The Housing Bubble

It’s Friday desk clearing time for this blogger. “According to new data released by Corelogic, a national consumer information company, homes in Grand Junction are increasing in both price and value. News Channel 5 spoke with Kris McChesney, a realtor at Bray Real Estate, who said this increase is only partly true. McChesney said like any market, housing is driven by supply and demand, and right now, the area is going through a period where inventory is low which would normally drive the price up, but there is no increase in demand. ‘In cases where you’re looking at homes and properties under $300,000 they are selling a little bit higher,’ McChesney said. ‘But, if you’re getting above that $300,000 level, the buyers out there aren’t there, even though the inventory is still low, we just don’t have the purchasers, so it’s not driving the price up.’”

“Manhattan apartment landlords, entering the prime leasing season, are boosting incentives to lure tenants as a surge of new supply gives renters more choices and the chance to bargain. Citi Habitats said that 17 percent of all new leases it brokered last month carried some form of landlord sweetener — the most for May since 2010. ‘Historically, this is the time when owners are more in control of the market,’ said Gary Malin, president of brokerage Citi Habitats. ‘The pricing that owners want is too out of reach for most. The concessions are making the market appear stronger than it actually is.’”

“The Woodlands residential real estate market has slowed as single-family home sales and list prices continue to inch downward. Home sales for the first quarter of 2016 tumbled to 341, down 14.3 percent from sales in the first quarter of 2015, with fewer pending sales, according to the Houston Association of Realtors’ MLS. And while there are fewer sales, more homes have flooded the market in the past year. In the first quarter of 2015, the median sales price for homes in The Woodlands was $356,250. For the first quarter of this year, median sales price has fallen to $318,500, which is an almost 11 percent drop year-over-year, according to HAR’s MLS. Residential lot prices were down as well.”

“The Woodlands is a buyers’ market for high-end homes, particularly those priced above $700,000. The Woodlands has 8.9 months of inventory for homes priced between $700,000 and $800,000 and up to 15 months worth of inventory for homes priced above $1 million, Realtor Brian Schweiker said of Re/Max The Woodlands and Spring’s market report for April. While the bulk of the market is homes below $1 million, those top-priced homes represented about 6 percent of home sales in the first quarter of 2016, according to HAR’s MLS. That means buyers may have more bargaining power to negotiate prices in their favor. ‘Sell when you’re ready to sell, but its more important than ever to hire a good real estate agent,’ Schweiker said.”

“Eight years after the housing bubble burst, nearly a quarter of homeowners in Keansburg and the Mystic Island section of Little Egg Harbor Township still owe more than their homes are worth, the two highest rates in Monmouth and Ocean counties, according to Zillo and analyzed by the Asbury Park Press. It leaves many homeowners there with three options, none of which are appealing: They can walk away, they can keep paying their mortgage and hope the value eventually will rebound, or they can sell it at a loss and go to the closing with a check in hand.”

“Residents told about the data said they weren’t surprised. Michael and Carmen Bednarz bought a house in Mystic Island in 2008 for $240,000. They estimate that it is worth about $170,000 now. ‘You try not to think about it,’ Michael Bednarz, 61, said. ‘You get depressed.’”

“An organizer with a pro-liquefied natural gas group in Fort St. John says he’s ‘alarmed’ by news that gas driller Progress Energy is drastically cutting spending as it awaits a decision on Pacific NorthWest LNG. The northeast real estate market is already feeling the effect of the downturn, particularly in the multiple-family rental sector. ‘The landlord party is over,’ said Kevin Kurjata with Century 21 Energy Realtyin Dawson Creek.”

“He detailed erosion in what had once been a high-flying rental market in Dawson Creek, which had posted the second-highest rental rates in the province as recently as two years ago, spurring a multi-family building boom. ‘The price of energy has plummeted and vacancy rates in Dawson Creek have skyrocketed. It used to be impossible to find a place to rent. Today, property management firms have given me vacancy estimates over 20%.’ Kurjata said he has reduced rents on older apartments he owns to around $950, down from the $2,200 range two years ago.”

“In 2012, he noted, a half-duplex on 104th Avenue in Dawson Creek sold in a month for $323,000. The adjoining, identical three-bedroom unit is now listed at $269,900 and has been on the market for 127 days ‘with no offers,’ he said.”

“Australia’s oversupply of apartments has hit 70,000, ­according to research. And banks are increasingly revaluing off-the-plan dwellings approaching settlement to ‘well below’ the initial purchase price, raising the risk that settlement failures will rise, investment bank JP ­Morgan says. That figure was ’set to rise as the record number of dwellings under construction are completed,’ said JP Morgan economist Tom Kennedy. He added a concerning ­development was the sharp fall in the number of unit sales relative to the number of apartments being completed — a ratio that has been falling since 2014 and is at near record lows due to oversupply and ­rising settlement times.”

“‘Longer settlements are a concern in their own regard, especially in an environment of falling dwelling prices,’ Mr Kennedy said. ‘Indeed, JP Morgan analysts highlight industry feedback suggesting banks are revaluing off-the-plan dwellings approaching settlement well below the initial purchase price. As a result, additional buyer equity is required to cover any shortfall between the sale price and what banks are willing to lend, increasing the risk of settlement failure.’”

“The island that was once lauded to be Phnom Penh’s biggest entertainment and residential complex was a flurry of construction activities when most of its high-end condominium projects broke ground in 2010, but some projects have run out of steam. Sovannaroth Khan, head of valuation at Independent Property Services Cambodia, noted that some initial Casa Meridian buyers are asking to sell or lease their units out as well. ‘I notice that D.I. Riviera has likely postponed its construction. The reason behind this is unclear, while the rest are keeping [on with their construction],’ said Khan, who acknowledged the high-end condo sector has now gone into oversupply.”

“The most recent UK residential market survey from RICS has already highlighted a ‘continued’ lack of confidence in the prime central London housing market. A lack of foreign investors will likely have a knock-on effect overall. The housebuilding industry, too, seems to be under pressure. At the high end, one property magnate recently admitted that the market for £2million to £10million homes had ‘collapsed’ and that Chinese speculators were ‘walking away’ from new-build flats they had agreed to buy.”

“Meanwhile, at the lower end of high-end residential property, one Surrey-based estate agent revealed that, he cannot sell ‘any house in the South East for more than £2million, for love nor money.’ All around, agents are speculating about an ‘unavoidable’ price crash.”

“Fang Tao’s hopes of striking it rich in the Chinese stock market died as his investments plunged by half over the past year. Now, he’ll be happy just breaking even. He sees no sign of the Shanghai Composite Index returning to its highs anytime soon, despite efforts by the ruling Communist Party to prop up the market. ‘The most significant change has been my mindset,’ Fang said. ‘Now I feel like when I’m not making a loss, I’m winning.’”

“Not all Chinese investors are cutting back on speculative trading, with many shifting to the property and commodities markets instead. New home values in Shenzhen have jumped 62 percent in the past year amid a real estate boom in China’s biggest cities, while prices for everything from iron ore to steel and eggs surged on the nation’s futures exchanges earlier this year, before reversing at the end of April.”

“The volatility in commodities suggests China’s individual investors still have a lot to learn, but the hope is that their casino-like mentality will fade over time, according to Steve Wang, chief China economist at Reorient Financial Markets Ltd. in Hong Kong. ‘Trees don’t grow to the sky,’ he said.”