A report from the Tampa Bay Times in Florida. “Real estate markets across the country are still trying to find their footing in the aftermath of the the COVID-fueled home-buying frenzy of 2021 and 2022 said Michael Wyckoff, a global real estate advisor with Engel & Völkers in Madeira Beach. ‘We’re in this weird sort of no man’s land,’ he said. ‘Sellers are still on a little bit of a power trip because the market has been so strong in the past few years.’ This month, the number of active listings increased 77.6% year-over-year, which means there are more options for buyers to choose from. Homes are no longer being snapped up by cash buyers within hours of listing. Wyckoff said people with second homes and investors are likely driving this uptick in inventory. ‘With the cost of maintaining and insuring a home going up, a lot of those people are deciding it makes more sense to sell.’”
From WFLA. “According to Realtor.com, the percent of homes that have dropped their prices is up from 12.7% in May 2023 to 16.6% in May 2024. The report also found that 46 of the top 50 metros in the United States saw share of price reductions rise compared to the previous year. Realtor.com listed three cities that saw considerable drops in prices: Tampa, Florida; Jacksonville, Florida; and Charlotte, North Carolina. The report stated that 28.6% of homes in Tampa saw price reductions, which is an increase of 10.9 percentage points compared to 2023. Jacksonville fell right behind with 27.3% percent of homes reducing prices, a 10.2 percentage point increase, and Charlotte came in third with 19.4% of homes lowering their prices, an 8.3 percentage point increase.”
The Boston Globe. “In one year, Fannie Mae’s secret blacklist of condo developments nearly doubled, and part of that surge can be attributed to the rising cost of insurance premiums. In Massachusetts alone, the number of blacklisted properties more than tripled. Other New England states also saw an increase. Homeowner’s associations and condo boards still aren’t being told they are on the list. Most find out only when unit owners list their properties and the deals fall through because Fannie Mae excludes them from their low-cost loans. ‘What we’re seeing is not only are condo owners paying their mortgage, they also paying the monthly fees,’ said Jake Marcus, a partner at law firm Allcock Marcus. ‘There is also a lot construction defect litigation. Now there are attorneys’ fees required to get off the blacklist, higher insurance premiums, and having to have a robust reserve fund at your association. Then there can be special assessments on top of the annual budget, where costs are also rising. It’s not everyone, but in a lot of cases, we see condo owners who are basically saying, ‘This is becoming unaffordable and I need to find something else.’”
Signal Cleveland in Ohio.”While scrolling through a Facebook group in 2017, a Swedish woman named Lena Jalke-Fehrm learned about a real estate opportunity in Cleveland. A company called Solid Capital Group said Swedes could buy American houses and generate ‘passiv inkomst:’ passive income, a reliable stream of rent payments from halfway around the world. Jalke-Fehrm was interested. Later, she met with two women from the company in her kitchen. It was a ‘lovely conversation,’ she said. She and her husband bought five Cleveland houses for a total of $271,500, records show. Nearly two years after buying her first house, Jalke-Fehrm felt that she wasn’t getting answers from the property management overseas. So she visited Cleveland and woke up from the dream.”
“By 2023, Solid Capital Group was finished. The company had applied for liquidation in Sweden. In court, the company did not mount a defense, a court judgment said. But there was no money for the investors to win. Despite these disappointments, Jalke-Fehrm still believes in the dream that she had grasped at years before: The ‘win-win’ of providing rental units to tenants thousands of miles away in the United States. ‘I also won’t shame myself for being a victim, because I still think it was a really good business idea,’ she said. ‘If it had worked, it would have been wonderful.’”
The Baltimore Banner in Maryland. “A new lawsuit alleges that a now-defunct Lutherville title company collected about $1.1 million for real estate transactions arranged by ABC Capital that never took place. More than a year after it shut down, Castle Title hasn’t accounted for what happened to the money, according to the lawsuit. ABC Capital, a Philadelphia-based company, first came under fire for not following through on renting or renovating scores of homes in distressed areas of Baltimore that it sold to out-of-state and foreign investors. Some lawsuits have called the operation a Ponzi scheme. Thomas Valkenet, an attorney who has filed a slew of other civil cases against Castle Title and ABC Capital, said the legal process has so far been slow, and that Castle has not accounted for the funds that he says belong to his clients. ‘They give the same stock response: We don’t know, and we’ve been doing an investigation for the last year. And therefore, we can’t tell you if we have your money. It’s maddening,’ Valkenet said.”
The San Francisco Chronicle in California. “In an effort to rev up San Francisco’s housing production engine, Supervisor Ahsha Safaí is introducing legislation that would cut the city’s transfer tax in half for projects that are financed, at least in part, by union pension funds. The proposed legislation comes at a time when much of the city’s housing pipeline is largely frozen, with tens of thousands of units approved but not financeable. San Francisco’s building trades union has about 800 members out of work, but the number would be higher were it not for the fact that some workers are being sent to San Mateo and Contra Costa counties, according to Rudy Gonzalez, secretary-general of the San Francisco Building Trades.”
The Houston Chronicle in Texas. “Vero Sade, a Houston-based multifamily developer, said it will begin work this summer on a 310-unit apartment complex in Rosenberg. Plans for the five-building project emerge as the market works through an oversupply that has led to falling rents and occupancies across the Houston region. Developers responded to record demand for apartments during the pandemic with a slate of new projects starting in 2021, said Bruce McClenny, an industry principal at MRI ApartmentData. As projects were completed, supply began to outpace demand in 2023, even though Houston continued to add jobs and population. ‘That small suburban market really got hit with a lot of new product,’ McClenny said. ‘This is something we’re seeing pretty much across all of Houston, Texas and the Sunbelt.’ Occupancy rates in the Richmond-Rosenberg submarket have fallen to 83% from 88% in May 2023.”
The Real Deal on New York. “Developers whose Staten Island hotel project went bankrupt are accusing their lender of a loan-to-own scheme. Unless the courts intervene, they could lose their personal residences. The developers’ LLC, Richmond Hospitality, is in Chapter 11, after lender Shaughnessy Capital stopped funding the loan for the 80-key development and ginned up a default to ‘reap millions’ in penalty interest and other fees, according to a lawsuit filed last week. The investors had to put up $6 million in additional collateral using their personal homes to secure the line of credit. ‘Shaughnessy intended it to fail and never had the financial ability to fund the entire project,’ the suit alleges.”
Global News in Canada. “The Office of the Fire Marshal is investigating a fire that destroyed a home in Hamilton Township, just north of Cobourg early Saturday. Northumberland OPP say around 12:20 a.m., emergency crews responded to a house fire reported at the corner of Leach Road and Rose Rose. They found the home engulfed in flames. OPP say no injuries were reported and said the home ‘sustained substantial damage.’ The cause of the fire remains under investigation. A real estate sign outside of the home had said there was an open house planned later that day. The three-bedroom home on 40 acres of land is listed at $1.5 million, according to the real estate agency.”
The Globe and Mail. “Slate Office REIT has defaulted on $158-million worth of debt, complicating management’s restructuring plan that involved selling off properties to generate cash for debt repayment. To deal with its $1.175-billion debt load, including mortgages, the company announced plans last year to sell 40 per cent of its assets. Although Slate owned office properties in Canada and the United States, it derived the bulk of its operating income from the Greater Toronto Area and Atlantic Canada. Rental demand for its properties has not returned to prepandemic levels, and interest rates remain elevated in order to combat inflation. Slate has a sizable exposure to variable-rate mortgages, which means its interest costs continue to eat up cash flow.”
“To save cash, Slate cut its monthly distribution by 70 per cent in early 2023, and later halted it altogether in addition to putting assets up for sale. However, the company could not move quickly enough and on Tuesday Slate announced that it will not make cash interest payments on three series of convertible debentures, which are a form of debt. Slate’s publicly traded units have been battered and are now down 94 per cent over the past five years because investors have worried that a debt restructuring could wipe out their equity value.”
From WION. “Owners of the famous Trianon building in Frankfurt have filed for insolvency. This comes as the biggest economy in Europe reels with a severe property crisis. Germany’s property sector contributes a fifth of the country’s total output but has faced the test of high borrowing costs and dried real estate financing since mid-2022. Major developers have gone bankrupt in recent times, echoing the need for government intervention. In the first quarter of 2024, prices declined 5.7 per cent year-on-year. This marks the sixth consecutive quarter of decline in both cities & rural regions. The housing construction backlog, apartments that have been approved but not yet built, has fallen for the first time since 2008.”
News.com.au in Australia. “A young homeowner has revealed that buying a house in your twenties isn’t all it is cracked up to be. In fact, the Aussie dream could come at the cost of getting a tan on your European holiday. Danielle Anstey, 26, posted on social media that she would rather be overseas and avoiding Australia’s winter than stuck at home making her mortgage repayments. ‘I want to be tanning my cheeks in Europe! But a year ago, I bought a f**king house, and now that is where all my money goes,’ she said. ‘Every single cent.’”
“In 2023, Ms Anstey bought a two-bedroom townhouse with no backyard with her partner in Melbourne’s north. This was a huge achievement but also cost her the emergency and holiday funds she had saved up. She said her savings were ‘completely wiped out’ because buying a home has so many hidden costs. ‘There is so many costs people don’t think of also. Such as the rates, solicitors/conveyancer fees, and the cost of filling your home once you purchase it,’ she told news.com.au.”
“Buying a home and clearing out your savings in the process isn’t unusual in Australia. Comparison website Finder has found that 29 per cent of homeowners have less than $1000 in their bank accounts, equivalent to 957,000 people with very limited funds to fall back on. Online people were split on if Ms Antsey’s situation warranted sympathy. ‘Nah, girl. You are winning,’ someone else said. ‘Smartest decision you’ll ever make. You literally make money just by living in it now and in the future. Houses are the best investment you can buy into, there’s a reason it’s stood the test of time,’ one said. ‘I pay $41k a year on my mortgage. Then still have to provide for my family. Australia is a joke,’ another claimed.”