A report from Barron‘s. “Places where prices have run up the most relative to historic norms are most vulnerable to setbacks, industry experts say. Florida, and Miami in particular, are cases in point. Frustration hangs over the housing market in the Miami area, says Riley Smith, an agent based in the city and president of the Riley Smith Group. Prices for new construction and land are strong, but the city’s condo market is seeing weakness, he says. Buyers, frustrated by high mortgage rates, ‘are really pumping the brakes,’ says Smith. ‘We’re seeing more deals fall apart because both sides feel like they’ve given so much to get there.’”
The Wall Street Journal. “In year three of the Federal Reserve’s high-rate policies, some home sellers and buyers are giving up waiting for the central bank to change course. With inflation still elevated, the Fed is in no rush to cut its own rates. Mortgage rates once again rose above 7% this week. Denver: Original Listing Price: $1,050,000. Number of Offers: 0. Carol Bhargava, 70, never planned to sell the dream house she had been improving for more than 40 years. Then, about four years ago, her husband, Girish, now 78, mentioned he had trouble making it up and down the 12 steps to the basement. They hoped he would improve, but last September they put the three-bedroom ranch on the market for about $1.05 million.”
“They relisted the house in February, cutting the price by about $150,000. After 25 individual showings, there were still no serious offers, Carol said. Reluctantly, they reduced the price again to $797,900. While waiting for a buyer, the Bhargavas bought a two-bedroom condo in a 55-plus community in Denver. The couple paid for the condo in cash. But they are counting on the sale of the house to cover some improvements to the unit, such as remodeling the two bathrooms and kitchen. They hope rates will come down and bring out serious buyers. ‘Hopefully buyers won’t keep waiting on the Fed,’ Carol said.”
From WTVR. “For most people, Hampton Roads and Northeastern North Carolina are beautiful places to call home. In 2023, WTKR reported several major insurance companies were leaving local customers without coverage. Fred Drummond of Virginia Beach was one of the thousands of residents dropped. Drummond’s home sits about three blocks from the Oceanfront, and he’s lived there since 1977. He says he was dropped by his insurance company last year despite being with them since the 1980s. ‘You feel very vulnerable because you suddenly realize that if you cannot get insurance, or if the insurance goes so high [that] you cannot afford it, then the mortgage company is going to call your loan due and it goes into foreclosure, you lose your house,’ he said. ‘So, there’s your life.’ Committed to following through on Drummond’s story, I wanted to see how he’s been doing since that July interview. ‘I called every insurance company you can imagine, and nobody was writing insurance,’ he said.”
TBR News Media in New York. “A significant shift is coming to Long Island’s real estate market, with the National Association of Realtors agreeing to a settlement that could alter how buyers and sellers pay their agents. Some industry experts warn this might not be a guaranteed benefit for buyers, especially for those applying for loans from the Federal Housing Administration or Veteran Affairs. ‘The problem is, if the buyer is going to pay the compensation to the agent, you’re not incorporating it into the property — as far as getting it from the proceeds of the sale — [and that] then is going to have an effect on FHA buyers and VA buyers and that’s extreme,’ John Fitzgerald of Realty Connect USA said.”
From Heavy. “While viewers and clients trust those personalities to deliver the best outcomes, records show that one of the network’s early home-flipping experts, Charles ‘Todd’ Hill of the 2014 series ‘Flip It to Win It,’ was scamming people before, during, and after he was on the network. On April 16, 2024, Hill was sentenced to four years in prison and ‘ordered to pay back close to $10 million for committing real estate and financial fraud against 11 victims,’ according to prosecutors in Santa Clara, California. Over the last decade, investigators have tracked Hill’s pattern of fraud, including a Ponzi scheme, according to the release, which said Hill was convicted in 2023 after ‘evidence showed that Hill spent the laundered money on a rented apartment in San Francisco, as well as hotels, vacations, and luxury cars.’”
“In what’s now become an eerily predictive exchange on the show’s trailer, Hill said, ‘I don’t want to go broke,’ and Kaufman heartily laughed, replying, ‘No, it’s inevitable. Just not for a while.’”
The Detroit News in Michigan. “Sterling Bancorp Inc. founder Scott Seligman has been hit with a $400,000 fine for allegedly pressuring bank employees to rush underwriting loans in a high-fraud risk residential mortgage program, according to the Office of the Comptroller of the Currency. He is also barred from the banking industry. According to a consent order released Thursday by the Office of the Comptroller of the Currency, Seligman was considered a ‘dominant influence’ at the Southfield-based bank where he issued directives to bank officers and employees, and ‘participated in the conduct of the affairs of the bank.’ Seligman and other insiders were accused of operating its residential loan program ‘without making a reasonable and good faith determination of applicants’ ability to repay the loan and did not ensure that documents used to verify applicants’ employment, income, and assets were obtained from third parties and were reasonably reliable,’ according to the order.”
“According to the court document, from 2011 through 2019, the bank offered an Advantage Loan Program, a low-document residential loan program. The program was the bank’s main residential loan product at the time. The program was considered a high risk for fraud, lending misconduct and money laundering so it required strong monitoring and controls, according to the order. An investigation found that the bank originated numerous ALP loans that had false or fraudulent loan applications. DOJ officials said the company made false statements relating to its 2017 initial public offering and in its 2018 and 2019 annual filings. The plea was related to the Advantage Loan Program. The bank originated at least $5 billion in loans through the program from 2011-19, according to the government. The fraud continued after the Sterling IPO resulting in a loss of nearly $70 million to the bank’s non-insider victim-shareholders, according to the DOJ.”
Bisnow on Pennsylvania. “Jobs for Philly construction workers could take a nosedive next year as a glut of residential projects wrap up and others get put on the shelf. Developers say construction starts are set for a hard crash after a rush to take advantage of the city’s former 10-year tax abatement program temporarily sent activity into the stratosphere. That means an industry that has historically been desperate for workers could find itself in the unfamiliar position of having to scale back employment. ‘It’s not even anticipating a downturn. The downturn’s already here,’ said Vince Jolly, founder and president of CVA Commercial Group. ‘I think construction workers, obviously, are going to get hit hard. Because once these jobs dry up, I mean, what else are they going to do?’”
“A building boom set to go bust will solve one issue — overbuilding that has led to too much supply and downward pressure on rents — and create another for the construction industry, The Riverwards Group Managing Partner Mo Rushdy said. ‘That glut of apartments will solve itself, let’s say, by May 2025,’ Rushdy said. ‘The real problem is, No. 1, jobs. We hear from our friend in the trade unions and from others that projects are going to dry up in terms of the residential industry and when it comes to new jobs coming from the pipeline of ’26 and ’27.’ Rushdy said jobs tomorrow depend on developers snagging permanent financing today. ‘I’ll tell you from experience, we’re not even seeking financing,’ Rushdy said.”
Real Deal Chicago in Illinois. “A Los Angeles investor has snapped up a distressed downtown office building at a fraction of what it last traded for, spotlighting a market that’s still grappling with the pandemic’s aftermath and broader challenges facing commercial real estate. Brog Properties paid $2.6 million for the 185,000-square-foot building at 216 West Jackson Boulevard via auction, with plans to aggressively pursue new deals with tenants and other measures to revitalize the mostly vacant property, CoStar reported. The price is about $14 per square foot. The last time the 10-story building changed hands was in 2013, when Marc Realty bought it for $22.3 million, or about $120 per square foot.”
“Marc Realty was sued over a year ago after allegedly defaulting on a $16.5 million loan tied to the property. Marc eventually surrendered the property via deed-in-lieu of foreclosure, leading Florida-based special servicer LNR Partners to take control of the site last summer. The building hit the auction block in February, and the sale was finalized this week.”
The Toronto Sun in Canada. “A GTA couple took occupancy of their pre-construction condo earlier this year and are waiting to close, but they aren’t living there yet. Instead, they’ve rented out their unit for a one-year term as they continue to live in their parent’s basement. Why? Because like many new condo purchasers in the city of Toronto, they find themselves in the ‘inconvenient experience’ of buying during a market peak and closing during a market dip, a scenario that forced them to get creative with financing, says mortgage broker and LowestRates.ca expert Leah Zlaktin.”
“‘They wanted to move in on occupancy but the finances didn’t add up,’ said Zlatkin, explaining that their property was appraised lower than expected upon completion, putting their mortgage approval in jeopardy. ‘I suggested they get a renter in right now … and work towards the closing cost and the ability to close while waiting for the property to get title,’ she added. ‘Many people who are buying a condo or something pre-build, might be buying their first home and using every last cent on their down payment,’ said Zlatkin, whose brokerage saw as many as 15 properties appraised at a lower price than anticipated in the first quarter of 2024. ‘If you appraise low, all of a sudden you need to come up with more money,’ she said.”
I News in the UK. “When Stacey Greenfield bought her home in April 2017 -a spacious two-bedroom flat in a new development in Borehamwood in Hertfordshire she didn’t imagine that, seven years later, she’d be asking her solicitor how she could get rid of it. ‘I was literally begging: please, can I just give this back?’ she says. ‘It sounds awful, but at this point I would happily give away the keys, even if I got no money back. That’s how bad it’s got.’ Stacey, now 33, had bought the property off-plan for £380,000 with her partner at the time. It was a home for the foreseeable future.”
“Stacey has been trying to sell the flat since lockdown, having broken up with her partner. But with the insurance premium soaring, fire defects unresolved and no date set for the repairs, lenders like Santander, HSBC and Virgin have refused mortgages on the property. Stacey is stuck in limbo, unable to move forward with her life – and growing increasingly desperate to sell her flat. ‘I’m literally stuck,’ she says. ‘We would like to move somewhere as a family, but we can’t do that. We’ve been having the same conversations for the last four years. We’re at breaking point. No one is listening; no one is helping. We want it to be taken seriously. We just want the works to start, or at least the contract signed,’ she adds. ‘We’re seven years on; our lives have changed. It’s been hell. Absolute hell.’”
From News.com.au. “The Block serial bidder Adrian Portelli is ‘rapt’ with a weekend auction that cost him more than $1m. Mr Portelli spent $4.3m buying in November last year buying 22 Charming Street, Hampton East, from The Block. But despite an Australian record 200 registered bidders for the five-bedroom house that had been listed with a $1 reserve, only nine parties actually made a bid and the home. It ultimately sold for $3.245m under the hammer, leading to a $1.055m loss, not including stamp duty, for the young rich lister known as ‘Lambo Guy.’ The auction opened with a $1 bid, which Ray White Sunbury director Aaron Hill said was something he didn’t normally see happen. ‘What the home sold for at The Block auction, the home was never worth that price,’ he said.”
The Telegraph. “In an eerie, unfinished village of pink and blue fairytale houses in Eastern China, billboards can be found advertising Evergrande’s once ambitious plans to build a tourism empire bigger than Disney. The derelict amusement park is among the 800 development projects and scores of vacant homes across China abandoned after the world’s most indebted property developer collapsed two years ago. According to an anonymous letter shared on Chinese social media platform WeChat last week, much of the blame lies with Evergrande’s former auditor: PwC. The open letter, which purports to have been signed by unnamed PwC partners, claimed the professional services firm ‘turned a blind eye’ while auditing Evergrande for more than a decade.”
“The letter accused Raymund Chao, chairman of PwC Asia Pacific and China, of being ultimately responsible for bringing the firm into the ‘hot pit’ of Evergrande, which filed for bankruptcy last year. Meanwhile, Evergrande’s liquidators are reportedly preparing for a potential professional negligence lawsuit against PwC to recoup compensation on behalf of creditors, the Financial Times reported. The collapse of Evergrande, which is regarded as a symbol of China’s real estate crisis, brings into question the role that auditors played in enabling China’s debt-fuelled property bubble.”
“Foreign-linked auditing and consulting firms over the past decade entered China to capitalise on the opportunities thrown up by the country’s booming property market. However, a combination of overbuilding, Covid restrictions and tighter government controls on debt that China’s property giants could carry on their balance sheets resulted in a wave of bankruptcies that has upended the world’s second largest economy. Big Four firms, including PwC, now stand accused of failing to spot the early signs.”
“George Magnus, economist and research associate at the University of Oxford China Centre, says: ‘In the upcycle in a long-standing property market appreciation, everybody becomes very optimistic. All sorts of behaviour is excused and allowed on the basis that if it makes you rich, it must be good.’