A report from the Wall Street Journal. “Builders are on track to finish more new apartments in 2020 than in any year since the 1980s, a new study shows, with developers across the U.S. chasing after the more affluent tenants. An additional 371,000 new rental units are expected to hit the U.S. market this year, which is a 50% percent increase over the number of new units completed in 2019, according to RealPage. In some of the largest metropolitan areas, like Houston and Los Angeles, the number of new rentals in 2020 will more than double last year’s figures for new supply.”
“But as much as 80% of new supply this year will come from luxury developments, or what the real-estate industry calls ‘Class A’ properties, said RealPage chief economist Greg Willett. ‘A lot of these properties are competing for a small group of renters,’ Mr. Willett said. ‘A typical renter can’t afford this brand new product.’”
“‘Land prices are expensive’ said Cyrus Bahrami, a managing director of Houston developer Alliance Residential, which has built several luxury rental buildings there in recent years. ‘It’s very difficult financially to make sense of building a cheaper product.’ RealPage’s Mr. Willett said that the potential oversupply in high-end developments is likely to lead to some price concessions for the most expensive apartments.”
The Bellingham Herald in Washington. “Rent increases appear to be slowing down in Bellingham, with median rates starting to drop in some situations, according to Zumper, which looked at December active house and apartment listings in Bellingham and other Washington cities. It’s possible that supply is finally starting to catch up with demand, particularly with apartment construction. According to data from the city, permits were issued for 1,011 residential units in 2019, making it the highest issuance level in at least a decade. This comes on the heels of a busy 2018 in terms of residential permit activity in Bellingham.”
From WTOP in Washington DC. “The D.C. area’s housing market has entered the winter doldrums, and for buyers, that might just be a good thing. Redfin said the number of sales with multiple offers on the table nationwide is at a 10-year low right now — and only about 9% of Redfin-represented buyers in D.C. faced competing bids in December. So, maybe an offer that’s not quite full price will get some traction right now.”
“‘Competition will heat up in the spring. Early this year could be a really good time to make a move on a house,’ Redfin chief economist Daryl Fairweather told WTOP. ‘You might still get it for under list price, and you might get some favorable conditions on it, like not having to waive any contingencies.’”
The New York Post. “Everyone knows the apartment condo-sale picture is bleak. Prices are tumbling. So much inventory has built up that Halstead Development Marketing estimated it could take six years for developers to completely sell them.”
The San Francisco Examiner in California. “A December survey completed by the U.S. Census Bureau raised the eyebrows of those who’ve been ignoring The City’s biggest real estate open secret: despite our city’s well-documented chronic housing shortage, San Francisco has 11,760 homes that are vacant. That’s not units that need to be built; that’s nearly 12,000 existing properties whose owners choose, for a variety of reasons, to leave them empty. This is not a new phenomenon by any measure. San Francisco has a tradition of vacant properties. As insane as it may sound to not capitalize on the most overheated rental market in the United States, there are a number of reasons why owners leave houses empty.”
From Homes and Property on California. “Michelle Pfeiffer and her TV producer husband have sold their San Francisco estate for £16.9 million. The Hollywood actress originally listed the place for £22.7 million in 2018 but agreed to drop the price for a mystery cash buyer.”