November 26, 2014

The Days of Double-Digit Appreciation Rapidly Fade Away

The Aurora Sentinel reports from Colorado. “While the housing market across the metro region continues to tighten, homes in Aurora are some of the most affordable in the state, according to a new market report released by Coldwell Banker. Average home prices in Aurora sit just under $297,000, which is significantly below the statewide mean of $407,000. Ed Hardey, board chair of the Aurora Association of Realtors, said that the rate of appreciation in Aurora has been staggering. ‘Aurora has seen dramatic appreciation in the past year, and prices show no indication of going down at all,’ he said. ‘The home that you bought six months ago is worth far more today than when you made your initial purchase.’”

From Bloomberg. “Growth in million-dollar home sales is slowing in areas including Miami, Las Vegas and Los Angeles as rising prices and the strengthening U.S. dollar discourage foreign investors who helped lead the recovery. ‘If the domestic buyer doesn’t step in. I wouldn’t be surprised to see the market stall,’ said Peter Zalewski, principal of CraneSpotters, a Miami-based real estate consulting firm. ‘It’s becoming too expensive for foreigners to buy in South Florida at the same pace as previous years. Foreign currencies are weakening against the dollar and local real estate prices are on the rise. It’s creating a perfect storm to push the foreign buyers away, or limit what they can acquire.’”

“Cash deals in the Las Vegas area have dropped in part because investors that helped revive the market by purchasing single-family homes after the crash have pulled back, said Kolleen Kelley, president of the Nevada Association of Realtors. Not only were investors buying low-priced homes to rent out, some were purchasing high-end foreclosures and reselling them for a profit, she said. ‘We don’t have big diversified economy here,’ Kelley said. ‘When the market starts slowing down, it really starts slowing down.’”

Vegas Inc in Nevada. “Southern Nevada homebuilders continue to struggle this year, with lower sales and a rising volume of canceled deals, a new report shows. Builders pulled 514 construction permits in October, ‘much less than we had hoped to see,’ Home Builders Research President Dennis Smith wrote. Buyers increasingly are canceling sales, Smith reported. Buyers backed out of 21 percent of new-home sales contracts in Henderson last month, up from 12 percent in April, according to Smith. In North Las Vegas, cancellation rates jumped to 34 percent from 25 percent in that period; in the northwest valley, it went to 24 percent from 13 percent; and in the southwest valley, it rose to 22 percent from 19 percent.”

The Seattle Times in Washington. “Housing prices showed further signs of cooling in September, with prices falling in the Seattle area and almost half of the cities in the S&P/Case-Shiller 20-city index, officials said. ‘The days of double-digit, home-value appreciation continue to rapidly fade away as more inventory comes on line, and the market is becoming more balanced between buyers and sellers,’ said Zillow Chief Economist Stan Humphries.”

Crain’s Chicago Business in Illinois. “The big-money investors that gobbled up thousands of local homes aren’t as hungry anymore. Institutional investors accounted for 4.7 percent of Chicago-area home sales in the third quarter, down from 7.6 percent a year earlier, according to RealtyTrac. Investor activity peaked at 10 percent of the sales in first-quarter 2013. The question is whether traditional homebuyers can pick up the slack. ‘That’s the only way the recovery can be sustainable, is if more traditional buyers get involved,’ said RealtyTrac VP Daren Blomquist. ‘The good news is the traditional buyer has less competition, but it probably means there’s not a lot of great affordable inventory in that market right now. If there were, the investors would be jumping on it.’”

The Union Tribune in California. “After a sluggish summer, the pace of home price appreciation in San Diego County’s housing market slowed again in September. It continued an intense slowdown in the pace of appreciation from a little more than a year ago, when prices were increasing 21.5 percent annually. At that time, the market’s large gains were driven by investor-led activity like foreclosure resales and fixing-and-flipping. ‘Prices continue to trend upward but most importantly they continue upward at a sustainable rate,’ said Mark Goldman, a loan officer and real-estate lecturer at San Diego State University. ‘We all want our houses to double in value, the problem with that is you end up with a market that’s going to collapse on its own weight.’”

The News Miner in Alaska. “Numbers collected by the Fairbanks North Star Borough show 150 foreclosures occurred through September of this year in the Fairbanks Recording District. That’s up from the 137 foreclosures for the same time period last year. In 2012, the number of foreclosures through September was 117. In 2011, the number was 102. Laura Burke, executive director of Fairbanks Neighborhood Housing Services, said her agency, which provides low-interest loans, is seeing a slight increase in the number of late payments, and she is bracing for harder times to come. ‘There is something in the air,’ she said. ‘I think it’s going to hit us again pretty hard.’”

“Audrey Foldoe, a real estate professional in Fairbanks for more than 30 years, said some of the foreclosures are a result of people simply walking away from their mortgages. Some people bought a home when prices in the real estate market were high about 10 years ago but now can’t sell their home for what they owe on the mortgage, she said. ‘One of the biggest factors is the fuel,’ she said. ‘A lot of people operate month to month,’ Foldoe said. ‘Any little thing is going to throw it off.’

“The Fairbanks housing market is strong with a large inventory and low interest rates, she said, making it even harder for strapped sellers to find a buyer. Sellers have to make concessions.”

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