September 13, 2018

A Little More Motivated Than Normal

A report from Bloomberg on New York. “Manhattan apartment vacancies dropped in August to the lowest level in more than four years as landlords, facing the end of peak leasing season, focused on filling empty units before the slower winter months arrive. Taken together with a decline in rents and an increase in concessions, it’s a sign that landlords cared more about finding tenants than pushing the line on prices. ‘These landlords know what comes after the summer so, yeah, they definitely want to fill these vacancies as best they can,’ said Hal Gavzie, executive manager of leasing at Douglas Elliman.”

“Owners offered sweeteners, such as a month’s free rent or payment of broker fees, on 35 percent of new leases in August, up from 24 percent from a year earlier, Miller Samuel and Douglas Elliman said. The median rent, with the value of those concessions subtracted, fell 2 percent to $3,310. It was the third straight month with a decline.”

“‘The past few years, the strategy of being aggressive and not willing to react to market conditions caused them to rack up more vacancies,’ said Gary Malin, president of brokerage Citi Habitats, which released its own report on the rental market Thursday. ‘They learned their lesson.’”

The Wichita Eagle in Kansas. “The Douglas is no more. The 240 posh downtown apartments at Douglas and Market will now be known as ReNew Wichita — the result of a recent change in management. As of last Friday, the apartments at 200 E. Douglas are managed by California-based Trinity Property Consultants. Previously, they were managed by the South Carolina-based Greystar, which operated the complex since its opening last year. The most notable change: Rent has been lowered by about $200 per apartment.”

“Studios now start at $650 per month, while one-bedrooms start at $850 and two-bedrooms start around $1,200. Previously, the cheapest studio at The Douglas rented for about $890 per month. ‘The property’s gorgeous, but the main thing we hear from people is the price point,’ said Kim Lewis, who is the new community manager for ReNew Wichita.”

“The property is currently at about 74-percent occupancy, Lewis said. The new management wants to fill those vacant units — so much so that the first 10 applicants who move into the complex will receive two tickets for a Royal Caribbean cruise (good for up to three years). ‘The reason we’re a little more motivated than normal is because we’re at the tail end of leasing season,’ Lewis said. ‘We just don’t want to go into the winter months and have a huge amount of vacancies.’”

“All the amenities of the luxury complex will stay: included with the rent, residents get valet parking, 175 cable TV channels and internet, as well as access to the ‘Sky Lounge’ with rooftop wading pool, a ‘bark park’ with dog wash, a 24-hour fitness center and more.”

The Advance Titan in Wisconsin. “The Annex of Oshkosh informed students it would not be ready for move-in on Monday, Sept. 3, three days before the start of the fall semester. The luxury student housing told residents that move-in day would start Labor Day, even doing hard-hat tours every so often to show residents what the place looked like.”

“According to an anonymous source, promises were made about the readiness of the apartment complex. ‘We came in for a tour and the guy was just like, ‘Oh yeah, don’t worry about it, we have a hundred men here today. It’ll be fine.’ And that was like a month before that,’ the source said. ‘I came again and it looked the same from the outside.’”

“On Wednesday, Aug. 29, The Annex emailed residents telling them that they would have to push the move-in time on Sept. 3 from starting at 8:30 a.m. to noon, adding they will be having a final inspection that Friday, three days before move-in day and that there is a possibility they may not get approved. Residents were informed that The Annex had booked rooms at a temporary hotel in anticipation.”

“According to an anonymous source, on Saturday, Sept. 8 residents were able to move into the Annex, but not without having some problems. ‘They were supposed to have the elevator working and everything, and they weren’t working at all,’ the source said. ‘So everyone had to carry their things. It was insane.’”

“Many of the units still have chipped paint, no screens on the windows and some residents even got reassigned units because theirs weren’t ready. ‘When I got into the apartment, it looked very rushed,’ said Mailine Yang, a resident at The Annex. ‘There were holes in the wall, drywall dust on counters and dents and cracks in the walls. It’s pretty disappointing to see that in a brand new complex.’”

From KTRK in Texas. “Some students moving into off-campus housing at Prairie View A&M University say their move-in has been nothing but chaos. Students who applied to live at the brand new Panther Hill Apartments say their move-in date was delayed several times and they say the new construction units aren’t completed.”

“‘There’s debris everywhere, her bedding was still in boxes, a construction worker had to come in and put her bed together. It’s dirty,’ said parent Tracie Watson.”

“Watson says they had to clean up the mess from construction in their daughter’s apartment, the furnished apartments are missing furniture and they say they had to assemble some of the furniture. Some students moved in as workers were still painting the walls. Construction trash litters the hallways, equipment is parked outside doors and in some cases, the new tenants say the air conditioning isn’t working either.”

From Crain’s Chicago Business in Illinois. “Suburban apartment landlords keep hiking rents, but they’ve lost some of their pricing power. Ron DeVries, senior managing director in Integra’s Chicago office, attributed some of the slowdown to a shift in jobs from the suburbs to downtown. At the same time, landlords in some suburbs are having a harder time raising rents amid competition from new buildings.”

“The rising rents of the past few years have fueled a suburban construction boom, with developers adding 1,363 units in the suburbs so far this year and another 4,148 under construction, according to Integra. Developers completed 2,831 suburban apartments in 2016, an annual record, and 1,843 last year.”

“The construction is spread out over a large metro area, reducing the risk of a glut, but some suburbs where developers have been especially busy have felt the impact. On the North Shore, which has added 1,917 apartments since the beginning of 2015, the median net rent fell 6.2 percent in the second quarter from a year earlier, more than any other suburban submarket, according to Integra.”

“Landlords in northwest suburban Des Plaines will also face competition over the next year or so from three new apartment developments totaling 619 units. ‘That’s going to be a challenge,’ DeVries said. ‘That’s quite a bit of inventory for one community.’”

September 11, 2018

Price Cuts And Long List-To-Sell Times

A report from KIRO 7 in Washington. “Buyers and sellers in the Seattle area are feeling the triumph and pain of a cooling real estate market in Western Washington. Numbers released by the Northwest Multiple Listing Service show the number of homes on the market in the area is up 11 percent to 18,580 active listings, the highest it’s been since 2015. But sales are down; in King County, pending sales are down 23 percent and in Pierce County, they’re down 12 percent. The new data also shows a $57,000 decrease in the median price of a home in King County in just three months. In August of 2018, the median price of a King County home was around $669,000. In May of 2018, it was more than $726,000.”

“The cool-down in the sizzling hot real estate market is being felt by Catherine Sabol and her family, whose home in Renton has been on the market for about a month. ‘What were your expectations when [your home] first went on the market?’ KIRO 7 reporter Linzi Sheldon asked.”

“‘We were hoping—to be honest, multiple offers would come in within a two-week period and we would be a quick sale and be able to move on to our new home,’ Sabol said. ‘But that just wasn’t the case this time and it has been a tad bit slower.’”

“‘I think sellers need to be a bit more realistic in terms of how they’re pricing their properties and adjust their expectations,’ John L. Scott real estate agent Nelya Calev said, ‘because I’m still seeing a lot of sellers who will say, ‘Oh no, the market’s hot and hopping.’ Yes, if you price it right.’”

“‘The big thing I see is that competitors are more reasonable with their offers,’ buyer Liat Arama said. ‘So I don’t see those ‘Cash only, no contingencies’ offer competitions as much as I used to see, which is awesome. I think the market is becoming normal, reasonable,’ Arama said. ‘It was crazy; (it) was too hot. And it’s now the way a real estate market should be.’”

“Sobol said she and her family are being realistic and believe with summer vacation over, a buyer is just around the corner. ‘We understand because the market has been changing and there’s a lot going on in our economy right now,’ she said. ‘So we’re open. We know we’ll get there. It’ll just take a little longer.’”

From WTOP on DC. “When talking about D.C.’s hottest housing markets, new H Street, Columbia Heights and Petworth waterfronts usually float to the top. While Upper Northwest sells, overall the ultra high end of D.C.’s housing market has slowed, and multimillion dollar properties are the most likely category to see price cuts and long list-to-sell times.”

“‘A lot of foreign buyers have dried up because their home countries are making it harder for them to divest assets, and also it is more difficult for LLCs to buy because they now have to be named as to who the buyer is,’ Corey Burr, with TTR Sotheby’s International’s Chevy Chase office, told WTOP.”

From Crain’s Chicago Business on Illinois. “A home on Oak Lake Drive in Barrington Hills sold at the end of August for less than its sellers had paid for it a full 16 years earlier, the latest in a series of gloomy data points in the affluent far northwest suburbs. The luxury property market has been weak in many suburbs this year, particularly those that lie far outside Chicago, but nowhere as weak as in the Barrington area, which includes the towns of Barrington, North Barrington, South Barrington and Barrington Hills.”

“‘Everyone’s attention has really shifted toward living in the city, and we’re so far from that,’ said Judy Gibbons, a Jameson Sotheby’s International Realty agent who focuses on the Barrington area.”

“At the end of August, the number of homes sold in the Barrington area was down more than 14 percent from the first eight months of the previous year, according to Midwest Real Estate Data figures posted by the Chicago Association of Realtors, and the median price of homes sold year-to-date was down a little more than ten percent.”

“From Burr Ridge in the southwest suburbs to Lake Bluff at the northern tip of the North Shore, no other place had as negative a combination of indicators. In Lake Forest, which is about as far north as the Barringtons are northwest, sales were up more than five percent and the median price down about four percent in the same period as the Barrington area’s double-barreled droop.”

“The hilly, sometimes bucolic landscape around the Barringtons is peppered with examples of the droop. In South Barrington, a 22,000-square-foot house on Star Line first hit the market in 2015, asking $10 million. The asking price is now $3.75 million. In Barrington Hills, a five-bedroom house with a 14-car garage on five acres on Plum Tree Road has been on and off the market several times since first going up for sale in April 2006. It’s now priced at a little under $1.2 million. In Barrington Hills, a 1920s home on five acres on Merri Oaks Road, whose seller wrote a country song from the perspective of the house, is priced at about $1.2 million, or less than half the 2015 asking price.”

September 10, 2018

After Inflated Activity, A Little Breathing Room

A report from Seattle PI on Washington. “It’s a buyer’s bonanza! Well, not quite yet but it we’re rolling briskly in that direction. For now, Seattle’s condo market is a bit of a contradiction, at least in August with skyrocketing inventory along with rising values. Inventory rose an incredible 161% over the same period last year, reflecting 470 Seattle condo listings for sale last month. That was also 16.6% more than in July. Historically, we’d normally see inventory taper off by now.”

“With the spike in listings and tempered sales, the inventory supply rate increased to 2.2-months of supply. That’s significant for two reasons. First, it is the first time in five years that the supply rate surpassed 2 months of supply. Second, the supply rate is an indicator of market condition with a sellers market having 3 months of supply or less and a normal/balanced market between 4 to 6 months of supply. Last month, we were half way towards a balanced housing market.”

‘That’s based on MLS listed properties. In reality, it’s a little higher as there are non-listed new construction units for sale that’s not accounted for in the officially published NWMLS statistics. There were 210 pending sales transactions (listings with accepted offers), reflecting a one-year decline of 34.6% and a one-month drop of 11%. As with pending transactions, the number of closed condo sales also declined, reducing 14% year-over-year and 9.4% from July.”

From Globest on Texas. “Construction in the Dallas-Fort Worth TX metropolitan area retreated 23% during the first half of 2018 from a year ago, as a 7% increase for multifamily housing was outweighed by a 36% drop for commercial building, according to Dodge Data & Analytics. For the full year 2017, commercial and multifamily construction starts had fallen 12%, which followed very strong increases in 2015 (up 60%) and 2016 (up 28%).”

“‘Commercial construction may have seen a decrease in the DFW area, but we have only seen continued growth in the multifamily sector, specifically in the size of the projects that we’re seeing,’ Brian Webster, KWA Construction president, tells ‘2017 was KWA’s best year on record, and with numerous high level projects in the pipeline, we are already on track to surpass that this year.’”

“The commercial building total during the first half of 2018 recorded a substantial decline for new office starts, down 52%, as well as weaker activity for hotels (down 56%), commercial garages (down 55%) and retail (down 14%).”

“‘After the huge mega-projects we just finished such as the Toyota and CityLine projects, which led to inflated activity, we needed a little breathing room,’ Dana Walters, vice president of business development, MYCON Construction, tells ‘That’s natural. This is an untested cycle where everyone is trying to predict what will happen. There are thousands of jobs coming in every month, stretching us out to the suburbs. Tertiary markets are becoming primary markets.’”

“Metropolitan areas showing decreased activity for commercial and multifamily construction starts during the first half of 2018 in addition to Dallas-Fort Worth ($3.4 billion), were Los Angeles ($2.9 billion), down 38%; San Francisco ($2.8 billion), down 38%; Chicago ($2.7 billion), down 37% and Atlanta ($2 billion), down 43%.”

“‘Multifamily housing has proven to be surprisingly resilient so far during 2018, following its 8% decline in dollar terms at the US level that was reported for the full year 2017,’ says Robert Murray, chief economist for Dodge Data & Analytics. ‘With apartment vacancy rates beginning to edge upward on a year-over-year basis, banks had been taking a more cautious stance towards lending for multifamily projects.’”

From The Oregonian. “Price drops on gilded 1882 Italianate mansion. The gilded Italianate mansion has captured attention since the day it was built in 1882 for a wealthy Portland shoe merchant. Original owner Morris Marks lived under gold-leaf ceilings and frescoes. The property is for sale at $1,995,000, a drop for the original asking price of $2.75 million.”

September 9, 2018

People Got Really Comfortable With The Way It Was

A weekend topic on market distortions starting with Washington City Paper. “It seems like there’s nothing real estate developers haven’t figured out a way to glossy-up. The new generation of group houses popping up around D.C. and the DMV, called ‘co-living’ apartments, are like the Everlane of the housing world—a comfortable, tasteful basic that’s inoffensive enough to appeal to a broad range of palates and sensibilities. ”

“One such company, OSLO, has leaned all the way in to the Zeitgeist: ‘You might hit the snooze button a few too many times,’ an orange-and-grey card on its website flashes, before showing, inexplicably, a glossy photograph of a white woman’s legs sticking out of her leopard-print coat. Other missives include ‘you might not be using your liberal arts degree;’ ‘you might cuff your jeans too many times;’ and ‘you might not be saving 10 percent of your paycheck.’ It’s a nod to the fact that young adults tend to have negative savings, and then a wink and a shrug: Life’s hard, it seems to say, so why not pay a premium to live with like-minded people?”

“OSLO is one of several companies cashing in on the fascination some young adults have with living alongside a pack of lovable screw-ups à la New Girl, reinforcing the stereotype that millennials are pretty and misguided, cashless and pathless. All told, OSLO is more like an apartment building where your landlord just happens to pick your roommates for you.”

“Across town, on Richardson Place NW, Common operates an apartment building that has vexed neighbors since the beginning of its development in 2016. A septuagenarian neighbor complained at the time that Common is ‘basically a glorified rooming house’ and ‘too big for the immediate context.’ The fully furnished two-story, six-person apartments will run each tenant between $1,425 and $1,700 per month, a fee that includes weekly cleanings (yes, the housekeeper will wash your dishes), all utilities and furniture, and basic supplies like salt, pepper, olive oil, and garbage bags.”

“In addition to another location in Chinatown, Common also operates buildings in Seattle, Chicago, San Francisco, and New York City. On its website, Common boasts a savings of $500 on average in D.C. for its memberships compared to a traditional studio rental. A closer look at the company’s savings breakdown shows that this ad is predicated on the assumption that someone living in a D.C. studio apartment will pay $1,795 for the apartment, plus $240 a month for a housekeeper and $110 for utilities, among other costs (none of which are even close to true for this reporter, even during the summer’s sweatiest months when the air conditioning is on full-blast). The same is true for its calculation of what it costs to share a Craigslist apartment with friends, which it estimates will run a tenant $1,610 per month in D.C.”

From The Takeout. “It’s an apartment so small, you wouldn’t be blamed if you thought it was in the heart of Manhattan. But this 200-square-foot residence actually exists in a pricey area of St. Louis, and is so compact that the kitchen has to bunk up with the bathroom: The toilet, bathtub, oven, and sink are all in one room.”

“This tiny splendor was advertised at $525 a month, and is now rented. The AP reports that Harold Karabell of S.F. Shannon Real Estate Management says the new tenant loves it: ‘Toilet/kitchen combo aside, Karabell says the apartment has a lot to like, including refinished hardwood floors and new windows.’ Spoken like a true real estate agent.”

The Jacksonville Daily Record. “The Indianapolis-based developer with three luxury apartment communities in Jacksonville this week purchased property to construct another multifamily neighborhood. Becovic Management Group purchased 16.75 acres of undeveloped land on Gate Parkway for $2.7 million. Becovic President Muhamed Becovic said the company plans to build about 230 ‘high-end’ units in four- or five-story buildings.”

“Amenities include a saltwater pool, dog park, walking trails and a 24-hour fitness center. The community hasn’t been named, but Becovic said they are considering something with the words ‘banyan wood.’ He said that other metropolitan cities in Florida, such as Orlando and Miami, are oversaturated, but that Jacksonville still has room for growth.”

The The E’ville Eye. “Zumper published their latest monthly rental report for the Bay Area that covers 30 cities in our region. Emeryville dropped from fifth to the sixth highest rents in our region. The price of one bedroom units also fell, dropping 3.7% to a median of $2,890. Two bedrooms dropped 4.2% to a median of $3,670.”

The Yorkshire Post. “There was nothing luxurious about student accommodation but over the last decade the scene has shifted and for many students, the days of sharing a bathroom with four others are long gone. With fees over a three-year degree course approaching £30,000, it appears that students are no longer prepared to accept poor quality accommodation. According to property agent GVA, the latest generation of student accommodation typically includes fast broadband and wi-fi, shared study areas, plus flexible communal facilities in a secure environment.”

“However, there is also a growing appetite for the top of the market with buildings featuring fitness suites, gaming pods and even private cinema rooms. Most new student accommodation is now provided by the private sector as universities focus on funding the core areas of educating and research. Figures by JLL show that the number of student beds in Yorkshire has risen by 48 per cent, from 45,000 to almost 67,000 in the last five years, despite the number of full-time students only rising by one per cent during the same period.”

“‘We consider the market to be balanced with little scope for further new schemes unless exceptionally well located,’ said GVA directors Roger Lown and Dai Powell. Meanwhile, in Sheffield, which is home to two universities, there is a significant pipeline of accommodation in the city. There are approximately 21,000 existing student beds with a pipeline of a further 9,000 beds, according to GVA.”

“Mr Lown and Mr Powell added: ‘If all of these are built there is a significant risk of an oversupply. However it is by no means certain that all of the schemes with planning permission will be built.’ So is the student housing bubble about to burst?”

From Newshub. “A massive haul of nail guns, drop saws and other power tools went up for auction in Christchurch on Thursday as part of the liquidation of Maven Interiors. It’s just the latest building company to go under in the city as earthquake work dries up, leaving tradies without work. All that’s left of Maven Interiors is its tools, lined up at the auction house at a bargain price for those still gainfully employed.”

“‘A lot of people got really comfortable with the way it was and how busy it was, and how good the money was and that sort of stuff - and now, obviously, it’s changed,’ explained Joe De Leijer from Competitive Painters. Builder Chris Sinclair is one of those who had to downsize to survive, reducing his staff number from 36 to just a dozen. He got by, picking up other work - but others are not so lucky. ‘The worst thing to do is when people start dropping their prices because they’ve not got the work, but those prices aren’t accurate,’ he says.”

From Standard Media. “Stanlib Income-Real Estate Investments Trust might have pinned its hopes too high when it sank the first cash it raised into Greenspan Mall. The allure of shopping malls that has taken hold in the country for a while now is quickly fading, leaving the South African-based financial provider along hundreds of other investors in a discomfiting financial position.”

“‘Rental income has come slightly under pressure due to a temporary increase in vacancies coupled with some tenants bargaining for reduced rentals upon renewal of leases,’ Stanlib said in a statement.”

“Most investors were lured into setting up malls by the gospel of an expanding middle class. Property consultancy Knight Frank in a report extolled the manner in which ‘the retail property sector has been a major focus for development activity within Africa over the last decade, causing the shopping mall concept to take root in increasingly wide range of major African cities.’ It noted that this growth has been driven by, among other factors, the explosion of the continent’s ‘consumer markets.’”

“However, it appears like the middle-class hype was just that, a hype; the mall bubble has finally burst. Kenya’s floating middle class noted AfDB, is at 44.9 per cent and without them, the country’s middle class would be at a low 16.8 per cent. The middle class that investors have tumbled over each other for includes this consumer group that is closer to poverty than riches.”

“Today, of the 10 biggest malls in sub-Saharan Africa, three are in Nairobi. Two Rivers Mall, Garden City Mall and The Hub are ranked second, third and fourth largest malls respectively behind South Africa’s Mall of Africa which is the largest in Africa, straddling 131,000 square feet. Experts have described the shopping mall craze as a ‘ticking bomb.’ Returns on these investments have been on the decline as too many malls scramble for a few moneyed shoppers.”

“British magazine The Economist, in a special report titled ‘Business in Africa,’ declared: ‘This is the Africa of business magazines and bank ads: A continent that is rising at a prodigious pace and creating profitable new markets for multinational firms.’ The magazine noted that there were 1.2 billion opportunities in Africa. Nairobi, specifically, was described as ‘a city of malls and highways’ by the magazine. And Garden City, which had just been opened, was celebrated as ‘the latest temple to consumerism.’”

“Today, Garden City is easily another ghost mall with an embarrassing sight of empty floors and deserted parking lots.”

September 4, 2018

Raising The Specter Of A Glut Once Again

A report from Downtown Bellevue in Washington. “Mira Flats, the condominium building that was previously apartments, are beginning sales in fall 2018. Located on 103rd Avenue Northeast, residents can easily enjoy dining, shopping, and entertainment in downtown Bellevue. Mira Flats has studio, one-, two- and three-bedroom residences available, ranging in size from about 400 to 1,200 square feet. Prices start in the $500,000s and go above $1 million for the larger homes, according to a press release for the seller. The new website for Mira Flats mentions a starting price even lower at $400,000s.”

From KIRO in Washington. “For 21 months in a row Seattle led as the nation’s hottest housing market in the monthly Case-Shiller home price index. Of late, however, prices dropped as housing availability increased and sales slowed down, reports Mike Rosenberg at the Seattle Times. ‘The last few months prices have dropped from their spring highs. The number of homes for sale has shot back up to 2014 levels, and the number of people buying homes has fallen back down,’ Rosenberg said.”

From 6sqft in New York. “Owning a piece of New York City history just got a little cheaper. The oldest home in Brooklyn Heights, located at 24 Middagh Street, has hit the market again, this time asking $4.5 million, a price drop of over $2 million from when it was listed last year.”

From Crain’s Chicago Business. in Illinois. “A key measure of demand, absorption—or the change in the number of occupied apartments—totaled 2,995 units in downtown Chicago in the first half of the year. But Integra forecasts that developers will complete just 3,000 apartments downtown this year, down from a record 4,348 in 2017, when absorption totaled 3,385 units. It could be the first year since 2014 that demand exceeds supply.”

“But they will flip back over the next two years, raising the specter of a glut once again. Integra forecasts that developers will complete a record 4,500 apartments downtown in 2019 and another 4,700 in 2020. The supply surge could challenge landlords, especially if the economy loses its momentum or even heads into a recession.”

“Competition could become especially fierce in the South Loop and West Loop. Developers will complete more than 2,600 apartments in the South Loop between now and the end of next year, including NEMA Chicago, an 800-unit tower at the southwest corner of Grant Park being built by Miami developer Crescent Heights. The West Loop will gain more than 1,400 apartments by the end of 2020, including a 492-unit tower at Madison and Halsted streets being developed by Chicago developers Fifield and F&F Realty.”

“‘It’s kind of the calm before the storm,’ said Ron DeVries, senior managing director in Integra’s Chicago office. ‘Probably the biggest challenge will be down in the South Loop.’”

September 1, 2018

The Reality Of A Level Of Sanity Returning

A report from Bizwest on Colorado. “To quote a recent article, it’s been a ‘remarkable’ run for the American economy. At 110 months of growth since the end of the last recession, we’re experiencing the second-longest economic expansion on record. And in Northern Colorado, like much of the country, we’ve watched home prices climb right along with it. Now there are signs that both the economy and home prices may soon moderate. We’re beginning to see a return to stabilization in the housing market. What’s that mean if you expect to be a seller or buyer in the coming months?”

“Above all, pricing takes center stage. Sellers who could optimistically set lofty list prices are beginning to temper their expectations, both locally and around the country. For instance, Zillow reported at least one price reduction on 14.2 percent of all its listings during June, up from 13.4 percent the year before. And Zillow’s chief economist thinks price cuts could be even more common.’

“In addition to more price reductions, we see fewer cases of sellers receiving multiple offers on their homes. Listings will spend more time on the market, and overall housing inventory — which has been scant in Northern Colorado — will begin to grow slowly.”

“As we see prices ease overall, here are some noteworthy statistics that reflect what’s happening in the communities that make up Northern Colorado’s regional housing market: Housing inventory for the region totaled 1,704, similar to the 1,705 homes listed in June but still a healthy increase (13.7 percent) over the 1,499 homes on the market in May.”

From Go Erie in Pennsylvania. “If you watch home prices in our area, you’ll find some of the price reductions are pretty dramatic. The reasons vary. Some homeowners don’t want to hang onto their homes and are willing to drop prices to move the house after a specific number of days. Others may have chosen a price point that’s a little too high or overcrowded with homes. And others want a closing before the weather gets cold.”

From Forbes on California. “Looks like there was a summer slowdown in Beverly Hills and neighboring real estate, both in pricing and sales volume. Summer in Beverly Hills was certainly hot this year with temperatures above average. Not so for real estate, especially in the $3 million-plus range. According to Selma Hepp, chief economist at San Francisco-based Pacific Union International, July numbers in that Beverly Hills, Bel Air, Holmby Hills golden triangle show a decline in the number of homes sold by 26%, year to date. As sales slipped, it’s no surprise prices were down 11%. ‘I think buyers are a bit more skittish compared with how well Beverly Hills and those areas did over the last few years,’ Hepp said.”

“Last year Beverly Hills did well with sales of higher priced homes above $5 million. Many of those properties went above asking price with multiple offers. ‘Now that pool of buyers has been reduced somewhat,’ Hepp observes. ‘Although, I do see more price reductions in Beverly Hills in that price range and up than other areas in Los Angeles, I see it as buyers and sellers rebalancing expectations to more realistic levels,’ Hepp adds.”

“In today’s beyond fast-paced market, when we see fewer sales, it’s the reality of a level of sanity returning, a good thing for buyers and sellers. ‘When you look at sales above $3 million and you see a slowing compared to last year, that change does eventually reflect on the median price,’ Hepp explained.”

“Another interesting stat from Hepp is inventory of homes priced above $3 million increased by 93, with most of that additional inventory in the West San Fernando Valley, Beverly Hills and West Los Angeles. It’s also clear some sellers and their real estate agents are adjusting pricing strategies to reflect the current market. There were more price reductions compared with last July in areas with a larger share of homes priced between $2 million and $3 million. Look to Malibu, Hollywood Hills and Brentwood for those cuts.”

“Stephanie Anton, president of the Chicago-based Luxury Portfolio International, a network of independent luxury real estate brokerage firms has a global view on luxury markets. ‘Look at the data in many luxury markets and the price increases have been a little crazy. I think what we are seeing here is a summer slowdown and a slight correction.’”

August 20, 2018

The Great American Price Boom Losing Its Oomph

A report from the Wall Street Journal on New York. “Sales of the most expensive New York apartments fell sharply in the first half of the year, but many sellers have adjusted by cutting asking prices to make deals, brokers said. Overall sales of apartments priced at $5 million or more fell by 31% during the first half of the year, compared with the same period in 2017, according to a luxury market report by Stribling. But the slide in sales was concentrated entirely in condominiums, including newer such buildings, where the supply of expensive apartments has surged, the report found.”

“Brokers said the modest rebound in sales reflected sellers’ willingness to abandon their dreams of outsize profits in the face of buyer resistance. ‘The contracts that are getting done in the luxury end of the market are the result of sellers capitulating to reality,’ said Donna Olshan, a broker who monitors contract activity for high-end apartments.”

“Luxury apartment prices rose sharply in 2014 and 2015, but have since stagnated at lower levels. Examples of steep discounts abound in the rarefied luxury market. A five-bedroom penthouse with a terrace and soaring ceiling sold in August in a new building at 11 North Moore Street in Tribeca. It was first listed in January 2014, for $40 million, but the price was cut three times since, for a final listing price of $22.5 million. A deed filed on Thursday listed a $20 million sale price.”

The Chicago Tribune in Illinois. If you’re considering purchasing a home in the coming months, you should be aware of an important shift emerging in the market: List prices on growing numbers of houses are being cut, even in places where previous appreciation has been strong and sales at record levels. The great American post-recession housing-price boom appears to be losing at least a little of its oomph, opening opportunities for alert buyers.”

“The rate of reductions was higher than it’s been in some markets for years. In Seattle, which has been scorching hot — with multiple offers and double-digit appreciation routine — 12 percent of listings got a price reduction in June, the highest percentage since 2014. The median cut was 3.1 percent.”

“Some of the largest cities and their suburbs are also seeing growing numbers of price adjustments: Nearly 1 of every 5 listings in Chicago saw a price cut averaging 2.7 percent in the survey. In the Washington, D.C., metro area, 15.4 percent of all listings had price reductions that averaged 2.5 percent. In Miami-Ft. Lauderdale, the average decrease was 2.9 percent; metropolitan New York, 3.6 percent; Boston, 3 percent; San Francisco, 4.2 percent; San Diego, 2.3 percent; Charlotte, N.C., 2.4 percent; and Columbus, Ohio, 2.7 percent.”

“In San Diego, 1 of every 5 listings got pared back in June, a significantly higher figure than the year before, when 1 of every 8 listings (12 percent) were reduced in price. Zillow’s study dovetailed with new research by realty brokerage Redfin, which found slowdowns and price softness in the upper-end, luxury segments — the top 5 percent most expensive homes — of some cities and suburbs. In Boston, luxury sales prices slumped by 16.7 percent year-over-year in the second quarter, compared with a 9.7 percent average increase in the nonluxury segment.”

“Here’s what could be another emerging trend, which turned up in the Redfin luxury sales study: Small but noticeable numbers of homeowners who live in high-cost, high-tax states such as New York and California appear to be fleeing to lower-tax markets. You might think local taxes are no big deal for well-off owners, but consider this: One house listed for $12 million in Massachusetts came with a $101,346 local real-estate tax bill. Ouch!”

From Wisconsin Public Radio. “For the second straight month the number of homes for sale has risen in Wisconsin. Two straight months of increases, after more than a year of declining inventory, could mean the state’s issues with housing supply may be easing, says David Clark of Marquette University. ‘These are peak months for closing on homes,’ Clark said. ‘To see some improvement in inventories, even in those high-volume months, is a suggestion that maybe we have turned the corner a little bit.’”

The Herald Palladium in Michigan. “Alan Jeffries is always watching the housing market. As association director of the Southwestern Michigan Association of Realtors, Jeffries grew up in Marcellus, Mich., and worked out of Kalamazoo before taking his current position. Having taken over as association director more than a year ago, Jeffries sat down with Herald-Palladium Staff Writer Tony Wittkowski.”

“Q: It seems we have a really in demand housing market. Anything that stands out to you lately? A: The biggest surprise is how fast the sales prices have risen. I think we’ve almost increased the values too fast to sustain this. I think we’ll see a slow down pretty soon. Not so much as a crash, but inventory will level off and prices will go down.”

“Q: You say that, but the prices have continued to rise. A: They are, but it’s just not sustainable. What goes up must come down.”

August 18, 2018

Agents Are Like Frenzied Fish That Are Starving

A weekend topic starting with the Kokomo Tribune in Indiana. “Across Indiana, real estate agents have gone to battle, fighting over a meager supply of homes as they juggle a growing number of potential buyers emboldened by a robust economy. And the amount those buyers are willing to pay is only going up. ‘It’s nationwide, the low inventory,’ noted RACI President Dee Dee Richards. ‘There are a lot of buyers. When a house goes on the market, all of us agents are like frenzied fish in a pond that are starving. I’m just hoping that Kokomo and our area will be steady and it won’t over-inflate too quickly and then people get in over their heads.’”

From MTN News in Montana. “In just one year, Butte’s housing values made a significant jump. ‘I’m going to tell you the average price of a house of the houses sold was $143,000. This year to date it’s $173,000,’ said Denise Kelly, broker at Re/Max in Butte. Realtors credit home buyers from Bozeman and Missoula turning their sights on Butte. ‘West coast towns like LA and Seattle have moved into Bozeman and Missoula and in turn have priced a lot of people out of their homes so they’re moving into Butte and Helena,’ Kelly said.”

“Increased housing values in Bozeman come with increased sticker shock. ‘We’re seeing the average price of a house in Bozeman is $462,000. How can a new family afford that?’ Kelly asked.”

From Las Vegas Now in Nevada. “Las Vegas is number one in the country for rising home values, beating out other major cities like Chicago, Houston, and San Diego. ‘It is currently a seller’s market as buyers choose to pay over market value because of all the competition,’ said Zar Zanganeh, a broker at Luxe Estates & Lifestyles.”

“As for what is next: Zanganeh says he does not think the housing market will dip anytime soon. ‘I don’t see the bubble bursting any time soon,’ he said. ‘We have multiple casino projects; we have the Raider stadium, we have the medical school coming in so there’s a lot of things that are going to keep the market strong.’”

The Miami Herald in Florida. “It’s no secret to anyone living in Miami that once again, real estate prices are up quite a bit. And if you’re a home buyer today, you are left wondering if you should buy now or wait. The biggest fear that you might have as a home buyer, naturally, is that you don’t want to overpay. And that’s perfectly understandable.”

“The great news is that banks won’t let you overpay! Not only will they require an appraisal of the property (which will be on the conservative side after the last financial crisis), but they also will only lend to people who can prove their financial stability, work history, good credit, and ability to come up with money for their down payment and closing costs.”

“Since the market crash of 2008, according to statistics from the Miami Association of Realtors, more than half of all properties were bought by cash investors and the other half, were bought by buyers who needed financing, and who needed to go through that extensive process of documenting their ability to afford the property. Although we don’t have a crystal ball, the chances of these property owners simply walking away from their properties and letting them go into foreclosure are minimal.”

“The math doesn’t lie, and even if prices dropped by 10 percent and interest rates went up to 6 percent, the monthly loan payments would be very similar, about $8 more per month. The difference is that you would have stayed renting for an additional two years and paying down someone else’s mortgage. Alternatively, if prices continue to go up along with interest rates, the monthly payment will only be higher. If this happens, it’s likely rent prices will go up as well.”

“However, if you buy a home you like and can afford, at the current 2018 value and with today’s interest rates, you’ll not only get the fantastic feeling of achievement, pride and stability that comes from homeownership, but you’ll also lock in your housing loan payment. This will allow you to better plan your savings for things like your kids’ college educations, retirement and even vacations.”

“Besides this, as a homeowner you’ll be able to take advantage of other financial incentives such as discounts in car insurance, improved credit score and being able to deduct the mortgage interest and property taxes from your taxable income, all while building equity.”

“The most important decision is simply to buy a home you can afford and that fits your family’s needs. Besides that, from a financial perspective I’ll leave you with a great piece of advice I received from a real estate multimillionaire… ‘You don’t wait to buy real estate. You buy real estate and wait.’”

From The Real Deal on New York. “In 2011, with the condominium market booming, Greg Altshuler’s Colonnade Group scooped up 403 Greenwich Street with plans to redevelop the former warehouse into high-end condos. But by the summer of 2017, when the building was complete, the luxury sector was teetering toward a slowdown. In October of that year, Residence A — a three-bedroom pad asking $3.8 million — hit the market. It sat there for the next 235 days.”

‘Then in May, a new listing agent hit reboot: The apartment was re-listed for $3.69 million as the building’s ‘Garden’ apartment and went into contract 18 days later. The lengthy listing history of ‘Residence A’ was still online — if you knew where to find it.”

“Real estate has never been more transparent — but amid a market slowdown, buyers are acutely aware that some units are sitting on the shelf. And as they pass over anything that’s not ‘new’ to the market, some agents are looking for ways to make their listings seem fresh. Changing apartment numbers to make a listing appear new is ‘an old trick,’ said Olshan Realty’s Donna Olshan, who tracks the luxury market.”

“Lately, though, looking new requires some finesse. During the last week of July, Olshan said properties asking $4 million-plus spent an average of 536 days on the market. That kind of tortured marketing time is giving agents added incentive to circumvent online portals with granular detail about each unit.”

“Brown Harris Stevens’ Lisa Lippman, for example, has used several iterations to describe one of her listings at 160 West 86th Street. In January, she listed ‘Unit 3′ for $7.395 million. After cutting the price to $6.9 million in April, Lippman re-named the apartment unit ‘3A’ last month, according to RealPlus. ‘When we switched it, people started calling,’ said Lippman, who played around with the unit number not just to avoid looking stale. Without a letter after the number three, she said, buyers did not realize the apartment is a full-floor condo.”

“‘Of course it’s somewhat disingenuous, but in the end, I don’t think you’re really fooling anybody,’ she said.”

“If brokers can make a listing look fresh, many will jump at the chance, and with good reason. During the second quarter of 2018, the number of sales dropped 24.9 percent year-over-year to 10,819, according to appraisal firm Miller Samuel. Meanwhile, inventory was up 6.5 percent (to 19,753 active listings). Compared to this time last year, the absorption rate — how long it would take to sell out all active listings — ballooned 41 percent to 5.5 months.”

August 7, 2018

Investors Got In At Way Too High Of A Price

A report from WAMU. “When she moved into her new apartment complex in Pentagon City, Carol Millman didn’t realize she would be sharing her building with hotel guests. But one morning about a year ago, as Millman stood in line awaiting a free breakfast provided by the building’s management, she made an unnerving discovery: her building was renting out apartments to temporary guests. Unbeknownst to Millman and other residents of The Bartlett, a company called Global Luxury Suites was renting apartments in the building. Millman had stumbled across a practice that’s become common in brand-new apartment buildings in the Washington region.”

“But some say developers and landlords are turning to companies like WhyHotel as a last resort, and overlooking the negatives. Joe Rieling is the co-founder of Nomadic Real Estate, a property management company in D.C. He says WhyHotel strikes him as a sound idea, because it capitalizes on the desperation of property owners that have gotten into financial hot water.”

“Thousands of new rental apartments hit the D.C.-area market around the same time in recent years, Rieling says. Many of them opened after prolonged construction delays that cost developers a lot of money. Then rents stopped rising — largely because of the new supply — and developers found themselves in significant debt without enough rental revenue to make up the shortfall.”

“‘I see it all the time now,’ Rieling says. ‘You’ve got all of these investors … who got in at way too high of a price, got kind of caught up in the frenzy of multifamily housing here in D.C., and as the unfurnished rental market started to return to reality off its peaks in 2013, 2014, the only model that can produce them revenue to generate a profit or even just to break even’ is short-term housing, he says.”

From Curbed Atlanta on Georgia. “Following a short-term visit in June to the Old Fourth Ward, a reviewer named Micheal opined online that he’d enjoyed ‘the best Airbnb I’ve stayed in.’ He hadn’t taken up temporary residence in an O4W bungalow or VRBO condo—but a Ponce City Market studio apartment dubbed ‘The Edison Loft,’ which costs $199 per night. Such brief PCM lodging arrangements will be the new normal.”

“Officials with the Flats at Ponce City Market, the development’s residential component, announced a collaboration this week with Atlanta Luxury Rentals to operate short-term rentals. The changes come at a time when other large apartment developments have been offering concessions—six weeks of free rent, for instance—to lure tenants in submarkets crowded with new inventory, such as Midtown. Earlier this year, property management software specialists RealPage found that metro Atlanta is leading the nation when it comes to average rent discounts.”

The Union Tribune in California. “Long before she got fed up and moved out, Whitney Harchanko said, weird things began to happen in the halls of the Hollywood building she had lived in for years. People rang her doorbell at odd hours, confused about which apartment they were seeking. Drunk strangers sprawled next to the pool. Housekeepers flitted around during the day. Harchanko snapped photos and tracked down online ads for short-term rentals in the building, urging the manager to stop it from happening.”

“‘Nothing ever changed,’ Harchanko said, ‘except they put up a sign in the elevator.’”

“Those signs, posted in the elevators by Redwood Urban property management, declared that subleasing apartments for short stays was not allowed. Yet the building near the famed corner of Hollywood Boulevard and Highland Avenue is still advertised online to travelers by an international company called Ginosi, which rents out furnished apartments to nightly guests.”

“Pelican Residences is another, catering to travelers from across the globe at seven apartment buildings, mostly in Hollywood, according to a manager. That manager, Chris Rivers, said building owners are happy to get rid of apartments that are sitting empty and that renting out units for short stays creates jobs for housekeepers and others who cater to vacationers, who then spend money wandering neighborhoods. ‘It generates money for the city,’ he said.”

From Multi-Housing News on Washington. “What to Expect From Seattle’s Hot Market. Can this last? Billy Pettit, president of local development company Pillar Properties, explains why he anticipates a slowdown. As a multifamily and senior housing developer in the Puget Sound area, Pillar Properties owns more than 1,600 units in the region. Pettit: ‘The new supply has absolutely introduced new challenges to the market here. We have seen downward pressure on rent growth and, for the first time in a while, we have seen the use of concessions appearing more and more in the market.’”

“Q: Is there any more room for multifamily expansion downtown? Pettit: ‘The short answer is yes, there is definitely more room for multifamily expansion in the downtown core. It really comes down to timing for us. Do I want to deliver another 2,000 units in the next two years? No. Do I want to deliver another 2,000 units over the next five years? More likely. Do I want to deliver another 2,000 units over the next 10 years? Absolutely.’”

From WBUR in Massachusetts. “Rents in Greater Boston have fallen slightly over the last year — but only for the top tier of the market. For everyone else, they’ve ticked up. The changes in this region’s rental prices are quite small, but follow a trend in big metros that was noted by The Washington Post on Monday. ‘Since last summer,’ the Post reported, ‘rents have fallen for the highest earners while increasing for the poorest in San Francisco, Atlanta, Nashville, Chicago, Philadelphia, Denver, Pittsburgh, Portland and Washington, D.C., among other cities.’”

“The divergences at different rental price points raise questions for local officials about how to address growing housing costs. Many argue that moderating prices should filter down through a growing supply of housing stock; others say more direct intervention is needed.”

“As the Post writes: ‘City officials have said that a boom in luxury housing construction would cause rents to fall for everyone else, arguing that creating new units for those at the top would ease competition for cheaper properties. In part based on that theory, cities have approved thousands of new luxury units over the past several years, hoping to check high rents that have led more than 20 million American renters to be classified as ‘cost burdened,’ defined as spending more than 30 percent of one’s incomes on housing.”

“But although some advocates say the dividends could still pay off for low-income renters, others say more direct government action is needed to prevent poor residents from being forced out of their cities or into homelessness. …”

From Common Dreams. “Diane Yentel, chief executive of the advocacy group National Low Income Housing Coalition, outlined the governing theory that has led to this nationwide crisis. ‘For-profit developers have predominantly built for the luxury and higher end of the market, leaving a glut of overpriced apartments in some cities,’ she explained. ‘Some decision-makers believed this would ‘filter down’ to the lowest income people, but it clearly will not meet their needs.”

From Bisnow on Texas. “Houston’s apartment rents remain cheaper than those in most major metros in the country. Cushman & Wakefield Senior Director Ed Nwokedi said the city’s economy has remained healthy and offered stable affordability compared to other gateway cities. ‘Apartment rents are competitive based upon the continuous population growth and [overbuilding] supply,’ he said.”

“Houston multifamily occupancy was near 90% as of August, with 11,691 units absorbed over the past 12 months, according to ApartmentData. The market delivered 9,806 units or 43 communities within this period with an additional 10,577 units or 40 communities currently under construction. The report also predicts more than 18,000 apartment units or 68 new communities will be proposed by developers before year’s end.”

“‘Like clockwork, you can depend on developers to overbuild apartments ahead of demand,’ Nwokedi said.”

July 30, 2018

Pulling A Rabbit Out Of A Hat

A report from the Bellingham Herald in Washington. “Rents in Bellingham and other Whatcom County cities have declined in the past several months according to a new study, but local observers say they’re not seeing rent declines and don’t see the housing crisis easing. Average monthly rent for the Bellingham metro area was $1,547 in June, according to Zillow. That’s an annual countywide drop of 2.2 percent and it shows a steady decline in metro-area rental prices from a peak of $1,672 a month in October 2017. Bellingham rents have been falling steadily since a peak of $1,734 in October 2017, according to Zillow.”

“Tom Follis, a Bellingham real estate appraiser and broker, said he suspects that the Zillow report is an aberration. ‘I think it’s an anomaly rather than a trend,’ Follis said. ‘There a lot of ‘for rent’ signs out, no question. But they’re aimed at the college students.’”

The Tribune Star in Indiana. “As two more large-scale apartment projects prepare to open, there are indications the Terre Haute rental market may have reached capacity, especially for certain demographics. Another housing development that has been on hold for more than a year is now undergoing closer scrutiny and a veteran local builder cautions against further investment in rental properties. ‘Anyone building rental units right now is making a mistake,’ said Rick Jenkins, who has constructed apartments as well as single-family homes. ‘The market is very soft in newer, higher-priced units … that are renting for $1,000 per month or more.’”

“Some apartments are offering discounts on monthly rental rates and move-in specials, actions that suggest they are responding to competition.”

From Press Connects in New York. “New York City-sized rents — backed in part by a government grant and tax breaks — have arrived in Binghamton. The first wave of an expected 122 apartments at 50 Front St. is now being marketed at prices rarely before seen in the region. One- and two-bedroom units at the city’s newest apartment complex are being listed between $1,720 and $2,440. Three-bedroom units are also planned, though pricing on those has not been disclosed.”

“Those rents are raising eyebrows among some in the local real estate market. ‘I don’t know who’s going to rent these things,’ said Eric Strong, a Binghamton real estate agent who specializes in rental properties. ‘It will be pulling a rabbit out of a hat. They are setting a new standard if they can get that.’”

“Among the amenities of this development on the west banks of the Chenango River are a fitness center with cardio machines and free weights; a business center; an outdoor terrace with fireplace; a dog park; in-apartment washer and dryer; quartz countertops; stainless-steel appliances; secure parking below the building; and wifi in all common areas. Rental rates for the apartments are comparable to the mortgage payments on a huge Binghamton home.”

The Denver Channel in Colorado. “Residential builders in the Denver area are set to complete more than 15,000 new apartments this year, a substantial increase over last year’s numbers, according to RentCafe. RentCafe estimates that metro Denver will see about 15,187 new apartments completed in 2018. That’s an increase of 150 percent compared to 2017’s numbers and puts Denver among the top three metros in the country for new apartment construction.”

“The metro area with the largest number of new apartments entering the market this year is also the country’s biggest city overall: New York. The Big Apple will see nearly 20,000 new apartments by year’s end. Coming in second place is the Dallas-Fort Worth metro area, which is expected to complete construction on more than 17,000 apartments in 2018.”

The Colorado Springs Gazette. “Apartment dwellers dug deeper into their pocketbooks during the second quarter as Colorado Springs-area rents hit another record high. Monthly rents averaged $1,156.76 during the April-June period, about $15 more than the previous record set during the same quarter last year, according to the Colorado Division of Housing and the Apartment Association of Southern Colorado. Some of the newest apartments that were opened during the first quarter and being filled in the second quarter were higher-end, amenity-filled units that carry higher rents — likely helping to push up the overall rental costs, said Laura Nelson, the Apartment Association’s executive director.”

“‘When you get some more of those luxury units coming on line, you do see that bit of a spike,’ she said.”

“The area’s apartment vacancy rate of 6.3 percent in the second quarter was unchanged from the first quarter and nearly identical to that of a year ago, the report showed. With a total of 49,494 apartments in the Springs area, the 6.3 percent rate translated to just 3,139 vacant units in the second quarter. ‘When you take 6.3 (percent) of 49,000 units, that’s not a whole lot for a city our size,’ Nelson said.”

“The number of units added by builders and developers in the second quarter totaled just 222. During the first half of this year, 234 apartments have been added; a year ago during the same period, the number of new units totaled 770. More units are on the way. ‘We need thousands more,’ Nelson said. ‘It is a complete supply and demand issue. I know people don’t like to see the high-end ones come on line, but really, they still add to the supply. Those folks who can afford them will move up and that will open up a unit that maybe is more affordable for someone else.’”

From USA Today. “Here’s an alternative to both a hotel and an Airbnb: a pop-up hotel. That’s the concept that startup WhyHotel has introduced to Washington, D.C., and Baltimore and hopes to expand across the country. Last year, WhyHotel began operating these pop-up hotels within newly-built luxury rental apartment buildings that have yet to lease out all their units. Once a building is completed, it can take a year or two to fill up. WhyHotel has swooped in to offer owners the ability to make money off their empty units.”

“Guests, in turn, can enjoy amenities of the apartment. Some, such as pools, gyms or dry-cleaning services, might even overlap with services offered at a hotel. Jason Fudin, WhyHotel’s CEO, says they can charge a decent premium because ‘these are the newest and nicest buildings in the city.’ The company recently received $3.94 million in seed funding, which it will use toward opening one or two more hotels this year and another six to 12 next year.”

From Patch Illinois. “The owner of a 221-unit apartment tower on Howard Street has put the building on the market less than two years after purchasing the property for $46 million, Crain’s Chicago Business reported. The 2008-built building has been sold three times since falling into foreclosure during the Great Recession, Crain’s reported. Due to increasing supply of rental property along the North Shore, the median cost of apartments has grown at less than half of the rate of the Chicago suburbs overall.”

“There are nearly 1,000 new apartment units currently planned or being built in Evanston, which has increased the risk of oversupplying the market, according to Crain’s. HFF is marketing the 415 Premier property as an opportunity for new buyers to carry out improvements and charge higher rents, Crain’s reported.”

The Journal Sentinel in Wisconsin. “A Walker’s Point upscale apartment project that’s been decades in the making has started converting its third historic building — with one more to go. River Place Lofts will eventually total about 150 units when that final building is completed on Milwaukee’s near south side. River Place Lofts was initially planned as condominiums. Developer Peter Moede began converting the Beam House in 2001, when new condos were going up throughout the downtown area.”

“Work on the Beam House stopped for three years while Moede fought a raze order issued by city building inspectors. By the time that dispute was resolved, the condo market was starting to become overbuilt. Moede repaired the fire damage, which was covered by insurance, but put his development plans on hold. Several years after the 2007-2008 housing market collapse and the related global recession, work began on converting the Beam House to apartments. By then, there was strong demand for high-end rental housing throughout the downtown area. The apartments at River Place Lofts’ four buildings are being constructed with enough space and high-quality finishes to some day convert to condos, Moede said.”

“‘It’s going to come back,’ he said about the condo market. ‘But there’s still people who want to rent. People want flexibility. They don’t want to be tied down.’”

“One-bedroom apartments in the Finishing House will be around 1,000 square feet, commanding about $1,500 to $2,000 in monthly rents. The Dock House also has features not found in most downtown area apartments, such as a lounge where residents can store wine in refrigerated cases; a cigar lounge with a humidor; and a pontoon boat docked along the canal.”

July 15, 2018

Everyone Is Really Good At Speculating

A weekend topic on reporting the housing bubble starting with WKBW in New York. “Across Western New York, buyers are struggling to find the homes of their dreams. Inventory is low and prices are jacking up. It’s not uncommon for a house to reach over 10 offers and John Heffron, realtor at Gurney Becker & Bourne said Buffalo has been undervalued for a long time and this market is here to stay. ‘I don’t see a gallon of milk going back to 79 cents, so I don’t see a house going back to what it was worth 10 years ago,’ Heffron said. ‘I don’t even call it a bubble, I don’t even think it’s a bubble.’ Heffron later joked that people are literally signing contracts on the hoods of cars.”

From Fox 2 Detroit in Michigan. “Realtor Paul Wolfert is used to showing off the latest homes popping up for sale. It’s hard to keep up. ‘It’s wild. Appraisers are saying they have never seen anything like it,’ he says. The housing market is hopping. People are willing to do anything to get the house of their dreams. ‘Highly, highly approved buyers, they have the extra money and they say, ‘I don’t care. The inventory is so low out there right now, I don’t care. Whatever I have to do, if the house is ($200,000) and if I have to pay $30,000 cash above what I’m already doing I will do it,’ he adds.”

“But what to make of a strong market like this — will the bubble burst anytime soon? Wolfert and Tim Smith, senior mortgage lender with Chemical Bank say no. ‘These are being purchased by people who can afford to do that. They’re putting $20K, $30K, $50K — some are cash. We have $400,000 houses that are selling for cash,’ Wolfert says.”

From KETV in Nebraska. “The Omaha housing market in a word? ‘Insane,’ Melissa Yardley says. She and husband Kevin moved to Omaha from Cedar Rapids. As Kevin worked his job at a local credit union, Melissa — remotely — took on a full-time job of her own. ‘I was looking at listings nonstop, almost 24/7,’ she said. Real estate agents now have a saying for clients who aren’t quick to act in this market. ‘If you have to sleep on it, you won’t sleep in it,’ said Jenna Jacupke, who’s sold homes for about nine years.”

“Buyers are employing a new tool in negotiations: escalation clauses. Essentially, it’s contractual language that raises what you’re willing to pay for a house to fight off competitors. ‘We had never used an escalation clause,’ Kevin explained, ‘and we’ve bought five homes.’ The Yardleys used an escalation clause on a house and lost it. Days later, they spotted a new home that just went on the market. They made an offer in hours.”

“‘Because we had just gone through the experience of losing the other house the second day it was on the market,’ Kevin said.”

From The Daily Item in Pennsylvania. “With fewer homes on the market, more prospective buyers are competing for fewer houses, Valley Realtors say. People determined to find the home of their dreams are offering more than the asking price on houses they love, offering to pay for home inspections, even writing letters to the seller to get the edge over other bidders. Todd Umbenhauer, Pennsylvania Association of Realtors president, said it’s the same story for the most part across the country. Low inventory creates a sellers market, which leads to higher home prices and more offers on a home. ‘When five people want to buy a house, it means four people are disappointed,’ Umbenhauer said.”

“Barbara Hamilton, Central Susquehanna Valley Board of Realtors association executive, couldn’t say for sure why there are so fewer listings. ‘Everyone is really good at speculating,’ Hamilton said.”

The Press of Atlantic City in New Jersey. “The Atlantic County housing market is beginning to rebound, according to ATTOM Data Solution. The amount of available, salable, well-maintained housing has been drying up for the past year, said Carlo Losco, owner of Balsley Losco Realty in Northfield. ‘So what are we going to have? We are going to have basically a food fight. We already have bidding wars. It’s going to intensify,’ Losco said.”

“During the past 10 years, for the most part, new homes stopped being built because the banks were not lending, Losco said. Last year, Atlantic County was still a national leader in foreclosure, average prices were down 8 percent month-over-month and 2 percent year-over-year in June, according to the South Jersey Shore Regional Multiple Listing Service. If some of the bank-owned properties can come on the market faster, hopefully, home sale prices will stabilize, Losco said. ‘If it doesn’t, then, the ready-made houses will continue to reap the benefits. They are going to sell fast and furious,’ Losco said.”

From US News & World Report on Illinois. “In 2011, Chicago officials created the Micro Market Recovery Program (MMRP) to jump start individual blocks that had a high rate of vacant buildings due to foreclosures. MMRP sought to transform those abandoned, dilapidated buildings into affordable homes for renters or first-time homebuyers. Chicago had already spent about $169.2 million from the Housing and Urban Development’s Neighborhood Stabilization Program (NSP) for areas hit hardest by foreclosures.”

“Besides Chicago, NSP has distributed roughly $6.8 billion nationwide over the last 10 years to cities hit hardest by foreclosures, says Brian Sullivan, HUD spokesman in Washington, D.C. ‘It’s hard to say if the foreclosure crisis is over,’ Sullivan says. ‘They say all housing is local and the foreclosure crisis ended sooner in some areas rather than others. But who says it’s really over?’”

From Fox 4 Kansas City in Missouri. “If you are looking to buy a home but are afraid you might not be able to afford it, a Kansas City Congressman wants to offer you a financial boost. Rep. Emanuel Cleaver, a Democrat in Missouri’s Fifth District, and Kansas City Mayor Sly James will announce the return of a popular homebuying program Monday. It’s called NeighborhoodLIFT, and it’s financed by Wells Fargo. The bank is providing $5.7 million in down payment assistance to boost home ownership in Kansas City. If you live in Jackson, Cass or Clay County and qualify for this program, you can receive up to $15,000 from Wells Fargo to be used on your down payment.”

“Jackson County officials say there are more than 15,000 vacant homes in the Kansas City area. According to the Census Bureau, 53.7 percent of Kansas Citians own a home. The average monthly mortgage payment is $1305 while the average rent payment is $826 a month. It’s cheaper to rent. By offering $15,000 grants, city officials hope it will encourage more people to take the risk and buy a house.”

July 6, 2018

Sellers Seemed Almost As Anxious As Buyers

It’s Friday desk clearing time for this blogger. “Despite a drop in housing prices, supply and demand continue to make Fall Church the most expensive location in the region in multiple metrics. According to May 2018 data provided by ShowingTime based on listing activity, the median City of Falls Church sales prices was $619,000 for this May, a drop of $210,000 when compared to May 2017, and a decline of almost $100,000 in the median price year-to-date change from $747,500 to $649,700. The Falls Church housing inventory rose by almost 26 percent from last May to this May. Louise Molton is the principal broker at Re/Max in Falls Church and she thinks prices do not discourage buyers as much as multiple offers on the properties they want do. ‘There is only one winner, no one gets a trophy if they come in second,’ she wrote in an email.”

“‘On the market today, and gone tomorrow’: that was the overall housing market trend across North Texas. Last year, listing prices continued to skyrocket and sellers in Collin County were making a killing. A new report revealed, in some cities, home prices may have flat lined.”

“‘This is especially true if a city has experienced fast and extreme growth, like Frisco. Home listing prices have plateaued for homes $400,000 and above. These homes are sitting on the market a little bit longer, and I’m even seeing some sellers negotiating closing cost for the first time in a long time,’ said said Rodney Anderson with Supreme Lending. ‘Some sellers are getting a little bit anxious, but no one is losing. I think that people will finally get an idea that some deals are being made for the first time in a long time.’”

“For the first time in a decade, the number of homes for sale in the Seattle area is finally starting to rise — and in a big way — as the rapid-fire market that has led to extreme bidding wars and lighting-fast sales slows a bit. The total number of single-family homes on the market jumped an eye-popping 43 percent in June from a year ago across King County, the biggest increase since the housing bubble and burst a decade ago. Condo inventory rocketed up 73 percent.”

“Interestingly, the reason is that homes already on the market are sitting unsold for longer, as opposed to a flood of brand-new listings, according to the Northwest Multiple Listing Service. This is supposed to be the hottest time of year for the market — it’s the first time prices cooled from May to June since before the recession. ‘Now there are homes that are available that they don’t have to get into a bidding war to get,’ said Sabrina Booth, a Windermere broker in Seattle.”

“When the owner of Richard Nixon’s former beachfront estate in San Clemente, California, listed the 15,000-square-foot home three years ago for $75 million, you may have been tempted. Now, with the historic property back on the market for $63.5 million, you can hardly say no. Yet that’s just what buyers are saying to extravagant real estate listings from the sunny sands out west, where a residence owned by Warren Buffett has been on sale for more than a year, to the austere brownstones of Manhattan and the opulent hedges of Greenwich, Connecticut.”

“In Orange County, homes listed for more than $1.25 million account for about a third of all inventory but only 14 percent of demand, according to market-data provider Reports on Housing. Many properties are expected to sit for months — in some cases, for more than a year — before going into escrow for a sale. Deepening the doldrums of the region’s luxury sector are recent increases in interest rates and fears about further tightening by the Federal Reserve, said Bill Cote, a Newport Beach agent with Coldwell Banker. ‘All that’s going to do is stymie the market a little bit more,’ he said. ‘For the last few years, it’s all been milk and honey.’”

“As the traditionally busy spring shopping season drew to a close, a decided market shift was underway: Sellers seemed almost as anxious as buyers. As of June 28, homeowners in the four-county region covered by the Southern California News Group added 9,334 homes to the market so far this year vs. 2017’s 2,939 – a huge 218 percent jump. Yes, the rate of listing homes for sale has tripled! Steve Thomas of ReportsOnHousing writes, ‘Article after article details the continued lack of supply, hot demand, and years of nonstop appreciation. How in the world can any local market be a buyer’s market? Technically, luxury housing favors buyers and it is anything but hot.’”

“In Chicago and the suburbs, spring and summer is prime time for real estate, with the first half of the year the busiest season for homes sales. Here in the near west suburbs, inventory is up and sale prices are down. For John Lawrence, owner of Weichert Realtors Nickels Group, the typically hot spring and early summer selling season had a different feel this year. ‘In the spring when $300,000 to $500,000 homes in Oak Park are flying off the shelves with multiple offers, we feel like the market is good. That didn’t happen this year,’ Lawrence said. ‘The market has a very uneasy feel, and a lot of people were saying the market was way down, but the data doesn’t back it up.’”

“‘Anecdotally, there is the tax situation,’ Lawrence said. ‘We’ve always said, ‘What is the tipping point?’ I think we’ve reached it.’ Steve Scheuring of Baird and Warner agrees. ‘We used to have buyers who would come and look at a $500,000 house with $8,000 to $10,000 in taxes,’ Scheuring said. ‘The taxes were high, but considering Chicago Public Schools and private school tuition, they were cool with that. Now, with that same house having taxes of $15,000-$16,000, the buyer is no longer cool with that. We’ve reached a saturation point.’”

“Those individuals in the market for a new or existing home in Mississippi’s fastest-growing county have a wide inventory from which to choose, according to Tracy Kirkley, broker with Crye-Leike Realtors in Olive Branch. The latest information from the Northwest Mississippi Association of Realtors shows that in Olive Branch, there is a 17.6 month supply for homes costing $400,000 and up. The inventory for the DeSoto County seat of Hernando is similar, according to Kirkley. Homes priced at $400,000 and up enjoy a 38-month supply and those homes on the upper price range of $300,000 to $400,000 have a 9.9 month supply.”

“Chief executive officer Lesley Nalley updated the Hot Springs Village Property Owners’ Association board of directors on the Comprehensive Master Plan phase 1 implementation plan at the board’s June meeting. Nalley said 80 percent of the Village is platted for single-family homes, although that segment currently represents only 30 percent of market demand. ‘Targeting key areas for suspension reduces the massive oversupply of those lots,’ she said.”

“The most expensive home in Cincinnati has been sold for $5 million – a whopping 38 percent discount from its listing price of $8 million just two years ago. The 27,000-square-foot French chateau on more than five acres of land at 9005 Camargo Road in Indian Hill had been reduced to $7.5 million at the beginning of the year. But as the Enquirer reported in April, the market for Cincinnati homes listed for $1 million and up is soft.”

“‘There just aren’t a whole lot of buyers capable of buying those homes,’ Mark McGrath, a Realtor with Home Information Network in Silverton, said at the time. ‘It is somewhat of a buyers’ market right now.”’

“Real estate broker Luis Eduardo Rodriguez is accused of funneling drug money through the Las Vegas real estate market and dummy corporations on behalf of an international narcotics and money laundering ring. Rodriguez faces charges for his role in laundering hundreds of thousands of dollars in drug money through Las Vegas real estate and multiple Nevada shell corporations with the intent on sending the profits to drug traffickers and money launderers in Mexico.”

“A woman accused of running a real estate fraud scheme is in custody after leaving South Carolina while her federal case is pending, according to court documents. Dana Roush was arrested Monday. She and Michael Roush are charged with fraud conspiracy and failing to maintain payments on a federally insured mortgage through their Greenville-based investment company. They are accused of operating the now-defunct Kingdom Connected Investments LLC to defraud dozens of home buyers and sellers. Part of the scheme involved falsely leading homebuyers into fake rent-to-own agreements in areas throughout the Carolinas.”

“Homebuyer remorse is on the rise, according to the latest ValueInsured Modern Homebuyer Survey. In a market driven by low inventory and heavy competition that has steadily escalated home prices for a few years now, buyers are increasingly regretting how much they’ve paid for their new homes. ‘Home payments in some areas are swallowing up 45 percent of local median income,’ ValueInsured wrote. In these areas, ‘expectation of buyer’s remorse is high.’”

“According to the findings, two-thirds of homebuyers and almost 70 percent of homeowners expect to have buyer’s remorse within a year. A quarter of those said they expect to have the same level of remorse reported by buyers just prior to the crash in 2008. Between 55 and 60 percent of buyers and owners said people who buy in their neighborhood now are overpaying; even more said that if they were to buy a home now, they would be buying high.”

“Homeowners in California and Texas–’two of the most overheated housing states’–are the most pessimistic about the sustainability of home prices, according to ValueInsured. Eighty percent of owners in these two states (vs. 71 percent nationally) believe a housing correction will happen within two years. Among potential buyers, the sentiment is only slightly less pessimistic. Sixty-five percent of buyers said a housing correction will happen within the next two years. (71 percent homeowners vs. 65 percent non-homeowners).”

“‘In Texas, 44 percent of all existing homeowners believe a housing correction is already underway in their area,’ ValueInsured said. This, the report stated, ‘reaffirms the astute sensibility of homeowners who seem to have foreshadowed the latest Case-Shiller Home Price Index report released this week showing Dallas-area home prices growing at the slowest pace in five years.’”