A Long Way To Go To Be Back To Normal
A report from The Telegraph. “Inflation hit zero for the first time on record in February, sparking concerns that long-term deflation could wreak havoc in a muted UK housing market already spooked by general election uncertainty. Bad deflation - as seen in Japan over the last two decades and now a lurking threat in the eurozone - is down to subdued inflationary pressures. According to Anthony Codling, an analyst at the broker, Jefferies, this is dire news for existing homeowners. ‘If property prices drop existing homeowners will struggle to trade up, as a lower selling price will force them to take on a higher loan-to-value mortgage,’ said Mr Codling. ‘Why would you buy if you think prices are going to go lower? Homeowners like buying into a rising market.’”
The McKenzie County Farmer in North Dakota. “Even though oil prices continue to be low, city officials aren’t seeing the housing market or rental prices dropping in the area. Instead, they have been in somewhat of a holding pattern. ‘Because of the timing of the first building opening in December, and being that it was around Christmas, we didn’t fill up very fast,’ said Katie Walters, managing partner for Homestead Management who manages one local apartment complex development. ‘We also manage some modular cabins, and when people left for Christmas, they didn’t come back.’”
“‘Rents don’t seem to be coming down for apartments or duplexes, but I have heard of lease rate and lease-term reductions for modular and camper type of rental units,’ says Watford City Mayor Brent Sanford. ‘If the newly constructed apartments don’t fill as soon as expected, and if hotel occupancy and rates begin to decline this summer, there may be some downward pressure on the rent levels. Time and the West Texas Intermediate oil price will tell.’”
The Katy Rancher in Texas. “Figures released by the Houston Association of Realtors (HAR) indicate the housing bubble that the Houston market has enjoyed in recent years may be showing signs of weakening, and Fort Bend County has not been immune to the decline. According to HAR, falling oil prices and related layoffs, combined with limited housing inventory and rising home prices contributed to the decline in sales. ‘We’ll probably continue to see a shift from a seller’s market to a buyer’s market in the months ahead,’ said Realtor Kim Patrick with Keller Williams Premier. ‘We’ve been in a seller’s market for a few years, so it was just a matter of time before we started seeing numbers switch the other way.’”
The Financial Post in Canada. “So you think Calgary’s housing market has seen a major downturn this year? Just take a look at what’s happening in the heart of Alberta’s oilsands industry as crude’s price collapse continues. MLS sales of single-family homes in Fort McMurray and its surrounding area have plunged this year. In February, sales were down by a whopping 66% from a year ago, at just 48 units. That followed an annual decline of 53.19% in January.”
“Don Campbell, senior analyst with the Real Estate Investment Network, said smaller centres located in resource-based regions, such as Fort McMurray and Grande Prairie always have higher highs and lower lows than the more diverse and larger cities. ‘When a city or region’s economy is based on one major industry, when that industry slows, the consumer confidence in the whole city begins to fade thus increasing the overall market fear,’ said Campbell.”
The Australian. “Port Hedland — the dust-coated Pilbara town at the heart of the nation’s economic miracle of the past decade — grew at breakneck speed during the boom as thousands of people poured in to seek their fortunes. As property prices in the town plummet in response to the end of the mining construction boom and the recent collapse in iron ore prices, its once-overheated economy is returning to normal.”
“A sudden availability of workers means small businesses — many of which were forced to close during the boom due to the dearth of labour — are opening at a rate not seen in years. And cheaper housing means families are again able to live in town, reducing the need for iron ore mines to rely on fly-in, fly-out workers. Mine worker Tom Hillcoat decided to switch from being a fly-in, fly-out worker to moving permanently to Port Hedland with his wife, Kylie, and two young children, who he says all enjoy the outdoor lifestyle.”
“Looking around for a rental property, he found a house that had once been rented out for $2600 a week but the price had fallen to $1700 a week — and has since plummeted to $900 a week. ‘To have my family up here is the best thing I can imagine,’ he says. ‘And as prices come down, it’s becoming more family oriented and more people are moving here.’”
“Yet not everyone is convinced that Port Hedland can return to normal so soon after the economic revolution of recent years, or that it can grow from 20,000 people to reach the Barnett government’s vision of sustaining a population of 50,000 in the next two decades. One of the town’s longest-serving residents, former mayor Arnold Carter, says the average rental value of a house in today’s market is still about $800 a week — far higher than in Perth and other centres. ‘It’s a long way to go to be back to normalisation,’ he says.”
