December 29, 2015

Coasting To A Slowdown

A report from the Associated Press. “There’s a dark side to those delightfully low gas prices: Housing markets are slumping in communities that were recently flush from the U.S. shale oil fracking boom. Home sales are down sharply this year in North Dakota and the West Texas cities of Midland and Odessa. Home sales have also slowed in El Paso, and, more recently, in Houston. The Permian basin in West Texas and the Bakken Formation in western North Dakota quickly became magnets for workers. ‘It was not unusual to have a house on the market and, in less than a week, have multiple offers. It was a crazy market,’ said Scott Kesner, chairman of the Texas Association of Realtors.”

“That frenzy began to dissipate early in 2015 as the slump in crude dragged on, and it has since deepened. Real estate agents in Houston say the loss of oil jobs has resulted in less competition for homes — fewer are fetching offers from multiple bidders. On the buyers’ side, the oil industry’s woes are giving some the confidence to put in lower offers, said Tim Surratt, an agent with Greenwood King Properties in Houston. In Minot, North Dakota, which is located within the Bakken Formation, the housing market has cooled somewhat after being red hot for years, said Dorothy Martwick, broker-owner of Century 21 Action Realtors. Now, she said, the scales have tipped more in favor of buyers.”

“‘In 2011, you could ask whatever your wanted for your house and you might get someone to pay it,’ she said. ‘Now, you have to realistically put it on the market for what it’s worth.’”

NewsOK in Oklahoma. “Home construction in the Oklahoma City area, coasting to a slowdown all year, will probably hit the brakes early next year in face of the swooning oil-and-gas business. Edmond homebuilder Caleb McCaleb said that’s the thinking of his colleagues in the business. McCaleb said homebuilders have seen a buildup of their own new inventory, reason enough for them to retreat. ‘Where we’re seeing the trend, it’s starting to trend down’ he said, and builders expect to pull back sharply ‘just because of the energy sector.’”

The Alaska Dispatch News. “Anxiety about the economy has many Alaskans unsure of what moves to make when it comes to buying or selling a home. The answer appears to depend on the price of the house, according to the latest available real estate statistics from the Multiple Listing Service. Above $750,000, it’s a buyer’s market. The inventory for up-market homes is estimated at about one year and would likely be even higher but for the fact that some homeowners in that higher bracket are holding back for now because they can’t demand the prices they want, the report said.”

“‘Anecdotal evidence suggests that the less-motivated sellers simply withdrew from the market when their price objectives were not achieved,’ the report said.”

“David Windsor, an associate broker at RE/MAX Dynamic Properties who works in the upper tier of the housing market, said he expects a blip in the real estate market, but no crash. He routinely tells clients selling pricier properties to be prepared for the selling process to take about two years. ‘Everybody seems to be worried about the upper end, but I’m not at all. There are plenty of people both inside and outside of this state with money,’ Windsor said. ‘And I might add, a million dollars is not that much anymore, in my opinion. There are plenty of folks that can afford homes above a million dollars.’”

The Bismarck Tribune in North Dakota. “With fewer people streaming into the state, demand for housing has slowed in central and western North Dakota during the past year. As a result, buyers are taking more time, looking at as many as 20 to 40 homes rather than being required to act fast and ‘take it or leave it.’ While the number of homes sold is down and apartment vacancy rates are up, Nancy Deichert, executive director of the Bismarck-Mandan Board of Realtors, calls the small decline ‘a return to normal.’”

“Jeremy Petron, president of the Bismarck-Mandan Apartment Association, said a lot of units have been built and the influx of people into the area has slowed. He said the area may even be a little overbuilt when it comes to apartments. Combined, those factors have led to an average vacancy rate of 5 percent to 6 percent, according to an association survey. Vacancies at newer complexes are higher, around 10 percent, because most of those are higher-end apartments, Petron said. A high-end, three-bedroom apartment typically rents for $1,300 to $1,500 per month.”

“In Watford City, the number of vacant apartments is way up. ‘There’s a pile of them coming online now,’ said Gene Veeder, public relations director for McKenzie County Development. ‘Availability is much different than this time last year.’ Rent is more competitively priced, $1,200 to $1,600 per month for a two-bedroom is common, Veeder said. ‘You still see some $2,500 but not many,’ Veeder said.”

“A typical single-family home costs from $250,000 to $300,000. A 20 percent down payment makes it hard to get a loan and some might be reluctant to buy because they got upside down on a house previously. ‘We don’t have inventory of older homes on the market,’ said Veeder, adding that many were snatched up by companies for housing their workers and others were turned into rental units. ‘What we don’t see anymore is a $75,000 house going for $300,000,’ Veeder said.”

Bits Bucket for December 29, 2015

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