September 4, 2014

Speculators Can’t Be Choosers

The Real Deal reports from New York. “With the New York City luxury condominium market on a long hot streak — resales of condo units are now trading at a 19-year high — developers are rethinking traditional ways of doing business. One dramatic shift: Builders are increasingly plowing ahead with condo projects without putting together a fall-back plan to turn a property into a rental. The meteoric rise in condo prices isn’t the only reason developers are casting back-up plans aside. ‘Since the current Manhattan development math largely only works as condo, I’m not sure how a plan B would be possible in this period,’ said Jonathan Miller of appraisal firm Miller Samuel. ‘With the going-in land cost at record levels, a condo project is generally not feasible as a rental or a hotel.’”

“If the property market were to take a header, developers of condos might have a struggle with lenders to hold on to their projects. ‘The out-of-pocket money the developers and their equity partners would have to contribute until they can sell could be substantial, based on the amount of rent they receive versus the carrying of common charges and taxes,’ said Andrew Gerringer, managing director at the Marketing Directors.”

AM New York. “The Manhattan condo market saw a spike in the number of available units and prices in July, according to StreetEasy. Costs are now at a nineteen year high. The median sales price in July was close to $1.4 million, a 14.4% jump from the $1.2 million median price during the same period last year.”

“The real estate site’s last report found the average asking price for condos and co-ops during the second quarter of 2014 was $1.24 million. Home hunters looking to get a bargain on those units will have to save up. StreetEasy’s latest report said 45.3% of the units listed in July were priced above $1.9 million and only 23% were priced below $914,000.”

The Gothamist in New York. “New York YIMBY has published renderings of the new residential tower planned for 125 Greenwich Street, rising to a ridiculous 1,356 feet tall and becoming the largest residential tower in all of Lower Manhattan. Shvo’s tower will rise to 77 floors, which considering its height, isn’t that many. Why not more floors you ask? Because this condo tower will have some truly insane ceilings; some apartments will be as high as 24 feet.”

“Three floors in the tower will be devoted to ‘maid’s rooms,’ while the lower floors will become a mix of retail space and amenities for the building’s many actual residents. The incorporeal residents, those oligarchs who will buy apartments in the tower without any intention of actually living there, will be missing out on the outstanding view of the harbor. It’s a shame they never visit their 24-foot high walls, which were honestly just made for a Dan Flavin installation, but speculators can’t be choosers.”

The Boston Globe in Massachusetts. “Lenders started 702 foreclosures in July, a 72.5 percent increase from the same month a year earlier, the Warren Group reported. Year-over-year, foreclosure starts have increased for five consecutive months. Through the first seven months of the year, they are up 20.2 percent from the same period in 2013.”

“Cassidy Murphy, editorial director of the Warren Group, said the jump in foreclosure starts doesn’t indicate a return to the problems of several years ago, but rather lenders resuming actions that they delayed last year while waiting for new rules to be clarified. ‘Lenders are more comfortable moving forward with foreclosures from a legal standpoint,’ said Murphy.”

The Providence Journal in Rhode Island. “Despite falling numbers of distressed-property sales in Providence, the city still has a distressed-property problem. The City of Providence has identified about 650 vacant properties. Some of the city’s vacant properties are ‘zombie foreclosures’ created when an owner has abandoned a home, but it has not yet been foreclosed by the lender that holds the mortgage. Banks may be slow in foreclosing because they don’t want to realize the loss on their books, according to City Solicitor Jeffrey M. Padwa. The foreclosure may also be avoided because the lender does not want to become legally responsible for paying taxes or assuming other ownership costs.”

“In other cases, investors who bought foreclosures at rock-bottom prices leave them boarded up because they are uninhabitable, but then don’t want to spend the money to rehabilitate them, and instead plan to hold them until prices rebound and they can make a profit. ‘We have a huge amount of vacant, abandoned and foreclosed properties that need to be digested,’ Padwa said.”

From “Keith Ludden looks out his living room window and worries about the foot-tall grass, peeling paint and other obvious signs that the house across the street in his otherwise well-kept neighborhood is vacant could attract vandals, thieves and varmints. He worries that the unmaintained house, and others like it in neighborhoods around the city, not only lower the value of the homes near them, like his, but also could act as a deterrent to people and businesses considering a move to Augusta.”

“One of the challenges is within the foreclosure process ‘there is that weird gray area where no one wants to take responsibility, where the house or property is in limbo with who owns it,’ said Ward 2 City Councilor Darek Grant. ‘It goes on for a year or so. You start to see a lot of property like that fall into disrepair. It’s a problem. It can become a public safety issue, and it drives down everyone else’s property values.’”

“Tom Connors lives next to a Hutchinson Drive home in the city’s large Mayfair neighborhood, which he said has been empty for the last year. Connors said another neighbor is trying to sell his ‘immaculate’ home near the vacant home, and he’s concerned anyone coming to look at his property to consider buying it could be scared off by the vacant, unmaintained home they’ll pass just before they get to the one that’s for sale. ‘There are homes like this in every neighborhood in Augusta,’ Connors said. ‘There was one on Windy Street that was vacant for a couple of years, that had water in the basement and raccoons living in the garage.’”

From North “Seven years after the meltdown of the subprime mortgage market, New Jersey continues to be a hotbed of home repossessions by lenders. In West Milford, homeowner Paul Onder has been in a stand-off with debt collector Select Portfolio Services for four years: Who owns the mortgage? He said he hasn’t made a payment on his $450,000 debt consolidation loan since 2010. ‘They want me to pay money? Where is that money going?’ he said.”

“Disputes like these could multiply in the months ahead as the numbers of new residential foreclosure filings continue to rise. New filings in New Jersey in the 12 months ended June 30 climbed 38 percent, to 47,534 filings from 34,347 the previous 12 months, according to the New Jersey Administrative Office of the Courts in Trenton. In the year ended June 30, 2012, there were 12,341 foreclosures filed.”

“Meanwhile, Onder remains in his West Milford home while his standoff with Select Portfolio Services grinds on. ‘They are paying my taxes, and they are paying my insurance,’ he said. ‘All they are doing is threatening because they have no leg to stand on.’”

The Valley News in Vermont. “Vermont is the only state in the nation that saw a drop in housing prices for single-family homes in the four quarters leading up to winter 2014, according to the federal Housing Price Index. Jeff ​Carr, the governor’s economist, took the grim housing index, along with several other factors, into consideration when they downgraded the state’s revenue forecast in July. The drop in housing prices at the beginning of 2014 is ‘of concern,’ Kavet said, and they’ll be watching closely to see if it continues to decline for the rest of the year. ‘Even one more quarter would add to the concern,’ he said.”

“Staige Davis, CEO of Lang McLaughry Real Estate, sees the housing price index decline as a warning sign. He agrees with analysts who point out that Vermont’s real estate market doesn’t have as much ground to gain because the state’s housing prices didn’t fall as far as many other states during the recession. But that doesn’t allay his concerns about the uncertainty he’s seeing among buyers. He also said a high number of homes are for sale. ‘It’s not a wonderful market,’ Davis says.”

Bits Bucket for September 4, 2014

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