A report from the Pioneer Press in Minnesota. “Taylor Swartwood bought a small apartment building off Rice Street a few years ago for $157,000. He’ll pay $4,500 in total property taxes (city, county, school district and special taxing districts) and special assessments in 2020, up from about $3,000 when he purchased the property in mid-2017. And next year could be worse. ‘It only breaks even right now, so I don’t even have a maintenance budget,’ said Swartwood, who owns eight properties throughout St. Paul. ‘I’m going to have to harm friends to feed the city come 2021.’”
“In late March, Gov. Tim Walz declared a temporary moratorium banning evictions for non-payment of rent during the pandemic. If that keeps up, Swartwood foresees landlords ultimately losing their properties. ‘If you have mortgage payments, and nobody’s paying you, it’s sort of like being told to turn lead into gold,’ Swartwood said. ‘They’re going to cause a lot of foreclosures.’”
The Associated Press. “Landlord advocacy groups filed a special action with the Arizona State Supreme Court on Aug. 12 seeking to invalidate as unconstitutional Gov. Doug Ducey’s moratorium on evictions of people who have missed rent payments. Five months after the moratorium was first imposed ‘we are at a breaking point,’ Arizona Multihousing Association’s CEO Courtney Gilstrap LeVinus said, noting that property owners also have mortgages, taxes and other bills to pay.”
From USA Today. “Hailey Bermel, 23, and her two roommates weren’t ready to give up their four-bedroom apartment outside Boston when the lease was up in June. They saw prices drop on comparable units in the area, took a list of discounted places to their landlord who agreed to knock $800 per month off their rent for the year ahead. ‘It felt amazing when she said ‘yes.’ I took a victory walk around our street,’ Bermel says.”
From Bisnow. “New York apartments cost far less to rent than they did this time last year. Manhattan’s median net effective rent, which takes into account incentives and concessions, hit $3,167 in July, according to Douglas Elliman and Miller Samuel Real Estate’s monthly report. That figure represents a more than 10% drop from July 2019. Face rents, which is what the apartment is advertised for and doesn’t include landlord-provided freebies, dropped too: The median price went down by 6% from July last year to hit $3,320.”
“Nearly 47% of new leases signed in Manhattan included some form of concession in July, per the report, which is the highest percentage in more than two years. The number of new leases fell 23% from the year before. Meanwhile, listing inventory soared by 121%. The vacancy rate crept up from last month to reach over 4%, the highest level recorded in Miller Samuel’s 14 years of compiling rental reports.”
The New York Daily News. “Peter Ward, one of New York City’s most powerful union leaders, is stepping down as president of the Hotel Trades Council. Over-development of hotels during the past decade has left the industry in an even more weakened position to weather the COVID-induced financial crisis, which Ward believes will lead to bankruptcies, foreclosures and court battles. ‘The industry has so badly overbuilt itself that they’ve destroyed the goose that laid the golden egg,’ he said. ‘They’ve created a situation now where many of them will not survive this crisis because they are just simply overbuilt.’”
The Wall Street Journal. “Commercial real estate has understandably not been policy makers’ main priority since the pandemic began to tear into economies. But it requires attention now. Commercial real-estate loans make up around 22% of U.S. banks’ total loans. Letting large landlords shoulder the burden alone cannot be the answer, however tempting the prospect might seem to some. Financial stability is at risk if lenders are simply left holding the bag when developers and owners default.”
From Senior Housing News. “Colony Capital has transferred ownership of 36 senior housing properties to a lender, as a step toward resolving a default. Los Angeles-based Colony is a global digital infrastructure, real estate and investment management firm with $46 billion in assets under management. Of Colony’s total health care-related debt as of June 30, $203 million was in default. The majority of Colony’s defaulted health care debt was already in default prior to Covid-19.”
The Real Deal on Florida. “Three Hundred Collins in Miami Beach’s South-of-Fifth neighborhood is besieged with poor quality interiors, debts to contractors and an unresponsive developer, among other problems, according to a recently filed lawsuit. The 300 Collins Condominium Association is suing JHPSB Collins Development, marking the latest salvo from buyers who allege they were duped into purchasing units in a condominium that is not as luxurious as advertised in marketing materials. The building at 300 Collins Avenue has 19 units that ranged in price from $1.7 million to $9 million.”
The complaint was filed in Miami-Dade Circuit Court, three days after Miami-Dade Judge William Thomas granted summary judgment in favor of JHPSB in a separate lawsuit that made similar allegations, filed by individual unit owners as the plaintiffs. Unit owners found that many of the most basic elements — such as electric garage doors, the pool deck and an ornamental fountain — ‘were installed cheaply or improperly, have been prone to malfunction or were never completed at all,’ the condo association claims.”
From Pacific San Diego in California. “Rent in San Diego County is down for the first time since the Great Recession. It is notable because rent hasn’t dropped in the county since the third quarter of 2010 and any talk of a reduction at the start of the year was unthinkable. Experts say the once-unstoppable rise in rents in San Diego County has been halted by large job losses, or income reductions, related to COVID-19 and a lack of people signing new leases in the region’s most-recently opened luxury buildings.”
“Alan Nevin, real estate analyst at Xpera Group, said the actual rent price with special offers — sometimes called the ‘effective rent’ — is probably a better way to look at what is happening. He said many of the luxury buildings are offering one to two months of free rent. That way they don’t have to lower rents and then be prevented from raising them substantially later under statewide rent control passed in 2019. CoStar said the effective rent was closer to $1,830 a month in the second quarter.”
“‘What they would rather do is have it free upfront so they can maintain their pro forma rents until things get better,’ Nevin said.”
“Joshua Ohl, CoStar managing analyst, said some of the newest apartments are marketed with high rents because of gyms, pools and other features that had to be closed to prevent spreading the virus. ‘If all those things are closed, what are you paying for?’ Ohl said.”
The SFist in California. “Nowadays, it’s somewhat common to spot sub-$1K Craigslist ads for single-room rentals in areas like the Lower Haight, Inner Sunset, and The Castro — all neighborhoods where you would be hard-pressed to find anything remotely close to that price before, pre-pandemic. For the first time in over a decade: San Francisco’s now home to both a renter’s and buyer’s market, with home prices steadily on the decline as the Bay Area’s real estate market continues reeling from lackluster business.”
“The recent (and widely publicized) exodus event in San Francisco was highlighted by Zillow, showing that their real estate inventory for the city had a 96 percent year-over-year spike as unoccupied SF homes went on to the market in huge numbers, unlike any other metropolitan area mentioned in the study.”
The Daily Mail on California. “Today, Los Angeles is a city on the brink. ‘For Sale’ signs are seemingly dotted on every suburban street as the middle classes, particularly those with families, flee for the safer suburbs, with many choosing to leave LA altogether. Danny O’Brien runs Watford Moving & Storage. ‘There is a mass exodus from Hollywood,’ he says. ‘And a lot of it is to do with politics.’ His business is booming. ‘August has already set records and we are only halfway through the month,’ he tells me. ‘People are getting out in droves.’”
“Veteran publicist Ed Lozzi says: ‘People are taking losses on the sales of their homes to get out.’”