January 20, 2016

A Dominant Theme: When Will It End?

The Longmont Times-Call reports on Colorado. “Positivity was the theme of the evening at the 2016 Economic Forecast event, put on by the Boulder Economic Council. The first question asked of Rich Wobbekind, executive director of the business research division at CU’s Leeds School of Business, was a dominant theme in nearly every conversation about the local economy, as recent upward trends in nearly every category have people asking: When will it end? One area that Wobbekind conceded might be a bit of a bubble is housing. ‘Our housing prices clearly are outrunning the income levels of a lot of people,’ he said — and there’s no indication that things will slow down in the coming year, as building remains slow.”

The Silicon Valley Business Journal in California. “New data from housing site Zillow shows a trend that might come as a surprise to many watchers of Bay Area real estate: When it comes to all-cash deals, the San Francisco metro region didn’t even crack the list of top 10 U.S. markets seeing such transactions. Zillow also pointed out that cash, which was king during the recession when it was difficult for many buyers to get mortgages, is no longer a large crutch for buyers. That is particularly true in the Bay Area, where massive price tags discourage a lot of cash buyers, said Svenja Gudell, a chief economist at Zillow.”

“‘Much of that is driven by the fact that homes cost so much more in San Francisco, with a median home value of $781,900 for the metro,’ she told the Business Times. ‘The median home value in Miami is $224,900 and in Detroit $121,300, making buying with cash there much easier.’”

The Real Deal on Florida. “In a bold move to sell the leftover units at Brickell Heights and SLS Lux, the Related Group is now offering real estate agents 10 percent commissions — in addition to lowering buyers’ deposit requirements — at both Miami projects. The commissions at the two nearby Brickell area projects equate to as much as double the standard 5 percent to 6 percent sales fee most condo projects offer, several top real estate brokers and executives told The Real Deal.”

“It’s the latest incentive as the Miami market slows down and flattens, amid foreign currency devaluations that are hampering spending. ‘I think it shows signs of desperation,’ said Harvey Daniels, VP of development sales for ONE Sotheby’s International Realty, which is handling preconstruction sales at such upscale projects as One Thousand Museum, Three Hundred Collins and L’Atelier — all at 5 percent commissions.”

“At a Bisnow conference last week, Related Chairman Jorge Perez said that 80 percent of Related’s preconstruction condo sales are to foreign buyers, and he conceded that declining foreign currencies have had the ‘largest dampening effect’ on the local real estate market. A key issue for the future, he said: ‘How do we get this market to be more local?’ When Related dropped deposit requirements to 30 percent from 50 percent at Brickell Heights 02 in October and at SLS Lux in November, Rosso had said it was so that the projects could be quickly sold out and the sales centers closed to move on to other developments. He disputed the idea that it was a sign that the preconstruction luxury condo boom had reached its peak.”

WTOP on Virginia. “Northern Virginia remains one of the most expensive places to buy a house or a condo in the D.C. region, but, by one measure, prices got a little cheaper last month. The Northern Virginia Association of Realtors says the average price of a home that sold in December was $551,451, down 3.71 percent from a year ago. Even so, the median price, a more accurate measure of selling prices, was down just 0.2 percent from a year earlier to $479,900. The median selling prices in both Arlington and Fairfax counties were down more than 2 percent.”

“‘Considering we have a year with new closing laws, a slower-than-usual market in the summer, a strong fall market, and sometimes a flurry of bidding wars, our buyers and sellers had a great 2015,’ says NVAR Chairman Virgil Frizzell. ‘Our region could always benefit from affordably priced new homes that will help our renter population make the move to homeownership.’”

The Urban News Service on Maryland. “Affluence is no antidote to foreclosure. In Prince George’s County, Maryland — one of the United States’ wealthiest majority-black jurisdictions — the foreclosure crisis has hammered several solidly middle-class communities. ‘They didn’t understand what it meant to take out a second mortgage, to refinance or to receive a subprime loan, they just made purchases,’ said Bob Ross, president of the NAACP chapter in Prince George’s County. ‘So when the bubble burst, they were stuck.’”

“One woman who attended the NAACP meeting in Maryland said she was there because she and her husband’s 3,800-square-foot home in the Woodmore South community was foreclosed after they failed to pay their mortgage for more than six months. She was laid off from her paralegal job more than a year ago. Her husband owns an entertainment company. She said she and her husband bought their home for about $700,000 in 2008. It now is worth less than $500,000. ‘My husband is in the luxury entertainment business, and when people started cutting back on luxuries, we had less money coming in,’ she said. ‘Then I lost my job.’”

The Suffolk Times Review in New York. “As incumbent assessor Richard Caggiano took the oath of public office for the second time Jan. 4, a separate proceeding related to his personal assets was taking place on town grounds. Following a two-year foreclosure process, his home was being auctioned off at Town Hall. Court records show the former Planning Board member and Southold Board of Education president and his wife owe more than $500,000 in principal and interest on a home loan after refinancing in 2010.”

“After refinancing his home, Mr. Caggiano was later laid off from his job as a budget analyst with the county. He did not find full-time employment again until he was elected as an assessor in 2013. ‘When you lose two-thirds of your income, there’s no way you can pay your mortgage, get your kids through college and deal with other expenses,’ he said. ‘It ain’t happening.’”

“Long Island has been hit particularly hard by the mortgage crisis in the past decade, something the state comptroller’s office noted in an August report. Suffolk County led the state in 2015 in the percentage of housing units being foreclosed on. ‘The foreclosure problem has tended to hit hardest in areas where the housing market had ‘boomed’ in the years preceding the recession,’ the comptroller’s report stated. Mr. Caggiano said his foreclosure reflects that boom. While a future buyer of his home may end up paying less in taxes, ‘the home is overvalued today,’ he said.”

“Town tax rolls list the home’s full market value at $545,455. Monday’s auction at Town Hall began with a starting bid of $450,000. No other bids were made, leaving the bank in possession of the home.”

Bits Bucket for January 20, 2016

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