A report from Bloomberg. “U.S. household debt rose slightly in the third quarter, reaching the highest level ever. Total debt increased 0.6% to $14.35 trillion from $14.27 trillion in the second quarter, the Federal Reserve Bank of New York said in a report. The gain was led by a surge in new mortgage loans, mostly refinancings, which reached $1.05 trillion, the second highest in data going back to 2003 and rivaling the historic refinance boom 17 years ago.”
“Borrowers who postponed their monthly mortgage payments offer a glimpse into the impact the looming cliff could have. Americans who took advantage of programs that allowed them to skip mortgage and auto bills tended to have much lower credit scores and higher delinquency rates than those who didn’t, the New York Fed data show. Lenders reported these borrowers as current on their bills, temporarily boosting their credit scores and possibly masking underlying distress, according to the New York Fed.”
From USA Today. “Competition in the housing market has cooled slightly since the summer. The typical home currently gets four or five offers, compared with eight or nine in September, according to Redfin. Don’t get greedy – ‘An overpriced home is still going to sit on the market,’ Jason Gell, president of the Greater Boston Association of Realtors, says.”
The Los Angeles Times in California. “The Southern California median home price rose sharply in October compared with a year earlier. October’s median price of $605,000 was down slightly from a record $610,000 in September. Economists say the large median price increases in recent months show values are rising but caution that values are rising less than the median indicates. Because the median is the point at which half the homes sold for more and half for less, it also reflects a change in the types of homes sold.”
“So one thing that has made the median price rise so much in recent months is that members of higher-income households have been less likely to have lost their jobs in the pandemic, leading a greater share of home sales to be in the luxury segment now than at the same time last year.”
From Bisnow New York. “The world’s largest brokerage is shuttering one of its New York Tri-State area suburban locations and downsizing its staff next year. CBRE is permanently closing its Westchester office at 70 West Red Oak Lane in White Plains and laying off 35 of its employees in February, according to a worker adjustment and retraining notification filed with the New York State Department of Labor. CBRE cited economic reasons for the closure.”
“In New York City, investment sales in the first half of this year were down 50% year-over-year and office availability is at its highest point in 16 years. CBRE’s total profit for the third quarter was $184M, down 28.2% from $257M during the third quarter last year, according to the financial results it released for the quarter. The company anticipates sales and leasing volume will be down between 30% and 40% overall for the year.”
“CBRE has already made cuts to its staff to save on expenses since the pandemic hit. The brokerage was also making cuts before the pandemic began to ravage the U.S.. In February, it laid off 40 engineers in the New York City office. Before layoffs, the company cut pay for senior staff members, GlobeSt. reported in May.”
The New York Times. “Real estate developers are seeking opportunities to buy student housing from strapped universities and convert them into apartments for white-collar workers. Thirty percent of American universities, both public and private, are running deficits, according to Moody’s Investors Service, and the pandemic has only added to financial pressures. ‘It is absolutely a perfect storm,’ said Michael Jerbich, president of B. Riley Real Estate Solutions. ‘The only thing they can do is turn to real estate or other hard assets.’”
“The shift has been playing out for years as universities face shrinking enrollments and ballooning debts, but as the pandemic worsens, college real estate will increasingly be redeveloped or sold, experts say.”
From Capital Hill Seattle in Washington. “One quarter of the first batch of units in the new Capitol Hill Station mixed-use development have been leased, as of early this month, according to the complex’s general manager. Coronavirus has shaken the local housing market, with rents down 14% since March, according to data from ApartmentList. The median one-bedroom apartment rents for just under $1,500 and two-bedrooms for $1,849. Rents have been going down for months and they were down 4.2% between September and October.”
“Seattle is obviously not alone in seeing rents plummet, with New York City down over 15% and San Francisco down a staggering 21.7% since March, according to ApartmentList. Meanwhile, local apartment buildings are also giving more concessions to renters, such as a month of free rent. Over 70% of large Seattle-area buildings constructed since 2017 are giving such deals to leasers, according to The Seattle Times. For example, the Capitol Hill Station developers are advertising two months of free rent on some units to prospective tenants.”
“14th Ave’s REO Flats, for example, is touting two rent-free months, a waived deposit and application fee, and $500 off move-in costs. The Capitol Hill Station development is offering a similar deal on ‘select’ units.”
The Nevada Current. “Henderson began regulating STVRs last year. This year through August the city imposed and collected $6,100 in fines on properties where owners or renters violated the rules, according to spokeswoman Kathleen Richards. Attorney Alex Velto of Hutchison Steffen confirmed he’s consulted with the group about possible legal action regarding property rights. ‘All of my clients are paying over market value for these homes,’ Lowman told the City Council in September, imploring members not to place distance and other restrictions on STVRs.”
“‘It’s good for sellers,’ Lowman told the Current, adding investors ‘are willing to pay above market value (by a good $10,000+) knowing they will make it back easily in the first month they rent it. STR(s) can bring in a lot of money if you run them correctly and have them set up right. With the distance rule, this will stop happening and values will not keep going up.’”
From Now Toronto in Canada. “A one-bedroom apartment in the old City of Toronto cost $1,922 on average in October, according to Rentals.ca’s National Rent Report. That’s a 2.3 per cent drop month-over-month, and 17.3 per cent drop, year-over-year. Dragging rental listing prices down is the oversupply, particularly in the city. There’s an oversupply of investment unit rentals due to new builds coming into the market. Owners of former Airbnb units are looking for long-term rent with the lack of tourism. And then there’s an exodus from the downtown core since so many people are working from home and looking for more space.”
“‘People are starting to say, ‘I don’t need to be in the concrete jungle,’ says Re/Max Hallmark Realty broker Meray Mansour.”
From Reuters on Canada. “Eager to move his young family into a house with a backyard amid the pandemic, Dale-Paul Jordan listed his Toronto condo for sale last month and prepared to start bidding on detached homes. But the condo didn’t sell or get a single viewing. And when another seller in the building slashed their asking price, Jordan and his wife pulled the unit off the market and decided to delay their dream until spring at least. ‘One of the things we’re handcuffed to is selling our condo to help with the downpayment,’ Jordan said.”
“The couple are among a growing cohort of would-be buyers in Canada keen to move up the property ladder, but are trapped by a flood of condos in the Toronto and Vancouver markets. The situation is only expected to worsen with a near-record number of new condos under construction. As more people find themselves in the Jordans’ position, there will be fewer buyers for detached homes, real estate experts said, and that could have a trickle-down effect on the red-hot detached home market.”
“The cracks appearing in the condo market may well become the fault-line in Canada’s housing market. Some agents say they have had clients on the brink of reneging on detached home offers, because of worries they won’t be able to sell their condo. ‘We came very close a few times but we got the deal done,’ said Thomas Mirkovich, a Toronto-based broker. ‘I had to have a lot of ‘come to Jesus’ moment conversations.’”
“Add in other pressures – Canada’s still-high unemployment rate, a sharp drop in immigration, and the winding down of mortgage deferral programs and emergency pandemic benefits – and conditions could be ripe for a reckoning. ‘Now people can’t sell their condos downtown. Nobody wants to buy a condo,’ Hilliard MacBeth, a portfolio manager and author of ‘When the Bubble Bursts,’ said in an interview. ‘The government support means the real start of the recession has just been delayed.’”
The Daily Mail on the UK. “Big city rents are dropping by up to 45 per cent as swathes of tenants no longer have to live near their workplaces. A Zoopla repor said average rents in London are now 5.2 per cent lower than they were a year ago – while those in Birmingham, Manchester and Edinburgh are also dropping. Some of the more drastic cuts include a two-bedroom flat in central London’s Baker Street which is down from £4,312 a month in May to £2,600 last month, while rent on a four bedroom flat around Bloomsbury dropped from £3,476 in June to £2,210, the Times reports.”
“Postcode W9, which covers parts of Maida Vale and Paddington, has seen the second biggest rent price drop (20 per cent), followed by SW1 (17 per cent), which covers Westminster, Belgravia and Pimlico. Matt Hutchinson, director at SpareRoom, noted: ‘Once again, London dominates the headlines in terms of falling rents, and it’s generally the most expensive neighbourhoods that are worst affected. ‘What we’re seeing might just be a temporary shift in the rental market, or it may be the start of the UK’s rental map being redrawn permanently.’”
From Dublin People in Ireland. “Dublin Central Labour Party Senator Marie Sherlock said she believes a ‘dangerous precedent’ is being set by Dublin City Council in approving applications to allow student accommodation developments to take bookings from tourists during term-time. Cabra-Glasnevin Councillor Declan Meenagh said: ‘At a time when tourism is on its knees and the supply of tourist accommodation is already over-saturated, we have to ask whether anyone’s interests are really being served by this application.’”
From Cyprus Property News. “Luxury real estate may see a dramatic downturn next year, as the Cyprus Investment Program is no longer available to foreign investors, plus the pandemic has made market conditions even worse. A bad taste left by Al Jazeera videos pushed the retreat by foreign buyers further and may send prices spiralling to 2013 era levels. Foreign buyers – who have helped fuel the push in premium homes and high-rise building apartments (mainly in Limassol and Paphos) – are on the wane.”
“According to DANOS International Property Consultants and Valuers, the volume of foreign purchases will see a sharp drop in 2021. The reasons include limits on taking cash out of foreign countries, anti-corruption laws taking effect, market saturation, rising property prices, the lack of citizenship incentive and concern about the stability of the EU economy, market and political situation.”
“The Limassol real estate market should slow significantly as sale volumes across the town are expected to fall by at least 25%. The average price for a high-rise tower apartment is expected to fall in the last quarter of this year and continue falling in 2021, as well. If you look around Limassol at all these, 15-28 storey modern towers with starting prices at €6,000 per square metre for a luxury apartment, people living in Limassol, are not buying them.”
“Also, because of the pandemic – economic uncertainty, we are seeing people in Cyprus, selling their property to save money or simply to pay back their bank debts. It is serious – people can’t rely on their business for enough income.”