Signs Of A Slowdown Abound
A report from Globest. “2016 promises to be another year of above-average rent growth in apartments, just not at the accelerated pace the sector has experienced for the past couple of years. Yardi Matrix is predicting ’solid’ increases for the year, ‘without the froth of 2015.’ Yardi’s forecast of moderating rent growth broadly squares with a CoStar Group report that found rents falling into negative territory during the fourth quarter of ’15. CoStar says same-store analysis of more than 50 million rent observations found that US apartment rents grew at an annualized pace of 9.4% during the first half of the year, but then decelerated to 2.7% growth in the second half, with Q4 in particular showing a decline across many metros.”
“‘Our latest analysis confirms the historically strong growth in apartment rents over the first half of the year has given way to one of the weakest fourth quarters on record,’ says Andrew Florance, CoStar’s CEO. ‘We’ve always observed seasonality in apartment rents, but the downturn over the last three months of the year is certainly a noteworthy occurrence and one that would not be apparent in a year-over-year comparison. While it may be too soon to declare this a trend, it certainly bears watching.’”
The Houston Chronicle in Texas. “Houston’s apartment market saw a slowdown at the end of last year and there’s further evidence the softness will continue. ‘With job growth declining and all the new product coming on, it’s just not a good recipe for a healthy market in terms of owners and landlords,’ said multifamily analyst Bruce McClenny.”
“Landlords have started offering rental concessions. One month of free rent is common, McClenny said, though some properties are willing to cut as much as two months. More than 20,000 new apartments were completed last year, and 29,000 are under construction.”
The Pagosa Daily Post in Colorado. “Recently I was part of a discussion group that was looking at the present and future impact of reduced oil prices on the economy of Southwest Colorado. Will the weak energy sector negatively impact other industries? Will we see fewer visitors to Southwest Colorado from Texas, Oklahoma and Louisiana in the years ahead? Good questions to ponder when you consider how important those areas have been in the tourism economy of Southwest Colorado.”
“I can tell you that the ongoing glut of supply and downward price pressure has certainly reduced the number of qualified ranch buyers looking at one of the finer recreational ranches we are involved in, such as the one illustrating this article. We toured the ranch with a buyer from Texas that came close to signing a contract… but the continuing weakness in the oil industry caused him to retreat to the sidelines. That was the end of last summer and prices have declined further since then.”
Curbed on Florida. “There was a time, only two years ago, when Miami’s condo market seemed like an ever-expanding balloon. But like most things filled with hot air, eventually the balloon starts its gradual descent back to earth. For those who have been waiting for the drop, 2016 may well be the year when softening demand—fueled by stock market volatility in China, low oil prices, currency devaluations in South America, and a heck of a lot of new condo units coming on the market— becomes too much to overcome.”
“As 2016 begins, signs of a slowdown abound. In the condo market especially, there seems to be a growing disconnect between sellers’ expectations and market reality. And local brokers say they are seeing mounting frustration. ‘We are seeing a lot of sellers calling us saying, ‘What is happening? Nothing is moving,’ said Mark Zilbert, president of Brown Harris Zilbert in Miami.”
KESQ in California. “According to new stats released by the California Desert Association of REALTORS, the Coachella Valley’s real estate market closed 2015 on a positive note with a slight increase in the sales of existing homes in December. However, the median price of existing single-family home sales dropped to $307,750, down from $396,500 in December of 2014.”
“‘So many economic factors drive the real estate market,’ said Beverly Fitzgerald, immediate past president of the California Desert Association of REALTORS®. ‘What we know for sure is the foundation of the Coachella Valley’s housing market remains strong and we will continue to improve in 2016 seeing the median price of existing homes continue to increase.’”
