A report from the Wall Street Journal on New York. “More New York City hotel owners are defaulting on their mortgages, succumbing to a crush of new supply and rising expenses. Colony Credit Real Estate Inc. recently hired a brokerage firm to sell the mortgage on the 1,331-room Row Hotel near Times Square at a loss, according to people familiar with the matter. Colony Credit said in a 2018 public filing that the loan package had a principal balance of $260.2 million. The loan could now sell for as little as $50 million, say people familiar with the matter. Several other hotel owners have had similar trouble.”
From KGET in California. “January saw home supply and demand in Kern County continue to decline, local appraiser Gary Crabtree says. New listings last month dropped 6.4 percent from 722 in December 2019 to 676 last month. Crabtree said home sales dropped 15.4 percent from 564 in December to 477. Crabtree said such a decline is common after the holiday season and is typical in the housing market. However, Crabtree said what is unusual is that the median sale price dropped by $13,500 last month, or 5.1 percent.”
The Atlanta Journal Constitution in Georgia. “The continued growth in the Sugarloaf area has not gone unnoticed or without opposition. A proposed 265-unit apartment complex was denied by the planning commission in February. A neighbor formally opposing the project at the meeting warned of potential oversaturation of the market. ‘Something is going to drop,’ said Hing Lee, a Duluth resident, referring to the Sugarloaf apartments. ‘Look over at the apartments around the Gwinnett Place Mall. Fifteen years ago, they were fine, they were luxury, they were great. But look at them now.’”
The Real Estate Journal. “The days of big monthly increases in apartment rents might be over, at least for now. That’s one of the takeaways from Zumper’s February National Rent Report. In Minneapolis, the median one-bedroom apartment stood at $1,400 in February, up a fairly flat 0.7 percent from January and completely flat when compared to February of 2019. Median two-bedroom rents actually fell in Minneapolis, dropping 2.8 percent in February to $1,750. That also represents a drop of 9.3 percent when compared to the same month one year earlier.”
From WSMV on Tennessee. “Nashville has more than 9700 short-term rental units – and a lot of neighbors are feeling the pinch. Cleveland Park in East Nashville is an example. Life-long resident Sam McCullough has short term rentals on either side of his house, and one across the street. ‘You don’t know who’s next to you on the weekends,’ he said. ‘Neighborhoods are unrecognizable.’”
“Metro council now has limits on short-term rentals in residential neighborhoods, but it hasn’t stopped entire buildings from being constructed specifically for the short-term rental market, where the property zoning allows it. One example is Hendrix Cleveland Park, which is under construction at 829 Lischey Avenue. There are eight units, four bedrooms each, and all are being built as short-term rentals. Investors are buying them up at $700,000-plus per unit.”
“Metro Council member Sean Parker, who represents district 5 where McCullough’s neighborhood is, has introduced a bill that creates a new type of zoning – it will allow multi-family housing, but explicitly prohibit short term rentals. Parker said the city needs more multi-family housing, but he said too many multi-family developments are selling as short-term rentals.”
From WTOV on Pennsylvania. “Sometime in the first half of 2020, officials say we’ll find out if a cracker plant is coming to Belmont County. But, what will it all look like? The future is next door in Beaver County, Pennsylvania. Nearly 4 years ago, Shell announced it had chosen the site in Potter Township to build its newest ethane cracker, an investment of around $6 billion that would employ 6,000 construction workers and create 600 permanent jobs.”
“What isn’t so obvious is what happens next. What happens when construction is done and 6,000 becomes 600? It’s something the county and its businesses will have to reckon with. ‘I’ve said that all along. Having lived in an area where there’s a chemical industry like this. If somebody overbuilt, some businesses will have overbuilt and will have to adjust accordingly,’ said Helen Kissick, president of the Beaver County Chamber of Commerce.”
“‘You don’t build permanent supply for temporary demand. If you are investing in a hotel-like project, you have to believe in that. Sometimes, that’s a gut feel,’ said Marcus Piatt, who operates the hotels for Millcraft Investments.”
The Boston Globe in Massachusetts. “Nardella Thomas had already been evicted from her home by the time she contacted Boston Community Capital, a Roxbury-based group that specializes in helping distressed homeowners. After her son’s father lost his job, she explained, she just couldn’t afford the mortgage any longer. So Thomas was ecstatic when the nonprofit group bought her Webster home from the bank in 2012, then sold it back to her, along with a mortgage she could afford.”
“But the relief was only temporary. Thomas said she realized there were costly strings attached in all the paperwork she had signed when she tried to refinance her house six years later: She owed Boston Community Capital an extra $49,000 before she could get a new loan. ‘Why do I have to give you all this money?’ she remembered asking Boston Community Capital officials. ‘I haven’t been late in five years and my credit is good. This woke me up. If it happened to me, who else did it happen to?’”
“That extra charge — called ‘shared appreciation’ — is at the heart of a class action lawsuit filed Friday alleging ‘predatory lending’ against an organization more accustomed to accolades than accusations. And it’s raising questions about the best — and fairest — way to help people facing foreclosure on their homes.”
“Sara Jane Shanahan, a lawyer for BlueHub, told the plaintiffs’ lawyers that all their clients saved money from working with BlueHub — even after the shared appreciation payment. Plus, they got to keep their homes. ‘If not for the SUN program, your clients would not have received any appreciation, because they would have lost their homes to foreclosure,’ Shanahan wrote.”
“Cheryl Ortiz was living with her husband and four kids in their Southbridge home in 2010, when her husband ruptured a disk in his back, was diagnosed with cancer, and her graduate school loans came due. The value of the house had dropped so much that refinancing wasn’t an option. After they tried unsuccessfully to sell the house, they went to what was then Boston Community Capital in 2013. In an interview with PBS ‘Newshour’ in 2015, Ortiz said that, with the group’s help, ‘We have a good place to live. My kids have their friends.’”
“But her view changed two years after the interview aired when she went to refinance and learned that she couldn’t close the deal until she paid $39,520 in shared appreciation. ‘Yes, I got my house back’ thanks to BlueHub, Ortiz said. ‘But you didn’t know what’s coming: the bomb that’s going to be dropped on you the day you go to refinance.’”