It’s Friday desk clearing time for this blogger. “October brought a degree of reprieve from seemingly relentless price increases for Seattle-area home shoppers, as median prices in King County dipped slightly from September. The Seattle condo market, meanwhile, is ‘presenting a ‘buyer’s market’ opportunity … like we haven’t witnessed since the Great Recession,’ said Realogics Sotheby’s International Realty owner Dean Jones in an email. As condo dwellers upsize into homes, a flood of inventory is lingering for months on the market.”
“BELLTOWN, DOWNTOWN SEATTLE: October, 2020, Median price: $622,450, Change over the year: -14.7%. QUEEN ANNE, MAGNOLIA, October, 2020, Median price: $1,038,900, Change over the year: -12.3%.”
“This spring, Kevin Brunnock considered himself one of the city’s lucky brokers. He was working with a client who wanted to keep searching for a home despite the pandemic. If the right property came along, the client was ready to commit sight unseen. In June, they found such a place: a two-bedroom condo on the Upper West Side. Brunnock’s client made an offer within two days and went into contract on June 25 with a mortgage contingency. But that’s where the deal’s momentum died.”
“The sale didn’t close until Sept. 30 to allow for the mortgage lender to verify the buyer’s employment and pore over income and assets, double and triple checking statements, Brunnock explained. The financing took double the time the broker had expected. ‘We saw for the first time how much the banks were scrutinizing everything,’ said Brunnock, who works at R New York. ‘Covid has turned mortgage lending into a daunting process.’”
“Nationally, available housing credit has fallen nearly every month this year, indicating that homebuyers with lower credit are increasingly unable to secure home financing, according to the Mortgage Bankers Association. Joseph Palermo, a mortgage loan officer at TD Bank, said he’s now reviewing bank statements and calling businesses to verify a borrower’s income and employment, something he never did or cared too much about before. ‘We’re not just taking the two-sentence letter from the accountant like we used to,’ he said.”
“Comparative sales for deals closed during the pandemic are beginning to roll in and, so far, they indicate property values have fallen since March, Palermo said. This means the leverage for loans issued based on pre-pandemic appraisals are now looking ‘a little squirrely,’ he said. ‘Banks are a little afraid that if the values keep coming down, then the leverage grows,’ he said.”
“That’s translating into banks wanting to get bad loans off their books, according to Mark Anderson, a partner at Anderson, Bowman & Zalewski who focuses on foreclosure defense. Starting in July, he began to see getting calls from bank attorneys offering to settle the long-running cases — some that dated as far back as the Great Recession. He would not elaborate on specific offers due to confidentiality agreements but said the number of offers is more than normal and the values on the table much lower than was originally discussed pre-Covid.’ ‘A bank’s offer is dependent on their valuation of a property,’ he explained in an email. ‘So it seems, despite what public figures may indicate, the banks are seeing darker times ahead.’”
“But as more and more borrowers are pushed to their limits, many have second thoughts. ‘Money is almost free but trying to get it is another thing,’ said Vickey Barron, a broker at Compass, who nearly gave up on refinancing her own property earlier this year. ‘You question, is it worth it?’”
“A short-term rental vacation host has filed a proposed class action lawsuit against Airbnb, alleging that the tech company violated its contract with hosts when the company offered full refunds to guests in the wake of the coronavirus pandemic in March. The lawsuit was filed by Anthony Farmer, an Airbnb host in Texas. Prior to the pandemic, Farmer relied on Airbnb as his primary source of income. Farmer used a strict cancellation policy that would have entitled him to at least a portion of a reservation booking if a guest needed to cancel. That was overridden by Airbnb’s extenuating cancelation policy.”
“Although $655 may not appear like a lot of money, he was counting on that money to pay his mortgage, utilities, homeowner association fee and other costs that come with running a short-term rental, Farmer said. ‘This is definitely impacting me during the pandemic,’ Farmer said. ‘I’m pissed about it. I’m angry, to be frank, and I’m sure that I’m not the only person impacted.’”
“Toronto’s real estate market fractured in October as buyers favoured suburban neighbourhoods and detached homes while sellers wanted out of downtown condos. The number of condos listed for sale this October was double the number of condos that hit the market in October 2019. ‘In past years — hot sellers’ markets — condos were selling in three to five days,’ said Freddy Mak, co-founder Ferrow Real Estate Inc. ‘You’re probably going to see listings in the 30- to 60- day sale cycles now, as opposed to three, five day cycles … I feel it’s almost a good problem to have as a buyer. It’s like having too many options.’”
“London landlords are feeling the full force of Covid-19 with many being forced to slash rents amid a glut of available properties. Rents in the capital fell for the seventh consecutive month in September, according to data from Hamptons International. Matt Hutchinson, communications director at SpareRoom, said it has seen staggering rental price falls in some areas of London. In Aldgate, landlords have cut their rental prices by 34 per cent whilst in Maida Vale and Paddington prices for spare rooms were reduced by 20 per cent on average, he explained.”
“The fall in London rental prices has been exacerbated by an over-supply of available rental properties, with 34 per cent more homes on the market than at the same time last year, according to Hamptons. Gary Hall, head of lettings at Knight Frank, said in some offices they now have up to 40 per cent more properties to try and let compared to any previous years. ‘Demand from tenants looking to rent properties hasn’t been the issue. ‘In terms of demand we’re actually back to the levels we were this time last year. It’s just been the oversupply.’”
“Rental housing platform Pararius said last month the rents being agreed between landlords and tenants for new contracts in the non rent-controlled sector have fallen for the first time in six years. The sharpest drop was in Eindhoven, where new rents are down just over 7%, taking the price of a 60 square metre flat to €824.40. In Amsterdam, new tenants are paying an average of €1,325.40 for the same size, a decline of almost 6% in the second quarter, Pararius said. The NVM put the difference in figures down to inclusion of more expensive furnished properties as landlords are forced out of the Airbnb by both new rules and the lack of tourists.”
“SA industry experts say the collapse of tourism due to the lockdown has led to thousands of empty Airbnb apartments being put back on the long-term rental market, which is placing huge pressure on rental growth and eroding buy-to-let returns. The biggest oversupply of rental properties is at the top end of the market: 14% of all properties for between R12,000 and R25,000 a month are standing empty. In the luxury rental market, for properties priced above R25,000 a month, vacancies are a whopping 23%.”
“Estate agents say this trend is especially evident in Say’s tourist epicentre of Cape Town, which is believed to have close to 20,000 Airbnb listings. Ross Levin, MD for Serf Atlantic Seaboard & City Bowl says the market has been ‘flooded’ with Airbnb apartments, which has placed pressure on rental rates all round. ‘Property owners will need to continue their compromise by offering lower rentals to fill units and mitigate losses,’ he says.”
“Although the overall property market is correcting itself, progress will be slow because of the huge overhang volume. Socio-Economic Research Centre executive director Lee Heng Guie says the overhang number continues to grow with every quarter. ‘The Covid-19 pandemic will add more pressure on the sector, further prolonging the slowdown, especially for the high-end units and those which are in excessive oversupply,’ said Lee.”
“SERC is the research arm of the Associated Chinese Chambers of Commerce and Industry of Malaysia. The overhang will take years to clear as it has been in existence for many years. So, it is crucial to plan current and future housing development properly and avoid adding to the already high unsold stock, he says.”
“Bargain hunters can expect bigger discounts on property in districts close to Hong Kong airport, as foreign pilots and flight attendants leave the city amid mass lay-offs at Cathay Pacific group. Anxious sellers have cut prices of flats in Tung Chung, the district closest to the airport. A foreign employee of Cathay Pacific, due to retire early next year, had to increase the discount on the flat to 8 per cent to clinch a sale, said Andy Chan, district sales manager at Centaline. The 518 sq ft flat at Le Bleu Deux in Tung Chung sold for HK$7.33 million, HK$650,000 lower than the asking price.”
“‘As the social sentiment is not very good, homeowners’ will not be too assertive and will be open to negotiations or even price cuts,’ said Simon Choi, district sales manager at Centaline Property Agency. In Tsing Yi Garden, prices of flats measuring 343 sq ft have dropped 18 per cent from HK$6 million at the peak of the market in the middle of last year to just HK$4.92 million this month, added Choi. ‘As family income reduces and [relative] mortgage burden increases, the entire Hong Kong will be affected, not just Tsing Yi,’ he said.”
“Rents in Tung Chung dropped 5 to 8 per cent last week amid the lay-offs, said Alfred Cheung, senior sales manager at Midland Realty. They are now about 25 per cent lower compared to the peak reached in the middle of last year, he added.”
“Property owners in a Pilbara town where mining boom-time real estate once rivalled Manhattan prices say they have been left out of pocket after being cornered into selling their homes through a government-sanctioned buyback scheme. Residents in Port Hedland’s West End claim they are being pushed out at bottom dollar to turn the historic heart of the town into a buffer zone for expanding mining export activity.”
“Many owners bought at the height of the mining boom, when a home in the dusty Pilbara town cost the same as a three-bedroom apartment overlooking Sydney Harbour. The economic bonanza of 2009-2012 was fuelled by the ‘Pilbara Cities’ campaign by the WA government to bring investment to the ‘Dubai of the Pilbara,’ which promised to boost the town’s population to 50,000 by 2035 through a raft of infrastructure projects.”
“But by 2019, the population of Port Hedland had stagnated at just 15,000 and most major infrastructure projects luring investors north had been swept under the rug. As workers left Port Hedland en masse, the median house price in town collapsed from $1.2 million in 2012 to $341,250 in 2019 – its lowest since 2004.”
“Port Hedland dentist Dr Roger Higgins funnelled millions of dollars into real estate under the premise the West End would become the next Darwin. Dr Higgins said he was never warned about dust, despite government reports from a year earlier flagging concerns. A decade later, he has lost millions in failed investments and now faces the prospect of having to sell the remainder of his assets for about half of what he paid for them.”