Where Home Prices Crashed Early, Signs of a Rebound

Among the first in the nation to see its housing market collapse, Sacramento, Calif. now seems to be in the earliest stages of a recovery. Investors and first-time buyers, the traditional harbingers of a housing rebound, are out in force here, competing for bargain-priced foreclosures. With sales up 45% from last year, the vast backlog of inventory has diminished. Even prices, which have plummeted to levels not seen since the beginning of the decade, show signs of stabilizing. Indications of progress are visible in other hard-hit areas, including Las Vegas, parts of Florida and the Inland Empire in southeastern California. Sales in Las Vegas in March, for example, rose 35% from last year. Foreclosures are driving the market in Sacramento. Two-thirds of the 2,092 existing single-family houses and condominiums sold there in March were bank repossessions, up from 8.5% two years ago, according to MDA DataQuick, a real estate research firm. These cut-rate properties are engendering the same frenzy and frustration that symbolized the boom, as Rebecca and Chris Whitman discovered when they started looking for a house in December. In two months, the couple looked at 100 houses, nearly all foreclosures priced under $200,000. They made verbal offers on 20, but rarely got a response. They ended up buying a spruced-up three-bedroom foreclosure for $224,500 that was purchased by a syndicate last fall for $172,000. At the current rate of sales, there is less than three months of inventory in the Sacramento market. In normal times, that would indicate a seller’s market, but the unemployment rate in the county is 11.3% and that in itself will tend to increase foreclosures. (www.nytimes.com)
New York Times (5/5/09); David Streitfeld

[Return to top]

More Homes Get Multiple Offers; Downturn May Be Nearing End

Multiple bids on homes for sale have picked up in recent months in California and other states hit hard by foreclosures and steep price drops, real estate executives say. “If a house is in a good neighborhood, is maintained and is a good value, it’ll get multiple offers,” says Julie Holt, owner of Anclote Title Services in Tarpon Springs, Fla. One in 10 homes now draws multiple offers, up from one in 30 last fall, she says. Multiple bids usually signify a market in which prices are rising and buyers outnumber sellers. That’s not true now, given rampant foreclosures, still-falling prices in many regions and low demand for higher-priced homes. Multiple offers on distressed properties are also not new, but their recent frequency offers hope for the real estate market, says Beth Peerce, treasurer of the California Association of Realtors®. “When you begin to see people willing to fight for a property, that’s a good sign,” she says. “We are beginning to see the beginning of the end of a disaster time.” The competition is driven by prices — California’s are down 39% from a year ago, the state’s Realtors® say — low mortgage rates and a new $8,000 federal tax credit for first-time buyers. (www.usatoday.com)
USA Today (5/6/09); Julie Schmit

[Return to top]

Housing Affordability: Rents Rise in Florida, Homes More Affordable in Most Cities

The average two-bedroom apartment became less affordable in 2008 compared with 2007 in all of the Florida metro areas studied in the latest “Paycheck to Paycheck: Wages and the Cost of Housing in America” report by the Center for Housing Policy. One explanation is that the number of foreclosures in the state is pushing home owners into the rental market. Meanwhile, the fall in home prices has made homeownership more affordable for many Americans, according to the report. On a national basis, it takes a little more than $60,000 a year to afford the median priced home, said Maya Brennan, research associate for the center. But markets vary: In Youngstown, Ohio it only takes an income of about $24,000 a year to afford the median home, while in San Francisco it takes an annual income of $187,000, she said. Elementary school teachers could afford a home in 39 more markets in 2008 than in 2007, according to the study. Licensed practical nurses could afford a home in 18 more markets, and police officers could afford a home in 29 more markets, Brennan said. In Oakland, Modesto, Stockton, Salinas and Merced, Calif., it required about 47% to 54% less income to afford a home in 2008 than it did in 2007. There were only five cities where it required more income to buy a home last year than it did the year before: Peoria, Ill.; Cedar Rapids and Davenport, Iowa; Raleigh, N.C.; and Charleston, W.Va., according to the study. (www.marketwatch.com)
MarketWatch (5/7/09); Amy Hoak

[Return to top]

Lease-to-Own Condo Deals Attracting Buyers

With some of South Florida’s swankiest condominium projects honeycombed with empty units, developers are increasingly using lease-to-own programs as a way of attracting wary buyers and eager renters. Some are offering terms unheard of in normal markets. Many developers, including the mega-builder The Related Group, are offering lease-to-own options that credit 12 months worth of rent payments toward a downpayment or closing costs. Taking advantage of such options generally carries no extra cost. The demand for lease-to-own options appears to be robust. Scott Greenwald, developer of The Lexi in North Bay Village, said 26 new tenants have signed lease-to-own agreements since he rolled out the program three months ago. The option allows tenants to lock in current market prices on their condos in the event prices go up over 12 months. But if prices fall, they can negotiate, said Greenwald. Developers currently hold about 10,000 new units in the greater downtown Miami area alone, not counting the thousands of new condos and condo conversions built throughout the rest of Miami-Dade and Broward counties. Developers can bring life and vibrancy to a project by populating it with leasing residents, making it more attractive to other buyers. They can also generate cash flow to cover their costs as they wait for the credit market to improve and buyers to come, said Jonathan Mann, a real estate agent with Grove Town Properties, who specializes in leasing developer-owned condos. “Renters get to test drive buildings and save up for a downpayment. They don’t have to worry about units going into foreclosure and they get a high-end, luxury building with low move-in cost. It’s a no-brainer.” (www.miamiherald.com)
Miami Herald (5/4/09); Monica Hatcher

[Return to top]

Increasing Number of Renters Are Taking Energy Conservation Measures, Study Finds

The availability of on-site recycling programs at multifamily communities has increased by 16% and that of energy efficient windows by 9% since 1997, according to a recent study conducted by Apartments.com. Simultaneously, it seems that renters are becoming more conscious of the environmentally friendly measures they can take in their homes. To conserve energy, 52% of renters said they are turning off lights and computers when not in use, setting air conditioners and heaters on timers and using energy-efficient bulbs, according to the survey. An additional 22% are recycling paper, plastics and electronics. The survey also found that more than 65% of renters say that practicing an environmentally friendly lifestyle is a high priority. More than 60% said they search for apartments that offer environmentally friendly amenities and 25% are willing to pay more rent to live at an apartment community that considers the environment in its day-to-day community operations. (www.multihousingnews.com)
Multi-Housing News (4/17/09); Anuradha Kher

[Return to top]

Connecticut Builders See No Decline in Land Prices

Longtime builder Greg Ugalde knows that when the real estate market slows, it can be the right time to start buying land for future developments. At least, that's the way it used to be. Ugalde, president of Torrington-based T&M Building Co., recently discovered that although the Connecticut housing market is sluggish — with the number of home sales and median sale prices dropping dramatically the past few months — the price of land has not followed suit. "In these kinds of economic times where the economy is struggling, this is usually a good time to try to replenish our land holdings and get ready for when the economy turns around," Ugalde, a builder for more than 20 years, said. "But we've found that, while there might be some small adjustments on some land, overall prices are holding steady." There is little new construction planned. Housing permits issued for residential construction in the state fell by 20% in February compared with a year earlier, with 200 permits for single-family houses, condos and apartments issued in 128 towns, according to the state Department of Economic and Community Development. So if real estate is struggling, why aren't local land prices falling? Local builders and others say the issue boils down to basic supply and demand. Although new home construction has slowed, there still is a very small supply of buildable land available in the greater Hartford area, especially for larger housing developments. And, for the most part, landowners are in no hurry to sell, especially at a reduced rate. (www.courant.com)
Hartford Courant (4/26/09); Robin Stansbury

[Return to top]