March 10, 2014

The Kind Of Growth That’s Not Sustainable

The Wall Street Journal reports on Nevada. “During the darkest days of the Las Vegas housing bust, most luxury homeowners sat on their homes, waiting for the market to improve. Now, real-estate agents say, they are returning to the market en masse, sensing a window of opportunity. And many are looking to sell quickly, having been spooked by the last downturn—which means they are willing to negotiate on price. Cecilia and Lawrence Ventimiglia, luxury-home builders, bought their lot for $800,000 in 2006 and built an 8,000-square-foot custom house on almost half an acre. When the market tanked, and similar lots in the same neighborhood were selling for half what they paid, they decided to stay in the house because they had too much money in it.”

“When the market started to improve last year, they decided to list it for $3.4 million—and sold it for $3 million. Though they said it meant a loss for them—they won’t say how much. ‘The higher-end homes have lagged in appreciation and people feel the timing may now be right to sell,’ says Dale Thornburgh of Synergy Sotheby’s International Realty.”

The Coloradoan. “Fort Collins’ housing market is squeezing out its working class. Retail and service workers, young professionals and others whose wages fall below Larimer County’s median household income of $75,800 are choosing to leave the Choice City in search of affordable housing. Chris Smith grew up in Fort Collins and has considered this home for most of his 46 years. But he and his wife just closed on a house in Severance. ‘I’m a native, but despite working two jobs and nearly 70 hours a week, plus adding my wife’s income, we can’t afford to buy here,’ Smith said.”

“The median value of an owner-occupied home in Fort Collins was $248,000 in 2012, an increase of $79,800 from 2000. According to the analysis, homeowners would need to earn about $19,300 more to afford the increase. ‘The area median income has gone down for the last two years and the average rents have continued to step up every year, aggravating an existing trend,’ said Sue Beck-Ferkiss, social sustainability specialist with the city of Fort Collins.”

“‘The problem is geography. We are landlocked and that restricts our supply,’ said commercial Realtor Eric Nichols, who helped build several Fort Collins condo projects. ‘It’s too late to expand our growth management area. We’ve gone from a huge oversupply to undersupply and the market is having a difficult time.’”

From Arizona Newszap. “The big home-price rebound in the Phoenix area may officially be over. For the first time since last summer, the market experienced a month-to-month decrease in the median single-family-home sales price, according to a report from the W. P. Carey School of Business at Arizona State University. ‘Despite the huge price increases between January 2013 and 2014, the total dollars spent on homes here this January actually dropped by 7 percent. This is the second lowest level of demand we’ve seen in 14 years, behind only 2008,’ says the report’s author, Mike Orr.”

“Even though the available supply of homes for sale was up 47 percent from Feb. 1 of last year to Feb. 1 of this year, sales activity plummeted.”

From AZ Family in Arizona. “It’s a case of supply and demand. Many people are looking to sell, but not a lot of people are looking to buy. In fact, many houses are sitting on the market for months. ‘It’s become more of a buyer’s market,’ says Michael Orr, author of the report. ‘The advantage lies with the buyer,’ he says.”

“Prices are dropping drastically in some parts of the Phoenix area, in an attempt to attract the pickiest buyers. ‘January is usually the quietest month of the year for sales, but this January was far weaker than January 2012 and 2013,’ says Orr.”

“At Hunt Real Estate ERA, realtors call it unprecedented. ‘It’s great when I’m working with buyers now, because we have all this inventory to choose from,’ says Taylor Pfeifer. ‘In the last 24 months was saw prices increase by about 20 percent, and that kind of growth is not sustainable.’”

The Phoenix Business Journal in Arizona. “Bobby Lieb, a broker at HomeSmart International in Phoenix, said he’s seen a slowdown in buyer activity. ‘Because the inventory has doubled now, they’re not in a hurry to buy right now … what I’m telling sellers is you have to price your home right,’ Lieb said.”

Bits Bucket for March 10, 2014

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