A report from Zillow. “Metro-level discrepancies exist as well, especially in San Francisco and New York, showing that not all urban cores are keeping pace with hot suburban markets. In Manhattan, home values have dropped 4.2% since last year and homes are staying on the market two months longer than a year ago, according to StreetEasy. In San Francisco, list prices have fallen 4.9% year over year and inventory has risen 96% with a flood of new listings.”
From Live Trading News on Florida. “Real Estate genius and the mind behind some of Palm Beach’s best real estate Robert V Matthews shares some of his inspiration. ‘it is a buyers market now, if you ever wanted to acquire something special real estate wise the timing has never been better’ says Matthews.”
Two reports from the Los Angles Times in California. “Actor Eddie Kaye Thomas has sold his canal-view home in Venice for a little over $2.55 million. He bought the place in 2016 for about $2.59 million, The Times previously reported.”
“Prince Harry and Meghan Markle have purchased a home in the heart of Montecito, according to people familiar with the matter who weren’t authorized to speak publicly. Area real estate agents point to a $14.65-million estate, which closed in an off-market sale in June. Tax records for the 7-acre property, which was previously listed for as much as $34 million.”
From Vice Magazine on California. “Among the many unsolvable mysteries on Netflix’s Selling Sunset—What the hell is going on with 1021 North Beverly Drive, and why is it listed for $75 million? Here’s a brief primer: Davina Potratz, an agent at the Oppenheim Group with a disfigured chunk of coal for a heart, is trying to sell a giant-ass house in the heart of Beverly Hills. The property’s owner, Adnan Sen, insists on pricing it at $75 million, and Davina caves to this demand.”
“She devotes a preposterous amount of time to trying to sell it, but (spoiler alert!) she never succeeds. It’s been on the market since 2019, and—while it has sparked rumors online about potentially being part of a money-laundering scheme—it still hasn’t sold. I called up four luxury realtors in Beverly Hills who specialize in properties with multi-million dollar price tags. The reason it’s still on the market is simple, they said: It costs way, way, way too much for what it is.”
“‘It’s an outrageous asking price,’ said Marc Noah, a realtor for Los Angeles luxury brokerage Hilton & Hyland. ‘They’re asking $4,200 a square foot. That’s on par—or even more expensive—than oceanfront, prime Malibu. Where? How? Why? As far as a justification goes, I can’t give you one.’”
“Despite the list price, you’d expect at least a few offers to roll in, even if they’re for less than $75 million. But over the course of Selling Sunset season three, that never happens. Steve Frankel, a luxury realtor for Coldwell Banker in Beverly Hills, told VICE that won’t change until the Oppenheim Group slashes the price.”
“‘There is an unforgivingness to being overpriced,’ Frankel said. ‘Buyers are very leery about making lowball offers because they feel that the seller is not realistic. So that’s a huge hindrance. They’ve got to get a price reduction to start getting some activity on the property.’”
“For Noah and Frankel, $50 million still feels high. Frankel said he’d slash the asking price in half, dropping the property down to about $37.5 million. Noah said he’d go as low as $30 million. ‘There’s definitely a chance that it never sells,’ Noah said.”
The San Francisco Chronicle in California. “A new report confirms what many have been talking about for weeks: There is an exodus out of San Francisco, and the numbers are staggering. Zillow’s ‘2020 Urban-Suburban Market Report’ reveals that inventory has risen a whopping 96% year-on-year, as empty homes in the city flood the market like nowhere else in America.”
“The astronomical cost of owning a home in the San Francisco city limits — which has been sky high for over a decade now, since the second tech boom — had to break at some point, and the coronavirus seems to be the straw that broke the camel’s back.”
The Orange County Register in California. “Lending Tree Chief Economist Tendayi Kapfidze expects disinflation to occur over the next few years. About one out of every three U.S. workers, or 56 million, filed unemployment claims since the beginning of the pandemic. ‘There will be significant, permanent changes to the economy, 6-7% unemployment compared to 3.5% pre-crisis,’ said Kapfidze. The current inflation of assets and housing side assets are not sustainable, he said. ‘There is a downside risk of home prices dropping 5% across the U.S. next year,’ he added.”
“How long will the government continue to provide helicopter money, virtually dropping money from the sky to keep the economy afloat? ‘We are in a period of stagflation right now — that is, slow growth with rising prices,’ said Michael Pento, president and of Pento Portfolio Strategie. Pento pointed out the U.S. has $74 trillion of total debt. The national debt is 130% of GDP. The Fed’s balance sheet was $800 million in 2008 and $7 trillion today.”
“In addition, the Treasury Department expects to borrow $4.5 trillion by the end of the fiscal year on Sept. 30, 3 ½ times last year’s total of $1.28 trillion. At what point does printing U.S. currency become worthless? ‘When the market for U.S. dollars loses faith in its purchasing power,’ said Pinto.”
“Pento foresees the 10-year Treasury rate at sub-zero and 30-year mortgage rates dropping below 2%. ‘Massive defaults are coming with corporate debt at the nucleus,’ he said. Another example Pento offers is today’s stock prices. Today, the market cap of equities is 177% of GDP. At the height of the Nasdaq bubble, it was 140%, said Pento. ‘It’s a ping pong of recession, depression and stagflation.’”
“While nobody expects a depression, whoever is president will need to continue to spend money, said Anil Puri, director of Cal-State Fullerton’s Wood Center for Economic Analysis and Forecasting. ‘To alleviate short-term pain, money needs to be spent now,’ he said. Modeling of past statistics is not a good guide for this event. This is a black swan event.”