You Keep Seeing The Market Going Down
A report from the Arizona Republic. “Condominium developers are building highrises near downtowns, luxury loft-style homes next to shopping centers and smaller infill-connected homes in popular neighborhoods of Phoenix, Scottsdale and Tempe at a record pace. But not every infill housing project is drawing buyers at the rate developers had hoped. Experts attribute the slack sales in those cases to location and pricing. ‘Attached projects dominate the landscape in many parts of the Valley, but the reality is that about one in five infill projects is selling really well and others are struggling,’ said real estate analyst Jim Belfiore of Phoenix-based Belfiore Real Estate Consulting.”
The Journal Sentinel in Wisconsin. “The Beam House has features found in many other Walker’s Point apartments that have been converted from historic industrial buildings. Beam House developer Peter Moedee isn’t concerned about the local apartment market possibly being overbuilt, which has led some developers to cancel, delay or downsize their projects. He’s building the units at River Place Lofts to a high enough quality level so they could eventually be converted to condos. ‘I think there’s still room for new projects,’ Moede said.”
The Post and Courier in South Carolina. “Apartments in the Lowcountry are less expensive than the national midpoint, and prices are falling just as rates across the country are on the rise. In its June study, Apartment List notes that Charleston’s median rent stands about 6 percent below the national average. ‘As rents have fallen in Charleston, many other large cities nationwide have seen prices increase, in some cases substantially. Charleston is still more affordable than most similar cities across the country,’ the company says.”
From Michigan Biz. “Stakeholders in West Michigan’s commercial real estate and construction industries remain generally upbeat as they look toward the second half of the year. However, they share concerns about one of the region’s key sectors: urban multifamily apartments. With minimal inventory and high occupancy, downtown Grand Rapids and its surrounding neighborhoods still have more than a thousand units under construction or in various stages of development.”
“Apartment developers like John Wheeler contend that while their projects continue to garner significant interest from renters, they may encounter a different situation six months or a year down the road. ‘I’d say a year from now, I wouldn’t want to be bringing a whole lot of apartments on,’ he said. ‘There’s going to be a whole bunch of them. A year out from now, I think there’s going to be cause for concern. There’s a lot of units coming on.’”
“Other active apartment developers in Grand Rapids share Wheeler’s skepticism about how much longer the current real estate cycle can last. Derek Coppess CEO of Grand Rapids-based 616 Development LLC, also noted that he believes the growth period is in its late innings. ‘I think we’re at the top end of this market cycle now,’ said Coppess, whose firm just completed a joint venture with a Mid-Michigan property management group. ‘I don’t say that out of fear. You just have to know where you’re at. I think we’re ready to look at some different development opportunities and just be prepared for a downturn.’”
From Miami’s Community Newspapers in Florida. “As of June 2nd, the Pinecrest market remains soft, but slightly better than in March. Homes listed over $1M are at 18 months of inventory, indicating a strong Buyers’ market. A healthy market is 3-6 months of inventory. If you’re a Seller, it’s tough out there.”
From Real Estate Weekly on New York. “Citi Habitats president Gary Malin said he sees certain segments of the sales market in New York City doing well, with people looking at both sides of transactions to see what makes sense for them. ‘I certainly know there’s definitely activity, but when you get above $5 million, people are getting more deliberate in their approach,’ said Malin. ‘Things are not moving. The average time on the market is high. I think there’s plenty of demand, and plenty of people who would like to transact, but plenty of construction is coming online and people feel that they have options.’”
“Level Group salesperson Jeremy Swillinger feels that the residential market is not where it used to be, and buyers that were once motivated to purchase a property in order to get into the New York market have ’simply disappeared.’ ‘While the demand is still here in New York City, we’re less with buyers purchasing on a ‘must’ basis,’ he said. ‘They’re not just buying something to buy something in New York, they are wise about it.’”
“‘There are still some investors, some foreign buyers, but instead of looking at five properties and making a decision, they’re seeing 25 properties and making a decision, and when they do, they’re not pulling the trigger and getting the asking price, they’re taking their time and making sure the comps make sense, and making offers at a lower price,’ he said. ‘Anything above $3 million struggles. They don’t struggle like the $8 million and up market, that market has crashed.’”
“With interest rates continuing to rise, Swillinger sees those who purchase with the help of a mortgage entering the market more and more, while those who are cash-only buyers ’sitting and waiting.’ ‘There’s nothing pushing them to go and buy something,’ he said. ‘What’s the motivation if you keep seeing the market going down, especially in the higher brackets?’”
“A couple years ago, Swillinger could show a client five properties and they’d make a decision and the deal would get done ‘incredibly’ easily. Now, he has to ‘go to bat’ for a client and negotiate ‘every hat trick’ to get the deal done, including throwing in incentives, being flexible and making sure the terms are best for both buyer and seller. ‘My clients are making offers, but there’s a disparity, from where my clients as buyers are and where sellers are, the gap is slowly narrowing,’ he said. ‘I think sellers now realize the market’s not where is used to be and are decreasing prices.’”
