For Almost Five Years We Were On An Upward Spiral
It’s Friday desk clearing time for this blogger. “Shares of apartment landlord Equity Residential fell the most since March after the company cut its revenue forecast for the third time this year, citing greater weakness than it anticipated in the Manhattan and San Francisco rental markets. Equity Residential is among landlords having to work harder to lure tenants in the high-cost markets of Manhattan and San Francisco as an apartment-construction surge gives residents more bargaining power and limits how much owners can raise rates.”
“AvalonBay gave renters lease-signing concessions worth $300,000 in the second quarter, four times more than in the same period a year earlier, Chief Operating Officer Sean Breslin said on the company’s earnings call. ‘Markets do reset from time to time, either due to new supply or changes on the demand side of the equation,’ Equity Residential CEO David J. Neithercut said on a conference call. ‘Unfortunately at the present time, we’re experiencing both factors in two of our most important markets.’”
“Slower sales and a glut of inventory has led to a buyers’ market for South Florida luxury properties, according to Miami Beach real estate agent Jill Eber. ‘For almost five years we were just on an upward spiral,’ Eber, of Coldwell Banker’s the Jills, told a gathering of real estate professionals. ‘But, right now, it has adjusted and it has become more of a buyers’ market.’”
“There are hundreds of unsold luxury homes priced above $500,000 in the Flagstaff area but just 36 priced below the median sales price inside the city limits. The median sales price for a home in the Flagstaff area in June was about $334,000, Century 21 Flagstaff realtor Stephen Brighton said. That price represents a 9 percent dip in the median price from May, which was $368,000. Brighton said in an email that those million-dollar home owners may be overly enthusiastic about the housing market.”
“Brighton said that so far this year, nine homes in the area have sold for $1 million or more. Last year, 20 homes sold for $1 million or more. ‘It’s a pretty safe bet that we’ll see a fair amount of price reductions from impatient, motivated sellers that don’t want to sit through winter and then have to revisit the selling season in 2017,’ he said.”
“Hamptons home sales cooled in the second quarter compared to the same period last year, according to reports released this week. Town & Country Real Estate noted ’significant drops’ not only in the number of sales but also in dollar volume and median price in most of the 12 hamlets and villages it covers on both East End forks. ‘I think the glaring trend is, there were declines in markets that are normally strongholds, such as the estate sections of Southampton, East Hampton and Water Mill,’ which includes Sagaponack and Bridgehampton, said Judi Desiderio, the CEO of Town & Country. ‘The crown jewels got a little dusty this year.’”
“Economic research head Wan Suhaimie Wan Mohd Saidie said Budget 2017 will still be very ‘rakyat-centric’ for the property segment with goodies to be given out under government housing schemes. ‘If we are lucky, (there would be) additional subsidies for government affordable housing. We do expect Bantuan Rakyat 1Malaysia (1Malaysia People’s Aid) to be given out as well.’”
“The cut in the overnight policy rate by 25 basis points and ever further cuts are unlikely to spur lending to the sector, he noted. ‘We think adjustments to the 70% loan-to-value cap (LTV) on third home purchases is also unlikely as those who are buying third homes are investors/speculators rather than genuine home buyers, so increasing the LTV may send the wrong message to the rakyat. Fiscal measure-wise, lowering or removing the real property gains tax will be detrimental for the property market as it may cause a panic sell which further exacerbates the oversupply situation.’”
“Kyrgyzstan and other Central Asian countries are constantly trying to attract foreign investment, which is very important for the local economies and one of the most important answers to persistent economic stagnation. Over the first three months of 2016 Kyrgyzstan’s gross domestic product dropped by 4 per cent to the amount of 78.8 billion som, while its industrial output lost a staggering 24.3 per cent on-year.”
“The basic explanation is rather simple: the Kyrgyz nation is spending more than twice the amount that it earns. The number of lavish mansions and luxury estates mostly around Bishkek but also in other parts of the country is mushrooming. So is the construction of luxury housing in the capital most of which stand all but empty. The reason is quite simple — Kyrgyz do not have any other place to hide their cash if not to build apartments and develop real estate.”
“Thousands of house sales across London have collapsed since the Brexit vote as alarmed buyers scramble to pull out of ‘overpriced’ deals, the Standard has learned. Agents said increasing numbers of ‘desperate vendors’ are prepared to accept previously unthinkable price cuts. Matthew Wright of the Marylebone and Mayfair branch of estate agents Winkworth said: ‘There are definitely people more eager to sell than previously who have instructed us to take quite substantial discounts. The rule of thumb is that people are offering 10 per cent below, but we have had offers at 50 per cent below and plenty at 20 to 25 per cent.’”
“With economic worry rife in Alaska, the annual three-year outlook luncheon hosted by the Anchorage Economic Development Corp. was a popular affair. AEDC President and CEO Bill Popp didn’t shirk from delivering some unpleasant news to the business community: 27 years of steady economic growth in the city came to an end in 2015.”
“Many in the audience lived through the disastrous recession of the 1980s, when at least a dozen banks failed and thousands of homes went into foreclosure. Popp emphasized that housing prices, while lower, have not dropped dramatically and it’s primarily sellers of pricier homes who are seeing values fall and days on the market exceeding a year or more. In terms of inventory, the Anchorage housing market is starting to look as it did during the Great Recession of the late 2000s, but not the crisis levels of the mid-1980s.”
“Popp echoed the opinion of realtors who note buyers now have more choices as a period of tightness in Anchorage’s housing market appears to have ended. ‘Housing is coming off of a four-year sellers’ market,’ Popp said.”
“It’s still not clear what will cool this smokin’ hot housing market and these unsustainable prices. Will it be an easing, a plunge, a bursting or what? Crib regularly tells you readers that as Amazon goes, so go housing prices here. One friend who’s pretty good with these things said it appears Amazon has effectively accomplished it’s build-out and is now ready for the transition to cash-cow. That friend thinks one big question is when does Amazon start hiring people in other places instead of continuing to concentrate on South Lake Union. If Amazon does that, that would be an easing.”
“The next force at play is just natural capitalist economic flow. Nationally and locally we are attempting to grapple with the widening gap between uber-rich and the poor, with a shrinking middle class in between. That’s a bubble itself that will burst. It has advanced like a bad cancer into the unhealthy range. We see it here in these unsustainable housing prices. We closed recently on a sale for a younger couple with two kids who had to look in Renton to find a home to buy. They said the other day that every one of their friends have migrated out of Seattle. Same with the older couple of teachers who migrated to Tacoma in search of a home.”
“Forces like that ebb and flow. They build then push over their banks. People can only commute so far in such mind-bending traffic. Light rail will be painstakingly slow in making that commute more palatable. Ten and 15 percent annual increases in housing prices can’t be, and aren’t, matched — as housing prices must be — with income gains.”
