A report from the Wall Street Journal on New York. “Despite a weak outlook for residential real estate, the number of building permits issued in New York City for new homes surged last year to the highest pace since 2015. It was the second-highest total since the end of the last big building boom in 2008. Even as permits spiked, the number of co-op and condo sales in the city fell last year in Manhattan, Brooklyn and Queens, with Manhattan sales plummeting to the lowest level in the last decade, according to Miller Samuel Inc. for Douglas Elliman real estate.”
“Some developers are predicting a lag in permits issued in the years ahead, as the market digests the large supply of condo inventory, and landlords wait in fear of the city and state expanding rent-regulation to more buildings. ‘We forecast a decline in units in the condo market because of the current oversupply,’ said Nancy Packes, a housing-market consultant who monitors the construction pipeline.”
“The continuing boom is supported by low interest rates and the willingness of lenders to provide funding for many new projects, especially outside of Manhattan, said Stephen Kliegerman, president of Halstead Property Development Marketing.”
The Fremont Tribune in Nebraska. “The land for Gallery 23 was purchased by developers in December 2016. It held a groundbreaking ceremony in September 2017. Kristina Young-Philbin, said the 115-acre mixed-use development project plans to add 178 homes around a new man-made lake. Two homes have already been listed for sale and a model home will be ready in Februrary, Young-Philbin said.Most of all, Young-Philbin said she wanted to stress the affordability and the flexibility with the pricing on Gallery 23.”
“‘The biggest thing for me is that you can’t build a new home backing up to a lake right now anywhere between Omaha and Fremont for a house price point of under $700,000,’ she said.”
“This is the eighth subdivision Don Peterson has worked on, said Marlin Brabec, chairman of its board. ‘We envision that a lot of these houses will be from people moving from an older house, maybe with a one-car garage into something that has a two-car garage and a ranch-style house,’ Brabec said. ‘But the market will decide. The market always decides how things are going to work.’”
The Omaha World-Herald in Nebraska. “New data reinforcing a local boom: Building permits show that the annual construction cost for Omaha projects given the green light in 2019 hit a 10-year valuation high, jumping 25% over the prior year. Economist Ernie Goss and others say, ongoing real estate development — driven in part by hungry investors capitalizing on low interest rates — has been a welcome boost vital to a community’s long-term physical and economic growth.”
“Goss is among those who think the local apartment market is becoming overbuilt and that developers soon will be seeing higher vacancy rates. But ask developer Chris Erickson, who co-founded City Ventures, and he says his recently built apartment complexes in Benson and downtown Omaha still have well-performing occupancy rates above 90%.”
“His team continues to build apartments at the La Vista City Centre site, and he expects those to fill as well. Generally, Erickson said, he has felt a ‘continued high level’ of construction over the past five to seven years, and he doesn’t expect a noticeable downturn any time soon. ‘We’ll start to see a slowdown in the next couple of years,’ he predicted. ‘Is that in 2020? I’d say not.’”
The Chattanooga Times Free Press in Tennessee. “The Chattanooga area has seen a sharp increase in proposed and completed housing developments in the past two years. 78, according to Times Free Press reports. With all the new projects taking shape, the increase in home prices has been outstripping wage and income gains, causing the region to become less affordable than in the past, according to a new study by the National Association of Realtors.”
“Rental rates have also been rising, yet prices remain cheaper than the U.S. average. One housing economist has pointed out that the area has seen more of a surge in housing units than jobs over the past 10 years, which could signal a potential oversupply in the market.”
From Westfair Online in Connecticut. “Boston-based WEEI-FM sports talk show host Greg Hill dropped an exclusive scoop: New England Patriots quarterback Tom Brady and his family had reportedly moved out of their home in Brookline, Massachusetts, and relocated to a recently purchased home in Greenwich. But there was one problem: the story was incorrect. The day after Hill’s story broke, WEEI quietly slipped an update on its blog that acknowledged ‘Brady does not in fact own a house in Connecticut.’”
“While it is not uncommon for news outlets to report stories that require a retraction, the Brady-in-Greenwich story sparked an excited frenzy that inadvertently highlighted lingering problems with the Greenwich real estate market and Connecticut’s overall economy. Houlihan Lawrence recently reported that Greenwich’s luxury housing market generated only 126 sales during 2019, a 18.7% drop from the 155 sales recorded in 2018. The median home price for a Greenwich luxury residence in 2019 was $4.08 million, a 1.7% decline from the $4.15 million set one year earlier. The total dollar volume for this market sector in 2019 was $633 million, a 17.6% tumble from 2018’s $769 million.”
From WFAA in Texas. “‘I still think what’s happening is the hangover effect,’ said Michael Coburn, broker/owner of RE/MAX Town & Country in Allen, in an interview with the Dallas Business Journal. ‘We had so many people buying so many houses in 2017 and 2018 that sellers could throw anything out on the market at any price and buyers were desperate to get a house, so they were paying it.’”
“‘Now the market has slowed down,’ Coburn said. ‘The giant demand from buyers that was pent up has decreased. Now you’re seeing houses stay on the market longer.’ Prospective buyers in North Texas are being more selective than they were in 2016, 2017 and the first part of 2018, Coburn said. ‘The market has shifted from where the sellers had the power to more of a flat market,’ he said, ‘and if your house isn’t fixed up, it’s more of a buyer’s market.’”
“With low mortgage rates and a steady stream of people moving to North Texas, Coburn doesn’t foresee housing prices declining in North Texas. ‘It’s still a great time to buy,’ he said. ‘I don’t see the market slowing up anytime soon, interest rates are still at all-time lows, and this market is going to continue to increase because we’re seeing so much population (growth) here. If you don’t buy now, it’s like, ‘When?’”
The Orange County Register in California. “Los Angeles County homebuying rose and prices increased as SoCal’s median hit an all-time high in December. Existing single-family houses: 4,306 sold, up 17.8% in a year. Median of $653,000. Newly built: Builders sold 396 new homes, up 17.5% in a year. Median of $642,500 — a 6.5% fall over 12 months.”
From Patch California. “Keller Williams Realty San Diego East Foothills in El Cajon, one of the largest residential real estate brokerages in San Diego County, has announced that Don and Tereasa Pittman of Jamul have joined the firm as a husband-and-wife real estate sales team. ‘We love working with first-time home buyers and helping other clients halt their foreclosure,’ said Tereasa.”
From Senior Housing News. “Real estate investment trusts (REITs) might soon feel ‘buyer’s remorse’ over recent decisions to bulk up their senior housing operating portfolios, according to Eric Mendelsohn, CEO of National Health Investors. In recent years, several factors drove some REITs to go big on RIDEA. With new supply, labor and other challenges squeezing their net operating income, senior housing operators have struggled with sizable rent escalators under triple-net leases, prompting some conversions to RIDEA.”
“Q: You’re expecting some ‘turbulence’ in 2020, which could bring opportunities for NHI? A: I think that the turnover that’s happening with some of the REIT tenants and operators is surfacing a lot of the issues that have been brewing for the past 24 months. I think there are some operators that aren’t doing as well as they could be. And I think some of the REITs might regret going 100% operational in RIDEA.”
“Operating revenues and NOI don’t always line up well [quarter to quarter] if you’re a public company — I learned that at Emeritus. So, there could be buyer’s remorse, and that could mean opportunities. That’s part of what you’re seeing with some of the operator replacements: Let’s not blame the real estate right away, let’s see if another operator can do better. And then if they can’t, then we’ll sell the buildings.”
“Q: Are you bearish on assisted living and memory care? A: I’m less excited about AL and much less excited about standalone memory care. Q: That’s because of the ongoing oversupply in standalone memory care? A: Right. And oversupply also in AL. I love the product, but people have to stop building new buildings. Let’s absorb what we have.”