A report from DS News. “Mortgage rates increased to 3.22%, the highest percentage since May 2020. Agents have said the potential for higher mortgage rates is motivating sellers to act quickly. ‘Sellers want to get their homes on the market ASAP,’ Seattle Redfin Agent Shoshana Godwin said. ‘They’re concerned that if rates rise too much, it could impact their chances of getting good offers since buyers may be worried about overall costs increasing.’”
The Associated Press. “An influx of out-of-state homebuyers and renters pushed up housing prices on the Hawaiian island of Kauai last year, officials said. Kauai County Councilmember Luke Evslin has set his sights on vacant homes and short-term vacation rentals, arguing wealthy people from outside Kauai have ‘parked’ money in local houses to take advantage of low property taxes. He estimated one in eight Kauai homes sits vacant, having been purchased as an investment or second home.”
The Idaho Press. “Longtime Boiseans remember a time when the North End was chock full of affordable rentals. Cathy Steuart Sherman rented several houses in and around the tree-lined neighborhood for years before she and her husband purchased a home on 5th Street in the late 90s. They moved out of the small house in 2005 and decided to rent it out at an affordable rate, joining several other homes and apartments for rent in the few blocks nearby.”
“That’s not so much the case anymore. Slowly, she said many of the rentals she remembers near her property turned over from long-term rentals to short-term vacation rentals listed on sites like AirBnb or VRBO. After looking around the neighborhood, she discovered the boom in short-term rentals where low-income renters used to live.”
“‘Then, it was about that time too I realized in the neighborhood there was an apartment house that flipped all the units in it to an Airbnb,’ she said. ‘…That one I think would have been one of the first ones and later out of curiosity I checked and now there are six within spitting distance of my house.’”
The Sacramento Business Journal in California. “One of the best-known buildings in Downtown Sacramento from the early 2000s real estate boom appears to have financial difficulty, with an ownership group filing for bankruptcy last week. According to the filing in U.S. Bankruptcy Court for the Central District of California, the entity known as 12th & K Partners LLC, which is connected to the Cathedral Building on the northwest corner of 12th and K streets, filed for Chapter 11 bankruptcy Thursday, claiming both assets and liabilities in the range of $10 million to $50 million.”
“Bon Clippinger, president of Los Angeles-based Clippinger Investment Properties Inc., is the signatory to the filing, which states the location of principal assets as 1020 12th St. in Sacramento. The phone rang with no answer Friday at Clippinger Investment’s office. The address appears to correspond to both retail space along 12th Street and two floors of apartments above it.”
From NBC News on California. “More tech industry employees, founders and investors who used to shrug off local politics have taken a sudden and fierce interest in San Francisco government. ‘Everyone I know is just mad — deeply, deeply mad,’ said Zach Coelius, a venture capitalist and former startup founder who moved to the Bay Area in 2005. ‘If you go to other major, world-class cities, they don’t have these problems. We can’t seem to build anything. We can’t seem to fix anything. And we can’t seem to have a city that can operate on a basic level.’”
From CTV News in Canada. “A drug and money laundering investigation called Operation Mad Money—which stretched from Toronto to British Columbia to China—has shown links between illegal marijuana sales and Toronto’s booming real estate market, CTV News Toronto has learned.”
“The investigation, led by the Calgary Police Service, is part of an attempt to seize millions in what authorities allege are drug profits that ended up in money service businesses in the Greater Toronto Area, who passed them along to people trying to buy homes. And it could be the tip of the iceberg, says one retired Royal Canadian Mounted Police officer and money laundering expert. In an interview, Garry Clement says Ontario should follow in the footsteps of B.C. and call a public inquiry to assess how big an impact laundered money has in the property market.”
“‘We know that this is going on, we know money is coming into the province. All you do is look at the number of condos that are sitting vacant,’ Clement said.”
The Calgary Herald in Canada. “A new year has delivered another nasty wallop to the value of Calgary’s downtown office towers. New data from the city’s annual reassessment process this week shows office buildings in the core lost another $1.1 billion of their combined value for the new tax year. Since 2015, about 160 office properties located south of the Bow River have seen their collective assessments shrink by more than two-thirds to $8 billion. It amounts to a whopping $17.3-billion decline over seven rocky years.”
“Five office buildings in the area are completely empty. The vacancy rate in the downtown’s west end, home to many older office structures, sat at 50 per cent in the third quarter, according to Avison Young. ‘The problem is we’re not overbuilt; we are under-demolished,’ said Trent Edwards, Canadian president for Brookfield Properties Development.”
From Nasdaq. “Shares of Chinese developer Modern Land plunged nearly 40% to all-time lows on resumption of trade on Monday after it said it has been in talks with noteholders on a restructuring plan for its $1.3 billion of offshore bonds. Modern Land said in a filing on Monday it has received notices from certain noteholders demanding early repayment of their senior notes, after the firm missed payment for its 12.85% notes due Oct 25, 2021.”
“Separately smaller peer Shimao Group Holdings, which defaulted on a trust loan last week, has put on sale all of its real estate projects, including both residential and commercial properties, Caixin reported.”
From Reuters. “Cash-strapped property firm China Evergrande Group has left what has been its headquarters in the city of Shenzhen and relocated to nearby Guangzhou, Chinese media outlet The Paper reported on Monday. Last September, the Shenzhen building was the scene of chaotic protests when investors crowded its lobby to demand repayment of loans and financial products. Last Tuesday protests also began at the Guangzhou offices, with around 100 investors in financial products issued by the company gathering to express their worries about getting their money back. Small crowds of protesters have continued to gather near the site since, 10 protesters told Reuters.”
From Stuff New Zealand. “The chance of snapping up a property bargain in 2022 will be higher than it has been in years, according to the chief executive of a nation-wide mortgage brokerage. Mortgage Lab chief executive Rupert Gough says a combination of new lending rules that he estimates reduced the number of eligible buyers by about 30 per cent, and mounting pressure on investors from rising interest rates and larger tax bills, added up to a greater chance for deals.”
“Rod Schubert, managing director of Rod Schubert Financial Advice, uses the example of an Auckland investor to highlight the point: If they took on a million-dollar mortgage today on an existing property, with mortgage interest no longer deductible from tax, he estimates that investor would end up losing roughly $35,000 a year on that property. Any investor willing to take on that loss would be gambling on capital gains continuing to outstrip the yearly losses, which would be ‘going in with your eyes closed,’ Schubert says.”