A report from Fortune. “Compass CEO Robert Reffkin told CNBC on Wednesday that 30% of the inventory on the market has seen a price drop, which is more than anytime in last 10 years. Meanwhile, the market has seen 16% more inventory. ‘It is a different environment. We are now seeing more sellers than buyers,’ he said. ‘Sellers bringing their homes on the market during this period need to be aware of how buyers are pushing back. If your home is well priced in this environment, it will sell quickly. But if it’s not, it will sit on the market. Then you’re going to have to have a price drop. Then buyers will see they get a price drop. The sharks come out, and it will hurt you even more.’”
From BBC News. “Nearly one third of all households now spend more than a third of their income on housing – the standard cut-off for affordability – the highest level since 2015, according to Harvard’s Joint Center for Housing Studies. Mimi Than, a 29-year-old who recently bought a three-bedroom condo in the Boston, Massachusetts area, says she is facing roughly $200 more in monthly costs than when she and her husband were pre-approved for a loan in March. They did not lock in the rate then, unaware borrowing costs might shift significantly. When they returned to their lender in April after making an offer, the interest rate they were offered was 6.9%, up from 6.5%. She’s hoping that they will drop back later this year, allowing them to refinance. ‘I’m obsessively checking the rates,’ she says.”
The Garden Island in Hawaii. “Home sales jumped more than 60 percent in the first full month of spring, as the Kaua‘i housing market continued to rebound from a rough outing in 2023. At the same time, the median price sank 28.12 percent to $1,128,500 from $1,570,000. That marked the first time this year the median sales price was lower than the same comparable period a year ago.”
Boston Magazine in Massachusetts. “In past years, the panorama before them would’ve been a high-rise testimony to the decades-long Boston construction boom that these developers, investors, and builders have helped nurture. But on this winter day, the vista was pockmarked with signs of impending doom. Just a half-mile away was 281 Franklin Street, worth $6.1 million in 2017, unloaded this past February for $3.8 million—a 38 percent falloff. Two blocks north, 186 Lincoln Street, with nine stories of office space, sold last fall for $11 million—a 47 percent drop from its $20.7 million 2015 purchase price. And to the north, at 125 Broad Street, sat one of downtown’s most extreme haircuts, bought for $14 million in 2018 and sold in December for $3.9 million—a 72 percent decrease.”
“It’s not just the Financial District that’s been racking up casualties of the Great Post-Pandemic Commercial Real Estate Crash. Down in the Bulfinch Triangle near TD Garden, an office building at 110 Canal Street recently changed hands for the second time in two years, with the seller swallowing a $6.1 million loss. And more than 34,000 square feet in the antique building at 33–41 West Street across from Boston Common, which fetched $16 million just eight years ago, sold last September for $4.1 million—a 74 percent markdown more reminiscent of the old Filene’s Basement than Boston’s once-thriving downtown. According to investment-data provider MSCI, property sale prices in the central business district cratered in the fourth quarter of 2023 by more than 30 percent year over year, a decline steeper than any other city MSCI tracked, including Chicago, Manhattan, San Francisco, and Washington, DC.”
“We could be headed for a world in which Boston’s annual tax collections run as much as $500 million below the current haul, a deficit that’s roughly an eighth of the current city budget. ‘The bleakest scenario is something like a return to the urban experience of the 1970s, a desiccated city where a lot of the energy has left and moved elsewhere,’ says Evan Horowitz, lead author of the CSPA report. ‘It’s not purely hypothetical. You need to deal with it.’”
The Globe and Mail. “Two years into the most intense campaign of interest-rate hikes in decades, commercial real estate’s last bastions of support are faltering, with industrial and storage property owners succumbing to oversupply and slowing demand. Until recently, these two sectors were considered immune, Canada’s national vacancy rate for industrial properties fell to 1.5 per cent, and distribution warehouses in and around cities such as Toronto and Montreal commanded some of the fastest-rising prices in the world. But just like the owners of office towers and rental apartment buildings before them, industrial and storage landlords are struggling with weaker valuations, darkening the cloud that has hung over the industry.”
“Higher rates did take some air out of this market, because they raise mortgage costs, but industrial and storage properties could endure the early pain. What’s really doing damage now is too much development, coupled with softer demand. ‘We’re seeing that this sector is not immune to oversupply,’ said Fraser McKenna, an industrial real estate broker at CBRE. Landlords must accept a different mindset, as prospective tenants aren’t as desperate to scoop up space any more. And when they want to rent, there are lots of properties to choose from. ‘The difference is, people have choices,’ Brad Dykeman, executive managing director at brokerage Cushman & Wakefield.”
From I News. “The great UK staycation flourished during Covid, tempting thousands of new holiday let owners into an already crowded market, fuelled by the rise of AirBnB and other platforms. But the boom now appears to be stalling. Now, holiday let owners, such as Tereska Walker, are considering walking away from their properties as bookings dry up and new taxes, designed to protect local communities, kick in. Walker, 53, and her husband, who live in Oswestry, were half-way through converting a cowshed barn on their 24 acres of land into a home for her elderly parents when her father died and her mother had to move into a residential home in 2020. They decided to continue with the build and rent it out as a holiday home, spending about £180,000 on the conversion.”
“‘It started to get quiet last year,’ says Walker, whose lodge costs from £525 for a four-night break in low season and is rented out via platforms such as Vrbo and Airbnb, as well as directly. ‘So far this year it’s dead.’ She says bookings are down about 50 per cent year on year. But she says there’s no way she can lower rates. ‘You can’t make it pay for a two-night break. The third night is your profit. You can only drop your price by so much.’ Walker currently has eight buy-to-let properties in Manchester, down from 15. But she says there will soon be zero. ‘It’s not financially feasible and with landlord regulations [tightening] and doing away with Section 21, where you can’t get your own property back, [it’s not worth it].’”
“Matt Fox, chief executive of Snaptrip Group, with up to 70,000 holiday lets across the portfolio, says the cost of living crisis has affected demand. He says many holiday let owners are starting to give up. ‘Absolutely we’re seeing people looking to sell. Holiday let owners are like any business. If you can’t make good margins… because don’t forget they work in seasons. If they reduce prices, they’re losing money.’”
From Le Monde. “It’s a return to reality after dreams of speculation. With just a few weeks to go before the opening of the Olympic Games on July 26, prices for accommodation in the French capital are no longer as stratospheric as those announced during the summer of 2023. ‘Since September-October, as Asian and American foreigners have made their reservations, prices have declined and continue to fall a little every day,’ confirmed Romain Bellet, co-founder of WeHost, a concierge service that manages a fairly large volume of rentals, from studios to large houses.”
“While it’s difficult to generalize, professionals estimate that a short-stay rental in Paris, in the mid-range, now costs 1.5 times its usual price over the same period. It is no longer 2.5 times, as was the case if you tried to book this period last fall. For example, a standard studio apartment in the 20th arrondissement of Paris, which usually rents for between €60 and €100 a night, now costs between €100 and €150 when rented during the Olympic Games.”
“‘Apartments are having a difficult time filling up,’ said Bellet, who noted occupancy rates of around 20% to 25% on the Airbnb platform. ‘It’s very quiet. Many are waiting for the last minute and to see prices drop even further.’ Another worrying sign for people hoping to cash in on the Olympics: When the national train operator SNCF opened its ticket office for train ticket purchases, the spike in bookings that travel industry insiders were expecting didn’t happen.’”
ABC News in Australia. “Valerie Shannon and Garth Woodcock own a spacious block in Coffs Harbour, but their house is full. The couple live with Ms Shannon’s elderly parents and her adult son. By the side of the garage sit steel frames with weeds poking through — part of what was meant to be a purpose-built tiny home for Valerie’s son but are instead a grating reminder of what they view as a ‘rip-off.’ The couple paid almost $55,000 for the tiny home in late 2022 and expected to receive the structure by the following April. By August last year, only part of the frame and roof had arrived. Despite repeated requests for a refund, the pair, both retired, are still owed more than $43,000. ‘It makes me feel sick because I just want my tiny home,’ Ms Shannon said. ‘If I don’t get my tiny home, I want my money back.’ Ms Shannon and Mr Woodcock are among dozens of people believed to be owed millions of dollars by My Tiny Home Kit.”
From News.com.au in Australia. “Customers fear that a building company is on the brink of collapse as their construction sites languish and payment defaults mount while tradies are chasing the business over unpaid debts. And in a reply-all fail, the building company accidentally sent a response to a customer calling them ‘nuts.’ News.com.au can reveal that half a dozen homeowners who signed with Melbourne-based custom residential builder Holbrook Homes are calling for an end to their misery, either through the construction firm finishing their builds or going into liquidation.”
“One customer, Don Jollie, is at the end of his tether, telling news.com.au that Holbrook Homes has tried to bill him twice for incomplete works, making him concerned about how desperate the business is for his money. ‘And I’m not talking a little bit incomplete,’ Mr Jollie said, explaining ‘the bank said they’re not paying this, the second floor hasn’t even been started.’”
“Then there’s Kate and Ryan Norris, 36 and 41, who entered into a contract with Holbrook two years ago for their $352,000 house. Their four-bedroom, two-bathroom house was sitting at lockup stage for seven months, and it’s now been stuck at the fix-out stage for the past eight months. ‘We’re renting temporary accommodation,’ Mr Norris said. ‘We thought worst case scenario June 2023 (was when we would move in). We burned through all our savings to get to that point.’”
“Another customer, Jason*, who preferred to remain anonymous told news.com.au there were ‘poor communication, delays, excuses right from the start.’ The Melbourne dad of four added: ‘The last year has been the hardest of my life. The constant feeling of dread and unknowing has taken its toll on my entire family.’ Jason has sought legal advice so that he can cancel his contract. ‘It will most likely mean our house will never be completed,’ he lamented. ‘It is looking more likely that we will need to sell the land and unfinished house as it is and lose out on the $150,000 we have already spent.’”
From Reuters. “Cash-strapped China Vanke has sold a Shenzhen land plot via auction for 2.24 billion yuan ($309.18 million), a filing on Monday showed, more than 27% below the price it paid for the same 19,000 square-metre block nearly seven years ago. Vanke is working to raise funds after saying last month it is facing short-term liquidity pressure, one of many companies to have been caught up in a broad-based cash crunch in China’s crisis-hit real estate sector. Its largest shareholder, state-owned Shenzhen Metro, and Shenzhen-based company Baishuoyinghai jointly bought the plot at Vanke’s reserve price, according to an online filing uploaded to a trading center in Shenzhen on Monday.”
“Theirs was the only bid for the asset, the same filing, made after mainland stock market was closed, showed. Vanke bought the land in late 2017 for 3.1 billion yuan, according to previous documents. In a statement to Reuters, Vanke said the deal reflects that its largest shareholder is ‘supporting the company with market-based, legitimate measures and real money.’ It said the deal will help the firm free up capital from non-core business assets. Vanke has said it aims to boost cashflow this year with bank financing and more asset disposals worth more than 30 billion yuan.”