Buyers Are No Longer Responding To That Feeding Frenzy
It’s Friday desk clearing time for this blogger. “Anyone who bought a luxury condo two or three years ago and is now trying to sell is faced with falling prices and a glut of new product that, in Manhattan, is still growing. That not-so-perfect storm, sources said, is pushing those sellers into a challenging position. And in some cases, it’s forced them to list their apartments for even lower than what they paid, openly advertising they’re willing to take a hit. ‘It’s painful, I try to not think about it when there’s been a huge loss for my seller,’ said Patricia Shiah, a broker with Stribling & Associates who marketed former Avon CEO Andrea Jung’s apartment at Toll Brothers’ 1110 Park Avenue, that sold in August for $17 million, an approximate $600,000 loss on what Jung paid last year.”
“In the case of 1110 Park Avenue and other buildings in the city, these private sellers are also competing with the sponsor’s remaining units. ‘There are lots of buyers out there who are finding that their assets are being devalued by their own sponsor,’ Douglas Elliman’s Frances Katzen told the Wall Street Journal this week. ‘I think that there are plenty of people who are very angry to see that.’”
“It’s time for a reality check. With decreases in the number of homes sold and average home price, the Denver real-estate market experienced a slowdown in September 2017, according to the Denver Metro Association of Realtors’ October market report (of September data). Those moves, though small, may spur more dramatic shifts in the future. Sellers can no longer put a house on the market on Friday and expect 10 offers by Monday. ‘Buyers are no longer responding to that feeding frenzy,’ says Steve Danyliw, chairman of the Denver Metro Association of Realtors Market Trends Committee.”
“Home prices in North Texas are continuing to rise, with prices in the Dallas area climbing 7.1 percent year-over-year in August. And as a result, some would-be buyers are beginning to push back, said Ted Wilson, principal at Dallas-based Residential Strategies, a firm that tracks the new home residential market. ‘At higher price points, we are running into a resistance of what buyers can afford,’ Wilson told the Dallas Business Journal. ‘We have a short supply of homes on the low end of the spectrum undergoing an inflationary situation. But we also are seeing a lot more discounts and incentives for the pricier properties over half-a-million dollars.’”
“House Republicans have released their proposed tax reform plan. It could take a toll on the housing market in California. Gustavo Gonzales with Santa Clara Co. Association of Realtors said, ‘Look at the numbers! I mean, we are being punished because our housing is expensive. That’s not fair to any Californian.’”
“A Richmond Hill, Ont., woman may lose the house she lives in because of bad timing and a falling real estate market. The plan was to sell the Richmond Hill home — where she has lived for the last five years — after securing the second home and apply the proceeds of the sale to her new house. But that plan hasn’t worked out. ‘It was an absolute disaster,’ Dora Elia said, referring to the chain of events that took place after she purchased a home in Innisfil, Ont., about a one-hour drive from her current home in Richmond Hill. ‘I am in jeopardy of losing both homes and owing money,’ she told Global News.”
“‘The bottom fell out,’ mortgage broker Ron Alphonso said, describing the cooling in the residential real estate market. ‘A lot of people who went into multiple properties are being adversely affected.’”
“Elia said she agreed to several mortgages to secure the purchase. While she accepts responsibility for agreeing to the purchase, she said the lenders didn’t supply legal paperwork in advance and put off her concerns, saying those would be addressed after the documents had been signed. After agreeing to purchase the second home, the market changed and her current home was worth about $100,000 less. On top of that, the home she was buying was similarly worth about $100,000 less. In short order, she had effectively lost about $200,000 worth of real estate equity.’You’re trusting in people who have a (mortgage broker’s) license and expecting them to be honest, not take your money,’ she said.”
“What does the property industry think of an interest rate rise? Sandfords – Andrew Ellinas, Director (London), ‘There are two blocks of apartments near our Regent’s Park office that are historically very sought-after and if a property came available we would be swamped with buyers and a sale would be made very quickly. In one of those blocks, in the same month in 2016 there were three apartments on the market and they all sold. This year, there are ten apartments currently available but there are no buyers for them. In the other block, a very similar situation, there was one property on the market in 2016 and in 2017 there are ten that are not selling. There are two main reasons for this. The first is that they are overpriced. Vendors still believe that values are what they were two years ago. There is too much uncertainty and buyers, particularly overseas investors, have been put off making big financial commitments.’”
“Average house prices have shot up around 70 percent in both Sweden and Norway over the past decade (in Copenhagen they’ve nearly doubled since 2012, the year Danish rates first turned negative). After years of warnings about excessive debt and overheating from financial regulators and central bankers, they’re now slowing in both Stockholm and Oslo. ‘These measures have worked,’ said Erik Bruce, senior economist at Nordea Bank in Oslo, noting that prices in Oslo are down 7-8 percent from their peak.”
“The provincial Department of Economic Development, Environmental Affairs and Tourism in Bhisho has turned down Nelson Mandela Bay’s application to build the homes in the upper catchment of the Baakens on the city’s western rim. The department said the Nu Way, KwaNobhule Integrated Housing Estate, Jachtvlakte and Utopia housing projects and more homes linked to Baywest and nearby Parson’s Vlei had all been approved, but had not yet been built. ‘It is evident there is an oversupply of housing in the immediate and surrounding areas.’”
“Auckland house values have fallen for the first time in six years but smaller towns also face a big risk of a property price plunge, according to new economic analysis. While much focus has honed in on property in major centres, many outlying areas have also seen prices sky-rocket over the past three years or so. Infometrics chief forecaster Gareth Kiernan calculated the 10 areas likely to see the greatest drop in house prices over the next three years, and regional New Zealand dominates the list.”
“‘The problem with some of those outlying areas is while they’ve had population growth which might have been the strongest in 10 or 15 years … when you think about their general economic prospects, it’s a bit of an aberration the way the property market’s performed,’ he said. Kawerau house prices rose by an astronomical 79 per cent between June 2014 and June 2017. Kiernan said this was not sustainable. ‘If they’ve gone up a long way and there’s not a lot of substance to it then they could easily come back down the other side.’”
“There was a common theme among the top eight places on the list: they were mostly smaller outlying areas that had been caught up in the tail-end of the property boom, without anything fundamental to justify the price lift, he said. ‘Population growth might have been reasonably strong, but not to the degree that justifies some of the house prices lifts.’”
“A global investment bank has called the end of Australia’s world record housing boom, saying the golden years are ‘officially’ over after home prices fell in Sydney for the second month in a row. ‘There is now a persistent and sharp slowdown unfolding,’ ending 55 years of unprecedented growth that has seen home values soar by more than 6500 per cent, UBS economists wrote in a note to clients. The recent weakness in auction clearance rates and anaemic price growth over the past five months suggested ‘the cooling may be happening a bit more quickly than even we expected,’ economists George Tharenou and Carlos Cacho wrote in their note.”
