October 6, 2017

There Aren’t Enough Buyers Paying Ridiculous Prices

It’s Friday desk clearing time for this blogger. “A new twist on Bravo’s successful ‘Million Dollar Listing’ franchise, ‘Real Estate Wars’ ratchets up the heat on professional rivalries. The show capitalizes on the real-life bad blood between two aggressive agents, John McMonigle and Jojo Romeo, who once worked together. Jojo Romeo, with three ex-husbands and five children, wears tight dresses and belies her 49 years. McMonigle’s storyline, along with his history of over-the-top properties, could eat up a whole episode.”

“He filed for Chapter 7 bankruptcy in 2011 as part of a series of setbacks that began when a lender cut off funds for a mansion he was involved in developing. Known at the time as Villa del Lago, it was once priced by McMonigle as high as $87 million. After price cuts, and under the auspices of another agent, it sold, unfinished, for $18.5 million. Since the housing downturn, McMonigle, 52, has risen from the ruins. He’s represented a Coto de Caza estate with a private lake and a pirate ship in the swimming pool. He keeps as a pocket listing a Pelican Crest mansion with a stripper pole on a stage in the home theater. And he’s newly married to a younger agent, Hannah McMonigle.”

“In one scene, he takes his bride-to-be to see a waterfront fixer-upper on Lido Isle that he’d like to buy. It’s priced at just under $5 million. She looks reluctant, but he persuades her it’s the right move for them and she appears to come around. ‘In real estate, it’s all about the spin,’ John McMonigle says into the camera. ‘You want to help your clients fall in love with the property, even if it’s not ideal.’”

“Local real estate agents talk about houses selling so quickly they do not appear on the Multiple Listing Service, and some who have worked in Waco for decades say they’ve never seen demand quite so high. Trammell Kelly, a residential sales specialist with Kelly Realtors, said the appreciation of home values locally is unprecedented. ‘Is the market cooling at all? If you had asked me that a month ago, I would have said it is cooling a bit. But then in the last couple of weeks, it has not. I put properties up for sale that sold within 24 to 48 hours. I’m seeing a lot of homes priced at $200,000 to $400,000 move very quickly.’”

“There was good news and more good news for home buyers for the Southwest Michigan housing market in August. The region produced its most homes sold so far in 2017, while the average price dropped significantly – compared to July. ‘After four months of selling prices holding fairly steady, the average and median selling prices dropped,’ said Alan Jeffries, association executive of the Southwestern Michigan Association of Realtors. ‘The average selling price in August fell 12 percent from July and the median selling price slipped 3 percent.’”

“The Pinellas County Commission is trying to convince voters to renew the 1-cent Penny for Pinellas sales tax for another decade. So this news comes at an inconvenient time: The commission recently decided to sell off a piece of land at a loss of $1.7 million — money that was raised by the penny sales tax. The commission voted 6-1 on Sept. 26 to sell land in Indian Rocks Beach on Gulf Boulevard for $1.1 million. But it paid $2.8 million for the parcel in 2006, at the height of the real estate boom.”

“With just one bidder, Commissioner John Morroni said the county should sell the property to recoup whatever it can and stop paying $3,800 a year to maintain the land. ‘I would not take a chance on waiting,’ he said before the vote.”

“The number of first-time foreclosures in the five boroughs reached 859 during the third quarter of the year, part of a dramatic increase to levels last seen at the start of the Great Recession, according to a report from PropertyShark. The third-quarter foreclosure count was 79% higher than the same period last year, though certain areas of the city saw even more dramatic increases. In the Bronx, first-time foreclosures were up 145% compared to the year prior. In Brooklyn, they rose 112%.”

“The overall numbers bottomed out in 2013, they have since begun to rise—a trajectory last seen in 2006. Foreclosures tend to peak earlier in the year, and the second quarter this year was one instance shy of matching the previous peak in 2009, when there were 912 foreclosures in April, May and June.”

“How quickly things change for Toronto’s housing market. At the start of the year, prices were rising by more than 30 percent annually. But as was seen in Vancouver, eventually the market wobbles under its own weight. It gets to a point where there aren’t enough buyers capable of paying ridiculous prices. Bloomberg’s Nanos Canadian Confidence Index fell to the lowest level since mid-July. Optimism about home prices rising is becoming harder to find.”

“‘I’m not a pure optimist, but by the same token I’m not an alarmist because people have been calling the end of this market for the last three years,’ said Brad Henderson, president and CEO of Sotheby’s International Realty Canada. ‘It really comes down to the psychology of the market and the comfort that people have in the future.’”

“Israel’s economy is strong enough to weather a steep drop in housing prices, according to the prime minister’s top economic adviser, a view at odds with central bank warnings. With a decade-old housing boom appearing to wind down, Avi Simhon, who heads the National Economic Council, said banks can withstand a 25 percent decline in home prices without any major problems. He added that because the typical value of a loan is low relative to property prices, even a 50 percent plunge, a level typically seen as catastrophic for an economy, wouldn’t destabilize the banking system.”

“‘Unlike in the USA, you can’t just tell a bank to take your house,’ Simhon said. ‘So it’s hard to see a housing slump leading to major problems for banks.’ If a major recession does come, he added, ‘then we’d have problems regardless of what happens with the housing industry.’”

“Despite the economic growth, Malaysia’s commercial and housing property market continues to face a glut, said Second Finance Minister Datuk Seri Johari Abdul Ghani. Johari said the increase in housing prices in the country has overtaken the rise in income, since 2012. ‘In the first quarter of 2017 about 130,000 unsold units of high-end properties are actually above RM250,000. These high-end units are considered to be affordable only to 58 per cent of households in Malaysia,’ he said.”

“He added that the oversupply of higher-end properties are the main reason the country is seeing a significant portion of properties remaining unsold. Compared to the first quarter in 2012, he said, only 54,000 units were unsold and from the number 19,500 higher-end properties were affected. ‘As you see today, 108,000 of 130,000 high-end properties are unsold. This is an alarming situation. It is because four to five years ago, before we implemented policies, many high-end projects were taking place.’”

“Blaine Callard, CEO of Harvey Norman Ireland, recently made headlines when his Brisbane CBD sub penthouse sold for $400,000 less than he paid for it eight years ago. Callard had been asking for offers over $2m for the 216 square metre sub penthouse apartment in the upmarket Admiralty Towers, but only managed to fetch $1.85m. Records show he’d paid $2.25m for the investment property in 2009.”

“Callard’s investment isn’t the only example of a Brisbane apartment that was resold at a loss. Official property searches indicate that many off-the-plan apartment high-rises completed at the start of the boom have since been resold at considerable losses – as high as 35% in densely built areas such as Newstead, Bowen Hills, and Hamilton. Nearly a quarter of Brisbane apartments lost money in the first three months of the year, up from approximately 18% of sales making a loss in mid-2016.”

“Angie Zigomanis, senior manager at BIS Oxford Economics, said newer Brisbane units were expected to lose value in the short term. ‘Anyone who has bought off-the-plan now is unlikely to see a gain at all in the three years,’ he told The Australian. ‘Those losses are bigger when you take into account the stamp duty on the purchases as well. For a lot of purchasers it means their equity has dissipated.’”