December 23, 2014

We’re Going To See The Market Tested

The Associated Press reports on Washington. “Savvy Seattle-area real estate agents have gained an advantage by paying attention to the growing connections between China and Washington state. ‘I’m so glad my mother made me study Chinese,’ laughed property broker Janie Lee, after showing a client from Beijing a $4 million home in the suburb of Medina. ‘I’ve been using it a lot.’”

“Part of the reason for the current increase of Chinese buyers is investment. ‘Chinese currency it’s still a soft currency,’ which is subject to rapid value fluctuations, said Jonathan Zhang, who teaches business at the University of Washington. Purchasing a home in the U.S. ‘is a good way to preserve wealth,’ he added. ‘When you have sudden prosperity, you get excited, you spend it,’ Zhang said. ‘At the same time, you think about how you’re going to preserve it for the future, because it’s not that clear this boom is going to continue.’”

The Boston Globe in Massachusetts. “Looking to buy a home or condo? Interest rates are likely to remain low, while home and condo prices are at least slowing down from their furious, double-digit growth over the past few years, real estate brokers say. If you are in the market for some deluxe digs, you may just hit the jackpot in 2015. Hundreds of trendy and expensive new apartments are poised to open in the new Ink Block project in the South End. It’s just the latest in thousands of new luxury apartments that have opened in downtown Boston over the past few years, with several thousand more on the way.”

“There is already talk of a surplus of luxury apartments, as developers and landlords resort to gimmicks like free rent for the first few months and gift cards to fill empty pads. Look for ever more creative concessions, and maybe even some outright rent cuts, as the number of luxury rentals steadily grows. Developers may also start to convert some of their empty units to condos, helping ease a shortage there, notes David Crowley, director of sales and marketing at Raveis Marketing Group.”

The St. Louis Post Dispatch. “Seven years after the great housing bust, could St. Louis be headed for a glut in upscale apartments? It’s possible, say some real estate players. After a long dry spell, St. Louis is seeing an uptick in construction of multifamily buildings, both condos and apartments, as well as rehabs of existing apartment buildings. ‘There’s a lot of new construction on the drawing boards. It’s kind of unprecedented,’ said Kirk Mills, president of Mills Properties, which owns or manages more than 9,000 apartments around St. Louis. ‘We’re going to see the top of the market tested over the next few years. There will be some people who really get in trouble,’ he added.”

The Arizona Republic. “Metro Phoenix’s home building slump continued in November. In November, 803 new houses sold across the Valley. That’s down 12 percent from a year ago. Builders have been offering deals including no payments for a year and discounts of 10 to 20 percent on houses already built as they try to sell inventory before the end of the year. The slump in construction employment also worsened in November, with the industry losing another 900 jobs. Over the past 12 months, Arizona has lost 4,300 jobs.”

The Oregonian. “A telling chart from the Federal Housing Finance Agency shows that Oregon has fared better than its neighbors in avoiding the biggest problems stemming from the overheating of the housing market and its subsequent collapse. The Fannie Mae profile shows Oregon has 1,336 properties counted as REO — Real estate owned by lenders. But there’s a troubling bulge in the python: 5,330 Oregon properties, or 1.9 percent of all home loans counted, are considered ’seriously delinquent.’ The FHFA defines this as cases in which borrowers are 90 or more days behind in their payments.”

The Springfield News-Sun in Ohio. “Homeownership took a hit in every state in the nation and every county in the Southwest Ohio region in the past decade and in many areas actually accelerated after the Great Recession, a Springfield News-Sun analysis has found. Part of the reason for that the homeownership rate has not turned around, Montgomery County Clerk of Courts Greg Brush, is that the foreclosure process can take two to three years before a property is cleared to a new owner. If it clears. ‘If you would have said in ‘06 when I came in that there are going to be houses that go to (foreclosure) sale that nobody buys, we would have thought you were nuts,’ Brush said. ‘A couple years later, there are a lot of things out there that don’t sell. Then they just sit out there and languish.’”

“Because sub-prime or risky loans were such a large part of new mortgages in the years leading up to 2008, Harnish said, ‘those were the people who got washed away first.’ ‘Last in, first out, so to speak,’ he said. ‘That was part of the decline in the percentage of homeownership. And that really continues to percolate today. Although the volume has dropped somewhat, we still have foreclosures in the pipeline.’”

The Tampa Bay Times in Florida. “At 79, Joseph Oates knows he can’t wait forever to get mortgage help. But he’s beginning to feel like he might have to. In September 2013, the retired railroad worker applied to Florida’s Hardest Hit Fund for a program that would pay down his mortgage by up to $50,000. Finally, last week, Oates got approval from state underwriters. But his application now goes to his bank for review, which could take another six weeks. And he still doesn’t know how much relief he’ll get. ‘Once again, I’m in limbo,’ said Oates.”

“Oates, who worked miscellaneous jobs after retiring from CSX in the mid 1980s, owes $137,000 on his house, which is valued at $82,563. ‘I was hoping to get a $50,000 reduction in my loan because I’m way under water, I’ve been living here almost 20 years, and I’ve always been up to date’ on payments, he said.”

Bits Bucket for December 23, 2014

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