Signs Of A Slowdown Abound
A report from Globest. “2016 promises to be another year of above-average rent growth in apartments, just not at the accelerated pace the sector has experienced for the past couple of years. Yardi Matrix is predicting ’solid’ increases for the year, ‘without the froth of 2015.’ Yardi’s forecast of moderating rent growth broadly squares with a CoStar Group report that found rents falling into negative territory during the fourth quarter of ’15. CoStar says same-store analysis of more than 50 million rent observations found that US apartment rents grew at an annualized pace of 9.4% during the first half of the year, but then decelerated to 2.7% growth in the second half, with Q4 in particular showing a decline across many metros.”
“‘Our latest analysis confirms the historically strong growth in apartment rents over the first half of the year has given way to one of the weakest fourth quarters on record,’ says Andrew Florance, CoStar’s CEO. ‘We’ve always observed seasonality in apartment rents, but the downturn over the last three months of the year is certainly a noteworthy occurrence and one that would not be apparent in a year-over-year comparison. While it may be too soon to declare this a trend, it certainly bears watching.’”
The Houston Chronicle in Texas. “Houston’s apartment market saw a slowdown at the end of last year and there’s further evidence the softness will continue. ‘With job growth declining and all the new product coming on, it’s just not a good recipe for a healthy market in terms of owners and landlords,’ said multifamily analyst Bruce McClenny.”
“Landlords have started offering rental concessions. One month of free rent is common, McClenny said, though some properties are willing to cut as much as two months. More than 20,000 new apartments were completed last year, and 29,000 are under construction.”
The Pagosa Daily Post in Colorado. “Recently I was part of a discussion group that was looking at the present and future impact of reduced oil prices on the economy of Southwest Colorado. Will the weak energy sector negatively impact other industries? Will we see fewer visitors to Southwest Colorado from Texas, Oklahoma and Louisiana in the years ahead? Good questions to ponder when you consider how important those areas have been in the tourism economy of Southwest Colorado.”
“I can tell you that the ongoing glut of supply and downward price pressure has certainly reduced the number of qualified ranch buyers looking at one of the finer recreational ranches we are involved in, such as the one illustrating this article. We toured the ranch with a buyer from Texas that came close to signing a contract… but the continuing weakness in the oil industry caused him to retreat to the sidelines. That was the end of last summer and prices have declined further since then.”
Curbed on Florida. “There was a time, only two years ago, when Miami’s condo market seemed like an ever-expanding balloon. But like most things filled with hot air, eventually the balloon starts its gradual descent back to earth. For those who have been waiting for the drop, 2016 may well be the year when softening demand—fueled by stock market volatility in China, low oil prices, currency devaluations in South America, and a heck of a lot of new condo units coming on the market— becomes too much to overcome.”
“As 2016 begins, signs of a slowdown abound. In the condo market especially, there seems to be a growing disconnect between sellers’ expectations and market reality. And local brokers say they are seeing mounting frustration. ‘We are seeing a lot of sellers calling us saying, ‘What is happening? Nothing is moving,’ said Mark Zilbert, president of Brown Harris Zilbert in Miami.”
KESQ in California. “According to new stats released by the California Desert Association of REALTORS, the Coachella Valley’s real estate market closed 2015 on a positive note with a slight increase in the sales of existing homes in December. However, the median price of existing single-family home sales dropped to $307,750, down from $396,500 in December of 2014.”
“‘So many economic factors drive the real estate market,’ said Beverly Fitzgerald, immediate past president of the California Desert Association of REALTORS®. ‘What we know for sure is the foundation of the Coachella Valley’s housing market remains strong and we will continue to improve in 2016 seeing the median price of existing homes continue to increase.’”
‘What we know for sure is the foundation of the Coachella Valley’s housing market remains strong and we will continue to improve in 2016 seeing the median price of existing homes continue to increase.’”
It gets Middle east hot out there from June-October. Can’t believe anybody would want to live there full time unless you dream of fishing the All American Canal everyday.
A 20% decline in prices is a good start to the housing recovery.
Frankly this entire state is bereft any positive attributes. A moribund econylomy, poverty and crime dominates California.
“the median price of existing single-family home sales dropped to $307,750, down from $396,500 in December of 2014.”
Coachella Valley (images)
https://www.google.com/search?q=coachella+valley&biw=1360&bih=667&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjX5pW77qbKAhVB22MKHcV0B2UQ_AUICCgD
Sacramento is another dismal area.
Sacramento, CA Housing Prices Crater 5% YoY
http://www.zillow.com/west-sacramento-ca/home-values/
Was up in Sacto last weekend to attend the funeral of my uncle. The house next to them was torn down and a two story is being put up.
The conversation turned to how much it would fetch.
Wife’s daughter said a million easy.
LOL
Uncle’s house is on the right, tear down on the left - same footprint but two stories and still just framing. They better get cracking!!!
https://goo.gl/maps/J6z8Q4FxCpS2
We joke quite a bit here about “shacks”, but those really are shacks. Places like those where I live sell for 150K and that’s only because of the bubble. IIRC after the previous crash you could get them for about 100K, mostly because EVERYTHING in them needed some work.
EVERYTHING?
Sounds like the ‘previous crash’ didn’t crash enough.
The Coachella Valley can’t be that bad! Bugs Bunny was trying to get there:
https://www.youtube.com/watch?v=DktJSGCAMTo
That’s all Folks!
“What we know for sure is the foundation of the Coachella Valley’s housing market remains strong…”
Migrant workers harvesting dates?
“As 2016 begins, signs of a slowdown abound. In the condo market especially, there seems to be a growing disconnect between sellers’ expectations and market reality.”
Drove down to the Keys for the first time in many years and couldn’t believe how many condo towers blotted out the ocean view in Miami. Nope, no bubble there. All those rich Venezuelans and Brazilians will be purchasing them in droves because of the weak dollar. Oh wait…
I enjoy that drive, but not the Miami-Dade part. On one occasion I came close to having an accident four times in about five minutes, including when a pickup with a tow-behind for lawn-care equipment made a sudden, unannounced lane change right in front of me.
Back in 2006, the last time I drove to Key West, I couldn’t believe the scale of the condo towers under construction in Miami. They were pharaonic, with several clearly exceeding 50 stories. I’m going to throw this out there, but does anyone know an actual person who lives more than 30 stories up?
Where in the Keys did you go Mugsy?
For the inexperienced, US-1 in the Keys is notorious as a speed trap. Driver beware.
Snake: Went all the way down to Key West. Used to live on Cudjoe Key in the 80’s. Still enjoyed it but there isn’t much local flavor left in the lower keys. Had to drive up to Marathon for local shrimp and grouper that was affordable.
I read someplace today that a govt. agency is going to require that the names of the buyers of these expensive condos in Miami and New York must be provided. They will not be able to hide behind a shell corporation. That will be interesting. (I could not find the article to link it here.)
Huntington Beach, CA Housing Market Craters; Prices Nosedive 15% On Ballooning Housing Inventory
http://www.zillow.com/huntington-beach-ca-92648/home-values/
Who knew CA had a special Realtors™ association for sand castles?
Who? I think everyone knew…..
Los Angeles, CA Real Estate and Homes for Sale-22,971 properties found
http://www.realtor.com/realestateandhomes-search/Los-Angeles_CA/radius-20?pgsz=15&pos=33.612453,-118.880676,34.45065,-117.766457
Los Angeles, CA Price Reduced Homes for Sale-6,568 properties found
http://www.realtor.com/realestateandhomes-search/Los-Angeles_CA/radius-20/show-price-reduced?pgsz=15&pos=33.612453,-118.880676,34.45065,-117.766457
28% of Los Angeles sellers slashed their price at least once
Tampa, FL Housing Prices Crater 5% YoY
http://www.movoto.com/tampa-fl/market-trends/
Miami, FL Housing Prices Crater 6% YoY
http://www.zillow.com/downtown-miami-fl/home-values/
Seattle, WA Real Estate and Homes for Sale- 6,472 properties found
http://www.realtor.com/realestateandhomes-search/Seattle_WA/radius-20?pos=47.05759,-122.862868,48.067388,-121.788359
Seattle, WA Price Reduced Homes for Sale-1,900 properties found
http://www.realtor.com/realestateandhomes-search/Seattle_WA/radius-20/show-price-reduced?pgsz=15&pos=47.05759,-122.862868,48.067388,-121.788359
29% of all Seattle area sellers slashed their price at least once.
‘CoStar says same-store analysis of more than 50 million rent observations found that US apartment rents…decelerated to 2.7% growth in the second half, with Q4 in particular showing a decline across many metros’
Oh dear, and those cap rates have been cut so thin. What was it someone said recently about some huge multi-family deals? It was something like, “if the government wasn’t backing the loans, those deals wouldn’t have been done.”
A 5% cap going to a 6% cap means that you need a 20% increase in income just to keep the same value.
And 6% is still low…
The wind has been at the back of apartments for so long, that there are far more likely to be headwinds over the coming 3-5 years, IMHO.
The wind has been at the back of apartments for so long, that there are far more likely to be headwinds over the coming 3-5 years, IMHO.
Any thoughts on how one might short this sector, RW?
Miami home values have declined -0.4% over the past year and Zillow predicts they will fall -2.9% within the next year.
where is carmen san diego
‘Housing affordability—or lack thereof—is going to put a damper on the housing market’s growth, according to Doug Duncan, chief economist for Fannie Mae and one of the biggest players in the housing market.’
‘The home market has seen a couple of discouraging signs as of late: Two weeks ago, the National Association of Realtors reported that November’s pending home sales number—an indication of future sales—edged 0.9% lower compared to October while year-over-year growth was a modest 2.7%.’
‘Meanwhile, two ETFs tracking home builders (trading under the symbols XHB and ITB) are close to bear market levels, trading at or near 20% declines from their 52-week highs.’
‘For Duncan, the story for housing is very much tied to whether incomes increase. ‘Our theme for the year is [that] housing affordability constrains as the expansion matures,” said Duncan. “Both rents and house prices are appreciating at pretty strong levels. And what is required is to see income growth, particularly at the medium and lower income levels.’
‘Though the drop in oil prices is thought of as great for the average consumer, some regions may be facing trouble because of it. “You see in the oil-related markets some retraction,” Duncan said. “Houston is slowing significantly.”
You don’t say Doug. If you had been following here you might have saved a few billion on the oil housing markets. Good luck with that theme of the year stuff. Because if I get a raise, the first thing I’m gonna do is ask my landlord if he wants it.
“what is required is to see income growth”
So Fannie Mae requires us to make more money. Make more money so that house prices and rents can go up even more. This is the Federal Government speaking.
Apparently there is no plan B.
As I mentioned the other day a nephew pays $1600 a month to rent a very ordinary 2 bedroom apartment in a northern Denver suburb, and can only afford it thanks to a tax free military subsidy.
600 and some 2+ bedroom rentals in Denver, many are houses, under $1,000/month.
http://denver.craigslist.org/search/apa?is_paid=all&search_distance_type=mi&max_price=1000&bedrooms=2
Someone’s BS’ing.
My brother is in the military and he doesn’t get a subsidy for renting a house off base. He and his family can live on the base but there is no private landlord profiting from that.
fny/fre are gov agencies
raises for everyone
‘After five years of record growth, signs of stress are emerging in New York City’s real estate market, especially in the past three months. Although new office leasing hit 28.2 million square feet last year, the third-highest Manhattan total in a decade, the figure is 14% below 2014 levels, according to a year-end report from Cushman & Wakefield released Tuesday morning.’
‘The drop came as several of the bulwarks of the bull market—including a steep rise in retail rents and a booming property sales, from residential towers to development sites—lost steam. “Last year was a great year, but as we progressed we began to see some cracks emerging,” said Bob Knakal, the head of property sales for Cushman.’
‘While the dollar volume of such transactions soared to $74.5 billion last year, the number of transactions—the ultimate barometer of the market’s health—sagged. He noted that a decline in activity accelerated in the fourth quarter, and that such softness is now being reflected in prices of raw land. For example, he pointed to a couple of Manhattan properties that sellers thought would command prices of $700 to $800 per buildable square foot that had instead drawn bids of $600 to $625 per square foot. In both cases, the seller decided to put off the transaction.’
‘The weakness in the pricing of developed properties has been led by a cooling in the formerly white-hot market for retail space. Per-square-foot retail rents that topped out in four-digit-dollar sums in areas such as Fifth Avenue and Times Square have softened. That trend shows no sign of abating in 2016.’
“We do see a slowdown in rents and more vacancies,” said Joanne Podell, Cushman’s head of retail leasing. She noted that on the gilded strip of Fifth Avenue, the city’s priciest in terms of leasing cost per square foot, rents ebbed 8.5% last year. Meanwhile, in the trendy meatpacking district, the amount of retail space available to rent jumped nearly 20% last year. And farther south, in SoHo, she said that so many spaces are available that “much of the talk is about how difficult the market is.”
‘Steve Kohn, head of Cushman’s equity and debt market operation in New York, reported that it’s getting harder to finance construction, “especially for high-end condos.” On that score, Knakal noted that a big client he described as a firm that has built condos for decades recently told him flatly: “I will not buy real estate to build condos in 2016.”
‘As for himself, Knakal termed this year almost too tough to forecast. On the one hand, he pointed out that the moderate pace of economic growth in recent years could leave plenty of gas in the tank for further growth. On the other hand, he said, we face the risk “of a deflationary spiral.”
Five years of record growth, and you dopes are surprised you aren’t getting a sixth? I studied real estate in college and I remember they said trees don’t grow to the sky. As a matter of fact, they told us booms always overdid it and people got their ass kicked at the end. Safe deposit boxes in the sky indeed.
Dallas, TX Housing Market Craters; Prices Plummet 19% YoY As Housing Correction Resumes Statewide
http://www.zillow.com/north-dallas-dallas-tx/home-values/
30% above 06 peak
we have a winner
25 MILLION excess, empty and defaulted houses CHECK
Housing demand at 20 year lows and falling CHECK
Housing prices inflated by 250% CHECK
Household formation at multi decade lows CHECK
Rampant housing fraud CHECK
A media corrupted by the housing industry CHECK
Population growth the lowest in US history CHECK
Immigration flat to slightly negative CHECK
What were you saying about housing?
Oh, so the magik number is 25M today, eh?
Data my friend. Stick with the data.
Bellevue, WA Housing Market Craters; Prices Plunge 6% YoY On Excess Housing Inventory
http://www.zillow.com/bellevue-wa-98006/home-values/
Anybody have any ideas on where the DC Metro housing market is heading? What effect, if any, will a new administration have on this area?
hitlery will spend big and hiring many- prices up
anyone else would chop-even neocons
prices down
my co fxco will raise taxes big and I figure 9% increase shaves 2% off your home value.
Yeah - the commies are destroying Fairfax County schools - sad. Will be going after taxpayers to pay for all the “Refugees” they brought in.
Join our merry band.
Fcta.org
hitlery will spend big and hiring many- prices up
Won’t she need the GOP controlled congress and senate to appropriate money for that?
It reminds me of an old political cartoon I read during Bubba’s admin. Clinton was dressed like a teen and Bob Dole was “dad” reading the paper. Bubba says something like “can I have 40 billion to go spend on stuff”? Without looking up from his newspaper, Dole says “no”
Keep bugging your reps
Everett, WA Housing Market Craters; Prices Tumble 5% YoY On Swelling Housing Inventory
http://www.zillow.com/everett-wa-98201/home-values/
“The End Of The Luxury Housing Boom: US Treasury Launches Crack Down On Secret Buyers Of Luxury Real Estate”
http://www.zerohedge.com/news/2016-01-13/end-luxury-housing-boom-us-treasury-launches-crack-down-secret-buyers-luxury-real-es
You’ve got problems.
This is big news.
Agreed. It truly is.
With the threshold to investigate at $3 million I’m guessing we’ll see a spike in purchases of $2.99 million.
Shame they didn’t include the Bay Area in their target regions.
You can wager it’s on the radar.
Is this the long-arm of China?