August 9, 2016

There’s Going To Be Some Winners And Some Losers

KOMO News reports from Washington. “Would-be home buyers, burned out on the city’s hyper-competitive real estate market, may want to consider jumping back in. Analysts at Seattle-based Redfin track home buying statistics in 15 major metropolitan areas. On average, they have found a 17% drop in buyer interest since last summer. The company found less demand among buyers looking right now than in Spring 2016, when Seattle hit its last peak. ‘Back in April, I wrote a handful of offers with no contingencies, escalating ten to twenty percent over list price and lost,’ says Redfin agent Karlyn Goetz. ‘It was cutthroat. That’s the best word for it.’”

“Repeated disappointment caused some of Goetz’s clients to put their house hunting on hold. But she has noticed a difference in recent weeks. ‘Now, when we submit an offer, we’re up against two or three others,’ she says. ‘That’s opposed to 10 offers, which I experienced a few months ago.’”

WTOP in Washington DC. “The vast majority of real estate construction in the District is residential, and the majority of those that are rentals are considered luxury apartment buildings — and in places that weren’t upper-end residential neighborhoods a decade ago. But there are signs that luxury apartment developers are having to step up concessions to rent them. ‘You see things like first and second month free, free parking attached or moving costs. You are starting to see some slowness, especially at the high end,’ said Svenja Gudell, chief economist at the real estate firm Zillow.”

The Miami Herald in Florida. “Slumping sales and falling prices tell one story: downtown Miami’s condo market is headed for hibernation. A new report from Miami’s Downtown Development Authority points toward relief for a market as overheated as August temperatures. The big news: for the first time in five years, resale prices for downtown condos fell, declining 4 percent to $438 per square foot through the first half of 2016. (The analysis looked at condos built after 2001. Older buildings faced steeper price cuts.)”

“Meanwhile, inventory is rising while demand sputters: Listings are up from roughly 1,900 in May 2014 to 3,000 in May 2016. Over the same period, monthly sales fell 43 percent. But don’t expect those cranes to disappear anytime soon: Nearly 7,500 condos were under construction in the second quarter of 2016, with another 1,550 being marketed for sale.”

“Since many condos are leased out, the new inventory is shifting the rental balance in favor of tenants. ‘We’re at that point in the cycle where things are going to slow down and there’s going to be some winners and some losers,’ said Anthony Graziano of Integra Realty Resources, the report’s author.”

The Aspen Times in Colorado. “The Aspen government will move ahead with the construction of four homes at Burlingame Ranch despite a lack of interest in the employee residences that are being advertised for more than $1 million each. The Aspen-Pitkin County Housing Authority, as of Tuesday, had received two lottery bids with mortgage prequalification for the single-family homes, which are part of the second phase of development at Burlingame.”

“The cost of the homes, originally projected to be $1.3 million, have lowered since the builder, eSopris of Carbondale, lowered its bid. Another bidding period for the two remaining homes will open after the lottery winners choose their homes, said Affordable Housing Project Manager Chris Everson. Everson said he expects to see more interest upon the completion of the homes, but ‘there are no guarantees of that.’”

“The homes would be sold as resident-occupied, which are intended for residents who can’t qualify for Category housing but don’t have the means to buy a home on Aspen’s free market, where the average price for a single-family home in 2015 was $5.87 million, according to Land Title Guarantee Co. Housing authority guidelines also stipulate that buyers of resident-occupied homes cannot have assets more than $900,000, which partly explain the lack of interest, Everson and Assistant Manager Barry Crook said.”

“‘(We) believe the $900(k) asset limitation is way too low,’ Crook said. ‘It was created 20 or 25 years ago and was never adjusted.’ The housing authority is willing to raise those caps to as high as $2 million or $3 million in time to capture more interest in the Burlingame homes, Crook said.”

“Another option would be to lower the prices of two of the homes — while the two prequalified bidders would pay the current advertised price — by the city providing subsidies. As it stands, the homes are being sold at cost with no subsidies from the city. Council members expressed reluctance to subsidize the development. ‘I’m a little bit concerned about incentivizing people to wait, to think all of the sudden the houses are going to get cheaper,’ Councilman Adam Frisch said.”

“A member of one the families that prequalified told council that lowering the prices for two other homes ‘doesn’t seem fair to us. We pay full price.’”