May 21, 2017

Tremendous Velocity That Is Not Normal In Any Market

Expanding on the previous weekend topic with the Amarillo Globe News in Texas. “Housing demand keeps rising in Amarillo, and the supply isn’t keeping up. Local real estate agents say first-time buyers, retirees seeking medical care and country folk moving into town have crowded the housing market and caused prices to rise, especially in the city’s most expensive neighborhoods. A similar imbalance persists in cities across the country. Oklahoma City saw an 8.6 percent drop in houses on the market from March 2016 to March 2017, per The Oklahoman. In Westchester, N.Y., a real estate agent told how he showed a house to 26 prospective buyers on one Sunday afternoon in April.”

“Listing prices are skyrocketing in Amarillo’s most expensive neighborhoods. According to Amarillo Multiple Listing Service (MLS), the average asking price for a home in Eagle Tree jumped by about $180,000 (50.8 percent) in the last year, La Paloma/Tascosa Estates homes on the market increased by about $130,000 (33 percent), and other neighborhoods are seeing significant increases in average asking price as well. The average listing in the Puckett neighborhood went from $161,353 to $249,035, a 54.3 percent increase.”

“Amarillo Triangle Realty co-founder Jamie Haynes doesn’t expect the trend to slow down any time soon. ‘I think we’re in a growth spurt, and Amarillo just hit this mystical, magical number (of 200,000 residents) where it started to boom,’ she said. ‘We’re going to see that see all the way down to Canyon.’”

The Waco Tribune-Herald in Texas. “It’s hard to be too surprised about rising tax appraisals when the superlatives about Waco real estate keep piling up. Waco-area ZIP codes last year topped the list for most popular searches on, thanks in part to a certain television show. In the first quarter of 2017, the city of Waco saw a record 151 housing permits issued. And local real estate agents are seeing things they’ve never seen in Waco, such as bidding wars over coveted homes.”

“The most obvious change has been the phenomenal success of the HGTV show ‘Fixer Upper,’ which has driven national attention to the bargain home prices here. ‘In 37 years, this is the strongest seller’s market I’ve seen,’ said Kathy Schroeder, vice president of residential property at Coldwell Banker Jim Stewart Realtors. She said the media coverage has brought in out-of-town investors who are willing to put far more money into older homes than was once thought prudent.”

“‘We’ve had a good diversity of buyers,’ Schroeder said. ‘We’ve seen some investor-speculators, some Baylor-related, but also a lot of people who have been renting property who can now qualify for a loan.’”

From The Oklahoman. “Ian Colgan was a real buzz buster at the otherwise celebratory Mayor’s Development Roundtable last week, presenting a sobering but necessary housing reality check on all the good Oklahoma City has going for it. Housing affordability has been a key strength of the city’s renaissance, but we’re losing it.”

“Rising costs are hitting the working poor hard, and rising rents and house payments are eating away at the stats that earned the city its reputation as a great place for first-time homebuyers and renters, said Colgan, assistant executive director of the Oklahoma City Housing Authority. Of the 50 biggest cities in the country, he said, Oklahoma City is the 32nd most expensive for homeownership and the 43rd most expensive for renting. So far, so good.”

“‘No Midwestern, Southern or Mountain West city’s rental market grew faster than that of Oklahoma City, including Texas,’ Colgan said. ‘Only Austin and Fort Worth (Texas) had faster growth rates for non-coastal cities. In Oklahoma City, Colgan said, more than 20,000 households pay more than half of their gross income for rent, which makes them ’severely’ cost-burdened. ‘The less income, the more burden. The estimate is that about 20 percent of city households making between 30 to 50 percent of area median income, and about 60 percent of households making 30 percent or less of median income, are severely burdened,’ he said.”

“‘Whether this is gentrification, this trend is worrisome,’ he said, referring to investing and renovating housing in poor areas to levels that attract higher-income renters who can pay the higher rents, shutting out poorer residents. Stagnant wages, in the face of rising home values and costs, also are taking a toll and creeping up the income scale. New apartments are almost all market rate, not aimed at the affordable market. Of 2,546 apartment units under construction or in planning in the city during the 2014-2015 research period, just 238 were affordable.”

The Real Deal on Florida. “While Miami’s residential market has hit the downside of the cycle, fears of a potential crash are largely unfounded, according to real estate professionals who spoke at Keyes Company’s 2017 South Florida New Development Showcase. Anthony Graziano, chairman of Integra Realty Resources who joined Pappas onstage, said the biggest problem facing brokers is convincing sellers to readjust their prices in a buyer’s market. ‘We cannot expect Miami to go back to 2013 and 2014 when Brazil was flush with petroleum dollars and Venezuela was not in the middle of civil unrest,’ Graziano said, referring to the record-setting boom years of the most recent cycle.”

“Reza Parsiani also said any comparisons to the boom years of the cycle are unfair. ‘We have seen tremendous velocity and movement that is not normal in any market,’ he said. ‘In 2015, I did 17 transactions a day. That is extraordinary. Now, we are just normalizing.’”

The New Zealand Herald. “It is remarkable the extent to which the tone of conversations about property has changed in Auckland. The slowdown started as far back as July last year when there were signs that the rate of growth had peaked. But it was hard to be sure, at least until April, because the same kind of slowdown occurred in late 2015. This time around growth appears to have stalled good and proper.”

“What got me was how quickly the tone of the conversation has changed at social events in Auckland over the past few weeks. The stories are told by those who are trying to sell, or have close friends or family trying to sell. And they all suggest it’s taking longer than they’d like. Open homes aren’t packed, auctions aren’t happening. Fear and worry are starting to take hold among sellers and their real estate agents. The lawyers and the bankers are getting antsy.”

“The difference between nine potential buyers or 10 turning up at your open home isn’t much at all. But one buyer instead of two makes a huge difference to the price you can command. No buyers, compared to one, and it doesn’t take long for the panic to set in.”

“In theory, with immigration still at record levels and supply slow to catch up, prices can’t fall far. But if immigration has been such a big driver of growth, why has Auckland growth hit the wall while longterm visitor arrivals continue to hit new records?”