Real Estate Speculation Is Pushing Up Prices
Seeking to discourage speculative home buying activity, Chicago-area home builder Marsha Elliott is now including a provision in her contracts that gives her the option of buying a property at the original price if the owner wants to sell within 18 months after closing. “If the buyer doesn’t find someone to flip the property to right after closing, it sits empty. Is it going to be maintained? Is it an open invitation to vandalism? And, does it have a negative impact on the overall community? Absolutely,” said Elliott, who is president of Terrestris Development/MLC Homes. Before initiating her policy, Elliott said that she sold two units months ago to one buyer in the Chicago suburb of Oak Brook for $775,000 each. The buyer is planning to flip the properties, which are selling for $840,000 apiece, an 8.4% jump in price. (www.washingtonpost.com)
Washington Post (6/20/05); Jeannine Aversa, Associated Press
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Only Residents-to-Be Welcome at Laing Homes in California
In a policy designed to protect property values and ensure that people who really want to live in a community are able to do so, John Laing Homes is requiring all of its buyers in Ventura County, Calif. to sign a contract stating that they will not sell or rent their home for 18 months. “If we allow a lot of investors through an open door policy, any crack in the market and there would be a flood of ‘For Sale’ signs and ‘For Rent’ signs,” said Annie Charles, vice president of sales and marketing for the company’s Los Angeles/Ventura Division. “It would just have a detrimental effect on the neighborhood.” Buyers agree that Laing is entitled to the profits from an early sale or rental, although home owners are allowed to sell or rent their homes in the case of illness, financial difficulties or a job change. (www.insidevc.com)
Ventura County Star, Calif. (6/17/05); Gretchen Macchiarella
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Soft Landing in Massachusetts: Economists Hope Pattern Is Replicated Throughout Nation
Home price appreciation appears to have begun cooling down some in Massachusetts and housing analysts say that they hope to see a similar “soft landing” replicated in other parts of the country. “It would be healthy for the U.S. housing market if the rate of price appreciation slows and gives income growth a chance to catch up to it, like we’ve seen in areas like Boston,” said Nicolas Retsinas, director of the Joint Center for Housing Studies of Harvard University. In the first quarter of 2000, Massachusetts ranked first in the rate of year-over-year price increases. In this year’s first quarter it had fallen to 20th place, according to the Office of Federal Housing Enterprise Oversight, with home price gains averaging 12% over those of the same period a year earlier. “Prices aren’t going up as quickly in Boston, but it’s not the end of the world,” said Mary Kelleher, a real estate broker with the city’s realty firm Gibson DomainDomain. “You can still make money in real estate, just not as fast.” (www.washingtonpost.com)
Washington Post (6/18/05); Kathleen M. Howley, Bloomberg News
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Apartment Buildings Find Fewer Buyers in San Diego
A first quarter decline in condominium sales in San Diego could signal that the county’s red-hot market for apartment buildings is beginning to slow. With applications to convert more than 13,000 apartment units since February of 2004, San Diego has been one of the nation’s most active condo conversion markets. In this year’s first quarter, the number of complexes sold in San Diego dropped 25% to 244 buildings, compared to the prior year, according to a survey from Burnham Real Estate Services. The number of units sold fell 16.4% to 3,984. There are an estimated 3,000-4,000 units now on the market or coming soon. “Condo conversions, while still a substantial bargain, are probably reaching prices that are at or near the peak of the market,” said Gary London of the London Group, a real estate consulting firm in San Diego. “And that has been reflected in slower absorption of the inventory that’s out there.” George Carlson, an apartment specialist with Burnham, said the slowdown may signal “a healthy breather for the market, which has seen record investment activity and pricing in recent years.” Loan rating agency Fitch Ratings has singled out New York City, Las Vegas and Florida as areas whose condo conversions are at risk of overheating. (www.signonsandiego.com)
San Diego Union-Tribune (6/20/05); Mike Freeman
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Hotel-Condo Hybrids Expanding Nationwide
Hybrid condo-hotels in which some of the units are sold as condominiums has become one of the industry’s popular trends, expanding in the past two or three years beyond traditional markets in ski resorts or Hawaii into other tourist destinations, such as Orlando, Fla. and Las Vegas. The renovation project of the Plaza Hotel is a notable example in New York and other hybrids are under construction in urban centers like Atlanta and Chicago. “Every major player, the major hotel owners in the country, are looking at hotel condos, hotel condo conversions, hotel condo construction to see if it fits their portfolios,” said Jan Freitag of Tennessee-based Smith Travel Research. Ritz-Carlton won’t even manage a hotel without a residential component because of the lucrative nature of the condo-hotel concept. (www.msnbc.msn.com)
MSNBC.com (6/7/05); Mike Schneider, Associated Press
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Landmark Study Documents Dramatic Increase in Housing, Transportation Costs
The nation’s average-income household spent $21,213 — or 52% of their income — on housing and transportation in 2003, according to “Driven to Spend: Pumping Dollars Out of Our Households and Communities,” a new study by the Center for Neighborhood Technology and the Surface Transportation Policy Projects. Separated from housing expenses, transportation costs nationwide took a 19.1% share of family budgets in 2002 and 2003, and gas prices have jumped about 30% since then. The study found significant differences among the 28 major metropolitan areas it examined, which were largely related to the use of mass transit. Average percentages of income going for transportation ranged from a low of 14%, or $5,605, in Baltimore to a high of 20.9%, or $9,891, in Houston, with enormous implications for the economies of those areas. “If Baltimore households spent the national average on transportation (19.1% instead of 14%), they would have spent an extra $2 billion in 2003 on transportation,” according to the authors of the study. “And if Houston households would have spent the national average on transportation (19.1% instead of 20.9%), they would have saved $1.2 billion on transportation.” (www.smartgrowth.org)
Smart Growth Online (6/14/05)
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Vacation Home Market Still Is Getting Hotter
There were a record 2.82 million vacation home purchases last year, according to the National Association of Realtors®, up 16% from the year before. The price of vacation homes has increased 21% over the past year, according to a survey of 54 ZIP Codes by the Cambridge, Mass. market-research firm Fiserv/CSW for the Wall Street Journal, about twice the overall rate of housing appreciation. All but two of the towns in the study showed median home prices above $350,000 and nearly all were on the waterfront. The typical buyer of a vacation home earns $71,000 and buys a home worth slightly less than $200,000, according to the Realtors®. The trend toward shorter mini-vacations instead of two-week breaks is favorable for slightly faded resort towns like Sayville, N.Y. and Newport, R.I. that are an easy drive from major cities. The entire New Jersey shore is popular with buyers, because of its proximity to New York City, Philadelphia and Washington, D.C., as is the coast between Los Angeles and San Diego. (www.chicagotribune.com)
Chicago Tribune (6/18/05); June Fletcher, Wall Street Journal
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Supply Costs Up Project Prices
Robert Garza, public works director for Las Cruces, N.M., said that the city is having a tough time finding contractors to bid on street construction projects because of the intense demand and limited supply of road-building materials. In some cases, he said, the cost of hot asphalt mix has gone from $24 per ton to $52 within the past year, and costs for concrete and other street materials have gone up almost as much. A spokesman for the only company in the area to supply those materials, Mexico-based cement giant Cemex, Rick Shapiro, said that, “The prices for ready mix and other materials reflect the competitive market conditions. The increases you’re seeing in your area are in large part due to the increases in raw materials and rail costs.” While he said that prices for asphalt in ready mix in the El Paso market are some of the lowest in at least the southern part of the country, the prices are going up. Cemex, along with NAHB and the Associated Contractors of America, have called on the Commerce Department to lift a 15-year-old duty on Mexican imports. The duty adds $33 per metric ton to the price of Mexican cement, according to Cemex. (www.csun-news.com)
Las Cruces Sun-News (6/13/05); Christopher Schurtz
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