The Fundamental Problem Is A Shortage Of Buyers

A report from the Wise County Messenger in Texas. “Real estate inventory and the days on the market for homes in Wise County continued to grow in August. According to the August housing report from the Greater Denton/Wise County Association of Realtors, the months of inventory grew to 4 months. It was the sixth straight month for the inventory to increase after dropping to 2.8 months in March.”

“More new inventory will be on the way soon. Wise County Engineer Chad Davis said 3,700 homes are on the drawing board around Newark, New Fairview, Rhome and Boyd. That is in addition to the several lots being developed east of Decatur. The number of active listings grew to 305 from 289 in July.”

“Local real estate agent Michelle Gregoire said the market has slowed down in the county. ‘I have houses that are taking 38 to 44 days that this time last year were selling in 15 days,’ she said. Closed sales in Wise County dropped from 98 in July to 87 in August. Of the 87 sales, the median price was $247,000 – $8,000 below July.”

From Chicago Magazine in Illinois. “Like most major metros across the country, Chicago has witnessed a construction boom that’s both reshaped its skyline and delivered thousands of new apartments to its neighborhoods. But new data from the Chicago-based apartment site Domu suggests that the hot rental market may be stabilizing, particular in trendy North Side neighborhoods.”

“According to Rory Keane, Domu’s Director of Communications, the stabilization could reflect supply catching up with up with demand in trendy neighborhoods. Renters in those areas don’t just have more choices than ever, he says, but a variety of housing types, from micro-apartments to two-flats to luxury units.”

“‘In many areas, renters will breathe a sigh of relief,’ Keane says. ‘Landlords are saying that it’s taken longer for some properties to lease up this year because renters are feeling this downstream effect of rents stabilizing.'”

“In the past, comparing downtown rentals to those in the neighborhoods was like mixing apples and oranges. But the flood of upscale apartments along the Blue Line and in the downtown outer ring has changed Chicago’s rental landscape, says real estate broken Aaron Galvin. ‘In fact,’ he continues, ‘high-end rental buildings in these neighborhoods are competing in price with downtown apartments.'”

“According to Keane, landlords in neighborhoods where rents have stabilized may shift their focus. ‘In areas where rents have been steady, landlords may lean towards the thought of trying to keep a reliable, stable renter versus entering the market.’ That, says Keane, indicates a shift toward a renters market.”

From Bisnow on Illinois. “Apartment rents in some Chicago markets changed dramatically since June. Humboldt Park and West Town both saw rent increases of 15%, while Pullman pricing plummeted 12.5% in the last three months, Zumper data shows. Pullman, which already was one of Chicago’s cheapest multifamily markets before its 12.5% drop, saw rates for one-bedroom apartments drop from $800 to $700/month.”

“Chicago overall got cheaper relative to the rest of the country, dropping beneath Philadelphia to become the 16th most expensive city to rent apartments. Two-bedroom units have fallen the most, with average rent for those units dropping 15% year over year. The average monthly rent now in Chicago is $1,860 for two-bedroom units and $1,520 for one bedroom.”

The Daily Commercial in Florida. “Beginning in 2007, the United States’ housing market began to flash warning signs of an impending collapse, but homeowners, investors and builders refused to heed the warnings. The housing market is starting to flash warning signs again. Just like last time, experts are providing reasons and excuses that ignore the fundamental problem — there is a shortage of buyers.”

“These following housing signs flashed brightly in June: The National Association of Realtors reported that existing home sales, which account for about 90 percent of all homes sold in America, were down 2.2 percent from the prior year. It is taking longer to sell a home. Plus, buyers are hard to find.”

“The federal government reported new home sales were down 5.3 percent from May and only up 2.4 percent from the prior year. Housing inventory rose to 5.7 months, which is up from 5.3 months in 2017. The median price for a new home dropped in 2018 to $302,100 versus $315,200 12 months earlier. Lagging sales, declining prices and increased housing inventory indicate that the new home market is cooling.”

“According to the U.S. Census Bureau, housing permits were down 3 percent from 2017, and housing starts were 4.2 percent below the prior year. This indicates current activity has slowed down. Even worse, future activity is slowing.”

“There are some who will read these numbers and quickly point to all the housing activity in Lake and Sumter counties as rebuke to these numbers. Yes, the local area is doing better than the national housing numbers indicate. However, you must consider that Hurricane Irma pushed out local housing demand by at least four months and the permitting process in Florida pushed demand further out than other states.”

“For me, the canary in the coal mine for housing has always been the wood commodity markets. These markets react quickly to changes in the housing market and it doesn’t take months to get a read on them. The wood commodity markets in July and the first of August could be best described in a price freefall, despite tariffs. Mills and manufacturers have drastically cut the price of wood and plywood to keep mills operating. Without a hurricane or spike in demand, these markets could go lower by year end.”

“Florida’s housing market should be better than other areas of the country, but despite Florida’s housing advantages, realtors are reporting that qualified buyers and affordable homes are harder to find. As with the last recession, it will eventually catch up with Florida.”