The End User Has Become Rational
It’s Friday desk clearing time for this blogger. “According to realtor.com, the Santa Cruz housing market is one of the hottest in the country. However, the red hot market is dousing the dreams of some potential home buyers. They’re being priced out, but it’s actually benefiting other communities. First-time home buyer Esperanza Espinosa and her husband have worked hard for years to get out of their two bedroom, $2,000 a month apartment. They now have better paying jobs and their hard work is paying off. They’re one of many families buying into the American Dream and buying a home in Watsonville. Affordability is unlocking the door to possibility. ‘A lot of people like it here because you can get a three bedroom and two bath for $450,000 right now,’ said Century 21 realtor Gloria Melo. ‘Which in any other place you cannot get that.’”
“‘Before, I couldn’t afford to buy a house because I always worked in the fields and I don’t make that much money,’ Espinosa said. ‘And then my husband work as a dishwasher and everything.’”
“The Treasure Valley market was on a hot streak in 2014 and 2015 that brokers and agents say is not sustainable. Stacie States, president of Keller Williams Realty Boise, said her office is training its 501 agents how to adjust to a slower market, both in terms of tempering client expectations and managing the agents’ personal finances. Nobody expects the Treasure Valley housing market to crash and burn like it did in 2007. But prices could fall this time, too. ‘The economy has always been cyclical,’ States said. ‘Unless history stops repeating itself, we will definitely see the market shift.’”
“The number of homes available for sale in metro Denver spiked in July, while home sales dropped and prices flattened out, providing further evidence that one of the country’s hottest housing markets might be topping out, according to the Denver Metro Association of Realtors. The median price of a single-family home sold, $350,000, was 2.8 percent below June’s median. ‘This is all welcome news for homebuyers who have survived the recent months of market frenzy,’ said Anthony Rael, chairman of the DMAR market trends committee.”
“The median price of King County single-family homes sold in July slipped 3 percent over the month to $485,000, a surprising reversal for a month that brought peak prices in each of the past two years. The drop comes after King County’s median home price hit a post-recession peak of $500,000 in June. More than half of Seattle Times readers who responded to a poll last month said ‘the single biggest reason’ keeping them from buying a home was affordability. Another one-fifth said they couldn’t find a home they want to buy.”
“Chinese developer Fantasia Holdings Group has launched a vacation rental business similar to Airbnb Inc and HomeAway Inc to utilise the scores of homes left unsold as a property boom faded. Unsold apartments are a hallmark of many provincial Chinese cities, as local governments used land sales and property development to generate growth. ‘There are more than 50 million vacant units in urban China, which have become a major source of properties for vacation use,’ Fantasia chairman and CEO Pan Jun said in a statement.”
“The sharp decline in the new launches in the NCR has pulled it down from being the biggest market in India in H2 2014 to fourth position now trailing behind Bengaluru, Mumbai and Pune. The report showed that the unsold inventory in NCR amounts to 1,89,678. Despite three cuts in the repo rates by the central bank in the last six months and some reduction in lending rates by the commercial banks, there has been no meaningful take-off in home purchase in H1 2015. Samantak Das, chief economist at Knight Frank said that even at the average absorption rate of last eight quarters, it will take five years to get rid of the inventory in the NCR.”
“‘Both the launch and the sales numbers are at a decade low for NCR. While the speculators are completely out of the market, the long-term investors are not coming in because of their previous investments are stuck and they have had a bad experience. As far as the end user is concerned, he has become rational and very cautious and is waiting for prices to come down and the economy to improve,’ said Das.”
“Resale prices of Housing Development Board flats took a tumble last month — the first since March — as the number of flats changing hands also fell. Mr Alan Cheong, Savills Singapore’s research head, noted that newly-completed Build-to-Order projects in Sengkang and Punggol have led to greater supply coming upstream, thus lowering demand for older flats in these areas. ‘The resale market is suffering in areas that are perceived to be congested,’ he said, adding that prices might take a further hit in these estates.”
“Nothing better portrays the high price of paradise in California than a poll showing one in seven recent homebuyers thought they had paid too much. True, the annual survey of homebuyers from the California Association of Realtors did find that 85 percent of buyers statewide thought the home they’d purchased was worth the price. But please note: 14 percent admitted they’d overpaid. Maybe the real estate rebound has gone too far?”
“It’s not clear why recent buyers felt they’d overpaid. Were they forced to pay up in a rising market? Did they fear homes would be even costlier in the future? Or was the overpayment the cost of getting into an appreciating asset?”
“It feels a bit like the Monty Python parrot sketch. The property pundits keep telling us the Dubai market is just sleeping. Are prices falling? No sir, just stabilising. Should we worry? No sir, it’s the sign of a mature market sir – lovely plumage, the Norwegian Blue.”
“The notion that a property market is maturing because prices aren’t falling quite so fast as they fell the last time they were falling slightly less fast is nonsensical. It is Michael Palin telling John Cleese that the expired bird is merely having a nap. Some international property consultants, who really should know better, have been at pains to sugar coat the huge decline in transactions this year. It makes me imagine pushing them from a very tall building and watching them ’stabilise’ all the way down until they reach maturity on the pavement.”
“A quick look at the propertyfinder website reveals hundreds of listings for as-yet uncompleted homes launched in the past two years, many of which are being sold on at zero premium. Speculation is still thriving. Banks are not so much reducing their property lending risk as moving it from Peter to Paul – or rather from the would-be house buyer to the off-plan developer.”
“But the strong US dollar and weak oil price are together doing a perfectly good job in ’stabilising’ the market right now. Meanwhile, the first-time buyer is being hit over the head with a skillet. The parrot isn’t dead. Just stop hitting it.”
