January 8, 2015

Seeing A Buyer Push Back

The Houston Chronicle reports from Texas. “After accelerating for the past several years, Houston-area builders will tap the brakes on new home construction in 2015, a prominent economist told a sold-out crowd. Mark Dotzour, chief economist and director of research for Texas A&M University’s Real Estate Center, said he expects builders to start construction on between 20,000 and 30,000 homes in 2015. Dotzour, who dedicated much of his talk to global politics and the reason oil prices will rebound, stayed away from dire predictions about the local housing market. ‘There’s no chance you’re going to see a generalized price decline with houses in Houston even if home sales fall off 50 percent,’ he said. ‘There’s a lot of risk, but it’s not the end of the world,’ he said. ‘Try to avoid getting too heavy in debt.’”

From Crain’s New York. “After three super-heated years, the market for the city’s priciest new condominiums appears to be cooling off a bit. In recent weeks, signs of the chill have even popped up at One57, the bellwether of the nosebleed niche. ‘We have some new developments that are beautiful but are aggressively priced, and we’re seeing a buyer push back,’ said Stephen Kliegerman, president of Halstead Property Development Marketing, who pins much of the blame on supply. ‘There is a lot of product coming out at the high end of the market, and buyers in some cases feel it’s in their best interest to wait and see.’”

The Daily Business Review in Florida. “New numbers from the MLS and Miami Association of Realtors suggest the tide might be turning for older properties that prospered from the lack of new inventory when developers stopped building in the wake of the housing crash. After months of rapid growth, Miami-Dade County home sales declined 9.2 percent in November. Especially hard hit were condominiums, where sales dropped 16 percent to 1,077 units compared to 1,274 a year earlier. Marketers are now at work selling more than 16,000 condos in 90 projects, with deals sealed on more than 64 percent of the units and average prices around $820 per square foot, according to market data from Condo Vultures LLC and the Realtors association.”

“Meanwhile, nine towers rose last year in a bustling Miami corridor east of I-95, offering 981 units. Another 66 projects with nearly 9,600 units are under construction, while 126 towers with more than 18,000 condos are in the development pipeline. Buyers continue to gravitate to new high rises, but marketers like Deniece Williams say their projects offer millions of dollars worth of upgrades plus large floor plans from an era when developers offered more to stimulate a sluggish market. ‘We were in a weird place,’ said Williams, president of DW Connect Inc. ‘Now as we sell more, we can diversify the buyer base. Investors are the first to test the water, but as you sell more units, you get more end users. That’s really where this project is going. We’re getting more end users who are being priced out of Brickell.’”

The Bend Bulletin in Oregon. “The lure of living in Bend will continue its pull on homebuyers in Oregon and beyond, and the price to buy those homes will continue to climb, just not as fast as it has the past two years, say two homebuilders in Central Oregon. Luke Pickerill, marketing manager at MonteVista Homes. Pickerill tracks the figures associated with sales of homes in Bend in the $200,000-$450,000 price range. ‘Developers are like these wounded animals, and they haven’t had a meal in five years,’ he said. ‘Now there’s this big spread in front of them.’”

“The average price for homes of all sizes and listed for sale in Deschutes County in November 2014 had risen by 12 percent to $467,000 over listed home prices in November 2013, according to data from the Multiple Listing Service available on the Central Oregon Association of Realtors website. Pickerill, talked of rising home values in terms of the price per square foot. On the east side, he said, that number rose $18 per square foot in the past year, from $140 to $158. For an 1,800-square-foot single family home in Bend, that’s a difference of almost $33,000, Pickerill said. ‘Break that down to the lowest common denominator,’ he said. ‘That’s 65 percent of annual income (in Bend) each year. That’s a substantial number.’”

“The median income in Bend in 2013 was a little more than $53,000, according to the U.S. Census Bureau. ‘The challenge is, who’s going to be able to afford a house?’ Pickerill said.”

The Gazette in Colorado. “Single-family homebuilding permits issued by Regional Building - a yardstick to measure the pace of construction - totaled 2,438 last year in El Paso County, a nearly 9 percent drop from 2013, the agency’s report showed. Some homebuilders probably built too many speculative homes - those without committed buyers - in 2013 and pulled back last year, said Todd Anderson, president of Challenger Homes in Colorado Springs. ‘I think we all went into 2014 thinking that it was going to be a 10 percent growth over 2013, and the opposite happened,’ Anderson said.”

The Arizona Republic. “Homebuilders cut their spending on metro Phoenix land during 2014 as new home sales fell. Last year, builders spent $510 million on Valley land, according to Scottsdale-based Land Advisors Organization. That compares with $709 million in 2013 — the most spent on land by home builders in the Phoenix area since the housing boom of 2004-06. Through November, new-home sales in metro Phoenix were down 10 percent from 2013’s pace, according to RL Brown Housing Reports. And housing analysts RL Brown and Greg Burger, publishers of the report, don’t think December new home sales or permits will see a big ‘bounce.’”

“In the spring, the recovery of the Valley’s home-building market appeared to be finally under way. Then new-home construction began slowing again over during the summer. Builders have been offering deals including no payments for a year and discounts of 10 percent to 20 percent on houses already built as they try to sell inventory.”

The Charlotte Observer in North Carolina. “The city of Charlotte’s tentative deal with Bank of America and Wells Fargo to erase $17.6 million in NASCAR Hall of Fame debt has left some homeowners angry after they said they struggled to restructure their loans and fight foreclosure. Jill Fletcher of West Palm Beach, Fla., said she has been trying to keep Bank of America from foreclosing on an investment home she and her husband bought in the Ballantyne area in 2006. She said she would be happy with a deal similar to what was given to the NASCAR Hall of Fame.”

“‘If they would just take off the interest, that would help,’ Fletcher said. ‘They are still trying to foreclose on us, and we are still trying to fight them.’”

The Milwaukee NNS in Wisconsin. “The financial crisis that encircled the globe in 2008 brought devastating levels of home foreclosures to Milwaukee’s central city neighborhoods. The effects are continuing to be felt today as the city and many residents struggle to recover. Before the housing bubble burst the city typically owned fewer than 100 foreclosed residential properties at any given time. Today, the city owns 1,100 foreclosed homes, according to Aaron Szopinski, Milwaukee housing policy director. He estimates that banks own an additional 1,500 foreclosed properties. And there are approximately 2,800 vacant homes throughout the city, many of which could be foreclosed soon if the owners don’t pay their mortgage or taxes.”

“Boarded up and in disrepair, today they consume police and other city services to provide minimal upkeep such as mowing the grass and shoveling the snow. Most are red ink in the city budget since they are no longer on the tax rolls. Washington Park resident Bobby McQuay Jr. said the neighborhood used to have the occasional boarded-up home. But when foreclosures and home demolitions started occurring in previously stable parts of the neighborhood, ‘that’s when you knew something really bad was happening.’”

Bits Bucket for January 8, 2015

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