The American Dream Continues To Fizzle
The Real Deal reports on New York. “There are at least 99 single-residence listings priced at $30 million or more in Manhattan, according to New York real estate appraiser Jonathan Miller, a staggeringly high number by historical standards. And how many potential buyers for these pads are out there? The data seems to indicate that developers would be better served building apartments at the lower end of the ultra-luxury market. ‘Two million square feet, potentially, in the next few years is a little daunting,’ HFZ Capital Group’s Ziel Feldman said.”
“‘I don’t think I have ever in my career seen such a disconnect between what is desperately needed built and what is being built,’ Miller said. He argued that while demand for the most expensive units is strong, developers are ‘over-enthusiastically’ building too many of them. Meanwhile, lower price points are being neglected, in part because the high cost of land often makes them unfeasible. The oversupply in the super-luxury market is ‘probably the world’s worst kept secret,’ Miller added.”
Chicago Business in Illinois. “A lakefront mansion in Wilmette came on the market yesterday with an asking price of $10.9 million, bringing the number of Chicago-area homes priced at $10 million-plus to 21, the highest it has ever been. The last high-water mark for homes like this was during the last years of the housing boom, when 11 homes were on the market at $10 million or more; their prices were mostly at $12.5 million or lower, while this latest round includes six at $15 million or more.”
“Up at the tip of the pyramid, buyers may have unusual demands for a property. Jessica Price, one of two agents selling a 22,000-square-foot home in Barrington Hills that’s priced at $14.9 million, said one potential buyer who was looking at being transferred from Switzerland to Chicago needed a home where a helicopter could take off and land. The client didn’t end up moving to Chicago, she said. When the property first came on the market in 2007, for $17 million, the agent who had the listing then ‘was going after the sports stars, but that’s gone,’ Price said. ‘The athletes aren’t buying the big houses anymore.’”
“When Chicago home prices were climbing fast, before the housing bust, an athlete who was in town for only a few years could re-sell his home at a profit. Sliding prices have changed that, and the example of Michael Jordan’s palatial Highland Park house, which has sat untouched for three years and is now priced at about half the original list price of $29 million, may give them caution.”
The Houston Chronicle in Texas. “A few years ago, ‘overvalued’ would never have been a word that described Houston real estate. ‘Cheap,’ ‘abundant’ or ’suburban’ might have been more apropos. But local home prices got so high in such a short period that national ratings agency Fitch released a report at the end of March pronouncing Houston as the second-most overvalued housing market in the country. Hammered by low oil prices, Houston-area employers are expected to generate just a third as many jobs as were predicted earlier this year.”
“Don’t expect buyers to continue to line up to make offers on homes they saw for 10 minutes or even from a Skype call with their real estate agents. And as builders continue to put stakes in the ground, especially in new subdivisions around the Grand Parkway, prices could soften as sellers of older homes compete with builders. The earlier Fitch report said Houston home prices spiked a staggering 43 percent between 2011 and the end of 2014. Stefan Hilts, a director in Fitch’s U.S. residential mortgage-backed securities group, said last week that the growth rate here has already started to slow in recent months.”
“‘In the last quarter or two, we’ve seen that disappear,’ Hilts said about Houston’s red-hot price appreciation.”
From Fauquier Now in Virginia. “Imagine a Fauquier County with thousands of suburban homes that relatively few want to buy, businesses that can’t find workers and an aging citizenry resembling that of Florida. Demographics and development patterns pose significant challenges to Fauquier’s future, a pair of experts told an audience of 300 people in Warrenton. ‘It used to be we were optimistic,’ Matt Thornhill, president of The Boomer Project said to the audience. ‘Now we’re not so sure. The only thing we’re certain of is that things are gonna change.’”
“In Fauquier — as in much of the nation — that change includes a rapidly-aging citizenry. Baby diaper sales nationwide have fallen 8 percent, while adult diaper sales have increased 20 percent, Mr. Thornhill noted. By 2025, Fauquier’s senior citizens will outnumber school-age children for the first time in county history. The number of those older than 65 will increase 90 percent between 2010 and 2030. ‘We have an oversupply of large-lot, single-family housing and we have a shortage of almost everything else,’ said Ed McMahon, the senior fellow for sustainable development at the Urban Land Institute in Washington.”
The Press of Atlantic City in New Jersey. “The Villages at Farmington, Farmington Cove and Green Spring North and South all sound like the perfect places for families to build their dream homes. Small problem: The developments were never built. There are many developments in southern New Jersey that were planned but never built, said Rick Van Osten, a spokesman for the Builders League of South Jersey. ‘Honestly, I think a lot of these projects are never going to be built,’ Van Osten said. ‘The recession played a huge part in this. The recession started in 2006, but developers and builders really didn’t feel it until late 2007 and late 2008.’”
“The largest development planned, according to the list, is the more than 600-home Villages at Farmington, proposed by Pennsylvania-based Pulte Group. Pulte appeared before the Planning Board in January 2007 and was granted preliminary approval for the project, but never sought final approval, officials said. During the hearing, a township planner hailed the project as a turning point for the municipality. ‘If I had any doubts that our community has turned into a major city, I don’t have those doubts anymore,’ then-Chairman Robert Levy said during the hearing. The site is still vacant.”
The Sun Sentinel in Florida. “It’s hard to stand out when it comes to crime in South Florida, but the attempted bowling ball bombing of a foreclosed home does the trick. There is little worse than losing your home to foreclosure. Tyler Butler, 21, of Loxahatchee didn’t want to part with his own; he wanted to blow his old home into tiny parts. First Butler tried to use a cigarette lighter to burn his home down. And then he got the bright idea to fill a bowling ball with gun powder and add a wick. By the time authorities responded to the fire, the found the ticking … or lit … bowling ball bomb.”
“Housing prices are up. And the foreclosure stock is shrinking. But Mr. Butler reminds us that a lot of people are still facing hard times. Hopefully, Mr. Butler bit the bullet for all of us. He made crime history with a bowling bomb plot that fizzled … just like the American dream continues to fizzle for so many people.”
