The Housing Bubble

It’s Friday desk clearing time for this blogger. “An investor group led by real estate broker Vivian Dimond will take over the partially built H3 Hollywood development, with plans to finish construction, settle subcontractors’ liens and partially repay buyers. Hollywood Station Investments halted construction of H3 Hollywood last fall after finishing 13 floors of the planned 15-story, 247-unit building. The developer said in a letter to buyers of 150 condos — who had put down 50 percent deposits — that it was seeking financing to complete the project. ‘We are setting aside a huge sum of money, in the millions, to compensate them … [but] they will never be compensated 100 percent.’ Dimond said, calling settlements with depositors ‘the most painful step’ in reviving the H3 Hollywood development.”

“H3 Hollywood is the among the latest projects to be canceled, put on hold or delayed amid a slowdown in the condo market this cycle. Other projects that have halted sales and delayed construction include the Related Group’s Auberge Residences & Spa Miami, a planned condo project near downtown Miami.”

“Real estate developer Robert C. Kettler is one of the pre-eminent developers of residential and multi-use properties in the Washington capital region. Kettler admits that even as he continues to build, the NoVa housing market has ‘a slight oversupply.’ Nevertheless, he is confident that the situation is temporary. ‘Millennials,’ he says, ‘are not al­­ways going to spend all their money on 450-square-foot apartments and takeout. They can’t live that way forever.’”

“The softening at the high end, a feature of the market in the Hamptons and New York City, continued in the first quarter. The median price for the luxury sector — the top 10 percent of all sales — was just under $5.2 million, a 6 percent drop on the same time period of last year. Listing discount was 16 percent — nearly double what it was last year. The average days on market has increased by more than 80 percent to reach 197. ‘In the last year-and-a-half, it’s gone through a rest. Just like we’ve seen in Manhattan,’ said Jonathan Miller, CEO of appraisal firm Miller Samuel.”

“For most of the housing market, homes are selling in Pierce County faster than owners can put new ones on the market. In recent months, dozens of million-dollar abodes have sold or are in the process of closing. But unlike homes at lower price points, high-end buyers won’t get into a bidding war just yet, said Jeff Williams, a real estate broker for South Sound Property Group. That’s because it’s a buyer’s market above $1 million. Unlike the rest of Pierce County’s housing market, which has less than one month’s supply in some areas of the county, million-plus homes have a whopping 19.6 months of supply, Williams said. Most of those homes have been on the market for more than 100 days.”

“In 1999, just 34 homes in Pierce County were valued at more than $1 million, according to News Tribune archives. Last year, the county valued 715 residences at $1 million or more, according to Pierce County Assessor records. But not all homes at that price point are priced realistically, said Realtor Mark Pinto. ‘If it’s completely unrealistic, the phone doesn’t ring,’ he said.”

“RE/MAX is out with its Spring Market Trends report, and it says residential home prices in Greater Vancouver fell 11 per cent in the first quarter of this year, to an average sale price of $969,000 from $1,094,936 in 2016. It blames the decline on several factors: the introduction of the foreign buyer’s tax last August, a relatively severe winter, and the natural stabilization of prices after the market reached a high point in May 2016.”

“London house prices posted their largest annual drop in almost eight years in April as buyers shunned the capital’s central areas. ‘While the rest of the country enjoys a spring surge with most regions seeing a price boom and new price records, some parts of the London market are still re-adjusting,’ said Rightmove Director Miles Shipside. ‘The more discretionary upper end of the market is having to tempt buyers with cheaper asking prices.’”

“Good news for apartment-hunters: rents are likely to fall during 2017 as the building of new homes leads to an increase in the number of vacant apartments. ‘The fundamentals of the Swiss rental market remain solid,’ said the Wüest Partner report. However ‘construction activity remains high, which will increase the number of available apartments in the coming months. ‘Due to the increase in homes, it has become more difficult to find tenants, particularly if rents don’t match their expectations,’ it added.”

“Landlords in Harare are in a fix as the prevailing cash shortages has triggered a reduction in both residential and commercial property rentals. A survey of estate agents and landlords by Harare News revealed that rentals have tumbled by rates of 15 to 50 percent depending on the area. Landlords offering accommodation in upmarket, low density suburbs are feeling the biggest pinch, as departing tenants are increasingly difficult to replace.”

“Property businessman Stephen Margolis says the situation is frustrating. ‘Rentals are down and are still coming down because of the economic depression, cash shortages, people not paying… some are running away with your rentals,’ he said. ‘Those who are paying are paying in bits and pieces. Some spaces spend months empty, people are negotiating rent downwards and you are forced to understand them because they have to survive too. So there are many frustrations.’”

“The latest FNB Namibia Housing Index, released yesterday, shows that growth in domestic house prices has slowed to about 11 percent over the last 12 months, compared to 16 percent during the previous 12 months. The growth figure is well below the 25 percent growth experienced in 2013/14, which placed Namibia first in the world in terms of the rate of house price increases. The effect is that there are many properties now selling below valuation.”

“It is definitely turning into a buyers’ market,’ said FNB’s market research manager, Daniel Kavishe. ‘There are signs that the market is self-correcting and for the near future we are looking at growth tapering down to five or six percent,’ said Kavishe while responding to a question by New Era on the possibility of the housing bubble bursting in the near future. ‘What we have also seen is a sharp decline in the upper segment of the market,’ he confirmed.”

“He added that property can still be seen as a good investment, but cautioned that it should be seen as a long-term investment of between 10 and 20 years and not as the get-rich-quick scheme that it has been in recent years when investors recouped their investment within two to three years.”

“The owner of an insurance company in Swissvale admitted Thursday that he ripped off 80 investors of $8.2 million over some two decades in what a federal prosecutor said was one of the largest Ponzi schemes in the history of Western Pennsylvania. John Hogan, 77, who splits his time between Swissvale and Ligonier, pleaded guilty to five counts of mail fraud before U.S. District Judge Mark Hornak.”

“Agents determined that the program amounted to what Mr. Melucci said was a “classic Ponzi scheme” in which much of the money from recent investors was used to pay off earlier ones. Mr. Hogan also used investor money to pay lenders who gave him loans for his business or to maintain his real estate holdings in several states.”

“J. Alan Johnson, Mr. Hogan’s lawyer, said he had bought about 25 condos and other properties across the United States over the years, in locales ranging from Arizona to Florida and Hawaii. He sold some, and others are encumbered with heavy debt or liens; none of the properties is worth enough for prosecutors to seize. Mr. Johnson said the value of Mr. Hogan’s real estate investments declined dramatically in 2008 when the housing bubble burst.”

“‘He does not live a high life,’ he said. ‘He doesn’t seem to be wealthy at all.’”