The Volatile Nature Of Boom And Bust
The Stockton Record reports from California. “San Joaquin County is among the nation’s most active housing markets for home flipping in 2015, RealtyTrac reported. Irvine-based RealtyTrac tallied nearly 700 home flips in San Joaquin County last year, accounting for 8.6 percent of all single-family and condo sales. It defines a home flip as a property that is sold for the second time within a 12-month period. That ranked the county — known demographically as the Stockton-Lodi metropolitan area — eighth among the 110 most-active home flipping markets. But the Stockton area was a standout for another reason — here, home flipping activity declined 11 percent from 2014. In each of the other 10 most-active house flipping markets, activity rose from year to year.”
“In San Joaquin County, RealtyTrac reported the median purchase price of a flipped home was $175,000, more than 17 percent below estimated market value, and were sold at a median $245,000, a 7 percent premium over market.”
The Daily Business Review in Florida. “Verzasca Group LLC believes now is the time to delve into the rental business. The Bay Harbor Islands-based developer has focused on condominium projects since its inception in August 2014. But it’s time for change, said Tim Lobanov, the firm’s managing director. His decision comes amid a slowdown in Miami luxury condo sales. Existing condo sales declined 10 percent in January compared to a year before, according to the Miami Association of Realtors. And developers continue pumping out supply. There are 78 towers with 1,769 floors and 11,201 units under construction in Miami-Dade County east of Interstate 95.”
“Why is Verzasca Group choosing the rental market as opposed to office or retail, and why now? ‘I’m sure it’s not a surprise that the condo market is slowing down a little bit. So we thought it would be the right time for us to diversify our business and start looking for rental opportunities.’”
The Coloradoan. “New home construction in Fort Collins is off to a slow start in the first two months of 2016. Builders pulled just 63 permits for single-family homes and nine multifamily units in January and February, the lowest two-month total to start a year since 2012. National firms are building new Fort Collins home in the $400,000 to $500,000 price range and may be sitting on a number of homes that haven’t sold yet, said Eric Holsapple of Loveland Commercial Real Estate, which is developing the Storybook subdivision in Fort Collins. ‘We’re definitely back to a drive ’till you qualify market,’ he said.”
“Despite the slowdown in permits, ‘the market is still really strong,’ particularly in the under $300,000 price range, Holsapple said. ‘I would expect the volume to slow down just because we’ve had more than 10 percent price increases for four straight years.’”
The Houston Chronicle in Texas. “The buyer who plunks down $3.9 million for the new five-bedroom house on Wink Road in Memorial’s Bunker Hill Village will walk on marble floors, cook with Sub-Zero appliances and swim in a custom-built pool. If that person steps up in March or April, the luxurious estate also will come with a $90,000 Tesla. The agent listing the property convinced the builder to pony up for the premium electric car in hope it would help snag a buyer. The property has been on the market since September and Houstonians aren’t purchasing as many luxury homes as they were when oil prices were rocketing past $100 a barrel.”
“In a city where fortunes are made and lost on the price of oil, some sellers of high-end houses are lowering their asking prices or resorting to unconventional tactics, some exotic but others more typical of the mass-market trade. ‘There are still buyers out there, but they really seem to have less of a sense of urgency,’ said real estate agent Diane Kingshill, who is listing the Bunker Hill house. ‘… Their hesitation is caused by their wondering what’s going to happen in the future. Will prices go lower?’”
“In further testament to the market’s fragility, Al Ross, the builder selling new homes in River Oaks, just called off his latest project, a six-story condominium building. Ross announced the project about a year ago and was planning to break ground on it last fall. The units were to start at $1.3 million. John Daugherty, Realtors had been listing units in the proposed building. ‘We withdrew the listing because it wasn’t the time to be marketing something like that,’ said John Daugherty Jr.”
“Kingshill said some of her listings are owned by Houstonians who wouldn’t be selling were it not for the struggling oil market. ‘I have more than one that are CEOs of their own energy companies that are hoping for equity out of their house to help their business,’ she said. To help promote her Bunker Hill listing and the Tesla giveaway, the homebuilder, Kickerillo Cos., is planning a March 30 event at the house for real estate brokers and the public. ‘We’re trying to do something creative to get attention to the property,’ Kingshill said. And if house doesn’t sell, ‘we’ll probably adjust the price and move on.’”
The Sierra Sun in Nevada. “Are we heading for another housing bubble? This is the question that continues to come up as residents read about rising home prices. To them, it feels like 2006. In the fourth quarter of 2015, 52.9 percent of homebuyers in the Reno MSA (Metropolitan Statistical Area) could afford a median value home, as opposed to 55.8 percent in the last quarter of 2014.”
“As challenging as the $300,000-$600,000 price range is, homes that are priced above this are not experiencing the lack of demand and have a different metric of absorption depending on the price: $601,000-$900,000 represented 3.5 percent of all sales in 2015 with a 5 month absorption rate; $901,000-$1,500,000 represented 1.3 percent of all sales with 9.8 month supply and homes above $1,500,000 represented .4 percent and have 27.3 months supply. All in all, we are experiencing a slow recovery but we need to have more affordable houses being built in order to grow effectively.”
The Deseret News in Utah. “A global market flooded with an oversupply of oil has led to plummeting prices and an exodus of workers from eastern Utah as companies declare bankruptcy, tighten their bottom line and cease exploration waiting for the cost of a barrel of oil to rise. Residents of the Uinta Basin are feeling it keenly, with businesses closing down week by week and others struggling to survive. Families are figuring out which bills to pay, the ones they can let go, and seeing their homes in foreclosure.”
“Kathy Deets sees the panic and fear on fresh faces in her office each week as the newly unemployed line up to apply for benefits, scour the computers for jobs and learn the ins and outs of federal assistance. ‘I tell them when they get to the end of their rope to tie a knot,’ she said. ‘That knot may get really big, but they’re still hanging onto that rope.’”
“‘Every business is seeing a great decrease in their sales,’ said Barton Jones, who owns a Duchesne ammunition and gun store that also sells a variety of other items. ‘Even if they come in, they look around and leave, because they just don’t have the money to spend.’”
“‘Our area is hit extremely hard,’ said Duchesne County Commissioner Greg Todd. Todd spent 40 years in the industry, so he knows its volatile nature of boom and bust, the frenetic ascent of a community bursting with job openings, struggling to find people to put to work, hotels and rental homes filled to overflowing and the money pouring in, only to have it tumble over the cliff. ‘There are for sale signs and for rent signs,’ he said. ‘Eighteen months ago, that would have been unheard of.’”
