November 7, 2017

You’d Think We’d Be Hitting A Ceiling

A report from KTVN in Nevada. “Yes the expensive Reno-Sparks housing train is still rolling, with the latest median house price racking up another near-high. At Keller Williams Group One Realty, real estate agent Guy Johnson reads off the latest high number: ‘October’s median sales price jumped up to $350,000.’”

“So are home prices going to keep increasing? You’d think we’d be hitting a ceiling, but he says…not yet. Healthy job numbers and rising home buying demand look positive. Reno’s housing market is still hot. As he put it, ‘Sales are robust, even with these prices, and prices are up almost 13% over last year. So it doesn’t seem to be deterring sales at all.’ His prediction of what the Reno-Sparks median home price will be one year from today? Up another $30,000 to $380,000. ‘Again, it’s the lack of inventory. We have the buyer demand and lack of inventory, and that’s pushing the prices up.’”

“That’s over the all-time high set in 2005, making 2018 an even more challenging year for home buyers. Yes, a house is still a great investment…if you can afford one.”

From New Channel 13 in Colorado. “With an influx of people and not enough houses to go around, home prices are at a high, making a competitive market for buyers. Dali Moncada and Ian Devillaz are under contract on a house in Colorado Springs, but it wasn’t without months of house hunting. ‘It was like a conveyor belt of people looking at one property. You felt so pressured to buy regardless of if it was what fit your needs,’ Moncada said. Devillaz did not see the house the couple is under contract on now before they put an offer down. ‘Just the way the market was I said, ‘Babe, if you like it I trust you so let’s put an offer on it,’ Devillaz said.”

“Home Smart Realty Group Realtor, Michael Dillon, has had to navigate the housing market with his clients. ‘We saw 20 people at the open house we’re probably going to need to offer above asking price and then in certain cases significantly above asking price,’ Dillon said.”

The Mercury News in California. “An emerging group of local entrepreneurs is taking up arms against the sky-high cost of living in the Bay Area, hoping to end once and for all the housing crisis crippling the region. These founders, intent on disrupting the housing market and bringing down costs, are stepping in as government officials and nonprofits struggle with the enormity of the problem. Landed splits the down payment on a home with its teacher clients — the teacher typically pays 10 percent of the home’s value, and Landed puts in another 10 percent. That money comes from investors — private institutions, like foundations, which receive equity in the house in exchange for their contribution.”

“When the teacher later sells the house, Landed’s investors get back the 10 percent they put in, plus 25 percent of any appreciation in the home’s value. So far the company, which received $5 million from the Chan Zuckerberg Initiative over the summer, has completed 16 home purchases in the Bay Area. Starting in mid-November, HomeSlice will help groups of potential homeowners navigate the hurdles and complications of collectively buying a home. HomeSlice’s website helps home buyers agree on details such as how the property will be maintained, how shares will be divided, and how decisions will be made, and then turns that information into a co-ownership agreement that can be made legally binding.”

“The company also helps connect clients with real estate agents and lenders, and plans to eventually roll out an online marketplace where users can buy and sell slices of homes. ‘I think the notion of homeownership is going to change over the next couple years,’ co-founder Anna Roumiantseva said. ‘People are just fundamentally rethinking how they’re using assets, how they’re buying assets — getting more comfortable sharing.’”

From Mortgage News Daily. “Lawrence Yun, chief economist of the National Association of Realtors (NAR), said that the many positives for housing that should pave the way for an increase in existing home sales are being handcuffed by continued supply shortages and passage of a tax bill that could disincentivize homeownership. ‘Despite considerable demand all year, pending sales have lost a step in recent months because low supply is pushing prices higher and making homebuying less affordable in several parts of the country,’ Yun said.”

“Yun is estimating the current year will finish with existing home sales at a pace of 5.47 million units. While this would make 2017 the best year since 2006 when sales hit 6.47 million, it will achieve only a modest 0.4 percent increase from 2016. Yun said he expects another 3.7 percent increase in sales next year, to 5.67 million units. He also forecasts price hikes of around 5.5 percent both this year and next.”

“The biggest impediment to sales, Yun said, is the massive shortage of supply in relation to overall demand. The slow pace of new home construction is creating a further logjam, delaying housing turnover. Because of the lack of new homes, homeowners are staying put longer, typically 10 years, keeping inventory low and hurting affordability. ‘The lack of inventory has pushed up home prices by 48 percent from the low point in 2011, while wage growth over the same period has been only 15 percent,’ said Yun. The inability of renters who want to become homeowners but cannot do so means they are missing out on the significant wealth gains that have come to homeowners through appreciation.”

“Yun was joined on stage at the Expo by Ken Rosen, chairman of Rosen Consulting Group and UC Berkeley’s Fisher Center for Real Estate and Urban Economics. Both men cautioned that the legislative overhaul proposed last week by the Republican-controlled House of Representatives could very well affect home sales and prices next year and into the future. They called the tax bill as proposed ‘a direct tax hike on homeowners’ and said it nullifies the homeownership incentive for all but the top 5 percent of tax filers. It could, according to an NAR analysis, negatively affect home values by about 10 percent and raise taxes on middle-class homeowners by an average of $815.”

“Rosen said, ‘Ownership rates are currently below their peak across the younger age groups and in cities that have seen sharp price increases, and it’s not a good thing. A higher rate of homeownership makes sense. It is so important to the financial health of the economy. Homeownership helps households accumulate wealth over time, reduces inequality, increases investments in communities and boosts economic growth.’ He added, ‘A willingness to embrace new ideas will go a long way towards easing the constraints of low supply, student debt and weaker affordability that are currently suppressing homeownership.’”

From Deadline Hollywood. “Johnny Depp seemed quite tired and emotional last week at the London premiere for the new Murder On The Orient Express but today the Oscar nominee may be feeling the wolf is at the door, at least legally and residentially. Nearly a year after Depp and his former business managers start throwing accusations and betrayals at each other in court over millions in the seemingly spendthrift actor’s troubled finances, The Management Group on Monday filed an ‘action for judicial foreclosure’ against the Pirates of the Caribbean star.”

“Aiming for the heart of what started the lawsuits flying back in January when the actor went after TMG in a $25 million fraud suit, the move Monday is to force a sale of five Los Angeles properties owned by Depp run trusts. Those sales are part of a larger play to repay a $5 million loan TMG made to the strapped actor in December 2012.”

“‘Although Depp is refusing to pay his debts, he does not and cannot dispute that he received the full benefits of the TMG/Depp Note by avoiding a public calamity in 2012,’ the duo from of Tinseltown heavyweights Kinsella Weitzman Iser Kump & Aldisert LLP state. ‘Nor can he dispute that TMG gained nothing from the transactions and instead, became indebted to CNB for $5 million.’”