November 26, 2015

A Merry Christmas Made Possible By Federal Officials

A holiday theme, with a re-post of this article for context to the second: National Real Estate Investor, “Lenders will keep pouring money into apartment properties over the next two years, originating about the same volume of loans in 2016 and 2017—with slight increases—that they are likely to close in 2015, according to the latest Commercial/Multifamily Real Estate Finance Forecast from the Mortgage Bankers Association (MBA), an industry trade group. That’s still going to be a big change from the last few years, when business of lending on multifamily real estate didn’t just grow a little, but instead grew incredibly quickly. So far in 2015, lenders have increased the volume of apartment loans they made by well over 10 percent compared to the year before. In 2016, experts expect more moderate growth, with less frenetic competition to make deals.”

“Lenders will likely originate a total of $224 billion in permanent loans to multifamily properties in 2015, according to MBA. That’s a 15 percent increase from the $195 billion they lent in 2014, which in turn marked a 13 percent increase from $173 billion in multifamily originations in 2013. That year marked an 18 percent increase in originations from 2012. Lending volume can’t grow like that forever. The growth this year already caught most experts by surprise. ‘The volume in 2015 is higher than most people anticipated,’ says Jamie Woodwell, vice president for the research and economics group at MBA.”

“The Federal Reserve was expected to raise its benchmark interest rates earlier this year. Instead, federal officials continue to postpone raising rates. Their next chance will be in December. In the meantime, low interest rates support high property values, encourage potential investors to buy more assets and existing property owners to refinance. All these factors increase demand for financing. And lenders continue to be eager to lend on apartment properties.”

“The lenders growing the fastest in 2015 include banks and agency lenders, who make loans to apartment properties based on the programs set by Fannie Mae and Freddie Mac. They increased the amount of mortgage debt they have outstanding to commercial and apartment properties by $15 billion in the second quarter of 2015. Giant loans on large portfolios of apartment properties account for much of the growth. The federal officials who effectively govern Fannie Mae and Freddie Mac also made this growth possible. Halfway through the year, they tinkered with the limits on how much the agencies can lend, so that many loans to affordable and workforce housing properties don’t count towards the agencies’ caps on lending.”

“Lenders will keep busy over the next two years, keeping their volume of apartment lending at about the same level they maintain today. Lenders are expected to originate $225 billion in permanent loans on apartment properties in 2016, roughly the same as in 2015. They are expected to originate $227 billion in 2017, a tiny increase. Over the long term, the volume of loans lenders make should continue to gradually grow. ‘There is natural growth in the system,’ says Woodwell. ‘Over the long term, one does see property values increasing.’”

The Idaho Statesman. “Beth Stapleton, a single mother to her son, Carter, 2, is scrambling to find a new apartment after receiving notice to vacate Westwood Apartments. The new owner is kicking everybody out in order to renovate and increasing rent rates. She thinks there’s $150 to retrieve from a retirement fund. There might be a couple of hundred more in a health insurance flex account as part of the benefits she receives from her employer, Fred Meyer. Stapleton is more worried that she won’t find another apartment by Dec. 10, the deadline given by Verity Property Management for tenants to move out of the 43-unit Westwood Apartments.”

“In a letter sent with the 30-day notices to vacate, Verity President J. Steven Fender said the new owner of the apartments — Preece Lane LLC, according to state filings — plans to renovate the complex. Stapleton said she was told the rent for her unit will increase from $595 per month to $900. ‘I appreciate that the timing is poor with the holidays coming up but the new owner is being compelled by the lender to proceed with the refurbishing of all the units as quickly as possible.’ - Letter to tenants from Verity President J. Steven Fender.”

“The Westwood situation resembles that of Glenbrook Apartments, located near the intersection of Cassia Street and Curtis Road. There, new owners Mark and Caran Daly of Eagle bought the complex as an investment. They planned to renovate and increase rent rates by more than 40 percent. Their decision forced nearly 400 tenants, most of whom were refugees, to scramble for housing. The property manager — Verity — issued 30-day notices to vacate to tenants of the complex’s 112 units. Most if not all requests for concessions to help tenants find new housing were denied, advocacy groups told the Statesman. Requests included extending the move-out deadline, returning deposits early or waiving deposit reductions for damage that would be replaced during renovation.”

“Preece Lane LLC bought the Westwood complex for an undisclosed price in August. The registered agent, Fender, filed to create a limited liability corporation. The filing with the Idaho secretary of state lists Steven Jackson and Cristine Clark, both real estate agents with Realty Executives in Vista, Calif., as members or managers of the company. Calls to Jackson, Clark and Verity were not returned. Verity has not staffed the Westwood office since the 30-day notices were delivered.”

“Bruce Ferrin, 59 has lived at Westwood for five years, including the last four with partner Nancy Summers, 62. Ferrin, who is disabled from a foot injury, lives on disability payments. Ferrin, who takes oxygen and suffers from respiratory problems, lives on Social Security. Ferrin said they must wait for payments before applying for apartments, tightening their window to find a rental by Dec. 10. ‘We’re trying to find a place before we’re kicked out,’ he said. ‘We took down the Christmas tree. Merry Christmas.’”

Bits Bucket for November 26, 2015

Post off-topic ideas, links, and Craigslist finds here. Please visit my Youtube channel which you can also find here:

November 25, 2015

Some Figure Prices May Be Nearing Their Peak

A report from Bisnow. “The other real estate sectors may have picked up this year in North Texas, but, make no mistake, multifamily was still the darling of commercial real estate for 2015. Many deals are seeing several types of buyers competing for the same assets, and private investors and midsized companies are stepping up into bigger deals with the money they’ve made over the last few years. They’re taking that equity, buying bigger deals, upgrading their portfolios and taking advantage of the economies of scale, says Marcus & Millichap national multi-housing group senior director Al Silva. NOI growth has contributed more to appreciation in this market (especially Class-B and C space) than low rates have. Al’s marketing Villa Bonita, a Class-C apartment complex in Dallas. Between 2012 and 2015, that property went from an NOI of $530k/year to $900k/year, a 67% increase.”

“Al tells us there are still real value-add opportunities out there, they’re just harder to find. The market is not overpriced across the board, he says; just don’t expect the same frenzied growth forever. No one is building any new B and C apartments, and the rent growth is sustained across DFW, Al says. Just a couple of years ago, not everyone was convinced that major rent growth was sustainable here; now, everyone knows it and that has helped drive down cap rates. As a result, DFW is beginning to look more like gateway and coastal markets with investors expecting appreciation and rent growth.”

The Dallas Morning News in Texas. “The number of homes for sale in North Texas has inched up for the first time in more than two years. Agents sold 8,138 single-family homes in October in the more than two dozen counties included in the North Texas numbers. In October, 20,254 preowned single-family homes were listed for sale with real estate agents, according to data from the Real Estate Center at Texas A&M University and the North Texas Real Estate Information Systems.”

“Dr. James Gaines, chief economist with the Real Estate Center, said homeowners who are having houses built might also be putting their current homes on the market. ‘Some figure that prices may be nearing their peak and want to cash out,’ he said.”

The Daily Journal of Commerce in Washington. “Seattle’s rental market seems to be softening a bit as all those new units under construction start to have an impact. Billy Pettit, senior VP at Pillar Properties, said he’s seeing signs that demand is slowing down. Market analysts are still reporting 95 to 97 percent occupancy rates for Seattle properties, he said, ‘but when we call (the properties) they’re more like 92 to 94 percent on the high end.’

“Pettit was part of a panel discussing multifamily trends in the Puget Sound area. ‘The next 12 months will be really telling,’ said fellow panelist Chris Rossman, VP at Wolff Co. ‘We’ll see how deep demand really is.’”

“Panelists said there’s one product we won’t see much of anytime soon from local developers: condos. Claudio Guincher, president of Continental Properties, said he’s sold 88 of the 117 condos in Vik, a complex in Ballard that will be done in January. Guincher said he chose to do condos because Ballard was ‘awash with apartments.’ The units have been selling for $550 a foot, he said, and demand has been shallow. ‘Young workers don’t want to get bogged down with a condo if they switch jobs,’ Guincher said.”

Vegas Inc. in Nevada. “Las Vegas builders sold the fewest homes and pulled the fewest permits in months in October, a new report shows. And while business this year remains above 2014 levels, one analyst doesn’t expect ‘any notable improvement’ in demand next year. Builders also pulled 556 new-home permits last month, a ‘disappointing’ sum and the lowest monthly tally since January, Home Builders Research founder Dennis Smith wrote.”

“Smith noted that Las Vegas’ housing market faces a number of roadblocks, including stagnant incomes and high rates of underwater homeowners. These and other issues ’seem to be hanging around like an unwanted house guest,’ Smith wrote.”

The Wall Street Journal. “The prolonged slump in crude prices is rippling beyond the oil industry into areas of the North American economy that, until recently, had managed to avoid the worst of the downturn. Signs of that distress are spreading throughout once-booming oil-producing regions across North America. Sales of single-family homes in Houston fell 10% on the year in October, the first double-digit decline this year, according to the local association of real-estate agents. Restaurants in Texas and the Southwest have experienced a drop in revenue and customer traffic, industry tracker Black Box Intelligence said in a recent report.”

“The slowdown is being felt acutely by towns in western North Dakota, the heart of the Bakken formation. Newly built apartment complexes and hotels in the regional hub of Williston stand half-empty, victims of disappearing oil field work crews. Williston rents have fallen by half from their peak in 2013, according to a survey by a local apartment management association.”

“John Sessions, who co-owns a real-estate developer called Bakken Housing Co., said his Eagle Crest multifamily apartment complex in Williston opened in February, but is still at 65% capacity. ‘Two years ago, it’d have been full up in two months,’ he said. ‘Back then, you could write a business plan with premium rents more akin to Seattle or parts of New York City due to the dearth of housing and seemingly endless flow of inbound potential employees in the oil patch.’”

KGW Portland in Oregon. “The stars of an HGTV show are coming to Oregon next week, but they’re not coming to film. They will be here for a seminar to teach people how to flip houses for a big profit. Tarek and Christina El Moussa, of the show Flip or Flop, remodel run-down homes in California, and sell them for big profits. Their traveling seminar has been advertising on Facebook and Instagram saying you can ‘…learn how to flip houses in the Portland area for a profit without using your own funds.’”

“Scrolling through the hundreds of comments on a sponsored Instagram post, most go like this: ‘Stay out of Portland!! You’re preying on low income families and marketing to out of state buyers that are pushing locals out. You are not welcome!!’”

“There are six stops for this seminar from November 30 through December 5. It will make stops in Eugene, Salem, Portland, Vancouver and Longview. Some people on social media promise to picket the locations.”

Bits Bucket for November 25, 2015

Post off-topic ideas, links, and Craigslist finds here. Please visit my Youtube channel which you can also find here:

November 24, 2015

Entering The Ponzi Stage

A report from Business Insider. “Quietly, over the last three months, Sotheby’s auction house has seen its stock lose one-quarter of its value. This is, in large part, due to its high-end clients. Something is about to happen to them. The polite way to say it is that — as Sotheby’s CEO Tad Smith put it earlier this month — they are about to get more ‘discerning.’ The frank way to say it is that they’re about to get walloped by this year’s choppy markets.Yes, we’re seeing record-breaking sales for some items, but if you look below that tier the picture isn’t so great. ‘The Modigliani sold last week for $170 million, but we’re seeing second-tier artists and second-tier works by the best artists starting to slide down in price,’ billionaire hedge fund manager and art collector Ken Griffin said in a CNBC interview.”

“For years, some have said that we are in the midst of an asset bubble spurred on by the Federal Reserve’s low-interest-rate policy. ‘When you keep the price of money at zero, all sorts of silly things start to happen,’ said Ruchir Sharma, head of emerging markets and global macro at Morgan Stanley Investment Management at a Bloomberg conference.”

The Press and Journal in Scotland. “The number of homes sold in the Aberdeen area has fallen in the last six months due to the effects of the oil price crash, new figures have show. A report by property firm Savills shows that the number of house sales in the Aberdeen area fell by 23%, while homes selling above the £400,000 mark dropped 44% between May to September 2015, based on the prior year. In the third quarter of the year compared to the same period the year before, homes over £400,000 saw their values drop 9%.”

“Faisal Choudhry, Savills’ head of residential research Scotland, said this had to be taken in context of the stellar rise in residential values in recent years. ‘Looking at the ten year average for the overall residential market, values are 24% higher in Aberdeen and 19% higher in Aberdeenshire, compared to 11% for Scotland as a whole,’ he said. The property group said it expects ‘further adjustment’ next year as the oil price is expected to remain subdued.”

The National Post in Canada. “The slumping oilpatch in Alberta continues to take its toll on the Fort McMurray housing market, as the average MLS sale price of a home in that northern community plunged by more than $117,000 in October. Data obtained from the Canadian Real Estate Association indicates that the average sale price for the month of $468,199 was down 20 per cent from $585,438 in October 2014. Sales also plunged by 41 per cent to 85 from 144 a year ago.”

“Doug Porter, chief economist with BMO Capital Markets, said there are many — mostly oil-driven — cities that have softened markedly. ‘The renewed sag in oil in recent months looks to have triggered a renewed weakening in housing markets across much of Alberta and Saskatchewan. Six of the 25 major markets reported double-digit declines in sales last month, and four of those were in these two provinces,’ he said.”

AFP on Brazil. “Brazilian Monica de Oliveira thought she’d forever left behind those days of worrying about getting her daughter new clothes. Biting recession in the world’s seventh biggest economy is starting to undermine the country’s widely lauded progress in dragging some 40 million people out of poverty, starting in 2003. De Oliveira knows what it’s like to be one of them and now she’s afraid her family is sliding back. She and her husband had a combined monthly salary of about $500 working as security guards in Caieiras, near Sao Paulo, and both have been laid off.”

“One by one their little luxuries have disappeared. Family outings on the weekend are over, the dream of a new car and bigger house is on hold. Even interest payments on debts are no longer feasible. She’s far from alone. ‘Soon there will be no new clothes for my daughters. We won’t go to the circus, we won’t go out to McDonalds,’ de Oliveira, 36, said. ‘I wanted to pay for them to study, to give them a better life.’”

From Perth Now in Australia. “Perth rental vacancies have risen 64 per cent in 12 months, according to a report. Property analysts SQM Research said the figure was based on a total of 7507 vacancies in October this year compared to 4567 vacancies at the same time last year. Asking rents were also down 6.4 per cent for houses and 8.4 per cent for units in the past 12 months, the company found. Perth is second behind Darwin for a challenged rental market, with their vacancy rate rising 75 per cent in the 12 months and their asking rents falling 20.5 per cent.”

“‘Clearly, vacancies have been soaring in Perth and Darwin, while our east coast capital cities have generally been stable,’ the SQM report found. ‘This is just one indicator on how the mining downturn has effected the economy. Clearly, not everywhere has been effected, but those cities and townships that do have exposure have been hit hard.’”

The South China Morning Post on Hong Kong. “Hong Kong’s home rents fell 1.8 per cent month on month in October, the biggest monthly decline in four years, a private study shows. The worst performer was City One Sha Tin, where average rents fell of 4.5 per cent month on month to HK$36.20 per square foot. ‘It is the biggest monthly decline in four years,’ said Wong Leung-sing, head of research at Centaline Property Agency, citing an increase in supply as a reason.”

“Rents have also been softening in popular housing estates such as Taikoo Shing. ‘The average rent once hit more than HK$42 per square foot when the market peaked in the second quarter, now it’s down to the HK$39.60 level,’ said Kenneth Chiu, sales manager at Centaline’s Taikoo Shing branch. ‘The average rent a few months ago was HK$26,000 a month. Now you can rent one at between HK$23,000 and HK$24,000.’”

From Bloomberg on China. “Chinese borrowers are taking on record amounts of debt to repay interest on their existing obligations. The amount of loans, bonds and shadow finance arranged to cover interest payments will probably rise 5 percent this year to a record 7.6 trillion yuan ($1.2 trillion), according to Beijing-based Hua Chuang Securities Co. Dubbed ‘Ponzi finance’ by Hyman Minsky, the use of borrowed funds to repay interest was seen by the late U.S. economist as an unsustainable form of credit growth that could precipitate financial crises.”

“‘Some Chinese firms have entered the Ponzi stage because return on investment has come down very fast,’ said Shi Lei, the Beijing-based head of fixed-income research at Ping An Securities Co., a unit of the nation’s second biggest insurance company. ‘As a result, leverage will be rising and zombie companies increasing.’”

“China Shanshui Cement Group Ltd. became the latest company to default on yuan-denominated domestic notes last week as overcapacity in the industry hurt profits and a shareholder dispute stymied financing. State-owned steelmaker Sinosteel Co., which pushed back an interest payment on a bond last month, postponed it again this week.”

“The amount of bad debt among Chinese banks rose 10 percent in the third quarter from the previous three months to 1.2 trillion yuan, about the size of New Zealand’s economy. Total debt at listed companies has climbed to 141 percent of common equity, based on a market-capitalization weighted average, the highest level in three years. Defaults will probably keep rising as profits fail to keep up with interest expenses at some Chinese borrowers, according to Zhou Hao, a senior economist at Commerzbank AG in Singapore. ‘We will see more defaults and rising bad loans in the financial system,’ Zhou said.”

Bits Bucket for November 24, 2015

Post off-topic ideas, links, and Craigslist finds here. Please visit my Youtube channel which you can also find here:

November 23, 2015

Once The Market Starts To Soften: ‘Get Out Of Dodge”

The Real Deal reports on New York. “Forget about aspirational pricing. Sellers serious about offloading their luxury apartments will need to slash prices to find buyers who have plenty of new development alternatives to choose from, top brokers said. After a slow start to the typically busy fall, agents said they’re just beginning to move product – and only when their sellers get real about asking prices. ‘Most sellers are absolutely not realistic,’ said Dolly Lenz, speaking at a conference hosted by the magazine Haute Living. ‘They’re buying into the hype and they’re bringing it to the brokers and saying, ‘Oh no, my apartment will sell for $15 million.’ Well, the last sale in your building was for $8 million.’”

“Some sellers appear to have gotten the message. Approximately 650 New York City listings lowered their ask by at least 5 percent over the last 30 days, compared to 419 listings in the previous 30-day period, according to StreetEasy. A total of 29 of those homes were priced at $10 million and up. ‘Everyone expected there to be an uptick in activity coming back from Labor Day but there wasn’t,’ said Compass’ Leonard Steinberg. ‘In November, all of a sudden the email inboxes are cluttered with price reductions.’”

The Miami Herald in Florida. “Pop star Pharrell Williams is giving the sale of his downtown Miami penthouse another try — and he’s willing to take a $1.6 million hit to get rid of it. The 42-year-old singer relisted the 40th-floor penthouse at Bristol Tower after more than a year off the market. According to MLS listings, Williams now wants $10.9 million for the three-floor, 10,000-square-foot crib. One drawback: Property taxes currently are about $60,000 a year.”

“Williams bought the place at the height of the real estate boom for $12.9 million. He has been trying to unload the digs for more than two years. The singer first listed it in November 2012 for a whopping $16.8 million, but the sale price melted steadily until Williams pulled it off the market a year ago.”

The Mercury News in California. “Home sales slowed in October across the Bay Area, dropping by just under 2 percent from the year before even as prices kept going up. Median sale prices rose, though not by the double-digit margins that had become routine for some parts of the region during the frenzy of the past several years. In Santa Clara County, a typical home sold for $869,000, up 6 percent from $820,000 in October 2014 — though down from $910,000 in September 2015.”

“Pleasanton-based agent Steve Mohseni, described ‘a general softening of the market. We may be heading into a period when appreciation will slow down compared to what we have been seeing over the past five years. Buyers are rethinking, pausing.’ After years of record prices, he said, ‘their willingness to pay more into new highs will be somewhat limited.’ The situation is pushing some potential sellers off the fence: ‘Once the market starts to soften, then people start thinking, ‘Well, let me get out of Dodge.’”

The Press of Atlantic City in New Jersey. “Atlantic County may be at ground zero for people losing their homes, with the nation’s highest foreclosure activity, but it is not alone in facing scores of abandoned properties. The was clear this week at the New Jersey State League of Municipalities meeting in Atlantic City, when a workshop called ‘Creative Solutions for Vacant Properties’ attracted more than 500 local government officials from all over the state. The huge crowd forced organizers to move the session from a regular room to a cavernous conference room.”

“‘In all my years of coming here I have never seen anything like this,’ said Michael L. Zumpino, CEO of the consulting firm Triad Associates, of Vineland, a member of the panel. ‘This large crowd shows it’s not just an urban city problem, it’s a problem for all of us,’ said Walter Denson of Trenton’s Housing and Economic Development office.”

The Herald Business Journal. “The symmetry of housing price history is disturbing to some investors and economists. In 2006 home prices reached their apex and began to decline. Five years later, the decline reached its nadir and prices began to recover. Next year, five years into the housing price growth, housing prices will probably have returned to their 2006 level. What bothers some analysts is the five-year down phase approximately matched by the five-year up phase. The question they are asking themselves is whether this is some sort of market cycle that will soon bring another housing bust?”

“There is general agreement that the housing price situation was a bubble. And when that housing bubble burst, it took Wall Street and the rest of us with it. Which is it, then? Is it a bubble now? Is the five-year pattern a fearful symmetry or just a coincidence?”

“There certainly is an eerie resemblance between where we are now and those pre-crash days. A report published by the New York Federal Reserve Bank in 2004 was entitled, ‘Are Home Prices The Next Bubble?’ and addressed the concerns of investors and economists at that time. What their research indicated was that, ‘A close analysis of the U. S. housing market in recent years, however, finds little basis for such concerns. The marked upturn in home prices is mostly attributable to market fundamentals. Home prices have essentially moved in line with increases in family income and declines in nominal mortgage interest rates.’”

“Researchers at the Federal Reserve Bank of San Francisco analyzed the current housing market and found that both the loan and the household financial data are encouraging. In a report entitled, ‘What’s Different About The Latest Housing Boom,’ they write that, ‘…conditions in the latest boom appear far less precarious than those in the previous episode. The current run-up exhibits a less-pronounced increase in the house price-to-rent ratio and an outright decline in the household mortgage debt-to-income ratio, a pattern that is not suggestive of a credit-fueled bubble.’”

“The Federal Reserve efforts to find a bubble definition sturdy enough to support monetary policy, though, have produced disappointing results. It is still not clear how to distinguish a bubble from a rising price environment caused by shifts in supply, demand, or both. And, worse, it is not clear what kind of Federal Reserve intervention would deflate a bubble efficiently enough to avoid widespread collateral damage throughout the economy.”

“In the end, it may be about symmetry after all. The current housing market is different from the bubble of last decade, but home prices still might stall or even decline. And because the Federal Reserve cannot really lower interest rates that are already near zero, our economy will have to respond on its own as best it can. That would be different from last time, too.”

“What haven’t changed are the imbalances in the overall economy, and in the housing market, due to wage stagnation and artificially low interest rates. Those factors provide enough symmetry with the pre-crash markets to make the prospect of a faltering housing market worrisome.”

Bits Bucket for November 23, 2015

Post off-topic ideas, links, and Craigslist finds here. Please visit my Youtube channel which you can also find here:

November 21, 2015

Luxury Apartments … Going Up In The Hood

A weekend topic on rents, affordability and the housing bubble. WWLTV in Louisiana. “Uptown remains one of the most expensive places to live in New Orleans. Realtor Greg Jeanfreau said the current growth and demand for housing in New Orleans is unprecedented. It has its plus and minuses. ‘You have people moving here from other parts of the country. To them, $500,000 is like $50,000 to us, and it doesn’t seem like that much. It’s a pretty wild time. There’s a lot of excitement, but there’s a lot of things happening and there’s people that aren’t happy about it.’”

“According to a report by HousingNOLA, rent in New Orleans have jumped 50 percent from 2000 to 2013. Home values have soared 54 percent in that same time frame. Harold Brooks said he’s feeling that pressure. For almost 20 years, Brooks has lived at a house on St. Claude Avenue near Poland Avenue in the Upper 9th Ward. It’s an area that Brooks says is increasingly gentrifying, driving up the costs of homes and rent around him. ‘You’re going to do one of two things: If you own a house, you’re going to sell it, if you’re renting, well, you’re just going to move.’ Brooks said.”

The Star Tribune in Minnesota. “Ralph Gilbertsen, 74, lives on about $900 a month from Social Security and pays around $250 for his one-bedroom apartment. The balance of his $750 rent is covered by Section 8, a federal government program that provides housing subsidies to low-income people. But Gilbertsen, along with hundreds of other residents, will have to find a new home. The Crossroads has been sold to a developer who’s spending millions of dollars to bring it upmarket.”

“It’s a scenario being played out across the Twin Cities, housing advocates say. With apartment vacancy rates in the metro area hovering around 2 percent, landlords have the market clout to raise rents and refuse vouchers, both steps that tend to force out low-income residents. ‘Crossroads is a huge example of this happening, and I think we’re going to continue to see it across the metro area,’ said Eric Hauge, an organizer with Home Line, a nonprofit tenant advocacy group. ‘It’s not illegal to discriminate against poor people.’”

The Yale Daily News on Connecticut. “I hadn’t come to the New Haven mayoral debate expecting fireworks. Everyone knew incumbent Mayor Toni Harp was going to win re-election in a landslide. But the forum had a tense moment when her opponent Ron Smith, former city clerk and Newhallville alder, criticized the new wave of ‘luxury apartments … going up in the hood.’ He cited Winchester Lofts in Newhallville as one example, whose units are unaffordable to many residents of the Elm City. ‘You know good and well,’ he said, his voice rising, ‘we can’t afford $1,900 a month.’”

The News Press in Florida. “The good news from a Zillow market report Friday was more apartments are opening across the county, slowing the rate of rising rents. The operative word is slowing. Rents continue to rise much faster than the historical norm, and faster than incomes, the Zillow October Real Estate Market Report says. ‘The owners I deal with, who read the national reports of rising rental trends, push me to raise their rents even higher. What they don’t realize is we’ve already increased them by a couple hundred dollars,’ says Larry Simons of Home Hunters USA, a leader in the local apartment market.”

Vegas Inc. in Nevada. “Las Vegas’ rental market has heated up in recent years, with investors buying cheap homes in bulk to lease out and landlords buying and building apartment complexes. The growth in rental prices, however, is far from robust, a new report shows. The median home-rental price in Southern Nevada was $1,214 a month in October, up 2.6 percent from a year earlier, according to Zillow.”

“Investors flooded Las Vegas and other hard-hit cities after the housing bubble burst to scoop up cheap rental homes. The buying binge pushed up local home values at one of the fastest rates nationally, raising fears of another bubble. Apartment investors also flocked to Southern Nevada to buy and build properties. In Southern Nevada, by comparison, investors are paying an average of $80,401 per unit for rental complexes this year, according to brokerage firm Colliers International.”

“Most of the construction today is in the southwest valley and Henderson, and some real estate pros have said developers might be overbuilding.”

Nevada Public Radio. “Keith Lynam, president of the Greater Las Vegas Association of Realtors, told KNPR’s State of Nevada that stability has returned to the Valley’s housing market. He said home appreciation is getting closer to where it should be and there are no ‘hot pockets’ of neighborhoods that are outpacing the rest of the valley. ‘It’s a great time to buy and a great time to sell,’ Lynam said.”

“However, Lynam said there are still 40,000 vacant homes in Southern Nevada that need to be dealt with. ‘We’ve got a tremendous amount of vacant homes out there that we need to address,’ Lynam said, ‘And unfortunately none of us can do anything about. It’s those people in the financial institutions that need to take an action on that.’”

The Union Tribune in California. “A new report from the federally backed National Resource Network published a long list of economically challenged cities, with a focus on California. The report spotlights our state because of its size and urbanization – and its high concentration of distressed places. The ‘Hidden In Plain Sight’ report lists 77 distressed California cities – defined as those with at least one of the following: unemployment rates above 9 percent as of 2013, where 20 percent or more adults are in poverty or where the population had declined by at least 5 percent over the last decade.”

“The report echoes data from the U.S. Census Bureau. Using the bureau’s newer supplemental poverty measure, California’s poverty rate over 2011 to 2013 was 23.4 percent, representing about 9 million people. This is the highest poverty rate of any state ‘largely due to California’s high housing costs relative to the rest of the country.’ The data is a bit old, but there’s little question that distress levels remain high in these places.”

“Urban writer Joel Kotkin, a fellow at Chapman University in Orange, fears California is becoming a ‘feudal society’ – an economic system with rich and poor and where people lack the opportunities to move into a different economic class. In his view, the state’s tax and regulatory policies are driving good blue-collar jobs to other states, while California’s land-use policies drive up the cost of housing, making it harder than ever to climb those economic rungs.”

The Kingman Daily Miner in Arizona. “David Sexton recently moved to Golden Valley from ‘Commie-fornia’ to escape government overreach, and that’s what he sees in a Mohave County zoning ordinance that would restrict the sale and relocation of manufactured homes older than seven years. ‘They’ve regulated themselves into Third-World status,’ Sexton said of California’s failing economy. ‘Old mobile homes have a following like old cars. People love them for what they are, and unfortunately, they’re both being regulated into oblivion.’”

“Sexton was among more than a dozen people who spoke Monday at the Board of Supervisors regular meeting in opposition to the ordinance that was scheduled to take effect Dec. 2. Supervisor Jean Bishop, whose district covers Golden Valley, Dolan Springs and Chloride, made a motion to postpone enforcement of the ordinance and send it back to the Planning and Zoning Commission for reconsideration or repeal. The board voted 5-0 to approve her motion.”

“The purpose of the ordinance, which was recently adopted by the board, is to make sure manufactured homes meet federal construction standards and that they’re consistent with surrounding development. Bullhead City enacted a similar ordinance a few years ago to clean up blighted neighborhoods. ‘We already have a tool called code enforcement,’ Elise Herron told the board.”

“Golden Valley resident Carmen Johnson asked for a complete repeal of the ordinance, saying it creates a hardship for low-income families wanting to move to the valley and for anyone who wants to buy a mobile home over seven years old. ‘Effectively, this eliminates growth and the creation of jobs and business,’ Johnson said. ‘It’s condemnation,’ added Margaret Wene. ‘You destroyed the values of our property, but you want to put a value on it and tax us. You’re going to destroy the valley and all the other areas.’”

“Supervisor Hildy Angius agreed with citizens’ comments about code enforcement issues and overregulation. ‘I think this is a really misguided ordinance and if it was up to me, I’d take it off now and don’t even waste any more time,’ she said.”

Bits Bucket for November 21, 2015

Post off-topic ideas, links, and Craigslist finds here. Please visit my Youtube channel which you can also find here:

November 20, 2015

It’s Investors Who Are In The Headlights

It’s Friday desk clearing time for this blogger. “Is Fed chair Janet Yellen a sorceress who needs to conjure up a new spell? One online retail executive seems to think so. Patrick Byrne, the CEO of Overstock, said in the company’s earnings release Monday that the United States economy has been lifted by ‘Janet Yellen’s Magic Money Machine.’ Presumably, the ‘machine’ is the Fed’s poiicy of low interest rates. Byrne said this machine ‘has kept sales of homes and home-related products robust.’ But he warned of a discouraging shift in the economy in the third quarter.”

“He noted that there were ’sharp traffic swings for competitors with sites catering to disposable income’ — particularly fashion and jewelery retailers. During a conference call with analysts, Byrne elaborated on these comments, saying that ‘there’s a real secular, fundamental question mark about the economy’ and that he is ‘quite bearish’ about consumer spending outside of housing. Yes, Home Depot and Lowe’s are still doing well. But the lousy results from Macy’s and Gap this week are not a good sign. Walmart is the worst-performing stock in the Dow this year. And shares of higher-end retailers like Nordstrom and Tiffany have plunged too. So there’s a case to be made that Yellen’s magic is starting to wear off.”

“People buying homes in Waco generally find bargains, according to a report by real estate giant Coldwell Banker. Trammell Kelly, a residential real estate specialist with Kelly Realtors, said would-be home buyers from California or the Northeast typically sell upscale homes before considering a move to Texas, or Waco. ‘They are simply amazed at how much more house they can acquire here for the price,’ Kelly said, adding he is seeing an increasing number of investors from California and even the Dallas-Fort Worth area who are buying homes locally not to live in but to resell.”

“Coldwell Banker reports that 50 of the top 100 most expensive markets in the United States are in California, with Newport Beach topping the list. The average listing price of a four-bedroom, two-bath home there is $2.29 million.”

“Orange County home sales and prices ‘lost steam’ in October, dipping more than usual from September amid the elevated cost and restricted supply of homes, CoreLogic reported. ‘The luxury market got hit in September because of the stock market dip,’ said Steve Thomas, author of ReportsOnHousing. ‘For example, demand in Newport Coast dropped down to 5 pending sales (as of) … Sept. 24, and there were 121 homes on the market at the time.’”

“The fictional home of Al Pacino’s character (Tony Montana) in the 1983 film Scarface has sold after a price drop of almost US $23 million. The ridiculously opulent Montecito, California mansion spent a whopping 17 months on the market. Russian-born financier Sergey Grishin bought the estate for a reported $20 million in 2008, when U.S. housing prices went through a major crash. Thinking he could make a pretty penny, he waited until 2014 to put the Montecito home on the market at $35 million, but no buyers bit. Months later, he dropped the price by nearly half, to $17.9 million. It finally sold at $12.26 million, leaving Grishin over $7.7 million in the hole.”

“RealtyTrac released their October Foreclosure Market Report and it’s a mixed bag. Despite a fairly steady flow of repossessions and auctions over the last few years Chicago’s shadow inventory has really flattened out. Gone are the days when it would decline by 800 or more units in one month. In fact, October’s level was actually up over September. That was the second time in less than a year where we saw an actual increase in the level of shadow inventory.”

“I don’t understand why this is happening since you would expect the auctions and repossessions to be steadily driving this number down. Could we really have reached a steady state where we are perpetually dealing with the most intractable properties that you can’t even give away?”

“Not so long ago, houses in Alberta suburbs couldn’t be built quickly enough to keep up with demand — but a report says the number of new houses that aren’t sold or rented has jumped by nearly one-third in Edmonton and by a smaller degree in Calgary. An ATB Financial report says Edmonton has seen the number of so-called ‘unabsorbed’ new houses skyrocket by more than 30 per cent in the past year. Currently there are 403 unabsorbed houses in Calgary, a number that’s falling, compared to Edmonton’s growing number of 949, according to ATB Financial. Some ATB economists believe the current economic conditions in the province will cause the number of completed but so-called ‘unabsorbed’ homes to grow.”

“Housing investors have suddenly become a bunch of nervous Nellies. A survey by Digital Financial Analytics, shows only 58 per cent of one-property investors expect higher prices in the coming 12 months, down from 83 per cent in the September survey. The change of heart has been no less dramatic for portfolio investors owning more than one property, with only 63 per cent now expecting price rises, compared with 89 per cent in September. The balance of supply and demand in the housing market is continuing to shift, with a divergence between the number of homes newly listed for sale and the total still on the market waiting for a buyer. Sydney and Perth share most of the blame.”

“‘House price expectations are on the turn, with investors, those eternal optimists, now more uncertain about future capital appreciation,’ DFA’s principal Martin North said. All market segments, including home owners and first home buyers, are less inclined to expect rising prices but it’s investors who are ‘in the headlights.’ ‘Such large changes over just a couple of months are unusual,’ Mr North said. The survey’s construction may even understate the extent of the turnaround. It is based on responses gathered over the latest 12 months.”

“Westpac economist reckon the Auckland housing market is suffering a hangover from what it calls ‘recent excesses.’ ‘The weakness was especially concentrated in Auckland, with sales down 15 per cent and prices down almost 5 per cent in just one month,’ say the report’s authors. ‘This confirms the idea that some of the recent froth in the Auckland market was driven by investors getting in ahead of the new regulations.’”

“The report says investors have done their dash for now, and the ‘Auckland housing market is likely to suffer the resulting hangover, for at least a few more months.’ Peter Thompson, managing director of real estate firm Barfoot & Thompson, says: ‘What is clear is that the rate of price rise that occurred in September, at the start of the spring season, has not been sustained. Clearance at auctions has definitely slowed,’ he says. ‘However, buyers are no longer under the same pressure to meet vendor price expectations, and the properties that are selling are those with realistic reserves.’”

“With the real-estate boom entering its fourth year banks and developers are eager to expand credit to the sector, though regulators say they are monitoring lending for real estate for signs of a bubble. The National Bank of Cambodia could increase the risk weights associated with real-estate lending. ‘The real-estate and construction sector has grown very fast. It seems to me that supply is in excess of demand. It is a bubble, but I don’t know when it will bust,’ said Economist Srey Chanthy. ‘If you have time, spend a day hanging around in Phnom Penh and the suburban areas. You will find that there are a lot of real-estate projects going on, many buildings, apartments/condos and they have low occupancy rates, some are even empty. Most project owners, apartment and condo investors, buyers and customers borrow from banks. If they cannot pay, the bust will occur and prices will drop.’”

“Stephen Higgins, managing partner at research firm Mekong Strategic, agreed. ‘It’s a bubble, particularly in the apartment market, with many buildings having very high vacancy rates, yet there’s a lot more supply coming online,’ he said.”

“Home sales Belgravia, the London district favored by Russian oligarchs for its large Regency-style houses, are slumping after the collapse of the ruble against the pound. Transactions dropped 25 percent in the neighborhood in the 10 months through October from a year earlier, compared with a decline of almost 20 percent in the rest of central London’s best districts, according to researcher Lonres. Sales of luxury homes in the capital have also been damped by an increase in the stamp duty sales tax and falling commodity values. That’s prompted broker W.A. Ellis LLP to warn that ‘the bubble may already have burst’ for the most expensive properties.”

“‘The share of Russian buyers in the prime central London market is down due largely to the currency weakness and difficulty in getting money out of the country,’ said Charles McDowell, who advises wealthy clients on buying luxury homes in London. ‘This has affected Belgravia and Knightsbridge in particular, which is very much the Russian heartland.’”

“During his career apogee in the early 2000s, Oscar-winning actor Nicolas Cage was one of the highest-paid celebrities on the planet and was making as much as $40 million a year. In 2009, the once high-flying Cage filed for bankruptcy. At the age of 51, he’s only now climbing back to financial solvency. How could a multi-millionaire movie star fall so far, so fast? Simply put, Cage made colossally stupid real estate investments — and dug a deeper hole for himself through poor management of his property-related debts and obligations.”

“His vast real estate empire included two apartments on a ritzy stretch of New York’s Fifth Avenue; three castles (one an ancient Bavarian castle in Germany); Dean Martin’s former home in Beverly Hills, Calif.; a townhouse in Bath, England; and two islands in the Bahamas. His magnificent homes, apartments and land either went into foreclosure or were sold for huge losses. What’s more, the IRS came after him for $6.3 million in back property taxes.”

Bits Bucket for November 20, 2015

Post off-topic ideas, links, and Craigslist finds here. Please visit my Youtube channel which you can also find here: