June 24, 2015

The ‘You’ve Got To Get Into The Market Now’ Feeling

A report from the Associated Press. “Real estate has gotten hot again. Home sales are on pace for their best year since 2007. First-time buyers are streaming back into the market. Prices are skyrocketing, aided by a stronger job market and tantalizingly low mortgage rates that are creating pressure for buyers to act fast. More homes are selling at a faster clip. A stunning 28 percent of homes are selling within two weeks, compared to 19 percent before the recession, according to a recent survey by the brokerage Coldwell Banker.”

“Buyers such as Amanda Fyler saw more financial benefits in owning after renting a 400 square-foot studio in Washington, D.C. The 32 year-old nonprofit analyst is in the middle of finalizing the purchase of a two-bedroom condominium. She figures that by renting the extra bedroom, her housing costs will largely stay the same as her current rent. Plus, she will be able to build equity and deduct the interest from her taxes. ‘Otherwise,’ she said, ‘it’s not affordable in this city.’”

The Wall Street Journal. “Many low-down-payment borrowers—including first-time home buyers—are returning to the market, boosting housing but raising concern among skeptics who worry about the risk of such mortgages. Joseph Rowe, 29 years old, bought his first home in Taylors, S.C., in May. Mr. Rowe said that he and his wife made a 3.5% down payment, which he said was all they could afford, and that their mortgage payment on the $163,000, three-bedroom home is only slightly higher than what they paid in rent. He said that they think home prices, which climbed 5% in the past year through April according to the South Carolina Association of Realtors, will continue to rise in their area, reducing the risk of putting so little down.”

“‘I love living in a house as opposed to an apartment. I wish I could have been able to do that earlier. We just didn’t have the money to put down,’ he said.”

“Nina Armah, a 33-year-old account manager, bought a $250,000 studio in Washington, D.C., after finding that her costs to rent a new place would be about as much as her mortgage payment. She said she didn’t have the savings to make a 20% down payment, but was able to effectively put no money down on a home by getting an FHA loan along with a subsidy from a Washington program geared to first-time home buyers. She said she isn’t worried that home prices could drop. ‘I definitely felt that property values were only ever increasing,’ said Ms. Armah. ‘I felt the impending ‘you’ve got to get into the market now’ feeling.’”

The Post and Courier in South Carolina. “Hugo Diedericks, a Realtor with Carolina One west of the Ashley, says he’s ‘relatively new’ to Charleston real estate but is familiar with properties in which local first-time homebuyers would show interest. There are rules of thumb, he says, that first-time homebuyers in the Lowcountry market — or any market, for that matter — can consider. ‘Nowhere in the world has real estate devalued over any 15-year period,’ he says. ‘The value of your home will double every 14 years, based on the last 4 and 14 year cycles.’”

“Moreover, with finance costs still low, ‘Now is a very good time to enter the real estate market. In fact it could still be the best lifetime investment for the average American — that is to purchase your primary residence,’ Diedericks says.”

WFAA in Texas. ” In the southeast corner of Denton County, around Lewisville, The Colony, and Carrollton, real estate broker Christy Thompson has, ‘A list of buyers who are just waiting, and waiting, and waiting.’ But most of the buyers Christy Thompson has dealt with aren’t going to work for any of those big businesses. Investors know the market here will likely only get hotter as workers do start to move in. ‘What I am seeing is a lot of investors,’ she said. ‘A lot of investors buying up the houses, paying cash.’”

The Coloradoan. “It is still beyond hard to find an affordable apartment in Fort Collins. Average rents in March fell to $1,174, down from $1,219 a year ago, but much of that decrease is attributed to a big decrease in northwest Fort Collins, which dropped from $1,407 to $1,017. Hundreds of new student and market-rate apartments are under construction or making their way through the city’s development process. During the early 2000s, the last rental bubble, landlords gave away washers and dryers, free cable or Internet, a free month’s rent and more to draw people to their property.”

“Fort Collins has not seen a significant impact from new construction yet, said Bev Perina of Armadillo Property Management in Fort Collins. ‘I’ve seen two times where we’ve had a huge impact from overbuilding. We’re not there yet, but I think it’s coming.’ Fort Collins is getting its share of investors snapping up rental property, Perina said. ‘Maybe we’ll be just fine and we won’t see a downturn, but it’s possible.’”

The Miami Herald in Florida. “After several years of overheated gains, South Florida real estate may be in for a slowdown. Prices have grown too high and the buyer pool is shrinking, say local brokers who are on the industry’s front lines. And it’s not just the usual summer doldrums. ‘There are too many properties out there that are over-priced,’ said Jeff Morr, an agent at Douglas Elliman and chairman of the Miami Master Brokers Forum. ‘The biggest thing that holds a property from selling is the price.’”

“‘Prices are getting too high,’ agreed Cyril Bijaoui, a broker at Westside Estate Agency, a Los Angeles firm that recently opened a Coral Gables office. ‘Sellers’ expectations about what they can get have gone way up and people smell opportunities. But it’s creating buyer frustration and a definite slowdown.’”

“Rising prices and static salaries have made South Florida one of the least affordable housing markets in the nation — and that’s putting a damper on buyers. ‘The number of showings is not what you’d expect,’ said Liza Mendez, a broker at Pedro Realty. ‘Something’s off. The market talks and we may have to readjust our prices.’”

“The market will need to correct its pricing in order to keep sales moving, said Christopher Zoller, president of the Miami realtor association. ‘Most sellers are realizing that buyers are more educated and more cautious and are shopping around a little harder,’ Zoller said. ‘We’re starting to see sellers getting more realistic on their pricing.’”

Bits Bucket for June 24, 2015

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