The Housing Bubble

A report from CBS 8 in California. “Sales of previously owned single-family homes in San Diego County dropped 10.5 percent in July compared to June, according to the Greater San Diego Association of Realtors. Month-over-month single-family home sales fell from 2,221 in June to 1,989 in July. Condominium and townhome sales fell from 1,162 to 994, a 14.5 percent drop, according to the association.”

“Single-family home sales and sales of condominiums and townhomes saw smaller decreases when compared to July 2017. The former decreased from 2,127 to 1,989 and the latter decreased from 1,136 to 994, drops of 6.5 percent and 12.5 percent, respectively. The year-over-year drop is in spite of the supply of homes for sale rising roughly 11 percent.”

“‘Demand is still outpacing the supply of homes,’ GSDAR President Steve Fraioli said. ‘But it’s clear that inventory of homes for sale has improved over last year. That should encourage buyers.’”

From The Signal. “With inventory on the rise, now’s the time to buy, is the message from Santa Clarita Valley Realtors for August. The number of SCV homes available hit the highest total since September 2016 — but sales remain ‘lackluster’ and resale prices are rising, Realtors said. ‘Inventory in the Santa Clarita Valley has almost doubled from last year this time to this year,’ said Mike Bjorkman, a broker for HomeSmart NCG and California Leasing. ‘Interest rates are slowing people’s buying powers down. There are some indicators that our market is softening.’”

“Some things Bjorkman noticed include: Price reductions are up more in the last 30 days than they have been in the last three months; open house signs are appearing more frequently; agents used to call and ask how many offers are on a house — now they tend to ask how much room there is to negotiate downward, he said.”

“For those in the market, there’s opportunity to be had, based on the numbers, Bjorkman added. ‘You’d get a much better deal this month than you would have 60 days ago — more to choose from and more negotiable prices,’ he said. ‘We pray the economy stays strong so we have stabilization.’”

The Sacramento Bee. “Home prices rose again in June for most of the Sacramento region’s neighborhoods, but an increasing number of them posted small price gains or declines amid potential signs of a market slump. Of the neighborhoods that had 10 or more resale home sales, 49 areas saw increases in the median sales price compared to the same month in 2017. Ten saw declines, according to new data from CoreLogic, and another 10 saw modest increases of less than 4 percent.”

“The largest decline in the median sales price for neighborhoods with more than 10 homes sold was in Truckee’s 96161, where prices dropped 40 percent. The median sales price was $839,500, down from $1.4 million in June 2017. But the area also had the most expensive home sale completed in the region in June — a transaction for $4.1 million.”

The Calaveras Enterprise. “According to Arnold-based broker associate Mike Karnes, the Calaveras County home market is slowly recovering from the 2007 collapse, though prices have not yet reached the peak experienced just before the crash. Despite widespread chatter about a recent downturn in the Southern California housing market, Karnes doesn’t believe that Calaveras County will be negatively affected and may actually benefit from the situation for the time being.”

“‘My opinion is that — at some point — how many buyers can spend $1 million on the low end? I’ve heard that the market is leveling and dropping a little bit, but I can’t believe that demand has dropped because people keep moving (to California),’ Karnes said. ‘In our area, we haven’t gotten to those prices yet, so we’re in a good spot. But if that market stays low, it will eventually trickle up to us. It always does.’”

A report from Seattle PI on Washington. “The Seattle condominium market continued to exhibit its buoyancy in July with increased inventory, fewer sales and rising prices. Seattle condo values rose year-over-year by 11.26% to $514,000. However, it was 2.6% lower than June and it also reflected the 3rd consecutive monthly decline of the citywide median sales price. Inventory of Seattle condo units listed for sale skyrocketed for the second month in a row, rising 104.6% to 403 units compared to a year ago. That’s also 8% more than were available last month. However, seller are starting to feel the effects with longer market times, fewer multiple offers and more instances of price reductions.”

“Even though buyers are starting to gain the advantage in the market place, they’re cooling off from pulling the trigger…at least in July. Condo sales, or pending sales transactions (listings with accepted offers), fell in July by 7.5% compared to a year ago and by a rather significant 22.4% from the prior month. That’s somewhat disconcerting given that listings had spiked 139% in June as well.”

From The Real Deal on Florida. “In Greater Downtown Miami, it’s a true buyer’s market. The area is facing a glut of luxury condo inventory, with about five years of excess supply, according to a new report from Condo Vultures Realty. Nearly 560 luxury units asking at least $1 million are on the market. During the first half of 2018, about eight high-end units sold each month in Greater Downtown Miami. That means that there are about 70 months of inventory.”

“Inventory is growing in Greater Downtown Miami. A year ago, there were 434 luxury units on the market in the area with about 8 units selling per month. That came out to 55.5 months of supply, or over four years of excess inventory, according to Peter Zalewski, whose firm created the report. Earlier this year, a Condo Vultures analysis found that there were about four years of luxury condo inventory countywide.”

From Bloomberg on New York. “It’s shaping up to be a cruel summer for Manhattan’s apartment landlords. Last month, the median rent fell 1.3 percent from a year earlier to $3,307, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. It was the second straight July with a decline and came after a 2.8 percent year-over-year drop in June. Rents are slipping in what’s traditionally the peak season for apartment demand.”

“Landlords contending with an oversupply of apartments had to offer sweeteners, such as a month’s free rent or payment of broker fees, on 35 percent of new leases in July, up from 27 percent from a year earlier, the firms said. And renters weren’t exactly jumping at the chance to move. A total of 6,145 new agreements were signed in July, just 0.2 percent more than a year earlier.”

The Bloomington Pantagraph in Illinois. “After years of consistent expansion, Normal’s student apartment market appears to be slowing down, and those involved think it may be healthy despite the obvious impact on the local economy. ‘There are 431 new construction beds opening (this month) for the (Illinois State University) campus, and that has shifted the supply and demand,’ said Andy Netzer, general manager of Young America Realty, a Normal-based company that oversees hundreds of units near ISU. ‘Developers aren’t that hungry to build new. I don’t know that we can support more supply.’”

“Netzer’s assessment squares with what town officials are seeing: The next wave of construction off-campus has gone missing, with a couple notable exceptions, after years of new construction without a significant enrollment jump. Netzer said regardless of the slowdown, student housing is likely to continue to be the best use for many properties near campus.”

“‘The highest and best use for so much of the land up here is habitational,’ he said. ‘I’m not sure I could think of anything that’s turned into something that’s not housing.’”

The News and Observer in North Carolina. “The increasing number of apartments built in the Triangle is starting to put a dent into the region’s rising rents. The Triangle has seen some of the most intense construction of new apartment buildings in the U.S., according to RealPage. The Triangle — which for this report included Wake, Durham, Orange, Chatham and Johnston counties — has the sixth-highest percentage increase in apartment units in the country.”

“The number of apartments in the Triangle have increased by 25.1 percent (or 31,890 apartments) over the past eight years. The area trails only Charlotte, Austin, Nashville, Salt Lake City and San Antonio. Annual rent growth in the Triangle is now clocking in at 2.2 percent, a rate that has slowed from 4 to 5 percent in 2014-2015. The norm for the U.S., in comparison, is around 2.5 percent. How that translates to local renters is a smaller increase in rent when renewing a lease or generous concessions — discounts offered by apartments — to sign a new lease.”

“Throughout the Triangle you can now find newer apartments offering deals to renters. For example, at the Bullhouse apartments in downtown Durham — which was only 43 percent full when it sold in June, according to Colliers International — you can get one month of free rent. Bell West End, another apartment in Durham, is offering up to two months’ free rent, and, in Raleigh, the Link Apartments in Glenwood South is dangling one month free rent and an extra $500 to potential renters. The current occupancy rate across the Triangle stands at 94.4 percent.”

“The rate of construction doesn’t appear to be slowing down yet even as land prices and construction costs continue to rise. ‘There’s still quite a bit of activity ahead for Raleigh-Durham,’ said Greg Willett, chief economist for RealPage. ‘Another 4,123 apartments are under construction, and those additions will grow the stock by 2.6 percent over the next year and a half or so.’”