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Price Pressure Fueled by Limited Supply

 

 

 

CoreLogic Home Price Index (HPI®) has exceeded the pre-crisis peak and continues to grow with a strong and steady pace. With demand strong and inventory thin, the share of selling for the list price or more has also returned to pre-bust levels.

Share of SalesWith demand outweighing supply, homes are more likely to sell above the asking price. Figure 1 shows the share of homes that sold at a price above, equal to or below the list price. [1] The share of homes selling at or above list price has returned to mid-2005 levels. In Q2 2018 that share represented more than 40 percent of total sales – almost triple the level during the trough in January 2008. The share of homes selling for less than list price has made up the majority of sales over the past 10 years. Regardless of market conditions, there are always highly motivated sellers – including those who begin with unrealistic expectations – willing to drop their price.

Share of Sales

Housing markets are different across the nation. Therefore, sales and listing patterns also vary geographically. Figure 2 shows the share of homes that sold at, above, or below their list prices in 20 CBSAs during July 2018. San Francisco had the largest share of homes – 81 percent – that sold for at least the list price. Seattle and Minneapolis followed with 65 and 58 percent selling for the list price or more, respectively. Houston and Miami had the lowest share – 27 and 20 percent – of homes selling at or above the list price in July 2018. San Francisco was one of the metros with the highest home price growth in the U.S. in July. According to the CoreLogic HPI, home prices in San Francisco increased 11 percent year over year in July. On the other hand, Miami had a moderate annual home price increase of 4.6 percent in July.

Months Supply vs Service Premium

Price pressures rapidly increase as supply drops below 3 months. Figure 3 shows the price premium or discount and months’ supply for over 200 CBSAs in July 2018. In San Francisco and San Jose, where months’ supply was at 2 and 2.2, respectively, home buyers had to pay 9.7 and 5.4 percent more than the asking price on average. On the other hand, markets like Miami and Naples, where months’ supply are sufficient at 10 and 12, home buyers were able to negotiate below asking prices, with average discounts of 6.5 and 7.5 percent, respectively, in July 2018.

Note: The U.S. statistics are based on data for 65 CBSAs. Each of these CBSAs has at least 50 percent coverage since 2000. CoreLogic MLS data coverage usually increases over time, which might also contribute to inventory increases.

[1] Figures 1 and 2 use 65 CBSAs to aggregate national level statistics. The inventory has not been adjusted for growth in the number of households over time. As the number of households increases over time, the ‘equivalent’ level of inventory should rise as well.

© 2018 CoreLogic, Inc. All rights reserved.

Tavistock buys 1,000-plus acres of Orlando airport land for $64M

Lake Nona is expanding its boundaries south of and it now owns the land it needs.

Lake Nona developer  Development Co. LLC’s related entity TDCP LLC spent $63.9 million, or roughly $55,700 per acre, on May 10 for nearly 1,147 acres south of International Airport from the Greater Orlando Aviation Authority and the city of Orlando, Orange County records showed.

The three different parcels, two in Orange County and one in Osceola County along Narcoossee and Boggy Creek roads, will be used by Tavistock to develop a portion of a mixed-use project west of Narcoossee Road, north and east of Boggy Creek Road near the Orlando VA Medical Center, Tavistock spokeswoman Jessi Blakley told Orlando Business Journal.

The project, known as the Poitras planned development, includes:

  • 2,973
  • 100,000 square feet of commercial use
  • A school on 25 acres

Tavistock previously sought approval from the city earlier this month to rezone the property as a planned development with aircraft noise.

The 11,000-acre Lake Nona already has billions of dollars worth of underway and there’s even more growth ahead. See the photo gallery above for a sampling of Lake Nona projects in the works, and read more from OBJ‘s Doing Business in Lake Nona event from earlier this month.

USTA National Campus to expand

The U.S. Tennis Association National Campus revealed that it wants to score more land for a future expansion to its 64-acre Lake Nona campus.

The $100 million campus, the largest tennis training center in the nation, wants to acquire adjacent land from developer Tavistock Development Co. LLC, Kurt Kamperman, the ‘s chief executive for community tennis and the campus, told  Business Journal during the Orange County Property Appraiser’s 2018 State of event on May 9.

was not immediately available for comment.

Kamperman said he’s talking with Tavistock about “trading a few pieces of land” for the expansion and that the newly acquired land would be within 100 yards or so of the existing USTA campus. “We’re working with Tavistock to find some adjacent land that would give us the opportunity to build a small stadium court for events and possibly have additional indoor courts.”

The reason behind the need for more indoor courts is basic: During the rainy season in July and August, the organization has only six indoor courts for people to use, Kamperman said.

Meanwhile, adding a small stadium court/amphitheater will allow the USTA campus to accommodate larger tennis events. “We would like the ability to host the Davis Cup or Fed Cup and the ability to host smaller professional events,” Kamperman said. “It’s not a set plan, but we would like to have that opportunity down the road.”

The campus currently has 100 tennis courts ranging from green clay to hard, acrylic cushion courts, indoor courts and European Terre Davis red clay. It also incorporates smart technology, allowing the players to record and review their movements, mistakes, and training.

What to Expect in the Homebuying Season

What to Expect in the Homebuying Season

Homebuyers will need to be on their toes this homebuying season if they are to snag their dream abode if the typical time taken to sell a home in 2017 is any indication. According to a report by Zillow, sold faster than ever in 2017, with a typical median-priced house flying off the market in 81 days. And this has been the case for the past three years, the report said citing data that indicated homes sold slightly faster at 80 days in 2016.

In 2017, the fastest-selling market was San Jose, California, with the typical home sold in 41 days. Homes in Miami, on the other hand, took 110 days to sell in both years, the report indicated.

What do these numbers indicate for 2018? “As demand has outpaced supply in the over the past three years, buying a home has become an exercise in speed and agility,” said Aaron Terrazas, Senior Economist at Zillow. “This is shaping up to be another competitive home shopping season for buyers, who may have to linger on the market until they find the right home but then sprint across the finish line once they do. Being prepared—working with a great , getting financing pre-approved—can help a buyer make a stand-out offer.”

According to an earlier Zillow report on Group Consumer Housing trends, a typical buyer spends around four months searching for a home and makes two offers before successfully closing on a home. But the latest data indicates that homes sold in lesser time than that in 2016 and 2017, making it imperative for homebuyers to be ready to move quickly when they find a home they want to purchase, the report said.

The report also indicated that homes sold the fastest in June when the typical U.S. home sold in 73 days flat. In San Jose, the report said, homes sold fastest last year in October within just 39 days of being listed.

What Does The 2018 Housing Market Look Like?

Oftentimes, it’s difficult to predict the . In the last decade alone, we’ve seen a market crash and slow rebound.

However, while some experts are focused on yet another housing bubble, real estate has been on the rise. In October, sales of new U.S. single-family homes hit their highest level in 10 years across the country.

What’s the market forecast for next year? Industry insiders and top experts have similar predictions.

As a future or current homeowner, it’s important to stay on top of the changes in real estate. Read on to learn what the 2018 housing market has in store.

Inventory Shortages

New home sales may be on the rise, but the number of available is on the decline.

Low home inventory has made home prices more expensive in recent years. This trend will continue in 2018, making it more difficult for first-time and budget-focused buyers to enter the market.

There are 12 percent fewer homes on the market than there were a year ago. If this trend continues, homebuyers will be faced with stiffer competition and higher prices. This will make the demand for home purchase loans even greater.

What’s contributing to this low inventory? There are several theories.

Rising housing costs have added emphasis to high-end construction. More expensive homes are being built, which is making it more difficult to find affordable homes.

Homeowners might also be less likely to sell their homes than they were pre-crash. Despite it being a seller’s market, they aren’t looking to enter the market. They’d rather stay locked into their current mortgage.

Whatever the reason, the inventory shortage is expected to continue. Low inventory and high prices will force new homebuyers to get creative if they want to find an affordable home.

Housing Market Opportunities

Certain demographics have seen an abundance of housing opportunities. They can expect these opportunities to be even greater in 2018.

One such demographic is sellers of mid-priced single-family homes. These are some of the most in-demand homes across the nation.

Developers and sellers can make big money on this valuable sector of the market. More millennials are seeking to buy starter homes while baby boomers are scaling back.

The housing shortage isn’t all bad for buyers. Experts are predicting that housing prices will slow down in the coming year.

Forecasts show that the average U.S. house price growth will be 4.9 percent in 2018, which is lower than the 6.6 percent growth seen in the second quarter of 2017.

Prices might be curbed thanks to mortgage rates. A moderate increase in mortgage rates should help decrease refinancing activities.

You can still expect higher growth in big markets such as Seattle and San Francisco. Yet good mortgage rates, limited refinancing, and market stability will still help buyers in 2018.

Your Next Move

Predictions show low-inventory, high-prices, and market stability in 2018.

You don’t have to wait until these predictions come to fruition. Contact us now to learn more about buying your dream home. We offer free loan advice with no cost or obligation.

Inventory Shortage at Crisis Levels in Nation’s Hottest Housing Markets

For-sale inventory is stuck at crisis levels in some of the nation’s hottest housing markets where home values are appreciating fastest. The number of homes for sale nationwide has declined on an annual basis for the past 35 straight months, and just 16.7 percent of a panel of housing expertsii surveyed in December 2017 expect a meaningful increase of home building in 2018, a sign that limited inventory could continue to drive the housing market this year.

 

“Tight inventory fueled by a tight labor market and low interest rates propelled home values to record heights in 2017, but the outlook is now much less certain,” said Zillow senior economist Aaron Terrazas. “Tax reform will put more money in the pocket of the typical buyer, but will limit some housing-specific deductions. Overall, this should increase demand for the most affordable and ease competition somewhat in the priciest market segments. On the supply side, the market is starving for new homes, but it won’t be easy for builders struggling with high and rising land, labor and lumber costs. Aging millennials and young families may be able to find more affordable new homes this year, but they’ll most likely be in further-flung suburbs with more grueling commutes to urban job centers.”

Lack of inventory, coupled with strong demand from home buyers, is one reason why home values across the country are reaching new peaks. The median U.S. home value rose 6.5 percent over the past year to $206,300, the highest it has ever been.

 

Snapshot of $172M worth of Lake Nona projects underway

The fast-growing, 13,000-resident Lake Nona community in southeast Orlando is dotted with cranes, piles of earth and the machines to push ’em around.

Among developer Development Co.’s projects underway are three valued at  $172 million combined:

Flip through Orlando Journal‘s slideshow for a closer look at these developments emerging out of former pasture land.

Lake Nona is home to several businesses, including the new $430 million KPMG training and innovation center and New York-based Drive Shack Inc. (NYSE: DS), a new global golf entertainment company opening its first location in Lake Nona in 2018.

HOAR SELECTED AS CONTRACTOR FOR NEXT PHASE OF LAKE NONA TOWN CENTER

, Fla.; August 7, 2017 – Tavistock Development Company, a diversified real estate firm owned by Group, announced today that Hoar Construction has been selected as the Pre Construction Program Manager and Master General Contractor for the next phase of development of the  Town Center which will include a thoughtful collection of more than one million square feet of retail, restaurant, , office, and hospitality uses.

Developed by Tavistock Development Company, with Steiner + Associates serving as the exclusive retail planning, leasing and development services partner, Hoar Construction plans to break ground on the next phase of construction in the Fall with anticipated completion in 2020. Hoar Construction brings the experience of having previously completed several projects with Steiner + Associates.

“Our team is eager to be a part of this transformative project and to help bring the retail and entertainment portion of the Lake Nona development to life,” said Michael Parks, Florida Division vice president of Hoar Construction. “We have a long history working with partners like Tavistock and Steiner + Associates to create world-class developments, and we are excited to be part of this team.”

Lake Nona Town Center is a 100-acre, 3.8 million square foot mixed-use experiential magnet and regional destination nestled within the large-scale Lake Nona master-planned community. Lake Nona Town Center fronts SR-417, Orlando’s eastern beltway, and is located adjacent to Orlando International Airport and its new multi-model transportation hub and international terminal.

Site plan for next phase of the Lake Nona Town Center

Lake Nona Town Center has already successfully opened and leased 85,000 square feet of class-A office, a dual branded Courtyard by Marriott and Residence Inn by Marriott hotel, 16,000 square feet of retail and restaurant space and a multi-level parking structure that doubles as public art adorned with colorful dichroic glass, lighting and a ‘Code Wall’ and is attached to a six-story digital art monument called ‘The Beacon.’

Local favorites Bosphorous Turkish Cuisine and Chorma Modern Bar + Kitchen – named Best New Restaurant 2017 by Orlando Magazine have thrived in the space – adding to the unique culture and atmosphere.

Tavistock and Steiner are currently in negotiations with several theatres and are close to finalizing plans for a brewery, comedy club and live performance venue, bowling concept and several additional restaurants and retailers. At full build out, Lake Nona Town Center will include more than 80 specialty retailers, anchors, junior anchors, and restaurants.

One of the most successful master-planned communities in the nation with more than 10 million square feet of current and planned residential and commercial development, Lake Nona’s corporate pipeline includes major regional projects including KPMG’s $400-million training and innovation center and the newly announced Amazon high-tech fulfillment center, both of which continue to position Lake Nona as one of the fastest-growing communities in America and a significant job creator for both the region and the state.

Home Sales Spiked in March…and Sold Fast

Inside the Release, by on April 21, 2017

An abnormally warm winter, strong consumer confidence and robust underlying demand ended up being the perfect formula to push existing-home sales in March to their highest pace in over 10 years.

More notably, despite the fact that supply is extremely tight and buying a home has gotten more expensive, home sales are up convincingly from a year ago nationally and in all four major regions.

In addition to the 4.4 percent leap in sales last month, equally impressive was the fact that typically sold 11 days faster than in February and 13 days quicker than a year ago. There’s no question that buyers are struggling to find an affordable home to buy, and when they do, they have to act very fast just to have a chance.

To reiterate what NAR Chief Economist Lawrence Yun said during this morning’s press conference: “sales will go as far as inventory does.”

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