It’s Friday desk clearing time for this blogger. “Realtor Josh Altman joins Yahoo Finance Live to explain the Los Angeles ‘Mansion Tax.’ If people think they were not going to be affected because they don’t have homes that are worth more than 5 million, I promise you, they are going to be affected because their houses, too, are going to go down in price. The issue is, these people that have bought houses two years ago and for some reason, they want to sell their house now, not only are they going to be down because the market’s down, but now they have to cut that 4% and 5 and 1/2% check out of their pocket, off of their loss. How crazy is that?”
“In LA, minus a couple of parts like Beverly Hills and Malibu, there is a lot of fear. It’s already been done in Santa Monica. Even in our office down south in Newport Beach, they’re getting worried that this is going to go down there as well. So it’s going to affect across the board.”
“How would you describe the Houston market right now? LaTisha Grant is the executive managing broker at TAS Realty Group in Houston: We are at a very interesting point where prices are starting to decline and buyers are now getting back into the market in many of our areas. I have a buyer that’s been approved for $195,000. Now, had this been six months ago, we would not have even been able to find her a home. But I’ve had the opportunity here recently to show her 10 homes, several of which have been on the market for about 60 days. It has drastically changed. For the buyer, it’s drastically changed for the better. For the sellers, it is not so much changed for the better. Now they’re having to deal with, ‘Oh my goodness, we have to actually entertain doing repairs, we have to entertain, maybe, paying buyers’ closing costs.’”
“Angela Romero received an email last week from Airbnb alerting her to a subpoena the company had received from the City of Philadelphia about her short-term rental properties. ‘We’re all freaking out. No one knows what’s happening,’ said Romero, after checking in on Facebook pages and group chats where hosts gather. ‘We have no context. We don’t know anything about it. Everyone’s in the dark.’ She’s no longer making money off of her short-term rental business and is looking for a job. ‘It’s been a nightmare trying to get the zoning permit,’ Romero said. ‘They shut down my business, and that’s what I’ve lived off of. I mean, it’s rough. It’s really rough.’”
“The swift collapse of Silicon Valley Bank earlier in March put a spotlight on potentially painful losses lurking at banks from trillions of dollars in commercial-real-estate loans on their books. The sale of $72 billion in assets from the failed Silicon Valley Bank by regulators at a $16.5 billion discount, which pencils out to about 77 cents on the dollar, offers a glimpse into a new clearing price for commercial-real-estate loans. ‘What everybody has been operating under is this hold-to-maturity veneer,’ David Blatt, chief executive at CapStack Partners said of banks that have continued to value loans at 100 cents on the dollar, or par. ‘There’s just no way these things get resolved at par,’ Blatt said. With the discounted sale of Silicon Valley assets, ‘the write-down is kind of implied.’”
“Domenic Gatto Jr., the embattled developer of the Banyan Cay Resort in West Palm Beach, is waving the white flag. On Wednesday, Gatto’s development entity for the hotel-anchored mixed-use project filed for Chapter 11 reorganization, with a plan to sell the 200-acre property to pay off debtors. The development entity also owns adjacent development sites that are approved for 179 condo units, 28 single-family homes and 22 villas.”
“The life sciences industry is now facing a sharp slowdown in demand as biotech firms grapple with economic pain. Developers in the industry’s largest hub, Boston and Cambridge, say they are having a hard time leasing their buildings as growth has begun to drop off in recent months, executives said. Boston life sciences companies laid off more than 3,000 people last year, putting downward pressure on lab demand at the same time that the market also saw its largest increase in inventory, with 6.2M SF coming online. ‘The days of shooting fish in a barrel are over,’ said Related Beal’s Stephen Faber.”
“Private real estate firm Laurus Corporation and Torchlight Investors have sold a roughly 250,000-square-foot mall named HHLA for about $30 million less than what they paid for it in 2015, The Real Deal has learned. The firms sold the West L.A. property, formerly known as The Promenade at Howard Hughes Center, for about $80 million, or about $320 a square foot, according to a source familiar with the deal. Laurus and Torchlight bought HHLA for $111 million in 2015, records show, or about $444 a square foot. The duo spent a further $35 million to renovate the building and add outdoor areas.”
“The number of mortgage defaults aren’t high, but the size of them challenge the GDP of small countries. Adam Slater, lead economist at Oxford Economics, makes mention of the PIMCO-controlled US$1.7 billion Columbia Property Trust default as one massive example. Lloyds Bank in the UK selling a defaulted property at 40% below its 2014-purchase price also makes the list of panic inducing defaults. Then there’s Blackstone’s US$563 million default in Europe. We recently discussed Blackstone’s reverse-Midas touch in commercial property markets.”
“Ontario’s cottage prices are expected to soften after two years of unprecedented growth in recreational property, according to a new Royal LePage report. Is the cottage market bubble bursting? Rick Laferriere, a broker based in Simcoe said drastic price drops have occurred in cottage country, it just depends on the location. For example, in the southend of Lake Simcoe, a property that sold for $1.7 million in the pandemic recently sold for $1.3 million, which is a $400,000 decrease or more than a 20 per cent drop. ‘The value of your property hasn’t dropped if you’re in a great area,’ he said. ‘But if you’re in an area where prices shouldn’t have been so elevated then you’ll be hit.’”
“At the height of the COVID-19 pandemic, Toronto’s Sewit Tamene decided she would finish getting her real estate licence. But by the time she completed the program in September 2022, the booming pandemic housing market had started to turn cold. ‘If you’re a newer agent, I definitely think that it’s a little bit more difficult to get going,’ Tamene said. ‘Some realtors are definitely taking a pause or leaving the industry because there’s just not enough cake for everyone.’”
“Prices, too, have come under pressure. The composite benchmark price for a home in the Greater Toronto Area (GTA) peaked at $1,370,000 in March of 2022, according to figures from TRREB, but as of February were down 18 per cent from there. Vancouver’s price decline has been steeper, according to the region’s real estate board, off 20 per cent from a high of $1,374,500 last April.”
“The realtor sector in Israel is in deep crisis as the number of real estate deals being completed has plunged by 40%. The crisis is reflected in the low rate of those taking the real estate brokerage exams in 2022. The Israel Association of Realtors reports that a large number of real estate agents are abandoning the profession due to the small number of deals, which makes it tough to earn a living in the current situation. Moreover, Ministry of Justice data show that many agents who have passed the exam are not paying their license fee because they see no point in working in this field at the moment.”
“Shahaf real estate network CEO Eran Nissim, who mainly works in the Sharon region, echoes this sentiment: ‘We have an 80% decline in the number of deals since the peak, and I say candidly that an agent needing to raise and support a family from this profession will not be able to do this today, unless they are experienced. Apartment sellers should understand that if they do not compromise on their price, there will be no deal. Even if the deal goes ahead it could collapse at almost any stage in negotiations with the lawyers, with the mortgage bank, and in between.’”
“The price of old apartments continued to fall in February, according to Statistics Finland. In Finland’s six largest cities, prices fell by 5.5 percent in February, compared to the same month last year. In other areas of the country prices dropped by around 4.4 percent. The capital region saw old apartment housing prices decline by 6.1 percent in February, year-on-year. Overall, apartment building prices fell by 5.8 percent across the country, while prices of terraced houses dropped by 3.7 percent compared to last year.”
“Owners of brand new flats built by Croydon council’s failed developer Brick by Brick say they’ve faced a catalogue of problems since moving in, from gas leaks to water pipes not being fitted. To make matters worse some of the owners fear they will struggle to sell their home when the time comes that they look to move due to all the issues. Melissa Chapman, 47, is worried about being able to sell her flat in the future if service charges keep going up. She claims there were drainage issues in her flat and the pipes in her bathroom were not fitted correctly. ‘People aren’t going to want to come and move here because of all the bills,’ she said.”