Daily Archives: July 1, 2013

Whither real estate market as interest rates rise? | Bedford Real Estate

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Wouldn’t you know it? There are still buyers wondering if now is the time to buy a home. Now, when inventory is extremely low, mortgage interest rates are starting to rise and home prices have seen huge price jumps in many markets.

And yet there are some who believe there may be a price advantage to waiting a few more months, until we get into the fall and even winter season. But more on that in a moment.

There’s no question that the real estate market is healthier than it has been in years, but the headlines aren’t quite giving consumers the whole story. While existing home sales, new construction sales and home prices are trending up, they are still below their prerecession peaks, noted Amy Crews Cutts, senior vice president and chief economist for Equifax.

Single family housing starts are still down around 60 percent from the prerecession peak, while existing home sales are still down about 38 percent and prices are down roughly 20 percent.

“Even with large percentage gains in housing measures, all major indices of housing market vitality point to a long recovery yet to come,” she said in a live webinar on the housing market hosted by Ilyce. (Full disclosure: Ilyce also serves as the managing editor for the Equifax Finance Blog.)

What’s keeping the housing market depressed isn’t a lack of buyers but a lack of inventory. There simply aren’t enough houses to buy. Home builders can’t build homes fast enough: There aren’t enough building materials in some communities, and others are experiencing a shortage of construction workers.

This lack of inventory is starting to push up prices and is making the market move much more quickly, noted Steve Cook, editor of Real Estate Economy Watch, and the former head of public affairs for the National Association of Realtors.

 

Whither real estate market as interest rates rise? – chicagotribune.com.

The buyers are back, Canada housing market defies doomsayers | Pound Ridge Real Estate

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Daniel DiManno sold his Toronto house for less than he had hoped and wanted to see if prices would cool before he bought a new one. But Canadian mortgage rates are rising again and that’s spurring DiManno and others to jump back into the market, cutting short an already brief housing downturn.

“I saw that they are going to increase rates, so I called my bank last Friday and locked in 2.5 percent for 120 days,” said the 31-year-old accountant, starting the clock on a four-month search for a new home before borrowing gets more expensive.

After nearly a year of cooling sales and plenty of concern that Canada could head for a U.S.-style housing crash, demand has roared back in key markets. What’s still unclear, however, is whether the recent surge is a reinflation of a real estate bubble, a final rush of buyers before rising rates choke off demand, or just a sign of market resilience.

The rise in mortgage rates comes after North American bond yields jumped on fears that an improving U.S. economy will cause the Federal Reserve wind down its monetary stimulus program, known as quantitative easing, more quickly than expected.

After a long cold spring that dampened house hunting, May sales of existing homes rose 3.6 percent, the biggest monthly gain in almost 2-1/2 years, returning the market almost to where it was before Canada’s Conservative government tightened lending rules in mid-2012 to stave off a housing bubble.

 

Analysis – The buyers are back, Canada housing market defies doomsayers – chicagotribune.com.

Real estate is booming in Vegas, but it may be too late | Bedford Corners Real Estate

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If you’ve been waiting to buy a home, you may have waited too long, at least as far as mortgage rates go. The 30-year-fixed rate rose to 4.61 percent this week, the highest since April 2011. Like the weather, the real estate market in Las Vegas has been red hot lately. But it’s not hot enough for homeowners who bought at the peak of the last boom.

We first caught up with Dave and Cheryl Burton last year, when their home’s value was in freefall. The house they bought in 2007 for $700,000 had crashed down to $325,000. In a dismal market, Dave was trying to keep his hopes up.

“When the market tanked,” he told us in 2012, “our mindset was put your nose to the grindstone, keep working hard, and it will turn around.”

The market actually has turned around in the city once known as the capital of foreclosures. Up and down the streets, “sold” signs in Las Vegas are replacing “bank owned.” Neighborhoods are buzzing again.

“Driving around with clients right now is fantastic,” said realtor Kina Foster Theivagt. “Kids are running around playing with each other. It makes it feel more like home and less like a ghost town.”

Like many in their neighborhood who had bought at the peak, the Burtons could have walked away. But they decided “it would wreck our credit,” said Dave. “It just goes against every fabric of how we were raised.”

Their new neighbors have been buying low and making money. But the Burtons still have huge house payments and they can’t find a bank to restructure their loan.

“We’ve never been late,” said Dave.

“We’ve never missed a payment,” said Cheryl.

 

Real estate is booming in Vegas, but it may be too late – CBS News.

Oil may be booming in North Dakota, but real estate is slow to follow | Chappaqua Real Estate

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Money and workers are pouring into Williston, the capital of North Dakota’s oil boom, but the only department store in town is a JCPenney, with a facade straight out of the 1950s.

“We desperately need some kind of shopping center or mall here in Williston,” said Rev. Jay Reinke, a 20-year resident and pastor of Concordia Lutheran Church. “You have to drive hours to find decent shopping.”

That drive is not getting shorter anytime soon. Real estate developers are finding loans and investments hard to come by from Wells Fargo, private equity firm Carlyle Group and other major American financial powerhouses for new department stores and other commercial property, as well as residential developments.

While billions of dollars in oil money may be rushing into North Dakota, big money has resisted financing large real estate deals there, barring some projects entirely and leading other developers to self-finance.

Many would-be financiers say the North Dakota oil patch real estate market is too hot to handle right now, with demand for housing outstripping supply, fueling high prices. The average two-bedroom apartment in the oil patch rents for more than $2,500 per month, helping drive land prices sky-high and sparking concern about a bubble.

National homebuilders such as Pulte Group, D.R. Horton and Hovnanian Enterprises have yet to enter North Dakota. Pulte said it was focused on improving its market share on the East and West Coasts, as well as some Midwest states. The other two declined to comment.

Part of the hesitancy stems from the reluctance of energy-field workers to move their families full-time to North Dakota, a step that would cause them to spend more money locally. The state’s biting winter weather and remoteness have discouraged all but a few families, realtors say.

Data about home-building permits suggests workers are still keen to rent apartments rather than invest in housing and settle down. Only 20 permits were granted in Williston during the first five months of this year, compared to permits to build 482 apartment units, according to the city’s building department. As recently as 2010 the number of homebuilding permits in Williston, a city of about 16,000, far outpaced apartment permits.

“At first we thought we really had to run fast to get position in the homebuilding market, and now we see a landscape that frankly isn’t running away from us,” said Terry Olin, a North Dakota native now exploring real estate projects in the state with Switzerland-based investment company Stropiq LLP.

HISTORY IS A GUIDE

Many banks remain wary of the past repeating itself. North Dakota saw a surge of oil activity in the 1950s and 1980s, only to have the flare-ups burn out, leaving many residents, municipalities and banks in debt after funding large projects. Williston alone had millions in debt from the 1980s oil boom as recently as 2005.

“What we don’t want to do is go into a community like Williston and engage in speculative lending and not have an exit strategy,” said Dan Murphy, Wells Fargo’s regional president for North Dakota, South Dakota and western Minnesota. “We’re happy to make loans. We want to be repaid.”

The hesitancy comes even as Marathon Oil, Exxon Mobil, Statoil and dozens of other energy companies spend billions of dollars to extract North Dakota’s oil and natural gas.

 

Oil may be booming in North Dakota, but real estate is slow to follow – CSMonitor.com.

Foreign investors snap up Washington real estate at an accelerating clip | Armonk Real Estate

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Foreign investors are pouring money into downtown D.C. office buildings even as many properties in the Washington suburbs struggle with stagnant leasing and growing vacancy.

Overseas investors have purchased or are under contract to buy nearly $1.9 billion in Washington office properties so far in 2013, according to data assembled by the services firm Jones Lang LaSalle. That tops the total of $1 billion for all of last year and is more than double the $807 million that foreign investors put up in all of 2011.

With the federal government undertaking stimulus spending measures to bolster the economy, Washington emerged from the recession more quickly than most commercial hubs, and foreign investors — looking for stable assets in a sea of uneasiness — began putting money into some of the city’s top downtown properties and development projects.

Middle Eastern sovereign wealth funds became primary investors in the city’s two mammoth downtown projects, the Marriott Marquis Convention Center Hotel (Abu Dhabi) and CityCenterDC (Qatar). Both are under construction.

Rather than waning as sequestration cuts began to hit Washington in March, interest from abroad appears to be strengthening. Foreign sales account for 75 percent of all investments in Washington commercial real estate this year, after not topping 30 percent in the previous three years and registering just 1 percent in 2006. On average, foreign firms accounted for 17 percent of all sales since 2001.

 

Foreign investors snap up Washington real estate at an accelerating clip – The Washington Post.