There Wouldn’t Be A Problem If Prices Had Kept Going Up
It’s Friday desk clearing time for this blogger. “According to the California Association of Realtors, the median home price in L.A. County was $390,000 for February 2014 – up 15.2 percent from the same period last year. In Orange County, the median home price last month was $677,000, up 11.6 percent. Only 30 percent of L.A. County residents can afford a median price home, down from 44 percent last year. In Orange County, it’s down to 20 percent from 34. ‘Much like 2006, 2007, we have limited inventory. Prices are therefore going higher. There are a lot of qualified buyers, which is the key in the market now – unlike we had in 2007. So yeah, we are seeing a frenzy,’ said Real-estate agent Jeremy Shelton.”
“Rising home prices over the past year turned South Florida into a seller’s market. Short sales and foreclosures now are selling for list price and above. South Florida investor Mike Mondelli said foreclosures and short sales once were plentiful, but no more. He said novice investors are flooding the market, often overpaying and depleting the supply of homes. ‘It’s definitely difficult to find the bargains that work,’ Mondelli said.”
“The fear of an impending bubble in Dubai’s real estate market was ruled out long ago, now real estate experts are convinced the residential segment won’t witness any oversupply. In its recent report, HSBC Global Research said that Dubai will see a supply of 90,000 new units by 2018, but the market will absorb fairly easily, even if the population grows less than 5 per cent per year. ‘We assume that 30 per cent of this new supply will be bought by foreigners who intend to use them as second homes, which they will not rent out,’ HSBC states, pointing to Emaar and Damac statements that ‘a large portion of their sales are to second-home buyers.”
“If you have confidence in Mount Isa, now is the time to buy property. Jay’s Real Estate principal Sophie Keily said that as of last week more than 350 properties were on the market. That figure marks a complete turnaround from the property shortage experienced by the city in 2012 and 2013 that forced traditional renters to buy property in order to find an affordable place to live. She said having such a large glut of reasonably priced homes was unusual for the region.”
“‘We have owners out there who have had property for a long time and are willing to sell it for less, because they’re ready to leave town,’ she said.”
“Property consultant Matthew Gilligan said there had been a ‘mini crash’ in South Auckland, and other cheaper areas would also be affected. Property commentator Olly Newland had two clients who bought entry-level properties to do them up and sell, but were stuck with them. ‘People can’t come up with 20 per cent. Even on a $350,000 property, $70,000 is a hell of a lot for a young couple to put together.’”
“A vendor in Massey, who declined to be identified, said the lending restrictions had hit the wrong end of the market. He had reduced the price of his property to just under $400,000, but there were still no takers. ‘It’s made the low end of the property market die. Lower-priced properties aren’t selling at all.’”
“As China’s property bubble shows signs of deflating in some areas, privately held developers are falling by the wayside, victims of a toxic combination of unjustified optimism about the property market and sky-high interest rates. ‘It’s not just Ningbo, it’s Hangzhou, and Nanjing has a problem too. Even Beijing,’ said Zhang Yongmin, director of the Centre for Global Finance at Nottingham University’s Ningbo campus. ‘Real estate has a problem; it’s over built.’”
“Analysts say there are plenty of other companies that have borrowed at punitive rates - sometimes as high as 20-30 percent - on the assumption that property prices would rise faster. ‘There wouldn’t be a problem if prices had kept going up,’ said the chief finance officer of a mid-sized property developer, with projects mainly in coastal provinces.”
“Housing prices in metro Phoenix were down again last month, compared to the month before. That’s according to a new report from Arizona State University. ‘Buyers are out there but they’re not showing a great sense of urgency, and many of them are still struggling to qualify even if they want to buy homes, so it’s creating less than ideal conditions for home sellers,’ said Real estate expert Mike Orr, of the WP Carey School of Business.”
“Attorney General Eric T. Schneiderman will bring his proposed legislation to address ‘zombie properties’ and increasing the number of land banks across New York State to Buffalo. ‘After just over a year, our Homeowner Protection Program is getting real results and helping New Yorkers in danger of losing their homes,’ Schneiderman said. ‘The next step – with new ‘zombie properties’ and land bank legislation – is to take the burden off our cities and towns, and help them recover from an epidemic of vacant properties.’”
“U.S. Census data shows about 10 percent of the housing stock in Erie and Niagara counties is vacant – about 50,000 units.”
“There’s a group of Ormond Beach homeowners battling a zombie home problem. The group has identified at least 300 foreclosed homes throughout the city, and numerous abandoned homes with no paper trail that homeowners simply walked away from. RealtyTrac said there are more than 140,000 homes in Florida that are in zombie mode, or are bank-owned. And zombie homes in Florida are in foreclosure for about 1,095 days. ‘It is an eyesore and it is exactly a zombie home because we don’t even know at this point who owns the homes,’ said Rita Press, president of Citizens for Ormond Beach.”
“A report released last week by the National Low Income Housing Coalition, looked at the annual ‘housing wage,’ the hourly wage a full-time worker must earn to afford a two-bedroom rental home at fair-market rent while spending no more than 30 percent of income. The report found that Vermont’s housing wage is $19.36 per hour, based on $1,007 fair-market rent for a two-bedroom apartment. The state’s minimum wage is $8.73. A Vermonter earning minimum wage would have to work 89 hours a week to afford rent, according to the report.”
“In the United States, the average 2014 housing wage for a two-bedroom apartment is $18.92 — more than two-and-a-half times the $7.25 federal minimum wage, and 52 percent higher than it was in 2000. In no state can a full-time minimum wage worker afford a one-bedroom or two-bedroom rental unit at fair market rent, the report found.”
“Data from the National Association of Realtors shows sales of homes priced below $100,000 dropped 19% during the past year. For homes priced above $1 million, sales rose by 38%. Vacation homes are in high demand, with sales jumping 30% in 2013. That represented 13% of all transactions — the highest level since 2006, which was the last year of the housing bubble.”
“There’s no mystery behind the gilded spending of the wealthy. The value of financial assets has climbed to a new record of $67 trillion, with a major assist from investor-friendly easy-money policies at the Federal Reserve. Many Americans, of course, are feeling no wealth effect at all, since they rent instead of owning a home and hold few financial assets, or none. Renting can actually be a smarter option than buying for some people. Had fewer people bought homes during the housing bubble, the subsequent recession probably wouldn’t have been as severe.”
“Still, a broad housing recovery remains critical to the overall health of the economy, as Fed Chair Janet Yellen has stressed repeatedly. ‘We are trying to make homes more affordable and revive the housing market,’ she said in a recent speech. ‘Our goal is to help Main Street, not Wall Street.’ Main Street is still waiting.”
