May 21, 2015

A Lot Of Speculation In The Marketplace

A report from the Virginian Pilot. “A national research and consulting company says the Hampton Roads real estate market may be approaching another housing bubble. Hampton Roads ‘is starting to show some signs of a bubble,’ said David Macpherson, chief economist for Smithfield & Wainwright. ‘It hasn’t risen up enough to get into the bubble stage, but if it keeps going, then it will be.’”

“According to Smithfield & Wainwright’s report, sales prices in the Virginia Beach metropolitan area for the fourth quarter of 2014 were 14.4 percent higher than what it would cost to rebuild if the homes were destroyed. Regions with ratios higher than 10 percent are considered at risk of forming real estate bubbles, said Hogan Copeland II, chairman of Smithfield & Wainwright. Until 1997, appraisals had to take the cost of rebuilding into account, Copeland said, but laws changed the requirements. ‘There’s no check and balance in there,’ he said.”

“Apparently, we haven’t learned our lesson from the collapse, according to Copeland. ‘I see a lot of speculation in the marketplace,’ he said. ‘Since inventory in certain areas is low, people are starting to bid up on properties again.’”

The Star Telegram in Texas. “New home building permits for Tarrant County rose in April to the second highest number since August of 2014, according to numbers from the Real Estate Center at Texas A&M University. Like many metro areas nationwide, the Tarrant area is showing pent up demand for new homes as well as the need for a larger inventory. Pam Yoakum, a real estate agent in Southlake, said she listed a home two weeks ago for $315,000 and had three offers within six hours. One of the offers was $7,500 higher than the asking price. ‘When properties are priced right, there will be multiple offers,’ Yoakum said, adding however that ‘appraisers are still playing a huge role in getting to closing. More and more, homes are appraising for the sales price.’”

The Aspen Daily News in Colorado. “In the forum broadcast on Aspen Public Radio, city council candidates Mick Ireland and Bert Myrin agreed that the town is in the middle of an affordable housing crisis. Myrin blamed a council decision in 2012 that allowed expanded short-term vacation rentals. Ireland said the problem has less to do with Airbnb-type rentals, and more with global forces of wealth inequality turning properties that once housed locals into second homes. ‘A town without babies, no matter how beautiful or famous or wealthy, has no claim to vitality,’ said Ireland.”

Twin Cities Business in Minnesota. “Downtown Minneapolis has been ground zero for developers of new apartments in recent years. But by the end of March, there were 695 vacant apartment units sitting empty there – enough to fill two larger apartment towers. Minneapolis-based Marquette Advisors reports a vacancy rate of 8.8 percent for downtown Minneapolis at the end of the first quarter in its latest report. That’s up from a vacancy rate of 5 percent during the same time in 2014.”

“Meanwhile, there are several additional apartment buildings still in the development pipeline for downtown. The Marquette Advisors report notes that another 866 new units are expected to open yet this year. For the full year, Marquette Advisors is forecasting that about 3,100 new apartments will open across the Twin Cities. By the end of 2015, that means that more than 10,000 new apartment units will have been completed between 2013 and 2015 across the metro.”

The Real Deal on Florida. “While Palm Beach County’s residential condominium market has rebounded from the worst days of the 2007-09 recession, it has barely treaded water over the past year, data shows. The 12 months ended April 30 saw 11,292 non-foreclosure condo sales, down 3.4 percent from 11,691 in the year-earlier period, according to CoreLogic data compiled by Metrostudy. The average price for new condos plunged 28 percent to $556,818 in the latest period from $769,482 a year ago.”

“‘We’re in the final phase of shaking out inventory from the last cycle,’ said David Cobb, regional director of Metrostudy South Florida. ‘While new construction is pretty muted, the inventory of the last cycle is being absorbed. A lot of re-sales are available.’”

“On the new construction front, Cobb said he knows of only one sizable project currently being built in the county. But plenty more may be on the way. Projects for about 4,000 new condos are underway or in the approval process, according to Jack McCabe, CEO of McCabe Research & Consulting in Deerfield Beach. That pales in comparison to 8,000 in Broward County and 22,000 in Miami-Dade.”

The Daily Pilot in California. “A former co-owner of surf- and skate-wear brand RVCA pleaded not guilty to charges that he bilked his mortgage lender out of more than a half-million dollars when he lied about not being able to repay the loan. In 2010, Conan Hayes persuaded Bank of America to let him sell his Costa Mesa home at a loss, in what’s known as a short sale, even though he had recently sold his stake in RVCA for millions of dollars, according to the Orange County district attorney’s office.”

“According to the district attorney’s office, the short sale of Hayes’ home cost Bank of America $586,245. That was the amount remaining on Hayes’ loan after the sale, but the debt was settled based on the belief that Hayes could not pay, according to prosecutors. Prosecutors say Hayes applied to short-sell the house in 2010 and later told his lender that he was unemployed. He neglected to disclose that he had sold his share of RVCA three months earlier for more than $7.5 million, prosecutors allege. Hayes, 40, could face up to five years in jail if convicted of one felony count of grand theft with a sentencing enhancement for a loss of more than $200,000.”

Bits Bucket for May 21, 2015

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