A report from Chicago Magazine in Illinois. “Chicago’s luxury condo market has cooled off significantly since 2018, but don’t expect a Manhattan-style meltdown. In a plunge described by commentators as a ‘bubble’ and ‘bloodbath,’ the median price of high-end condos and co-ops built in New York’s premier borough plummeted by 24 percent over the course of FY2019. Noting that nearly half of new units had remained unsold since 2015, the New York Times proclaimed last month that the residential tower boom that altered the city’s skyline in the 2010s had gone bust. The beginning of the 2020s would represent a ‘reckoning with reality,’ in the words of one expert.”
“The news isn’t quite so grim for Chicago. ‘The luxury market has been slowing down in a lot of cities, but New York is a different animal altogether,’ says Matt Laricy, a broker at Americorp in River North. ‘The international super-rich want to buy expensive places there — it’s a bragging thing. As a result, [New York developers] overbuilt a lot, but here, it’s more slow and steady.’”
“The proof is in the numbers. Luxury condos and townhouse values fell here in 2019, but only by about three percent — significantly less than the 24 percent recorded in New York, according to Zillow, which defines the nebulous term ‘luxury’ as the 90th percentile of the market in terms of price per square foot. More eyebrow-raising for developers and sellers is the 47 percent freefall of the number of luxury units sold in the city since 2017, as reflected by the same data: from 4,142 to 2,189 last year.”
“Wealthy condo seekers have been taking a wait-and-see approach when ponying up big bucks for new construction for a litany of reasons: uncertainty when it comes to interest rates, higher property taxes, and the overall local economy under a new mayor and governor. In turn, developers yank listings or pull projects.”
“For example, Crain’s reported earlier this month that Related Midwest, the developers behind One Bennett Park — the sparkling, ultra-luxe, 70-story Streeterville tower near Navy Pier — removed about 30 listings in late 2019, including three $14 million penthouses. You can currently snap up a two-bedroom, three-bath condo for $1.85 million, marked down from $1.95 million a few months ago. Likewise, a lack of demand for $1.3 million–plus luxury condos in River North recently prompted developers to scrap plans to build a 15-story residential tower on the site of the old Erie-LaSalle Body Shop in favor of a five-story boutique hotel.”
The Wall Street Journal on New York. “Two trophy penthouses in a nearly 800-foot-high new construction tower in Manhattan have finally sold after several years on the market. At Madison Square Park Tower in the Flatiron District, the two top penthouses, as well as two studio apartments on a lower floor, have sold in a deal totaling approximately $45 million, according to Ian Bruce Eichner, the building’s developer. The sale brings the East 22nd Street building to more than 90% sold, Mr. Eichner said. It’s taken more than four years to get to that point, as the New York luxury market suffered amid an influx of new condo inventory in Manhattan.”
“‘There’s a general perception in the buying community that everything is overpriced and there’s plenty of it,’ Mr. Eichner said. ‘The people who have the money to afford these units are sophisticated. When they ask their advisers what they think, they’re asking them, ‘How comfortable are you catching a falling knife?’”
The Nashville Post in Tennessee. “A large portion of the long-stalled Ovation property in Cool Springs is up for sale. Colliers International in Nashville is representing Paramont Capital in the sale of a 34-acre portion of the Ovation property on which a loan group foreclosed last year. They began advertising the property in November. The full 150-acre Ovation area was supposed to be a hub of Cool Springs, with a mix of office space, retail, multifamily housing and hotels. Since its initial approval several years ago, a large portion of that project has largely been stalled.”
“A few days after Highwoods held a ribbon-cutting event for Mars, a lending group held a foreclosure auction for a piece of Thomas’ land. (Thomas still owns 42 acres in the Ovation area.) The bizarre auction on the courthouse steps in Franklin ended after a bail bondsman bid $42 million for the property but then couldn’t produce the money. So the property went back to the lending group for a sale price of $40.5 million.”
“In a press release from late last year, Colliers notes that the property for sale is development-ready and is approved for 480,000 square feet of office and retail space, 380 apartments and 480 hotel rooms. Executive Vice President and Partner Shane Douglas and Senior Vice President Patrick Inglis are leading the effort to sell the property.”
“‘The first and most important step in our engagement will be to formalize a process for presenting Ovation to appropriate buyers,’ Douglas said at the time. ‘This is a high-profile opportunity that many buyers are already aware of, so we will focus on designing an appropriate timeline that gives prospective buyers the ability to respond to an opportunity of this scope.’”
“In short, the company doesn’t plan to sell the property to a bail bondsman on the courthouse steps.”
The Canton Rep in Ohio. “The Arthur J. Cirelli building on 30th Street NW will remain vacant for the foreseeable future. The Stark Metropolitan Housing Authority (SMHA) and developers Giltz and Associates planned to demolish the dilapidated structure and build an $8 to 10 million housing and retail complex. Confusion and changes regarding the proposal and city practices, however, have halted discussions.”
“This ordinance would update the original 1988 agreement between the city and corporation. It removes a clause, mandated by the city but not state law, that requires the CCIC to pay fair market value for city property. City officials have said that clause has rarely, if ever, been used. ‘We have never required obtaining fair market value,’ Mayor Thomas Bernabei said at a council meeting earlier this month.”
“That’s because past transactions have been ‘upside down’ and required more investment from the buyer than the property was worth, Law Director Kristen Bates Aylward said.”
From Inman News. “U.S. foreclosure filings in January 2020 increased 13 percent from December 2019 to 60,085 total filings, according to a report by Attom Data Solutions. The increase also brings foreclosure filings up 7 percent from a year ago in January 2019. New Jersey, Delaware and Illinois reported the worst foreclosure rates in January 2020. Among 53 metro areas containing at least 1 million people, areas that reported the greatest foreclosure rates included Chicago, Illinois (one in every 1,027 housing units); Cleveland, Ohio (one in every 1,029 housing units); Philadelphia, Pennsylvania (one in every 1,072 housing units); Jacksonville, Florida (one in every 1,144 housing units); and Riverside, California (one in every 1,189 housing units).”
“19 states reported year-over-year increases in foreclosure starts, including California (increased 27 percent); Tennessee (increased 21 percent); Georgia (increased 14 percent); Illinois (increased 9 percent); and Ohio (increased 3 percent). Likewise, 75 of 220 metro areas analyzed reported year-over-year increases in foreclosure starts, like San Antonio, Texas (increased 66 percent); Los Angeles, California (increased 63 percent); Riverside, California (increased 22 percent); Nashville, Tennessee (increased 19 percent) and Chicago, Illinois (increased 14 percent).”
“National bank repossession rates also rose after the holidays, increasing month-over-month by 49 percent and year-over-year by 70 percent.”