Real estate market needs restructuring: economic experts

The government has stepped up efforts to open the real estate market of late, by attracting investments in low-income housing for poorer residents; however there is still a lot to be done in this sector.

At a discussion on ‘Finance and Real Estate Market in 2012’ organised in Ho Chi Minh City recently, Dr. Vu Dinh Anh, market guru, shared his concerns on cost of housing in the city, which was still fairly high.

According to economic experts, for successful restructuring of the real estate market, the government should support a switch from luxury housing to low-income housing, as well as warn businesses against depending too much on capital from banks.

The development of the real estate market nationwide, particularly in HCMC, has revealed various weaknesses, said vice chairman of the HCMC People’s Committee Nguyen Huu Tin in a conference with related agencies on ‘Proper Solutions for the Housing Programme in HCMC.’

Tin commented on a surplus of housing projects, most of which were unsuitable for the present market demand. In fact, there is a serious lack of accommodation for both white-collar and blue-collar workers as well as low-income groups or for resettlement households.

To resolve the issue, the government decided to buy back commercial housing complexes and sell to people in the social welfare group, another factor that can also help the real estate businesses in freeing inventory.

Recently, the Ministry of Construction has proposed to local authorities in Hanoi to buy commercial housing for public offices and resettlement programmes.

Dang Hung Vo, former vice minister of natural resources and environment, agreed that it was a brilliant idea to resolve the dilemma. However, a strict price assessment is needed to ensure the success of this proposal.

“The act of buying back commercial housing to save the real estate market at the moment is quite proper. Support for major real estate businesses is essential, but means to do so need to be considered carefully as the government has to assist both sellers and buyers,” said Vo.

In response to recommendations of the Vietnam Real Estate Association, the Ministry of Construction has proposed setting up of a Bank for Construction in order to support national housing projects such as accommodation for poor people, students, low-income city dwellers.

It is hoped that this solution will become an effective channel to attract investments for the real estate market, better housing demand, and actively contribute to the development of the country.

However, many have raised their concern whether it is a sensible idea to create a new bank at a time when the country is restructuring the banking system.

According to a bank guru, Vietnam now has quite a few banks, some of which have very weak credit growth, making it very difficult in ensure their liquidity. In this time of economic depression, the government has to check the stability of the whole banking system, which is why it is not smart to found a new bank.

Moreover, there are many banks that are able to grant credit for construction purposes, hence the opening of another bank is quite unnecessary.

Agreeing with this idea, Dang Hung Vo said that it is better to set up a bank at a time of economic growth, when capital can be attracted from various sources. At the moment it is nearly impossible to draw funds from any source, to save the struggling real estate business, which is on the verge of bankruptcy.

Source:http://www.saigon-gpdaily.com.vn/Hochiminhcity/2012/3/100145/

Location still rules in real estate

By ROBERT DIGITALE / The Press Democrat

On a recent Friday night, the Century 21 Classic Properties office in Rohnert Park was bustling with agents working late to write offers and show clients properties.

A few years ago, business was “a lot slower,” said Pat Miller, a broker associate at the office. But times have changed, even in January, often the doldrums for home sales.

“We’re still screaming busy,” Miller said.

In 2011’s bumpy real estate market, Rohnert Park and neighboring Cotati saw their biggest home sale numbers in five years. Single-family sales rose 21 percent last year, while condominium sales jumped 26 percent, according to the Press Democrat’s monthly housing report compiled by Pacific Union International Vice President Rick Laws.

Other communities with their best sales years in a half-decade include Windsor, Healdsburg, Sonoma, west Petaluma and the Sonoma Coast.

Across Sonoma County, home sales rose 7 percent last year as buyers purchased 4,637 homes, the second-best year since 2005. The year’s median price fell 8 percent to $325,000, the lowest since 2000 when not adjusted for inflation.

Some communities turned in stronger performances, while others lagged behind.

In Santa Rosa — the county’s single biggest real estate market — sales rose 5 percent last year but the median price fell 9 percent to $295,000.

In Rohnert Park and Cotati, agents and brokers suggested the jump in sales last year came from both an uptick in buyer confidence and a continued drop in prices. The lower prices at times were exacerbated by an abundance of foreclosures and short sales, where the home is sold for less than the amount owed on the mortgage.

In 2011, the median price for a single-family home in the two cities fell 11 percent to $285,000. That amounted to half the median price in 2005 of $565,000.

The drop in home prices meant that once more “the average family can afford the average house. And the average house is in Rohnert Park/Cotati,” said Matthew Tarr, a broker associate with RE/MAX Pros in Rohnert Park. Most of the homes there were constructed in tract subdivisions rather than by custom builders.

The RE/MAX office sold more homes last year than in 2005, Tarr said.

Along the Sonoma Coast, which includes Bodega Bay, sales increased 18 percent from 2010, while the median price dropped 12 percent to $525,000.

The vast majority of coastal buyers are seeking second homes or vacation rentals. More seemed ready last year to make such discretionary purchase, probably due to low interest rates, lower prices and a belief that “the market’s not going to fall off the cliff,” said Steve Hecht, a broker associate with Artisan Sotheby’s International.

But if buyers are content to snap up deals, many owners trying to sell homes take a different view of the situation, Hecht said.

“The sellers are tired of getting beat up,” he said. “They’re saying, ‘We’ll just wait it out.’”

That view may help explain a near-universal lament by agents and brokers about a lack of available homes for sale. The county ended December with only 1,120 single-family homes on the market, down 32 percent from a year earlier.

In Healdsburg, agents often see a slowdown in business from Christmas until the Super Bowl, said Beth Robertson, a broker associate for Century 21 North Bay Alliance. But this year, perhaps encouraged by the warmer winter, more buyers wanted to go looking for properties.

“The sun’s out and they love it,” Robertson said.

Last year sales were up 5 percent in Healdsburg and 10 percent in Sonoma. For both towns, it was the biggest results since 2005.

The two towns attract a higher share of buyers looking for second homes than do many other communities in the county. Even so, the bulk of their sales today fall under $500,000.

In comparison, “five years ago we didn’t have a house under $500,000,” said Catherine Sevenau, broker/owner of Century 21 Wine Country in Sonoma.

The mid-range market of $500,000 to $900,000 remains sluggish in both towns. But in the last half of the year, Sonoma agents saw “an uptick in the higher end of the market,” those homes priced at $1 million or more, said Jill Silvas, branch executive in Sonoma for Pacific Union International.

For many communities, sales last year got a boost from buyers of rental properties.

“There’s a tremendous amount of investor-type folks with a good amount of cash that are still looking for good buys,” said Tom Lawrence, a broker associate who specializes in Windsor and Healdsburg properties for Wine Country Group.

The housing market now has gone through six years of near-steady declines in home prices. But the extent of that decline varies considerably among communities.

In southwest Santa Rosa, the median price has fallen 56 percent since 2005. Other communities with the largest drops include northwest Santa Rosa, which declined 51 percent; Rohnert Park/Cotati, 50 percent; Cloverdale, 49 percent, Russian River, 48 percent; and Windsor, 45 percent.

At the other end, the median price in Healdsburg is down just 32 percent in six years. The drop in Sebastopol was 34 percent; west Petaluma, 38 percent; and both Oakmont and Sonoma, 39 percent.

Most of the communities with the smallest drops are “eminently desirable places” with “the plaza ambience” of small towns, said Laws at Pacific Union. That desirability curbed the drop in prices.

At the other end of the spectrum, west Santa Rosa and Windsor were home to the bulk of the county’s new home construction in the last decade, said Mike Kelly, an agent with Keller Williams Realty in Santa Rosa.

Those new buyers not only went underwater fast when home values plummeted, but many of them also had interest-only and other “funny money” loans that imploded when the buyers had no chance of refinancing, Kelly said. Many of their homes ended up in foreclosure and values in those neighborhoods suffered even more.

“They just got nailed,” Kelly said.

Source: http://rohnertpark.towns.pressdemocrat.com/2012/02/news/location-still-rules-in-real-estate/