price. However, other factors like well-maintained exteriors, perfectly functioning plumbing and sanitation, additional space for storage, etc. can help further increase the resale value to a higher denomination.

Five Renovations That Don’t Increase Home Appraisal Value

re15Every homeowner must do routine maintenance to their home that more or less just maintains its current condition. However, some homeowners decide they want to improve their home’s value and marketability. The amount of value certain improvements cost may not add as much value as the cost to do it.

Homeowner’s are very biased when it comes to their own home, they see the things they have done to it and think dollar for dollar the home’s value should go up with each improvement, this is not often the case. A potential buyer or real estate appraiser may be unimpressed with certain improvements, what you must keep in mind is that what you view as a valuable upgrade may not be the same as what the real estate market sees as a valuable upgrade.

Below I am going to outline Five Renovations That Don’t Increase Home Appraisal Value.

1. Swimming Pools

There aren’t many areas of the world where backyard pools are common place. Before adding a pool think about your neighbourhood, do the majority of properties have pools? Would a potential buyer expect there to be a pool? If pools are not common place in your area and/or have a very short season you likely will not be adding much value to your home, definitely not as much as the cost to put one in. In fact, Many potential home buyers view swimming pools as dangerous, expensive to maintain and insurance claims waiting to happen. Potential buyers with small children could really be turned off by there being a swimming pool. In-ground pools come at a very steep price, my opinion is if buyers in your area would not expect a pool then this money is better spent elsewhere as you are not likely recoup the cost in a sale or appraisal.

2. Elaborate Landscaping

Home buyers and appraisers definitely appreciate good landscaping, but there is a line where elaborate landscaping no longer adds its equivalent in value to what it costs. Keep in mind that the next person buying your home may not want to take on the upkeep work of elaborate landscaping and may not want to have to hire a professional landscaper to take care of it. An appraiser will also only assess so much value to landscaping in their report as not a lot of emphasis is put on landscaping by the market, how often have you heard of someone buying a home because it had great landscaping? sure it is a plus but you are better off to just meet the standard in your area than to get too carried away.

3. Overbuilding for the Neighborhood

It is better to have the other homes in your neighbourhood “pull-up” your home’s value than to have them drag it down. Your neighbourhood plays a large factor in your home’s value, you do not want a large, elaborate, two storey home surrounded by older bungalows. The people that will be looking for that type of home will go to a neighbourhood where it will be surrounded by similar properties. Likewise, it will be very difficult for an appraiser to find similar comparables in your area and this could lead to a lower value being assessed.

4. High-End Upgrades

Most people are on a strict budget when it comes to home improvements, so what they will do is they will pick a room and do a complete remodel adding higher end flooring and fully modernize the room. This is good and I understand the strategy, next time you have some extra funds, pick another room and the same and after 5 years or so your home will be fully updated. But does that full remodel of that first or even second room really add as much value to your home as it costs? My opinion is now, if you full remodel one room and then plan on selling or getting an appraisal the appraiser is going to see the other 80 or 90% of the home is still dated and would be considered a project. An alternative strategy might be to take all of those funds that you were planning on sinking into an elaborate bathroom and spread them over the whole home, the cost of a full bathroom remodel could redo the flooring and paint throughout the entire home and this would be look upon much more favorably by a potential buyer or appraiser in their assessment of value than you just having one high quality room.

5. Invisible Improvements

New plumbing, electrical or HVAC might be necessary, but don’t expect to be adding dollar for dollar value for their cost. Home buyers and appraisers simply expect these systems to be up to date and in good working order. These items would be considered more home maintenance than home improvements.

The Bottom Line

When spending money on your home assess why you are doing it, if it is purely for your own comfort and enjoyment with no real intent in adding value then go ahead and add that pool. But if you are consciously trying to add value to your home then where to spend your renovation budget requires much more thought. Consider speaking with a realtor or appraiser and ask them where they feel your funds are best spent to improve value.

You Need to Know This About Home Appraisals

re14A home appraisal is a critical component of any real estate transaction that involves a mortgage loan. If you are refinancing you will need an appraisal, if you are selling your home to someone that needs to get a mortgage, he or she will need to have an appraisal done.

What Is a Home Appraisal?

A home appraisal is an opinion on value by a qualified, unbiased third party. Mortgage lenders require an appraisal to be completed when you are refinancing your mortgage. An appraisal is also completed in a transaction when someone is buying a home to make sure they have not over paid for it.

Mortgage Lenders require appraisal to ensure that homeowners are not over paying for a property because if the borrower stops paying for the mortgage the lender will take action to remove the borrower from the home and sell it to recoup their money, this is why it is important for the home to be worth more than the money loaned. In essence, a home appraisal is a lawyer of protection for the mortgage lender.

The Appraisal Process and How Appraisal Values Are Determined

These are the main factors that influence your home’s appraisal value: current market trends which are reflected in the comparable properties the appraiser selects, the house’s features,, square footage, number rooms/bedrooms & bathrooms, condition, is the property considered up to date, landscaping and exterior condition and parking (garage). The appraiser will do an interior and exterior inspection for the above noted factors and will also make note of any deferred maintenance which will be included in the report for the lender.

The appraiser will complete his report on a standard report form that is required by their appraisal jurisdiction. The information that has to be included in an appraisal report will not vary much from Canada to the United States.

A standard report includes the following: comparable sales, a street map, building sketch, square footage, photos of the front, back and street scene of the home, photographs of each comparable property used; a map showing the location of the comparables in relation to the subject property, plot map, description of intended users of the appraisal report, photo and description of each room in the house.

The cost of a residential appraisal report ranges from $250-$500 and the homeowner is typically responsible for paying the appraiser..

What Homebuyers Need to Know

When you’re buying a home an appraisal could potentially sink your deal. If you make an offer to purchase a house, towards the end of the home buying process your mortgage lender will require that the home being purchased be appraised. If the home appraises for less than your offer to purchase the lender will not provide the loan, however, this could be good for a buyer as well because you may be able to negotiate to lower purchase price but very often at the point of the home appraisal in the buying process an agreement of purchase and sale is already in place.. If a bad appraisal is standing between you and your home purchase, look into getting a second opinion via a second appraisal. Appraisers are not perfect and it is possible for them to make mistakes.

What Home Sellers Need to Know

As a seller, a low appraisal means that you may have to lower your home’s price to get it sold. Lenders won’t approve loans for more than a home is worth, and holding out for an all-cash buyer who doesn’t require an appraisal as a condition of completing the transaction is unlikely to net you a higher sales price. No one wants to overpay for a home but more importantly a mortgage lender will not over lend on the value of a property, therefor if the appraisal comes in lower than what your buyer is offering this will likely sink your deal unless you lower the price.

What Refinancing Homeowners Need to Know

If you’re refinancing your mortgage and looking to access some of the equity in the home the appraised value is very important. Mortgage lenders will have maximum loan to value ratio that they will go up to so the larger the difference between what you owe on your current mortgage and what the home is appraised at obviously the better. Having a better loan to value ratio will also make obtaining the lowest possible mortgage rates possible. Lenders put a lot of emphasis on this ratio so a high appraisal value is very important.

The Bottom Line

The home appraisal is a very standard process these days in any real estate transaction involving a mortgage loan, it should be taken serious, you should know how the appraisal works and what the value is based upon, if you feel your home is undervalued you can speak with the appraiser and make your case or get a second opinion.

The Importance of Master Planned Communities

re13Why Master Planned Communities?

According to predictions, there will be changes around the globe in the future that will challenge the way people live. These changes include:

  • Much higher gasoline prices
  • Greater emphasis on energy efficiency
  • Environmental protection and other green features
  • Growing water shortages
  • A 24-7 world that will demand amenities that are open 24-7

To be able to keep up with the global changes, innovations are needed, especially in the real state industry. Understanding the future requires understanding the demographics and how they influenced the market. Thus the birth of the Master Planned Community.

What Is A Master Planed Community?

A Master Planned Community (MPC) is a large scale self-sustaining residential plan. It has a number of various essential amenities not normally found in a regular housing subdivision. A Master Planned Community gives the ability to work, live and play all within walking distance. Some real estate professionals consider this type of luxury real estate development a “Mixed Use” development since they include retail, housing and entertainment In previous times, clubhouses and pools were at the top of home buyers’ lists. Today, access to neighborhood retail services, hi quality restaurants and health care is becoming the top priority according to the latest research. People want to get access to everything they need quickly and at reasonable prices, thus walkable access to civic use areas is in high demand.

Convenience

Master Planned Communities are designed to provide a master planned convenience. In its varied housing within a community layout, homes are designed to conform to the lifestyle of diverse generations. They are created to provide both soft and hard amenities and services in the way people want them delivered. These luxury communities facilitate residents building and living comfortable lives and having more time to spend with their families. This lifestyle also enhances connectivity between neighbors and their surroundings through shared spaces created for everyone across varied demographics to use whether alone or together.

Important Aspects of Master Planned Communities

To highlight the benefits and most significant aspects of Master Planned Communities, listed below are some of the reasons why it is important to the home buyer.

1. Better Access to Important Resources

As mentioned above, people nowadays want to have easy and quick access from their own homes to their most important resources. In regular housing subdivisions, however, people bought all lands and built huge properties to maximize their lots, leaving no space for other amenities. In Master Planned Communities, lots and houses are planned accordingly by providing a required minimum and maximum size. That ensures that there are more open spaces for the building of other amenities. For example, park and play spaces are already built within the community and cannot be removed or replaced by any other infrastructures. In Master Planned Communities, virtually everything a resident needs is within the community or within short distances. This kind of setting is not just good for working parents, young professionals, aspiring entrepreneurs, and retiring baby boomers, it is also great for children going in and out of school most of all.

2. A Sense of Community Among Residents

The quality of neighbors defines a community. Not surprisingly, most people living in a luxury real estate development such as a Master Planned Community share a common interest which instantly creates a sense of togetherness among neighbors. As a result, residents feel safer, more serene, and more secure. Community events are organized within MPCs to provide residents with an avenue to socialize, get to know each other, and build strong connections. Additionally, the Master Planned Communities are founded on good governance with the rules and responsibilities of every community member that are declared beforehand. Many Luxury Master Planned Luxury Communities provide a variety of different community activities based upon the area within the PUD. For instance, in the luxury area, where homes start at $850,000 or so, you may find high end marinas, with wet slips and dry boat storage. Some luxury developments even have their own private beach in the luxury sectors. In the sections of the Planned Unit Development (PUD) where the homes are in the $300,000’s you may find community activities that involve fishing and pool parties.

3. Incorporated Agriculture

Gardens owned by the community is becoming popular in some Master Planned Communities. MPCs work to assist its residents to have their own local food production through either providing community gardens or incorporating small-scale farms.

4. Best Practices for Handling Transportation Issues

The use of multiple trails for biking and walking as well as the presence of sidewalks are necessary features of Master Planned Communities. And, as a solution to the most frequent and current demands of the community on transportation, MPCs implement various, sometimes combined, options of transporting people such as an electric autonomous vehicle systems, bus transit stops, car-sharing services, charging stations for electric vehicles, providing golf carts for driving within the community, or implementing shuttle services.

How to Deal With a Low Home Appraisal

re12Want to learn how to deal with a low home appraisal? In a competitive real estate market, a home being sold may enter into a multiple offer situation which could potentially raise the purchase price above the comparable sales in the area. In a situation like this, it is possible that the home appraisal for the buyer’s mortgage lender will come in lower than the purchase price. In a real estate market that favors buyers (home prices are soft or declining), sellers can also face a home appraisal that is lower than what they paid for the home if they bought the house at the peak of the market. Be aware that a low home appraisal can happen in any type of real estate market.

Why Do Low Appraisals Happen?

Here are a few reasons why a home appraisals may come in low:

  • Inflated home price because of multiple offers.
  • Declining real estate market due to a large inventory of homes and not enough buyers.
  • The seller has overpriced the home.
  • The real estate appraiser lacks experience and doesn’t understand the influences on value.
  • The real estate appraiser incorrectly selected his comparable sales for his report which may have resulted in a lower home value than what should have been assessed.

Solutions for Low Appraisals

If a low home appraisal is threatening to sink your sale, purchase or refinance, stay calm, here are a couple solutions:

    • The buyer can pay you the difference between the purchase price you agreed upon and the appraised price in cash, you can sell the property for the appraised value and get the difference from the agreed upon higher price in a lump sum cash payment if the buyer is able to do so.

 

    • If you are the seller of the home you do have the option of lowering the selling price. If you don’t you will run the risk of every buyer running into the same problem and not being able to get a mortgage because of a low appraisal.

 

    • The seller can offer to carry a second mortgage for the difference.

 

    • If the buyer feels they absolutely have to have your home and you are not willing to lower the selling price and the buyer cannot come up with a lump sum to pay you (as mentioned in option 1) you could accept having them make payments to you over a period of time instead of the lump sum.

 

    • Get a second opinion, have the buyer ask the mortgage lender for a list of their approved appraisers and select another company on this list and hope for a higher value, you could end up wasting another $300 on an appraisal but appraisers are not perfect and a mistake could have happened.

 

  • Cancel the transaction.

Have your realtor put in your purchase and sale agreement a loan contingency that if the home appraises for a lower value that you will get your money back (if you’re the buyer). If you are a seller being affected by a low appraisal propose on of the above options to your buyer if you would like to try and salvage the transaction.

The Next Real Estate Collapse

re11As daily commutes go, I have nothing to complain about when I point my car toward Sovereign HQ each morning. The traffic congestion on Interstate 95, South Florida’s main artery, is horrendous. So I take the scenic route, the coastal beach road known as A1A.

The views of the Atlantic Ocean are nice. But more recently, I enjoy the drive for a different reason. It’s a ringside seat to the extravagance of the now-deflating luxury housing bubble I warned about three months ago. Recent data point more ominously to a serious problem in this sector.

Each day, my drive on A1A takes me past what is the single most expensive new home for sale in the United States: Le Palais Royal, under construction for the last five years.

Situated on 4.4 acres of beachfront, the “spec mansion” features the Atlantic Ocean as its backyard. The front yard is a nearly 500-foot deep-water expanse of the Intracoastal Waterway – perfect for even the largest private super yacht.

The mansion’s soaring front gates, accented in 22-karat gold leaf, make it sort of hard to miss as you drive by. Just beyond the gates is a 60,000 square foot home with 11 bedrooms, 17 bathrooms, an 18-seat IMAX home theater (with its 50-foot-wide screen), and a 30-car subterranean garage. The building plans call for a second phase on the vacant beachfront lot next door. That’s where the ice-skating rink, go-cart track, bowling alley and private nightclub are supposed to go.

And it can all be yours for just $159 million.

But the tide of money fueling the purchase of luxury homes, big or small, is receding as we speak.

Luxury Homes: The Next Real Estate Collapse?

Largely ignored in the holiday rush was the news that luxury home prices fell 2.2% during the third quarter – the first such decline in nearly four years.

According to the Redfin real estate brokerage, wealthy clients are stepping back out of fear from stock market volatility, and are worrying about tying up too much of their wealth in non-liquid assets, especially if another real estate collapse appears.

The decline is even more notable because luxury homes serve as something of a bellwether for the rest of the “non-lux” real estate market (which still rose just under 4% for the same period).

The original housing-bubble stocks of a decade ago might offer a clue on the timing. Shares of Toll Brothers (NYSE: TOL), the nation’s largest builder of luxury homes, peaked in July of 2005 before starting their precipitous decline. But the stock prices of builders focused on the low- and mid-priced ends of the market stayed strong – at least at first. For instance, the shares of Lennar Brothers (NYSE: LEN), one of the biggest homebuilders in the country, didn’t crack until April of 2006.

Interestingly, Toll Brothers’ shares today are down nearly 25% from their post-recovery highs (to the lowest price in 13 months), while Lennar shares are just starting to break down.

California Dreamin’?

Chinese buyers have been key players in the run-up of America’s luxury home prices. And their influence is felt most strongly in California and the San Francisco Bay area, the hottest of America’s real estate markets this go-round.

Not coincidentally, it appears Chinese buyers may now be pulling back there as well, possibly ushering in the next real estate collapse. Home sales in California fell 20.5% in November – more than twice the monthly average (it’s traditionally a weak month prior to the end of year holidays). October’s home sales also fell a little over 5%, while dropping 1.5% in September.

For now, the real estate community appears to be dismissing the collapse of sales as the result of changes in new loan disclosure rules by the Consumer Financial Protection Bureau, and what is usually a softer seasonal period for home sales anyway.

I don’t blame them. As a media consultant once told me back in my reporting days, “Never let too many facts get in the way of a good story.”

But the “Chinese buyers” real estate gravy train is grinding to a halt fast. Last summer’s 40% decline in the Shanghai Composite Index should have been the first clue. The second was the relentlessly positive “it’s just temporary” narrative spun by so many brokers and property developers who don’t want the ride to end. The third clue may be upon us here at the start of 2016 as the Shanghai index lurches lower yet again.