An Ominous Echo Of The Housing Crash
A report from the Kansas City Business Journal. “On Wednesday morning, Katie Yeager, owner/broker of Your Future Address LLC in Overland Park, tried to show a couple three different area homes that had just hit the market. The prospective homebuyers weren’t allowed to tour any of them, however, because the sellers of all three had already accepted offers, Yeager said. ‘There’s hardly any inventory,’ said Jeff Hill, president-elect of the Kansas City Regional Association of Realtors. ‘So a house that looks good and is priced reasonably is going to have a ton of activity and multiple offers on the first day it’s on the market. That’s true for homes up to $300,000, and there’s even $400,000 and $500,000 houses in the right areas that are selling the first day with multiple offers.’”
WMDT in Maryland. “Local realtors say millennials in Salisbury and Wicomico County are making a decision that makes more sense now than it did for the same generation in previous years. Realtors we spoke to also said there are a variety of programs at both the national and state level that make it easier to become a home owner. Realtor Zach Bankert said his clients have used a U.S. Department of Agriculture program that helps with mortgages in rural areas like Salisbury.”
“‘They’ve used USDA financing, which is zero percent down, they got the Maryland mortgage program, $5000 interest free loan to help towards closing costs, and with a little bit of seller contribution, you know, they’ve gotten into a house for basically nothing,’ Bankert said.”
The Contra Costa Times in California. “The conversation that is going around the real estate industry water cooler is, ‘Are we in the bubble in the Bay Area and when is it going to burst?’ ‘This is not a bubble,’ says Chris Thornberg, an economist in Los Angeles. ‘The money flooding the Bay Area isn’t built on speculation like the last boom. These are people with real money, with real incomes. They have enough money to live in whatever cities and neighborhoods they want, so if there’s not enough high-end housing, they’ll just gentrify lower-income neighborhoods.’”
“Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley, said, ‘The high-tech boom we have is unsustainable. Job growth is unsustainable. There will be, in the next three years, a correction. These unicorns (private companies valued at more than $1 billion) will have to cut jobs. That will have by far the most important impact’ on the housing market. The only question, he said, ‘is whether it’s a minor decline or something more substantial.’”
“At this point, with sky-high home prices, house lusting families are willing to do anything to buy even if this means they are setting themselves up for the next wave of foreclosures. Quicken Loan is pushing the rocket mortgage which you can ‘Push Button, Get Stuff’ — sounds about right for a marketing slogan for a Twitter addicted audience that probably has totally forgotten the sins caused by the first Great Recession. Now you can get a mortgage while sitting on the can or going zero down up to $2 million. What can possibly go wrong? So feel free to buy that $1.2 million shack in San Francisco with a 30-year $1 million mortgage. I’m sure that startup will be around in 30 years.”
The Denver Post in Colorado. “Denver’s single-family housing market, with some of the strongest home price appreciation and fastest turnover times in the country, often gets pegged as a bubble in the making. Zillow research director Krishna Rao argues that those looking for a bubble should instead focus on metro Denver’s multi-family rental market. More than 31,000 multi-family permits have been pulled the past four years, a record-setting pace. And new units are expected to keep hitting the market even though more supply means landlords are being forced to dial back on rent increases and provide heftier concessions.”
“He said oversupply will only get worse, given the long times needed to plan and complete apartments. ‘Taken together, all of this suggests that while demand so far has been sufficient to absorb those units that have already come online, it may be stretched to accommodate the tens of thousands of units builders are planning to deliver over the coming years,’ Rao said.”
The Bay State Banner in Massachusetts. “Real estate broker Delince Louis is bullish on Roxbury’s real estate market. A three-bedroom Dorr Street condo his firm sold last year for $550,000 is now back on the market for $618,000. One single family at 10 Elmore Street sold recently for $550,000 in cash to a Chinese graduate student. Another single family at 45 Elmore Street sold for $590,000. Those prices are still far below the $799,000-$879,000 asking prices for condos on Wyman Street in neighboring Jamaica Plain.”
“The gulf between the higher values in abutting neighborhoods and lower values in Roxbury hasn’t stopped sellers from reaching. There’s the nine-room puddingstone house in the Highland Park section of Roxbury that was last year listed at $829,000. It didn’t sell and is now on the market for $750,000. Then there’s a rather battered looking triple decker near Dudley Square. ‘Great opportunity for developers! Major rehab in the heart of Roxbury,’ reads the $659,900 listing on Trulia. That property hasn’t sold in the 56 days it has been on the real estate website Trulia, despite a price reduction from its original $699,000 asking price.”
“The undisputed king of the high asking prices is 27 Howland Street, where a developer carved out a 4,500 square foot unit and a 3,500 square foot unit from a three-story home and listed listed them for $1.39 million and $1.34 million, respectively. Those prices are down from $1.5 and 1.4 million when the property debuted on Trulia 83 days ago. Will the developer get those prices? ‘I don’t think so,’ says broker Kobe Evans. ‘I don’t see it happening. There are some smooth-talking agents who get owners thinking about prices they wouldn’t ask for.’”
The Wall Street Journal on Florida. “Miami is facing a condo bust—again. Developers have started canceling projects, slashing prices and offering incentives such as private-jet access to spur sales, an ominous echo of the housing crash that pounded South Florida especially hard. In the fourth quarter of 2015, the number of Miami Beach condo transactions declined nearly 20% from a year earlier, while inventory jumped by nearly a third, according to a report from appraisal firm Miller Samuel Inc. The median sales price slipped 6.6%, according to the report.”
“Many of the forces buffeting the Miami market are also hitting luxury markets in New York, Southern California, Australia and London. A strong U.S. dollar and weakening local currencies, dropping oil prices and global economic turbulence have crimped the buying power of foreign investors. ‘The condo market has peaked,’ said Neisen Kasdin, a real-estate development lawyer at Akerman LLP in Miami. ‘Sales velocity has slowed down considerably.’”
