  Mrjoshua Member Username: Mrjoshua Post Number: 677 Registered: 03-2005 Posted From: 69.209.162.3 |
Finding a House Gets Easier Inventories Rise Sharply In Many Major Markets As Some Buyers Hang Back By RUTH SIMON and JAMES R. HAGERTY Staff Reporters of THE WALL STREET JOURNAL February 8, 2006; Page D1 With the key spring selling season about to get under way, the inventory of homes on the market is climbing sharply in a number of major cities. It is the latest sign that the balance of power between buyers and sellers is shifting as the once red-hot housing market continues to cool. The slowdown is affecting both existing homes and new homes. Yesterday, the nation's largest builder of luxury homes, Toll Brothers Inc., reported a 29% decline in new orders in its first quarter, which ended Jan. 31. That was below many analysts' expectations and prompted a sharp selloff in Toll Brothers stock. And Ryland Group Inc., a Calabasas, Calif., builder that sells homes in a wide range of prices, recently announced that new orders declined 4.7% for its quarter ended Dec. 31.  Nationwide, there were 2.8 million existing houses and condominiums on the market at year end, according to the National Association of Realtors. That is down slightly from November's 2.9 million listings, but up 26% from a year earlier. Adjusted for seasonal variations, inventories have climbed 38% since April, according to Goldman Sachs Chief U.S. Economist Jan Hatzius, the largest eight-month increase on record. The changing climate is particularly noticeable in once-hot markets such as Miami, Phoenix and Washington, D.C., and in areas such as Detroit, where price increases have been modest but the job market is weak. Some brokers report that traffic has increased in recent weeks. But with plenty of properties to choose from, buyers have become more selective. The rise in inventories has been good news for people like Mike Perillo, an accountant who has been looking for a home in the Philadelphia suburbs for well over a year. "We're now seeing a lot more properties that appeal to us," says Mr. Perillo. "There's more on the market, and there seems to be a lot less people looking now as opposed to this time last year." In Phoenix, where inventories have climbed steadily since last spring, open houses are attracting a steady stream of lookers, says Charles McLean, broker-owner of Century 21 Metro Alliance. "But people are taking their time," he says. "They're not just jumping and writing a contract." Mr. McLean says that if a listing doesn't attract enough traffic, within 30 days they will consider lowering the price. In Detroit, sales fell nearly 10% in the fourth quarter and inventories climbed amid uncertainty about auto-industry layoffs. To stimulate demand, Real Estate One, a Detroit brokerage firm, has been running a companywide "Bonu$ Homes" promotion in which sellers agree to provide $2,000 to $10,000 toward buyer closing costs on purchases made before April 15. "The creativity to sell homes is coming back," says Dan Elsea, president of brokerage services at Real Estate One. "We haven't needed it for years." Economists and real-estate experts are watching the inventory numbers closely for signs of whether the housing market is poised for a soft landing -- or something worse. When inventories are tight, buyers competing for scarce properties bid up prices. As the supply of homes on the market increases, price increases slow and buyers gain negotiating power. The recent rise in inventories follows a prolonged housing boom during which strong demand and low mortgage rates triggered bidding wars and fueled double-digit price gains in many markets. But those days appear to be over. The National Association of Realtors said that it expects sales of existing homes to fall by 4.7% this year to 6.74 million and median home prices to rise an average of 5%, down from 12.7% last year. Some analysts are more pessimistic. In a joint forecast issued last month, housing analytics firm Fiserv CSW, a unit of Fiserv Inc., and economic forecaster Moody's Economy.com, a unit of Moody's Corp., called for home prices to increase by an average of 1.5% this year. With the number of listings rising and the pace of sales slowing, there is now a 5.1-month supply of existing homes on the market, based on the current rate of sales, according to the National Association of Realtors, compared with a record low of 3.8 months in January 2005. Historically, a 5.5-to-six-month supply has been considered a balanced market, says NAR Chief Economist David Lereah. But with the Internet making shopping for a home easier, he says, it is no longer clear just what a balanced market is. Another uncertainty: how much of the increase in inventories is due to speculators looking to sell, and whether they will be more willing to cut prices as the market cools. Investors accounted for 9.5% of mortgages to buy homes through October, but their share of purchases peaked during the first half of the year, according to LoanPerformance, a unit of First American Corp. Brokers in markets such as Phoenix and South Florida say they've seen an increase in investor-owned properties for sale. The sharp rise in inventories isn't universal. In Seattle, inventories have declined modestly over the past 12 months as a robust job market sustains demand. The supply is so tight, "I don't know if it can get any lower," says Michael Skahen, owner of Lake & Co., a Seattle brokerage firm. In Dallas, inventory has edged up slightly, but the pace of sales is up. "The buzz around my office is that everybody is busy now," says Steve Hendry of Re/Max Associates of Dallas. "Our economy seems to be picking up considerably. It's just night and day compared to what was going on this time last year." Still, the pinch is being felt in many corners of the housing market. The number of completed new homes currently on the market has risen nearly 40% over the past year, according to Hanley Wood Market Intelligence in Costa Mesa, Calif., a market research and consulting firm. The shift has been particularly noticeable where inventories had been thin: In central California, the inventory of new homes climbed to 238 in the fourth quarter, from just 26 a year earlier, an increase of more than 800%. As orders slow, builders are engaged in heavy discounting and promotional activity, particularly among homes for the second-time, move-up and luxury buyer. A survey conducted last month by the National Association of Home Builders found that 64% of builders are now using incentives such as offers to pay closing costs and free upgrades; 19% are cutting prices. Last week Standard Pacific Corp., a major builder, said that new orders, excluding acquisitions, fell about 20% in the fourth quarter compared with the same period a year earlier. Lennar Corp., another builder, recently offered discounts of $20,000 to $30,000, plus help with closing costs and bonuses to brokers, on selected homes in the Tampa area. Robert Toll, Toll Brothers' chairman and chief executive, indicated that slowing orders appeared to reflect three trends. First of all, speculators, who buy homes as investments hoping to flip them later at a hefty profit, are getting out of the market and canceling contracts. Toll said it also is constrained by long delivery times in many communities. During the first quarter, delivery times have increased to 11 months or more -- before the maximum was 11 months. Buyers are reluctant to commit to such a long delivery time when the future of the market is uncertain. Toll also has a big exposure to Washington, D.C., New Jersey, Phoenix and California -- markets that appear to slowing more rapidly than some others. The supply of unoccupied condominiums is also climbing in many areas. In New York's Westchester County, the number of condos on the market jumped to 617 at the end of 2005 from 397 a year earlier. In the Boston area, the number of condos listed at the end of January was 5,114, up from 2,876 a year earlier. In the Washington, D.C., metro area, new-home inventory climbed by more than 900% to 2, 413 in the fourth quarter over the same period a year earlier, largely because of the completion of several condo projects, according to Hanley Wood. --Kemba J. Dunham contributed to this article. Write to Ruth Simon at ruth.simon@wsj.com and James R. Hagerty at bob.hagerty@wsj.com | ||
Jt1 Member Username: Jt1 Post Number: 6684 Registered: 10-2003 Posted From: 66.19.21.34 |
Well under the fine repub leadership they have encouraged sprawl and more building with no increase in market. Yay Engler, Yay DeRoche. | ||
Gildas Member Username: Gildas Post Number: 390 Registered: 12-2004 Posted From: 69.222.64.169 |
Sprawl develops because someone buys the land and places homes there and people choose to live in one area or another. It has nothing to do with whether a D or R is in office. This is private money at work. Government can offer incentives (reduced taxes, etc) to encourage people to live in one area or another, but it is their choice. Perhaps if city government and Detroit wasn't so messed up on so many levels people would move back to Detroit. It's what I hope happens but we need to be competative with other areas such as taxes, services, etc to get people and money back into the city, and in those regards, Detroit sucks. Regarding the market, capital takes the path of least resistance, right now that is other cities and worse yet, states. Lets not blame Engler for everything, at some point we expect our elected officials to take ownership of the office to which they were elected to work on our behalf. Granholm stating that she will veto the single business tax is an indication of our current governors pro business, pro growth mentality. The rest of the nation has surpassed us, we are the ones that need to change. | ||
Jt1 Member Username: Jt1 Post Number: 6685 Registered: 10-2003 Posted From: 66.19.19.46 |
This doesn't have to be a Detroit issue but a regional one. Why is RO losing population, why is Southfield losing population, why is damn near every inner ring is losing population. Why is DeRoche pushing to build roads (subsidized with all of our dollars) where 'people want to live'. To claim that the Engler administration wasn't pro sprawl and pro un planned development is silly and our current leaders are pushing it, They seem to believe that construction jobs will keep the state afloat. So tell me why people are fleeing inner rings at such a quick pace instead of making the focus purely on Detroit. | ||
Detourdetroit Member Username: Detourdetroit Post Number: 159 Registered: 10-2003 Posted From: 205.188.116.137 |
sprawl develops because the michigan roadbuilders association has mdot in the palms of their hands. sprawl goes hand in hand with bad policy. the "free" market needs incentives too. | ||
Lmichigan Member Username: Lmichigan Post Number: 3163 Registered: 10-2003 Posted From: 67.172.95.197 |
To say that politics has nothing to do with sprawl is just plain silly. Those living in sprawl always want to bitch about how they have to subsidize cities, when they don't realize that pro-sprawl legislation is subsidized off the backs or urban dwellers, too. In fact, laws and policy have long been tipped in favor of sprawlers. Even the most well-put-together cities have not been immune, though those cities have been able to maintain their core. IMO, 50+ years of sprawl is long enough. The market is a artificial one. People like to believe that they have power over where they move, when the fact is that most of those people don't even realize they are buying into a created trend. Of course it goes both ways, but it's the sprawlers that have had their way for so long, now, that they are completely disillusioned not realizing their "freedom" isn't what they think it is. | ||
Gildas Member Username: Gildas Post Number: 391 Registered: 12-2004 Posted From: 69.222.64.169 |
People are fleeing Detroit, the inner rings, Michigan and largely the Midwest. This is well beyond a regional issue. People are leaving the area and state for better opportunities elsewhere, those that are staying are choosing to live further out from the center. There are many reasons for this, lower taxes, more land, new construction, better services, etc. Government has an obligation to serve all people, even those in the burbs, if their local government pushes for roads, these things happen. You only view it as wasteful spending because the money is not coming to the projects you want funding, the townships on the other hand are happy to see the money being spent. The sprawl and "unplanned" development is a matter of opinion and our current leaders would not have to worry so much about these issues if they could get more money and jobs into the area. People have been fleeing Detroit for decades and now the inner rings are feeling the pinch as more people choose to move away. I agree with you that construction jobs will not prop up our economy, nor will building lots of new houses which people will buy, while vacating Detroit and the inner rings. This is not a Detroit issue, however Detroit could do things to encourage people to move back. No one has ever been taxed into prosperity and if I decide to keep more of my money i.e. lower property taxes, no income tax, decent services, I could go to the inner rings, or better yet, further north to new construction. It's whats happening. People have made the choice to leave the city, inner rings and state because other cities, states are doing better at keeping taxes down and creating jobs and opportunities. We cling to a decaying auto industry, veto taxes to help small businesses, have very high property taxes and horrible government services. You have to ask why people are fleeing? | ||
Mrjoshua Member Username: Mrjoshua Post Number: 678 Registered: 03-2005 Posted From: 69.209.162.3 |
Gildas, I will be moving downtown in a few weeks, much to the chagrin, I'm sure, of many on this board. I am doing so because I feel it's the right thing for me to do at this time, and to a certain degree, my civic duty. For although I recognize the right of citizens to live and work where they so choose, I also lament that we seem to have forgotten the virtues and ideals of the polis/city-state. That being said, my decision has not been an easy one. The crime, lack of services, high taxes, Socialist mindset, etc., have not been the primary deterrents for me as they are for most people. The real challenge I have witnessed is that Detroit seems to be its own worst enemy. The energy here can be fabulous, but it is all too frequently angry, distrustful and unwelcoming. The commentary by and experiences of those who visited here for the SuperBowl was overwhelmingly positive. The focus has been on what those outside the state had to say, but the feedback I've gotten from those who live in the surrounding suburbs has been most amazing. People who had not visited the downtown area for a decade or more expressed utter astonishment at how much progress has been made. They could not get over the potential for Detroit to regain its footing as a place to live and work once again. Just my thoughts. | ||
Lmichigan Member Username: Lmichigan Post Number: 3165 Registered: 10-2003 Posted From: 67.172.95.197 |
There is a reason for everything, distrustful attitudes and all. The problems are not easy to explain, and nor are solutions. I tend to believe that many of our cities are in a current transitioning state, a serious one, and we are all too far within to see which way things are transitioning. Within any of these declining cities I think the main question is quite simply, though. Are the community groups and grassroots efforts beginning to win out, or is the status quo winning out and overpowering these efforts? With all of that said, while central cities have problems that only central cities can solve (i.e. problems they can no longer blame, or ever could have blamed, on the suburbs), it is completely fair (and necessary) to dicuss the negative consequences sprawl has, and still is having, on these central city. | ||
Gildas Member Username: Gildas Post Number: 392 Registered: 12-2004 Posted From: 69.222.64.169 |
Mrjoshua, I agree with you 100% I also live in the city and for my wife and I the choice was one that required alot of thought. I am on the eastside and for work and location we have almost no commute time, which we love. Another factor for us was the housing available, we like the older Tudor style homes and that was key in our decision making. With that said, we accept that we pay more in taxes and get less, pay higher insurance rates then many others and deal with a cumbersome, bloated city government that is both incompentent and unresponsive to many peoples issues. With that said Detroit has huge potential and on the whole great people. Detroit has made alot of improvements and I hope it continues in the right direction, but Detroit as you said is often it's own worst enemy and it does at much to hurt growth as it does help it. In spite of that, Detroit seems to be on a upswing, I hope it continues inspite of itself. Glad your moving into the city and good luck with everything, regardless of what some on the board might think, Detroit needs EVERYONE it can get and I for one am glad you made the choice you did, WELCOME TO DETROIT!! | ||
Matt_the_deuce Member Username: Matt_the_deuce Post Number: 486 Registered: 10-2003 Posted From: 69.14.248.252 |
Unchecked sprawl and lack of cohesive regional planning have contributed greatly to mess we find ourselves in. 100 plus municipalities all fighting/competing against each other. What a waste of governmental recources. Talk about redundancy/inefficiancy/poor services. Sprawl = Stretched regional resources = poor qaulity of life = let's move away. Short term planning and a "look out for my own little fiefdom" mentality has been a recipe for disaster. It's one of the major reasons we can't cooperate on any regional "good for everybody" initiatives. There is no "everybody" in south eastern MI. - Sad state of affairs. Gildas - a lot of the decisions people make depend on the options they have. Just because there's a cigarette in front of someone doesn't mean they should smoke it... I'm not taking about social engineering, I'm just talking about the fact that public policy has been pro sprawl for 50 plus years and now look where we are. You can't pin this on Detroit and peoples free choice to move away from it. Thats why we have leaders who are supposed to figure out what will be good for the region for the long term. They are not doing this and I would say the power brokers at the big builders like Toll Bros. and Pulte are lobbying hard to influence a pro build sprawl build sprawl policy. I don't care how many construction jobs this creates. I would argue that just as many contruction jobs would be created if they were shifted to nurturing the infrastructure we already have and building on the unused land we already have within the region as opposed to gobbling up new land on the fringes. We need more density/tax base within the region to stop the stretching of dollars. It's short term thinking and the chickens are coming home to roost. Or should I say - leaving the state to roost... | ||
Gianni Member Username: Gianni Post Number: 206 Registered: 05-2004 Posted From: 69.3.250.170 |
MrJoshua, Welcome to Detroit and hope you have a the best experience possible. But our socialist mindset can be contagious. We may convert you yet. Here's an idea. Lower property taxes in Detroit. Increase gasoline taxes nationwide. Even Bush, hypocrite that he is, is at least saying we are addicted to oil. Nothing like higher gas taxes to discourage sprawl, encourage (and fund) mass transit, encourage more people to live in the central cities, and encourage consumers to buy and producers to to make more fuel efficient vehicles. People bitch about the price of gas here but I think we have the cheapest gasoline prices in the world except for Venezuala or Kuwait perhaps. | ||
Rustic Member Username: Rustic Post Number: 2033 Registered: 10-2003 Posted From: 67.163.181.81 |
Back to the initial article (Thanks for posting it Mr.J.) ... 13 very different large metro areas yet dramaticly growing #'s of homes on the market in 9 of them (where are SF/SJ and CHI btw? anyway) ... In the case of Detroit it is kinda obvious what the cause is: declining regional population and relatively high individual home ownership levels should equal lotsa houses for sale (in addition, low interest rates and relatively low housing prices have encouraged additional moves within the region (e.g. 50-100k$ increase gets you a significantly better house), that isn't the case in regions with much higher prices). The fact that it is spiking now can be blamed on the recent Auto biz downturn, ok fine. In the case of metro areas where the population is growing (Like LA and DC) increasing numbers of homes for sale indicates too high asking prices (levelling off of housing bubble prices). OK fine. In the case of areas with ~flat population levels and high prices (Like PHI and BOS) it isn't clear what is happening, bubble bursting, the first wave of retiring boomers overlapped with the last wave of their parents leaving these older metro areas, or maybe people are starting to leave those cities in droves too? Curious, eh? Yay consumption! The AUTO BIZ ain't the only one to offer financing deals to spur sales! The Auto biz ain't the only one with an overcapacity problem. Yay Detroit! | ||
Jt1 Member Username: Jt1 Post Number: 6686 Registered: 10-2003 Posted From: 198.208.251.24 |
Mrj - Politics aside, welcome to the city. Any time someone moves to the city and supports local biz, pays taxes, etc is a good thing. | ||
Rustic Member Username: Rustic Post Number: 2034 Registered: 10-2003 Posted From: 130.132.177.245 |
jt1, "pays taxes" ... ya socialist! | ||
Jt1 Member Username: Jt1 Post Number: 6688 Registered: 10-2003 Posted From: 198.208.251.24 |
One more note Mrjoshua. As I see it diversity in all forms is good in any city. Diversity can come in the form of race, ethnicity, finances, political beliefs, etc. | ||
Tomoh Member Username: Tomoh Post Number: 78 Registered: 11-2004 Posted From: 68.40.205.183 |
Government encourages sprawl by providing free or subsidized high speed auto-only roads and cheap subsidized gasoline (imagine if gasoline users had to directly cover the cost of a military to keep long term prices stable or to clean up environmental damage, etc). Since the end of the second world war the government assumed greater risk and made mortgages available cheaply to people who wanted to build new homes in new suburbs. Today lending institutions discourage financing of non-sprawl developments in suburbs by requiring strict separation of uses. Of course we can't blame an individual who in a 'free market' between expensive gas and cheap gas chooses cheap gas, it's the 'market' that is at fault. Not that free markets are nearly perfect themselves. | ||
Digitaldom Member Username: Digitaldom Post Number: 428 Registered: 08-2004 Posted From: 69.14.238.105 |
I think you fail to realize one thing in the sprawl agruement. When new houses are going for 160,000 brand new (in the middle of no where) with low taxes like Macomb TWP, people will flock there. Keep in mind the houses are 2x the size of there suburban counter-parts, but one thing buyers tend to NOT realize. How much it costs to cool and heat a home of that size. This spawl will come to a temporary hault in the very near future due to home builders not selling what they thought they could. They are real enemy here. | ||
Broken_main Member Username: Broken_main Post Number: 804 Registered: 06-2005 Posted From: 69.222.11.226 |
I just bought a condo in the St Annes Gate community in Detroit. Some of the main factors of buying here were the tax abatement , the location, it is in close proximity of my job. In addition, with all of the progress that is taking place within the city, i just couldn't leave. In addition, with the rising costs of heating and electricity, it was more feasible for us to go smaller instead of taking a risk and buying one of those gas guzzlin mini mansions |
