Eventually They’re Going To Have A Big Sale And Mark It Down

A report from Multi-Family Biz. “For the first time since 2012, rents nationwide remained at the same level as they were a year earlier, with a median rent of $1,440. Annual rent appreciation has slowed for six straight months, according to the August Zillow Real Estate Market Report. The median rent fell on an annual basis in 19 of the 35 largest markets. Rent declined the most in Portland, Ore.”

“It’s not only rent appreciation that slowed in August: Home value appreciation is at its slowest pace in two years. ‘As summer turns to fall, the more typical pattern is reemerging, as rents and home values are both slowing in unison,’ said Zillow Senior Economist Aaron Terrazas. ‘The feverish housing crunch of the past few years seems to be cracking.'”

The Press Herald in Maine. “For more than six months, Chris Lavoie has tried to sell a condominium in Portland’s West End, a desirable neighborhood with historic buildings and a short walk from award-winning restaurants, coffee shops, art galleries, breweries and shops.”

“At 515 square feet, the one-bedroom condo under construction at Onejoy, a 12-unit development off Brackett Street, qualifies as micro-housing – a hot trend among some buyers, particularly young professionals or empty-nesters. The price – $208,700 – is actually lower than what comparable condos have sold for in the neighborhood, even in the same building. And it’s being marketed at a time when the real estate market in Maine’s largest city appears to be firing on all cylinders.”

“Such is the plight of the real estate agent tasked with selling Portland’s first newly built price-restricted housing unit to result from a 2015 affordable housing ordinance. ‘I can’t get traction on it,’ said Lavoie. ‘The only thing I can go back to is the deed restriction. People buy the real estate to get the upside of it. If they’re realizing in the process that they’re being handicapped in selling it, they look for something else.'”

“Portland’s so-called inclusionary zoning ordinance was intended to promote the construction of housing affordable to middle-income workers. The city has seen a flood of luxury condos being built since 2015, but those developers have opted to pay the city hundreds of thousands of dollars in fees rather than put units on the market that qualified as affordable under the ordinance.”

The Daily Business Review in Florida. “Across South Florida, sales of apartment buildings dipped this year — yet multifamily remains one of the strongest property types, a market study found. Just how strong? Some condominiums were converted to apartments, in large part a response to the demand, experts said. In the world of conversions, switching from apartments to condos was popular before the housing crash.”

“As the multifamily market has tightened, the heavily built condo market has softened, experts said. There’s been a barrage of condos — in particular luxury units prices art $1 million and up. Even with multifamily demand, some submarkets could be getting saturated with condos. This unfavorable tip in the supply-demand balance could spell the end of the cycle.”

“‘We had a pretty strong (condo) run here, and if things start to overheat on appreciation and building then, yes, there could be a correction,’ said Brian Hart, a Carlton Fields shareholder in Miami.”

“Condo construction peaked in 2016, triggering an inventory buildup, said Neisen Kasdin, Akerman’s Miami office managing partner. Perhaps no other metric illustrates an oversupply better than one showing how long it would take to sell off the available supply. The number of available condo units is divided by the average number of units sold per month, said Ron Shuffield, CEO of EWM Realty International in Coral Gables.”

“The optimum is 12 to 18 months for $1 million-plus condos. But Miami-Dade and Broward exceed this — with Miami-Dade at nearly 42 months and Broward at nearly 19 months, according to EWM data. In Palm Beach, the 13.6-month supply is within the optimum range.”

“Condo saturation in Miami-Dade and Broward might push down prices. ‘I kind of like to use the example of Macy’s. If you walk into Macy’s and you have one shirt left on the counter and you have three people wanting to buy it and somebody is willing to pay more for it,’ Shuffield said. ‘Conversely, if you walk into Macy’s and you have 100 shirts on the counter, and you have one buyer there, eventually they are going to have a big sale and mark it down so they can move the inventory. Real estate is not a lot different. It’s all based on supply and demand.'”

From West Hawaii Today. “Preliminary numbers show a dip in the occupancy rate for the University of Hawaii at Hilo’s newest dormitory, Hale Alahonua, which has struggled to reach capacity since it opened in fall 2013. Vice Chancellor for Student Affairs Farrah-Marie Gomes said that as of Sept. 14, Hale Alahonua had 189 student residents, a 63 percent occupancy rate, which is down from last year’s 205 total, or 68 percent occupancy.”

“In Fall 2016, however, the dorm had 148 residents, a 49 percent occupancy rate. ‘So if you were to put this on a bar graph, (you would) see there is no pattern,’ said Gomes. ‘However, what happened between 2016 and 2017 is that we significantly reduced the rental rate in ‘Alahonua, which we believe led to that increase from 148 to 205.'”

“Part of the $28 million project was funded with a 30-year, $17 million revenue bond, to be paid back through money generated from housing fees, the Tribune-Herald previously reported. But Hale Alahonua, a 300-bed, suite-style dormitory, has struggled to fill all its beds since opening. Occupancy was 57 percent that first year and dipped as low as 39 percent in 2015.”