A press release from Redfin. “The U.S. housing market has been on fire this year. But the condo market has missed out on much of the gains. ‘Before the pandemic, it was challenging to find a condo in Seattle for less than $500,000, but now there are plenty selling for under $400,000,’ said local Redfin real estate agent Forrest Moody.”
“In San Antonio, there’s been a resurgence of high-end condos in the downtown area, according to local Redfin real estate agent Jim Seifert. ‘Young people who work in tech and healthcare are moving here from Seattle, California, Washington, D.C. and Maryland because San Antonio is so much more affordable, and they have a bigger appreciation for downtown living than the average person from Texas.’ Seifert continued: ‘San Antonio’s condo market is also likely being fueled by the fact that buyers know they can get in. There’s a shortage of single-family homes for sale, but the supply of condos is growing like wildfire, so some folks are opting for condos because they don’t want to deal with a bidding war.’”
From Mile High CRE. “Reports from around the country indicate the sale of multi-family units have plummeted in densely populated areas on the coastlines of America. As reported by New York City Comptroller, Scott M. Striner in his weekly economic forecast released on September 28, 2020, residential real estate transactions declined by 40 percent in July and 57 percent in August in New York City, year over year. The west coast has not fared much better. According to local real estate brokerage Compass, the San Francisco Bay area has been hardest hit by the pandemic as it relates to the housing market and condo sales have taken the brunt of the impact.”
“‘The number of price reductions—again heavily concentrated in the condo market—has jumped to its highest point in many years,’ Compass said in its report. ‘In certain segments, sellers are now competing for buyers, instead of buyers competing for listings.’”
“Denver area Realtor Amra Besirevic said, ‘The convenience of being close to entertainment and restaurants is the reason her current buyers are looking at downtown Denver, not to mention the ability to choose from a number of newly built units.’”
From the Boston Globe in Massachusetts. “It’s been a while since renters have had the upper hand in Boston. But in a market that’s largely tied to the academic calendar, a drop-off in college students — thousands of whom didn’t return to campus this fall due to the pandemic — has led to staggering vacancy rates across the city. ‘There’s hundreds and hundreds of vacancies,’ said Stephen Visco, team leader at RTN Realty Advisors in Brookline. ‘It’s the worst I’ve ever seen, and I’ve been doing this for 18 years.’”
“Nearly 7.2 percent of apartments in Boston were sitting vacant on Nov. 22, according to Boston Pads, a real estate technology platform that tracks local sales and rental data. That’s more than a five-fold increase over a year ago, when the vacancy rate sat at 1.32 percent. Landlords have been making concessions to fill those unrented units, covering the much-hated broker’s fee and slashing rents. ‘They’ve decreased their rents by like 20 percent from what they were a year ago,’ Visco said. ‘I mean, they’re just scrambling to get these places rented.’”
“For example, in Brighton’s Oak Square neighborhood, Visco said, ‘You can get a three-bedroom right now for $2,000 to $2,100 a month versus, back in the day, looking at $2,500 to $2,600.’ That’s for an average unit in an older home, Visco noted. New construction and luxury buildings aren’t necessarily dropping rents, he added, but are instead offering two or three months of free rent with no broker’s fee.”
“Visco said landlords across the board are feeling the impact of a soft rental market, from big management companies to ‘mom and pop’ owners. ‘Even in Newton, Watertown, Brighton, there’s still a ton of vacancies,’ he said, though buildings closer to downtown and near colleges have been hit the hardest. From Commonwealth Avenue to Harvard Square to the Fenway, apartments that ordinarily get filled up by incoming students still have hundreds of vacancies.”
The Real Deal on New York. “HFZ Capital Group has laid off a number of employees as the developer’s financial and legal troubles mount. Two sources familiar with the matter said the layoffs and furloughs mainly affected people working in the construction side of the business and also those at the company’s main office at 600 Madison Avenue.”
“The developer has been under pressure as it deals with a slew of lawsuits from lenders and subcontractors over delinquent loans and unpaid bills tied to several of the firm’s Manhattan condos. The first signs of HFZ’s financial troubles emerged in September, when the mezzanine lender on four of the developer’s Manhattan condo projects, CIM Group, hired a brokerage to market the positions for a UCC foreclosure auction.”
“In October, Starwood Property Trust sued HFZ for allegedly defaulting on loan payments at a co-op conversion at 344 West 72nd Street. Then, this month, the lender on HFZ’s planned Upper East Side condo project alleged that HFZ owed more than $18 million in defaulted debt. The loans had been personally guaranteed by Ziel Feldman and his number two, Nir Meir, the lawsuit said.”
“HFZ was granted some relief this month when it went to court to stop CIM from going ahead with the UCC foreclosure auction, and a judge granted a temporary hold. HFZ had argued the auction — for loans tied to condos at 88 and 90 Lexington Avenue, The Astor at 235 West 75th Street, and Fifty Third and Eighth at 301 West 53rd Street — was ‘commercially unreasonable’ and a ‘predatory attempt to capitalize on the Covid-19 pandemic,’ which would allow CIM to take over the properties. The next court hearing is scheduled for Nov. 30.”
From Bisnow on Texas. “Nine months after the coronavirus shutdown in Dallas-Fort Worth, many market analysts still envision a rosy future where companies and residents running away from high-tax states keep North Texas commercial real estate healthy or even frothy. But those predictions, while true in some individual realities, could be glossing over pending financial stress in the commercial and residential real estate markets, experts say.”
“‘The data points that we have, which are a few very large international investors, [show] they have confidence in the long-term stability of U.S. commercial real estate,’ Walker & Dunlop Investment Partners President Sam Isaacson told Bisnow. ‘But they do believe in the short term there is going to be more pain in the broader economy, which is going to impact U.S. commercial real estate.’”
“Another pressure point for DFW markets is softness in the once-booming office market. There has been just shy of 5M SF of negative net absorption in DFW office space year-to-date, CoStar found. It’s the first time since 2009 that the market is going to finish at negative net absorption levels, CoStar Group Director of Market Analytics Paul Hendershot said. Unemployment also remains a drain on the real estate economy, with the Bureau of Labor Statistics reporting that 488,800 people across three DFW employment markets were unemployed in October, up from 252,000 a year prior.”
“There has been a surge in the number of DFW and Texas home loans backed by the federal government entering into some stage of delinquency in August and September, the Dallas Morning News reported. More than 19% of Federal Housing Administration-backed home loans in DFW were behind in payments in August, the seventh-highest delinquency rate in the U.S. Across all types of home mortgages, 8% of DFW homeowners had missed at least one payment by then, the DMN said.”
“‘I think what a lot of real estate investors are maybe looking at is what happens next year if there isn’t the additional stimulus or it’s not as meaningful,’ Isaacson said. ‘The longer they are keeping interest rates low, we are continuing to inflate asset values. And, it just makes the reset potentially worse, or you end up with a decade of no appreciation or even longer with no appreciation once investors start to realize there is a complete disconnect between the asset value and the [net operating income] that these assets are delivering. That is the one thing we have to be very cautious about is what is the new NOI going forward.’”
From NBC Bay Area in California. “After five years of searching, Avinash Jha and Ami Shah say they finally found their dream home in Fremont, Calif. Already locked in a rental lease, they couldn’t move in with their two children right away, so they decided to rent it out for one year to a family they met online. ‘They’re a family like us; they’re trying to build a life here. We thought, ‘Oh it’s great. They’ll take care of our home,’ said Shah.”
“The couple and their new tenants signed a rental agreement in August 2019, which strictly prohibited subleasing. Little did they know, their tenants would disregard the agreement and turn their dream home into a hotel, Jha and Shah said. In June 2020, neighbors alerted them to multiple Airbnb listings advertising individual rooms inside house. ‘I read through the reviews that even during the pandemic about 200 guests had stayed there!’ said Jha. ‘I was furious. All they wanted to do was make money off our house,’ said his wife.”
“After learning their tenants violated the rental agreement by subletting the home, the Jha’s served them a 30-day notice to vacate on September 24, 2020. After weeks of back-and-forth, the couple learned their situation was about to get much more complicated. The Jha family said when the tenants tried to get the Airbnb guests to leave, the guests refused, saying they were now legally tenants because they’d lived there for more than 30 days. They also cited Alameda County’s moratorium on evictions, said the Jha’s.”
“NBC Bay Area reached out to both the original tenants and three of the Airbnb guests. The tenants didn’t want to speak with us and the Airbnb guests did not agree to an interview. Their original tenants have since abandoned the situation, according to the Jha’s, leaving them stuck in a housing dispute with Airbnb guests who they don’t know. ‘Legally, the [Airbnb guests] very well might be right. Legally, there’s nothing the landlords can do about this,’ said Alan Horowitz, a landlord attorney who is not representing the Jha’s or associated with the case.”
“Horowitz said this Fremont case is not isolated and said these kinds of situations are happening all over the Bay Area. And because of Alameda County’s eviction moratorium, Horowitz said they can’t resolve the situation in court. ‘I don’t know how many calls [I get] each week where I have to tell people that I am completely helpless to do anything for you right now.’”
“The Jha’s said they have reached out to the Board of Supervisors and haven’t received meaningful help. Until the end of the year, and likely longer, they said they’re forced to absorb the losses – losses that have taken more than a financial toll. ‘[I’m] just emotional that this has turned out to be such a nightmare,’ said Ami Shah.”
The Wall Street Journal. “Nick Price, a retired former top-ranked golfer, is trying once again to sell his estate on Florida’s Jupiter Island, this time for $17 million. He previously listed it for close to $22 million in 2016 and took it off the market early last year, according to Zillow. Before the virus, the Jupiter market was sputtering and price cuts were plentiful. Now sales are increasing as buyers from the Northeast, now able to work from home, head south.”
“Tracy Ward of the Eklund|Gomes Team at Douglas Elliman, one of the agents representing Mr. Price this time around, declined to comment on his reasons for selling but said he is motivated. ‘I think he wants to sell. That’s clear with the new price point, we’re pricing it to move,’ she said.”