May 12, 2016

A Housing Bubble Can Lead To Buyer Remorse

News Channel 5 reports from Tennessee. “It’s no surprise that Nashville home sales are hot, but new numbers released this week have caused some to wonder if Middle Tennessee could be on the verge of a housing bubble. According to the Greater Nashville Association of Realtors, home sales increased more than 11 percent in April, compared to one year earlier. At the same time, the median sale price in Nashville has crossed over $250,000.”

“And perhaps the most significant statistic — the number of closings last month is now more than the record that Nashville set during the last housing bubble. For sellers, if the home is priced right, realtors say it’s common to have five or even 10 offers on a home. Realtors say it’s common for home buyers now to have only hours to make a decision on a home, before an offer is made by someone else. ‘That can lead to buyer remorse, which can lead to expectation management, of asking, ‘Did I make the right decision?’ said Christie Wilson of the Wilson Group.” on Massachusetts. “Home buyers may have their fair share of challenges in this market, but appraisal issues apparently aren’t one of them, a new survey finds. As buyers go all out in their pursuit of every available home, they are running into relatively few issues with appraisers, who peg the market value of the property for the bank writing the mortgage, the Massachusetts Association of Realtors reports. The vast majority of real estate brokers in the state – 60 percent – said they had no appraisal issues during the first three months of the year.”

“‘With a busy market and increasing prices, there is always a risk that the agreed upon sales price and appraisals could come into conflict,’ said 2016 MAR President Annie Blatz in a statement. ‘It’s good to see that this isn’t generally the case and that buyers and seller are coming together on realistic prices.’”

The Colorado Real Estate Journal. “The Apartment Association of Metro Denver’s report on apartment vacancy and rental rates shows an uptick in average rent to $1,315 for the first quarter of 2016. The newer apartment properties have predominately higher rental rates than older properties, so these new units are somewhat responsible for pulling the average up over $1,300. However, the increase was mitigated by discounts and concessions, which rose in the first quarter to 6.7 percent, according to the report.”

“‘Other published sources of rental data often include the rents of luxurious single family homes,’ explains Mark Williams, Executive VP of the Apartment Association, ‘for example the Zillow announcement released last month is extremely misleading when it reports median rents are $1,959.’ For an apartment renter, they should know the median apartment rent is $1,274.”

The Real Deal on California. “Rent is actually decreasing in Los Angeles, a new report claims. Rental rates at L.A. apartments decreased by 5 percent from April to May, according to Abodo, an apartment search platform. The company ranked L.A. at No. 6 in the entire U.S. on a list of the biggest rent drops during that period. San Antonio saw the biggest rent decrease, at 13 percent.”

“Meanwhile, apartment sales across the U.S. are on an upswing. Apartment sales grew 33 percent last year to reach $151.8 billion, and in the first quarter of this year, sales have already reached $38.6 billion, according to Real Capital Analytics data cited in the report. Nationally, developers are expected to complete 285,000 residential buildings this year, compared to last year’s 250,000, the report said. However, analysts at Marcus & Millichap said there may be a bigger gap between asking rates and prices that buyers are willing to pay.”

Crain’s New York Business. “A court-appointed monitor will hold on to some of the profits from Joseph Chetrit’s Flatotel condominium conversion project at 135 W. 52nd St., a judge ruled this week. The decision was part of a larger lawsuit over allegations that money stolen from Kazakhstan was used to fund the development. Last year, Almaty and BTA sued Chetrit, accusing him of being complicit in Ablyazov and Khrapunov’s alleged money-laundering scheme. But weeks later, the two sides settled the suit. The Wall Street Journal reported at the time that Chetrit agreed to cooperate with the bank and city, and gave them an equity interest in the Flatotel conversion.”

“Chetrit has acknowledged that he would pay $21 million for the stake that the two investors owned in the Flatotel project. The question is who should get the proceeds. The investors claim the cash is theirs, but BTA and Almaty said the money was stolen from them and they are entitled to the entire $21 million. The $10.5 million in escrow is a part of that total, and a federal judge will ultimately determine who can claim the funds.”

From Shorebeat in New Jersey. “After word spread that an abandoned, bank-owned home on South Beverly Drive in the Herbertsville section would cost more than $100,000 to demolish, residents have begun asking the township to crack down on the banks that allow the properties to fall into disrepair. The single home on South Beverly would cost more than the township budgeted for an entire year’s worth of demolitions. ‘I have a lot of confidence in the business administrator, but something has to be done with these banks, we have to move this along,’ said George Scott, who served on the township’s property maintenance board, which ordered the property to be demolished more than a year ago.”

“After the vote to negotiate a price to raze the South Beverly property, residents of Queen Anne Road brought another two properties to the attention of the governing body. ‘There’s still mold and mildew inside this house,’ said Richard Morrill, who lives next door to the home. In the case of that home, a bulkhead, never repaired after Superstorm Sandy, is collapsing and threatening Morrill’s property. Like the South Beverly property, there is hole in the roof which is only partially covered by a tarp. ‘Just go after the banks and make them pay,’ said Morrill.”