A report from KTNV in Nevada. “Some Las Vegas sellers are getting creative to get more offers. Zoom in towards the area of St. Rose Parkway and I-15 and you’ll find a home listed for only one dollar. ‘It is not a mistake,’ says local agent Lana Boley, ‘You basically have to talk to the listing agent and see what’s the highest you could do for that home.’ She says this is a creative strategy, and showed clients the home recently. ‘Sometimes people just need to move to another state, or they have a different situation, and they don’t want to wait for an offer,’ Boley said. ‘So if they would like to sell it fast, they could list it for $1, or really really low, so they could receive several offers and choose the best one.’”
“Boley is also selling a similar home blocks away listed at around $335,000. She says the house has been on the market for a few months and the price has recently dropped. She says it’s a changing market. ‘There are a lot of opportunities, especially for the first-time homebuyers,’ Boley said. A dollar listing could catch the eye of some, Boley says, because it’s different, even though it will hopefully sell closer to market value. ‘I like it, try different strategies if it is not working, try something new.’”
ABC 15 in Arizona. “Fewer people are looking and properties are staying on the market longer, according to Mesa associate real estate broker Monie Wilder. ‘Now you have the opportunity to negotiate, and to create a plan and a deal that really works for you and your family,’ she said. Another option is target flips. ‘Most of the time, when something’s newly remodeled, it’s somebody who’s flipping it. Which means that they didn’t plan to own this house for very long and now they must sell it,’ she said.”
“The need to sell could mean a significantly lower price on the buy. According to Wilder, ‘that big price decrease automatically helps almost mitigate the interest rate increase.’ Which is what happened to Xiques and Lowell. Their home was flipped and originally listed at $400,000 which was out of their price range. They paid $339,000. ‘Plus, the sellers bought down the rate, plus they’re paying for our new laundry room and closing costs,’ Lowell said.”
The Marina Times in California. “Matt Fuller, a past president of the San Francisco Association of Realtors, summed it up this way when describing the vibe in real estate today: ‘Everyone knows something is happening, and absolutely no one knows what that is. Inventory. Interest Rates. Layoffs. Remote work. Empty downtown. State housing elements. Supervisors.’ He added with a smile, ‘Destination unknown, full speed ahead!’”
“Ted Andersen of the San Francisco Business Times said in a November article that some of San Francisco’s most recent condo developments still have many unsold units after sales failed to tick up during the third quarter — a time when inventory and sales expectations rise each year. ‘While large downtown condo towers such as the 392-unit Mira (280 Spear Street) and the 298-unit Harrison (401 Harrison Street) have filled up, others have fallen far short,’ he wrote. ‘For example, the Serif at 960 Market Street, delivered last year, has only sold just over 50 of its 252 units. Likewise, One Steuart Lane has sold 40 of its 120 units.’”
The Mercury News in California. “A San Jose office building seized through foreclosure in 2021 is in default on its loan — again — following two aborted efforts to develop housing on the building’s choice site near the city’s mega malls. The office building is located at 826 N. Winchester Blvd. in San Jose. Since the start of the coronavirus outbreak nearly three years ago, the building has had a trio of owners and faced two foreclosure proceedings. Now, the current lender on the site is pushing forward with plans to auction the property before the end of this year. Two of the recent owners of the property envisioned the 0.6-acre as a site where housing development could occur.”
From Bloomberg. “A Chinese developer of beleaguered projects across the US has found a potential buyer for a stalled Los Angeles complex where it spent $1.2 billion before running out of money. Oceanwide said it plans to use part of the proceeds to repay debt on its Shanghai properties, which are currently in receivership. The company faces $220 million in lawsuit liabilities on the LA project, where a partially built three-tower hotel and residential complex has been in limbo for years, according to a September filing.”
“US commercial real estate faces tough headwinds as higher borrowing costs slow deal-making and drive down building values. The largest office landlord in downtown Los Angeles, a unit of Brookfield Asset Management Inc., warned last month that it may not be able to refinance debt on its buildings. Since the pandemic, the city has suffered from a reputation for rising crime and rampant homelessness that deters investors, according to Lewis Horne, president of the Southern California district of CBRE Group Inc. ‘In downtown Los Angeles, there’s a very negative narrative going on right now,’ Horne said.”
“After spending $3.5 billion on US projects, Oceanwide has battled to recoup its overseas outlays and revive its Mainland China operations. Lenders last year seized a San Francisco project, where Oceanwide spent $1.3 billion. In November, the company said it found a buyer for some of its holdings in Hawaii for $95 million. Meanwhile, Oceanwide is in talks to extend a forbearance agreement on a New York tower where it invested $410 million, according to Friday’s filing.”
The New York Post. “Bank of America is demanding a Brooklyn judge force Public Advocate Jumaane Williams to pay up on the more than $600,000 he owes on a Brooklyn rental property, or put the property on the auction block, according to the latest filings in a years-long foreclosure battle. Williams’ multi-family Canarsie home has been in foreclosure since 2014 and Bank of America is seeking $622,545 in principal and interest payments, court papers show.”
“Williams — a Democrat who is supposed to be the people’s watchdog as a public advocate — has also shirked other fees on the property. ‘He was an a–hole. He was never there. He just come to collect the rent and that’s it,’ Andre Thompson, who lived in the house from 2009 to 2012, previously told The Post. ‘If it breaks, you gotta fix it. He won’t come or send no one.’ Thompson said the situation ultimately got so bad, he stopped paying rent, forcing Williams to initiate eviction proceedings in December 2010.”
Axios on Minnesota. “Owners of some of the most expensive office towers in the Twin Cities are choosing to walk away from their properties instead of continuing to make loan payments. The 30-story LaSalle Plaza in downtown Minneapolis is scheduled to go to auction next week after the previous owner, the Teachers’ Retirement System of the State of Illinois, avoided foreclosure by transferring the building to its lender, Northwest Mutual.”
“Nearby Fifth Street Towers is facing the same fate and may also go back to its lender this month, according to Axios’ sources who were not authorized to discuss the matter. Real estate experts predict more distressed office properties will follow suit, in Minneapolis, St. Paul and the suburbs. ‘Anytime commercial values plunge downtown it’s bad news for people who pay apartment taxes and homeowner taxes,’ Steve Brandt, a member of the Minneapolis Board of Estimate and Taxation, told Axios.”
The Business Times in Colorado. “Real estate activity continues to slow in Mesa County. The story of the local market has changed, said Robert Bray, as mortgage interest rates and residential inventories have reversed roles. In nearly doubling, interest rates have gone from hero to villain. What were low inventories have nearly doubled, becoming something of a hero in offering more selection. ‘Those two characters have switched places,’ said Bray, chief executive officer of Bray & Co. Real Estate in Grand Junction.”
“Annette Young, administrative coordinator at Heritage Title Co. in Grand Junction, said there’s still an unfilled need for housing. But until interest rates and prices moderate, sales will slow. ‘The demand is still there, though. But, obviously, it’s got to be affordable.’ Property foreclosure activity continues to increase, Young said. Through 11 month of 2022, 226 foreclosure filings and 44 sales were reported. That contrasts with 25 filings and 18 sales for the same span in 2021. Foreclosure activity could increase further as more loans come out of forbearance, but Young said she doesn’t consider the numbers alarming.”
Global News in Canada. “The number of houses sold in Waterloo Region continued to decline in November despite prices that continue to spiral downward. The realtors’ monthly report says that on average, a home sold for $736,024, which is a 3.6 per cent decrease from October, when the average home sold for $752,421. We are now well below the high-water mark established in February when the average sale price of a home in Kitchener-Waterloo was $1,007,109. Similarly, the average price of detached homes is also dropping in the area as it fell to $838,609, which is down 13.1 per cent from a month earlier, when that price was $860,568.”
The Globe and Mail in Canada. “Central bankers must be feeling punch-drunk. For years, they strode like superheroes. We praised their genius, bestowed them with titles such as ‘maestro’ – as one journalist labelled Alan Greenspan in a now-infamous encomium – and revelled in the New Jerusalem to which they’d delivered us: a Promised Land of low inflation and endless credit, where all we had to do to get rich was buy a house and watch it grow.”
“But then, almost overnight, the story changed. Central bankers turned into villains – architects of soaring inflation, punishing mortgage costs, plunging house values and the inevitable advance toward recession. Unifor chief Lana Payne, leader of Canada’s largest private-sector union, recently charged that, by raising interest rates, Bank of Canada Governor Tiff Macklem ‘has basically declared class war on working people.’”
“Ouch. As a long-standing critic of the bank, I partly agree with Ms. Payne. But I’m also experiencing an odd sensation – sympathy for the alleged devil of this drama. Mr. Macklem is doing the right thing in raising interest rates. Actually, the bank should have done it long ago. That it didn’t, ironically, is because it was previously engaged in an actual class war.”
“It started after the 2008 Great Financial Crisis. During that frenzied time, as asset markets collapsed, the bank cut interest rates to near-zero and turned real rates negative. It justified the action by saying, first, it had to prevent a collapse of the financial system and, second, it wanted to spur an economic recovery. The ultimate effect was that it made the rich richer and the poor poorer.”
“Just why central banks should feel the need to underwrite asset values is itself an interesting question. Nevertheless, the justification of preventing collapse did at least make sense in the context of the crisis. The justification of spurring recovering, on the other hand, always looked flimsy. After the 2008 crisis, for various reasons, investment flowed heavily into real estate, an asset which, as I can’t repeat often enough, produces nothing.”
“Nothing, that is, but a wealth effect. Property owners who felt flush spent a part of their windfall, raising demand. But all the while, owing to that sluggish business investment, the underlying growth of labour productivity kept declining and output rose but slowly. This was bound to eventually boost inflation. Indeed, by the middle years of the last decade, pressures were building.”
“But the central bank largely waved them off. It said that whatever inflation there was, it wasn’t yet affecting consumer prices, the only inflation which mattered to it. Now think about that. If you’re a young graduate entering a job market where real wages are moribund because productivity growth is so poor, but your rent is rising by double-digits each year, someone telling you that inflation doesn’t matter might seem at best insensitive, at worst hostile.”
“Or even, you might say, a bit like a class warrior. With the bank’s loose monetary policy effectively transferring money from workers to owners, in this case the owners of the houses workers had to buy or rent, it would seem to have been taxing the poor to feed the rich. Inevitably, though, inflation in asset markets did work its way into consumer prices, forcing the bank to abandon its war to make the world safe for wealth. But while everyone is feeling the pain, it’s actually owners who are taking the biggest hit.”
“Asset prices are falling a good deal harder than wages. That will hurt owners most, including pensioners – not so much the unionized workers. There is indeed a class war that the Bank of Canada has been waging. But raising interest rates isn’t it.”