July 29, 2016

For Almost Five Years We Were On An Upward Spiral

It’s Friday desk clearing time for this blogger. “Shares of apartment landlord Equity Residential fell the most since March after the company cut its revenue forecast for the third time this year, citing greater weakness than it anticipated in the Manhattan and San Francisco rental markets. Equity Residential is among landlords having to work harder to lure tenants in the high-cost markets of Manhattan and San Francisco as an apartment-construction surge gives residents more bargaining power and limits how much owners can raise rates.”

“AvalonBay gave renters lease-signing concessions worth $300,000 in the second quarter, four times more than in the same period a year earlier, Chief Operating Officer Sean Breslin said on the company’s earnings call. ‘Markets do reset from time to time, either due to new supply or changes on the demand side of the equation,’ Equity Residential CEO David J. Neithercut said on a conference call. ‘Unfortunately at the present time, we’re experiencing both factors in two of our most important markets.’”

“Slower sales and a glut of inventory has led to a buyers’ market for South Florida luxury properties, according to Miami Beach real estate agent Jill Eber. ‘For almost five years we were just on an upward spiral,’ Eber, of Coldwell Banker’s the Jills, told a gathering of real estate professionals. ‘But, right now, it has adjusted and it has become more of a buyers’ market.’”

“There are hundreds of unsold luxury homes priced above $500,000 in the Flagstaff area but just 36 priced below the median sales price inside the city limits. The median sales price for a home in the Flagstaff area in June was about $334,000, Century 21 Flagstaff realtor Stephen Brighton said. That price represents a 9 percent dip in the median price from May, which was $368,000. Brighton said in an email that those million-dollar home owners may be overly enthusiastic about the housing market.”

“Brighton said that so far this year, nine homes in the area have sold for $1 million or more. Last year, 20 homes sold for $1 million or more. ‘It’s a pretty safe bet that we’ll see a fair amount of price reductions from impatient, motivated sellers that don’t want to sit through winter and then have to revisit the selling season in 2017,’ he said.”

“Hamptons home sales cooled in the second quarter compared to the same period last year, according to reports released this week. Town & Country Real Estate noted ’significant drops’ not only in the number of sales but also in dollar volume and median price in most of the 12 hamlets and villages it covers on both East End forks. ‘I think the glaring trend is, there were declines in markets that are normally strongholds, such as the estate sections of Southampton, East Hampton and Water Mill,’ which includes Sagaponack and Bridgehampton, said Judi Desiderio, the CEO of Town & Country. ‘The crown jewels got a little dusty this year.’”

“Economic research head Wan Suhaimie Wan Mohd Saidie said Budget 2017 will still be very ‘rakyat-centric’ for the property segment with goodies to be given out under government housing schemes. ‘If we are lucky, (there would be) additional subsidies for government affordable housing. We do expect Bantuan Rakyat 1Malaysia (1Malaysia People’s Aid) to be given out as well.’”

“The cut in the overnight policy rate by 25 basis points and ever further cuts are unlikely to spur lending to the sector, he noted. ‘We think adjustments to the 70% loan-to-value cap (LTV) on third home purchases is also unlikely as those who are buying third homes are investors/speculators rather than genuine home buyers, so increasing the LTV may send the wrong message to the rakyat. Fiscal measure-wise, lowering or removing the real property gains tax will be detrimental for the property market as it may cause a panic sell which further exacerbates the oversupply situation.’”

“Kyrgyzstan and other Central Asian countries are constantly trying to attract foreign investment, which is very important for the local economies and one of the most important answers to persistent economic stagnation. Over the first three months of 2016 Kyrgyzstan’s gross domestic product dropped by 4 per cent to the amount of 78.8 billion som, while its industrial output lost a staggering 24.3 per cent on-year.”

“The basic explanation is rather simple: the Kyrgyz nation is spending more than twice the amount that it earns. The number of lavish mansions and luxury estates mostly around Bishkek but also in other parts of the country is mushrooming. So is the construction of luxury housing in the capital most of which stand all but empty. The reason is quite simple — Kyrgyz do not have any other place to hide their cash if not to build apartments and develop real estate.”

“Thousands of house sales across London have collapsed since the Brexit vote as alarmed buyers scramble to pull out of ‘overpriced’ deals, the Standard has learned. Agents said increasing numbers of ‘desperate vendors’ are prepared to accept previously unthinkable price cuts. Matthew Wright of the Marylebone and Mayfair branch of estate agents Winkworth said: ‘There are definitely people more eager to sell than previously who have instructed us to take quite substantial discounts. The rule of thumb is that people are offering 10 per cent below, but we have had offers at 50 per cent below and plenty at 20 to 25 per cent.’”

“With economic worry rife in Alaska, the annual three-year outlook luncheon hosted by the Anchorage Economic Development Corp. was a popular affair. AEDC President and CEO Bill Popp didn’t shirk from delivering some unpleasant news to the business community: 27 years of steady economic growth in the city came to an end in 2015.”

“Many in the audience lived through the disastrous recession of the 1980s, when at least a dozen banks failed and thousands of homes went into foreclosure. Popp emphasized that housing prices, while lower, have not dropped dramatically and it’s primarily sellers of pricier homes who are seeing values fall and days on the market exceeding a year or more. In terms of inventory, the Anchorage housing market is starting to look as it did during the Great Recession of the late 2000s, but not the crisis levels of the mid-1980s.”

“Popp echoed the opinion of realtors who note buyers now have more choices as a period of tightness in Anchorage’s housing market appears to have ended. ‘Housing is coming off of a four-year sellers’ market,’ Popp said.”

“It’s still not clear what will cool this smokin’ hot housing market and these unsustainable prices. Will it be an easing, a plunge, a bursting or what? Crib regularly tells you readers that as Amazon goes, so go housing prices here. One friend who’s pretty good with these things said it appears Amazon has effectively accomplished it’s build-out and is now ready for the transition to cash-cow. That friend thinks one big question is when does Amazon start hiring people in other places instead of continuing to concentrate on South Lake Union. If Amazon does that, that would be an easing.”

“The next force at play is just natural capitalist economic flow. Nationally and locally we are attempting to grapple with the widening gap between uber-rich and the poor, with a shrinking middle class in between. That’s a bubble itself that will burst. It has advanced like a bad cancer into the unhealthy range. We see it here in these unsustainable housing prices. We closed recently on a sale for a younger couple with two kids who had to look in Renton to find a home to buy. They said the other day that every one of their friends have migrated out of Seattle. Same with the older couple of teachers who migrated to Tacoma in search of a home.”

“Forces like that ebb and flow. They build then push over their banks. People can only commute so far in such mind-bending traffic. Light rail will be painstakingly slow in making that commute more palatable. Ten and 15 percent annual increases in housing prices can’t be, and aren’t, matched — as housing prices must be — with income gains.”

July 28, 2016

Thinking The Market Is Going To Go On Forever

The Business News Network reports from Canada. “Foreign investment accounted for about 10 per cent of Vancouver real estate transactions over a five-week span, according to data released Tuesday by the British Columbia government. Of the $8.8 billion-plus in Metro Vancouver real estate transactions collected between June 10 and July 14, more than $885 million came from foreign purchases, according to the report. Vancouver purchases accounted for 73.3 per cent of all foreign real estate transactions in B.C. over that time frame. The latest data on foreign investment comes a day after B.C. Finance Minister Mike de Jong announced a new 15 per cent property transfer tax on foreign nationals purchasing real estate in Metro Vancouver. That additional tax is set to take effect on Aug. 2.”

“The 10.9 per cent of Vancouver transactions involving foreign nationals marked a lower percentage than the numbers posted in Burnaby and Richmond, B.C. which saw 15 per cent and 19.1 per cent respectively in total investment from foreign nationals. Brendon Ogmundson, economist at the B.C. Real Estate Association says the unintended consequence of the tax implementation is the timing,as the long weekend fast approaching. ‘There’s a lot of deals currently underway that could fall through simply because they were agreed to under certain terms and now all of a sudden, a buyer may be subject to a pretty significant tax hit,’ said Ogmundson in an interview with BNN.”

The Globe and Mail. “Vancouver’s surprising new property-purchase tax for foreigners has generated a storm of coverage in Chinese-language media both in Vancouver and in China itself, with articles warning of dramatic new costs, analyzing the political motives of the B.C. Liberal Party and predicting a host of negative outcomes. But it was journalists and commentators in Vancouver who were the toughest on the new tax and who gave it the most coverage.”

“In the Sing Tao Daily, one article warned that foreign buyers would be able to hide their identities by asking local residents to buy properties on their behalf. Another article criticized the tax, which was much higher than anyone expected. ‘Increasing the tax to cool down the real estate market has limited effects,’ it said. ‘It won’t achieve its goal of reducing housing prices dramatically.’”

“The Ming Pao Daily News echoed some of that and went further. It ran one story about a Chinese buyer looking for contracts being abandoned by offshore buyers because of the new policy. Another story talked about the likelihood that buyers will shift their attention to Toronto, Vancouver Island or Vancouver houses priced under $2-million. ‘The new policy will have a strong impact on houses over $4-million, which are always favoured by offshore buyers,’ said Yongci Lyu, a realtor in Vancouver.”

The Daily Herald Tribune. “Grande Prairie’s current real estate market is great for those looking to buy a home, said Curtis Burbee. ‘In a typical week right now, there’s a lot more new listings than solds,’ the vice president of the Grande Prairie and Area Association of Realtors told the Grande Prairie Rotary Club. ‘That says a lot about our market. It is a buyer’s market right now where… the new listing inventory is outweighing the number of buyers out there.’”

“While it’s hard to predict how long the area will remain in a buyer’s market, Burbee said realistically it could be close to 12 to 18 months. ‘Stay positive. It’s a buyer’s market and the economy changes from buyer to seller’s (market) consistently like I said over that seven to 10-year cycle so it’s no new news and for buyers it’s great news,’ he said.”

The Innisfail Province. “After dodging the bullet for more than 18 months from the provincewide economic downturn, the home resale market in Innisfail, Penhold and Bowden is now bending from recessionary blows. The number of home sales in all three communities, along with total sales volumes, has dropped significantly for the first seven months of the year when compared to statistics from the same period in 2015. As well, there has been a sharp increase in the number of active residential listings, creating a buyer’s market but also reflective of increased worry over the economy.”

“‘It takes a while for everything to trickle down. Consumers were feeling the pain earlier and I think they are just continuing to feel it,’ said Sandi Gouchie, president of Central Alberta Realtors Association. ‘We talked to people and they were ready to hold on for a little while, but now some people just can’t hold on anymore.’”

The Rocky View Weekly. “The slumping economy has impacted Cochrane’s housing market, according to data from the Canada Mortgage and Housing Corporation (CMHC). Since the start of 2016, Cochrane saw 161 new starts of all dwelling types – down from 572 over the same period in 2015. ‘We’ve seen a decline in housing construction, and we’ve seen that right across the Calgary region,’ said Richard Cho, principal of market analysis for the Calgary area with CMHC.”

“Rocky View County realtor Dave Swanson said though a large inventory of higher-priced homes remain on the market, the overall market remains stable. ‘Our whole country is built on the middle class, and the middle class is, for the most part, working. I think the market is good. We’ve seen a little bit of downturn in pricing, but it’s so minimal,’ he said. ‘The multi-million dollar stuff, that stuff is dropping by 30 points. (But) if you want to move up, now is the time to move up. Interest rates will never be much better.’”

“Swanson attributed the decrease in starts in Cochrane to homebuilders overbuilding to forecasted demand. ‘Everything goes in a cycle,’ he said. ‘When those guys overbuild, they’re thinking the market is going to go on forever.’”

Oversupply, Falling Demand And Weakening Yields

The New Daily reports from Australia. “A Sydney real estate boss has branded young city dwellers ‘generation selfish’ for refusing to cut back on widescreen TVs, Netflix, fashionable clothes and craft beer to get a footing in the property market, unlike thriftier generations of the past. Malcolm Gunning, founder of the Gunning agency, issued the blistering call-to-arms accusing young people of failing to make necessary sacrifices. ‘More and more we are seeing a victim mentality associated with the high cost of property, yet this ‘generation selfish’ sees widescreen TVs, designer clothes, international holidays and eating out as everyday essentials. They simply won’t do what is necessary to cut their lifestyle in order to save a deposit,’ he said. ‘If you were serious about buying a house, you would compulsively save and you’d have to cut things out of your life.’”

The International Business Times. “The gradual recovery of Australia’s house prices could be stymied by a property funding crisis. The crisis is triggered by new borrowing rules imposed by local banks on foreign and Australian purchasers of apartments. The Australian Financial Review reports that Shanghai-based financiers have been complaining that funding of the Chinese clients from Australian banks were frozen. Their only recourse is to foreclose the property or borrow at usurious interest rates from private financiers.”

“The problem is not limited to Chinese buyers of Australian apartments. Local clients of Australian financiers, mostly Asians, have also complained of their settlements being deferred by three months to find alternative sources of funding. Because all deals have been frozen, discloses Mark Yin, agent with Home Tree Group, based in Shanghai, financiers are now scouring for new financing from all over the world.”

The Australian Financial Review. “Trips to Europe and luxury Asian resorts are on offer to off-the-plan buyers of Melbourne apartments as rising supply and falling demand increases pressure on developers. Buyers of two or three bedroom apartments in the south-eastern suburban complex selling for up to $810,000 are offered flights and accommodation in Europe worth $10,000. Buyers of one bedroom apartments, which cost about $350,000, are offered flights and accommodation in Bali, or Fiji, worth $5000.”

“DealCorp managing director David Kobritz said the offer was an alternative to usual promotion packages such as rent guarantees, window furnishings, furniture or technology packages. ‘We just felt it was something different,’ he said. ‘It has been a long, cold, wet winter and we thought it might just help persuade someone on the verge of buying.’”

“Some property developers around Melbourne’s central business district and Docklands are pushing back settlement for off-the-plan buyers by up to three months to enable them more time to refinance their purchase, according to financiers and developers. Oversupply, falling demand and weakening yields are expected to push down apartment prices by between 8 and 15 per cent, particularly in Melbourne, where new apartments continue to flood onto the market, according to BIS Shrapnel.”

The Gold Coast Bulletin. “A Taiwanese businessman who four years ago put his lavish Gold Coast mansion on the market at $16 million has sold it for half that amount. James Tsai’s 2638sq m Sanctuary Cove home has been bought by Chinese buyers in an $8 million deal that has already settled. The house was intended for Mr Tsai’s family and was completed in 2011 but, after his adult children opted against living in Australia, he decided to remain in Taipei.”

“Last year he sold another Sanctuary Cove home for $1.5 million and in 2012 was sued for failing to settle the $1.395 million purchase of a 38th-floor apartment in the Hilton Surfers Paradise. The mortgagee resold the apartment for $780,000 and the court action subsequently was discontinued.”

“The buyers of Mr Tsai’s Sanctuary Cove mansion, Feng Kou and Aiyi Wei, have a home that barely has been lived in, overlooks the Coomera River and has a 78-metre frontage to a private harbour.”

From Domain News. “Perth property prices continue to plummet despite hopes they may stabilise this year, with the median house price now at its lowest point since March 2013. House prices sunk 1.7 per cent to a median of $568,132 in the June quarter, the sixth consecutive fall for the city. Over the past year, Perth house prices have fallen by 5.6 per cent, the worst in the country, bar the volatile Darwin market.”

“‘After looking like the market might bottom out, Perth recorded a sharpish decline in the month and an even sharper decline in the June quarter,’ Domain chief economist Andrew Wilson said. ‘House prices in Perth are the lowest they’ve been in three years and they are still falling.’”

July 27, 2016

This All Sounds A Lot Like The Bubble Of 2006

KARE 11 reports from Minnesota. “When real estate agent JJ Korman showed homes a few years ago, he knew it might take several visits before he got an offer. But this year, buyers are nearly knocking down his door. ‘Back then maybe we’d get a 15 to 20 showing amount in the first month,’ said Korman, owner of Korman Realty. ‘Here, we have that in the first weekend.’”

“Homes now sell both faster and higher. Twin Cities median sale prices are at a record $242,000, often driven up as buyers scramble to outbid. Dave Hackenmueller, a local real estate agent for 40 years, calls the last few months ‘insane.’ ‘You are going to have multiple offers,’ said Hackenmueller. ‘That’s just a given.’”

“But if this all sounds a lot like the bubble of 2006, experts say, it’s not. A new study from the University of St. Thomas found the bad loans and excessive flipping of ten years ago are gone, saying sales are now thanks to a healthy economy and cheap loans. ‘There’s a direct relationship between interest rates and values,’ Hackenmueller said, ‘And when rates are 3.5 percent, people are willing to spend more.’”

The Denver Post in Colorado. “Homebuyer demand suffered a big drop in Denver in June, despite a surge in listings that came onto the market last month, according to an index from Redfin. Redfin tracks the home tours its clients take and the subsequent offers they make, using that sample to get a pulse on demand in the larger market. A score of 100 on the index matches the three-year average of activity from 2013 to 2015. Scores below that reflect weakening buyer interest.”

“The Denver demand index came in at 36 in June, down from an index score of 129 a year earlier and the lowest monthly score captured since the index started in 2013. The 54.7 percent drop in June was the most severe among the 15 major metros that Redfin tracks.”

“Denver has faced a shortage of listings for three years now. But the June home sales report from the Denver Metro Association of Realtors showed a 24.4 percent surge in listings in June vs. May, nearly six times the average increase between those two months.”

“Despite that surge in supply, unlike any seen in months, Denver buyers cut way back. Karla Kirkpatrick Adams, a Redfin agent in Denver, said overall homes are taking longer to sell. Some buyers panic after their homes spend more than a month on the market, even though historically speaking that isn’t a long time. ‘The market is not as crazy as it has been,’ said Adams. ‘Prices have increased to a point where it is pricing people out of the market.’”

The Alaska Dispatch News. “In Anchorage, selling more expensive homes is getting harder. More listings, slower sales and flat prices in Alaska’s largest city are apparent across the housing market this summer, but it’s the upper reaches of the market, above the $750,000 mark, that are most sluggish. That’s in part because oil companies are transferring some high-earning employees out of state, said Niel Thomas, associate broker at Coldwell Banker Best Properties. Sellers in that price range also include doctors, attorneys, architects and financial and other business executives, municipal property records show.”

“Thomas sees a wide-open window for those with above-average financial means who are on the hunt for a more expansive layout. There are ‘good opportunities for local residents to upgrade if they are in stable economic circumstances,’ he said.”

“The expansion of choices at better prices is the silver lining to a market that is reverting to what realtors are describing as more balanced. The number of active single-family home listings in Anchorage as of June stood at 1,026, up 38 percent from June 2015, according to data provided by Thomas from the Multiple Listing Service. The tail end of the last recession, in October 2011, was the last time home listings broke the 1,000 mark.”

“Closings recorded by MLS totaled 1,268 for the first six months of 2016, a 7 percent drop from the first half of 2015. The year-to-date average sales price of $365,811 for a single-family home, while just barely lower than last year, is nonetheless significant for breaking a four-year trend during which the average sales price increased by 3.3 percent each year.”

“While buyers hold the advantage at the upper end, the market favors neither buyers nor sellers at the lower to upper-middle price ranges, below $500,000, as an inventory shortage has eased, according to Naomi Louvier, owner and chief executive officer of Jack White Real Estate. ‘Compared with last year, we’re not seeing as many bidding wars,’ she said. ‘To compete against the other listings, you have to do more preparation. You might have to stage your home.’”

Prices Aren’t Skyrocketing — At Least Not Statewide

The Boston Globe reports from Massachusetts. “A powerful combination of low mortgage rates, high demand, and few choices have pushed home prices in Greater Boston and across the state to record highs. The median sale price of a single-family home in the metro region was $585,000 in June, and for condominiums it was $505,000 — both records for the month, the Greater Boston Association of Realtors said Tuesday. But even at these levels, according to Warren Group’s chief executive, Timothy M. Warren Jr., the housing market is not in a bubble. Rather, Warren said, prices are reflecting strong demand and a very limited supply.”

“‘Median prices are rising slowly. We’re not in a situation where prices are skyrocketing — at least not statewide,’ he said.”

“James Gulden, a Redfin real estate agent in Boston, said he expect prices to continue rising steadily. ‘I haven’t made a bid in the past year that has sold for what it previously sold for,’ Gulden said. ‘Every time it’s for a next higher price than what the previous buyer bought it for.’”

The Providence Journal in Rhode Island. “Though the number of houses sold in Rhode Island in June went up by 2.6 percent, and the median sales price rose 3.6 percent, to $245,000, a dwindling supply of homes for sale may put the brakes on the real-estate market, according to the Rhode Island Association of Realtors. Rita Danielle Steele, broker/owner of Steele Realty Consultants International, in Providence, said investors from Boston have been winning bidding wars for multifamily investment properties on the West Side of Providence, often making cash offers on the spot.”

“As for the single-family housing market, she said, limited inventory has been pushing the spring market into summer, as many buyers, through they started a search in the spring, ‘are still looking.’ ‘When things do come on the market that are suitable, buyers need to be aggressive,’ Steele said. ‘Buyers have really needed to adjust their expectations this year.’”

“The association said condo sales were strong in June, with sales up 22 percent, though the median sales price fell 5 percent, to $207,900. The association said easier financing guidelines for condos has helped sales. About 10 percent of the house sales in June were distressed, meaning they were either foreclosed properties or short sales, and this level is nearly unchanged from a year ago.”

The Real Deal on New York. “With temperatures hitting Mars levels, Manhattan’s luxury market slid further during the third week of July with just 15 contracts signed on properties $4 million and up, according to Olshan Realty. For the week of July 18-24, the total weekly asking price sales volume was $104.5 million with an average asking price of $6.9 million and a median asking price of $5.6 million. The average discount was 6 percent, and the average number of days on market was 333.”

From The Record in New Jersey. “On Wilson Avenue in Wayne, a shady street of well-kept homes, the wood contemporary at No. 96 stands out. It’s been empty for years, thick moss grows on the roof and, neighbors say, water from a broken pipe flooded the interior and poured down the street several years ago. On Berdan Avenue in Fair Lawn, a piece of black tarp hangs off the roof of a brick Cape Cod, and two dead evergreens stand sentinel at the front steps. Get close to the house and you’ll catch a whiff of mold.”

“On Cumberland Avenue in Teaneck, weeds grow through the patio behind a vacant brick ranch; inside, paint is peeling off the walls in sheets. Neighbors call these homes eyesores. Real estate experts have another name: ‘Zombie’ houses — homes in foreclosure that stay empty and neglected for years.”

“Nancy Dyrsten lives across the street from the home at 4-03 Berdan Ave. in Fair Lawn, which was repossessed by the lender earlier this year after sitting empty for years. The landscaping is overgrown and a lamppost tilts at an angle. The roof appears to be damaged, and inside, large pieces of Sheetrock are missing from the walls and ceilings.”

“‘I’m sure the whole house is just destroyed from water damage,’ Dyrsten said. ‘It’s a very upsetting situation. It’s sad and it’s not good for our property values. There is something wrong when a house is allowed to sit like that.’”

“The house on Wilson Avenue in Wayne has been vacant for years. According to property records, it sold for more than $800,000 in 2005, as the housing bubble inflated. The home was repossessed by the lender in a Passaic County sheriff’s auction last October. It was recently for sale for $500,000, before being taken off the market last month.”

“The home, in an upscale neighborhood just blocks from a country club, has five bedrooms and 4,000 square feet, plus an indoor pool, on a lot of nearly half an acre. According to neighbors, the former homeowners left late at night, hastily packing their belongings into their vehicle. After they departed, neighbors say, a pipe inside the house broke, sending water cascading down the street. They assume the interior has water damage.”

Allowing Greed To Overcome Common Sense

A report from Bloomberg. “It turns out that even the well-off need help in a housing market as crazy as the one in the San Francisco Bay area, and lenders are elbowing each other in a rush to provide it. They’re courting Silicon Valley workers with tailored loans, guaranteed 24-hour approval and financial-planning services. Social Finance Inc. has deals with Google and other top technology companies that allow it to market to new hires. First Republic Bank — which gave Facebook Inc. billionaire Mark Zuckerberg a 1.05 percent interest-rate mortgage — has opened branches in Facebook and Twitter Inc. headquarters. San Francisco Federal Credit Union will finance 100 percent of houses costing up to $2 million.”

“For many, it’s not home values that keep them in rentals but alarming down payments, which can be more than the cost of the average U.S. house: $187,000. That’s where San Francisco Federal Credit Union comes in. It started offering zero-down loans in December to people who work in San Francisco or San Mateo County. The credit union has more than $100 million pre-approved for 30-year adjustable-rate mortgages in what’s called the Proud Ownership Purchase Program for You.”

“As the tech boom starts to show signs of cracks, there’s some concern that high loan-to-value mortgages are dangerous. Silicon Valley venture-capital funding fell 20 percent in the second quarter from a year earlier, according to a report by PricewaterhouseCoopers and the National Venture Capital Association. New companies are staying private longer, leaving fewer options for shareholders to cash out.”

“The median San Francisco condo price rose less than 1 percent in the second quarter after an 18 percent increase a year earlier, data from Paragon Real Estate Group show. Inventories of condos listed at $2 million or more jumped 44 percent — but the number sold fell 30 percent.”

“‘Lenders get so caught up trying to stay competitive and finding a market edge, they basically allow greed to overcome common sense,’ says Terry Wakefield, a mortgage consultant who co-founded one of the first online direct lenders in 1998. ‘Easy money does fuel and accelerate the inevitable bubble.’”

“And the notion of 100-percent financing makes some in the industry nervous. ‘Given what we went through in 2008, zero-down financing is suicidal for our country,’ says Chuck Green, CEO of Bay Area Captial Funding Inc., a mortgage brokerage that offers loans from about 40 different companies. ‘We have to learn from our mistakes.’”

July 26, 2016

Familiar Anxieties And Debates

The Register-Guard reports from Oregon. “Across Lane County, and especially in Eugene, many local real estate agents and housing market analysts say prices are rising at a pace not seen since the pre-recession boom years more than a decade ago. The record-breaking home prices — not just in Eugene but in many markets in Oregon and nationwide — are triggering familiar anxieties and debates. Are we in a housing-market bubble — or for that matter a stock market bubble — that’s inflated by desperate buyers and is doomed to burst? Or are the escalating home prices sustainable and reasonable?”

“Lisa Frey, a buyer’s agent with Keller Williams Realty in Eugene, has worked in real estate sales locally for 19 years. She watched Californians flood the market here during the mid-2000s boom. As the economy has recovered from the recession, they’ve returned to the Eugene market, competing with local buyers. The hot real estate market in California allows owners there to sell their property and direct the cash into Oregon. ‘The last six months is when I really noticed the frenzy start picking up,’ Frey said. ‘I just talked to somebody on Sunday who said, ‘We hate California. We want out.’”

“The recent price escalation puts pressure on buyers to up their offers and make snap decisions. That concerns real estate brokers such as Ron Blacquiere, who owns Equinox Real Estate in Eugene with his wife, Bess. After years of depressed home prices and inventory rates above 10 months, the market appeared to be heading toward a sweet spot between a buyer’s and seller’s market around late 2014, he said. The surge in prices ‘has kind of been in the making over the last 18 months,’ Blacquiere said. ‘The rapid increases give me pause, they make me nervous.’”

The Pueblo Chieftain in Colorado. “Real estate agents will tell you Pueblo’s housing market has heated up in the past few years — though they are divided over whether the cause is people coming to the area for legalized marijuana. ‘We’re going through a seller’s market right now that I’ve never seen before in my career here in Pueblo,’ said Betty Martinez, owner of a local real estate company. ‘You’re seeing multiple offers on property that are above the asking price.’”

“Laurie Linn, of the Pueblo Housing Authority, said that for whatever reason, Pueblo clearly is at the top of the list for many housing investors. ‘I had a call from a Denver man who asked me, ‘If I buy 25 or 50 houses in Pueblo, can I rent them all?’ she recounted. ‘And I told him that right now he could.’”

The Houston Chronicle in Texas. “The housing market in northwest Houston has remained steady this summer, despite the downturn in the energy sector. And builders are adjusting to suit the needs of the market. Last year, there were many builders who offered homes priced more than $300,000. But the demand now is for lower priced homes. ‘Builders start to adjust the product line they have out there,’ said Jill Wente, a real estate agent with Better Homes and Gardens, Gary Greene, in Spring. ‘We’re seeing some builders come back and make adjustments to offer lower prices in the under $300s to accommodate for that segment of the market where the demand is definitely still there.’”

“The more expensive homes are sitting on the market longer, and inventory is therefore greater. ‘It’s a different market in a sense that we’re seeing more inventory available in the higher price point,’ Wente said. ‘Buyers have more to choose from. They are taking their time on the higher price points.’”

“The housing market has returned to more normal levels, said David Patton with Heritage Texas Properties. ‘Over the $300,000 range, homes are staying on the market longer,’ Patton said. ‘That’s not necessarily a bad thing. It’s just not the frenzy we’ve had the last two years. It’s more a normal market.’”

“‘For higher price points, it is a buyers’ market because they have options they did not have in prior years,’ Wente said. ‘For lower price points, it’s still a sellers’ market.’ And more communities will be developed. ‘We still have land for them to build on,’ Wente said.”

The Days Of Impressively Peaking Values Are In The Past

A report from Bloomberg. “Welcome news for America’s renters could be unhelpful for the Federal Reserve. A 42-year high in the number of apartment buildings under construction points to an impending surge in supply that portends a moderation in the cost of shelter, which in June capped the biggest 12-month jump in almost a decade. Any cooling in the most pronounced driver of inflation means the Fed will have to wait even longer to reach their 2 percent price target — a prerequisite for some policy makers to raising interest rates.”

“Costs for shelter accounted for 63.9 percent of the run-up in the consumer price index excluding food and fuel in the 12 months ended June, the most since 2007 and almost four times the contribution of medical care, the next-biggest source of upward pressure, according to the Labor Department. That boost will be difficult to repeat.”

“Ben Weixlmann, who recently relocated to Washington, saw seven apartments over two months before moving with his girlfriend into a new development in Arlington. For a few hundred dollars more, they snagged a two-bedroom place instead of having to settle for a one-bedroom. ‘We found somewhere we’re both quite pleased with,’ said the 28-year-old, who works for an aerospace company. What helped cinch the deal: a 14-month lease for 12 months of rent.”

The Naples Herald in Florida. “Naples Area Board of Realtors Mike Hughes was somewhat subdued as he announced the latest data for the real estate market in Collier County. NABOR’s second quarter market report showed double-digit declines in pending and closed sales. It’s provided for a splash of cold water after a torrid 2015. ‘We’re facing some headwinds,’ Hughes conceded. ‘We have a nasty presidential election, and I don’t care who you’re for, it’s going to continue to be nasty until the election takes place. So that’s one thing that’s affecting consumer confidence.’”

“Pending sales dropped by 11 percent over the same period a year ago, with closed sales falling by 14 percent. Median closed price, which rose by double digits in 2015, has remained virtually flat, growing by 2.0 percent to $325,000. Meanwhile inventory on the market rose by 35 percent over this time last year. ‘[T]he days of impressively peaking values and expecting a price over market value are in the past,’ said Kathy Zorn, of Florida Home Realty.”

From Greenwich Times in Connecticut. “Second-quarter home sales in Fairfield County reached their highest level in a decade, according to a new report from Douglas Elliman. But not everything went up. The median sales price was $360,000, a decrease of 16.5 percent from the same quarter last year, and the luxury median sales price, at the top 10 percent of the market, fell 26.4 percent to $1,815,700. ‘What’s happening in Greenwich is what we’re seeing across the region,’ said Jonathan Miller, president and CEO of Miller Samuel Inc. ‘The market is softer at the top and firmer in the middle and at entry-level.’”

“In Greenwich, with its pricey real estate market, housing price trends and sales fell short of the levels from last year. Both the sales of single-family home and condos declined; the median sales price for the former fell 7.5 percent to $1,757,000 while it declined by 26.5 percent to $680,000 for the latter. Luxury-market prices followed the overall trends of the market.”

The Inland Valley Daily Bulletin in California. “The townhomes sit half-finished — or half-unfinished depending on your perspective — and the city of Claremont has had enough of what officials and residents are calling blight. So this week, city officials will be meeting with Newport Beach-based William Lyons Homes to discuss the status of a 95-unit townhome project near the 210 Freeway, Mayor Sam Pedroza said. The development has not been, well, developing for some time, said Pedroza, who, along with other city officials, is calling for the project to either get moving again or be sold to another builder who will finish it.”

“‘I think we’ll continue pushing to make sure that either the developer moves forward with something or they figure out a way to unload it to someone else. From a city perspective we’re not going to ignore it,’ Pedroza said. ‘Not only is it a blighting type of situation, but the community gets upset when they see nothing is happening as well.’”

“Claremont Community Development Director Brian Desatnik said the city is working to find options that would complete the project. ‘We don’t like any project sitting half-completed, so the site as it currently sits is a blight on the neighborhood,’ Desatnik said. ‘It is not acceptable to us.’”

“The Claremont City Council in February was informed that construction was halted. Desatnik said William Lyon Homes, which has 19 other projects currently for sale in Southern California, indicated it needed 60 days to reassess the market. ‘They did not believe the market was in a place where they needed it to be in order to proceed with the project,’ he said.”

July 25, 2016

It Could Be Sell Time

The Silicon Valley Business Journal reports from California. “A closely watched measure of real estate developers’ sentiment turned sharply lower, suggesting a pullback is on the horizon for the region’s go-go office growth. That’s the message from the latest Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey. The report found that by 2019, Silicon Valley office developers expect rental rates to be lower, and vacancy rates higher, than they are today. ‘What our panelists are saying is as they’re looking forward to 2018, they’re seeing markets that are not quite as good as they are today, that this building boom is kind of topped out,’ said Jerry Nickelsburg of the UCLA Anderson School of Management.”

“Signs have been emerging that the office market is losing steam, and the recent round of brokerage reports found less deal activity and in some submarkets, rising vacancy rates. Adding to the mix: A number of office projects, built without tenants lined up, that are reaching the market still unspoken for. ‘What we saw in this survey was really a bit of a peak in the middle part of 2014. What we’ve been seeing ever since then is a slow but basically continuous decline,’ said John Tipton, an attorney with the law firm Allen Matkins, which works with UCLA on the report.”

The Arizona Republic. “It could be sell time for two big groups of metro Phoenix homeowners. Many Canadians and institutional investors bought bargain foreclosure homes in the Valley during the crash. Tom Ruff, who is author of the Arizona Regional Multiple Listing Service’s monthly Stat report, has been tracking north-of-the-border addresses on property records, concluding that for every Canadian buying a metro Phoenix home now, another nine others are selling.”

“Big institutional investors, who paid cash for Valley homes and turned them into lucrative rentals, also could start selling at least some of their Phoenix houses soon, Ruff said. They now own about 12,629 houses across metro Phoenix , according to Ruff’s latest count. But institutional homeowners are losing renters as more people opt to buy. Institutional investors Colony Starwood Homes, Invitation Homes and American Homes 4 Rent all report losing more than 20 percent of their renters nationally as those folks decide to buy, Ruff said.”

“Many of the rental houses owned by institutional investors in the Valley were bought for less than $150,000 and could now sell for double that. It’s a good thing there’s a shortage of metro Phoenix homes for sale under $350,000. Still, I hope they don’t all try to sell at once. That could produce a glut of homes for sale, potentially hurting all our home values.”

The Chugiak-Eagle River Star in Alaska. “While the state of the state economy is still forefront on the minds of most Alaskans, some may be wondering whether summer 2016 is a good time to buy or sell. All of the listings in the Chugiak-Eagle River area that The Star looked at had an average falling under $500,000. Inventory is up by nearly 10 percent while homes sold in the first six months are down 8.2 percent. Days on the market are nearly equal to last year, although the average closing price has dipped by about 1.2 percent.”

“Army National Guard Lt. Col. Ruth Anne Cresenzo at JBER said she feels everyone is nervous about the future of oil prices, the state of the economy in Alaska and the future of the Permanent Fund Dividend. She told The Star that homeowners, including her, are afraid their home values will drop and those who are currently renting are afraid to buy.”

“But more encouraging words come from Bill Popp, President and CEO, Anchorage Economic Development Corp.: ‘It’s important that anyone thinking of buying or selling a home know that the Municipality of Anchorage market remains relatively stable. Total listings in Anchorage, while up in the last three months, are still at levels well within the 10-year historical range. In the last four years, it’s been a strong seller’s market in the Municipality, though that trend seems to be softening a little in the first half of 2016.’”

The Forum News Service on North Dakota. “Rental prices in Dickinson are the lowest they’ve been since the oil industry planted stakes here, but people aren’t flocking to fill up rental properties. While residents might be excited about the cheaper prices, property companies are having a difficult time renting out units and houses that once had a waiting list.”

“Amber Lengyel, who manages the Dickinson Meadows apartment complex and oversees multiple properties in the city, said it’s an unstable market. Dickinson Meadows currently has 63 percent occupancy rate and the other properties Lengyel oversees aren’t doing so well either. ‘When we opened (Dickinson Meadows) in October of 2014 we were renting at the $2,500 to $3,300 range and now we are over half that cheaper,’ she said.”

“Dickinson Place Townhome, a low-income housing complex, used to have a waiting list, Lengyel said. Now there are vacancies that can’t be filled. ‘When I first moved here three years ago at Dickinson Place Townhomes … I had a wait list a mile long,’ she said. ‘Now at that property we have something like eight vacancies and nobody on a wait list, and it’s incredibly hard to fill because market rent and low income are competing. So why would anyone want to jump through the hoops of having to do all of the paperwork with low income and you know all of the rules when they can honestly go get a nicer, if not as nice, place where it literally takes a half hour to sign a lease to move in?’”

“Realtor Diana Zietz of Continental Real Estate said the firm has an estimated 190 rentals with 30 percent vacancy. ‘When people were moving into the area, those buildings were starting to fill up even at the higher prices,’ she said. ‘Now that people have vacated, there is an abundance of properties and we haven’t seen that in the past. This is probably the worst that I have seen it.’”

Where Are They Going To Find All These Buyers?

The Wall Street Journal reports on New York. “The number of new rental apartments in New York City is expected to surge in the coming years. But the question remains whether that increase will hit the investment market for such buildings like a wave or a ripple. Over the next three years, more than 38,000 market-rate rental apartments—mostly in Brooklyn and Queens—are expected to be completed, with 14,686 of them added this year, according to Ten-X, an online real-estate company. The company estimates another 17,044 new apartments will be completed in 2017, marking a new high. The last peak came in 2001 when about 5,500 units were added.”

“The forecast from a recent Ten-X report is stark: The supply increase will result in market-rate vacancies of more than 10% by 2017 and zero rent growth for market-rate apartments in 2019. ‘I refer to it as a digestion problem,’ said Peter Muoio, chief economist and head of research at Ten-X. ‘There is so much, so fast at one point in time, that it’s difficult for any market to absorb that wave of supply.’”

From Real Estate Weekly. “With the one-two punch provided by the strong dollar and the volatility in financial markets, the United States’ appeal to foreign homebuyers was expected to wane. The National Association of Realtor’s 2016 Profile of International Activity in US Residential Real Estate, which took into account home sales to international clients between April 2015 and March 2016, found that foreign buyers purchased $102.6 billion in residential properties.”

“This represents a 1.3 percent drop compared to the previous year’s survey. The figures in the current survey show a drastic u-turn for foreign homebuyers. During the previous year, total sales dollar volume from international buyers increased by 13 percent. Edward Mermelstein, the managing partner of law firm Rheem, Bell & Mermelstein, agreed that Chinese investors have been gradually retreating from the US over the past year. ‘We’ve definitely seen a pullback over the past year from Chinese investors. That has more to do with the fact that, internally, China has been having some serious economic issues, as well as political issues,’ he said.”

“New York City is due for some tough times in some segments, According to Wei Min Tan, an associate broker at Rutenberg who works with a lot of Chinese clients, foreign buyers have scaled back their price targets. ‘In New York, you have a lot of these super-luxury buildings and many of them, by super-luxury I’m referring to ones priced seven million dollars and above, a lot of them were built with the intention of selling to rich Chinese buyers. I think that there’s an oversupply and the question would be: ‘Where are they going to find all these ultra-luxury buyers?’ he said.”

The Real Deal. “The U.S. government moved to seize four high-priced condominiums in Manhattan, as well as a stake in the Park Lane Hotel, in connection with a money-laundering scheme that allegedly diverted $3.5 billion away from a Malaysian investment fund. The government’s effort to seize the entities offers a rare glimpse into how dirty money is moved into some of the city’s most expensive properties by a complex global network of shadowy characters, mysterious business entities and willing bankers and lawyers.”

“In a complaint filed Wednesday, federal officials sought to seize valuable artworks, a private jet and real estate in New York and Beverly Hills amid its probe into how billions of dollars meant to benefit the Malaysian citizens were misappropriated from the 1Malaysia Development Bhd., or 1MDB.”

“The Manhattan properties include a full-floor penthouse at Walker Tower purchased for a then-record-breaking price of $50.9 million in 2014, as well as a penthouse at the Time Warner Center (bought for $30.55 million), Park Laurel ($33.5 million) and a condo at 118 Greene Street ($13.8 million). Federal prosecutors also moved to seize a roughly $200 million stake in the Witkoff Group’s TRData LogoTINY Park Lane Hotel.”

“In all, the New York City real estate – worth nearly $350 million – represents a small slice of the funds federal prosecutors say were misappropriated from 1MDB. But they nonetheless served as a vehicle for concealing the stolen monies and they reflect the ability of anonymous corporations to launder money through U.S. real estate, the government alleges.”

North Country Public Radio. “There are more than 150 abandoned homes in Watertown. A report put out by the city assessor finds homes in the city can be empty for months, even years, before the bank takes them over. Vacant homes have become such a problem in Watertown, the city council has had trouble wrapping their head around what to do. Brian Phelps, the city assessor, visited hundreds of empty homes and poured over stacks of paperwork to figure out why these homes were abandoned.”

“Phelps said he did find a common scenario, though. In many cases, a person had bought a home in Watertown, but two or three years later they had to move away. Often they’re military who had to relocate to another Army base. ‘When it gets time for them to leave the time on market to sell their house is not financially viable for them to make that many payments while the property is for sale,’ said Phelps.”

“Or the house just doesn’t sell. Some homeowners try to rent their property, but that can be hard to do if they don’t live nearby. Phelps said in the last two years, home values in Watertown have been steadily going down. ‘And this is a definitely a factor when you look at the market as a whole. That there are these problem properties out there that people can’t afford to stay in,’ said Phelps.”

“To answer the question of why this is happening you have to look back a few years. In 2008, when the housing market collapsed across the country, home values in Watertown stayed steady. As an influx of soldiers arrived at Fort Drum, Jefferson County and Watertown leaders asked developers to build lots of new homes. Today, selling a home is harder because there’s a lot more choice. ‘The reason why you can’t put a house on the market and sell it in three months is because there is an overabundance of supply and a lack of demand,’ Phelps said.”

July 24, 2016

You Can Hear The Panic In Their Voices

The Cape Breton Post reports from Canada. “Housing sales figures released for the second quarter show little good news for Cape Breton’s economy. So far in 2016, residential sales are down 14 per cent in the Cape Breton region, which covers the Cape Breton Regional Municipality and Victoria County. While sales are down overall for the year to date, the number of properties currently on the market last month was up 14 per cent with 627 active listings over figures from June 2015. Sydney realtor Mary Ann MacCormick said sellers are receiving approximately 83 per cent of the asking price for their home — down from 90 per cent at this point last year.”

“The increased inventory on the market has sellers readjusting sales prices downward, MacCormick said. ‘There are more choices for the buyer looking around,’ she said. ‘People are reducing the prices of their homes even though they’re originally priced, hopefully, at market value.’”

“There’s also been an interest in people looking to buy duplexes or triplexes as income properties, said MacCormick. However, the sluggish economy hasn’t provided the type of return on investment those property owners would have wanted, she said. ‘People who have bought investment properties (and) probably had a five-year plan in mind are not getting the increase now when they’re trying to sell them. They’re not really seeing the profit that they thought they were going to see and that’s because prices are not going up the same way they were in the past.’”

The Dawson Creek Mirror. “Lita Powell doesn’t mince words when she talks about the Fort St. John rental market in 2014. ‘The general feeling was just panic,’ said Powell, who has managed property in Northeast B.C. since the 1980s. That year, rents were among the highest in the province outside the Lower Mainland, driven by promises of a liquefied natural gas boom. Few if any units were available, while investors poured money into new apartments, duplexes and suites.”

“‘I describe the work environment and the rental environment as hysteria,’ Powell recalled. ‘Everybody was responding to the big companies: drill faster, work harder, we need more.’”

“Now, nearly 18 months after the first signs of an economic downturn in Northeast B.C., renters have more choice than ever, and landlords are feeling a sense of whiplash. ‘We went from an absolutely ludicrous landlord’s market to a really generous tenant’s market in a few months,’ said Kevin Kurjata, a Dawson Creek realtor and landlord. ‘I saw the oversupply issues coming,’ he said. ‘I did not see the demand vanishing at the same time.’”

“Powell, who worked for the CMHC before founding Li-Car Property Management Group, said official vacancy rates don’t take into account properties with fewer than three units—leaving out duplexes, homes with suites and other types of rentals. When those properties are accounted for, Fort St. John’s overall vacancy rate is now closer to 30 per cent, she said, with more rental units set to come on the market in the coming months.”

“The weak rental market has left homeowners with few ways out if they lose their jobs. Powell has heard from more than a dozen families this month who faced a stark choice: find a tenant or lose the home. ‘I ask them what their expectation for rent is and they say ‘for $1,800 I could do it.’ I have to tell them ‘I’m really sorry, but that’s not the magic number.’ You can hear the panic in their voices.’”

From The Province. “A Chinese property tycoon linked to a massive banking scandal in China’s industrial north is at the centre of more than $500 million in B.C. property deals, a joint investigation by Postmedia and global due diligence firm IPSA International shows.”

“Chinese real estate magnate Kevin Sun — also known as Hong Sun, Kevin Lin, Hong Wei Sun and Sun Hongwei — founded Sun Commercial Real Estate in 2013. In addition to buying and selling hundreds of millions in B.C. property, the B.C. company, which focuses on immigrant investors, has raised over $200 million from investors.”

“A B.C. Supreme Court civil case connected to a South Vancouver property flip provides insight. Detailed testimony from Bo Jiang, Sun’s friend and first employee in B.C., points to Sun’s fortune in China, his arrival on B.C.’s real estate scene, and complex land investment strategies that preceded Sun Commercial’s incredible growth.”

“Bo Jiang — or Bobo, as Sun affectionately called him — was Sun’s translator and jack-of-all trades in property speculation, Jiang would recall in the 2008 B.C. Supreme Court civil case. It’s not clear how much Jiang knew about his boss’s history in China. But according to Jiang’s testimony, he did know that Sun claimed to be enormously wealthy. Bobo was the worker who asked Richmond bureaucrats for land subdivisions, opened a Marine Drive Royal Bank account to manage Sun’s cash, and took care of all the little things, such as maintaining Kevin Sun’s growing roster of empty homes.”

“‘At that time he said something like, ‘Eventually I would give you more than what you want or what you ask,’ Jiang told the Supreme Court. ‘He said that, ‘Given that I’m so wealthy, I don’t give a damn about this little money.’”

“One associate said that in B.C., Sun seems to be repeating the style of business he started in Jilin. ‘He is an opportunist. You know, in Jilin he bought factories very cheap and he sells it for the real estate value and then leaves,’ the associate said in an interview. ‘Now he moves very fast from buying farmland to flipping houses to flipping commercial property. If a developer from China wants to develop in Vancouver, Sun buys the land first and sells it to them. He is very secretive and smart.’”

“An associate of Sun told Postmedia: ‘In Vancouver, it is not just Kevin, though. There is hundreds of people similar to him.’ The belief that there are hundreds of real estate investors in Vancouver who are under suspicion in China is shared by Canadian law enforcement sources. ‘Sometimes we ask ourselves if we’ve already lost the battle,’ one such source said. ‘I think this guy is just part of a large network.’”

Do The Underwriters Know Something That We Don’t?

Two reports from the Denver Post in Colorado. “High plateau — it’s a phrase starting to pop up a lot more in descriptions of metro Denver’s housing market. But the leveling off could require an adjustment in thinking and strategy in a market accustomed to sharp increases in home prices. And someone who buys in 2017 might find themselves sitting on zero appreciation come 2021. ‘If we get anything under 5 percent in appreciation, sellers will lose their mind and think the market is collapsing,’ said Anthony Rael, chairman of the Denver Real Estate Market Trends Committee at the Denver Metro Association of Realtors.”

“June saw a huge 24.4 percent jump in the inventory of homes for sale versus May, an increase about six times the historical average between the two months. And while the overall inventory was still a historically low 6,769, agents note that a change is in the air, even if it hasn’t yet shown up in rates of appreciation, which are still running in the double-digits. Redfin broker Michelle Ackerman said the big jump in inventory should have translated into more showings this month, but that isn’t happening. Sellers are getting fewer offers than just a few months ago and fewer buyers are touring homes.”

“In something she hasn’t seen in two decades, Ackerman said bank underwriters are getting much more cautious, asking for more time to review appraisals and in some cases challenging them. ‘That has triggered conservativeness on the part of buyers,’ she said. ‘Do the underwriters know something that we don’t?’”

“One group will have a disproportionate influence on the housing market in the years ahead: retirees who are rich in home equity but short on savings. If they perceive the market is about to roll over, they may put their properties up for sale sooner rather than later. ‘Sales are being fueled by ‘move-down’ buyers,’ said Mark Boud, chief economist at Real Estate Economics. ‘That is the only way they can take advantage of their equity.’”

“But the bottom won’t drop out as long as developers and builders continue to put out too little supply. With land and labor constrained, builders have focused on the highest profit margin opportunities — luxury apartments and higher-end homes. That leaves those segments of the market more vulnerable to any softening.”

“Metro Denver’s average apartment rent reached a record high of $1,371 in the second quarter, according to a quarterly survey from the University of Denver’s Daniels College of Business, Colorado Economic and Management Associates, and the Apartment Association of Metro Denver. Newer units, which demand higher rent, pulled the average above the median of $1,324 DU associate professor of real estate Ron Throupe said.”

“Vacancies rose last year as developers put a large number of apartments on the market. They continue to build, adding 2,442 new units in the second quarter, but renters absorbed 4,189 units, causing the vacancy rate to fall. As the market has tightened, prices have gone up: Throupe found rents increased by $56 in the second quarter. The first-quarter figure of $1,315 had been a high at the time.”

“Rents are also rising because developers have focused on adding ‘luxury’ apartments in places like downtown Denver and central Boulder. As those become a larger part of the mix, they push up the average rent. But landlords, in an effort to lure new tenants, are also offering more concessions. The ‘economic vacancy’ rate, which accounts for discounts like a month or two of free rent, is at 14.3 percent, up from 13 percent in the first quarter.”

The Gazette. “Colorado Springs’ resale housing market remains red hot, but not problem free. The pace of buying and selling in the just-concluded first half of 2016 signals this could be a second straight record-setting year for single-family home sales in the Pikes Peak region. Many sellers of lower-priced homes put their properties on the market and field multiple offers that exceed their asking prices - sometimes within days or even hours.”

“But bidding wars, delays in getting appraisals, a tight supply of homes in the $300,000-and-under range and an oversupply of half-million-dollar-and-up properties are among problems that have led to head-banging frustrations for buyers, sellers and even their real estate agents. Despite the demand for lower-priced homes, the higher-end market - $500,000 and up - remains slow, said Tiffany Lachnidt, a real estate agent with Re/Max Properties.”

“Sellers of those properties are increasingly frustrated because they keep reading the market is so strong, she said. ‘Not every segment of the market is flying off the shelf,’ Lachnidt said. ‘Over certain price points, we jump from having six months of inventory to 38 months of inventory…We talk sometimes to sellers in those price points that are incredibly frustrated because they can’t understand why they’re not flying off the market. It’s because nobody’s talking about it.’”

“Owners of more affordable homes sometimes can’t understand why their properties aren’t selling, Lachnidt said. In spite of the demand for lower-priced homes, properties still must be priced to reflect the market; a home that’s too high by just 3 percent to 4 percent won’t get the offers it should, she said. Homes also must be in good condition, and marketing them for online viewing and in-home walk-throughs is key, Lachnidt said.”

“‘Sellers and agents can’t get lazy,’ she said. ‘You still have to have staging, you still have to be priced right and you still have to have good marketing. Otherwise, you’re still not going to sell in any market.’”