A report from the Herald Tribune in Florida. “A new 5,335-square-foot Casey Key home with a private beach will be auctioned, without reserve, this month. The luxury house on Casey Key was built last year and has never been occupied, according to Heritage Auctions, which is handling the March 23 sale. It’s a Florida Coastal Colonial-style home with an assessed value of $3,277,400, according to the Sarasota County Property Appraiser. An auction without reserve means the property will be sold regardless of price.”
From Oregon Business. “‘Portland was probably overrated when it was at its peak,’ muses Chris Nelson, principal at Capstone Partners. Nelson and others acknowledge that downtowns are hurting. ‘The most difficult sale we have right now is the condo, where the city is your living room,’ says Drew Coleman, president of Oregon Realtors. ‘People are looking for suburban or rural locations while the desire for city dwelling has plummeted.’”
From Bisnow New York. “Manhattan’s high-end residential market received a boost last week. The market is partly moving because sellers are slashing prices, in some cases taking a loss. The priciest deal of the week, two apartments to be combined at 551 West 21st St., went under contract at an asking price of just shy of $26M. It previously sold for more than $31M in 2016 and was first listed at $40M in 2017.”
From AM New York. “As many New Yorkers began to leave the city, rents started to drop. By the end of the second quarter of 2020, StreetEasy found that Manhattan rents were falling and potential renters were boosting their searches in Brooklyn and Queens. According to StreetEasy, in November of 2020 rents in Manhattan dropped 12.7% year over year, the biggest drop since the Great Recession.”
“‘There are 12,000 empty apartments in Manhattan. We’re in a time where tenants can take longer than 5 minutes to think about where we want to live. Landlords are going to have to add more concessions. In 2019, 5 or 6 people were going after the same space,’ said Allia Mohamed, CEO of openigloo. ‘Even though people are coming back to the city, there are still decreases in rent. … Rent has decreased 17% in Manhattan and 13% in Brooklyn.’”
From Livabl in California. “One-bedroom rent in Los Angeles continued to decline in February, falling 2.1 percent month-over-month to $1,900. Compared to the same period last year, rent was down 15.6 percent, according to Zumper, which has recorded softening Los Angeles rents since the pandemic began in March of last year. Two-bedroom rent also took a hit, dropping 1.5 percent from January to February. The median rate of $2,660 per month was 11.3 percent lower than where prices stood a year earlier.”
From Bisnow Silicon Valley in California. “Postal service change-of-address data indicates a net migration of 53,000 households out of S.F. from March to November in 2020 compared to 17,000 in 2019, S.F. Chronicle reported. The migration resulted in steep drops in apartment rents in S.F. ‘The threat is — and it’s a serious one — if we don’t solve the housing problem, affordable and worker housing, I believe we are headed toward becoming a Detroit,’ Santa Clara County Assessor Larry Stone said.”
From Forbes. “Recently I was involved in a panel discussion that covered, among other topics, the reuse of pandemic-affected commercial real estate. During this discussion, one panelist asserted that commercial real estate, currently, is under-demolished. An aspect of what I do is to buy and sell properties, and to me, this seemed an odd statement. So, I looked deeper. It’s true that there is a lot of property that will likely just sit forever. Prospective tenants will be few and far between.”
“Any bank would have the same trouble as another landlord would have when seeking tenants for an aged property during an economic calamity. A nonbank owner could walk away from a property and suffer whatever losses come, and the bank’s problems increase to the level of ownership. That means they will be responsible for the local and state property taxes and all other issues until the property has moved off their books. That is not a bright outlook for anyone.”
“If you have a hopeless situation with a property, perhaps demolition to grade is an option. A major out-of-the-box rethink by governments will be needed to remove the parcel, perhaps by increasing the taxes on remaining parcels, considering the stock of properties will have shrunken.”
From Yahoo Finance. “Hotels, leisure parks and malls have seen their incomes evaporate as the world essentially shut down. Lockdowns pushed about $146 billion of commercial real estate into distress, serious risk of bankruptcy or default at the end of last year, concentrated in hotels and retail, according to Real Capital Analytics. Pimco teamed up with mall landlord NewRiver REIT Plc to buy a mall in the center of Sheffield, England, at a ‘significant discount,’ according to a statement. The site can accommodate 1,100 rental apartments and dorms for 300 students.”
“‘We are increasingly seeing owners who are losing interest, losing money or losing hope, and are now considering transacting,’ said Bill Benjamin, head of real estate at Ares Management Corp. ‘There will be some very exciting cyclical opportunities to buy assets at deep values.’”
From Blog TO in Canada. “Toronto condos and apartments are offering more perks than ever in order to lure in new tenants, and one building is even offering to pay for your move. As buildings in the city struggle to fill their vacant listings, landlords and property managers are enticing potential renters with move-in incentives like free internet, month-long free rent, and gift cards. The number of move-in perks have seen a spike since the beginning of COVID-19, says listings website Rentals.ca, and we should expect incentives to be a common offering until demand for condo units catch up to supply.”
The Evening Standard in the UK. “Demand for rented properties in London has dropped by as much as 43 per cent in the last year. SpareRoom showed that no area of the capital has been spared a plummet in interest. West Central London saw the biggest downturn, with year-on-year demand dropping 43 per cent, while East Central London also took a considerable hit, dropping 39 per cent. Even perennially popular hipster magnet East London saw interest drop by 19 per cent. Becky Fatemi, director of central London estate agent Rokstone, agrees that domestic migration of renters out of London is partly at fault, but highlights that it isn’t the only factor affecting demand.”
“‘The disappearance of international students and the switch of AirBnbs to long term rentals means there is currently an oversupply of rental accommodation in the capital and therefore rents, in the centre of London particularly, have fallen,’ Fatemi says.”
From Ekathimerini in Greece. “The pandemic and the resulting crash in the tourism industry also greatly affected short-term rentals, with total earnings falling to €467.4 million from €989 million in 2019, a drop of almost 53%. The average occupancy rate of short-term rentals dropped to 36.1% from 50% in 2019. In other words, reservations accounted for just over one-third of available days. The most popular destinations were not immune to this decline; quite the contrary.”
“The picture becomes even worse when one takes account of just the active listings. Thus, in December, fewer than 20,000 available listings had at least one reservation. Even at the height of last year’s tourist season, in August, just over 60,000 listings were active. This is proof that the short-rental market was operating at well below capacity in 2020 and a sizable number of property owners saw little or no business.”
From Gulf News. “‘So, how much have your rents dropped?’ Over the last 14 months, and even before the pandemic showed up, this has been the trending topic for UAE residents residential rental declines swept across the city. No single location was immune, because there would always be one or more landlord willing to drop his asking rate. And it’s starting to happen more frequently as winning a new tenant or retaining an existing one has become one difficult task. For tenants, it’s about finding they are holding all the aces in this particular game – and bragging about the ‘unbelievable’ rent drop in the latest contract renewal has become another talking point for many residents.”
“‘I asked my landlord for a discount and he gave it to me just like that. This is a huge saving – I have had a salary cut and paying a lot on my petrol as I have a sales job. So any saving goes a long way,’ said Ahmed Al Hamzy, who is staying in a studio and paying Dh30,000. His landlord has given him a Dh5,000 cut.”
The West Australian. “Jumping into homeownership is no easy feat for many, and servicing a mortgage can be challenging, forcing some into a distressed sale when they cannot make ends meet. A distressed sale occurs when the homeowner is under significant financial stress which forces the sale of their property, or they default on their loan and the home is sold as a bank or mortgagee sale.”
“Ray White Whiteman & Associates Director David Whiteman said a multitude of factors could affect someone’s ability to service a loan, making distressed sales common. ‘Economic factors are a part of life, and health implications can affect our ability to service debt,’ he said. ‘I think the financial literacy issue is massive. Financial literacy is not something that is taught in schools, and if it is not passed down by a parent it is common for people to have a lack of understanding on how to organise their money.’”
“Mr Whiteman recommended seeking a financial advisor before the situation became dire. ‘When things get tight, seek help straight away to get back on track,’ he said. ‘Unfortunately, it is common for some folks to try and wish the problem away, which seldom helps. In the case when issues are ignored, people stop communicating with their bank, get into default and try to wish away the problem – the trouble gets bigger. If a bank forecloses on a person, generally there is an additional cost to the borrower to go through that process.’”
“If worse comes to worst and you have to undergo a distressed sale, Mr Whiteman said the process was the same as any other sale. ‘The process of sale is essentially the same as any other and certainly buyers would not be made aware of the distress unless the seller specifically wanted this to be the case,’ he said. ‘A good and experienced agent can walk you through the process and provide sensible options to move forward in the best possible way.’”