December 10, 2015

Cries For Help From Investors

A report from Crain’s New York. “Toll Brothers Inc. plans to use competitive pricing and offer buyers incentives to speed up sales at some of its New York City condominium projects. ‘There are certain units in certain locations within a building that are hot, and then there are other units that may be in a dark, cold corner that you have to incentivize a bit more,’ Chief Executive Officer Douglas Yearley said on the company’s earnings conference call. While Toll ‘will not fire-sale it to move’ units, ‘we will price to the market.’”

“Toll shares fell 7.3% to $34.78 at 1:54 p.m. in New York, the biggest drop since late August. The Standard & Poor’s Supercomposite Homebuilding Index was down 3.1%. Investors are probably reacting to Toll’s comments about the New York ‘market becoming more competitive and the fact that they will start incentivizing more in that market,’ Megan McGrath, an analyst with MKM Holdings LLC in Stamford, Connecticut, said in an e-mail.”

The Middletown Press in Connecticut. “October was another good news, bad news month for Connecticut’s single-family home sales, according to The Warren Group. The bad news for the Connecticut housing market is that median home prices continued to drop. The median price of homes sold in October was $235,000, a 2.1 percent decrease compared to the same period in 2014. The median sale price for October of this year represents a 14.4 percent drop from where it was nine years ago. The year-to-date median sale price is $249,000, 1.9 percent less than it was through the first 10 months of 2014.”

“Donald Klepper-Smith, chief economist and director of research for New Haven-based DataCore Partners said the decline in median housing prices ‘goes hand in hand with under performing labor markets.’ ‘It doesn’t help that you have excess housing inventory on the market,’ Klepper-Smith said.”

KGAB in Wyoming. “The President and CEO of the Greater Cheyenne Chamber of Commerce says a housing shortage for both rentals and homes for sale seems to have eased in recent months. Dale Steenbergen says that while he considers the increased availability to be a good thing as things stand right now, if current trends continue to the point where there is an oversupply of housing sitting vacant, that could be ‘problematic.’ He says a major factor in the decreased demand has been low oil prices and the resulting decrease in oilfield jobs in Laramie County. He says the current situation isn’t yet one of panic for property owners, but adds ‘we’ll be watching this situation carefully.’”

“Cheyenne Mayor Rick Kaysen said in August that around 1,500 new housing units were either being built or planned for the city over the next few years.”

The Advertiser in Louisiana. “Home sales for Lafayette Parish are struggling — and failing, of late — to keep the torrid sales pace set here in 2014. Blame it on the energy industry’s price plunge and the impact felt across this oil-soaked region. Bill Bacque, chair of the MLS this year, suggested that the housing market has been affected by oil and gas price declines. A Bureau of Labor Statistics report released this week showed jobs lost in the Lafayette Metropolitan Statistical Area were the highest in the country from October 2014 to October 2015. The area lost 4,300 jobs, the federal report said. ‘With no relief on the near-term horizon, it would appear that the ripples emanating from the oil patch will continue to play a mitigating role in our housing market during 2016,’ Bacque said in an issued statement.”

“Bacque said the market shows a 3.7-month supply of homes in the $150,000 to $299,999 range, the most popular price range in Lafayette. But there was a surfeit of housing in the pricier, $300,000 and up price range, about 9.9 months’ worth, homes that may prove more difficult to sell if jobs decline or if interest rates rise this month, which is widely anticipated.”

The Houston Chronicle in Texas. “Houston-area home sales fell 10.5 percent in November, the second straight double-digit decline, the Houston Association of Realtors said. The local housing market has been affected by low oil prices, which have led to thousands of layoffs throughout Houston’s energy industry. More job cuts are expected next year. Energy companies and manufacturers could shed another 18,000 jobs next year, in addition to the at least 29,000 lost this year, according to a report released this week by the Greater Houston Partnership.”

“‘Houston won’t sink into recession, but growth will be much, much slower, and to some that might feel like a recession,’ the partnership report warned.”

Reuters on Michigan. “Buying a property in Detroit a few years ago seemed like a steal for overseas investors – as little as a few thousand dollars would get them a house in a city that had hit rock bottom and could only see better times. Yet the promise turned into a nightmare for many and stories of properties vandalized, ransacked, left untended and un-rentable have sapped the interest from overseas buyers, real estate brokers say. ‘The bottom has fallen out of the speculative market,’ said Darin McLeskey, co-founder of Denovo Real Estate, who said he had received a lot of ‘cries for help’ from investors.”

“Brokers say overseas investors got burned by their own inexperience or were misled by companies misrepresenting the state of the properties and over-promising rental income. Foreigners also had trouble finding contractors or property management companies they could trust. Amsterdam-based investor Edwin Schouten said he was shocked to find his locally-managed houses empty and vandalized. ‘The first red flag was when I found houses empty and I could see the grass growing half a meter high,’ said Schouten, who now organizes his own property management.”

“Many investors have never visited Detroit and were unaware of problems such as buying the lone intact house on an otherwise abandoned block, brokers say. Michael Jordan, founder of, estimates overseas demand has fallen by a third since 2013 and says foreigners who come to him to sell are often taken aback by losses they would need to take. ‘The problem I run into is that investors are so deep in the hole.’”

Bits Bucket for December 10, 2015

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