March 3, 2016

It’s Still A Serious Disconnect

CBS Boston reports from Massachusetts. “See a house for sale in Boston? Like the price? Don’t get too comfortable. If you want to buy property in certain areas around the city, real estate agent David Bates says you should be prepared to shell out a lot more money than what the sellers are asking. ‘We’re seeing, literally, condos selling for hundreds of thousands of dollars more than the list price,’ said Bates. ‘It’s almost like their listing prices don’t exist.’ Bates says buyers need to know that going in, so they’re not shocked when a bidding war ensues. ‘Buyers aren’t trying to negotiate value in Boston anymore,’ Bates said. ‘They’re trying to win.’”

The Merced Sun Star in California. “After a stretch of little growth, the housing market in Merced County has begun to show new signs of life, with cities beginning to issue more housing construction permits and home sale prices rising faster than the state and national averages. The impact of the Bay Area’s infamously tight housing market is once again spilling over to Los Banos, where the city’s Planning Commission issued 73 permits for new home construction in the first two months of this year. That compares to the 127 permits taken out in all of 2015. ‘(Homes) are not being built and sitting there,’ Senior Planner Stacy Souza Elms said. ‘They’re being sold, as well.’”

“About two-thirds of the Los Banos homes are being sold to people looking to commute to Bay Area jobs, she said.”

From Florida Today. “The new home construction market is moving along at a decent clip in some parts of Brevard County, most notably Suntree, Viera and West Melbourne. But who are most of those homes being built for? Daniel Levitan, a nationally recognized housing expert based in Plantation, said they’re mostly going to people moving into Brevard and not individuals who live here and are moving up from an existing home to a newly constructed one. The price barriers to the new home market currently are just too high for meaningful activity in the latter type of movement, he said.”

“‘What there is, is a disconnect between the pricing of resale housing and the price of new housing,’ Levitan said. ‘And, while improving, it’s still a serious disconnect. And what that has done is that the new housing market then becomes dependent on new ‘in-migrants’ - employee transfers, retirees, whatever - for a large percentage of its business because locals can’t afford to buy new housing.’”

12 News in Arizona. “The west Phoenix ‘urban village’ of Laveen is embarking on a new housing boom. Three new subdivisions are going up in the community of roughly 93,000 residents. A recent study by Brown and Burger forecasts an estimated 18,000 new homes will be built Valley-wide this year. But in Laveen, there are still reminders of what happens when the housing market gets ahead of itself. Another development just to the south of the Beazer subdivision remains half-finished. The site was abandoned by the builder six years ago, leaving dozens of lots empty next to finished homes.”

KFYR TV in North Dakota. “Mariah Schulte says the signs are all over town. ‘Five, six, probably at least seven on my street alone,’ said Schulte, Dickinson home owner. But the price tags on Dickinson homes don’t seem to be lower, even with more options and an economic slowdown. ‘People have lost way more than we have and housing prices just aren’t coming down,’ Schulte said.”

“Schulte’s family recently moved into the larger home, and says a house nearby is listed for more than what she paid. But those in real estate say business is steady and prices have lowered about 10 percent. Shirley Dukart, Home and Land Company broker associate, admits homes purchased by oil companies and rented have flooded the market, but says many who once couldn’t afford homes, now can and are looking. ‘They can afford the home prices because now they’re up to 250, before that we had 250 and higher,’ Dukart said.”

The Scotsman Guide. “In recent months, some economists have cited a lack of new homebuilding as the cause of tight housing inventories and rising home prices. National Association of Home Builders (NAHB) Chief Economist David Crowe spoke with Scotsman Guide News about why the supply of single-family homes has lagged behind traditional levels, and also why he doesn’t believe the nation is experiencing a housing shortage.”

“Q: Over the last couple of years, why haven’t builders been more aggressive on the single-family side? A: It is all about demand. For example, in one positive report this past week, we noticed that inventories of new homes for sale have continued to increase, but the [drop in] sales of new homes in general has [been the result of] a lack of demand. The lack of the buyers [is caused by] a number of things. One principal reason is that purchasers of new homes are almost always sellers of existing homes, and the turnover in existing homes has been extremely low. Without that feed from the existing market into the new market, the new market has been slow to recover.”

“Q: Are there factors that are holding building back? A: The number one factor is demand. There hasn’t been a robust demand from potential buyers, but it is also true that builders are having difficulty finding trained labor and also some difficulty in finding lots in desirable locations in places where people would want to live.”

Q: Some economists have said housing shortages are developing. Do agree with this? A: I don’t agree with that at all. It is a lower inventory than we would normally be used to. If you compare the level of the inventory now to what it would be normally, you could perhaps come to that conclusion, but that is ignoring the fact that we have lower demand. You wouldn’t want to see the inventory exceed the expected demand.”

Bits Bucket for March 3, 2016

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