A report from Curbed New York. "If you want views of Central Park and at least 6,000 never-before-lived-in square feet from which to admire them, you’ve got a lot to choose from right now: Central Park Tower’s 17,545-square-foot penthouse — 'a once-in-a-generation residence' — is on sale for 22 percent off its original asking price of $250 million. On Billionaire’s Row, 23 percent of sponsor units remain unsold, according to an analysis by appraisal firm Miller Samuel. And that’s not counting all the people looking to offload the ones they previously bought, which likely brings the total percentage of trophy apartments seeking buyers closer to 50 percent. The first few ultraluxurious skyscrapers seemed to coast on some combination of FOMO among the megawealthy, bragging rights, and the promise of a sweet return upon flipping. But then more went up. And more. 'For a while it was like, ‘Oooh, 18-foot ceilings,’ says one broker. 'Now it’s like, ‘Oh, you also have 18-foot ceilings.’"

"Mostly, though, stuff just sat, gathering dust. At 111 West 57th Street, also known as Steinway Tower, which launched sales in 2019, less than half of the 60 units have sold, according to Miller Samuel. Another issue is the lackluster appeal of many newly created luxury districts. Stephen Ross’s fantasies about the allure of the far (far) West Side have been collapsing, to all appearances: At 35 Hudson Yards, only 50 percent of the units have sold in four years, The Wall Street Journal reported this summer, with some of the larger units trading for discounts of more than 40 percent. Discounts were even steeper — up to half off — for active listings."

"There’s very little urgency for buyers to buy anything right now, one broker told me, even for much more desirable real estate, like, say, a townhouse on the Upper East Side. Of course they’re not scrambling to snap up penthouses in Hudson Yards. 'It was supposed to be the fashion, the media, the retail center of the world. It was going to be where Google and LVMH were headquartered. It’s very far from that vision,' he says. 'Can we stop calling all these things trophies? It’s in the middle of nowhere.'"

From Newsweek. "After being the poster child for the booming American housing market during the pandemic, Austin has seen its fortunes reverse, as the incredible growth that started in 2020 has evaporated. The Texan city has been at the epicenter of the American housing market correction after house prices reached the national peak of $348,225 in July 2022, according to Zillow. Now prices in Austin are dropping 10 times faster than the national average. 'There was an explosion of activity in Austin that just got too hot,' Redfin chief economist Daryl Fairweather told Newsweek. 'It just had this period of really rapid growth to the point of it turning into a bubble and there needs to be a correction, but I think moving forward, prices will probably stabilize and potentially even grow into the future because it's still an attractive place to live and a growing job center.'"

"Between July 2022 and April 2023, home prices in Austin fell by 10.2 percent, according to the Zillow Home Value Index, while the national decline was only 1 percent in the same period. It was the biggest decline in the nation, narrowly beating San Francisco's 10 percent fall, the 9.5 percent slump in Bend, Oregon, and the 9.3 percent drop off in Boise, Idaho."

The Wall Street Journal. "Foreclosures are surging in an opaque and risky corner of commercial real-estate finance, offering one of the starkest signs yet that turmoil in the property market is worsening. Lenders this year have issued a record number of foreclosure notices for high-risk property loans, according to a Wall Street Journal analysis. Many of these loans are similar to second mortgages and commonly known as mezzanine loans. Mezzanine loans have high interest rates and offer a faster and easier path to foreclose than mortgages. The Journal analysis found notices for 62 mezzanine loans and other high-risk loans this year through October. That is more than double the number for all of last year, and likely the highest total ever for a single year, as higher interest rates and rising vacancies punish the property sector."

"Foreclosing on mezzanine loans is often quick and easy because they aren’t technically mortgages. These loans took off in the decade following the 2008-09 financial crisis as regulators cracked down on big banks and they became more conservative lenders. Many property owners made up the financing shortfall by borrowing from smaller banks, or by taking out these second loans from debt funds and other nonbank lenders, often on top of bank mortgages."

"Mezzanine lending became big business for companies such as Blackstone, KKR and Starwood Capital, which collectively lent billions. South Korean asset managers also became big mezzanine lenders, lending against hotels and office towers in cities such as New York and Los Angeles. Finance companies pooled billions from thousands of would-be immigrants in the EB-5 cash-for-visa program, turning them into mezzanine loans to developers. That debt allowed investors to bid up prices while putting in little of their own money, inflating the commercial real-estate market leading up to 2022."

"Now, real-estate prices are falling and many of these loans are in default, the latest sign that regulators’ efforts to shore up big banks after the 2008-09 crisis have created new trouble spots in property finance. 'A lot of borrowers have basically said ‘I can’t hold this asset any longer, I can’t keep putting money in,’ said Terri Adler, managing partner at law firm Adler & Stachenfeld. 'And the lenders have said ‘OK, we’ll take it back.’ Many recent foreclosures are office buildings. Earlier this year, an affiliate of asset manager Brookfield foreclosed on a 48-story tower in Los Angeles after the building’s owner defaulted on a $64.7 million mezzanine loan. Some apartment investors who took on too much floating-rate debt to buy rundown properties with plans to aggressively raise rents are also in trouble."

"Mezzanine loans helped fund some large deals in the years leading up to 2008. While there were fewer of these loans then, they often had many layers piled on top of each other. 'Things got so crazy,' said Kenneth Chin, a partner at law firm Kramer Levin Naftalis & Frankel. 'I did a deal where there were six levels of mezzanine debt.' Often loans added up to more than the value of the building. The Stuyvesant Town and Peter Cooper Village apartment complex in Manhattan, which was taken over by lenders following the crash, had 11 layers of mezzanine debt, according to the property’s bond prospectus. Many loans across the country were wiped out when the market turned."

The Globe and Mail. "Last week, Bank of Canada senior deputy governor Carolyn Rogers took to a podium in Vancouver to deliver a wake-up call to Canadian consumers and investors. 'We’ve all been through a lengthy period of very low interest rates,' the central bank’s No. 2 official said. 'And it may be tempting to believe the low rates that we all got used to will eventually come back. But there are reasons to think they may not. It’s not hard to see a world where interest rates are persistently higher than what people have grown used to.'"

"There’s a temptation to lament for the good old days. But was that era of ultralow rates really so good? Frankly, we may be better off consigning it to the history books. From a monetary-policy standpoint, these barely-above-zero rates posed a serious problem. Interest rates are a central bank’s main weapon – in most times, only weapon – to combat economic shocks. Standard procedure to cushion a fall, and to help lift an economy out of a slump, is to cut rates. But when there’s little to no room to cut, central banks can quickly find themselves out of ammunition to deal with a recession."

"Perpetually low rates helped feed a frenzy in real estate that set the stage for the housing crisis that the country is now going through. They also helped the national household-debt-to-disposable-income ratio balloon to a record 185 per cent by the time the Bank of Canada started raising interest rates last year. Low rates were a self-destructive party that went on for far too long. Yes, as Ms. Rogers said in her speech, consumers and investors have to prepare for a rate future that doesn’t look like the past. But we needn’t fear it. This is not bad news."

The Times of Israel. "Since the outbreak of the war with the Hamas terror group, the number of real estate transactions has plummeted to a level lower than the one seen in April 2020 at the height of Israel’s first pandemic lockdown, according to preliminary estimates by the Finance Ministry. 'The public is currently preoccupied with war matters, the national mood is very low, there is great uncertainty, Israelis are not currently buying apartments and the market has almost completely ground to a halt,' said Revital Roth, head of the analysis department at business data firm Dun & Bradstreet Israel. 'It is already clear that the ‘Swords of Iron’ war [the IDF name for the military campaign] is one of the biggest crises that the real estate industry in general, and the construction industry in particular, has confronted.'"

"Even before the outbreak of the war, the Israeli housing market experienced a slowdown in real estate deals as interest rates gradually increased to 4.75% from a record low of 0.1% last year. Higher borrowing costs hit existing and potential mortgage holders hard, with the majority of home loans in Israel tied to variable rates."

"'Data published even before the outbreak of the war show a significant slowdown in the sale of new apartments, an increase in the inventory of unsold apartments held by contractors, a decrease in the number of mortgages given to the public, a decrease in construction starts and even the beginning of a drop in prices,' said Roth. 'All of these are now joined by the war – where the main problems resulting from it are the shutdown of the construction sites, a severe shortage of manpower resulting from the lack of Palestinian workers and uncertainties regarding the duration of the war and the plan for the compensations and reliefs to be determined by the government.'"

From Bloomberg. "Private equity firms that amassed more than $1.5 trillion of assets in China in just two decades are now struggling to offload once-promising investments they were counting on for hefty returns. With public markets in a slump and offering unattractive valuations, buyout firms are exploring private sales. But mounting concerns about the risks of investing in mainland China have left so-called secondary buyers demanding discounts of 30% to more than 60%, according to people familiar with the market. Haircuts in Europe and the US are closer to 15%."

"The lack of easy exits — affecting the likes of Blackstone-backed PAG and Carlyle Group Inc. — has shifted the world’s second-largest economy from a vast frontier for buyouts into an uncertain landscape for long-term investing. Demand for Chinese assets cratered in the past few years, with record outflows even from public markets, as the economy struggles to regain traction and concerns mount over the political direction under Xi Jinping. 'We are in more challenging times, very similar to the way we experienced the global financial crisis,' said Niklas Amundsson, partner at Monument Group, a global private placement agent. 'China is completely out of favor and global investors are going to put China on hold for now.'"