February 3, 2016

Speculation And Hesitation

A report from the Wall Street Journal. “Wall Street wants to bring back the ‘low-doc’ loan. These mortgages, which are given to borrowers that can’t fully document their income, helped fuel a tidal wave of defaults during the housing crisis and subsequently fell out of favor. Now, big money managers including Neuberger Berman, Pacific Investment Management Co. and an affiliate of Blackstone Group LP are lobbying lenders to make more of these ‘Alt-A’ loans—or even buying loan-origination companies to control more of the supply themselves—according to people familiar with the matter.”

“Years of easy-money policies by central banks and ultralow interest rates are pushing investors to seek out riskier assets with higher yields, such as these Alt-A loans.”

The Tennessean. “Lisa Wurth, the Farmers’ Realtor, said the market is unbelievably competitive. She knows of one seller who received 21 offers in just one day. ‘It’s obviously a sellers’ market and absolutely a prime time to sell,’ said Wurth, president-elect of the Williamson County Association of Realtors (WCAR). Buyers have to be ready to move quickly, especially in certain price ranges, said Benchmark Realtor Sharon Brugman. ‘If you see a house for $300,000 or below, you have a bidding war on your hands. Even $400,000 and below. That’s a crazy-strong market,’ said Brugman.”

“Buying a home is a significant step, and WCAR President David Logan understands why clients often tell him they want to take time to pray over their decision before making an offer. ‘While you’re praying about it,’ he tells them, ’someone else’s prayers are being answered.’”

The Laguna Beach Indy in California. “The median price of homes sold in Laguna Beach during 2015 fell to $1.7 million, a 5 percent decline over a year ago and the first price drop in four years of escalating values. The total volume of home sales also declined for the year, to 384 transactions, a 6 percent drop compared to 2014’s levels, according to MLS data compiled by Frank Hufnagel, past president of the Laguna Board of Realtors. Hufnagel described the 2015 price decline as an ‘expected correction’ given the ‘overheated’ escalation in the three previous years, where median home prices locally rose at double-digit rates year over year.”

“And while a flurry of higher-priced $5 million homes found buyers last year, a sea change cooled the market at mid-year. Fewer prospective buyers traipsed through open houses and top-end homes began to languish. Last year, 22 homes priced at $5 million or more sold in Laguna Beach; today, 46 in that price range – or two year’s worth of inventory — are on the market, Hufnagel said. ‘The market is much healthier at the lower level,’ he said.”

The Real Deal on Florida. “Miami’s residential real estate sector is still sending mixed signals, though one seems clear: don’t expect many broken sales records in 2016. The city — including luxury enclaves on both the mainland and Miami Beach — experienced a big slowdown in sales activity during the final quarter of 2015, while pricing trends swayed depending on the neighborhood, according to fourth quarter 2015 Elliman reports.”

“For Miami, the data shows one major trend: the residential market has slowed. Sales for both condos and single-family homes in Miami Beach were down significantly and new inventory continues to surge into the market. ‘The market has transitioned out of this sort of frenzied situation from the last couple years to something that’s not as robust,’ Jonathan Miller, president of Miller Samuel and author of the report, told The Real Deal. ‘The sense of urgency is not the same.’”

The New Canaan Advertiser in Connecticut. “Reflecting on the year that was 2015 in New Canaan residential real estate, with its flat unit sales, lower median price and higher inventories, there was no common theme among realtors about why the market was the way it was. ‘The second half of the year, however, seemed filled with speculation and hesitation. The strong and late spring market seemed to come to a screeching halt at the end of June. Builders and contractors were crazed, which is sometimes a sign that people are staying put,’ said Rachel Walsh of William Pitt Sotheby’s.”

“Joe Scozzafava, an agent with William Raveis and president of New Canaan Board of Realtors, said, ‘Inventory is high and mortgage rates are still at historic lows. Almost 30% of the inventory is more than 180 days on market, and we have motivated sellers. Median prices have come down and we are seeing steady reductions in asking prices. It’s a buyers market.’”

“Perhaps more importantly, Scozzafava said, ‘Wall Street bonuses impact the local real estate market, and word is that they are similar or below 2015 levels.’”

Bits Bucket for February 3, 2016

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