January 15, 2015

Bumping Up Against An Affordability Problem

The Orlando Sentinel reports from Florida. “In November, the core Orlando market had a 5.4-month supply, according to Orlando Regional Realtors Association. In spring 2013, the area had half the inventory that’s now offered for sale. The supply of houses on the market in Orange and Seminole counties is at its highest level since 2011 and nearing the six-month mark that is considered the point at which the market shifts from favoring sellers to giving the advantage to buyers. Laurie Millman is not a first-time buyer, but she said the low interest rates recently helped her purchase a newly built home for $210,000 in Lake County’s Sorrento Springs community. And the pickings were plentiful, she said. ‘I think we’re reaching the point where the market is getting saturated with people trying to sell,’ said Millman.”

The Virginian Pilot. “Existing home sales in Hampton Roads last year lost the forward momentum that had been building slowly since 2012, according to data. Active listings have increased every month since August 2013. In December, 10,450 homes were listed across the region, compared with 9,836 the same month in 2013 - a 6.24 percent increase. December’s sales brought the total number of existing homes sold in South Hampton Roads last year to 13,216 - down 1.1 percent from 2013, according to data from the Virginia Beach-based Real Estate Information Network.”

“Compared to the previous two years, ‘you could certainly say that in terms of sales, the housing recovery has slowed down,’ said Vinod Agarwal, Old Dominion University economics professor. ‘Things should have gotten better.’ Agarwal said the lack of consistent job growth likely took the wind out of the market’s sails last year.”

The Orange County Register in California. “The Orange County housing market ended 2014 on a so-so note, with home prices up a little, sales trending downward and another lackluster year forecast for 2015. The median home price – the price at the midpoint of all sales – was $591,000 for housing deals that closed in December, CoreLogic DataQuick reported. That’s a gain of $21,000, or 3.7 percent, from the start of the year. It’s the smallest year-over-year percentage gain since a home-buying frenzy took off in the summer of 2012. By comparison, 2013 ended with home prices up a whopping $100,000, or 21.3 percent.”

“In all, 34,014 houses, condos and townhomes changed hands last year, compared to an average of 42,300 sales per year since 1988. The reason for slow sales in Orange County, observers said, is that prices are too high. ‘What we’re doing is bumping up against an affordability problem,’ said Chris Pollinger, senior vice president of sales for Irvine-based First Team Real Estate.”

The Houston Chronicle in Texas. “Houston-area home sales hit a record high in 2014, but with low oil prices expected to drag down regional growth, the local real estate market is poised for a slower year ahead. The market was so competitive last year that buyers purchased houses sight unseen, while sellers collected multiple offers within days of putting their properties on the market. ‘We’ve seen a 20 percent increase in the last two years,’ said Bill Gilmer, director of the Bauer Institute for Regional Forecasting at the University of Houston. ‘We may have very well overdone it, especially in the new home market where builders have been able to set the price anywhere they wanted to.’”

“Less than a week ago, Ofelia McDonald put her house in Upper Kirby on the market. The house, built in 1938, has an ‘unconventional floor plan’ and a pool in the backyard. It sits on 6,875 square feet. McDonald is listing it for $575,000, ‘lot value,’ she said. She’s already had three offers, but they’ve all been for less than she wants to sell it for. The Inner Loop housing market has historically been a strong area for real estate, interest rates are low and the stock market has done well, she said. ‘Not everybody has their money in oil,’ McDonald said.”

The Calgary Herald in Canada. “Prices for repeat home sales in Calgary fell by 1.1 per cent in December from November, according to the Teranet-National Bank National Composite House Price Index released on Wednesday. They also fell by 0.2 per cent across the country in 11 markets surveyed. ‘The slump in world oil prices will hit oil-producing regions hard, and it won’t be long before housing activity and prices begin to fall significantly in Calgary,’ said David Madani, economist with Capital Economics.”

“It was the second consecutive month for a monthly decline on the national level. In December, prices were down in five of the 11 metropolitan markets surveyed: Halifax (1.9 per cent), Calgary, Quebec City (1.0 per cent), Montreal (0.9 per cent) and Vancouver (0.4 per cent).”

The Leader Post in Canada. “Regina house prices decreased year-over-year in two of three major housing categories, due in part to an oversupply of both resale and new homes, according to Royal LePage’s fourth quarter house price survey. Compared with the fourth quarter of 2013, two-storey homes dropped in price by 6.8 per cent to $345,000; detached bungalows dropped 6.5 per cent to an average of $310,000. ‘Over the past year, Regina real estate prices have been largely influenced by an oversupply of housing, comprised of both resale homes and new builds,’ said Mike Duggleby, broker and managing partner with Royal LePage Regina Realty. ‘This accumulation of homes available for sale has put downward pressure on most housing types.’”

“‘For our 2015 forecast, we could not ignore the potential impact of the steep decline in the price of oil on housing markets across Canada,’ said Phil Soper, CEO of Royal LePage. ‘In the immediate term, we anticipate that the natural slowing of home price appreciation we called for in the third quarter of 2014 will be delayed in Central Canada and accelerated in the West by recent developments in the energy sector.’”

The Winnipeg Sun in Canada. “Winnipeg’s housing market in 2015 is going to look a lot like it did in 2014: flat, according to Royal LePage. ‘We continue to see a trend of prices flattening across the board in Winnipeg,’ said Rick Preston, a broker and owner of Royal LePage Dynamic, in a press release. ‘With supply at a current 10-year high, and a smaller pool of willing buyers, prices have softened across the city.’”

“Preston suggested one cause of the current over-supply in the local market is the tendency of ‘newcomers’ to buy not only a home to live in, but a second home as an investment property. Some of those properties are sitting vacant and up for sale again, said Preston, giving buyers even more bargaining power.”

Bits Bucket for January 15, 2015

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