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A Market Where Units Are Piling Up Amid Near-Record Vacancies

A report from the Sun Sentinel in Florida. “A townhome development in the process of being approved to be built in Pembroke Pines is causing concern among some residents who want traffic fixed above all else. ‘Developable land is especially scarce in Broward because about half of the county, or approximately 660 square miles, lies in the Everglades. The market also favors townhomes because there is a current oversupply of condos,’ an analysis of the project said.”

From KIRO in Washington. “In the Puget Sound area, housing prices are continuing to go up, says Matthew Gardner, chief economist at Windermere Real Estate. But it seems the prices must hit a ceiling at some point. But there’s something else in the numbers that Gardner pointed out, in the condominium market. ‘You look at condos and the biggest concern is on the urban environment. Well, we still saw a reasonable pick-up in the number of sales occurring, let’s say in downtown Seattle and Queen Anne. However, what we’ve seen already, active listing price is actually dropping,’ he said.”

“For now, Gardner thinks a ceiling needs to be reached on home prices, but he says there is a buying opportunity. ‘There always must be a relationship between home prices and incomes. We broke that relationship a while ago, and we saw a very significant increase in sale prices, quite frankly, because over the course of the last year mortgage rates dropped by a full percentage point,’ he said. ‘So I think that there are some options, but we’re going to start seeing, hopefully, a slowing down in the appreciation of home values through the course of this year. And quite frankly, I’m looking forward to it. Markets aren’t sustainable when values are going up by double digits every year.'”

From KOIN in Oregon. “Former landlord Debra Kay Nemec told KOIN 6 News said she had one rental house in Oregon City before the pandemic hit. She said at first, her tenants started paying rent late. ‘Then they just stopped paying altogether and I took a deferment on my mortgage because I couldn’t pay the mortgage without the rent,’ she said.”

“Eventually, Nemec’s tenants were six months behind and owed her $15,000, not including utilities. She said her only option was to sell the house. ‘It was better than having a year’s worth of mortgage hanging over my head and having my house repossessed because that’s what would’ve happened, I would have had to have a foreclosure,’ said Nemec.”

The New York Post on California. “A London-based brokerage has identified just 20 potential international buyers for the famed ‘Beverly House,’ a mega-mansion once home to William Hearst and used as a filming location for ‘The Godfather’ and several Beyoncé music videos. At $119 million, the pink terracotta stucco house is the most expensive in the US and has been on and off the market for between $95 million and $195 million since 2007.”

“It’s not just the price tag on the 18-bed, 25-bathroom Italian and Spanish-style mega-mansion: Taxes are $68,000 a year, according to Realtor.com. It seems like even the current owner can’t keep up: the Los Angeles County Assessor Portal shows that the owner defaulted on their property taxes in 2019.”

The Bay Area Newsgroup in California. “Migrations out of the region jumped during the health crisis, with a 30 percent increase in people moving out of San Francisco compared to 2019, according to a new study by the California Policy Lab at UC Berkeley and UCLA. During the fourth quarter of 2020, roughly 114,600 people left the Bay Area, up 29.7 percent from the same period in 2019. At the same time, researchers estimated about 267,000 people left California, an increase of 14.9 percent.”

“The study noted that it’s too soon to tell how long-lasting or extensive the exodus might be. But experts warned that the implications could be enormous. ‘The stakes are high,’ the California Policy Lab stated in its report. ‘Significant population shifts could affect the size and composition of regional labor markets as well as rent and home values.'”

From Bloomberg on New York. “TikTok isn’t just a platform for dance videos and investment advice. It’s also a place to hawk Manhattan apartments. New York real estate professionals are turning to the booming social media app to find tenants in a market where units are piling up amid near-record vacancies. Filling Manhattan apartments is especially tough these days, even as rents slide and landlords offer the biggest move-in incentives on record. The pandemic sent many city-dwellers fleeing for the suburbs, and newcomers are finding few reasons to settle down in New York’s costliest borough while nightlife venues are still dark and office towers remain mostly empty.”

From The Real Deal. “Mack Real Estate has gained control of a seven-hotel portfolio for what appears to be a major discount. The developer paid transfer taxes on $315.8 million — or less than 40 percent of the portfolio’s 2016 value of $816.3 million — for the seven properties, all of which are in Manhattan. Earlier this year, the firm initiated UCC foreclosure proceedings against the owners of the properties, a joint venture between Hersha Hospitality Trust and Chinese investment firm Cindat Capital Management. Those firms defaulted on an $85 million mezzanine loan issued in 2018 by Mack Real Estate Credit Strategies.”

“The portfolio hit the auction block on Jan. 21, and Mack was apparently the winner, according to a transfer tax document filed with the city. The hospitality industry has been one of the hardest hit in the pandemic-driven economic downturn, with both smaller and major hotel brands being forced to hand their keys over to lenders. The owner of the Hilton Hotel in Times Square, for example, surrendered the property to one of its mortgage owners.”

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This Post Has 71 Comments

  1. ‘It seems like even the current owner can’t keep up: the Los Angeles County Assessor Portal shows that the owner defaulted on their property taxes in 2019’

    What about 2020? Fugedaboutit. Nobody needs a100M shack. The only reason you’d buy one is you expect to sell for 150.

  2. ‘The developer paid transfer taxes on $315.8 million — or less than 40 percent of the portfolio’s 2016 value of $816.3 million — for the seven properties, all of which are in Manhattan. Earlier this year, the firm initiated UCC foreclosure proceedings against the owners of the properties’

    A big discount! Uh, you made the loan so you were the winnah out of yer own pocket.

  3. ‘She said her only option was to sell the house. ‘It was better than having a year’s worth of mortgage hanging over my head and having my house repossessed because that’s what would’ve happened, I would have had to have a foreclosure’

    But Debra Kay, what about all that sweet equity yer giving up? Could it be making a profit is important?

      1. Yeah, but the taxes. I used to have 40th floor condo on the lakefront by the zoo. Sold it for 140 in 2001. Just went and looked at the taxes on it. I’d have bought the thing three times over by now with the Condo fees and taxes. And those just keep on going on forever.

    2. Methinks that sweet equity might be headed in the wrong direction once moratoriums run out at the end of the month and independent landlords burned by gub’mint-mandated parasitism start dumping their “investment properties” en masse.

        1. “They’ve been extended through June 30, 2021.”

          Is there any reason they can’t be extended indefinitely? Why not just kick the can farther down the road forever, rather than face the music sooner?

          1. Don’t miss the connection between current national U.S. housing inventory at about 1/3 of its level in 2016 and the foreclosure moratoriums which enable people to keep living in places after they stop paying their monthlies. Supposedly they will owe back payments whenever the moratoriums end. It will be interesting to see how they work that out without massive bailouts.

          2. Is there any reason they can’t be extended indefinitely? Why not just kick the can farther down the road forever, rather than face the music sooner?

            At some point enough of the properties with unevictable deadbeats will be back in the hands of the banks, after the owners have been driven to walk away or go under. Seeing that, I expect they will purchase some additional congresscritters to ‘fix’ the situation.

            I wonder if we will see federal and local moratoriums orders at odds with each other. I need to look up how that works.

      2. The upcoming 1.9 trillion dollar stimmy has relief for Landlords if I’m not mistaken. So they will get handouts.

        Landlords could probably just lie and get free money and rent.

        1. Sort of, but not really. Here’s a snippet from Louisiana. In the full article, the language is all bleeding heart for the poor renters “in these challenging times.” 🤮 The LLs get a raw deal.

          COVID-19 Relief: Louisiana launches new program to help renters and landlords

          by: Nancy Cook Posted: Mar 7, 2021
          ———————
          …The federal Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (H.R. 133), … includes $25 billion for emergency rental assistance, with $161 million has been allocated to the state to provide help in 57 Louisiana parishes. The program will focus on paying back or past-due rent, and up to three months of future rent for eligible applicants.

          Louisiana renters may be eligible for assistance from the state-administered program if they meet all the following criteria:

          Qualify or previously qualified for unemployment benefits or experienced an income reduction or other financial hardship due to COVID-19.
          Are not current on rent payments or at risk of eviction.
          Their total household income is at or below 80% of their area’s median income.

          Louisiana landlords may apply on their tenant’s behalf. To participate in the program, landlords must not evict a tenant for at least 60 days after the assistance ends and must forgive late fees, penalties, interest and court costs.
          —————-
          https://www.arklatexhomepage.com/health/coronavirus/covid-19-relief-louisiana-launches-new-program-to-help-renters-and-landlords/

          In other words, if you’re an LL, the only “relief” you get is to pick out only those tenants who are getting unemployment (with extra cheese), fill out paperwork for them, keep them around, and waive any costs. If your deadbeat tenants kept their jobs and stiffed you just to stick it in your face, you don’t get help and you still can’t evict.

          In my book, it wouldn’t surprise me if this all got extended for years via UBI from the upcoming “unprecedented” depression. We have millions of young men at the border just begging to be paid peanuts for any work, while these deadbeats can take drugs and squat for free. Yet, the FIRE donks and the Ramseybots are still starry-eyed about “passive income.”

      2. Nobody who thought owning rental properties was the certain path to untold riches could have seen it coming!

  4. ‘There always must be a relationship between home prices and incomes. We broke that relationship a while ago’

    You said a mouthful Matt. There must be a “relationship”, yet that’s broke. Hello subprime lending!

    March 26, 2020

    “As America heads into a deep recession, the $11 trillion residential-mortgage market is in crisis. Investors who buy home loans packaged into bonds are dumping even those with federal backing because of panic that millions might not make their payments. Yet one risky sector had started to show cracks long before the coronavirus pandemic sparked the worst financial meltdown in 12 years: the federal government’s largest affordable-housing program, whose lenient terms are geared toward marginal borrowers.”

    “As real estate prices soared in recent years, working-class adults everywhere have increasingly relied on mortgages backed by the Federal Housing Administration — and U.S. taxpayers. Since 2007, the FHA’s portfolio has tripled in value to more than $1.2 trillion, almost 11% of the market. While private lenders make these loans, they are packaged into Ginnie Mae bonds, common in mutual funds and pensions.”

    “Before Covid-19 started roiling China, a November FHA report found that 27% of borrowers last year spent more than half their incomes on debt, a level it describes as ‘unprecedented.’ The share of FHA loans souring in their first six months has doubled over the last three years to almost 1%.”

    “Not long ago, Alex Castillo drove his shiny black Infiniti SUV through an office park north of the San Antonio airport, along a busy seven-mile stretch of highway that loan officers call ‘Mortgage Row’ because of its abundance of small independent mortgage companies that dominate FHA lending. Castillo, who has the words ‘The Dream Starts Here’ stitched into his jacket, works for Pennsylvania-based American Residential Lending. Oddly, amid the pandemic, his business is booming. His customers locked in FHA mortgages after interest rates plunged this month — adding to federally backed mortgage debt.”

    “‘If the government tells me you’re good enough to get a loan, I have to trust and believe in the government,’ Castillo said. ‘Then we just hope and pray that the client doesn’t get foreclosed on.’”

    “In downtown San Antonio, scores of investors stood on a parched lawn beside the city’s historic granite-and-red-sandstone courthouse. It was the first Tuesday of February, the day of the foreclosure auction. Matt Badders, a San Antonio lawyer who represents lenders, auctioned off two houses. The failed mortgages remind him of the run-up to the financial crisis 12 years ago, when lending to customers with spotty credit nearly brought down the world’s financial system. ‘We’re almost back to 2007, when mortgage originators are waking people up on park benches, saying sign here,’ Badders said.”

    “At the auction, the crowd bid on 338 homes, a third with FHA mortgages, according to Roddy’s Foreclosure Listing Service. One house had dual master bedrooms, a game room and granite kitchen counters. It sold for $202,000 — $52,000 less than the homeowner borrowed only two years ago. The taxpayer-backed FHA insurance fund will take a loss.”

    “Dave Stevens, FHA commissioner under President Barack Obama and former chief executive officer of the Mortgage Bankers Association, said a recession will expose hidden risks in home lending. ‘This should be an alarm bell to policymakers,’ Stevens said. ‘Sometimes you get blinded by a good economy and suddenly look at it and see a bubble of defaults coming.’”

    “The federal government has decided it doesn’t want to pursue — and has asked a judge to dismiss — a lawsuit against Utah-based Academy Mortgage Corp. The judge refused. The suit claims the company’s staff would repeatedly feed information into an automated federal underwriting system, manipulating it until the computer gave the green light. ‘Decline is a curse word,’ Plaintiff Gwen Thrower, a former underwriter, quoted a manager as saying. ‘We don’t use it.’”

    http://housingbubble.blog/?p=3070

  5. Article for the Lockdown Lovers.

    Wall Street Journal — Vindication for Ron DeSantis (3/5/2021):

    “A year after the virus hit the U.S., Mr. Cuomo’s luster has faded, and Mr. DeSantis can claim vindication. The Sunshine State appears to have weathered the pandemic better than others like New York and California, which stayed locked down harder and longer.

    Mortality data bear out this conclusion. The Covid death risk increases enormously with each decade of age. More than 80% of Covid deaths in the U.S. have occurred among seniors over 65. They make up a larger share of Florida’s population than any other state except Maine. Based on demographics, Florida’s per-capita Covid death rate would be expected to be one of the highest in the country.

    Nope. Florida’s death rate is in the middle of the pack and only slightly higher than in California, which has a much younger population. Florida’s death rate among seniors is about 20% lower than California’s and 50% lower than New York’s, based on Centers for Disease Control and Prevention data.”

    https://archive.fo/UKd1N

    1. When I was driving home the other day, I was listening to the radio. They said something about the AZ guvnah and mask mandates. Seems he isn’t rescinding the mouth hankey rule cuz – there never was one! But you’ll see it posted everywhere that there was a mandate. Oh silly us.

      1. In California Governor talking about a double mask mandate because he’s not going to make the mistake Texas is making.
        You mean that people who have to work 8 to 10 hours a day might have to wear 2 masks. It’s just cruel to take breathing away like that.
        if that Dr Fauci had his way people should wear masks forever. Turn people into paranoid freaks afraid of air when 99.8% won’t have a threatening event over Covid, or whatever it is.
        Unreal.

    2. Picked up some shellfish yesterday. Guy asks “wheres your mask”. I told I don’t wear one and he shouldnt either. He says “you have to wear a mask in the store.” I said ‘lets stop the charade” and kept walking.

    3. So many things are drastically different between Florida and New York besides their COVID-19 responses that a difference in mortality rates cannot be simply attributed to mask policies.

  8. CNBC — New stimulus proposals look like a guaranteed income experiment. Early results show whether it will work (3/7/2021):

    “To some experts, the move shows the idea of guaranteed income, where a certain floor of money is provided to a targeted set of people, could be gaining momentum in the U.S.”

    https://www.cnbc.com/2021/03/07/will-us-experiments-with-guaranteed-income-work.html

    Experts? There’s always some vague reference to these alleged experts. Their “expertise” is taking Cloward-Piven plus CCP Flu plus Social Credit Score (article doesn’t mention the last one but you know it will be a primary component of gibs distribution) to punish badthink and reward a docile, controlled population of sheep.

    1. Are they going to monitor changes in drug and alcohol consumption among newly qualified UBI recipients?

      It seems like a key reason for handing out food stamps instead of dollars back in the day was to avoid incentivizing increased alcohol and narcotics consumption. Of course, I suppose one might have traded food stamps for dollars or drugs, so I am not sure if the old approach worked, either.

      1. Are they going to monitor changes in drug and alcohol consumption among newly qualified UBI recipients?

        I’m certain that would be racis or something.

    2. Chinese state media also does the “experts say” without proper attribution. I think the USA Fake News is learning from the best!

  10. US protesters including young children burn face masks at Idaho Capitol rally against coronavirus measures
    Posted Yesterday at 5:17pm
    A protester tosses a surgical mask into a fire as others look on, some filming on mobile phones. As well as burning masks, protesters waved signs displaying messages like “we are free” and “no masks”.

    At least one hundred people have gathered at the front of the Idaho Capitol in the US to burn masks in a protest against measures taken to limit infections and deaths caused by the coronavirus pandemic.
    …

    1. Their Social Credit Scores just dropped by 10 points for doing this. If they were burning Dr. Seuss books instead they would have received 10 points.

      Clown World gonna clown.

      1. If they were burning Dr. Seuss books

        He did commit the unforgivable sin of drawing a picture of a Chinese kid using chopsticks in one of his books.

      2. “they were burning Dr. Seuss books instead they would have received 10 points.”

        Oh, the Thinks You Can Think! 1975

        Oh, the Racist Thinks You Can Think?

  12. “At $119 million, the pink terracotta stucco house is the most expensive in the US and has been on and off the market for between $95 million and $195 million since 2007.”

    It sounds like the pink elephant may actually be worthless than $95 million.

      1. They might be able to find a buyer if they lower their wishing price by only $80 million dollars (67%).

        Good luck with that!

  13. Does it seem like everybody and his dog is trying to sell a megamansion these daze?

    Think hotcakes!

  14. This is larceny against the American people on a grand scale:

    Senate COVID Relief Bill Retains 15 Weeks of Paid Leave for Feds Despite GOP Opposition

    The provision would grant up to 600 hours of paid leave—capped at $1,400 per week—to all federal workers, including U.S. Postal Service employees, if they are suffering from symptoms of the coronavirus, if they are caring for a family member who has COVID-19, if they are getting vaccinated or experiencing symptoms related to the vaccine, or if they are caring for a child whose school or child care center is closed or engaging in virtual learning due to the pandemic.

    https://www.govexec.com/pay-benefits/2021/03/senate-covid-relief-bill-retains-15-weeks-paid-leave-feds-despite-gop-opposition/172466/

    1. “Think I’m going to take a 4 month paid vaccination holiday.”

      This is sick, people. We need to stop these financial terrorists.

  16. OK, now MSN is talking about the new Oregon Mutant Strain of Covid 19.
    The article said in essence the new vaccines might not be protective enough against the Mutant Strains.
    Do you get the feeling that this is never going to end ?

    1. “this is never going to end”

      California will be the last state to fully re-open, not until 2022.

      People in Denver will be voluntarily wearing masks while driving in public until 2025.

      1. “…wearing masks while driving…”

        Yesterday, I drove home from Portland, OR with the my daughter’s next Honda Accord Coupe, and as I was passing through Troutdale I saw an older woman in a Toyota Prius driving alone wearing double masks. LOLZ!!

    2. Do you get the feeling

      Actually, I have the feeling that it never was what they told us it was.

      A year ago I thought allhell was coming. I talked to the manager of our little grocery store and volunteered to take grocery orders to anyone in town who couldn’t or shouldn’t go to the store. I mentioned here while we discussed the looming die off event that if needed I could probably operate our water plant based on my practical engineering experience. In two weeks we were expecting to have piles of bodies along our streets. It seemed serious and so did I.

      It never happened. Hundreds of millions were tested with a method which probably detects the common cold, just unreliably. Now hundreds of millions will take a shot that we have no idea if it works or not or worse. Then we’re still expected to act like death is coming.

      Not happening here.

    3. Once is chance. Twice is coincidence. Three times is a pattern.

      https://twitter.com/uTobian/status/1368653689741709313 (thread with links to articles from WaPo, Reuters and NYT):

      Every major newspaper is running with a story this week about ‘clever virus variants that evade the “protection” of coronavirus vaccines’. That’s the Pharma script. They’re preparing everyone for either: 1.) complete vax failure or 2.) pathogenic priming.

      1. 1.) complete vax failure or

        Wouldn’t it be odd that’s why you don’t have to store the vax at cryogenic temperatures, it doesn’t matter!?

        1. I honestly don’t think they’re a complete failure but I do believe we are being lied to about their benefits and risks (both known and unknown) such that informed consent is a total farce.

          1. we are being lied to

            Yes, so many examples. The truth is not in these people trying to herd us, and making bank off of it. As if it’s an industry and we are the product, or the raw material.

  17. Action news is taking on a whole new meaning.

    “Three guys jumped out one had a gun and said, we’re taking the camera” 🙂

    KPIX 5 Reporter Robbed At Gunpoint While Looking Into Auto Thefts At San Francisco Twin Peaks

    172,483 views•
    Mar 3, 2021

    https://youtu.be/5RpIHYZ2JNA?t=54

    Comments are a hoot

  18. Statement by Donald J. Trump, 45th President of the United States of America
    03/04/21

    Karl Rove has been losing for years, except for himself. He’s a RINO of the highest order, who came to the Oval Office lobbying for 5G for him and a group. After a lengthy discussion with Rove and Chief of Staff Mark Meadows, I said no, they’re not qualified. Our Nation can do much better!

    On Election Evening, Nov. 3rd, at 10:30pm, Rove called to congratulate me on “a great win.” I said thank you Karl, only to watch the rigged election take its final form.

    Karl Rove’s voice on Fox is always negative for those who know how to win. He certainly hasn’t helped Fox in the ratings department, has he?

    Never had much of a feeling for Karl, in that I disagreed with so many of the things he says. He’s a pompous fool with bad advice and always has an agenda. He ran the campaign for two Senators in Georgia, and did a rotten job with bad ads and concepts. Should have been an easy win, but he and his friend Mitch blew it with their $600 vs. $2,000 proposal. Karl would be much more at home at the disastrous Lincoln Project. I heard they have numerous openings!

    If the Republican Party is going to be successful, they’re going to have to stop dealing with the likes of Karl Rove and just let him float away, or retire, like Liddle’ Bob Corker, Jeff “Flakey” Flake, and others like Toomey of Pennsylvania, who will soon follow. Let’s see what happens to Liz Cheney of Wyoming.

    If it weren’t for me, the House would have lost 25 seats instead of gaining 15—it was a shock to everyone, and almost cost Pelosi her Speaker position. Likewise, 8-10 Senators would have lost their position, including Karl’s friend Mitch, our wonderful leader who would rather spend his time fighting me than Pelosi, Schumer, and Sleepy Joe. In last year’s Congressional primaries, 120 of the 122 candidates I endorsed won – and the two that lost were beaten by people claiming to be more Trump than their opponent. In the Senate, I was undefeated in primary endorsements with a record of 21 and 0, and close to that in the general election.

    31 million people listened to my CPAC speech online, and it had among the largest television audience of the week, even though it was on cable at 4pm on Sunday afternoon.

    Karl Rove is all talk and no action! Next time Karl, save your Election night phone call and keep doing a great job for the Democrats. Fox should get rid of Karl Rove and his ridiculous “whiteboard” as soon as possible!

    https://www.donaldjtrump.com/news/statement-by-donald-j.-trump-45th-president-of-the-united-states-of-america_2

    1. Gotta hand it to The Donald for keeping his bully pulpit megaphone turned up on high blast despite his election loss.

    1. The Financial Times
      Opinion Global Insight
      ECB faces headache from ‘unwelcome’ rise in yields
      Doves in Frankfurt echo lessons drawn by Fed and urge central bank to keep foot on accelerator
      Martin Sandbu
      Nomura research analyst Chiara Zangarelli cautions that there is a big divide within the European Central Bank ‘between dovish and hawkish members’
      Martin Sandbu 3 hours ago

      As Covid-19 vaccinations are rolled out, some worry that people will jump the gun, and start taking the dangers of renewed contagion too lightly before the pandemic has been fully beaten back. Similar fears about misplaced economic optimism haunt central bankers — especially in the eurozone.

      Like the vaccinated elderly British flouting lockdown rules, rising market interest rates reflect what is fundamentally good news: that the economy is on the cusp of a strong recovery (or in the case of senior parole-skipping, that the danger of exposure to coronavirus has been significantly reduced).

      This could be premature anywhere, but especially in continental Europe, where rising bond yields have partly spilled over from US markets reacting to the massive fiscal stimulus that President Joe Biden is seeking to push through Congress.

      Chiara Zangarelli, research analyst with Nomura, said that while European nominal yields remain at low levels, the recent rise is “notable . . . with most countries still under lockdown, vaccinations proceeding at a slow pace and inflation rising mainly for temporary reasons”.

      In what must be the most dovish recent speech from the European Central Bank, its executive board member Fabio Panetta last week warned that “we are already seeing undesirable contagion from rising US yields . . . that is inconsistent with our domestic outlook and inimical to our recovery”. The market’s effective tightening of financial conditions since December, when the ECB last tweaked its stance, “is unwelcome and must be resisted”, he added.

      Analysts have duly noted the logical implication: a looser monetary stance in order to offset the tightening of financial conditions. “Panetta is explicitly calling for additional accommodation to lower bond yields,” noted Frederik Ducrozet, a Pictet strategist.
      …

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