Inventory shortages – The Next Bubble? According to the Case Shiller Home Price Index released February 25th – showed that through the end of December 2013, in the United States, home prices were up 11.3% overall, which was the best year since 2005 according to the chairman of the S&P Dow Jones Index Committee, David M. Blitzer. Some standout markets in 2013 included
Several of those markets were hit very hard in the downturn and the numbers listed above reflect a rebound (such as Detroit, Las Vegas, Miami, Phoenix, and Tampa),
- But what about Atlanta, Los Angeles, Portland, San Diego, San Francisco and Seattle?
- Several of these markets are driven by pent-up demand and the loosening of credit. However, it is important to take a closer look at these markets, and any other market that is seeing high demand, to determine where the demand is coming from and if that demand is sustainable
- For Seattle, there are several factors at work:
- Growing tech industries and various companies expanding and hiring in the area.
- Migration to Washington State from other states is very high. In fact, Washington State has the 10th highest migration totals in the country with 215,494 people moving here from other states in 2012.
- Foreign and domestic investors are investing in the Seattle housing market and the surrounding areas due to the potential for higher rents in these areas.
- When demand occurs for more than one reason, it is a sign that a market is healthy, not spiraling out of control
- We must also take into account that credit is loosening up from recent years, but it is nowhere near as loose as it was in the years leading up to the market correction.
- New guidelines have been set in motion to prevent the kind of collapse we have had in the past.
- Credit score requirements are on the way down for loans.
- In fact, as reported by the LA Times, lenders are reducing the required credit scores for FHA loans and are allowing some with credit scores of 600 to receive mortgage funding.
- Lenders are also raising the debt-to-income ratio limit.
This is not a bubble.
- This is a direct result of pent-up demand from buyers who have been waiting almost three years to buy.
- Buyers who were getting ready to buy a year ago chose to wait because of issues the country was having with the debt ceiling and there was a lack of confidence in the market
- Consumers are feeling more confident now and they show that confidence in buying real estate.
- In some markets there just isn’t enough inventory to go around. The increased consumer confidence along with the lack of new construction inventory has created a storm of demand.
Boomerang Buyers Making Moves to Return to Home Ownership
- Now that the worst of the foreclosure crisis is in the rearview mirror, former home owners who lost their homes to a short sale or foreclosure are re-entering the housing market. They’ve spent the last few years rebuilding credit – and they’re ready to buy again.
- “We’re about three years past the peak of the foreclosures, and that’s about the time when most people would qualify for another loan,” says Daren Blomquist, spokesman for RealtyTrac. “The market really needs boomerang buyers to maintain the current recovery.”
Church pays $15 million for downtown Bellevue office building
- Bellevue First Congregational Church on bought the Star Plaza office building in downtown Bellevue for $15 million.
- It is unclear when the church will move to the 25,250 sq/ft building at 11061 N.E Second St. “Right now we are in the very early stages of the design process.”
- The church bought the building from Atrium Building Limited Liability Co., according to public records, which also list Barry Mattaini and David Keyes, both of Bellevue, as the LLC’s managers.
- The church bought Star Plaza because the congregation sold its longtime home at 752 108th Ave. N.E. in February to Plus Investments USA for $30 million. The 1.6 acre property is zoned for high-rise development.
Medina at $586 per square foot isn’t all that bad
- Los Angeles luxury housing has typically been less expensive than in other major cities, according to London-based Knight Frank LLP. High-end homes sold in 2012 for $5,920 a square foot in Monaco, $5,050 in Hong Kong, $4,300 in London and $2,240 in New York, compared with $1,340 in Los Angeles, the property-consulting firm said in their March report
75-plus presales logged at new condo project in downtown Seattle
- More than 75 residences at Insignia have been presold. Insignia is the first major condo project to be built in downtown Seattle in six years.
- Insignia is a two-tower, 41-story project at 2301 Sixth Ave.. It will have a total of 707 units. The developer, Bosa Development Corp., is pre-selling units in the first tower, which is scheduled to open in 2015. The second tower is scheduled to be done in 2016.
- As the inventory of new condominiums remains low, prices are shooting up.
- The Mark Co. said that the average per-square-foot prices for all new downtown condos was 13% higher in January compared to the same month the year beore.
- The Mark Co.’s Condominium Price Index puts the average price of all new downtown condos that sold in February 2014 at $686.