Demand For Luxury Has Limits
The Los Angeles Times reports from California. “Packed open houses. Bidding wars. Rising prices. That’s the landscape for much of the Southern California housing market as the spring selling season gets underway. ‘Be ready to write the offer on the Realtor’s car,’ mortgage broker Jeff Lazerson said.”
“Sameena Shaikh, a medical researcher, and her husband, Muddassar, who works as a software engineer in Santa Monica, have been searching for a home for about a year but haven’t pulled the trigger. As they surveyed the packed open house they vowed to be less picky. Muddassar explained their new tactic: ‘Let’s just buy something.’”
“Not everywhere in Southern California is red hot, however. Pegi DiRienzo, a Teles Properties agent, said the market has slowed in the corner of Irvine in which she specializes. There are fewer buyers from China than last year, given troubles in that country’s economy, DiRienzo said. ‘It’s going to take a little longer this year to sell properties,’ DiRienzo said. The ultra-luxury market — $10 million and above — has also floundered as international buyers pull back while the economies in their home countries weaken and the U.S. dollar strengthens, said Nick Segal, chief executive of the Partners Trust brokerage in Beverly Hills.”
“‘A fair number of these purchases 12 months ago were aspirational luxury purchases: ‘I now own a home in Los Angeles and it’s my fourth residence,’ he said. ‘Those buyers have dried up.’”
From Hawaii News Now. “Howard Hughes Corporation will begin accepting applications for buyers in a new Kakaako high-rise that’s mostly moderately priced Saturday, sparking an important question: Is the luxury condo market softening? In January, the luxury condo Vida at 888 Ala Moana, planned by a different developer, announced it was scrapping the project because of a lack of sales and increased construction costs. In a letter to shareholders on Wednesday, Howard Hughes CEO David Weinreb said ‘Demand for luxury condominiums in Honolulu, like any market, has limits.’”
The Institutional Investor on Florida. “The South Florida real estate market, which includes Miami-Dade, Broward and Palm Beach counties, has enjoyed a strong rebound over the past six years from the meltdown of 2007–’09. But some analysts say a bubble may be percolating in the condominium market, especially in Miami, which has seen a huge influx of foreign buying.”
“‘South Florida is in a big bubble for high-end condos,’ says Jack McCabe, an independent residential real estate analyst in Deerfield Beach, Florida, who correctly forecast the rout in the 2000s. The bubble is different this time around, he says. ‘Last decade it was U.S. real estate causing a U.S. recession, causing a global recession. This decade it’s a global recession that will end up causing a U.S. recession, causing a decline in the U.S. housing market.’”
From CNBC. “CNBC Contributor Ron Insana thinks high-end housing is headed to crash, particularly in New York where he’s seen a dangerous oversupply, citing slowing demand, especially from foreign buyers. ‘Anything under $3 million, we’re seeing go right off the market,’ Austin Hoffman, real estate agent with Douglas Elliman told CNBC. ‘We’re seeing a lot of price reductions in those higher end properties as listings are not moving as fast.’”
The Oklahoman. “Houses sold faster this winter than last, but for a little less on average, according to the Oklahoma City Metro Association of Realtors. After a bottleneck dating to the Great Recession, new neighborhoods with ready-to-build lots are coming available, said developer-builder Jack Evans, owner of TimberCraft Homes. Houses priced much over $275,000 to $300,000, he said, ‘are a little sticky,’ but he’s not aiming for the upscale market.”
“For all the worry about depressed crude oil prices, job losses and the effect on the economy, Evans said, housing not connected directly to the high-income unemployed isn’t feeling it. ‘That’s part of our strategy. We don’t sell a lot of houses to people who work at Chesapeake,’ he said, but so far this year, ‘I’ve sold three houses to people who work at P.F. Chang’s.’”
KTRH in Texas. “Home ownership is becoming increasingly more difficult for Americans. The average price of a single-family home in Houston in February was just under $261,000. ‘People are not able to afford a home because prices are higher than their actual wages and what they could qualify for,’ says Michael Weaster of Berkshire Hathaway HomeServices Anderson Properties.”
“Weaster says Houston remains relatively affordable compared to other major U.S. markets, and should become a buyer’s market in the coming months. ‘Its all shaking out with oil and the layoffs that have been happening in the last 12 months, I’m starting to see more and more defaults happening within the energy corridors,’ he says.”
