May 9, 2016

Luxury Buyers Wealth Is At Stake

The Lincoln Journal Star reports from Nebraska. “According to the Realtors Association of Lincoln, the median sales price in the first quarter was $166,900. That’s up more than 10 percent from the same time last year and the highest local median price ever recorded. Local real estate officials lay the blame — or credit, depending on whether you are a buyer or seller — squarely on the lack of homes for sale. Ryan Pierce, co-owner and managing broker of SimpliCity Real Estate, said that buyers pretty much have to be ready to put an offer on a house the day it comes on the market, and even then, they still might miss out. In the $100,000 to $300,000 price range, ‘It just seems like they’re flying off the shelves,’ he said. ‘We’re seeing a lot of multiple offers.’”

The Tampa Bay Business Journal in Florida. “The vast majority of apartments constructed in Tampa Bay in 2015 were luxury units, according to a new study. RentCafe, a national apartment search website, released data that shows 82 percent of new apartments completed in the Bay region in 2015 were high-end rentals. Nationally, an average of 75 percent of completed apartments were luxury units, according to RentCafe. ‘The ratio of high-end to total apartments completed increased by a staggering 63 percent from 2012,’ according to RentCafe. ‘In absolute numbers, this translates into 896 luxury multifamily projects of 50+ units (out of a total of 1,188 total projects) completed in 2015, compared to 382 luxury multifamily projects of 50+ units completed three years prior.’”

“The dynamic will likely continue in 2016, according to RentCare. Of developments completed nationally in the first quarter, 79 percent luxury developments. There are varying philosophies on luxury apartment development in the Tampa Bay region. Some developers, like Atlanta-based Pollack Shores Real Estate Group, believe that the segment is overbuilt.”

The Charlotte Observer in North Carolina. “Recently opened upscale apartment buildings in the city are offering breaks on rent as they compete for tenants, a result of the surge in new apartments hitting the market. This week, I looked at 24 apartment buildings that have started leasing in the past two years, and found 13 of them are advertising concessions to lure new renters – up to two free months of rent, in some cases.”

“Although the city’s overall vacancy rate remains low, some markets have a substantially higher share of empty units. Uptown and the Southeast-1 submarket (which includes South End) have the highest vacancy rates, at 11.9 and 11.3 percent, according to Real Data. They also have the highest average rents, at $1,694 and $1,332 a month, respectively. ‘The overall market still seems to be very healthy, and things are leasing up,’ said Charles Dalton, head of Charlotte-based apartment market-tracking firm Real Data. ‘Even though we are building quite a lot.’”

The Odessa American in Texas. “Odessa apartments on average rent for nearly 30 percent less than they did a year ago, a trend market watchers expect to continue as the high living costs of the oil boom keep fading during the bust. ‘You’ve seen even 18 months ago, we did have the highest rents in the State of Texas,’ said Rhonda Lesley, association executive of the Permian Basin Apartment Association. ‘Now San Antonio and Dallas are higher than we are. That sounds right. Because when we were the highest it didn’t seem feasible, but it was actually true.’”

“Another reason for the continuing drop, said Andrew Woo, an Apartment List data scientist, is that homes are still being built and apartments being added in Midland. Lesley said apartments are still getting built in Midland, which saw more units come online during the boom, but the last Odessa apartment complex was finished more than a year ago. ‘Now Leasing’ banners abound throughout Odessa. Meanwhile, home values are falling albeit at a slower pace. Woo said less expensive houses also puts downward pressure on apartment rents for now.”

“The manager of Pebblebend Apartments, 4315 Esmond Drive, said the property is about 97 percent full, up from 82 percent at this time last year. ‘I’ve been busting my tail with marketing and stuff like that and doing things for the residents to try to keep them here,’ the manager, Tiffany Wood, said. One bedroom apartments that Pebblebend had rented out for $1,000 recently rented for as low as $560, Wood said.”

Boston Agent Magazine in Massachusetts. “Luxury housing markets across the U.S. have seen declines in 2016, but according to a new analysis from Redfin, few markets have slowed more than Boston. Through Q1 2016, the average sale price for luxury homes in Boston was $3.19 million, an 11.8 percent decline from Q1 2015. That was the fourth-largest such decline in the country. Redfin Chief Economist Nela Richardson explained: ‘Luxury buyers are out of step with the rest of the market because their wealth is at stake. Instead of cheering rock-bottom mortgage rates, luxury buyers recoiled from high-end spending in the face of volatile asset prices.’”