August 3, 2014

It’s As If Someone Had Flicked A Light Switch

It’s Friday desk clearing time for this blogger. “Panelists answered the following: Do you feel positive about the direction of the national housing market? Richard Place: ‘If you own a house you have to feel positive about the trend. One of the reasons you buy a house is to make money off the investment. It’s a no-brainer.’

“Marty Richman: ‘No, I believe that many local and regional bubbles still exist. California housing costs, in general, are way out of line with income. The state has a financial interest in inflated housing prices – that is why they did nothing about the last bubble until it burst.’”

“Did you hear that pop? Listen closely, there it goes again. According to my analysis of MLS data, Boston’s rental inventory last July 15 was 843 units. This July 15, 1,349 apartments are available for rent, up 60 percent. Pop. The Brookline rental inventory last July 15 was 126 units. Yesterday, 168 units. Pop. The South End rental inventory one year ago was 67 units. Now, 118. Adam Mundt, leasing manager at Metro Realty in Brookline, told me, ‘It’s gonna be interesting come August to see what’s left and what desperate landlords start doing to move their inventory.’ Pop, pop, pop, pop, pop…”

“Where did all the billionaires go? After a year of frenzied sales in 2013, high-end condo deals have slowed at several luxe buildings, including One57 on W. 57th St. supply has finally started catching up with demand. Right now, 43 Manhattan units are listed at more than $40 million — a 48% increase from last year and a 126% increase from two years ago, according to StreetEasy. Some said a slowdown in sales may not be the worst thing if it means the market is leveling out from the dizzying heights it reached last year. ‘The last time people went out there and lit their hair on fire to buy apartments,’ said broker Jason Haber of Warburg Realty, ‘we had the biggest crash in a generation.’”

“According to Neuse Rinver Regional MLS figures, 518 homes have been sold in Craven County, down more than 20 percent from the first half of 2013. The Shackelford Report shows there is an 11.4-month inventory of homes on the market. Of them, 6.7 months of availability is in new construction inventory, something that implies slower home construction and fewer jobs. An abundance of foreclosed homes on the market is also contributing.”

“‘I’ve been in business 50 years and the bubble has burst,’ said Whit Morgan of New Bern Real Estate. ‘A lot of retirees want to come to New Bern,’ he said, ‘but the ones from up north who want to come here cannot sell their homes there so they can’t buy here.’”

“A glut of condos in Montreal have fostered ideal conditions for a housing market slump. Marie-Michele Rousseau-Clair put her condo in Rosemont on the market two months ago in preparation for a move to Trois-Rivières. She’s worried because it still hasn’t sold. ‘I’ve had about seven or eight visits. I’ll be really concerned if I don’t have any visitors or calls,’ she said.”

“Remax real-estate agent Mike Abatzidis said there are simply too many condos on the market. ‘I had a condo downtown — it was really hard to sell because they were building brand new condos. A lot of buyers will just say, ‘I want a brand new condo renovated the way I want,’ Abatzidis said.”

“The luxury market in central London was the first to show signs that the city’s residential housing may be cooling. The slowdown in price gains and the prospect of realizing profit tied up in London homes could tempt wealthy foreigners to head elsewhere, economists say. Asking prices for London properties declined for a second month in July as more homes were offered for sale, according to Rightmove. The decline was led by three districts, prices in each fell by an average of almost 4 percent in the month. ‘It’s as if someone had flicked a light switch,’ Johnny Morris, head of research at Hamptons, said.”

“Developers sold just 482 condominium units - excluding executive condominiums - last month, a 73.3 per cent drop from June last year, according to the Urban Redevelopment Authority. Savills Singapore research head Alan Cheong noticed that buyers are holding back on purchasing new homes because of ‘all the talk in the market that prices are going to come down.’ But developers have held firm and the launch prices are, in fact, higher than last year’s. ‘Buyers are asking the wrong people for their views on the real estate market,’ added Mr Cheong.”

“Buyers prefer to purchase affordable smaller units, leaving larger units unsold and ‘creating dead pools in the market,’ said Mr Cheong. ‘With the cooling measures, serial real estate buyers would rather spend their money elsewhere, even though they can afford it,’ he added.”

“Ridgefield Town Clerk Barbara Serfilippi reports 14 foreclosures had been filed with her office as of Monday, July 21 — more than in all of 2013. The 14 foreclosures are more than last year, just one less the year before, and not far from the highs found research finance board Chairman Dave Ulmer — 19 in 2011, and 18 in 2010. ‘Some of 2014 we believe to be ‘catch-up’ as banks were stopped from overdoing it in the last couple years,’ he said.”

“Ms. Serfilippi expects more foreclosures are coming. ‘There’s a new law that before they file a lis pendens or a foreclosure, the firm has to file a foreclosure registration,’ she said. ‘Thirty-eight foreclosure registrations from Jan. 1 to July 21,’ she said. ‘There’s 38. And some of these were foreclosed, but there’s still others out there that are pending. I think what’s happened is there were a lot of these pending since 2008, and finally some of the banks are coming out and finally foreclosing on the property. They had so many in pre-foreclosure, and now the banks are finally getting down to it.’”

“The long-term solution to Jackson Hole’s workforce housing shortage needs to involve a dedicated source of revenue, housing experts say. The ideas for solutions come during a summer in which, by many accounts, the housing market is exceptionally tight in Jackson Hole. People are camping or living out of their cars. Businesses are short of staff. The master planning document sets a community goal of housing 65 percent of the workforce locally.”

“But the 65 percent goal won’t be possible by just adding density to town, according to a real estate agent who spoke at a special meeting on housing. ‘We can’t build our way out of this,’ said Brett McPeak, an owner and broker with RE/MAX Obsidian Real Estate. ‘Something needs to change. In 2012 a townhouse on Redmond Street was on sale for $200 per square foot. In 2014 a townhouse just next door was on sale for $400 per square foot. What’s available is ’somebody’s beat up hand-me-down or something brand new with a large price tag on it,’ McPeak said. ‘We seem to be at a sort of an endgame with the housing stock that’s available.’”

“A shot across the Fed’s bow from Simon Johnson, former IMF chief economist and bank critic, on the surface looks to be a good bit of news. Johnson, in a recent Project Syndicate article, warns that the notoriously cloistered central bank is overly confident about its political position. His warning is clear: the Fed is more powerful than ever despite having been wretchedly incompetent in the runup to the crisis. The result is a flaccid economy, bubbles in many financial assets and destabilizing hot money flows sloshing through developing economies.”

“In other words, the Fed has become ‘independent’ in the worst possible way. It shirked its oversight duties prior to the crisis and now it thumbs its nose at performing tasks clearly and explicitly assigned to it under Dodd Frank. So if we were to have Audit the Fed implemented in its original version or have other right-left initiatives to bring a central bank that can’t shoot straight to heel, that would be a welcome development. The disconcerting part, as Johnson indicates, is that the Fed appears to think that it is invulnerable.”

Bits Bucket for August 3, 2014

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