April 27, 2016

Everybody Got The Same Idea

A report from Bloomberg. “Canadians who collected Sunbelt bargains during the housing crash have shifted from buying to selling. They’re locking in gains from years of soaring values that are even sweeter because the American dollar, in the past five years, has jumped about a third against their home currency. In Naples, a wealthy southwest Florida town that’s bolstered by Canadian snowbirds escaping cold winters, sales plunged 19 per cent in the first quarter and inventory is piling up. The inventory of homes on the market rose 33 per cent in the first quarter from a year earlier, data from the Naples Area Board of Realtors show. Transactions are also down in once-booming getaway areas such as Palm Springs, California.”

“In the Palm Springs area, a popular getaway for western Canadians, single-family home sales in March were down 2.8 per cent from a year earlier, and inventory rose 45 per cent, according to the California Desert Association of Realtors. Inventory began rising at the end of last year because vacationers saw an opportunity for a currency play, said Joshua Devane, a real estate agent with Bennion Deville who works in the Palm Springs area. ‘Everybody got the same idea, and inventory in the market became a little bit flooded, which makes it difficult to move properties,’ Devane said.”

“In the Phoenix area — which includes Scottsdale, popular with vacationers — Canadians purchased only 110 homes in the first quarter, down from a peak of 1,454 in the second quarter of 2011, according to Michael Orr, founder and publisher of the Cromford Report, a website providing insights on the region’s housing market. Sellers from Canada now outnumber buyers five to one, he said.”

National Real Estate Investor. “For the last few years, the multifamily asset class has been the top performer of all property types. But there is much concern that developers have been adding too much inventory, flooding some markets with new supply. This will inevitably raise vacancy rates and exert downward pressure on rent growth. In fact, new supply has exceeded demand for eight of the last nine quarters. This trend was most pronounced in the last quarter of 2015, when excess supply measured 13,559 units total for the 82 markets Reis tracks. This marked an increase of nearly 10,000 units above the excess supply for the seven prior quarters.”

“In the first quarter of 2016, this trend continued. The vacancy rate climbed to 4.5 percent as 12,000 more units were produced than were absorbed. The oversupply of units has pushed the vacancy rate of CBD sub-markets from a low of 4.4 percent to a high of 6.3 percent in the fourth quarter of 2015.”

SFist in California. “Many of us not in the tech industry saw Twitter’s small round of layoffs last fall. And it turns out, many within the industry look to Twitter as a high-profile barometer as well, and the Chronicle reported this past weekend that that ‘Twitter effect’ has trickled down to the office rental market as a whole, and now more recently to the apartment rental market. Says Chandler Duvall, a big-time property manager in the city, ‘Commercial office brokers get worried, smaller tech companies get worried, venture capitalists get worried — whether it’s legitimate or not. If they are not hiring, should we be hiring? That’s when it starts to affect apartments.’”

“As of last month, also, given the bevy of empty, brand new units that all hit the market at around the same time, properties like this SFist sponsor have been offering one month free if people sign one-year leases — a long-used tactic of landlords when the market becomes more competitive that allows them to keep the base rent up while still giving a discount.”

WBRE in Pennsylvania. “Hundreds of ‘Halliburton’ employees near Montgomery received pink slips Friday, and now the ripple effect of those layoffs is hitting the local economy. Eyewitness News Reporter Cody Butler has the story. Rick Sanguedolce, is the owner of ‘Riverside Campground’, a place where many of Halliburton’s employees from out of state set up temporary homes. Nearly a quarter of the 138 campsites were occupied by those workers now only a few still are are. ‘Its hurt us financially, when you have a large company like Halliburton pull out of an area and let a lot of people go it’s a lot of lost revenue.’”

“If there is a silver lining to all this, it may come in the form of rents. When the boom was on, landlords could set rents as high as the market would bear. But now they have a glut of empty apartments. ‘When you have a large influx of outside workers coming into an area, they bringing a lot of money. But now, that a lot of them have left and are leaving, rent prices have really stabilized,’ said Sanguedolce.”

Nevada Public Radio. “How much do you really know about your neighbors? According to local law enforcement and those in the housing industry, there’s a lot of people living in valley homes who shouldn’t be there. They’re called squatters, and when the economy took a hit in 2008, it created the perfect storm of bank foreclosures and empty houses for squatters to move in. It pushed Las Vegas at the top of the list of metropolitan cities struggling with this issue.”

“Many abandoned homes are foreclosures, which means the banks own them. ‘The banks are absentee. They’re overloaded,’ said Scott Beaudry, the president of the Greater Las Vegas Association of Realtors. Sgt. Kirk Moore of the Henderson Police Department and Vandana Bhalla, a realtor at Signature Real Estate agree there is not one area of the valley with a bigger problem than another. ‘It is really everywhere,’ Moore said. ‘It happens in Summerlin, it happens in Green Valley, some of the nicest neighborhoods in gated communities,’ Bhalla said.”

Scarsdale 10583 on New York. “Though some realtors and residents are laying the blame for a stagnant market for premium homes on Scarsdale’s tax revaluation, it’s clear there are more factors in play than tax rates. A closer look at the market shows that developers have been aggressively buying up and tearing down smaller or older homes and replacing them with premium priced homes that buyers may not be able to afford. There are currently 71 homes on the market in Scarsdale priced at $2,900,000 and above, and among these, 33 of the listings are for new homes.”

“Lewis Arlt of Houlihan Lawrence reported that inventory of homes priced from $3mm to $5mm is up 65%, with 53 active listings this year compared to 32 in that price range at the same time last year. Commenting on the market, Arlt said, ‘Softening in the luxury home market is not due only to village taxes, but a widespread phenomenon. High end product is sitting everywhere. It may have many contributing factors: the stock market, the economy in general, uncertainty in the world, etc., but for whatever reasons, $3M+ buyers around here are scarce, and in some cases they’re simply not perceiving value. There’s an oversupply at the high end, and too many entry-level buyers for the scarce supply we have.’”