November 19, 2014

We May Have Reached An Affordability Tolerance

The Marin Independent Journal reports from California. “The median price of a single-family home in Marin jumped 9 percent in October, to $977,000 compared with a year ago, while sales edged up 2 percent, according to CoreLogic DataQuick. Condominium sales were down 3 percent, with 62 condos selling compared with 64 in October 2013. The median condo price fell 6 percent, to $462,000. ‘We may have reached an affordability tolerance level for condos,’ said Jill Hill of Coldwell Banker. She was suggesting that condo prices may have gone up so high, the first-time and other low-end buyers who turn to this alternative may no longer be able to afford them. It’s (condos) getting out of the reach of first-time buyers in terms of affordability,’ Hill said.”

“Connie Irwin, a Pacific Union agent, said the market slowed more than usual this summer. ‘I have felt in the last few years, people have started listing their properties earlier to get ahead of the curve,’ said Pickrel. ‘Another trend is that people want houses to be turnkey. People who are buying are young and they work really hard to afford these houses and they don’t have time to fix them up.’”

US News and World Report. “The statistics tell us there aren’t as many young homeowners as there used to be. Thirty-six percent of American homeowners are 35 and younger, the lowest on record since 1982, when the census’s Housing Vacancy Survey began tracking homeownership by age. If you graduated from college and flocked to a big city with a high cost of living, like New York City or Los Angeles, your location may be holding you back from purchasing a house. ‘I’m in my late 20s and haven’t bought, partly because I live in the San Francisco Bay Area,’ says Chad Reid, a director of communications for a marketing firm in Oakland, California. ‘I’m not sure I know anyone under 40 who owns here.’”

The Mercury News. “Real estate agents said they’re seeing the market soften as the holiday season nears. ‘It’s been steadily cooling since the summer,’ said Redfin agent Mia Simon, who covers a pricey part of Silicon Valley, from Redwood City to Los Altos. ‘Homes that were getting 15 to 20 offers in the spring are getting three to five, and some aren’t getting any offers at all.’”

“‘We get less offers and less interest,’ said Abby Wentworth of Redfin, who covers the East Bay communities that front the bay. Although there’s more to chose from, some buyers are deciding to keep renting or stay in the place they already own, she said.”

The Sacramento Business Journal. “Speakers at the North State Building Industry Association’s 2015 forecast event offered generally positive predictions — but also said the past year is a good lesson about being too positive. A resurgence of homebuying in 2013 led many in the industry to think 2014 would be better yet. Instead, said residential housing consultant Greg Paquin of The Gregory Group, new-home sales appears if they’ll be virtually flat compared to last year. ‘What’s really obvious at this point in time is supply is outstripping demand,’ Paquin said.”

The Press Enterprise. “For all the talk of housing shortages, watch for stealth companies that bought distressed property at rock-bottom prices to put their holdings back on the marketplace in 2015. One sign of heightened activity is at our doorstep. Mana Investments Inc., a Carlsbad firm that picked up more than 2,700 lots in various stages of development in California in the downturn, revealed plans recently to sell some of its land holdings.”

“In Riverside County alone, Mana is offering 1,480 lots in Indian Palms and Fiesta de Vida of Indio with values expected to exceed $520 million at build-out. ‘We’ve spent the last two years in investment mode, and now we’re rolling into harvest mode,’ said Mana managing partner Orville Power.”

The Atlantic. “Janeen Milhorn and her husband bought their four-bedroom ranch-style house on a quiet street in this Stockton, California suburb in 2004. Then the recession hit, and building stopped. There were overgrown weeds, beer bottles, shopping carts. Discarded children’s toys and car seats and plastic bags. People from all over town would come to get rid of their old mattresses or party at night. There are hundreds of zombie subdivisions like this one scattered across the country. They’re one of the most visible reminders of the housing boom and bust, planned and paved in the heady days where it seemed that everybody wanted a home in the suburbs, and could afford it, too.”

“‘It’s kind of horrible,’ Milhorn said, standing in her front yard, staring out onto the abandoned development next door, as a man on a motorcycle gunned his engine, speeding in noisy circles around the empty streets.”

Bits Bucket for November 19, 2014

Post off-topic ideas, links, and Craigslist finds here.