November 27, 2017

Is This Just Seasonal, Or Is This Something Else?

A report from the Daily Journal in California. “Cold weather brings a cooling effect to a local rental market which real estate experts believe will remain considerably less expensive than the astronomical rates reached in recent years. Rent for a one-bedroom unit in San Mateo last month floated near $2,500, according to Zumper, down from the yearly peak of nearly $2,600 in June. Last year, prices for similar units were reported as expensive as $3,100. There seems to be consensus on a general market softening. ‘It appears San Mateo County has reached its peak and the county is in a downward trend. In the past two years, rent growth has slowed down and vacancies have increased,’ Rhovy Lyn Antonio, the apartment association’s vice president of public affairs, said.”

“Michael Pierce, a local landlord for more than 30 years, said his stock of older units exposes him to a much less expensive rental market as well. ‘It’s really different,’ he said. ‘It’s not that pie-in-the-sky number that those new buildings are getting.’”

“But even with less expensive offerings than some of the new developments sprouting along the Peninsula, Pierce said he too is witnessing a slowing market, resulting in lingering vacancies and occasional discounts for tenants. Another factor driving the cost drop is the crush of recent residential development becoming available, increasing supply to meet the outsize demand. ‘We are starting to see the benefits from new supply,’ said Pierce, pointing to ongoing construction of developments in Redwood City, San Mateo and Foster City. ‘It’s causing the market to soften a bit because we have a lot of product.’”

From the Virginia Gazette. “The Greater Williamsburg Area has plenty of options to offer home buyers as the fall comes to an end. ‘In the last three months, we’ve seen inventories increase, which indicates the market is evening out. This means the rates of new houses going on the market is outpacing closed sales. It’s a good trend,’ said Kimber Smith, president of the Williamsburg Area Association of Realtors.”

“The median sale price for single-family detached homes was up 5.8 percent to $350,200 and was down 8.1 percent to $229,400 for single-family attached properties since last October, according to the Williamsburg Area Association of Realtors.”

From Crain’s Chicago Business in Illinois. “If you’re looking for a deal on a downtown apartment right now, you shouldn’t have too much trouble finding one. Many landlords are offering prospective tenants two months’ free rent, gift cards and other goodies as they try to fill up their buildings in an overbuilt downtown market. After enduring years of rent hikes, renters are gaining leverage over landlords as the supply of apartments outstrips demand.”

“‘This is the time of year when landlords and property managers get desperate,’ says Maurice Ortiz, director of operations at the Apartment People, a Chicago brokerage. Now ‘it’s an all-out dogfight because there are so many new developments that are competing with each other, as well as the established buildings.’”

“The once-hot market is getting chillier amid an unprecedented development boom. Developers will complete a record 4,500 downtown apartments this year, 3,500 in 2018 and as many as 5,000 in 2019, Integra predicts. While demand for apartments is as strong as it’s ever been, it’s not keeping up with supply. Absorption, the change in the number of occupied units, will total about 2,900 units this year—also a record—and 3,000 in both 2018 and 2019, according to Integra. Put another way, downtown supply growth—13,000 new apartments over three years—will exceed demand by 4,100 units, or 46 percent.”

“The supply surge is making some developers and landlords nervous. That’s one reason they’re offering bigger concessions than they have in the slow leasing months of prior years. ‘The difference now is there’s more fear of the unknown. We’re getting aggressive because you don’t know,’ says Jim Letchinger, president of Chicago-based JDL Development, which opened a 250-unit tower at 640 N. Wells St. over the summer. ‘Is this just seasonal, or is this something else?’”

From Westfair Online on New York. “Housing inventory in Westchester County has reached its lowest level in 13 years, according to a recent report from Douglas Elliman, and while that record-low supply has led to frequent bidding wars in the low- to midlevel markets, the same cannot be said for luxury homes. Real estate professionals agree that a wealth of high-end properties remain for sale. ‘When you start going $1.5 (million) and north, there’s a heck of a lot of stuff on the market and practically nothing selling,’ said Mark Seiden, broker and owner of Mark Seiden Real Estate Team in Briarcliff Manor.”

“Price isn’t the only reason many luxury properties aren’t changing hands. ‘There are plenty of people in the market who I think are overpriced, but we also have plenty of stuff that I think is priced fairly reasonably,’ Seiden said. ‘It’s just that the stuff that’s selling is selling for an ‘oh my God’ low price.’”

From Mansion Global on New York. “A penthouse has been relisted with a massive price cut in a new boutique condo in Manhattan’s Carnegie Hill. The price tag for the penthouse, the largest and most expensive unit in the nine-residence building on 1110 Park Ave., was lowered to $25.95 million Tuesday, more than $18 million, or 41%, less than the asking price three years ago.”

“The penthouse was first listed for $44 million by the building’s developer Toll Brother City Living, when the condo was still under construction in October 2014. The price was dropped to $35 million in early 2015 before the construction was completed that fall. After a year, the developer signed on a brokerage and reduced the price further to $29.95 million in April 2016. In addition to the penthouse, Warburg Realty also re-listed another high-floor unit in the building for $15.95 million last week. The 5,097-square-foot residence was listed for $20 million in 2015 by the developer, Toll Brother City Living.”

“In August, former Avon CEO Andrea Jung sold her apartment in the building, which she never moved into, for $17 million, a loss compared to the $17.616 million she paid in July 2016.”