A report from Market Watch. “It’s a tough time for the real-estate industry, which faces a significant test in the form of higher mortgage rates, Dave Liniger, the real-estate tycoon, founder and chairman of Denver-based real-estate giant Re/Max, told MarketWatch. Over the past few years, the same mortgage rate that was averaging around 3% to 4% went as low as 2% during the coronavirus pandemic, when the Federal Reserve cut interest rates. ‘That’s an unreal market — it’s never happened in the history of our country,’ Liniger said. ‘And so what you have is an entire generation of homebuyers who have gotten used to 2.5% to 5%.’ The housing markets that are currently the weakest are ‘ones where home prices are the most unaffordable and overvalued,’ Matthew Walsh, a housing economist at Moody’s Analytics, told MarketWatch. Markets like Austin, Texas, and Boise, Idaho, which saw big run-ups in prices during the pandemic are seeing big drops now, he added. In Austin, home values are down by 4.1% from a year ago, according to Zillow in its March 2024 market report.”
From Newsweek. “The number of homes available for sale rose by more than 10 percent in March compared to the same time a year ago, data from the U.S. Census Bureau showed on Tuesday. Last month, there were 477,000 new homes available for sale, 44,000 more than in March of 2023. Compared to February 2024, new homes ready for sale were up by close to 3 percent. The March data amounted to 8.3 months of supply of homes available for sale. Yelena Maleyevm KPMG’s senior economist pointed out that new homes are able to sell at higher prices as they are also able to give incentives to buyers, such as mortgage rate buydowns. ‘Incentives work,’ she said, pointing to the fact that sales were 8.3 percent higher in March compared to the same time last year.”
Sarasota Magazine in Florida. “Compared to last March, the median price of single-family homes in Sarasota County is only down by 2.5 percent, from $528,013 to $515,000. Among condos and townhomes in Sarasota County, the median price has dipped by almost 9 percent, from $423,245 last March to $385,775 a year later. ‘It’s a more favorable market for buyers now,’ says local realtor Kristina Bregu of Corcoran Dwellings. ‘I’m seeing more price decreases to attract offers, and I’m also seeing more homes going to contract but getting bumped back to the market when something doesn’t work out,’ she continues. ‘I feel like sellers are now realizing there are no more bidding wars and they have to be more strategic.’”
“Bregu says sellers will have more luck if they price their property right at the beginning. ‘You’ll get momentum to start with,’ she says. ‘You have to be realistic now. If homes that cost less than yours aren’t moving, you probably have to drop the price. Sellers aren’t in a hurry to do that,’ she says. ‘But the sooner they understand it, the faster their home will sell.’”
New York Post on California. “San Francisco, once the crown jewel of the West Coast, is now teetering on the brink of collapse. The city’s housing market, in particular, has been hit hard over the past year, with prices plummeting and homeowners fleeing in droves. Once-luxurious properties are now listing and selling for massive discounts just to attract buyers. Consider the penthouse at the San Francisco Four Seasons Residential, initially listed in November 2020 for $9.9 million, now begging for buyers at $3.75 million — a jaw-dropping 62% markdown. It remains on the market today. Homeowners desperate to escape the sinking ship are offloading their properties at losses, with many seeing their investments dwindle by hundreds of thousands of dollars in just months. A five-bedroom home at 478-480 Fourth Ave. sold for $1.1 million earlier this month, after selling less than a year prior for $1.6 million.”
“Real estate veteran Craig Ackerman, who’s witnessed San Francisco’s rise and fall over three decades, laments the city’s potential squandered by inept leadership. ‘I do think that San Francisco probably has another five to eight years of mismanagement. I mean things are a mess out here and they don’t need to be. This could all be changed by the stroke of a pen,’ Ackerman told The Post. ‘But the mayor — they choose to continue this ridiculousness. I don’t think it’s going to change. They are happy waving their liberal flags and looking for a fantasy land that doesn’t exist … It’ll kill you on the way there.’”
The San Francisco Chronicle. “Deeply discounted office towers have become the norm in San Francisco over the past year, but no recent deal has been as radical as one that closed in the city’s struggling Mid-Market neighborhood this month: An empty 16-story tower traded for just $6.5 million. The $72 per square foot pricing for the tower at 995 Market St., which anchors the corner at 6th and Market streets, represents a 90% drop in value from when the building last sold in 2016, for roughly $62 million. The April 18 sale comes after the tower’s former owner, Bridgeton Holdings, last year defaulted on a $45 million loan tied to the property.”
“‘Part of the issue is that the lenders and the owners have no idea what these assets are worth right now,’ one individual said, explaining that the best way to measure the current value of a building is by putting a property up for sale. ‘Even the brokers have no idea.’”
Hawaii News Now. “There’s a final push underway at the state Legislature to let counties phase out short-term rentals to help ease the housing crisis. They’re all advocating for Senate Bill 2919, which would give the counties the power to convert short-term to long-term rentals. The Maui wildfires exacerbated the critical need for housing and the proliferation of short-term rentals. State Sen. Jarrett Keohokalole said there has been some pushback from ‘transient owners … who were offended at the notion that their dream investment property on Maui would be compromised by our efforts here to get fire victims.’”
KPNX in Arizona. “Babies have been born in tents. There’s a secret food bank that school teachers – and others – visit. Families are sleeping in the woods. The lure of Sedona’s red rocks and crystal shops tends to eclipse an unfortunate truth— a growing number of people who work in Sedona can no longer afford to live here. The average home price in Sedona is $944,879 — nearly double what it was 4 years ago, according to Zillow. Sedona Mayor Scott Jablow refuses to blame Sedona’s bustling tourism industry for the rise in prices. Instead, he points the finger at short-term rentals many out-of-towners stay in. According to the mayor, these properties make up almost 17% of Sedona’s housing inventory.”
“‘Of course, we have some people who are very generous and realize that they could make $5,000 a month as a short-term rental,’ Jablow said. ‘[But] they realize the problem, and they are keeping it as workforce housing. Not everybody is looking to make a buck, as opposed to corporations coming in and buying a group of houses.’ Some of those corporations, Jablow said, have made offers $100,000 over asking price.”
The Dallas Morning News in Texas. “Plano City Council unanimously voted late Monday night to ban almost every new short-term rental in single-family neighborhoods. Homes rented through apps like Airbnb and VRBO will still be allowed, but only in areas zoned for hotels and with more strict regulations. Cities have complained about short-term rentals and a lack of regulation on the properties for years because of safety concerns stemming from out-of-control parties, shootings and how one property had a connection to a brothel. ‘We never second-guessed our decision to move to Plano until STR’s showed up at our doorstep,’ said Plano resident Tatiana Ramirez. ‘These properties advertise our neighborhoods as private and quiet, but fail to mention that we are now a crime watch area due to their guests’ criminal acts.’”
Fast Company. “Late last year, New York City made headlines when it all but banned Airbnbs and other short-term rentals within city limits. Since the pandemic, Airbnb had overtaken an estimated 39,000 rental units, hollowing out neighborhoods and causing already-high rents to grow even higher. So, in September of 2023, New York City decided to do something about it. A series of bold requirements capped the total number of short-term rentals (STRs) and limited guests to just two at a time. They required STR operators to be primary homeowners — and to be present in the home while hosting. Though it may sound revolutionary, New York’s crackdown isn’t the first of its kind. In fact, it’s part of a growing trend — one largely spearheaded by much smaller towns. Over the last decade, communities from Irvine, California, to Durango, Colorado, have implemented clever regulations, taxes, and zoning policies to hobble the STR market — or, in some cases, eliminate it altogether.”
“‘You would see tourists on the streets in neighborhoods where there weren’t any hotels,’ recalls New York-based artist and activist Murray Cox. The sound of rolling suitcases could be heard at all hours. Once tight-knit communities began to feel lifeless. ‘It didn’t take very long for people to realize the sharing economy was basically a scam,’ explains Cox, who later went on to found data-sharing platform Inside Airbnb. ‘People weren’t using that car that was sitting in the driveway to drive Uber. And people weren’t just renting out a sofa or a spare bedroom.’ Instead, people saw an economic opportunity they could invest in. And they started buying whole homes to rent out on Airbnb.”
“In many cases, speculators and investment companies were buying multiple homes expressly for short-term rental use. Right now, about 90% of Airbnbs in Bozeman, Montana, and Nashville, Tennessee — both popular vacation spots — are whole homes. San Francisco-based housing activist Dale Carlson first heard about the Airbnb Effect back in 2014, when the city was undergoing a major housing affordability crisis. When he learned that nearly 5% of the city’s limited housing stock was devoted to Airbnbs, he decided to get involved. ‘We were defeated in the ballot. Airbnb spent close to $10 million—they outspent us 20 to 1,’ Carlson says. But despite the heavy spending, Airbnb barely eked out the win. ‘So many people had told us, ‘You’re never going to beat them because they’re too big and powerful,’ Carlson says. ‘But suddenly they didn’t look so powerful. And we didn’t seem so vulnerable.’”
The Globe and Mail. “New condo sales in the Toronto region dropped to their lowest level since the 2009 financial crisis, with investors balking at lofty purchase prices and higher borrowing costs. There were 1,461 new condo sales in the Greater Toronto and Hamilton Area in the first quarter of the year, according to Urbanation Inc. ‘It is dead. I would never use words like this, but I am because it is true,’ said Simeon Papailias, managing partner with real estate brokerage REC Canada, whose firm sells new condos, also known as preconstruction condos because they have not been built yet.”
“The preconstruction condo market started to falter in 2022 as the Bank of Canada raised interest rates to cool inflation. Preconstruction buyers do not take out a mortgage until their condo unit is built and that process can take several years. However, they still need to show developers up front that they can qualify for a loan when the condo building has been completed. Pierre Carapetian, who has sold real estate in the Toronto region for 18 years, said he has steered his clients away from preconstruction homes into the resale market because resale homes are cheaper. ‘In the last two years, I have not recommended a single project,’ said Mr. Carapetian, who runs his own real estate brokerage. ‘I could not in good conscience recommend anything at this juncture because it makes no logical sense.’”
“‘It’s very difficult for investors to make the numbers work on buying new condos, given their record-high price premium over resales and steeply negative cash flow on rentals,’ Urbanation president Shaun Hildebrand said.”
Blog TO in Canada. “In response to this dismal level of activity, developers are ‘dramatically’ pulling back on launching new complexes in and around the city, with 75 per cent of new condo buildings opened so far in 2024 debuting in York Region rather than Toronto proper. Unsold inventory of new condos in the region now sits at around 22.8 months of supply or 23,815 homes (30.6 months of supply in the 416 specifically), with the number of unsold, never-lived-in units increasing by 124 per cent in the last two years. Prices for new units are falling somewhat, now at $1,168 per square foot, largely due to the fact that most new units are outside of the city. This number marks a 12 per cent decrease from the last quarter of 2023, and a 17 per cent fall from the record high seen in Q1 2023.”
ABC News in Australia. “The collapse of one of Perth’s best-known residential building companies is being blamed on mounting pressure on the home construction industry, as one lobby group tips more local builders will go under. Collier Homes, first established in 1959 and more recently operated by veteran builder Dario Amara, was placed into liquidation earlier this week. It is the latest in a series of building company collapses that have plagued the industry nation-wide since the COVID pandemic. One Collier Homes customer from Perth’s northern suburbs, who asked not to be named, said he learned of the news through media reports.”
“The 73-year-old said there was still up to $200,000 worth of unfinished work at his property, nearly three years after construction started. ‘It’s been very stressful up until now, this whole three years … I reckon they’ve actually worked for four or five months in total on the job,’ he said. He said he was also ‘fed up’ with excuses that COVID or impacts to supply chains were to blame. ‘My advice in this climate is don’t build, go and find yourself something that’s almost what you want, and knock a few walls down,’ he said.”
“Home Builders Action Group chairman Jason Janssen said post-COVID stimulus measures intended to keep the industry afloat have instead contributed to the issues now putting pressure on construction companies. But Commerce Minister Sue Ellery said the government was not at fault for trying to turbocharge the industry. ‘We did not require builders to take on more than they had capacity to deliver,’ she said. ‘That was a commercial choice that some of them made. Some companies deliberately put a limit on how many contracts they would sign based on what they knew was their capacity at the time. I don’t think we can blame anyone. It was an extraordinary set of circumstances.’”