May 30, 2017

A Supply-Demand Imbalance Of A Different Kind

A report from Arlington Now in Virginia. “A report this week revealed the 20 most profitable cities for real estate appreciation. Nothing in our area came close. Arlington showed zero percent appreciation in 2016 across the board for all types of housing; condos, townhomes, and single family. Can anyone explain how home values remained flat when there was only about 2.2 months of inventory and interest rates remained relatively stable? A conundrum…”

From Nevada Public Radio. “The story that helped build Nevada was that you came here, worked hard and could soon buy a home. That story is being edited. Home prices are through the roof, especially in Reno. In Reno, the Reno-Gazette Journal recently reported that a home that cost you $135,000 in 2012 will cost you more than $320,000 today. For first time homeowners and millennials at the lower end of the pay scale, that kind of mortgage payment is almost impossible to make.”

“However, Mike Kazmierski with the Economic Development Authority of Western Nevada told KNPR’s State of Nevada that while those prices seem high it is important to keep them in perspective. ‘That same house that you’re talking about for $320,000 - three bedroom, two car garage with a nice sized lot - that would be a million dollars in the Bay Area,’ he said.”

The Sun Sentinel in Florida. “The South Florida housing market is something of a riddle these days. Values are going up, but some appraisals aren’t matching the agreed-upon sale prices. Low- and mid-priced homes tend to sell quickly, but buyers are getting picky, unwilling to overpay or even to make offers on properties that aren’t in move-in condition. To help buyers and sellers better understand the market, the Citron Real Estate Group at Re/Max ParkCreek has organized a free real estate seminar. ‘It’s definitely a time to be informed about what your current value is,’ said agent Michael Citron.”

The Los Angeles Times in California. “John Burns is chief executive of John Burns Real Estate Consulting. He describes his job as running around and talking to a lot of ‘insanely smart people all the time.’ Burns says he knew last decade’s housing boom was over the day after the 2006 Super Bowl. He recalls seeing an ad from national home builder Centex that offered $100,000 off a $500,000 home in Sacramento. Surprised, he called the company’s chief executive, Tim Eller — who was also a client. ‘He said, ‘John, I have seen many of these cycles and they are always worse than everyone thinks they are, and the first guy to drop price sells homes.’”

“In coastal California, home values have become ‘overpriced’ based on income, Burns says. As a result, he’s recommending that clients be cautious when making big investments, especially since some analysts think a recession could be likely in the years ahead. ‘2017 looks great because the economies are strong. But this would not be a time to really grow your business dramatically in those markets and borrow a lot of money and take a lot of risk.’ he says. ‘As soon as we have a recession … if you don’t have a strong balance sheet you are done.’”

The Daily Camera in Colorado. “Jeffrey Long wants to move to California. He wanted to move four years ago, but he failed to find a buyer for his home north of Longmont in unincorporated Boulder County, situated on 5 acres overlooking Terry Lake. So he kept the house on the market for another year, hoping for a bite. Then another. Now, Long has turned to a North Carolina-based auction marketplace for high-end homes, Interluxe. Next weekend, thirty prospective buyers will be previewing the property and preparing for a June 5 online auction that Long hopes will push the price past the $1.25 million minimum bid.”

“‘It’s startling how much interest it’s gotten,’ he said . No matter what price the house ultimately fetches, ‘it’s a lot better than sitting on it and waiting.’”

“Longmont’s luxury market is very different from Boulder’s, according to Kevin Byrne, the listing broker on the property at 9722 Meadow Ridge Lane. The area is beset by a supply-demand imbalance of a different kind. With 30 current listings and a historic sell-rate of one per month, there is a 30-month supply of luxury inventory. A healthy market would be closer to six to twelve months. ‘We’ve got to limit the supply,’ Byrne said. ‘If you don’t have to sell your house, you shouldn’t have it on the market.’”

From The Monitor in Texas. “Despite McAllen’s economy narrowing late last year, it has avoided declining wages that have plagued Texas border economies, according to a study from the Texas A&M Real Estate Center. McAllen has seen an uptick in homes sales, the study said, even though the number of monthly housing permits is down substantially. ‘A glut of new houses in McAllen fueled the sales surge,’ said A&M Research Economist Luis Torres, ‘as the months of inventory (MOI) for new homes remains longer than 12 months and continues climbing.’”