A report from the Daily Mail on Florida. “The millionaire residents of a gated community that live on a secluded island in Miami say their private paradise has been destroyed, after the city allowed a developer to build a huge 91-foot high, seven story block of condos that now blots out the sunshine and their waterfront views. Not only that, the way the new block has been constructed with its curved design has created a wind tunnel effect, meaning patio furniture on the neighboring balconies is being blown around. The prices of the original homes are also said to have plummeted by 30 percent. ‘When residents move in over there, they’ll be close enough to see what I’m watching on TV. Or what I’m reading. I’ll be able to see into their bathrooms,’ said Wendy Gordon to the Miami Herald. ‘We bought a peaceful island lifestyle. It was heaven. It’s gone. This used to be a kind and friendly place. Now everybody hates each other.’”
“The new condo was the result of a 2020 settlement signed by the developer and Homeowner Association (HOA) leaders in closed-door negotiations with the Grove Isle homeowners never consulted for their opinion or given a chance to voice their opposition. David Schaecter, 94, has lived at the Grove since its construction in the late 1970s. He and his wife used to enjoy stunning views over the marina and tennis courts, but now their unit sits just 40 feet away from the new apartment block being built. ‘Now we’re staring at a wall of condo units,’ said Schaecter. ‘It’s invasive. We’ll have to keep our shades closed. The HOA dictators betrayed us. They screwed us royally,’ added Schaecter.”
From WEAR. “The home insurance crisis in Florida could possibly see some stabilization. But that may not be enough for some homeowners. Pensacola realtor Christina Leavenworth says she’s actually seen more people backing out of moving to Florida instead. ‘We have had buyers where they have gone under contract, they’ve done the inspections, the home is nearly perfect — there’s nothing wrong with it,’ Leavenworth said, ‘And then they get an insurance quote for $4,000 — which really isn’t that bad in this market — and they go you know what, I don’t want to move to Florida.’”
From WCIV. “South Carolina has the fifth highest foreclosure rate in the nation, according to a recent real estate study. But what does this mean for Charleston? Brian Beatty, a real estate agent with Keller Williams Realty said Mount Pleasant homes that would’ve sold for roughly $500,000 pre-pandemic are now selling for close to $1 million. He said with such a large number of people looking to move to the area, it creates a high demand, low inventory market. But many people already living here aren’t earning enough to afford it. ‘Right now, our affordability index is at 76. So, what that means is that the median income in the Charleston metro area is only 76% of what’s necessary to qualify for the median-priced home,’ Beatty explained.”
Hawaii Real Estate Dreams. “March numbers were almost identical to last year in units sold for all three categories for Kona. Cash sales for March are down to 45% for Kona as compared to 55% last year. Prices are so far out of reach that now if something is listed under a million, it is almost always a condo. House listings under that range were only 13 at the close of March… pretty skinny choices! In condos you would have had 70. That is where the insurance issue runs smack dab into the pricing. The fees have gone up dramatically the last few years in most complexes, I mean hundreds a month in increases. This is now limiting how buyers think about what is in their price range… not just the sticker price but the per-month expense which continues to grow. And property taxes went up almost $100 a month on rental condos last year too! It affects how the unit cash flows, with many many rentals now not able to cover all the expenses, so some owners will decide to sell.”
The Wall Street Journal. “Wall Street went on a home-buying spree. Now, more lawmakers want to stop it from ever happening again. Democrats in the U.S. Senate and House have sponsored legislation that would force large owners of single-family homes to sell houses to family buyers. A Republican’s bill in the Ohio state legislature aims to drive out institutional owners through heavy taxation. Lawmakers in Nebraska, California, New York, Minnesota and North Carolina are among those proposing similar laws. Critics of regulation note that many of the largest investors have bought very few or no homes in the past year. ‘The great trade is done,’ said John Burns, founder of the eponymous housing research and consulting firm. ‘So what are you trying to stop?’”
The Real Deal. “For a few months, Tides Equities has been desperately seeking preferred equity to shore up its investments in 30 apartment complexes. The company has said the money would help it through this punishing stretch of high interest rates and prepare the properties for sale in the next couple of years. But there’s a tradeoff: If Tides scores that lifeline, some of its original investors could lose everything they put in. Tides, working with AMC Investments, pooled together $277 million from limited partners in 2021 and 2022 to buy 28 properties across Nevada, Arizona and Texas.”
“Now, if Tides hits its $69 million preferred equity goal, 88 percent of that original equity will be wiped out, according to marketing documents obtained by The Real Deal. Just $30 million will be returned to the original limited partners. On some deals, investors may see nothing. But Tides hasn’t been able to save everything: foreclosure auctions are scheduled next month on three properties in Fort Worth, Texas. Tides expects to lose money on some properties. It expects Tides on 67th in Glendale, Arizona, to sell for 17 percent less than it paid in December 2022. In 2023, Class C multifamily complexes in Phoenix were selling at an average of $208,000 per unit, according to Northmarq data, down 17 percent from the previous year.”
“Tides is hoping to sell its Phoenix-area properties in the AMC portfolio, which count as Class C and are older, lower-quality assets, at an average of $256,000 per door, 23 percent higher than the 2023 median. It bought the buildings for $201,600 per unit, according to its marketing materials. But the way the market is going, some observers see that projection as wildly optimistic. Across Phoenix, Las Vegas, Austin and other Sun Belt cities, vacancy increases and falling rents are driving down multifamily property values. Rents in Phoenix dipped 2.5 percent from 2022 through 2023, according to Northmarq.”
“In Austin, rents have fallen 5.6 percent, according to data from Matthews Real Estate Investment Services. At the beginning of 2022, apartment buildings in Austin were trading at $270,000 per unit, according to Matthews. One multifamily agent in Austin said Class C, 1980s-era apartment properties were selling at $180,000 or $190,000 a unit at the height of the market in 2022. Now, those same properties are ‘struggling to trade at $120,000 a door.’ To think that pricing is going to rebound like that is insane,’ the agent added.”
Bisnow on California. “Positive momentum from local and out-of-state investors in San Francisco’s office investment market over at least nine months has helped reset pricing and inspired newfound hope in the beleaguered property sector. But a glut of unoccupied office space means the local office market is not quite out of the woods. ‘To be perfectly honest, anyone buying real estate in San Francisco right now is not looking at a cap rate,’ said Connor Kidd, CEO of The Swig Co. ‘They’re saying, at $250 a foot, I am 70% below replacement cost, and in some cases your cap rate might be zero. You’re barely covering your expenses because you’re not that well leased.’”
“Ryan Miller, West Coast analyst for Green Street, said that values for average-quality office product in San Francisco are down 70% from their 2019 peak. Meanwhile, values for Class-A, institutional-quality assets dropped 50% from the same period. San Francisco still faces political and economic headwinds that are keeping office values depressed, Miller said. A wave of tech layoffs caused ‘cyclical challenges,’ while the desire to work from home, particularly among tech workers who have faced some of the biggest layoffs, continues to keep vacancies high.”
The Globe and Mail in Canada. “Dear Nancy, I had planned to sell our family cottage and an investment property next year. With the recent budget change and the expected capital gain from the sale of these two properties being more than $250,000 I’m not sure I should wait. What do you think? Dear Steve, Deciding to sell a real estate property is not something that can be done as quickly as when selling a stock or bond. There is something to think about that could come into play if you try to sell before the June 25th deadline. There are many other real estate investors that will be trying to do the same thing. That can cause an increase of listings for sale. When there is more supply than demand, prices go down. You could end up selling for less than you expect. You could end up losing more money than the higher tax rate if you don’t wait.”
“Consult your real estate agent to get advice on pricing, expected time to complete the sale and cost to get your properties ready for sale. In the end it may turn out it is better to wait after the rush for the exit is finished.”
The National Post in Canada. “The new capital gains tax proposed in the Liberal budget has led to speculation that there might be a flood of cottages entering the market or a push for earlier closing dates as sellers try to avoid a hefty tax bill. ‘I am seeing an increase in people wanting to list their properties now that this is going into effect,’ said Beth Groom, a broker and owner of Cape Breton Realty. Groom added that buyers don’t seem to have it on their radar that now may be the time to buy. ‘But I think potentially sellers are thinking they would give a deal if it could close early,’ she said.”
“In Muskoka, the heart of Ontario’s cottage country, John Fincham, a broker with Re/Max Parry Sound Muskoka, said he believes the capital gains tax ‘is going to prompt a lot of people to list. People for the first time in a while will have something to pick from,’ Fincham said. Since interest rates have been so high, many prospective cottage buyers have been waiting for rates to come down. But realtors say that it is turning into a strong buyer’s market and has been for a few months. This is for a few reasons, such as pandemic buyers rethinking if they still want to be cottagers, and owners no longer being able to afford a cottage. ‘You’ve got a combination of inventory to choose from, and lower prices,’ said Fincham, adding that this puts buyers in a much better position than they previously were.”
Domain News in Australia. “House prices have fallen in a string of sought-after inner city and bayside hot spots, as Melbourne’s housing market softens. The inner-city beachside suburb of Elwood recorded the largest decline, with house prices down 22.8 per cent in the 12 months to March. St Kilda and Brighton also recorded double-digit falls. House prices fell in the desirable inner suburbs of South Melbourne, South Yarra and Carlton North, by 17 per cent, 13 per cent and 10.4 per cent, respectively.”
“Director at Buxton Brighton Halli Moore said although the bayside prestige market was still buoyant, increased building costs combined with lower borrowing capacities have contributed to downturns in the area. Brighton unit prices dropped by 21.7 per cent, while house prices decreased by 10.7 per cent over the past year. ‘When rates were low, people were happy to pay premium prices for land value properties, pull them down and build a new home on them, whereas the cost of building going up by about 30 per cent has probably seen that segment of the market suffer,’ Moore said. Moore added that buyers were happy to pay more for property when banks were ‘handing out money willy-nilly’ pre-Covid but were now more restricted in their borrowing capacities.”
The Independent Singapore. “In an attempt to address concerns over housing affordability, the authorities have been quick to highlight the slowdown in price growth ahead of the general election slated for no later than 2025. The weakening sentiment in the property market is evident from recent sales figures. Last weekend, a private residential project managed to sell only three out of 59 units put on the market. Additionally, prices of high-end condominiums are being slashed. Notably, a firm associated with major developer City Developments Ltd. managed to offload 65 luxury units in Sentosa after implementing price cuts of over 40%.”