The Common Markers Are Essentially Present
A report from USA Today on Tennessee. “In Nashville, the median home price was up 8.6 percent annually at $263,000. That came on the heels of four consecutive years of double-digit price increases, Moody’s figures show. But the soaring prices have taken a toll. Homeowners devote 35.1 percent of their monthly income to housing costs, up from a 27.8 percent average over the past 13 years, according to ATTOM Data Solutions. Metro area sales fell 4.3 percent in 2017 year and are down 0.5 percent so far this year.”
“‘Things have slowed down,’ says Sher Powers, president of Greater Nashville Realtors. ‘It’s not a bad thing for the market. It can’t sustain itself endlessly. There has to be some correcting. It’s still a sellers’ market.’”
From Crain’s Detroit Business in Michigan. “Real estate market watchers are looking for clues on the next downturn as home prices continue to rise on shrinking inventory in Metro Detroit. Housing price bubbles have been on the minds of some real estate market observers, Realcomp said in its monthly market statistics analysis.”
“Demand is still strong — a decline isn’t forecast as imminent. But ‘the common markers that caused the last housing market downturn are essentially present,’ as wage increases aren’t keeping pace with climbing home prices, the Realcomp news release said. Worries about lack of affordability could lead to falling sales.”
From Multi-Housing News. “Real estate players have been gearing up for the next phase in the cycle for a while now. Borrowers and lenders alike are watching closely as the Federal Open Market Committee continues to raise short-term interest rates. Josh Migdal, partner with Mark Migdal & Hayden, specified. ‘In the wake of the financial crisis, banks have become more discerning as to whether borrowers should qualify for loans. This included larger down payments and lower levels of debt-to-income ratios. However, in recent years, people have begun to forget about the crisis. In fact, the Financial Times reported in March 2018 that subprime mortgage bond issuance in the first quarter of 2018 went from $666 million to $1.3 billion.’”
“In some cases, non-bank lenders have taken advantage of the opportunity, Migdal explained, leading to situations where loans get approved through less lenient vetting procedures. ‘I believe that lenders are really trying their best to vet proposed borrowers based on well-thought-out underwriting guidelines, but are also getting somewhat creative for these loans to be pushed through and ultimately reach approval.’”
“Developers are finding ways to offer incentives to buyers. G&L Real Estate Development, the American division of Empresas Guzmán & Larraín, has put together a special lending structure for the company’s first U.S. luxury project, One Bay Residences. ‘The lending structure we offer our buyers allows them to purchase a residence with up to 97 percent financing, with the remainder of their deposit going to cover closing costs and upgrades, additionally removing the need to dip into their savings. This is essentially unheard of in Miami’s condo market, where deposits can range from 30 to 50 percent,’ according to Nicolas Guzman, CEO of G&L Real Estate Development.”
The Herald Tribune in Florida. “The Sunshine State’s delinquency rate rose by 1 percentage point from May 2017 due to the continued effects of Irma’s widespread destruction in September 2017, according to the CoreLogic. Florida had the third-highest delinquency rate of any state at 6.2 percent. Analysts say it’s the ongoing aftermath of Irma, which damaged homes, put some people out of work at least temporarily and left some homeowners unable to make their payments promptly.”
“In Charlotte County, May’s delinquency rate reached 4.1 percent, an increase from the 3.2 percent mark last year. ‘Serious delinquency rates continue to remain lower than a year earlier except in Florida and Texas, the hardest-hit states during last year’s hurricane season,’ said Frank Martell, president and CEO of CoreLogic. ‘We have observed continued challenges for families to make mortgage payments in regions impacted during the 2017 Hurricane season.’”
The Tampa Bay Times in Florida. “The priciest house for sale in the Tampa Bay area could soon become its biggest foreclosure. A Miami company has filed a lis pendens on a Clearwater mansion that was once part of the storied Century Oaks estate and is now on the market for nearly $19 million. Built in 1915 on a huge lot overlooking Clearwater Harbor, the 23,919-square-foot house has had a tangled recent history.”
“In early 2017, powerboat racing champ Hugh Fuller sold it to Princess Yenega Properties LLC for $11.18 million — the highest price ever paid for a bay area home — and Mystery Key LLC took out a $14 million mortgage. The managing members of both companies are Blaise Carroz, whom Bloomberg News once described as a ‘French-born, Dubai-based real estate developer,’ and Marata Tapsoba Carroz. The couple, who had been leasing the house from Fuller, put it back on the market just four months later for $19.75 million. The price was lowered in March to $18.999 million.”
“In 2013, a Louisiana bank foreclosed on a $5 million mortgage on the 28,000-square-foot Tampa home of former corporate raider Paul Bilzerian. That house, on a lakefront lot in the gated Avila community, once was priced at $18 million but sold two years ago for $2.85 million.”
From Realtor.com on California. “Napa County is known for its premium wines—and premium housing. Which makes it an unlikely candidate for one of real estate’s most ignominious titles. We usually don’t see grand, French-inspired estates in Northern California falling into the hands of creditors, but Villa Vigne is the exception. The nearly 40-acre spread is on the market in Saint Helena for $5.5 million—making it the most expensive foreclosure in the country.”
“If you think bank ownership means you can make a lowball offer to score a deal, don’t get your hopes up. Listing agent Julie Larsen notes that both she and the bank carefully researched the right price for the property. ‘They are not into the idea of giving properties away,’ she says.”