July 30, 2015

Preparations For Growth Can Be Overly Optimistic

The Los Angeles Daily News reports from California. “New home building is finally showing signs of life around the Valley with several projects underway or in the planning stages, including one that will bring a taste of Manhattan-style living to the well-heeled. The projects are in Sylmar, Winnetka and Woodland hills. Santa Clarita-based Williams Homes Inc. is doing two of them. ‘We made this bet about two years ago,’ Keith Herren, Williams’ executive VP, said of the decision to develop the Winnetka property. ‘We like the San Fernando Valley and we like the City of Los Angeles. There is unlimited demand (for housing.)’”

KPHO in Arizona. “People have lost faith in the stock market and they’re apparently getting over the fears created when the housing bubble burst. ‘Real estate is something that’s tangible,’ said Nathan Pierce with Strong Tower Real Estate Group. He’s not surprised people trust Maple Street more than Wall Street. He’s hoping to flip a $275,000 home in central Phoenix for $700,000, but he said the average person can start smaller. ‘I think people need to start with their primary residence first because, for the majority of Americans, that’s the biggest investment they’ll make anyways,’ Pierce said.”

The Boston Globe in Massachusetts. “Buying a home in the Boston area has been a high-stakes competitive sport, marked by packed open houses, pitched bidding wars, and ultimately, disappointment. That may be slowly changing. Some brokers say they’ve detected a shift in the market that could signal more opportunities for buyers. ‘It has become a little less crazy for buyers,’ said Lara Gordon, a real estate agent who works primarily in Cambridge and Somerville. ‘Instead of competing against 15 to 20 offers, maybe it’s three to five offers.’”

“In June the number of home listings that came on the market increased by 11.6 percent. ‘We’re heading to a more stable appreciation,’ said Alison Socha, a real estate agent in Melrose. ‘The buyers now are being more cautious. They don’t want to get into major-league bidding wars. They are tired of being the bridesmaid, and they’re feeling that the market has reached the high and that it’s settling.’”

From The Paper in Texas. “Residents of The Woodlands – or Houston commuters driving through the area to and from Dallas and other points north – have found themselves stuck in all kinds of traffic. A significant reason for the massive surge in infrastructure upgrades is due to the world headquarters of Exxon/Mobil moving into the neighborhood. For over a year, local residents have been bracing themselves for the influx of what was estimated to be 50,000 new inhabitants. However, the current substantial drop in oil prices put a hold on much of the transition, and only a fraction of the predicted total have moved in.”

“Kimberly Nicole, a Realtor based in The Woodlands who caters to upscale and elite homes and clientele, terms situations like this ‘The Exxon Effect,’ where preparations for growth can be overly optimistic. There is a glut of new building and real estate agents alike; when the bubble pops as reality sets in, there are too many empty houses and an overabundance of those wanting to fill them.”

“‘The Woodlands situation is an example of how a housing market can fluctuate as wildly and as immediately as the New York Stock Exchange,’ she said. ‘Most agents are unprepared for the tumult; it’s the savvy agents who are familiar with all aspects of real estate that can successfully navigate through the turbulence.’”

The Journal in Nebraska. “The city of Plattsmouth is helping to pave the way for a new housing development to be constructed within the city limits. The final assessed value of each home and lot it sits upon is estimated at $210,000. ‘Per the contract, the developer must make its best effort to assure minimum assessed valuation of $210,000, real estate and house combined. That valuation exceeds most homes in the immediate area,’ said City Administrator Erv Portis.”

“A recent survey identified the lack of housing and the updated Plattsmouth Comprehensive Plan addresses the need to address the shortage. The plan identifies a shortage of homes in the middle and upper-middle income ranges. ‘On the other hand, a glut of homes valued between $25,000 and $50,000 exists. Homes in this bracket, discourage middle income families from ‘moving-up’ in the housing market due to concerns on whether the home would be able to sell.’”

Vegas Inc. in Nevada. “The apartment industry is one of the most-active areas of real estate locally and nationally, especially for development. In Las Vegas, investors have been buying and building multifamily properties as younger residents shy away from homeownership and because many locals — their personal finances wrecked by the recession — haven’t been able to land a mortgage, let alone afford a down payment, and have to rent.”

“Developers completed about 1,700 units last year. As of December, they were projected to open roughly 5,750 units this year and almost 2,000 more in 2016, according to CBRE Group. Not everyone’s cheering the workload. Some people have said developers are piling in too quickly and overbuilding, especially in the southwest valley, where it seems most of the projects are concentrated. ‘Apartments have probably gotten a little ahead of themselves right now,’ RCG Economics founder John Restrepo said a few months ago.”

The Pasadena Star News in California. “At age 29 and in a committed relationship with his girlfriend, Daniel Garcia, a Long Beach barista, thinks occasionally about what it would be like to own a home. But then he’d rather pay off some personal debt and travel a little more. He’s not alone. While 74 percent of millennial renters between ages 18 and 34 plan to buy a home one day, 53 percent who expect to purchase a home said they are putting it off until at least after 2018, according to a survey of more than 5,800 millennial renters nationwide by Apartment List.”

“Garcia rents near downtown Long Beach. He said while he and his girlfriend, a graphic designer, are Southern California natives, they haven’t ruled out moving out of state to buy a home. But the American dream, defined by previous generations as owning your own place, seems to be a foreign concept to those his age. ‘I’m 29, I have friends that are a little older, some a little younger,’ Garcia said. ‘None of my friends actually own a house. It’s not a topic we bring up too much.’”

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