May 25, 2016

Everybody’s Dream Started To Scare Everybody

The Richland Source reports from Ohio. “An unusual, but optimistic trend is unfolding in the Richland County housing market, much different than years past. ‘It looks like what’s happened is there are so many buyers in the market that as soon as a home is put on the market, it’s taken,’ said Rich McCleery of Coldwell Banker Mattox McCleery Realtors. ‘It’s crazy what’s happening. I think people are seeing they need to get on the bandwagon and purchase a home before prices go higher.’”

“Jerry Holden of The Holden Agency, as well as Peter Haring of Haring Realty, have also noticed that if homes are reasonably priced, it’s not long before one or more offers are made. ‘Right now we have less than a two-month supply of homes on the market in Lucas,’ Haring said. Lexington is another area where demand is greater than supply. ‘That’s probably where we have the biggest shortage right now, and that’s for anything under $300,000,’ Haring said. ‘I’ve never seen a real estate market like the one we’re having now.’”

11 Alive on Georgia. “Luxury apartment buildings are taking over Atlanta. Nearly a 900 percent increase between 2012 and 2015 in the number of high-end high rise buildings according to a study by Rent Café. The question is, is the luxury market inching toward over-saturation and how are middle-income people supposed to live in a city of rising rents? ‘We have all of the housing being built for a tiny portion of the population,’ said John O’Callaghan, President and CEO of Atlanta Neighborhood Development Partnership.”

The Real Deal on New York. “The Real Deal counted it up, and the pessimists are right: Modern aristocrats’ appetite for en suite lap pools, members-only pet spas and penthouse views of New Jersey really seems to be on the wane. Luxury sales volume is down a stomach-churning 25 percent in the first 20 weeks of 2016 compared to the same period last year. Major developers such JDS Development and the Chetrit Group have either halted sales plans for marquee skyscrapers packed with luxury condos, or scrapped them altogether. Some condo builders are lowering their planned sellout prices, while others are aggressively cutting asks, notably on penthouse units, a StreetEasy analysis found in April.”

“Other developers say the slowdown in the luxury market is mostly about perception, blaming the press for sullying the mood. ‘There’s no liquidity issue, there’s a mood issue,’ said Michael Shvo, who’s in the planning stages of a high-rise condo at 125 Greenwich Street. ‘The only thing wrong with the market is an oversupply of overpriced, average apartments. Those are in buildings that should not have been built and they’ll suffer.’”

The Valley News in Vermont. “It’s generally accepted that the Upper Valley is sheltered from severe economic headwinds by the presence of two large, stable employers. Nevertheless, a trio of stories in the business section of this week’s Sunday Valley News served as a useful reminder that despite its good fortune, the Upper Valley economy does not operate in splendid isolation. The third story discussed home sales, which are in the doldrums, according to a biannual report sponsored by the Upper Valley Housing Coalition.”

“It found falling sales prices for existing homes during the first quarter, along with shrinking inventory (although there were also some bright spots, including that homes were selling more quickly). One of the authors of the report, Ned Redpath, owner of Coldwell, Banker Redpath & Co., pointed to stagnating middle-class wages as one possible reason: It’s hard for people to put aside enough for a down payment. ‘Everybody says the economy is strong, but it’s nowhere near as strong as they say it is,’ Redpath said.”

The Guardian on Texas. “Shawn Baker had an entrepreneurial epiphany years ago when she saw a group of young people outside a concert venue throwing junk out of a truck and pulverizing the trash with a bat. It looked fun. She wondered: could there be a way of monetizing our appetite for mindless destruction? She put the idea on hold. Then oil tumbled below $50 a barrel and in May 2015, after more than 20 years at the same company, the 45-year-old was let go from her job along with a quarter of her colleagues. ‘It was devastating. I had never been laid off or fired or anything,’ she said.”

“Baker now had spare time, little prospect of quickly finding another role in the energy industry, and a hunch that thousands of others could be sharing her sense of frustration. So she returned to her idea and started Tantrums LLC, one of a growing number of ‘rage rooms’ in America where her frustrated clients come and blow off steam with the help of a baseball bat and some inanimate objects.”

“The city’s economy is far more diverse and resilient than during the oil bust of the 1980s, but Houston is nevertheless feeling the hit of the slump. New high-end apartment complexes built to appeal to now-departed expats are so empty they are offering perks such as rent-free months, Apple watches and cruises, according to the latest economic report from the Greater Houston Partnership, which anticipates the city’s unemployment rate will soon rise above the national level.”

NPR News on Nevada. “For 26 years, Brian Burns watched Vegas grow. He saw the desert dirt roads transformed by construction projects. The land was available and cheap. By 2004, housing prices soared. Burns and his then wife had bought into the dream. They lived in a huge house he estimates was 3,500 square feet. ‘There were parts of the house you never even saw – that’s how big it was,’ he says.”

“When a realtor friend convinced him to sell, he was blown away by the profit he turned. ‘That house that I bought for $250,000, my friend sold for $645,000 three years later,’ he says. ‘I had never had remotely that much money in my life. Probably never had more than $10,000 to $15,000 in the bank before. And I took $40 out one time and I showed my friend my ATM receipt and it said $228,000 balance. And we just looked at each other and laughed, it was ridiculous. I didn’t know what to do with it.’”

“He decided to keep it in the bank and buy another, smaller house in a brand-new development in the town of Henderson, Nev. Sure, the tan, stucco tract-style housing didn’t have a whole lot of charm, but Burns didn’t care. He convinced some of his friends to buy other houses in the neighborhood. He had cash in the bank, excellent credit, and he put no money down.”

“‘I think everybody’s dream, when you are a normal person — not super rich, not super poor — is that your home is kind of your biggest asset,’ Burns says, ‘that you feel like, ‘I’m going to play by the rules, I’m going to pay my mortgage, it’s just going to continue to increase in value.’ Maybe not by leaps and bounds, but by no means should it be worth a third of what you paid for it. And it started to scare everybody.’”

“He found out that the house he bought for $320,000 was now worth only $140,000. At the same time, his work as a graphic designer was drying up. Eventually, he chose to stop paying his mortgage. He didn’t feel good about it. He could have used his savings to keep paying his mortgage payments, but he thought that was a bad idea. The decision destroyed Burns’ credit, he let the bank take his house and he moved to Oregon to start over again. ‘The analogy I use back then is, I’m not going to pay Mercedes prices for a Kia. Why would I pay $320,000 for a house that’s never going to be worth that?’”

“Today, Brian Burns is back in Las Vegas, where he rents an apartment with his fiancée. They feel really gun-shy about buying anything, mainly because it doesn’t seem like the housing crisis is over in Vegas. Roughly 20 percent of homeowners are still underwater there, and it doesn’t look like a recovery. ‘I drive up into suburbia, and there are streets still of empty houses. No curtains, no nothing, weeds in the yard,’ Burns says. ‘There are still a lot of empty houses in this town.’”