The Market Is Taking Care Of This Issue
The Union Leader reports from New Hampshire. “Optimistic that the housing market in southern New Hampshire will stabilize by the end of this year, real estate agents are looking at two major infrastructure projects to spur on home sales in coming years. Plans to connect the F.E. Everett Turnpike with the south end of Manchester-Boston Regional Airport in Londonderry and to widen the Interstate 93 corridor from the Massachusetts border to Manchester should create a boom for employment, retail development and housing that will propel an already recovering real estate market to new heights, according to John Conley, president of the Granite State South Board of Realtors.”
“Gloria Koanfal, a realty agent with Fireside Real Estate since 1997, is less optimistic that the market is set for a rebound. ‘We are … incredibly slow,’ she said. ‘I don’t see it turning around for a while.’”
“She pointed to a glut in inventory in southern New Hampshire that needs to be dealt with before prices can begin to increase again. ‘There is a lot of building going on, and a lot of that has to be sold before anything picks up,’ Koanfal said. ‘Right now, of course, people aren’t moving. They are putting their houses on the market and blaming real estate agents for not selling them.’”
The Boston Herald from Massachusetts. “Boston’s housing market has sunk to its worst level since 2001 as home and condominium sales plummeted by nearly 30 percent in February. ‘There are qualified buyers out there ready to go, but they believe properties are still overpriced,’ said Gary Dwyer, broker-owner of Buyer Agents of Boston.”
“The median price of a single-family home fell to $242,834 last month in Boston, down from $302,500 a year ago, a 20 percent drop. Median condo sale prices fell by 27 percent to $280,000 in February, down from $339,000 a year ago, according to the Warren Group. The once-resilient luxury downtown Boston condominium market is also hurting. Sales are off by 43 percent in the Back Bay, Beacon Hill, South End and North End for the first two months of 2009 compared to a year ago, and prices are down nearly 9 percent.”
The Boston Globe. “‘Distressed property sales have become a bigger share of the market and will continue to be a factor going forward as lending institutions try to reduce their portfolio of real estate-owned property,’ Timothy M. Warren Jr., CEO of the Warren Group, said in a statement.”
The Daily News Transcript from Massachusetts. “The Massachusetts housing market still has not hit bottom. ‘I hate to say it, but I think it’s pretty much true,’ Timothy Warren Jr. said yesterday.”
“The real estate market is much the same locally, as sales numbers and prices are down significantly in Dedham, Norwood, Westwood and Walpole. In Dedham, 21 homes have been sold this year through February, compared to 25 at the same point a year ago, with a median price of $285,000, down 27.9 percent.
In Norwood, home sales were down from 13 to 11 for the same period, with the median price at $332,000, off 11.5 percent. Sales were down from 20 to 7 in Walpole, with the median price $330,000, a decrease of 19.4 percent. ‘It’s pretty much what the rest of the state is doing. No big differences,’ Warren said.”
“Home sales did bump up in September, October and December compared to the same months a year earlier. But January and February have seen double-digit declines in both sales and in the price of those homes. The 6 to 12 months of sales before prices begin to rise have yet to begin. ‘If you’re going to have that spinning your wheels for 6 or 12 months, you want the wheels to begin spinning soon,’ Warren said.”
The Cape Cod Times from Massachusetts. “The connection between rising unemployment and slumping real estate activity across the Cape and Islands was highlighted by two sets of economic indicators released yesterday. The unemployment rate on the Cape and Islands reached a 14-year high last month, with 11.5 percent of the region’s labor force out of work, according to numbers released by the state. Last year, at the same time, the jobless rate was 6.8 percent.”
“Also in February, sales of single-family homes in Barnstable County dropped 26.8 percent, falling from 194 sales in 2008 to 142 sales in 2009, according to The Warren Group. The median price of a single-family home fell 27.4 percent from $368,000 to $267,500 over the same time period.”
“‘People who have lost their jobs or don’t feel confident that they’ll be able to retain their jobs are not able to participate in the market on the buying side,’ said Michael Goodman, director of economic and public policy research for the University of Massachusetts Donahue Institute. ‘As people lose their income, they’re more likely to fall behind on their mortgage payments. There are more defaults and they’re forced to sell.’”
“Because prices have fallen so sharply over the past two years, the real estate deals that are available may soon be too tempting to resist, Goodman said. ‘At some point there’s a bottom at which point it becomes too good a deal for buyers to turn down,’ he said.”
The Associated Press. “The National Association of Realtors said…home sales in the northeast fell 14.9 percent over February 2008, but rose 15.6 percent over January, when adjusted for seasonal buying patterns. The median sale price for homes bought in the northeast dropped 4.8 percent over last year to $251,200, the smallest dip in the country. Nationally, the median sales price plunged to $165,400, down 15.5 percent from $195,800 a year earlier. That was the second-largest drop on record.”
“Home sales in seven major Northeast cities recorded double-digit declines in February, while median prices continue to fall across the region, according to The Associated Press-Re/Max Monthly Housing Report, also released Monday. Pittsburgh sales fell the most in the region, plunging nearly 44 percent in February from the year before. The median price there, however, only dipped 1.4 percent to $109,450, the best showing in the Northeast. Inventory fell by more than 23 percent year-over-year.”
“The city’s housing prices didn’t balloon like other places in the country, so its bust has been more moderate, said Sheryl Morgan, an agent in Canonsburg, Pa. But Morgan worries the recession will change the city’s fortunes. ‘I’ve lost two listings because of pay cuts,’ Morgan said. ‘They planned to move into a bigger home, but instead of selling and buying a new home, they’re staying and refinancing.’”
“Home sales in the suburban counties surrounding New York City — Suffolk, Nassau and Westchester counties…were off by 33 percent in February and the median price fell more than 13 percent to $370,000. The supply of unsold homes also grew by nearly 5 percent, the only area in the Northeast to show an increase.”
“Nearby in Passaic, N.J., home to many Manhattan commuters, February sales fell 23 percent, while prices dropped nearly 13 percent from a year ago to $311,000.”
“‘Distressed sales are almost a different segment of the market now,’ said real estate agent Julie Longtin, who is working with buyers like Justin Natale to buy foreclosures, renovate them and rent them. Natale is waiting to close on his latest investment, a bank-owned two-bedroom townhouse in downtown Providence, for $35,000. Last week, the bank asked to postpone the closing.”
“An investor since 2001, Natale hasn’t bought anything since 2005, when the market got out of control with loose lending and ‘cowboy investors,’ he said.”
The New York Post. “The madness is over. For obvious reasons, banks have finally stopped paying insane rents for still proliferating, huge Manhattan retail branches that serve mainly as ego-gratifying billboards. Manhattan retail brokers have long voiced awe over how much banks paid for new branches even making first offers that were higher than asking rents.”
“Some view it as demonstrating that banks ‘have no idea of the value of money,’ as a prominent retail broker who asked not to be named put it. This broker said, ‘They spent like drunken sailors. We could only shake our heads and laugh at the offers that came across our desks. Spaces we pro-formaed at, say, $100 would routinely fetch double that from a bank.’”
“‘To top it off, they insisted on locking in these rates for absurdly long periods of 15 or 20 years. Because they always signed with the parent corporation there is no way to get out of these absurdly overmarket obligations that will haunt them for years.’”
Crain’s New York. “Sales of multi-family and mixed-use buildings across the city dropped 37% in 2008—the steepest drop in two decades. The decline accelerated in the second half of 2008, when sales volume plummeted 45% from the same period a year ago, according to a new report.”
“The largest declines in transactions for properties valued between $500,000 and $100 million took place in Manhattan and the Bronx. There, sales volume dipped 54% and 60%, respectively, in the last half of 2008, according to…Miller Cicero, a commercial real estate advisory firm, and Massey Knakal Realty Services, a brokerage firm.”
“Many of the transactions that took place during the last half of the year were deals signed under contract prior to the Lehman Brothers collapse in September and the credit market freeze. ‘We will see a shift over the next year or two,’ said Mr. Knakal. ‘As distressed sellers have no options we will see a reduction in value.’”
“Declining Manhattan rents are taking a toll on Equity Residential, a large real estate investment trust that owns 47 apartment buildings in the New York metropolitan area. The Chicago-based REIT appears to be among those most vulnerable to the deteriorating market here, according to Macquarie Research, an investment bank. Equity Residential’s New York City buildings are high-end luxury rentals which draw many of their tenants from Wall Street, where firms are cutting back and employees are suddenly looking to pinch pennies.”
“Since February alone, Equity Residential has lowered its Manhattan asking rents by an average of 13%, said Michael Levy, an analyst at Macquarie. That reduction came on top of a 15% cut over the previous year. he noted that the greatest asking-rent declines took place at Equity Residential’s Trump Place buildings on the Upper West Side, where rents fell by an average of 15.5% at 1,325 units. The biggest drops were for studio apartments, where rents were lowered by 19%.”
“‘This is troubling, given our view that Trump Place is Equity Residential’s regional crown jewel,’ Mr. Levy wrote. ‘In this market we find that the upper-end of the rental market is getting hit harder in terms of having to lower asking rent.’”
The Hartford Courant from Connecticut. “We’re losing our young people! A Jan. 23 New Haven Register article says what is oft repeated: ‘Connecticut has lost a higher percentage of 25- to 34-year-old workers since 1990 than any other state.’”
“Orlando Rodriguez, demographer and head of the State Data Center at UConn, suggests looking at the nuances in the numbers. For example, the young people who do leave tend to be the more educated ones, usually leaving in search of jobs. The ones who stay tend to be less well educated, which bodes ill for the future workforce. Also, since a peak in 2003-2005 at 523,100, the state’s public school population has begun to drop.”
“So before the state turns into one big Medicaid nursing home, we need to get moving. We need to improve the business climate and enhance the quality of life so we can create and attract real jobs. We need to stop building so much ‘active adult’ housing for people leaving the workforce and build something for the people trying to enter the workforce. We need to leverage what is here — great hospitals, corporations and universities — into more business opportunities.”
The Stamford Advocate from Connecticut. “Senate Banking Committee Chairman Christopher Dodd on Monday endorsed as ‘an important step forward’ in the Obama administration’s plan to take over as much as $1 trillion in sour mortgage securities with the help of private investors.”
“‘”In order to turn this economy around and help families in Connecticut and across the nation get back on their feet, we must end the rising number of foreclosures, unfreeze our credit markets and stabilize the banking sector,’ he said. ‘The Obama administration has already recognized that the root cause of our problem is the housing crisis, and is working with Congress to help American families keep their homes.’”
The Norwich Bulletin from Connecticut. “Killingly and Plainfield are among 12 Connecticut towns with high foreclosure rates named to receive a slice of the federal stimulus package to purchase and rehabilitate foreclosed homes. However, town officials said Tuesday they aren’t sure if the funds will be helpful.”
“First Selectman Paul Sweet said he has not received much information about the funds. But he said it’s unlikely the town would receive enough to re-purchase a majority of foreclosed homes. ‘It’s not going to be easy to take advantage of this program,’ Sweet said. ‘It may be something we can’t take advantage of.’”
“Killingly Town Council Chairman Robert Young said he thought the idea for the program was good, but wasn’t sure it would be useful for Killingly. Young, a lawyer, said he frequently deals with cases in bankruptcy court. He said he has seen a phenomenon developing in the last month where more and more foreclosed homes re-enter the market at a lower price and are sold.”
“‘If the market is taking care of this issue, then I don’t want to turn the town into a real estate speculator,’ Young said. ‘This may be something we pass on.’”
