Another Frothy Market On The Verge Of Reversing
The Press & Journal reports from the UK. “A former Scottish rally champion has taken one of the most expensive houses for sale in Scotland back off the market. Brian Lyall put his luxury seven bedroom mansion in Aberdeen on sale for offers over £3.2 million last month. It was believed to be one of the highest asking prices in the country for a house this year and was earmarked by property experts as a possible landmark deal of 2015. And an undisclosed offer was made earlier this month for the opulant abode which sits on one of the city’s wealthiest streets. But today property firm Simpson and Marwick confirmed that One Rubislaw Den North had been withdrawn from the market – as Mr Lyall no longer wants to sell at this time.”
“Concern has been mounting in recent months that the slumped oil price may affect Aberdeen’s buoyant housing market. Mr Lyall bought the pink Granite house in 2012 for just under one million pounds.”
The Montreal Gazette in Canada. “The soft landing has landed for the Montreal condo market. After years of condo boom times with rising prices and more and more construction, developers appear to be scaling back — and prices have dropped. The Canada Housing and Mortgage Corporation is forecasting this year or next, the number of completed, unabsorbed units will surpass the peak of 3,473 empty units reached in 2006. The number of unsold condos is increasing, with a 40-per-cent rise from 2013 to 2014, said rancis Cortellino, senior Quebec market analyst at the CMHC. Still, last year, there were nearly 11,000 condos under construction.”
“The CMHC indicates in 2014, only 69 per cent of new condos were absorbed at the time of completion. In 2013, there was a slowdown in new condo starts to 8,805, compared with about 12,000 in the two preceding years — and economists believed this would continue, he said, but it was not the case: in 2014, that number increased to 10,516. This was due to major projects in Montreal’s downtown, larger than expected, said National Bank senior economist Marc Pinsonneault. It seems promoters didn’t see they were building at a rate that exceeds demand, he said.”
The Midland Reporter Telegram in Texas. “In my time in Midland I have heard a lot about how the city has changed, how there are too many people and how everything is expensive. While I don’t know enough about the first two things, I can say this: Midlanders, your city has undergone a profound change in its real estate market.”
“In figures I compiled from the Real Estate Center at Texas A&M, I found that the market has completely switched between 2006 and 2014. In 2006, 65.4 percent of Midland’s homes sold for $159,000 or less, and only 21.6 percent were sold for more than $200,000. In 2014, the number of houses sold below $159,000 made up only 16.6 percent of the market, while houses that sold for more than $200,000 jumped to 67.8 percent. Midland has fundamentally changed.”
“Even now, home builders tell me that if they could get all their homes for 2015 online right this moment, they would not have enough stock for demand and they would continue to build. Big builders such as DR Horton and Betenbough have shown so far this year that they are not slowing down, applying for permits with the city at a similar rate to last year. Their confidence seems reflected in the fact that Midland has not felt a deep cut yet from layoffs in the oil industry.”
“But as the price of oil hovers in the $50 range, can Midland’s real estate market continue to hold out against a drop that feels right around the corner? Would a slowdown or even a drop in real estate prices be good for Midlanders? Do you feel like you paid too much for your home?”
CNBC on Texas. “Another frothy housing market may be on the verge of reversing, but this time it is for a historically classic reason. Houston has been one of the top-performing real estate markets in the nation for several years. Driven by a strong, energy-focused economy, the city, plain and simple, saw job growth push demand. But as oil prices hover at about half their year-ago values, Houston housing is suddenly teetering from its success. ‘Now that oil prices are down, things haven’t completely changed, but let’s just say that they have come to more of a stall,’ said Michele Marano, a real estate agent in the Houston area.”
“It will take significant time for lower oil prices to impact the city’s housing. While Houston companies like Halliburton, ConocoPhillips, Weatherford and Baker Hughes have announced corporate layoffs, it is too soon to see any real change in the real estate market. In previous oil downturns, it has taken 18 months to two years for job losses to affect home prices, according to Trulia’s chief economist, Jed Kolko. ‘For instance, in the 1980s, the largest year-over-year oil price declines were in early and mid-1986. In Houston, job losses were steepest in late 1986. But home prices didn’t slide most until the third quarter of 1987,’ noted Kolko.”
“All eyes are watching the city’s housing, which still appears to be moving. Houston sales and prices hit record highs in 2014, and in January sales were still 6 percent higher than a year ago, and prices jumped 7 percent, according to the Houston Association of Realtors. For now at least, it appears that extremely tight supply is hurting the market far more than oil prices. ‘We still expect to see sales cool as a result of lower oil prices and the limited supply of homes,’ said association Chair Nancy Furst with Berkshire Hathaway HomeServices Anderson Properties in a monthly release. ‘We’ve already started to see declining townhome and condominium sales.’”
