May 4, 2018

Stuck With Huge Places They’re Never Going To Get Sold

It’s Friday desk clearing time for this blogger. “Richmond’s real estate market is on fire. Multiple offers in some areas are common along with personal letters, all-cash offers, inspection waivers and escalation clauses, allowing buyers to offer more if they are outbid. Kellie Bonner and Barbara Layman wanted a move-in ready home in the upper $200,000s or lower $300,000s near their work in state government. They stayed in their price range but settled for a fixer upper in Hanover County. ‘We were putting in offers and escalation clauses and writing letters about how the house would be wonderful for us and our dog,’ Bonner said. She offers this advice for other home shoppers: ‘Make an offer immediately and make it high.’”

“More existing Jackson County homes sold at a faster pace between Feb. 1 and April 30 than a year ago, Southern Oregon Multiple Listing Service reported. ‘There is still a considerable demand for housing,’ said Windermere Real Estate Chief Economist Matthew Gardner. ‘Because we’ve had low inventories, sellers can basically ask anything — and get it.’”

“Finally, some good news for homebuyers in Austin, Dallas, Honolulu and a handful of other red-hot markets across the U.S.: Asking prices are cooling off. In March, median list prices fell 5.4 percent from a year earlier in San Antonio followed by Austin, with a 3.4 percent drop, and Honolulu, with a 1.4 percent decline, according to Trulia. One thing nine of the 10 markets have in common is that listing inventories grew from a year earlier and that probably tamped down asking prices, according to Felipe Chacon, housing economist at the real estate website.”

“One of the most extreme examples is Austin, where home construction is booming. Starter-home listings jumped 150 percent in the first quarter from a year earlier. ‘The story over the past six years was one of steady inventory decline, so these are big increases upward,’ Chacon said. In some markets, ‘this is possibly the beginnings of inventory turning around and home-price growth slowing from a breakneck pace.’”

“Opportunities to turn a quick profit buying and selling luxury homes in today’s market are growing scarce. During a five-year stretch from the end of 2012 through 2017, prime housing prices in Sydney and Melbourne grew an average of nearly 55%, according to Knight Frank’s latest report on prime global cities. In North America, led by Toronto and Vancouver, luxury home prices catapulted 45% in that time. And Middle Eastern cities saw luxury homes appreciate more than 40%, according to the index.”

“But investors tempted by robust markets everywhere from Los Angeles to Guangzhou, China, may want to tread carefully as the explosive momentum of the past five years has tapered. Peak prices and little tax incentive make speculative buying a foolish prospect in today’s market. ‘I’ve got a number of clients that are stuck with these huge places and they’re never going to get sold,’ said Tim McGrath, financial adviser at Riverpoint Wealth Management, at least not for the asking prices they wanted.”

“Housing sales in the city continued their downward slide last month, with 32.4 per cent fewer sales compared to April of 2017, according tothe Realtors Association of Hamilton-Burlington. April’s figures show slowdowns compared to a year ago not just in sales, but also in prices and the amount of time it takes to sell a property. The average sale price for all property types dropping 8.9 per cent from $609,664 to $555,661.”

“Despite the drops, RAHB CEO George O’Neill said he believes the changes the government has made will have positive outcomes. ‘Last year 88 per cent of homes were sold in two weeks or less,’ he explained. ‘That’s not sustainable. This is actually better for everyone in the long run.’”

“In chic central Bangkok, a foreign buying binge is fueling a red-hot market for ultra-luxury real estate. At 98 Wireless, a luxury condo opened last March in the capital, one buyer from Hong Kong snapped up a US$2.2 million apartment without more than a moment’s thought. ‘It was an impulse purchase for him,’ says Uthai Uthaisangsuk, an executive at the project’s developer.”

“Scenes like this have become more common in the Thai capital, where foreign money is pushing up prices at the top of the real estate market, even as developers struggle to sell more pedestrian properties. ‘Developers are having problems selling to locals,’said Ratchaphum Jongpakdee, general manager for Thailand at real estate firm Colliers International Group Inc. ‘But they have no problem selling to foreigners.’”

“In Manila’s main financial district and its fringes, signs of the new inhabitants are everywhere: the restaurants serving steaming Chinese hotpots and dumplings, the Mandarin broadcasts at the Mall of Asia, and the soaring property prices. Yet it leaves the property market vulnerable in the event of an abrupt shift in online gaming or immigration policies from either country.”

“The perils of relying too heavily on Chinese buyers became painfully obvious last year in the Malaysian enclave of Johor Bahru, which has been grappling with a glut of vacant homes after China imposed controls on investments in overseas property and demand abruptly dried up. ‘Concentration risk could be a potential concern,’ said Emilio Neri, an economist at the Bank of the Philippine Islands in Manila.”

“Kitt Lapeña, 34, a Makati resident for most of his life, has seen waves of foreign residents come and go before, from Japan and Korea, but never on the scale of the recent Chinese influx. While he welcomes the economic boost, he worries about the motivations of the new arrivals. ‘In a way, it’s good for business,’ Lapeña said. ‘I hope they become an asset to the community and not just out to make money.’”

“Business sentiment in the housing sector in South Korea remained in the doldrums amid tough government regulations and supply glut, data showed. A poll of 500 members of the Korea Housing Association and Korea Housing Builders Association stood at 72.1, far below the confidence threshold of 100. Downturn is hardly surprising as government clampdown on real estate speculation came amid supply glut and sluggish economy.”

“An increase in homes for sale in Nelson has taken some of the heat out of the region’s housing market, new figures show. An increase in rental properties going up for sale was one of the main reasons the market had plateaued over the past few months, QV Nelson Property Consultant Craig Russell said. Prices had dropped in some cases because vendor expectations were too high, Russell said. ‘Expectations in some cases have risen faster than the market, which has a resulted in some properties sitting on the market for an extended period. There have been quite a few [properties] that we are aware of that the vendor will think the property’s worth $1 million, whereas in fact the market thinks it’s worth $800,000.’”

“As the Sydney market slows down and Melbourne comes off the boil, house hunters are finding themselves on a more level playing field. But with more stock coming onto the market and the investor ranks thinning, buyers are no longer forced to the very top of their budget. Several experts have reported a ‘fear of overpaying’ (or FOOP) replacing the fear of missing out.”

“Buyers agent Michelle May cited the fear of overpaying as a major cause of anxiety. ‘The buyers out there are actually missing out on good properties because they don’t know what to pay,’ she said. ‘They’re scared to pay too much.’”