A report from Moneywise. “Susan Apel and Keith Irwin purchased a four-bedroom house in Lebanon, New Hampshire, 24 years ago — and are now looking to downsize in their golden years. Apel finds it harder to climb up the stairs, while Irwin is tired of shoveling the snow and doing yard work. The couple estimated their current house is worth around $700,000 and had hoped the sale would help them snag a smaller place — they’re looking for a two-bedroom condo with a den — but they simply can’t find one within their budget. ‘We were very grateful to live in this lovely place and to have paid off our house,’ Apel said. ‘It never occurred to us that it didn’t give us the ability to move out of it.’ Apel told the Times one unit she and her husband recently saw cost $950,000 and needed some work, while even ‘tiny shoeboxes’ were selling for $600,000.”
The Times of San Diego. “Has San Diego County already built enough new housing to accommodate all the currently projected population growth through the year 2050? This is a stunning question to ask given the frenzied rhetoric about needing to build large numbers of new units of every type, everywhere to deal with what is widely perceived as a massive housing shortage by politicians, housing advocacy groups, and the public. But the answer, surprisingly, is ‘yes.’ A new demographic reality has become firmly established with each successive update of the 2050 population forecast for the county. The increase in population between 2010 and 2050 was originally forecast by SANDAG to be about 30% to almost 4.5 million people. But over time, the forecast for 2050 has steadily fallen as fertility rates continued to decline, increases in life expectancy stalled, and net migration into California turned negative starting in 2015.”
“The 2024 SANDAG forecast for 2050 calls for under 3.5 million people — not much more than the current population of San Diego County. In fact, San Diego County could see only another 125,000 new residents between now and 2050. In San Diego County the state’s legal mandate to provide housing units to accommodate projected growth has already been met — all the way through 2050. A frequently heard contention is there is a need to catch up on building because San Diego systematically underbuilt during the Great Recession. San Diego has caught up from that deficit because the county’s population has declined by almost 30,000 people since 2018, while construction continued at a brisk pace with building permits pulled for over 50,000 housing units.”
Action News Jax. “Abandoned homes, sometimes called ‘zombies,’ are infecting local neighborhoods. During the housing recession of 2008, many homes got stuck in foreclosure limbo. In Florida the process can take years and impact surrounding property value if the houses sit abandoned for long. Early forecasts show zombies could come back to life in Jacksonville. North of downtown Jacksonville, Jeanette Williams has seen the problem firsthand. She’s not worried about her house, but the one a few doors down. The zombie a few doors down has been empty ever since she moved in eight years ago. The Jacksonville Sheriff’s Office responded to the address 18 different times since Williams has lived down the street. JSO’s calls for service show everything from drug investigations, to trespassing, and even a call about a dead person.”
“A zombie home is when the owners are told their house is going into foreclosure, so they move out. The home slowly goes through Florida’s judicial foreclosure process and the banks often slow roll it hoping the value will increase, and they can sell the property for more money. When the property is less than what’s owed, the bank sometimes reverses the years-long process and gives it back to the original owner who is long gone. ‘Where some percentage of the property is underwater, you will see this process restart,’ said Jim Kowalski, the president of Jacksonville Area Legal Aid.”
“Action News Jax Investigates found foreclosures are again on the rise. Data from the Duval County Clerk of Courts shows 693 foreclosures have been filed so far this year. In 2020, there were 1,447. Besides a dip during COVID, that number has climbed year over year to 2,146 last year. Data from Redfin shows these homes stretch across the entire county and still don’t account for all the abandoned properties in Jacksonville. In April, JEA said there were 1,175 homes that haven’t had electricity for more than a year. While they are not necessarily ‘abandoned,’ it’s likely no one is living in them a representative for the utility said.”
National Mortgage Professional. “If 2022 was bad, more expenses, fewer sales, and thinner margins in 2023 makes 2024 a make-or-break year for many. Last week the Mortgage Bankers Association (MBA) released its Annual Mortgage Bankers Performance Report for 2023, showing 36% of reporting institutions posted positive net financial income, down from 53% in 2022. Of those firms reporting their figures to the MBA, the average production volume was $1.9 billion in 2023, down from $2.6 billion in 2022, and $4.8 billion in 2021. Pre-tax net financial income per reporting institution was a negative $2.3 million, down from an average gain of $382,000 in 2022 and $18 million in 2021. Reflecting the multi-decade-low in home sales last year, average loan origination count per reporting firm decreased to 6,021 loans in 2023, from 8,371 loans in 2022.”
Bisnow Washington DC. “A 50-year-old Georgetown office building is now in the hands of its lender. JPMorgan Chase cast the winning bid of $22.3M for The Foundry, a 256K SF building at 1055 Thomas Jefferson St. NW, at a foreclosure auction this month. JPMorgan’s credit bid was just over a third of the amount still left on the note, which was $58M, according to the foreclosure auction notice. The assessed property value is $74.4M, according to the trustee’s deed. In February, Bethesda-based JBG Smith said it had ceased putting capital into the property and didn’t expect any near-term cash flow, Bisnow first reported. The price JPMorgan paid is another indicator of how far office values have fallen in D.C. The deed transfer was for 28% of the building’s last sale price, a similar discount to other distress trades that have taken place in and around the District in recent months, like the January sale of 1101 14th St. NW for $18.2M, down 70% from its 2017 price of $62M.”
The Wall Street Journal. “Defaults are reaching historic levels in the office market. More than $38 billion of U.S. office buildings are threatened by defaults, foreclosures or other forms of distress, according to data firm MSCI. That is the highest amount since the fourth quarter of 2012 in the aftermath of the 2008-2009 financial crisis. As recently as 2021, more than 90% of office loans that were converted into commercial-mortgage-backed securities were paid off when they became due, according to Moody’s. Last year, that figure fell to 35%, the worst payoff rate in the history of the data, which goes back to 2007. Most of the mortgages that are coming due now were made when interest rates were much lower than now. In a normal office market, many landlords would be able to pay the higher rates. But since Covid-19, the office market has been far from normal.”
“‘The problem you have in office is, in many instances, there is no cash flow at all,’ PNC Chief Executive Bill Demchak said on an earnings call. ‘It is really a unique animal at the moment.’”
The Toronto Star. “Developers are scrambling to sell units by offering reduced deposits and mortgage assistance as demand for preconstruction condominium units continues to plummet. In Toronto since mid-2022, 11,595 units over 29 projects have been delayed as interest rates remain high and confidence in the market weakens, according to Urbanation. Developers drastically reduced the number of new launches in the first quarter of 2024, with just four projects brought to market. ‘These incentives have become a key driver to help sell,’ said Simeon Papailias, managing partner of Royal LePage’s REC Canada. Developers have always offered incentives but it’s becoming more commonplace as there’s currently little demand for preconstruction units, he added. ‘People can’t expect consumers to be taking on all of the risk when there are such high interest rates,’ he said.”
“For a limited time, Toronto developer Camrost Felcorp offered to pay two years of the mortgage cost to a maximum of $90,000 for units priced at less than $1 million. Emblem Developments offered a reduced down payment of 10 per cent to be paid over two years, instead of the standard 15 to 20 per cent deposit upfront, to help buyers afford the unit sooner, Papailias said. ‘You’re also seeing developers offer increased commissions where they beef up the commission as high as 10 per cent to the buyer agent and then the agent distributes part of it to the buyer,’ said Daniel Foch, a Toronto-based realtor. ‘It almost acts as a de facto cashback system. They don’t want to lower the value of the unit because that would devalue the product,’ Foch added. ‘So this offers them another alternative to try to sell the unit.’”
The Investor. “Development Investment Construction JSC (DIC Corp), among Vietnam’s top real estate developers, incurred a loss of VND117.2 billion ($4.62 million) in the first quarter of this year, marking its largest quarterly loss since floating shares in 2009. DIC Corp recorded VND186 billion ($7.34 million) in sales and service revenues in Q1/2024. However, its net revenue plummeted to VND489 million ($19,294) after a significant portion of its products were returned, according to the firm’s consolidated financial statements.”
South China Morning Post. “Hongkongers are less willing to buy homes amid price increases at new launches by developers, analysts said after Great Eagle Holdings announced a new higher price list for another 150 units at its Onmantin project on Monday. ‘The main and only reason why homebuyers have been snapping up all units at recent project launches is the discounted prices developers have been offering,’ said Joseph Tsang, chairman of JLL in Hong Kong. ‘Once developers increase prices for subsequent units, the sales slow down,’ Tsang said. ‘[This is] because there is too much stock in the market.’ Buyers have many choices and there is, therefore, a lower acceptance of price increases, he added.”
“The price range for the first batch of Onmantin flats was more than 25 per cent cheaper than that of the nearby In One Above residential project, which was launched by Chinachem Group in May last year. It was also the lowest for the neighbourhood since 2016. CK Asset Holdings, Hong Kong tycoon Li Ka-shing’s flagship developer, sold 98 per cent of the 422 units it put up for sale at its Blue Coast project in Wong Chuk Hang during a first round of sales at the beginning of April, after pricing the project cheaper than all completed projects in the Southside residential neighbourhood. These flats were priced more than 20 per cent below cost, which means CK Asset will make a significant loss on this inaugural batch.”
From Reuters. “Amy Wang was counting on a 100,000 yuan ($13,800) subsidy promised by authorities in the eastern Chinese city of Weifang to fit and furnish an apartment she bought two years ago. Still waiting for the money, she is yet to move in. The 30-year-old now pays 6,000 yuan of her 8,000 monthly salary on the mortgage for the 1.1 million yuan apartment and another 1,800 yuan to rent another one, relying on her parents for other basic expenses. ‘I feel under a lot of pressure,’ said Wang, who works in electronics manufacturing, and bought the bare shell of her apartment, without floors, interior walls or other fittings – which is common in China.”
“Weifang, with a population of more than 9 million, and dozens of other Chinese cities, have promised subsidies and other incentives to homebuyers to prop up the ailing property sector. But the real estate downturn also affects the ability of cities to lease land to developers, a key revenue source. This meant some local governments were unable to raise funds to pay the promised subsidies, frustrating buyers and casting doubts over future support measures. ‘What’s underappreciated in China’s property market downturn is that the real implication falls upon local governments,’ said Logan Wright, a partner at research provider Rhodium Group.”
“Shangqiu civil servant Alan Liu, 30, says that some homebuyers in the city have received their subsidies, but he is still waiting for the promised 30,000 yuan, having bought a flat in a ‘prime location’ in June 2022. ‘It’s crucial for relevant departments to realise that this issue cannot be ignored for long and must be resolved, or it will affect the credibility of the government,’ said Liu.”