It’s Friday desk clearing time for this blogger. “Here are some examples, followed by a breakdown by neighborhood, of recent price cuts on homes, condos, apartments and other Eastside properties. How Low Will They Go? $109k chop on Glassell Park 3-bedroom; $20k slice on Eagle Rock bungalow; $100k cut on Echo Park triple.”
“Purchased for $2.25 million in April of 2018, having been newly expanded and remodeled, the Bernal Heights view home at 149 Bradford Street returned to the market three weeks ago listed for ‘$1,995,000.’ 149 Bradford is ‘already in contract!’ (having been listed for 11.1 percent below its 2018 price).”
“Zeckendorf Development is on track to buy a condo project on the Upper East Side after its former developer, Ceruzzi Properties, lost the site to its lender. Zeckendorf is set to acquire the property, a 61-unit development known as The Hayworth, for roughly $250M. It is currently in the hands of a UK-based lender. The lender took over the building in 2019, when Ceruzzi, which had been looking at a $375M sellout on the project, fell behind on a construction loan following a slowdown in the condo market and the unexpected 2017 death of Ceruzzi’s founder.”
“As a short-term rental owner myself, converting to a long-term rental won’t work, even with the incentives offered. Changing one’s business model is a big ask of someone who wants only to cover some second-home ownership costs while still being able to enjoy the grandeur and amenities of Summit County. A short-term rental owner will likely want to at least cover their mortgage payment, which might be high due to real estate prices in the county. As such, the amount that they would need to charge long-term renters, even if the county subsidizes that cost with additional funding, would probably be out of reach for the workers we’re trying to assist with housing.”
“Speculation is a gamble that property values will increase in the short-term. Investing is buying a property for the positive cash-flow, mortgage buy down, and tax advantages. Right now, a median two-bed apartment in Kelowna will cost you about $525,000. A two-bedroom apartment in Kelowna will command $2,100/mo in rent payments. Your mortgage payment, with 20% down and 30-year amortization at 2.5% interest will be around $1,650/mo, netting you $450/mo before any other expenses. After paying strata fees around $350/mo and property taxes around $200/mo, you can see how this investment is already underwater by $100/mo. It’s no big deal if the property’s value is increasing by 100x that per month. But what happens if you carry this mortgage into a recession brought on by rising interest rates?”
“Governor Adrian Orr acknowledged the housing market was already softening and the committee thought higher interest rates were ‘consistent with house prices becoming more sustainable.’ Orr said there would be ‘small pockets’ of New Zealanders, particularly those who had taken on large levels of debt recently, who could be in a position where they needed to manage negative equity – owing more than their properties are worth – ‘for some time.’”
“ANZ chief economist Sharon Zollner said it was possible to imagine a situation where more people were in negative equity. ‘The housing market is in full retreat at the moment.’ She said it was very unusual for the Reserve Bank to forecast steady hikes of interest rates in a falling housing market. ‘That’s a pretty big deal.’”
“Residential developer Frasers Property Home (Thailand) will shift to single detached houses and the upper-end segment as the pandemic has hit purchasing power of townhouse buyers and middle-to low-income earners. Chief executive Saenphin Sukhee said the mortgage rejection rate of townhouse customers who were mostly middle-to low-income people escalated to 70% last year as their income was lower against higher expenses during the pandemic. ‘The two-year pandemic caused a rise in household debt to 90%,’ he said. ‘Around 3.2 million people had income insecurity, while unemployment increased to 2.25 million.’”
“Dominique Gallmann, co-founder of a Bali-based real estate agency in business since 2002, has weathered downturns before. This one is different, he says. Gallmann says notaries and other property agents he talks to concur that ‘the market has definitely been soft. Some villa owners have had to sell very much below their expectations,’ he adds. In one extreme case, an overseas owner is said to have sold his beachfront apartment in Legian for US$155,000, after paying US$450,000 for it nine years earlier. Another client, who had held two villas in Seminyak for eight years, sold the five-bedroom villa for US$205,000 (original purchase price US$450,000) and the three-bedroom villa for US$210,000 (original purchase price US$380,000).”
“Probuild, one of the country’s largest construction companies, has collapsed under the pressure of the beleaguered construction industry, leaving $5 billion in unfinished projects under a cloud of uncertainty. The firm is behind several major builds, including the Melbourne Convention Centre and Sydney’s new glass IMAX building in Darling Harbour. This includes the luxury residential apartments at 443 Queen St project in Brisbane, which was meant to complete construction in late 2021 and has already lost $120 million, and the Western Road Upgrade project in Sydney, which had a forecast loss of $161 million by June last year.”
“Probuild suffered a drop in revenue last year to $1.6 billion from $2.4 billion a year earlier, and is the largest and latest in a string of construction industry failures.”