A Stark Reminder That Not All Investments Pay Off
Real Estate Weekly reports on New York. “As late as a year ago, most real estate experts scoffed at the notion that New York’s luxury condo market is heading for a bubble. But in the past months, opinion has shifted noticeably as more and more new luxury towers are being announced. At a panel at last week’s NYC Real Estate Expo, most industry leaders agreed that luxury condo development is heading in the wrong direction. The most vocal critic was Ofer Yardeni, head of development firm Stonehenge. ‘Condo development is on life support,’ he told a packed audience at the Expo, adding that the much-touted luxury condo market on 57th Street ‘has just stopped.’”
“Last month, Extell Development’s Gary Barnett told Crain’s New York Business that he believes the luxury market may be nearing a dip. ‘We’re not there yet, [but] I think we’re seeing the beginnings of a slowdown,’ Barnett said during a tour of a model apartment at One57, where a penthouse is reportedly in contract for $90 million. A full pipeline of development could create an over-supply of luxury homes that would cause the entire market to contract, the developer believes.”
The Boston Globe in Massachusetts. “A year ago, it seemed nothing could stop the Massachusetts housing market recovery. Flash forward to today: Sales are down, foreclosures are up, and buyers are walking away from pending deals. Construction of new housing is falling again. To top it off: Single-family home prices in September fell compared with the same month in 2013, the first such price decline in two years, according to the Warren Group.”
“With prices in many local markets rising quickly in previous years, some buyers have hit a price wall, drawing the line on spending extra for post-sale repairs, said Steve Hussey, a home inspector and licensed real estate broker in Boston. ‘They feel they’re already paying too much and just walk away from deals and then that property goes back on the market again,’ he said.”
The Press Democrat in California. “Sonoma County’s home sales continued to trend lower in October. The county’s median price last month declined 2.2 percent from September, to $485,000, but still remained 6 percent higher than a year ago. In recent months some sellers have encountered buyer resistance and eventually reduced their initial asking price, said Brian Connell, managing broker at the Santa Rosa Mission office of Coldwell Banker. ‘It’s because the property was priced too high in the first place,’ he said.”
“Only 6 percent of October sales involved financially distressed properties, compared to 48 percent three years ago. Even so, the county still has plenty of homeowners facing financial troubles and the threat of foreclosure, said Brenda Alarcon, an agent with Bradley Real Estate in Santa Rosa. ‘There still are people in distress,’ she said. ‘They’re just a few payments away from going under.’”
The Orlando Sentinel in Florida. “The good news on the foreclosure front for Metro Orlando during October was strong signs of recovery. The bad news: The region ranked second nationally for its foreclosure rate, a new report shows. Orlando real estate agent Matthew White, of Sloane Realty, said Orlando’s real estate market might have a slower comeback than that of coastal areas that have plenty of vacation rentals near the beaches. Vacation homes were the first thing that owners left behind during the recession but they became the target for buyers nationally after prices bottomed out. ‘If you’re in financial trouble, the first things I would let go is my second home,’ White said.”
Cronkite News in Arizona. “Wilson Gee, owner of the Ahwatukee Lakes course, let the course go fallow because the water bills were too high. Then he became embroiled in a years-long ongoing dispute with angry homeowners who’d paid premium lot prices to face the golf course. Gee wants to convert the dead golf course into homes, and the homeowners are threatening to sue him. Broken ball retrievers and trash litter the landscape, a stark reminder that not all investments pay off. Barbed wire fences ring the lakes.”
“Ben Holt, 74, has lived on the Ahwatukee Lakes golf course since 1998. He played there three times a week with 11 golfing buddies. Now the golf course is dead. ‘All these people paid a premium for these lots because they were on a golf course.’ Holt says. For now, Gee says he just wants to sell his dead golf course property. He’s sympathetic to the residents’ anger, but to him the golf industry isn’t viable anymore. ‘When you look at the business end, it’s very difficult. Sometimes we’re cutting our own throat just to survive, so everyone is dropping prices,’ Gee says.”
The Ottawa Citizen in Canada. “Ottawa’s condo market — until recently a glittering star in the housing industry’s sky — is tarnished these days. A glut of unsold inventory is the major cause, according to Canada Mortgage and Housing Corporation’s most recent housing outlook for Ottawa. Calling the slippage in condo sales a ‘notable drop,’ PMA Brethour Realty Group’s Patrick Meeds says reasons for the decline include slowing purchases by all-important first-time buyers who, faced with poorer job prospects, are being cautious. As well, investors are buying less. Meeds says they’ve bought a lot in previous years and may be both maxed out financially and scared off by still-increasing prices.”
