By Lauren Baier Kim
RISMEDIA, July 16, 2007—(RealEstateJournal.com)—Here’s a look at what’s new in real-estate markets across the U.S. from around the Web.
It’s up for you, New York
New York’s a big city, and it’s prices just keep getting bigger: for the three months ending June 30, the median selling price for a Manhattan condo or co-op apartment was between $840,000 and $895,000, with the average price reaching about $1.3 million, according to estimates provided by three New York brokers, according to CNNMoney.com.
Meanwhile, housing inventory saw a year-over-year decrease of 31.5%, and apartments are staying on the market 117 days on average, down about 10% from a year ago, CNNMoney.com says. Fueling the demand are Wall Street’s hedge-fund managers and investment bankers, overseas buyers, and parents looking to purchase a place for college students, the Web site says. In a separate article, CNNMoney.com reports that the Indianapolis area (with a median home price of $116,000) and Youngstown, Ohio (with a median home price of $78,000), rank as the most affordable major housing markets in the U.S. The Los Angeles-Long Beach-Glendale metro area ranks as the most unaffordable, CNNMoney.com says.
Super rich keep buying
The average home buyer may be more hesitant about purchasing a house these days, but not the extra-wealthy — and not in California. In the state’s “Platinum Triangle” of Beverly Hills, Bel-Air and Holmby Hills, the rich are snatching up trophy homes — to the tune of several million dollars apiece, according to the Los Angeles Times. The first four months of this year saw 23 homes priced at or above $10 million sell in the region, the Times says, with soccer star David Beckham, Amazon.com founder and chief executive Jeff Bezos and actor Tom Cruise purchasing there this spring, the article says. Fueling such sales is the soaring wealth of U.S.’s richest 5%, who saw its average household income grow 40% (adjusted for inflation) between 1990 and 2005, the Times says. “The wealthy are growing exponentially compared to the rest of us and they’ve got the money to really fulfill their fantasies,” the newspaper quotes Rick Goodwin, publisher of Unique Homes magazine, as saying.
Seattle sales slow
It seems that even Seattle is showing signs of the housing slowdown. The metro, although tied with Salt Lake City as the strongest housing market in the U.S ., saw pending home sales in King County drop 9.4% year-over-year in June, while the number of homes for sale rose 53% year-over-year, according to a Seattle Times article. Although boosted by a strong job market, Seattle’s housing market is being hurt by its high prices and lack of affordability, the Times says.
But the outlook isn’t all gloom and doom: “I’d still characterize the Seattle market as being healthy — one of the few in the country,” the paper quotes Lawrence Yun, senior economist for the National Association of Realtors, as saying.
Rising foreclosures in Atlanta
Atlanta, which has one of the highest rates of foreclosure in the U.S., may be a signal of what’s to come for the U.S. housing market, says a New York Times article. The city’s surge in foreclosures — about 2.7% of the metro area’s homes were in foreclosure at the end of 2006, versus about 1% of U.S. housing units — has come despite a healthy local economy, the Times says. Attributed to the increase are “aggressive” low-interest-rate mortgages — about half of them adjustable-rate mortgages — taken out by area home buyers when home prices were rising, and a Georgia law that speeds up the foreclosure process, the Times says. Experts fear that such a trend will become apparent in the rest of U.S., as housing values fall and interest rates on loans reset. “Everybody thought if the home prices kept going up, the lenders will keep refinancing you,” the newspaper quotes an economics professor from Georgia State University as saying.
Builder shrinks houses
KB Home is leading the way in a relatively new tactic to draw home buyers in a sluggish housing market — constructing smaller homes, according to an article by the Orlando Sentinel. This strategy is being used by other major builders as well, the newspaper reports.
“Smaller homes generate lower revenues, but they sell faster, therefore the cash returns are better,” the newspaper quotes Jeffrey Mezger, KB Home’s chief executive, as saying.
Within the past two months or so, the builder has sold 48 units in one Las Vegas community where homes range from 1,267 square feet to 1,608 square feet, with prices beginning at $195,590. But the move may be too little, too late: It may take builders as many as four years to unload excess inventory, the Sentinel says, and “what you really need is a much sharper ramp down in production,” a real-estate analyst quoted by the paper says.