April 24, 2012

A Murky Monopoly Game

The Missoulian reports from Montana. “In recent years, Missoula real estate broker Rebecca Donnelly had gotten in the habit of bringing a book to open houses. The dreary residential housing market meant visitors were few and far between. This year, Donnelly hasn’t done much reading. On top of that, the last three offers Donnelly has submitted for houses ended up in competitive offer situations. ‘I don’t bother with the book anymore, I have 10-13 groups through on average (at each open house),’ said Donnelly.”

“Donnelly said sellers are realizing that the market isn’t going to bounce back quickly. The incentive of getting more on the other end has prompted some to list. ‘You may take a loss … but chances are, they will get a lot more house than what they already have at a cheaper price, so it’s really not a loss,’ Donnelly said.”

The Idaho Statesman. “New-home permits in Boise, Meridian and Eagle have doubled in the first quarter this year compared with the same period last year, and more buyers are seeking houses in the $400,000 range, said Bobbie Schultz, president of the Building Contractors Association of Southwest Idaho and owner of Jordan Homes in Eagle. ‘It shows that people are buying those less expensive houses and bumping people up as well,’ she said.”

“Buyers are turning to new homes because of the persistent shortage of existing homes for sale and because of good deals on new construction, said Kit Fitzgerald, president of the Ada County Association of Realtors. Marc Lebowitz, executive officer of the Ada County Association of Realtors said people are speculating about the effect bank-owned houses could have on recovery if they were put up for sale. But he said the increased level of demand and the rock-bottom inventory suggest the market can handle them.”

“The lack of supply means that multiple buyers are putting bids on homes. ‘It’s who can get it first,’ Fitzgerald said.”

“Because of demand, prices are now going up, and builders aren’t offering concessions or discounts as they have in the past few years, Fitzgerald said. ‘Everything in every price category has gone up,’ she said. ‘Anything $150,000 and less is just flying off the shelf.’”

StateImpact Idaho. “Lynne Smith pushes open the door of the home she’ll move into in just a couple of weeks. It’s brand new. ‘This is it!’ she says. ‘It’s just nice to come in and look around and say, ‘Oh, this is going to be my house!’”

“It was low interest rates and depressed home prices that drew Smith into the market. She thought she’d buy a foreclosure, and snap up a good deal. Instead, the search was a slog. She saw a lot of homes that had been damaged, or neglected. For the better places, competition was fierce. ‘The things that are really nice and in good, clean shape that people actually took care of, they’re gone in like a day,’ she says. ‘We would call the listing agent, and they would say, ‘Oh yeah, we have multiple offers,’ or, ‘We just got that offer sealed up 15 minutes ago.’ So – you really have to move quickly.’”

“Idaho Business Review reports the number of bank-owned homes for sale in southwest Idaho dropped almost 20 percent from February through the end of March. ‘This fact is worth mentioning since foreclosure sales are still occurring, and the vast majority of properties are going back to the lender, but there haven’t been that many REO sales to account for the decline,’ Idaho Data Providers President Charlie Nate said in the report. ‘This is evidence that lenders are holding REOs off the market and probably renting them for a while to help keep the market stable.’”

The Juneau Empire in Alaska. “Assessment data the city has collected and calculated has found that in 2011, housing sale prices in Juneau reached an all time high. In 2008 the median value for single-family homes was $318,000. That number dropped and hovered just above $308,000 for three years, and in 2012 the median value has risen to $332,000. City Finance Director Craig Duncan said the four year trend is a 9.6 percent increase, with an average increase over those years of 2.4 percent per year.”

“‘If you just compare ‘11 to ‘12, it looks like it went up 11 percent,’ Duncan said. ‘But then you would be forgetting it went down for several years.’”

McCleans on British Columbia. “While warnings about a Canadian housing bubble and rising household debt keep piling up, the government of British Columbia appears intent on fuelling the fire. This spring, first-time homebuyers can get a cash-back bonus of up to $10,000 for a newly built home. This ‘tax relief,’ which aims to also ‘assist the residential construction industry,’ will last until 2013. Government stimulus seems like the last thing Vancouver’s market (the priciest in the country) needs.”

“Tina Mak, a broker with Coldwell Banker in Vancouver, knows of at least two condo projects that sold out in a matter of hours earlier this year with prices starting well above $500,000. Mak expects a buying boom. Her phone has been ringing off the hook with clients interested in the rebate.”

The Vancouver Courier in British Columbia. “According to last week’s Real Estate Weekly survey, 46 per cent of Lower Mainlanders think now (spring 2012) is a good time to buy a home mainly due to low interest rates. On the supply side, 56 per cent think it’s a good time to sell, mainly due to high prices. But what do they think in China?”

“Now more than ever, Chinese eyes gaze east to places like British Columbia, which has no restrictions on foreign ownership. But anecdotal evidence abounds. Empty homes, bought and mothballed for future sale, decrease housing stock, increase demand and up prices. According to the Real Estate Board of Greater Vancouver, last year the average price of a detached home in Metro Vancouver rose 11.2 per cent to $887,000. On the West Side, the average home price rose 20.7 per cent to $1.99 million.”

“Trafalgar, they used to call it. A patch of urban plain between West 16th Avenue and King Edward in Arbutus Ridge on Vancouver’s West Side. Prime real estate in a beautiful city. And ground zero of the investor invasion. It’s no longer a community, it’s a commodity. A pocket of land bought and tilled by speculators. Down went the old stucco bungalows, once the neighbourhood’s signature home, up went dozens of ‘developer specials’—two and three-storey monstrosities that often sit empty, windows shuttered, for months. Sometimes years.”

“Colin grew up in the neighbourhood, at Trafalgar elementary and Prince of Wales secondary. He remembers streets bustling with life. Kids on bikes. Barbecues and burning leaves. Now a 38-year-old investment adviser, he lives in a rented bungalow not far from his childhood home. While the street names remain the same, the neighbourhood is unrecognizable.”

“Colin, not his real name, wishes to remain anonymous, fearing backlash and smears. If you dare note the ethnicity intrinsic to foreign real estate investment in Vancouver, you court charges of bigotry from industry benefactors. Last Friday, Colin took me on a Trafalgar tour. Street after street with many vacant homes. He pointed as we walked. ‘That’s empty. That one. That one. The whole side of this street almost.’”

“In Trafalgar, bilingual ‘For Sale’ signs in English and Mandarin dot front lawns. During our afternoon stroll, we happened upon a grey, two-storey with white-trimmed peaks. The front door was wide open. A young Asian man appeared in the foyer. ‘Yes?’ ‘Is this an open house?’ ‘No,’ he said, in limited English. ‘We show to private buyers.’ ‘How much? What’s the price?’ ‘Three point eight nine million.’”

“That’s typical of Trafalgar and other sections of Arbutus Ridge, probably the most overpriced neighbourhood in the city. It’s a market within a market with baffling trends. According to Colin, several Trafalgar homes seem to exist solely for ’sale’ yet never get occupied. ‘These three places in a row,’ he says, near West 21st and Yew. ‘No one’s ever lived there but [For Sale] signs go up for a few weeks then go away for few weeks. It just doesn’t make any sense.’”

“It’s a murky Monopoly game. Where do the interests of your global industry and our city diverge? How deep doth thy zeal for globalization run? No, they want this conversation to go away. Shut it up before folks get wise. If you’re troubled by dead neighbourhoods shuttered by foreign investment, you’re a racist dog stuck in 1923. Get back to your rented bungalow. You’ll be hearing from us soon.”

Bits Bucket for April 24, 2012

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