guest blog by Deborah Goonan
I must admit, it’s becoming very difficult to keep up with real estate market news these days. The most recent Census data report pegs the US homeownership rate at a mere 64% – a 25-year low. Yet, markets are heating up and home prices are making the American Dream even less attainable.
I’ve included a few links to some of the dozens of recent reports that I read every month. If I had to describe the current housing market in one word it would be “insanity.”
The so-called market recovery varies considerably from one market to another, and even between market segments. For instance, in Miami 4th Quarter year-on-year sales of single family homes were up 7.7%, while condo sales in the same market were down 3.3%. Prices were up 4.7% for single-family homes, and 8.6% for condos, despite falling demand. Yet 325 new condo towers have been have been proposed in Miami, and 13,000 of the total 41,000 units proposed are currently under construction. Foreign buyers from Russia, South America, and European countries make up a significant portion of the market, but their buying power is eroding as the value of the dollar increases.
Who is going to buy all of these condos?
Phoenix and Denver also reports low supply and high prices, while in Chicago, sales are still lagging behind.
Meanwhile, in the Tampa Bay area, where dozens of condo conversions gone bad were de-converted to apartment rentals in recent years, several previously stalled new construction condominium projects have since been scoffed up by investors and rented for several years. Guess what? Now those rentals are converting back to condos for sale. Staging companies are having a field day furnishing vacant units to woo buyers.
So in addition to displaced condo owners losing their homes and life savings, we also have displaced tenants competing in an already tight rental market. The problem is, condo prices are too high for most of these displaced owners and rents are going through the roof for all of these folks on the move. But who cares? Not all those private investors in the process of making their next wave of fortunes in this budding boom market.
The same condo conversion euphoria is reportedly occurring in other major urban areas, especially New York City.
My head hurts from shaking it.
At the same time, the luxury real estate market is going wild. In Tampa and Miami, for instance, many condos are selling above $1 million, even though the median price for condos in the Tampa-St. Petersburg market last year was a mere $110,000. New high-end condo complexes in Tampa Bay are pre-selling their units for millions of dollars.
Washington Post’s Christopher Ingraham reports that the McMansion is back in vogue across America. Developers are apparently targeting affluent families buying up the real estate ladder, despite the fact that the millennial generation is opting out of buying first homes and renting instead. (Be sure to check out the photos of some very posh properties in FL, selling at $5 million and up. The author also notes that despite all the marketing and political hype about the virtues of urban living, most developers and construction companies are politically Conservative (according to campaign contribution records), and prefer to live in spacious homes with large lots in far-flung locations away from the hustle and bustle of the city.
Go figure. After all, I suppose big-time stakeholders in this insane real estate market need somewhere nice and private to live