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Bloomberg Markets: Why High-Flying U.S. Home Prices Seen Getting Another Jolt

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The U.S. housing market’s storyline for the last several years has been one of steady demand and limited supply, pushing prices ever higher. Now, a new chapter has opened up for the industry and its customers: soaring costs for building materials.

Reports on Tuesday underscored both resilient purchase activity and accelerating home prices. The S&P CoreLogic Case-Shiller index showed property values in 20 major U.S. cities climbed 6.8 percent in February, the biggest year-over-year gain since June 2014. Government data revealed a faster-than-projected rate of new-home sales in March and huge upward revisions to the prior two months.

Inventories of previously owned homes are plumbing the lowest levels in at least 19 years, a key reason why resilient demand by itself has fueled price appreciation that’s extending to the new-homes market. Now, with the costs of lumber and other building materials soaring together, buyers are unlikely to see any relief for some time.

In fact, builders such as PulteGroup Inc., Lennar Corp. and KB Home have indicated they are having success passing along construction costs and signaled margins will remain in good shape going forward.

“There is pressure on a few of the commodities and we are all dealing with some of the labor pressures that have been in the news. So we expect that you’ll continue to see some pressure. And in the first quarter, we were able to outpace the cost pressure with price.”
— Jeffrey Mezger, CEO at KB Home, on March 22 earnings call“There is inflationary pressure on commodities. The good news is that we’ve seen a market that’s allowed us to price to cover most of that.”
— Robert O’Shaughnessy, CFO at Pulte, on April 24 earnings call

The cost of materials is important because everything from the laying the foundation to framing to painting represents the largest share of a typical single-family home purchase, according to an annual survey by the National Association of Home Builders.

What Our Analyst Says

For homebuilders, rising construction costs are definitely the biggest headache at the moment (and have been for much of the cycle). In the near-term, builders will be able to raise prices to offset material cost inflation. You may see some whose average selling prices are slowing, but that’s primarily due to mix, while ‘like-for-like’ pricing has improved across much of their footprint. A lot of that has to do with a lack of supply.

— Drew Reading, U.S. homebuilding analyst, Bloomberg Intelligence

The framing of homes, or putting up roofs and walls, accounts for 15 percent of the cost of construction. A composite measure of the cost of lumber for framing rose 16 percent from December to March, according to data from Random Lengths, a publisher of information on wood products.

And it’s not just lumber. A Labor Department gauge of prices paid at the producer level for construction inputs — everything from particleboard and plumbing to concrete and insulation — was up 5.1 percent in March from a year earlier, the biggest annual advance in nearly eight years.

So far, neither higher home prices or a four-year high in mortgage costs have been enough to dissuade buyers. Results of the Conference Board’s consumer confidence index on Tuesday showed 1.7 percent of the group’s respondents in April planned to purchase a new home in the next six months, matching the highest share in this expansion.

Helping shape that pickup is a larger share of Americans who say that now is a good time to buy because prices aren’t going to fall any time soon. Sixteen percent of consumers surveyed by the University of Michigan in March said that homebuying conditions were “good” considering asking prices won’t get any better.

At some point, affordability will become a bigger issue for those wanting to own a home. So far though, consumers are taking higher home prices in stride and builders remain relatively upbeat about the market’s prospects.

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Bill Fandel among select top Sotheby’s agents at Santa Barbara’s Market Leader’s Forum

The Belmond El Encanto Hotel was home this past weekend for 45 of the top Sotheby’s International Realty agents from across the U.S. who gathered here for the Market Leaders’ Forum, a two-day event focused on best practices, collaboration and strategic growth within the global real estate space.

The intensive meetings and networking events were co-hosted by Montecito’s own, Suzanne Perkins and Bill Fandel of Telluride Sotheby’s International Realty, and proved the perfect opportunity to showcase the beauty, history and culture of the Santa Barbara and Montecito Coast. Those in attendance represented luxury markets throughout California, Colorado, Connecticut, Florida, Georgia, Hawaii, Illinois, Massachusetts, Nevada, New York, Texas, Washington, and Washington, D.C.

Six Homes by Famous Architects

Ours is the Age of the Starchitect. Elite practitioners have achieved bold-face status, and owning a piece of their work comes with a hefty price tag. According to Inger Stringfellow of William Pitt Sotheby’s International Realty in New Caanan, Connecticut, homes by top- tier architects can command a premium of as much as 50 per cent over comparables. One example is the $12 million Philip Johnson-designed Wiley House in New Canaan. A glass pavilion perched on a stone podium, it is a cousin to Johnson’s celebrated Glass House, which is on the National Register of Historic Places and is located just across town. “Homes like this have their own aura,” Stringfellow says. “It’s a privilege to be in them.”

While high-net-worth individuals have long sought famous architects, many home buyers today show a genuine “interest in design and how it affects where and how they live,” says Christopher Mercier, a founder of (fer) studio in Inglewood, California. A member of Frank Gehry’s team during the conception of the Guggenheim Museum Bilbao in Spain, Mercier sees this fresh passion for design as a welcome evolution. It makes for the best kind of client – an involved one. “You want the individual’s lifestyle to be reflected in that project,” he adds. “Otherwise you’re just making a spec house.” And as savvy clients know, the right house by the right architect may be the most precious possession of all.

New York-based writer Iyna Bort Caruso has contributed to The New York Times, The Wall Street Journal and others.

Palm Beach
Florida

Ideally located on the north end of Palm Beach, this Peter Marino-designed estate offers all the luxuries of island living. From the existing 1937 home, Marino devised a tropical retreat whose Indonesian-contemporary interior showcases spectacular ocean views.

$32,000,000  Property ID: 0076920
Sotheby’s International Realty – Palm Beach Brokerage
Cristina Condon +1 561 301 2211

Kentfield
California

Joseph Esherick and world-renowned landscape architect Lawrence Halprin collaborated to integrate indoors and outdoors seamlessly at this iconic California residence. In grand-scale rooms with twelve-foot ceilings, glass walls bring the outside in, while the kitchen and great room open  to Zen-like exterior entertaining areas.

$4,995,000  Property ID: D9TFY4
Golden Gate Sotheby’s International Realty
Stephanie Lamarre +1 415 806 3176

Westerly
Rhode Island

One of the few Charles Moore-designed homes on the East Coast of the US, Sun Up offers serene living without sacrificing the sophistication expected from a famous architect. Renowned for the remarkable spirit of his designs, Moore created different levels, cathedral ceilings and octagonal wall shapes. The entire space feels open while also offering areas of seclusion. As Moore once noted, “Good places matter.” This is one of them.

$1,775,000  Property ID: EV33SJ
Mott & Chace Sotheby’s International Realty
Jim Buffum +1 401 741 2836  Desa Buffum +1 401 741 2809

Pol De Mar, Barcelona
Spain

Built by renowned architect Ignasi Mas i Morell, this home is an exquisite example of classic Catalan architecture. High ceilings and commanding arches ensure wonderful spaciousness, and a combination of ornate and earthy textures creates a warm ambience.

€2,000,000  Property ID: LCENVX
Barcelona & Costa Brava Sotheby’s International Realty
+1 34 93 467 58 10

New Canaan
Connecticut

A star among the city’s legacy of mid-century Modernism, the Wiley House, designed by Philip Johnson in the early 1950s, was restored by Roger Ferris + Partners. The double-height glass pavilion – with a living room and subtly hidden but generous galley kitchen – cantilevers out over the fieldstone base. The slope of the land offers lower-level rooms full views of the property. A new pool house and reconstructed barn-art gallery are set around their own separate courtyard.

$12,000,000  Property ID: S24GC9
Sotheby’s International Realty
John Hersam +1 203 417 5198 Inger Stringfellow +1 203 321 9361

And below –

Telluride
Colorado

Designed by world-renowned John Pawson, this remarkable Telluride residence offers truly inspired minimalism in a most alpine setting. The collaboration between seller & architect was his first commission in the U.S. and timelessly showcases Pawson’s attentive focus on space, proportion, light and materials.

$5,995,000  Property ID: PMDY5H

Telluride Sotheby’s International Realty
Bill Fandel +1 970 708 4141

Living2OutsideAngle

To visit Telluride Luxury Properties click here

Sotheby’s International Realty® Brand Leads National Rankings for Individual Sales Volume Category in REAL Trends/The Wall Street Journal Report

The-Thousand-Logo_revised

Sotheby’s International Realty Affiliates LLC today announced that the Sotheby’s International Realty® brand was the No. 1 real estate company represented in two of the six categories that comprise the 2016 REAL Trends/The Wall Street Journal “Top Thousand.” The annual report ranks America’s top 1,000 residential real estate agents and teams based on 2015 annual sales volume and transaction sides, and the top 50 agents and top 50 teams on average sales price—making it a ranking of the top 1,100 nationwide.

The Sotheby’s International Realty brand claimed 45 of the top 250 sales associates in the REAL Trends Individual Sales Volume category, more than any other real estate company. The brand also had the highest combined individual sales volume from sales associates in the same category. In addition, the Sotheby’s International Realty brand had the most individuals represented in the Individual Average Sales Price category, holding 17 of the top 50 spots (34%), including Brenda S. Powers and Elizabeth L. Sample in East Side Manhattan who tied for No.1 at $37.59 million. The brand also had the No. 1 Team on the Average Sales Price ranking; Drew Mandile and Brooke Knapp Team in Beverly Hills topped that list with an average sales price of $18.3 million. This further establishes the strength of the Sotheby’s International Realty brand as a leader in luxury real estate sales.

“We are thrilled to see that the Sotheby’s International Realty brand is continuing to build off the momentum of the 2015 record-year,” said Philip White, president and chief executive officer of Sotheby’s International Realty Affiliates LLC.  “Having the most sales associates represented in two categories of the REAL Trends/The Wall Street Journal rankings is a huge accomplishment and underscores how many of the top sales professionals are affiliated with the Sotheby’s International Realty brand.  I am so proud of the companies and the sales associates represented on this list.”

The Sotheby’s International Realty network currently has more than 19,000 affiliated independent sales associates located in approximately 845 offices in 63 countries and territories worldwide.  Sotheby’s International Realty listings are marketed on thesothebysrealty.com global website.  In addition to the referral opportunities and widened exposure generated from this source, the firm’s brokers and clients benefit from an association with the Sotheby’s auction house and worldwide Sotheby’s International Realtymarketing programs.  Each office is independently owned and operated.

The complete Thousand Top Real Estate Professionals list can be found on REAL Trends’ website, http://www.realtrends.com.

To visit Telluride Luxury Properties click here

Wealth-X Reveals: The 10 Wealthiest Real Estate Tycoons

Wealth-X has produced a list of the 10 wealthiest real estate tycoons in the world.

With a combined net worth of US$123 billion, these 10 individuals have made the majority of their fortunes from real estate development, investment or management business. Of these real estate magnates, seven are from Asia; Hong Kong is home to five of the tycoons on the list, while two billionaires hail from China.

Hong Kong’s ultra high net worth (UHNW) individuals — defined as those with net assets of at least US$30 million — have a particular affinity for real estate; 9% of the region’s ultra wealthy population made their fortunes through the real estate industry, according to the Wealth-X and UBS World Ultra Wealth Report 2014.

Two Americans were in the top 10, while one Australian billionaire rounded out the rankings at No. 10.

China’s wealthiest man, Jianlin Wang, was No. 1 on the list with a net worth of US$33.7 billion as of April 2016.

Hong Kong’s Kwok brothers — ThomasRaymond and Walter — were No. 7 to 9 on the list. They inherited Sun Hung Kai Properties, one of the largest real estate developers in Hong Kong, in 1990 after the death of their father, Tak-seng Kwok.

Six of the 10 real estate magnates were entirely self-made, building their fortunes from the ground up. Among the world’s self-made UHNW individuals, real estate is the second-most popular industry — at 7.3% of the population — after finance, banking and investment (26.4%), according to the World Ultra Wealth Report 2014. In comparison, real estate was the third-most prominent industry among UHNW individuals with a blend of self-made and inherited wealth, at 8.2%, after finance, banking and investment (17.4%) and industrial conglomerates (12.5%). Among UHNW individuals with purely inherited wealth, real estate wasn’t even in the top five industries.

Top Industries UHNW Individuals - WUWR 2014
Source: World Ultra Wealth Report 2014

Learn more about these real estate tycoons below. Read Manager Magazin’s feature on the list here (in German).

1. Jianlin Wang

Age: 61

Net Worth**: US$33.7 billion

Country of Citizenship: China

Primary Company: Dalian Wanda Group

Wealth Source: Self-Made

2. Shau-Kee Lee

Age: 88

Net Worth: US$19.9 billion

Country of Citizenship: Hong Kong

Primary Company: Henderson Land Development

Wealth Source: Self-Made

3. Donald Bren

Age: 83

Net Worth: US$17.3 billion

Country of Citizenship: US

Primary Company: Irvine Company

Wealth Source: Self-Made

4. Ka-Yan Hui

Age: 57

Net Worth: US$8.9 billion

Country of Citizenship: China

Primary Company: Evergrande Real Estate Group

Wealth Source: Self-Made

5. Stephen Ross

Age: 75

Net Worth: US$7.9 billion

Country of Citizenship: US

Primary Company: Related Companies

Wealth Source: Self-Made

6. Joseph Lau

Age: 65

Net Worth: US$7.9 billion

Country of Citizenship: Hong Kong

Primary Company: Chinese Estates Holdings

Wealth Source: Inheritance/Self-Made

7. Thomas Kwok

Age: 64

Net Worth: US$7.2 billion

Country of Citizenship: Hong Kong

Primary Company: Sun Hung Kai Properties (SHKP)

Wealth Source: Inheritance

8. Raymond Kwok

Age: 64

Net Worth: US$7 billion

Country of Citizenship: Hong Kong

Primary Company: Sun Hung Kai Properties (SHKP)

Wealth Source: Inheritance

9. Walter Kwok

Age: 65

Net Worth: US$6.9 billion

Country of Citizenship: Hong Kong

Primary Company: Sun Hung Kai Properties (SHKP) as shareholder; founded Empire Group Holdings

Wealth Source: Inheritance

10. Harry Triguboff

Age: 83

Net Worth: US$6.4 billion

Country of Citizenship: Australia

Primary Company: Meriton Group

Wealth Source: Self-Made

**Note: Net worth as of April 14, 2016. Wealth-X’s dossiers for the most notable billionaires have real-time net worth valuations that may fluctuate from day to day based on changes in publicly listed equity share prices and changes in currency exchange rates.

Telluride foreclosures down 93 percent from 2010

town-of-telluride

Telluride Daily Planet

When San Miguel County Treasurer Janice Stout took office in 2007, her office opened 19 foreclosures countywide. By 2010, the nationwide mortgage crisis had reached Telluride; her office opened 107 foreclosures that year.

The county has once again returned to the other side of that peak, she reported this week: In 2015, her office opened just eight foreclosures in the county. To date in 2016, she has not opened a single foreclosure case.

The drop in foreclosures means Stout’s office is bringing in less revenue, but the treasurer said that’s good news for the county.

“Fewer foreclosures is a good thing. We’re not here to make money on the backs of borrowers who can’t make their payments,” she said. “This is wonderful news.”

Stout said federal programs, including the Making Home Affordable program that requires lenders to work with borrowers on loan modifications before filing for foreclosure, have contributed to the decrease in foreclosures, but the strengthening local economy has also played a role.

Thomas Galleger, community bank president for the Telluride branch of ANB Bank, agreed.

“If people lose their jobs, nobody wants to let their house go into foreclosure, so one option is they could sell the house,” Galleger said. “In 2010, it was not even a possibility to sell their house.”

“The housing market right now is extremely strong, and that’s the primary reason you haven’t seen any foreclosures,” he added. Owners headed toward foreclosure can opt to sell the property.

“Ultimately, we haven’t had any problem loans in the past couple of years,” Galleger said. “Traditionally we haven’t had many foreclosures, but lately it’s down considerably from the last few years.”

Telluride Association of Realtors President Pat Pelisson said the local real estate market has rebounded. In 2011, he said, TAR brokers completed $247 million in transactions. In 2014 that number had risen to $461 million.

Pelisson added that the local market was slow in 2010 and 2011 because “bottom feeder buyers” were coming into the market looking for a deal, but local owners had less of a need to sell than those in other markets.

“Since all those foreclosures have gone away, there are people coming in with more realistic expectations, looking for the Telluride lifestyle rather than a good deal,” Pelisson said. “We’ve seen the number of transactions and prices coming up.”

Prior to reaching single digits in 2015, the county treasurer’s office opened 27 foreclosures in 2014.

WEALTH-X: ADVICE FOR PROPERTY INVESTORS IN 2016

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Development is one way to secure investment grade stock in highly competitive cities.

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SOTHEBY’S INTERNATIONAL REALTY BRAND EXPANDS PRESENCE IN AUSTRALIA WITH QUEENSLAND SOTHEBY’S INTERNATIONAL REALTY

Queensland

$7,500,000 AUD | Queensland, Australia | Queensland Sotheby’s International Realty

Sotheby’s International Realty Affiliates LLC today announced the brand’s existing affiliate brokerage Gold Coast Sotheby’s International Realty in Queensland, Australia will now do business as Queensland Sotheby’s International Realty under the current owner and managing director, Paul Arthur, and will expand to provide luxury residential real estate services throughout the state of Queensland.

Queensland Sotheby’s International Realty is expected to open its newest office in the capital city of Brisbane in March 2016, with further plans for expansion in the markets of Noosa, Cairns and the Whitsundays & Islands in the later part of 2016.

“Queensland is known for its unique beauty and global appeal and has long been a leading tourist destination – the area is seeing increasing interest from buyers of international real estate,” said Philip White, president and chief executive officer of Sotheby’s International Realty Affiliates LLC.  “Sotheby’s International Realty is dedicated to providing our network’s exclusive real estate services in luxury property destinations around the world and we are proud that our brand presence in Queensland in expanding.”

Queensland is the second-largest and third-most-populous state in Australia. Located in northeast Australia, its coast, stretching nearly 7,000 kilometers, is also known for the Great Barrier Reef, the world’s largest coral reef system.

“The timing to expand operations in the Gold Coast area and throughout Queensland has never been better,” said Arthur. “We have extreme confidence in the region, acknowledging the inherent domestic and international appeal of this market. The area is renowned for tourism and a wonderful lifestyle with its many homes and apartments along the waterways and oceanfront. Our goal is to deliver exceptional customer service through our best-in-class associates, whom reflect our prestigious brand position.”

The Sotheby’s International Realty network currently has more than 18,000 sales associates located in approximately 825 offices in 61 countries and territories worldwide.  Queensland Sotheby’s International Realty listings will be marketed on the sothebysrealty.com global website.  In addition to the referral opportunities and widened exposure generated from this source, the firm’s brokers and clients will benefit from an association with the Sotheby’s auction house and worldwide Sotheby’s International Realty marketing programs.  Each office is independently owned and operated.

To visit Telluride Luxury Properties click here

CNN: Cowboy Dreams – A Peek Inside Some Of America’s Most Expensive Ranches

cowboy dreamsClick on image to start slideshow

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SOTHEBY’S INTERNATIONAL REALTY® BRAND TO EXPAND LUXURY BRAND PRESENCE ACROSS ITALY

Italy

€35.000.000 EUR | Salerno, Italy | Italy Sotheby’s International Realty

Sotheby’s International Realty Affiliates LLC today announced the brand’s existing affiliate brokerages Milan, Lake Como, Rome and Tuscany Sotheby’s International Realty will now do business as Italy Sotheby’s International Realty under the current managing partners, Lodovico and Clemente Pignatti Morano. With this agreement, Italy Sotheby’s International Realty plans to provide residential real estate services throughout the country, focusing on Italy’s major cities and key markets such as: Argentario, Amalfi Coast, Forte dei Marmi, Lake Garda, Sardinia, and Portofino/Santa Margherita. The Sotheby’s International Realty® brand is also represented in Venice by Venice Sotheby’s International Realty, which is owned and managed by Ann-Marie Doyle. The two brokerage companies plan to work cooperatively together to service customers’ needs throughout the country.

“Increasing the Sotheby’s International Realty brand presence in Italy is yet another example of our commitment to providing our network’s exclusive real estate services in luxury property destinations around the world,” said Philip White, president and chief executive officer of Sotheby’s International Realty Affiliates LLC.  “Italy has an important position in the luxury market in Europe and this coordinated initiative provides a stronger and wider footprint in one of the most beautiful and historic countries in the world.”

“The Italian luxury real estate market provides strong opportunities in major cities and second-home destinations throughout the country in terms of both sales and rentals. We are thrilled to represent the Sotheby’s International Realty brand under the name Italy Sotheby’s International Realty. It means being able to service and advise our global clients willing to own their personal Italian dream whilst, in the process, confirming our market leadership,” says Lodovico Pignatti Morano‎, managing partner for Italy Sotheby’s International Realty.

“Italy is now officially out of its longest recession in history, having passed a number of key economic reforms and with more in the pipeline. Institutional reforms have paved the way for the long-awaited political stability, and World Expo 2015, held in Milan, perfectly symbolizes this new beginning for Italy,” said Clemente Pignatti Morano, managing partner for Italy Sotheby’s International Realty.

The Sotheby’s International Realty network currently has approximately 17,000 sales associates located in approximately 800 offices in 61 countries and territories worldwide.  Italy Sotheby’s International Realty listings are marketed on the sothebysrealty.com global website.  In addition to the referral opportunities and widened exposure generated from this source, the firm’s brokers and their clients will benefit from an association with the Sotheby’s auction house and worldwide Sotheby’s International Realty marketing programs.  Each office is independently owned and operated.

To visit Telluride Luxury Properties click here

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