December 21, 2015

The Market May Not Be As Strong As Most People Think

The Sun Sentinel reports from Florida. “If you’re looking to buy a new condo this weekend, you might be able to walk away with a leased set of wheels. Quantum Marketing Group, in conjunction with the Engel & Volkers real estate firm in Boca Raton, says it has created a program that will pay the car leases for buyers of certain condos across South Florida. The kind of car depends on the price of the condo, but BMWs, Cadillacs and Corvettes are among the possibilities, said Gary Hochman, head of Quantum Marketing Group. ‘This is just an extra tool to get the deal done,’ he said.”

“Offering incentives to buyers became common a decade ago during the housing bust. Perks have included cars, trips and paid closing costs for buyers and higher commissions for real estate agents. Jack McCabe, a housing analyst in Deerfield Beach, said the market may not be as strong as most people think if builders and sellers are back to offering incentives. ‘If they didn’t need to do it, they wouldn’t do it,’ he said.”

Home Town Focus on Minnesota. “Our Iron Range has always had its own heart beat from the rest of the nation. Now we embark on yet another shift, once again due to the heartbeat of our area; the mining industry. We have suffered job loss after job loss; layoff after layoff. We have started to see the impact to our housing industry and I suspicion we will continue to for a while. Our October Range Association of Realtors Housing Reports indicates our number of closed sales is down 24.4% over last year; the one year median sales price is down 21.4%. In other words, if last year Mr. Seller got $100,000 for his home; this year he received $78,600. Those are some pretty major price numbers for our market.”

“Our market is certainly a buyers’ market with far more inventory than qualified buyers. Our median list price is down 7.7%, not coinciding with the market drop of 21.4%. When these numbers are far apart, that helps explain of why our days on market get extended: the reality of the market, in relation to the price of the house on the market, is not correlating.”

WWNY TV in New York. “For many Watertown area landlords, there is one way to describe the rental market. ‘The rental market right now is flooded. There are so many apartments that have been built in the last two or three years,’ said Michael Siptrott, Conley Rental management.”

“New apartment complexes started popping up just a few years ago to help alleviate some of the pressures on soldiers and their families moving to the area. At that time there were few places to rent. As of November, the vacancy rate is just above 9 percent. And that means prices are falling. ‘A $1,000 a month apartment five years ago is probably now about eight hundred dollars,’ said Siptrott. So what does this mean for landlords? ‘I think the take home message for a lot of landlords is you need to take care of your property. If you don’t, your property is going to be vacant,’ said Siptrott. And more rental units are in the works.”

The Alaska Dispatch News. “A troubled multimillion-dollar luxury condo development in Anchorage’s Bootlegger Cove neighborhood will go on the market at a foreclosure auction in early January. Dubbed ‘The Alexis,’ the planned seven-unit building on the shore of Cook Inlet has racked up about $4 million in construction costs, yet is only about 60 percent completed, said Nick Mystrom, a New Mexico-based developer who purchased the $2.4 million lien from Keystone National Group, the previous lender. ‘The entire project should have been finished for that amount,’ he said.”

“Mystrom said the amount owed to contractors and subcontractors on the project by the previous developers totals about $1 million, but foreclosure proceedings may leave some who worked on The Alexis unpaid. Robert and Lisa Munson, co-owners of Accurate Framing Systems, said the project left them uncompensated for about $100,000. ‘No one has said where the money is. We don’t know if it’s fraud or mismanagement,’ Lisa Munson said. ‘My question is: Who got the money and where did it go?’”

The Californian. “Despite home prices continuing to improve since the recession and demand to buy homes remains high in Monterey County, the number of properties foreclosed over the first 11 months of 2015 outpaced the same period last year by more than 13 percent. And Monterey County, which had a 60 percent increase in foreclosures year-over-year in November, was one of only 15 of the 58 California counties where foreclosures increased over that period. Those others included Santa Cruz, Tehama, Alameda, Amador, Los Angeles and Kings counties.”

“Over the past three months, Martin Morales, broker for Monterey-based Century 21 Showcase Realtors, said he has seen the number of foreclosed properties in the local market rise, mostly in Salinas, Prunedale and southcounty. He said part of the reason likely is that five- to seven-year, interest-only home loans issued by lenders in 2005 to 2009 are resetting to regular rates in which interest and portions of the principal have to be paid every month — and some of the affected home buyers are discovering they can’t afford those rates. ‘And those loans are resetting or have been resetting for the past two years, and those are the homes we are seeing still lingering and gong to the foreclosures process,’ Morales noted.”

“Any loan modifications homeowners made from 2010 to 2012 also are undergoing five-year modifications, and some people can’t afford those new rates, said Juan Del Real, a broker for Bay Capital Real Estate in Salinas. Also appearing to have an effect is California’s Homeowner Bill of Rights, which took effect at the start of 2013. But any predictions about housing trends in Monterey county or anywhere else in the country could be turned on their ears within a few days or months if officials at the Federal Reserve decide to raise interest rates. ‘After rates go up, [home] prices may stabilize or drop some,’ said Del Real, noting demand for homes is high and the inventory is low countywide. ‘It all depends on how rates go.’”

The Morning Call in Pennsylvania. “When Coca-Cola relocated Tim Fischbach from Northern California to the Lehigh Valley in 2010, Fischbach figured a little more than $300,000 for his five-bedroom home in Schnecksville was a bargain basement price for a home snatched up near the bottom of the market. Surely its value would skyrocket in just a few years, courtesy of the recession rebound, and he could flip it for a tidy profit, he thought. Five years after landing that bargain, Fischbach sold the home this summer for barely more than he paid. ‘We tried to wait the market out, but it didn’t exactly happen that way,’ Fischbach said. ‘It became pretty clear that it wasn’t going up any time soon. It was surprising.’”

“According to the Greater Lehigh Valley Realtors Association, the median sale in 2015 through November was about $173,000. That’s not just a disappointment for people like Fischbach who thought they were making a sound buy in the recession, but frustrating for people who bought at the height of the market, from 2004 to 2008, and are now stuck in homes that are not worth what they owe.”

“The report only confirms what Realtor Brad Patt has been living every day. But Patt said there are some encouraging signs on the horizon. ‘It’s a really good time to buy a house in the Lehigh Valley,’ he said.”

“Of course, that’s what Tim Fischbach thought in 2010.”

Bits Bucket for December 21, 2015

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