A report from the World Property Journal.”According to Redfin, condo prices are falling in major Florida and Texas metros as inventory piles up and buyers back off. This comes as high HOA fees and insurance costs make condos a tough sell. In Tampa, for instance, the number of condo units for sale soared 57.2% from a year earlier in July, pending sales dropped 18.9% and the median sale price fell 4.9%. In Houston, condo inventory is up 35.9%, pending sales are down 35.3% and prices are down 6.5%. ‘The condo market isn’t moving,’ said Steven Weiss, a Redfin Premier agent in Tampa. ‘Most of today’s buyers want move-in ready single-family homes. It’s much more difficult to sell a condo. Buyers are aware we’re at somewhat of a tipping point for condos, and that their value may continue to decline as HOA fees rise and people grow more wary of buying in a waterfront building.’”
A press release. “Home shoppers are looking at more options to choose from this fall as the number of homes for sale sits at the highest level since May 2020. The number of homes actively for sale grew by 35.8% in August, the 10th straight month of growth, according to the Realtor.com®. ‘This August, as the number of homes on the market continues to climb, price cuts are more common, asking prices are moderating, and homes are taking longer to sell. The widely anticipated Fed rate cut has already ushered in lower mortgage rates, but it seems that some buyers and sellers are waiting for additional declines,’ said Danielle Hale, Chief Economist at Realtor.com®. Of the 50 largest metro areas, just 11 had higher levels of inventory in August compared with pre-pandemic levels, including Austin,Texas (+36.6%), Memphis, Tenn. (+28.7%) and San Antonio (+25.2%).”
Lodi News in California. “The party’s over. The days of over-sized operating surpluses for the city are quickly becoming a distant memory. During COVID years the city realized record operating surpluses, thanks to federal and state money that filled the coffers. Now, those halcyon days are gone and it’s back to the future. Another shoe to drop could be the soon-to-be-built homeless access center and to what extent the city’s general fund has to pay for operating costs. The local housing market is softening, according to online real-estate company Zillow. The number of homes currently for sale is growing as well, says Zillow, approximately double what it was last year.”
NBC Bay Area in California. “Antioch Mayor Lamar Hernandez-Thorpe is telling other Bay Area cities that his city ‘will not be a dumping ground.’ He is pointing the finger at San Francisco and Oakland, specifically.’We shouldn’t have encampments on our trails and waterways because that poses a public threat that’s not right. Don’t push people into our communities and expect us to be the dumpsite for all your problems. That’s not fair and that’s not right.’ Contra Costa County Resident Dolores Brown said the rise in homeless encampments in the city of Antioch has her feeling frustrated and scared. ‘If you’re out walking, you’re afraid to go down the trails cause you don’t know if one of them are gonna attack you or whatever,’ she said.”
The Wall Street Journal. “Faun James was at work in a Pennsylvania hospital last month when a storm flooded her town. Unable to drive in the surging water, she watched the devastation unfold from her home’s security cameras. Her possessions—and others’—were floating down her driveway. ‘We were told we don’t live in the flood plain, so why would we need insurance?’ said James. ‘My husband’s lived here for 60 years and never had any flooding.’ The total number of homeowners with flood insurance has declined. One explanation is higher costs for federal coverage layered on top of higher premiums for regular homeowners insurance.”
“In Florida, which has more policies than any other state, only 12% of properties have federal policies, according to insurer Neptune Flood. In four counties—Gadsden, Hamilton, Liberty and Jackson—less than 1% of homes had NFIP policies at the end of July. ‘If your driver’s license says Florida, you live in a flood zone and you’d better buy flood insurance,’ said Lisa Miller, an insurance adviser based in the state and former regulator. ‘It’s tragic that so many people aren’t covered.’ In Westfield, Pa., James said cost was a big reason so many people in the town lacked coverage. ‘It’s so expensive and our income here’s not that great,’ she said. ‘So now we’re praying that FEMA helps us.’”
The Daily Voice. “A Toms River man was accused of leading a multimillion-dollar scheme to commit mortgage fraud and steal federal COVID-19 loans, authorities said. Arthur Spitzer, 37, was indicted on 25 counts, New Jersey’s U.S. Attorney Philip Sellinger said in a news release on Tuesday, Sept. 3. A grand jury also indicted 38-year-old Mendel Deutsch of Toms River and 42-year-old Joshua Feldberger of Howell Township in the case. According to the indictment, Spitzer got mortgage loans for real estate properties that he didn’t own in New Jersey and Brooklyn, New York. He chose properties that had no mortgages or ones significantly below market value.”
“Spitzer received the loans six times by lying that he had the authority to obtain them despite not owning the properties. Prosecutors said he used documents with forged signatures of property owners, fraudulently transferring control to him. The mortgage loans were deposited into Spitzer’s bank accounts and he used the money to pay off his debts. ‘Spitzer then caused the mortgage loans to default by not making the required payments, leaving the true property owners subject to foreclosure and eviction,’ Sellinger said. According to prosecutors, Feldberger owned the settlement company that handled the fraudulent transaction.”
From Bisnow. “Fire sales of office buildings are becoming more common. In the first half of 2024, eight office properties sold at discounts greater than $100M from their prior sale price, more than in 2022 and 2023 combined, according to Moody’s data provided to Bisnow. In New York City, where some of the first marks of distress began showing up a couple of years ago, the pain has become more acute in recent months. In March, GFP Real Estate and TPG entered into contract to buy 222 Broadway at a 70% discount — shaving off more than $300M from what Deutsche Bank’s asset management arm paid for it in 2014. In July, UBS Realty Investors sold the 20-story office building at 135 W. 50th St. at an auction for a 97.5% discount to its prior price. Menashe Properties is betting that it can succeed where others have failed. Last month, Menashe did it again, buying Montgomerly Park, a historic building in Portland recognizable by its distinctive U-shape, for an 87% discount, $222M less than it had sold for before the pandemic. Menashe said the price amounted to ‘significantly less than land value.’”
From Reuters. “Global property markets, rattled by the steepest rise in interest rates in a generation, will get little relief from the gradual easing of borrowing costs, with scant hope of a return to the free money that fuelled a boom. Industry executives and bankers see no quick fix for an industry built as rock bottom rates sent trillions flowing into property, money the sector is now hemorrhaging as bonds and ordinary savings accounts regain their appeal. The past two years of rate hikes have claimed scores of victims, including property group Signa, which owned trophy buildings in Germany, leaving behind a trail of half-built homes and empty skyscrapers. Britain’s construction sector has seen the most insolvencies of any industry for two years running, with roughly 4,300 over the 12 months to June 2024.”
“‘I’ve never worked so hard in my life and feel like I have nothing to show for it,’ said Brian Walker, president of the Pittsburgh-based property company NAI Burns Scalo. ‘Some will say … we’re probably at the bottom of where the office market is, but I don’t know how you can say that,” said Walker. ‘You’re starting to see a lot of office buildings keys just go back to the bank.’ Earlier this year, a company liquidator knocked around 160 million pounds ($209.89 million), or 60%, off the previous purchase price of an office tower in London’s Canary Wharf, a source familiar with the matter said, but the sale foundered regardless. In Los Angeles, the Century City commercial district surrounding Fox Studios is doing well, while large swathes of downtown are a ‘total train wreck,’ with many buildings going bust and much space unoccupied, said Jeffrey Williams, a New York-based investor at Schroders Capital.”
CBC News in Canada. “With three upstairs windows blown out, a once beautiful neo-Victorian home in Greater Napanee, Ont., now stands charred and empty as a reminder of a deadly tragedy that several neighbours called ‘inevitable’ due to the chaos inside. Last month, 67-year-old Walter Lasher died in a suspicious fire at the multi-unit building. He was one of many tenants who once called the house on John Street home — and not the first to struggle with poverty and housing insecurity, with a friend telling CBC it was the only place he could afford. Following his death, Andrew James Thompson, a 31-year-old man from Picton, Ont., was charged with first-degree murder, criminal harassment and multiple counts of arson.”
“‘The house was a dump,’ said one person familiar with the property who knew both the victim and the suspect. ‘It was terrible in there.’ Around 14 people lived in the house altogether, according to multiple people. ‘It was just like a drug house — needles, everything,’ said the one confidential source. Drugs would be lying around the house in the open, they said. Sometimes, people overdosed. ‘Walter feared [for] his life all the time,’ they said, noting that people in the house would also fight using knives, shovels and baseball bats. ‘Who approved that living condition? That’s what I’d really like to know,’ said Karen Donaldson, who lives a few doors down.”
Cottage Life in Canada. “When it comes to cottage real estate, it’s safe to say that buyers have the upper hand right now. To get properties moving again, real estate experts say that sellers must shed their pandemic-era revenue dreams and list their properties at market value. ‘For sellers, if they don’t price it right, they will get shredded in this market,’ says John Fincham, a real estate broker at Re/Max in Parry Sound, Ont. There are also the cottagers who bought properties during the pandemic and are having ‘buyer’s remorse,’ says Fincham. Plus, there’s the sellers who couldn’t adjust with interest rate changes, he adds. ‘A lot of sellers still have the Covid market mindset,’ says Fincham. ‘And the buyers, of which there are very few, are far more savvy and on top of the market.’”
The Courier Mail in Australia. “RBA Governor Michele Bullock warned her ‘message on interest rates is not what many borrowers want to hear’ especially ‘as labour market conditions ease, more households will experience a strain on their finances from unemployment or reduced working hours.’ Ms Bullock said RBA estimates around 5 per cent of owner-occupiers were ‘in a particularly challenging situation, where the combined total of their essential spending and scheduled mortgage repayments is more than their income.’ ‘Some may ultimately make the difficult decision to sell their homes,’ she warned, with lower income borrowers ‘over-represented in the group of people who are really struggling.’”
“Millions of dollars worth of Aussie homes have already been seized for mortgagee sales from McMansions to townhouses and inner city apartments, with S & P Global Ratings naming the 10 hardest hit postcodes which contain 100 suburbs in trouble.”
From Real Estate Asia. “Four homes on the Peak were sold for more than 40% lower than other nearby sites. In a recent report, Knight Frank said Hong Kong’s home prices fell to the lowest level in nearly eight years. This is due to pressure from first-hand price reductions, high interest rates, economic uncertainty and the negative impact of deteriorating wealth effect in the investment market. ‘Home prices decreased by 1.2% MoM and 13.1% year on year (YoY) in June, according to the Rating and Valuation Department. This marks two consecutive months of decline after a temporary uptick following the government’s removal of property curbs,’ the report said.”
“The trend of secondary luxury stock selling at significant reductions persisted. Notable transactions included four homes with a total of GFA 16,986 sq ft at 46 Plantation Road on the Peak, which were sold for HK$ 1.1 billion, or HK$64,759 per sq ft. The price was discounted more than 40% compared to a nearby luxury property transaction in 2017. Another example includes a 6,493-sq-ft house with a 6,000-sq-ft garden at 8 Purves Road, Jardine’s Lookout, which was sold for HK$360 million, or HK$55,444 per sq ft. This represented a reduction of over 60% compared to the asking price three years ago.”