Quote of the Day
"The high-end market is the fortress of the real-estate asset class, and the inner sanctum has been breached." - David Darst, chief investment strategist at Morgan Stanley, about high end real estate prices starting to fall.
House Price and Sales Data
Foreclosure Fuels Sales Bounce In Hard-Hit Areas. WSJ: "Home sales are rising in some U.S. metropolitan areas where lenders have slashed prices on foreclosed properties." Check out what has happened in the city of Detroit: The average price of a home sold in the first four months of the year dropped 56% from year-ago levels to $20,514. That is not a typo.”
Auction Market: Growing, Growing Strong. “A four-bedroom, two-bathroom home in Cleveland recently sold for $6,050 on eBay. Not all properties are going as cheaply at auctions, but the market itself is certainly growing as an efficient way to move properties that otherwise sit on the market for months... National Auctioneers Association: Nationally, the market for real estate live auctions grew about 5.3% in 2007 to $16.8 billion, and a total of about $58.4B worth of all types of real estate was sold in live auctions during 2007. Also, the gross revenue of residential real estate sold at auction grew 39% from 2003-06.”
Home Prices In California Down 10.6%. “The Office of Federal Housing Enterprise Oversight’s seasonally-adjusted purchase-only house price index fell 1.7% in Q1’08 compared to Q4’07. Over the past year, home prices fell 3.1%... The largest decline in the purchase-only index’s 17-year history… Prices fell in Q1 in 43 states. Eight states exhibited quarterly price declines of more than 3% and two states — California and Nevada — saw prices decline more than 8%... States with the greatest price appreciation since Q1’07: Wyoming (6.3%), Utah (5.6%), Montana (4.9%), Texas (4.7%), and Alabama (4.5%). States with the sharpest depreciation for the same period were: California (-10.6%), Nevada (-10. 3%), Florida (-8.1%), Arizona (-5.5%), and Michigan (-3.1%).”
Cheap Chic. “Homes in the $5 million-plus market have come down an estimated 10%-15% in the past two quarters, and are likely to shed another 10% or more over the next 12 months, according to Housing Predictor, a company that crunches data on 250 U.S. regions… Florida, Southern California, Phoenix and Las Vegas, already have seen luxury-home prices fall by 15%-20% [since 2006]… Gary Gold, EVP of brokerage Hilton & Hyland: During the real-estate boom, the typical turnaround time to sell a home in the $2M-$10 million range was from 24hrs.-3 months…"Now it's at 7-8 1/2 months…” ZipRealty: In early May, one-third of the 321 properties listed in Los Angeles County for more than $5 million had their prices reduced. In Miami, one-quarter of 774 top-end homes had price reductions.”
Home Price Appreciation In Parts Of Country Offsets Declines Elsewhere. “Federal Housing Finance Board quarterly survey: Nationally… the average cost of houses in Q1’08 rose by 0.8%, from $318,000 a year ago to $320,500 at the end of March. Twenty-one of the local markets recorded increases, one by 40%. But 11 posted declines… The clear winners: The Pacific Northwest and Texas: Portland registered a 16% jump in the 12-month period, from $332,200 to $385,400, while Seattle recorded a 14.9% increase, from $415,100 to $476,800… California has four of the country's largest metro areas, and all four saw their prices drop by double digits in the latest survey. But they are still among the nation's most expensive housing markets.”
Chattanooga Home Sale Prices Dip But Outpace Nation. Tennessee: “National Association of Realtors: After declining through most of last year… the Q1’08 median home price in Chattanooga was down less than half as much as the national average over the past year. In Q1’08, the median price of Realtor-assisted homes sold in Chattanooga was $125,200, up 3% from Q4’07 but still 3.4% below year-ago levels… Home sales by Chattanooga-area Realtors in Q1 were still off 19.5% from a year ago. The C.A.R. said 1,461 homes sold in Q1’08, down from 1,815 in Q1’07.
Mcmansions No More. Pennsylvania: “For nearly a decade, tax-weary people from New Jersey and New York poured into the Lehigh Valley in search of a bigger home on a bigger lot, and developers couldn't build so-called McMansions fast enough to meet demand. But as a credit crisis sweeps the nation… home building -- especially construction of large homes -- in the Lehigh Valley has slowed to a crawl… Last year, the average size of a Valley home declined for the first time since 2001, as the number of new McMansion-style homes fell from a peak of 2,401 in 2005 to 1,088.”
At Least a Start on Housing’s Revival. “What most concerns industry analysts is the giant glut of unsold homes... Census Bureau: The number of vacant residential properties, new and existing, reached a record 18.6 million in Q1. Paul Puryear, real estate analyst at Raymond James Associates: “I don’t think people appreciate how long it’s going to take to get the inventory level back down enough to give sellers some pricing power. It’s going to take, in our opinion, two to three years.” Ivy Zelman, real estate research firm Zelman & Associates: “It isn’t enough any more to just offer incentives. Now there has to be significant price reduction.”
New Mortgage Loans Plummet In Hawaii. “Hawai'i's mortgage lenders saw a nearly 50% drop in business in Q1’08 as home sales slowed and lending rules were tightened. The total value of residential mortgages, commercial real estate loans and home refinancings statewide dropped to $5.2 billion during Q1’08, from $10.4B in Q1’07, according to Title Guaranty. The number of new loans fell 32.5% during Q1 to 13,390 from Q1’07's 19,825… Honolulu Board of Realtors: The number of single-family home and condo sales on O'ahu has dropped around 20% during Q1 while prices have remained relatively flat.”
House Markets Seem to Stabilize. “West Florida homes sales appear to be bottoming out… Sales were up from April 2007 to April 2008 in some of the worst hit markets south of the Tampa Bay area. Sarasota, Punta Gorda and Fort Myers-Cape Coral all reported rising sales vs. a year earlier. Tampa Bay area single-family home sales slipped 8% y/o/y, but Hillsborough and Citrus counties both reported little or no decline. Although Pinellas County Realtors said sales were down 10.7%, condo sales were higher than they've been since June 2007. Pending sales were up in April in every county in the Tampa Bay area compared to a year earlier.”
April Existing Home Sales Drop 1%. “NAR: Existing home sales fell 1.0% to a seasonally adjusted annual rate of 4.89 million units in April from an upwardly revised pace of 4.94 million in March, 17.5% below April 2007… Inventory of existing homes rose 10.5% to 4.55 million, an 11.2-month supply, up from 10 months in March. Single-family home sales were off by 0.5%, to a seasonally adjusted annual rate of 4.34 million, 16.1% below last April. The median existing single-family home price was $200,700 in April, down 8.5% from April 2007 but up 0.5% from March. The national median existing-home price for all housing types was $202,300, down 8% from a year ago but also up marginally from March.”
Utah Homes Still Appreciating. “OFHEO: Wyoming had a 6.3% gain in home-price appreciation from Q1’07 to Q1’08… Utah's gain was 5.6%, followed by Montana, at 4.9%. A downturn in real estate markets throughout Utah has pushed home sales down and led to moderating home prices. Utah slipped to No. 2 after five consecutive quarters in the top spot.”
Your Summer Share: It's Not Too Late! Hamptons, NY: “A cursory search this morning on various brokerage websites shows the following rental availability in East Hampton alone: Prudential Douglas Elliman, 1,481 listings; Corcoran, 768 listings; and Brown Harris Stevens, 671 listings. Counting for some overlap, that's still a serious glut.”
The Boston Premium. “NAR: In 2001, the Boston-area median home price of $331,900 was 2.12 times the national median home price of $156,600. By 2005, even as the local median peaked at $413,200, the ‘Boston Premium’ had dropped to 1.89 times the national median… The late housing boom disproportionately lifted the prices of the least expensive homes, because the availability of easy-money loans disproportionately increased the buying power of lower-income families… The long-term trend remains strongly upward… Despite a six-year decline in the Boston Premium, the local median still is almost twice as high as the national median… This may suggest something about the future of relative home prices in a nation whose wealth and companies are increasingly distributed more evenly across the vast American landscape.”
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