December 17, 2013

Investors Faced With Prices They Helped Create

Fox 13 reports on Utah. “Real Estate Researcher Zillow predicts Salt Lake City will be the hottest housing market nationwide in 2014. ‘I think there’s a lot of accuracy in the report,’ said Dave Frederickson, who is the president of the Salt Lake Board of Realtors. ‘There’s a lot of jobs coming and a lot of activity and positive buzz about the state of Utah.’ It’s not, ‘if you build it they will come.’ They are already en route.”

The Boulder County Business Report in Colorado. “The Boulder Valley is experiencing significant upward pressure on prices, as inventories decline and home builders struggle to keep pace with demand. ‘This spring is going to be even tougher than last spring,’ Re/Max of Boulder’s D.B. Wilson said. ‘When you think of the number of multiple offer transactions (that occurred last spring), I think that’s what we’re going to see again. … I think we’re going to have a strong market but I think we’re going to be fighting over the same listings.’”

For the first three quarters of 2013, the city’s median home price climbed to $642,000, while the average sales price reached $747,233. While five to seven months is considered a healthy inventory, Boulder County’s inventory of single-family homes stands at a mere 3.2 months. That’s a buyer’s market. And it’s one that likely will continue in the year ahead. So prospective homebuyers might want to jump in while they can, before prices escalate even further.”

The Albuquerque Journal in New Mexico. “The number of available homes hitting the market is up significantly compared to last year, both year-to-date and via monthly comparisons, according to the Greater Albuquerque Association of Realtors. Other than January, each month this year has had a higher inventory of homes on the market than last year. And from June through October, it’s been about 10 percent higher.”

“From a Realtor’s perspective this is good, said Betty Blea who is both a Realtor and also manages Mesa Verde Homes, but from a builder’s perspective, it means that new homes are receiving more competition from existing resales, which can be tough in a market still on the rebound. ‘For new-home builders, it makes it harder because that means there’s more inventory on the market,’ she said. ‘I don’t know that we’ve got the demand right now for more.’”

From Vegas Inc in Nevada. “The median sales price of previously owned single-family homes in Southern Nevada in November was $183,000, down 1.1 percent from October, according to the Greater Las Vegas Association of Realtors, marking the first time in almost two years that prices fell month to month.” ‘I’m not surprised to see prices go down a bit this month,’ GLVAR President Dave Tina said in a news release. ‘We may see prices soften a bit more through the winter before hopefully bouncing back in the spring. We’ve been saying for months that it’s very hard to sustain the kind of price increases we’ve been seeing since 2012.’”

“Las Vegas’ housing market has been recovering fast this year, thanks in large part to Wall Street investors buying cheap homes in bulk to turn into rentals. Faced with rising prices they helped create, many investors have been scaling back their local purchases.”

From Arizona Newszap. “The Phoenix housing market is quietly ending the year, with a drop in demand and activity, according to a new new report from the W. P. Carey School of Business at Arizona State University. ‘I anticipate sales will be way down in November and through the holidays, when some people even take their homes off the market until late January,’ says Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. ‘We also anticipate a much slower rate of price appreciation in 2014 than the furious pace we have witnessed over the last two years.’”

“Investors and out-of-state buyers are also losing interest in the Phoenix area, he points out. The percentage of Maricopa County homes sold to out-of-state buyers was down from 20.1 last October to 16.4 this October. That’s the lowest percentage since January 2009, according to the release.”

From NBC News. “Phoenix and Las Vegas both saw rapid price appreciation due to high investor demand. For the past three years, single and institutional investors swooped into these highly distressed markets and began inhaling properties. The intention was to put most of them up for rent. Prices had fallen by well over half in both areas peak to trough, so the bargains were plentiful. Until they weren’t.”

“Inventories of homes for sale in Phoenix are up 40 percent from a year ago. ‘If I was a Phoenix real estate ‘investor’ sitting on the upside—or in the long process of readying dozens, hundreds, or thousands of houses for rent into a market about to get pounded for years with single-family rental supply—I would push the ’sell button’ on everything I could, immediately, on data such as these,’ said housing analyst Mark Hanson. ‘In fact, by the looks of the November supply and demand metrics, it’s already happening.’”

From Reuters. “After rapid gains, some of the hottest housing markets in the United States look like they are starting to roll over. In Phoenix, pending sales fell 32 percent in October, while the number of months (at current sales rates) of supply is up 111 percent from May. In Sacramento, the October figures are equally grim, with year-on-year supply up 93 percent and sales down 20 percent. Volume isn’t slumping just in the classic boom and bust towns. Washington, DC house sales fell 14 percent in November, while sales in Silicon Valley, now in the midst of a technology IPO boom, fell 20.9 percent in November.”

“Mark Hanson, a mortgage banking veteran, argues that as supply and volume usually lead price, we could be on the verge of a substantial downdraft in values. ‘I feel like it’s 2006-2007 again,’ Hanson said. ‘Data is everywhere but nobody is looking, or wants to look.’”

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