January 4, 2016

The Pastel-Colored Unicorn

The Ravalli Republic reports from Montana. “The Missoula real estate industry looks like it will keep up 2015’s brisk pace in 2016, but it’s still somewhat of a seller’s market – meaning affordability is climbing out of reach for many buyers. ‘As of now, we don’t see many reasons why the positive trends of 2015 wouldn’t continue into 2016,’ said Mike Nugent, president of the Missoula Organization of Realtors. ‘The biggest problem Missoula has had is lack of inventory. That has caused the median price to go up to a point we haven’t seen, well, ever, including pre-housing bubble.’”

The Idaho Statesman. “Median home prices have steadily increased across the Valley. They were up 8 percent in Ada County through the first three quarters of 2015, and 7 percent in Canyon. That is partly because out-of-state buyers are inflating the market, said Idaho Housing and Finance Association Executive Director Gerald Hunter. Real estate agent Lacey Beauvais was one of a handful of agents who have told the Statesman this year that 40 percent or more of their buying clients moved from another state. Many of those buyers sold homes in high-dollar markets in California, Washington or Oregon and bought larger houses for less money in high-end Valley neighborhoods.”

“Those buyers drive up prices even though they usually stick to the higher end of the Valley market, Hunter said. ‘If you drive up the upper end of the market, that will have a pulling effect on lower-price homes as well,’ Hunter said. ‘You can’t segregate them.’ Cash-rich buyers entering the market can also close more quickly than local, median-wage-earning buyers who need to line up financing, Beauvais said. ‘Last summer, I worked with buyers from Oregon, California, Colorado, and a lot of times we beat locals out of the market just because sellers like cash buyers,’ she said.”

The Boston Herald in Massachusetts. “Boston’s residential real estate market in 2016 looks to be as strong as last year with more new apartment buildings as well as a number of smaller, boutique condo buildings sprouting up. But it’s the Seaport that will see the largest influx of super-luxury condo complexes. Are we headed for a glut of luxury condos in the Seaport? ‘If all these condo projects time their openings properly, there shouldn’t be a problem selling them,’ said Fan Pier developer Joe Fallon of the Fallon Cos.”

The Milwaukee Business Journal in Wisconsin. “New development in the apartment market shows no signs of slowing in 2016. Roughly 4,000 apartments recenlty opened, are under construction or proposed, said David Behnke, president of Siegel-Gallagher Management Co. in Milwaukee. ‘I think we’re going to start to see a little bit of oversupply,’ he predicted.”

“That means pressure to lower rents for some units, and more use of concessions in new buildings that are first opening their doors to renters, Behnke said. Those concessions could include free rent for the first month, or months, for tenants, he said. ‘Developers want to get the buildings filled quickly, so their method of choice has been pretty sizable concessions,’ he said.”

The Benito Link in California. “So how has the market faired this year? I was doing some research and discovered the prices have come up in Hollister and San Benito County an average of 17 percent in the last 12 months. That’s actually a little scary. At the beginning of the year, it was definitely a seller’s market, with multiple offers being relatively common. Now, inventory is staying on the MLS for longer times. While having the luxury of picking from among several offers seems to have gone by the wayside, most properties are being sold at 98 percent of the list price. The average sales price this month has been $560,000. Properties are not selling for over list price as they were at the beginning of this year.”

“One of the worst strategies for both a seller and a buyer is the ‘Let’s Just See.’ For sellers, pricing a home too high makes it so the property shows poorly against its competition. And even worse, people who could afford to buy the home (and might really love it!) won’t even see it because they think it’s out of their price range. For buyers, throwing a lowball offer into the ring might actually insult the seller, who could then refuse to deal with you at all. As professionals, Realtors try to dissuade clients from Let’s Just See, but its siren song is strong.”

From Salon. “Earlier this month when Fed chair Janet Yellen offered her rationale for raising interest rates, it was sadly reminiscent of President George W. Bush’s infamous ‘Mission Accomplished’ speech. Yellen spoke from her well-feathered perch about the ‘considerable progress that has been made restoring jobs, raising incomes, and easing the economic hardship of millions of Americans.’ A few days later Congress passed a $1.1 trillion spending bill and $700 billion in tax breaks before they went on their holiday. The president signed off on it all and headed off for his spectacular vacation to Hawaii.”

“Just what country are these happy holiday revelers living in? Even the Hallmark Channel in 2015 has more social realism than the happy talk generated from the Beltway.”

“Down here at the pedestrian level, between 2010 and 2014 poverty increased in one third of America’s 3,000 counties, when compared to the 2005 to 2009 period, according to the U.S. Census’s American Community Survey. In fact, the ‘recovery,’ that pastel-colored unicorn, was only seen in the 4 percent of the nation’s counties where poverty actually declined. The rest remained stagnant. A wide swath of the Pacific Northwest and most all of California, down on through the Southwest, saw this rise in poverty. On the East Coast, the New England states and those in the mid-Atlantic region were equally hard hit, and the ‘new’ South did not escape unscathed.”

“And while Yellen and her colleagues, with their Inspector Clouseau magnifying glass, are unable to find inflation, there is plenty of evidence of deflation of the wages Americans are earning. NELP found this past Labor Day that wages in the 800 lowest-paying occupations they surveyed had actually declined by 5.7 percent from 2009 to 2014. Mid-level wage-paying positions saw a 2.6 decline in the real median wage while the best-paying jobs saw a 3 percent slide.”

“Historically, residential rental costs were deemed as affordable if they were below or at 30 percent of a household’s monthly income. According to a comprehensive Harvard University study, in 1960 only one in four renters paid more than that 30 percent threshold for housing. Today, half of all renters are defined as cost burdened. From 2007 through 2011 the number of households ’severely burdened,’ in that their rent claimed 50 percent of their income, spiked from 2.5 million to 11.3 million households.”

“While many Americans struggle to find safe and affordable housing, the U.S. Department of Housing and Urban Development reports, post-foreclosure meltdown, there are 2.5 million vacant homes in the hardest-hit 25 American cities. These homes, and millions more in the rest of the country, are rotting in place. Data published by the National Center for Homelessness and Poverty shows that the number of poor families that have doubled up with relatives or friends is approaching 8 million, up by 67 percent since 2007. Over the same period the number of poor households where more than 50 percent of their monthly income goes to rent is approaching several million, up 25 percent since 2007.”

“Back in 2012 in their seminal book ‘The Rich and the Rest of Us: A Poverty Manifesto,’ authors Tavis Smiley and Cornel West captured the essence of our national political discourse with an accuracy that endures. ‘Beyond sound bite competition, these candidates for high office, protected with gilded lives of wealth and privilege, seem to know nothing about poverty or the poor. They claim to be concerned about the middle class, but they must have not gotten the memo, the new poor are the former middle class.’”

Bits Bucket for January 4, 2016

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