A report from KCCI on Iowa. “Ted Weaver, the president of the Des Moines Area Association of Realtors, tells KCCI the housing market is starting to stabilize. Weaver said if someone is selling right now, the price has to be realistic. Fewer homes are selling above list price. ‘The reason why it’s going down is because the inventory levels are starting to come up,’ Weaver said.”
From KOB 4 in New Mexico. “It’s getting easier to find a new house in Albuquerque. The real estate market took a wild ride over the past year and a half. ‘The last year has been, I think a fair word, especially earlier in the summer, was frantic,’ said Tego Venturi, co-owner of Venturi Realty Group. Venturi said he believes the market has downgraded from frantic to steady.”
From Realtor.com on California. “Ashton Kutcher and Lina Kunis have heaved their trophy home in Beverly Hills back onto the market, the Real Deal reports. The East Coast traditional is now available for the discounted price of $12.25 million. The stars had previously attempted to sell the posh property in June 2020, asking $14 million. Shortly thereafter, the home’s price dropped by $1 million, to $13 million. By October 2020, the mansion was offered for sale at $12.25 million—or to rent for $49,000 a month. After a couple of months, the listing came off the market in December 2020. Nearly a year later, it’s back.”
The San Diego Business Journal in California. “Luxury home buyers in San Diego have an array of pricey homes to choose from and the market remains strong, although it softened a bit, mirroring what’s happening in the overall housing market in the county. Not so long ago, anything over $1 million was considered luxury. ‘The norms of what we once defined as luxury have shifted,’ said Jay Becker, director of the Luxury & Coastal Group of Pacific Sotheby’s International Realty. ‘There are certainly buyers that still believe that $1.2 million is a luxury home and I wouldn’t deny them that feeling.’”
“Melissa Goldstein Tucci, an associate broker at Coldwell Banker West, said she’s seen ‘a slight cooling’ in the luxury market, cooling in the sense that sellers are still getting multiple offers, but fewer than a few months ago. ‘It’s not 10 offers, maybe it’s two or three offers, but the values are being upheld and the inventory level is still low,’ Tucci said. ‘People have the expectation that we’re going to put this on the market and get flooded with offers. That does happen sometimes, but it’s not happening as often.’”
The Real Deal on New York. “Affiliates of Ceruzzi Properties have agreed to a $29 million judgment after failing to make payments on a $155 million construction loan tied to the troubled Hayworth condo project. Executors of the estate of Louis Ceruzzi and BVS Acquisition Co. — an LLC tied to Ceruzzi Properties— will pay lender Children’s Investment Fund after allegedly defaulting as guarantors on the loan at the partially built Upper East Side tower, court documents show.”
“Children’s, a U.K-based hedge fund, was initially only seeking $10 million from the affiliates for failing to make interest payments between March and September 2020. But since Children’s filed its lawsuit in October, Ceruzzi failed to make any additional payments, increasing the amount owed to $29 million. Guarantors of the Hayworth project’s loans are facing challenges with other lenders besides Children’s.”
“There are ‘numerous lenders who are seeking payment and our client is trying to resolve them,’ said Neil Leiberman, who represents the executors of Ceruzzi and BVS Acquisition, during a July hearing, court documents show. In March, Industrial Bank of Korea filed a lawsuit seeking $40 million in damages after Ceruzzi allegedly defaulted on a $110 million loan backing Centrale, a 72-story, 124-unit condo tower in Midtown East. The state-owned bank was acting as trustee for an investment trust.”
“Children’s, meanwhile, has provided loans to some of New York’s largest developers, including HFZ Capital. A Children’s subsidiary is seeking to foreclose on HFZ’s stake in its luxury condo development known as the XI on the Far West Side.”
The Daily Mail Australia. “Real estate data group CoreLogic’s Pain and Gain report has revealed sellers are making a median return of $123,000 by selling after two years. But the gains weren’t evenly distributed with houses in both capital cities and regional areas surging as apartment sellers suffered in parts of Sydney, Melbourne, Perth, Darwin, Brisbane and the Gold Coast. CoreLogic’s head of research, Eliza Owen, said record-low interest rates had pushed up house prices as high-rise apartment sellers suffered from the absence of international students.”
“A closer look at the numbers by council area shows where profitability levels were well below the national average, especially in parts of Sydney with an oversupply of apartments. Burwood, in the city’s inner west, had a profitability level of 81.7 per cent with median losses of $70,000. The Parramatta council area had a profitability level of 85.4 per cent and a median loss of $49,000 in a region that covers Sydney Olympic Park, the home of the troubled Opal Tower.”
“The problem of falling unit prices wasn’t confined to Sydney. In April, May and June, 4,900 apartments across Australia sold at a loss. Unit sales made up 30.1 per cent of resales but a disproportionate 54.1 per cent of losses. Sellers who made a loss typically held the unit for 7.3 years before putting it on the market, compared with eight years for apartment owners who sold for a profit. Loss making unit sales were heavily concentrated in the Brisbane, Gold Coast and Melbourne council areas with those regions making up 23.9 per cent of loss-making unit sales.”
“Inner-city areas with lots of apartments were most at risk with the Perth council area having a high loss rate of 63.5 per cent compared with Darwin’s 39.3 per cent and Melbourne’s 34.8 per cent.”
The Vancouver Sun in Canada. “It’s not only the looming collapse of China’s largest house-builder, Evergrande Group, that has caused a shock to North America’s real estate and financial markets. The U.S. Federal Reserve, a pillar of the American establishment, has also published a report that zeros in on how wealthy buyers from the People’s Republic caused a ‘China shock’ on U.S. housing prices.”
“The report found an influx of buyers from China contributed to gentrification of neighbourhoods and caused lower-income people to move away. Why don’t Canadian officials produce something similar for this country, where cities like Vancouver, Toronto and Calgary have also been impacted? China’s housing bubble has been fuelled by massive housing speculation through companies like Evergrande. It’s contributed to oversupply and an estimated 65 million empty homes in China.”
“The company’s crisis resonates worldwide. The media has reported Evergrande, financed in part by the Royal Bank of Canada, owns many properties outside China. But beyond that Ottawa doesn’t offer much information on how much corporations or investors from China — or any country — own property in Canada. In an era of global free trade, federal politicians don’t want to know. Many also don’t want to rile China.”
“Unlike in the U.S., where central bank researchers look openly into foreign ownership, a certain faction have labelled Canadian researchers and politicians who try to get to the bottom of the phenomenon, or restrict it, as xenophobes.”
“So, as often happens in Canada, we end up relying on the Americans to expose developments occurring in our own country. Ottawa has a lot of catching up to do with the U.S. on providing information on housing (and money-laundering, for that matter). Much as Canadians make fun of Americans, they generally have a more transparent political, legal and economic system. The Federal Reserve’s 60-page study is an example. It’s titled Capital flows, asset prices and the real economy: A ‘China shock’ in the U.S. real estate market.“
From AFP on China. “Another payment is due this week on a separate bond after Evergrande appeared to miss a payment last week. A slowing population has also hit property demand. ‘The root of Evergrande’s troubles… is that residential property demand in China is entering an era of sustained decline,’ Capital Economics chief Asia economist Mark Williams said in a note.”
The Washington Post. “The imminent collapse of Evergrande, the world’s most heavily indebted real estate developer, marks the end of China’s housing boom. Scrutiny of the highly leveraged property sector fits squarely in that broader trend. ‘Evergrande is not the only source of the debt problem, it’s an exemplar of the broader problems in the property sector,’ said Logan Wright, director of China markets research at Rhodium Group, a research firm. ‘It’s exceptional because of size, not methods.’”
“So far, public anger has largely been directed at Evergrande and its billionaire founder, Xu Jiayin. On Monday, a video of an Evergrande creditor yelling at the company’s executives for ‘throwing money into the dirt’ with spending on private jets and villas was shared widely on social media. Yet, further contagion that leads to plummeting house prices could spark a larger public backlash against government policies. Property accounts for 80 percent of household wealth. Past falls in housing prices often sparked protests from middle-class homeowners who bought apartments assuming their value would increase.”
“In Zhangjiakou, a city of 4 million that will host Alpine skiing events during the 2022 Winter Olympics, prices had already dropped by 40 percent before the government intervened. Only 50 minutes from downtown Beijing by high-speed rail, the city in recent years has been a popular destination for investors who snapped up new apartments hoping to sell them at a markup.”
“Even before Evergrande’s crisis, the struggle to break even was distressing some Zhangjiakou homeowners. In July, local police detained a man and a woman for 10 days for ‘disrupting public order’ after they threatened to jump from a high-rise building to protest their recently purchased apartment’s rapidly declining value.”