Buyers Saw That It Just Got Beyond The Pale
It’s Friday desk clearing time for this blogger. “Real estate is the heart of Miami’s economy. In the past four years, more than 3,000 condo units have been built, and a whopping 11,000 are slated to finish construction by 2018. It might seem an insane proposition to sell 14,000 new luxury condos in six years, and it appears market experts agree. Real-estate expert Andrew Stearns released a study that suggests, yet again, that demand for luxury condos in Miami could be hitting its breaking point. Though there were more than 700 post-2012 ‘preconstruction’ condos on the market in August, Stearns reported that only eight of them had sold. And all of them lost money on the sale. ‘There appears to be something going on,’ Stearns said.”
“Stearns’ website, StatFunding.com, has been compiling data all year. This past May 5, Stearns reported that Miami’s condo market might be hitting an ‘inflection point,’ wherein there are simply too many new condos, and people trying to resell even 1- or 2-year-old condos will be selling them at ’significant losses.’ ‘At [the] current rate of sales, there is over 10 years of inventory of recently completed condo projects due to lack of sales activity,’ he wrote. ‘If current sales trends continue, in the next 24 months there will be over 57 years of inventory of newly completed condos on the resale market.’”
“This, he said, would then cause spillover problems with Miami’s rental market. In the next 24 months, he wrote, ‘rents will likely tumble as preconstruction buyers unwilling to take losses on their condos flood the rental market with new units.’”
“Could it be the break Bay area homebuyers have been waiting for? New numbers show home sales are actually slowing. Santa Clara County Realtors Association President Trisha Motter said, ‘We’re not seeing the bidding frenzies or paying as much over list price as we were before.’ For instance, a house in South San Jose has been up for sale for three months and counting, something that would have been unimaginable a year ago.”
“Motter is in process of selling a nearly identical home just across the street from the home that has been sitting on the market for months. She says the combination of the right price and a tasteful staging helped her snag a buyer in just two weeks. ‘Before you could put your home on the market with no preparation and it would move quickly. Now, buyers are taking it a little bit slower. They have options,’ Motter said.”
“A potential shadow inventory looms over the market as state-mandated mediation proceedings drag out the process, raising the specter that foreclosures could jump again in the coming months as those procedures reach their end. ‘We’re about seven, eight years after the crash and were still dealing with foreclosures,’ said Mike Feldman, president of the Connecticut Association. ‘Eventually, we’ll wash through all this stuff, but it’s hanging over our heads because the judges have to deal with it. Other states have done it a lot faster.’”
“In upscale Gold Coast communities like Greenwich, it is not unusual for a mortgage to be triggered simply by a house carrying more debt than its actual value, according to David Marantz, a court-appointed attorney based in Stamford currently overseeing the auction of a Greenwich property. ‘Often people don’t want to pay because they’re under water,’ Morantz said.”
“A former realtor who owned at least 12 rental properties in Nevada and Texas and filed multiple bankruptcy petitions to avoid paying the mortgages has been sentenced. Barbara Jean Dennis, 60, of Las Vegas pleaded guilty in February to bankruptcy fraud, admitting that she used the automatic stay provision in bankruptcy proceedings to avoid paying the mortgages, while at the same time, collecting rent from her tenants, according to a Department of Justice news release.”
“‘As this case demonstrates, the fallout from the housing crisis in Nevada is still impacting federal investigations and prosecutions,’ said Daniel G. Bogden, U.S. attorney for the District of Nevada. ‘The prosecution of these cases typically takes years and requires a significant amount of resources.’”
“After a dismal year in 2016, the Fort St. John housing market may be starting to stabilize. Fort St. John RE/MAX owner Trevor Bolin says the homes in Garrison Landing are selling for up to $70,000 less than they were last year. But he says sales aren’t just picking up because of the huge discounts. Pipeline projects in the area are providing new jobs, and there is confidence work is going to pick up soon.”
“But not everyone is confident things are turning around. Robin Spencer-Pickell was thinking about selling her home last year. Bolin told her she could get about $360,000 for it, despite the tax assessment for her home being $460,000. Spencer-Pickell figures the value’s only gone down since then, and doesn’t see any signs the market is stabilizing.”
“‘That isn’t the true picture. Go up and down any of these streets and see how many for sale signs are up and how many for rent. All these new ones that are up, those guys lots of them are renting them out or selling them just to get what they put in to building them back out. It’s a bleak picture. It’s not pretty,’ said Spencer-Pickell.”
“A record year for Australia’s volume home builders raises concerns that the country’s largest-ever housing construction cycle has peaked. The home builder with the biggest absolute increase in starts last year was Newcastle-based MJH Group. ‘Greenfield developers had to be willing to cut their profit expectations to keep volumes rising,’ said managing director Andrew Helmers. ‘The prices have come off. The clever developers with a bit of room to move, are adjusting their prices. It’s good signals for buyers. The peak of the market was about Fathers’ Day last year. After that it seemed to switch off – it just got beyond the pale. I think buyers saw that.’”
“Facing a slump of almost 30% in sales in the past two years, the real estate sector in Indore is struggling to get into gear. Of the 60,000-odd apartments in the city, as many as 28,000 are lying unsold and vacant. A major chunk of apartments in the city have seen a dip in resale value. With more than 25,000 vacant apartments, real estate developers are finding it difficult to earn from the projects. ‘The current rate per square feet is almost the same as it was two years ago. This is one of the reasons why home-buyers are not finding it viable to sell their flats. There is no appreciation,’ said CREDAI Indore chapter’s secretary Akhilesh Kothari.”
“‘Today 70% buyers look for affordable housing and the rest are in for luxurious apartments. But the newer projects that are coming up are largely focusing on premium flats, which are not on the list of most home-buyers,’ said CREDAI’s youth wing secretary Niket Mangal. But realtors seem eager to cash in on luxury. ‘The biggest gap is in demand and supply of housing. Affordable housing is what majority consumers need but there are increasing options in premium apartments. That is not what most buyers need,’ he added.”
