Starting To Get Nervous About Prices
CNBC reports on Colorado. “Houses have been flying off the shelves for the past six months, but the sales pace is starting to slow, and could in fact decelerate more dramatically in some of the hottest markets come winter. Real estate agents and homebuilders say they are starting to see more buyers balk at high prices and shy away from bidding wars. ‘We definitely saw a bit of a cool toward the end of July. People started to get nervous about rising prices,’ said Jill Schafer, an agent at Kentwood Real Estate in Denver.”
The Boston Globe in Massachusetts. “For several years, wealthy Chinese have been snapping up homes in high-end neighborhoods from Cambridge to Wellesley, while institutional investors, such as some of China’s big insurance companies, have provided financing for pricey condo towers under construction. There is anecdotal evidence of some pullback. Patty Chen, a Wellesley entrepreneur who helps Chinese investors find houses in the Boston area, said she has seen some would-be buyers hold off this summer. ‘Some are nervous because of the stock crash,’ Chen said. ‘I think we are in a ‘buffer period’ where Chinese just want to wait out the volatility.’”
The Midland Reporter Telegram in Texas. “Warren Ivey, a Midland Realtor with the Texas Association of Realtors, said buyers are still hesitant because of the oil economy but still want to move out of rentals and into a home. Ivey said that there is still no pattern for why sellers are offloading their homes. While the number of homes on the market are nearly 70 percent higher than the same time last year, they are still below the year’s peak of 533 homes on the market in March, according to the PBBOR’s figures.”
“‘Some of our buyers, in the past, when they make an offer on a home, and they discover that they got beat out because there were three other offers on a property. When that happens to them, they get discouraged, and, a lot of times, they say never mind, I don’t want to play that game,’ Ivey said. ‘So with this increase in inventory, this might be enough to push those people back into the home buying market.’”
From Michigan Live. “Ann Arbor’s annual fall housing shuffle is in full swing, with University of Michigan students flocking back into town and other renters beginning new apartment leases. But even with the start of the fall semester just around the corner, many apartments near downtown and campus are still available to rent. Landlords who are used to having fall leases signed long before now say this is a new phenomenon, and some are lowering prices to stay competitive.”
“‘It doesn’t take a rocket scientist to figure out there’s been an unbelievable increase in the supply of downtown apartments in the last few years,’ said Jason Costello, co-owner of Cabrio Properties, which has about 350 rental units in Ann Arbor. ‘It’s certainly quite a different landscape out there than it has been in the last few years for sure. We’ve reached — or probably surpassed — a saturation point of rental housing in Ann Arbor, both in the downtown area and campus area, but also just throughout the city in broader terms.’”
The Florida Times Union. “One sits on the river in San Marco, the other on the ocean in Ponte Vedra Beach. So one has docks, the other a beach. And they’re both for sale, the only two homes in Northeast Florida listed at more than $10 million. Owner Don Brindley listed the Ponte Vedra house in April and admitted there hasn’t been a lot of interest. ‘It’s a pretty small group that can afford to live out here,’ he said. ‘“It’s really a matter of luck. It could be day one, it could be year two. I’m motivated, but I don’t have to sell. I don’t owe anything on it. I can stay here until the day I drop dead.’”
“James Mussallem said he had the same problem McAfee did when it came to comparing recent sales. Still, he’s reduced his price from when he first listed it last year at $14.85 million. He had it listed with a real estate firm then. Now he’s selling it himself. ‘I interviewed brokers and asked them what’s the most expensive home they’ve sold,’ he said. ‘They $1 million, $2 million, $3 million. I sell paintings for $10 million, $20 million,’ he said. ‘I’m used to selling expensive items to rich people.’”
WIVB 4 in New York. “Local leaders expanded their ‘bank shaming’ initiative, Friday, taking aim at a ‘zombie property’ in West Seneca. The property has been vacant for about 5 years, but Town Councilman William Hanley said, there is no shortage of interest. ‘We all know somebody that would love to purchase one of these houses. For the banks to sit on them just to help their bottom line is a shame.’”
“Town officials said West Seneca is a hot real estate market, and with about 90 vacant properties in town, Town Supervisor Sheila Meegan said zombies are killing the American Dream of home ownership. ‘It is a missed opportunity for another young family to come in and enjoy this community. It is an easy fix, and that is why we don’t understand the banks’ posture.’”
PBS News Hour. “Founded in 1920, National Bureau of Economic Research is a private nonprofit research organization devoted to objective study of the American economy. The following summary was written by the NBER and doesn’t necessarily reflect the views of Making Sen$e. We will tell you, however, what the takeway is: The U.S. foreclosure crisis, so commonly referred to subprime mortgage crisis, was not in fact, just a subprime event. While it began that way, it became a much broader phenomenon and mainly included prime mortgages. The findings suggest that effective regulation cannot just focus on restricting risky subprime contracts.”
“There were only seven quarters, all concentrated at the beginning of the housing market bust, when more homes were lost by subprime than by prime borrowers. In this period 39,094 more subprime than prime borrowers lost their homes. This small difference was reversed by the beginning of 2009. Between 2009 and 2012, 656,003 more prime than subprime borrowers lost their homes. Twice as many prime borrowers as subprime borrowers lost their homes over the full sample period.”
“The authors’ key empirical finding is that negative equity conditions can explain virtually all of the difference in foreclosure and short sale outcomes of prime borrowers compared to all cash owners. Negative equity also accounts for approximately two-thirds of the variation in subprime borrower distress. Both are true on average, over time, and across metropolitan areas.”
“None of the other ‘usual suspects’ raised by previous research or public commentators — housing quality, race and gender demographics, buyer income, and speculator status — were found to have had a major impact. Certain loan-related attributes such as initial loan-to-value (LTV), whether a refinancing occurred or a second mortgage was taken on, and loan cohort origination quarter did have some independent influence, but much weaker than that of current LTV.”
“The authors’ findings imply that large numbers of prime borrowers who did not start out with extremely high LTVs still lost their homes to foreclosure. They conclude that the economic cycle was more important than initial buyer, housing and mortgage conditions in explaining the foreclosure crisis. These findings suggest that effective regulation is not just a matter of restricting certain exotic subprime contracts associated with extremely high default rates.”
