A Price Point Even The Middle Class Can Afford
Bloomberg reports from New York. “Tumultuous stock and commodity markets are roiling investors around the globe. For Hong Kong developer Neo Que Yau, that presents an opportunity on Manhattan’s 59th Street. ‘The world economy is fairly weak in general, and I think there’s a lot of room for the New York market to grow,’ said Neo, who’s building his company’s first tower in the city, and the tallest it’s ever developed. His $160 million project at 118 East 59th St., where all 29 units are at least a full floor, began sales this month, with prices starting at $5 million for the lowest apartment.”
“In cities such as New York, Chinese developers are betting on increasing demand from the rising number of fellow countrymen seeking property overseas, including homes for children studying abroad, said Omer Ozden, who helps Chinese institutional clients find development opportunities as president of RockTree Capital. ‘Absorption for the five, 10, 20 million-dollar condos has slowed,’ Ozden said. ‘There’s a limited number of purchasers who can buy at that price point. If you can hit a price point that even the middle class can afford, that’s a very large market.’”
WTHR in Massachusetts. “If you had $650,000 to spare you could buy a three-bedroom, two-bathroom condominium on East Seventh Street in South Boston. Or, for the same $650,000, you could buy one single parking space in the Brimmer Street Garage in the Beacon Hill neighborhood. That would be all 171 square feet — housing sold separately. But one of many reasons the $650,000 asking price is raising a lot of eyebrows is the last parking space to sell here, just last month, went for $390,000.”
“And per square foot that you’re buying, that makes the Brimmer Street Garage more expensive, inch for inch, than the $37.5 million dollar condo under construction at the top of the Millennium Tower. Once you plunk down the purchase price, you still have to pay a $250 monthly condo fee for the all-valet garage, plus some $2,700 a year in city property taxes. For all those reasons, David Bates, a real estate broker who works nearby, doubts the owners get their $650,000 price. ‘If we were in a situation where we were going to bring in an appraiser,’ Bates said, ‘I think they’d have a tough time coming back with a valuation of $650,000.’”
The Tribune in California. “Local real estate agents note that there are two distinct markets in play, with sluggish sales for higher-end homes pulling down both median price and sales volume. Dennis Allan, owner/broker of Allan Real Estate Investments in Arroyo Grande, said that many of the pricier homes are sitting unsold for a year or more because of high-end buyers who are ‘very price conscious.’ Lower-priced homes, on the other hand, are seeing brisk sales and rising prices.”
“Many first-time homebuyers are finding the current housing market frustrating for a number of reasons that include intense competition from ‘investors and other first-time buyers for a limited amount of units,’ said Jordan G. Levine, economist at Beacon Economics. He also noted that, despite low interest rates, more stringent loan processes may make the housing market out of reach for some first-time homebuyers. ‘While the price of the home may be affordable relative to income, most banks are requiring larger down payments than during the heights of the previous bubble,’ he said.”
National Mortgage News. “The housing market is weakening due to slower economic and job growth, along with other factors, such as low inventories and tight credit conditions that continue to stymie potential buyers, according to industry analysts. ‘Most of the data measuring current conditions in the housing market have weakened recently,’ Wells Fargo Securities economists wrote in a recent report.”
“‘Texas is not growing like it was,’ the report reads. Texas alone accounted for 15.7% of single-family housing permits in 2014, and Houston was the nation’s top housing market by a large margin, according to the report. ‘Today Houston’s economy is in recession.’”
KYYR TV in North Dakota. “The cost of living in Minot has risen significantly over the past five years, but now with the downturn in oil prices will the prices start going down? And with the new construction increases, that supply putting some power back in the hands of the ones signing the lease. ‘I think renters are being more price conscious now so there’s a lot more shopping around going on,’ said Justin Hammer, IRET Properties.”
“But was the new construction too much? Now that all of these apartments have opened are there still enough people coming in to Minot to fill the vacancies? ‘The Magic City Apartment Association did a survey and we came in at just under 11 percent, that’s probably the lowest it’s going to get,’ said Hammer.”
The Daily Press in Virginia. “Foreclosures on the Peninsula are on the rise. RealtyTrac recorded 511 residences in Newport News, Hampton, York and James City counties that were foreclosed on during the first eight months of 2015. That’s a 28 percent increase over 399 recorded foreclosures on the Peninsula during the first eight months of 2014, according to the report. Another 1,167 homes in the Peninsula’s largest municipalities were facing foreclosure auction proceedings. That’s a nearly 50 percent increase over the 785 homes slated for foreclosure during the first eight months of 2014.”
“Newport News recorded 302 foreclosures, according to the report, up 23 percent from 245 foreclosures posted during the first eight months of 2014. Foreclosure activity also increased in Hampton, with 85 foreclosed homes since the start of the year, according to the report. That is up 150 percent from the 34 recorded foreclosures in the city during the first eight months of 2014.”
CBS Philly on New Jersey. “The numbers are staggering. Foreclosure auctions are up 61 percent and bank repossessions have more than tripled. For Alejandra and Jose Perez of Galloway Township, New Jersey it was like a one-two punch. Alejandra says, ‘My husband, his hours got reduced from 40 hours to 16 hours a week and then I ended up losing my job also as well, so it got even worse.’”
“The parents of three children, Alejandra and Jose now work multiple part-time jobs to make their condo mortgage payments. Alejandra says, ‘I mean it was full time, I had benefits, I had everything, and I lost it.’ The couple now struggles to stay afloat, but for how long. Alejandra says, ‘we won’t be able to afford our monthly payments.’”
“‘It’s a very real issue for many of our fellow neighbors,’ says Markita Morris-Louis of Clarifi, a non-profit credit and housing counseling agency. She says that the Perez family is far from alone. ‘We knew this was on the horizon,’ says Morris-Louis. According to RealtyTrac, nearby Atlantic City topped national metropolitan foreclosure filings in the 3rd quarter of this year. One in every 97 homes had some sort of foreclosure activity. Trenton wasn’t far behind with one in every 172 homes in financial distress.”
