A report from NBC Montana. “Nationwide, 2023 saw the lowest number of homes sold in the past 30 years. ‘We have to stop the bleeding before an improvement can take place,’ Lawrence Yun, an economist with the National Association of Realtors told the crowd at the Gallatin Association of Realtors. ‘There’s a steady change in consumer sentiment. (It’s) slightly better now than before. But let’s not get too excited, it’s simply coming out of the grave.’ According to the report, a household earning Gallatin County’s average median income of $83,520 could comfortably cover only 39% of a payment on a median priced home without facing financial burden. In Bozeman, ranked as the county’s least affordable area, the prospect of buying a home is even less attainable. ‘Montana is no longer affordable,’ said Yun.”
Naples Daily News in Florida. “According to Naples Area Board of Realtors, transactions are down more than 9% from that time in 2023 while 67% more abodes are available, reaching above 5,000. Even with rising costs, not all Naples homeowners are getting the price they desire. February featured 2,264 price decreases, indicating ‘sellers are shifting from aspirational pricing to realistic market pricing,’ NABOR research concluded. ‘Some sellers are still struggling to accept the fact that the pandemic buying frenzy years with climbing price increases are over. As more new sellers enter the market, those sellers with overpriced properties risk missing an opportunity” attracting buyers.’”
“The NABOR report showed a 103.4% leap in properties under $300,000. Possibly, ‘investors are offloading rental property units to capitalize on the winter selling season,’ said Mike Hughes, Downing-Frye Realty vice president. ‘Also, the carrying costs on some of these properties has climbed in recent years.’”
The American Statesman. “This just in from Ben Caballero, a top-ranked real estate agent who tracks the new-home market in the Austin area and across Texas: the spring homebuying season is ‘underperforming,’ Caballero, CEO of Dallas-based HomesUSA.com, says in his latest report. ‘The spring homebuying season is underperforming as the new home sales recovery has been unimpressive in Austin,’ Caballero says. ‘New home markets throughout Texas are struggling to return to normal seasonality.’”
The Business Journal in California. “Across all sectors, Fresno County real estate has been marked by rising costs (insurance, particularly), a difficult lending environment and low inventory. The near-term forecast predicts much of the same. Low commodity prices, tighter lending and increased scrutiny of underground water supplies due to the Sustainable Groundwater Management Act have commingled to depress farmland values, said Sullivan Grosz with Pearson Realty. For ‘low risk’ areas with more than one source of irrigation water, prices have dipped 10-15% in the last year. For ‘high-risk’ areas, such as those with a single irrigation option, prices are down 25-30%. ‘There’s going to be fewer Escalades purchased by farmers this year,’ joked Grosz. But underscoring the position the ag industry is in, he forecast more bankruptcies and forced land sales to come.”
The Gazette Journal in Nevada. “The good news for renters is that average rents in Reno-Sparks have gone down for two quarters in a row, ending 2023 at $1,612. That’s the lowest average rent seen in the area since, well, early 2021. Reno-Sparks would see the largest number of housing permits filed since the 2005 housing bubble. Permits for apartments, in particular, surged and several new apartment projects started to come online in recent years. For now though, the pace of housing development in Reno-Sparks is still high, according to Yardi’s Doug Ressler.”
“When the percentage of housing units coming on board is equal to 3% of the existing housing stock, the pace of development is considered to be aggressive, Ressler said. The pace this year for Reno-Sparks is 3.5%. Next year is even higher at 4.8% of inventory, Ressler added. ‘So there’s a tsunami (of new housing units) for Reno,’ Ressler said. ‘The pipeline is pretty full.’”
From Bisnow. “‘In the major life science markets, like San Diego, Boston and the Bay Area, it’s still the perfect storm when it comes to the real estate side,’ said Savills Vice Chairman Shane Poppen, market leader for the firm’s San Diego life sciences practice. ‘Companies just aren’t taking down space at the same clip they used to. And there’s no scarcity of supply anymore. In fact, it’s mind-numbing how much space there is.’”
The Vancouver Sun in Canada. “‘Projects will stop,’ Rob Blackwell, an executive vice-president at Anthem Properties, told Metro’s board of directors. ‘There’s a formula, and that formula allows for projects to be built and a certain amount of fees can be built into that. But it’s past the tipping point. And I think what you’re going to see — because I know it because I’m dealing with it — is projects getting cancelled.’ Beau Jarvis, president of Wesgroup Properties, keeps a running list of Vancouver development site foreclosures, court-ordered sales, and receiverships, which he estimates could total close to 7,000 homes across dozens of different projects at last count.”
“Some of those distressed developments may eventually get built, but many will likely be delayed. Insolvencies can halt projects for years. Jarvis has also tallied another 3,000 or so homes in several Metro Vancouver residential projects that have been put on hold, some of them from established B.C. development companies — including his own. Perhaps Vancouver’s highest profile recent real estate insolvency case was Coromandel Properties seeking creditor protection last year, citing $700 million in outstanding debt on 16 prime Vancouver sites.”
“The Coromandel situation is ‘indicative of what happens when the train hits the wall and you don’t have the cash to service the debt,’ said Alan Frydenlund, a lawyer with Vancouver firm Owen Bird, which specializes in commercial foreclosures. Frydenlund has seen upticks in foreclosures over his four-decade career, and says the past year or so in Vancouver has been busier in terms of big real estate insolvencies than any time since the early 1980s, including the 2007-08 financial crisis.”
The Express. “A city under construction which has been designed to become Egypt’s new centre of power risks worsening the country’s already difficult financial situation. The city, known as the New Administrative Capital, is rising in the middle of the desert some 20 miles east of Cairo. Mostafa Madbouly, Egypt’s Housing Minister between 2014 and 2018, said at the time: ‘This project will produce 1.7 million new employment opportunities and it will have the biggest park in the world.’ This new, ambitiously lavish megacity is expected to become the new home of the Egyptian palaces of power.”
“However, the huge costs of the project itself paired with the price of the houses in the city likely unaffordable to most everyday Egyptians are turning the New Administrative Capital into a massive financial headache. Political analyst Maged Mandour told the Wall Street Journal last year: ‘It’s a city for six million people and I don’t think there are six million people that can actually afford this city.’ The starting price for an apartment in the New Administrative Capital still under construction, the Journal reported, is at £64,230. In 2020, the average income of a household in an Egyptian urban community was approximately £2,087.”
News.com.au in Australia. “When they bought a dated 1980s brick veneer home on the Gold Coast, Bec and Jared Wiseman had hoped to do a knockdown-rebuild. In doing so, they calculated they’d make enough money to halve the mortgage on their family home, where they live with their three children. But their dream turned into a nightmare when the builder they had hired for the job pulled the pin, Bec lost her job and interest rates started to rise, so they could no longer borrow the amount of money they needed for the project. When they tried to sell, things went from bad to worse.”
“They’d bought the property for $1.55 million, but the offers that were coming in were around the $1 million to $1.2 mark. If they’d sold as it was, they would have been looking at a $400,000 to $500,000 loss — doubling the mortgage instead. In pure desperation, the couple turned to Selling Houses Australia for help. Host and real estate expert Andrew Winter said the couple’s predicament was an issue of timing. ‘It was a hell of a lot of bad luck,’ he said. ‘Markets go in cycles all the time but there’s not necessarily a big crash or boom, it’s just changing a little bit. The trouble is these days when we’re talking about house prices with so many zeros a little blip in the market can be $100,000 and that can really ruin things. That’s exactly what happened here. They thought they could do a duplex development, but the site was a little bit too small.’”
Channel News Asia on Singapore. “Liquidators are seeing more construction companies going under, with numbers higher than pre-pandemic levels. Construction engineering company TA Corporation, which for years profited from building freehold condominium projects, is one such victim of the spillover from the pandemic years. It closed its subsidiary Tiong Aik Construction last July, citing inability to pay debts. ‘The burn rate for our company was very high for our construction arm. We’re talking about S$2 million (US$1.47 million) to S$3 million a month,’ said the firm’s group CEO Neo Tiam Boon. ‘The COVID years were the drag. Most, if not all, construction companies suffered (similar) fate. Whenever we see each other, our first question is: ‘how much have you lost?’”
The Wall Street Journal. “It seemed to be a great deal at the time: Swap an aging townhouse and a small piece of farmland for five apartments and two stores. Bella Zhao’s family grabbed that offer in 2009, when property developers led by Wanda Group moved into their sparse, snow-capped village in China’s northeastern Jilin province. Wanda planned to spend $2.8 billion to turn the area into a high-end resort replete with ski slopes, golf courses, hunting spots and five-star hotels. The developer offered locals a large number of new apartments in town in exchange for their old homes, creating a village of property tycoons almost overnight.”
“‘I was so happy then,’ said Zhao, who was a teenager at the time and later inherited the properties. Now, all five of her apartments sit empty. Only one of the stores has a tenant. The ambitious development project stalled years ago; the promised tourism boom never happened. Zhao has become so desperate that she has offered to lease the apartments rent-free so long as the tenants agree to pay the bills and management fees. ‘But no one wants to live there, even for free,’ she said. ‘Everyone who still lives in the town has their own properties.’”
“While much attention has focused on Chinese property developers in the wake of the country’s real estate crash, homeowners, too, are stuck. Many are desperate to sell with no buyers in sight. Others, like Zhao, thought they had a winning lottery ticket, only to find it is now impossible to cash it in. ‘When property prices started to fall, I felt upset,’ said Zhao, 26. ‘It felt like my life plans were thrown into disarray.’”
“Making matters worse, villagers who traded their homes with developers, often for several new apartments, are adding to the wall of potential supply, said Liu Yuan, head of property research at Centaline. ‘It is impossible to sell at a decent price,’ said a homeowner in Nanjing, who owns eight properties with her husband and parents, five of which were compensation for relocating.”
“A man in China’s Henan province said he is still waiting for the six apartments he was promised in 2018 in exchange for his townhouse and piece of farmland when a developer moved into his town. The apartments were to be delivered in 2021, but the development has stalled. He said he is optimistic that the apartments will eventually be finished, but he isn’t optimistic about much else. Perhaps two of the apartments will be occupied by his relatives, he said. The rest will sit empty. ‘It’s not possible to sell or rent out. It’s not worth decorating,’ he said.”