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They Thought They Could Get In Early And Get Out Early, But These Out-Of-Towners Got Snookered

It’s Friday desk clearing time for this blogger. “Record vacancies dropped Manhattan apartment rental prices to their lowest levels in seven years as tenants continued to flee the city. The number of apartment listings tripled from a year earlier to 15,923, the most since record-keeping began in 2006, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The vacancy rate reached 5.75%, a fifth straight month with a record. Studios saw the biggest decline in rents with the median price down 13% from a year ago to $2,350 per month. One-bedroom prices fell 11% to $3,195. By location, Northern Manhattan saw the biggest price decline with the median off 9.9% to $2,208. Prices on the West Side fell 9.6% to $3,300 and Downtown dropped 7.8% to $3,595.”

“The big question for New York City, which is facing a population decline, higher crime rates and high unemployment, is whether prices can fall enough to lure residents back to the city. ‘I don’t think we’re there yet,’ said Steven James, CEO of Douglas Elliman’s New York City brokerage. ‘I think we have a little ways to go. The consumer knows the landlords are on the ropes and they know they’ve got them.'”

“Rentals account for two-thirds of the apartments in Manhattan. As rents fall, and more apartments sit empty, the pain could begin to cascade down to smaller, less capitalized landlords and to mortgage lenders and banks. It could also start to impact property tax revenue — which is the largest source of revenue for New York City — as landlords don’t have rental income to pay their taxes. ‘The chain reaction is going to be difficult, especially for newer landlords that haven’t been through something like this before,’ James said.”

“The rental market in Boston has softened amid a glut of apartments. Rents have fallen 12% in Boston over the past year, according to Apartment List. They have fallen 9% since the pandemic started in March. Other high-rent cities such as San Francisco, New York and Washington. D.C., are in the same predicament as Boston. Boston Pads has more than 6,000 apartment listings on its website, a gain of more than 366% versus the 1,289 that were on the site in September 2019, according to CEO Demetrios Salpoglou. The company’s real-time vacancy rate has surged more than 730% since the pandemic struck in March.”

“‘A lot of landlords have dropped last month’s rent,’ Salpoglou said. ‘They’ve dropped security deposits. They have added one month’s free rent, two months free rent. Yesterday I saw a luxury building offer three months of free rent.'”

“San Francisco’s residential real estate market saw brisk activity from July through September with a steep increase in both sales and inventory, as a significant jump in buyers was not enough to keep up with the deluge of new condos and homes flooding the marketplace, according to Compass. The number of listings is at a 15-year high, with a 10-month inventory for condos in some neighborhoods. Comparing September to the same month last year, the number of price reductions was up 172% for houses and condos combined. Of the price reductions, 80% were of condos.”

“‘The issue is the inventory is increasing so much faster than the sales rate,’ said Patrick Carlisle, chief market analyst for Compass. ‘Any time you have this relatively huge overhang of supply, and demand is stable, you are going to see price reductions.'”

“Opendoor, a digital home buyer and seller, received a $4.8 billion valuation when it went public three weeks ago, and it is the largest iBuyer in the U.S., based on market share — but 2020 isn’t expected to be a winning sales year. ‘If you look at Opendoor’s numbers, they projected almost negative 50% [-49%] year-over-year growth in 2020. That seems like a bigger loss than what I would have expected,’ said Sumant Sridharan, COO of Homelight. Instead of risking entering a booming but unpredictable market, Opendoor and other iBuyers will take losses through the end of the year.”

“1199 Seymour St., No. 2402, Vancouver. Asking price: $669,000. Selling price: $660,000. The seller, who sometimes rented the unit out, was looking at upsizing to another home downtown. Listing agent Nicolas Blachette says sellers are responding to changes in the market, such as higher insurance premiums and fewer tenants. ‘Some investors are selling due to rental rates going down due to higher inventory,’ Mr. Blachette says.”

“It’s a pretty good time to be renting a posh London pad. The price to lease a home in the capital’s wealthiest areas slumped by an annual 8.1% in September, the steepest in more than 10 years, according to broker Knight Frank. Landlords are flooding the market with short-term rentals as tourists stay away from the capital, and more owners are opting to rent out properties amid the pandemic uncertainty. The pain for owners in London’s priciest districts will likely continue into the current quarter, with Knight Frank forecasting a 9% decline for the whole year.”

“The economic impact of the ongoing coronavirus outbreak has battered the housing market, which has seen purchases plummet to their lowest levels in nearly two decades, according to a Finance Ministry report. The number of sales has not been so low since 2003, when violence from the Palestinian Second Intifada decimated the economy. The downturn was most keenly felt in the center of the country, with Tel Aviv seeing a 33.6% drop in the volume of purchases and reaching its lowest level since tracking began in the early 2000s.”

“As of Sunday, 936,712 Israelis were unemployed in total — almost a quarter of the workforce, which numbers some 4 million — including 595,667 who were furloughed.”

“Residential buy-to-let investors beware: South Africa’s flat vacancy rates spiked to 11% in the third quarter of 2020, from 7% in the prior quarter. ‘All the major cities now have vacancy rates in the double digits, with Durban and Cape Town the worst off,’ according to the latest Rode Report. ‘We are sitting with a large number of vacant flats and an even bigger list of tenants in arrears with rental payments,’ Rode quotes one of its Cape Town survey respondents as saying. ‘Job losses are at record highs, and many South Africans have also experienced salary cuts. But it’s not only about Covid‐19. Let’s not forget the economy was already in a recession before the virus emerged in South Africa in March,’ Kobus Lamprecht, head of research at Rode & Associates, notes in the report.”

“Sydney’s property market may be in worse shape than the latest price data suggests on account of sellers withholding or delaying ‘bad’ sales and auction results. Two experts told The Sydney Morning Herald values had likely fallen by as much as 5 to 10 per cent since April, obscured by a decrease in the level of sales data being published. Stefan Trueck, co-director of the Centre for Risk Analytics at Macquarie University, estimated that Sydney property prices may have already fallen by up to 6 per cent since April – double the estimates from official price data.”

“Professor Trueck said auction results were less likely to be reported during the COVID-19 crisis, and calculated about 60 per cent of results were made public in the past two months compared to almost 80 per cent in the October to November 2019 period. ‘A lot of information on property prices is very much backward-looking and never up-to-date,’ he said. ‘By not having information on recent ‘bad’ sales, purchasers are more likely to accept price expectations closer to ‘old prices’ from before May 2020 for comparable properties when buying a house.'”

“Martin North, principal of Digital Finance Analytics, agreed ‘prices are indeed falling more than reported’ because of delays in reporting sales or withheld results. Mr North estimated apartment prices had fallen about 10 per cent and houses about 5 per cent, but there were ‘big differences’ across locations. ‘I think many of the numbers being quoted by industry insiders are too optimistic,’ he said.”

“Economist Jason Murphy said CoreLogic’s model is ‘a bit of a black box and that encourages constant speculation about it being wrong.’ ‘They say they get prices in a timely manner, to overcome the fact prices are withheld,’ he said. ‘Perhaps they do. But are there exceptions? We can’t be certain because it is a proprietary product.'”

“Professor Trueck said recession, rising unemployment, lack of migration and people wary of borrowing large amounts of money were all reasons to be sceptical about the ‘so-called soft landing.’ ‘I think real estate agents are far too optimistic, but this is probably not surprising, since they want to sell houses for the highest possible price,’ he said.”

“Citadel CEO Ken Griffin has paid more than $1 billion on a cache of ultraluxury homes from London to New York. Real-estate industry veterans view the spate of deals with a combination of wonder and bafflement. Why pay record-breaking sums for all these homes at a time when many speculate that the market was at its peak?”

“Last year, Mr. Griffin grabbed headlines by closing on a deal he initially made in 2015 to pay about $238 million for an apartment in 220 Central Park South. Real-estate insiders believe the value of Mr. Griffin’s condo likely has suffered the effects of an oversupply of residential inventory along Billionaires’ Row. He decided to buy the units ‘at the height of the market in 2015,’ said appraiser Jonathan Miller of Miller Samuel. But the market ‘isn’t what it was.'”

“Also in 2015, Mr. Griffin purchased a pair of apartments at the top of Faena House, a then under-construction condominium in Miami Beach, for $60 million. Though they have not yet been combined, the resulting penthouse is often cited as the most expensive unit ever sold in Miami. Since then, the Miami condo market has taken a nosedive amid a flood of new inventory, and prices at the building have suffered. Some of the big names who have tried to sell their units have taken significant losses. Art dealer Larry Gagosian sold his apartment at the building for $12 million in 2017, a loss of nearly $1 million, and Mr. Black sold his unit at the building for $12.5 million, far less than the $16.5 million he paid, records show.”

Mr. Griffin tried his own luck selling his unit in 2016, listing it for $73 million, but didn’t attract a buyer. The property has since been taken off the market. ‘They thought they could get in early and get out early, but these out-of-towners got snookered,’ said Peter Zalewski , a principal with real-estate consulting firm Condo Vultures. He added that Mr. Griffin’s unit has likely lost further value since then. While neighboring areas like Palm Beach have seen an enormous uptick in deal flow since the pandemic began, high-rise buildings in Miami Beach are still suffering, he said.”

“‘This is like a worst-case scenario,’ he said. ‘Not only did people overpay to be in that building, now you have this movement away from high-rise living.'”

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This Post Has 76 Comments

  1. ‘‘The issue is the inventory is increasing so much faster than the sales rate…Any time you have this relatively huge overhang of supply, and demand is stable, you are going to see price reductions’

    Eat yer crowz Thornberg…

    1. What’s interesting is that all the previously “hot” markets – the city centers – are seeing a massive inventory increase with collapsing prices, yet the far flung areas (drive until you qualify) are the recipients of increased demand and stronger prices. Yet, those areas have absolutely no jobs to support prices long term. There is no way in hell they can build a jobs infrastructure that will catch up to prices. This is all a temporary phenomenon, like every WFH person suddenly buying an RV and setting out on the road for the good life.

      1. Starting next month, my employer is going to start reimbursing us for home internet service. I don’t think we’re going back to the office anytime soon.

        2. We got a non-anymouse survey about “Where are you moving to, and are you planning to leave California”.

          I’ll be heading north next friday.

          2. I came out here from my rectangular state to make money, now I’m going back. The ones that festered in place are a little salty about that… but that don’t change where I’m from or who I am.

      2. There is no way in hell they can build a jobs infrastructure that will catch up to prices.

        Not in a day, that’s for sure. But hypothetically, if this goes on for a long time, and extra money keeps coming in from people who work elsewhere but would rather live there, it seems like those attractive places might actually redevelop? But yes…prices need to fall everywhere.

        This is all a temporary phenomenon, like every WFH person suddenly buying an RV and setting out on the road for the good life.

        Hahah. Just got back. So far no symptoms from getting exposed to covid in Utahrr. Still need to get the oil changed and all the bugs washed off. Then all the little broken crap fixed. No regrets doing it, but don’t want to go that far again (~11k miles).

  2. ‘Instead of risking entering a booming but unpredictable market, Opendoor and other iBuyers will take losses through the end of the year’

    The UHS have been a lion.

  3. ‘By not having information on recent ‘bad’ sales, purchasers are more likely to accept price expectations closer to ‘old prices’ from before May 2020 for comparable properties when buying a house’

    ‘Martin North, principal of Digital Finance Analytics, agreed ‘prices are indeed falling more than reported’ because of delays in reporting sales or withheld results’

    December 30, 2011

    ‘Even Lawrence Yun, NAR’s chief economist, was cautious in his announcement, perhaps chastened by NAR’s admission last week that they had overstated sales for the past five years: “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high.” And to avoid making the same mistake twice, Yun said that some of the increase in pending home sales may be people who couldn’t qualify before who are attempting to make another purchase now.’

    https://thenewamerican.com/latest-housing-numbers-may-be-an-aberration/

    1. Actually, they had double counted sales those years, and only “discovered” the “mistake” when revising the past numbers down would show an increase in sales.

      1. When the organization leadership perpetrates egregious fraud like that, just imagine what goes on at street level.

  4. Studios saw the biggest decline in rents with the median price down 13% from a year ago to $2,350 per month. One-bedroom prices fell 11% to $3,195. By location, Northern Manhattan saw the biggest price decline with the median off 9.9% to $2,208.

    Is that a lot?

    1. “The big question for New York City, which is facing a population decline, higher crime rates and high unemployment, is whether prices can fall enough to lure residents back to the city. ‘I don’t think we’re there yet.”

      Anyone looking to move to NYC and rent a one-bedroom for $3,200 a month? The declines may seem like a lot, but not compared with the prior increases.

      The people to fill those units are already in the city. They are stuck living with their parents, or room-mates, rather than having their own place. Young adults who might have lived in Manhattan are living in Queens. If they move to Manhattan, others in Queens can get an apartment.

      But they have to be able to afford it.

  5. “Rentals account for two-thirds of the apartments in Manhattan. As rents fall, and more apartments sit empty, the pain could begin to cascade down to smaller, less capitalized landlords and to mortgage lenders and banks.

    Gosh, there’s that “cascade” word again. Thankfully we have Yellen the Felon’s assurances that there will be no new financial crisis “in our time,” or else I’d be worried.

  6. Boston Pads has more than 6,000 apartment listings on its website, a gain of more than 366% versus the 1,289 that were on the site in September 2019, according to CEO Demetrios Salpoglou.

    I don’t even have to ask if that’s a lot.

  7. ‘Asking price: $669,000. Selling price: $660,000. ..sellers are responding to changes in the market, such as higher insurance premiums and fewer tenants. ‘Some investors are selling due to rental rates going down due to higher inventory’

    There are UHS in Vancouver who will tell you prices are up 20%.

    1. NYC Tells Teachers It Can’t Pay $900M in Owed Back Wages: Union

      Published October 9, 2020

      I’m sure Pelosi had that covered if she could have only gotten her $2.2 Trillion Blue State Stimulus cheese pushed through.

      2. Tell those Volvo driving oracles to turn around and take one for the team; it’s for the kids, remember?

  9. Things are really picking up speed now… and it looks like lockdowns will return before the end of the year. Hospitals are getting full, and the rate of infection is increasing. Schroedinger’s stimulus not withstanding.

    Feeling pretty good about my prospects now, Scrooge McDucking in my little pile of cash, watching years of inflation burn away. Opportunity is walking up the driveway, poised to knock.

    1. We are the waves. Not the weather. We are. Open restaurants, open party colleges, open schools, defy mask recommendations, you start new waves. It’s as simple as that.

      Trump is really touting Regeneron now, and tbh I don’t blame him. There’s a high chance that the cocktail — administered immediately instead of waiting 9 effing days for a positive test — saved his life. Between Regeneron, a potential cheaper treatment drug, masking, some lockdowns, and pending vaccines, we’ll get through this.

  10. “…Martin North, principal of Digital Finance Analytics, agreed ‘prices are indeed falling more than reported’ because of delays in reporting sales or withheld results….”

    Prices going up: All databases current and updated 100%.
    REIConplex response: ‘buy now before you are priced out forever’

    Prices going down: All database updates lag.
    REIConplex response: ‘The market is just so red hot we just can’t keep up’

  12. We are sitting with a large number of vacant flats and an even bigger list of tenants in arrears with rental payments,’ Rode quotes one of its Cape Town survey respondents as saying. ‘Job losses are at record highs, and many South Africans have also experienced salary cuts.

    Oh dear. In such a market environment, I fear housing speculators may sustain serious losses. I’m trying to feel sympathy, but just can’t muster any.

  15. I think real estate agents are far too optimistic, but this is probably not surprising, since they want to sell houses for the highest possible price,’ he said.”

    Whup, there it is!

  17. Let’s not forget the economy was already in a recession before the virus emerged in South Africa in March,’ Kobus Lamprecht, head of research at Rode & Associates, notes in the report

    Talk about a riches to rags story. South Africa’s economy was already swirling the drain long before most people had ever heard of Wuhan.

      1. They briefly had the most expensive residential real estate on the planet a few years ago.

        In a country where BLM like grifters have been in charge for decades, embezzling everything they can. Of course South Africa was being propped up by the West, who wasn’t going to allow it to fail. Curiously, foreign investment has dried up, as the patrons have their own problems to deal with now.

  18. “Citadel CEO Ken Griffin has paid more than $1 billion on a cache of ultraluxury homes from London to New York. Real-estate industry veterans view the spate of deals with a combination of wonder and bafflement. Why pay record-breaking sums for all these homes at a time when many speculate that the market was at its peak?”

    Peak in 2015!!!! Now they tell you

  19. Just have to laugh listening to and watching the racist white BLM protesters trying to control the black BLM protesters which is almost as good as this black dude who is fed up with all the BLM protesters blocking his street.

    Ian Miles Cheong
    @stillgray
    ·
    16h
    A black man gets out of his truck to confront Black Lives Matter protesters in Tacoma who are blocking the roads.

    https://twitter.com/stillgray/status/1314377699024990208

    1. After watching it a few time I noticed a couple of what looks like fat white female (wasn’t that the name of a movie?) peaceful protesters with what appears to be semi auto shotguns in the melee. I wonder how well they are trained in dealing with upheaval and crowd control? Dangerous.

        1. “Single White Female (1992)”

          I remember it pretty well. 🙂

          But if I was making a movie about the twitter video above I would call it…

          Single Fat White Female (2020)

      1. They don’t think of it that way. They think that Trump triggered all of it. So now they’re going to “take revenge” by bluing up the red states — all the while enjoying the perks of a red state, like a cheaper house and poop-free roads.

          1. It’s a sad day when Communism is exported from the USA to Canada.

            Interesting the old lady told the reporter to “tell the truth”.

          3. Where do they get these people?

            Someone wrote a check. Pay the “protestors” a per diem and there will be plenty to found.

    3. Down here in Custer County, CO they don’t have those problems, I wonder why.

      However, I did run into a roadblock just now a few miles back up the road, some cowboys on horseback were moving their herd of cattle across the road.

      #BovineLivesMatter

  20. “In a bizarre monologue on Fox News on Thursday, President Donald Trump said California was redirecting “millions of gallons” of water to the Pacific Ocean to help “certain little tiny fish.”

    I was at a town meeting years ago and the water agency person said they couldn’t turn the pumps on to fill reservoirs because of the delta smelt and sort of snickered that the drought was not their fault just following the rules. News articles these days are worse than trash.

    2. Gotta love the former golden state: water shortages, power shortages, homeless camps everywhere. Yet, somehow, none of this is their fault.

      1. Most of them are so demented they blame Reagan for half their problems, as if several decades of their autocratic rule just can’t seem to fix the destruction he caused. Bet everyone in that sh!thole would prefer to rewind to when it was Reagans California though!

        Its hilarious to watch their empty skulls blame Reagan, Trump, etc and then in the next breath talk about how great it is to live there as its the height of civilization and the 6th largest economy in the world. Needless to say, cognitive dissonance is not just the default state, but their only one.

        Sooooo glad I left that asylum many many years ago. In the rare instance that I go back the people seem like theyre suffering from stockholm syndrome and want everyone else to join them as they march off the cliff like lemmings. As they say, misery loves company.

      2. It’s terrible… every time I step outside my door, hobos pelt me with feces and dirty needles.

          1. Theres that pesky cog dis thing at work again, lol.

            For many it was probably developed as a survival mechanism after being attacked by pedos like Joe the kiddie sniffer and the rest of the Orc puppeteers.

  22. Many have escaped the cities buying up big homes in suburbia expecting to keep working from home on their same city salaries. Microsoft just announced some can work permanently at home, but they will be subject to pay decreases based on their geopay scale. Oops! Hope they didn’t buy based on a max monthly payment.

    1. pay decreases based on their geopay scale

      Hard to not see that one coming.

      I worked the last 16 or so years from home. That was after many years of working in the office where I got to know the company and they got to know me.

  25. Rye, NY Housing Prices Crater 47% YOY As Housing Liquidation Accelerates In NY Suburbs

    https://www.movoto.com/rye-ny/market-trends/

    As one nation housing analyst observed, “The rush out of housing is happening across the US. Not just on the east and west coasts. Losing your shirt is always part of the housing equation.”

  26. ‘I think we have a little ways to go. The consumer knows the landlords are on the ropes and they know they’ve got them.’

    It most certainly sux to be a COVID-era landlord!

    2. Or their more sane neighbors will put up a sign of their own. For protection. Whenever I jog through a nearby wealthy neighborhood with zero affordable or high density housing filled with BLM signs I realize it’s insurance more than anything.

      1. filled with BLM signs I realize it’s insurance more than anything

        They are deluding themselves if they think those yard signs will protect them from the mobs.

        1. they think those yard signs will protect them from the mobs. Do you know how many of those signs are wired to explode on command from inside the house?

  30. Looks like another Trump supporter has just now been shot dead in Denver. These violent leftists need to start getting the death penalty. It’s the justice that their family would probably demand.

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