A report from the Los Angeles Times in California. "In downtown Los Angeles, rent for a 566-square-foot one-bedroom at the Eighth and Grand luxury apartments would have set you back at least $2,286 at the end of January, according to Zillow. As of Thursday, the same size unit at the building with a Whole Foods on the ground floor was advertised for as low as $1,771. A few blocks away, at another luxury building, monthly rent for the cheapest 1,284-square-foot, three-bedroom unit has come down $385, to $3,870. Walk a bit more and you'll find more discounts, often with extra goodies such as two months' free rent."

"The declines appear concentrated in the top end of the marketplace, according to multiple data sources, but there are signs rents are falling slightly on the lower end as well. 'The pain is landing at the top,' said Steve Basham, an analyst at CoStar."

"CoStar data show the largest rent declines in the Mid-Wilshire area and downtown, where rents have fallen 10% and 8%, respectively, since March. Those areas, which are more expensive than the city as a whole, have also seen a flood of new, luxury apartments. Estimates didn't take into account the expiration of the $600 in additional weekly unemployment benefits. 'It could be a pretty dramatic downturn in the coming months,' CoStar analyst Basham said."

The North Bay Business Journal in California. "State and local governments that continue to allow renters in this pandemic era to delay payments are raising concerns among property owners and managers. Their looming question: If tenants don’t pay their rent to the landlords, how will property owners pay their mortgages? Some have already answered that question — by selling off properties."

"Keith Becker, general manager for DeDe’s Rentals and Property Management of Santa Rosa, said that of 500 tenants Becker’s company rents to, four have stopped paying, negotiating and communicating. Eleven renters are attempting to pay but have fallen short. The loss of tenant income has resulted in 12 units leaving the rental market. Eight units are on the market, and property owners plan to sell four."

"'I can’t tell you we’re doing great. In the last three months, the number of properties rented have consistently flat-lined, and the clients are unsettled,' he told the Business Journal."

"Property owner Jennifer Coleman knows the territory far too well. The Sonoma County landlord has sold two single-family homes and a townhouse to scale down the number of properties she rents. 'It’s the draconian evolution of laws. I wanted to lighten my risk. It frightened me,' said Coleman, who has rented her own space for 19 years. Owing debt is hard enough for a homeowner owning one house, much less multiple locations. 'It’s a gamble, but this is my retirement,' she said."

From Multi-Housing News. "The second quarter is usually strongest in demand for multifamily housing. But that was not the case this year, when net absorption plummeted to the lowest Q2 level in 11 years, only 21,100 units. Completions were higher in both the first half and second quarters of 2020, compared with year-earlier numbers. They stood at 129,100 in the first half and 78,300 units in Q2. In the year ending Q2, New York City and Dallas topped the country in the number of multifamily units delivered, with Houston rounding out the top three."

"As a measure of overbuilding risk, the completions-to-inventory ratio of 4.9 percent in Austin was particularly high. Omaha, Neb., and Orlando, Fla., were next, with 3.9 and 3.7 percent respectively. The net absorption in Austin for the quarter was 76.6 percent of deliveries. Absorption matched completions for the quarter in Omaha. Orlando’s net absorption was 61.6 percent of deliveries in Q2."

From Yahoo Money. "An estimated 30 to 40 million Americans are at risk of losing their homes over the next several months after a federal eviction moratorium for government-backed mortgages expired on July 24, according to a new report from The Aspen Institute, a nonpartisan think tank. 'The United States may be facing the most severe housing crisis in its history,' the authors of the report wrote. 'The COVID-19 housing crisis has sharply increased the risk of foreclosure and bankruptcy; long-term harm to renter families and individuals; disruption of the affordable housing market; and destabilization of communities across the United States.'"

"'There are a lot of protection laws in California, especially in places like Los Angeles,” said Jonas Bordo, CEO of Dwellsey, a home and apartment listing site. 'I think you're looking at least four to six months in the eviction process. If you’re a landlord, you might imagine the results of that.'"

"Once the local California eviction protections expire, Bordo said, some renters would have ample time to figure their situation out due to the 'stratification of rentals.' 'Demand for the top 20% of rentals in terms of price has cratered significantly and therefore there’s a low likelihood that they’ll evict someone. It will take you months to find someone better to work with,' Bordo said."

From Bisnow. "The indecision wrought by the coronavirus pandemic on global business essentially froze critical revenue streams for commercial real estate brokerage firms during the second quarter. While brokerage leaders say business will improve toward year’s end, it likely won’t prevent a spike in empty office spaces, declining rents and falling values. Commercial real estate investors are struggling to price buildings, and with sellers still expecting more than buyers are willing to pay, the investment sales market has plummeted, dropping by nearly 70% year-over-year in Q2, according to CoStar data."

"As companies punt on office decisions, most brokerages saw leasing revenues drop between 40% and 50%, particularly in the United States. 'In the near term, we've seen a precipitous drop in leasing and sales activity. Investment capital has moved to the sidelines as investors begin the process of price discovery,' CBRE CEO Bob Sulentic said."

From Skilled Nursing News. "Citing significant financial strain related to the ongoing COVID-19 pandemic, nursing home giant Genesis HealthCare on Monday expressed serious concerns about its future — while also raising the specter of a potential bankruptcy filing. 'Without giving effect to the prospect, timing and adequacy of future governmental funding support and other mitigating plans, many of which are beyond the Company’s control, it is unlikely that the Company will be able to generate sufficient cash flows to meet its required financial obligations, including its rent obligations, its debt service obligations and other obligations due to third parties,' the Kennett Square, Pa.-based operator announced in its second-quarter earnings release."

"'The existence of these conditions raises substantial doubt about the Company’s ability to continue as a going concern for the twelve-month period following the date the financial statements are issued,' the release continued."

The Wall Street Journal. "Thousands of commercial-mortgage borrowers have been struggling to meet payments on their loans in the midst of the coronavirus pandemic. But there might be another reason so many are falling behind: aggressive lending practices that overstated borrowers’ ability to repay. A study of $650 billion of commercial mortgages originated from 2013 to 2019 found that even during normal economic times, the mortgaged properties’ net income often falls short of the amount underwritten by lenders."

"The underwritten amount should be a conservative estimate of how much a property earns. Instead, the actual net income trails underwritten net income by 5% or more in 28% of the loans, according to the study of nearly 40,000 loans by two finance academics at the University of Texas at Austin."

"The study shows risks in the $1.4 trillion market for commercial mortgage-backed securities, or CMBS, where loans on malls, apartment buildings, hotels and the like get packaged into bonds bought by investors, often with guarantees from the government. The findings suggest that loans sold to investors before the pandemic frequently featured overstated income and could have more trouble staying current in case of a downturn."

"Income was overstated by more than 5% in more than 40% of loans originated by UBS, Starwood Property Trust and Goldman Sachs Inc., the study said. Loans from these originators were among those most likely to be on a watch list, John Griffin, a finance professor and co-author on the study found. 'This is a direct function of the aggressive underwriting,' Mr. Griffin said."

"Sometimes fraud can play a role, too, according to federal prosecutors. In 2019, the SEC and the Justice Department each filed fraud cases against Robert Morgan, who had borrowed about $3 billion to amass a multifamily property empire that once spanned more than 34,000 units across 14 states. Prosecutors alleged that Mr. Morgan conspired to create fictitious leases at some of his properties to make their income look bigger than it was. The SEC alleged that he ran a Ponzi-scheme-like scam that used investors’ money to 'repay an inflated, fraudulently obtained loan' on one of his properties."

"Mr. Griffin found that 70% of loans exhibiting income inflation of 5% or more in the first year of the CMBS deal also overstated properties’ historical financials. John Flynn, a CMBS industry veteran who filed the complaint, said that after poring over thousands of loans, he feels relieved to see someone else spot the same pattern. 'It’s much more widespread than I even realized,' Mr. Flynn said."