A report from Fox Business. “Florida, it turns out, isn’t for everyone. But you would never know it from the PR coming out of the state. David Lowe, sold his longtime home outside Sarasota, Fla., in 2019 for $375,000 and purchased a similar-sized house on a larger piece of land in North Georgia for $180,000. He still has a small place in Florida, but in the next few years he plans to make Georgia his full-time home. He wanted a change from Florida’s flat landscape and ‘smoking hot’ weather. ‘I’d wake up every morning wondering, ‘Now, why am I still in Florida?’ he said.”
From Forbes on New York. Kushner Cos declined to oppose its lenders’ bid to appoint a receiver to take control of its Times Square property, a sign the company could be ready to throw in the towel on the beleaguered entertainment retail project, according to three attorneys not involved with the case. Kushner could also be holding its legal fire power to avoid triggering the debt’s recourse provisions, the attorneys said.”
“‘When a lender is putting a receiver in place it generally means the owner is not doing basic things, not keeping the lights on, not flushing toilets, and they have to get someone else in to run the building,’ the first attorney said. Even as the amount of distressed properties has increased during the pandemic, the step remains fairly unusual, he said. ‘It indicates the borrower has stepped away from the property,’ and such borrowers are typically opting to stop putting money into deteriorating properties to which they will never return, he said.”
“Kushner Cos acquired the Times Square property in October 2015 for $295.3 million. The value of the 248,457 sq ft property was appraised in October at $92.5 million, down sharply from $470 million when bankers securitized the debt.”
From Bisnow Southern California. “A year has passed since many coronavirus-spurred emergency rules were implemented, including moratoriums on commercial evictions that will expire in less than four months. Companies new and established have put together funds expecting to capitalize on a wave of distressed properties as a result of Covid. Over the summer, LA-based BH Properties launched a $200M fund anticipating ‘a dramatic and troubling increase in defaults, foreclosures, receiverships and bankruptcy filings across the country once commercial eviction moratoriums expire,’ according to a July Commercial Observer story.”
“Or, as Greensfelder Commercial Real Estate Managing Principal David Greensfelder, put it, ‘What’s going to happen when the music stops?’”
From CBC News in Canada. “Anna Pires bought a pre-construction condo unit in Richmond Hill, Ont., north of Toronto, on an assignment sale in September 2016 after coming across the sold-out development online. An employee of the developer, Ideal Developments, sold Pires his own purchase-of-sale agreement for $80,000 plus the $20,000 deposit he’d already put down on the unit. Now, after years of delays, the Modern Manors townhouses still aren’t built — and Pires recently found out that her purchase agreement is in jeopardy.”
“‘I have all my life savings in this project,’ said Pires. ‘To think that I may not ever get to see the home that I waited for, for five years, breaks my heart.’”
From Domain News in Australia. “Ultra-low interest rates are pushing up property prices, with new figures showing the average home buyer could spend $41,000 more at auction than a year ago. Interest rates were slashed to boost the pandemic-hit economy and the Reserve Bank this week emphasised it will keep rates low for the next three years even if house prices soar. ‘The house might not be any better — it might just be the same house and they’re just paying more for it,’ Canstar group executive of financial services Steve Mickenbecker said.”
“Jellis Craig managing director Steven Abbott has seen prices rise 5 per cent to 10 per cent in the last six weeks for some segments of his market in Melbourne’s leafy east. ‘[Buyers are thinking] ‘If I extend my budget 10 per cent or 20 per cent, the cost of funding that over time is, at the moment, attractive,’ he said. ‘It’s just one person’s capacity and perceptions of value over another’s. In a market that’s moving, you get less people that are probably telling you what things aren’t worth.’”
From ABC News in Australia. “Jacob had big dreams before the global financial crisis. He wanted to develop his then property in the Tweed Valley into a tourist lodge. But in November 2009, he had a serious accident on the farm tractor and could not work. He asked his lender at the time — who he had taken a high-risk low-doc loan from — to let him defer mortgage repayments until he could resume work.”
“But the lender would not give him leeway and started charging higher interest and default fees. ‘All they said is, ‘When are you going to pay?’ Jacob tells ABC News. He was forced to put the property up for sale in 2010, but because of the GFC, potential buyers were also in strife. Jacob couldn’t sell in time to keep the bank at bay and eventually they repossessed his property.”
“But the lender would not give him leeway and started charging higher interest and default fees. ‘All they said is, ‘When are you going to pay?’ Jacob tells ABC News. He was forced to put the property up for sale in 2010, but because of the GFC, potential buyers were also in strife. Jacob couldn’t sell in time to keep the bank at bay and eventually they repossessed his property.”
“‘We lost all the hard work of 12 years — doing up the property into a real magic place — that’s what we lost,’ he says. ‘And we ended up in a caravan.’”
“Jacob’s story is one that consumer advocates fear could repeat itself. The federal government is looking to wind back safe lending laws, saying there are other adequate protections for consumers. Perth-based mortgage broker Helia Singh said her customers were trying to push her to get bigger loans from the bank so they can afford more expensive housing.”
“‘In cities such as Melbourne and Sydney, the prices have gone up so much,’ Ms Singh says. ‘[There are] people who say, ‘I can afford it, I know I can do it, so how am I going to get my hands on more money.’”
“Property data analyst Martin North said if the federal government changes are passed as suggested, it would place most obligations on borrowers. ‘It tilts the playing field in favour of the banks — especially now, with the prospect of rates rising and higher unemployment ahead,’ Mr North said. ‘They [borrowers] can say whatever they like about their finances, the banks do not have to validate it — but it also means banks can then sue borrowers if later it transpires their information was not correct.’”