A report from Mortgage News Daily. “Extremely serious delinquencies, those loans 150 days or more past due, reached historically high levels in August. Corelogic said the rate of delinquencies among those loans spiked to 1.2 percent, the highest level since at least January 1999, which we assume is the limit of the company’s records. CoreLogic said this surge was likely due to large volumes of delinquencies moving in tandem through the pipeline.”
“Dr. Frank Nothaft, chief economist at CoreLogic said, ‘This was the highest rate in more than 21 years and double the January 2010 peak during the home-price bust. The spike in delinquency was all the more stunning given the generational low of 0.08 percent in March and April.’ Loans meeting the more traditional measure of serious delinquency, 90 or more days past due including loans in foreclosure, now include 4.3 percent of active mortgages, up from 1.3 percent in August 2019. This is the highest serious delinquency rate since February 2014.”
“Every state and nearly every metro area logged an annual increase in overall delinquencies during the month. States with popular tourist destinations again showed the highest increases, with Nevada (up 5.3 percentage points), Hawaii (4.9 percentage points), New Jersey (4.6 percentage points), Florida (4.5 percentage points) and New York (4.4 percentage points) topping the list for gains.”
The Tampa Bay Times in Florida. “Florida continued to rank high for its delinquency rate, with the fourth-largest increase from the same time last year: 5.02 percentage points, to arrive at 15.19 percent of loans past due. Nevada came in at No. 1, followed by New Jersey and Hawaii. The fact that both Nevada and Hawaii were included near the top led Richard Buttimer, dean of the University of North Florida’s Coggin College of Business, to suspect a loss of tourism as a culprit for Floridians’ difficulties.”
“‘A lot of homes in Florida are rental homes and with the decline in tourists because of the pandemic, my guess is some of those folks are stressed,’ he said.”
The Columbus Dispatch in Ohio. “Two new reports suggest that a wave of foreclosures is threatening to land on homeowners in Ohio and throughout the U.S. In Ohio, 3.8% of homeowners were at least 90 days behind on their loans, more than double the 1.6% from the previous August, according to CoreLogic. A separate report, by the foreclosure and real-estate information service RealtyTrac, suggests that pandemic-related foreclosures have already started, despite the moratorium.”
“The number of homes that have been the subject of some sort of foreclosure filing — a default notice, bank repossession or auction notice — jumped 20% in October from the previous month, RealtyTrac found. ‘It’s a little surprising to see foreclosure activity increasing in spite of the various foreclosure moratoria that are in place,’ Rick Sharga, executive vice president of RealtyTrac, said. ‘It’s likely that many of these properties were already in the early stages of default prior to the pandemic, or are vacant and abandoned, which makes them candidates for expedited foreclosure actions.’”
The Wall Street Journal. “Amid the pandemic-plagued New York City real-estate market, a luxury penthouse condominium has gone into contract for $35 million. The unit sold for its full asking price despite less-than-favorable market conditions because it was priced more reasonably than its competitors at other high-end buildings across Manhattan, said Miki Naftali, a veteran real-estate developer. ‘I could have asked $50 million for this penthouse and then negotiated it down, but I don’t like to do that,’ he added. ‘I like to be realistic.’”
“The number of home sales in Manhattan dropped by more than 46% in the third quarter compared with the same period a year earlier, according to a recent report by Douglas Elliman. For luxury homes, which represent the top 10% of sales, transactions were down by almost 47% compared with the same period last year. There are now 34.5 months of supply of homes currently on the market based on the current pace of sales, compared with 22.4 months last year.”
The New York Post. “For companies looking for impossibly cheap Midtown sublease space, now’s the time to pounce. How cheap? Would you believe $25 per square foot on a prime stretch of Park Avenue? That mind-boggling low rent is what high-profile public-relations firm 5W is paying at 299 Park Ave. under a sublease from MarketAxess Holdings, which moved to 55 Hudson Yards. Real-estate firm Keller Williams is said by brokerage sources to be paying less than $20 psf — a figure we couldn’t confirm — at 99 Park Ave., where the asking rent was reported by the Real Deal in July as $52 psf.”
“The avenue’s ‘going to look like a shadow of itself until people start going back to their desks,’ an executive of a longtime tenant said. ‘There are only about 50 people going to work at 299 Park every day, which is the same at lots of buildings, and not just on Park Avenue.’”
From Mortgage Professional America. “The events of this year will have a lasting impact on the real estate market, according to a new white paper from Lima One Capital. MPA recently chatted with Robert Neely, director of marketing for Lima One. MPA: Lima One also warns in its white paper of a possible spike in pandemic-related evictions and foreclosures as moratoriums expire. Could that spell trouble for investors?”
“Neely: Eviction moratoriums and foreclosure moratoriums are fine, but eventually somebody’s got to get paid. Eventually, for the system to work, it’s got to get caught up. It’s just a question of where the stress point is. Say a blue state says, ‘No evictions until 2021.’ If you’re a landlord that owns two single-family rentals, and one of them stops paying, you’re probably going to end up unable to pay your own loans.”
The DCist in Washington DC. “Landlords and real estate industry stakeholders fiercely oppose expanding rent control. Some of the city’s biggest landlords testified Monday that it will drive investment out of the city, sink property values and slash much-needed tax revenue as D.C. recovers economically from COVID-19. ‘There could not have been a worse time to consider sweeping legislation of this type than during the economic catastrophe we’re facing from the pandemic,’ said John Ritz, president of WC Smith, which controls nearly 10,000 apartment units in the District.”
“‘Anything that will that will stifle my ability to increase rent gradually, should I face any hardship, will cripple me and honestly put me in a position of foreclosure in about no time,’ testified real estate investor Rody Damis, a member of newly formed trade group the Small Multifamily Owners Association.”
“As the debate rages on, housing providers say they can’t withstand any new restrictions on rental income, as the pandemic risks driving urban apartment dwellers out of D.C. — an existential threat to their business. ‘Remote working during the pandemic has made it abundantly clear that people no longer need to be in the city’ WC Smith president John Ritz said in testimony. ‘The outmigration has already begun.’”
The Capital Fax Blog in Illinois. “Gov. Pritzker’s 30-day eviction moratorium expires at the beginning of next week. From a press release: Rent collections in the month of September were significantly lower than usual. The industry standard for a safe level of rental collection is 95% payment of full rent, but the NBOA survey showed that only 54% of respondents had received that amount. Alarmingly, 29% of respondents indicated that their rent collections were below 85%, which is considered the industry threshold for profitability. As such, it is likely that about one-third of respondents are losing money on their buildings.”
“The problem is worse on the south side of the City of Chicago and in the south suburbs. On the north side of the City, 51% of respondents indicated their rent receipts met the industry standard, but on the south side it was only 34%. The survey also measured the availability of vacant units, finding that 42% of respondents reported a vacancy rate of more than 6%, which is just at the edge of a safe level. Alarmingly, 21% of respondents indicated a vacancy rate of 11% or higher. At this level, housing providers face additional financial burdens due to non-productive units (which may be on top of units paying reduced or no rent). Half of respondents said they had residents who were refusing to communicate with them.”
The South Seattle Emerald in Washington. “Renters across Washington state have existed in a kind of financial and legal limbo since mid-March, when Governor Jay Inslee issued the first statewide eviction moratorium. Inslee has extended the moratorium four more times, most recently in October, when he set a new expiration date of December 31. The Rental Housing Association of Washington, which represents rental property owners and has been critical of the eviction moratorium, argues that the sale or move-in exemption provides a necessary escape hatch for the smallest landlords.”
“Kyle Woodring, RHA’s director of government affairs, says the RHA has been hearing from ‘more people working through the process of selling their property’ than usual, because their income (from rent or other sources) has dried up and ‘they need to get some cash out of that property.’ ‘It’s easy for local governments and state governments to protect tenants, and much harder to protect people who pay mortgages and the lending institutions, because those are generally federally regulated,’ Woodring said. ‘Short of giant bailouts, I think we’re going to see more and more people looking to sell.’”
The Los Angeles Times in California. “A new California law aims to reduce the transfer of properties to investors. The new rules apply to one- to four-unit properties sold at foreclosure auctions. If an investor wins one of those homes at auction, then people who want to live in it, as well as nonprofit organizations and government entities, get 45 days to submit competing offers. There is a chance of additional liens on the property that could raise questions over who is the true owner, leaving the buyer vulnerable to litigation. It could also be impossible to inspect a house for defects before buying it, especially if someone still lives there.”
“The buyer would be responsible for carrying out any necessary eviction. ‘I am aware of clients who bought foreclosed properties in the Central Valley that were money pits,’ said Maeve Elise Brown, executive director of Housing and Economic Rights Advocates.”
From TRNTO in Canada. “As the COVID-19 pandemic continues, it has begun to impact the real estate market in a negative way, or at least one part of it — condos in downtown Toronto. The downward trend in this sector of the market has led some to sell their condos in a hurry — and in some cases before the building has even been built. Jas Takhar, the co-founder of real estate agency REC Canada, said that some are ‘definitely’ offloading their condos as the market heads into an uncertain future. ‘I think there are people who are fearful right now,’ he said. ‘They’re not long term investors. They’re making a short-term decision.’”
“The sellers might have bought the property on speculation, thinking values would continue to increase, but then the pandemic hit, Takhar said. ‘Their confidence [in the market] is very low,’ he said. Adding to the dilemma is the sharp drop in rental prices for downtown condos to the tune of approximately 20 per cent, according to Takhar, due to an increase in supply as some residents have made the move out of the downtown core altogether.”
The Telegraph on the UK. “Fancy living in a Shoreditch penthouse for a third off? How about a steep discount on the rent of a skyscraper on the Thames? The economic fallout and psychological impact of the pandemic and lockdowns has put London’s rental market into freefall – with tenants in the driving seat, and landlords at risk. The effect of this is stark. Daniel Farey-Jones, a freelance journalist, has been collecting listings of London rental properties where prices have been slashed by a quarter or more.”
“Take a two-bedroom flat in Primrose Hill complete with a sauna and concierge, down 25pc to £2,578 a month. But if you look closer, his collection of cut-price listings simply illustrates how crazy London’s frenzied rental market had become. Of course these sky high rents could not be sustained, particularly in a period of deep economic crisis. he glut of properties available has been partly caused by some Londoners escaping to the country, but the main explanation is the dearth of international visitors due to the pandemic and the short term Airbnb lets that have flooded the long-term market.”
“According to estate agency Chestertons, those now looking for somewhere to live are mostly tenants who are ‘seeking a better deal than they currently have.’ Put aside the economic disaster caused by the pandemic, and there hasn’t been a better time to be a tenant for years. The nature of the market now means that the power lies with them. Not only can they get a cheaper deal, they can secure a good landlord and shun properties in bad conditions that previously they may not have been able to. And while supply is high and there is little new demand, rents could continue to fall.”
The Sydney Morning Herald in Australia. “The exodus of international students due to the COVID-19 pandemic has cost Sydney’s economy $2.5 billion as small businesses go quiet and rental properties remain empty. New modelling from Victoria University’s Mitchell Institute shows the number of international students living in Australia will halve, dropping by up to 300,000 by mid next year, if international borders remain closed. The research estimates this will result in a $10.7 billion annual loss to the broader national economy.”
“About 80,000 overseas students are estimated to have already left NSW due to the pandemic. Small businesses along Anzac Parade in Kingsford are among those struggling to survive as a result of lost trade. Kingsford has, so far, lost about 2840 international students and Kensington has lost about 2000. The report shows international student visa applications, where the applicant is outside Australia, have dropped by 80 to 90 per cent since the same time last year, suggesting there is little pent up demand.”
“The owner of Glory Printing on Anzac Parade in Kingsford, Pang Gunawan, said it was the quietest he had seen in the 27 years running his printing business. Before the COVID-19 pandemic students were lining up outside. ‘It’s totally dead now,’ he said. ‘This is the worst ever, in my experience. We’ve had a 75 per cent drop in business. It’s very stressful.’”
“Sam Karatasas, principal of Raine and Horne Kingsford, said properties that were rented for about $600 were now renting for $200 less ‘because the international students aren’t here.’ The Mitchell Institute data shows rental vacancy rates have increased by more than eight per cent in Kingsford, Kensington, Redfern, Chippendale, Macquarie Park, Pyrmont, Ultimo and by more than 12 per cent in the Haymarket area.”
“Domain data also shows rental vacancies have increased and rents have fallen by more than eight per cent in Kingsford and Kensington, more than 15 per cent in Pyrmont and Haymarket and by more than 10 per cent in Chippendale since last year.”