A report from For Construction Pros. “July’s drop in U.S. housing starts outstripped forecast declines as consumer sentiment toward financed purchases faded to the lowest level since 2011. ‘There is no question that home building has hit some sort of near-term ceiling, with surging home prices reducing affordability and leading to a record drop in the proportion of consumers that feel now is a good time to buy a home,’ says Mark Vitner, senior economist with Wells Fargo Securities.”
The Star Press in Indiana. “If buying a home is stressful anytime, what’s it like buying a home in 2021? ‘It’s crazy,’ Ashley Donnelly said with a laugh. ‘The market is all over the place. It’s wild. Just wild.’ Homebuyers like Donnelly, a Ball State University professor, and home sellers and professionals in the real estate industry all agree. They’ve never seen such a bizarre time to buy and sell a home.”
“Homes are in short supply, in markets from Richmond to Muncie to Lafayette and across Indiana. The experts say that if you can find a house in your desired area and for your desired price point, be ready to buy it and be ready to pay more than the asking price. Sometimes thousands of dollars more.”
“And be ready to snap up that home quickly. ‘You have to be pre-approved with a lender and ready to jump on something that pops up,’ said Donna Penticuff, a Muncie real estate broker. ‘I know the minute I list a house, the same day – the same day – I have five showings and receive an offer in the first hour,’ said Donna Spears, a Richmond Realtor.”
“Houses are a hot commodity, the way new vehicles are hard to find now and toilet paper and Lysol were hard to find in the early days of the pandemic. ‘It’s bizarre to see bidding wars for homes in Delaware County,’ said Muncie Realtor Steve Slavin. ‘You think that happens in Fishers or Carmel. But it’s happening here.’”
The Phoenix Business Journal in Arizona. “Homebuyer bidding wars in metro Phoenix aren’t as severe as they are in the Tucson market, according to a Redfin report that shows the nationwide homebuyer bidding war rate dropping to its lowest level since January. ‘We are seeing a slowdown of the bidding wars here in the Valley,’ said Keith Burton, Realtor for The Rider Elite Team. Burton said he is seeing more new construction homes being delivered for new homeowners, adding inventory to the market. ‘The mania has quieted a bit for sure,’ said Don Barrineau, Phoenix division president for Mattamy Homes.”
“As for the existing resale home market, there are 5,612 active residential properties in Maricopa County on the market as of Aug. 16, citing the Cromford Report, said Maximilian de Melo, managing partner for America One Real Estate. That’s up from 5,117 on July 16, and even higher from Feb. 24 when there were 3,045 active listings representing an all-time inventory low, he said. ‘The market has definitely cooled off,’ de Melo said. ‘We have been seeing significant list price reductions that have been steadily increasing since about March. That applies across all price points.’”
“Burton said he’s seeing listed homes in some areas taking price reductions because there are no offers in three to five days. ‘This is a sign the market has come to a point of leveling off,’ Burton said. ‘People are not willing to pay that $20,000 to $50,000 over asking price. We are seeing in some areas 30% to 40% of the homes in a ZIP code are having to take a price reduction to get an offer. The Valley is also seeing less appraisal and inspection waivers.’”
“Greg Hague, CEO of 72Sold, said the Arizona sellers’ market peaked in April, with existing home inventory at its lowest point in over 10 years. ‘The number of homes for sale has been increasing consistently since then,’ he said. ‘Are we on the precipice of a housing crash? Absolutely not. This is an expected correction of a market that got so hot so fast it needed a breath of cool air.’”
The Austin Business Journal on Texas. “Home sales in the Austin metro fell for the first time in more than a year in July, according to the Austin Board of Realtors. Some housing experts think this — along with other indicators — mean the market might finally be seeing some relief. Monthly inventory showed signs of improvement: in July, 3,294 homes were actively listed on the market, compared with 2,265 in June. Closed sales in July were down 9% year over year at 4,041.”
“Paul Reddam, a local agent for Homesville Realty Group with Compass Austin, said when he talks with agents in other markets about how they’re doing, their answers often echo his own. When Austin’s market was at its peak, agents elsewhere were also reporting demand that was tough to keep up with. When Austin’s market began to slow this summer, agents in other metro areas reported similar dips.”
“He added that he has felt the return to normal market seasonality the data suggests. ‘We’re dusting off all the cobwebs of how we used to handle things,’ Reddam said. Reddam noted that inventory has been noticeably higher in recent months. He recently showed a Google executive 20 houses in one weekend. There were, however, some lingering signs of Austin’s bidding wars. They had zeroed in on two homes. On the first, priced just under $1 million, they made an offer of about 7% over. The selling agent told them they were in the middle of the pack with that offer.”
“On the second home, which was listed for about $1.3 million, Reddam and his client were able to negotiate down to $1.1 million. They ended up closing on that house. ‘I think buyers right now have a small window,’ Reddam said. ‘I don’t know how big it is, of course.’”
From Mansion Global on California. “As its luxury market rebounds, a window of opportunity remains for buyers of high-end condos—a segment that is appreciating slower than the feverishly in-demand single-family home market—which means that now is the time for savvy investors to strike a deal. ‘This is an opportunistic time for buyers in the condo market in San Francisco,’ said Krysen Heathwood, senior managing director for Compass Development Marketing Group, the new development arm of the brokerage firm.”
“‘Even before Covid, the luxury condo market in San Francisco had its volatility,’ said Selma Hepp, deputy chief economist at CoreLogic. ‘Inventory is still so low anywhere you look in California, and the presence of venture capital activity and start ups—it’s still the epicenter in the U.S.,’ she said. ‘You may not see the rates of appreciation that we’ve seen in previous years but you’ll get your money back.’”
The New York Post on California. “After 14 years and $148 million in discounts, the infamously expensive Hearst Estate is finally set to sell. The 75% off the house doesn’t come with the chandeliers. Los Angeles-based investment company Berggruen Holdings agreed to pay $47 million for the eight-bed, 15-bath Italian and Spanish-style mansion, which has been on and off the market for between $69.95 and $195 million since 2007. An auction on Sept. 14 could accept a higher offer, but Berggruen has put a $1.41 million deposit down, according to California bankruptcy court documents.”
The Associated Press. “When Ryan David bought three rental properties in 2017, he expected the $1,000-a-month he was pocketing after expenses would be regular income well into his retirement years. He also was counting on the rent money from the properties in Dupont, Pennsylvania, to help with the cash flow of his business buying and selling distressed properties, launched early last year. David, the father of a 2 1/2-year-old who is expecting another child, fears the $2,000 he’s owed in back rent will quickly climb to thousands more.”
“The latest moratorium ‘was the final gut punch,’ said the 39-year-old, adding that he now plans to sell the apartments. ‘I have had this internal struggle going back and forth. I have lost sleep at night, and I have now come up with a decision to sell and walk away.’”
“‘Without rent, we’re out of business,’ said Gary Zaremba, who sold 40 of his properties in Ohio due to the moratorium and still has a quarter of his tenants in the remaining 100 buildings struggling to pay rent. He has helped some apply for rental assistance, he said. ‘It’s like a restaurant that doesn’t have patrons,’ he said. ‘I don’t get the rent. I can’t pay my maintenance staff. I have to lay them off. I can’t fix the buildings and keep them in good repair. So, that means they are going to get even worse off. I can’t pay my taxes.’”
“Many landlords are saddled with tens of thousands of dollars in lost rent – money that was meant for retirement, a college fund or for their investors, who themselves had sought a safe investment. They are maxing out credit cards or dipping into savings to pay property taxes, staff salaries, insurance, water bills and maintenance.”
“‘I keep thinking to myself, when does my family get paid?’ said Matthew Haines, who owns 253 units with his wife in the Dallas/Fort Worth area and is owed more than $300,000 in back rent. He has referred $250,000 of that to collections.”
“The couple put in $50,000 of their own money to avoid laying off their seven full-time and three part-time employees. Haines is also doing repairs like fixing an air conditioning unit or changing a pool light himself to save money. Their investors, retirees who typically get an annual return of 7% to 9%, got nothing last year on two multifamily apartments and 3% on a third one because of unpaid rent.”
“In upstate New York, Michael Reid sold three of his houses to stem losses – after paying some delinquent tenants thousands of dollars to leave. Already out more than $100,000 in back rent on 13 of his 31 units and more than $20,000 in unpaid water bills, Reid took out a $90,000 home equity loan on his house so he could pay property taxes and other bills. On Tuesday, he finally received $9,000 in federal rental assistance, a fraction of what he’s owed.”
“‘I’ve lost an incredible amount of money on top of the rent owed,’ said Reid. ‘A lot of landlords are disgusted. They are selling at losses. They are getting out period,’ Reid said of the dozens of investors he talks with.”