Housing Update From WSJ
Todays WSJ had a decent article on housing, ‘Housing Glut Gives Buyers Upper Hand’. Seems like certain parts of the country are in for a bumpy ride. Here are some excerpts.
*A quarterly survey of housing conditions in 28 major metropolitan areas by The Wall Street Journal showed that the inventory of unsold homes at the end of 2006 was up substantially in nearly all of the markets from the already plentiful level of a year earlier. The biggest increases were in the metro areas of Miami-Fort Lauderdale, Orlando, Tampa and Jacksonville, Fla.; Phoenix; and Portland, Ore. (Unlike the other cities, Portland had a lean supply of homes a year before.)If you found this post helpful, consider donating to my coffee fund!*Some of the biggest gluts of new homes are in Florida, Phoenix and the outer suburbs of Washington, D.C., says Ivy Zelman, a Cleveland-based housing analyst for Credit Suisse Group. Many of the gluts are due to frantic building of condominiums over the past few years. The supply of condos listed by real-estate agents is up 86% from a year earlier in the Las Vegas metro area, 43% in Washington, D.C., and 21% in the Northern Virginia suburbs of Washington. In Florida’s Miami-Dade and Broward counties, the listed condo supply has more than doubled from a year earlier.
In Miami-Dade, the number of existing condos on the market is enough to last 27 months at the current sales rate, says Jack McCabe, a real-estate consultant in Deerfield Beach, Fla. The oversupply will grow, he says, as about 8,000 condos are expected to be completed this year and 12,000 in 2008.
“It’s going to get bloody down here,” Mr. McCabe says. He estimates that condo prices in Miami-Dade fell between 8% and 10% last year and will drop 20% in 2007. Eventually, he predicts, hedge funds and other investors will step in to buy surplus condos in bulk at huge discounts.
*In California’s San Diego County, developers have more than 10,000 condos available for sale in new buildings, projects under construction or properties being converted from rentals, says Peter Dennehy, a senior vice president at Sullivan Group Real Estate Advisors, a consulting firm based there. He says that supply is enough to last more than 20 months at the current sales rate. That number excludes several thousand condos being offered for resale by speculators and others.
Mr. Dennehy estimates that condo prices have fallen at least 15% to 20% in the county over the past year, though it’s hard to measure price changes because sellers often give incentives such as free upgrades or help with closing costs that aren’t reflected in the price.
*Some of last year’s strongest housing markets now are showing signs of cooling a bit. In the San Francisco Bay area, the median price paid for new and resale homes in December was $612,000, up just 0.5% from a year earlier, according to DataQuick. But prices fell in parts of the Bay Area; they were down 6.3% from a year earlier in Sonoma County and down 5.1% in Solano County, DataQuick says.
One of California’s weakest markets last year was the Sacramento area. Anthony Graham, an analyst at Trendgraphix Inc., a provider of housing data, says sellers of previously occupied homes there have had trouble competing with the huge discounts and incentives offered by builders.
Mr. Graham expects average home prices in the Sacramento metro area to fall between 6% and 8% this year, but believes the market will begin to recover modestly by the fourth quarter, assuming that home builders continue to cut their production.
*In Atlanta, where the housing market began to soften in August, business started picking up again in December, says Lewis Glenn, president and chief executive of Harry Norman, Realtors. “There’s more negotiation,” and builders are cutting prices and offering concessions, such as buying down the borrower’s mortgage rate, he says.
*In Scottsdale, some sellers are cutting prices by 10% or more, says Dale Pavlicek, sales manager for the Coldwell Banker Residential office there. “There are a lot of vacant homes on the market,” he says. Sellers who bought in the past year or two are barely breaking even or are coming to the closing table with money to pay off their mortgage and other costs, he adds.
*In Manhattan, big bonuses recently doled out by Wall Street firms will help support the market in this year’s first half, says Jonathan Miller, chief executive officer of Miller Samuel Real Estate Appraisers in New York. But a rash of new condo developments will help moderate prices. He expects price increases this year to average 5% to 6% in Manhattan. On Long Island, he believes prices are likely to be flat to slightly higher this year.
*Houston remains one of the nation’s more buoyant housing markets, supported by job growth in the energy industry. Rob Cook, chairman of the Houston Association of Realtors, says the supply of homes on the market is enough to last about six months at the current sales rate — what he calls a “balanced” market. Prices are rising only modestly, though, because Texas has plenty of room for new construction. “We just keep expanding out farther and farther,” Mr. Cook says.
![[del.icio.us]](http://images.del.icio.us/static/img/delicious.small.gif){kind=small}
- Housing Update Interesting update on some markets from the Real Estate Journal. Utah homes worth their salt Utah apparently has missed the news about the end of the housing boom, with median selling prices on the way up. For example, Utah County's Alpine area saw median selling prices rise 57.2% to $529,000......
- Condo Prices Fall Nationally According to MarketWatch.com,Prices for condos were down 0.3% year-over-year nationally. Fifteen cities had double-digit increases from a year earlier, while 14 had declines. In the condo market, Phoenix, Ariz., had the biggest gains, up 25.3%. Condo prices fell 5.1% in the Atlanta, Ga., metro region. Condo prices were down in......
- Utah Economy Strongest in the Nation According to the Deseret News,Utah's economy is the single strongest state economy in the nation, according to one Utah economist. And the single strongest sector within that economy is construction. It's growing so fast that many construction companies say they can't hire fast enough to staff the jobs they've got......
Related Websites
- Mortgage Home Possessions Continue to Rise The last two quarters of 2008 have seen a steady increase in the number of mortgage possession orders reaching the county courts, and this is according to data and statistics that have been released by the UK's Ministry of Justice. In England and Wales, there have been a total sum......
- How to Buy a Foreclosed Home I have always had a general interest in real estate, which is a little strange, since until just recently I leased or rented homes, or shared one with a family member. Buying our first home was confusing enough as a first-time home buyer, but considering how to buy a foreclosed......
- Does anyone REALLY know what they are Talking about With Housing Prices? As I was sitting in the dentistâs office waiting for them to call me in so I can get 3 cavities filled (yeah my mouth hurts as I write this) I was reading cnbc.com headlines on my phone and I saw an article that just really made my blood boil.......
[All content is copyright of Living Off Dividends & Passive Income]
January 28th, 2007 at 12:27 pm
I saw that too, only underscores the truth that it boils down to location wrt real estate.
January 29th, 2007 at 3:42 pm
Sounds like Houston may be a good place to invest. Thanks for the heads up on the article. I’ll have to stop and pick up a WSJ today.