A report from the Jacksonville Progress. “For those of us who live in East Texas, some of the information and data that follow will blow your mind. In May of this year, it was reported half of the homes that sold in our country over the past year sold for more than $419,300. In Cherokee County, half of the homes sold for more than $239,950. It’s all about supply and demand and local economics. In San Francisco the average selling price is $1,400,000. When I moved to San Francisco, in 1980, I paid $155,000 for a nice four bedroom, three bath home. When we sold it in 1982, the real estate market had cratered and we sold it for $137,000. In 2016 the home sold for $1,250,000. In April of 2023, it sold for $1,460,000.”
“In the Southridge Addition, on the southside of Jacksonville, homes sold in the upper $80s to the mid $90s, back in the teens. Now they are selling for close to $200,000. When Southridge began building about 20 years ago, it was their plan to build around 254 homes. Well, there are about 80 there now. All of the planned streets have yet to be built. In Jacksonville, half of the households have an income of $49,750 or higher. In San Francisco, half of the households have an income greater than $119,136. Today the real estate market has gotten poky. The reason the market has gotten poky is because the hot market blew up prices significantly and fewer people were able to buy. Building spec homes in Jacksonville is risky. There are several new brick homes on Zimmerman St. that are new and that were built a couple of years ago. Only recently it appears that a couple of them have sold.”
KTVU on California. “Good luck buying a starter home in the Bay Area: You’ll need to earn $285,000 a year. Broken down, your monthly payments would be $7,000 or more, according to Redfin, as San Francisco starter homes went for a median of $950,000 in July. ‘Homes in the Bay Area are so expensive that even many high-earning tech employees have been priced out of the area, so they’re looking at neighboring cities,’ said Craig Pellegrini, a Redfin Premier agent in the San Jose area. In half of the 50 most populous U.S. metros, a family earning the local median income can’t afford a starter home, Redfin concluded. The gap is biggest in Anaheim and Los Angeles, where families would need to earn twice the local income to afford a starter home.”
“Anaheim’s median income is $122,192; a family needs to earn $251,302 to afford the typical starter home, according to Redfin data. In Los Angeles, the median income is $93,197 and a household needs to earn $184,477 for a starter home. The gap is only slightly smaller in San Diego, San Francisco and San Jose.”
The New York Post on California. “Their real estate profits may be ‘Gone Baby Gone.’ Ben Affleck and Jennifer Lopez could lose $25 million on the sale of their Beverly Hills mansion, which is on the market for $68 million, because it’s overpriced, in a bad location and too big, said at least one real estate expert. ‘That house is actually worth between $40 and $50 million,’ a West Coast real estate investor told Paula Froelich of NewsNation. ‘It’s in a terrible location. Wallingford Estates is a gated community with no guard. Most homes in the area are from the 1970s and are worth between $5 to $10 million. This is just a huge white elephant. It’s garish, too big and dated with amenities that are just silly and not necessary (like an indoor sports complex).’”
“The couple bought the sprawling 12-bedroom, 24-bathroom, 5-acre abode in 2023 for just over $60.8 million and put it on the market in July, before Lopez even filed for divorce. The insider told Froelich that the house, which has been on the market for close to two months, according to its Zillow listing, isn’t aesthetically pleasing — and took a while to sell when it was new. ‘The house is ugly. It was built in 2001 by a mediocre developer with just bad taste in architecture … it’s a mish-mosh of styles with a faux French roof,’ the source said.”
“When it was built, it sat on the market for years and was listed at $100 million, so maybe [Affleck and Lopez] thought they got a deal for buying it at $61 million. But remember, they also put millions into renovating it to their tastes. ‘The property taxes alone on that house are $762,000 a year — and another $750,000 to insure it and maintain it. So, whoever buys it, they’re out at least $1.5 million per year just to keep the lights on,’ the insider continued. The former spouses will also lose at least 10% on the proceeds from the sale of the house — which they will have to split — due to a California mansion tax and realtor fees.”
Public News Service. “Michigan has seen a 10% rise in foreclosures this year. The Middle Class Borrower Protection Act, intended to assist middle-class homebuyers, is under fire for potentially increasing housing costs and making homeownership harder. Critics warned the bill might benefit landlords and large corporations more than average families by reversing recent Federal Housing Finance Agency fee changes for Fannie Mae and Freddie Mac mortgages. Caroline Nagy, senior policy counsel at Americans for Financial Reform, explained the concern. ‘This bill would order the FHFA to undo that change, raise prices for lower-income folks, first-time home buyers and order the FHFA to lower prices for investors and vacation-home buyers,’ Nagy outlined.”
“In Metro Detroit, the median sale price for a home in 2023 was at an all-time high of $250,000. Detroit saw around 100 foreclosures in July alone, underscoring the city’s ongoing foreclosure problem. Nagy expressed surprise Rep. John James, R-Mich., a Detroit native, actually supports the bill. ‘I think that is a very interesting vote, given his location, and the Detroit metro area,’ Nagy observed. ‘This is an area that has seen a lot of struggles.’ James did not respond to requests for comment. In Michigan, more than 12,000 properties were affected by foreclosures.”
From KTAR News. “Another self-storage development designed for housing your valuable and collectible ‘toys’ is coming online this fall. Those toys come in the shape of luxury and classic cars, boats and RVs and can be stored at Toy Barn, which already has six existing Arizona locations. Beyond being a home to stash away their luxury vehicle, Toy Barn looks to bring its car-crazed members together through its clubhouses and monthly events. Members often entertain and socialize within their units, which can be personalized to their taste. ‘We are a luxury garage condominium community, kind of like a country club for car guys, in a way,’ said Jason Phillips, co-owner and founder of Toy Barn. ‘So it’s a real estate ownership concept. It allows people to buy and invest in real estate to serve a need versus renting a locker in a traditional storage facility.’”
From Bisnow. “The former home of the New York Stock Exchange, which became home to more than 500 housing units for New Yorkers, is facing default. The Financial District office tower at 20 Broad St. was converted into housing by Nathan Berman’s Metro Loft Management several years before the pandemic. But the $250M mortgage tied to the property comes due in September, and the firm ‘has indicated it was unable to repay the loan at its maturity,’ according to bond rating firm KBRA, as first reported by Crain’s New York Business. The loan, set to mature Sept. 9, was transferred to a special servicer earlier this month, according to commentary on Morningstar Credit’s dashboard.”
“The apartment building has 533 units and ground-floor retail. The apartment portion of the building is more than 95% occupied but has suffered from offering concessions, according to July commentary on Morningstar. In this case, tenants were offered one month free for 12-month leases or two months free for 14-month leases. ‘Existing rent concessions are biggest driver of depressed cash flow but is expected to improve over the next six months,’ the servicer commentary says.”
“20 Broad St.’s financial troubles could be a lesson for landlords looking to residential conversions as a solution to vacated office stock. ‘The building was really big, and it did feel almost office-like, not super-communal or homey,’ a 63 Wall St. resident told Bloomberg. ‘They tried their best to turn it into a beautiful, grand luxury building, but I lived in a studio, and it was a very awkward space. It wasn’t square, it wasn’t a rectangle, it had all kinds of bizarre edges and weird corners.’”
From Politico. “Four and a half years after the pandemic sent workers home, the office property bill is finally coming due. The market for office buildings — already reeling from higher vacancy rates amid the rise in remote-work policies — has been crushed by high borrowing costs. Investors, banks and property owners are now beginning to accept that some commercial buildings will never recover their pre-pandemic value, and that’s leading to a steady drumbeat of distressed sales. Over the last four months, seven office properties were sold at a staggering loss of more than $100 million each, up from just one such sale in the first three months of the year. Banks and investors will have to take significant haircuts — one midtown Manhattan office building sold at a 97.5 percent discount in July.”
“‘Three out of four office properties ‘don’t end up being refinanced without an additional equity infusion from the owner,’ said Stijn Van Nieuwerburgh, a professor of real estate and finance at Columbia University’s business school. ‘So the question is what does the owner do; is it throwing good money after bad?’ Scott Rechler, CEO of New York landlord RXR, which defaulted on a $240 million loan tied to a Manhattan building last year, said the delayed onset of the storm — via loan extensions and adjustments — has allowed banks to build up reserves. Now, he said, more banks are moving from the ‘denial’ stage of grief to ‘acceptance’ and marking down their holdings. ‘There is a clear acknowledgment that if you’re kicking the can — this is different than 2008 — that this is not going to resolve itself in just, you know, prices and values re-inflating because of an injection of capital into the system,’ Rechler said.”
Canadian Dimension. “The word mortgage has its origins in medieval French jurisprudence. Roughly translated it means ‘deal unto death.’ In the context of Canada’s housing market this etymological root has special resonance. Our homes have been mortgaged by an aging generation hell-bent on carrying them into the grave. Many of these propertied elders are not treating housing as a human right, but as an asset class to be accumulated for the purpose of wealth extraction.”
“Despite being a quarter of the population, baby boomers own 41 percent of the homes in Canada. These senior speculators are the majority of small investors in much of the country—up to 67 percent in some provinces—and they are accruing property at an accelerating rate. In 2021, 20 percent of single family home purchases were made by investors. By 2023 that number was over 25 percent. The use of homes as investments rather than places to live is part an economic process called financialization which has pushed housing prices far higher than comparable nations around the world.”
“But governments are not interested in combating investor-driven price inflation. ‘Housing needs to retain its value,’ Prime Minister Justin Trudeau declared earlier this year. ‘It’s a huge part of people’s potential for retirement and future nest egg.’ Unfortunately, policies that move towards decommodification are not politically viable because real estate speculation has come to replace pensions as the retirement plan of choice for aging Canadians. We need to address these issues together as part of a broader turn away from neoliberalism. It is imperative that Canada once again become a country that invests in services, social housing, and livable pensions. Our elders should never have been compelled to involve themselves in real estate ponzi schemes to attain a dignified retirement.”
Global News in Canada. “A Montreal engineer and part-time professor is voicing his frustration at Quebec’s slow housing tribunal after he alleges a new tenant in an apartment he owns sparked chaos on the streets and rattled the neighbours. Francois Tardy rents out an apartment on a Hochelaga Maisonneuve street, which he said rented to a new tenant on a one-year lease in March. That lease, the engineer and Concordia University professor said, led almost immediately to complaints. The issues reported by those around included ‘people going up and down all the time, smoking crack all over the place, sitting down in that location, defecating and urinating over there’ and ‘howling at people’ and ‘screaming at each other.’”
“Tardy told Global News someone else who rents from him described the problem in stark terms. ‘One of my tenants called me and he said, ‘You realize that you just invited a crack house up there?’ he recalled. The engineer shared videos with Global News that appeared to show people consuming drugs in the street. Tardy noted that an elementary school is just steps away from the address. ‘I thought it would be a quick resolution, but it was not,’ Tardy said of his attempt to evict the tenant. ‘It was much more complicated than I could ever imagine.’”
From The NL Times. “Criminals from the drug trade are setting up large-scale mortgage fraud networks throughout the Netherlands. Several regional police forces shared signals about this after the Amsterdam police discovered that drug criminals had purchased hundreds of homes in the capital through mortgage fraud in recent years. Nationwide, at least 8,000 homes are in criminal hands, the Financieele Dagblad reported.”
“According to the police, the ease with which criminals can get a mortgage using fake documents is alarming and has a huge attraction effect. ‘We are currently seeing criminals grow from drug trafficking to this form of fraud. Particularly because it is an easier revenue model and also offers the opportunity to launder drug money,’ Amsterdam police chief Pim Jansonius told FD. ‘At the same time, they run less risk since, in the drug trade, you never know who is going to chase you: the police or fellow criminals. The chance of being caught in fraud is also significantly smaller.’”
“In July, the Amsterdam police reported uncovering a criminal network consisting of a realtor with a history in drug trafficking, administrative offices, and mortgage advisors. The network arranged mortgages with fraudulent payslips and employer statements against cash payments of around 10,000 euros per home. He called the extent of these networks ‘alarming.’ Thousands of homes are being removed from the regular housing market nationwide, he said. ‘It disrupts society and undermines the integrity of the financial sector. Criminals involved earn tens of millions from it, and banks provide billions in mortgages,’ said Jansonius.”
The Herald Sun. “Melbourne’s median house value has fallen for the fifth straight month, and is now $16,000 below where it was a year ago in a blow to homeowners across the city. The latest PropTrack Home Price Index released today has revealed the drop, which has in part been caused by government taxes driving investors to sell and thinning buyer demand. Australian Bureau of Statistics data also shows that investor purchasing is growing weaker. While this has been great news for buyers, PropTrack senior economist Eleanor Creagh noted it showed it was an early sign that ‘buyer demand isn’t meeting the stream of listings.’”
From CNBC. “China’s property struggles and U.S. sanctions have significantly affected some of its cities, even as others benefit from Beijing’s tech push, Milken Institute’s best performing cities China index showed Tuesday. Cities such as Zhuhai, once a ‘rising star,’ dropped in the rankings due to the slump in real estate. The city, in the southern province of Guangdong near Hong Kong, fell 32 places from the previous index published in 2022 to 157th place. Suddenly no one bought houses. ‘Builders didn’t have much money to complete their projects,’ Perry Wong, managing director of research at the institute, told reporters in Mandarin, translated by CNBC.”