It’s Friday desk clearing time for this blogger. “San Diego County’s median home price was $575,000 in December, a slight decrease from the previous month but still near record highs. Rich Toscano, who predicted the housing crash in November 2005 on his housing blog Professor Piggington’s Econo-Almanac, said low interest rates have made home prices feasible when compared to wages and rent. That is unlike before the Great Recession, he said, when homes were overvalued when looking at rent and income. ‘With rates at this level, assuming they stay at this level, these (home) prices are reasonable,’ Toscano said, ‘because the monthly financing cost is reasonable compared to rent that people pay, and what they are earning. You really can’t make a case that it is a bubble.’”
“Here’s how the different home types fared in December: Resale single-family homes: Median of $627,500, down from a peak of $649,000 in June. Resale condos: Median of $432,500, down from a peak of $440,000 in August. Newly built: Median of $626,500, down from a peak of $812,500 in October 2018.”
“Embattled Chinese developer Oceanwide Holdings has sold its flagship San Francisco development for $1 billion, taking a substantial loss on what was slated to be the city’s second-tallest tower. Oceanwide is the same firm behind the Downtown Los Angeles megaproject Oceanwide Plaza, a $1 billion-plus condominium, hotel and retail project which has been stalled for about a year, as well as 80 South Street in Lower Manhattan, whose status is also uncertain.”
“The buyer for the San Francisco site was an entity associated with SPF Capital International Ltd., Oceanwide announced in a regulatory filing on the Shenzhen stock exchange. That entity is associated with Beijing-based asset manager SPF Group. Oceanwide said it expects to take a $276 million loss on the project, or a haircut of about 28 percent.Oceanwide was one of several firms from China that bet big on the U.S. development market from 2015 onwards, spending billions on large-scale projects in L.A., New York and beyond. However, after the Chinese government tightened capital controls beginning in late 2016, many of these efforts have fizzled out or been mired in uncertainty. Dalian Wanda Group, for example, sold a large Beverly Hills site to Beny Alagem, while Anbang Insurance Group is looking to sell an office condo on Manhattan’s Fifth Avenue for a substantial loss.”
“Changes in the annual median sales price were less dramatic last year, said Rick Laws of Compass real estate brokerage in Santa Rosa. With the exception of Oakmont, where the median dropped from $700,000 in 2018 to $613,750 in 2019, fluctuations in median price in other cities and towns in the county were under 10%. ‘For most of the year, it was hairy in Windsor,’ said real estate agent David Rendino. ‘We were having to make reductions on properties and they were sitting for a while.’”
“Lisa Sheppard, a real estate agent with Sotheby’s International Realty in Sonoma, said the local market for high-priced homes has softened. Sheppard who specializes in pricey estates and vineyard and winery sales, said the average price paid countywide in 2018 for homes priced above $1 million was $1.65 million. Last year, it was $1.58 million. In 2018, similar data showed there was a total of 770 such homes sold for $1.27 billion overall. Last year, there were 664 homes priced at $1 million or more sold for a total value of $1.05 billion. ‘What that tells me is, we’ve had a decline in the market,’ she said.”
“Over 25 percent of Manhattan’s newly built luxury condos remain unsold, and prices may have finally begun to adjust to that glut of units. According to a new StreetEasy report, luxury home prices, which constitute 20 percent of Manhattan real estate, dropped to their lowest levels since 2013 in the last quarter of 2019. But, even as prices dropped, adjusting to a widely known surplus, more units continue to be added to the market: StreetEasy’s report shows that luxury inventory increased 12.2 percent over the last year, that is more than 4,000 homes over the $3.816 million threshold.”
“‘With so much new construction saturating the Manhattan real estate market, we were bound to see prices start to sink at record paces,’ StreetEasy economist Nancy Wu said. ‘This is happening across all price points and boroughs, as prospective buyers wait out the market from the comfort of their rentals. Market dynamics in 2020 will continue to favor the buyer across all price tiers, and many sellers will have to face the fact that if they want to sell, it may very well be for less than their initial asking price.’”
“A deal has been struck to partially repay 654 investors in a mortgage registered to a failed downtown Toronto condominium. The larger group of non-registered investors, often smaller-dollar investors, will share $22,684,580, which adds up to 64.86 per cent of the amount of their principal investments, but virtually none of the interest accrued, which drops their total repayment down to 47 per cent of what they are owed.”
“Meanwhile, another group of investors in the other failed Neilas project appear to be in far worse straits. What was to be the OpArts condos in Oakville, Ont., has gone from being merely an open pit to a dangerous hazard. In November, 2019 the city ordered the excavated basement partially filled back in as the shoring work that was done has been judged to be on the brink of collapse. The land is up for sale for $1, compared to the millions investors claim Mr. Neilas promised it would be worth.”
“London-based Tristan Capital came up with its own index to try and counter what it said is backward-looking information provided by real estate brokers. ‘This index is designed to help us cut through the bias, noise, data deficiencies and headline-grabbing hype that surrounds real estate,’ Tristan Capital Head of Research Simon Martin said in a note emailed to clients. ‘Given it was designed to cut through the bias, we originally thought of it as a ‘Broker Bias Index’ but some of my more colourful colleagues have subsequently nicknamed it ‘Broker Bullshit Index’ (sorry to our friends in the broker community)!’”
“In 2015, financial services provider Stanlib Kenya launched its much-awaited Real Estate Investment Trust (Reit), a first for the Nairobi Securities Exchange. The Reit was targeted at individuals seeking to invest in the property sector, even with limited funds, and was introduced at the price of Sh20 per share. It came at the peak of the sector when developers were raking in billions of shillings from buying, developing and flipping residential and commercial property in Nairobi’s sprouting suburbs.”
“The Reit promised ordinary Kenyans that they would have a chance to own a piece of the real estate billions. This did not happen. Five years later the story has taken a gloomy turn. With Fahari iReit yesterday retailing at Sh9.60 per unit at the NSE, the sale means shareholders will be losing more than Sh1.6 billion on paper value of their original investment. The disappointing performance of Kenya’s first real estate investment trust highlights the distortions in Kenya’s real estate market that have left developers and investors with billions in losses.”
“Dubai and Abu Dhabi posted two of the highest property price declines in the world, according to Knight Frank’s latest Global Residential Cities Index. The index showed that average Abu Dhabi prices fell by 7.7 percent. Knight Frank ranked it 149th out of 150 cities, with Jerusalem the only worst performing market (-13.6 percent) compared to the year-earlier period. The report comes as Dubai property prices continue to fall by around 30 percent compared to their peak five years ago. A recent report from consultants Core said that 2019 was the fourth consecutive year of price softening across all asset classes.”
“Nang, a real estate broker in Ho Chi Minh City, said salaries and bonuses at his company were the lowest point in the past half-a-decade since he entered the industry, so he and his family are embracing austerity for this Lunar New Year. ‘I’m not sure whether I can survive in this sector next year with forecasting continued difficulties for the market in 2020,’ he added.”
“Competition is tough in the real estate market in the Kingdom and the market is limited, some developers allow potential buyers to make installment payments on properties, especially houses, directly with the developers without asking for a down payment. In some cases homes are repossessed and buyers lose a lot of money. ‘Because it is so easy to borrow, some customers can buy one or two houses. Therefore there could be a housing bubble,’ said investment specialist Ngeth Chou. ‘Some customers expect that when they buy a house they can sell it on at a profit or make money renting it out. But, if that expectation is not met, the customer may suffer a problem with financial flow. He or she may then put the property up for auction, which has an impact on the market as a whole.’”
“‘In Klang Valley, if there is no major correction of prices in serviced apartment /Soho/ Sovo, it would take over the next five years to be cleared (the overhang units),’ CBRE-WTW managing director Foo Gee Jen said. With this, he suggested for Malaysians to emulate the Europeans such as those living in London where they bargain property prices even in the primary market, reported Bernama. ‘You (Malaysians) should also earn your rights, it is your own money and you decide what you want to pay for and do not follow the herd mentality.’”
“Rahim & Co International Sdn Bhd said property developers should have been cautious and done more research before they embarked on new housing projects in the country. Executive chairman Tan Sri Abdul Rahim Abdul Rahman said there should have been more research on the demand, pricing and cost structure. Some developers launched landed and high-rise residential units at prices that most Malaysians couldn’t afford to buy. He said, property overhang in Malaysia has been on an upward trend but he expects the situation may improve as developers continue to give discounts and other incentives.”
“‘We should not be overly concerned to the extent of having to set up a special body just to acquire these units given that developers are now reducing their prices,’ he said.”
“An apartment at 42 Wyandra Street in Newstead, 3 kilometres north of Brisbane’s CBD, was sold for $115,000 below the purchase price, five years after the owner bought it as new. The two-bedroom, one-bath, one-car space apartment was purchased for $610,000 in March 2014 and was sold for $495,000 in July last year, inflicting an 18.85 per cent loss on the vendor.”
“Brisbane-based buyer’s agent Zoran Solano said Newstead has been struggling with the oversupply of new apartments, which contributed to the lower sale price of this unit. ‘This particular pocket of Newstead has had a significant amount of new units and apartments, which would have subdued the price point,’ he said. ‘If the owner purchased it brand new, there’s also a built-in premium and it wouldn’t be unrealistic to think that the owner overpaid for this apartment in the first place. Basically they’re taking a 20 per cent loss, which means they’ve lost all the deposit. That’s a lot of money.”
“Another Brisbane property that was sold below the purchase price was an older unit in Boundary Street, Spring Hill, located 2 kilometres north of the CBD. The two-bedroom, one-bathroom, one-car space unit was sold for $323,944 around July last year – $31,056 lower than the purchase price. The owner paid $355,000 in September 2009 and despite the long hold period, the property failed to grow in value.”
“‘Spring Hill has a lot of new apartments so an older unit like this will struggle to compete, especially if it’s not well-maintained,’ said Mr Solano. ‘Although the apartment market was very poor for the last 10 years because of the oversupply, investor-owned older units need to keep the maintenance and presentation up as high as they can, because they’re competing with brand new property.’”