There’s Too Many Buyers Who Can’t Afford A House
A report from CBC News. “When it comes to low interest rates, winter is coming. That was Federal Reserve chair Janet Yellen’s clear message Wednesday. Despite strong objections from some of her advisers, Yellen announced no change this week. So strongly that Yellen and her advisers on the committee that makes interest rate decisions were unanimous that a rate rise was needed. ‘We are worried that bubbles could form in the economy,’ she said.”
“Borrowers should keep their eyes open. Yellen’s message is that, for the first time in a long time, rates are on the way up. Then again, she gave us a much more serious warning a year ago, and since then, nothing much has really happened.”
From Bloomberg on Florida. “Alex Sifakis never raised this much money this fast. The house flipper from Jacksonville, Florida, crowdfunded nine deals totaling more than $9 million through RealtyShares over the last two and a half years. A July deal for $1 million took him just 12 hours. ‘It’s the greatest thing in the world,’ Sifakis said. ‘The amount of money you can raise isn’t limited by anything but their investor base. And the investor base is growing and growing.’”
“House flippers and property developers are increasingly crowdfunding — tapping the virtual wallets of anonymous internet backers on platforms such as RealtyShares, LendingHome, PeerStreet and Patch of Land. For riskier ventures, such as building new homes and buying, renovating and selling existing ones, they’re finding quick financing can be easier to get online than from banks. That’s contributed to an increase in home flipping. In the second quarter, 39,775 investors bought and sold at least one house, the most since 2007, according to ATTOM Data Solutions.”
“‘If you’re originating and selling, you’re just trying to get as much volume as you can,’ said Brett Crosby, a Google Inc. alum who co-created PeerStreet and is now chief operating officer. ‘In order to get more borrowers in the door, you start to drop underwriting guidelines.’”
The Williamette Weekly in Oregon. “The 21-story, dark glass tower looming above the east end of the Burnside Bridge is supposed to help solve Portland’s housing shortage. The apartment building known as Yard opened in late July. The tower was intended to ease Portland’s housing crunch by adding 284 apartments to a city where low vacancy rates are driving up rent. That’s why the Portland Housing Bureau offered tax credits to the real estate developers that bought the property from the Portland Development Commission in 2014.”
“But the entire 11th floor is available as a short-term rental. The decision to create short-term rentals out of a whole floor of a city-subsidized apartment complex raises questions about the city’s use of scarce housing dollars and its failure to enforce the rules for companies like Airbnb. ‘This entire floor dedicated to Airbnbs speaks to the fallacy of the argument of ‘build, build, build and the market will provide something that’s affordable,’ says housing advocate Justin Buri.”
The Mercury News in California. “In the Bay Area housing market, it appears to be a game of cat and mouse. Sales of single-family homes in August crept up ever so slightly from the year before as many buyers took a wait-and-see attitude, challenging sellers to negotiate — something unheard of in the overheated market of 2015. ‘Outside hotly contested areas, we’re seeing price adjustments of a kind we haven’t seen in some time,’ said Timothy Ambrose, treasurer of the Bay East Association of Realtors. ‘Buyers start thinking, ‘Well, should I wait?’”
“‘The Bay Area eked out a very small year-over-year gain for home sales,’ said Andrew LePage, a research analyst for CoreLogic. ‘Now why is that the case when the job market’s doing well and interest rates are still incredibly low? Once again, it’s because of affordability and constraints’ in the housing supply. ‘And it’s not just that there’s not enough houses for buyers — there’s too many buyers who can’t afford a house.’”
The Real Deal on New York. “In yet another sign of the dipping ultra-high-end market, the seller of the city’s most expensive listing has cut $24 million from the asking price. The 12,000-square-foot duplex co-op at 834 Fifth Avenue was listed in April for $120 million. But now that it has sat on the market for five months, the seller decided to offer a discount to $96 million ($8,000 per square foot), the New York Observer reported.”
“One of the most sought-after addresses in the city, 834 Fifth Avenue doesn’t allow financing for co-op purchases.”
