Aspirational Pricing Is On The Wane
A report from the Orange County Register in California. “No money down. Three words that unnerve many real estate observers who wince at ugly memories of risky loans and the mortgage-making disaster of the previous decade. Lending industry logic suggests the more money any borrower puts into a loan the more likely they’ll make the house payments. So why is Orange County’s Credit Union offering to finance homebuyers who put zero down?”
“Carlos Miramontez, the vice president for mortgage lending, says zero-down financing targets the house hunter with good credit history and a steady job but lacks the funds for a down payment. Often, it’s the classic first-time buyer. Yes, Miramontez knows non-traditional lending like no-money-down mortgages helped create last decade’s housing bubble. But he also notes that many of the loan styles used in that risk-taking era were actually historically solid mortgage options … but only when prudently used by lender and borrower alike.”
“‘We’re looking at sensible and responsible products that help solve affordability challenges,’ he said.”
The Houston Chronicle in Texas. “The Houston Association of Realtors last week announced its August home sales report, which reveals Houston’s hot housing market is starting to balance itself out, with some areas demonstrating sales slow downs. ‘Overall, the Houston housing market had a strong July, although we are seeing slower sales in some outlying areas like The Woodlands and Cypress,’ HAR Chair Cindy Hamann said in a prepared statement. ‘That is why we always emphasize that real estate is local. The combination of moderating pricing and growing inventory should make conditions even more appealing for prospective home buyers.’”
From Metrostudy. “Dallas remains the top new home market in the country, with builders starting 31,049 homes in the twelve months ending in 2Q17. With the median new home price in DFW at $320,600, new homebuyers are stretched to the limit of what they can afford. While resale home prices continue to increase, new home prices are stagnant, as compared to 2016.”
“‘The increase in second quarter closings reflects stronger sales during the first quarter than the end of 2016; however, many builders and communities have hit a price ceiling,’ says Paige Shipp, Director of Metrostudy’s Dallas-Ft Worth market. ‘With the median new home price in DFW at $320,600, new homebuyers are stretched to the limit of what they can afford. While resale home prices continue to increase, new home prices are stagnant, as compared to 2016. In an effort to spur sales, some builders are either reducing prices or minimizing price increases all while costs, including land, labor and materials, march higher. The difference in median price between a new home and resale home in DFW decreased to 30.7% from a high of 48.6% in 2015.’”
The Idaho Business Review. “Ada County home prices took a breather in July, but median home prices in Canyon County hit a new record high at $185,750, according to Boise Regional Realtors. Ada County median prices in July settled at $271,000, a slight dip from the June record high of $273,950. So far, no year has seen its highest prices after August – but 2017 for the first time had record highs in February and May before they were eclipsed by the existing record in June, according the Intermountain Multiple Listing Service data.”
“‘It’s kind of a freak of nature,’ Woyak and Company Realty owner Cindy Woyak said of the February record prices. ‘It’s probably because we had more cash buyers than we’ve had otherwise.’”
“Since early 2016, the same pattern has been in play: low supply of homes, increasing prices and no slow-down in the number of homebuyers willing to pay those prices. ‘The data is clear — demand is up, inventory is down, and this is impacting home prices,’ BRR President Katrina Wehr. Wehr said. ‘That is the difference in our market today versus the market ten years ago when speculation was driving home prices.’”
From 27 East in New York. “As summer winds down and the final sales numbers for the first half of 2017 are crunched, The Press asks Hamptons real estate industry experts to offer their insights into the state of the market and the indicators they watch to predict future performance. How does the mood of the Hamptons housing market differ from last summer?”
“Kenneth Smallwood: I think sellers are starting to acknowledge that the market is soft and that home price and condition do matter to sellers. Buyers in this market do not want to feel they are overpaying. If a home is priced too high, it can sit for a year or more unless the price is reduced. If you are selling your home, and you have not received any offers after 60 to 90 days—your home is overpriced.”
“Are most listing prices seen right now aspirational or on target? Paul Brennan: Aspirational. The sales that you see transferring are sellers who read the market and understood that prices in most markets are not appreciating.”
“Kenneth Smallwood: Aspirational pricing is on the wane. You see many listings in the $10 million-to-$70 million range slashing their asking prices.”
“Philip O’Connell: The asking prices are, for the most part, aspirational.”
“Judi Desiderio: This is specific to the market and the price range: Certain segments of the market are way off—crazy listing prices, sometimes driven by brokers, sometimes misguided sellers.”
