A report from the Associated Press. “In the days after Helene razed much of western North Carolina, some store owners in downtown Boone have a lot of cleanup to do and don’t know if they’ll see much business at all for the foreseeable future — a critical problem for a town of about 19,000 people that relies on tourism, especially in the fall. Kurt Kaunath said there’s been ‘cancellation after cancellation’ for an Airbnb he owns in the area. It was almost fully booked for October before the storm hit, he said. ‘That’s when all these businesses make their money, and that’s when all the people are here supporting the hotels and all the infrastructure that’s here,’ he said. ‘And that’s not going to happen.’”
From Channel 9. “Condo owners in Central Florida are urging state officials to reform a 2022 law that dictates how condos must be maintained. In May, Channel 9 shared how one Orange County Condo board planned to pass a more than $22,000 special assessment. Bryan Pricher helped lead the effort to oust the board and now serves as the new Regency Gardens condo board president. But Pricher said several homeowners decided to sell their units before the new board had the chance to adjust the budget. ‘Like 40% of the association sold to investment companies that were offering pennies on the dollar. Essentially, you know, $180,000 units were going for $130,000,’ said Pricher. Pricher is now one of many condo owners calling for reform. ‘It’s not sustainable. They’re not going to be able to fund reserves by the end of next year, as this current legislation says,’ said Pricher.”
The Miami Herald in Florida. “The long-time president of a ritzy Aventura condominium was arrested Monday and charged with stealing $1.5 million in association fees, laundering some of it through his dead mother and using the money to buy art and chicken wings. Gregori Arzumanov, 62, was taken into custody at his apartment Tuesday morning and charged with a bevy of felony counts. Miami-Dade State Attorney Katherine Fernandez Rundle read off a list of alleged wrongdoings in Arzumanov’s 32-page arrest warrant and explained how he intimidated unit owners who questioned his tactics through excessive fines and lawsuits. The state attorney said he was able to do that because at the time of his arrest Arzumanov was not only president of the Turnberry on the Green Condo Association, but the building’s chief engineer and property manager. ‘It turns out there was trouble in paradise,’ Fernandez Rundle said.”
5280 in Colorado. “The problems started four days before we moved in, when one of the window washers we’d hired to clean our new Sloan’s Lake duplex walked upstairs from the basement and said, ‘Ma’am, you’ve got a leak.’ The two-year-old, never-been-lived-in duplex was on the market for around $100 per square foot less than others we’d toured, largely because the original builder had been foreclosed on. We thought we were getting a great deal. So did our real estate agent. Hot—literally and figuratively—I started to wonder who was at fault for all these mistakes. It turns out that we aren’t alone in our tribulations. The Mile High City is experiencing an unfortunate convergence of factors that’s leading to some people—like us—unknowingly moving into shoddily constructed homes and then experiencing The Money Pit in real life.”
“‘A housing shortage means builders can get away with cutting corners,’ says David Pardo, technical lead at Nookhaus, a Colorado firm that builds accessory dwelling units in Denver, and a property manager for condos and townhomes. The reality, he says, is that because of the shortage of homes, ‘builders know that every home they build will sell’—even if it’s a house of cards.”
“In a Hail Mary to solve our ongoing lack of air conditioning, we had our ducts cleaned in the hope that it would improve airflow, if not fully cool the moving air. After pulling out two beer cans, a wad of tape, and seemingly all of the drywall debris from the home’s construction, which the builders had swept into the ducts instead of a dumpster, one of the technicians looked befuddled. ‘I was just at a house where the people have lived for 40 years and never had their ducts cleaned,’ he said. ‘Yours were dirtier.’”
Bisnow on California. “When Los Angeles Mayor Karen Bass received the Olympic flag at the closing ceremonies of the 2024 Games in Paris, the countdown to the 2028 Olympics and Paralympics in Los Angeles began for real. But with all these new visitors slated to descend on the LA area in less than two years, the Los Angeles County hotel sector is facing major headwinds, Atlas Hospitality Group President Alan Reay said. LA County saw an 80% decline in sales volume in the first half of 2024 — the steepest decline in sales volume statewide, Reay told the audience. ‘That obviously says that buyers are not seeing what they think are opportunistic buys,’ Reay said.”
“Reay also said distress in the hotel market is common, estimating that of the state’s roughly 10,000 hotels, a fifth are in default of some kind, whether on the basis of debt service coverage ratio or a technical default. Lenders aren’t being pushed to enforce notices of default, Reay said, so they aren’t. ‘We’re not really ready for company,’ The Hollywood Partnership President and CEO Kathleen Rawson said, speaking generally about the city’s infrastructure and streetscape. Rawson said the city is ‘a case study in deferred maintenance,’ referring to the kind of maintenance that affects how people experience the city, such as street cleaning, sidewalk maintenance and new lighting.”
Silicon Valley in California. “San Jose city leaders have signed off on a plan to attract new businesses downtown — including a two-year business tax exemption — hoping that the short-term benefits offered will lead to long-term growth and vibrancy. According to data from real estate firm CoStar, vacancies in downtown San Jose exceeded 31% through the second quarter of this year, up from 12% in 2019. ‘For a lot of businesses, it doesn’t pencil financially, so they’re not renewing their leases,’ San Jose Downtown Association CEO Alex Stettinski said in an interview with The Mercury News. ‘We have a vacancy rate that is substantial, so we have to creatively find ways to push businesses over the edge with financial incentives.’”
KCRA in California. “One of downtown Sacramento’s tallest buildings has been sold for significantly less than it was purchased for. Manulife US Real Estate Management (MUST) announced that it is divesting 400 Capitol Mall. The 29-story building is often referred to as the Wells Fargo Tower or Wells Fargo Building at the corner of 4th and Capitol. MUST plans to use proceeds from the sale to help pay off debt. The 501,308-square-foot building was sold to an all-cash buyer for $117 million. KCRA3 Money Expert Kelly Brothers said this represents a 41% drop in value from what it was most recently sold for. Brothers also stressed that this sale creates a ripple effect of less tax revenue in the future.”
The Washington Post. “The D.C. Council unanimously passed an emergency bill Tuesday to roll back pandemic-era eviction protections and rental-assistance policies that city leaders say have led to a crisis of unpaid rent, causing some affordable housing developments to be on the brink of foreclosure. While the council earlier in the pandemic sought to make it easier for people to access those funds and avoid eviction, Council Chairman Phil Mendelson (D) has acknowledged that those changes have had unintended consequences for affordable housing providers and require urgent correction. ‘The problem is this: It’s financial. What we are seeing is, on an aggregate basis, these affordable housing providers are carrying tens of millions of dollars in uncollected rent, and that is not sustainable,’ Mendelson said.”
Bisnow New York. “In March 2023, First Citizens BancShares, which has a history of acquiring failed banks, acquired most of Silicon Valley Bank’s assets, including approximately $2.6B in CRE loans. Two months later, it pulled back from the real estate market, announcing it would no longer draft general office loans. Similarly, New York Community Bancorp bought a chunk of Signature’s assets, including $13B in loans, last year. However, that acquisition caused NYCB to spiral, nearly collapsing itself before receiving a last-minute $1B cash infusion from a group of investment funds. Earlier this year, it was reported that even investment management behemoth Blackstone, which led a joint venture that purchased a stake in a $17B portfolio of Signature loans, was looking to offload more than 10% of that purchase a month later. Blackstone Managing Director Tony LaBarbera doubled down on the asset manager’s position at the Bisnow event. ‘You can have all of our Signature loans,’ LaBarbera joked onstage.”
“Panelists discussed eyeing everything from distressed trophy buildings to residential conversions to niche properties like data centers and cold storage — and avoiding the beleaguered office sector. ‘[Lenders] spend a lot more time negotiating much tougher loan documents. They push that risk onto not just the sponsors, in general, but the guarantors as well,’ PH Realty Capital founder Peter Hungerford said. ‘There is a rule that we live by, and that is, ‘He or she with the gold makes the rules.’”
The Financial Post. “In Vancouver, Canada’s most expensive housing market , home prices compared to income growth have not increased as much, while rents have risen sharply, says UBS. It is now considered at moderate risk of a real estate bubble. Globally, the cities at greatest risk of real estate bubbles in 2022 before interest rates began to climb saw the biggest corrections in prices, said the report. ‘Vancouver, Toronto and Amsterdam recorded significant prices declines of around 10 per cent in real terms,’ it said.”
The Telegraph. “There are few more inconvenient truths in modern Britain than the failure of mass migration. We wanted to believe the myth, that we could fling open our doors and into the UK would flow migrants from across the globe, transforming our nation into a prosperous melting pot. But wishing it so was not enough, and with each new dataset the economic miracle looks more and more like a mirage. The Office for Budget Responsibility (OBR) recently showed that a ‘low-wage migrant’ who comes to Britain aged 25 will cost the taxpayer £150,000 net by the time they reach 66, £438,000 by 80, and £1.2 million if they live to 100. That we’ve recently experienced the worst GDP per capita growth since the 1970s suggests immigration does not magically boost living standards.”
“And that’s before you get to what the OBR refers to as ‘dilution of capital stock’: how the rate of immigration far exceeds the ability of our state to adapt. So we have a decaying NHS, clogged up roads, crumbling infrastructure. And it’ll only get worse: in the 27 years since 1997, net migration added six million people to the country. In the next 13 years, we could easily add half that number again. The elites expect everyone to swallow the idea that everything is fine. That mass migration is an unalloyed good, and unrelated to such issues as our chronic housing crisis. The trouble is, people no longer believe that everything is fine. They want our doors open to the best and brightest. What they don’t want is for Britain to open its welfare state to the world.”
Scoop New Zealand. “Our latest QV House Price Index shows values decreased nationally by an average of 2% throughout the three months to the end of August – a fraction of a percentage point more than in the July quarter. The average home is now worth $905,357, which is almost exactly the same as at the start of the 2024 calendar year. ‘Home values have continued to slowly ebb and flow throughout the first eight months of 2024, but they are now effectively flat overall for the calendar year,’ said QV operations manager James Wilson. ‘Now that interest rates are finally coming down, we are seeing renewed interest in housing generally across the country. However, this won’t necessarily translate into home value growth while there’s such an excess of stock available for sale. Values will tighten again when prospective buyers aren’t as spoilt for choice as they are currently, which could take a while. An abundance of real estate listings – especially in and around our largest cities – is expected to keep a firm lid on home value growth.’”
“‘Of course, we also expect to see even more real estate listings in the months ahead, as spring is traditionally when the real estate selling season starts ramping up again,’ he said. ‘More investors will look to sell properties following the changes to the bright line test back in July, and sellers who pulled their listings after trying and failing to sell earlier in the year may even look to try again now that there’s an uptick in activity and a general sense that confidence amongst buyers is increasing.’”
From ABC News. “A Perth builder which is fighting to retain its building registration after failing to complete hundreds of homes has now rebranded as a property sales company. Western Australia’s Building Services Board deregistered Nicheliving in July, saying it was not confident the company could pay its debts when they fell due. But a stay order issued by the State Administrative Tribunal (SAT) allowed Nicheliving to continue operating until a full review takes place in November. The Niche group has now moved much of its building and property work under an entity called Australian Property Alliance.”
“The initial decision to deregister Nicheliving was a huge relief to customers with unfinished homes, as it would have allowed them to claim up to $200,000 in indemnity insurance to complete the work. The stay order has since left unhappy customers in limbo, with the SAT hearing about 200 customers, some of whom signed contracts as far back as 2019, were still waiting for their homes to be completed. Some have told the ABC they were facing homelessness and were close to bankruptcy, as their properties remained unfinished years past the completion dates specified in their contracts.”
“Janine Carter, 58, who’s been waiting for her Nicheliving home in Tapping in Perth’s north to be built for almost four years, was shocked to learn of the company’s rebrand. ‘I’m worried that they’re going to be moving assets into a different company or just running under a different company name to suck more people in because the name Nicheliving has been tarnished so much,’ she said. The single mother signed on for a Nicheliving home in December 2020, which was supposed to be finished by July 2022. She said an extension was successfully sought by Nicheliving until April 2023, but the build is still largely unfinished. ‘You can’t plan ahead because you just don’t know when you’re ever going to be in, and at this stage, I don’t think I ever will be,’ she said. ‘We thought we had a light at the end of the tunnel and then it got taken away from us and I can just see that this is going to keep dragging on and on.’”
“Nicheliving director Ronnie Michel-Elhaj has also come under fire over an altercation with channel seven reporter Geof Parry on September 29. Mr Parry approached Mr Michel-Elhaj outside a house Nicheliving is currently building for Mr Michel-Elhaj’s wife. Mr Parry asked him why he was working on the house rather than prioritising his customer’s homes. Mr Michel-Elhaj attempted to grab Mr Parry’s microphone, lunged at the camera and physically grabbed Mr Parry, at one point tackling him to the ground. Mr Michel-Elhaj then followed the news crew across the street, stating repeatedly that he did not wish to be filmed. WA Premier Roger Cook condemned the behaviour in a media conference on Monday. ‘Violence is never OK,’ Mr Cook said. ‘My message to Nicheliving is: ‘Ronnie, read the room’. ‘It’s not OK that you look after yourself and your home when you have literally hundreds of clients that are still not being able to get into their own homes that you are under contract to build.’”