January 22, 2015

The Past Two Years Was Not Reality

The Bismark Tribune reports from North Dakota. “Members of the Bismarck-Mandan Board of Realtors say the community’s housing market is less frantic than it was two years ago. Previously, Kristin Oban, president of the Bismarck-Mandan Board of Realtors, may have called clients in the morning when a home came on the market. By noon, there were usually three to five offers on the house and many times the offers were higher than the listing price. She said sellers are still getting 99 percent of their listing price but multiple-offer situations are back to a normal pace. For homes in the higher price range, $400,000 or more, Oban said sales prices have not been as high as they previously were. ‘It may not be the news sellers want to hear, but it is good for our market,’ she said.”

The Teton Valley News in Idaho. “After a public hearing, the Teton County Planning and Zoning Commission voted unanimously to give approval for a new 26-lot subdivision in the northern part of Teton County. Randy Blough of Harmony Designs, who designed Cutthroat Creek, said he realizes that the county still has many empty subdivisions left over from the housing boom. ‘We acknowledge there are many vacant lots, there’s no doubt about that,’ he said. ‘If a lot of those subdivisions were designed in this type of way, [the county] wouldn’t be in the [situation] we’re in now.’”

From Miami Today in Florida. “Miami-Dade County is home to a growing number of condominiums, most of which are held by absentee owners. Of the nearly 352,000 condominium units in the county, 37%, or 130,000, had a homestead exemption, according to the Miami-Dade Property Appraiser’s 2014 preliminary tax rolls released mid-year.”

“‘A condo is effectively a big lock box in the sky. That’s really what they are,’ said Peter Zalewski, principal of real estate consultancy CraneSpotters. ‘If I am from Latin America and I bring $100,000 and put it in a lock box. I am not making anything. I’m actually losing because of inflation. So instead of taking money [to the bank], these Latin American investors are saying, ‘I could just put it in a condo, make a very small return and hope that once I put this money out and re-sell, I make money.’”

From Bloomberg. “Manhattan real estate agent Lisa Gustin listed a four-bedroom Tribeca loft for $7.45 million in October, expecting a quick sale. Instead, she cut the price this month by $550,000. ‘I thought for sure a foreign buyer would come in,’ said Gustin, who is still marketing the 3,800-square-foot (353-square-meter) apartmen. ‘So many new condos are coming up right now. They’ve been building them for the past few years and now they’re really hurting the resales.’”

“On the Los Angeles MLS, there were 3,198 homes with asking prices greater than $2 million at the end of 2014, up 17 percent from a year earlier, according to Partners Trust, a Beverly Hills, California-based brokerage. The number of homes priced at more than $5 million, including new and existing properties, jumped 27 percent to 546. ‘They’re shooting themselves in the foot,’ said Roger Perry, a broker-associate with Rodeo Realty in Beverly Hills. ‘Everyone’s trying to get a piece of that luxury pie.’”

“The luxury sales frenzy since 2012 was caused by a limited inventory after the global property rout all but shut down construction for almost three years, according to Leonard Steinberg, president of brokerage Urban Compass. Now that buyers have more options, deals will progress at a more ‘normal’ speed — about two to four years to sell out a building, he said. ‘Some people will get a little panicky because things are not selling as fast,’ Steinberg said. ‘But what we experienced over the past two years was not reality. That was a moment in a century.’”

The Australian. “Residential real estate agents could be forgiven for upgrading their BMWs or putting a new-model Porsche Cayenne Turbo on order after the year they’ve had. However, mining towns fared far worse, prices in the Queensland ­resources outpost of Mackay taking hits of nearly 38 per cent in the September quarter. Western Australia’s resources regions also suffered. There is a growing belief that there could be a cooling in the residential property market.”

“Melbourne-based buyers’ advocate David Morrell believes illegal foreign investment has driven up prices. He says, this will be a year of ‘price compression.’ The market has hit its top and is on the way down. Prices are cooling in the prestige sector and this tends to filter down to cheaper property. ‘The top end is the first to fly and it is the first to fall. You could almost pick it — after Melbourne Cup weekend it has cooled right off,’’ he says. ‘We’d be walking into places with $3m to spend and come out spending in the twos. It’s all about confidence. In the last three weeks before Christmas, it was buyers’ nirvana. My clients aren’t saying they don’t want to buy property this year, but they are saying that they aren’t going to pay high prices. ­Prices will really get put under the pump.’”

From AFP via Yahoo. “China’s property market is no longer ‘red hot but deep cold.’ elites gathered at the Davos forum heard Wednesday, as fears grow that a real estate slump could accentuate slowing growth in the giant Asian economy. ‘China’s urbanisation-led growth is almost coming to an end. Very little money is going into buying new land and building new buildings because so many buildings have been built,’ said Zhang Xin, chief executive and co-founder of real estate giant SOHO China. ‘Real estate has moved from red hot to deep cold. This is the cold, cold sector of the economy. No money wants to go into real estate,’ Zhang said.”

Bits Bucket for January 22, 2015

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