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There Is Tons Of New Construction

A report from the Oregonian. “A Northeast Portland condo building still under construction will market more than a quarter of its units exclusively to buyers who live in Asia, an apparent first for the city. About half of the buyers would likely be investors, said broker Michael Zhang of Cascade Sotheby’s. Those buyers might hire a manager to rent out the property to locals.”

“Others might buy the units as a second or third home, he said, where they’d spend a couple of months out of the year. Chinese investors have typically looked to luxury properties, particularly in high-rise apartments, as a way to hold a lot of money in one place.”

“But units in the TwentyTwenty building, expected to be finished in 2019, are priced nearer the region’s average home price. Its one-bedroom units will start at $300,000 and its two-bedroom units at $500,000. That’s part of why Zhang believes Chinese buyers might suddenly be interested in Portland.”

“The Chinese government has in recent months restricted the flow of Chinese cash out of the country to about $50,000 per person. That makes it difficult for a would-be buyer — even with the help of family and friends — to wire enough money to buy a multi million-dollar property.”

“‘To get $3 million, it takes forever,’ Zhang said. ‘To get half a million, it’s reasonable.'”

“There’s one problem: Most Chinese buyers haven’t even heard of Portland or Oregon. ‘They say, ‘What? Ohio?’ Zhang said. ‘I have to sell them the lifestyle. I have to sell them on Portland, Oregon.'”

The Salt Lake Tribune in Utah. “Homebuilding has surged along the Wasatch Front, but those waves of new construction are doing little to make housing more affordable. Several reports indicate substantial increases in new home and apartment construction across Utah’s urban core and up into Summit and Wasatch counties over the first half of 2018, with thousands of new dwellings slated to come online for sale and rent.”

“‘There is tons of new construction,’ Salt Lake City real estate broker Myra Petersen said one busy morning last week as she showed newly built homes for sale in Riverton and Millcreek. ‘And people want new,’ she quipped, ‘but they don’t necessarily have an $800,000 budget to do it.'”

“Average prices for a newly built home in Salt Lake County are now estimated to be just shy of $400,000. And even that listing price for a new home is considered a bargain in many pockets of the county. ‘I’ve never seen any new construction for that price,’ Petersen, with Windermere Real Estate, said. ‘I’d be all over it.'”

“New starts on single-family homes for sale leapt 25 percent in April, May and June across the seven-county area centered on Salt Lake County compared with the same months a year ago. The quarterly survey by real estate research company Metrostudy found a total of 3,725 new homes either under construction or poised to break ground.”

“Metrostudy’s numbers also reveal a 43 percent jump year over year in construction of attached homes for sale, including condominiums, duplexes, town homes and row houses.”

“Trulia released a study Thursday saying inventories of homes for sale in the Salt Lake City metro area increased by 45 percent over July, August and September compared with the same period in 2017. That jump placed Salt Lake City with cities such as San Jose, Calif., and Seattle, other less-affordable markets that are seeing sizable increases in their housing stocks, Trulia said.”

“It’s not hard to find the many reasons home prices are climbing in Utah. Matt Sneyd, a developer and real estate broker, walked last week through the wooden shell of a new home going up in the historic Old Town section of Park City.”

“Wedged between two existing homes on a tiny lot, the five-bedroom, 4,900-square-foot house has been under construction for a year and will probably take another year to finish, Sneyd said. At this point, the final listing price will likely top $3.2 million. Sneyd said he intends to pitch it to rental investors and well-heeled tourists looking for a second home in Park City.”

“‘They want new,’ he said, ‘and they have the money to demand it.'”

“In Millcreek, Petersen recently showed a newly built duplex in a cluster of town homes near 700 East. With four bedrooms and about 3,000 square feet, the dwelling will probably list for $450,000, she said.”

“Across the Salt Lake Valley, she said, dwindling supplies of undeveloped land are also having a profound effect on home prices. ‘You go to Ninth and Ninth [in Salt Lake City] and you buy a 0.09-acre lot for $250,000 right now,’ she said. ‘I mean, they have a structure on them, right? But people are wiping the lot and doing these expensive pieces of construction.'”

“Another stand-alone home she’s showing on a quiet cul-de-sac in Riverton has 4,767 square feet, high ceilings and white quartz countertops. It’s taken 14 months to build, and while priced at $635,000 during construction, it sold for $830,000.”

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This Post Has 19 Comments

  2. ‘New starts on single-family homes for sale leapt 25 percent in April, May and June across the seven-county area centered on Salt Lake County’

    Seven county’s?

    ‘Metrostudy found a total of 3,725 new homes either under construction or poised to break ground…Metrostudy’s numbers also reveal a 43 percent jump year over year in construction of attached homes for sale’

    ‘inventories of homes for sale in the Salt Lake City metro area increased by 45 percent over July, August and September compared with the same period in 2017’

    Shortage – check.

    ‘You go to Ninth and Ninth [in Salt Lake City] and you buy a 0.09-acre lot for $250,000 right now’

    You must realize Myra, that price is insane.

    1. With respect to the “seven counties”, Utahans typically refer to this as the “I-15 corridor”. The 4 major growth counties are Salt Lake County, Utah County, Iron County, and Washington County. Utah County is where the growth boom is arguably the strongest. Most demographic projections show it surpassing Salt Lake County in population in the next 10 to 20 years.

      It is definitely much cheaper to rent than buy along the Wasatch Front. There are some incredible deals on apartments right now. I think Utah is at the top of the list when it comes to new units built per 100,000, so they are actually building for the growth.

      1. If they have huge construction increases in seven counties, along with massive resale inventory increases, I see an ebola comin’.

        1. One of my cars is way past the warranty phase so I take it to a local mechanic here in SoUtah (Washington County). The guy works out of a strip mail location that is shared with some other small businesses.

          Next door is a granite countertop place that has been there for years. Over time the granite place has grown quite large and the owners have taken over half of the strip location including the parking areas where they store inventory and their work trucks.

          I had some car work done last week. While there I heard a conversation between my mechanic and one of the granite workers from next door that had dropped his car off for some sort of estimate.

          Evidently a few hundred dollars in repairs were necessary to fix his automobile. The granite worker asked if the car could be “patched up for less” because he “didn’t have the funds” presently. He told the mechanic, whom he seemed to know well, that the 60-80 hours per week that he was working last year were cut to “only 40” at the beginning this year and that he and his fellow workers were just told by their boss that they couldn’t promise them more than a 20 hour work week until further notice because “things have slowed down”.

          The median price for homes here spiked to a record high in July mostly driven by sales on the higher end ($750K plus). Inventory has increased by about 18% over the last two months. This puts us back to 2014 levels for the number of homes on the market.

          1. ‘they couldn’t promise them more than a 20 hour work week until further notice because “things have slowed down”.

            That sounds like Sedona sometime in 2006. Pretty soon they were all gone.

  3. “Another stand-alone home she’s showing on a quiet cul-de-sac in Riverton has 4,767 square feet, high ceilings and white quartz countertops. It’s taken 14 months to build, and while priced at $635,000 during construction, it sold for $830,000.”

    – KEEP BUILDING BOYZ

  4. ‘About half of the buyers would likely be investors, said broker Michael Zhang of Cascade Sotheby’s. Those buyers might hire a manager to rent out the property to locals. Others might buy the units as a second or third home, he said, where they’d spend a couple of months out of the year’

    The Oregonian dismounted their high-horse and engaged in some good old fashioned greedy capitalist boosterism, complete with a plan to shake down some rich Chinese who don’t know Oregon from a shoebox!

    1. At some points, will the “rich” Chinese care more about return on investment or return of investment?

      1. The Chinese are done. They’d have more luck hawking these airboxes to Canadians. Anyway, I thought there was some huge shortage in Portland.

    1. Don’t know where Hammond is but the Movoto data only shows an inventory of 5 properties of which 4 are single family. Thinks they have a glitch in their data collection program or their IDX does not function properly.

  6. >>Northeast 21st Avenue and Multnomah Street.

    Did anyone bother to tell the Chinese investors that the building will border interstate freeway I-84 on one side?

  7. “Across the Salt Lake Valley, she said, dwindling supplies of undeveloped land are also having a profound effect on home prices.”

    Utahns easily fall for this narrative because it’s a valley. But unfortunately it’s not true. In the Salt Lake valley there is still so much undeveloped land they can build a big brand new airport next to the old one without disrupting the current operation in any way.

    Utah has no Fortune 500 companies. There are few high paying jobs. Somehow the conventional loan limit for Salt Lake county is $600,000 – which makes no sense because that is larger than any county in Illinois.

    https://www.bankrate.com/finance/mortgages/utah-jumbo-loan-limits-by-county.aspx

  8. What will happen if the easy money ever finally ends?
    ————————————
    The Wall Street Journal
    Markets
    IPO Market Has Never Been This Forgiving to Money-Losing Firms

    Money-losing companies are going public at a record rate as investors hunger for new issues

    By Corrie Driebusch and
    Maureen Farrell
    Updated Oct. 1, 2018 7:26 p.m. ET

    Stock investors are welcoming money-losing companies into the public markets this year with open arms.

    About 83% of U.S.-listed initial public offerings in 2018’s first three quarters involve companies that lost money in the 12 months leading up to their debut, according to data compiled by University of Florida finance professor Jay Ritter. That is the highest proportion on record, according to Mr. Ritter, an IPO expert whose data goes back to 1980.
    …
    https://www.wsj.com/articles/red-ink-floods-ipo-market-1538388000

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