August 19, 2016

Asking For More Money Has Become A Nightmare

It’s Friday desk clearing time for this blogger. “The annual off-campus student housing boom near Missouri State University has a little more ooomph this year. Since the recession, new private development around campus has had an almost singular focus: amenity-rich apartment complexes. This month saw the largest increase in beds yet, thanks largely to the opening last weekend of Aspen Springfield. The complex recently posted that it only has ‘a few spots left’ — but there’s one sign that demand may have been, at least initially, lower than developer Aspen Heights expected. In October, an Aspen executive told the News-Leader that two-bedroom units would start at $694 per bed per month, with three-bedroom units starting at $664. As of this month, however, advertised prices were $599 for a spot in a two bedroom, and $589 for a three bedroom — a drop of 14 and 11 percent, respectively.”

“A mile away on Kimbrough Avenue, developer Bryan Magers is preparing for a one-year construction push within his Bear Village development. Every spring, Magers told the News-Leader, he finds himself wondering if this is the year that the area around Missouri State will be overbuilt — when there won’t be demand to match supply. ‘We are going to finish Bear Village, and we are hoping there are 375 more students that will be able to fill it,’ Magers said.”

“The development boom in Portland shows no signs of slowing. And for the first time in decades, the city has seen an explosion in market rate and luxury apartment buildings and condominiums. Southern Maine Landlord Association president Brit Vitalius, who also tracks the rental market, said in an email that this year’s rent increase is ‘less than half’ of the 2015 increase and that one large landlord is ‘actually reducing rents on a handful of units in Portland and South Portland due to current market conditions.’”

“Brooklyn development exploded in the last decade, but all good things must come to an end. A big concern came from Hornig Capital Partners managing partner Daren Hornig, who said the increasing difficulty of acquiring construction financing could make it almost impossible to find a deal to underwrite and be confident on absorption. While Slate Property Group’s fortunate to have repeat credible lenders, Slate managing director Michael Zampetti said, finding acceptable terms or asking for more money has become a nightmare.”

“Some Miami developers are trying to entice potential buyers to open their wallets by offering immediate amenities in some cases before shovels are even put into the ground. ‘We’re seeing this trend in many housing markets that have experienced a lot of development over the past several years,’ said Jonathan Miller, CEO of appraisal firm Miller Samuel. ‘The idea is to give that one final push to the buyer. Clearly when more of that is being offered to buyers, it’s a reflection of the market not being as white hot as a few years ago.’”

“Recent data has shown that the market across Miami has been softening over the past year amid an oversupply of luxury condos coming onto the market and weakening demand thanks to growing concerns over the global economy.”

“Proponents of a proposed ballot measure that would temporarily halt some large developments in the city of Los Angeles said Wednesday they are willing to withdraw their initiative if Mayor Eric Garcetti agrees to an alternate plan. Jill Stewart, the campaign director for the ballot initiative, said the media has focused on the ’sexy’ part of the measure — the ban on certain types of development — but ‘that is a small part of what we’re doing.’”

“‘That’s a wake-up call for the City Council,’ she said. ‘No more mischief, no more backroom meetings with developers during a two-year period. Take all that wasted time you’ve spent creating a luxury housing glut in Los Angeles and instead do your jobs, create a plan in L.A. that involves the public.’”

“Home sales in the Austin area tumbled almost 5 percent in July — the second month this year to see a sales drop — but prices continue to rise, according to the Austin Board of Realtors. Charles Heimsath, an Austin-based real estate consultant, said the sales decline ‘probably reflects a combination of ‘buyer fatigue’ due to multiple-offer competition, a change in demographics where potential buyers choose to rent, and excessive 100-degree heat’ that kept people inside.”

“Diane Johnson, team leader of Keller Williams Realty Austin, also cited buyer fatigue, saying many buyers ‘are choosing to stay out of the bidding wars. We expect they are waiting for the market to cool to buy.’”

“Arguing that the current rate of foreclosures is worse than anything Massachusetts has seen since the run up to the American Revolution in 1763, activists and homeowners pushed the Legislature to clarify the rights of municipalities to try to prevent foreclosures and minimize their damage. Esther Ngollu, a Beverly resident, told the committee that she has been trying for a decade to get the bank to sit down with her and agree to a loan modification so she can keep her house.”

“‘I got a predatory mortgage two years after I immigrated into this country and I’ve been fighting for my home for about 10 years,’ she said. ‘I have tried to apply for modification for more than 10 times within a period of 10 years.’”

“Every day, there are headlines announcing the housing crisis is over, that home prices are recovering and that Las Vegas is out of the woods (or nearly out). On the surface, these largely positive headlines are accurate, but it may be too early to celebrate.”

“A few sleeping giants in the mortgage and finance industry have started to stir. Ten-year notes are coming due, the Troubled Asset Relief Program is ending and the Nevada Foreclosure Mediation program is running out of funding. Our fragile economy might be able to shake off one of these events, but all of them at once? That’s not likely.”

“Year over year, housing prices in Las Vegas have risen, but they’ve been mostly flat or even slightly down this year. More important, upper-middle-class home prices are down nearly 40 percent from their peak values in 2006. This may not seem significant, but it’s important to remember that a favorite product of purchasers and refinancers in 2006 and 2007 was the 10-year, interest-only adjusted-rate mortgage. With this loan type now adjusting into principal and interest payments, borrowers are seeing their payments double or even triple overnight.”

“Under normal circumstances, homeowners would have several nontraditional programs available to them, such as loan modification, short sale and underwater refinance. These programs are still available, but time is running out. The government versions of these programs — the Home Affordable Modification Program (HAMP), Home Affordable Refinance Program (HARP), and Home Affordable Foreclosure Alternatives Program (HAFA)— all end Dec. 31, and they are unlikely to be renewed.”

“None of this spells certain doom for Nevadans. I’m cautiously optimistic that our federal and state lawmakers will see the confluence of events looming and take the necessary steps to ensure the economy can handle it. Until they do, or if they don’t, it’s important to remember that just before the last bubble popped, the headlines were pretty positive, too.”