The Market Reached Its Peak At The End Of 2013
The Denver Post reports from Colorado. “Metro Denver home sales prices slipped for the third month in a row in December but still were 9 percent higher year-over-year, according to Case-Shiller. ‘I think what we are seeing overall is a very slight moderation more related to seasonality,’ said Metrolist CEO Kirby Slunaker said ‘The reason I say that is because we are at 9 percent year-over-year. If you look at the Case-Shiller Index for January 2013, it was sitting at 134, and in nine months it went to 147. That is a 13 point increase in just nine months — a pretty aggressive increase.’”
“In 2013, single-family home sales in metro Denver beat a record set during the housing boom. There were 42,762 detached single-family homes sold, which surpassed the previous record of 41,682, set in 2004. Those homes sold for an average price of $336,831, which also was an annual high.”
The Albuquerque Journal in New Mexico. “Sales of existing homes across the US and in New Mexico plummeted in January to the worst pace in 18 months, the National Association of Realtors said. In New Mexico, separate reports of non seasonally adjusted sales — statewide and in the Albuquerque metro area — also showed a strong dropoff in January from December. ‘Such a picture confirms that the U.S. housing market reached its peak at the end of 2013 and further reacceleration is unlikely near term,’ Annalisa Piazza of Newedge Strategy said in a research note.”
The Phoenix Business Journal in Arizona. “The Phoenix-area real estate industry has been somewhat tight-lipped on its opinion of the controversial ‘religious freedom’ bill that’s waiting for Gov. Jan Brewer to either sign or veto. But the few local housing experts I did speak to collectively agree that Senate Bill 1062 being signed into law would be a damaging blow to the market and its recovery, which has been slowing in recent months.”
“‘If it hurts business; it hurts housing because business drives housing,’ said Michael Orr, a housing expert at Arizona State University’s W.P. Carey School of Business.”
“Orr noted demand is already weakening. Despite the fact that there were 36 percent more homes on the market Valleywide in December than a year earlier, sales had taken a 17 percent drop, according to Orr’s research. Part of that drop in sales was due to a loss of interest from out-of-state buyers.”
The Wall Street Journal on Arizona. “Home prices in Phoenix posted their first monthly decline since 2011 in December, according to the S&P/Case-Shiller price index. The latest figures show Phoenix is off to a less than promising 2014. The number of homes for sale in January stood 29% above their levels of a year earlier, according to the Arizona Regional Multiple Listing Service Inc. Meanwhile the number of homes sold in January fell 17% from last year, the sixth straight month in which sales have fallen from a year earlier.”
“If Phoenix cools, that could portend ominously for parts of California, Nevada, and Florida that have shown similar rebounds in recent years. ‘Demand is really getting quite low. Each month it seems to get a little worse than I expect,’ said Mike Orr, a real estate director at the W.P. Carey School of Business at Arizona State University. Last year, the problem for builders was that they were running out of homes to sell. ‘Their biggest problem now is not having enough people coming through the sales offices with good credit,’ says Mr. Orr.”
“Investors accounted for just 19% of homes sold in December, according to Mr. Orr, down from a peak of nearly 40% in July 2012. Demand from Canadian buyers has also cooled as the exchange rate becomes much less favorable compared with a few years ago. Prices could turn negative ‘if the current situation lasts much longer,’ says Mr. Orr.”
“Mr. Orr says it’s ‘over-simplistic to write this all off on investors,’ said Mr. Orr. ‘It’s not just investors and it’s not just weather. We’ve had glorious weather here.’ Instead, Mr. Orr says demand from entry level buyers is weak, and that younger households seem more inclined to rent, either because they can’t afford to purchase, they can’t qualify for a loan, or they simply aren’t interested in ownership.”
Inside Tucson Business in Arizona. “By the end of this year, roughly 1,150 units constituting about 3,200 beds will be built for students, in the towers and elsewhere within blocks of the University of Arizona. And university-area property owners are already feeling it. Allan Mendelsberg, who specializes in apartment and investment sales at Picor, said as the 2013-14 school year approached, owners of smaller, dated campus-area properties got desperate and took big reductions just to fill units.”
“Now, student-geared complexes along First Avenue, Stone Avenue and north of Grant Road are shifting focus, angling for the nontraditional students, foreign exchange students and small families to fill the three- and four-bedroom units. ‘There’s definitely supply versus demand question that lingers in the marketplace,’ Mendelsberg said.”
“Mendelsberg said the complexes that were at the top of the heap 10 to 15 years ago have all changed hands within the last couple of years as owners saw the writing on the wall. ‘There’s a reason for that, I think,’ he said. ‘The previous owners have started to realize what’s going on and a lot of them wanted to exit.’”
“Many of his chats are with frustrated owners, and the financials aren’t pretty when he approaches lenders. ‘I’m embarrassed sometimes to try to even get financing,’ he said. There just aren’t many cash buyers willing to purchase properties in less desirable parts of town, properties that need a lot of updating, and owners feel stuck. Mendelsberg said he sold a southside complex at a $500,000 loss because the owner, who owned it for less than a year, just wanted out.”
