A report from Axios. “Metro Denver’s housing scene is finding its equilibrium as more homes hit the market, but many buyers aren’t budging. The slow spring selling season is stumping local realtors, who predicted a year ago that a boost in inventory would bring buyers back. ‘We are not seeing that play out and once again, the truth is the cost of housing is too high — at least in the median price points,’ Colorado Springs realtor Patrick Muldoon said. The ‘uncertainty of the upcoming election’ isn’t helping, and ‘many buyers seem to be waiting this one out,’ added Boulder-area realtor Kelly Moye.”

“For the first time in nearly 12 years, there was more than three months of inventory in Denver County, with over 1,700 new listings and only 1,013 sales closed. ‘The current level of inventory is a strong indication that we are experiencing a balanced market for the first time in over a decade,’ Denver County-area realtor Cooper Thayer said.”

KXAN in Texas. “The Austin-Round Rock Metro area is 15th in the nation for vacant apartments, according to a report. The report states that 9% of apartments in the Austin metro are vacant. This is up since 2023, when 7.3% of apartments were vacant. San Antonio and Dallas-Fort Worth areas are slightly under (around 8%). The Austin Apartment Association tells KXAN that it expects the city to see 26,000 more units become available by the end of 2024. Redfin shows that 66% of the metro’s house sale listings are ‘stale,’ meaning that the listings were on unsold after 30 days. Dallas’ metro saw the largest year-over-year increase in stale listings (7.5 points), but is still under Austin’s metro (60.5%). The Houston metro matched Austin’s year-over-year change, but its share (64.4%) was still less than Austin’s share. San Antonio was the only Texas metro to grow faster than and surpass Austin’s share (68.4%).”

The Dallas Business Journal in Texas. “A prominent high-rise in Uptown’s popular West Village neighborhood has received a $15 million makeover — but is also being threatened with foreclosure by a lender. Houston-based apartment developer Vero Sade has completed renovations to the 21-story, 381-unit building at 3700 McKinney Ave. it calls 3700M, the company said June 12. But the property has also been scheduled for a July 2 foreclosure auction. Limited liability companies connected to Vero Sade acquired the building from a Brookfield Properties affiliate in February 2022, according to Dallas County records. The companies took out a $121.5 million loan at that time with Column Financial Inc., according to a deed of trust.”

The Orange County Register. “The cost of homebuying is so insane that San Diego County’s sales are running at the slowest pace in records dating back 37 years. Only 59,146 San Diego County residences were sold in 24 months ended in April 2024, the slowest two years on record. This was fifth-straight month an all-time sales low was hit. Affordability is the current culprit. Only 11% of San Diego County households have the financial strength to qualify to buy, according to California Association of Realtors’ estimates. Only 357,486 Southern California residences were sold in 24 months ended April 2024, the slowest two years on record and the sixth-consecutive all-time low.”

The Real Deal on California. “Compass agent Butch Haze said he has spoken with clients who are waiting to see the election results before they make their move and some might even become sellers if the results go the wrong way. Across the city, he said, there’s a ‘united front’ from bartenders to bankers that change is necessary for a full recovery. ‘We lost our way and unfortunately were maybe too kind and need to restore just basic human rights of safety and common sense,’ he said. ‘If we see change happen, I think there will be a flood of people moving in to bet on San Francisco. It would be irresponsible not to believe San Francisco is a good long-term investment.’”

The Mercury News. “The South Bay must ditch empty office buildings and replace them with housing so the San Jose area can accommodate cutting-edge tech jobs such as artificial intelligence, a top economist says. That was one of the assessments and recommendations from economist Christopher Thornberg. ‘You need to start taking down these office buildings and putting up apartments,’ Thornberg said. Thornberg also disagreed with assessments that California is locked in a doom loop characterized by an exodus of corporations and a flight of its residents to rivals such as Texas, Arizona and Florida. ‘California is not dead yet,’ Thornberg said. ‘California is doing just fine.’”

The Oaklandside in California. “Architects, developers, and contractors settled into rows of seats to hear their colleagues discuss the state of the local homebuilding industry. The conference would turn into a commiseration session, with panels of mutli-family housing developers discussing how slow work’s gotten in the East Bay lately. ‘It’s no secret that the headline news is there’s nothing happening out there,’ said Dan Calamuci, senior representative at the Nor Cal Carpenters Union. JP Walsh, director of finance at Panoramic Interests, pushed back, saying rate hikes staved off a recession. ‘We were drunk in money with interest rates at 3%,’ he said. ‘We’ve all got it in our psyches that interest rates are super high. But on a 30-year average, they’re not.’”

Multi-Housing News. “The end of the zero-interest rate period has brought significant shocks to the commercial real estate industry. Yardi estimates that over $60 billion worth of multifamily loans are maturing this year. The industry believes that about $21 billion of those loans are underwater. After the pandemic, some owners took for granted that people could pay more rent. Rent as a percentage of income jumped from 30-35 percent to 50-55 percent, and that is not sustainable. As rent growth ends, cash flow and exit NOI will make those properties even less viable for the owners as they look for refinancing, resulting in more distressed sales. The second half of 2024 will see more distressed activity with an acceleration in 2025, as another $84 billion in loans mature next year.”

Market Watch. “The Federal Reserve’s roughly $1 trillion pile of paper losses stemming from its underwater securities holdings have begun to turn into more than $100 billion in actual losses, with no relief in sight. Importantly, restrictive rates also could end up costing the Fed around $100 billion a year well into the next decade, according to Ali Meli, chief investment officer of Monachil Capital Partners, a credit fund he founded in 2019. ‘The Fed bailed out Wall Street,’ Meli said, pointing to the heaps of long-duration 2% and 3% Treasury and mortgage bonds bought by the Fed during the COVID crisis. Now it is underwater, as it also must finance its operations at its current 5.25% to 5.5% policy rate. ‘If they had cut their balance sheet before increasing rates, they wouldn’t have had as big of losses,’ Meli said. ‘But maybe they should not have expanded it as much as they did in 2020.’”

CTV News in Canada. “An older condominium complex in Kanata is asking its residents for more than half a million dollars to replace its aging infrastructure. The five condo buildings on Stratas Court were built in the 1980s on a sloping sedimentary foundation. Crumbling walkways and leaky roofs have put pressure on the local condo board to restore the buildings back to code. Those against the repair fee argue the board should have never let the reserve fund fall to the point where it currently stands. ‘These people are spending my pension,’ resident Moira Green said on Friday.”

Investigative Journalism Foundation on Canada. “A trio of Metro Vancouver homeowners all say they were tricked into taking out mortgages on their properties by a man posing as a mortgage broker, who then pocketed the money through a complicated series of numbered companies and fake builders’ liens. Ashley Kong, Chenming Li and Allen Li (no relation) all testified last week during a disciplinary hearing held by the B.C. Financial Services Authority (BCFSA). The professional regulator has alleged that Hon Kit Chung, also known as Larry Chung or Joe Chung, falsely represented himself as a mortgage broker and arranged loans for his own financial gain from January 2020 to August 2022.”

“During their testimony at the BCFSA hearing, Allen Li and Chenming Li both said they connected with Chung when they were trying to raise money for real estate projects. Chenming Li testified that Chung filled out a mortgage application for his Surrey home without his consent, and he lost $800,000 as a result. Meanwhile, Allen Li described a complicated entanglement with Chung that began with a $250,000 ‘deposit’ Chung told him was necessary to secure a loan. That money was never returned to him, Li testified.”

“Chung later convinced him to take over as director of one of his numbered companies and then purchase a vacant lot in Burnaby through that company, Allen Li told the hearing. He said Chung also directed him to deposit $170,000 from a mortgage on his home into the numbered company and arranged for two mortgages totalling $1.3 million on the Burnaby property. Allen Li testified that when he became suspicious of Chung and tried to withdraw his cash from the numbered company, ‘It turned out the money was all gone.’”

The Globe and Mail in Canada. “The B.C. condo market has slowed significantly in the last eight months. The current downturn is perhaps not surprising considering that market cycles are often tied to interest rates. Small builders are going into foreclosure at an unprecedented rate. Mark Goodman, broker at Goodman Commercial, which specializes in the sale of multifamily buildings, says many apartment building owners in the Lower Mainland have owned for so long that they aren’t impacted by the higher rate. But investors who purchased in 2016 or 2017, when the ‘market was strong and money cheap,’ are having to refinance at four times the initial mortgage.”

“‘And coupled with rent freezes during COVID and only nominal rent increases after. Combine that with rapid inflation, insurance and tax and utilities, and many of these landlords are in a negative cash flow. This situation is even worse in the land development market. There has never been a time that I have been selling real estate in the last 22 years that I have seen so many court-ordered sales. The big guys are okay. But the ones that are not well capitalized… I have a lot of developments for sale and some of my clients are in trouble. It’s a tough time.’”

“Jacky Chan, chief executive officer at BakerWest Real Estate said the market overall, is hugely impacted by the lack of available cash from China, which has seen a significant real estate downturn. ‘Nobody is really throwing anybody a bone, right? Everyone is suffering. Nobody has a lot of cash lying around doing nothing. They are all servicing their increased cost because of the increased interest [rate].’ Mortgage broker Eitan Pinsky says that after ‘a bit of a nosedive’ the last eight months, they saw a busier spring that has since tapered off. ‘From everything I’ve heard, downtown Vancouver is a ghost town, very few people are purchasing. I think [buyers] think prices are going to be decreasing. A lot of listings are coming online.’”

News.com.au in Australia. “Fears of another interest rate rise have prevented fireworks from going off across Sydney auctions this week, with buyers rarely making outlandish offers unless they saw properties as exceptional. ‘You have to understand, Sydney has not had ‘normal’ for a very long time, basically all the way back to the global financial crisis in 2008,’ said PropTrack economist Paul Ryan. ‘What we’re finally seeing is a more balanced market. It’s not a bad time to be selling or buying. The market has lost those earlier (extremes) … interest rates are a factor in that.’ Sydney buyers recently got an extra boost in the form of a 30 per cent jump in the number of new listings, which has taken some pressure off them to offer bigger prices, Mr Ryan said.”

“Auctioneer Edward Riley said the auction attracted strong bidding, but this was not the norm across Sydney auctions. ‘You can go from one property to the next and the results can vary hugely, even if those properties are quite similar. There is little consistency,’ he said. ‘A while back, if it was a turnkey property, where the buyers didn’t have to do anything, you knew it would sell well, but the results are a lot more mixed. It’s patchier than it’s ever been before.’ Mr Riley attributed the mixed results to growing uncertainty over the direction of interest rates and vendors’ often setting their price expectations based on results that occurred when the market was stronger. ‘I think all the rhetoric about rates has had an impact. One minute buyers were told they’d be getting up to three cuts this year. Now they’re told there won’t be a cut this year. It’s all playing into their decision making.’”

Radio New Zealand. “House values continue to fall, with some main centres seeing an increase in the rate of decline. ‘The housing market has largely stalled, and now the seasonal slowdown is well and truly upon us, with both buyers and sellers continuing to grapple with difficult economic conditions,’ QV operations manager James Wilson said. He said a glut of houses for sale was contributing to price weakness. ‘So those who are in a position to buy right now have the upper hand. Property owners might look at our latest figures and start getting that sinking feeling again, while first-home home buyers might even look at them with renewed optimism. But the reality is a market that is stuck between a rock and hard place, at least until mortgage pressure eventually lifts.’”

From WWD. “Chinese luxury spending is still growing slower than expected despite jumps in offshore spending in Japan, according to a latest report from Bernstein. According to the report titled ‘China is in the repair shop,’ Chinese spending on luxury goods has yet to recover to pre-COVID-19 levels, when they saw 20 percent annual growth. A faltering housing market has meant many Chinese consumers are less willing to splurge on luxury goods. ‘Lower real estate prices have dissipated the consumer wealth effect and boosted people’s propensity to save, as they feel poorer,’ wrote the report.”

“Bernstein laid out the worst case scenerio as well, if the housing market continue to worsen. ‘Failure to break the doom loop would usher a bear case on China,’ wrote the report. ‘A deepening economic crisis would bring higher social tensions and increase the risk of more ‘anti wealth’ policies. This in turn would accelerate capital flight and brain drain.’”