Will We Get To Step 7 This Time?
A report from Builder Online on Florida. “Metrostudy’s 2Q16 survey of the Tampa housing market shows that 2,034 single-family units were started in the quarter, a 1.9% increase from 2Q15. The annual rate of 8,191 starts showed a 24.2% increase compared to last year. Single-family quarterly closings totaled 1,855 units, 8.6% higher than 2Q15. The annual closings rate was 7,277 units, 21.2% above the annual closings rate for the twelve months ended 2Q15. ‘The 2Q16 quarterly starts pace of 2,034 units was the second single best quarter for starts since 1Q07, closely following the strong performance of 2,097 starts last quarter,’ said Tony Polito, Director of Metrostudy’s Tampa market. ‘Competition, especially at the low end, comes from apartments. Townhomes are an attractive alternative to renting and there was a 54.4% increase in the annual starts pace for townhomes during 2Q16 versus 2Q15, up from 890 annual units to 1,374 units.’”
“In 2Q16, total single-family inventory – units under construction, finished vacant and models – equaled 4,647 units on the ground, a 7.7-month supply. Inventories grew by 24.5% compared to 2Q15. ‘Tampa’s new housing inventory is also showing a significant trend: although the market added 111 FV units during 1Q16, FV inventory was only reduced by 24 units in 2Q16,’ said Polito. ‘The result was that Months of Supply held level at 2.2 months in June not only compared to March 2016 but also June 2015. Ideally the supply of FV units would be nearer to 1.5 months. The backlog of under construction remains strong and points to solid closing numbers in 3Q and 4Q 2016. With 2,899 units under construction, close attention should be paid to cancellation rate as this could push FV supply even higher.’”
The Miami Herald. “While the Miami condominium market can be unpredictable, it is also very cyclical. Real estate experts and insiders often can see what’s coming next. And what’s next could be bulk buys. As the market cools, investors can oftentimes buy 10 or more units — and sometimes even entire buildings — at a discount. Of seven conditions that typically lead to bulk buys, we are already seeing signs of six of them.”
“Commissions and incentives to brokers are increasing. The practice started in late 2015 and has spread. In March, one developer announced it was raising commissions to 10 percent on two Miami projects and lowering deposit requirements. Another developer upped its commission from 6 percent to 7 percent while also offering Realtors car leases or jet skis as additional incentives and other projects promptly followed suit.”
“Sales prices are flat or falling. A report released by Miami’s Downtown Development Authority at the beginning of August showed that downtown Miami condominium prices dropped for the first time in five years. The report focused on resale prices, which declined 4 percent, a phenomenon representative of the entire Miami market. Which leads to resales in new buildings. The same DDA report compared listings from May 2014 to May 2016. There were 1,900 listings then; there are 3,000 now. Over that same period, monthly sales fell 43 percent.”
“New inventory builds up. According to the Integra Realty report released by the DDA, more than 2,500 units were available in any given month over the past two years. This May, the number topped 3,000. Because of long lead times, nearly 7,500 condos were under construction in the second quarter of 2016 with another 1,550 being marketed in the pre-construction phase.”
“Developers and investors begin looking for financing against their unsold or all cash units. This is where we are right now. For example, the demand for hard money lending to foreign buyers has never been higher. All of these steps could eventually lead to…Off-market opportunities. If history repeats itself, we could start to hear developers whispering about blocks of units for sale. Although we have not seen this yet, the practice became common in the last cycle when velocity slowed and buyers stopped showing up for closings.”
“Between July 2008 and August 2009, nine bulk sales in Miami-Dade County totaling 613 units averaged $199 per square foot, according to Condo Vultures. One buyer bought 10 units at Brickell on the River South Tower at a 43 percent discount. Another buyer paid less than $200 per square foot for 21 units at Marina Blue. Over the next two years, bulk sales were recorded at a Fontainebleau project, Regent Hotel, 900 Biscayne Bay, Downtown Dadeland and others.”
“Will we get to Step 7 this time? This is not 2008-09.”
The Real Deal. “Commercial property brokerage Marcus & Millichap announced the bulk sale of 188 condominium units in Orlando for $8.084 million, or $43,000 per unit. The units are part of a 200-unit property called Los Robles Condominiums. Michael Donaldson and Nicholas Meoli in the Tampa office of Marcus & Millichap secured and represented the buyer, which plans to rent the 188 condo units acquired in the bulk sale. Meoli said in a written statement that Los Robles underwent conversion to condo units in 2007 and ‘will prove to be one of the most attractive rental communities in the sub-market.’”
From First Coast News. “A Jacksonville family says they feel trapped in their own home. The couple says there has been a rash of car break-ins at their Arlington apartment complex and they want something done about. The couple have lived at Sorrel Luxury Apartments off of Kernan Boulevard N. for a little more than a year. In that time, they said their truck has been broken into three times. The most recent time was Friday night. The couple said the thief ripped their car apart, leaving behind thousands of dollars in damages. The couple said eight other cars were also broken into and vandalized that night.”
“According to the couple crime is an on-going problem at the luxury complex and they want out but management isn’t budging. ‘They wont let us get out of our lease. They said it’s not grounds to break a lease, even with the amount of criminal activity that goes on here,’ said Sara Obadia.”
Las Vegas, NV Affordability Surges As Housing Prices Plunge 8% YoY
http://www.zillow.com/las-vegas-nv/home-values/
‘In 2Q16, total single-family inventory – units under construction, finished vacant and models – equaled 4,647 units on the ground…although the market added 111 FV units during 1Q16, FV inventory was only reduced by 24 units in 2Q16..With 2,899 units under construction, close attention should be paid to cancellation rate as this could push FV supply even higher.’
Metrostudy would see a bust coming if it had a banner on it. 24 units and they’ve got thousands coming? Naples and Fort Myers are already selling new houses cheaper than existing; that’s crunch time.
over at cnbc today:
“yellen speech being eyed”
Is this sh@t ridiculous or what?
‘the bulk sale of 188 condominium units in Orlando for $8.084 million, or $43,000 per unit’
This is at a time when apartment guys are running around paying 200k-500k for units.
Somebody is getting their unit slammed in the door. Alot of sombodies.
“…or $43,000 per unit…”
The private equity peeps should be able to clear a profit at this price even with crooked property management.
It’s a busted condo conversion…the 188 are part of a 200 unit project.
1. HOA fees payable by the owner of the 188 are probably significantly higher than the costs would be if if was a 188 unit apartment project.
2. Debt financing for a busted condo is WAAAY worse than for a 188 unit apartment project.
$43k might be a bargain, but it might be a disaster.
By the way, this little gem of a property was built in 1969, and converted to condo in 2007. Looks like they only sold 12 as condos.
Definition of “busted condo”
These condos are in “Crime Hills”? Pine Hills, Florida….not the nicest area…..
$43k ,that’s HA country
va_donk….. your engagement with enragement is causing your derangement.
‘The three primary drivers of the economy are starting to head south: retail, housing, autos. I can smell the housing market slipping away now. I’ve been early on housing, like I was when the mid-2000’s Bubble 1.0 popped, but I was eventually very correct (I sold my dream house in November 2004).’
‘The housing market is beginning to crater. I draw on “hands on” data from the Denver area because I can get “boots on the ground” due diligence accomplished. Denver is considered somewhat of a demographic “bellweather” for economic trends as they unfold. I don’t care what the media propaganda is reporting, in Denver housing sales are rapidly slowing, inventory is rapidly building and prices are falling. I’ve witnessed two $2 million+ homes in my area reduce their offer price 14% and 20% respectively shortly after their initial listing.’
‘Ultra-high end resort areas are starting to get killed. Aspen is reporting that sales are down more than 42% in the first-half of 2016 vs. 2015: Aspen’s Sustained Nosedive. Same with Long Island’s Hamptons, where sales volume in East Hampton and Southampton plunged 53% and 48% respectively from a year ago.’
‘Once the high-end wets the bed, the rest of the market follows very reliably and obediently.’
‘My view is supported by the homes sales data for July reported by Redfin.com last week. According to Redfin, home sales (closings) fell 11% in July. Redfin of course concocts a ridiculous calculus to rationalize the decline, but that’s nothing more than a disconsolate effort to defer acceptance of the unpleasant but inevitable reality.’
‘Perhaps most shocking in Redin’s report is the extent to which the bottom fell out of what had been some of the hottest markets in the country. Year over year for July closings fell 46% in Vegas, 24% in Miami, 21% in Portland, 20-% in Oakland and 11% in Denver.’
‘I have a subscriber who is three decade-plus real estate professional in Denver who is sharing some great insider color on the market, something you will NEVER get from the National Association of Realtors: “You are spot-on the housing market. I think the flippers in Denver metro are driving the under $400,000 price to a frenzy and the over $500,000 in the burbs are dropping in price. Some of these flippers have 8-10 houses at the same time. A little jiggle and they will dump. Then the part time rental landlords follow in selling as the rental market gets tough.”
“I am selling a $309,000 condo and showing another buyer $300,000-$350,000 houses in the same part of Denver. Condos and houses of the same 1980’s age are not worth the same. Every time the condo and house of same square footage and age get the same price, the prices fall. Condos go down the farthest of anything.”
‘I believe the flippers who are facing getting “stuck” with their inventory will start to panic and look to unload their “investments.” Many of them are using debt to make their purchases. This of course will hasten the downturn in housing. This is exactly how the end of the big Housing Bubble 1.0 was triggered.’
‘Many of them are using debt to make their purchases’
As we’ve seen, even the “all cash” Chinese supposed gazillionaires are using borrowed money. And I’ll remind readers that I found a article with a Miami Beach broker saying all of his clients (south American types) were refinancing their pre-contruction condos and “buying more”. Meaning they are refinancing their hefty 30-50% downpayments right back out again. This is the deposit structure the condo guys down there have told everyone will keep the dam from breaking. And it just isn’t there.
“Chinese supposed gazillionaires”
And there were gazillions of them swarming the solar system. They evaporated right about when the false narrative itself was crushed.
‘Once the high-end wets the bed, the rest of the market follows very reliably and obediently.’
IIRC the last bust started late 2005 with the cookie-cutter shacks in Arizona. Then through 2006 everyone pointed to the “median” sales price rising because the low-end wasn’t moving and only the high-end was selling.
And I’m not a “three-decades-plus-meaning-less-than-20-years” real estate professional.
I think the big signal back in 2005 or 2006 was when San Diego and Las Vegas new construction started getting discounted and when not enough of them were sold, they were discounted again, leaving past buyers angry about paying higher prices in the past than their current neighbors in the same house models.
I had this same experience in 1990 through 1992. The discounting by the builder in my area went on for over 24 months. The billboard at the corner of the street kept getting changed with lower prices every few months.
It was a tough lesson for me. When seeing this again - Ben posted these articles - back in 2005 or 2006 with Vegas and San Diego new subdivisions I was thinking - there are people learning lessons like I did.
“three decade-plus real estate professional”
It’s 2016. When did he start practicing? “Three decade-plus” means he could have started in 1999.
“Real estate professionals” are “geologists.”
“Practicing”?
That’s like saying a car salesman is a professional.
There are other “real estate professionals” besides geologists. For example, the strategic hooker who’s able to get her John congressman to spill the beans about whether the $1 trillion contract for sharks with lazers on their heads is going to be awarded to Atlanta or San Diego.
‘A Jacksonville family says they feel trapped in their own home. The couple says there has been a rash of car break-ins at their Arlington apartment complex and they want something done about. The couple have lived at Sorrel Luxury Apartments for a little more than a year. In that time, they said their truck has been broken into three times. The most recent time was Friday night. The couple said the thief ripped their car apart, leaving behind thousands of dollars in damages. The couple said eight other cars were also broken into and vandalized that night.’
‘According to the couple crime is an on-going problem at the luxury complex and they want out but management isn’t budging.’
Somewhere out there are some elderly men and women who think they are going to retire, but they aren’t.
I only am passingly familiar with Jacksonville, but do know that the nicer parts of town, including where that apartment complex is, are east of the St. John’s River. Not where one would expect vehicle break-ins or vandalism, which makes me curious whether the victims left belongings in plain sight, or whether there’s more here than meets the eye.
Shouldn’t a “luxury” apartment complex have better security?
Why didn’t they move after the first year?
That is the beauty of renting.
They must have signed a multiyear lease. Once that expires they will have all sorts of choices.
You can always break a lease. The penalty likely is less than the cost to fix up their car and the increase in their insurance…
At least in 2012 when I lived in Florida the state law was that you owe at most one month’s rent to break a lease.
I have that same feature in my lease in California.
Nice thing about renting is that if the neighbor’s become too rotten you can move on. This is why you save lots of cash.
-> “trapped”
Of all the range of human emotions, that has got to be one of the worst ones. Like an animal. I don’t think people can think very clearly when in that mode.
Let’s all hope to never become trapped in life.
Young phat women who become pregnant and the sperm donor is nowhere in sight likely feel trapped; enter welfare.
North Bethesda, MD Housing Prices Plummet 11% YoY As Speculators Dump Properties
http://www.zillow.com/north-bethesda-md/home-values/
I have to start reading the ST more often. I can vicariously benefit from learning about how far things can go there w/o even visiting:
http://www.seattletimes.com/business/this-mold-house-decaying-home-too-dangerous-to-enter-sparks-insane-bidding/
no speculation there im sure.