November 24, 2014

Hearing The Word Oversupply Just About Everywhere

The Los Angeles Times reports from California. “By most measures, the housing market these days is a bit sluggish. But the high end is hopping. Luxury home sales in Southern California are hitting levels not seen in decades. Sales worth $10 million or more are on pace this year to double their number from the heights of the housing bubble. The number of homes bought for $2 million or more in recent months is the highest on record. Sales have been brisk, said Joan Marcus Colvin, New Home’s senior VP of sales, marketing and design, especially at that Newport condo building, the Meridian, where 34 units have sold since February, at an average price of nearly $3 million.”

“That’s without even having a model home to show customers — the site is still under heavy construction. ‘It’s quite a testament to the strength of the high end of the market,’ Colvin said. ‘These were bought sight unseen. We couldn’t even stand people there and show them it.’”

CNN on New York. “Sales of multimillion dollar residential properties are up 120% so far this year, according to CityRealty. Many of this year’s sales have taken place at the new, super-luxury buildings that are popping up in neighborhoods just south of Central Park, the Upper East Side and in Chelsea, said Pam Liebman, CEO of Corcoran Group. The cost of acquiring land to build on in Manhattan is so sky-high that builders are aiming for the very high end and charging many millions for the apartments. ‘That’s the only way the math works,’ said Liebman.”

National Mortgage Professional. “The number of homes for sale continued to increase across the U.S. in October, a good sign for buyers—but with a catch. In many parts of the country, supply increased more among the most expensive homes than low- and mid-priced homes, according to Zillow. In Denver, there were almost four times as many homes available for sale in the upper price tier (priced at $357,900 or more) than there were homes priced in the lowest price tier (less than$219,000). The same was true in many other markets. Dallas, Atlanta, Phoenix and Nashville had at least two times more homes for sale in the top tier than the bottom tier.”

“As the market has cooled, buyers looking for less expensive homes did find some relief in the hottest metro areas, including San Diego, Los Angeles and the Bay Area. In San Francisco, the number of low-priced homes on the market rose by 39 percent, but there were fewer high-priced homes on the market.”

The Arizona Republic. “More owners of metro Phoenix’s high-end houses are trying to sell, but there fewer buyers in the market for a house costing between $500,000 and $3 million. The Valley’s luxury housing market had been bucking the overall slowing trend until recently. In September, 213 houses priced above $500,000 sold in east Phoenix and the northeast Valley. That’s down 10 percent from August and down 7 percent from September 2013, according to housing analyst Mike Orr’s Cromford Report.”

“The report tracks luxury home sales in Scottsdale, Paradise Valley, Fountain Hills, Rio Verde, Arcadia, Biltmore, Cave Creek and Carefree, where most of metro Phoenix’s more expensive neighborhoods are located. Listings of houses priced above $500,000 in these areas climbed to 2,295 in September, up 3.6 percent from August and 19 percent from September 2013. Demand from high-end buyers has enticed more owners of the Valley’s most expensive houses to try to sell.”

The Sun Sentinel in Florida. “Home listings are on the rise across South Florida — especially in the picked-over lower price ranges, a new report shows. In Palm Beach, Broward and Miami-Dade counties, 10,001 for-sale properties were priced below $149,950 in October, a 49 percent increase from a year ago, according to Zillow. Mid-tier and high-end listings also increased, but not by nearly as much as the low-priced properties.”

“Amanda Wilson, an agent for EWM Realty in Broward and Palm Beach counties, said many low-end homes are foreclosures that haven’t been maintained. Some have missing appliances or structural and roofing issues — costs that easily stretch into the tens of thousands of dollars. ‘Finding something that they’re proud to live in is hard,’ Wilson said. ‘Most buyers in that price range don’t have $30,000 or $40,000 that they can put into the house. They’re middle class America. Every penny counts.’”

The Philadelphia Inquirer in Pennsylvania. “I spent the first six months of the year hearing real estate agents complain there just wasn’t enough for sale to satisfy prospective buyers. The supply shortage - that is, a shortage of houses that buyers wanted, houses that were up to date and properly priced - lasted well past the spring selling season ending June 30. And it was widespread. For ‘Town by Town’ in the Sunday Business section, I visited 26 municipalities and neighborhoods in eight counties, and of the 75 real estate agents and builders I interviewed, all but two started the conversations lamenting a shortage of listings.”

“But after the usual summer sales lull ended at Labor Day, Veteran agent Gary Segal, who sells in eastern Montgomery County, and other agents said, folks began listing their houses at a pace Realtors had been hoping for back in the spring. Unfortunately, there were fewer prospective buyers in the fall market than there had been four months earlier, so ‘almost overnight,’ Segal said, ‘the seller’s market became a buyer’s market again.’”

“The dynamic has changed just about everywhere, said Martin Millner, an agent with Coldwell Banker Hearthside in Yardley. ‘There isn’t tremendous buyer demand, and yet more houses are going on the market,’ he said. The high-end market dynamic is changing as well, Millner said. He repeated an observation by a friend of his who sells more expensive houses that ‘it is the worst he’s seen in 35 years.’”

“As I like to emphasize, real estate is local down to the neighborhood and even the block. But I’m hearing the word oversupply just about everywhere in the region now. Where have all the buyers gone?”

Bits Bucket for November 24, 2014

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