February 20, 2017

A Form Of Denial

A report from the Dallas Morning News in Texas. “Vacancy rates for almost every North Texas real estate sector are staying near recent lows. Less than 4 percent of Dallas-Fort Worth apartments are empty, even with several years of extensive building. The shopping center market is less than 8 percent vacant. And office space in the area sits at about 15 percent vacancy — pretty good for that business. Since we are more than five years into this property cycle, you can’t blame me for being nervous and keeping an eye on those vacancy rates. Dallas isn’t the only property market where things are in good shape.”

“‘At the national level, we feel like there is good balance right now,’ said Kenneth McCarthy, principal economist with Cushman & Wakefield Inc. ‘We are starting to see the amount of construction in the pipeline pick up. But it’s not anywhere near historic highs.’”

The Detroit Free Press in Michigan. “After several years of apartment scarcity in and around downtown Detroit, supply is starting to catch up with demand, prompting some building owners to offer rent deals and to shorten waiting lists. Hundreds of new market-rate rentals have opened in the city’s downtown and Midtown since last fall with hundreds more planned to open this spring. Local development experts point to the average 98% occupancy rate last year for residential buildings in greater downtown and say the inventory deluge doesn’t mean that the housing market is getting saturated or that the surge in new construction since 2013 was all a bubble.”

“For apartment-seekers, the recent flood of new apartments means they have more choices than ever in leasing rates and locations and more buildings offering a wide array of amenities, which some say Detroit has been lacking. It also could lead to more for-sale condos, which are still in scarce supply. ‘I think Detroit has been slow to build the type of product with all of these amenities that you might see in markets like Boston,’ said Sue Mosey, executive director of Midtown Detroit Inc.”

From Bloomberg on New York. “Luxury developer Toll Brothers Inc. has a deal for those shopping for a condo in Manhattan: buy something soon, and we’ll pay the taxes on your purchase. The publicly traded homebuilder is offering to pay the city transfer tax and the New York state ‘mansion tax’ — an effective discount totaling almost 2.5 percent — on deals made at three of its developments by Feb. 20, the company said in a statement. Toll’s offer comes as Manhattan developers contend with a market brimming with costly condos and buyers tepid about committing.”

“Builders hoping to boost sales in their projects are doing what they can to attract interest without officially lowering their prices — everything from offering gift cards and upfront commission to brokers, as well as payment of transfer taxes that, in a healthier market, are passed on to buyers, said Joshua Stein, a Manhattan real estate lawyer. ‘Developers like to pretend that values haven’t gone down,’ said Stein, who’s not involved in the Toll Brothers projects. ‘Eventually you’ll see discounting off the face price. But this is a form of denial.’”

The Minot Daily News in North Dakota. “The Minot-area real estate market has settled into calmer times as it moves away from the frenzied activity spurred by a flood and energy development. It’s meant a somewhat slower pace of sales and a leveling off of property prices. The number of homes being sold is down about a third from its peak but prices have seen only a small decline. If there’s a negative, it’s the impact the current market is having on homeowners who had purchased during the peak of the boom and now are needing to sell only a few years later, said Cindy Harvey, Realtor with Elite Real Estate and past president of the North Dakota Association of Realtors.”

“‘They are having a hard time walking away with a profit. I have seen people have to bring money to the table now,’ she said.”