August 26, 2018

Buyers Are Well-Aware They Have The Upper Hand

A report from the Australian Financial Review. “Just like the party room at Parliament House on Friday, you can cut the auction tension over the weekend with a knife. The Australian Financial Review went on a roadtrip to the western Sydney suburbs of Guildford, Merrylands, Lidcombe and Wentworth Point and saw agents and sellers herding in buyers like cattle, bringing down the hammer in less time you can say ‘house prices.’ On the flipside, agents with no bidders were quick to downplay their dismal situation with auction accomplishments of a bygone time. While many agents said cool conditions were just a winter lull, Corelogic said winter auctions were about 20 per cent lower than last year, ‘highlighting a substantial weakening in vendor confidence driven by the softer housing market conditions.’”

“That was clear to see at the sale of a two-bedroom unit at 16 Baywater Drive in the apartment city of Wentworth Point, west of Sydney. It has been on the market for nearly a year and its asking price has fallen about 12 per cent in that time. Public records show it had an asking price of $730,000 last October, and on Saturday it passed in at $645,000 from one registered bidder against a new asking price of $675,000.”

“At two other auctions - a three-bedroom unrenovated home at James Street in Guildford and a four-bedroom two-level penthouse at the newly completed apartment project of ‘The Skypoint’ at John Street, Lidcombe - the Financial Review was the only attendee at the auctions. The agent marketing The Skypoint penthouse said its asking price was $1.2 million, a steal for 320 square metres of space and six parking spaces and he was right. At $1.2 million, that would be a significant low of $3750 a square metre, unlike the rest of inner city’s $12,000 to $15,000 a square metre.”

“Looking at the latest sale data on the unit, the developer just sold it for $1.265 million in June to an investor. When asked why the investor wanted to sell it if it was such a steal, the agent said it was best to ask the owner but it was likely they ‘needed the capital.’”

“On Frampton Street in Lidcombe however, a rundown home sold for $1 million. Its value lies in its 595sq m of landholding. Buyers are well-aware they have the upper hand when a neighbour was overheard telling a buyer, ‘that’s not expensive, a while ago, something with that much land sold for $1.4 million.’ ‘Wow, we are really in a buyer’s market,’ the buyer said.”

“In Melbourne, buyer’s agent Morrell and Koren’s Emma Bloom said agents were moving to a ‘less transparent’ private treaty sale process to ‘protect values’ of homes. ‘There are now either no bidders, or one bidder,’ she said.”

“The passed-in auction of 52b Lansell Road, Toorak is a sign of the times after its sister property next door 52a sold in June, she says. Another sale that went against vendor expectations was the $6.25 million sale of 23 Airlie Street in South Yarra. It once had an asking price of $8.5 million, she adds.”

From Domain News. “NAB economists have downgraded their property price forecasts and say sentiment toward property has dropped to a two-year low. The move comes three weeks after rival bank ANZ cut its own property price forecasts. Chief economist Alan Oster nodded to ongoing concerns of regulatory tightening and shifting market dynamics. ‘Overall confidence levels fell to a new survey low, driven down mainly by NSW and Victoria where capital city house prices declined,’ according to Mr Oster.”

“Meanwhile, ANZ also offered a sombre view on residential property prices on Thursday, with the results of its own sentiment survey showing nationwide falls. ‘The survey results support our view that house prices are set for a sustained decline,’ ANZ head of Australian economics David Plank wrote.”

It Doesn’t Have To Be, ‘Oh, My God, This Is 2007 Again’

A report from the Abilene Reporter News in Texas. “Last school year, Bobby Easterling’s Jim Ned Consolidated Independent School District experienced 6.5 percent growth. This year, he’s projecting something close to that. And while the areas south of Abilene may be seeing new homes built and new subdivisions developed, a lot of the new homes, Easterling said, are actually sitting vacant because they’re spec houses, not homes being built for a known customer. He said there are probably 40 to 50 homes built in Jim Ned every year, but many of them go without people.”

“Tammy Kister, president of the Abilene Association of Realtors, said these houses may be finding owners much quicker in recent years than even in 2015. Kister said the school district’s boundaries saw 55 sales in 2015 rise to 100 in 2017. And in the first quarter of 2018, Jim Ned experienced 37 sales. Why? Kister said there are a number of different factors, but it could be a decreasing land price over that same time period, with the median home dropping from $270,000 in 2015 to $224,000 in the first quarter of 2018.”

“‘It would appear, as sold prices have decreased in the last few years homes have become more affordable,’ she said in an emailed statement. ‘The increased affordability factor could be attributed to additional subdivisions being opened with those homes selling in the popular price point of less than $300,000.’”

The Bend Bulletin in Oregon. “The Central Oregon Business Index posted its 28th consecutive quarter of growth in the three months that ended June 30, rising from 145 to 145.8. Although the gain was a fraction of a percent, Tim Duy, University of Oregon economics professor and index author, said it’s significant. Duy said Central Oregon still could see home-price increases slow, similar to what’s happening in the Portland area.”

“‘When does this end? It ends when people can’t afford to pay these prices anymore,’ Duy said. ‘It doesn’t have to be a dramatic, ‘Oh, my God, this is 2007 again.’”

The Tampa By Newspapers in Florida. “After a meeting that lasted four hours before a full house, IRB commissioners unanimously passed first reading of an ordinance to control short-term rentals in the community. Numerous residents spoke on the issue. They came from both sides of the debate. Residents have been complaining that organizations such as Airbnb have turned residential neighborhoods into pockets of small businesses with renters coming in and out at all hours and having late night parties when they are trying to sleep.”

“Local politicians say they are powerless to stop it because of Florida law. However, they are able to pass ordinances that make it more difficult for short-term rentals in residential neighborhoods to operate.”

“Several residents spoke of the disruption short-term rentals cause to their way of life. Among those who spoke to that was Robert Klemmer. ‘I live next door to two Airbnb houses and it is like a revolving door,’ he said. ‘Renters don’t care about trash. The recycle bins are out there all day with the plastic bottles blowing all over the neighborhood. The residential neighborhood has turned into a business district. Maybe this is something you can’t control.’”

“Jo Hammond said living next to a short-term rental property was tough for her. ‘It is an absolute nightmare, nonstop with two or three families there at once,’ she said.”

“Former Commissioner Jim Labadie, who lives in a residential neighborhood and operates a short-term rental motel on the Gulf, said the problem could be solved with a little effort by the neighbors. Labadie did admit that he doesn’t like the short-term rentals in the neighborhoods. ‘I feel like it is devaluing my property,’ he said. ‘It is hurting the people who worked so hard to get their homes.’”

The Orange County Register in California. “A 13,000-square-foot Shady Canyon home is on the market as a short sale for just under $7 million. Short sales, in which a home is for sale at less than what is owed on the mortgage, are a rarity on the Multiple Listing Service these days, especially in a neighborhood full of multi-million dollar homes. Short sales were more prevalent about a decade ago, during the housing downturn, as a way to avoid a foreclosure. In a short sale, the lender must approve the transaction.”

“Built in 2007, the estate at 89 Canyon Creek has nine bedrooms and 11 bathrooms. The listing also cites ‘multiple kitchens, raised pool and multiple game rooms.’ The home, on two-thirds of an acre, has been on and off the market over the past decade. The residence first was listed in April 2008 at $11.8 million. By February 2016 it was for sale at $7.495 million, eventually increasing to $9.495 million. The price dropped to $7.995 million in June and to $6.995 million on August 21, according to the MLS.”

“Tarek El Moussa of HGTV’s ‘Flip or Flop’ is co-listing the Canyon Creek home with Eric Crisp.”