Sellers Are Waking Up
A report from Bloomberg. “Gold’s traditional role as a store of wealth has been usurped by contemporary art and apartments in cities such as New York and London, according to Laurence D. Fink, head of the world’s biggest asset manager. ‘The two greatest stores of wealth internationally today is contemporary art….. and I don’t mean that as a joke, I mean that as a serious asset class,’ said Laurence D. Fink, chairman of BlackRock Inc. ‘And two, the other store of wealth today is apartments in Manhattan, apartments in Vancouver, in London.’”
Crain’s New York Business. “A new sales team and an interior redesign is all that Naftali Group’s new Upper West Side condo development needed to jump-start sales. The developer first launched the 25-unit building in September. But after nearly four months without a single sale, Naftali pulled the apartments off the market and shut down the project’s website. The lack of interest was partially due to the slowdown in the luxury condo market, resulting from a glut of pricey apartments that gave buyers more options.”
“Rather than cut prices, Naftali decided to redesign the apartments with higher quality interiors and upgrade the amenities of the 18-story building, essentially increasing what potential buyers would get for the same prices, which start at about $4.7 million depending on the size of the unit. ‘We took the time to listen to the marketplace and respond to the feedback we received from our target audience,’ Miki Naftali, chief executive of the Naftali Group, said in a statement. ‘We are confident that buyers will love the changes we’ve incorporated.’”
From MarketWatch. “Lame income growth and weak demand from first-time buyers are big reasons why home sales aren’t stronger, economists said Tuesday. ‘It’s strictly a matter of low demand,” said David Crowe, chief economist of the National Association of Home Builders. ‘There’s a significant lack of first-time home buyers.’”
“David Blitzer, index committee chairman at S&P Dow Jones Indices, chimed in that a lackluster labor market is holding back home sales. ‘If wages were growing faster, you’d have…more people buying houses,’ he said. Weak home sales are ‘much more of an income problem than a credit problem.’”
“But the U.S. economy is growing too slowly to help out housing much, Blitzer added. ‘Housing, unfortunately, is one of the sectors that shows this slowness and this weakness and this lack of recovery,’ he said. ‘If a lot more people wanted to buy houses, someone would figure out a way to build them.’”
The Sun Sentinel in Florida. “More than half of all home and condominium sales last year in Palm Beach and Broward counties were all-cash deals, according to data from local Realtor boards. That suggests the region’s housing market remains firmly in the grasp of investors and affluent buyers, but cash sales as a percentage of total sales are slowly declining. Investors are pulling back on purchases as prices rise and their potential profits shrink — just as home financing becomes easier to obtain.”
“The strong appreciation of the dollar against other currencies is making foreigners — another big group of cash buyers — reconsider their plans, according to Frank Nothaft, chief economist for CoreLogic. ‘They’re probably taking pause and backing off buying at the same pace they used to,’ Nothaft said. ‘If Canadians … are looking to buy in Fort Lauderdale and West Palm Beach, things have suddenly gotten 20 percent more expensive.’”
The Press Enterprise in California. “Low inventory has also been at the heart of an existing-home sales market that Mark Fleming, a former CoreLogic chief economist, believes is underperforming at a time of historically low interest rates and housing affordability. Fleming said the market will continue to underperform until equity builds for existing homeowners. ‘They can’t be homebuyers if they don’t have sufficient equity to be home sellers,’ he said.”
“Beacon Economics founder and chief economist Christopher Thornberg pushed back. ‘People are buying and selling; it’s just there are a lot of buyers relative to sellers,’ he said. ‘The idea that tight inventory is a reflection of a weak real estate market sounds weird.’”
“He offered this view: ‘People who were deeply underwater, for the most part, were foreclosed on. Since many of those foreclosed homes were bought by investors or people coming back into the market on the cheap, more than a year’s worth of price gains have added a lot of equity to the market.’ For the rest of 2015, Thornberg is watching for home sales to continue to rise, inventory to loosen up and new home sales to start to show gains. ‘In a very real sense, there is still lots of headroom on (home) price,’ he said.”
The Los Altos Town Crier in California. “California’s housing market continued to pick up steam as existing home sales and prices rose in March, with both posting back-to-back increases, according to the California Association of Realtors’ monthly data report. In Silicon Valley, March housing-market numbers showed a substantial rise in inventory. MLSListings Inc. indicates that inventory of single-family homes increased substantially in March in Santa Clara and San Mateo counties, rising 54 percent and 45 percent, respectively, when compared year-over-year. Month-over-month inventory for both counties also rose – 18 percent in Santa Clara County and 52 percent in San Mateo County. New listings for both Santa Clara and San Mateo counties increased 45 percent from their February numbers.”
“‘The March data is a strong indicator that we are bound to have a busy spring and summer, with strong competition for homes from buyers wanting to live here,’ said Chris Isaacson, president of the Silicon Valley Association of Realtors. ‘Sellers are waking up to the fact that if they want to sell their home, now is the time to do so.’”
The Wichita Eagle in Kansas. “The small town of Bentley hopes that it has finally found the cure for its painful housing bubble hangover. Mayor Rex Satterthwaite said that in 2014, a third of the city’s $250,000 general fund budget went to loan payments for the streets and utilities that were extended to the Castle Estates subdivision. That annual debt bill is scheduled to rise to more than half the city’s general fund by 2017 unless some of the lots can be sold.”
“‘If these lots were filled, I guarantee you these roads would be in a lot better shape,’ he said. ‘And that’s key to making the town the kind of place you want to move to. You have to have money to make money.’”
“When many developers stopped selling lots and builders stopped building homes in 2008 and 2009, many stopped paying their taxes and specials on the lots. But when developers stop paying those taxes, other taxpayers in the community must shoulder the costs. And as many communities found out during the most recent housing bust, even when the homes and lots were foreclosed upon and resold at a tax sale, there wasn’t always a happy result. Many times the lots were sold to flippers who sat on them – without paying the specials or taxes – in hopes of a quick payday. Many lots went through tax foreclosure a second time.”
“The dramatic expansion promised by the subdivision followed by the unanticipated financial burden created by the housing crisis has caused some hard feelings in the town over the past decade, Satterthwaite said, but that appears to be finally healing. ‘This town is ready to move forward,’ Satterthwaite said.”
