The Victim Of Our Own Creation
Readers suggested a topic on local market observations. “Report on your county. 1st: Fairfax Va - inventory still low- lots of INwesters buying around me. One chopped down all the trees- a feng shui move I guess.”
One said, “Volusia County, FL. 529 properties owned by Federal NMA. 443 currently owned by major banks: Deutsche, Suntrust, B of A, Wells, Fifth Third, among others. 437 sheriff’s sales scheduled for October. Same old shacks for sale that were listed two years ago. Some fell off the radar during the summer, but most will show back up again when the snowbirds arrive. Private equity seems to be sapping up everything that doesn’t already have granite and stainless.”
The Herald Tribune in Florida. “A recent newspaper story about the number of $1 million-plus houses that sold in August caught the attention of Kim Ogilvie, a top-selling Realtor with Michael Saunders & Co. The high-end market may be seeing a lot of sales, she noted, but more than half of the purchase prices of those August transactions were for less than the sellers had paid for the properties. ‘Buyers are still very sensitive to price,’ she said, especially when they are spending $3 million or more. ‘They are not willing to throw their money around.’”
“Yet in such an environment, and with the headlines touting price gains of 10 to 12 percent, Ogilvie said, ‘Sellers are so cocky that everyone is trying to raise their prices 10 percent. I am losing listings because they want to raise their asking prices. Some agent will get that listing (by agreeing to list at an inflated price) and then have to cut the price’ to sell the house. ‘We could see another bubble; we could be the victim of our own creation.’”
eNews Park Forest in Illinois. “Home prices in Chicago may be on the rise again, but the housing recovery is bypassing families like the Gutierrez’, who face eviction this winter. Time is running out for Domynika Pawelczak, Juan Gutierrez and their teenage daughter, who have been ordered to leave their home by early November.After the Gutierrez family began writing letters to TCF, the bank offered them a new loan less than a week before the May auction. But the offer increased the principal by $22,000, asked for $4,000 up front and reset the mortgage for 30 years again.”
“Nearly 7,000 Chicago-area families received notices of foreclosure activity in August.’It was like we had never made a payment, even though we have lived in this house for over 8 years now,’ says Pawelczak.”
The Calgary Herald. “Although the real estate market in the Phoenix, Ariz., area passed its best-before date a couple of years ago, there is still room for Canadians to lay claim to a bargain or two, says an industry watcher. ‘It’s far too late for Canadians to capitalize on the bargains that existed in 2009 through 2011,’ says Mike Orr, director of the Centre for Real Estate Theory at the W.P. Carey School of Business at Arizona State University. ‘However, prices are still going up and likely will continue to do so until a significantly greater supply comes to the market.’”
“Calgarian Evelyn Studer, an executive and single mom, first entered the Phoenix housing market in early 2012, putting in an offer on an investment property that cleared the short-sale process 10 months later. Since then, she has closed on a second rental home — another short sale — and recently put down a deposit on a recreation home that she is having built. All three properties are in Goodyear.”
“‘Now, although prices are going up, they are still reasonable. For instance, the base price of my recreational property went up more than $10,000 (US) in six weeks, but is nicer than my Calgary home and for half the price — and it will have a pool and hot tub,’ Studer said.”
The Sydney Morning Herald in Australia. “Buoyant auction clearance rates have underpinned price growth in Melbourne and Sydney this year, but instead of triggering a sigh of relief at the market’s return to health, there are fearful cries of a boom and surging house prices. Agents are having none of it. ‘Adjectives like ’solid’ are more accurate than ’surging’,’ says Paul Castran of Castran Gilbert, a Melbourne agency that sells everything from development sites and apartments to family homes. ‘The boat has left the dock and we are just at the beginning of a new cycle,’ Castran says.”
“Frank Valentic, from Advantage Property, who acts for investors and home owners buying and selling property, says the number of investors on his books has doubled in the past 12 months. ‘People have a herd mentality. When they see the market moving, they want to jump in. Investors were sitting on the fence last year. Home buyers will always need to upsize or downsize, but investors don’t have to buy so they are looking at the timing and they see growth now,’ Valentic says.”
“About 25 per cent of his investor clients are buying for super funds. ‘They are mainly at the lower end of the market, spending around $500,000 depending on the size of their super fund, rather than the family upsizers in the $1 million to $2 million market,’ he says.”
