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Ambitions Not Aligning Directly With Reality

A weekend topic starting with Forbes on New York. “A glut of continues to plague property owners, who are beginning to relist apartments they had held off the market due to low prices. In the short term, and in select areas, that still presents renters with the upper hand. ‘With over 20,000 listings available across the 5 boroughs, renters still have a lot of bargaining power,’ says Allia Mohamed, CEO of openigloo.”

“Elliman’s latest report shows that, in Manhattan, the biggest discounts can be found on studios and one-bedroom apartments, where median rents are down 14.8% and 11%, respectively. Queens remains heavily discounted across the board, with median prices down between 12.9% and 22.9%, depending on the apartment size.”

The Des Moines Register in Iowa. “The fate of a proposed high-rise at 515 Walnut St. in downtown Des Moines is in question as its developer, Blackbird Investments, faces several lawsuits for failing to pay its loans on other high-profile projects in Iowa’s capital and across the state. Several publicly announced deadlines for the $100 million project have come and gone without progress. It’s one of two proposed skyscrapers that would be the first built in the city in nearly two decades.”

“The future of the other tower, known as The Fifth, also is unclear. Its developer, Mandelbaum Properties, is embroiled in a complex legal battle with the city over which is to blame for a loan default and foreclosure, and the remaining undeveloped land on the prime tract remains in limbo.
Des Moines-based Blackbird Investments plans a 33-story apartment tower at 515 Walnut St.”

“‘We mutually parted ways over the project’s ambitions not aligning directly with what we would consider reality,’ J.J. Smith of CA Ventures told the Register at the time. ‘I have the highest regard for the Blackbird team and can appreciate their visions for the project, but we at CA have to pick projects that stand the greatest chance at success, and for us, this wasn’t one of them.'”

From Bisnow Washington DC. “Activity has brought new demand for D.C. hotels that have survived a nightmare year, but hotel owners say it isn’t enough. Hotel occupancy in the District averaged 35.7% for the week ending May 16, according to STR data shared with Bisnow by Destination D.C. The District’s total hotel revenue that week was down 75% from the same period in 2019, according to the STR data. Occupancy at the W Hotel was about 35% the week after Memorial Day, General Manager Meade Atkeson said. ‘Very few hotels are making money right now,’ Atkeson said.”

The Hartford Courant in Connecticut. “A development partnership has purchased the former Red Lion Hotel in downtown Hartford — its upper floors already converted to apartments — with plans to convert the rest of the 18-story building overlooking Dunkin’ Donuts Park into residential rentals. The new owners say they intend to put the project’s troubled past behind them. A previous developer that started on the conversion ran into heavy cost overruns, stalling the project for two years. DW Commercial of New York, the lender, took over the project, completed the conversion of the top nine floors and pursued a foreclosure.”

The Greater Baton Rouge Business Report in Louisiana. “Though businesses have reopened and are operating at full capacity, there are still several question marks about what the second half of 2021 will look like in the multifamily sector. That’s in part because of the market’s employment picture. The Baton Rouge metro area lost 20,700 jobs in 2020 and unemployment remains high, despite demand for workers in low-wage, hourly jobs. Until there’s job growth there won’t be demand for new housing.”

“What’s more, experts have been warning for several years that the market is overbuilt, particularly in the student housing sector, and the amount of inventory remains high.”

The South Florida Business Journal. “In the initial months of closures with the onset of the Covid-19 pandemic last year, some CMBS lenders struck short-term deals that included delayed mortgage payments. Some hotel owners could even use reserves to cover operating expenses for their properties, said Jay Sakalo, a partner at Miami-based Bilzin Sumberg who specializes in corporate finance and restructuring. Reserves are usually kept as collateral by lenders in case payments are missed, but in this scenario, owners could use those funds to cover expenses, including electricity and payroll.”

“The question remains: Why would banks work with owners rather than just foreclose, as they may have done before the age of Covid? Any lender that chooses to foreclose on a hotel has the responsibility of managing the property on its own. While many would opt to then sell the hotel, values for business and convention hotels are far below pre-pandemic levels, experts say. These are also the properties most likely to still be struggling through the pandemic, so there’s likely no real demand for lenders if they want to sell.”

From Socket Site in California. “Having bottomed out at around $3,050 last month, the weighted average asking rent for an apartment in San Francisco has since ticked up around 2 percent to $3,125 per month but is still 24 percent lower than prior to the pandemic having hit and 30 percent below a 2015-era peak.”

“There are still 45 percent more apartments listed for rent in San Francisco than there were at the same time last year and 85 percent more than there were prior to the pandemic, while the population has shrunk.”

The Globe and Mail in Canada. “In April, Calgary city council approved a new plan and a $200-million budget to revitalize the city’s dwindling downtown, including the conversion of six million square feet of vacant office space into residential use over the next decade. Since the economic downturn of 2014, high office-vacancy rates in Calgary have persisted, hitting 32 per cent in the first quarter of 2021, according to a report from commercial realtor CBRE.”

“Although not as severe, the downtown residential market has also been in decline, a consequence of the loss of thousands of oil and gas jobs in Calgary’s core. ‘Downtown sales went from a peak of just under 2,000 units in 2014, to the low last year, where there were under 300 sales,’ said Matthew Boukall, vice-president of product management and data solutions at Altus Group.”

“Last fall, the Canada Mortgage and Housing Corporation estimated that 8.8 per cent of purpose-built rental apartments in downtown Calgary were vacant; higher than the overall city average of 6.6 per cent and the second highest level in 30 years. Yet, part of the city’s solution to the vast oversupply of office space downtown is to increase the housing supply.”

“Some worry the residential conversion component of the downtown plan could affect the condo resale market. ‘It’s exacerbating the issue by adding more supply, and therefore, more choice and more pressure on existing apartment prices,’ said Robert Price, CEO of Bode, a Calgary-based real estate tech start-up. Another challenge for the condo market specific to Calgary is that downtown units are usually not a buyers’ first choice. Sprawl has generated an ample supply of single-family homes still within reasonable distance of the downtown core.”

“Condos in the city’s centre continued to struggle. ‘[In the past], the housing market growth was really based on the fact that the downtown office market and employment was growing,’ Mr. Boukall said. Now, the situation has changed. ‘There really is no reason to be downtown if you’re not working downtown.'”

This Post Has 77 Comments
  1. ‘Sprawl has generated an ample supply of single-family homes still within reasonable distance of the downtown core’

    In other words plenty of shacks and airboxes everywhere.

  2. ‘values for business and convention hotels are far below pre-pandemic levels, experts say. These are also the properties most likely to still be struggling through the pandemic, so there’s likely no real demand for lenders if they want to sell’

    Far below? No demand? But hotcakes dammit!

  3. ‘still 24 percent lower than prior to the pandemic having hit and 30 percent below a 2015-era peak. There are still 45 percent more apartments listed for rent in San Francisco than there were at the same time last year and 85 percent more than there were prior to the pandemic, while the population has shrunk’

    How do those 5% cap rates look now?

  4. This is a sponsored content “article” published by the National Association of Realtors.

    “People are just borrowing and finding that buying a better house is a good idea right now,” said Dr. Kishore Kulkarni, distinguished professor of economics and author at Metropolitan State University of Denver.”

    Distinguished? How much is the NAR paying you?

    “And they are fine paying retail value, plus 10 to 15%,” Abbey said. “You overpay 20% on the house, the way the market is going right now, you’ve made that back up in four months. Nobody cares.”

    Abbey says there’s also another interesting trend in investing.

    “I’ve got clients that are using their 401ks,” Abbey said. “They’re investing in housing because the percentage gain is so much higher than it would be in the stock market; and it’s much more stable.”

    https://www.thedenverchannel.com/news/360/construction-costs-residents-needing-more-space-and-investors-impacting-metro-denver-housing-prices

    Realtors are liars.

      1. And broke. Then insolvent after deciding to rent a house from the bank at twice the monthly cost.

        1. “…“the kids” as an excuse…”

          Around in these parts [SoCal] , its the [trophy] wife.

    1. “With a 2% or 3% interest rates, this is like free money,” Kulkarni said. “And you should grab it.”

      You can do this!!

      1. “…With a 2% or 3% interest rates, this is like free money,” Kulkarni said. “And you should grab it….”

        Pitch for new reality TV show: “Make believe multi-millionaire’.

        Opening scene. Wide shot: Mr. Bankers office:

        Follow Fred and Judy who were down to their last [paycheck protection plan] paycheck borrow a couple “free money” million and buy their very own overpriced SoCal crap shack.

        “I have never felt so liberated, says Judy. With all that new HELOC money I can now buy that Mercedes that I deserve.”

        Cut to close up: Tight on Mr. Banker as Fred and Judy sign loan documents.

        Mr. Banker: “Whatever works”

        1. The camera pulls back to reveal two grinning fools, each sipping probably the most expensive cup of free coffee that they will ever regret drinking.

          The camera continues to pull back, revealing Mr. Banker relishing the moment as he contemplates another wasteful and frivolous expenditure he intends to make as he convinces himself that there is no end to the vast amount of stupidity that possesses the dim-witted minds of his fellow human beings who surround him in seemingly limitless numbers and are forever ready and incredibly eager to thoughtlessly sign away to him any gifts of financial freedom that have been bestowed upon them due to nothing more than their birth, a birth that granted them a birthright of a joyous lifetime of freedom that is readily and carelessly traded for a miserable lifetime of debt servitude.

      2. how come these advice givers dont put their own $$ into the game, instead of leading other sheeple to do it

  5. I came across this, which is an eye opener if you know anything about the foreclosure biz:

    ‘The U.S. Department of Housing and Urban Development has been incommunicado about a dead Villager’s home in foreclosure and descending into a neighborhood eyesore.’

    ‘The home owned by the Estate of Korlene Saunders, located at 807 Beechwood Ave. in the Village of Silver Lake, was the subject of a deed compliance hearing Wednesday afternoon before the Village Center Community Development District Board of Supervisors.’

    ‘In addition to being in foreclosure, the utilities have been shut off and the real estate taxes have not been paid.’

    https://www.villages-news.com/2021/06/09/hud-incommunicado-about-dead-villagers-home-in-foreclosure/

    HUD usually is all over these things. And picky about every little detail.

    1. HUD is one of many bloated bureaucracies that thrust taxpayers into the role of involuntary patrons for Democrat dependency voters sponging off the system.

  6. This is a pearl clutching article.

    MIT Technology Review — Anti-vaxxers are weaponizing Yelp to punish bars that require vaccine proof (6/12/2021):

    “Negative spam reviews are destroying bars and restaurants as they attempt to re-open safely.

    These spam one-star reviews can be extremely damaging. The default mode for viewing reviews is in chronological order, from newest to oldest, which means a spam attack places fake reviews up top, making the most recent reviews that much more influential if you’re the victim of a concerted campaign.

    While some companies have gotten around this issue on their own sites by verifying that reviewers are actual customers by reaching out to them via email and matching them with what they have on file, industry-leading platforms like Yelp and Google let anyone to rate and review a business.

    https://www.technologyreview.com/2021/06/12/1026213/anti-vaxxers-negative-yelp-google-reviews-restaurants-bars/

    Turnabout is fair play, snowflakes.

    The HBB remembers the CCP Flu police arresting and fining business owners and ripping their liquor licenses off the wall.

      1. It’s the day to think about HELOCing all that recently generated equity wealth created by nearby money-laden fools overpaying for tulip-houses.

        Go to the bank the first thing in the morning and cash out your wealth while it still exists. Remember, you never can overpay for real estate because real estate values ALWAYS go up hence buying real estate AT ANY PRICE is the sure road to riches.

        Also remember that it is YOUR equity you will be cashing out; I seen no reason you should ever have to give it back.

        😁

      2. It’s Sunday, June 13th and Joe Biden is still not the duly elected President of the United States.

          1. They gave him just enough Adderall to make it through his Europe speech today but not too much to interfere with his Dr. Jill sleepy time meds tonight.

            Imagine voting for this coma patient?

      1. I do not rule out that my cat is some sort of guerrilla warfare expert. He has mastered the art of the sneak attack and complex ambush, no doubt about it. No creature with a walnut-sized brain should be that diabolically crafty.

        1. If there’s anything that will survive a nuclear apocalypse, it is the humble feline. Sl utty “doctors” of education? Not so much.

          1. This morning I went out just in time to see one of my dopes rolling in dirt. Gave me a look of utter joy as I was calling her an idiot.

          2. Oops, almost passed on an opportunity to slam Dr. Jill. I’ve mentioned it before…this website has some iffy items and the design doesn’t help but there are juicy Joe/Jill tidbits/photos:
            https://neiliabiden.com/

  7. The Baton Rouge metro area lost 20,700 jobs in 2020 and unemployment remains high, despite demand for workers in low-wage, hourly jobs.

    Why would workers report back to low-wage hourly jobs when the Biden Administration is paying them to stay at home? The destruction of the economy is by design.

  8. Any lender that chooses to foreclose on a hotel has the responsibility of managing the property on its own. While many would opt to then sell the hotel, values for business and convention hotels are far below pre-pandemic levels, experts say.

    Oh dear. What is this doing to the value of the collateral that was put up for those loans?

  9. The following numbers are from the Bank for International Settlements (BIS)

    Total credit to the non-financial sector (core debt), % of GDP (as of the end of the 4th quarter, 2020)

    Greece – 345.6
    Canada – 359.7

    https://stats.bis.org/statx/srs/table/f1.1

    The following BIS chart shows Canada’s total credit to its non-financial sector (core debt), as a percentage of its GDP from 1990 to the end of the 4th quarter of 2020:

    (At the end of 2006 it was 219)

    https://stats.bis.org/statx/srs/tseries/CRE/Q.CA.C.A.M.770.A?t=f1.1&c=&p=20204&i=6.10

    1. “In 2016, Sign reported that former President Clinton had met with Lynch on her private jet at Phoenix Airport. It was alleged that their conversation centered around an ongoing investigation into whether Hillary Clinton’s use of a private email server while Secretary of State was illegal. Bill Clinton and Lynch would go on to portray it as an impromptu friendly chat.”

      “Pardon Me, Do You Have Any Grey Poupon?”

        1. phrase describing the space between houses here

          Can you spare a roll of toilet paper? My roll is empty.

          1. 🤣 Yeah, spare a square.
            You could definitely do that here without leaving your seat.

  10. An observation:

    Yesterday, off Interstate 5 in Oregon, I passed a PARKED mile-or-so-long series of railroad flatcars loaded up with lumber and other building materials. The key word here is the word “parked”, as in “not in motion on its way to reach a destination”. The last time I saw such a sight was in the year 2005 or thereabouts when the then real estate mania had peaked.

    IMO this is clear evidence that lumber and other building material inventory has built up to the point where it has outpaced demand. This stuff has to be stored somewhere, anywhere, where space can be found. Railroad flatcars are as good a place as any.

    FWIW.

    1. The “shortage” narrative was just that – a narrative. Or, in other words, A BIG FAT LIE to line somebody’s pockets. The only shortage I ever saw was last year when I had to go to a different lumberyard for some T1-11 as well as some 3/4″ CDX. This year has never seen a shortage of any lumber.

    2. Brings to mind the oil glut of a few years back when black gold was strored indefinitely at sea in tanker ships rather than delivered and sold for a loss.

      Obviously this transport storage delay strategy can’t buy much time before the crater accelerates.

    1. if GF were really changing his life around he wouldn’t be in a car with wanted felons from anther state he would be in a car with a college professor.

    1. Almost $10,000 per year in taxes to the local rugrats, schools, cops, firefighters and bureaucrats. I wouldn’t want it for free. That would pay rent somewhere.

  11. I think I had a dream about this happening to me on one of the pre-rehab magic mushroom nights of the 1980s.

    “Oh my God, I’m in a whale’s mouth and he’s trying to swallow me.”

    Edward Helmore
    Sat 12 Jun 2021 13.27 EDT

    “Oh my God, I’m in a whale’s mouth and he’s trying to swallow me. I thought to myself, ‘Hey, this is it. I’m finally going to die. There’s no getting out of here,’’’ Michael Packard told a local news station in Provincetown, Massachusetts.

    Packard, 56, was 45ft down off Race Point in search of lobsters when the feeding whale, presumed to be a juvenile, took him. He said he “felt this huge bump and everything went dark”.

    At first the fisherman assumed he had been attacked by a great white shark but he could find no teeth. “It was happening so fast,” Packard said. “My only thought was how to get out of that mouth.”

    Partially ingested in the leviathan’s maw, and surrounded by a curtain of filtering baleen, Packard said he kept breathing into the regulator of his scuba tank.

    “I realised there was no overcoming a beast of that size. He was going to do with me what he wanted to do. He was going to spit me out or swallow me.”

    https://www.theguardian.com/us-news/2021/jun/12/whale-mouth-lobster-diver-humpback-cape-cod

  12. investing in housing because the percentage gain is so much higher than it would be in the stock market; and it’s much more stable.”
    Yeah, housing is so much more stable?? Remember a thing called leverage? With a 10% down payment a 10% decrease 100% loss in investment.

    1. Any loanowner taking out a mortgage now to buy a shack in Denver deserves the lifetime of incalculable losses they’ve got coming their way. Arguments with the spouse about money, divorce, foreclosure, bankruptcy, suicide.

      Loanowners are living one foot in the financial grave.

      1. ….. and the other on a banana peel.

        Do DebtDonkeys have two feet(or hoofs) or four?

  13. Bizarre: Biden Claims ‘A Lot of People May Not Know What COVID Is’

    June 13th 2021, 12:22 pm

    Puppet president flubs, flails and wanders around G7 summit in embarrassing series of gaffes.

    “…COVID is…well I know you all know, but a lot of people may not know what COVID is,” Biden told reporters Sunday at during a press conference at the G7 summit.

    Boris Johnson insists to Joe Biden that he already introduced the president of South Africa to a G7 meeting.

    WATCH: America’s cognitively compromised President confuses Syria with Libya THREE times in less than two minutes.

    https://www.infowars.com/posts/bizarre-biden-claims-a-lot-of-people-may-not-know-what-covid-is/

    1. It is an open secret. The emperor has no clothes. Just wondering how my bernie bro buddy will spin this after the official news gets put out. My guess is that he will act like no one could have seen this coming and sometimes a nearly 80 year old person can have a health event out of no where. It is infuriating. His occams razor explanations generally parrot everything cnn would report.

    1. Everything said about Covid-19 by Fraud-Chi, the CDC, NIH, WHO, DOCTOR Tedros, MSM, Democrats, Liberals and the TRD crowd has been a lie. The biggest lies were the most important: Where did Covid-19 come from and was it an engineered virus. The answer to those two questions would determine how to stop the pandemic.

      Because Fraud-Chi and the MSM were more interested in hurting President Trump, they sacrificed the lives of hundreds of thousands (or millions, who knows…) people. You can’t fight a disease with lies and made up facts, nature will always win and only can be defeated with the truth.

      Because the entire medical/science establishment and academia also were in on the scam, nobody knows what potentially beneficial therapies and treatments weren’t used or if all of the current therapies are just wrong. You can’t trust any medical journal, physician organization or teaching and research institution.

      It’s 100% corrupt. It’s not possible to wrong about what and where Covid-19 came from and be right about treating the disease. Fraud-Chi should have his license suspended and he should be put on trial for murder. Start with him and work down from there. This entire scam has cost Americans billions, millions lost businesses and livelihoods, millions of students have been harmed and millions of Americans have suffered in countless ways just because the medical establishment, Democrats and MSM were more interested in hurting Trump than saving lives or the economy.

      The Soviets, Nazis, Tojo and the rest of the Commies never did 1/1,000.000th as much damage to this country as what we’ve suffered because of the actions of these criminals.

      1. On June 15th in California the vaccinated can take off their masks indoors and outdoors ,but the unvaccinated can’t.

        Strangely, a lot of scared people who did get vaccinated still don’t want to take the masks off.

        So, your punished if your not vaccinated. So, this extreme pressure on people , like myself, to take a experimental vaccine. I never took vaccines anyway all these years, except for a couple that they forced on us in grade school.

        I have not been a big lover of the Big Pharmacy approach to medicine anyway. The FDA isn’t protecting the public. Brainwashing the public that all these magic pills or vaccines , with all the side effects is acceptable is evident.
        Now, the One World order wants to force you to take whatever they mandate, for public health reasons that doesn’t follow the Science.

        They are messing with Mother Nature, just like all the covert cloud seeding going on. These nuts like Gates want to block out the Sun. These mad hatters are the biggest threat to humanity and the planet.

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