A report from News Channel 5 in Tennessee. “With higher interest rates these past couple years those looking to buy or sell a home have seen them stay on the market longer. The Greater Nashville Association of Realtors says in an increasing number of cases that’s led to price drops as sellers are looking to find a buyer. ‘Buyers can potentially sleep on the decision and not have to make a quick decision because of multiple offers and things like that,’ says Collyn Wainright.”
The Daily Mail on Colorado. “The housing market in Denver has cooled rapidly with prospective buyers shunning larger properties despite an increase in inventory, according to a report. Compared to July of last year, buyers now have 68 percent more listings available to them, but sales are still down. Due to the market cooling, there is now a reported seven-month supply of single-family homes priced above $2 million. While there is now enough condos and townhouses priced above $2 million to meet 16 months worth of sales. While Colleen Covell, a member of the associations committee, added: ‘This deacceleration in activity resulted in a tremendous increase in available inventory. Sellers with homes priced $1.5 million and above are experiencing the toughest buyer’s market in years.’”
“Denver is not the only city cooling down after a pandemic boom, with other major metropolitan areas around the country being affected. Among the ten housing markets experiencing the quickest cooldown, six are located in Florida, with an additional two in Texas. In western Florida, housing markets are experiencing the most extreme drop.”
Florida Politics. “The ‘Elliman Report,’ which provides assessments of the housing market on a monthly basis, showed July was yet another sluggish month for home sales in South Florida. July saw sales stumble in Palm Beach and Broward counties, while Miami-Dade saw a slight increase in home sales. As single-family home sales remain sluggish in South Florida, the number of properties listed on the market is causing a glut. All three South Florida counties saw substantial year-to-year increases in the number of homes listed for sale.”
WFLA in Florida. “It was an absolutely devastating scene in Sarasota Tuesday, as people are being taken back to their homes by boat to see just how bad the damage is. Matt Jonas walked through his home with floodwaters to his knees. He said after living in this house for the last four years through Hurricane Ian and other catastrophic storms, he never expected a tropical storm to leave this much damage. ‘We don’t have flood insurance,’ he said. ‘We weren’t required to have flood insurance. So this is families out of their house,’ he said. ‘Gone, everything is gone.’ It’s a devastating story that’s become a reality for so many families, as people like Joe Scotti accessed their home by boat only to find out almost everything they own is ruined. ‘I lost everything, and I’m homeless,’ Scotti said. ‘Now, I’m in big trouble. I don’t have any vehicles to work,’ he said. ‘I got no place to stay.’”
Consumer Affairs on California. “As Hurricane Debby left Florida sopping wet and headed north, homeowners’ minds turned to their insurance coverage. The inevitable result is skyrocketing premiums and outright cancellations for homeowners like Marisa, a thirtyish screenwriter and actor. Her three-level townhouse in the Studio City section of Los Angeles is roomy enough for a small studio in the basement. But the dam burst in 2023. Two water leaks caused by faulty plumbing caused more than $70,000 in damage. Next a huge storm swept through in the spring of 2024, once again flooding the property, thanks to an aging roof. The condo association is slowly repairing the damage while imposing an $8,000 special assessment on homeowners to replenish its contingency fund. All of this followed a $10,000 special assessment imposed by the condominium association to fund a foundation retrofit to make the aging building more resilient to earthquakes.”
“Time to sell? Maybe, but it’s pretty hard to sell a $1 million property that can’t be insured, since lenders aren’t in the business of writing mortgages for uninsurable homes. In fact, Marisa’s mortgage provides she must maintain a homeowners policy or be subject to foreclosure. A call to the mortgage company allayed that fear, at least temporarily. ‘Don’t quote me but we’re not foreclosing on people like you,’ a company rep told her. ‘We can’t get insurance either and we can’t sell a house nobody can insure. So just sit tight and maybe the state will do something eventually.’”
Palo Alto Online in California. “The 32,000-square-foot Palo Alto Hills home that made headlines in 2018 with its record-breaking price tag of nearly $100 million, has finally sold — at a $65 million discount. The home, which had been on and off the market for more than five years, sold for $35 million on July 18 after most recently being re-listed for $53.9 million in July 2023, according to data from Zillow.”
My Northwest in Washington. “As one of downtown’s busiest Starbucks temporarily closed its doors over safety concerns, prominent members of the Seattle business community are speaking out forcefully and publicly about the continuing crime and homelessness crises. ‘Why do we continue to tolerate these open-air drug markets downtown at Third & Pike/Pine and Third and James/Yesler?’ Patrick Foley, co-founder and managing partner at Lake Union Partners, wrote to King County Executive Dow Constantine. ‘This man has purposely kept the downtown jail staffing at COVID levels (roughly 50% capacity) not out of necessity, but because he believes people dealing and consuming fentanyl out in the open, passed out on our sidewalks, smashing windows, starting fires, using the streets as a bathroom, and stealing from stores like Target and Nordstrom don’t belong in jail or some form of forced treatment.’”
“‘Walking downtown is embarrassing. The drug addiction and mental health crises are glaringly apparent,’ Investment Manager Jeffery Judson-Baker, the wrote in an open letter. ‘Stepping off the light rail near my home in Pioneer Square or in Westlake Center, I see drug addicts folded in half and manic episodes untreated. Commuters step over needles, trash, and human waste. Many favorite restaurants and shops remain boarded up. Once vibrant, downtown Seattle now can feel at times like a wasteland.’ Meanwhile, downtown Seattle home prices have taken a nosedive, now cheaper than the citywide average for the first time in nearly a decade.”
Bisnow Washington DC. “In the early years of the pandemic, multifamily construction was booming. Money was cheap and plentiful, and developers were gobbling it up, building apartments and condos at record speed, leaning into an asset class that — especially compared to office — looked like a golden goose. But the developers of those new buildings are now feeling the effects of a quick and dramatic reversal. ‘Most of the new projects are in hot water right now,’ Virginia Investment Properties CEO Srinivas Chavali said. ‘They’re in big trouble.’ Chavali makes a business out of buying distressed loans and properties in the D.C. metro, and he’s seen a dramatic shift in the amount of new multifamily distress.”
“The financial troubles are coming despite the underlying multifamily market remaining relatively stable: Class-A rents across the D.C. Metro area increased by 3.5% over the past year, according to Transwestern’s second-quarter report. ‘While the asset isn’t distressed, the capital stack is,’ Greysteel Senior Director TC Cosby said. ‘In D.C., rents are fine, things are going well, it’s not really that the asset isn’t a clean and good asset. It’s more a function of the capital stack needs to be reimagined, maybe reset at a lower basis. That’s the dynamic going on in D.C., but also across the country.’”
“The Lanes is one of several new multifamily buildings that have gone into foreclosure over the last few months. But those are just the tip of the iceberg, experts say. The distress is manifesting itself in a number of ways, from banks selling off loans they don’t want to carry on their books, to forced sales, to owners searching out rescue capital to fill the gaps. ‘There is a very hidden, significantly growing challenge,’ Acumen Cos. Investment Committee Chair AZ Abiud said. ‘It’s very hidden, you’re not seeing it. Lenders want to control it, want to control a narrative, so it doesn’t create panic. We are chasing every pre-foreclosure that’s coming out,’ Abiud said, ‘We have a list of them, hundreds of them, on a regular basis.’”
The Globe and Mail in Canada. “Toronto home sales fell in July despite a second recent interest rate cut, as inventory piled up and sapped the motivation of buyers to make purchases. Instead, homeowners have been putting their homes up for sale, especially those who own condos. Active listings, or the amount of inventory up for sale, are at the highest level since the 2008-09 financial crisis. Because home prices have been steady and because there is a high volume of homes for sale, buyers believe they have more time to shop for a property. ‘It’s not putting pressure on buyers to get in now,’ said Karen Yolevski, chief operating officer of Royal LePage Real Estate Services Ltd. ‘Buyers will jump in when they see prices start to rise,’ she said.”
“Prospective buyers are even less motivated to purchase a condo given the amount of supply on the market. Last month, there were nearly 9,000 active condo listings, which is a record high. Owners are trying to sell their condos as a slew of new units are also being completed this year.”
Blog TO in Canada. “Thanks to the well-supplied market, many properties — including this Brampton home — sold well below the original selling prices. The detached home first sold in February 2022 for $1.73 million, at a time when cheaper borrowing rates contributed to skyrocketing prices and heightened demand throughout the GTA’s real estate market. Two years later, the home was listed for just under $1.5 million, marking the first attempt to resell the home. In April 2024, the home was put back on the market for just under $1.4 million, and again in June for $1.388 million. Finally, the home was sold in July 2024 for $1.3 million — representing a loss of $430,000 when compared to its price just two and a half years earlier.”
Radio New Zealand. “The lease of Ngāti Whātua Ōrākei’s downtown Auckland land at the former Railway Lands, Te Tōangaroa, comes up for review in August next year. The leasehold terms included a ground-rent free period until 2011, and then reviews at seven-year intervals. It is the site of many apartment buildings, including the Scene buildings. Scott Dunn, of City Sales, said his firm had listed 11 or 12 properties on the leasehold land in recent weeks. Dunn said there could be a situation where ground rent had increased ahead of incomes, or the rent that tenants were paying investors who owned apartments on the land. ‘In seven years the ground rent could double, which has decimated some people,’ he said.”
“He said many of the apartments had been working well as investment properties but that could change. ‘I believe the next one will be the most interesting yet, my feeling is that a lot of these, this will be the time that the ground rent gets so high that income – rent from tenants – won’t cover it for a lot of properties. They worked very well for a while. The last rent review a lot of them went close to double and that shocked a lot of people but there are still people I’m talking to now who went through the last review but are saying ‘oh well I’m getting good rent’. I’m like ‘you know what happened last time’ but some people might still have their heads in the sand a little bit.’”
ABC News in Australia. “For Martin and Joanne Rodden, signing up to build a new home in December 2020 was meant to be the start of a bright future. Aided by $45,000 from state and federal building stimulus grants, the married couple were going to build the perfect home to retire in, with a bedroom on the ground floor that would make life easier after Mr Rodden’s double knee replacement. Instead, three-and-a-half years later, they have watched their incomplete house become damaged by the weather, have still been working and have no idea when, or even if, the house would be finished. ‘The mental and financial burden on us victims of this particular builder is pathetic,’ Mr Rodden said. ‘It’s a torment. My wife suffers with anxiety, and this has put her over the top.’”
“Fellow Inspired Homes client Andrew Scott said he regretted his decision to build as a result of the stimulus grants. He signed a contract with Inspired Homes in December 2020 and was paying both a mortgage and rent on a flat in Perth for a few years. When his rent increased from $310 to $450 a week, beyond what he could cover, he moved to Queensland to live with his parents. ‘[The grants] were $55,000 in total, including a stamp duty discount,’ Mr Scott said. ‘That was great at the time, it looked really good, there was no indication from Inspired that it would take them three-and-a-half years to build a house under those conditions. Whatever benefit I would have received from that $55,000 is long gone, I just bought myself a nightmare with that money. But the builders have profited from it and there’s a lot of people suffering as a result.’ Like the Roddens, his house is still far from finished and there is no sign of work being done.”
From Bloomberg. “Banks are expected to take more enforcement actions on distressed buildings amid Hong Kong’s property market downturn, according to PricewaterhouseCoopers LLP. That’s based on the estimate of the firm’s partner Christopher So, whose team oversees a portfolio of real estate under receivership valued at more than HK$10 billion ($1.28 billion). ‘Lenders tend to give borrowers some breathing space at the beginning. But if it’s clear that the negotiation is not going anywhere, banks may consider taking enforcement actions,’ said So, who leads PwC’s restructuring and insolvency practice. ‘Many banks have put collateral under receivership in the past six to 12 months.’”
“A slew of luxury residential units are hitting the market as rich local families have been caught up by a debt crunch. High interest rates and low rental yield are also deterring investors. The city’s office vacancy rate hit a historic high of 16.9% in the first half of the year, while rental prices are expected to fall as much as 10% in 2024, according to CBRE Group Inc. ‘The distress in Hong Kong’s property market is taking a toll on everyone,’ said Raymond Kwong, an associate director at PwC Hong Kong’s restructuring and insolvency practice. ‘We are certainly going through a challenging time.’”