Raising The Specter Of A Glut Once Again
A report from Downtown Bellevue in Washington. “Mira Flats, the condominium building that was previously apartments, are beginning sales in fall 2018. Located on 103rd Avenue Northeast, residents can easily enjoy dining, shopping, and entertainment in downtown Bellevue. Mira Flats has studio, one-, two- and three-bedroom residences available, ranging in size from about 400 to 1,200 square feet. Prices start in the $500,000s and go above $1 million for the larger homes, according to a press release for the seller. The new website for Mira Flats mentions a starting price even lower at $400,000s.”
From KIRO in Washington. “For 21 months in a row Seattle led as the nation’s hottest housing market in the monthly Case-Shiller home price index. Of late, however, prices dropped as housing availability increased and sales slowed down, reports Mike Rosenberg at the Seattle Times. ‘The last few months prices have dropped from their spring highs. The number of homes for sale has shot back up to 2014 levels, and the number of people buying homes has fallen back down,’ Rosenberg said.”
From 6sqft in New York. “Owning a piece of New York City history just got a little cheaper. The oldest home in Brooklyn Heights, located at 24 Middagh Street, has hit the market again, this time asking $4.5 million, a price drop of over $2 million from when it was listed last year.”
From Crain’s Chicago Business. in Illinois. “A key measure of demand, absorption—or the change in the number of occupied apartments—totaled 2,995 units in downtown Chicago in the first half of the year. But Integra forecasts that developers will complete just 3,000 apartments downtown this year, down from a record 4,348 in 2017, when absorption totaled 3,385 units. It could be the first year since 2014 that demand exceeds supply.”
“But they will flip back over the next two years, raising the specter of a glut once again. Integra forecasts that developers will complete a record 4,500 apartments downtown in 2019 and another 4,700 in 2020. The supply surge could challenge landlords, especially if the economy loses its momentum or even heads into a recession.”
“Competition could become especially fierce in the South Loop and West Loop. Developers will complete more than 2,600 apartments in the South Loop between now and the end of next year, including NEMA Chicago, an 800-unit tower at the southwest corner of Grant Park being built by Miami developer Crescent Heights. The West Loop will gain more than 1,400 apartments by the end of 2020, including a 492-unit tower at Madison and Halsted streets being developed by Chicago developers Fifield and F&F Realty.”
“‘It’s kind of the calm before the storm,’ said Ron DeVries, senior managing director in Integra’s Chicago office. ‘Probably the biggest challenge will be down in the South Loop.’”
‘Prices start in the $500,000s and go above $1 million for the larger homes, according to a press release for the seller. The new website for Mira Flats mentions a starting price even lower at $400,000s’
Oh dear…
This is located in the NW corner of the downtown zoning district (it’s all SFH beyond it) behind the old Post Office I think. Not the most desirable of locations for Bellevue, but like the pig, it’ll do I guess…
$1 Million for about 1000 sq ft, or about $1000 per sq/ft give or take a tad… Wow. Not overpriced at all for a new building with unknown defects and an unknown monthly condo fee… /s
I know it’s been a point that I’ve sounded like a broken record on, but I’m sure it’s about the owners and investors heading for the exits now that they see that they won’t get the premium rents they had plugged into their spreadsheets to get the deal done in the first place.
From Wiki: Mira is a feminine given name with varying meanings. In the Romance languages, it is related to the Latin words for “wonder” and “wonderful.” … In Sanskrit, it means “ocean”, “sea”, “limit” or “boundary” In Hebrew, it is a derivative of Miriam or the female equivalent of Meir, meaning light.
Mira is about to gain a new meaning: schlonged.
Mira is about to gain a new meaning: schlonged.
I LOL’d pretty hard at this, thanks.
Looks like the Everything Bubble is finally being noticed and the herd is beginning to sniff something not quite right in the air. Virtuous cycle about to turn vicious, sell your assets, pay down your debt, and keep plenty of cash on-hand.
Testify, brother. Among my own family and friends I’ve tried to warn them of what’s coming, and have some credibility since I also warned my siblings and niece not to buy in 2006/2007 (they did anyway, and got schlonged). This time around is going to be massively worse, since debt loads have tripled since 2009, so the amount of toxic waste that needs to be flushed out of the system is that much worse. And best of all, the Fed has already blown its wad re-inflating the housing and stock market bubbles.
The oldest home in Brooklyn Heights, located at 24 Middagh Street, has hit the market again, this time asking $4.5 million, a price drop of over $2 million from when it was listed last year.”
Um, yeah…I think I’ll wait till it gets to the early 1990s price.
El Dorado, CA Housing Prices Crater 8% YOY As Sales Agents Team With Buyers To Leverage Sacramento Area Prices Lower
https://www.movoto.com/el-dorado-ca/market-trends/
“Integra forecasts that developers will complete a record 4,500 apartments downtown in 2019 and another 4,700 in 2020. The supply surge could challenge landlords, especially if the economy loses its momentum or even heads into a recession.”
What’s needed is a vacancy tax on all apartments and shacks owned by “investors” (speculators). Make the tax high enough to incentivize owners to fill these rentals even if they have to drop the rent.
“A vacancy tax”
We don’t even need that, just an end to the appreciation-refi churn that has incentivized and enabled speculators the world over. The problem is not too much capitalism that needs to be more taxed and regulated. The problem is too little capitalism, where failures and unproductive investments are papered over with debt.
Ending the appreciation-refi churcn would involve some regulation, no?
I think there are aspects of capitalism that could be improved upon by radically rethinking it. But we’re still going to need regulation to tame capitalism and protect the integrity of markets. See here for a hot book that is full of radical capitalism solutions instead of regulation:
https://press.princeton.edu/titles/11222.html
Not RE, but some top-quality doom-and-gloom from JP Morgan Chase:
“JP Morgan’s top quant warns next crisis to have flash crashes and social unrest not seen in 50 years”
https://www.cnbc.com/2018/09/04/jpmorgan-says-next-crisis-will-feature-flash-crashes-and-social-unrest.html
“Suddenly, every pension fund in the U.S. is severely underfunded, retail investors panic and sell, while individuals stop spending,” Kolanovic said. “If you have this type of severe crisis, how do you break the vicious cycle, the negative feedback loop? Maybe you stimulate the economy by cutting taxes further, perhaps even into negative territory. I think most likely is direct central bank intervention in asset prices, maybe bonds, maybe credit, and perhaps equities if that’s the eye of the storm.”"
Or they could just put a floor under houses again and get everybody to pile back in once the political enemies are crushed by the fear of how bad it could get. It’s a known winner.
San Francisco, CA Housing Prices Crater 13% YOY As Unemployment And Crime Ravage Northern California
https://www.zillow.com/san-francisco-ca-94109/home-values/
*Select price from dropdown menu on first chart
These headlines hit home “literally”. Keep em coming, they will be written on MSM sooner than we think (Mabye not the ones about areas contracting housing Ebola though 😂)
Rental rates from bizjournal in Seattle
SLU - Amazon and Google offices
Belltown - trendy area north of the market - also where a lot of Amazonians live.
Belleveue is a shock
1. Downtown Bellevue, up 4.6 percent to $2,824
2. Downtown Seattle, down 0.4 percent to $2,816
3. Belltown, down 1.9 percent to $2,642
4. South Lake Union, down 1 percent to $2,414
5. Klahanie/Issaquah Highlands, down 1 percent to $2,254
6. Mercer Island, up 2.8. percent, to $2,216
7. Pioneer Square and part of First Hill, down 1.9 percent to $2,189
8. Queen Anne, down 1.8 percent to $2,124
9. Fremont and Wallingford and North Seattle, up 0.4 percent to $2,113
10. Downtown Redmond, up 1.9 percent to $2,109
Have you been to Bellevue lately? It’s like a nice version of Seattle. I’m not shocked at all.
nice, pablum version of Seattle.
I grant that there are nice looking women at the black bottle. But i am not going to pay $20 for a 12 yr old single malt.
:-)
There is just so much supply coming online in Bellevue - that i am surprised by the increases.
This is a new one. From the description of a new listing for a $6 million house in the Hollywood Hills (last sold for $282,000 in 1994):
“Generates over $70k annually in photo shoots.”
Wonder if that alternative revenue stream gets factored into the mortgage?
https://www.zillow.com/homedetails/8467-Brier-Dr-Los-Angeles-CA-90046/63091984_zpid/
Bet they shoot porn movies there.
The whitest thing in the shoot should be the female model, so that place wouldn’t cut it.
I wonder if the Fed foresaw this consequence of housing bubble reflation?
The Financial Times
US banks
High house prices stifle banks’ mortgage units
Lenders feel the pinch as would-be buyers balk
Robert Armstrong in New York 2 hours ago
Last month, when it was reported that Wells Fargo would lay off 638 workers from its home mortgage division, there were two obvious explanations. Rising interest rates have removed homeowners’ primary incentive for refinancing, depriving Wells of a key source of fees and profit. And in any case Wells does not appear to be in a position to add mortgage loans to its balance sheet, given that the Federal Reserve has capped the US bank’s assets in the wake of a its fake accounts scandal.
The first explanation, however, is incomplete; the second is likely false. The stress on Wells is not just about refinancing, and it is not the result of Wells’ recent scandals. It is a symptom of a larger phenomenon that it is no longer possible for bank investors to ignore: house prices in the US have risen to the point where buyers are keeping out of the market.
“House price appreciation has been running at four times the long-term average for several years,” said Doug Duncan, chief economist at Fannie Mae, the government-backed mortgage guarantor. “As a result, people are saying, ‘at these prices, and with rates rising, I’ll stay where I am’.”
…
I wonder if the Fed foresaw this consequence of housing bubble reflation?
The can was successfully kicked. The fact that we’ve now reached the can again is irrelevant to that original success. Now we need a new plan to kick it again.
Unfortunately there’s another ten years before the baby-boomer retirement wave begins to recede, so there’s likely two or more scams on the drawing board.