July 20, 2018

Discount Sales Can Create A Snowball Effect

It’s Friday desk clearing time for this blogger. “Summer has brought a dramatic shift in the Portland-area housing market. Sales have slowed. The inventory of homes is growing. Longtime real estate brokers and market-watchers recognize this new normal as something approaching — well, normal. And that, they say, would be a welcome return to something Portland hasn’t seen since before the housing bubble started to form back in the mid-2000s. ‘The bottom hasn’t fallen out. The sky isn’t falling or anything like that,’ said Chris Guinn, the co-owner of Dwell Realty in Northeast Portland. ‘Sellers have had a pretty good five, six, seven-year run. It’s almost overdue.’”

“More homesellers are dropping prices, realizing after they fail to net an offer that their homes might not have appreciated in value as much as they expected. Buyers, meanwhile, might have the luxury of taking some time to think — a big change from recent years, when many felt the only way to buy a house was to make an offer on sight. The region’s apartment-building spree, meanwhile, has slowed the rising rents. That’s eased the pressure for some renters seeking the financial stability of homeownership, and it might have pushed some owners of rental houses to sell.”

“A growing number of homes for sale in the area signals a slight slowdown in the housing market, according to new data from the Northwest Multiple Listing Service. Throughout Western Washington, there were 5.2 percent more homes on the market in June than in June 2017, and 8.4 percent fewer pending sales. There were also fewer buyers making offers on them, according to the listing service. ‘Inventory is up and demand has dropped,’ said Robert Wasser, an officer with the board of directors at the listing service. That combination is ‘a pretty simple economic recipe for a softening market.’”

“Home purchases are down or unchanged in more than half the Dallas-area’s residential districts this year, ending several years of ever-increasing sales. Most of the slowdown is concentrated in higher-priced neighborhoods that have already seen high sales volume and big price hikes in recent years. Longtime Dallas real estate agent Barry Hoffer says he’s seeing more price cuts on houses that don’t quickly attract a buyer.”

“‘We’re not seeing the buyer frenzy that we did two years ago — multiple offers on most houses,’ said Hoffer. ‘You have a lot of factors coming together that are causing a little bit of slowdown, more days on market and the inventory building.’”

“It’s still a good time to sell a home in Fort Collins, but the tide may be shifting. Realtor Mike Salza said the market is changing as some sellers get lazy and buyers get fed up with continually rising prices. Homes that are overpriced or not staged properly are sitting on the market. ‘There aren’t enough people to buy,’ Salza said.”

“At the midway point of 2018, the latest data from the Matrix multiple listing service indicates the market is experiencing a leveling off of home sales from the lofty heights of the past several years. Jan Holland, a Realtor in Bentonville, noted one segment of the market where inventory is becoming more balanced — the higher-end market. ‘The buyers are still there for the higher price points,’ she said ‘There’s just so many more choices than years past.’ Holland said the market ‘definitely’ favors buyers among high-end homes. ‘Leveling off had to happen at some point to keep things healthy,’ she said.”

“Uncertainty surrounding State Farm was one of the biggest pressures on the Twin City housing market during the first half of 2018. Sales are down 10 percent through May—most recent data available—and average prices are down 2 percent too, according to the Bloomington-Normal Association of Realtors. Those in the industry say the market is soft in the higher price ranges—above $250,000. Prices are dropping on those more expensive homes.”

“‘We used to be in this thing called ‘The Bubble,’ because we had State Farm and ISU and Mitsubishi,’ said Keith Thompson, senior loan officer at MSI in Bloomington. ‘We had great employers that kept the market rolling. In Bloomington, things were going well no matter what. But that’s no longer the case at the moment.’ ‘The upper end definitely has taken a hit. That’s because we don’t have the jobs in Bloomington-Normal to support that upper end of the market. The prices—I like to say they’ve corrected,’ said John Armstrong, president of the Bloomington-Normal Association of Realtors.”

“You’ve probably seen the ‘for sale’ signs all over Virden in front of houses that have been on the market for months, some of them even years. The housing market seems to have slowed to a crawl - what realtors call a ‘buyers market.’ If you bought a house in a resource-producing region like southwest Manitoba at the peak of the market, say 2013 or 14, you may lose money by selling now. On the other hand, if you try to get what you paid, the property can languish for a long time.”

“The average selling price this year on Virden homes is almost a quarter of a million dollars, Virden real estate agent Kelsey Gerrand says. ‘When a home is overpriced, buyers will look past it as it doesn’t compare to other homes that are priced lower,’ she says. ‘This can lead to some properties sitting on the market for some time.’”

“A report in the Financial Times lays bare the scale of the housing market downturn in central London - it suggests almost 40 per cent of new-build sales in recent months have been to corporate landlords. The FT says discounts to asking prices from 10 to 15 per cent are now ‘becoming quite normal’ with 20 to 30 per cent reductions possible on selected schemes. The piece continues saying: ‘An analyst in the sector, who asked not to be named, said bulk discount sales can create a ‘snowball effect’. ‘As more of this comes through, it becomes obvious to the rest of the market and triggers further sales among those who had been hoping to ride out [the tough market],’ he said.”

“Apartment sales in Jakarta slumped in the first half of this year, Jones Lang LaSalle said. Developers only built 1,292 units between January and June this year, bringing the number of total unsold units to 144,000. In the same period last year, developers built 4,843 units, resulting in total stock of 134,536 units.”

“As one of Cambodia’s leading economic centers, Siem Reap has drawn its fair share of local and foreign investors. Massive investments from abroad have fuelled a roaring property boom. According to Mario Tan, Sales and Marketing Director of Siem Reap-based Hunter Estate, the number of rental transactions this year declined by 40 percent, compared to two or three years ago. ‘Before, we receive around 100 inquiries every month. But it went down to only 50 to 60 inquiries these days,’ he said. ‘And they are not even good quality inquiries,’ Mr Tan stressed.”

“Sek Saran, Business Director at A1 Real Estate Cambodia, echoed Mr Tan’s observations that rental transactions in Siem Reap are taking a big hit and going down. ‘Rent inquiries dropped down more than 50 percent, compared to the previous years,’ he said. With regards to rental price, there was also a significant decrease. According to Mr Saran, the rents went down by as much as 30 to 40 percent. ‘These have become much cheaper. But at least they’ve get some rents’ he mused.”

“A growing number of landlords who rented out their homes are at risk of being unable to return deposits to tenants seeking to move out amid declining sales due to stringent curbs on property speculation. According to the Korea Housing and Urban Guarantee Corporation (HUG), which guarantees deposits paid by tenants, 142 defaults on deposits were reported during the first six months of this year, up from 33 during the same period of 2017.”

“The Korea Appraisal Board forecast in a recent report that jeonse and apartment prices across the nation will drop in the second half of this year along with an increase in empty homes, with the trend expected to be especially noticeable in the outskirts of Gyeonggi Province and other provincial areas. ‘Many people leveraged to purchase homes as an investment by getting loans without their own money, expecting profits from skyrocketing home prices over the last few years,’ said Park Won-gap of KB Bank.”

“The full impact of the end of the mining boom on WA’s property market has been revealed with new figures showing falls of up to 73 per cent in house and unit values over the past decade. In 2008 the median house price in Perth was almost on a par with that of a Sydney house. They are now close to $500,000 apart. CoreLogic found that the worst hit parts of the nation have been the northern and southern areas of outback WA, with house values falling 38.4 per cent and 34 per cent respectively.”

“It was even worse for their apartment markets, with the value of units in the State’s northern areas falling by 73.3 per cent. In the southern outback they fell by 65.7 per cent.”

“Thousands of properties are coming into the state’s possession not because they’re bogged down in debt, but simply because the people who inherit them are opting to give up the titles. According to real estate experts, more than 135,000 inheritances were disclaimed in 2017, because the beneficiaries were unable to pay the inheritance tax or they found the future financial demands of the property unbearable.”

“Recent data from Eurostat showed that Greece had the highest housing costs as a percentage of disposable income among the European Union’s member-states. ‘Property has become a burden,’ says Babis Haralambopoulos, a certified valuer, scientific consultant to Solum Property Solutions and former president of the Hellenic Valuation Institute. ‘Since the start of the crisis, residential properties have shed an average of 45 percent of their value.’”