July 21, 2017

So How Is It A Buyers Market?

It’s Friday desk clearing time for this blogger. “Barbara L. Pearce, president of the North Haven-based real estate firm Pearce Co., said the oversupply of luxury-priced homes in Fairfield County has a negative impact on similarly priced homes in the New Haven area. ‘It’s hard to predict which homes are priced well and will go quickly and which will linger on the market,’ Pearce said. ‘There’s a lot of demand for luxury homes in East Rock (section of New Haven) but the price is pretty much capped at $850,000.’”

“Affordable luxury homes continue to dominate the market in South Florida, with less expensive areas inland and north of Miami seeing strong activity, according to Douglas Elliman. It’s a different tale on Miami Beach and barrier islands. The median price of a luxury condo on Miami Beach fell to $2.283 million, a nearly 20% drop from a year ago—though the number of luxury sales are as strong as they were then. ‘The market still remains softest at the top,’ said Jonathan Miller, chief executive of Miller Samuel.”

“Despite a steady wave of indicators that suggest Calgary’s economy is on the mend after a bruising recession, data shows the city is dealing with a glut of housing that hasn’t been so big in two decades, perhaps longer. City hall reported in its latest census that nearly 23,600 housing units are vacant, up by 2,700 over last year’s levels. ‘Every indicator is showing that things have bottomed and bounced off the bottom,’ said Bob Dhillon, chief executive of the western Canadian landlord Mainstreet Equities. ‘The challenge is, how long will it take to absorb the vacant units?’”

“A slump in super-prime home values in London is rippling down the luxury-property market. Sales values per square foot for houses priced between 2 million pounds ($2.6 million) and 5 million pounds fell by 8.4 percent in the second quarter from a year earlier as political uncertainly deterred potential buyers, according to researcher Lonres. Selling prices for super-prime properties — those over 5 million pounds — fell 3.2 percent. ‘There is a lack of urgency in the market which, combined with considerable buying costs, means many who would have transacted have stayed in their current properties instead,’ said Marcus Dixon, head of research and data analysis. While sales across the prime central London market are similar to 2016, they’re down 40 percent from three years ago, he said.”

“It’s a buyers’ market. Or so say analysts tracking the real estate market. Reams and reams have been written about how anyone planning to buy a house can pick and choose from the large stock of unsold inventory and pay lower than what was the price a few years back. But Delhi resident Simi Mohan isn’t convinced. ‘I don’t want to book a flat in any upcoming project because I don’t know when I will get it. And the prices of the already built flats are not in the affordable range for me. So how is it a buyers’ market?’ asks the 32-year-old paramedic.”

“Mohan has a point. The unsold inventory is piling up, developers are sitting on unfinished projects and the consumer is nowhere in sight.”

“At Bogyoke Market in the centre of Yangon, commerce proceeds very much as it has since the times of British colonialism. But it is a very different situation when it comes to residential developments. A glut of high-end properties now sit either unfinished or empty as the envisioned influx of wealthy foreigners expected to rent them has failed to materialise. The Colliers report notes that the total completed condominium stock is estimated to have exceeded 6,000 units at the end of 2016 with more than 10,000 units in the pipeline.”

“However, the report warns that ‘inadequate sales take-up along with the rising number of defaults from buyers could mean delays in completion or even the possibility of project cancellation.’ David Ney, managing partner at York Road Realty in Yangon says that high-end rents have fallen by around a third. ‘Properties that were renting for USD5,000 per month are now going for USD3,000 or even USD2,000.’”

“A property downturn could dent the big banks and Australia’s financial stability because home loan customers could not quickly funnel cash out of other investments, economists say. Australian Securities and Investments chairman Greg Medcraft this week described hybrid securities as ‘ridiculous’ products for retail investors. University of Melbourne ­finance professor Kevin Davis said the securities could prove problematic in the event an Australian bank was in financial difficulty.”

“While they looked on the surface ‘like a really good idea, in practice they’d be an absolute nightmare,’ he said. The complexity of hybrids was also a concern, he said. ‘With the global financial crisis 10 years ago, one of the problems was too many ­complex instruments being sold to investors. What have we got now? Really complex ­financial instruments that people can’t value being sold to ­retail investors.’”

“The downturn in the residential property market that began in Auckland late last year has now spread throughout the country, shaving $100 million from real estate agency commissions in the second quarter of this year. The Auckland market has borne the brunt of the downturn, with the number of sales in the region down by just over a third, dropping from 8731 in the second quarter of last year to 5756 in the second quarter of this year, a decline of 2975 (-34%). But the downturn has spread well beyond Auckland with sales throughout the country well down in the second quarter of this year compared to the same period of last year.”

“Average sales rates at the major Auckland auctions are still running at less than half of what they were during last year’s peak. And there are increasing signs that vendors are accepting that the market has softened and are starting to be more realistic in their price expectations, which will help expedite sales. However buyers are increasingly prepared to play hardball on price, and some investors who over-extended themselves and took on high levels of debt during the boom will be starting to feel squeezed. Others that aren’t feeling the pressure yet are likely to be getting nervous.”