A report from Realtor.com on New York. “Nobody wants to buy notorious sex offender Jeffrey Epstein’s real estate. The convicted criminal’s grand, 28,000-square-foot townhouse in Manhattan’s tony Upper East Side has undergone a $23 million price cut. ‘In New York, it’s not uncommon to see sellers ask for fantasy prices,’ says Olshan. ‘It’s obviously more appropriately priced now.’”
From Patch New York. “In November, the Upper East Side had the most home price drops of any New York City neighborhood — asking prices declined on 171 listings, according to RealtyHop. The home with the single biggest price drop in November was also on the Upper East Side. A 13th-floor apartment at 1040 5th Ave. had its listing price reduced by a whopping $7.4 million that month, the study found.”
From Boston 25 News in Massachusetts. “Broker Marie Prest, with offices in Stoneham and Newton, explained that there under two months worth of inventory in the suburbs around Boston. “That’s completely different than downtown Boston which has over seven months supply of inventory. The rental market has softened, according to Presti. ‘I’ve got some landlords who have had to take a drop in what the true market value of a rental is, to get someone in there.’”
From Seattle PI in Washington. “Rent prices in Seattle have gone down significantly. In December, the trend continued. Seattle rents declined 3.6% month over month in December, and were down 22% since the start of the pandemic in March, according to ApartmentList. In San Francisco, rent prices have dropped 26.7% since the start of the pandemic in March and 2.7% month-over-month. In Boston, rent prices have dropped 20.6% since the start of the pandemic in March and 3.1% month-over-month.”
From Bisnow on California. “According to Zumper’s data, the median price for a one-bedroom apartment in S.F. in January 2021 is $2,660, down from $3,500 just a year ago. That 24% drop also distinguishes the city as leading the nation in rental rate declines for one-bedroom apartments, tied with Santa Clara. In the Bay Area, Zumper’s report found nearly all cities in the nine-county metro area experienced rent declines. With major tech companies shifting to remote work, the cities of Menlo Park, Mountain View, Redwood City, Santa Clara and Oakland saw rate shortfalls of over 20%.”
From Socket Site in California. “Having ticked up to over 10 percent in November, the average vacancy rate for a sampling of ten large apartment buildings in San Francisco, representing a combined 3,000 units of housing located in Hayes Valley, Dogpatch, Mid-Market and Downtown, has ticked down to a little under 8 percent, driven by aggressive discounting and incentives to sign a new lease by the end of the year.”
“The vacancy rate for one of the larger buildings is still over 20 percent and another building, which was fully occupied prior to the pandemic, has had over 100 vacant units since the end of October, with three times as many apartments now listed for rent in San Francisco than there were at the same time last year.”
From The Real Deal on Florida. “Developer Ari Pearl and investor Jonathan Leifer paid $30 million for the Tryp Hotel in Bay Harbor Islands, with plans to convert it to a condo-hotel, The Real Deal has learned. Pearl’s PPG Development and Leifer, chairman and founder of L3C Capital Partners, acquired the waterfront property out of foreclosure. The seven-story Bay Harbor Islands hotel was completed in 2018.”
“Hospitality was among the hardest hit sectors last year, and few hotels traded. In September, the owners of the Variety Hotel in Miami listed the property for sale amid a foreclosure lawsuit.”
From Bisnow on Texas. “Millions of square feet of Dallas-Fort Worth office space hit the sublease block in the past 12 months, creating fear of a much larger office market disruption in 2021. ‘It is unprecedented,’ Younger Partners Corporate Services Director Bob Acuff told Bisnow in an interview. ‘It is probably double what we would typically see in the marketplace, and I don’t think any of us right now know how we are going to be affected next year, or even the year after, by all of that space because there is so much uncertainty.’”
“Younger Partners predicts another 300K to 600K SF will hit the DFW sublease market in the coming months as Pioneer Natural Resources lists additional space in its former DFW headquarters. The addition of this one listing will bring the sublease market to roughly 10M SF, according to Younger Partners. ‘Given past subleasing activity over the past two cycles, there is a four- to five-year supply of sublease space available,’ Acuff said. ‘I don’t think the demand is out there to eat up a four- or five-year supply of sublease space.’”
The Wall Street Journal. “Shares of real-estate investment trusts that are big owners of rental apartments in New York, San Francisco and other large urban areas got clobbered last year. The FTSE Nareit Equity Apartments Index, which tracks the apartment sector, fell 19% in 2020. The index is weighted heavily toward companies with large downtown holdings. Analysts say this trend is likely to continue in 2021 and, possibly, beyond.”
“Shares of Equity Residential and UDR Inc., which have large portfolios of luxury apartments in San Francisco and Manhattan, fell 27% and 17%, respectively, in 2020. The more urban-focused UDR reported that about 40% of its tenants who left Bay Area apartments during the pandemic decided to give up on the entire region. Before the pandemic 20% to 25% did so.”
“In New York and San Francisco, analysts and apartment owners are still waiting for a floor for falling rental prices. ‘Where does the new demand come from? Gen Z, the younger end of the millennials, and businesses continuing to hire in these cities, which right now is not happening,’ said John Kim, a real-estate securities analyst at BMO Capital Markets Corp.”
The Globe and Mail in Canada. “When the COVID-19 health crisis prompted the Ontario government to impose restrictions on travel and business in March, immigration halted, Airbnb rentals dried up, and young people fled the core to live with their parents in the suburbs. The combination created a perfect storm that hammered the market for downtown condo apartments, says John Andrew, a professor at Queen’s University in Kingston. ‘The smaller the condo unit, the worse it was going to perform.’”
“All of this will have long-term implications for the downtown condo market, in his opinion. Some of the short-term rental market may rebound because out-of-town employees may be willing to rent a unit for the one or two nights they are in the city, he says. But the cohort of people looking to live in condos long-term will probably be diminished for some time to come. ‘I think that demand is probably not going to recover.’”
“Prof. Andrew estimates condo prices have dipped about 10 per cent in downtown Toronto. While a certain number of people – especially investors – have been waiting on the sidelines for a correction, he does not expect they will provide enough demand to buoy the market. ‘I think we’re going to see a continued decline in condo prices.’”
“Prof. Andrew has long feared that a downturn in the condo market could lead to panic selling by some investors. In many cases, the rent they collect barely covers the mortgage payment. ‘If they’re not able to rent for a few months, they can quickly get into trouble,’ he says.”
From Mortgage Broker News in Canada. “Before 2020 ended, Toronto and Vancouver saw their mortgage delinquency rates reach their highest levels since 2016. ‘Compared to the same quarter last year, the rate is 23.1% higher,’ Better Dwelling said in an analysis. ‘The sharp annual increase puts delinquencies at a rate not seen since 2016.’”
“Better Dwelling added that the Toronto and Vancouver delinquency rates are especially strange considering their current market conditions. ‘Toronto and Vancouver are seeing price increases and record sales. It’s odd to see anyone fall delinquent in the current narrative,’ Better Dwelling said. ‘Further, the government rolled out a number of policy measures to prevent delinquencies … [which] should have made the rate lower than usual.’”