August 13, 2016

Eerily Quiet Compared To The Buying Frenzy

The Calgary Herald reports from Canada. “Buyers who turned to the city’s resale market for a single-family home last month saw more than $17,000 in savings, says the Calgary Real Estate Board. The benchmark price on single-family homes in July was $502,300. That’s a 3.5 per cent dip from the same month in 2015 when it was $520,000, says CREB. The setback in prices was joined by a nine per cent cool down in sales, easing to 1,108 deals last month from 1,220 a year ago.”

“‘To buyers and sellers that have been paying attention to the housing market in Calgary and surrounding areas, it should come as no surprise that we continue to see a slowdown in sales activity,’ said CREB’s president Cliff Stevenson. ‘Buyers are expecting further declines in sold prices, and sellers are adjusting to softer demand with price decreases. When these expectations intersect, we’re seeing sales activity in the market, but not at the level realized over the last several years.’”

The Calgary Sun. “Canada’s biggest residential landlord said Friday vacancies at its apartments in Alberta are on the rise as it lowers rents and offers incentives to attract tenants — and it doesn’t expect conditions will improve much for the rest of the year. Calgary-based Boardwalk Real Estate Investment Trust, which owns 33,000 rental units in four provinces, said there are signs of weakness in Alberta’s rental market.”

“In July, the landlord saw a spike in the number of tenants who gave late notice to move out, which suggests some instability in the lives of renters who may be suffering from job losses, said Rob Geremia, the company’s president. ‘That really got us thinking, and we felt our original assumption of beginning to see strength in (the second half of the year) has to be pushed out farther because we are not seeing the financial numbers to back that up,’ Geremia said.”

From CKNW AM 980. “Still more indication we’re in the grips of a slow down in the economy. On the heels of provincial numbers that developers are scaling back projects, specific numbers on what’s happening in metro Edmonton show in April May and June of this year, the number and value of building permits are off almost by fifty percent.”

“The reason for the drop, City of Edmonton economist John Rose said the break neck pace couldn’t possibly keep going over what we saw in the last two years. ‘We saw a real run up in apartments and condo buildings in the Edmonton region, in 2014-2015 so yes the numbers did have to come down,’ he said. ‘However I would point out the building permits numbers are down substantially and that means the slow down in the construction sector, particularly on the residential side will continue into 2017.’”

“The good news out of that, if there is good news, Rose said once things start to pick up, there won’t be an over supply of product, and a resulting price crash. ‘There’s a lot concerns, particularly around Toronto and Vancouver, around where their housing market is going and are they in a bubble? Is there an over-build in condos particularly in Toronto. We’re not in that situation at all.’”

The Langley Advance. “July saw home price increases stall in Langley, though they remain shockingly high compared to last year. Sales in Langley dropped sharply across all categories of housing. While Langley saw largely flat prices between June and July, the Fraser Valley as a whole actually saw a decline in the price of detached houses. Parts of Surrey saw steeper declines in both sales and prices than Langley.”

“Wiebe said that the slowdown in sales will be good for the market. ‘Additional inventory will help drive us towards a more balanced environment for consumers and remove some of the upward pressure on prices we’ve been seeing,’ Wiebe said. The provincial government recently imposed a 15 per cent tax on purchases of homes by foreign nationals, which caused a scramble at the start of August to finalize sales. The change was announced less than a week before the end of July.”

The North Shore News. “Local real estate agents say they know of several multi-million-dollar real estate deals collapsing and predict the hot North Shore housing market will cool slightly in the wake of a new 15-per cent provincial tax on property purchased by foreign buyers. ‘It’s one of the most shocking events that’s ever arrived in our industry,’ said Brent Eilers, a longtime West Vancouver Realtor with Re/Max. ‘Nobody really knows how it will unfold.’”

“Eilers said the new foreign buyers’ tax is bound to have an impact, particularly in markets like West Vancouver and North Vancouver, which have been ‘incredibly dependent on offshore money or new money’ that’s come from sales to foreign buyers in other areas of the Lower Mainland. Eilers said he knows of several ’sizable purchases’ where the real estate deals may fall apart. ‘There was a $13-million house in West Van that just got nailed with it,’ he said. ‘It’s hard to see in some of these transactions there’s a clear path to the finish line.’”

“Realtor Steve Taylor of MacDonald Realty in West Vancouver recently sold a house for a retired couple in Ambleside to buyers from mainland China for about $2.5 million. But the deal is now subject to the new tax, adding a significant cost, which the buyers say they don’t have the money for. Meanwhile, the West Van couple has already bought another home on the North Shore. Until the closing date, said Taylor, ‘They have to sit and hope for the best.’”

“Since the new tax went into place, the housing market on the North Shore – particularly for detached homes – has been eerily quiet compared to the buying frenzy and bidding wars seen in the spring. The number of sales for detached homes in July were down 45 per cent over last year and down 15 per cent in North Vancouver for the same time period, said Eilers. The 44 West Vancouver sales in July 2016 contrast with the 74 sales in 2015 and the 153 sales there in February 2016.”

“August has shown an even more pronounced dropping off. The average number of August sales in West Van is about 60. Last year there were 80 sales for the month. So far this month, there have been two.”

From The Tyee. “And any claim that the BC Liberals’ surprise move to impose a 15 per cent tax on foreign nationals buying residential property will make homes affordable for average buyers is a cruel joke. That horse has truly left the barn. Median detached housing prices would have to be cut in half from their current $1.58 million to even begin to be affordable, using the term almost jokingly – for some upper-middle to higher income families. Everyone else is out of luck.”

“And if the market did collapse and prices fell 50 per cent, we would be in a economic crisis and no one would be buying houses anyway – they would be hoarding canned goods and water.”

“How bad is Vancouver’s housing affordability crisis? Incredibly, unbelievably awful, with the price of detached homes up 38 per cent in one year. One example: Only 10 years ago, just 11 per cent of Vancouver detached homes were valued at $1 million or more – when the city was already Canada’s most expensive. Today more than 90 per cent of Vancouver detached houses are worth more than $1 million.”

“Royal LePage CEO Phil Soper argues that Vancouver’s extreme housing price hikes are unsustainable. ‘You have severe affordability issues in Vancouver. It has become a serious public-policy issue, so it’s not healthy,’ he said in an interview. ‘Prices are moving upward at an irrational rate.’ True. And for some personal perspective, let me tell you about one modest home on West 15th Avenue in Kitsilano that I’m very familiar with – because we used to live there.”

“Friends bought it in 1986 for $180,000 and sold in 1992 for $380,000, when we rented it. The new owner eventually moved in, did some renovations and sold it for about $500,000 a few years later. Its BC Assessment value in July 2015 was $1.96 million – and a nearby very similar house sold recently for $2.5 million! That means the value of our old Vancouver home is 10 times greater than it was 30 years ago, with most of the increase in the last decade.”

“And so, as the price of that house and the homes across the region show, the horse has not just left the barn – it has left the country.”

Is History Repeating Itself?

NECN reports from Massachusetts. “The median home price in Massachusetts is now $372,000, a new record. With bidding wars and record prices, the headlines are strikingly similar to a decade ago, right before the housing market tanked. Is history repeating itself? Annie Blatz, president of the Massachusetts Association of Realtors said, ‘We have a very competitive market very high demand and low inventory. That is making our prices go up. This is different from years in the past when we had a different economic set of circumstances when we had high demand and high prices and also high inventory.’”

“Massachusetts’ most competitive markets right now are Boston and the western suburbs, where it’s not uncommon to wait in line to get into an open house. Buyers need to be ready to pounce when they find something they like. Jim Cotter of William Raveis Real Estate said, ‘All your ducks in a row. Ready to make an intelligent offer on the spot is absolutely key. This market is so fast. It is not the type of situation where you can say ‘we’ll look at it tonight and think about it overnight.’”

“Blatz said, ‘They have to get in to the competitive spirit of it. They have to be ready to buy and have their checkbook with them and be ready to make their highest and best offer and if they do that they’ll eventually get a house.’ She added, ‘They also need to have some flexibility. Maybe they need to consider a home that might need some repairs or renovation.’”

The Press Democrat in California. “Sonoma County’s housing market slowed markedly in July, leading real estate brokers to wonder whether a sluggish pace of sales in the Bay Area is moving north. County home sales declined nearly 17 percent last month from a year earlier, according to The Press Democrat’s monthly housing report, compiled by Pacific Union International senior VP Rick Laws. Buyers in July purchased 450 single-family homes, the lowest number for the month in five years.”

“New listings, meanwhile, declined 20 percent from a year earlier, falling to the lowest level for July in at least seven years. That second drop, which will mean fewer available properties in an already tight housing market, caught brokers by surprise. ‘It’s only one month,’ said Laws, ‘but it was enough for me to go, ‘Wow, what’s going on?’”

The Register Guard in Oregon. “After reaching historic highs in June, Lane County’s housing market came back to earth in July, with fewer closed sales and lower sale prices, according to the latest figures from the Regional Multiple Listing Service. The 418 closed sales in July was down from 524 in June. July’s average sale price of $261,400 was lower than June’s $279,800 average price — the highest ever in Lane County, according to RMLS.”

The Pueblo Chieftain in Colorado. “The recovery in Pueblo home sales slowed for a second month in July. Sales last month were down 26 percent by unit volume (191 vs. 261) and down 19 percent by dollar volume ($32.5 million vs. $40.5 million) compared with July 2015, according to data from the Pueblo Association of Realtors.”

“Real estate industry professionals are sensing a slowdown, said Dave Anderson of RE/MAX Pueblo West, a spokesman for the Colorado Association of Realtors. ‘Last week, we noticed that the showings were down and even one of the mortgage companies said they noticed a few less people coming in and applying for loans,’ Anderson said.”

The Pioneer Press in Minnesota. “The median sales price for homes in the Twin Cities region in July retreated slightly from the record level it reached in June, but still rose on a year-on-year basis. The median in July was $239,900, a 6.6 percent rise from July of last year, but down from the $242,000 record high set in June 2016, St. Paul and Minneapolis Realtors associations reported. Homes prices above $1 million are taking an average 174 days to sell. ‘Those selling properties above the $500,000 mark know that patience is a virtue even in our current environment,’ said Cotty Lowry, president-elect of the Minneapolis association.”

The Frontiersman in Alaska. “The man with the finger on the pulse of the largest economic center in the state told the Wasilla Chamber of Commerce that dire predictions about the decline of the regional and state economy have yet to be realized. Bill Popp, CEO of the Anchorage Economic Development Corp., told the chamber that there will be some pain, he said of the state’s current economic straits, but the direction is vastly different from comparisons made to the state’s economic crash in the 1980s. That era was marked with an epic housing and banking collapse that shouldn’t happen in the current climate, he said.”

“‘In the month of June, we were down 1,000 jobs in construction, 1,000 jobs in professional and business services and 1,000 jobs in oil and gas in Anchorage — 2,500 on a statewide basis,’ Popp said. ‘That was from the (2015) peak. So, it’s down about 19 percent, and that’s where we are feeling the pain. And we are feeling it in these high-dollar jobs that we value very much.’”

“‘Right now were are feeling a very sharp pinch,’ Popp said. ‘It’s going to hurt and it is going to leave a mark. But it’s not the head blow that some people try to portray it as, like it is 1986 all over again.’”

Crain’s Chicago Business in Illinois. “A home in south suburban Riverdale sold in May for less than half what its seller paid 19 years ago, but his real estate agent said the owner ‘was glad to get that monkey off his back.’ Rodney Russell bought the house for $81,500 in 1997 and sold it for $37,000, according to the Cook County recorder of deeds. He wasn’t in foreclosure, according to the recorder, but made a deal with his lender to short-sell the house because he’d been trying to sell it since 2009, said listing agent John Palomo of Coldwell Banker. ‘He was happy to finally be walking away with no debt on it anymore,’ Palomo said.”

“Russell, who couldn’t be reached for comment, was so far underwater on the house that the likelihood of getting back to a break-even point was minuscule. His predicament is common in Riverdale, where more than 76 percent of homeowners with a mortgage were ’seriously underwater’ in the second quarter, according to a report from Attom Data Solutions. That means they owe at least 25 percent more on their mortgage than their home is worth.”

“Riverdale has the nation’s second-highest concentration of seriously underwater homeowners, according to Attom, formerly called RealtyTrac. Among all U.S. ZIP codes with at least 2,500 homes, only the St. Louis suburb of Bellefontaine Neighbors has a higher level of mortgage distress, 79.8 percent, according to Attom’s data. In two dozen Chicago-area ZIP codes, more than 50 percent of homeowners were seriously underwater in the second quarter.”

“‘The entire south suburban part of Chicago isn’t pulling up out of the problem that started in 2008′ with the housing bust, said Mike Buder, a Re/Max 2000 agent and former homebuilder in Dolton. ‘We’re not seeing a recovery here.’ The average sale price in Dolton was $25,500 last year, or less than 40 percent of the $110,600 average a decade earlier, he said.”