November 30, 2016

Not Long Ago, Things Were Different

A report from Q13 Fox in Washington. “Seattle is the hottest housing market in the country according to new numbers released by the Case-Shiller Indices. Home prices across Snohomish, Pierce and King Counties are up and Seattle prices are rising twice as fast as the rest of the country. Derek Parkhurst purchased a home in Kitsap County, learning to get used to the longer commute. ‘We couldn’t afford Seattle,’ Parkhurst said. The influx of buyers going further out of Seattle is also driving prices up outside King County. Zillow says Pierce County’s median home price is $281,000, up 10 percent. Snohomish County is $377,200 - up 11.2 percent - while King County’s median price is $518,000. ‘That’s crazy, but look at all the cranes - you know it’s exploding here,’ Parkhurst said.”

“‘It seems like Seattle’s great renaissance,’ said Joe Paganelli, who recently moved to Seattle from L.A. Paganelli said Seattle has yet to reach the height of the market, so he believes buying in now will still be a good investment. ‘We better get buying right away,’ Paganelli said.”

From CBS Sacramento in California. “Housing prices across the country and in Sacramento County are back to where they were when the market peaked nearly 10 years ago. Today’s buyers and sellers haven’t forgotten about the housing meltdown and some are worried we’re on the brink of another bubble. ‘Are you kidding? I’m not going anywhere,’ said Ty Smith, who bought his home back in 2008, just as home prices across the country hit rock bottom. Less than a decade later, he thinks history is coming full circle. ‘The bubble is close, if it’s not here already,’ he added.”

“Sacramento State Finance Professor Sanjay Varshney doesn’t think we’re there just yet. ‘If history repeats itself, the best real estate market and the worst real estate market of our lifetime is behind us,’ he said. ‘If you’re still sitting on the fence, thinking that ‘I’m going to wait a little bit more because chances are the market might crash like it did in 2008,’ you might be waiting forever because it may never happen.’”

The Mercury News in California. “Repeat, repeat, repeat: The Bay Area housing market is showing definite signs of cooling. That message — heard again and again in recent weeks — is amplified once more by a report from the California Association of Realtors, showing pending sales across the region down 11.6 percent in October on a year-over-year basis. The report shows pending sales for October were down year-over-year in San Francisco by 21.2 percent, in Santa Clara County by 12.5 percent, and in San Mateo County by 5.0 percent.”

“‘Prices have risen to a point where they’re starting to eat into demand,’ said Jordan Levine, an economist for C.A.R. Given the dramatic size of the regional decline, Levine said, ‘You can extrapolate that this is something we’re seeing in the East Bay, as well. It’s not just a San Francisco and Santa Clara phenomenon.’”

“Levine emphasized that buyers are suffering from sticker shock and therefore feeling less competitive. ‘It’s a question of finding the funds you need for a down payment,’ he said. ‘When prices get to the levels that we’re seeing, you’re still having to come up with a pretty decent down payment — even if you’re a first-time home buyer getting an FHA loan for 3.5 percent down.’”

“Levine did some quick math: In Alameda County, where the median price of a single-family home is $780,000, that FHA loan would translate to ‘more than $27,000 cash you’ve got to put down, not counting other closing costs …’ he said. ‘I just think that affordability is becoming an issue on the demand side.’”

From Bloomberg on New York. “Some Manhattan apartment owners trying to sell their homes have big dreams these days: They’re seeking about 40 percent more than they paid for the properties, even if they were bought within the past five years.”

“This year through September, sellers listing apartments priced at $3 million or less that were bought in 2010 sought a median of 47 percent more than their purchase price, data compiled by StreetEasy show. Owners who bought in 2011 have returned homes to the market for a median 42 percent markup, and buyers from 2012 listed for 35 percent more, according to the real estate website.”

“‘That detachment from the market, from what the value actually is, is a big part of why sales are down,’ said Jonathan Miller, president of appraiser Miller Samuel Inc. ‘In my experience, it takes sellers a good one to two and a half years to believe in the new market. The buyers are with the program immediately.’”

“Not long ago, things were different. Apartments for less than $3 million were scarce, the result of a post-recession development boom that focused on ultra-luxury condos aimed at investors. Resales in general were also in short supply, as owners refrained from listing their units because they couldn’t trade up. Sellers who did put their homes on the market were reaping large returns from buyers fighting each other for what little was out there.”

“In Manhattan as a whole buyers aren’t feeling the urgency they once did. Of the apartments listed for $3 million or less at the end of September, 58 percent had gotten price cuts at some point while on the market, according to a StreetEasy analysis. The median decrease was about $46,000. People interested in bidding on homes may still hesitate to make an offer for fear coming in too far below what an owner might agree to, said Scott Harris, a broker with Brown Harris Stevens. But that’s starting to change.”

“‘Buyers are getting more confident in making lower offers,’ he said. ‘I don’t know that sellers are happy to accept it yet.’”