This Could Just Be An Oversupply Situation
The Naples News reports from Florida. “According to the Bonita Springs – Estero Association of Realtors (BEAR) Media Committee, the easing of the market experienced over the last several months continues. D. Michael Burke, 2016 BEAR president, stated: ‘The days on the market is down because accurately priced homes are selling first. Buyers set the value; they know the correct price range before they even enter the market.’ Joe Pavich, broker, Realty World J Pavich Real Estate, added, ‘Open house traffic continues to increase, which makes realistic pricing even more critical for sellers.’”
“Sellers who are moving up are also finding choice properties in the new construction market, but still need agent representation for these transactions. ‘Many buyers of new construction may not understand that on-site builder agents work on behalf of the builder, not the buyer,’ Burke said. ‘As a buyer, agent representation is needed to ensure the new construction home is also priced right and all concessions/incentives are discussed. Since the builder pays the commission, there is literally nothing to lose.’”
The Hamptons Magazine in New York. “Saunders real estate broker Alan J. Schnurman is a savvy property developer with plans for the future. State of the market: ‘If you tell me where Wall Street is going, I’ll tell you where our market is going. The price point last year, $24 million, $25 million, was not unheard of; today, those houses which have not sold are under $20 million. This could just be an oversupply situation. But the stock market has not been as robust as people would like it to be.’”
This Garden Island on Hawaii. “Kauai realtor Sean Ahearn said it’s a buyer’s market here on the Garden Isle. ‘If you look at what you can buy on Kauai versus what you can buy on Maui or Oahu, I’ve had people who looked on Maui and come here and commented about how a similar property seems to be less expensive,’ Ahearn said.”
“The median sales price for homes on Kauai is also down from last year, currently sitting at $600,000 compared to $620,000 in June 2015. According to the report, the Westside has the lowest median priced homes on Kauai at $360,000, which is down $40,000 from last year. ‘There’s more inventory on Westside than anywhere else,’ said Julie Black, owner and principal broker for Kauai Dreams Realty.”
“As of July 22, there were 388 residences for sale on Kauai, Ahearn said. There is, however, a discrepancy between the median sales price of homes on the market and homes sold. Numbers from the last 12 months indicate the median price for homes currently on the market is $1.155 million with the average price at $2.2 million. During the same time period, the median sale price for homes sold was $499,000 with an average price of $798,000.”
“‘You can see the disconnect on what was sold and what is available to sell,’ Ahearn said. ‘The inventory on the lower level is low, but there’s more of a supply in the higher level.’”
Curbed San Francisco in California. “Jerry Brown has had his ups and downs, but having now been elected governor of California four times, it’s fair to say he’s regular winner. A loss is possibly even a novel experience for him these days. Even so, Brown recorded not one but two losing efforts in a single go over the weekend, selling his sprawling Oakland home for a $200,000 discount off the asking, as well as a $50,000 loss on what Brown himself paid for it back in 2007.”
“As we noted, the property is a handsome piece, even if Brown’s tastes seem a little old-fashioned. But the home, designed by Sallie Lang, just recorded a sale of only $2,375,000. When you add up the inflation (based on the Bureau of Labor Statistics formula), this amounts to the equivalent of a $435,000 loss.”
Yahoo Finance on California. “San Francisco is notorious for sky-high rental prices, and while that situation won’t likely change in the near future, there are signs the San Francisco rental market is finally (finally!) softening. ‘Listings that once rented in just two to three weeks can now take two to three months to rent,’ explains Paul Hwang, principal broker at Skybox Realty.”
“Tech layoffs more than doubled during the first four months this year compared to the same period in 2015, according to the San Jose Mercury News. Raising funds isn’t as easy as it once was, when seemingly any entrepreneur with a half-baked idea — another Snapchat clone, the 20th food delivery startup — could raise a few million before slowly puttering their way into irrelevance.”
“Then there’s the huge surplus of the available units up for rent. Research firm Axiometrics estimates 12,300 new units will glut San Francisco, Oakland and San Jose this year, up from about 7,000 units in 2015 and 6,700 units in 2014. For more attractive deals, look no further than Craigslist, where ‘1 month free’ is a popular tagline in listings spanning from San Francisco proper and Oakland to San Jose and Cupertino.”
“‘Welcome Home!! 1 Month Free!! No App Fees!! $500 Deposit!!’ reads one listing for an 845-square-foot one-bedroom in San Jose. ‘Love where you live! 1 month free – $500 [Visa] gift card!’ another listing declares for a 679-square-foot one-bedroom in Redwood City. Still others are dangling a $1,000 ‘look and lease’ special: Lease an apartment the same day you view it, and the landlord slashes $1,000 off the deposit or one month’s rent.’”
I got stuck without internet access for a while. Back to the salt mines:
‘As hot as Oakland’s real estate market might be, Gov. Jerry Brown and his wife, Anne Gust Brown, just took a $50,000 loss on the sale of their home in the East Bay hills. The state’s first couple bought the three-bedroom home on Skyline Boulevard nine years ago for $2,425,000. It went on the market in April at $2,595,000.’
‘By time the buyers closed the deal Friday, the price had dropped $220,000 — to $2,375,000. The Browns’ agent, Robin Dustan of McGuire Real Estate, said the drop in value wasn’t too surprising, given that the house “was brand-new when they bought it (in 2007), and at the height of the market.”
‘Plus, “there are fewer people at the top who can qualify for over $2 million, so the air gets a little thinner there,” Dustan said.’
Mr. Robin Dustin,
Please share with us what the taxes were for NINE years.
Sincerely
Havana Norte
Hard to say exactly since property taxes are always going up in Oakland, but tack on at least another 300K flushed down the drain.
Keep slashin’. You got a long way down yet.
This article got past me a couple weeks ago:
‘End of an Era as China’s Love Affair With U.S. Real Estate Fades’
‘For David Wong, the business of selling homes isn’t as good this year as it was in 2015, and he’s blaming that on a decline in customers from China.’
“The residential-property market here, especially for those priced between $2.5 million to $3 million, has been affected by China’s measures to control capital flight,” said the New York City-based Keller Williams Realty Landmark broker. “You need to cut the price, or it may take a real long time.”
Wow!
That’s the peak. I am positive it means Irvine prices are peaked as well. On Facebook local realtors have posted that OC prices are record highs and many of them suggested to sell and bag the money. I am sure they would suggest to buy a mover up though
‘China’s measures to control capital flight’
Their currency is one of the key global financial issues. This flood of money is an example of how something that can’t possibly continue is expected to never end.
“It is a great time to buy or sell a home”
Realturd
“It’s a great time to give me a commission.”
- Realturd
Ive been to about a dozen open houses lately in the nabe, and every one had at least 1 Asian realtor and Asian lookers
If you notice ants invading your office or house, it takes awhile for them to go away once you take action to stop them.
Just an analogy.
Did you discuss falling housing prices with any of them?
Brooklyn Heights Housing Prices Crater 12% YoY As International Demand Evaporates
http://www.zillow.com/brooklyn-heights-new-york-ny/home-values/
‘look no further than Craigslist…Then there’s the huge surplus of the available units up for rent.’
We’ve been pointing to the Craigslist thing for some time at the HBB. I guess the MSM is a bit slow. This is the fun part. The recession will not be so much fun.
‘12,300 new units will glut San Francisco, Oakland and San Jose this year, up from about 7,000 units in 2015 and 6,700 units in 2014;
‘Tech layoffs more than doubled during the first four months this year compared to the same period in 2015, according to the San Jose Mercury News. Raising funds isn’t as easy as it once was, when seemingly any entrepreneur with a half-baked idea — another Snapchat clone, the 20th food delivery startup — could raise a few million before slowly puttering their way into irrelevance.’
It’s interesting to me how casually this insane waste of money is discussed. Perhaps when the Yellen bucks start becoming harder to find the enormity of what has happened will sink in.
Trulia listings that were coming in at 2 or 3 a day are now coming in at 8 to 10 a day. Still asking 3200 for a 1 bed.
Recently I posted an article on Denver which said the apartment vacancy rate was low, like 6% or something. When they took concessions, etc, into account it was over 14%. IMO, 14% means default time for owners banking on a 5% return. And there are tons more in the pipeline, just like everywhere else. Re-posting this to show how over the top bullish these people are:
‘To gain more insight into the lending climate for commercial real estate, REBusinessOnline reached out to some of the most experienced mortgage bankers and direct lenders.’
‘Bernard: Like the rest of the known planet, we have been very bullish on all forms of multifamily lending, whether it be new construction, refinancing, market-rate apartments, manufactured housing communities or seniors housing. We also remain bullish on any financing in the City of Detroit, where we have placed over $700 million in the last 27 months.’
‘We are still very positive on the Michigan industrial market, which is very tight and not overbuilt at all.’
‘Sue Blumberg: NorthMarq Capital, the largest privately owned mortgage banking firm in the United States, provides sources of debt and equity on all property types. We work directly with Freddie Mac Program Plus, Fannie Mae DUS program and FHA, as well as a correspondent to 50 life insurance companies, numerous banks and financial institutions. In addition, we have servicing and production relationships with 12 CMBS lenders.’
‘Our annual production exceeds $12 billion. The average loan size is $12 million. We service 5,700 loans, carrying a servicing portfolio balance of more than $47 billion. More than 50 percent of the loans originated in the last three years have been multifamily, evenly split between life company lenders and the agencies. About two-thirds of our loans are refinances.’
‘As a company, we are bullish on multifamily. Continued demographic changes point to continued rental housing in all age groups — from young adults through empty nesters. There is no sign homeownership will be trending up anytime soon. Both suburban and urban apartments are enjoying steady rent increases and high occupancies.’
‘The industrial market is booming, with distribution centers in the Midwest expanding and becoming very desirable investments due to the increase in online shopping that drives faster delivery expectations.’
‘The office sector has strengthened and become more diverse.’
‘Snyder: At this part of the cycle, I wouldn’t say we are bullish on any asset class in particular, but we do think well located, newer vintage multifamily will continue to perform well. At the same time, I wouldn’t say we are bearish on any particular asset’
‘Krawitz: As a correspondent for multiple life insurance companies, we seek to lend on assets that have well-diversified tenancies. Clearly, multifamily is preferred in this regard.’
‘REBO: Apartments have been the darling of the lending community in recent years. Do you anticipate that trend to continue for the foreseeable future, or are lenders starting to tap the brakes on apartment lending?’
‘Snyder: We don’t foresee the rent growth that some markets have experienced over the past five years continuing. That’s especially the case in Chicago where there is a new project announced each month. So, at some point we will move past equilibrium and supply will outpace demand. It hasn’t happened yet, but the next 12 to 18 months will be interesting. In general, lenders are aware of the new supply pipelines and are pulling back leverage to developers.’
‘Hofmann: We track the apartment supply coming to market closely and still feel positive about the sector as an asset class. We have a strong multifamily franchise, particularly given Key’s presence with Fannie Mae as well as Freddie Mac and FHA. We will continue to be very active in the multifamily sector and see continued growth and opportunity.’
‘Krawitz: While there are some indications that the tepid wage inflation may tap the brakes on the ability of landlords to push through rental increases, apartments are squarely fulfilling the housing needs of millennials and baby boomers alike. Lenders will continue to keep multifamily at the top of their lists, albeit with more discretion than in the past.’
‘Blumberg: Multifamily has shown incredible resilience due to the demographics and trends in rental housing. Homeownership has been on the decline, especially for first-time buyers and new households. This trend is predicted to continue for three to five years.’
Ahem…
‘Like the rest of the known planet, we have been very bullish on all forms of multifamily lending’
Interest rates are so low, and leverage levels for projects are such that it will take a lot to default the loans.
The returns on equity will be crap, but the loans will probably be OK.
I recently declined an apartment investment where their answer to the significant supply being added to the market was “it will be absorbed by the time we open”.
I recalled a similar answer to a similar question on a single family development in 2005 or 2006.
No reason to continue the conversation.
Millions of empty condos, apartments are driving defaults higher. It always does.
‘the loans will probably be OK’
Click!
‘A Bay Area woman said she was left to deal with a massive cleanup at her home after it was trashed by a sex worker who rented it on the popular home-sharing website Airbnb. According to homeowner Sharon Marzouk, evidence suggested the renter was shooting pornographic photos and videos inside the Menlo Park house.’
‘Marzouk posted video to Facebook showing a huge mess. Her home sustained extensive water damage after the Airbnb guest allegedly left the bathtub running, Marzouk said. Marzouk believed it was an accident, but damage estimates have exceeded $10,000. “There was water pouring from the second floor to the first floor,” the host said. The place is destroyed.”
‘Marzouk said Airbnb was slow to respond when she called to report the damage. The woman renting the room had told Marzouk she was a real estate agent, but things didn’t add up. “I realized that I didn’t know who the person in my house was,” Marzouk said. “As the pieces fell into place that she was more than likely using my bathroom as a business to take photos of herself.”
“I gave my key to someone who Airbnb didn’t even check their identification,” Marzouk said.’
As I’ve said before, how many of these toilet scrubbers will do this when they realize prices aren’t going up double digits, year after year. And this company is supposed to be worth 30 billion$? What a joke.
‘Tesla said on Wednesday that one of its cars had crashed in Beijing while in ‘autopilot’ mode, with the driver contending sales staff sold the function as ’self-driving’, overplaying its actual capabilities. The company, which is investigating the crash in China’s capital last week, also said it was the driver’s responsibility to maintain control of the vehicle. In this case, it said, the driver’s hands were not detected on the steering wheel.’
‘The crash, Tesla’s first known such incident in China, comes months after a fatal accident in Florida, which turned up pressure on auto industry executives and regulators to tighten rules on automated driving technology.’
‘A 33-year-old programer at a tech firm, Luo Zhen was driving to work and engaged the autopilot function as he often does on Beijing’s highways, he told Reuters in his first interview with international media. Luo, who filmed the incident with a dashboard camera, said his car hit a vehicle parked half off the road. The accident sheered off the parked vehicle’s side mirror and scraped both cars, but caused no injuries.’
“The driver of the Tesla, whose hands were not detected on the steering wheel, did not steer to avoid the parked car and instead scraped against its side,” a Tesla spokeswoman said in an emailed response to Reuters.
‘Luo, however, blamed the crash on a fault in the autopilot system and said Tesla’s sales staff strongly promoted the system as ’self-driving’. “The impression they give everyone is that this is self-driving, this isn’t assisted driving,” he said.’
‘These Tesla owners all said salespeople described the cars’ function in Chinese as “self-driving”, a term the company generally avoids using in English, and took their hands off the wheel while demonstrating it. “They all described it as being able to drive itself,” said Shanghai resident Mao Mao, who bought a Tesla Model S last year.’
You’ve been had Mao Mao. What’s the point of this thing if you have to be prepared to drive at any time?
“You’ve been had Mao Mao. What’s the point of this thing if you have to be prepared to drive at any time?”
This self-driving auto thing drives me nutz. One of the local Tampa Bay forums had people going into rhapsodies about how great it was going to be for this area. I wouldn’t want to even be on the road with “automatic”, “driverless” cars.
Anybody that enables autopilot in Bejing is reaching for a Darwin Award.
Funny, most people with a brain do not want to rely on gov or others for anything, but they think there Tesla has “auto-pilot.” Darwin.
You rely on others for everything that keeps you alive and comfortable.
It’s no ones imagination. AirHeadBnB and Uber are the first tools of drug dealers, hookers and other sordid characters.
She very well might have been a real estate agent with pornography as her second gig…
Yes, and from what I hear, there are videos that combine the two.
‘Many buyers of new construction may not understand that on-site builder agents work on behalf of the builder, not the buyer,’ Burke said.”
I was just thinking about this yesterday. As I recall, back in 2006/2007, here on the blog there was some story about a buyer at a development here in Florida who begged some on site developer/builder rep not to sell her something that was “over market”. And the guy solemnly told her he would never sell her something “over market”.
Las Vegas, NV Real Estate and Homes for Sale, 18,896
http://www.realtor.com/realestateandhomes-search/Las-Vegas_NV/radius-10
Las Vegas, NV Real Estate and Homes, Price Reduced, 5,997 Homes
http://www.realtor.com/realestateandhomes-search/Las-Vegas_NV/shw-pr/radius-10
32% of Las Vegas sellers reduced their price at least once.
Mount Vernon, VA Housing Prices Crater 20% YoY As Speculators Dump Properties
http://www.zillow.com/mount-vernon-va/home-values/
So….my wife and I are watching a real estate show for people wishing to relocate to other countries. I’m taken aback by how much the rest of the world looks like the rest of the world. Now in Shanghai the agent is pitching a nice 2/2 for only…cough…$5000/month. In my part of the planet that’s a lot of money. And we’re not looking at luxury, either. Then we’re off to Mongolia, another mecca of desirability where for only $1400/ month….
My favorite, of course, is left for last: Greenland. Somehow, I am distracted by a visit to the meat market where you can buy an impressive diversity of cuts: whale, whale, seal, whale, seal , more whale….the reality of the new digs is starting to hit the wife/fiance/partner/significant other… who is looking around for trees and shrubbery.
I think it’s a plane flight to the nearest tree.
So I have a serious question: What is the monthly rent for an apartment in Hong Kong with a view of the water ? Ten thousand dollars? Is it on parity with Manhattan ?
Remember… Nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels. Nothing.
Well….. oil went from $140 a barrel to $40, where are all the jobs and good times???
Correct. Housing is next.
where are all the jobs and good times?
Housing prices are grossly inflated lola.
More than Manhattan.
Strange considering the inferior construction methods and materials anywhere outside the US.
Fake show…fake prices.
On top of that if you are gringo, the natives will fleece you.
In every country I visited on this trip the bubble is far worse than in the USA. Crummy communist era flats fetch $150 a sq ft, even though the average monthly wage is 800. Newer stuff goes for even more.
Renters were offered their flats for 1000 Euros when the wall fell, and most bought their flats. But they refuse to contribute to common area maintenance, except for the lift. Of course their kids didn’t get that deal later and most of them rent their tiny apartments.
Residential A/C is pretty much non existent here, even in Germany, and it gets pretty hot and humid in central Europe. In Bratislava I learned that seniors ride the new trams, which have AC, all day because for them it’s free.
Washington, DC Real Estate and Homes for Sale, 14,023
http://www.realtor.com/realestateandhomes-search/Washington_DC/radius-5#
Washington, DC Real Estate and Homes for Sale, Price Reduced 5,146 Homes
http://www.realtor.com/realestateandhomes-search/Washington_DC/shw-pr/radius-5
37% of all Washington DC sellers slashed their price at least once.
I like when they show countries w no extradition
Wow,what happens when the drums stop ?
Dead honkey
Logan Circle(Washington, DC) Housing Prices Crater 6% YoY On Skyrocketing Inventory
http://www.zillow.com/logan-circle-washington-dc/home-values/
“Click!”
I think that might be the sound of a latch locking on a RageCage.
is it harder to walk away from a loan today vs 2006?
Squat or walk, it’s all mortgage defaults going forward.
not if you are Chinese
Irrespective of ethnicity.
Hillary will be our next president. Aside from stupid, amoral voters now being a majority, this is the other reason.
http://www.cbsnews.com/news/rigged-presidential-elections-hackers-demonstrate-voting-threat-old-machines/
Hillaryous is unelectable.
I actually hope Trump will become our next president only so that you guys and some of my relatives who worship that fascist will be sorry that you ever been evangelizing about “H”im.
Last week I mentioned that colleges would soon start excluding whites and I was called a racist who wanted to go back to the 60’s. Well, maybe I wasn’t too far off with my assessment:
http://campusreform.org/?ID=7977
“I’m not responding to NO comments and NOPE I don’t wanna have a dialogue.”
Ebonics minor?