July 26, 2017

The Risk They’re Not Making Money On Their Homes

A report from the Seattle Times in Washington. “Seattle’s real-estate market, already the hottest in the country, is now seeing prices rise faster than at any point since the housing bubble last decade — and even some wealthy foreign buyers are apparently starting to get priced out. For the past few years, a small but growing portion of homebuyers had been coming from overseas, especially from China — targeting mostly upscale homes, and often paying cash, sometimes sight unseen. But now, a new annual survey from the National Association of Realtors shows foreign home sales across Washington state dropped to $1.55 billion for the year ending in March, down 24 percent, from $2.05 billion, in the previous year.”

“Foreign homebuyers have themselves contributed to rising prices in some ZIP codes here. In some parts of West Bellevue and along the Lake Washington waterfront, Realtors have reported that half or more of their business now comes from foreign homebuyers. Juwai’s data show 38 percent of Seattle buyers from China purchase the home primarily as an investment. Some of those buyers might also live in their new home or allow family members to live there, but in other cases, they sit empty.”

From WBUR in Massachusetts. “The median selling price for a single-family home in Massachusetts has crossed $400,000 for the first time, according to a new report. The state’s median price was $410,000 in June — an increase of $30,000 over June 2016, according to the Massachusetts Association of Realtors. A separate housing snapshot found a similar trend in prices, though not quite as high. The Warren Group said the median selling price for a single-family home in Massachusetts rose to $395,000 last month — 6.2 percent higher than the price of $372,000 in June 2016.”

“‘[T]he fact that the median is just a hair under $400,000 is unprecedented, and perhaps worrisome,’ Warren Group CEO Timothy Warren said in a statement. ‘The growth in the number of home sales has slowed due to the the fact that so few homes are for sale. Prices are being driven up, but are they sustainable?’”

From ABC 11 on North Carolina. “For a city known for its oak trees, Raleigh’s reputation has a solid foundation for growth. Add in an explosive real-estate market, and the Triangle seems to have strong footing in the event of an economic downturn … or does it? Overall, the numbers are staggering - at least 653 new subdivisions have been approved in the past seven years, amounting to at least 40,888 new homes built or approved for construction. In Raleigh, the county’s largest municipality, the Development Services Department approved 279 subdivisions (4,438 homes).”

“Home prices are growing even faster in Wake County, fueling worries about an out-of-control seller’s market. ‘I do think the risk on the horizon is that we see slowing home-value growth and even flat home values,’ Aaron Terrazas, a senior economist at Zillow, told ABC11. ‘People shouldn’t plan on making hundreds of thousands of dollars on their home looking five to ten years down the line. You’re seeing that already in places like San Francisco. Home values have been flat in that upper segment over the past year. The real risk there isn’t that people are losing money on their homes - they’re just not making money on their homes.’”

The Orange County Register in California. “It may be the time of year when home buying typically slows down, but it didn’t look like it a Fountain Valley open house in last weekend. As many as 150 house hunters streamed through the 53-year-old, four-bedroom house on Ash Street after a $50,000 price drop to $749,000. That’s a steal for that neighborhood, some said, even though the kitchen and bedrooms need updating, the spa doesn’t work and a two-room addition out back is unfinished. As of Monday, the home had five offers, the property’s agent said.”

“‘It’s a seller’s paradise,’ said Lynn Redwater, a house hunter who stopped by on Saturday. ‘You list your house, and you have one or two offers.’”

“Agents interviewed reported the market has cooled since April and May, with slowing most pronounced for homes priced at $1 million or higher, which make up more than a third of the Orange County market. A seller’s market, for sure, but only for the savvy sellers, said Ron Miller, a broker-associate with Star Estates in Mission Viejo. Every neighborhood has its sweet spot — the price buyers are willing to pay. Homes priced higher, Miller said, will sit and miss that golden 30-day window when buying frenzies are most likely to occur.”

“‘The buyers today do not want to overpay because they think we’re at a peak,’ Miller said. ‘They all think we’re going to have a correction in the real estate market.’”

The News Press on Florida. “Monthly foreclosures in Lee County bottomed out in October 2005, when 127 were filed. That was near the end of the boom. They reached a high of 2,665 in October 2008, when the county represented one of the nation’s ‘foreclosure capitals.’ Fast-forward to today. The numbers pale in comparison, though they may be higher than readers might expect.”

“Denny Grimes, a real estate expert and also a presenter at The News-Press Market Watch, said ‘every market should keep an eye on foreclosures,’ but ‘it is in the healthy range. It’s something to talk about, write about, however it’s nothing to worry about.’ ‘There’s a sliver of the population out there that believes there’s going to be another crash,’ he said. ‘Barring something catastrophic, I don’t see it happening.’”

“Meanwhile, Grimes sees foreclosure opportunity for investors in homes priced above the median, and in luxury properties: ‘The opportunity is in the nicer homes, 300 plus, a million plus. That is where the success stories are going to be written.’”