July 29, 2014

Sellers Have Come Out Of The Woodwork

The Orange County Register reports from California. “Mike Shapiro has an uneasy feeling, one that’s refreshingly surprising for a real estate brokerage owner coming off a record month. Shapiro is chairman of Hom Sotheby’s International Realty, a Newport Beach-based operation with a network of upscale-oriented brokerages stretching from Los Angeles’ Westside through Orange County’s beach towns and out to Palm Springs’ desert enclaves. In June, Hom agents sold a company-best $325 million in property. Shapiro is stunned that it looks like July’s projected closings will be roughly half that sum. One month doesn’t make a trend, he notes. But the sharp drop, paralleling other hints at economic anxiety, is, if nothing else, thought-provoking.”

“Shapiro, who in a previous career traded stocks, wonders if recent skittishness among Wall Street traders bubbled over into real estate. ‘Something is up … I don’t know what,’ the 51-year-old executive says.”

The Union Tribune. “Q: Halfway through 2014, what has surprised you so far in the housing market? Bill Davidson, president of Davidson Communities: ‘This recession has been unlike any economic downturn I’ve experienced in my career. The housing market has traditionally led the recovery. The traits and values of today’s Millennials are different from previous generations, in direct response to this disastrous recession. Not committing early to family formations, trouble finding good paying jobs, and, after witnessing what happened to their parents since December 2007, they’re skeptical of real estate. They are staying flexible, free and cautious.’”

“Kurt Wannebo, real estate broker and CEO of San Diego Real Estate and Investments: ‘The slowdown in sales and appreciation were all predicted factors, as we knew that investors would be leaving the market as foreclosures dried up, and sellers with equity who were waiting things out would start to flood the market, slowing the growing prices.’”

The Los Angeles Daily News. “It was supposed to be a breakout year for home sales. But after years of recession that bulldozed the Inland Empire housing market, there are still glitches in the road to recovery. The first quarter of the year looked promising, but it has come to full stop, said Redlands Realtor Perrie Mundy, a 30-year industry veteran, primarily because people are still worried about keeping their jobs. ‘It’s just at a standstill. We have no inventory,’ she said. ‘I think there is just so much uncertainty in our whole economic picture. Everyone wants it (the market) to be healthy and march along but there is a lot of uncertainty and people are wondering if they are going to have jobs tomorrow.’”

“Paul Herrera, government affairs director for the Riverside-based Inland Valleys Association of Realtors, believes the market is still adjusting to changes over the last year. ‘I think a year ago you had a lot of buyers who were ready and willing but were getting outbid by investors but that is no longer the case,’ he said. ‘The scenario of having a dozen or 20 or 30 offers come in on a home is gone. The price increase has stopped.’”

The Desert Sun. “Once-soaring price gains for single-family homes slumped in June across the Coachella Valley, two housing reports show. The rapid price appreciation during the first five months — jumping as high as 20 percent from the year before – ended its streak amid a tight inventory and fewer sales in June. The median price of single-family homes sold in the nine desert cities was $382,400, according to the Palm Desert-based California Desert Association of Realtors, which tracks properties through its MLS. That’s a 1.7 percent drop from the $389,000 in June 2013.”

“‘The market will correct itself, and that’s what we’ve been going through,’ said Mark Hilgenberg, a Keller Williams agent based in Rancho Mirage. ‘You will see prices rise, but not at the rate that they did.’”

From SCV News. “The median single-family home price in the Santa Clarita Valley dipped slightly in June to $481,000 from $485,000 in May, but the figure was still well ahead of last June’s $430,000. ‘I expect prices to keep moving up, but not at the double-digit pace seen last year,’ said Jim Link, CEO of the Southland Regional Association of Realtors.”

“Sales were somewhat more sluggish than Realtors tended to expect. ‘Pricing the property correctly is the key to a quick sale,’ said Nancy Starczyk, president of the Realtor group’s SCV Division. ‘Homes are taking longer to sell now, buyers are much more selective, and the pool of prospective buyers shrinks as prices move higher. The market is highly competitive.’”

“Some sellers have come out of the woodwork, though. As of June 30 there were 706 homes listed for sale on SRAR’s MLS, that’s 65 percent more than a year ago.”

The Signal. “Home sales sputtered slightly in June, although the increasing number of existing homes listed for sale are beginning to pull the Santa Clarita Valley out of the ‘inventory drought’ it had been in during the recession. Increased inventory is giving buyers slightly more leverage to negotiate. ‘Sellers have tried to continue the rise in prices from last year and there is some ‘push back’ in the market, meaning the buyers overall are not biting at the higher prices,’ said Dwight Hawkins with Realty Executives.”

“In the past seven days there were 100 new listings and 110 prices changes, and all sales prices went down except on 17 homes, Hawkins said. ‘We are seeing more inventory than has been on the market for a while in the SCV cities,’ said Connor MacIvor with Re/Max.”

“Other factors slowing home sales in June include fewer buyers qualifying as a result of stricter lending requirements, and appraisals still coming in too low to match the seller’s listing prices, said Bob Khalsa with United American Realty. The conservative appraisal is causing some blowback, Hawkins said. It causes some homes to have to go back on the market when a buyer’s lender won’t approve a loan at the agreed-upon sales price. ‘The appraisal comes in low and sometimes the seller and buyer will negotiate again,’ he said. ‘The sellers want the buyers to bring in money over the appraisal, and sometimes they can’t come to terms.’”

“One sales number did spike, however, and that was for properties listed as a short sale. Unlike a traditional home sale, in a short sales the seller owes more on the mortgage than the home is worth on today’s market. Short sales jumped to 9.1 percent of the total sales in June, up from 4.6 percent in May.”

“‘We are now seeing those who have been trying to hang on to their homes by the tips of their fingers losing their grip and finally short-selling,’ said Sam Heller with Keller Williams VIP Properties. ‘They (the sellers) tried to wait for the market to come up to cover their current mortgage amount, plus cover selling closing costs. Although the rise in prices was faster than many expected, they were not fast enough or high enough to save everyone.’”

A Dark Cloud In The Distance

The Gainesville Sun reports from Florida. “Jennifer Beguiristain plans to be in Gainesville at least three more years to work on a master’s degree in speech pathology, so she traded in her $700-a-month apartment for a $988 mortgage payment and arranged to rent out two rooms for $400 each. The 27-year-old recently closed on the four-bedroom, 1,500-square-foot house in northwestern Gainesville for $139,000 with a 5 percent down payment. ‘I just feel like, renting, you’re throwing money out of the window,’ she said.”

“If she gets a job out of the area when she is done with graduate school, Beguiristain likes her chances to make money on the property. ‘The good thing about a house in that area is I do have the option to sell or rent it since it’s near Santa Fe (College) and the values are going up, so I think it was a very good investment,’ she said.”

“Matt and Hallie Johnson recently bought a three-bedroom, 1.5-bath home in Micanopy on a USDA loan with 100 percent financing after Hallie was accepted into the UF veterinary school. The Johnsons were paying $700 a month for a condo and wanted instead to put that money toward a $810 mortgage payment. ‘When you’re paying rent, you don’t have to worry about lawns, so we really didn’t have any financial burden in terms of taking care of the place, but I knew that home equity and being able to purchase our first home would allow us to put that monthly income of rent toward something that might actually make us some money in the future,’ Matt Johnson said.”

The Sun Sentinel. “More than 4,000 coastal condo units are coming to Broward County as developers trying to capitalize on an upbeat housing market. The number of units completed, under construction or planned has nearly doubled over the past year, according to the database created by the CondoVultures consulting firm in Bal Harbour. Some analysts wonder whether that’s even enough to satisfy demand from wealthy empty-nesters, retirees from the Northeast and opportunistic foreign investors.”

“‘People don’t want the hassle of mowing the lawn or maintaining the roof,’ said Dennis Eisinger, co-developer of a handful of boutique condos in Las Olas Isles, east of downtown. ‘And right now it makes much more sense to buy than rent.’”

“To be sure, Broward is no Miami-Dade County, where more than 27,000 units are completed or in the pipeline, prompting some market watchers to wonder whether Miami-Dade is destined for another downturn like the one that devastated the area from 2006 through 2011.”

The News Press. “Two of Southwest Florida’s biggest builders say condo skyscrapers could rise again here as the economy improves and inventory tightens. But it’s not clear that potential buyers are ready to shell out for the high life in Southwest Florida at the prices they’d have to pay, some say. ‘The problem is the new condos being built in Florida have primarily been contracted by high-end investors, who are predominantly interested in south Florida although there are some in Sarasota and Orlando,’ said Jack McCabe, a Deerfield Beach-based real estate consultant. ‘One of the worries I’ve heard is that the target pool of potential buyers is really retiring baby boomers,’ he said. ‘That west coast area between Fort Myers and Port Charlotte doesn’t have the attraction for major builders.’”

“The towers in downtown Fort Myers were conceived mainly during the last days of the real estate frenzy that gripped Lee County in 2004 and 2005. Some never got off the ground when the market crashed in early 2006, and even builders who managed to complete a project often were deserted by buyers who walked away from their deposits as prices plunged. Where demand is strong, builders are putting up a lot of towers, McCabe said, noting that statewide there are 227 new condo projects with almost 40,000 units announced or under construction. Most of those are in south Florida, he said.”

“As the towers return, the question arises whether coming years will see a repeat of the first decade of the century, when a frenzy of high-rise activity led to a crash in 2006. ‘I definitely think it’s going to happen in south Florida, maybe in Sarasota,’ McCabe said. ‘The people here can’t afford them. Builders are relying on out-of-state and out-of-country buyers.’”

The Orlando Sentinel. “The once-sizzling home-sales market has cooled off this summer in the Orlando area as sellers face increasing competition and buyers no longer have to wait in line with investors to buy houses. The number of listings has ballooned. In June 2013, about 7,600 houses were listed in the core Orlando market, which primarily covers Orange and Seminole counties. It’s still considered a seller’s market, but last month the area had more than 11,500 listings, according to the Orlando Regional Realtor Association.”

“One shift that has just started in Orlando could help determine future prices: Investment groups are bundling the single-family homes they own and trying to sell them in bulk. At least some of those groups are trying to sell to other real-estate companies that want homes for rental income. Last week, for example, a Naples-based group offered a portfolio of 43 houses in Orlando, Deltona, DeLand, Daytona Beach, Mount Dora, Sanford and Apopka for a total price of $3.1 million.”

“The prospect of investors selling off properties and lenders auctioning off their foreclosures could further increase the supply of home listings and reduce prices. ‘When there’s too much inventory on the market, there’s a dark cloud in the distance,’ said Orlando resident Justin Stamper, who has bought and sold about 90 foreclosed homes since the recession for Investment Homes Direct. ‘If the [investor groups] do unload their inventory, prices are going to go down. If they don’t, then prices will rise steadily.’”

The Palm Beach Post. “Aging foreclosures continue to linger in Florida’s court system with 33 percent of Palm Beach County’s backlogged cases at least two years old. According to new data from the Florida State Courts Administrator, the 15th circuit has 15,195 foreclosure cases pending, with 5,005 topping the 730-day mark. Statewide, 55,798 foreclosures are two years old or older. The total number of pending cases statewide is 185,823.”

“While new foreclosure files have fallen to levels more common pre-real estate crash, some foreclosure defense attorneys wonder whether there won’t be an uptick soon. Wellington attorney Malcolm Harrison said banks are struggling to adjust to new regulations issued by the Consumer Financial Protection Bureau. ‘I have met with clients who have not made payments in over two years and who still have not received foreclosure papers,’ Harrison said. ‘The cases will eventually be opened against them but only when the old cases are resolved and the banks know how to comply with the new regulations.’”

Bits Bucket for July 29, 2014

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