A Lesson in Contradiction and Irony – America’s Real Estate Market

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

(link to Tampa Bay Times on condo de-conversions to conversions)

(link to NBC real estate market report – Miami)

(link to Tampa Bay Times on luxury condo market)

(link to Orlando Sentinel/Washington Post  on the return of McMansions)

(link to Jan 2015 US Census housing data)

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About

Ward Lucas is a longtime investigative journalist and television news anchor. He has won more than 70 national and regional awards for Excellence in Journalism, Creative Writing and community involvement. His new book, "Neighbors At War: the Creepy Case Against Your Homeowners Association," is now available for purchase. In it, he discusses the American homeowners association movement, from its racist origins, to its transformation into a lucrative money machine for the nation's legal industry. From scams to outright violence to foreclosures and neighborhood collapses across the country, the reader will find this book enormously compelling and a necessary read for every homeowner. Knowledge is self-defense. No homeowner contemplating life in an HOA should neglect reading this book. No HOA board officer should overlook this examination of the pitfalls in HOA management. And no lawyer representing either side in an HOA dispute should gloss over what homeowners are saying or believing about the lawsuit industry.

6 thoughts on “A Lesson in Contradiction and Irony – America’s Real Estate Market

  1. robert

    It’s only “Contradiction and Irony” if you believe that the purpose of the housing market and housing policy is to provide people with a place to live. If you instead realize that their purpose is to benefit investors, then it all makes perfect sense.

    “I suppose I’m something of a lapsed capitalist/free-marketeer these days. The praises and mantras that we hear true believers repeating now give rise to reservations. Take the one, for instance, about the market operating via its price structure to service those with the greatest need as expressed by their willingness to pay. It doesn’t. It caters to the whims of those with the ability to pay. A little reflection will show that there’s a large and profound difference.”

    – James P. Hogan. “Greed”. September 5, 2006.
    http://www.jamesphogan.com/comments/index.php?id=14
    Mr. Hogan is a two-time winner of the Prometheus Award (1983 and 1993) given by the Libertarian Futurist Society. Ayn Rand is a two-time winner of their Hall of Fame Award (1983 and 1987).

    Reply
  2. robert

    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.

    As critical as I am of conservatives and libertarians, the liberals, progressives, etc., who advocate “New Urbanism” (or whatever it’s called nowadays) are also guilty of this; i.e., they think we should all live in dense cities and use public transporation, while they take limousines and private planes to their mansions and estates, and (e.g., Al Gore and various Hollywood celebrities). Of course, it’s also funny how the anti-“Agenda 21” conservatives are pro-H.O.A. There’s no shortage of hypocrisy and cognative dissonance among the “elites”.

    I’m not an expert on urban planning, but for the rest of us, it looks like there is a huge dichotomy between what people want, what they say they want, what they’re told they’re supposed want, and what they can actually afford.

    Reply
    1. Angela

      You are spot on with your observations about many conservatives. I am very anti-HOA and consider myself conservative, but I have many conservative friends and relatives who think HOAs are great.

      Reply
  3. Angela

    I will add that the environment and the character of communities suffer too when developers destroy forests and farmland to put up new homes that are literally inches apart without a care to whether the infrastructure can handle it. Where I live a civil war estate was torn apart and “luxury” apartments were built in its place. These apartments aren’t near shopping or anything. For giggles I looked up the rents. I don’t know who will rent those at that price considering how many current apartments have vacancies are are much cheaper.

    Reply
  4. Deborah Goonan

    The truth is that both Conservatives and Liberals have their sub-groups that think HOAs are wonderful. Either they are wooed by the “prestige” of a private community or they own their property (often more than one and sometimes many properties) as an investment rather than a homestead property.

    Some like the idea that the rules can be used to keep their neighbors in line — or at least they THINK that restrictions and rules always lead to higher property values, and conversely, that LACK of restrictions would lead to blight.

    That simply isn’t true. Blight occurs in many an HOA or Condo project — in fact I would say anecdotally blight occurs more often in HOA Land than our cities and towns,The real cause of blight is lack of proper funding to maintain infrastructure and security and/or poor management. Even in cities that have restrictive ordinances on the book, the problems step from not enforcing those laws due to lack of funding or poor city management.

    HOA proponents are usually of the misguided belief that more restrictions on aesthetics will lead to better appearances and higher sale prices, but that plan often backfires. We read about those cases every day on NAW – everything from denying play houses for children to suing neighbors for exercises their First Amendment rights. The only ones who win are the attorneys with all the billable hours.

    By the way, two Democratic state legislators sponsored the “eminent domain for condos” law in Florida — the one that is resulting in tens of thousands of condo owners to lose their homesteads at a fraction of the prices they paid. So much for the theory that HOAs preserve and increase property values.

    Reply
  5. Nila Ridings

    Nothing could be further from the truth than claiming one or the other political party is responsible for the mess this country faces with HOAs.

    When homeowners banded together and worked with our Kansas legislators somehow die hard Democrats got together with die hard Republicans. We had a Democrat Representative and two Republican Senators who worked together beautifully to carry the bill and help us educate other legislators as to the need for it to pass. Never once was a party affiliation ever mentioned that I was aware of.

    The Kansas Uniform Common Interest Owners Bill of Rights Act passed and now benefits Democrats, Republicans, Libertarians, Independents and all others.

    Reply

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