Froth, Overpaying, Fear And More Price Reductions
The Kern Golden Empire reports on California. “The numbers are in for the 2015 Bakersfield housing market and Thursday the forecast for 2016 was released. Local appraiser Gary Crabtree says uncertainty over oil prices makes for a difficult forecast. Oil layoffs mean shattered budgets at home, putting mortgage payments in jeopardy, among other things. Without being able to tell how much longer the slump will last, Crabtree said 2016’s market changes are dependent the health of our local oil and Ag industries. Local real estate agent, Laurie McCarty, agrees. ‘We see a fear of those in the industry, a lot of sellers proactively putting their home on the market, trying to preserve whatever equity they have, even though they still have a job they think maybe at the end of the year they won’t,’ said McCarty.”
The Midland Reporter Telegram in Texas. “The recent oil boom led to a huge increase in rental prices. Ryan Dixon, 28, who moved to Midland last year, faced a situation of wanting a newer apartment since it would mean only a few hundred dollars difference. He visited about 10 complexes between May and the end of June. By the time of his move-in date, the rent of the apartment Dixon chose decreased $300. ‘It’s so amazing, the supply-and-demand difference, even back then,’ Dixon said.”
“He had picked the complex because of amenities, price, location and floor plan were the best of the 10, so the price drop came ‘as a plus,’ he said. Dixon signed a one-year lease but anticipates he could negotiate for lower rent. His reasoning is the decline in the oil and gas industry but also from a less-than-scientific measurement: available parking spots. ‘Just based on observational occupancy rates, it appears to be close to 50 to 60 percent occupancy now. Just based on how many parking spots are full every night and all that jazz,’ Dixon said. ‘It’s nowhere near as full as when I first moved in.’”
The Sierra Sun in Nevada. “The average sales price for an existing single family home in Washoe County was $292,000, according to recent statistics released by the Reno/Sparks Association of REALTORS. This is a decrease of 12 percent from November 2014 and a moderate 4 percent increase from October. Still, even with higher prices, it’s a buyers’ market, according to Sarah Carmona Zink, owner of Dreams Realty in Reno. She says homebuyers more and more are asking for concessions in contracts, such as asking sellers to cover home warranties or for any repairs before they take up residence. And they’re asking for these concessions up front.”
“‘We’re in a weird place, because we’re seeing a low inventory, but we’re seeing a lot more price reductions. Buyers are not apt to get into bidding wars and reluctant to buy until the price feels right,’ said Zink. ‘We’re starting to see price reductions and a lot more repair requests.’”
The Miami Herald in Florida. “Eddy Arriol’s Apollo Bank has been a big hit, recently earning a coveted five-star rating from Bauer Financial. Arriola answered these questions from the Miami Herald in an email. Q. Are Latin American investors and businesses facing liquidity issues because of struggling local economies? How will that affect crucial drivers of Miami’s economy such as real estate?”
“A. Yes, Latin America — and the rest of the world — is having liquidity issues, but that is not the only driver in figuring out what will happen to Miami’s economy…If you’re asking me if things are frothy in the luxury condo market and if foreign and out-of-town investors are overpaying for multifamily rental properties, then I’d say yes. We have a luxury real estate correction knocking on our front door.”
The Nikkei Asian Review. “According to the Institute of International Finance, the net capital outflow from China stood at $60 billion in April to June of 2015. The figure grew to $221 billion in July to September and to $239 billion in October to December. Where has the money gone? The answer can be found in Manhattan. Close to the intersection of 53rd St. and Lexington Avenue, a 61-story condominium is under construction. The residential tower, whose penthouse will be sold for $65 million, is slated for completion in 2017.”
“What is interesting is the list of developers involved in the property. It includes state-owned nonperforming asset disposal company China Cinda Asset Management and China Vanke, a real estate company. Chinese businesses invest in property projects in the U.S. and sell them to affluent Chinese. This condo may be one such ‘all-China’ property. ‘We are seeing less individual investors with the smaller numbers of $1 million to $3 million. Now the larger purchases on an institutional level with north of $10 million have significantly increased,’ said New York-based real estate lawyer Edward Mermelstein.”
The Worcester Telegram in Massachusetts. “When David J. Parent purchased a single-family two-bedroom house in Worcester in November 2006, he paid $195,000 for it. Now after a series of roof replacements, bath and kitchen remodels, new electrical wiring and the passage of nine years, his father’s real estate agency, Parent Prudential Associates, sold the house for $184,900 – $10,100 less than the purchase price of the house. ‘He won’t be even able to sell it for the original price. It’s worth less than it was 10 years ago,’ said his father, David G. Parent, before a purchase and sale agreement was reached.”
“The house at 27 Uncatena Ave., which was listed for sale for $194,900 on Oct. 29, underwent a series of price adjustments, dropping to $189,900 and then to $184,900, which is the price it sold for earlier this month. ‘This house is a typical situation of what is happening in Worcester right now,’ David G. Parent said, with a shrug of his shoulders.”
