January 25, 2018

The Potential For A Glut Of Properties

A report from MarketWatch. “‘It is 2005 all over again in terms of the valuation extreme, the psychological excess and the denial.’ That’s what James Stack, who accurately predicted the last housing crash, told Bloomberg about what he’s seeing with home prices these days. Stack explained that his ‘Housing Bubble Bellwether Barometer’ of home builder and mortgage company stocks, which enjoyed an 80% rally in the past year, is once again sounding the alarm for overconfident real-estate investors. ‘People don’t believe housing is in a bubble and don’t want to hear talk about prices being a little bit bubblish,’ Stack, who manages more than $1 billion for high net worth clients, told Bloomberg.”

From the Press Herald in Maine. “For the third consecutive year, Maine set a statewide record for home sales volume in 2017, according to Maine Listings data. The evidence that limited inventory in southern Maine curtailed what could have been an even bigger sales year can be found in the data for York and Cumberland counties, said Michael Sosnowski, owner of the Portland real estate brokerage Maine Home Connection. ‘Nearly every community in the Greater Portland area experienced sales declines in 2017 – some in double digits,’ Sosnowski said. ‘For example, Portland, which eclipsed 600 annual single-family homes sales for the first time in history in 2016, recorded a decline of 15 percent in 2017.’”

“Portland homebuyers Charlotte Harrison and Sam Tracy said they experienced firsthand the effects of a housing market in which demand far outstripped supply. Harrison and Tracy, both 26, visited about a dozen homes before placing the winning bid of $425,000 on a four-bedroom, 1,960-square-foot home on Noyes Street in Portland’s Oakdale neighborhood. ‘It ended up being pretty much our dream house,’ Tracy said. ‘It’s big and yellow and has a turret.’”

From the Los Angeles Daily News in California. “Housing prices in the San Fernando Valley ended the year at a median price of $643,783, the highest ever recorded in the area, according to the Southland Regional Association of Realtors. ‘Today’s resale activity is a shadow of what the local housing market once was,’ said Gary Washburn, president of the association in a statement. ‘Even with record prices, people clamor for housing more than ever, yet there simply are not enough homes listed for sale.’”

“A report from the California Association of Realtors said all major regions posted year-over-year sales declines, with sales in the Los Angeles metro region dropping 7.1 percent, the Inland Empire decreasing 3.5 percent.”

The News Press in Florida. “Fort Myers, Naples and other parts of Florida do not have enough workers. The shrinking labor force is a big issue that a nationally acclaimed economist said he could not stress enough ‘You’re out of people,’ said Elliot Eisenberg. ‘This is a real problem. You will have problems in ’19 or ’20 because there will be no one to hire.’”

“Quickly: there’s no housing bubble, student loans have gotten ‘really big,’ but millennials will be fine, and consumer confidence is good. Taking everything into consideration, ‘it’s virtually impossible for us to have a recession this year,’ Eisenberg said, adding the only way he sees that happen is if the stock market crashes.”

“A weaker dollar is a concern. Gross domestic product was 2.5 percent this past year, but it’s unlikely to increase much due to productivity issues and labor force growth. ‘It’s just not that good,’ he said. ‘We can’t do much better. It’s not possible. Economically we’re running out of workers. It’s going to slow us down.’ Changing that reality will not be easy, with workers on the sidelines unlikely to jump in. ‘We’re just out of workers, and the workers that are available, they can’t pass a drug test,’ he said.”

The New Haven Register in Connecticut. “Single-family home sales in Connecticut last month fell dramatically compared to December 2016, according to a state real estate trade group. ‘You have to look at the prospect of rising interest rates,’ said Donald Klepper-Smith, chief economist for New Haven-based DataCore Partners. ‘I would not use the word ‘robust’ to describe this housing market.’”

“Add to the mix the problem that more people are leaving Connecticut than are moving in and you have the potential for a glut of properties on the market.”

The Real Deal on New York. “The number of luxury contracts signed in the residential market last week looked a lot like this time last year. But prices were pushed way down due to big reductions on the week’s priciest deals, according to Olshan Realty’s luxury market report. The week of the Martin Luther King holiday saw 18 contracts signed at $4 million and above, the same number from a year ago. But luxury units saw a 20 percent discount from their original to final ask, a result of developers who spent years marketing their units at what Olshan called ‘fantasy prices.’”

“The priciest contract signed was on the penthouse at DHA Capital’s 12 East 13th Street in Greenwich Village, which took a haircut of nearly 60 percent from its original ask. The 5,704-square-foot triplex went into contract with an asking price of $12.95 million, down from the $30.5 million it was asking when it first hit the market in December 2013.”

From Champagne and Shade. “Margaret Josephs isn’t the first person on Real Housewives of New Jersey to have money problems. She is the latest! New reports claim that the ‘powerhouse in pigtails’ is facing the foreclosure of not one, but two properties due to failure to pay. According to Page Six, Margaret Josephs and her husband, Joe Benigno, were sent a foreclosure notice by Unity Bank on December 15. More recently, information from the paperwork was entered in as a public record in Bergen County.”

“The bank notice seeks to recover a $1.2 million mansion owned by Josephs and Benigno as well as the property right next door. Now, this is where it gets weird. According to the report, Margaret and her husband took out two mortgages on the two separate properties in late 2016. That would have been around the same time that Margaret should have started filming Real Housewives of New Jersey with her new group of friends.”

“It was pointed out that Margaret hosted her 50th birthday party in the home despite having an empty living room and making excuses about how she wasn’t done renovating yet. Did she run out of money in the middle a la Sheree Whitfield from RHOA? Or did the RHONJ couple just bite off way more than they could pay for?”