July 13, 2015

People Are Confident, Afraid, Kind Of Nuts

The Maui News reports from Hawaii. “Maui’s housing shortage is driving up the cost of homes, both for buyers and renters. Marion Haller, president of the Realtors Association of Maui, said it’s axiomatic that whatever trends happen in the U.S. West Coast real estate market take three to 12 months to arrive on Maui. And, now there’s a ‘crazy sellers’ market’ on the West Coast in places like Monterey and Santa Cruz, Calif., San Francisco, San Diego and Seattle, she said. ‘Houses are selling in a day. There’s multiple offers on homes,’ Haller said.”

“Maui Realtors are beginning to see the first signs of that here, she said. ‘Real estate is a herd mentality,’ she said. ‘People see other people buying, and they figure ‘I should be buying too.’”

The Kingman Daily Miner in Arizona. “New home construction is trending up and building permit activity indicates the market will continue its uptick for at least six months, according to the city of Kingman’s Development Services department. It’s the highest level of new home construction in more than seven years. ‘Obviously, we get a lot of contractors that build spec homes and they get sold, and so people are buying homes,’ said Jim McErlean, building official with the city of Kingman. ‘The best answer I’ve got from our contractors as to why they think the market is up in Kingman is because of the flooding of cash by the Fed’s monetary policy, so interest rates are artificially low.’”

The Bellingham Herald in Washington. “Whatcom County home sales continue to rise, but there’s concern that first-time homebuyers are being priced out of the market, particularly in Bellingham. Less new home construction in Bellingham is a major factor, giving sellers a fair amount of leverage in recent months, said Darin Stenvers, branch manager at the Bellingham John L. Scott office. He believes this is a short-term problem, as buyers are becoming more cautious as sellers demand too much. Stenvers said he’s come across situations where sellers have refused to make repairs for problems found during house inspections, resulting in the buyer withdrawing the offer.”

“‘In the last few weeks I’ve seen more buyers realize that they don’t have to move as quickly and are not making rash decisions,’ Stenvers said. ‘I think a small market correction is taking place.’”

The Washington Post. “Buyers in the D.C. metro region are snapping up homes at a pace not seen since the housing boom. ‘Overall, I can see more hope in people,’ Mary Bayat, chair of the Northern Virginia Association of Realtors board. ‘People are more confident, happier. Maybe people are afraid interest rates will go up. They shouldn’t wait. They need to jump into that pool.’”

“Although the prices are up in the region as a whole, the Virginia suburbs and parts of Maryland are seeing declines. Falls Church, Fairfax City and County and Loudoun County each had year-over-year declines in median price. Falls Church’s median price fell the most, dropping to $568,500 last month from $745,000 in June 2014. The low number of sales tends to make the median price volatile in that city. The year-to-date median price in Falls Church is down just 2.4 percent compared to 2014.”

“Fairfax City’s median price slid to $496,000 from $500,000, while Fairfax County’s median price slipped to $495,900 from $497,500. Loudoun County’s median price dropped to $441,750 from $453,500. In Maryland, Frederick County’s median price sank to $275,000 from $296,100, while Anne Arundel County’s median price slid to $322,000 from $328,250.”

WFDD in North Carolina. “The Triad Business Journal’s Kristin Zachary has reported on the rebounding housing market and says it’s complicated. ‘Homebuyers are seeing some price increases, so what you could get for $125,000 a couple of years ago is now going for $160,000,’ says Zachary. But she says it’s still a buyer’s market–people are looking for newer construction or they’re looking for houses that have been remodeled. ‘So, sellers who have not been remodeling and have been sitting on their homes for the last fifteen years, they’re going to have a more difficult time selling their homes.’”

“‘There is a little bit of a risk. If building permit filings continue to outpace closings, we are going to be flirting with overbuilding,’ says Zachary.”

Bloomberg on Connecticut. “It took more than two years for Katherine Tenney and her husband to sell their 16,000-square-foot house in Greenwich, Connecticut. The town — home to some of the country’s largest hedge funds, — is seeing a pile-up of luxury houses on the market as a real estate rebound spurs more owners to try to sell. At the current pace of sales, it would take 4.9 years to absorb Greenwich’s inventory of 252 luxury houses on the market at the end of the first quarter, according to Miller Samuel and Douglas Elliman.”

“‘The tide is changing,’ said Tenney, who lowered the asking price of her earlier home before finding a buyer. ‘Nobody wants those huge houses anymore. You look back and there’s rooms you never even entered.’”

The South Florida Business Journal. “The majority of new condo buyers in Miami have been looking to capitalize on their investments by flipping the units or renting them out, according to research by CraneSpotters. Looking at the four largest condo towers completed in greater downtown Miami since construction resumed in 2011, anywhere from 45 percent to 96 percent of the units sold by the developers in each building were placed back on the market or put up for rent. That indicates a high level of investor ownership in those buildings, and also raises some questions.”

“With more than 18,100 condo units either under construction, planned with approvals or proposed in greater downtown Miami, according to CraneSpotters, is there enough rental demand at higher price points to support that many new units? And how will they be impacted by the nearly 7,800 apartments in the development pipeline?”

The Mercury News in California. “Andrew Greenwell has been cast as a kind of brash hero of our cash-obsessed era on ‘Million Dollar Listing San Francisco,’ Bravo’s new reality show. This interview has been edited for length and clarity. Q: Do you feel any remorse over being someone who helps drive this crazy real estate market? The region is becoming unaffordable for most people.”

“A: I don’t think that brokers and Realtors encourage the crazy market. We simply facilitate transactions…My brokerage will do close to $500 million in sales this year, but I actually don’t like crazy markets. It’s not healthy. You can’t sustain it. I have not enjoyed the markets of the last few years in the city and it’s actually been slowing down and that brings me great joy.”

“Q: How is it slowing down? A: Six months ago we would have gotten 12 or 15 offers on a property. Now we get one or two. The properties are still moving. But we’re not seeing a lot of $1 million over asking; it has to be a special property to drive those prices. Q: Why is the market slowing? A: Why? Because people are tired of overpaying. I just sold a condo in Noe Valley for $2 million, and that’s kind of nuts. It’s beautiful and it’s a great location — but, come on, it’s two bedrooms. I think people are tired.”

“Q: So are we in a bubble? A: I think it’s a different kind of bubble. People need to be cautious not to compare it to 2005. I think the bubble to be concerned about is if Chinese investors want to liquidate their assets, if they flood the market. That’s what keeps me up at night: What’s always driven the market is demand, but if you suddenly increase the supply, things change.”

Bits Bucket for July 13, 2015

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