May 26, 2017

Desperate To Sell In A Supposedly Hot Market

It’s Friday desk clearing time for this blogger. “On the cusp of the summer season and with housing sales overall on a steady upswing, homes at the lower end of the market on Martha’s Vineyard are being snapped up at a record clip. Real estate broker Doug Reece added that sellers now appear to be testing the upper limits of the market. As one indication, he noted that while the median price of properties sold has risen slightly since last year, the figure doubles to $1.65 million when looking at all homes currently on the market. ‘Everybody likes to take advantage of an up-market,’ he said. ‘And that’s okay. But when you see the median price being double what the median price sold is, you wonder where the market’s going to go. You’ve got to wonder at what point a buyer is going to say, no, we’re not going there. So this is going to be an interesting year coming up.’”

“Owners of Manhattan luxury homes are waking up to a simple reality: If you want your place to sell, drop your price. For high-end homes that found buyers in 2017, the median asking price was the lowest in at least five years, according to data from luxury brokerage Olshan Realty Inc. Perhaps sellers got tired of waiting. The homes that found takers this year lingered on the market for an average of 389 days, a record in data going back five years, according to the brokerage. ‘People are thinking harder about price cuts sooner,’ said Donna Olshan, president of the brokerage.”

“Sellers need to be mindful, not of their fabulous floorplans or views, but what a competitor with a similar apartment is seeking for their unit, she said. ‘The most important thing for sellers is to see who’s swimming in the lane next to you,’ Olshan said.”

“There is a construction frenzy across the South Bay. However, the U.S. Commerce Department noticed a hiccup last month. New home sales in the West dropped 26 percent, the largest drop in over six years. ‘I think we’re about to see a shift in the marketplace, and the new home sales may be the leading indicator of that,’ real estate broker Quincy Virgilio said. He’s starting to see a softening of the market. ‘Where I used to get 10 to 12 officers on a property, now I get two or three and where it used to be $100,000 over asking, it’d be $20,000 or $30,000.’”

“The median priced home in San Jose has gone from $800,000 to $1 million, but the number of buyers who can afford to buy that home is at a tipping point. ‘Right now, it’s about 20 percent. Meaning 1 in 5 people, 1 in 5 families, can afford to buy the median-priced home. If that number falls below 20 percent, which it did in 2006 and 2007, typically we see a slowing in the marketplace,’ Virgilio said. No one is predicting a bubble bursting, but change could be in the wind.”

“When a 59-year-old accountant in Shanghai wanted to invest for her looming retirement, she bought two cheap apartments — on the other side of the country. ‘When friends told me about a chance to buy properties in Xishuangbanna, I thought ‘why not?’ said Yuan Junxi, talking of the steamy, subtropical region in Yunnan province, bordering Laos and Myanmar. ‘No buying limits; cheap, easy mortgages; and maybe property prices will jump over there too.’”

“‘The current surge in sales in third- and fourth-tier cities is fueled largely by expectations of a future price rally, not by asset yields, and that’s exactly a sign of a bubble,’ said Zhao Yang, Hong Kong-based chief China economist at Nomura Holdings Inc.”

“Chinese investors are pulling out of Melbourne’s apartment market, prompting a downturn. In the past, they helped drive the inner-city apartment market to new heights. However, around 80 per cent of Chinese buyers will not be able to settle because of trouble getting finance, according to Ming Li, a real estate agent in Melbourne’s eastern suburbs who specialises in selling Australian property to Chinese investors.”

“He said many of his clients had either forfeited their deposits or sold their apartments at a loss. ‘The Melbourne apartment market is cooling down,’ he said. ‘It is kind of the oversupplied market, and the Chinese investors are losing their interest in buying an apartment in Melbourne. ‘The capital gains return is so low.’”

“According to economist Philip Soos: ‘There certainly is a housing bubble in Australia. Since 1996, we’ve seen housing prices inflate above all known fundamentals, such as GDP, inflation, income, rents and population growth. Australia has accumulated the world’s second highest household debt to GDP ratio at 123 per cent and rising,’ Mr Soos added. “All countries that have a ratio above 100 per cent have experienced or are currently experiencing a housing bubble.’”

“After a decade of being able to command high prices, London property sellers are having to offer discounts in order to secure deals, according to real estate listings website Zoopla, which indicates that the price cuts are getting larger in outer London boroughs. Affordability is the main factor. The average London salary is £34,000 while the average property price is £600 000 – far beyond the reach of most city workers. Even with the discounts of at least 20%, homes in many areas with easy commuting access to the city centre still look very expensive.”

“‘Peripheral areas, which buyers turned to when inner London became too expensive, have seen considerable inflation recently and reached a point where affordability is stretched,’ said Neal Hudson, founder of researcher Residential Analysts Ltd. ‘Before, people got around it with longer-term mortgages, but the limit has been reached.’”

“Less than two months ago, Toronto’s housing market was roaring. Just a single new listing on the market, especially of single-detached homes, would send buyers into a feeding frenzy, clamouring over each other to view properties and upping their bids by as much as 30 to 40 percent in some cases. Then in late April, in a move that some say was unnecessary and politically-motivated, the Ontario government intervened to cool the housing market.”

“‘There were 140-plus listings in the downtown core alone earlier this week. I’ve never ever seen a surge like this before,’ said David Fleming, a Toronto-based realtor with Bosley Real Estate. ‘April was a weird month too — we suddenly started seeing all this inventory creep onto the market.’”

“‘I think there’s a change in the psychology of home buyers and sellers, ever since the government intervened,’ Bruce Joseph of Anthem Mortgages told VICE Money. ‘Perhaps the big cash out is at play now, people listing their homes and wanting to sell because they think prices are going to go down.’”

“Buyers too, seem to think prices are may taper off. One buyer, Oakville resident Vijayalakshmi Govindasamy was surprised to see that open houses in her neighbourhood were deserted. ‘I went to view three properties in Oakville over the weekend. In the first house, there were only two other people. In the second and third houses, I was the only interested buyer.’ Govindasamy says that she was told by one of the realtors present to make an offer for ‘even just $1 million,’ despite the fact that the said home, a single-detached house, was being listed for $1.4 million. ‘Why are people desperate to sell in a supposedly hot market?’”

“Joseph, a mortgage broker in Barrie, Ontario, has long believed that Toronto and its surrounding towns never had a supply problem. ‘That’s just what real estate players want you to believe. Our home ownership rate is one of the highest in the world. If you just go on Kijiji, you’ll see that there is no lack of places for people to live in.’”