July 23, 2014

The Hedge Funds And Cash Buyers Have Gone

The Miami News Times reports from Florida. “It’s not exactly a secret that Miami’s latest unhinged condo boom is being fueled by foreign money, but the exact number of new residential units being bought in downtown by those from abroad is eye-popping. According to a not-yet-released report from consulting firm Integra Realty Resources for the Miami Downtown Development Authority that was obtained early by the Wall Street Journal, ‘90 percent of the buyers of new residential units are from abroad.’”

The Miami Herald. “Sales of existing condos have slumped for three months in a row in Miami-Dade, and prices have moderated in 2014 after years of torrid gains, according to the Miami Association of Realtors. Cash purchases — which often signal investor deals — have been on the decline. ‘We’ve seen a real slowdown in buyer activity in the past few months,’ said Mark Zilbert,CEO of Zilbert International Realty in Miami Beach, whose firm focuses on higher-end coastal properties.”

“The median period of time to sell a condo has increased to 61 days from 44 a year ago, and listings are fetching 94.5 percent of original asking price on average, down from 96.9 percent a year ago, the Miami Realtors said. ‘I don’t think there is anything to worry about at the moment,” said Francisco Angulo, who is residential president of Miami Realtors. ‘Wall Street [similarly] goes up and down. We shouldn’t be panicky.” A bit of stabilization after the protracted run-up in prices is ‘healthy,’ said Angulo.”

“The spurt in condo construction is providing stiff competition for the existing inventory, Realtors say. And a lot more unit owners have put their condos on the market to take advantage of the price increases. The supply of existing condos swelled 34.4 percent to 10,967 units — a 7.8-month supply. Zilbert said among higher-end coastal condos, there is 12 to 14 months’ supply of inventory.”

The Tampa Bay Tribune. “The June housing report released Tuesday by Florida Realtors paints a fairly bright picture of the market here with more closed sales and better median housing prices than the Tampa metro area saw a year ago. And for buyers, there is slightly less pressure, since the cash buyers and the hedge fund companies that were snapping up properties for rental have backed away from the area, one consultant said.”

“‘The institutional buyers — the hedge funds buying everything to turn them in to rentals — and the cash buyers have gone,’ said Tony Gonzalez, a Tampa residential real estate consultant and Realtor for Keller Williams.”

“The area’s residential real estate market is a bit more stable now and buyers have some breathing room to decide what is the best property for them, instead of having to race to the table with an offer, Gonzalez said. Statewide, inventory is up 21.7 percent, with 108,046 single family homes on the market in June, compared to 88,746 in June 2013, Florida Realtors reports.”

The Orlando Sentinel. “In Metropolitan Orlando, foreclosure legal filings increased 20 percent in June from a year ago and the region ranked second nationally for its foreclosure rate in June, according to RealtyTrac. And the amount of activity also increased for nearby Volusia and Polk counties last month from a year earlier. Orlando’s deeper dive into foreclosure during the last year may reflect lenders’ increasing impatience with holding onto the properties. They may be less interested in sitting on vacant residential asset pools at a time when homes are no longer increasing in value as much as they did in the past, said Daren Blomquist, VP of RealtyTrac.”

“‘It’s a reflection that even while the foreclosure starts are down, more people who have been in foreclosure are now going to the auction block and losing their homes,’ Blomquist said. “Certainly the slower home-price appreciation means that banks have less to gain by holding onto foreclosures for a longer period of time.’”

“One thing that is certain for Orlando is that its mounting volume of foreclosures does not indicate that homebuyers who purchased in recent years are the ones getting into trouble now. RealtyTrac analyzed the recent foreclosures in the metro area and found that 60 percent of houses that received a notice during June were saddled with mortgages originated in the boom years of 2005, 2006 and 2007. Of the Orlando-area properties that got foreclosure notices in June, only 6 percent had been financed with mortgages approved during the past three years.”

The Herald Tribune. “Southwest Florida continued to distance itself from the foreclosure crisis in the second quarter, with defaults lower than in the first three months of 2014 and in the same period last year. But because there are more defaults stuck in the local court system that will soon be scheduled for auction, the housing market could see another wave of discounted bank inventory — at a time when tight supply has lifted prices to post-recession highs.”

“‘We had the biggest mess of all of the states, and we still have more foreclosures than anyone else, but the numbers are trending down,’ said Jack McCabe, a Florida real estate consultant. ‘The amount of housing assets the banks are sitting on is amazing.’”

From Florida Today. “‘Zombie’ swimming pools at homes in foreclosure soon morph to algae-caked cesspools, inviting habitats for the species of mosquitoes that spread agonizing and sometimes fatal viral diseases such as dengue fever and chikungunya. Both diseases have been inching in on east Central Florida. This past week, state health officials reported the first cases of chikungunya contracted in the United States: one in Miami-Dade County, the other in Palm Beach County.”

“‘It’s just sitting there, festering,’ said Mary Ellen Maciejczyk, who lives next to a ‘zombie’ pool in Suntree. ‘It’s turning into mud right now. It’s black as tar, and there’s mold on top of that.’ The zombie house next to Maciejczyk’s home is set to go on the auction block in August. But that’s happened before, only to have the sale canceled at the last minute.”

“Zombie houses — abandoned by the owners, but still not reclaimed by banks — pose a daunting challenge to mosquito control, code enforcement and other local government agencies. The problem may have grown worse, county officials say, as some foreclosures dragged on for years. More than 8,100 properties in Brevard are in some form of foreclosure, according to county Clerk of Court estimates.”

“‘It’s a huge problem since the recession started,’ said Chris Richmond, operations manager for Brevard County Mosquito Control. ‘The increase in foreclosures just compounded the problem. They’re everywhere, even in the nice neighborhoods,’ Richmond said of the zombie pools.”

Bits Bucket for July 23, 2014

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