June 6, 2017

What Got Us Into Trouble Before

A report from NBC News. “Millennials are growing up, settling down and looking to buy a house — for the extra room and the investment opportunity. Millennials were the largest group of home buyers (34 percent) for the fourth consecutive year, according to NAR’s 2017 Home Buyer and Seller Generational Trends study. After five years of living together in a one-bedroom apartment, Jamil Saeed and Felicity Greenpalm are ready to take the next step and buy a house in Seattle. Saeed, a 29 year old marketing consultant, and Greenpalm, 31, who works for Nordstrom, are thinking about starting a family and that means they need more space.”

“‘We want a yard and a place where we can have all of our friends and family over,’ Saeed told NBC News. ‘I feel like if we don’t do something soon, we’re going to get priced out of the market. Salaries aren’t increasing quickly enough to keep up with the pace that home prices are growing. It’s kind of now or never for us.’”

“Jacob Berg, a 33 year old bookkeeper, and Bianca Rose, a 27 year old insurance agent, recently bought a home in Valencia, California. It took them a year to find the right place: a small house (900 sq. ft.) with two bedrooms, two bathrooms and a two-car garage. They paid $430,000 for it — a price that was well within their comfort zone. ‘We didn’t take into consideration having good jobs,’ Berg said. ‘Unforeseen things can go wrong. If we had to go get a minimum-wage job, we would still be able to afford to make our house payments.’”

From News Channel 13 in Colorado. “A new report from Realtor.com indicates Colorado Springs has the highest percentage of home buyers move in during the first quarter of 2017. If you’re looking to buy or even rent right now: you know the housing market is hot. During this time of year, business for Matt Young is always busy, but right now he’s completely booked. Young said they usually work 10 hour days, usually cranking out 60 moves a month. ‘This year our calls doubled,’ said Young. ‘We’ve noticed so many people are trying to get over here, mainly people from California.’”

“A number of realtors in town said the market is especially booming in Northeast Colorado Springs. Houses in that area range from $300,000 - $350,000. ‘We’ve seen so many people move to the area recently,’ said Lynne Gillick. The good part about a housing bubble? It generally leads to higher economic growth. Keep in mind if you’re looking to move here, act fast. Realtors report homes are going after being on the market for only a few days. The question is now: how long will it last? ‘I imagine it’s just going to continue to grow, and it’s probably going to help the economy.’”

From Cranes Today Magazine. “It has been a tough slog for the crane industry since the 2008 global financial crisis. While there have been occasional moments of optimism with growth in some markets, the trend has been one of declining sales. The big push for the construction market – not just in the US but around the world – came with the growth of residential construction in the early 2000s. When that bubble burst, it took out not only construction but also large chunks of the banking industry that had provided finance for new homes, as well as cranes.”

“The residential sector has been developing slowly since 2007. In 2013, residential construction started to exceed 2008 levels for the first time on a per-unit basis and has continued on a promising trajectory. Randy Robertson, Manitex director of sales and marketing, said, ‘Residential and commercial construction is a big part of what drives our industry. We are seeing a recovery from the recession since 2009: it’s been very long. Everyone’s very cautious though. They don’t want to get into the situation where mortgage companies finance just anybody. That’s what got us into trouble before – we overbuilt.’”

The Union Tribune in California. “Homebuilding was down across Southern California in the first three months of 2017, but nowhere more than San Diego County, said a Real Estate Research Council report. Residential building permits were down by 10 percent in the seven-county region compared to the same time last year and 37 percent in San Diego County. The biggest drop in San Diego County, 50 percent, was in multifamily construction — apartments and condos — but there’s a catch. There were a lot of multifamily projects that began construction at the end of last year and could be a major reason for fewer permits being pulled at the start of this year.”

“Russ Valone, president of local industry tracker MarketPointe Realty Advisors, said there are roughly 3,100 units now in some stage of being built. ‘There was quite a bit of stuff started last year that is still in the construction cycle,’ he said. ‘(This quarter’s numbers) might be a bit of a fluke.’”

“Another potential for the slowdown is investors are concerned that rent has gone up too quickly. Valone said lenders are getting more cautious out of fear the market is getting overbuilt. ‘There’s a little concern out there they are pushing the (rental price) envelope a little too much,’ Valone said.”

From Curbed Miami in Florida. “There’s some mixed news on the Monad Terrace front in Miami Beach. The pre-construction luxury condo development planning to rise off 13th Street and West Avenue sold a penthouse that was offered at $7.6 million, per Miami Luxury Homes, to an undisclosed buyer at an unknown price. However, not all is peachy with the Jean Nouvel-designed project, which expected to break ground in January but has yet to do so.”

“Monad Terrace Property LLC (of JDS Development Group) was served with a $45.8 million foreclosure lawsuit by EO Monad Terrace, as first reported by The South Florida Business Journal: ‘Monad Terrace Property Owner acquired 14 homes from 2015 through 2016 for a combined $51.15 million to assemble land for its project. It received a $46.8 million mortgage from EO Monad Terrace in June 2015. According to the complaint, the mortgage originally had a maturity date of June 15, 2016, but the loan was extended four times. During the last extension on Jan. 17, 2017, the maturity date was moved to May 17, 2017. The complaint says that the borrower has not repaid the mortgage at maturity and owes $45.8 million in principal.’”

“‘The lender filed this lawsuit during the course of the negotiations over a brief extension that would facilitate the closing of the refinancing,’ says attorney Jonathan Minsker, who represents Monad Terrace’s developer. ‘The lawsuit is entirely without merit, and Monad will respond in due course. In the meantime, Monad expects to close on the new construction loan shortly.’”

“Monad Terrace’s nearby sales gallery launched a few months ago. Prices started at $1.7 million.”