September 9, 2016

Cutthroat Price Competition Is Emerging

It’s Friday desk clearing time for this blogger. “Even with another hint of a late-summer cooling in home prices, the Seattle area real-estate market has still gotten so intense there often aren’t enough inspectors and appraisers to keep up with the demand. That’s creating extra risk and cost for homebuyers desperate to get an edge in bidding wars. ‘You get a lot of panicked phone calls (for inspectors): ‘Do you know anybody? We’ll take anybody with a pulse,’ said Dylan Chalk, who owns Orca Inspection Services. ‘It worries me — whenever we get these bull markets, there’s a huge pressure to lower the quality of a home inspection to make it quicker and cheaper.’”

“‘Houses can be in filthy condition — rot infested with mold — and the buyer’s response, is, ‘Yeah, but can I buy it?’ said Richard Hagar, owner of American Home Appraisals, and also an agent. ‘So there are people who will not have inspections. Or (after buying), they will discover things — cracked foundations and things like that.’”

“Metro Denver’s housing market continued to show signs of leveling off in August, with both median and average prices dropping for single-family homes, according to the Denver Metro Association of Realtors. Interest rates dropped after Britain’s June 23 vote to leave the European Union, unleashing a big wave of mortgages refinancing and leaving appraisers stretched thin. ‘Appraisals are taking longer than ever and, as a result, are causing widespread delays with closings,’ noted Anthony Rael, the report’s author and a Denver area real estate agent.”

“Manhattan’s traditional peak apartment-leasing season wrapped up in August with no rent growth for landlords, a sign that their ability to push up costs may wane further in the coming months. ‘Owners felt that these four months were their primary season — they were in the driver’s seat and they didn’t feel they needed to make adjustments,’ Citi Habitats President Gary Malin said. ‘Now, there’s that fall and winter drop-off, and they realize, ‘If I don’t start corrective action, I may be stuck with apartments for longer than I’d like to be stuck with them.’”

“As other luxury condo developers are pulling back, ROVR Development is unfurling its plans for The Fairchild Coconut Grove, a boutique luxury condominium set to soon rise on the Coconut Grove waterfront. Sales have already softened in the luxury category, and prices are expected to eventually follow suit, said Peter Zalewski, a principal of the Miami real estate consultancy CraneSpotters. Between January and June, eight luxury condo units closed in the Grove this year, at an average square foot price of $703, he said. In the Grove’s preconstruction category, there are six projects with 357 units proposed, planned or under construction, he added.”

“‘I would characterize the market as over-saturated,’ Zalewski said, noting that inventory levels in Coconut Grove are almost three times what is considered healthy. ‘Where you are in the market now, a buyer can be very selective and make the seller or the developer bow down and provide incentives. Two years ago the developer would have had the advantage.’”

“There is some good news for those who feel high property prices have locked them out of the buying market - renting is becoming more affordable. According to the latest CoreLogic rent review, Darwin recorded the biggest drop of 14.1 per cent and in Perth rents dropped by 9.4 per cent. Real estate investment advisor Zaki Ameer of Dream Design Property said while many people focused on buying property, renters held all the power in the property market. ‘Renters have the ability to live in whichever area they like, without worrying about a large mortgage,’ he said.”

“Lamudi Philippines managing director Jacqueline Van den Ende attributed the shift in consumer interest towards renting instead of buying to the rapid growth of vacancies due to more new properties being completed. ‘I think one of the key drivers here is the big inventory of unsold units. There’s a lot of inventory coming into the market, and that inventory is increasing vacancy rates,’ Van den Ende said. ‘With more than 11,000 more residential units, primarily condominiums, expected to become available by the end of the year, developers are under some pressure to find residents for their new properties.’”

“Residential housing units inside and surrounding the four three-rail terminal stations in Taiwan have failed to resist the trend of declining prices that has plagued the property market for the past two years. Average prices for residential housing units plunged by 11.6 percent to NT$507,000 from NT$574,000 per ping (one ping = 36 square feet), according to statistics provided by Great Home Realty Co. Ltd. A senior researcher at Great Home Realty Co., Ltd said the booming ‘rail economy’ has attracted commercial entities seeking to cash in on the robust consumption habits of passengers.”

“This caused an initial surge in residential property prices around the stations, with the availability of multiple transportation systems attractive to home buyers. Yet most home buyers share the view that the housing prices will continue to trend downwards, the researcher added. Cutthroat price competition is emerging in the pre-sales housing market, undermining the possibility that house prices in areas surrounding the four three-rail terminal stations will pick up.”

“The home bubble has burst in Athens with home prices and leases continuing to drop. In a market that hit rock bottom following Greece’s financial meltdown home prices have plummeted with basement flats selling for a song. Rent prices in the capital have also dropped and are continuing to do so, says Remax realtors. The steepest drops in Athens were noted at upmarket regions such as Ekali and Psychiko (13 percent), the working class western suburbs (10 percent) and some regions of the center, such as Ambelokipoi (11 percent).”

“Volos, Larisa and Patra tenants prefer small apartments that they can get for a song from 180-300 euros per month.”

“Amid rumblings of pre-pre-election campaign talk focusing on B.C.’s real estate situation, some were surprised at the Premier’s use of the word ‘bubble’ yesterday. NDP housing critic, David Eby took it to Twitter this morning saying the ‘Premier describes Vancouver Real Estate as a ‘housing bubble’… Not sure Bob would approve of these election year talking points.’ A dig at developer Bob Rennie as well who many see as being too close to the premier, who’s been accused of dragging her heels on cooling the market.”

“But Eby says Clark’s message is inconsistent. ‘It’s one that’s definitely going to drive a wedge in her fundraising base which is driven by real estate agent Bob Rennie who’s been very clearly saying that there is no bubble so it’s a very interesting change of talking points in an election year.’”