Getting Ourselves In Trouble Again
The World Herald reports from Nebraska. “When Legacy Homes sank roots in Omaha nearly four years ago, its leaders talked of filling the void left by a popular volume builder that had catered to entry-level homebuyers. The business plan changed. Manager Allen Grimes said his house lot costs have nearly doubled since Legacy in 2012 bought the intellectual assets of the bankrupt HearthStone Homes. Its new Majestic Pointe subdivision in Bennington, for example, is to feature houses from $225,000 to $350,000.”
“Several other developing subdivisions that Jason Troshynski of Grace Custom Homes said he is working in are heavy on $400,000 to $800,000 homes. He said a few Grace clients built upward to $2.5 million. Said Grimes: ‘It just doesn’t make sense to build a $175,000 home on a $45,000 lot.’”
From the Oregonian. “Like the soaring peaks and shaded valleys of the nearby Cascade mountain range, Bend’s real estate market has earned a reputation for spasmodic highs and lows. In recent years, area prices jumped back on the chairlift and are heading back toward the top. Some residents are wondering if the overdevelopment, bankruptcies and foreclosures of past downturns are lurking around the corner once again. ‘I’m working with so many people from the Bay Area, it’s not even funny,’ said Danielle Snow, a broker for John L. Scott Real Estate who has sold in Bend for nine years. About 80 percent of Snow’s sales these days, she said, are all-cash offers.”
“Jim Long has tried to find homes for low-income and working-class residents for 28 years, the last 10 of them as Bend’s affordable housing manager. Long also worries that – though permitting and pricing aren’t yet at 2006 levels – the market may be drifting in the that direction again. ‘People will say the loans are safer because Dodd-Frank went in,’ Long said. ‘But Congress has been whittling away at Dodd-Frank, and I’m starting to see the risky loans coming back. … I personally think we’re going to get ourselves in trouble again.’”
The Greeley Tribune in Colorado. “Buyers, sellers and real estate agents are all reporting a looser feel in the Greeley/Evans housing market, which was extremely tight throughout the spring and summer. ‘It’s a lot less frustrating for the buyers right now because we’re not seeing so many multiple offers,’ said Derek Andersen, a broker with Sears Real Estate. At the beginning of the summer, buyers often looked at a house and put in an offer within 24 hours. Some even bought without looking first because houses were flying off the shelves, so to speak. That’s not happening anymore. Andersen said he thinks the increased market inventory is also allowing buyers to be a little more particular.”
“‘I think they’re going back to being a little more picky,’ Andersen said.”
From Candy’s Dirt in Texas. “As I mentioned in my live-blogging at MetroTex Association of Realtor’s annual ’state of the DFW Real Estate union’, Dr. James Gaines, chief economist with the Real Estate Center at Texas A&M University, told 300 plus DFW real estate agents that we might expect a slowdown in the frenetic market we are experiencing. I can see how Steve Brown wrote that ‘Dallas-Fort Worth’s runaway real estate market is likely to slow down in 2016.’ But his headline was almost a shade of 2007 Debbie Downer days: Forecast for 2016 sees slower D-FW real estate, fewer job gains.”
“Home affordability may be a bigger problem in Dallas-Fort Worth, given that home price increases have been outpacing wage gains that in the area. ‘We have smaller household income today in real terms than we had in 1999,’ Gaines said. ‘Affordable workforce housing is going to be a major issue. We are not building enough houses in the $150,000-to-$200,000 bracket.’”
“My take-away from today (and chatting with the agents): the market is already simmering down. As Dave Perry-Miller told me earlier this week, it’s still busy, just not as frenetic. I do see home prices on the upper end of the luxury market softening, or home prices that may have been over-reaching, pulling back. But beautiful, exciting product will still fly off the shelves, and the under $700K market is still extremely hot because of demand.”
The Oklahoman. “Low crude oil prices could be lubricating a turn in the Oklahoma City-area housing market from seller-friendly to buyer-friendly. The inventory of homes for sale has been under the four-month mark for months. But some smell change coming. ‘I see the market right now turning from a seller’s market to a buyer’s market,’ said Phil Boevers, a homebuilder and developer who also is a real estate agent and Realtor with Keller Williams Platinum. ‘I think the economy will slow somewhat due to oil prices — hopefully not too much.’”
“Last month saw an increase in listings priced at $500,000 and above — 109, compared to the usual 60 to 80 — but it wasn’t necessarily tied to job cuts in the energy sector, said Susanna Lorg, president of the Metro Association of Realtors. ‘It’s going to take a little bit of time for it to come around and hit us in the resale market,’ said Lorg. Homebuilders will see and feel pressure from the oil slump first, she said, ’so builders may be thinking about a slowdown.’”
The Wall Street Journal in New York. “A banker and a former politician from Kazakhstan tried to launder tens of millions of dollars of stolen money through New York real-estate holdings, a civil lawsuit alleges. The men allegedly conspired with New York developer Joseph Chetrit to hide at least $40 million by investing in a former Manhattan hotel and the Cabrini Medical Center, according to a complaint filed on Oct. 12 by Kazakhstan’s largest city, Almaty, and one of the nation’s biggest lenders, BTA Bank.”
“The Kazakh men, ex-BTA chairman Mukhtar Ablyazov and former Almaty mayor Viktor Khrapunov, are separately under investigation for criminal fraud in Kazakhstan, the complaint says. Mr. Ablyazov is alleged to have stolen billions of dollars from BTA and Mr. Khrapunov is alleged to have stolen about $300 million from Almaty, according to the complaint, filed in federal court in Manhattan. The Kazakh men parked ‘corrupt assets’ in New York City real estate to avoid the scrutiny of escalating international investigations, the complaint alleges.”
“Mr. Chetrit sold the Kazakh men, through their special purpose vehicle, stakes in two Manhattan properties now closed and being converted into condo buildings, according to the complaint. Foreign buyers in recent years have flooded into major markets like Manhattan, particularly attracted to high-end condominiums, as they seek stable, long-term investments, property analysts say. But with few disclosure requirements in the U.S. for real-estate transactions—wealthy buyers often preserve their anonymity by making purchases using limited liability companies—money-laundering experts warn the area is ripe for abuse by those looking to park ill-gotten gains.”
“Banks and brokerages are far more regulated than real estate and are required to report suspicious activity. Real estate doesn’t face such requirements, which is an ‘enormous loophole in our financial system,’ said Louise Shelley, director of the Terrorism, Transnational Crime and Corruption Center at George Mason University.”
