A report from the Naples Daily News in Florida. "Royal Palm's inventory has surpassed 6,300. That's more than 50% higher than a year ago as 1,930 new listings were added in May. A similar trend is pumping up Naples Area Board of Realtors, which has 67.1% more available than 12 months earlier, with 1,201 fresh additions in May. That's also happening at the same time as another continuing shift. 'There were more price decreases than new listings in May,' said Jeff Jones, broker at Keller Williams Naples. 'Price reductions are good for our market. It tells us that sellers are finally realizing the market today won’t support aspirational pricing.'"

"The 1,710 NABOR price decreases in May go with 2,365 price decreases in April. 'The list price decreases are a signal that we are moving toward pricing that reflects today’s home values,' said Molly Lane, senior vice president at William Raveis Real Estate. 'About 40% of the buyers we see at our new home developments in Southwest Florida are unable to qualify for loans,' said Mike Bone, area sales manager for D.R. Horton. 'Even with rate buydown programs and cash incentives, we are seeing enormous financing challenges.'"

The Wall Street Journal. "U.S. prosecutors are cracking down on commercial mortgage fraud, a growing push that is sending shudders through the $4.7 trillion industry by raising questions about the numbers underpinning major property loans. Regulators and federal prosecutors say that property loans based on doctored building financials and valuations have been rising. This type of fraud became more widespread between the mid-2010s and 2021, federal investigators and real-estate brokers say, when commercial property prices surged to new highs and landlords had much to gain from such maneuvers. Now, the drop in property values caused by higher interest rates and a rise in defaults is exposing more of these schemes, dealing another blow to a commercial real-estate market suffering through its worst stretch since the 2008-9 financial crisis."

"'It’s a general trend throughout history that fraud occurs during boom times and is revealed during bust times,' said John Griffin, a professor of finance at the University of Texas’ McCombs School of Business. Since last fall, at least five different landlords of properties, mostly apartment buildings, in cities including Cincinnati, Hartford, Conn., and Little Rock, Ark., have pleaded guilty to federal fraud charges. Some allegedly doctored building income statements, others allegedly faked property sales at inflated prices, all to get bigger loans."

"At the heart of the problem is the way lenders underwrite commercial mortgages. Borrowers typically submit financial statements called T-12 that show building income and expenses for the past year. Lenders use these documents to estimate the building’s value and calculate how much they are willing to lend. But in most cases they don’t audit these statements to verify that the sums listed in the spreadsheets actually flowed in and out of the landlord’s accounts."

"A rental apartment complex in Tallahassee, Fla., financed by JP Morgan Chase, made around $296,000 in profit before mortgage payments in 2018, according to Michigan-based landlord ROCO Real Estate’s internal numbers, federal prosecutors said. But those weren’t the numbers lenders saw. ROCO told Chetrit Group, the New York firm that was in talks to buy the property, that profit was much higher—$644,000. ROCO arrived at the higher numbers in part by including rent that wasn’t actually collected and by leaving out concessions such as free-rent periods, an FHFA special agent testified in court."

"Chetrit bought the building along with dozens of other properties across the U.S. from ROCO in 2019. JP Morgan Chase funded the deal with a $481 million loan, which it repackaged into bonds and sold to investors. An appraiser hired by the bank used ROCO’s inflated numbers to value the Tallahassee property at $5.78 million. JP Morgan Chase declined to comment. The mortgage on the Tallahassee property went into default in late 2022, according to data from the company managing the loan."

"ROCO’s Tyler Ross last year pleaded guilty to falsifying financial statements at a number of properties. His lawyer told the Journal that while the T-12 statements Ross shared with Chetrit were inaccurate, he supplied the buyer with additional data that showed the building’s true financial state. In a similar case, a judge in January sentenced New York property manager Jacob Deutsch to more than five years in prison for defrauding lenders in connection with 24 multifamily mortgages in Hartford, Conn. Deutsch and his co-conspirator Aron Deutsch (who was sentenced to probation) overstated the number of renters in their buildings and inflated rental income, the Justice Department said."

"Landlords have an incentive to come up with inflated building profits so that they can land bigger loans. But lenders also often have an incentive to accept these inflated numbers, especially if they plan to repackage the loan and sell it off to investors, Griffin said. That is because bigger loans mean bigger fees. 'This space is littered with conflicts of interest,' Griffin said."

The Tri-City Herald in Washington. "Move-in specials, including free rent, are common as a wave of new construction coupled with hotel conversions adds a wave of new rental units to the market this year. The Tri-City Herald tallied more than 1,030 apartment units under construction in 2023. Today, many of those have started to welcome rent-paying tenants. But the market is considerably softer than it was a year ago, according to a study by CoStar Group, a real estate research firm, published by TMG, a Vancouver-based developer and property manager active in Tri-Cities."

"The Tri-Cities vacancy rate topped 7.75% at the start of the year, more than double the 3.7% rate of 2020. The average market rent stood at $1,370 per month. That’s up 1.7%, but still well below 13% growth recorded in 2021. The 10-year average is 4.4%. The cool-off means it takes longer to fill new properties. It once took six to eight months to fully lease a new complex. Now, takes a year to 18 months. The cool-down has revived an old standard: Offering customers deals to sign leases. CoStar reports that it is now common to expect one month free. Some properties routinely offer three months."

"The Tri-Cities apartment market is echoing a national trend, according to Tim Ufkes, a senior broker in the Seattle office of Marcus & Millichap, a commercial real estate brokerage. Ufkes specializes in apartment properties and works extensively in the Tri-Cities, including the Broadmoor development area. He said the market is soft nationally with nearly 500,000 new units coming into the system this year. 'Concessions,' ie free rent and related specials, are part of the process of balancing supply with demand. 'The Tri-Cities will add about 2,000 units in 2024 and as a result, vacancies have indeed increased, rents are a little soft and concessions are definitely being offered,' he said. The construction surge could end with a slowdown."

Bisnow on California. "Miami-based Crescent Heights, owner of the 754-unit Nema San Francisco apartment building, agreed to pay its lenders $10.5M as part of a loan modification to retain control of the 37-story property, according to the San Francisco Business Times. A spokesperson for Crescent Heights confirmed to Bisnow that the parties arranged the loan modification. Last August, the $384M CMBS loan backed by Nema entered special servicing as rising interest rates placed upward pressure on the property’s operating expenses, resulting in a default, the Business Times reported."

"Crescent Heights purchased the property in 2006 as a vacant office building. Originally, the firm planned to build a residential condominium project with about 720 units, but the subprime mortgage crisis forced the company to shift gears and develop rentals in 2012 instead. The asset lost more than half of its value from October 2018 to 2023, declining from about $544M to roughly $280M, SFist reported, citing a Trepp report."

Burnaby Now in Canada. "If you were looking to buy a house in Burnaby last month, you may have a slight decrease in prices. Single-family detached homes hit $1,963,600 in Burnaby East (-2.1 per cent), $2,173,900 in Burnaby North (+0.9 per cent) and $2,264,900 in Burnaby South (-1.8 per cent), according to the latest Greater Vancouver Realtors (GVR) report. Burnaby South residential properties hit a benchmark price of $1,147,400 (-0.9 per cent compared to May). The GVR said sales totalled 2,418 last month throughout Metro Vancouver compared to 2,988 sales in June 2023, marking a 19.1 per cent decrease year over year."

"'The June data continued a trend we’ve been watching where buyers appear hesitant to transact in volumes we consider typical for this time of year, while sellers remain keen to bring their properties to market,' Andrew Lis, GVR director of economics and data analytics, said in a news release. 'This dynamic is bringing inventory levels up to a healthy range not seen since before the pandemic. This trend is providing buyers more selection to choose from and driving all market segments toward balanced conditions.' Areas covered by Greater Vancouver Realtors include Burnaby, New Westminster, Coquitlam, Port Coquitlam, Port Moody, Pitt Meadows, Maple Ridge, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, North Vancouver, West Vancouver and Whistler."

The Globe and Mail. "Canada’s unemployment rate rose to a 29-month high of 6.4 per cent, data showed on Friday, highlighting that people might be losing jobs as the labour market struggles to absorb a rapidly swelling population. The jobs report, which also showed that youth unemployment reached almost a decade high barring the pandemic years. Royce Mendes, head of macro strategy at Desjardins Group, said the sharp rise in the unemployment rate will have many questioning whether Canada has entered a recession."

"'Lowering interest rates is the only way to soften the blow from upcoming mortgage renewals and keep any hope of a soft landing alive,' he said, adding that the BoC would cut rates by 25 basis points this month and another two rate cuts in the three meetings thereafter."

The Luxembourg Times. "The fall in Luxembourg’s property prices has slowed in the second quarter, although costs have still dropped by 3.8% year-on-year, while rents have shot up again, real estate agency atHome said on Wednesday. That compares to a 9.3% annual drop in the first quarter of 2024 and similar downturns in the previous three quarters, the agency said. 'This trend affects the whole of Luxembourg, although there are significant regional disparities,' atHome said."

"In the centre region, which includes Luxembourg City and its affluent suburbs and where real estate is most expensive, prices for flats dropped by 2.1% and those for houses by 3.8% in the second quarter compared to the same period in 2023. In the south, the most populous region, average prices plummeted by 6.1%, with flats and houses dropping by 6.4% and 5.6%, while the east saw an average price decrease of 2.5%, with houses dropping by 5.6% and flats inching up by 0.9%. The west saw the largest price correction at -6.6% on average while the north registered the smallest average drop at just 0.6%."

"'An analysis of price trends by quarter shows a gradual slowdown in the decline since the peak observed in the third quarter of 2023. This trend could herald a stabilisation of the market in the months ahead,' atHome said. The atHome data is provisional as it refers to asking prices. The national housing observatory, which records actual transaction prices, said last week that Luxembourg’s real estate prices were down by almost 11% in the first quarter of 2024."

Radio New Zealand. "The number of mortgagee sales looks to be on the rise - but they are still just a fraction of the total market, experts say. A mortgagee sale happens when a homeowner does not meet their mortgage repayments, so the property must be sold to repay the debt owed to the bank. TradeMe currently has 65 residential properties listed as mortgagee sales, which is 35 percent up on the same time last year. In Wellington, Bayleys regional general manager Grant Henderson said his team would usually appraise up to three properties a year for banks considering mortgagee sales. But lately, staff were hitting that number each month."

"'We've got a broad range, from developers who've found themselves in a sticky situation due to funding, we've found mums and dads that've got themselves just in the wrong situation, but also investors,' he said. 'People have probably let it all go too long, and there's a lot of denial around the situation they're in.'"

"Banks did not take such sales lightly, and it was an absolute last resort, he said. 'Based on some of the things we've seen, these people have been in financial difficulty for a long time, it's not just like, 'you lost your job last month, this month we're gonna close you down', this takes a long time for the banks … to get to the point where they have to pull the pin.' People got plenty of warning and communication from the bank - up to three years' worth - before they exercise their mortgagee rights and force a sale, said Henderson. 'Most pragmatic and practical mums and dads will get through it, but some people are just in that denial phase,' he said."