There Are Signs Of Oversupply Because Of Easy Access To Capital
A report from Bisnow. "When is the commercial real estate property bubble going to burst? Depending on whom you speak to, a market correction or even a recession is already happening or could occur later this year or next year or 2021 or 2022. No one is quite certain the date. No one is quite certain of the impact. But what experts do know is a downturn is bound to happen."
"Real estate advisement group RCLCO's sentiment survey found that 20% of respondents believe the downturn has already begun. Nearly half (46%) believe either the downturn has begun or will start sometime this year. However, while almost one-half of the survey respondents believe that the downturn is here or coming, nearly all of the respondents said they were not concerned. Banks are more guarded and conservative with the loans they hand out. The unemployment rate is low. And mostly, investors are smarter with their money."
From Multi-Housing News. "Multi-Housing News sat down with Norman Radow, CEO of RADCO Cos. How has the influx of purchasing Class B properties changed the dynamics of the multifamily industry?"
"Radow: The influx of Class B purchases has drastically changed the way we do business in the multifamily industry in several profound and transformational ways. First, until a few years ago, Class B properties were allowed to age into Class C properties. Now, with the urgent need for more affordable housing options, Class B property buyers invest capital to reset the economic clock on these communities. Second, institutional capital is planning to dish out billions of dollars to invest in value-add communities. This capital is chasing yield. Simply put, more capital is being raised than there are Class B deals to invest in."
From Mansion Global. "Though the U.S. housing market recovered dramatically in the years since the recession, there are concerns that stock market volatility, rising interest rates, and global trade tensions, could compound the slowdown of the real estate market, and some are bracing for another recession."
"However, there’s no such thing, even at the high end, as an entirely recession-proof investment, real estate analysts agree. 'No class of real estate is immune to recessions,' said Richard Green, director of the USC Lusk Center for Real Estate. 'Recession-proof implies that if we’re in a recession and someone needs to dispose of a property, they can get all their money back.'"
"That simply does not happen, he added: 'No investor should think any investment they make is recession-proof.'"
"However, in certain locations, post-recession development booms have led to a large supply of multi-family properties, which could make it more challenging to generate substantial rental income. In New York City, for instance, 20,000 new apartments, for sale and rent, will come onto an already soft luxury market this year."
"'There are signs of multifamily oversupply because of easy access to capital after the financial crisis, and rent trends are showing signs of weakness,' said Jonathan Miller, president of appraisal firm Miller Samuel."
From AZ Big Media on Arizona. "Homebuilders like Fulton Homes, Mattamy Homes, Meritage Homes and others have been busy buying parcels of land at major intersections. 'Chandler has seen several undeveloped commercial corners rezoned to residential,' said David de la Torre, planning manager for the City of Chandler. 'There are probably many more empty or undeveloped parcels that are currently zoned or planned for commercial that may never be developed as commercial due to the oversaturation of commercial currently in the market.'"
The Idaho Mountain Express. "Safe Haven Health Care, which owns two nursing facilities in Bellevue—Bell Mountain Village and Care Center and Safe Haven Assisted Living Homes—announced in bankruptcy court that it is pursuing liquidation of its two Wood River Valley facilities to lessen their financial burden as the company proceeds through Chapter 11 bankruptcy."
"Safe Haven’s financial advisor, Walter Denekas, said Safe Haven defaulted on the payment to Citizens Bank due to overestimated revenue projections. Revenue was down across the board for Safe Haven, partly due to a lack of patients in its Boise facility, as well as a competing nursing-care facility opening up in Hailey several months ago, he said."