June 29, 2015

Cautious Buyers Are Willing To Walk Away

The Memphis Daily News reports from Tennessee. “Hampered by a severe lot shortage, homebuilding activity in Memphis and Shelby County slowed considerably in May, with builders starting and selling fewer new homes than last year. Steady demand, coupled with low inventory, higher lot prices and escalating construction costs, has prompted builders to raise prices. The average sales price of a new home in Shelby County in May was $311,303, up a whopping 19 percent from $261,311 a year ago. ‘I cannot remember anytime dating back to the 1980s where this has occurred in the past,’ said Keith Grant, an owner of Grant & Co. ‘Even during 2005 and 2006 we were not even seeing increases of 10 percent in the market.’”

“‘Everything we’re putting up gets sold and we’re raising prices continuously,’ said David Goodwin Jr., owner of David Goodwin Jr. Cos. LLC and 2015 president of the West Tennessee Home Builders Association.”

The Wall Street Journal on New York. “Sales of Manhattan’s most-expensive luxury apartments were strong during the second quarter—with a record number of sales for more than $4 million—but sales at less-lofty prices sagged. Brokers attributed the slowdown at lower price points to buyer resistance to high asking prices and to limited supply. Julia Hoagland, a broker at Compass, said the market was ‘extremely active’ but shifting to a point where cautious buyers are often willing to walk away from high prices. ‘Buyers are just reaching the point where they say, ‘If I get a price that is fair, fine. And if I don’t, I don’t care,’ she said.”

The Press Democrat in California. “Sonoma County home prices keep rising, but plenty of sellers nonetheless are finding they can’t get as much money as they’d like for their properties. For various reasons, agents and brokers said, more owners this spring have dropped their initial asking prices. Multiple listing data suggest that better than 1 in 5 currently available properties have undergone price reductions, said Mike Kelly, an agent with Keller Williams in Santa Rosa. ‘You’re having price reductions because they priced them too high, and they can’t sell them because they think the market’s so hot they can price them for anything and people will jump all over ’em,’ Kelly said.”

The Tallahassee Democrat in Florida. “Florida’s rate of monthly home sales is 98.2 percent of when the market peaked a decade ago, housing reports indicate. But Tallahassee falls below the state’s average with sales hovering at 61 percent of peak levels. Leon County is hitting 51 percent of the 2005 rate. Joe Manausa, a Tallahassee real estate expert who mines data and produces the Tallahassee Real Estate Newsletter, said the market is still over supplied and poised to get worse. The irony, Manausa said, is that the demand builders can fill is the segment of the market that has too many homes, specifically those costing less than $300,000. He said the ‘real demand’ is for lots that cost less than $50,000.”

“‘We still have too many homes for sale in Tallahassee,’ Manausa said. ‘It looks like the situation is going to continue for the next few years.’”

The Press of Atlantic City in New Jersey. “For months, Atlantic County has led the nation in foreclosure activity for metropolitan areas with more than 200,000 residents. Faced with poor maintenance and the problem of vacant homes, neighbors may feel like celebrating when they hear a sheriff’s sale is set. But the sales rarely result in a quick happy ending, said Atlantic County Sheriff Frank Balles. First, the banks can postpone the sale as often as they want. On a recent Thursday, ‘we had 50 homes to be auctioned,’ Balles said. Only 25 to 30 actually went to auction.”

“Only a small number end up selling to anyone other than the bank that holds the mortgage. If a bank or mortgage company buys a property, it ends up vacant, or the mortgage holder asks the previous owners to stay to avoid the vacant look. ‘Two weeks ago we had 45 properties for sale, and we sold six to third-party buyers,’ Balles said recently. ‘Last week we had 30, and only two sold to third parties.’”

Vegas Inc. in Nevada. “Lenders are ramping up foreclosures in Southern Nevada, seizing homes that in many cases likely have been in default — and possibly empty and in disrepair — for a lengthy amount of time. Creditors repossessed 677 homes in the Las Vegas area in May, the third consecutive month-to-month increase and the highest monthly tally in more than 2 1/2 years, according to RealtyTrac.”

“Real estate agents say banks don’t want to flood the market with listings. That could push down prices valleywide, limiting lenders’ ability to recoup their losses from soured mortgages. Today, even though there are more repossessions, lenders might not list the homes right away for that same reason. In many cases, banks and hedge funds are seizing homes and giving residents an opportunity to lease their house or buy it back, Platinum Real Estate Professionals agent Steve Hawks said. ‘They don’t put it on the market, a lot of them,’ he said.”

“Hawks said he knows a woman who owns a roughly 4,000-square-foot house in the upscale Henderson foothills community of MacDonald Highlands who hasn’t made a mortgage payment in more than 4 1/2 years. She is, however, renting out the house for nearly $4,000 per month, he said. Hawks said he recently met a man in his office who hadn’t made a mortgage payment in seven years. ‘That’s common,’ he said.”

“The two-story townhouse at 2823 Cool Water Drive in Henderson, has been empty for at least a few years. But its condition is ‘not terrible,’ and it hasn’t been vandalized, next-door neighbor Gina Hughes said. Lenders seized the home May 22, more than two years after the default notice was filed. Hughes, herself a real estate agent with Coldwell Banker, said prospective buyers have stopped by to look at the house but rarely come anymore. On a recent visit, foreclosure and abandoned-property notices were taped to the front door and to a window facing the street. ‘There is a lot of ghost inventory out there,’ Hughes said.”

Bits Bucket for June 29, 2015

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