July 10, 2018

We’re Going To Come Back To Reality

A report from the News Tribune in Washington. “If you want to buy a median-priced home in Pierce County with average wages, get ready for sticker shock. A new analysis shows a single-income family earning the average wage of $49,556 a year will pay more than half of that on housing if they expect to buy. Young or first-time home buyers also tend to take advantage of federally backed loans. VA and FHA loans are most prevalent in Lakewood, Parkland, Spanaway, South and East Tacoma, representing nearly 50 percent of all sales in in these areas, said Dick Beeson, principal managing broker with Re/Max Professionals.”

“Buyers in some areas of Pierce County are getting help from sellers contributing money to the buyer’s closing costs. ‘Pierce County buyers often need help with the cost of acquiring a loan to purchase,’ said Dick Beeson, principal managing broker with Re/Max Professionals. Sellers still might be in control, but Beeson noted ‘on average, nearly 40 percent of FHA and VA sales have seller’s concessions (the paying of buyer’s closing costs) and on average nearly 30 percent of all conventional sales do as well.’ The scenario is the same for Thurston County buyers, Beeson said. ‘Nearly half of all Thurston County sales include an FHA or VA loan. Sellers are expected to assist buyers with their closing costs similar to what’s occurred in Pierce County.’”

“That’s an increase since the first part of 2017, when about 40 percent of buyers used FHA or VA financing to buy a home, according to data from the Northwest Multiple Listing Service.”

The Kitsap Sun in Washington. “After months of high demand and diminished supply, the housing market in Kitsap County is finally starting to stabilize with a bump in the number of newly listed homes on the market and the lowest median home price increase seen in months, according to recently released statistics from the Northwest Multiple Listing Service.

“‘We’ve seen a reduction in the frenzy,’ said Kitsap County Association of Realtors CEO Mike Eliason. At the same time, King County saw almost a 50 percent increase in the number of active listings on the market year over year, up to 4,503 homes from 3,055 homes in June 2017. The addition of so many new homes on the market in King County might provide some much-needed relief for Kitsap’s housing market, Eliason said. ‘I think because of the increase in inventory in King County during the prior month, and that lack of supply has been fueling the Kitsap marketplace, with the increase in King, it should be helpful to reduce the demand in Kitsap,’ Eliason said.”

The Press Democrat in California. “For at least a decade the tract housing subdivision sat uncompleted in west Santa Rosa — a repossessed field with a looped, asphalt road and most of the sidewalks installed. But this spring foundations and framed walls arose from the ground along Sebastopol Road near the Courtside Village neighborhood. Plans there call for the construction of 51 single-family homes and 16 attached units. ‘We plan to build all 67 just as fast as we can,’ said Richard Lafferty,CEO of Lafferty Communities. The project is one of the few remaining that sat for years after the original developers gave properties back to banks in the midst of a historic housing market crash.”

“This year builders have broken ground for new subdivisions from Rohnert Park to Windsor for the first of hundreds of homes that are expected to be built in the next five years. But in a sign that the rush since has somewhat subsided, City Ventures in recent months has increased its referral fee to 3 percent of each sale for outside agents who bring in clients to buy homes at the subdivision. In the wider market, several brokers this summer are reporting a bump in buyer resistance to listed home prices and an increase in price reductions.”

“What lies ahead remains a matter of debate. Some think prices simply may stay flat for a time before resuming their upward march. But Randy Waller, broker/owner of W Real Estate in Santa Rosa, is less optimistic. He argued the housing market already has given up much of the roughly 10 percent jump in prices due to the fires. ‘We’re going to come back to reality,’ said Waller, who for years has specialized in both new subdivisions and home resales.”

The Victorville Daily Press on California. “The Great Recession was punctuated nearly 10 years ago when media outlets from across the nation focused their attention on the demolition of over a dozen new homes in a bankrupt housing development in the High Desert Today, in that ‘very same spot site’ near Bear Valley Road and Highway 395 in Victorville, the once doomed property is seeing a resurrection of sorts as a new developer is building a 105-lot housing tract, according to city spokeswoman Sue Jones.”

“The Silverstone tract includes two communities, Agave Pointe and Juniper, which include single-story and two-story homes ranging from 1,740 to 2,709 square feet and starting at over $280,000. On Tuesday, balloons and large banners welcomed potential homebuyers to Silverstone as completed and landscaped homes in one portion of the tract waited for buyers or their current owners. On another side of the tract, construction crews worked on several phases of home construction. Lawn signs that read ‘Sorry … Too Late Sold’ were posted in front of the majority of the completed homes. Several contractors, who wished to remain anonymous, told the Daily Press ‘a sold sign’ is being posted even before a house is completed.”

“In 2009, 16 homes built by developer Matthews Homes were in various stages of completeness when they were destroyed, Jones reported. The housing collapse led to the homes being razed by a heavy equipment operator, an action caught on video, which drew the attention of the Daily Press, Wall Street Journal, Los Angeles Times and several other news agencies. The homes, which were abandoned for nearly 18 months and unsecured, were eventually vandalized and experienced ongoing compliance issues with the city’s code. The bank finally opted to destroy the homes due to safety concerns, Jones said.”

“Four of the homes in the financially doomed tract were complete, four were models, and the remaining homes were in the framing stage. The financial institution that took over the foreclosed development confirmed the bank approved demolishing the homes on the property, the Daily Press previously reported. A bank official said in 2009 that it would cost more than $1 million to bring the property up to code. The financial institution also faced daily fines from the city if the improvements were not made.”

The Dallas Morning News in Texas. “Observers of North Texas real estate may have noticed something unusual about Frisco’s $2 billion Wade Park development. Namely, that it is still a very large hole in the ground and not the 175 acres of apartments, offices and high-end retail space promised by Atlanta-based Thomas Land & Development back in 2014. The project has been in a kind of suspended animation since site excavation stopped about a year ago, and lenders started threatening to foreclose on the property.”

“Thomas Land defaulted on more than $130 million in debts and contractors who did work on the site — concrete makers, construction companies and plumbers — started seeking millions in unpaid bills. In February, the two lenders declared the project in default and said they planned to foreclose on the property. But instead of doing so, the lenders have posted the property for foreclosure for five months in a row without going through with the sale.”

“Experts have predicted that the end of the nation’s economic expansion could be coming in 2020. Meanwhile, D-FW’s housing and office markets have softened considerably. Joseph Cahoon, director of Southern Methodist University’s Folsom Institute for Real Estate, said that in recent years, developers were building office space even before they had tenants signed up. But no more. ‘At this stage in the market, no lender would move forward with a construction loan on a truly speculative office building,’ he said. ‘Particularly of [Wade Park’s] size and scale.’”

“Back in 2014, Cahoon said, companies were announcing lots of big expansions and headquarters relocations, especially in non-coastal markets, which meant that the other developments were able to capitalize on the trend. But those moves have slowed. ‘That whole corridor … they’re all competing for the same corporate users,’ he said. ‘Invariably somebody’s going to lose.’”

The Palm Beach Post. “A couple in their early 30s — a writer engaged to a federal employee — spent months preparing to buy their first jointly owned property. They both clocked hours at second jobs to help build a substantial down payment. They perfected their credit scores and then met with a lender to gain mortgage preapproval.”

“Just hours after they left their lender’s office, they immediately happened upon a house they loved from the moment they stepped inside. It was a brick colonial with gleaming hardwood floors, an updated kitchen and an artfully landscaped patio. Excitedly, they made a nearly full price offer for the place, which pushed them to the top of their price range.”

“But will the couple in this true story later suffer buyers’ remorse? Despite their love-at-first-sight feel about the property, should they have done more comparison shopping before bidding on the first house they’d toured with their real estate agent? Should they have thought through the pros and cons of the neighborhood? Longtime real estate pros say only time will tell.”

“‘When I hear buyers have fallen in love with the first house they visited, I cringe. That’s like marrying the first person you’ve ever dated. That person could be absolutely wonderful. But have you had enough experience to know for sure?’ says Merrill Ottwein, who heads his family’s real estate brokerage.”

“Obviously, those seeking to buy for appreciation potential should avoid neighborhoods where many homes languish unsold for a lengthy time. Indeed, evidence that available properties are snapped up quickly is a strong sign of the desirability of a community. ‘You’re unlikely to experience eroding values in any area where homes are flying off the market,’ Ottwein says.”