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Credit for Millennials | Waccabuc Real Estate
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Tracy A. Becker, President
Miami Market Cools as Foreign Buyers Flee | Waccabuc Real Estate
An aerial view of Miami Beach and South Beach, where the condo market is showing signs of stagnation. Photo by Chris Condon / Getty Images.
There was a time, only two years ago, when Miami’s condo market seemed like an ever-expanding balloon. South Florida was the nation’s biggest real estate comeback story. Miami became a go-to destination for luxury buyers looking to add to their property portfolios.
But like most things filled with hot air, eventually the balloon starts its gradual descent back to earth.
For those who have been waiting for the drop, 2016 may well be the year when softening demand—fueled by stock market volatility in China, low oil prices, currency devaluations in South America, and a heck of a lot of new condo units coming on the market—becomes too much to overcome.
As 2016 begins, signs of a slowdown abound. While prices continue to rise for single-family houses, fewer are selling. The market for condos, which many consider a health indicator of vacationer-heavy Miami Beach, is also showing early signs of stagnation.
The number of single-family home sales that closed dipped by 6.7 percent in November compared to the same month in 2014, while new pending sales fell by 15 percent, making it the fifth straight month of decline, according to the Miami Association of Realtors. Nevertheless, median home prices rose by 12 percent to $274,900—the third straight month of double-digit increases.
The condo market told a slightly different story. Overall, closed sales inched up by 1.9 percent, reversing a two-month slide. New pending sales slid by 16.5 percent, year-over-year, the second highest month of decline in 2015 (October being the highest, at 17.9 percent). Median prices grew by 7 percent to $203,000.
While overall the median days on the market for condos fell by 12 percent, units selling for $300,000 to $999,999 proved particularly sluggish, with homes from $300,000 to $399,999 spending 72 days on the market, a median increase of 50 percent, according to Miami Real Estate Association.
In the condo market especially, there seems to be a growing disconnect between sellers’ expectations and market reality. And local brokers say they are seeing mounting frustration. “We are seeing a lot of sellers calling us saying, ‘What is happening? Nothing is moving,'” said Mark Zilbert, president of Brown Harris Zilbert in Miami.
The Porsche Design tower reached its full 60-story height in October 2015. Photos courtesy of Porsche Design Tower.
How did this happen? Blame the foreigners. In 2012, developer Gil Dezer publicly said “obrigado” (thank you) to the many Brazilians who were scooping up condos in Miami and Miami Beach. Dezer, who has been developing the 60-story Porsche Design Tower, credited the Brazilians for almost single-handedly turning around the depressed condo market. Other groups followed suit, including Argentines, Venezuelans, Colombians, Russians and other Europeans, and many Canadians.
Today, much of that interest has disappeared. “We are seeing a lower intensity of demand from foreign investors, comprising an estimated one third of the condo market sales” in Miami, said Jonathan Miller, president of Miller Samuel, a real estate appraisal and consulting firm in New York.
The view from the under-construction Porsche Design Tower in Sunny Isles. Photo by Joel Auerbach / AP Photo.
Miller cited a stronger U.S. dollar, volatile financial markets, and “sharp declines in GDP in source countries that fed Miami demand” as the biggest reasons for the turnaround.
He added that the “significant volume of new housing stock” that is being added has “provided a lot of information for investors to process and removed the sense of urgency from the market.” Also contributing to the general slowdown has been a decline in distressed sales in 2015, which previously helped skew overall prices higher. Foreclosures and short sales both dipped by double digit percentages in November.
But problems abroad are clearly at the heart of the Miami slowdown. Brazil’s currency, the real, has fallen off by more than half since Dezer gave thanks, and the country’s economy is poised for a second straight year of contraction. Economic sanctions on Russia are finally taking a toll on Miami buying at all but the billionaire oligarch level. “Rubles? We don’t see much of those any more,” Zilbert said.
Falling oil prices have hurt Brazil and Russia as well, and compounded problems even further for Miami’s biggest foreign buying group: Venezuelans. Despite government restrictions on how much money they can pull out of their country, Venezuelans continued to buy in and around Miami in 2015. But the restrictions “have had a huge effect on the flow of business,” Philip Siegelman, a principal at real estate marketer ISG, told me late last year.
Venezuelans and Brazilians, it can be argued, are smart to play the currency game. In a downward economic spiral, waiting can end up costing them more, as inflation rises and currencies continue to decline at home. Brazilians that paid hefty deposits in 2014 for pre-construction Miami condos look brilliant now. Their money has more than doubled in Brazilian currency terms.
But there is too much of that new development coming on line to keep the market surging.
The result is that, while a lot of Americans and foreigners continue to show interest in Miami, “There is a shrinking number of people willing to pull the trigger,” Zilbert said. “And the sellers are starting to notice.”
What is especially troubling to brokers is that the expected surge of buying in the last quarter of 2015 didn’t pan out. The bottom line: Many buyers are no longer accepting the price increases that sellers are pushing for.
“I think we are going to see pricing slip back to 2014 levels in order to attract the buyers,” Zilbert said.
Sales have remained fairly stable at mid-tier properties priced between $350,000 to about $700,000, where condos have not appreciated enough to scare away buyers, brokers say. Units in buildings like the Waverly South Beach and the Yacht Club at Portofino continue to find buyers, Zilbert said.
But lately, resale units at the Icon South Beach, the Floridian South Beach and 900 Biscayne in downtown Miami, have struggled to move, as buyers have balked at higher listing prices.
Construction in Miami’s South of Fifth neighborhood. Photo by Felix Mizioznikov / Shutterstock.
In Zilbert’s own South of Fifth neighborhood, he is seeing buyers pass on a number of units for sale in premium buildings like the Murano Grande (where he lives) and the Continuum. Just two years ago, South of Fifth, a once-blighted section of the beach known for crack houses and rampant crime, was considered Miami Beach’s most-expensive and hottest neighborhood, a truly stunning rebirth story. Lately, more and more units are lingering on the market, Zilbert said.
As Miller noted, sellers are “usually the last to recognize a change in the market when it is weakening,” which results in lower sales activity. “It is not that demand is weak, but rather that there is a growing disconnect between what sellers want and what the market can support,” he said.
Not every segment of the Miami market is showing signs of softening. The high end, with prices in excess of $3 million, is still raging. Sales remain brisk at luxury towers like Faena House, the newly announced Eighty Seven Park, and the Surf Club Four Seasons.
read more…
http://curbed.com/archives/2016/01/12/miami-market-cools-condo-prices-foreign-buyers.php?utm_campaign=issue-42758&utm_medium=email&utm_source=Curbed
Sales of used homes rose 3.2% in June | Waccabuc Real Estate
Existing homes sold in June at the fastest pace in more than eight years, and the median sales price hit a record, according to data released Wednesday.
Sales of existing homes rose 3.2% in June to a seasonally adjusted annual rate of 5.49 million, the fastest pace since February 2007, the National Association of Realtors reported. Meanwhile, the median sales price rose 6.5% over the past year to a record of $236,400.
Some buyers may be rushing to lock in mortgage rates before they rise further, according to NAR. There’s also a “solid foundation” for more home sales, given healthy jobs growth, said Lawrence Yun, NAR’s chief economist.
Economists polled by MarketWatch had forecast a sales rate of 5.42 million for June, compared with an original May estimate of 5.35 million. On Wednesday NAR revised May’s pace to 5.32 million.
Wednesday’s report gives markets a look at how buying activity is faring during this year’s hot home-selling season. The sales pace is down about 24% from a bubble peak.
While the growing economy and jobs market, as well as still-relatively-low mortgage rates, are supporting sales, there are also challenges facing the housing sector. Lenders have strict credit standards, erected in the wake in the financial meltdown, looking to protect themselves from the financial and legal risks attached to making loans that end up going bad. Also, while the U.S. housing market as a whole is growing stronger, there are still pools of deeply distress borrowers in the country.
Elsewhere in the housing market, there are signs of uneven improvement. Recent government data showed that new home building sprang higher last month, but the gains were lopsided, led by apartment building. Construction starts in buildings with at least five units made up 41% of total new home construction in June — the largest share in 42 years.
read more…
http://www.marketwatch.com/story/existing-homes-sell-at-fastest-pace-in-more-than-eight-years-2015-07-22
How Dodd-Frank changed housing | Waccabuc Real Estate
The effect of loose lending during the last housing boom was abundantly clear: Nearly 8 million U.S. homes fell into foreclosure. The response was a slew of new lending rules under the Dodd-Frank financial reform law, and the result was a credit lockdown that continues today, nearly five years after the legislation was enacted.
“For lenders this is all about paperwork, verification and doing a lot of the grunt work that was ignored or passed over before the crisis,” said Jaret Seiberg, a managing director at financing firm Guggenheim Securities.
The rules fill thousands of pages and have cost lenders millions of dollars in labor and software to revamp their systems in compliance, but at face value, they’re pretty simple. Highly risky loan products, like negative amortization mortgages, are now banned. Borrowers must document their employment and debt levels. Lenders must disclose all the costs involved in each loan, and, perhaps most important, lenders must verify a borrower’s ability to repay the mortgage.
That last one may sound ridiculous, but it was the fundamental reason for the financial crisis in housing. Borrowers were given loans they could never repay.
“If you’re a high-quality credit consumer, Dodd-Frank just made it a much bigger pain in the butt to get a loan. You’ve got to fill out more paperwork, you’ve got to dig up more tax returns,” said Seiberg. “You’ve got to find information related to retirement accounts, stuff that was never asked for before. But if you’re on the low end of the spectrum, it has made it tougher to get that mortgage.”
So tough that the average FICO credit score on loans made today are the highest in history. Tight credit, though, is blamed for a still-falling homeownership rate, now at the lowest in a quarter century.
“The biggest misconception is that you need a big down payment to buy a house. It’s just not correct. What has changed is not the down payment, it is the credit and the ability to repay rule. Beyond that it’s the documentation piece,” said Craig Strent, CEO of Maryland-based Apex Home Loans. “It’s not hard to qualify, it’s hard to get through the process because of the massive amounts of additional documentation that is now required.”
Getty Images
Borrowers, however, still complain that it is not just the process, but the level of creditworthiness that is keeping them out of the homebuying market; even the Federal Reserve chair, readying to raise interest rates, says credit is too tight.
“Demand for housing is still being restrained by limited availability of mortgage loans to many potential homebuyers,” said the central bank’s chair, Janet Yellen, in testimony to the Senate Banking Committee on Wednesday.
Tight credit is also blamed for a shift in the lending landscape. Large bank lenders are moving out, and independent, nonbank lenders are moving in. Nonbanks now make up 43 percent of mortgage lending today, up from just 10 percent in 2009, according to Inside Mortgage Finance, an industry publication.
“Banks consolidated massively. The big four are so well-diversified that revenue stream from mortgages is not part of their headline strategy,” said Anthony Hsieh, chairman and CEO of California-based loanDepot, a nonbank lender that has grown dramatically in just the past year.
Private sector investors have not returned to the mortgage market. Loans backed by government entities Fannie Mae, Freddie Mac and the FHA make up more than 90 percent of all new loans today, a historically high share. During the housing boom they were barely one-third of the market.
“I think Dodd-Frank, not only does it add complexity, but it adds a lot of confusion,” said Hsieh.
It also adds significant costs in time and labor. Lenders like Apex Home Loans have had to hire dozens of additional staff just to comply with new rules.
read more…
http://www.cnbc.com/2015/07/16/how-dodd-frank-changed-housing-for-good-and-bad.html
Housing’s Share of GDP Expanded at the Start of 2015 | Waccabuc Real Estate
With the release of the final estimates of first quarter 2015 GDP growth (a decline of -0.2%), housing’s share of gross domestic product (GDP) grew to 15.45%, with home building and remodeling yielding 3.14 percentage points of that total.
Housing-related activities contribute to GDP in two basic ways.
The first is through residential fixed investment (RFI). RFI is effectively the measure of the home building and remodeling contribution to GDP. It includes construction of new single-family and multifamily structures, residential remodeling, production of manufactured homes and brokers’ fees. For the first quarter, RFI was 3.14% of the economy.
The RFI component reached a $512 billion annualized pace during the start of the year. This is the highest quarterly rate for RFI since the middle of 2008.
The growth for RFI at the start of 2015 added 0.21 points to the headline GDP growth rate (GDP would have declined 0.4% absent the RFI component).
The second impact of housing on GDP is the measure of housing services, which includes gross rents (including utilities) paid by renters, and owners’ imputed rent (an estimate of how much it would cost to rent owner-occupied units) and utility payments. The inclusion of owners’ imputed rent is necessary from a national income accounting approach because without this measure increases in homeownership would result in declines for GDP. For the first quarter, housing services was 12.3% of the economy or $2 trillion on an annualized basis.
Taken together, housing’s share of GDP was 15.45% for the start of the year.
Historically, RFI has averaged roughly 5% of GDP while housing services have averaged between 12% and 13%, for a combined 17% to 18% of GDP. These shares tend to vary over the business cycle.
read more….
http://eyeonhousing.org/2015/06/housings-share-of-gdp-expanded-at-the-start-of-2015/
Snap Up a Well Done North Haven Flip | #Waccabuc Real Estate
88 Sunset Beach Road, North Haven
The brokerbabble for this really lovely flip begins, “Just finished ground up renovation of Captains Manse.” And by “captains manse” we mean “1950s cape,” and by “Just finished ground up renovation” we mean “we shoved assloads of stacked stone everywhere!” All kidding aside, we’re pretty impressed with how stylish the house looks now. It’s been turned from a dowdy three-bed, two-bath to a handsome five bedroom, 4.5 bath house, with 3500sf. The natural materials and copious use of glass keeps the look cohesive, yet modern and airy. We particularly like the interesting lighting. The plot is 0.65 acres, and the original studio has been kept to adjoin the new pool, which is fenced with glass and stacked stone. The place previously sold for $945K; given the quality of the improvements, we don’t think $1.995M is ridiculous.
read more…
http://hamptons.curbed.com/archives/2015/01/13/snap_up_a_well_done_north_haven_flip_asking_1995m.php
Cultured Austin Home with Exquisite Gardens | #Waccabuc Real Estate
Photos by Zac Seewald
Location: Austin, Texas
Price: $4,500,000
The Skinny: One of the coolest residences in Austin is on the market. Built in 1979, the original structure was designed by architect Robert James Coot, and has since been transformed by additions from Paul Lamb in 1988 (the farmhouse style kitchen, outdoor dining area, and lower level guest suite) and Mell Lawrence in 2003 (the expanded master bedroom, the covered second-floor porch, and the first-floor bedroom suite). Broker Laura Gottesman describes the result as “eclectic but elegant,” and speaking of eclectic, as of 2007, it sits across from an almost Brutalist-looking, AIA Austin-approved concrete work studio, also designed by Lawrence. This swell hodgepodge has been listed for$4,500,000 by landscape architect James David, who has lived and worked on it for three decades with his partner, Gary Peese.
In the two acres of surrounding gardens, “terraces linked by limestone steps, landings and garden paths” sit alongside what’s essentially the showroom of David / Peese Design, the landscape architect firm the couple runs together. Their work here has been featured in House & Garden, Metropolitan Home,Garden Design, House Beautiful, and most importantly, for our purposes, Martha Stewart’s “field trip” series. Inside, the home has limestone and plaster finishings, and a diverse assemblage of furniture that a tasteful buyer should really try convincing them to part with, collected over the years by the couple behind Austin’s now-shuttered but fondly remembered home decor and gardening store, Gardens.
read more…
http://curbed.com/archives/2014/12/09/-james-david-home-for-sale-austin.php
Behind the Hedges and Inside the History of Danielle Steel’s Spreckels Mansion | Waccabuc Homes
2080 Washington Street (before the infamous hedge), via SAN FRANCISCO HISTORY CENTER, SAN FRANCISCO PUBLIC LIBRARY
The Spreckels Mansion at 2080 Washington – best known as the current home of romance superstar novelist Danielle Steel – has been a major San Francisco landmark since day one and has played host to tales that are worthy of her books. Of course, it’s now hidden behind a massive hedge worthy of a photo tribute, but we took a peek inside the storied home’s history. Here now is a look back at one of the city’s most iconic mega-mansions.
The Spreckels family is one of San Francisco’s oldest and most illustrious. Their story goes back to Claus Spreckels, who first started a brewery when he brought his family to San Francisco in 1856. Claus soon switched to the sugar industry and built his fortune in Hawaii by allegedly acquiring water rights in poker game with the King of Hawaii. He built his first SF-based sugar refinery in 1867 at 8th and Brannan, but soon needed more space and opened a larger facility in Potrero Point. His California Sugar Refinery funded additional Spreckels enterprises, like a resort hotel in Aptos, an investment in the Santa Cruz Railroad, and sugar beet operations in the Salinas Valley that sprouted the company town of Spreckels, California.
Spreckels’ Sugar Factory beneath Potrero Hill c1890s, via Found SF
Claus was the sugar daddy (sorry) to thirteen children with his wife Anna, but only five survived to adulthood. The oldest son, John, established a transportation and real estate empire in San Diego, while second son Adolph ran the family sugar business. Adolph was a big whale in San Francisco, but it was his wife Alma who gained the moniker “great grandmother of San Francisco”.
Adolph and Alma with their kids, both via SAN FRANCISCO HISTORY CENTER, SAN FRANCISCO PUBLIC LIBRARY
Alma lived a true rags to riches story. She was born in the Sunset in 1881 when it was still a windswept district of sand dunes. Her parents were Danish immigrants, and while her father spent more time hating on the city’s nouveau riche than working, her mother ran three successful business out of the family home. Alma had an interest in art and took night classes at Mark Hopkins Art Institute. At six feet tall, “Big Alma” soon became a favorite model of local artists. These jobs led to several lucrative side gigs as a nude model.
After a lawsuit against an ex-boyfriend for “de-flowering,” Alma became something of a celebrity in the city, and was the obvious choice to model for sculptor Robert Aitken’s monument to Naval hero Admiral Dewey and President William McKinley (it still stands today in the center of Union Square). Wealthy bachelor Adolph Spreckels was on the Citizen’s Committee in charge of the landmark’s funding and became smitten with the model. After “courting” for five years, they finally married in 1908.
Alma looking fierce as the Goddess of Victory atop the Dewey Monument in Union Square, both via Flickr/Peter Kaminski
The new couple first lived in Sausalito, but Adolph purchased the property that would become the Spreckels mansion as a Christmas present for Alma. The Victorian-style home was torn down to make room for a new French Chateau designed by architects Kenneth MacDonald Jr. and Beaux-Arts trained George Applegarth (fun fact: Applegarth was buddies with Jack London, and the pair would ride their bikes from the Bay Area to Yosemite and Half Dome). The Spreckels had to buy up several nearby Victorians to make room for the new manse, and Alma insisted on saving the structures by moving eight of them to new locations. Completed in 1912, the new house became host to lots of lavish parties and launched Alma into high society.
Spreckels Mansion in 1954, via SAN FRANCISCO HISTORY CENTER, SAN FRANCISCO PUBLIC LIBRARY
Spreckels Mansion, via SAN FRANCISCO HISTORY CENTER, SAN FRANCISCO PUBLIC LIBRARY
Spreckels Mansion, via SAN FRANCISCO HISTORY CENTER, SAN FRANCISCO PUBLIC LIBRARY
Spreckels Mansion in 1913, via SAN FRANCISCO HISTORY CENTER, SAN FRANCISCO PUBLIC LIBRARY
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Alma went to Europe on a trip to stock the new house with loads of 18th century antiques. She became friends with dancer Loie Fuller in Paris, who in turn introduced her to sculptor Auguste Rodin. Together, the women secured thirteen of Rodin’s bronzes, which Alma brought to the Panama Pacific International Exposition of 1915. This sparked the idea for Alma to build a museum for her art. It later became the California Palace of the Legion of Honor.
read more…
http://sf.curbed.com/archives/2014/11/25/behind_the_hedges_and_inside_the_history_of_danielle_steels_spreckels_mansion.php
6 Reasons Why Your Home Isn’t Selling | Waccabuc Real Estate
Wondering why your home is still sitting on the market after weeks-or even months-of showings? Can’t figure out why your open houses are well-populated but nothing ever comes of them? Or maybe no one is coming to your open houses at all?
It’s easy to get frustrated when your home isn’t selling and you don’t know why. Which is why we’ve rounded up 10 of the top reasons houses sit on the market. Chances are no one’s biting because
Your home is really only worth what people are willing to pay for it.
you’ve committed one (or more) of these mistakes. Identify which ones they are, do the work to set them right, and you could be signing on the dotted line in no time.
1. It’s priced way too high. Like or not, the market dictates how much you get for your home-regardless of how much you think you’re home is “really” worth. Buyers will be looking at comparable homes in your area and seeing how yours stacks up, and if your asking price is much higher, it will work against you.
Remember, your home is really only worth what people are willing to pay for it.
2. Your timing is off. More people house-hunt in the spring, summer and early fall than they do in the winter. It’s simply a matter of convenience — no one wants to trek from house to house in the snow and freezing temperatures, and even if they find a house they like, no one wants to move in at that time, hauling cardboard boxes across snow and ice. Unless they need to find a home ASAP, many put their searches on hold over the winter.
That’s not to say you can’t sell your home during the wintertime, but you need to take the season into consideration. Offering incentives (like a $500 credit towards moving services) and targeting buyers who are on a similar deadline can help.
3. Buyers can’t find it. More and more buyers are searching online, and if your home isn’t listed in all the places they’re looking, they could be passing you by. Make sure your home is listed on major real estate sites like Homefinder, Zillow and Trulia, as well as on the multiple listing service (or MLS) used by realtors.
4. Your photos suck. When buyers do find your home’s listing, your photos (or lack thereof) could be sending them away. Buyers want to get a good feel for what a home has to offer before they decide to arrange to visit it in-person, and they can’t do that if you have no photos, few photos, or photos that are of a very low quality.
Include plenty of shots of the major areas of your home, as well as what the front and back exterior look like. Highlight any special selling points. Make sure these photos are well-lit, in focus and show off your home at its best.
5. It needs some work. While some buyers may be willing to take on a “project,” the majority of them won’t-especially if you’re asking the same price as homes that don’t need any repairs. From big things like a leaky roof to little things like a leaky faucet, you don’t want your buyers creating a running list in their head of projects they’ll need to take on if they buy your home.
Fix everything you can before you list so that when buyers tour your home, they can focus on the home and not how much it will cost them in repairs.
6. It’s got too much “you” in it. Roman statesman Cicero once said that people fail because they “refuse to set aside trivial preferences.” Apparently, he would have been a great at selling homes.
You want people to be able to picture themselves living in your home, and they can’t do that if too many of your personal touches are on display.
Get rid of those family photos on the mantle in the living room and your kids’ drawings tacked up on the fridge. Repaint bold-colored walls a more neutral tone. Remove any statements pieces that aren’t to everyone’s taste. If you’re a big collector, take some of your souvenirs and knickknacks down and box them up for your next home.
read more…
http://realestate.aol.com/blog/2014/11/04/reasons-why-home-isnt-selling/
U.S. new home sales up in September | #Waccabuc Real Estate
Sales of new U.S. single-family homes rose to a six-year high in September, but a sharp downward revision to August’s sales pace indicated that the housing recovery remains fragile.
The Commerce Department said on Friday that sales increased 0.2 percent to a seasonally adjusted annual rate of 467,000 units, the highest reading since July 2008. August’s sales pace was revised down to 466,000 units from 504,000 units.
Economists polled by Reuters had forecast new home sales at a 470,000-unit pace last month.
New home sales, which account for about 8 percent of the housing market, tend to be volatile month to month and large
revisions are not unusual. Compared to September last year, sales were up 17 percent.
Housing is slowly regaining its footing after activity stalled in the second half of 2013 as mortgage rates soared.
With the 30-year fixed mortgage rate this week falling to its lowest level since June of last year, sales could pick up.
Slow wage growth, however, remains a constraint. Data this week showed sales of previously-owned homes touched a one-year high in September.
Last month, new home sales fell 8.9 percent in the West, handing back some of August’s 28.1 percent surge. In the
populous South, sales rose 2.0 percent, while they increased 12.3 percent in the Midwest. Sales were flat in the Northeast.
read more…
http://finance.yahoo.com/news/u-home-sales-september-august-140503880.html