What An Incredible Force It Was
It’s Friday desk clearing time for this blogger. “Pilloried as the hallmark of the 2008 financial collapse in the movie The Big Short, Miami and South Florida’s condo market has made a colossal comeback since 2011. But with sales slowing since the end of last year, and an onslaught of new units slated to come to market through 2018, market observers near and far are wondering whether they’re about to see the same movie twice. ‘I think for some people, it will end badly,’ says developer Ryan Shear. ‘It boggles my mind when I see announcements for brand-new condos coming out of the ground today. There’s so much product coming on line, why would you want to launch right now?’”
“Consultant Jack McCabe of McCabe Research & Consulting, points to Related’s recently completed, 300-unit IconBay building in the Biscayne Corridor. He says more than 30% of the units are listed for resale, with some owners offering to vacate at a 7% discount to what they paid. ‘What’s going to cause a lot of pain for developers who have unsold inventory is that they’re going to end up competing against their investors,’ McCabe says.”
“The Houston region saw record-high median home prices last month and sales remained strong, despite challenges from slipping oil prices and uncertainty in the overall economy. Drilling down to individual neighborhoods, though, there are signs of weakness. For homes priced at $1 million or more, the inventory is 13.3 months. ‘The prices are dropping fairly quickly in the most expensive parts of Houston,’ said Bill Gilmer, director of the Institute for Regional Forecasting at the University of Houston. ‘There are big inventory buildups.’”
“Bill Bacque, president of Van Eaton & Romero, said mortgage lending rates in the 3.5 percent range for 30-year mortgages are keeping the local market from collapse, despite steep job losses in the oil and gas industry, which is a mainstay in Lafayette’s economy. Especially hard-hit are luxury homes in the million-dollar and up range. Only two have sold in Lafayette this year; 31 remain on the market. There have been seven sales at $800,000 and above from January to June; last year, there were 24.”
“Bacque said there has been some ‘uptick’ in foreclosed properties, not a significant number but it could grow if jobs don’t rebound. ‘There is a time lag from pink slip to foreclosure,’ he said. ‘More foreclosures may show up in the second half of the year.’”
“You don’t have to search far for a New Jersey homeowner who would end up losing money by selling his or her home today. In fact, according to experts in the housing industry, that would be the case for most folks who bought a home in New Jersey from 2005 to 2010. ‘What you’re seeing now in 2016 is a leveling out and a correction of what existed in those years,’ said Amber Noble Garland of Keller Williams Realty West Monmouth. ‘There was this sort of artificial appreciation that existed.’”
“New Jersey’s slower-than-normal rebound, meanwhile, is having an effect on the inventory of homes for sale. Those who purchased towards the end of last decade are hesitant to let go of their properties before market conditions improve. ‘Homeowners do not want to list their house and then get offers below what they’d be willing to entertain,’ said Patrick O’Keefe, director of economic research at CohnReznick in Roseland.”
“New foreclosure data out from RealtyTrac show foreclosures are down, but there are still some rough spots. Some houses have been abandoned entirely by banks (making them ‘zombie’ homes with effectively no owners), which then in turn drives down property values further. ‘You can’t even give the houses away in certain parts of the city of Rochester because we have thousands of vacants,’ said Ruhi Maker, a lawyer at the Empire Justice Center in Rochester, New York.”
“Near-empty skyscrapers and rising vacancy rates are pressuring landlords to offer big incentives – such as a year of free rent or money for renovations – to keep a shrinking number of tenants in their downtown Calgary towers. And with more than two million square feet of new construction set to become available, the soft market for Calgary landlords is expected to last for as long as a decade.”
“Calgary Economic Development president and CEO Mary Moran said 25,000 people that had been working in the city’s downtown core have lost their jobs in the past two years, which has contributed to the city’s empty office towers. She also notes that some in the real estate industry have discussed tearing down older buildings given vacancy rate projections. ‘There are a lot of people in Calgary that would say, ‘We’re not overbuilt, we’re under-demolished.’ So there are some products that probably could go,’ Moran said.”
“Leicestershire construction companies and building specialists are counting the cost of the EU referendum, with a big drop in their share values. Barratt Developments, brick company Ibstock, Breedon Aggregates and even Topps Tiles have seen millions wiped off their share prices following concerns about a drop in property demand. A spokesman for stockbroker AJ Bell said: ‘Since the EU referendum vote, the roof has fallen in on Barratt’s shares – as it has across the whole housebuilding sector.’”
“David Cheetham, market analyst and foreign exchange broker, said while the long-term impact of Brexit on construction was uncertain, there had been ‘panic-selling in shares of firms within the industry. Whilst there is little to suggest this will mark a substantial house price decline like the one seen during the 2008 financial crisis, sentiment has certainly soured and the relentless run-up in house prices over the past few years may at the very least pause.’”
“Perth renters are enjoying the easiest conditions in the country, with plummeting rents and a luxury of choice as the market continues to adjust to the collapse of the mining boom. ‘Three years ago we were writing about the remarkable increase in Perth rents,’ Domain Group chief economist Andrew Wilson said. ‘The mobile workforce dragged thousands of people into the economy and housing was provided to meet that demand, but now the party’s ended. It just shows you what an incredible force it was, but there’s the hangover after that party.’”
“Recent research on Phnom Penh’s condo market by Century 21 Cambodia found that in the first six months of 2016, 13,790 off-plan condo units were launched, jumping 52 per cent compared to the previous corresponding period. The growing condo supply isn’t expected to slow down any time soon, with the report anticipating available condos to reach 37,570 in 2020. Thida Ann, associate director of CBRE Cambodia, said that while the condo market in Phnom Penh is changing direction, there is no cause for alarm. ‘The condo situation is not stuck. It’s just hard to sell. If you want to sell, you have to provide a special price,’ she said.”
“Stephen Higgins, managing partner at Mekong Strategic Partners, told Post Property that demand will not be able to keep up with condo supply in the next few years. ‘A lot of those condos are going to sit vacant or unsold, which ultimately will put downward pressure on rents and prices,’ he said. According to Higgins, property developers had banked on a large amount of foreign purchasing activity. ‘The developers were hoping to sell to foreign buyers, and for a while that worked,’ he said, noting further: ‘It seems now foreign buyers are realising that maybe it isn’t such a good investment, and they’re staying away.’”
“Tea-shop manager Zhang Yue is so desperate about her home city of Tieling’s future that she has borrowed about five times her annual income to buy a work visa to leave for Japan — an economy that has flat-lined for a generation. ‘Two years ago, everything was fine and I bought whatever I wanted,’ said Ms Zhang, 29, whose husband’s wages have since halved and her own have stalled. ‘Then, suddenly, the slump started. The economy went straight down. It’s in free fall.’”
“Tieling is among the places hardest hit by a slowdown across the nation of 1.4 billion people triggered in recent years by a commodity-price slump, housing correction and campaign to rein in wasteful investment. At a coal mine in Diaobingshan, about an hour’s drive from downtown Tieling, coal-truck operator of 20 years Zhang Xiuju, 49, says business has halved over the past two to three years.”
“Some coal miners who were paid 3,500 yuan (S$705) a month two years ago now receive 2,000 yuan, she said. Another sign of weakening employment: Many at the mine have been offered unpaid leave packages for two years while the company pays their social security. ‘It’s a terrible time for the workers,’ said Mr Zhang. ‘After 2012, things went down and this is the worst time ever.’”
“Home foreclosures continue to plague Worcester, with the latest data from April showing a 133-percent increase from last year. Part of the goal of the Worcester Anti-Foreclosure Team is to put a human face to the problem – which they did July 11 by blockading Marilyn Orr-Davis’ Frothingham Road home and finding a loophole that has kept Orr-Davis’ possessions in the home. Orr-Davis is the latest in her family to own the picturesque property since her grandfather built it in 1910. It looks like she could also be the last, as the home was bought in a foreclosure action in February after she stopped making payments on the mortgage.”
“Davis’ home, which is valued at around $310,000, is only one piece of the Central Mass foreclosure crisis that began after the economic crash of recent memory. But it is an important reminder, WAFT members say, of the damage foreclosures do to neighborhoods and communities.”
“‘We want the community to come together and bear witness to the heartbreak of foreclosures, the devastating effect it has on our elderly and disabled residents and all of us,’ Ismail Abdelhamed said. ‘We got our homes and invested our hearts and our money. An illegal, unrealistic housing bubble should not mean we lose our homes. The banks knew the prices were inflated and planned to just foreclose. When they promised we could afford these mortgages, we believed them and took our commitments seriously.’”
