July 6, 2016

Sellers Who Had To Put Their Tails Between Their Legs

The Houma Today reports from Louisiana. “Home prices in the Houma-Thibodaux area dipped slightly compared to just a year ago, according to CoreLogic. Lucille Duprey, general manager at Larussa Real Estate in Houma, said the oil slump has affected the real estate market, but it ‘hasn’t been catastrophic.’ Duprey said while there have been a number of local layoffs, the area has a diversified market that keeps the real estate market going. ‘They always say to expect the worst, but I don’t think it’s as bad as the 80s. I don’t see the amount of foreclosures that we’ve seen in past years. I’m remaining optimistic and I certainly wouldn’t mind paying more at the pump,’ she said.”

The Casper Star Tribune. “Wyoming lost nearly 8,700 jobs from the first quarter of 2015 to the first quarter of 2016, according to a new report from the state’s Economic Analysis Division. Wenlin Liu, the chief economist for the state Economic Analysis Division, said the last time the state unemployment rate was higher than the country’s was during the Great Recession. ‘The largest factor is the mineral extraction industry,’ he said. ‘Due to the reduction in energy activities caused by the dramatic downturn of both oil and natural gas prices, sales of equipment, supplies and services, the mining sector experienced a year-over-year contraction of 55.1 percent for the first quarter of 2016,’ the report said.”

“The report went on to say the decline is ‘the steepest drop ever in Wyoming’s history.’ Permits for single-family home construction were down 17 percent in the first quarter of 2016 compared to the same period in 2015, but permits for multi-family housing doubled. ‘The worst is either behind us or approaching,’ Liu said.”

The Albuquerque Journal in New Mexico. “You can measure the slow-rolling oil bust in the thousands of frack tanks, water-hauling trucks and port-a-potties parked in dirt lots, out of service. Or take stock of it at a popular steak restaurant, where a year ago the bar was packed three deep after 5 p.m. and 25-year-old Irma Zamudio was pulling $900 a week in tips. Today, she says she is lucky to take home $500. See it in the ‘free rent’ signs hanging on housing complexes, at the ‘unbelievably busy’ Palmer Drug Abuse Program, and on the now-quiet highways to the oil and gas fields around Loco Hills and Eunice.”

“The thousands of working people who came to work the boom begin to leave and homes for rent stand empty. Gretchen Koether is president of the Hobbs realtors’ association. A major property manager tells Koether that two-thirds of her business is ‘outgoing,’ Koether said, and ‘50 percent of those are giving notice because they found jobs elsewhere, and 50 percent are coming in and throwing their keys on the desk and saying they can’t make it here anymore.’”

“Irma Zamudio, the 25-year-old bartender who works at the popular steak restaurant, said her husband had been working in the oilfield since he was 18. Their whole adult lives were boom times – until the bust. ‘It really caught us by surprise,’ she said. ‘We didn’t save. In the back of our heads, we always knew it wasn’t guaranteed. It can go back up and fall right back down again. Next time, we’ll prepare for the worst.’”

The Midland Reporter Telegram in Texas. “Double-digit declines continue to prevail in the Midland-Odessa economy as the area’s dominant oil and gas industry continues to struggle with low commodity prices and activity levels. Leading the decline is unemployment, which is up 29.3 percent from last May and up 42.2 percent the first five months of this year compared to the same time frame of 2015. Employment is also down sharply compared to last year. May employment was down almost 5,000 jobs from last May and is down almost 9,000 jobs so far this year compared to last year.”

“May building permit valuations were down 40.2 percent in May from last May’s levels, and are down 34 percent so far this year when compared to last year. In the 17 months from January 2015 to May 2016, real building permit activity has declined (year-over-year) in 15 of those months, said Karr Ingham, the Amarillo economist who prepares the Midland-Odessa Regional Economic Index.”

“New single-family housing construction has also generally been in a state of decline over that period as well and that remains the case with Midland-Odessa issuing 70 new housing permits in May, down 30.7 percent from 101 last May. Housing prices have also yet to show significant declines, Ingham said. The May average sales price of $237,468 was down 6.9 percent from $255,111 last May, which was over 9 percent above the average sales price in May 2014.”

The Orange County Register in California. “Is there a summertime chill for Orange County’s upper crust? ReportsOnHousing says the local resale housing market is going through a pretty typical post-spring cooling, but its most dramatic slowing is for the pricier homes listed. As of June 30, the supply of homes priced above $1 million had grown by 8 percent in a month. Meanwhile, demand for those homes — measured as new escrows opened — fell by 19 percent.”

“ReportsOnHousing measures ‘market time,’ how fast inventory would sell at current rate of demand. For all Orange County homes, market time was 74 days on June 30 vs. 65 days a month earlier. Homes priced between $1 million to $1.5 million: market time was 143 vs. 102 days a month ago. Between $1.5 million to $2 million, 159 days from 137. Above $2 million, 322 days vs. 231 days. Overall inventory of existing homes listed for sale rose by 8 percent in two weeks to 7,104, the highest since August 2015 and 7 percent above the year-ago level.”

The Belmontonian in Massachusetts. “Remember the memorable final line in the outstanding film ‘The Usual Suspects’? ‘And like that, poof. He’s gone.’ You could change a few words, and you have a metaphor for the Belmont real estate market. ‘And like that, poof. The house for sale was gone.’ In the past week, six of the seven homes and condos that sold were bought just weeks after being listed on the market. And in half the sales, the final price was greater than the original list price.”

“But there is one caveat to that supply/demand function for real estate in Belmont: don’t be greedy. There have been numerous examples – many involving high-end homes reported in the Belmontonian – of sellers who had to put their tails between their legs and recalculate (i.e., cut) the listing price. Buyers are willing to pay a premium but not a ransom for a house. Winchester is just one town over, and it has better roads, a new high school, and the same housing stock.”