Natural Market Corrections To Inflated Prices
A report from CNBC. “America’s housing market is heating up again, fortifying the finances of current homeowners and frustrating potential first-time buyers. After hitting bottom in 2012, home prices took off dramatically before leveling off a bit in mid-2014. In the last two months, though, they turned higher again. The amount of equity homeowners now have — the value outside their mortgage debt — has doubled in the last five years, according to CoreLogic. Housing affordability is now below average in half of the nation’s top 20 metropolitan markets, according to John Burns Real Estate Consulting. These include Denver, Houston, Austin, Texas, and Nashville, Tennessee.”
“‘This means that they are at high risk of a sharp price correction whenever the next recession hits,’ the Burns researchers said.”
The Real Deal on Florida. “The Trump Group is delaying construction and sales on the second planned condo tower of its $1.5 billion Estates at Acqualina in Sunny Isles Beach, amid the market slowdown, The Real Deal has learned. Rather than wait to reach 80 percent pre-sales of both towers — the requirement for financing — the developers will focus on sales on the South Tower and build the project in two phases, developer Jules Trump, told TRD. ‘In this market, selling at these prices, [$3.8 million to $9 million and up to $36 million for penthouses], it’s not such an easy [sale], so we want to be conservative and make sure we can deliver,’ Trump said.”
“Estates at Acqualina is the latest South Florida project to be placed on hold, canceled or delayed amid a slowdown in the condo market this cycle, as the strong U.S. dollar and foreign economic turmoil continue to dampen sales. Among the developments, Alan Faena has placed his Versailles planned condo project on hold and is considering building another hotel instead; H3 Hollywood, a planned condo tower, has put construction on hold while its developer seeks financing; Boulevard 57, a planned mixed-use project on Biscayne Boulevard in Miami, called off condo sales this summer, and the entire site is now being marketed for sale. And Auberge Miami, a planned condo tower just north of downtown Miami is delaying construction until at least late 2017.”
The Marin Independent Journal in California. “Toni Shroyer, a Marin real estate agent who also handles rentals, just found one of her clients a home in San Marin. The asking rent was $4,250, but it was reduced to $3,950 — one of many indications that rents are on the way down in Marin. ‘Absolutely, rents are softening,’” said Melissa Prandi, proprietor of San Rafael-based Prandi Property Management, a 33-year-old property management firm that handles 450 units in Marin. ‘Things aren’t moving. The phones aren’t ringing the way they used to.’”
“She added, ‘Very commonly, we follow the San Francisco market, and our rents tend to go down six to 10 months after San Francisco rents fall.’ ‘We saw San Francisco rents going down in late spring, so we expected it (Marin rent drops),’ Prandi said.”
The Denver Business Journal in Colorado. “Two reports released this week seem to indicate that rents in Denver appear to be falling. The first, put out by apartment app Zumper, indicated prices for one-bedroom apartment rentals in Denver have fallen 3.1 percent over the past year, and Denver is no longer on the list of the nation’s 20-most expensive rental markets. The second report, put out by Yardi Matrix, indicates that Denver rents are dropping ’swiftly.’”
From Park Cities People in Texas. “The North Texas housing market is showing signs of cooling down. The latest North Texas Real Estate Information Systems statistics show that the median September home price in the Park Cities was down 17 percent compared to June. Despite a double-digit drop, the $1.2 million median price is still 5 percent higher than it was in September 2015.”
“The median home price in Preston Hollow climbed 19 percent to $952,000 over the third quarter. However, houses in Preston Hollow are taking longer to sell, as is the case in the Park Cities. According to some local real estate experts, these trends are not necessarily a bad thing. ‘This is a much more healthy and balanced market,’ said Virginia Cook realtor Lori Sparks. ‘It’s still an awesome time for sellers, but we couldn’t have continued on that pace forever. It would have been impossible.’”
“‘With more things coming on the market, there’s not that same urgency and frenzy,’ Sparks said. ‘Buyers are now taking their time a little bit.’”
“Will Seale, a partner with Trusler-Seale at Briggs Freeman Sotheby’s International Realty, compares the long-term market pattern to a heart EKG. Since the end of the great recession in 2010, area homes sales have followed a fairly regular pattern for the past six years. He sees the current price drop and inventory increase as natural market corrections to inflated prices. The key to doing business in the current environment is conducting proper research to determine a correct price point. ‘I still have not seen houses sell for less than last year,’ Seale said.”
