June 8, 2015

This Is A Different Market

A report from the Coloradoan. “Critics say rising home prices are threatening the future character of Old Town Fort Collins. With many homes between 900 and 1,200 square feet, Old Town was a viable option for first-time homebuyers attracted by the small sizes and lower prices — up until about five years ago. The average sale price of a single-family home in Old Town last year topped $339,000, not the highest sale prices in the city but a far cry from the average $266,000 of five years ago, based on the Coloradoan analysis. ‘The price per square foot is astronomical,’ said Joel Schwartzkopf, a physician’s assistant at an urgent care in Cheyenne. ‘All of these houses are going for over $500,000, that’s way too much to spend on a house.’ Even with a large down payment, the monthly mortgage would be more than $2,500 a month, he said, adding, ‘I was brought up to be a little more responsible than that.’”

“Old Town is on pace for about 120 sales this year, ‘the second-lowest number since 2010,’ when Fort Collins was coming out of the recession, said Eric Thompson of Windermere Real Estate in Fort Collins. It’s really the land that’s appreciating as opposed to the physical structure, Thompson said. ‘What will happen in the future are more remodels and tear downs. The underlying land value will support more expensive physical structures.’”

The Merced Sun Star in California. “In the coming months, the Merced County Planning Commission is expected to see a plan for a new housing subdivision in Planada, the first in about a decade, according to county officials. The area has seen some interest from investors, said Brandon Ruscoe, an associate broker with Merced Yosemite Realty in Merced, and the approval of a new subdivision would be good news for the area. He said many homebuyers who have been on the fence or who can’t afford prices in Merced would likely look at buying homes in Planada. ‘When inventory is tight like that, they end up competing with investors,’ he said.”

The East End Beacon in New York. “Few issues have recently riled up the citizenry of Southold as much as internet-based rental services. Attorney Abigail Field of Cutchogue said she represents several responsible landlords who rent their houses short-term. She said that many people who own second homes on the North Fork simply allow their friends to use their houses, which would not address the concerns of community members who don’t like seeing new strangers in their neighborhood each week. ‘It’s very important for the board and community to get a sense for who some of these people are. There’s a perception they’re investors and people who have no ties to the community,’ she said.”

“Judith Ullman lives in Brooklyn, but she owns a small cabin in Southold Town, which she bought knowing she couldn’t afford it unless she rented it out. She said she hopes to one day retire on the North Fork. ‘You’ve got landlords who stink and you’ve got landlords like us who are invested and responsible,’ she said.”

The Houston Business Journal in Texas. “Houston’s hot multifamily construction market is cooling faster than expected amid the oil downturn, according to a new report. As energy companies announce layoffs and budget cuts, funding for new apartment construction is drying up and developers are stalling dozens new projects in the Bayou City. On the other hand, Houston’s single-family construction market seems to be holding up despite the oil slump. Homebuilders broke ground on $1.72 billion worth of new homes in the first quarter of 2015, compared to $1.65 billion in the first quarter of 2014, according to CMD Group.”

“‘It’s pretty hard to knock the stuffing out of that sector,’ said Alex Carrick, CMD Group’s chief economist. ‘Houston’s population is growing. You’ve got to have increased housing stock.’”

The Williston Herald in North Dakota. “The collapse of crude oil prices has forced rents to drop more than $1,000 a month in Watford City. North Dakota’s housing units increased 10.4 percent between 2010 and mid-2014, and remains the fastest growing county in the nation, according to the latest annual report from the U.S. Census Bureau. Between 2010 and mid-2014, Williams County’s growth ranked No. 1 in the nation, with a 56.8 percent rate in housing units, according to the census bureau report. Williston issued building permits for 1,630 units in 2014, and officials estimated more than 2,000 units would come online by the end of the year.”

“‘We have a tremendous amount of inventory here,’ said Shawn Wenko, executive director of Williston Economic Development.”

Bloomberg on Florida. “The sales office for condominiums at Miami’s Brickell City Centre attracted more than 100 visitors daily last year, with prospective buyers crowding in and snapping selfies beside a scale model of the $1 billion project. Now, the flow of people has trickled to about a quarter of what it once was. ‘Buyers are asking really good questions’ instead of rushing into deals, said Stephen Owens, president of the U.S. unit of Hong Kong-based Swire Properties Ltd., the developer of the 9-acre condo, hotel, office and shopping complex. ‘Two years ago, it was, ‘Where can I sign?’”

“In response, developers are delaying projects, lowering down-payment requirements and turning their focus to Americans. ‘We’ve seen a very strong shift in the last year in the dollar — it has literally pushed whole countries out of the marketplace,’ said Kevin Maloney, principal of Property Markets Group, which is developing Echo Brickell, a 57-story luxury tower that will have a shark tank in the lobby. ‘We look around as real estate guys and say, ‘Jeez, who is our buyer?’ he said. ‘Now you are going to allocate more of your dollars to domestic United States.’”

“More than 3,000 condo units planned for construction are at risk of delay, said Anthony Graziano, senior managing director at Integra Realty Resources Inc., which prepared the report. He estimates that international buyers account for as much as 95 percent of downtown’s new-condo market. Carlos Rosso, president of Related Group of Florida’s condo division, doesn’t expect a repeat of the bust of the last decade, which left thousands of new units empty as speculators pulled out of deals, sending Miami-area home values plunging by half before bottoming in 2011.”

“‘Everybody is looking at Miami and saying when is something bad going to happen?’ Rosso said. ‘And I say this is a different market. You’re not going to have a bubble burst.’”

Bits Bucket for June 8, 2015

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