A report from the Wall Street Journal. “Mariano Rivera, the retired Major League Baseball pitcher, is listing his home in Rye, an affluent community in Westchester County, N.Y., for $3.995 million. Mr. Rivera and his wife bought the property in 2006 for $5.7 million, according to listing agent Heather Harrison of Compass. Ms. Harrison said the lower price reflects the fact that the Riveras bought the property brand new from a developer at the height of the market and were the first people to live there.”
The Real Deal on New York. “HFZ Capital Group continues to have trouble meeting its debt obligations. The lender at HFZ’s planned project on Manhattan’s Upper East Side claims the prolific condo developer owes more than $18 million on defaulted loans, according to a motion for summary judgement filed in New York Supreme Court on Tuesday. HFZ principals Ziel Feldman and Nir Meir are named as co-defendants for personally guaranteeing the debt.”
“The lender, identified as YH Lex Estates, claims it loaned HFZ a total of $20.5 million between 2017 and 2019 to develop the project on an assemblage around 1135 Lexington Avenue. The lawsuit alleges that after HFZ defaulted on the initial loan agreement in November 2019, it agreed to a repayment plan. In July, the two parties again agreed to extend the repayments, allowing the developer to repay the loans in six installments by October.”
“But HFZ only paid $1 million towards the balance of these loans, the suit alleges. At one point, the lender claims a $750,000 check that Meir sent from HFZ was returned for insufficient funds. HFZ has become one of the most active condo developers in New York City in recent years. But recently the company has seen its share of problems. In December, federal officials alleged that HFZ managing director John Simonlacaj let the mob skim hundreds of thousands of dollars from the XI, as well as other Manhattan projects. (He was fired from HFZ.) And in September, CIM Group tapped a brokerage to market junior mezzanine loans tied to four of the developer’s condominium projects — including 88-90 Lexington Avenue and The Astor at 235 West 75th Street — through a foreclosure sale.”
“Last month, Starwood Property Trust filed suit against HFZ alleging the firm defaulted on loan payments at the Chatsworth, an Upper West Side co-op conversion.”
From Bisnow Chicago on Illinois. “Cracks in the multifamily foundation have appeared as the coronavirus pandemic continued to sour the economy and some residents of large urban properties began to exit. The struggles of top downtown properties are not exactly news, said Kiser Group Managing Broker Lee Kiser, but vacancies are rising, and renewals are scarce in other prime locations for the same reasons, including Lincoln Park, Lakeview and Bucktown. ‘It is pretty scary right now,’ Kiser said. ‘The biggest problem right now is with lenders, and I don’t mean that they’re doing something wrong, but many are subjecting properties to more scrutiny.’”
“There has been a flood of condos recently hitting the market, many in the downtown area, said Nykea Pippion McGriff, president of the Chicago Association of Realtors, and that could be a sign that many downtown dwellers plan permanent exits. In August and September, more than 1,000 condos in Chicago were hitting the market each week, with only a few hundred selling each week.”
From WTOP. “The COVID-19 pandemic has negatively impacted the D.C.’s region’s rental housing market, with apartment vacancies rising and landlords lowering rent to fill up empty units. Across the metro area, Class A rents are down 7.0% from a year ago, the steepest year-over-year decline recorded by Delta. For Class A and Class B apartment units combined, metro area rents are down 5.5%. ‘The unprecedented nature of the pandemic and the resulting prolonged economic slowdown in its wake has impacted the apartment market more than initially expected,’ the firm said.”
“In Northern Virginia, Delta’s data shows high-rise apartment building rents are down 10.9% from a year ago. Rents at older, low-rise buildings are down 3%. In the Rosslyn-Ballston corridor, average apartment rents are down 13% from a year ago. In the District, average high-rise rent is down 10.7%. In Upper Northwest D.C., rents are down 3.2%, but in downtown, rents are down 12.7%.”
“Higher vacancy rates currently may be a problem for developers in the D.C. region. Delta reports the pipeline of likely deliveries of newly-built apartment units in the D.C. region over the next 36 months stands at 41,642 new units, 2,900 more than at this time last year. It is the 10th year in a row the development pipeline has been above 30,000 units.”
From Livabl in California. “Throughout the pandemic, we’ve been closely monitoring Zumper’s monthly rent reports, watching prices for one-bedroom apartments in Los Angeles trend downward over the past eight months. In its latest release, the apartment rental platform noted that 13 out of the 100 most populous metro areas have experienced record-breaking annual price reductions for one-bedroom units. Zumper has been tracking monthly rental data since 2015, pulling from more than 1 million apartment listings.”
“Los Angeles logged the seventh-largest price slump nationwide, with one-bedroom rents falling 13 percent year-over-year to a median of $2,000 per month. Two-bedroom rents in Los Angeles tumbled 14.7 percent over the same period last year to $2,780.”
The Santa Monica Mirror in California. “A recent report shows the average rent in Santa Monica has decreased 13 percent since the start of the pandemic in March, a steeper drop than experienced in any Southern California city. According to a November report from Apartment List, Santa Monica rents have declined ‘decreased sharply’ by 12.8 percent in comparison to the same time last year. ‘This is the eighth straight month that the city has seen rent decreases after an increase in February,’ the report reads.”
“Only the Northern California cities of San Francisco (-23.4 percent), Mountain View (-21.1 percent) Sunnyvale (-17.9 percent), Redwood City (-15.4 percent) and San Mateo (-13.2 percent) experienced sharper declines than Santa Monica.”
“Other Southern California cities that experienced rent decreases this past year include Burbank (-9.7 percent), Los Angeles (-8 percent), Pasadena (-7.7 percent), West Hollywood (-7.3 percent) and Irvine (-4.8 percent). While the report did not include nearby cities of Beverly Hills and Culver City, other estimates show respective -7 percent and -5 percent decreases experienced the past year in those cities.”
The Midland Reporter Telegram in Texas. “Apartment rents continued their downward move in October, according to apartmentlist. Rent has decreased nearly 30 percent since October 2019, according to the apartment information website. Apartmentlist shows a 29.7 percent decrease year over year in Midland. Midland’s rents have dropped for 17 straight months, including a 1.4 percent decline from September to October and a 21 percent decline since the COVID-19 pandemic began in March. Odessa rents also are going down. ApartmentList.com shows a 35.2 percent decline in rents year over year and a 27.7 percent decrease since the beginning of the pandemic in March.”
From CNA Luxury on the UK. “Alex Woodleigh-Smith, founder of bespoke buyer’s brokerage AWS Prime, believes that investors, including many Asian buyers, lose billions buying off-plan new build in bad locations in London. ‘Buying in 2015, they were promised growth prospects, but five years on they’re trying to sell before completion at the same figure that they paid at purchase. It’s not the ROI investors imagined, but this story is unfortunately all too common in the London new-build arena,’ Woodleigh-Smith said.”
“Woodleigh-Smith believes that the case for buying heritage and period properties, as opposed to new builds off-plan, couldn’t be clearer. ‘Firstly it’s the scarcity value, simple supply-and-demand economics. New builds may have 800 units – with another 700 being built next to you – so when you want to sell or re-let you’ll be up against 20 to 30 near-identical units in the scheme, which significantly drives down prices. The reasons to buy new builds simply don’t outweigh the fact that they won’t hold their value, given considerable over-supply.’”
From Domain News in Australia. “Property prices across a string of suburbs in Australia’s east coast cities have remained virtually unchanged in the past five years, with an oversupply of homes and weaker market conditions leaving their median prices at 2015 levels. Sydney had the most suburbs where price remained flat or saw limited growth, with medians in more than a dozen suburbs virtually unchanged. These were mostly in middle to outer-ring areas where there has been development aplenty in recent years, creating an oversupply of units in some pockets.”
“Haymarket, a suburb typically popular with international students, was the only inner-city suburb where prices were at 2015 levels. Hard hit by border closures, it has seen reduced demand from buyers and renters, which has put downward pressure on prices – which dropped 8.7 per cent over the year to a median of $1,105,000.”
“‘Back in 2015, 2016, 2017 things were selling hot off-the-plan,’ said Norman So, of Belle Property Strathfield. Mr So said lending policy, during the pervious market downturn and in recent months, had seen investors shy away from the market. ‘[Now] in 2020 we are in recession, amid the COVID environment there’s been a bit of a drop-off in terms of values. Commonly, two-bedder apartments in Strathfield were selling for $850,000 to $900,000, but the same unit now would trade for around $750,000,’ he said.”
”’Apartment [prices] haven’t really changed over the last five years, since about 2016, mainly because they keep building more and more in Richmond and Abbotsford,’ said Emily Sayers, of Biggin & Scott Richmond. An abundance of new supply in upscale Hamilton – at a time when investors have deserted the market – was making apartments a tough sell, said Richard Dixon, of Connect Realty.”
From TVO 50 in Canada. “Real estate is a favourite topic of Ontarians, particularly those residing in the Greater Toronto and Hamilton Area. The ones who got into the market on its way up tend to pat themselves on the back for their decision-making savvy, while those left out have been calling for the bubble to burst for years, even decades. Now, it appears that those priced out of the market will soon have their moment — and that a deep correction of the industry is an inevitability.”
“The pandemic has exposed vulnerabilities in the condo market, especially for investors who purchased units, converted them into short-term rentals, and listed them on such websites as Airbnb. While the pandemic-induced collapse of Toronto’s condo-turned-Airbnb market might have been bittersweet for its hotel industry — on the verge of its own implosion — it is mostly just bitter for local Airbnb hosts and their fallen ‘ghost hotel’ empires. In the past, it’s been tough to get a full read on what’s really going on in the condo market; I suspect that’s because developers, real-estate professionals, and even condo owners want to avoid publicizing its glaring issues, thereby dragging down valuations.”
“Now, though, the issues facing the market are becoming too big to ignore. Just last week, several realtors in my own circle confirmed that they’re being swamped by panicked buyers looking to offload their units or find long-term renters. This week, another sign of more than just ‘weakness’ in the market came to light: according to local realtors, the number of assignments (the right to purchase a pre-construction condo from its previous owner) has soared since the impacts of COVID-19 have settled in. While there are no exact numbers, it’s estimated that almost 50 per cent of pre-construction condo sales are as investments.”
“For a while, Toronto’s booming condo market seemed unstoppable: the average price almost doubled in just 12 years. This appetite for condos meant that proper planning, both at the design and urban levels, was farther down on the priority list, leading to problems that still couldn’t stop this runaway market. It took the one-two punch of regulating the short-term rental market and the pandemic to finally slow it down. They say that the bigger the bubble, the bigger the bust — based on the concerns being expressed by real-estate agents and investors alike, I’d wager that we are due for a massive correction.”