Buyers Are Waiting For The Market To Further Decline
A report from the Wall Street Journal on Massachusetts. “Even as U.S. home prices hit a high in September, the building bonanza of luxury apartments in Boston, one of the nation’s hottest rental markets, may be peaking, according to a report. The number of permits issued for new housing units across Greater Boston is expected to fall sharply, by 18%, this year, the first drop since 2011, according to a report by the Boston Foundation, a nonprofit philanthropic organization that conducts civic research. The decline is concentrated in multiunit buildings, the study said.”
“A similar trend is unfolding nationally, where construction of new apartment buildings is generally slowing as developers who targeted the upper end of the market essentially realize there is a limited supply of high-end renters, said Walter Page, the director of U.S. research for CoStar Group, a real-estate data firm that wasn’t involved in the study. ‘Only so many people can afford $4,000 a month in rent,’ he said.”
The Record Journal in Connecticut. “Residential property values in Meriden dropped an average of 7 percent in the latest revaluation, with condominiums seeing the most dramatic decrease, depreciating by 20 percent. ‘The market in Meriden is down about seven percent from what it was five years ago for your standard residential property,’ said Richard Nagle, the Northeast Revaluation Group’s president. ‘It’s a reflection of the current market.’”
“City Finance Director Michael Lupkas said a decrease in residential property values was anticipated, noting that ‘there’s not a market out there for condos.’ ‘Sale prices on condominiums are still relatively low,’ Lupkas said. ‘It’s a good buyers market.’”
The Real Deal on Florida. “Two weeks after the glitzy opening for his company’s latest high-end project, the SLS Brickell Hotel & Residences, Miami condo king Jorge Perez signaled a shift away from building luxury towers locally during a high-powered real estate panel. ‘I think there will be a slowdown,’ Perez said. ‘International demand [for Miami condos] is still there, but there is a lot of product to choose from.’”
“Perez also said construction financing will also be harder to come by for some builders. ‘We are seeing second tier developers having a difficult time getting financing,’ said Perez, who also noted some of these smaller builders have approached Related about providing them with construction loans.”
The Hamptons Online in New York. “As we move towards the end of the year, I sat down with Laura Miele Wynne and her real estate partner, Elliott R. Epstein, agents with Brown Harris Stevens in Southampton, to gain their insights into the Hamptons real estate market. Both of you have been in the real estate business prior and after the market crash, how do you view the current market and where do you see it going in the foreseeable future?”
“LMW: The market is very slow, but I see this as a good opportunity for buyers to take advantage of the excess inventory resulting in price reductions. Unfortunately, buyers are withholding making offers waiting for the market to further decline.”
“What do you see as some of the reasons for the decline? EE: For one thing, there are way too many expensive houses being built in ‘B’ locations. I have seen many times where these homes sell and are back on the market within a year because the owners can’t stand the traffic morning, noon, and night. The tradesmen know all the back roads.”
“Are builders pricing the homes consistent with market value? EE: No, they are overpricing the homes but not selling at those prices.”
“Usually builders are very knowledgeable about the market and build to suit market conditions, so how do you reconcile overpricing with that?
EE: Because today, everyone is a builder. They are less sophisticated in building to the market than some who have been doing it a while. It amazes me when I see the construction that is taking place despite the backlog of inventory. I see buyers still wanting large homes with all sorts of amenities, but the unemployment and lower bonuses on Wall Street together with the overpricing of homes are the biggest causes for the downturn in the market. We’re in a real estate market where sellers don’t need to sell and buyers don’t need to buy.’”
“Where is the biggest demand price wise? EE: Under $2 million. There is a big excess of inventory in the $4 million and above price range, which in my estimation, based upon statistical data, will take years to move.”
