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While There Were Some Vendors In Denial, Most Were Acting Swiftly Due To Concerns Of Further Falls

A report from Global News in Canada. “Data on Canada’s housing market have yet to reveal the full impact of the novel coronavirus pandemic. But market watchers say one group of homeowners looks especially vulnerable: over-leveraged residential landlords. ‘You have investors who were sitting on a portfolio of maybe five to 10 rental properties, and had been renting them all out on the short-term rental market,’ said Stephen Brown of Capital Economics. But with the country on lockdown and the border with the U.S. shuttered, the short-term rental business dried up overnight, Brown noted.”

“In the pre-coronavirus economy, ‘Airbnb’s seemed like the best game in town,’ said David Larock, a Toronto mortgage broke.r. Some struggling landlords may just have to sell their investment properties. ‘Some of those people have tenants who simply can’t pay anymore, and maybe … their own incomes have been impacted,’ Larock said.”

“Another set of homeowners in a tight spot are those who bought a new home before the lockdown and have yet to sell the old one, Brown said. ‘That’s a small proportion of people who are basically stuck now with two homes,’ he said.”

From The Tyee in Canada. “In Vancouver, the city with the highest gap between housing prices and incomes in North America, renters have been left questioning why they should pay so much of their now meagre incomes to landlords. Meanwhile, landlords — especially smaller ‘mom and pop’ landlords who rent a basement suite or a condo — are anxiously wondering if their tenants will be able to pay the rent, so they can in turn pay the mortgage.”

“‘These are a lot of people, their housing is contingent on them having a secondary suite, that’s how they got their mortgage financing for their principal residence,’ said David Hutniak, the CEO of LandlordBC. ‘They all have regular jobs or they’re pensioners on fixed incomes, and we’re getting a lot of very nervous folks.'”

From Mortgage Broker News in Canada. “With just over a week until rent cheques are due, the blizzard of rent and mortgage deferrals that hit the Canadian housing market on April 1 is expected to blow in once again. While most landlords at this point have come to some understanding with their tenants regarding late or adjusted rent payments, RealEstateLawyers.ca senior partner Mark Weisleder says there is no shortage of other issues his clients are still coming to grips with when it comes to selling their homes.”

“With 44% of Canadian households reporting some form of work disruption, there will inevitably be a number of potential buyers forced to abandon their plans mid-deal. The consequences could be dire for any buyers who agreed to purchase a property only to see their finances go up in smoke weeks later.”

“He recalls a specific case where a set of buyers had put down a $50,000 deposit on a property only to walk away from the deal because of an inability to get the purchase financed. The sellers wound up selling the home for $500,000 less than what had been agreed to. After being taken to court, the buyers were ordered to make up the difference and pay the sellers the full $500,000.”

“Regardless of the excuse, whether it be sickness or quarantine or an inability to access capital, buyers cannot walk away after they have agreed to purchase a property. ‘If they don’t close and a settlement is not reached, the seller can sue them,’ Weisleder says.”

From Domain News in Australia. “Sydney sellers are revising property prices more frequently and dropping them further than their Melbourne counterparts during the coronavirus pandemic, new figures show. Sellers across the country are adjusting price expectations in a bid to sell, but Australia’s biggest markets – Sydney and Melbourne – are likely to bear the brunt. ‘This has probably been the quickest vendors have moved in any downturn that I’ve seen,’ said Sydney agent Matthew King of McGrath, who felt sale prices in his market had already dropped 10 per cent.”

“While there were some vendors in denial, Mr King said, most had accepted the need to adjust prices and were acting swiftly due to concerns of further falls. Steven Abbott, managing director of Jellis Craig, said Melbourne property prices had fallen between 5 and 10 per cent across the city.”

“Buyers’ agent Peter Kelaher said the Sydney vendors who were happy to negotiate were those who had only recently come onto the market. ‘The vendors with a March campaign, they were vendors who were told a price before coronavirus really hit and they’re not ready to actually get out of home and try find another home unless they get the price that they want,’ Mr Kelaher said. ‘They’re being unreasonable, they’ll just come off the market and the new market will start in May.'”

From ABC News in Australia. “Many Townsville residents and businesses had pinned their hopes on 2020 being a year of prosperity for the region. Coronavirus social-distancing restrictions have brought an end to crowded open house inspections and on-site auctions. Real estate agent Wayne Nicholson said that had contributed to a dramatic 70 per cent drop in sales through his Townsville office.”

“‘One day they were there and the next day they weren’t,’ Mr Nicholson said. ‘We had some good momentum in sales in Townsville and then April came along and it just fell off a cliff.'”

From Starts At 60 on Australia. “As social distancing rules keep us indoors, and many out of employment, property markets across the country have taken a hit, with Brisbane house prices projected to take a hit of up to 10 per cent over the next six months. According to CommSec, the Commonwealth Bank of Australia’s (CBA) stockbroking and financial advice arm, the plunge in economic activity due to the prolonged shutdown will begin to trickle down to property prices.”

“‘The usual underlying demand pulse from net overseas migration has evaporated because the border is shut,’ a CommSec spokesperson said. ‘New lending is expected to contract, buyer expectations have adjusted downwards from exuberance to pessimism, rents are likely to fall, auction clearance rates are expected to remain weak and turnover will be lower than usual. The net result means that price declines are inevitable.'”

From Emigrate. “If you’re considering giving Australia a try as your expatriation haven, now’s the time. The pandemic has already spiked an economic downturn, especially in Oz’s huge cities, with landlords feeling the pain of losing the majority of tenants due to their either moving back to the home country or saving money by moving in with their parents. Businesses are shedding employees like cashmere sweaters in a heatwave, and the exodus of expat workers is growing by the day.”

“According to leading real estate agencies in Sydney, the exodus is responsible for a 300 per cent rise in vacant apartments over the past four weeks, with Brisbane suffering the same effects. For buy-to-let property investors it’s the worst news, but for newly-arrived expat professionals it’s a gift, as many landlords are now offering free rentals for a period of time or huge discounts for the next six months.”

“Professionals in the sector believe vacancy has been the highest expense for businesses during the pandemic to date, with rental property listings being honest about the reasons for stunning discounts. Managing agents agree, adding that landlords would rather take half the rent or even none for a short period rather than seeing their properties standing vacant for an unscheduled amount of time.”

“Melbourne landlords are in the same position, igniting a scramble to offer the best discounts and free rentals in the hope the pandemic will run its course before they’re forced into selling their properties at an even larger discount.”

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Miami, Florida

https://www.youtube.com/watch?v=iHSDOJczKjU&feature=youtu.be Miami, Florida

This Post Has 50 Comments

  1. Is there any mystery about what happened to inventory in any destination city and many others?

      1. “inve$tors’ HODLing$ by location?”

        Doe$ it involve collecting fee$?

        My gue$$ i$ they have a good data ba$e that gather$ that data.

          1. If they can short housing prices in places where they had a lot of multi-property customers, perhaps AirBNB might have a profitable business.

  2. ‘These are a lot of people, their housing is contingent on them having a secondary suite, that’s how they got their mortgage financing for their principal residence…They all have regular jobs or they’re pensioners on fixed incomes, and we’re getting a lot of very nervous folks’

    Yes, that peculiar Canadian financing arrangement where people could use rent in a basement to qualify for a insane loan. Blows up in their face!

    ‘Another set of homeowners in a tight spot are those who bought a new home before the lockdown and have yet to sell the old one ‘That’s a small proportion of people who are basically stuck now with two homes’

    OK, couple has one mortgage, but miraculously qualifies for another without settling the first. Now that’s a rock solid financing system right there.

    1. miraculously qualifies for another

      They’re allowed to do that because they’re more responsible than Americans.

      1. it is the CDN equivalent of a bridge loan (when both are with the same bank).

        The issue is that for paperwork reasons, they dont go back to the original mortgage and institute new conditions (length and having to sell at a certain pre-agreed price)

    3. In this case, might’ve referred to the tight spot of financing falling through, not closing on the new home, losing their deposit, and potentially getting sued by seller for losses….as detailed after

  3. ‘He recalls a specific case where a set of buyers had put down a $50,000 deposit on a property only to walk away from the deal because of an inability to get the purchase financed’

    But buyers were the winners?

    ‘The sellers wound up selling the home for $500,000 less than what had been agreed to. After being taken to court, the buyers were ordered to make up the difference and pay the sellers the full $500,000’

    Sucks to be buyer!

  4. ‘New lending is expected to contract, buyer expectations have adjusted downwards from exuberance to pessimism, rents are likely to fall, auction clearance rates are expected to remain weak and turnover will be lower than usual. The net result means that price declines are inevitable’

    ‘Sir, this is a Wendy’s.’

    1. Roll Over Beethoven
      Writer: Chuck Berry
      Releasing date: May 1956
      Format: 7″ single
      Label: Chess Records (#1626)
      B-side: “Drifting heart”
      Chart positions (Usa): Hot 100, #29; R’n’B, #2
      Other versions: The Apple Pies; The Beatall; The Beatles; Beatles 84; Benny & the Bedbugs; The Byrds; The Carnebees; The Cavern Beat; Electric Light Orchestra; Charlie Feathers; Narvel Felts; Flamin’ Groovies; Flamingos; Iron Maiden; Kickhunter; The Koppykats; Jerry Lee Lewis; L.A. Workshop & New Yorker; Jerry Lee Lewis; Meat Loaf; The Meteors; Mountain; The Overbeat; Lee Roy Parnell; Wes Paul; The Prellies; Punkles; Quartz; The Rajahs; Johnny Rivers; The Rolling Stones; Leon Russell; Raul Seixas; Paul Shaffer and the World’s Most Dangerous Band; The Sonics; Status Quo; Ten Years After; The 13th Floor Elevators; Uriah Heep; Gene Vincent.

  8. Great info on Airbnb rentals. Look at Seattle. 8800 units, with over 74% of those being entire homes or apartments. Those Super Hosts and Airbnb empire kings and queens are going to hit the release button soon. Somebody got too drunk at the housing market casino. Time to sober up! Pay the man.

    1. Here is the link-http://insideairbnb.com/

      Look at Portland! Almost 4600 STR- with 76% listed as the entire home or apartment! For rent will soon be for sale, as they get their arses handed to them.

      2. Thanks for this amazing resource, I can’t believe how many entire homes are being used for AirBnb in Oakland, Ca. No wonder there’s a lack of supply here but that may change soon.

      3. Great link! In San Diego, 11,922 with 69.7% entire homes/apartments. Not much data north of Solana Beach though.

  9. I’m getting email spams from this LV realtor Linda Eden. Not sure how she got my contacts but like Ben said, when the cheerleaders are on the bus, the game is over. This is vastly different tone than the spams from past years.

    Subject “Home Prices are Dropping and it is a Buyer’s Market PLUS Down Payment Assistance Programs up to $20k!”

  10. In the pre-coronavirus economy, ‘Airbnb’s seemed like the best game in town,’

    Yeah…but it never should have been a game in the first place.

  11. Hopium is not a COVID-19 treatment.

    The Financial Times
    Markets Briefing Equities
    Stocks fall as coronavirus drug flops in first trial
    Investors had pinned hopes on treatment providing relief in fight against Covid-19
    The falls in Asia also came as confirmed deaths globally from the coronavirus pandemic surpassed 176,000
    © REUTERS
    Hudson Lockett in Hong Kong 2 hours ago

    Global stocks fell after a potential antiviral drug to treat coronavirus flopped in its first clinical trial, dashing investors’ hopes for a quick medical solution to the pandemic.

    The declines in markets in Asia and the US followed a report in the Financial Times that a Chinese trial of remdesivir did not improve the condition of patients or reduce the pathogen’s presence in the bloodstream.

    Wall Street’s S&P 500 closed 0.1 per lower overnight following the report, reversing gains of as much as 1.6 per cent. Shares in California’s Gilead Sciences, remdesivir’s developer, fell 4 per cent on Thursday.

    In Asian trading on Friday, investors sold off shares in Gilead’s partner companies in China. Shenzhen-listed Porton Pharma, which makes drug ingredients, fell by the exchange’s 10 per cent daily trading limit after having doubled since the start of the year. Hainan Haiyao, another drug company, dropped as much as 5 per cent. Zhejiang Yongtai Technology, a maker of pharmaceutical raw ingredients, tumbled as much as 9.8 per cent.

    The falls helped take the Shanghai Composite index down more than 1 per cent, while the broader CSI 300 index slipped 0.7 per cent, even after the country’s central bank trimmed one of its policy rates.

    The disappointment over the development of a possible treatment came as the number of confirmed deaths globally from the coronavirus pandemic surpassed 176,000 with infections now above 2.6m.
    …

    1. Dont worry /s. The US market futures are up

      To the moon – just like real estate at vacation destinations.

    2. Here is some better hopium for you:

      It appears that zinc does the real work of killing the COVID virus. All you need is something to help the zinc cross the cell membrane to get into the cell where the virus is — that’s called an “ionophore.” You can use ANY zinc ionophore, doesn’t have to be HCQ. There were some studies which showed that a combination of zinc with PBT-2* inhibited the first SARS-COV from 2010. Another zinc ionophore is querciten, an OTC supplement.

      This could be huge, if the politics allow it. Could it be that this virus can be beaten by two OTC supplements and a z-pack?

      ——————–
      *PBT-2 is a hydroxyquinoline analogue (yeah, there’s that hydroxyquinoline again) which flunked as a potential Alzheimer’s drug but it still an ionophore.

        1. Yup, there appears to be a lot of disjointed-type research that all points to the same idea — get zinc in to the cell by hook or by crook. Now if only we can get better and better data, soon.

        2. FDA retracts recommendation for HCQ.
          WashPost gloats like crazy.

          I just read that Trump bought 29 million doses of HCQ. I hope he keeps them on hand. The libs can hate all they want, but I think the doctors will eventually decide.

  12. Note that it never a reduction in actual rental rates, it is an incentive.

    The reason (at least for the luxury rentals in downtown Seattle) is that they can apply the free months or discount to the sales/marketing budget. They can retain the full monthly price for the building valuation (for REIT and other purposes)

    —-
    For buy-to-let property investors it’s the worst news, but for newly-arrived expat professionals it’s a gift, as many landlords are now offering free rentals for a period of time or huge discounts for the next six months.

  13. Where are those new $s coming from – to buy real estate?

    Interestingly i was on a Toronto based cbre call. They were saying that buildings with retail on the ground floor were going to do well???

    Unless people want to pop down to get groceries, or dry cleaners etc. And pop back up to their apt/condo

    —
    A new survey by Cushman & Wakefield found that 48% of these investors are planning to reduce their investment in international markets in 2020. The Canadian market is no exception, which was already experiencing a slowdown in investment originating from Mainland China prior to the pandemic.

    “[The activities] by Mainland China investors were mainly due to central government policy guidance and tightened lending to real estate developers and operators, and we anticipate this trend of decreasing investments and increasing dispositions to continue in 2020 by Mainland China investors globally,” Jason Zhang, the head of China outbound investment capital markets at Cushman & Wakefield, told Daily Hive.

    https://dailyhive.com/vancouver/mainland-china-real-estate-investment-forecast-2020?fbclid=IwAR1OMpAJQumrFxACB9na2wwuhbEEPZt4uFY8czn_UFNnts4X73wAHpoSBeo

  14. Our communist allies had to eat their bat soup, so now none of these people can afford any soup:

    “With unemployment about 30 times higher than the Great Recession’s peak— 231,610 initial claims were filed with the state between March 16 and April 11 — the economic fallout of the weeks-old COVID-19 pandemic is emptying kitchens across Colorado. An unparalleled demand for food assistance is exacerbating inequities in place long before the virus arrived, and exposing gaps in government nutrition programs.

    “Everyone needs food right now,” said Dana Wood, a project manager at the Safe and Abundant Nutrition Alliance, which serves hard-hit mountain counties on the Western Slope. “Everybody has a different heartbreaking story that goes so much beyond food.”

    https://coloradosun.com/2020/04/24/record-unemployment-food-insecurity-colorado/

    1. More local CRATER:

      “A recent survey of local governments by the Colorado Municipal League, Colorado Department of Local Affairs, Colorado Counties, Inc. and the Colorado Special Districts Association, show cities are bracing themselves for both severe revenue loss, and increased expenditures related to the coronavirus pandemic.

      Not all municipalities offered an estimate of the total revenue decline. Of those that did, the average anticipated revenue decline is $10.5 million.

      Kevin Bommer, the executive director of the Colorado Municipal League, said cities and towns are going to have to do some major belt tightening.

      “They’re going to be delaying capital projects,” he said. “They will see furloughs and lay-offs. We’ve already seen some of those. Obviously hiring freezes and delaying equipment purchases.”

      https://www.thedenverchannel.com/news/local-news/colorado-municipalities-could-face-long-term-fiscal-crisis-related-to-covid-19-sales-tax-plunge

      1. And to think that just 6 months ago the city council in my little burg wanted to go on a $100M spending spree, funded by a sales tax increase. Voters wisely rejected it and the tax and spenders pouted and even had hissy fits, cursing TABOR.

        Now they want a sales tax increase to cover current budget shortfalls. It will be on the November ballot. I doubt voters will be in the mood to approve it. Municipal layoffs have begin in my little burg. Other local cities are in denial and hoping for a miracle, or maybe a bailout.

  15. Facebook has banned creating events to organize protests, in case any of you weren’t aware:

    “Protesters on Thursday gathered in front of Michigan Gov. Gretchen Whitmer’s (D) home in Lansing to call on her to reopen the state amid the coronavirus pandemic.

    “Gretchen Whitmer is tyranny, this is like a third world country. It’s like V for Vendetta and Idiocracy hooked up and they produced this baby that is 2020,” Brandon Hall, the organizer of the event, told Up North Live.”

    https://thehill.com/homenews/state-watch/494434-protestors-gather-in-front-of-michigan-governors-house-calling-on-her-to

    Did you know that you can not buy seeds in Michigan? If you wanted to buy some seeds to grow some food so you can eat it, you can’t do it in Michigan 🙁

    1. No longer the case as of today:

      https://www.detroitnews.com/story/news/local/michigan/2020/04/24/whitmer-issue-short-term-extension-stay-home-order-friday/3018451001/

      Under the new order, some Michigan businesses can reopen, as may cordoned off sections of big-box stores such as garden centers.

      Much like the protest at the capitol, there was right and wrong on both sides of this — if idiots weren’t taking their entire families and pets to Home Depot because the malls were closed, it would not have happened in the first place. But there also needed to be more careful consideration of and additional input for all of the consequences of the restriction decisions made, rather than just the unilateral “shut up and do as you’re told” the state got initially.

  16. Here’s your “pent-up demand” REALTOR, pent-up demand for a welfare check handout to the Free Sh*t Army. I’ve lived through fluctuations in income before but I’ve never paid my rent late, unlike these loanowner deadbeats. They shouldn’t get a penny of my tax dollars, they need their sorry a$$es and all their belongings dragged out to the curb:

    “As the economic shutdown drags on and job losses mount, more borrowers are opting to delay their monthly mortgage payments through mortgage forbearance plans.

    The majority are doing it through a program designed to provide relief to holders of government-backed home loans, part of the coronavirus CARES Act relief package.

    Just over 3.4 million borrowers, representing 6.4% of all mortgages outstanding, are now in forbearance plans. That’s an increase of 477,000 loans in just one week, or a nearly 9% jump, according to Black Knight, a mortgage data and analytics firm, which is running weekly tallies.

    These forbearances represent $754 billion in unpaid principal. They include 5.6% of all loans backed by government-sponsored enterprises Fannie Mae and Freddie Mac and 8.9% of all FHA/VA loans. At the current level, mortgage servicers are required to advance $2.8 billion of principal and interest payments per month to mortgage bondholders of government-backed loans.”

    https://www.cnbc.com/2020/04/24/mortgage-bailout-balloons-by-half-a-million-more-loans-in-one-week.html

  18. Shoppers stunned by 60c mince, as supermarkets scramble to offload ‘oversupply’ of meat

    ‘After weathering the run on supermarket meat that left many shoppers high and dry for basics like mince amid coronavirus panic, Aussies are now taking to social media to share the astonishing meat deals unfolding around the country.’

    ‘One woman was so amazed to find a packet of Woolworths beef mince selling for 60 cents, she just had to share with other bargain buffs.’

    “Never had a markdown score like this! Lilydale Vic! 60c mince, Half price steaks and potato salad!” the impressed shopper writes .’

    https://kitchen.nine.com.au/latest/aussie-shoppers-stunned-as-price-of-mince-plummets-oversupply-woolworths-coles/d99e1bf3-c270-4a77-827c-c91ef5418894

  19. No “pent-up demand” for $500,000 starter homes happening here:

    “The millions of Americans who have lost their jobs in recent weeks due to the coronavirus pandemic will have a devastating impact on the economy going forward as workers are left without pay.

    Losses in the month of April alone could push the unemployment rate to about 16%, according to James Knightley, chief international economist at ING. If another 10 million Americans file jobless claims in May, that would push the unemployment rate to roughly 22%, he said.

    “Thankfully this is below the 24.9% peak experienced in 1933, but we have to remember that one third of Americans aged 18-65 are not classified as employed or unemployed – they are students, early retirement, homemakers, carers or sick,” Knightly wrote in a Thursday note.

    “This leads us to yet another sobering statistic – that less than half of working age Americans will be earning a wage next month,” he said.

    https://www.businessinsider.com/layoffs-coronavirus-less-than-half-american-workers-paycheck-wage-may-2020-4

  20. Yahoo Business reports Friday 4/24: “Coronavirus pandemic isn’t making home sellers lower prices…”

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