April 19, 2016

A First-Come, First-Served Market

A report from Bloomberg. “As the luxury market expanded after the financial crisis, developers bent over backwards to up the ante, hawking screening rooms, wine cellars, bocce courts, and concierges until so many buildings had them that they seemed like one big blur of luxury add-ons. In the hope that buyers have not become completely immune to fancy treats, a new development in Sunny Isles Beach, Fla., is offering something so over the top that it’s actually in the sky. With every purchase of a condo at the 61-unit Aurora, owners get a one-year membership to JetSmarter. The company lets users charter private jets in 170 countries.”

“The Aurora isn’t the only development offering easy access to private planes. In New York City’s TriBeCa neighborhood, the developers of 111 Murray Street have teamed with Blue Star Jets. Even with such enticements, it’s a tall order to hawk high-end condos these days, and not just in Florida. Last year, we reported that luxury real estate prices in Manhattan were on a downward slide. But better amenities might not do much to correct the downturn, says Jonathan Miller, president and chief executive officer of real estate appraisal firm Miller Samuel Inc.”

“Luxury buildings have been overbuilt, he says, and developers may actually lessen amenities in the future to rein in costs.’The market’s slow, so there’s this assumption that we’re going to see a battle of amenities,’ he says. ‘I think that the focus on amenities is going to shift to items that are much more pragmatic.’”

The Real Deal on Florida. “First-quarter sales of single-family homes and condos in Palm Beach dropped from the levels of last year, Douglas Elliman Real Estate reported. Elliman calculated that the number of condo sales in Palm Beach fell 50 percent to 45 units in the first quarter, down 50 percent from last year’s first quarter, while single-family home sales declined year over year by 14.3 percent to 24 homes.”

“The average sale price of a single-family home in Palm Beach increased to $7.9 million in the first quarter, up 70 percent from the same period last year, and the average price per square foot rose 37.1 percent to $1,588, a new record. But Elliman also reported that the average sale price of a Palm Beach condo dropped to $922,822 in the first quarter, a year-over-year decline of 10.7 percent.”

The Record Journal in Connecticut. “The Town Council voted Tuesday night to remove the affordable housing requirement for Simpson Village, a 55-and-older condominium complex on Center Street. Bob LaRosa, of LaRosa Construction Co., is listed as principal for the company, according to the secretary of the state. LaRosa and his attorneys argued that despite having the affordable units on the market for 18 months, they have only been unable to sell one due to the stipulations which require they be priced starting at $250,000, and that they be sold only to seniors with annual income of less than $68,000.”

“Former mayoral candidate Donald Kennedy, who is retired, said he looked at Simpson Village when he was moving to town and passed it over because it was overpriced. He said the burden of the lack of sales should not be the council’s. ‘The condo market is a very, very soft market and I don’t think we need to bend over to help the developer,’ Kennedy said. ‘I’m sure he’s going to survive, so I think we should either ask him to lower his prices and make it more affordable for the seniors than for the council to give him another sweet deal.’”

CBS SF Bay Area in California. “They’re words you don’t expect to hear about San Francisco’s housing market: lower prices. But guess what, It’s actually happening right now. Arrian Binnings, from Pacific Union/Christie’s International says the market is balancing out from record levels. ‘The number of solds that have occurred so far in 2016 is about 15 to 20 percent less than it was this time last year,’ Binnings said.”

“And there is also some concern over the amount of properties about to hit the market – particularly the condo market. There are nearly 63,000 units in soaring glass towers in some form of construction. ‘If you’re buying into the condo market, where there’s a lot of supply, you need to be prepared to hold on to your property for the long term,’ Binnings said.”

The Houston Chronicle in Texas. “After several years of unbridled job and population growth that led to a very unHouston-like run-up in home prices, the housing market has hit its first big stumbling block since the last recession. Sales have fallen in recent months, and houses are sitting on the market for weeks or months rather than days. Neighborhoods around the Energy Corridor to the west and north to The Woodlands are already seeing houses sit on the market much longer than they would have a year ago when the combination of low inventory and high demand resulted in a first-come, first-served market where only the most aggressive buyers ended up with homes.”

“After 22 years in their suburban home, Eric Wort and his family are moving to Louisiana. Wort, a financial analyst who works for an oil and gas company, is being transferred as part of some corporate reshuffling. He’s not too worried about selling his home because he’s getting help from a relocation company, and his family has put a lot of upgrades into the five-bedroom property. It has a pool, an outdoor kitchen and a ‘beautifully landscaped backyard.’”

“If he could, Wort would rent his house in hope of being transferred back to Houston in a few years, but there appears to be a glut of rental houses for lease in his neighborhood. ‘We can’t take the chance of double house payments,’ he said. ‘It’s riskier now because there seem to be fewer people moving in.’”

“‘If my daughter asked me tomorrow, I’d say, ‘You should wait a while,’ said Bill Gilmer, director of the UH Institute, ‘because you’ll find some bargains out there this time next year that aren’t going to be here now.’”