June 25, 2016

Sellers Won’t See As Many Offers As Peak Frenzy

A weekend topic on some markets I missed in the excitement yesterday, the American Statesman in Texas. “Austin-area home sales and prices surged in May, the latest figures show, but some real estate agents says competition is easing a bit as buyers become more cautious with their bids. ‘Buyers are now more cautious and mindful about escalating prices, and aren’t as willing to get into bidding wars,’ said Yvette Evans, an agent in Austin with Redfin. ‘If a home is overpriced, the seller won’t see as many offers as they may have in March or April when the Austin housing market was at peak frenzy.’”

“Andrew Vallejo, an agent with Redfin, also is seeing competition soften slightly, ‘as buyers realize that not every home is necessarily worth 10 percent over list price.’ ‘One of my buyers recently made an offer on a home that six months ago would have received four or five competing bids, but we were the only ones to make an offer,’ Vallejo said.”

The Marin Independent Journal in California. “The median price of a Marin home jumped to a record high $1.2 million last month, up 8 percent from the previous May, according to CoreLogic. While this might seem like great news for Marin, some local real estate agents painted a different picture. ‘I think what you have is a lag effect,’ said Peter Richmond, a Pacific Union agent. ‘What you are seeing is homes that closed in May. Those homes probably went on the market in April or earlier. But houses that went on the market in May and June — even if they are holding the price, they are not moving as quickly,’ the agent said. ‘I’ve seen cases where multiple offers are not happening as often as they were and people are taking more time,’ Richmond said.”

“Agent Marilyn Rich said, ‘Luxury prices have not gone up at the same rate that lower-priced homes have. There have been a lot of price reductions and houses back on the market in the luxury market.’”

The Real Deal in Florida. “It might not be the bloodbath seen when Miami-Dade County’s housing market crashed in 2008, but many in the real estate community are likely feeling the pressure. As previously pointed out by market analysts like Jonathan Miller, pricing trends can lag behind sales by as much as 15 months. Others are saying sellers might have to face reality sooner than that. Researcher Anthony Graziano of Integra Realty Resources said at a recent panel discussion that many homeowners are still listing their properties at ‘aspirational’ prices, which means those homes end up staying on the market for longer.”

“That buildup of inventory is starting to show: May saw 14,107 active condos and townhomes on the market, a figure that’s surged 16.8 percent from the year before. All those units translate to 11.2 months of inventory.”

The Philadelphia Inquirer in Pennsylvania. “Philadelphia banks are worried about a couple of things, writes veteran bank analyst Frank Schiraldi in a report to clients of Sandler O’Neill + Partners: Too many apartments are being built for the ‘frothy’ Philadelphia market; ‘Irrational’ loan pricing is making it tougher to profit from loans.”

WNCT in North Carolina. “With a new class of ECU Pirates scheduled to move to Greenville in less than two months, one student apartment complex is going into foreclosure. Captain’s Quarters filed for foreclosure on June 17. Court records show the complex hadn’t made payments since November 2015, and owes more than $26.2 million. Occupancy rates are rumored to be around 13 percent, so low that the complex is offering free cruises for students who sign with them.”

“The foreclosure has led some Greenville leaders to question whether or not this is just a sign of things to come. Councilmen McLean Godley and P.J. Connelly both point at the student living marketplace being over-saturated in Greenville. In a statement, Godley said the foreclosure, ‘is a result of councils’ of years past who rubber stamped student housing requests while not taking their time to foresee their effects on our community.’”

From Prairie Business in North Dakota. “In a quarterly housing market analysis of 400 U.S. cities, Bismarck, N.D., ranked the worst overall and Grand Forks, N.D., had the third-largest decline in the past year. Ben Ayers, senior economist with Nationwide, which issues the report, attributes the poor markets in both North Dakota cities to the oil slump. It’s not surprising, he says, as the slowdown has affected many other industries and job sectors. ‘The whole story is the oil decline.’ Texas and Wyoming host many of the lowest-ranked housing markets, also, both feeling the pinch of their oil sector problems, Ayers adds.”

“House price growth is flat in Bismarck, as sellers are having trouble finding buyers, while in Grand Forks, employment growth is flat. Both factors translate into fewer people looking to invest in homes, Ayers says. Grand Forks also is seeing increased delinquency rates on home mortgage payments.”