A report from the LA Daily News in California. “Since 2000, U.S. inflation has averaged 2.2%, according to the Consumer Price Index, while rates on 30-year mortgages averaged 5%, according to Freddie Mac. So historically speaking, loans are usually priced 2.8 percentage points above these cost-of-living increases. Yet in October, U.S. inflation was 6.2% while this benchmark for mortgage rates — kept artificially low with Federal Reserve help — averaged 3.1%. That’s 3.1 points BELOW the inflation rate.”
The Marin Independent Journal inn California. “The median price for a detached home in Marin County was $1.67 million in October as the median continued to ease off its $1.8 million peak from the summer. Sue Pence, a listing agent for a $20 million sale in Tiburon in October, said the deal was noteworthy in that it included no foreign bidders. The seller was a bank that obtained the property through a foreclosure. The list price was $28 million. Pence said the buyers got ‘a really good deal, for what it is.’”
“‘I feel like the market is a bit confusing,’ said Yoko Kasai, a Marin-based agent for 16 years. ‘While it’s still wildly active — homes can still sell for hundreds of thousands over asking — I feel like the condo market has slowed a little bit. There just seems to be a little more inventory on the condo side as opposed to single-family homes. It feels like the trend is the prices are not going as high as they used to. But I feel like that’s an opportunity for buyers.’”
The North Bay Business Journal in California. “Napa County pricing was down 10.5% to $850,000, and sales increased 4.1%. Lake County homes sold for an average of 6.2% less at $345,000, while unit sales jumped 17.1%. ‘As the housing market moves from ‘frenzied’ to ‘less frenzied’ and price growth comes back to earth, fewer homes are selling above asking price and bidding wars are less prevalent, so more buyers who pushed pause earlier this year will be able to take advantage of still-cheap financing,’ said association President Otto Catrina, a Bay Area real estate broker.”
From Corridor News. “‘Although we’re seeing a slight decline in homes sold from the same period a year ago, it’s important to remember we’re comparing to 2020’s record-breaking numbers,’ said Marvin Jolly, chairman of Texas Realtors. Luis Torres, Ph.D., research economist with the Texas Real Estate Research Center at Texas A&M University, commented, ‘The housing frenzy due to the pandemic has possibly peaked. Home prices and homes sales are beginning to slow. In addition, months of inventory and home listings have reached a trough and are now increasing.’”
“Chairman Jolly concluded, ‘Our housing supply remains stretched, but we’re not seeing as many properties with a frenzy of offers above asking price like earlier in the year.’”
The Phoenix Business Journal in Arizona. “Tony and Sarena Miller were furious when they got a call from Zillow Offers on Nov. 18 canceling their home sale contract. The Millers were told their contract is being cancelled because it goes past January 2022. ‘Our original contract is through May 2022, since we are building a new home and contracted with Zillow to buy our current home,’ said Tony Miller, a disabled U.S. Air Force veteran. ‘When I challenged the reason, Zillow offered $10,000 if I sign a document before Nov. 30, otherwise, I get nothing but a cancelled contract.’”
“The Millers said their 1,580-square-foot home was under contract to sell to Zillow Offers for $418,872. But now that the market has been softening over the past few months, they’re worried they won’t get as much for their home, which they had planned to use that cash toward the purchase of a 2,800-square-foot home being built for them in Buckeye. ‘We expected them to uphold their end of the deal,’ Sarena Miller said. ‘We thought this was a done deal.’”
From Bisnow New York. “An affiliate of troubled Chinese investor HNA Group has defaulted on its mortgage at the former office building of Major League Baseball. PWM Property Management failed to make its November payment on a $500M CMBS loan at 245 Park Ave., which has been sent to a special servicer, according to commercial mortgage-backed securities firm Trepp. HNA paid $2.2B for the 1.8M SF Midtown office building, in 2017 and financed the transaction with $1.2B in CMBS debt.”
The Real Deal on Florida. “Minority investors in Michael Stern’s Miami Beach condo project filed a summons against his development entities, seeking $10 million. Limited liability companies linked to Ariel Ackerman’s Ackerman Development and Daniel Minkowitz’s Mink Development, investors in Stern’s waterfront luxury condo project at 1300 Monad Terrace in Miami Beach, filed the summons in New York State court. A complaint has not been filed.”
“The plaintiffs allege that Stern has a ‘pattern and practice of duping investors’ to back his projects ‘only for Stern to explode the project costs without authority, and siphon off the money, value, and publicity of the project for his own benefit through a variety of tactics in blatant violation of negotiated contractual and other legal rights,’ according to the summons.”
“In a statement to The Real Deal, Stern’s firm, JDS Development Group, denied the claims, calling them ‘baseless allegations asserted in what amounts to an unfortunate publicity stunt’ created by Minkowitz and Ackerman, ‘principals of a series of entities who are currently attempting to stave off their creditors.’”
From China Daily. “As the focus of residential property sector regulations has shifted from avoiding housing bubbles to both contain the rapid growth of home prices and guard against any substantial price drops, a growing number of Chinese cities have taken measures to stabilize home prices, and experts believe the property market will successfully avoid a hard landing.”
“At least 21 cities, ranging from northeastern Liaoning province’s Shenyang to southwestern Yunnan province’s Kunming, have introduced measures to prop up home prices from falling drastically, said China Business News. Amid such a backdrop of market stabilization, more homes are used as collateral in project construction payments by cash-strapped property developers to their construction companies.”
“These collateralized properties are usually priced lower than those offered by real estate developers. Taking ones recently available in Guangzhou, for example, such a collateralized property can be priced between 100,000 yuan and up to 1 million yuan-lower than regular ones. This is because construction companies holding collateralized properties are eager to sell the assets as quickly as possible to get cash, and the properties are usually situated in less ideal locations or on less preferred floors, said Lu Wenxi, a researcher with Centaline Shanghai.”
“‘Many real estate developers and construction companies are feeling more capital pressure amid the ongoing market adjustment, so more collateralized properties have recently appeared in the market,’ said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institution. Illegal promotion in the name of collateralized properties is forbidden by local governments. In October, a property project in Xuzhou, Jiangsu province, was requested to sell at normal prices, as the project promoted itself as collateralized properties with steep discounts.”
“‘Only by recognizing the vulnerability of the property sector are regulators quickly making fixes to maintain market stability. And real estate developers have ceased reckless expansion and instead are attaching importance to cash flow issues. Thus, we can expect the previously overheated real estate market to see a soft landing,’ Lu said.”