The Investors Love Affair Has Substantially Wound Down
A report from the Coloradoan. “Fort Collins housing prices hit their highest average in city history last month, topping $313,000 per home sold in May. That’s a 19.4 percent increase from May 2013 and could be the harbinger of higher prices to come. ‘These price levels are unprecedented,’ said Dave Pettigrew, a residential Realtor who closely watches the Fort Collins market. ‘The highest price in the Fort Collins area prior to this was in July last year, when the average sale was $285,501.’”
“How is it possible to have housing prices this high in Fort Collins ‘when most jobs for the college educated appear to only pay between $30,000 and $50,000 a year?’ asked Peter Gibbons on the Coloradoan’s Facebook page. ‘Who can afford a $300,000 house on such incomes?’”
“The 19.4 percent increase in home sales prices in May is not sustainable, said CSU regional economist Martin Shields. Fort Collins has recovered the 6,000 jobs lost during the recession and the unemployment rate was down to 4.4 percent in April, but many recovered jobs are part-time or lower-wage positions. ‘The economic fundamentals don’t support an overall 20 percent price increase in terms of labor market or wage,’ Shields said.”
The Colorado Springs Gazette. “Perhaps only a mountain trail has more twists and turns than the Pikes Peak region’s single-family housing market. As mortgage rates plunged and the economy improved, demand picked up. In 2012, and continuing into 2013, prices climbed and homes began to sell in days and weeks instead of months, giving the edge to sellers. But the market turned around again late last year, as sales and prices cooled during the fourth quarter. That slowdown continued during the first several months of 2014.”
“The median price of homes that sold in February, March and April fell when compared with the same months in 2013, Realtors Association figures show. There were 34 homes priced at a half-million-dollars and more that sold in April, a 17.2 percent increase over the same month in 2013, Realtors Association figures show. Even so, plenty of pricey homes remain on the market; the number of $500,000-and-up homes listed for sale in April was about 27 percent higher than in April 2013. ‘As you go up in price, there’s some wonderful opportunities,’ said Kevin Patterson of The Patterson Group. ‘But there’s only so many buyers out there.’”
“There were 3,671 homes listed for sale in April, according to the Realtors Association - the most for any month since November. Seven to eight years ago, the market was so strong that even overpriced homes were getting offers, and buyers didn’t seem to care what they paid because they expected home values to continue to rise, said Becky Gloriod, a longtime Springs real estate agent. ‘They were more anxious to get into a house they liked, and they weren’t worried about the price they were paying,’ she said. That’s not true anymore. ‘Things don’t fly off the shelf,’ she said. ‘Sellers have got to be realistic.’”
The Albuquerque Journal in New Mexico. “Thousands of homebuyers and sellers in New Mexico are eligible for a national discount program that could save them thousands of dollars – if only they knew about it. Working or retired teachers, police officers, firefighters, health-care workers, veterans and members of the military all can receive discounts through the national Homes for Heroes program. There is some marketing involved in being a Homes for Heroes real-estate agent — each pays a $1,200 annual fee to be an exclusive affiliate for certain ZIP codes and get referrals from the corporate office – but the main benefit is the satisfaction of doing something to help others.”
“‘My philosophy is I don’t need to make all the money, I just need to make some money,’ said Realtor JoAnne Brown, co-owner of Brown & Associates. ‘There’s enough money being made on some of these deals. I don’t mind sharing.’”
KTAR in Arizona. “It’s starting to look like Valley home prices aren’t likely to go up for the rest of the year. Lower demand for homes is the reason. Michael Orr, director of the Center for Real Estate at ASU’s W. P. Carey School of Business, said that local home sales actually dropped 16 percent between April 2013 and one year later. ‘We started slowing down from August onward last year,’ Orr said. ‘We’ve now got to the point where the total number of sales for the year so far is the second-lowest since 1999.’”
“The supply of available homes in the Valley has increased of late. As of May 1, there were 73 percent more active listings in the Phoenix area than there were at the same time a year ago. Despite the slowing of sales, Orr said that the Phoenix real estate market is healthy, and there’s little chance of a crash like that seen during the recession a few years ago.”
The Phoenix Business Journal. “Metro Phoenix was one of the first markets in the country to experience the investor buying spree, starting around 2011. Investor activity peaked in July 2012, making up almost 40 percent of all Valley home sales, according to Arizona State University research. That high investor demand shoved the market into a frenzy as prices climbed steeply. But investors’ love affair with the Valley has since substantially wound down. Investor purchases slipped again to only 16.3 percent of all sales that month, according to a new ASU housing report.”
“But regular buyers have been slow to make up for the loss in investor buying activity. In April, single-family sales Valleywide were up about 9 percent from March but down 16 percent year-over-year, the report said. ‘New home sales were down 12 percent from last year and because very few investors buy new homes, we can conclude that something significant has changed in buyers’ motivations,’ said Michael Orr, the report’s author.”
The Ahwatukee Foothill News in Arizona. “A new survey from Zillow is projecting that metro Phoenix home prices will rise 3.6 percent by April 2015. That is not a significant increase compared with the 17 percent rise last year and the 30 percent jump in 2012. ‘Zillow’s forecasts are for entertainment purposes,’ said housing analyst Mike Orr, of Arizona State University’s W.P. Carey School of Business. ‘Zillow is not predicting changes in home prices. They are predicting changes in their own Zestimates.’”
“So, what can we expect for the rest of 2014? In assessing our local market in Ahwatukee, it appears that prices might be stagnant this year or even dip a little. Given the current days on the market for some properties, sellers might have to drop their prices to get an offer and eventually sell their homes. If your home has been on the market for six to nine months or more and you have not received an offer, it is probably an indication that buyer’s do not view the property the same way that you and your agent do at this time.”
“So, keep that in mind when determining the list price of your home. Overpricing initially tends to mean longer days on the market and lower final sales price.”
‘State regulators are warning real estate agents not to keep listings away from the market in an effort to boost their pay without warning sellers, a tactic an official called “fairly widespread.” The Colorado Real Estate Commission is concerned about brokers who put up signs saying listings are “coming soon” to the market and find buyers before they go public.’
‘Because the full market can’t bid, sellers might not get as much as they could, but agents benefit: They can take a commission from both the buyer and the seller, said Marcia Waters, director of the Department of Regulatory Agencies’ real estate division.’
‘Selling property off the market is OK if sellers realize the risk they’re taking, the commission wrote in its opinion issued last week. If not, that “endangers the interest of the public.”
‘That risk can be substantial, said Marcia Cotlar, an agent at 8z Real Estate in Boulder. She said sellers could stand to lose as much as 25 percent of their homes’ value by going under contract before hitting the market. “I think sellers these days are, ‘Oh, my God, I can get that much? I’ll take it,’ where really the seller can get even more than that,” Cotlar said.’
‘The tactic has been a recent issue amid Colorado’s booming real estate market, Waters said. Local groups and agents have complained to the state, leading Waters to think it’s fairly widespread.’
“I think they’re playing catch-up in a lot of ways,” said Ted Lupberger, broker-owner at Coal Creek Brokers in Lafayette. “We’re moving so fast into this new world.”
‘As the housing market in Denver heats up and supply diminishes, some homes sit on the market for less than a day before being snatched up. “If you wait and ponder, there’s five other families looking at that house and then it becomes a bidding war,” said Broderick Jalloh, who was at another open house with his wife Sunday. “The house could start in your price range and the bidding war could take it out of your price range.”
‘Jalloh toured a home in Denver’s Alamo Placita neighborhood. Listed at $375,000, the 3 bedroom home was in his price range, but competition around it is expected to be fierce.’
‘Jalloh, who has been house hunting for a month now, had a piece of advice for other potential home buyers. “Be selective, but don’t be picky, if that makes any sense,” he said.’
Anytime I hear “snatched up,” or “bidding war,” or any other term signifying buyer desperation, I am supremely confident that the market is overrun with speculators and it’s a poor time to buy. That’s all I need to know.
+infinity.
Thanks, but I decline to bid against greater fools.
‘SUN CITY, Arizona. — The median sales price of a Sun City home increased 11.4 percent in the last year, with the average listing for Sun City homes for sale for the week ending May 28 topping $146,000. As sales increase, SCHOA officials said they have become aware of more homes becoming rental properties. Statistics indicate approximately 10 percent of Sun City homes are being rented as well as approximately 4,500 homes being used as a secondary residence.’
‘Coldwell Banker Sun City agent Walter Patterson said that it’s a good time to buy in Sun City. “I personally see a good market. There is a lot of inventory out there, and prices have moderated slightly.”
‘For years the downtown Phoenix area had a shortage of apartments. That is changing. About a half-dozen projects were scheduled for the area this year, and they’ll add about 1,000 housing units.’
‘Millennials are behind the push to fill up the downtown Phoenix area. Mike Misheski with Home Smart Realty said the area hit rock bottom in 2008 but has been coming back. “Years ago downtown Phoenix was kind of a ghost town on the weekends and after 5 (p.m.). Fueling the rush in the downtown area has been a boom in restaurants, bars and hotels all within walking distance of homes and apartments.’
It wasn’t exactly a ghost town Mike. There were several hookers and crack dealers walking around. Of course, when a thousand bar flies move in, the hookers and crack dealers will probably leave.
‘As the economy recovers, experts say more people are taking a closer look at downtown living. Experts say people from across the Valley have shown interest. And not only to rent; they want to buy. In response, at least four condominium projects have popped up or are planned downtown.’
‘In 2004, the Phoenix City Council approved the Downtown Strategic Plan, which identified “downtown living” as a major focus. The recession made meeting the goal of 10,000 new units by 2014 impossible, said Scott Sumners, Phoenix’s deputy economic development director. The city has seen an upswing in interest in building projects on city-owned land, however.’
‘Downtown’s first high-rise condo project, which changed direction during the recession, has re-entered the market.’
‘The Summit at Copper Square was planned for condos when built in 2007, but the project converted its units into rentals because of the economic downturn. But the project began selling condos recently, and leasing agents say fewer than 20 units out of 198 in the luxury high-rise remain available. Starting prices for a one bedroom are $179,000. Penthouses start at $469,000.’
‘Some owners saw the downside of buying an urban condo after they purchased units in developments originally intended for condominiums like the Summit and 44 Monroe, the tallest residential high-rise in Phoenix. During the recession, those units significantly decreased in value and most of the units became apartments. But Simplot said those days are past.’
“The downtown and midtown market is extremely stable,” he said. “There is no longer the fear that if somebody purchases a condo, they will lose their investment because of a falloff in the market.”
‘Despite the risk factor decreasing for owners, condos remain a risky project for developers, Stapp said. Unlike housing communities that can grow over long periods, entire condo projects must be built up-front regardless of interest.’
“I worry about it a little bit only in that financing those condo mortgages has been a little tough,” he said. “The entire mortgage industry has slowed way down.”
I can point you to three separate buildings in the Salt Lake area where condo units are STILL sitting on the MLS from 2008-09 and never sold. I’m sure there are others here, I can’t imagine how many such condo projects like this there are in the Phoenix area.
Who do we believe, the shills that endlessly tell us that the shadow inventory has been wound down, or our own lyin’ eyes?
BTW, I’m not seeing much news out of Utah or Nevada. There’s being very quiet about the housing market lately.
The SL Trib doesn’t seem to do real estate feature stories much any more. It’s a mixed bag here, as hiring for real jobs is much better than average. Not as expensive as Denver, things really got bid up last year but this year is somewhat slower. Apartment units are coming on line by the many thousands, condos are still dead because they’ve never reverted to norms. $350/sq. ft in Salt Lake? C’mon.
I don’t follow things that closely here anymore, as we’ve given up any idea of ever buying in again. Still renting, after all these years. We’re both from the Mid-Atlantic piedmont region and that’s where we plan on returning to. The median income to median price ratios are much better back there than anywhere out west, the land is much more useful, and VA and NC have plenty of work for old fart engineers like me.
And I guess I should clarify my comment about the income to price ratios being better - that assumes of course that one is at least a three hour drive or more from the DC/NoVA area. Charlottesville is on a par with SL and Denver, have to go farther than that!
Downtown Phoenix is not safe for white people. Whitey beware!
My all time favorite name for a hotel, the Westward Ho. Is it still bagging fleas in Phoenix?
Fueling the rush in the downtown area has been a boom in restaurants, bars and hotels all within walking distance of homes and apartments.’
Strange—why a sudden boom in restaurants/bars? Wasn’t there already sufficient population density to support them previously
Or is that part even true? Does anyone know the area well, and observed the change?
‘For the third-consecutive month, home sale prices in the metro area have increased. The data was released by the Greater Albuquerque Association of Realtors.’
‘There were 1,734 new detached homes added to the market in May, boosting an already considerable housing inventory. The active inventory of detached homes at the end of last month was 4,682, an almost 14 percent increase from one year ago.’
“Even with an increased inventory, average and median sale prices continue to climb,” said GAAR President John Kynor. “This is good news for buyers, who have a greater selection of homes to choose from, and also for sellers, who are receiving more for their homes.”
A greater selection of overpriced homes! Yippee! That’ll sure make them buyers happy, ‘cuz they’re only going up from there!
John, are you saying that this is a great time to buy or sell a house?
‘Developer Mark Paris has sought for years to build a city within a city in Henderson, with schools, trails, a hotel and thousands of homes squeezed onto a former industrial-waste dump off Boulder Highway. He delayed his plans when the housing market crashed, and nothing got built — but he’s not idle anymore.’
‘Paris, CEO of LandWell Co., has sold roughly 255 acres of his Cadence community to homebuilders. The sales came in the past six months or so, and now, his sprawling dirt lot might finally get developed. He’s not alone. Developers around the valley are gearing up to build mini-cities that, during the recession, either went bankrupt, were seized through foreclosure or were left on the drawing board.’
‘If all goes as planned — and that’s a big “if” in economically wobbly Southern Nevada — the massive communities would bring up to 45,000 new homes to the region. North Las Vegas’ Park Highlands, which went bankrupt twice before a single house was built, is slated to have 15,000 homes on almost 2,700 acres, with construction poised to start by early 2015. And at Inspirada in Henderson, builders are ramping up work on the community, which was derailed for years after it went bankrupt. It still has room for another 7,500 or so homes.’
‘Cadence, at 2,200 acres, would have up to 13,250 homes, 1.1 million square feet of retail and a 1,500-room resort. Homebuilders are expected to start grading land this week. Skye Canyon, a 1,700-acre site in northwest Las Vegas that was seized by lenders during the national economic meltdown, is designed for 9,000 homes and hiking and biking trails. Olympia and its partners, which bought the site at a steep discount over the past year, are holding a groundbreaking ceremony Thursday.’
‘Local builders sold roughly 1,700 new homes through April, down 25 percent from the same period last year, while the median sales price of April’s closings was $287,000, up 20 percent year-to-year. Despite the weak start, developers say business will bounce back. “The market’s a little slow now, but over the long-term it’s going to have good health,” Cadence’s Paris said.’
“We are running out, in the Las Vegas Valley, of quality home sites,” said Garry Goett, chairman and CEO of the Olympia Cos., a local development firm.’
You are correct Garry. When I drive around Las Vegas and see all the boarded up houses, the first thing I think is, that was probably NOT a quality home site!
They are going to run out of water before all those houses get filled up.
‘Investors continue to show disinterest in the Phoenix housing market now that better bargains can be found in other areas of the country with more foreclosures. The percentage of residential properties purchased by investors was down to just 16.3 percent in April from the peak of 39.7 percent in July 2012.’
‘In contrast, the supply of homes available for sale is way up, with 73 percent more active listings on May 1 of this year than May 1 of last year. As a result, buyers have far more choices. However, Orr believes that may change if demand and prices don’t pick up. Potential home sellers may stay out of the market, deciding to wait for better times.’
“The underlying key problem for entry-level and mid-range housing demand is a lack of household formation due to many factors, including unemployment, falling birth rates, lower net migration and greater home-sharing, especially among millennials,” explains Orr. “However, if household creation were to return to the normal long-term average, we would quickly have a housing shortage here in Greater Phoenix.”
If a homemoaner decides not to sell the house where he lives, then he will not be buying another one. Yer point, Orr?
‘Six months ago, the Tucson economy was “still in a hole, but making progress.” Now, skies are “cloudy, but clearing.”
‘Recovery marches on, in small steps, University of Arizona economists told the assembled breakfast crowd at their annual midyear economic update. Arizona’s economy is growing, in jobs, residents, and real income, said George Hammond, director of the Economic and Business Research Center at the UA’s Eller College of Management. The growth rate isn’t at pre-recession levels, though – blame federal fiscal drag for 2013’s slow growth.’
‘Job replacement moved along last year, but at a crawl here (0.7 percent in Tucson, versus 2.1 percent for Arizona overall and 2.8 percent in Phoenix). Jobs lost to the recession should have been fully replaced in the nation overall in May, Hammond said. But that won’t be the case zooming in to Arizona, which proportionally got hit harder during the downturn. Arizona’s workforce is also contracting rapidly as more workers here retire than elsewhere. Tucson, though less volatile than Phoenix, also has a slower bounce. So, don’t expect full job replacement here until 2016.’
‘But it will get better, Hammond urged: The fiscal drag of 2013 shouldn’t repeat itself, the housing recovery will continue, and faster national growth should pull Tucson along.’
The stupidity on display here is breathtaking. It’s in every single thing he utters, too much useless verbiage to even waste time mocking.
How much do you think this guy gets paid to spout this nonsense, and who is funding his paychecks?
Kidbuck once worked for the U of Az. They employed illegals freely. Would never pay union rates to electricians. Brought in illegals after dark to wire new classroom buildings, no blueprints were used, no real inspections passed. I once found illegals fixing state university vehicles working out of a self storage locker.
This is how Az creates jobs.
“But it will get better, Hammond urged…”
George Hammond has to spin better stories than that if he ever expects to land a job at Beacon Economics.
Not to mention that high paying jobs are being lost. The HP Campus in Fort Collins is a ghost of its former self. Across the street at Intel, about 10% of the staff has signed up for separation packages and will likely have to commute to Longmont, if not all the way to Denver, to find a replacement job.
Fort Collins looks prosperous. Lots of nice, large homes with well manicured lawns. Plenty of nice, pricey, late model cars clogging the streets. But increasingly, more and more of the city’s residents commute to distant jobs in Denver every morning as local employment stalwarts like HP and Advanced Energy continue to offshore and lay off locals. Colorado State U is one of the few major employers who isn’t laying off.
It’s a good example of how the mania will manifest practically anywhere. DC, it’s the jobs, California the weather, Texas the economy, Las Vegas the gambling. I used to visit Colorado to go fishing years ago. A lot of the little towns looked depressed to me at the time. In 2001, I drove past Denver; there were cows, then apartments, more cows, then townhouses. Now people are paying $300k for a 3 bedroom.
I’m not surprised that any HP facility is a ghost of its former self. After dealing with their substandard manufacturing and overall ineptness insofar as repair and customer service is concerned, I’ll never buy another product from them again- EVER. The most expensive notebook I ever purchased has faulty hinges. They repair them for free, then it lasts a few months and has to be sent back in. That’s their fix- keep doing the same thing over, and over, and over, like people can just be without their computer for a few weeks here, a few weeks there, but never actually solving the problem. I hate this company.
FWIW, neither HP nor Dell or any of the other big players make or design their own notebooks anymore. That is all completely outsourced to Asian suppliers who design and manufacture them. Other than inkjet cartridges I don’t believe HP manufactures anything anymore.
The Fort Collins site is pretty much dedicated to Enterprise computing, and HP is losing marketshare at the low end to generic Linux boxes and at the high end to Sparc powered Solaris machines.
I don’t blame you hating HP. As a former HP’er, it is painful to watch what was once an admired company self destruct.
Then HP should have better supplier control. I hate that company’s products.
“…it is painful to watch what was once an admired company self destruct.”
+1 Another bloated bureaucracy.
+1 Another bloated bureaucracy.
I would argue instead that the blame lies with only a few individuals; this kind of culture change happens from the top down.
HP used to be considered a quality-driven company. They manufactured some of the best devices in the industry. Their founders cared about quality, and they cared about their employees—they had a reputation for taking good care of them, and having excellent retention. At one point, I remember considering them a good option for long-term career potential.
After the founders were no longer in the picture, the company has taken a steady death-march in the direction of caring less and less about quality (the printers may be disposable junk, but we can still make good money on the ink!) and less and less about their employees.
What a difference a couple of decades and a change at the top can make!
‘Julian Castro, President Barack Obama’s nominee to head the U.S. Department of Housing and Urban Development, said it’s possible to give lower-income borrowers access to mortgages while keeping the Federal Housing Administration financially solvent.’
“My perspective, whether it relates to requirements for down payments or other measures, is that we achieve this balance to stay within the historic mission of the FHA to ensure that first-time homebuyers, that folks of modest means who are creditworthy, that they have the opportunity to reach the American dream of homeownership,” Castro, 39, said at a confirmation hearing today held by the Senate Banking Committee in Washington. “But at the same time that we have policies in place that ensure what happened a couple of years ago doesn’t happen again.”
‘The FHA is a mortgage insurer run by HUD that helps lower-income borrowers buy houses. Losses of more than $50 billion on mortgages it insured as the housing bubble burst caused it to take a taxpayer subsidy of $1.7 billion last year, the first in its 80-year history.’
My perspective is that people of modest means can easily afford to buy a house in a market where prices are not propped up through government lending programs.
endangers their commssions
Selling property off the market is OK if sellers realize the risk they’re taking, the commission wrote in its opinion issued last week. If not, that “endangers the interest of the public.”
?????????