September 24, 2015

The Impression They Might Not Sell For What They Bought

A report from the Seattle Times in Washington. “After years of sizzling growth, rents could be headed for a cool-down. The slowdown in rent growth for the older units is even more striking in or near downtown where most of the new units are being built. Mike Scott, co-owner of Dupre+Scott, said he expects rent growth will be slower over the next three years and could even turn negative. If developers keep building legions of apartment units, he said, that could extend the cooling-off period after an intense growth period for rents. Only about a third of landlords in Dupre+Scott’s semiannual survey expect to raise rents by March, compared with about three-quarters a year ago. And while few properties offer move-in incentives, among those that do, the total amount is growing.”

“Developers have more than 22,000 units under construction in King and Snohomish counties, the majority of which are in Seattle, said Tom Cain, head of Apartment Insights Washington. His firm is tracking a total of nearly 64,000 units at various stages in the pipeline. Scott says the picture for investors in apartment properties is not pretty over the next decade. Since 2000, rents have gone up just 2.8 percent compounded annually, while real-estate taxes and utilities have increased 5.4 percent over the same period. ‘The problem is that taxes and utilities are eating up more of the total rent,’ Scott said.”

The Houston Business Journal in Texas. “When Exxon Mobil Corp. announced plans to construct a new campus north of Houston, residential developers and homebuilders swung their hammers into action. However, now that the first phase of the new Exxon campus is complete, homebuilders are realizing this so-called ‘Exxon Effect’ isn’t as immediate as originally thought. ‘The Exxon Effect is slower than expected,’ said Lawrence Dean, senior advisor with Metrostudy Corp.’s Houston office, a housing research firm. ‘It’s caught a lot of developers and builders by surprise.’”

“Instead of immediately buying homes in the north Houston suburbs, new Houston energy transplants are signing nine- and 10-month apartment leases.”

The Daily Advertiser in Louisiana. “The Lafayette area’s housing market, ablaze with record-setting sales in recent years, may face cooler prospects as effects of the oil and gas downturn linger or worsen here. Thus far in September, real estate in general is showing a significant decline from numbers recorded in the Lafayette area in September 2014. ‘The economy drives the real estate industry,’ said Bill Bacque, president of Van Eaton & Romero real estate in Lafayette. And the local economy here, with unemployment creeping up and sales tax collections dipping over the last several months, suggests that the economy is not robust. He said he expects ‘corrections’ in the local housing market.”

“Nationwide’s study, said senior economist Ben Ayers, seeks out stability in housing markets through what he called the ‘goldilocks index’: Economists are rating MSAs that are ‘not too hot, not too cold, but just right.’ Markets like Dallas and Denver, he said, were ‘too hot,’ with sales and prices that are unlikely to sustain themselves.”

The Denver Channel in Colorado. “Over Labor Day weekend everything changed. That’s what experts are saying about the housing market in metro Denver. After a white hot spring and summer, the hottest housing market in the nation has cooled quite a bit. ‘We’ve seen a big slowdown’ said RE/MAX Unlimited realtor Ronda Courtney. ‘I have a listing that I’ve had to reduce twice in the past month.’”

The Bismarck Tribune in North Dakota. “Some man camps are becoming ghost camps in the oil patch. There are 3,600 temporary beds in Williston city limits or its extended one-mile zoning territory — about half and half in each, said city planner Donald Kress. ‘I would like to see them go away,’ said Williston Mayor Howard Klug, adding that it’s time for workers to double down on Williston and become part of the community. ‘The apartments and housing have caught up now.’”

“A website lists 370 homes for sale in Williston, 141 in Watford City and 530 in Dickinson. Apartment rentals aren’t centralized, but a quick Internet search shows hundreds, if not thousands, for rent across the oil drilling region and construction still going strong.”

The Watertown Daily Times in New York. “For-sale signs have increasingly popped up since the spring on lawns of homes in the city, where a strong buyer’s market has been created by an influx of new rental housing that real estate agents describe as ‘overbuilt.’ ‘Homes are selling faster but not as many of them are selling,’ said Lance M. Evans, executive officer of Jefferson-Lewis board. ‘And it’s not just happening in Watertown but throughout Jefferson County. This is a buyer’s market, and it’s going to be harder to sell a house now because there are a lot more rental choices.’”

“Along with a rising number of vacant homes in the Watertown area, the number of vacant apartments has climbed, said Carl A. McLaughlin, executive director of the Fort Drum Regional Liaison Organization. ‘People are less satisfied with the older housing stock because it hasn’t been improved and doesn’t have some of the options the newer housing is coming with,’ he said, adding the city has had an increasing number of so-called ‘zombie houses’ that have been abandoned. ‘These houses aren’t moving and nobody’s taking them.’”

“Mary C. Adair, broker/owner of Exit More Real Estate in Watertown, said move-in specials are offered by rental complexes that are ‘feeling the crunch’ to keep apartments occupied. ‘They’re lowering the rent or giving away three months of rent, or a flat-screen TV. So those first-time homebuyers are maybe waiting until next year to buy,’ she said, adding that military families aren’t buying as many homes. ‘Some military families are under the impression they might not be able to sell it for what they bought it.’”

Bits Bucket for September 24, 2015

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