They’re Not Betting As Much As They Were
A report from Q 13 Fox in Washington. “When you think the housing market couldn’t get any hotter, it does and continues to set records. Chinese investors make up the majority of foreign buyers in our area. They have always been interested in the Puget Sound area but several local realtors are telling Q13 News they are buying up residential properties at a rate they never seen before. Among the competition are Chinese investors who many times overbid and pay in cash. Broker Gary Lu with John L. Scott specializes in the cash-bidding world. ‘I am their personal shopper,’ Lu said. In fact, Lu says some Chinese investors have never even set foot in the Emerald City. ‘Not just one client, many of my clients they have never even been to Seattle,’ Lu said.”
From Hawaii News now. “A developer whose permit has stalled in Honolulu City Council is threatening to organize a boycott of Hawaii if he doesn’t get his way. In a rambling letter to Councilman Ikaika Anderson, Johnson Fang, developer of the proposed 26-story Hawaii City Plaza high-rise on Sheridan Street, accused the Windward lawmaker of being biased. ‘We deem your racial remarks (have) violated federal law…and discriminated against Chinese-Americans,’ Fang said in the letter. ‘l will call on Chinese to not visit Hawaii… not to make investment or buy property in Hawaii.’”
“Fang is referring to comments by Anderson last week where he said, ‘If you’re looking to provide 25 rental units and then you’re going to take 130 units to market in China, sir, I’m not interested in that quite frankly.’ Anderson declined comment on Fang’s allegations on the advice of city attorneys. But he said he opposes the condo project — where units go for as much as $1.5 million — because it would do little to ease the housing crisis.”
From the Macomb Daily in Michigan. “The county’s top assessor worries about a repeat of a decade ago when rapidly rising housing prices created a real estate bubble that led to a crash and economic recession. But Macomb County Equalization Director Kristen Sieloff hopes, and other experts have assured, a crisis is less likely this time because of safeguards in place now that didn’t exist in 2008. She worries when she notices two gaps — one ‘bubble’ between taxable value and assessed value, and a second bubble between the inflation rate and rate of the housing price increase.”
“‘I am a little concerned about the bubble between taxable value and assessed value,’ she told county commissioners. ‘That’s kind of what happened in 2006 and 2007. It became a snowball effect.’”
“Sieloff prefers housing prices to rise two to three times the inflation rate, not the current situation of five to 10 times. The CPI last year was .3 percent and this year is .9 percent, she said. ‘To me as an assessor it makes me a little nervous because of what happened last time. I like to see a 2 to 3 percent increase, a little above the CPI (Consumer Price Index),’ Sieloff said. ‘When I see a big, wide gap like that, I hope we have enough safety measures in place. Hopefully people aren’t buying properties they can’t afford.’”
The Des Moines Register in Iowa. “Des Moines’ housing market has enjoyed several years of uninterrupted growth. And that’s starting to make some real estate professionals anxious. Many in the industry say the housing market — which has seen record home prices and a feeding frenzy for entry-level homes in recent years — is poised to continue growing thanks to the city’s solid economy and booming population. But some are beginning to wonder how much longer the ride can last.”
“Internal data from Keller Williams, which has nearly 160,000 agents nationwide, shows coastal markets started slowing down around September 2016, said Erin Rundall, a Keller Williams agent. During the last housing crash, the Des Moines market slowed down about 18 months after coastal markets. Some agents are already starting to cut expenses like advertising and overhead in anticipation of a market slowdown, said Brian Wentz, CEO of Keller Williams Realty Greater Des Moines. Others are going back and reviewing practices that helped them stay afloat following the 2007 housing collapse.”
“‘There is no question that in our industry we have the sense we are in the eighth inning,’ said Wentz. ‘At some point the market will become overheated and pull back.’”
The San Mateo Daily Journal in California. “Redwood City officials will broaden their perspectives on the city’s future to its role in the region and position in the face of an uncertain national economic climate following a sobering report on the city’s economic indicators presented to the City Council. Economist Jon Haveman predicted the city may experience the slowing employment growth already documented in the state and region, which could have a delayed effect on sales and property taxes, the city’s two largest sources of revenue in the city’s 2015-16 fiscal year. Though Haveman noted the city’s home prices are high by regional standards, he said a decline in the last year may bring relief to Redwood City residents.”
“Councilwoman Alicia Aguirre said she was encouraged by Haveman’s analysis of the city’s housing stock, which showed permits for the construction of new residential buildings had grown faster between 2014 and 2015 than nearby areas, while permits dropped in San Mateo County and the Bay Area as a whole during that time. ‘I’m happy to see that housing is adequate for the growth that is expected of us,’ she said. ‘Because rents are coming down, I’m hoping we’ll be able to keep more people here.’”
“But she said Haveman’s less rosy perspective on indicators such as the city’s employment growth rate, which he said would follow the Bay Area’s suit in falling to 3 percent from 4 percent, puts the city’s budget decisions in the context of regional, state and national policies. As a board member of the San Mateo County Transit District and Caltrain, Councilman Jeff Gee said he has seen similarly sobering sales tax revenue numbers as those agencies are working slowing tax revenue growth into their budgets. ‘They’re seeing the slowdown in the economy and they’re not betting as much as they were betting two years ago,’ he said.”
The Palm Beach Post in Florida. “The storied history of the north end waterfront project that once bore the name ‘Trump’ awaits its next chapter. In its most recent iteration, as a six-building, 1,000-condo and apartment complex, Marina Village was supposed to have come out of the ground late last year. But more than five months into this year, there’s no sign of activity and neither development partner will talk about it.”
“‘I drove by it this weekend,’ said Jonathan Gladstone, a developer who bought commercial property just to the north in Riviera Beach, thinking that the big Marina Village project would catalyze the market there. ‘I’m always looking for movement and nothing’s happened on the site.’”
“Others in the real estate industry point to a number of market factors affecting the development climate, from shallowness of demand, to rents too soft to support construction. Developer Jeff Greene, who has several West Palm Beach projects in the works, said that in recent months, an oversupply of projects in the pipeline has led to some being cancelled, and as a result, construction prices leveled off. Greene, who is bidding out work on his upcoming One West Palm, a $250 million, two-tower office/hotel/apartment project, said he has been told that contractor and subcontractor prices are dropping. ‘Basically I’m told it’s time to save money on your subs,’ he said.”
“On the other hand, apartment demand in West Palm Beach is steady but not bursting, he said. ‘This is a tough market,’ Greene said. His downtown buildings, for example, have vacancies, ‘not a lot but some,’ he said, but enough to make you think, ‘what happens when you have 800 more units being built? It hasn’t proven to be the dynamic real estate market where you have the support for the real estate development. People are nervous to go in here. I’m nervous, too.’”
