Demand Isn’t Assured
A report from the News Press in Florida. “The national market is hot, the local residential market is not. Millennials are starting to drive the market. And commercial real estate is behaving strangely. Those are some of the topics coming to The News-Press Market Watch 2018: Focus on Real Estate on Feb. 27. Locally, sales are down and inventory is up, what Denny Grimes, president of Denny Grimes & Co., called a ‘double whammy.’ ‘The national media is reporting record median sales prices, the best sales in 11 years,’ he said. ‘We can’t say any of that.’”
“Randy Thibaut, CEO of Land Solutions Inc., said there are conflicting signals in the market for new housing in the region. While the sub-$300,000 price tier is hot, the ultra-luxury new housing market is still vibrant, although with fewer transactions and primarily focused in Bonita Springs and Naples. ‘We’re seeing the most challenges to home sale absorption with the $400,000-$700,000 mid-tier market,’ he said.”
From Bloomberg on New York. “It’s tough to stand out in Manhattan’s overbuilt luxury-condo market, but James Linsley is working on it. Instead of building a single, skyscraping tower designed by a world-famous architect, he’s putting up three — on the same site. The trio of towers has 263 condo units in all. GID reports that 53 of them, about 20 percent, have sold since marketing began in June. The most expensive was a $15.5 million, four-bedroom home selling at $4,097 per square foot, a record for an apartment on Riverside Boulevard, according to StreetEasy.”
“Selling pricey condos in Manhattan these days is an uphill climb, as developers keep splashing the landscape with ever more units for buyers to choose from. This year, 4,600 newly developed apartments are expected to reach the sales market, with nearly half of them priced at $2,400 per square foot or higher, according to Corcoran Sunshine. That’s on top of the 3,323 new units that were listed for sale in Manhattan last year.”
“Demand isn’t assured. Closed sales for new units in the fourth quarter dropped 19 percent from a year earlier to 387, according to Miller Samuel Inc. and Douglas Elliman Real Estate. New apartments over $5 million accounted for 20 percent of those going into contract in 2017, down from 25 percent a year earlier, according to a report by Halstead Property Development Marketing.”
The Santa Maria Times in California. “The developers and financial partners behind Rice Ranch Trilogy, the largest housing project in Santa Barbara County, are named in a federal lawsuit that accuses them of fraud, deceit, breach of trust and taking money from an investor who claims she never saw a penny of the $200,000 she put into the venture. ”
“The lawsuit, filed by attorney Faith Devine of Fraud Law Group in Carlsbad on behalf of plaintiff Susan Brachfeld, of Indio, alleges that Brachfeld and others were defrauded in connection with a $25 million securities offering for Rice Ranch, an Orcutt housing project approved by county supervisors in 2003. Despite the investment money, Rice Ranch Ventures LLC faced foreclosure in 2012, and was given just a few months to come to terms with Wells Fargo Bank.”
“In March 2013, Manchester Financial notified investors that they were in partnership with Shea Homes, which is not named in the suit, and that the change wouldn’t affect their original investment with Rice Ranch. Again, investors were assured they’d get their money back, the suit said. In April 2017, Brachfeld terminated her relationship with Manchester Financial. In turn, Manchester kept assuring her that her investment still had substantial value, and that her membership interest in Rice Ranch Investment Fund was safe, and that there was no reason to pursue legal action to recover her money, according to the suit.”
“The suit also accuses the defendants of siphoning a significant amount of profits for themselves without disclosing that to investors. ‘They had no intention of repaying the $25 million they received from the 2008 funding,’ the suit alleges.”
From Tap into Montclair on New Jersey. “A Nutley man, who worked as a loan officer with a mortgage company, was charged today with using fraudulent documents to deceive his employer into approving a loan, U.S. Attorney Craig Carpenito announced. Richard Patino, 42, is charged by complaint with one count of wire fraud. He made his initial appearance before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court and was released on bail. Law enforcement is aware of approximately 23 loans that Patino approved that are suspected of fraudulent activity.”
From KFYR TV in North Dakota. “According to one realtor, there’s a record number of homes for sale right now. She says prices are staying pretty steady, but will probably increase slightly this year just because of inflation. Realtor Amber Sandness says Bismarck/Mandan is currently more of a buyers’ market than a sellers’ market. ‘We have a really good market here in Bismarck/Mandan,’ said Sandness. ‘We have some great homes on the market. We have a lot of homes on the market so there’s definitely a lot for the buyers to pick from today.’”
From the Flathead Beacon in Montana. “In 2017 the overall median price of sold residential properties in Flathead County was $275,000. Of the 1,872 sales in the last 12 months, 18 percent sold in the price range of between $100,000 and $200,000, compared to 27 percent in 2016. At this time there are 771 residential listings and only 5 percent are priced in that $100,000 to $200,000 range, compared to 6 percent at this time a year ago. With 331 sales in this price range and a current inventory of 35 listing, this means that there is currently 39 days of inventory, making this price range a seller’s market.”
“As we move up into the $1 million to $2 million range, we find that this price range only accounts for 2 percent of the sales, but 14 percent of the current listings are in this price range. With only 34 sales in the last year and 109 current listings, this tells us that there is currently around 38 months of inventory of homes in the $1 million to $2 million dollar range. This segment of the market is very much a buyer’s market.”
“The existing housing inventory goes from one month for home priced $100,000 to $200,000 and up to 69 months for home priced over $2,000,000. Currently, there are 63 $2,000,000 plus homes on the market, but there were only 11 sales in the last year. For homes priced over $500,000, there is currently 13.2 months of inventory, putting these higher priced homes in a buyer’s market. The market is generally quite smart and pricing is key to getting homes sold. This is especially true in the higher price ranges because there are a lot of sellers competing for a relative few number of buyers.”
From Go Dan River in Virginia. “More Danville properties are selling for prices below tax assessment values than above, according to a review of property transfers recently filed in Danville Circuit Court. Between Nov. 13 and Jan. 3, there were 87 properties sold, with 63 selling for under assessed values and 23 selling above. Hampton Wilkins, broker/owner of Danville-based Wilkins & Co. Realtors, said the problem stems to when the real estate market took a hit during the Great Recession and housing values in Danville dropped.”
“The local drop in housing prices was not historically normal, Wilkins said. For many years, houses were selling above the assessed values. Then the recession arrived. ‘It reversed [housing values], and it was hard for all of us to come to grips with it,’ he said. ‘It was not just a learning curve, it was an emotional adjustment.’”
“As Art Craft, an agent at Danville-based Hauser Manasco Realty Group put it, ‘A house is only worth what someone is willing to pay for it.’”
The Albuquerque Journal in New Mexico. “Albuquerque resident Robert Keen says he has watched as a vacant house near his on the city’s east side has deteriorated over the past several years. Though the city has repeatedly boarded up its windows and door, it continues to be broken into. The home has been on the Safe City Strike Force’s list of habitual problem properties since 2013, according to city records, and more than $6,000 in liens were paid off recently.”
“While Planning Department Deputy Director Brennon Williams said the number of vacant homes hasn’t necessarily increased, the city is hearing about them more, and the costs of dealing with them have increased. The city spent more than $450,000 last fiscal year to secure, clean and tear down vacant residences, up from around $315,000 in years past.”
“Often, the home is owned by an out-of-state bank or lending institution. ‘One of the issues that our code enforcement officers have to deal with … is getting a responsible party to come forward and do what needs to be done,’ he said.”
