A report from Business Insider. “When hopeful sellers call up Eric Peterson, a real-estate broker in Austin, he usually asks them how much they think their home could fetch on the market. Austin was among the cities hit hardest by the pandemic hangover, with local home prices in March down roughly 12% from the peak in May 2022, according to the Freddie Mac House Price Index. ‘The further and further we get from the peak of the market,’ Peterson told me, ‘the harder it is to deny what’s happened.’”
“Libby Levinson-Katz, a broker in Denver, said she’s advising sellers there to price their homes conservatively and take care of big-ticket items, such as large repairs, before listing. Price-conscious buyers are already battling high rates and home prices — they don’t want to take on more expenses as soon as they get the keys. ‘I think sellers need to kind of buckle the seatbelt and know that it’s not necessarily going to be a quick sale,’ Levinson-Katz told me. ‘It could take awhile because buyers are being really discerning right now.’”
Go Skagit in Washington. “Owner of Windermere Skagit/North Cascades Josh Scott said real estate sales in the first quarter of the year lagged behind the same timeframe in 2023. Scott said he is seeing sellers waiting to sell their home until more buyers enter the market. With many buyers tight on cash as they try to put as much into a down payment as possible, Scott said buying a fixer upper is becoming less and less likely. He said this leads to sellers needing to get their homes pre-inspected and any major repairs completed before putting their homes on the market. Sellers are also having to think more about what they are willing to sell their house for as bidding wars are largely over. This is causing homes to sell just below the listing price, rather than a bidding war driving the price above listing.”
KTVZ in Oregon. “The Bend median sale price declined $46,000 in April, to $707,000 while Redmond’s median sale price was mostly stable in April, dropping $4,000 to $533,000. SFR inventory levels at certain price points in Bend and Redmond also increased last month, appraiser Donnie Montagner said. There is a nearly eight-month supply of single-family residential properties in Bend in the $1.6 to $1.8 million price range and slightly over a nine-month supply of SFR properties in the $1.8 M+ price point. In Redmond, homes priced between $650,000 and $800,000 range from a six- to seven-month supply.”
WRIC Richmond. “Several subcontractors are waiting for an out-of-state developer to pay them the over $1 million they are owed after working on an affordable housing project in Richmond’s Southside for months. For Travis Whaley and Mike Wood, construction work is their livelihood. For decades, the two have worked to bring construction projects to life throughout the Central Virginia area. Combined, Wood and Whaley told 8News they are still owed about $1,100,000. It’s this backpay that prompted them and others to put down their tools in December 2023, agreeing not to continue work until they get paid. ‘All of us need our money — I mean, don’t you want to get paid every week?’ Whaley said. Whaley said they’ve continued to ask Dakota Partners about when they should expect their checks. We keep getting the same answer: ‘We’ll pay you in a week or two weeks,’ Whaley said. ‘And it’s not working.’”
The Dorchester Reporter in Massachusetts. “A stalled re-development project along Dorchester’s Port Norfolk peninsula that would bring new housing and a modern marina to the neighborhood took a new turn this week when one of the development partners filed for bankruptcy to stave off a public auction of the land that was set for Tuesday. CPC Ericsson Street LLC, whose principal is Ryan Sillery of City Point Capital, filed for Chapter 11 bankruptcy just hours before the Paul Saperstein Company was to begin auctioning off the property to bidders on the waterfront site. Rise Together, a co-developer on the project, filed suit in Suffolk Superior Court against CPC Ericsson in February for failure to pay a Connecticut-based consultant, who had previously filed suit against Rise Together last year. The two companies have plans to build four buildings to include 120 residential units, office space, and a marina on the roughly 3.6 acres on four lots. The project — known as Neponset Wharf— was approved by the Boston Planning and Development Agency in Jan. 2022.”
Bisnow Washington DC. “For the second time in less than a month, a newly developed apartment building in NoMa is headed for the auction block. The lender backing the 13-story, 99-unit Tribeca NoMa residential building at 40 N St. NE has filed to foreclose on the building’s owners, a joint venture of Urban Investment Partners, Kadida Development, Alliance Development and United Investment. UIP led the development of the building, which began construction in 2018 and delivered in 2021. The developers funded Tribeca’s construction with a $35M construction loan and refinanced the debt on the building with a $39.9M CMBS loan in 2022.”
“The building was developed as condominiums — each individual unit is listed separately as a parcel in the foreclosure notice — but UIP has been leasing it out as rentals. The building hasn’t been able to cover its debt service and has been delinquent on interest payments for more than 90 days, according to the Morningstar Credit database. At the end of last year, the property was almost 89% occupied, according to special servicer commentary in the Morningstar Credit database. While occupancy has been steadily increasing, its net operating income has only been able to cover roughly a third of its debt service, according to the commentary. Tribeca’s fate is similar to that of a 110-unit apartment building delivered last year by New York developer Ranger Properties. The building at 400 Florida Ave. NE, stalled by pandemic-led delays and financing challenges, is set to be auctioned off later this month, Bisnow first reported.”
The San Jose Spotlight in California. “As we see the first distressed office building sale transactions of what is romantically called The Great Reset — also known as the greatest single asset class value extinction event in commercial real estate history — a few observations about the leasing of these battered towers come to mind. Selling for pennies on the dollar from the prices of just three years ago, we are definitely seeing a category of more engaged, local and private new buyers. The great office value boom of the pre-pandemic era, say from around 2012-2019 followed by a brief gasp of hope that it would continue post-pandemic in 2020-2021, ended with a spectacular splat that interest rates brought on and the remote work revolution cemented.”
“The mad run up of office values of the time was almost exclusively the domain of top of the food chain institutional sources of money versus private wealth. These would all be in the hands of the massive fund operators tapping into the oceans of cash held by government pension funds, top dollar university and college endowment money and foreign country sovereign wealth funds. Combine those piles with straight up Wall Street alchemy money-raising schemes and it created a seemingly endless source for the rapid fire office building investments and wild appreciation in that era.”
“The general business model of the large scale owners and operators of the fund advisors buying all these assets is not really about the making of money on the asset itself, but more about getting paid for placing the money in the first place. If it does sell at a profit in the future the winnings are shared, but the truth is the risk of a future failure (like now) is well outweighed by the rewards associated with just processing the money. With a few exceptions, the fund operator doesn’t lose any money, only the fund that provided the money does. Kind of backs up my theory that the further the distance between the money and the pocket it came from, the worse the decisions are made about how to spend it.”
CP 24 in Canada. “As preconstruction condo sales in Toronto plummet to levels not seen since the global financial crisis 15 years ago, developers are now turning to more lucrative incentives to try to entice prospective buyers. Sales were down 71 per cent this year compared to average first quarter sales over the past 10 years. Matti Siemiatycki, the director of the Infrastructure Institute at the University of Toronto said developers have been careful to incentivize buyers without dropping the price per square foot.”
“‘It’s interesting to see how the market has responded because… One of the things you see is that they’re trying to provide incentives that don’t change the base price of the units. Because that’s where you start to see market corrections. If the underlying asset price gets revalued, then that can have a long term knock-on effect,’ he said. ‘So you see them trying to bring forward different types of one-off incentives like free parking or like mortgage holidays for a couple of months, or things of that nature to try to bring buyers in without resetting the overall value of the units because once that reset happens, then that can change the market dynamics going forward.’”
Soo Today in Canada. “The group of now-insolvent out-of-town landlords affiliated with SID Developments has been granted an extension of its court-ordered protection from creditors until June 24. According to court filings in the Ontario Superior Court of Justice, the landlords said they could be forced to respond to hundreds of claims without an extension, which they believed would ‘severely strain the applicants’ and the additional stay parties’ limited and already stretched resources’ and ‘jeopardize the applicants’ ability’ to successfully restructure their operations. The landlords behind 11 insolvent corporations — Aruba Butt, Ryan Molony and Dylan Suitor — filed for protection from creditors in the Ontario Superior Court of Justice in late January, claiming they owe more than $144 million in unpaid loans and have less than $100,000 in the bank amid rising interest rates and falling real estate prices.”
“Seven of the insolvent corporations collectively own 201 rental properties in Sault Ste. Marie, 79 of which sit vacant. Together, the group of insolvent SID-affiliated corporations own more than 600 rental properties in housing markets across the province with lower average costs of living, including Timmins, Sudbury and the Sault — making it ‘one of the largest holders of residential real estate in Ontario,’ wrote Justice Kimmel during insolvency proceedings.”
From Bloomberg. “Britain’s homeowners have brought a flood of properties to the market at a moment when high borrowing costs have reduced the number of buyers, according to an industry survey. The Royal Institution of Chartered Surveyors said that its gage measuring the monthly increase in new homes coming onto the market hit its highest level since 2020 in April. The average inventory of places for sale at each agent reached a three-year high. ‘This has all the makings of a buyers’ market – except for the fact there are so few buyers,’ said Sarah Coles, head of personal finance, Hargreaves Lansdown.”
The Bangkok Post in Thailand. “With an unfavourable economy and expiration of discounts for the land and building tax this year, property developers are thinking twice about acquiring new land plots, shifting instead to draining inventory. Weak demand led to an increase in housing inventory. As of the end of 2023, the number of unsold residential units in Greater Bangkok totalled 209,894 units worth 1.17 trillion baht, up 13.7% and 26.7% respectively from 2022, according to REIC. The rising inventory caused developers to exercise more caution in launching new supply and acquiring land for future projects.”
“Kajonsit Singsansern, chief executive of SET-listed developer Siamese Asset, said the company would put land purchases on hold for three years and freeze new project launches this year. ‘Buying new land leads to holding costs if we don’t have plans to develop projects in the near term,’ he said. ‘Even when a project is completed and there are unsold units remaining, those units are subject to the land and building tax.’”