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The Housing Market Has Seen The Bottom Fall Out

A report from Forbes on New York. “Landlords in New York City and across the country are offering more flexible rental options in response to demand from renters facing unclear economic futures. The number of listings for short-term or month-to-month leases jumped 70% and the share of furnished rentals rose by more than 40% over last year, according to data from New York City listing site StreetEasy. Nationally, Zillow saw an unprecedented surge in rentals for six months or less starting around the week of March 10. Between that day and the end of April, there was a 33% increase in short-term rentals.”

“Jared Antin, director of sales at New York City brokerage Elegran, says he’s seen some landlords offer tenants to renew leases for three to six months and in, some cases, allow tenants to go month to month. ‘Landlords would rather have a paying tenant in place than risk units being vacant and having to find another paying tenant,’ Antin says.”

From WGBH in Massachusetts. “A Massachusetts landlord organization says the state’s emergency eviction moratorium is already creating turbulence in the rental housing market. Douglas Quattrochi, executive director with the group MassLandlords, said he estimates 20 percent of rent payments have gone uncollected from landlords since the coronavirus shutdown, and that’s created a long-term problem of hundreds of millions of dollars in unpaid rent.”

“Quattrochi said the college housing market has seen the bottom fall out, mainly because college housing arrangements disintegrated when most college classes went online and students moved back home. As a result, many of the households disbanded. ‘We’re seeing a lot of increased vacancy in three bedrooms because a lot of times three college students will rent, or in Boston, it can be up to four legally,’ he said.”

The Miami Herald in Florida. “Landlords might finally be cutting multifamily renters a break in South Florida, with Zillow reporting decreased asking rents for new leases since the pandemic. The average asking rents decreased year-over-year and month-to-month for multifamily units in Miami-Dade, Broward and Palm Beach counties, according to Zillow. Landlords will likely renegotiate rent with existing tenants and make concessions or, in the last resort, lower asking rents for new tenants, Olsen said, in the months ahead. ‘Landlords do not have a huge incentive to evict tenants,’ said Skylar Olsen, senior principal economist at Zillow, ‘because they have their own maintenance costs, mortgage, and insurance payments for the property.'”

The Tampa Bay Times in Florida. “The first condo tower built on Tampa’s Bayshore Boulevard in 15 years has completed the construction phase and is ready for its residents to begin moving in, developers announced. Residents are paying at least $1 million for each of the luxury units in the 24-floor tower, though some went for more than $5 million apiece. Even though the coronavirus pandemic has affected many luxury apartment complexes in Tampa Bay — prompting many of them to offer free months of rent or other perks — Virage’s sales were largely unaffected. That’s because much of their units were already secured before the pandemic began, with all but four having been sold by this time last year.”

The Daily Advertiser in Louisiana. “Lafayette Parish had 83 pending sales in the first week of March, compared to 45 the final week leading into April, a drop of 45%.T he problem has been particularly pronounced for properties requiring ‘jumbo loans’ — loans for properties that are too expensive for a conventional loan. Jim Keaty, president of the Realtors Association of Acadiana, said any loan not backed by the government is difficult to come by.”

“There are also issues for investors looking to build large residential properties, like apartment complexes. ‘The banks aren’t lending money for those right now,’ Keaty said. ‘I guess because they’re concerned about people paying rent.'”

The Union Tribune in California. “A well-known real estate tracker is predicting a 10 percent drop in rents in San Diego County by the end of the year because of the economic fallout of COVID-19. CoStar says the average rent now, around $1,840 a month, should drop to roughly $1,664 a month by the last three months of 2020. It would be a historic decline considering rents hardly changed during the Great Recession and San Diego is often considered one of the most resilient multifamily markets in the nation.”

“Joshua Ohl, CoStar managing analyst, said the extra $600 people are getting on unemployment from the federal CARES Act runs out at the end of July and there doesn’t seem to be more stimulus checks coming. ‘In my judgment, I think that once the stimulus checks and the $600 a week sweeteners fall off, people are just not going to be able to make rent payments,’ he said. He said the formula also considers the downward trend seen in the last few months.”

“Ohl said much of CoStar’s analysis looks at losses among high-end apartments that have popped up all over the county, especially downtown and University Town Center, in the last few years. The vacancy rate in University Town Center, where a high percentage of new apartments are located, has gone from 6.16 percent in the fourth quarter 2019 to 6.5 percent now. Rent in UTC has fallen from $2,535 a month to $2,402 in the same time period, but calculating the actual rent can get tricky because of the increase in concessions.”

The Los Angeles Times in California. “Nowhere in Los Angeles are the logistical, financial and health complications of the coronavirus outbreak on greater display than at Park La Brea — the largest housing complex west of the Mississippi River. Park La Brea has slashed the rent on vacant apartments in recent months. That has encouraged existing tenants, many of whom are looking to save money in an economic downturn, to break their leases and move into other apartments within the complex.”‘

“David Patton, 63, lived in a two-bedroom, one-bathroom garden apartment with his wife and son. They paid $2,660 a month. But the family found a slightly larger apartment in Park La Brea — for $400 a month cheaper.Patton said he would have preferred if Prime Residential Apartments had just lowered the rent for his previous apartment. But that wasn’t the deal. ‘It was inconvenient,’ Patton said, ‘but the inconvenience was outweighed by the economics.'”

From Bloomberg. “Uber, Lyft and Airbnb have slashed thousands of jobs. Salesforce and Visa are letting employees work remotely for months; Twitter and Square are allowing them to do so for good. For the companies’ hometown of San Francisco, the moves are early signs of a dire blow. In a city with a long history of booms, busts and natural calamities, the coronavirus pandemic has suddenly upended nearly a decade of prosperity.”

“The pain wreaked by the pandemic is only accelerating negative trends for the city, such as the departure of companies, conventions and residents to less-expensive areas, said Ken Rosen, chairman of the Berkeley Haas Fisher Center for Real Estate and Urban Economics. ‘The boom is over, and the question is how deep will the bust be,’ said Rosen, who warned the city may have diminished appeal to the tech industry. ‘We are going to need dramatic changes if we’re going to keep our golden goose here.'”

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This Post Has 81 Comments

    1. So here’s my question. I’ve read all the posts about STR super hosts leveraging up “owned” property, mainly to pay the bills while awaiting the appreciation. Seen it start and fail through several cycles in Florida panhandle condos. But what about the fool in yesterdays post that had 700 units, all over BFE, most of which sounded like leased apartments that were sublet as STR. It would seem those situations would collapse even faster, with a big impact on rental availability. Was the demand enough, and margins there to even support such a business before the travel restrictions?

      1. Every lease I’ve signed specifically prohibits any sort of subletting. So I’m not sure where that person is getting away with subletting hundreds of apartments?

      2. I’ve sold all my US REITs and International REITs after taking my 6% profit. I’m out of real estate for good.

        1. For someone whose handle is “Mortgage REIT investor,” I’d say that’s quite a big step. Congrats… I suppose?

          The macro investor guys are at their wit’s end. They think we’ll see deflation followed by inflation.

    1. The twenty-something singer-songwriter daughter of a family in our circle is back from Nashville after moving there last year to try her hand in their music scene. It’s the worst time for gig musicians right now since I started playing in public forty years ago.

      1. Yup my old bandmates are sitting on their hands. Glad I retired from all that.

        But amateur stuff is a no go too.

      2. I have many friends in the music industry who are very successful and they tell me the industry has about a 5% success rate where you are actually making money. The music industry is even worse now because all the money is made from live performances.

        I have a friend she was on MTV in the 1990s and she has been struggling since 1999. She actually had success and is talented. But the industry is brutal especially for those who are over 40. It’s a young person’s industry. The only people over 40 in the music business are the ones who made it famous in their 20s.

        1. My wife has booked our first COVID-19 era gig. It’s a backyard wedding next month.

          Outdoor performances are a place to restart.

    2. I was reading some comments on an article yesterday, and I wish I could remember so I could post a link, but the commenters were from Texas. A few of them had plans to sell their houses and retire somewhere else because they could no longer afford the taxes. Another guy had a huge ranch or something and he was bemoaning his 12% yearly increase, vowing to fight it but knowing he’d likely get nowhere.

  3. ‘Over the past 12 months, street-rate rents dropped 2.6 percent for the average 10×10 non-climate-controlled and 6 percent for climate-controlled units of similar size. On a year-over-year basis, street rate performance for standard non-climate-controlled units was negative in roughly 97 percent of the top markets tracked by Yardi Matrix. All top markets saw negative street rate performance for standard climate-controlled units.’

    ‘The pandemic has not yet visibly impacted self storage development activity across the country. Nationwide, projects under construction or in the planning stages accounted for 9 percent of total inventory, a 20-basis-point increase month-over-month. Raleigh-Durham saw the highest increase in development activity—the metro’s new-supply pipeline represented 8.9 percent of existing stock, up 130 basis points over the previous month.’

    ‘However, the COVID-19 crisis is eventually expected to lead to a decline in construction activity. According to Yardi Matrix’s most recent new-supply forecasts, deliveries will drop by 10 percent in 2020, and by about 40 percent over the next five years. Oversupplied markets, however, could greatly benefit from a decline in self storage constructions.’

    https://www.cpexecutive.com/post/self-storage-rents-not-immune-to-covid-19/

  4. ‘Uncertainty In Student Housing CRE Market Prompts A Faster Flight To Quality’

    “Pre-COVID, there was so much capital for student housing you didn’t have to get that creative to get a joint venture,” Leatherman said. “But post-COVID, we have had to come up with some pretty creative structures to get these done.”

    ‘Investment sales pricing for student housing also underwent a quick transformation. “The majority of our sales transactions have been put on pause, but the discount for post-COVID pricing has been somewhere between 7% to 12% and that is driven one-thirds by capital markets, or the cost of capital, and two-thirds by changing in underwriting,” Leatherman said.’

    https://www.bisnow.com/dallas-ft-worth/news/student-housing/uncertainty-in-student-housing-cre-market-prompts-a-quicker-flight-to-quality-104472-104473

    Recession proof!

    ‘Pre-COVID, there was so much capital for student housing you didn’t have to get that creative to get a joint venture’

    Yellen bucks looking for a place to die is a real thing.

    1. Who can afford the fancy student housing? I don’t get it.

      If debtors crying about their student loans really got them just to finance this lifestyle, I say fook ’em.

  5. ‘The boom is over, and the question is how deep will the bust be,’ said Rosen, who warned the city may have diminished appeal to the tech industry. ‘We are going to need dramatic changes if we’re going to keep our golden goose here’

    The goose is cooked Ken. Enjoy the bust.

    1. ‘Commercial real estate interests say Senate Bill 939 trades a short-term business revenue problem for a long-term commercial property foreclosure crisis. Rex S. Hime, president/CEO of the California Business Properties Association says, “SB 939 seeks to reduce rent amounts paid by leasees, but does nothing to reduce the mortgage payment still owed by the property owner.”

      ‘State Sen. Scott Wiener (D-San Francisco) is one of the bill’s authors. He says, “California faces the very real prospect of a mass extinction event for small businesses and nonprofits.” Hime said that if the bill becomes law “it will trigger a commercial mortgage crisis.”

      https://gvwire.com/2020/05/29/state-lawmakers-wants-moratorium-on-business-evictions-opponents-say-it-will-trigger-a-mortgage-crisis/

      1. Miami Agent magazine
        Florida has second highest number of zombie
        foreclosures in …
        So-called zombie foreclosures made up about 7,650 (3%) of the homes in foreclosure in the second quarter, where the owner has abandoned the property and the …

        South Florida Business Journal
        Condo development site on Indian Creek Drive in Miami Beach in foreclosure lawsuit – South Florida
        Miami Beach condo development site could be seized in foreclosure lawsuit

        1. “If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.”

    3. It’d actually be a net positive the to get the tech bros out of the area and let the freaks and weirdos return. SF has very little soul any more. Generica needs to be beat back.

      1. and let the freaks and weirdos return

        Aren’t they busy defecating in the streets?

      3. It’d actually be a net positive the to get the tech bros out of the area and let the freaks and weirdos return.

        Depends on whether tax receipts matter. The productive can be boring but they pay their way.

    4. SF, SD, NY, Boston. These are all places many, many people would like to live. They were priced out.

      “‘We are going to need dramatic changes if we’re going to keep our golden goose here.’”

      How about a 70 percent reduction in housing prices, and a 50 percent reduction in housing and commercial rents? Suddenly, all the problems go away.

      It’s about the prices.

  7. Are you worried about catching COVID-19 from your food?

    Every Single Worker Has Covid at One U.S. Farm on Eve of Harvest
    By Mike Dorning and Jen Skerritt, 5/29/2020, 3:00:00 AM
    Workers stand behind plastic screens while harvesting lettuce on a farm in Greenfield, California, on April 27.
    Photographer: Brent Stirton/Getty Images

    One farm in Tennessee distributed Covid-19 tests to all of its workers after an employee came down with the virus. It turned out that every single one of its roughly 200 employees had been infected.

    In New Jersey, more than 50 workers had the virus at a farm in Gloucester County, adding to nearly 60 who fell ill in neighboring Salem County. Washington state’s Yakima County, an agricultural area that produces apples, cherries, pears and most of the nation’s hops, has the highest per capita infection rate of any county on the West Coast.

    The outbreaks underscore the latest pandemic threat to food supply: Farm workers are getting sick and spreading the illness just as the U.S. heads into the peak of the summer produce season. In all likelihood, the cases will keep climbing as more than half a million seasonal employees crowd onto buses to move among farms across the country and get housed together in cramped bunkhouse-style dormitories.
    …

    1. It turned out that every single one of its roughly 200 employees had been infected

      They’ve achieved herd immunity.

      I did find it amusing that one of the workers pictured was using a hair net as a face mask.

        1. The good news it that nobody in Rhea County has died of “it”. The story is already over two weeks old.

          1. I bet most of them didn’t even know they had it. Weird disease. I wonder if they’ll ever find something specific that makes some people more vulnerable.

          3. I think our superflousinvestor is wondering what characteristics of a person would make him suffer only a mild case instead of a major case or even a death.

            It’s probably a combination of things. They’re young, strong, probably thin, and probably getting lots of vitamin D from working outside all the time. All those make for a strong immune system. Strangely tho, I wonder if they got a big or small initial viral load. That’s another predictor.

          4. Strangely tho, I wonder

            Here’s something else to ponder. How long does an “infection” last? 5 to 10 days? What statistically is the probability that each and every one of 200 co-workers is in this state all at the same time, with none of them recovered and only one with cold symptoms?

            Also, if the test returns 20% false negatives, how is it that they all tested positive?

            Another thing, if they are all from a base camp in Mexico (same company), wouldn’t the health officials followup on what is the situation at that camp?

            Strange and stranger.

        2. “Herd immunity” – nice abstraction. But AFAICT there is no test for determining whether someone is immune to COVID-19 or not. Antibody tests just show presence/absence of antibodies, but have not been determined to prove immunity.

    2. This article’s quality is so poor – there is no mention of exactly what kind of test / how many different kinds of tests were done. Without knowing that, no conclusions can be drawn!

      1. Reading all the related articles, especially the local ones, gives no additional insight.

  8. The Tampa Bay Times in Florida. “The first condo tower built on Tampa’s Bayshore Boulevard in 15 years has completed the construction phase and is ready for its residents to begin moving in, developers announced. Residents are paying at least $1 million for each of the luxury units in the 24-floor tower, though some went for more than $5 million apiece.
    Tampa? Yech! Us locals call it tampon. Why anyone would want to live in that mess of a city I do not know.

    1. I was there for 3 days about 10 years ago and I kinda liked it. People were nice and favored malt beverages in colorful cans. Middle of the day even!

    2. I grew up in Tampa .I left 22 years ago. I read that they are selling those townhomes for $1million. You couldn’t pay me to move back there. I still go visit Extended family every Few years and never book my visit more than 3 days. Day 1 I remember the weather. Day 2 I go out to drink with old friends / family and they show me all the new cars etc .Day 3 I fly home because that is about all I can take of that place. Traffic is way worse than 20 years ago and the roaches are still in every restaurant you eat at.

      1. the roaches are still in every restaurant you eat at. Have you ever found one in an alcoholic beverage?

    1. US food prices see historic jump and are likely to stay high

      That doesn’t sound like deflation to me.

      1. At the chain store yesterday I saw organic half-breast chicken for 99 cents a pound. And there was plenty of everything. T-bones were expensive. Giant packages of ground beef for $2.99/pound.

          1. It’s not price spikes, it’s “news” of price spikes. A different animal altogether.

      2. I went to the grocery store today. The Australian grass-fed ground beef was $6.49/pound, which is where it’s been for the past year. They just got a big supply of paper towels. They had hand sanitizer but it was expensive. The only things I saw out of supply were rubbing alcohol and TP.

    2. “US food prices see historic jump and are likely to stay high:”

      Says who?

      I can’t see how food prices can get any cheaper.

  11. Free rent FOREVER in Denver:

    “A statewide moratorium on evictions ends in 15 days, but Denver will continue on with its own moratorium on evictions.

    Mayor Hancock said in March that Denver sheriffs deputies would be redeployed away from evictions indefinitely, adding that people should not be evicted during the coronavirus outbreak. Erika Martinez, a city spokeswoman, said in an email Thursday that “Denver’s order will not expire on May 31. It will stay in place until further notice.”

    https://denverite.com/2020/05/29/denvers-eviction-moratorium-will-stay-in-place-until-further-notice/

    1. It would be interesting if the City and County of Denver allowed evictions to begin, against the current backdrop of unrest.

      Maybe some people would have to stop protesting, etc. so they could pack their sh*t and move.

      1. “the City and County of Denver”

        Just got the emergency alert of the curfew effective 8pm to 5am tonight and Sunday night here. Not that I was planning to go downtown anyway.

    1. Bike, RV sales surge during pandemic

      ANDERSON — Bicycle shoppers are finding a lot of empty shelves these days as sales of bikes have skyrocketed during the pandemic.

      “Within the industry, they’re saying this is basically the biggest month in the last 30 years,” said Buckskin Bikes owner Ben Orcutt.

      “The inventory that we’re normally selling, $300 to $700, it’s zero in every category, every brand, I have nothing available, it’s really intense.”

      Another area seeing strong sales is the RV industry.

      As the pandemic hit in March, business slowed down for Walnut Ridge Family RV Sales in New Castle, and then took off at the end of April.

      “This whole month has just been, it’s been crazy, we’ll obviously have a record May,” said Nathan Hart, general manager and partner at Walnut Ridge.

      https://www.heraldbulletin.com/news/bike-rv-sales-surge-during-pandemic/article_b3d345d8-a1d6-11ea-9053-5335a3a6c4d3.html

  13. “Some Vocal Real Estate Advisors Are Whistling Past The Graveyard”

    Definitely.

    Why housing prices aren’t dropping in the pandemic
    The housing market isn’t collapsing.
    By Emily Stewart on May 29, 2020 7:30 am
    Rick Nazarro of Colonial Manor Realty talks with interest buyers in the driveway of a home he is trying to sell in Revere, Massachusetts, on May 2.
    Blake Nissen for The Boston Globe via Getty Images

    For house hunters wondering whether the coronavirus crisis might lead to a better deal on an upcoming purchase, there’s some bad news: probably not, at least not right now.
    …

    1. One thing that can be said about the Bay State is that they hold tight to a particular worldview.

  14. Is Hong Kong’s role as a global financial hubb over and done?

    Associated Press
    China says US action on Hong Kong ‘doomed to fail’
    Published: May 30, 2020 at 11:35 a.m. ET
    By Associated Press
    Hong Kong says “not unduly worried by such threats” from Trump
    Pro-China supporters hit the effigy of U.S. President Donald Trump outside the U.S. Consulate during a protest in Hong Kong, Saturday, May 30, 2020. AP

    The mouthpiece newspaper of China’s ruling Communist Party said Saturday that the U.S. decision to end some trading privileges for Hong Kong “grossly interferes” in China’s internal affairs and is “doomed to fail.”

    The Hong Kong government called President Donald Trump’s announcement unjustified and said it is “not unduly worried by such threats,” despite concern that they could drive companies away from the Asian financial and trading center.

    An editorial in China’s official People’s Daily newspaper said that attempts at “forcing China to make concessions on core interests including sovereignty and security through blackmailing or coercion … can only be wishful thinking and day-dreaming!”
    …

    1. The Financial Times
      Coronavirus business update 30 days complimentary
      The Big Read Hong Kong politics
      ‘A broken piece of jade’: the turbulent future of Hong Kong
      The city’s unique role as a halfway house between China and the rest of the world is now under threat
      Tom Mitchell in Singapore, Nicolle Liu in Hong Kong and Xinning Liu in Beijing yesterday

      For four decades Hong Kong has thrived as a perfect middle ground between China and the US.

      Independent courts and free information flows made the city a base for everyone from US investment bankers advising Chinese state companies to supply chain managers dealing with low-cost factories just over the border in Guangdong province.

      Since Beijing’s economic reforms began in 1978, Hong Kong has played a unique role — a place where western businesses could dip their toes in the new Chinese economy and where China’s Leninist system could engage with the modern, globalised economy.

      For the past year, that lucrative position has been hanging by a thread. To the consternation of Beijing, a wave of pro-democracy protests, sometimes violent, regularly brought large sections of the city to a standstill, including, on one occasion, its airport, one of the busiest in the world.

      Two new shocks now threaten to completely derail Hong Kong’s status as one of the world’s great financial, commercial and media centres — and place the city in the middle of the increasingly fractious relationship between China and the US.
      …

  16. George Floyd tried to pass a counterfeit $20 bill in Minneapolis and ended up paying with his life. Meanwhile, the counterfeiters and racketeers at the Fed have pumped trillions of Yellen Bux funny money into the system, debasing the currency and robbing the 99% through the stealth tax of inflation. Maybe once the Wall Street-Federal Reserve Looting Syndicate starts looting police pension funds, the cops will finally be incentivized to go after the real criminals.

  17. Jerome Powell denies that the Fed’s “No Billionaire Left Behind” monetary policies are contributing to record wealth inequality, while even globalist media outlets are admitting that there’s never been a greater concentration of wealth in the hands of so few, while the middle and working classes are falling further behind.

    I wonder if the Powers that Be are making any connection between the record numbers of futureless, disenfranchised, screwed-over people in this country, thanks to the globalists and their Fed cohorts, and the seething public anger that is starting to explode into violent civil unrest.

    https://finance.yahoo.com/news/powell-says-fed-policies-absolutely-180650997.html

  19. Oh, the irony: the Clinton News Network, which among all the globalist propaganda media outlets has been most strident in purveying The Narrative, finds itself the target of violent thuggish protesters. How do you like them apples, Real Journalists? Maybe decades of relentlessly pushing identity politics and feeding a sense of pathological victimization and entitlement came back to bite you, huh?

    https://edition.cnn.com/2020/05/29/us/cnn-center-vandalized-protest-atlanta-destroyed/index.html

        1. I’m not on bored with the double-standard where it’s ok for blacks to use a word, but not whites. That kind of hypocrisy doesn’t fly with me.

    3. How do you like them apples, Real Journalists?

      It’s what they are paid to do. I’m sure that they are on board with The Narrative, but they don’t create it, they are paid to spread it.

      1. they are paid to spread it and they tend to get fired when they don’t parrot The Narrative.

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