Five years after the housing market peaked, conditions are not improving in most areas. The latest data shows housing prices are still down and housing sales are sluggish. New home sales hit a record low in February and the S&P/Case-Shiller home price index suffered it’s sixth-consecutive price slump in January.
Unfortunately, the halcyon years of real estate will not return, no matter how much stimulus is pumped into the economy, says Harry Dent founder of HS Dent. Demographics and debt can no longer support it, he argues. “Housing is not coming back. Baby boomers are done buying housing.” Simply put, “housing is dead,” he declares.
Worse yet, the bursting of the housing bubble will continue until we’re back to pre-irrational exuberance levels, he tells Aaron in the accompanying clip. “Just to erase the bubble, (housing) has to drop 55% [from the peak], not the 33% we’ve seen on the Case-Shiller thus far.”
The drop could be as bad as 65% from the peak before Case-Shiller bottoms sometime in 2013, he says.
The trouble with housing is a global phenomenon. “This is a worldwide real estate and credit bubble. We’re going to see a worldwide crash,” Dent predicts. Shanghai, Hong Kong and Mumbai are especially fragile, noting home price to income levels have reached 40 -to-1 in Shanghai.
There is no subprime rot in Asia as there was in the U.S.. The problem in the emerging markets is based on over speculation by the relatively small wealthy class. “The wealthy are speculating in housing, even if they’re putting down more cash. This is a bubble of the wealthy and it will burst.”
Dent also mentions in this video that the Dow could be at 3,000 as early as 2012:
Villa Mayana was designed by architect Enrique Barascout and is located near Hermosa Beach in Costa Rica. The main entrance features a covered walkway over a 2,000 square foot reflecting pool of black volcanic candistone.
“Construction followed a deliberate theme of rustic simplicity through the selection of natural materials such as sandstone, bamboo and Cristobal wooden doors and flooring. The result is a blend of casual elegance and comfortable luxury.”
Developers and construction officials are seeing signs of what could be the next trend in San Diego’s construction: multifamily housing.
The county of San Diego reported 541 multifamily permits were pulled in February, the most in any month since 633 were pulled in April 2008.
When one adds February’s number to January’s, 836 multifamily permits have been issued so far in 2011, the most in the first two months of the year since January 2006 when 987 permits were pulled.
Tammy Harpster, chief investment officer for Taag Investment Management, said there is a “feeding frenzy” going on with developers and investment companies for land to build multifamily housing projects.
She believes it’s because the demand for renters is increasing.
“A lot of people who lost their homes due to foreclosures or short sales, now want to rent and move back into the city,” Harpster said. “The core area is in between Interstates 5 and 805.”
Harpster said rents have been rising on the multifamily entitlements Taag Investment Management owns and in turn has raised the price of land for multifamily housing projects, saying land is going for about $1.50 to $1.75-per-square-foot.
“A lot of people who bought (single-family homes) in Santee or other areas outside of the city of San Diego and lost their home now want to relocate closer to where they work, even if they have to rent,” Harpster said. “Before people didn’t mind the long commute to work since they thought they were getting a great deal on their single-family home.”
One of the largest master planned developments in San Diego County is Civita in Mission Valley. The first phase of the 4,800 housing unit community calls for a 306-unit apartment complex and two townhome buildings totaling 200 units, but no permits have been pulled in the last two months for any of these housing units, according to Marco Sessa, senior vice president of Sudberry Properties. Sudberry is part owner and developer of Civita.
Dave Gilmore, principal at the architectural firm LPA Inc., said some developers are going off the trend of seeing vacancy rates on office space decrease.
“We have seen a lot of office space being leased up in the last month,” said Gilmore, whose company is based in San Diego’s East Village. “I think developers are seeing business expand and moving into California and believing more (multifamily) urban housing is needed, especially on the westside of San Diego.”
Gilmore could not point out a new multifamily development in the works in the county, but did say some of his clients are developing master- planned communities — with multifamily housing projects — such as the Irvine Co. in Orange County.
Jeff Bingham, chief executive officer of Bingham Construction, said he has noticed land in Mira Mesa and in Escondido being leveled off for the construction of multifamily housing projects.
“There is a wave of apartment complexes coming, because people now can’t afford those large (single-family) homes and are now downsizing,” said Bingham, who added his company has completed a few renovation projects to existing apartment complexes.
Major banks may be forced to let severely delinquent homeowners sell their houses for less than the loan amounts owed as part of a broad settlement of federal and state investigations into botched foreclosure paperwork, according to government officials involved in the negotiations.
The requirement to allow so-called short sales would be in addition to forcing mortgage servicers to reduce the amount some homeowners owe on their loans, said two officials, who spoke on the condition of anonymity because negotiations are ongoing.
The goal of short sales would be twofold: provide a quicker and more economical way for banks to dispose of distressed real estate and to help stabilize the real estate market by clearing out a backlog of defaulted mortgages that are poised for foreclosure.
They would be used in situations in which borrowers were so underwater that the more costly and time-consuming process of foreclosure would seem to be the only option.
“Short sales just command a better premium than foreclosures,” said Glenn Kelman, chief executive for online brokerage Redfin. “It’s like day-old bagels. They never sell for the same price. If they sit there for a while, nobody wants them because houses just break down when they are left alone.”
Foreclosures continue to drive down housing values, with prices in 20 major U.S. cities down an average of 3.1% in January compared with the same month a year ago, according to new data from a Standard & Poor’s/Case-Shiller index. Prices in Los Angeles were down 1.8%.
The latest proposal is among those to be discussed when executives from the top five mortgage servicers meet Wednesday in Washington with state and federal officials working on a settlement that could range from $5 billion to $25 billion.
Short sales would help accelerate the turnover of homes from borrowers who are months behind on their mortgage payments, Kelman said.
Some sellers are not eager to complete a short sale because it would force them out of their home. And lenders can withhold approval of a short sale if they don’t like the price.
Banks often resist such sales because they are difficult to execute, particularly when multiple creditors and other parties are involved. In addition, short sales lock in losses for the lender that might be reduced if the sale is delayed until the market improves.
Requiring banks to allow short sales could fuel further opposition from some Republican attorneys general and members of Congress who already have criticized the broad scope of the proposed settlement.
Some House Republicans have derided possible payments of $20,000 to encourage distressed homeowners — dubbed by some as “cash for keys” — as a bailout for irresponsible behavior.
Seven Republican attorneys general recently wrote to Iowa Atty. Gen. Tom Miller, a Democrat who is leading the negotiations for the states, saying the proposals go beyond resolving damages from foreclosure paperwork problems. Those problems include robo-signing, the practice of bank employees’ signing sworn documents without reading or understanding them.
“I think it’s morphed into something that’s bigger and different than what we talked about in the beginning,” said Oklahoma Atty. Gen. E. Scott Pruitt, a Republican who organized the signing of one of the letters.
The Skinny: This 3,800-square-foot glass and concrete number lies on 70 feet of Lake Washington waterfront and features a “spa,” media room, deep-water mooring, and boulder-lined swimming pool. Apparently, all those luxuries didn’t leave space in the glass cube for more than two bedrooms.
The upper level, with soaring ceilings and walls of glass, makes for a stunning entertaining space, particularly the massive kitchen and dining area with space for 10. Twenty minutes from downtown Seattle, the house has views over the water to Mercer Island.
What does it mean when three model-matches go pending the same week?
Casual observers might think, “the market’s picking up!”
It makes people wonder if they sold too cheap.
It’ll make sellers think they should adopt the “wait it out” program.
But those paying attention will notice how unpredictable home sales can be.
We only know the list prices of the other two, so they could close for considerably less. The first house shown in this video had been on the market 70 days, though they did start at $820,000. It had the dark hardwood floors but was also on the T-intersection. The other was a short sale, which nobody cherishes.
Yet when we made our offer on the REO, listed for $699,900, there was only one other offer, and it was lower.
We offered $650,000, the bank countered $680,000, and we countered $660,000 – and they took it.
How do you explain the other two selling the same week? Was there that much difference between them?
The “market” tends to be a random, roving swarm of marginally-related events.
Nearly a decade after he purchased Lloyd Wright’s 1926 Sowden House and pumped more than $2 million into the historical property, designer Xorin Balbes has put the Mayan Revival on the market.
The home has a rectangular design. Its rooms open to a long courtyard that once was an open-air theater where original owners John and Ruth Sowden hosted performances for their film-industry friends. (more…)
New York, March 29, 2011 – Data through January 2011, released today by Standard & Poor’s for its Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show further deceleration in the annual growth rates in 13 of the 20 MSAs and the 10- and 20-City Composites compared to the December 2010 report. The 10-City Composite was down 2.0% and the 20-City Composite fell 3.1% from their January 2010 levels.
San Diego and Washington D.C. were the only two markets to record positive year-over-year changes. However, San Diego was up a scant 0.1%, while Washington DC posted a healthier +3.6% annual growth rate.
The same 11 cities that had posted recent index level lows in December 2010, posted new lows in January.
Double-dip enthusiasm from Forbes.com:
Continuing its descent to the lower depths of a double-dip trough, the U.S. housing market fell even further in January, according to the widely followed S&P/Case-Shiller Home price Indexes. The 20-City Composite fell 3.1% from January 2010 while 11 of the 20 metropolitan areas (MSA) surveyed hit their all-time lows since the index began. In the words of David Blitzer, Chairman of the Index, the latest readings “bring us weakening home prices with no real hope in sight for the near future.”
Every piece of data covered by the index seemed to come in negative in January, with 13 of the 20 MSAs showing further deceleration in annual growth rates and the 10 and 20-City Composites marking their sixth consecutive month of declines. With markets back at their summer-2003 levels, Blitzer sounded his most apocalyptic yet, saying “at worst, the feared double-dip recession may be materializing.”
The condo owners in the landmark El Cortez Hotel building in downtown San Diego have received a $6.4 million settlement in a construction-defect lawsuit and are moving to fix the many water leaks that were detected even before they moved in.
“I believe this construction defect settlement will improve our situation financially,” said homeowners president Barry Bruins. “I believe lenders will be interested in the building again — as well as the fact that the real estate market seems to be coming back in general. All things are coming together to help our values come up a little, and I think they will continue to improve.”
There are currently three units for sale, ranging from $214,340 to $225,000.
Located at 702 Ash Street, El Cortez opened in 1927 and achieved its pinnacle of popularity in the 1950s after the addition of a glass elevator and Sky Room cocktail lounge on the roof of the 17-story building.
But the building eventually lost its attraction, fell into disrepair went through a series of ownerships and uses before developers Peter Janopaul and Anthony Block bought it in the 1990s, restored it to its original look and reopened it as an apartment building in 2000 and converted it to condos in 2004.
However, in the restoration process, plumbing problems were not adequately handled and the developers sued their contractor and subcontractors and the condo buyers sued the developers as well.
“I’ve been doing complex business litigation and construction defect litigation for 20 years and I have never seen a case like this before,” said the owners’ attorney, Andrew Berman.
He said five years of litigation involved six lawsuits, 200 depositions and multiple construction tests.
The settlement, reached earlier this month, will net the homeowners association just over $3 million, some of which will be used to repay a $200,000 loan taken out earlier to fix the worst problems.
“The board will be very careful about spending money that will save us money in the long run in the maintenance of the building,” Bruins said.
Janopaul, who has left San Diego and moved back to hometown of Modesto, said the financial outcome is somewhat less than the original settlement he and his business partner, Anthony Block, offered at $3.5 million.
“The homeowners association was in a terrible situation,” he said. They had to ask for $27 million so they could get $3 million.”
As for the substance the construction complaints, Janopaul said the problems in his mind were “not a big deal,” but grew to major proportions through battles waged by the attorneys.
Looking to the future, Janopaul still hopes to build an annex on the north side of the block and will seek a three-year extension of the city permit that expires at the end of the year. But when he moves forward with construction is unknown.