It’s Friday desk clearing time for this blogger. “A wave of foreclosures is likely coming that will hit low-income homeowners. As of August, over 10% of the eight million single-family mortgages backed by the Federal Housing Administration were delinquent by more than three months. According to the FHA, the reason for 86% of those delinquencies was ‘a national emergency,’ a category that includes the pandemic. These delinquencies are heavily concentrated among loans associated with low credit scores.”

“Two days before Halloween, zombie foreclosures — homes abandoned by their owners but not yet seized by lenders — account for 4.4% of all distressed properties in the Sarasota-Manatee region, according to ATTOM Data Solutions. The Sarasota-Manatee area reported a total of 9,423 vacant residential properties, or 2.8% of the entire housing stock. Just over 1,000 of those are in pre-foreclosure status.”

“As the coronavirus pandemic transforms San Francisco’s workplace, legions of tech workers have left, able to work remotely from anywhere. Families have fled for roomy suburban homes with backyards. The exodus has pushed rents in the prohibitively expensive city to their lowest in years. Tourists are scarce, and the famed cable cars sit idle. For Rent and For Sale signs began popping up this summer with increasing frequency — and offering steeply reduced prices.”

“Now landlords are hard-up for tenants and some are offering several months free, said Coldwell Banker realtor Nick Chen, who recently rented out a one-bedroom for $3,150 that before would have easily gone for $4,300. ‘San Francisco rents have been really inflated over the past couple years,’ Chen said. ‘It will come back, but I think the question is: Will it come back to the level it was at previously? Maybe not.’”

“Inventory is starting to pick up very slightly now, but most are looking to the spring of next year for any real change in the market. ‘I think we’ll see MUCH more inventory than usual Spring 2021,’ said David Fogg, a real estate agent in Burbank, CA. ‘You’ll have all of the 2021 planned sellers as well as most of the 2020 planned sellers who put their move off for a year. Also based on my call level, I think in California you’ll see more new planned sellers than ever.’”

“Decidedly weak quarterly earnings reports from major apartment real estate investment trusts this week paint a bleak picture for some of the largest urban rental markets. Equity Residential, whose portfolio consists mostly of mid- to high-rise buildings on the East and West coasts, saw a particularly bleak third quarter. Its stock is down about 43% year to date. Occupancy and average rent rates fell and will likely drop further in the coming quarters.”

“Nearly a quarter of its holdings are in downtown San Francisco, Manhattan, Brooklyn, New York, Boston and Cambridge, Massachusetts. Those are the markets most impacted, as they have seen large outflows of tenants moving either to smaller cities or the suburbs. ‘The proof is that rents are down double digits, plus the AvalonBays and Equity Residentials of the world are offering 2-months free on top of that in the major Coastal Urban Markets,’ said Alexander Goldfarb, a REIT analyst at Piper Sandler. ‘When DC, long a laggard, and Baltimore are the best relative apartment markets for companies like Equity Residential and AvalonBay, you know things have changed.’”

“It’s a nationwide trend that has hit Hawaii especially hard. The pandemic crippled the state’s tourism industry in March and has left tens of thousands of people out of work. Emergency orders to protect renters during the pandemic will end one day, and many fear that will thousands of tenants in financial holes ― unable to dig out. ‘It’s tough for everybody. There’s been a lot of reduced income and that makes paying rent difficult,’ said Dale Kobayashi who wears two hats ― as a landlord and a state lawmaker. He said he’s seen first hand the stress people are under due to the pandemic ― with 20% of his tenants currently out of work.”

“Kobayashi says landlords have two choices. ‘You either take someone to court,’ he said. ‘Or you sit down with them and work it out with them. I’m always in favor of the latter.’ ‘Come to the table. Mediate and work together,’ Kobayashi said. ‘You can’t get blood from a stone.’”

“Well before the outbreak of Covid-19, the luxury real estate sector in New York City was in trouble. The oversupply was particularly an issue in Manhattan: By the end of last year, 25% of the borough’s new condos built in the previous six years were still unsold, and that number climbed to 40% for the new construction along Billionaires’ Row. And now, sellers of ultra-luxe properties are slashing prices. ‘What people forget is that the market was having major issues pre-Covid. It was down 30% for the past year and a half,’ said Lauren Muss, a broker with Douglas Elliman in New York. ‘It may be that real estate became so crazily inflated that this is the new reality.’”

“Ben Myers says there’s no precedent for what’s happening. ‘In my 20 years covering the market, I have never seen rent declines like this,’ said Myers, reflecting on the persistent drop in Toronto apartment and condominium rental rates since March. Myers attributed the glut of units on the rental market to various factors. Asked for his view on prices in the months ahead, Myers offered this prediction. ‘We think it’s going to continue to go down,’ he said.”

“The sale bonus is a relatively new phenomenon in Vancouver, but one that is showing up more frequently in today’s uncertain real estate market. With the downtown condo market in a slump, many of those who made presale purchases appear to be unloading them. Adam Major, manager of Holywell properties, believes the bonus commissions indicate they are dealing with a market that has more listings than buyers.”

“Private rents in London have dropped for the second quarter in a row, with some areas posting sharp falls of up to 34% year on year, while other cities led by Edinburgh have also reported a decline during the pandemic. The areas with the biggest drops in rents were Aldgate in east London (EC3), where rents were down 34%, Maida Vale and Paddington in west London (W9), where rents dropped by 20%, and Westminster, Belgravia and Pimlico in the south-west (SW1), with a decline of 17%.”

“Matt Hutchinson, the communications director of SpareRoom, said: ‘The places that are more expensive usually see the biggest falls first, always the south-west and west of the capital. If people are feeling the pinch, the most expensive places are just out of budget.’”

“Residential rents in Dubai, which have dropped 43 per cent since their peak in the second quarter of 2014, will continue to decline in the next six to nine months due to a sustained supply of new units in the months ahead, say real estate industry consultants. Citing an example, Sailesh Israni, managing director of Sun and Sand Developers, said earlier, when a new engineer used to come to Dubai with a Dh6,000 salary, he lived in a sharing accommodation; now, such professionals are preferring independent or shared apartment with only a single person.”

“The new black swan of the global economy leading to the worst recession in Thailand in over two decades is a negative factor that will worsen the weak property market, in addition to the lending curbs imposed last year. According to property developer Pruksa Holding Plc, housing market value in Greater Bangkok shrank 36% to 128 billion baht in the first half, from 199.51 billion baht in the same period last year. The largest drop was from condos at 54%, followed by townhouses (20%) and single detached houses (12%).”

“‘Some 10 million people have been affected by the Covid-19, in terms of layoffs and salary cuts,’ Supalai’s chairman Prateep Tangmatitham said. ‘The government should reopen to international tourists, otherwise the economy will crash in the fourth quarter.’”

“In the classic fairytale Cinderella, the fairy godmother turns Cinderella into a princess with her magic wand – but only until the clock strikes midnight. In many ways Prime Minister Scott Morrison and the banking regulator APRA have acted like a fairy godmother for the nation’s mortgage and SME (small and medium enterprise) borrowers. They’ve used their magical abilities to change otherwise concrete rules surrounding financial regulation and loan repayments, to make bad loans good and offer an unprecedented number of loan deferrals.”

“But like the story of Cinderella, the magical illusion of low mortgage arrears and good times underpinned by government support will fade when the clock strikes midnight. However, unlike the fairy godmother, APRA and the Morrison Government have already waved their magic wand again to extend mortgage deferrals, from their initial conclusion in September and October, to March next year.”

“This has been dubbed by some economists and finance experts as a strategy of ‘Extend and Pretend’. Effectively ignoring what would otherwise be a US subprime crisis level of mortgage arrears and hoping that someway, somehow, things would improve. With so many workers potentially facing unemployment in the coming months, it’s possible we may see a second wave of struggling borrowers seeking to defer their loans. When this time comes, the property market may face a perfect storm as struggling borrowers stare down the possibility of being forced to sell their homes or investment properties at the same time.”

“Perhaps Australia’s property market will be protected by the magic wand of APRA and the Morrison Government, emerging relatively unscathed. Or maybe this time, the storm is simply too powerful for even the magic of government and banking regulator intervention to overcome.”