May 19, 2016

A Combo Of Falling Prices And Unrealistic Expectations

NBC 26 reports from Wisconsin. “Home sales for the first quarter of 2016 are the best we’ve seen in nearly ten years. Inventory of homes for sale is down and that means the prices are rising. But many are prepared to shell out some extra cash in this market for the right home. ‘Our neighbors across the street just sold their house and it hadn’t even been listed and they sold it above asking price,’ says Monica Merriman of Green Bay.”

“At Keller Williams Realty they’re selling nearly 30 percent of their homes in less than five days right now. And while sale prices have risen nearly 20 percent in just three years many are finding out the inventory of homes available, has dropped 20 percent over that time period as well. Housing experts predict that sales will continue to be strong throughout the summer. That is, just as long as interest rates remain low.”

From Mid-Missouri Public Radio. “Multi-family housing development downtown will be put on hold after the Columbia City Council adopted an ordinance imposing an administrative delay on approvals. The bill, which passed with a vote of 5-2 after just over an hour and a half of tense discussion and public comment, was specifically designed to target the rapidly growing number of luxury student housing complexes.”

“‘I just think the council…needs to be very concerned that we’re not inadvertently contributing to this luxury student housing bubble,’ Mayor Brian Treece said, citing concerns over declining student enrollment and issues filling some existing spaces. ‘The reality is no one makes money, whether it’s the university with their dormitories or private sector housing, when these facilities are only 80 percent occupied.’”

The Miami New Times in Florida. “New data suggests Miami’s average rental rates have already begun to dip and may experience even further drops. Abodo found that the average rent for a one-bedroom apartment in Miami fell 3 percent between April and May. It was the eighth-largest dip of any market in the nation. Another report, from Andrew Stearns of Stat Funding (via Curbed Miami), also points to the possibility of tumbling rents.”

“That means buyers who scooped up apartments for investment properties may have a difficult time flipping them for a profit, so they may put the units on the rental market instead. ‘Rents will likely tumble as preconstruction buyers unwilling to take losses on their condos flood the rental market with new units,’ the report reads. But those owners may have a hard time finding anyone to pay top-market rents for those units, meaning that some who ‘choose to rent their units will have to rent for an operating loss… resulting in negative carry/negative cash flow.’”

The Observer in New York. “No one wants to be the bearer of bad news, but for brokers it’s sometimes part of the job description. Right now is one of those times, as real estate pros laboring in the fields of New York’s highest end find themselves, in many cases, contending with a combo of falling prices and unrealistic expectations. Most sellers are willing to be flexible, said Miron Properties agent Robert Halperin. ‘I’m not really wrestling anyone [about pricing] right now,’ he said. ‘For instance, I have a townhouse listing on 55th Street between Park and Madison, and we have adjusted pricing over the past few months. But it’s just about having patience, keeping everyone informed and acknowledging that there is a slowdown. You can’t pretend like it hasn’t happened.’”

“Then again, maybe you can. Citi Habitats broker Victoria Rong Kennedy said that some of her clients are still taking a ‘wait and see’ approach. ‘They want to see how bad it can get before they really drop their price,’ she said.”

The Springfield News-Sun in Ohio. “The number of foreclosed homes in Clark County sold at sheriff’s sales is at the lowest in a decade. Although the numbers are down, Tina Koumoutsos, executive director of the Neighborhood Housing Partnership of greater Springfield said they are still significantly higher than numbers the community saw before the most recent housing collapse. Since the housing bubble burst in 2008, banks had been holding on to properties, buying them back at sheriff’s sales to not lose money from defaulted mortgages, said Koumoutsos.”

“‘One of the things that we’ve seen happen is when the bank gets these houses back, they could sit on them for years,’ she said.”

Reuters on North Dakota. “More than 80,000 people poured into North Dakota, looking to stake their future on the fracking economy. The state’s Bakken oil patch, centered here in Williston, was a magnet for oil workers, business investors and job-hungry folks. That future has evaporated. Those who haven’t packed up and left the Bakken are facing a new reality of smaller budgets, fewer residents and the physical detritus of a building boom that left behind hundreds of empty apartments.”

“In downtown Williston, near the strip club, a $15 million building with retail, residential and office space opened last March. All of the retail spots and more than half of the apartments sit empty. ‘It seems like people are on the fence, waiting,’ said Paul Russo, a vice president at The Renaissance Cos. The developer named the property Renaissance on Main, thinking it would serve as a symbol of western North Dakota’s rebirth.”

“Instead, it has become a monument to the overbuilding that continues in a region quickly losing residents. The 900 apartment units under construction today in Williston will soon join the more than 10,000 already built since the boom began in 2009, according to a study from THK Associates, an architecture firm. ‘No one has any money to spend here anymore,’ said an exotic dancer at Williston’s Heartbreakers strip club. She estimated that tips had gone down more than 60 percent since last fall. One recent evening, Heartbreakers attracted only three customers. Since then, the club’s owner has closed Heartbreakers and is planning to reopen the venue in coming days as Williston’s first gay bar.”