August 3, 2015

It Can Be A Gamble For The Sellers

The Journal Gazette reports from Indiana. “In the Fort Wayne area, sales of existing homes are up. Median home prices are way up, and the percentage of list price garnered at sale is up. What’s going on? Nothing like Realtor J. Kyle Ness has ever seen in his 12 years selling the area’s residential real estate. ‘With our inventory so low, people are scrambling to get to it,” says Ness, who heads the Multiple Listing Service for the Upstate Alliance of Realtors. ‘It’s almost like a frenzy. When something hits the market, it’s gone in a couple of days.’”

“Ness says he recently closed a sale with one buyer who told him that the purchased home seemed ‘a little dirty and needed work,’ but she was happy to have it. ‘But she said, ‘If I had never seen it first, I never would have thought I’d go for it,’ Ness says. ‘There’s not a lot out there.’”

The Associated Press. “Once considered a last resort to dump a property that was distressed or couldn’t sell, auctions have become a viable marketing option for selling luxury homes. It can be a gamble for the sellers. Sheldon Good recently sold a house next to the 12th fairway of the Pebble Beach Golf Links for $14 million from a starting bid of $6.9 million. On the other hand, a seller in Seattle who previously had a home on the market for $25 million ended up selling for $12 million after no buyers were willing to pay the minimum auction bid of $15 million. Sellers can only back out of an auction if their minimum bid isn’t met. Otherwise, they are locked in.”

“‘The auction helped to identify the buyer and the marketplace,’ Craig Post, executive director of Sheldon Good, said of the home in Seattle. ‘In this case, the market didn’t feel the home was worth $15 million. The seller listened and accepted a lower price.’”

King 5 News in Washington. “The housing market is hot all over Western Washington, but not everywhere. Real estate broker Wayne Snoey of Coldwell Banker Bain in Kent blames media coverage focusing solely on the building boom in the area’s largest cities. He says it’s up to him and other brokers to temper some clients’ sky-high expectations. ‘They expect Seattle everywhere. It’s not Seattle everywhere,’ Snoey said, referring to some clients’ high hopes. ‘If it happens to be in those less robust areas, you have to spend a lot more time educating the clients as to realistic expectations.’”

“Valerie Stone lives in Shelton in Mason County and says she’s noticed some signs staying up for months – or even years. ‘They’re just there,’ Stone said, adding some signs start to blend into the scenery after a while.”

The Boston Globe in Massachusetts. “The Boston area’s red hot real estate market has suddenly become a lot more volatile, with price cuts and scuttled home sales both on the rise. That’s the takeaway of two new reports tracking the health of the real estate market in Greater Boston and across the state. The percentage of listings in the Boston area with price reductions is now up over 21 percent, compared to 20 percent last year, Redfin reports, with a growing number of listings in Boston and the inner suburbs sporting price cuts.

“Meanwhile, anywhere from 13 to 20 percent of all sales are falling through before they close, an analysis of monthly pending sales numbers put out by the Massachusetts Association of Realtors shows. When one sale falls through, it can disrupt a whole chain of deals, especially if it involves a move-up buyer who is planning to sell their house, brokers say. ‘It’s this kind of domino effect,’ said James Gulden, a Redfin agent working out of the company’s Boston area office. ‘If one piece doesn’t go forward, then the next piece won’t go forward.’”

“Arlington, Melrose, Concord, Lexington, Hopkinton, Andover, Wellesley and Winchester are some of the most prominent suburbs that have seen a surge in price cutting. Arlington has seen a 23 percent increase over last year in homes with price reductions, bringing the total of listings with at least one price cut to more than 45 percent, according to Redfin.”

New Jersey Advanced Media. “According to RealtyTrac, 1 out of every 544 homes in Newark was in foreclosure in June. In some areas concentrated in the South and Central Wards, the rate was as high as 1 in 331. The state as a whole is faring only slightly better, with a foreclosure rate of 1 in 584 last month. Roughly a quarter of those were so-called ‘zombie foreclosures’ — homes that have been vacated by their owners — the highest percentage in the nation.”

“In addition to foreclosures, a massive share of Newark-area homeowners are underwater on their mortgages, having purchased their homes at prices that averaged about $325,000 at the highest of the real estate bubble, but are now worth as little as half that.”

“When Grace Alexander bought her home in Newark, she thought she had finally reached the culmination of a long journey, one that began in her native country of Guyana nearly 20 years earlier. Before long, however, her dream appeared to have gone horribly wrong. She lost 2 of the 3 jobs she had been using to pay her bills, and was repeatedly turned down by Bank of America when she tried to modify her mortgage. Falling further and further behind, she turned to everyone she could for help, including politicians from the White House to Newark City Hall. ‘All I got (were) promises after promises. After all that I’ve done, I’m about to lose my home,’ she said.”




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August 2, 2015

Getting The Last Juice Out Of The Orange

A weekend topic on what one poster called the Milli Vanilli nature of the global housing bubble. From CNBC. “Ask anyone trying to buy a home today, and the vast majority will launch into a story about a bidding war. Demand for housing has returned, but housing supply has not, and the numbers are only getting worse. ‘Finding a house is the last hurdle for many buyers who have saved a down payment and gotten pre-approved for a mortgage, but low inventory levels like those we’re seeing across the country can bring the homebuying process to a screeching halt,’ said Stan Humphries, chief economist at Zillow. ‘Sellers tend to want to hang in and get the last juice out of the orange. If you think you might see 10 percent appreciation over the next year, is it rational to move where you might squeeze more out of the market? No.’”

“That seller psychology is only feeding the problem in some of the hottest markets. Low inventory only pushes prices higher, and makes more sellers want to wait. That in turn pushes supply lower, as housing demand rises. In addition, higher rents are keeping more first-time buyers from saving for a down payment. ‘If we can get additional increase in supply, then price increases will begin to flatten out, which will be good for the economy, good for many first time buyers, but as long as we have limited supply, and that’s what we have today, then prices inevitably will continue to rise,’ said Lawrence Yun, chief economist for the National Association of Realtors.”

Palm Springs Life in California. “The median Coachella Valley price per square foot rose $3 in April to $183.39. This represents a 4.1 percent gain over the price one year ago of $176.06. However, three major cities now have negative gains year over year — La Quinta, Indio, and Palm Desert — with Palm Desert just barely so at minus .8 percent. Overall, this deceleration in gains after three years of rapid price increases was expected; that pace could not continue. Many people still expected an increase in sales due to easier credit and a drop in unemployment. However, this has not yet happened; sales are still running 30 percent below pre-bubble norms.”

“Valley inventory, at 4,948 units, is still near the off-season high of 5,116 units that was set two months ago. This is 900 units, or 22 percent, larger than it was last year at this time. The best measure of the inventory size is a ratio called ‘months of sales,’ which is calculated by dividing inventory by the average monthly sales rate. It is currently at 7.2 months, which is a little high even when allowing for seasonality. Last year at this time, it was 5.6 months and the year before that, 4.4 months.”

“This ratio indicates how many months it would take to sell the entire inventory at the current sales rate. If it gets much over six months, it can put pressure on homeowners to reduce their asking price. It is already putting some upward pressure on how long it takes to sell the median home, called ‘days on the market.’ While still at an acceptable 90 days, it took only 74 days one year ago.”

KBTV in Texas. “Beaumont home sales soared 34 percent in June 2015 while home prices also posted strong double-digit gains, according to the June 2015 Beaumont housing market report. One strong indicator is that average selling price in June was $155,000, up 24 percent (459 listings) from last year, which itself was a strong year. Beaumont’s monthly housing inventory was 5.5 months in June 2015, 2.6 months less than the year prior.”

“President of the Beaumont Board of REALTORS®, Vivian Todd said she had never seen the Beaumont market as busy as it is. ‘I am personally seeing multiple contract offers on a house and houses selling in one or two days.’”

D Magazine in Texas. “Home prices have spiked as demand far outweighs supply. While sellers sift through dozens of offers, buyers stalk moving vans and estate sales. The North Texas real estate market has turned into a seller’s bonanza, but buyers have become frantic and frustrated. Real estate brokers are working overtime to accommodate them, but selling fewer houses because there aren’t enough to go around. Some sellers are cashing in. Others are holding onto their homes because they’ve got nowhere to go.”

“‘This is unprecedented,’ says Mark Dotzour, chief economist at the Real Estate Center at Texas A&M University. ‘I have never seen anything like this in the four decades I’ve been studying the markets.’”

“‘Nine times out of 10, if you’re not there in the first five hours, it’s just gone,’ East Dallas agent Britt Lopez says. Many buyers don’t believe it at first. Then they lose out on a house or three. Finally, they turn into buying commandos. They cruise neighborhoods looking for moving vans and estate sales. They check and recheck their iPhones for new listings. ‘I am on the MLS app like it’s Candy Crush,’ says Michelle Chism, as she searched for homes in Plano.”

“Brokers are showing more houses and writing more contracts than ever before—but selling fewer homes. Lopez generally sells more than 40 houses a year in East Dallas, but last year sold only 33. ‘And it was a fight to sell that many,’ Lopez says. ‘I’m working three times as hard as I normally do, for two-thirds of the income.’”

“Just before her house went live on the real estate market this spring, Emily Morris ran the vacuum one last time and prepared to leave town for the weekend. As she stepped outside, Morris was surprised to see that a line had already formed along the sidewalk. Cars clogged the small subdivision in Allen. In the next two days, 149 real estate agents made appointments to show the 1,400-square-foot house, shuffling buyers through in 10-minute increments. By Sunday night, Morris had 70 offers. All but four said they would pay more than the list price of $150,000, by as much as $20,000.”

“That evening, real estate agent Kim McCarty sat at her kitchen table, entering the details of each contract into a spreadsheet. Offer amounts, closing dates, earnest money, loan guarantees. And then there were personal letters, a stack of them—from a soldier, a pregnant woman, a working mom—each one straining for the right tone, the right mix of humor, sentimentality, and obsequiousness. Prospective buyers sent pictures of themselves. Pictures of their pets. (One dog, Dr Pepper, looked plaintively at the camera, a bandanna around his neck.)”

“Many agents are trying to dial down the frenzy. Buyers are having to move so quickly to get houses that, once gotten, they often have second thoughts. That’s what happened to real estate agent Kim McCarty’s listing in Allen. After topping the list of 70 offers—by paying $20,000 more than list, picking up the title policy, and allowing the young couple to stay in the home rent-free until their new house was ready—the first prospective buyers ended up backing out.”

“‘Buyer’s remorse sets in,’ McCarty says. ‘They start to wonder: ‘Have I overpaid? Did I agree to too many things?’ But another buyer stepped in, offering nearly the same terms. And the process continued.”




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August 1, 2015

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July 31, 2015

The Bust Doesn’t Destroy Wealth

It’s Friday desk clearing time for this blogger. “A Nobel Prize Laureate is warning that Sydney’s real estate market is showing every sign of being in a dangerous price bubble. Professor Vernon Smith, who was honoured for his work in experimental economics, is in Sydney to talk about global property prices and he spoke to our business editor Peter Ryan. Ryan: ‘What lessons should Australia be learning from the subprime crisis in the United States, which led to the housing crash which triggered the global financial crisis, even though the circumstances are different that Australian holders of mortgages simply can’t drop their key off at the bank.’”

‘Smith: ‘Guard against allowing people to buy homes that last up to 100 years largely with other people’s money and particularly bank money because it exposes the banks so seriously. Actually, we learned it in the 1930s, but forgot it. You see, it isn’t that we’ve never been there.’”

“Readers had plenty to say this week about the high rate of abandoned homes and ‘zombie foreclosures’ in New Jersey. Heisenberg: ‘It’s still very difficult for young couples to get a mortgage.’ Eh, I didn’t find this to be the case. My wife and I bought our first house 2 years ago, at the age of 25. We were both out of college, with excellent credit, and we were approved for approximately $400,000. WHAT? Sure we both made decent money and only had some student loan debt, but 400k? We wouldn’t be able to pay a mortgage and taxes on a $400k home. We ended up paying less than $300k for our home. We were shocked at how quickly the big-bank mortgage lenders gave us an enormous loan, like 2006 all over again.’”

“That ‘all-cash’ dominated luxury condo market you keep hearing about? Turns out, it’s not really a thing. In fact, more than 40 percent of buyers purchasing Manhattan condominiums priced at $5 million or more took out mortgages, according to The Real Deal’s analysis of condo purchases between July 2014 and June 2015. To be sure, some who buy $5 million homes avoid massive mortgages because they ‘don’t want the hassle,’ said Warburg Realty’s Jason Haber. Many of them ‘refinance after closing,’ he added.”

“Ed Mermelstein, a real estate lawyer, noted that wealthy individuals often finance home purchases by borrowing against their own portfolio of investments rather than against the property itself. ‘The wealthier you are, the more options you have in terms of the purchase of a real estate asset,’ Mermelstein said. ‘Investment professionals come up with some ingenious proposals on borrowing against your own assets.’”

“The ills of the housing crash are far from cured: 7.4 million borrowers were still ’seriously’ underwater on their mortgages at the end of June, according to RealtyTrac. How can this be when home prices are still rising? It depends on how you read those prices. The median, however, means half the homes sold for more and half sold for less, so if higher-priced homes are selling more, which they are, that skews the median higher. Another report from Weiss Residential Research digs deeper in local areas and finds that nearly half the homes in the nation’s top markets are actually losing value.”

“‘Don’t be fooled by averages,’ said Allan Weiss, CEO of Weiss Residential Research. ‘All of the largest metro indexes are rising more slowly than they were a year ago though market reports give the impression that values are rising across the board. However, people don’t own the entire market, they own one house.’”

“Renters in Edmonton are getting a break now that the oil prices have dropped and the economy is slowing down. The softer market means landlords have to try harder to get and keep tenants. David McIlveen, director of community development of Boardwalk Rentals, says they have to offer incentives. ‘Right now in Calgary and Edmonton, you could get at least a hundred dollars off many of the suites that are available from what you would be renting a year ago,’ he said.”

“The situation is even more extreme in Fort McMurray. Apartments are going for $500 a month less than they did a year ago. According to the Canada Mortgage and Housing Corporation, the vacancy rate is just over 22 per cent. McIlveen says apartments are going for $300 to $500 a month less than they did a year ago.”

“Mumbai’s real estate sector is going through one of its worst phases. According to Samantak Das, chief economist, Knight Frank India, various factors have led the realty sector to stagnate. ‘Builders are facing shrinkage in funds and are saddled with a huge pile of unsold inventory,’ said Das. The findings also point out that more than two lakh houses remain unsold in the MMR. ‘It will take at least three years to clear this stock,’ said Shishir Baijal, chairman and managing director, Knight Frank. ‘There will be turmoil if things do not improve in the coming months,’ he said.”

“China’s stock-market plunge soon could be crashing like an economic tsunami onto the shores of Orange County and the rest of California. China stands as California’s third-largest export destination, after Mexico and Canada, Esmael Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University, told us. Exports to China amount to $16.1 billion a year, 9 percent of the state’s total. Although no official numbers exist for Orange County alone, he estimated that roughly 10 percent of the Golden State’s total comes from here.”

“A slowing Chinese economy could scale back its citizens’ real estate investments in Orange County and other California coastal areas. Although that could cool a hot market for sellers, it also could make housing here a little more affordable. Much of China’s problem stems from government attempts to shift investments from its faltering real estate sector and into stocks. That created a stock market ‘bubble’ whose bursting probably was inevitable.”

“It’s similar to interference by the U.S. government, with the positive goal of increasing homeownership, that helped cause the real estate bubble of a decade ago – and the inevitable crash during the 2007-09 Great Recession.”

“Last week for the first time the average house price in Sydney passed one million Aussie dollars. But excessive house prices, although trumpeted by some as a sign of economic strength are usually the very opposite; they are more typically a sign of dreadful economic mismanagement. The higher house prices, the more vulnerable the market is to a massive reversal. Sometimes this reversal can be triggered by events that seem far away but suddenly appear right on your doorstep.”

“For Australia, events in China could well be the trigger to make Aussies realise that while house prices may fluctuate, debt doesn’t. Debt is real and if a market that is being driven by excessive lending slumps, the post-crash society will be characterised by excessive debts.”

“Australia is ‘China’s quarry.’ It exports all sorts of commodities to feed China’s apparently insatiable demand for raw materials. This Chinese demand drove commodity prices facilitating a boom in the vast mining outback of Western Australia. Right now, the Aussie housing market looks to be madly overvalued. Without commodity wealth, Australia looks like a large leveraged bubble.”

“When it comes to the fallout from housing booms, Aussies would be well advised to heed the wisdom of John Stuart Mill, the 19th century English economist and philosopher, who said of market booms and busts that ‘the bust doesn’t destroy wealth, it merely reflects the extent to which wealth has already been destroyed by stupid investment decisions taken in the so-called boom.’”

“When we see average house prices hit one million dollars, we can’t say we weren’t warned.”




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July 30, 2015

Preparations For Growth Can Be Overly Optimistic

The Los Angeles Daily News reports from California. “New home building is finally showing signs of life around the Valley with several projects underway or in the planning stages, including one that will bring a taste of Manhattan-style living to the well-heeled. The projects are in Sylmar, Winnetka and Woodland hills. Santa Clarita-based Williams Homes Inc. is doing two of them. ‘We made this bet about two years ago,’ Keith Herren, Williams’ executive VP, said of the decision to develop the Winnetka property. ‘We like the San Fernando Valley and we like the City of Los Angeles. There is unlimited demand (for housing.)’”

KPHO in Arizona. “People have lost faith in the stock market and they’re apparently getting over the fears created when the housing bubble burst. ‘Real estate is something that’s tangible,’ said Nathan Pierce with Strong Tower Real Estate Group. He’s not surprised people trust Maple Street more than Wall Street. He’s hoping to flip a $275,000 home in central Phoenix for $700,000, but he said the average person can start smaller. ‘I think people need to start with their primary residence first because, for the majority of Americans, that’s the biggest investment they’ll make anyways,’ Pierce said.”

The Boston Globe in Massachusetts. “Buying a home in the Boston area has been a high-stakes competitive sport, marked by packed open houses, pitched bidding wars, and ultimately, disappointment. That may be slowly changing. Some brokers say they’ve detected a shift in the market that could signal more opportunities for buyers. ‘It has become a little less crazy for buyers,’ said Lara Gordon, a real estate agent who works primarily in Cambridge and Somerville. ‘Instead of competing against 15 to 20 offers, maybe it’s three to five offers.’”

“In June the number of home listings that came on the market increased by 11.6 percent. ‘We’re heading to a more stable appreciation,’ said Alison Socha, a real estate agent in Melrose. ‘The buyers now are being more cautious. They don’t want to get into major-league bidding wars. They are tired of being the bridesmaid, and they’re feeling that the market has reached the high and that it’s settling.’”

From The Paper in Texas. “Residents of The Woodlands – or Houston commuters driving through the area to and from Dallas and other points north – have found themselves stuck in all kinds of traffic. A significant reason for the massive surge in infrastructure upgrades is due to the world headquarters of Exxon/Mobil moving into the neighborhood. For over a year, local residents have been bracing themselves for the influx of what was estimated to be 50,000 new inhabitants. However, the current substantial drop in oil prices put a hold on much of the transition, and only a fraction of the predicted total have moved in.”

“Kimberly Nicole, a Realtor based in The Woodlands who caters to upscale and elite homes and clientele, terms situations like this ‘The Exxon Effect,’ where preparations for growth can be overly optimistic. There is a glut of new building and real estate agents alike; when the bubble pops as reality sets in, there are too many empty houses and an overabundance of those wanting to fill them.”

“‘The Woodlands situation is an example of how a housing market can fluctuate as wildly and as immediately as the New York Stock Exchange,’ she said. ‘Most agents are unprepared for the tumult; it’s the savvy agents who are familiar with all aspects of real estate that can successfully navigate through the turbulence.’”

The Journal in Nebraska. “The city of Plattsmouth is helping to pave the way for a new housing development to be constructed within the city limits. The final assessed value of each home and lot it sits upon is estimated at $210,000. ‘Per the contract, the developer must make its best effort to assure minimum assessed valuation of $210,000, real estate and house combined. That valuation exceeds most homes in the immediate area,’ said City Administrator Erv Portis.”

“A recent survey identified the lack of housing and the updated Plattsmouth Comprehensive Plan addresses the need to address the shortage. The plan identifies a shortage of homes in the middle and upper-middle income ranges. ‘On the other hand, a glut of homes valued between $25,000 and $50,000 exists. Homes in this bracket, discourage middle income families from ‘moving-up’ in the housing market due to concerns on whether the home would be able to sell.’”

Vegas Inc. in Nevada. “The apartment industry is one of the most-active areas of real estate locally and nationally, especially for development. In Las Vegas, investors have been buying and building multifamily properties as younger residents shy away from homeownership and because many locals — their personal finances wrecked by the recession — haven’t been able to land a mortgage, let alone afford a down payment, and have to rent.”

“Developers completed about 1,700 units last year. As of December, they were projected to open roughly 5,750 units this year and almost 2,000 more in 2016, according to CBRE Group. Not everyone’s cheering the workload. Some people have said developers are piling in too quickly and overbuilding, especially in the southwest valley, where it seems most of the projects are concentrated. ‘Apartments have probably gotten a little ahead of themselves right now,’ RCG Economics founder John Restrepo said a few months ago.”

The Pasadena Star News in California. “At age 29 and in a committed relationship with his girlfriend, Daniel Garcia, a Long Beach barista, thinks occasionally about what it would be like to own a home. But then he’d rather pay off some personal debt and travel a little more. He’s not alone. While 74 percent of millennial renters between ages 18 and 34 plan to buy a home one day, 53 percent who expect to purchase a home said they are putting it off until at least after 2018, according to a survey of more than 5,800 millennial renters nationwide by Apartment List.”

“Garcia rents near downtown Long Beach. He said while he and his girlfriend, a graphic designer, are Southern California natives, they haven’t ruled out moving out of state to buy a home. But the American dream, defined by previous generations as owning your own place, seems to be a foreign concept to those his age. ‘I’m 29, I have friends that are a little older, some a little younger,’ Garcia said. ‘None of my friends actually own a house. It’s not a topic we bring up too much.’”




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July 29, 2015

Gaming The Market

The Denver Post reports from Colorado. “Lauren Frommer, 28, socked away a fifth of every paycheck and last month purchased a Cherry Creek condo, renting out two of the three rooms to friends who help her cover the mortgage. Frommer previously worked in the natural resources industry before becoming a jewelry designer and said the industry’s instability motivated her to lock in a home. ‘It feels like when you are renting, you are throwing away money,’ Frommer said.”

“But Frommer’s view doesn’t appear to be the most common one among her peers, the millennials born between 1980 and 1997. Her roommate Kate Braden, also 28, said she prefers the freedom that renting provides, and even Frommer concedes locking in a mortgage seemed frightening at first. ‘I’ll start to look at houses when I am ready to settle down,’ said Braden, who estimates it will be another five years before she purchases a home.”

The Atlanta Journal Constitution in Georgia. “Metro Atlanta home prices continued to rise late into the spring, although the pace was slower than usual and the number of homes for sale remained lower than normal. Luis Gaud, 27, took the leap this spring, buying his first home, a one-bedroom condo in the Poncey Highland area of the city of Atlanta. The customs officer said he wanted to act while he could afford what he wanted and buy something he’d be able to sell in a few years. ‘I figured it was time to buy,’ he said. ‘And the way things are going, I think the value will go up.’”

The Seattle Times in Washington. “Home prices in the Seattle metro area hit a wall in May, traditionally one of the year’s busiest shopping periods, posting weaker than expected gains, according to the S&P/Case Shiller index. ‘It’s been a slow, languid summer for home values, with annual growth rates having pretty much leveled off over the past few months,’ said Zillow Chief Economist Stan Humphries in a statement. ‘But consistent slowing in the rate of seasonally adjusted month-over-month growth in the Case-Shiller indices will eventually be reflected as slowdowns in year-over-year appreciation, too.”

“Zillow’s Humphries said mortgage rates won’t be in a holding pattern much longer and will put downward pressure on home value appreciation as soon as they begin rising. ‘Enjoy summer while it lasts, because in just a few months, things could start getting interesting again,’ he said.”

The Dickinson Press in North Dakota. “Buying a home in Dickinson is cheaper and less stressful than it was only a year ago, two of the city’s top Realtors said. ‘They (prices) have definitely softened and buyers are now more cautious, so there’s more on the market,’ said Ninetta Wandler, a longtime Dickinson Realtor. ‘But they’re not forced to buy yesterday. Before, if you had three houses to look at, you were lucky — and you didn’t have time to think about it.’”

“About one-third of the homes listed in Dickinson so far this year started at more than $300,000. To put the rise of Dickinson’s home prices into perspective, Wandler said a house selling for $350,000 today would have probably gone for as low as $230,000 five to 10 years ago. ‘That was a really nice house,’ she said.”

The South Jersey Times in New Jersey. “Of all the American homes currently in the foreclosure process, one in four were vacated by homeowners prior to a bank repossessing the property, according to RealtyTrac. These houses sit abandoned, with the homeowners gone and the bank not yet in possession of the properties. New Jersey has the highest rate of foreclosures — and zombie foreclosures — in the nation.”

“It’s not only a matter of the state’s lengthy mortgage foreclosure process that leaves these houses in limbo, though. Banks are keeping many properties out of circulation, hoping that if they don’t flood the market with foreclosures they can getter a better price later as the market continues to improve, explained Realtor Nancy Kowalik, of Keller Williams Realty. She described situations in which she has interested buyers for such homes but cannot even get a returned phone call from these institutions. ‘They don’t want to sell,’ she said. ‘They are gaming the market.’”

From Marketplace. “JoAnn Henderson bought her house New Carrollton, Maryland, in 2001. She refinanced a few years later for a higher amount. Shortly before she retired from her teaching job, she started having trouble with the steep payments. Henderson got a loan modification, which dropped her interest rate to 3 percent. Now she’s even got a rainy day fund. ‘A tiny one,’ she says, laughing. ‘Not a big rain. A small rain.’”

“What would really help Henderson is if the amount of her loan could be reduced in what’s called a principal reduction. Henderson owes more than $450,000 on her house, which is only worth $212,000, according to Zillow. She’s underwater, owing more on her home than it’s worth. Mel Watt will be making the decision on principal reduction. He’s head of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac.”

“Watt is caught between homeowner advocates like Wilson, and people like Tim Rood, chairman of the Collingwood Group of financial advisers. Rood wonders where the money for principal reduction would come from. ‘This money doesn’t come out of thin air,’ he says. ‘So, it’s going to have to come from investors or from taxpayers.’”




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July 28, 2015

Prices Either Continue To Go Up Or They Crash

CTV report from Canada. “These days, buyers hoping to land a condo in Vancouver’s highly competitive housing market will need more than a down payment to close the deal. This past week, hundreds of people spent days in line ahead of the Saturday pre-sale for a new condo development on the waterfront in the False Creek area. Those who couldn’t commit to camping out themselves hired somebody to do the waiting for them. Chris Malkin and his team camped out for a week, representing out-of-town buyers and those who didn’t have the time to stand in line. Malkin, who says he has clients from Victoria, Seattle, and even mainland China, described the condo-buying frenzy as ‘fun, exciting, but insane.’”

“Andrey Pavlov, a professor of finance at Simon Fraser University, said that housing and the industries associated with it could account for up to 25 per cent of the provincial economy. And the housing bubble is more likely to burst than slowly deflate, Pavlov said. ‘It’s tricky to get a two or three or four per cent decrease,’ he said. ‘The way these things work is they either continue to go up or they crash.’”

Domain in Australia. “Frenzied bidding between six developers resulted in an unrenovated Granville house selling $1.53 million over reserve at auction on Saturday morning. The house sold for $2,781,000. Selling agent Tony Eltakchi of LJ Hooker Granville said the owners had, until recently, been unaware their land had been rezoned. After the hammer fell the pair were close to tears. They said the result had changed their lives. Soon after, they drove off in their car. ‘They were off to Picton to buy a new house,’ said Mr Eltakchi.”

“In other auctions, a four-bedroom house at 46 Thurlow Street, Redfern, was hot property, going for $1.9 million - $100,000 over its reserve through Ray White Surry Hills. The couple who bought it were ‘chuffed.’ ‘We can’t believe we got it under $2 million,’ IT manager James Sillence said. As an indication of how much stronger the market is this year than last year, the same home was listed for sale at $1.9 million last September and then discounted down to $1.7 million before being withdrawn from sale.”

The New Zealand Herald. “A second real estate boss has backed a foreign buyers’ register, after support from Barfoot & Thompson’s Peter Thompson. Geoff Barnett, the New Zealand manager of international real estate agency Century 21 with 20 offices throughout New Zealand, said such a register made perfect sense. Labour’s data pointing to large numbers of Chinese-based buyers speculating on Auckland residential properties did not surprise Barnett.”

“‘It’s confirming everyone’s suspicions which have been held for a long time. Sydney has exactly the same thing. There are reports of bus loads or bus tours from China and India, going out to the suburbs and buying properties, about 10km from the CBD,’ Barnett said.”

The BBC in the UK. “Foreign criminals are laundering billions of pounds through the purchase of expensive properties, which is pushing up house prices in the UK, the National Crime Agency has said. Its economic crime command director, Donald Toon, told the Times that London prices had been ’skewed’ as a result. He said prices were being artificially driven up by criminals ‘who want to sequester their assets here in the UK.’ Hundreds of billions of pounds are laundered in the City every year, according to the NCA, and it said investigations were intensifying.”

The Daily Express in Malaysia. “There is no chance that the prices of properties will go down even with the country facing an economic slowdown now, said Sabah Housing and Real Estate Developers Association (Shareda) Vice President John Chee. He said prices of properties can either go up or stabilise and in the current economic situation, prices are at a standstill. He said the imposition of the six per cent GST that led to rising construction costs and increase in property prices, falling of crude oil prices and oil palm prices as well as the plummeting of the ringgit value to name a few had greatly affected the property industry.”

“‘No doubt it is in our wish list to expect the property market to recover and stay resilient as our industry spearheads moving forward for a better remaining year of 2015 and coming 2016 as we experience the changing economy and development paradigm,’ he said.”

The Myanmar Times. “Prices for standalone housing have started to drop, the latest sign that the real estate sector has entered a decline. Several agents told The Myanmar Times that prices are in some cases as much as 30 percent off their peak last year. Rental prices for houses have also somewhat dipped, according to Ma Myat Thu, an agent at Moe Myint Thaw Dar real estate. ‘It’s been quite a back-down in the price of standalone houses.’”

Today Online on Singapore. “Private home prices in Singapore have recorded their longest losing streak in more than a decade after another decline in the April-to-June quarter. The price weakness came as the vacancy rate climbed to 7.9 per cent in the second quarter from 7.2 per cent in the previous three months amid a rising glut of completed homes. Mr Desmond Sim, research head for Singapore and South-east Asia at property firm CBRE, noted that this followed the record number of home sales between 2011 and the first half of 2013.”

“‘At that time, there was a surge in land sales and liquidity was cheap… While there may be a lag between the time a project is completed and when occupants take residence of the units, the reality is that the market is still coping with an overwhelming number of completions,’ he said.”

Want China Times. “The stigma facing Kangbashi, which was labelled a Chinese ‘ghost town’ in international press, has been tough to shake. A futuristic town built with coal money in 2011, Kangbashi has long been the epitome of heedless city construction and the resulting housing bubble. Four years have passed since it first earned the blighted label and the town remains busy fighting for its image.”

“For Kangbashi and Ordos, however, image is not the only worry. In Ordos, coal mining used to make up 70% of the city’s GDP, but now coal mines have difficulty paying wages and fallout from the property bubble left most of the area’s ‘newly rich’ in heavy debt. Xiao Xiaohong, an Ordos native in her 40s, recalled the ‘good old days’ when coal prices soared and they reaped in money. ‘Those years were crazy. It was just me and a couple of friends, idling away time and cash. I went shopping and visited an apartment in Beijing. Without a single moment of hesitation, I bought it right away, with cash,’ she said. ‘Now after the debt crisis and housing bubble, we’ve fallen on our bottom, almost busted.’”