No one’s ready to say a real estate rebound is here to stay. But at least we now have a hint of positive uncertainty. Here are a few things we’ve learned about real estate, Vegas-style, as we lurch into 2013.
Legislators hate Realtors. Just when we thought passing laws to help people in a tough spot was a good thing, the real estate industry tells us no. AB 284, a.k.a. “the robo-signing law,” took effect in October 2011. Throughout 2012, it was blamed for declining inventory on the multiple listing service (MLS). For most of the year, fewer than 4,000 homes in any given month were available on the MLS, off from the 10,000 or so in 2010 and 2011. Other experts say the Justice Department’s $25 billion master settlement also affected the market because it helped underwater homeowners stay in their homes. Either way, agents still long for listings.
Homeowners have reason to be grateful. Thanks to the tight supply, those who decided to keep rowing in their underwater homes were rewarded with 15 percent appreciation. Homes are still selling for less than half of boom-year levels, but it’s better than a fork in the eye.
New homes cost more than they should. Home buyers tired of bidding wars on resales have a nice inventory of new homes to choose from. But they’ll pay for the privilege of pristine: Resale homes are selling at about 62 percent of new-home prices; in a normal market, they should sell for between 80 and 90 percent of new pricing, says Applied Analysis’ Brian Gordon. Nonetheless, new-home sales are up more than 50 percent from 2011 lows. Oh, and a few construction jobs have been saved.
Commercial real estate is still in a holding pattern. It’s more than 80 percent off its peak values, and there’s no shortage of investors kicking tires on land deals and empty buildings. But they still battle an office-vacancy rate of about 25 percent and retail vacancy in the double digits. Landlords will be giving away rent for a while, local experts say.
SLS is still an intriguing question mark. In May, we cheered Sam Nazarian of SBE for announcing $300 million in financing from JP Morgan for a $629 million overhaul of the Sahara, soon-to-be SLS. But Standard & Poor’s has highlighted some fine print in the deal. It’s contingent on another $115 million in junior financing, and escrow on the original $300 million has been extended because of a lack of takers on the smaller financing portion. SLS likely will still happen, but Wall Street will need to believe in it first.
Stalled projects are coming back with new names. On the condo front, Luxe Lofts is now The Modern. Panorama Towers’ third building is The Martin, and Vantage Lofts will be resuscitated and renamed in 2013. Alas, the Fontainebleau remains the Fontainebleau.