January 9, 2014

Investors Are Not In Endless Supply

The News Press reports from Florida. “Lee County permits to build new homes in 2013 spiked up 40 percent while foreclosures fell 45 percent in 2013 as the area’s given-up-for-dead residential construction industry roared back to life. Randy Thibaut, president of Fort Myers-based Land Solutions, said several factors combined to create a more energetic market. Chief among them, he said, was ‘the cheap money for mortgages and the fear that they would be going up, so you have a lot of buyers, particularly young and first move-up buyers, concerned that if interest rates went up much they’d be out of affordability.’”

The Palm Beach Daily News. “Where have all the big deals gone? That’s the question you might ask after tallying up Palm Beach residential sales over the past 12 months. After all, only one transaction has been recorded at more than $15 million since the end of August. By any estimates, that’s an anemic denouement to a busy summer of sizable deals. Since summer, sales of property priced in the stratosphere have all but evaporated.”

“In all, at least 26 single-family-home deals were recorded between $7 million and $13 million. But just six of those occurred between Sept. 1 and the end of the year. And there’s nothing on the horizon that indicates any major shift soon. But, hey, it’s the new year. And, as they say in Palm Beach — where wallets are as deep as the ocean and off-the-market deals are always simmering — anything is possible.”

The Longboat Observer. “Realtors say they expect fewer investors to snatch homes off the market in the coming year, which will leave more inventory available from which primary homebuyers can choose. ‘Investors are shifting to other markets,’ said Peter Crowley, the 2014 president of Sarasota Association of Realtors. ‘That’s not to say they aren’t still here, but I don’t think they’ll be as predominant in 2014.’”

“As of Nov. 30, the supply of homes in Sarasota County’s inventory was 5.4 months’ worth for single-family homes and six months for condos — up from 4.8 months in 2012. New homes account for 56.3% of all homes sold in the Lakewood Ranch market currently.”

The Orlando Sentinel. “Cora R. Fulmor, president of a nonprofit agency that helps distressed homeowners, spoke with Sentinel staff writer Richard Burnett. Q: Some researchers have called Orlando the country’s ‘most financially distressed’ metro area. Today, several years into the economic recovery, do you think that title is deserved?”

“A: I truly believe there is a recovery and it is helping a lot of people. I see a lot of clients whose financial situation seems to have improved, and they are climbing out of debt. That being said, there are many of them who are still not able to make their full mortgage payment. And that’s largely because of the type of mortgage they have. We see a lot of adjustable loans that are resetting higher, plus we have old loan modifications that were given in 2008 and 2009 and they are resetting as well. All of that may cause somewhat of a hiccup for these clients.”

From Miami Today. “Million-dollar homes are selling faster than ever. So fast, in fact, that 156 sell per month, on average, in Miami-Dade and one in every five sales of single-family houses is for a property costing at least $1 million. As for million-dollar-plus condominiums, they account for one in every eight sales countywide. At the 40-floor Carbonell tower, a 1,500-square-foot condo commands an asking price of $920,000. For just under $1 million, buyers get a two-bedroom, two-bath unit with two parking spaces, storage, marble or wood floors, a state-of-the-art kitchen with Sub-Zero refrigerator and high-end appliances by Miele.”

“‘A million dollars doesn’t buy you very much any more, unfortunately,’ said Rob Feland, a top producer with Avatar Real Estate Services.”

The Daily Business Review. “In spite of seemingly boundless enthusiasm by developers, record-setting transaction prices and a conventional view that the market is in full upswing, the recent spate of residential megatower announcements is causing some speculators to quietly pull back on their plans, a Miami commercial real estate broker told The Daily Business Review. Jonathan Gerszberg, a senior associate at the Miami office of national real estate services company Marcus & Millichap, said he had a sense people were holding back on making further announcements, waiting to gauge if the market is currently oversaturated.”

“‘When somebody announces 1,300 or 1,500 new units in a market, it actually has a cooling effect on everybody else,’ Gerzsberg said. ‘If you’re the guy that’s coming a little later, they might want to hold back a bit.’”

“The market will now have to contend with the likely influx of several thousand new units over the next few years, even as employment growth remains stagnant. Gerzsberg said part of the reason for the cautious approach might be the recognition that the foreign investors who have been boosting Miami’s residential real estate market for much of the past four years are not in endless supply. ‘People like to think they’re immune, but these cycles have a way of moving fast,’ he said.”

From Yahoo. “Several months ago, experts began warning of a second housing bubble. I didn’t need to see the affordability index to know my Floridian neighbors aren’t earning higher salaries even though home prices have risen to prices beyond what I paid during the first housing bubble.”

“Although homes quickly sold about 6 months ago, I’m noticing sales have slowed down considerably. I think sellers became overly confident that they could finally sell their homes at a profit since prices have gone up. One of my neighbors invested about $60,000 into the renovation of a former foreclosure. She listed the home above $200,000, which is what it sold for during the housing bubble. No one has bought the home even though it’s immaculate and beautifully staged.”

“When I first saw the listing prices of new construction townhomes in my area, I was flabbergasted. I purchased a new townhome before the first housing bubble for about $100,000. The homebuilders were asking twice as much several months ago, but recently had to lower prices. When the prices on new homes get slashed by 20 percent due to non-existent sales, it seems like the opposite of a housing bubble. I think most builders in my area have hit a plateau with prices as most homebuyers can’t afford to pay more.”

“I am disappointed that the housing recovery quickly mutated into another housing catastrophe just as my young adult sons are looking to buy their first homes. I’m urging my sons to wait before buying since the home prices appear to have peaked, although it doesn’t take much urging. They don’t make enough to qualify for a mortgage at this time. I think prices have already peaked in my community. Now, it’s just a matter of waiting for a new wave of short sales and foreclosures to come on the market.”

Bits Bucket for January 9, 2014

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