A report from the Wall Street Journal. “Chinese investors sold off billions more in U.S. commercial property last year than they bought, as other foreigners start to sour on the U.S. market as well. Foreign investors were net sellers of U.S. commercial real estate last year for the first time since 2012, posing a fresh setback for a market that is already showing signs of strain. Chinese were by far the biggest foreign sellers, unloading $20 billion more than they bought, according to Real Capital Analytics. But investors from Japan, Canada, the U.K. and elsewhere were also active sellers last year, exiting properties in New York, Los Angeles and cities in Texas and Illinois. Their exodus is putting new pressure on the market as property values have leveled off.”
“Some Chinese owners, strapped for cash, feel compelled to make full or partial sales of their projects. China’s Oceanwide Holdings last month said it has sold its San Francisco condo and office project for a loss of 1.9 billion Chinese yuan ($274 million). ‘The cost and difficulty of development and operations has risen sharply, putting a strain on the company’s overall operations,’ the Beijing-based company said in a filing.”
“‘Prices are high relative to where we are in the cycle,’ said Jim Costello, senior vice president at Real Capital Analytics. He added that there is increasing skepticism about being able to profit when properties are this highly valued: ‘It’s getting harder to make anything pencil out.’”
From Yahoo Finance. “Monthly payments are cheaper for renters in 84% of the counties analyzed. In these counties, home prices were 260% higher than the national median price, while rents were only 79% more. But the gap in renter-friendly counties is narrowing even faster than it is in the rest of the country. With rents in Brooklyn, New York City, and Santa Cruz, Calif. decreasing 24%, 20% and 18%, respectively — compared to the 2.8% decrease nationally.”
“‘In these areas, the markets are so large and well established that, for the most part, buying comes with a huge premium. These tend to be markets that attract not only homeowners and investors but international investors, too — like New York and California,’ said Danielle Hale, chief economist at Realtor.com, about these counties, including Santa Barbara, Calif., Monterey, Calif., San Mateo, Calif., and San Francisco, Calif.”
The Los Angeles Times in California. “Veteran baseball outfielder Matt Kemp has sold his custom estate in Poway’s Heritage community for $4.3 million, records show. The 15,844-square-foot mansion, which Kemp spent about $3 million to renovate, originally hit the market in late 2016 for $11.5 million and was more recently listed for $4.999 million, records show. The three-time all-star bought the property in 2013 using a corporate entity for $9.075 million, according to the San Diego County recorder.”
The Daily Progress in Virginia. “Prices in Albemarle actually dropped about 7%, from $395,000 in the last quarter of 2018 to $369,250 in fourth quarter 2019. ‘The median price dropped almost $30,000, and that could be a reflection of there being less demand for certain price points and types of housing hitting the market in the county,’ said Tom Woolfolk, CAAR president.”
From Curbed Austin in Texas. “People play pretty fast and loose with the term ‘modernism’—especially when it comes to residential architecture. Rest assured, then, that this sprawling home in leafy Highland Park West embodies some of the form’s most identifiable aspects—and does so in stunning fashion. When the home hit the market in September, it was priced at an ambitious $3.25 million. Now it’s back, this time asking $2,999,000—a drop of more than $250,000.”
From Bisnow on Texas. “When lender Beal Bank posted a foreclosure notice against the former JCPenney corporate campus revitalized by developer Sam Ware, the bank’s quick move took Ware by surprise. ‘[There is] a tremendous amount of activity going on, so I think everyone is very alarmed and shocked that the bank was so aggressive, but we can’t speak for the bank,’ Ware, CEO of Dreien Opportunity Partners and Silo Harvesting Partners said. ‘All we can do is protect our asset and continue to work with our tenants and our prospective tenants and land buyers.’”
“He blames the development’s Beal Bank troubles on unsustainable financing. The property’s existing 36-month loan with an original principal of $388M carries an interest rate of roughly 9% to 10% at a time when other commercial loans on similar properties are financing for half as much, he said. ‘My goal is to sit back and say there is nothing wrong with the asset, it’s the capital stack,’ Ware said. ‘It’s a spectacular asset. There’s nothing wrong with the asset.’”
From Forbes on New York. “A New York City mayoral commission released a report last week that recommends massive changes to the way residential properties are taxed across the five boroughs. Mark A. Hakim, a real estate attorney, says that while the property tax system in New York City, the proposal, like the Housing Stability and Tenant Protection Act of 2019 passed last year by the New York State legislature, doesn’t consider the ‘realities of the marketplace.’”
“‘Obviously something should be done,’ Hakim says. Under the current proposal, ‘tax bills for some will decrease but will, for others, increase drastically, making their homes and apartments unaffordable and possibly even unsaleable. The legislature needs to slow down and consider the actual effect on individuals who will benefit and those who will not. I truly understand the need for fairness, but a knee-jerk, feel-good legislation, without ample consideration of the real estate markets and economy in general, would be foolish and shortsighted. We already have many people investing and moving to droves more affordable states and there is no need to further push New York into a downward spiral.’”
From Patch New York. “What a difference a month made for swanky home prices in Crown Heights and Prospect Lefferts Gardens. Real estate prices plunged across Brooklyn in January, a new study home listing website RealtyHop found. A Crown Heights brownstone at 2 Virginia Place saw its listed price drop by $426,875, for instance. That’s nothing compared to a pair of Chelsea apartments that nabbed the distinction of the biggest drop by dollar amount — $4.78 million — but the now-$1.8 million Crown Heights home’s listing dip was a larger percentage drop.”
“Five Brooklyn neighborhoods, in fact, counted as the city’s top five for highest median percentage price drops, the study found. Those were: 1. Rugby-Remsen Village Brooklyn with a $243,500 typical decrease, or 12 percent. 2. Crown Heights South Brooklyn with a $185,000 typical decrease, or 10 percent. 3. Williamsburg Brooklyn with a $230,000 typical decrease, or 10 percent. 4. Cypress Hills-City Line Brooklyn a $55,000 typical decrease, or 10 percent. 5. Prospect Lefferts Gardens-Wingate Brooklyn with a $111,111 typical decrease, or 9 percent.”
“The Virginia Place home wasn’t the only high-dollar Crown Heights or Prospect Lefferts Garden listing to take a hit. A seven-bedroom home at 1247 Union St. fell $320,000 in January to $1.9 million, according to the report. Likewise, a three-bedroom at 1 Grand Army Plaza is now listed just shy of $3 million after a $290,000 plunge.”