Benefiting From Oversupply And Negotiability
A report from Mansion Global. “U.S. luxury markets have entered a ‘new normal’ of subdued price growth after eight years of frenzied appreciation post-recession, according to Coldwell Banker Global Luxury. The report underscores high-end price stabilization that Mansion Global has previously reported in markets including New York and Los Angeles. In cities such as Miami and Park City, Utah, wealthy buyers are benefiting from oversupply and negotiability. Despite strong activity in South Florida, well-heeled buyers are likely to have an edge in Boca Raton and Delray Beach, Florida, as well as in Miami proper.”
“Park City is one of the nation’s top luxury buyer markets. And sun worshippers have the upper hand in the Santa Barbara, California, and Scottsdale, Arizona, markets, according to the report.”
From Realtor.com. “While the idea that “Your home is your castle” has been around, presumably, since medieval times, it took on a whole new meaning in the 1980s and ’90s, when ‘McMansions’ started sprouting across the United States like upscale real estate kudzu. More than 70% of the housing markets we looked at saw an uptick in the share of listed homes larger than 3,000 square feet since January 2016. There are more large homes being built now than there were at the height of the housing market, over a decade ago. But that doesn’t mean they’re easy to sell.”
“In Denver, 61% of homes listed on realtor.com are above the 3,000-square-foot mark. There are about 3,115 of these residences in the metro area listed on realtor.com. But that’s nothing compared to Provo, UT, where 71% of listed homes boast 3,000 square feet or more. The smaller city boasts about 971 of this size, up from 66% in 2016. Desire for conspicuous consumption has attracted McMansions to the Bridgeport, CT, metro. More than half of the homes in this metro, 53%, have more than 3,000 square feet of space. (There are more than 2,416 abodes of this size listed on realtor.com.)”
“But they come at a steep price. The median home listing here is $735,000. However, all that McMansion building has left a little bit of an oversupply, says Douglas Cutler, a modular home architect and owner of Douglas Cutler Architects in Fairfield County. ‘I had a client trying to sell a super[large] McMansion,’ he says. Part of the reason it made a tough sell is that a lot of high-paying finance jobs on Wall Street were lost during the recession and still haven’t come back. ‘He’s had to cut the price down a lot.’”
“About 34% of home listings, about 1,018 abodes, in the Seattle metro are for more than 3,000 square feet. But there are also a lot of those homes lagging on the market.”
From Summit Daily in Colorado. “It’s no secret Summit County is in the midst of a record-breaking building boom with the county recently announcing it issued more building permits last year than any other year prior to the recession. The permits cover everything from spec homes to the luxury housing market and commercial builds. Despite all of that, though, the average sale price of vacant land in Summit County was actually down 8 percent last year compared to 2016.”
“Many factors are pushing on the market, according to local experts, but one likely reason for the price drop of vacant land is the limited number of local contractors to build on it. ‘There is much greater demand than we have people to do the work,’ said Chris Renner, owner of Pinnacle Mountain Homes, a Breckenridge-based builder that accounts for roughly a third to a fourth of Summit County’s luxury home builds.”
The Los Angeles Times in California. “Despite the constant refrain from economists that an increase in supply is key to solving the region’s woes, anti-growth advocates have countered that the bulk of new projects charge rents that are unaffordable to the average Angeleno, and therefore can’t help end our problems. Nowhere has this debate played out more contentiously than downtown Los Angeles. Bolstering the anti-development argument, the real estate data firm CoStar revealed in September 2017 that the apartment vacancy rate downtown had reached 12.4%, three times higher than the citywide average.”
“Per CoStar, more than 1,600 apartments became available downtown in the first half of 2017, and approximately 7,000 additional units are scheduled for completion through late 2020. Nevertheless, the Downtown Center Business Improvement District estimates that the neighborhood’s population is just 67,000. As a result, the opening of a single 500-unit rental development is, by itself, capable of spiking the vacancy rate.”
The Dallas Morning News in Texas. “Along with pulling down the securities market, higher interest rates are likely to slow the rate of home price appreciation in markets across the U.S., said Daren Blomquist, economist with Attom Data Solutions. ‘Especially in light of what we’ve seen in the stock market in the last few days, I think there is going to be a lot more pressure on interest rates to go higher,’ said Blomquist, who was in North Texas this week for a mortgage industry conference. ‘What people have predicted in the last few years is actually going to happen.’”
“‘The housing market has become somewhat dependent on low interest rates,’ Blomquist said. ‘It’s going to be an adjustment for the industry to deal with even marginally higher interest rates. In markets that have gone hog wild in terms of home prices, they are going to be in for a rude awaking as interest rates rise.’”
“Dallas-Fort Worth is one of those ‘hog wild’ home price markets. Median North Texas housing costs have shot up by more than 40 percent in the last four years to an all-time high.”
From National Mortgage News. “Hurricanes continue to have a notable impact on mortgage delinquencies, clearly evident by CoreLogic’s Loan Performance Insight report. Serious delinquency rates were up sharply in both Texas and Florida in November, compared to a year ago according to CoreLogic Chief Economist Frank Nothaft. The serious delinquency rate in Texas grew to 2.5% from 1.9% from the previous year, and rose in Florida to 3.9% from 3.2%. The serious delinquency rate in the Houston metropolitan area more than doubled to 4.6%, and grew more than one-third in the Miami area to 5.1%.”
“In Florida, the share of mortgages that were 30 or more days delinquent grew to 9.9% from 6.3% year-over-year in November, and in Texas, they rose to 6.7% from 5.6%.”
