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The Glory Days Of Easy Returns And Cash Flow Are Likely Over

A report from Your Observer in Florida. “As the busy season on Longboat Key winds down, so does the demand for properties. The real estate market on the barrier island has slowed down alongside the area’s. ‘We’re seeing price reductions pretty much across the board because the demand has slowed down,’ real estate consultant for RE/MAX Andrew Vac said. ‘Some properties that are priced properly are selling more quickly. … The market is adjusting and listing prices are coming down.'”

“In spring 2022, properties often stayed on the market for as little as two or three days. Now, two or three months on the market is about average for a property on the barrier island. In Manatee County, condo supply increased by 337.5% to a 3.5-month supply. Single-family home supply increased 237.5% to a 2.5-month supply. At the end of April, there were 5,253 active listings for both property types in the North Port-Sarasota-Brandenton area. The number represents a 166.8% increase in active listings compared to April 2022.”

KUTV Salt Lake City. “Higher mortgage rates are further squeezing the housing market along the Wasatch Front, according to new data from the Salt Lake Board of Realtors. The data showed home sales in Salt Lake County dropped nearly 33 percent in April compared to the same time last year. Home prices were universally down year over year in April across Davis, Salt Lake, Tooele, Utah, and Weber counties, the data showed.”

The Tribune. “A spike in mortgage rates and low housing inventory tamped down California home sales in April — with some of the worst results hitting the Central Coast, according to the California Association of Realtors. ‘At the regional level, median home prices continued to drop from a year ago in all major regions, but only one region posted a double-digit decline compared to three regions in the prior month,’ the report said. Compared to the previous year, no region of the state performed worse than the four-county Central Coast. Mariposa County’s 80.8% year-over-year sales drop was the worst in the state, followed by declines in sales in Calaveras County and Santa Cruz County of 59% and 58.4%, respectively. San Luis Obispo County had the 10th worst year-over-year sales decline in the state. Home prices also fell in April across broad swaths of the state.”

“Santa Barbara County’s median home price declined by 10% from April 2022 to $1.08 million. Meanwhile, Santa Cruz County experienced similar market trends to its neighbors. The median home price declined 4.3% from last April to $1.35 million. The median home price in San Luis Obispo fell 17.7% over that time to $1.05 million. In Templeton, six homes were sold in April, which was 20% more than the previous year, but the median home price experienced the same dramatic drop seen in several other cities. Templeton’s April 2023 median home price of $1.51 million was 37% lower than the previous year, the CAR report found, as the number of available listings grew 15.4% to 15.”

Las Vegas Business Press in Nevada. “Las Vegas homebuilders are sounding more optimistic about the new-home market after a second consecutive solid month of sales after rising interest rates caused sales to slump during the second half of 2022. While base asking prices have been slowly rising over the past couple of months for some builders, said Home Builders Research President Andrew Smith that during the last 12 months the overall base asking price has fallen 6 percent. The average square footage of actively selling plans has dropped less than 1 percent while the average price per square foot fell 6 percent, Smith said.”

“Scott Bleazard, vice president of land acquisition for KB Home, said demand remains ‘enormous’ in Las Vegas. ‘They are lined up at every single one of our communities but with interest rates where they are at, many don’t qualify,’ Bleazard said.”

The Real Deal. “We know the story: In the pandemic, a wave of new residents flooded into Texas. That presented a massive opportunity for developers, with homebuilders such as Lennar developing entirely new cities on the outskirts of Austin, Houston and Dallas. But will a bust come after the boom? ‘When interest rates started to rise and mortgage rates rose alongside them, buyers started to cancel home buys,’ TRD reporter Joe Lovinger says on the latest episode of TRD’s podcast, Deconstruct. ‘Almost immediately you saw a lot of homebuilders start to dump their development sites.'”

“Lovinger talks about some of the challenges Texas homebuilders and other commercial real estate owners are facing in light of interest rate hikes. ‘They’re all very afraid to have non-performing homes on their balance sheets,’ Lovinger said of homebuilders. ‘They want to be able to have homes sold before they can even build them, if possible.'”

Bisnow Houston in Texas. “A group of 123 investors have filed a lawsuit against Jay Gajavelli and his Applesway Investment Group, claiming their $12.4M investment was shifted to a different, unsuccessful deal than the one they believed they were buying into, and that Applesway then lied about it. The fraud claim is the latest in a series of troubles stacking up for Irving-based Applesway Investment Group. The company lost ownership of a four-complex Houston portfolio through a $229M foreclosure in April. Gajavelli is also facing a $1.6M lawsuit related to unpaid work on his properties, which have been described by tenants as run-down and vermin-infested.”

“Another defendant is S3 Your Financial Future, an LLC owned and operated by Atti, according to the lawsuit. S3 Your Financial Future began raising money for the deal in March 2022, promising ‘lofty future returns.’ Some investors used retirement savings to buy in, the lawsuit states. In September 2022, plaintiffs were told that the Siena on Westheimer deal closed. ‘It was a lie that defendants maintained for months,’ the lawsuit states. ‘In February 2023, plaintiffs were shocked to discover that the Siena on Westheimer deal never happened and that, in fact, their money had been moved months earlier, without their notice or their consent.’ Applesway is also facing foreclosure on a $65.2M loan for the Cabo San Lucas apartments in southeast Houston, The Real Deal reported.”

The Real Deal New York. “Three Nolita mixed-use properties owned by Edmond Li’s Veracity Equities are slated for a foreclosure auction as the firm struggles to repay a $41 million loan. The loan on the portfolio — 31 Prince Street, 46 Spring Street and 48 Spring Street — is now more than 121 days delinquent, according to Morningstar. Their appraised value has dropped from $66 million when the loan was issued in March 2018 to $49.5 million. A January analysis by Fitch said a property tax increase and a rent shortfall from retail tenants drove the portfolio’s debt-service to coverage ratio down to 0.22 for the first half of 2022, meaning building revenue was covering barely a fifth of the loan payments.”

Investing.com on Canada. “The Greater Toronto Area’s new construction condominium market is reaching a critical point due to rising interest rates, as revealed by a recent collaborative study from Urbanation and CIBC Capital Markets. The report highlights that over half of investors who purchased pre-construction condos for rental purposes experienced financial losses last year. The circumstances have continued to deteriorate this year with an estimated average loss of $400 per month during Q1. Furthermore, 14% of investors are losing over $1000 each month while a third face losses amounting to at least $400. ‘The glory days of easy returns and cash flow are likely over,’ said Shaun Hildebrand, Urbanation President.”

The Globe and Mail. “Mortgage refinances have fallen off a cliff. They’re down by 32 per cent, according to the Canada Mortgage and Housing Corporation. Throngs of homeowners desperately need to restructure their debt. But there are three key reasons why they can’t. Until recently, median prices in most parts of Canada were down at least 20 per cent from the 2022 peak, to ballpark data from the Canadian Real Estate Association. That’s a problem for many, as you need at least 20 per cent equity to refinance at mainstream lenders. Higher borrowing costs eliminate refinance demand from those looking to lower their interest costs and prevent borrowers from reducing their total payments.”

“Fifteen months ago, a qualified borrower with a $100,000 income and no other debt could afford a $479,000 mortgage, give or take. Today, that same borrower can afford only about $410,000. That’s because rising rates have made the government’s stress test more challenging. Higher borrowing costs have contributed to a record number of Canadians having high ratios of monthly debt to income. One in six households with mortgages now see more than 50 per cent of their gross income going to servicing monthly obligations. Take taxes out of the remainder, and it doesn’t leave them with much.”

From The Local. “It’s no secret that Germany’s property market as been slowing down in recent months. Across almost all major cities, prices for houses and flats slumped in the previous quarter as prospective buyers turned to the rental market instead. But in Frankfurt am Main, the Hessian capital that has long had some of the most expensive real estate in Germany, the turnaround is far more noticeable.”

“According to a new report by the Association of German Pfandbrief Banks (VDP), prices for residential properties in Frankfurt have dropped by an astounding 6.7 percent compared to the same period last year. This is a far more dramatic dip than the previous quarter, where Frankfurt saw a year-on-year decline of 2.7 percent. In Hamburg, Düsseldorf, Cologne, Stuttgart and Munich, there’s been a year-on-year decrease of between 2.3 and 3.8 percent for residential homes, VDP revealed. ‘Now prospective buyers have to recalculate because of the increased mortgage rates – they wait and negotiate more,’ said Daniel Ritter, managing partner at Von Poll. This leads to fewer deals closing at the original asking price.”

“The real estate specialist CBRE recently reported that the investment market in Frankfurt had slumped by 92 percent in the first quarter to a volume of €201 million. This was the weakest result among Germany’s top five investment locations, it said. Back in 2021, Frankfurt took the top spot in the UBS Global Real Estate Bubble Index, coming in ahead of Toronto, Hong Kong, Munich, Paris, Amsterdam and Zurich as the city with the biggest housing bubble in the world.”

The Malaysian Insight. “The number of stalled and abandoned private housing projects is expected to increase due to the effects of the Movement Control Order (MCO) which saw development projects halted to curb the spread of Covid-19. Deputy Local Government Development Minister Akmal Nasrullah Mohd Nasir said the task force for stalled and abandoned private housing projects has identified 545 stalled projects and 112 abandoned projects as of March 31. ‘The task force evaluates the number of projects on a monthly basis because the status of a project changes dramatically, from a healthy state in one month to stalled in the next month. We were given the picture in the last meeting that there could be further increase, but I have not announced the statistics yet,’ he told reporters when visiting two stalled private development projects in Kuala Lumpur yesterday.”

The Manila Standard in the Philippines. “Property consultancy firm Colliers said the completion of condominium projects is expected to slow down this year amid elevated interest and mortgage rates and rising prices of construction materials. It said lease rates for studio and one-bedroom residential units declined by more than 40 percent in the Bay Area amid dampened demand from local professionals and exodus of Chinese employees from the offshore gaming sector.”

Vietnam Investment Review. “Chairman of the National Assembly (NA) Vuong Dinh Hue last week urged the government to make new timely measures to assist people and enterprises struggling against prolonged woes. Feeling anxious about the economy’s performance, the NA’s Economic Committee (NAEC) also underscored that the economy is now facing huge difficulties. It recommended that the government take more drastic actions to fuel the economy. ‘Many localities which are the country’s key industrial propellants have suffered from below-zero growth. The key driving forces for economic growth such as exports, foreign direct investment (FDI), especially industrial production are on the wane,’ the NAEC stated.”

“‘Cutback of employees and delays in payment of salary, insurance, and taxes have become an oft-seen situation in many construction firms,’ the Ministry of Construction added. ‘A number of contractors, especially small-scaled ones, are on the brink of dissolution and bankruptcy.'”

From News.com.au. “Construction company A1A Homes and its company A1A Commercial Builders have gone into administration. The Melbourne-based company built residential and commercial builds across Australia and New Zealand but was recently embroiled in a debacle where a customer was demanded to pay an extra $125,000 to complete a build. The company immediately began to build a series of one-star reviews online, with other customers revealed similar experiences.”

“In March it was reported by news.com.au that customer Abishek Mahajan had signed up to build a $675,500 home with Melbourne construction firm A1A Homes in August 2021. The 27-year-old claimed his build was delayed for a year before the slab was poured – but once it was completed he was ‘angry and shocked’ by what happened next. He claimed the building firm demanded an extra $125,000 to complete the build but it was impossible for the NDIS worker to come up with the huge sum.”

“The situation left him reeling. ‘Literally the earth was gone from my feet and my heart was about to come out. How would you find that much amount of money and how could ask for that much money?’ he said. ‘People take out a loan to get that money, it’s not like $5000 or $10,000, but $125,000 is a down payment for a house…Mentally I was so damn sick from the inside, I was having breathing issues when I spoke to them. I was having a mini heart attack as you have lost everything in that split second.'”  

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This Post Has 84 Comments

  1. ‘Santa Barbara County’s median home price declined by 10% from April 2022 to $1.08 million’

    A million pesos wouldn’t buy a shanty in much of the state. How the mighty have fallen.

  2. ‘Higher borrowing costs have contributed to a record number of Canadians having high ratios of monthly debt to income. One in six households with mortgages now see more than 50 per cent of their gross income going to servicing monthly obligations. Take taxes out of the remainder, and it doesn’t leave them with much’

    That’s some sound lending right there.

  3. ‘Literally the earth was gone from my feet and my heart was about to come out. How would you find that much amount of money and how could ask for that much money?’ he said. ‘People take out a loan to get that money, it’s not like $5000 or $10,000, but $125,000 is a down payment for a house…Mentally I was so damn sick from the inside, I was having breathing issues when I spoke to them. I was having a mini heart attack as you have lost everything in that split second’

    Well, it was cheaper than renting Abishek.

    1. ‘Literally the earth was gone from my feet and my heart was about to come out.

      Pro tip for Millenials and Gen Z: Learn to use “literally” correctly. Real example: “The British were able to create their Empire because they were technologically advanced; for 150 years they literally brought a gun to a knife fight.” –Peter Zeihan

    2. ‘Literally the earth was gone from my feet and my heart was about to come out.”

      Same damn thing happened to me in 1979 when I didn’t get my head turned in time to see a Boston College D-linemen who blindsided me on a punt coverage.

  4. In Manatee County, condo supply increased by 337.5% to a 3.5-month supply.

    Is that a lot?

  5. Home prices were universally down year over year in April across Davis, Salt Lake, Tooele, Utah, and Weber counties, the data showed.”

    Doesn’t the Mormon church have prophets? Did they not warn their aptly-named flock this was coming?

      1. I took a family vacation to park city in the summer two year ago, but drove a bit around SLC and some surrounding areas. Nice place, didn’t understand why housing cost more than Chicago, until I realized there were equity locusts from CA. I supposed that’s how southern WI and northwest IN residents feel about Illinois residents who flee Chicago for a cheaper, and redder, environment. Wisconsinites have a special name for IL residents visiting their state: FIBs – F**king Illinois Bastards.

        1. Unless they’re Mormons, California equity locusts are in for a shock moving to SLC.

        2. Wisconsinites have a special name for IL residents visiting their state: FIBs – F**king Illinois Bastards.
          In New Hampshire they call invaders from Boston Mazzholes

        3. The problem is Utah is LOCALS.

          I lived there, and my local landlord, who lived in SLC, kept the build half empty on purpose. Why? Because that creates “demand”. And every other person who meets at their social club on Sunday morning did the same thing.

          Half of SLC is a ghost town. It’s a glorious bunch of speculation and manipulation.

          But sure, blame “Californians” like all the other Utahns. This red v blue stuff is obnoxious, and so called “reds” are sounding like the Chinese with their us v. them crap.

  6. Mariposa County’s 80.8% year-over-year sales drop was the worst in the state, followed by declines in sales in Calaveras County and Santa Cruz County of 59% and 58.4%, respectively.

    Gosh, what if plunging shack sales are a prelude to plummeting shack prices?

  7. ‘Almost immediately you saw a lot of homebuilders start to dump their development sites…They’re all very afraid to have non-performing homes on their balance sheets’

    Non-performing homes? Wa happened to my waiting list Joe?

    ‘In September 2022, plaintiffs were told that the Siena on Westheimer deal closed. ‘It was a lie that defendants maintained for months,’ the lawsuit states. ‘In February 2023, plaintiffs were shocked to discover that the Siena on Westheimer deal never happened and that, in fact, their money had been moved months earlier, without their notice or their consent.’ Applesway is also facing foreclosure on a $65.2M loan for the Cabo San Lucas apartments in southeast Houston’

    Wa happened to my lofty future returns? This is the Holy Grail of investing dammit!

  8. ‘during the last 12 months the overall base asking price has fallen 6 percent. The average square footage of actively selling plans has dropped less than 1 percent while the average price per square foot fell 6 percent’

    Now add in rate buy downs, freebies, and yer fooking the recent buyers good Andy!

  9. “A group of 123 investors have filed a lawsuit against Jay Gajavelli and his Applesway Investment Group, claiming their $12.4M investment was shifted to a different, unsuccessful deal than the one they believed they were buying into, and that Applesway then lied about it.

    I love the smell of burning housing speculators in the morning. It smells like…victory.

  10. ‘The report highlights that over half of investors who purchased pre-construction condos for rental purposes experienced financial losses last year. The circumstances have continued to deteriorate this year with an estimated average loss of $400 per month during Q1. Furthermore, 14% of investors are losing over $1000 each month while a third face losses amounting to at least $400’

    Every single article I’ve read on this is screaming shortage! Logic is like this: developers need pre-construction buyers cuz they are broke. No development = shortage! K-da REIC is probably the most dishonest on the planet and that’s saying something.

    Anyhoo, these Toronto airbox gamblers have always been cash flow negative. It’s a lot more than 1000 K-dn pesos a month if you add it all up.

    1. How did you lose yer igloo mate?

      The glory days of easy returns and cash flow are likely over.

      1. #Nuremberg2 can’t come soon enough, along with summary justice for all the scamdemic criminals & lockdown totalitarians.

    2. They would of never qualified for “emergency use vaccine”, had they not supressed and censored Ivermectin.
      There are still Doctors fighting Medical Boards that went after them for using Ivermectin and other medical cures.
      Hospitals still have the killer Fauci protocol for treatment, where you won’t get out alive.
      They rigged a trial on Ivermectin somewhere in the crisis, to make it look like it wasn’t effective by giving low dose to almost dead people, so as to discredit ivermectin .
      Only the fake vaccine, when cheap meds could of wiped out the bio-weapon attack of Covid, that shut down the World..
      Will these evil mothers ever face Justice for what they did?

  12. ‘In February 2023, plaintiffs were shocked to discover that the Siena on Westheimer deal never happened and that, in fact, their money had been moved months earlier, without their notice or their consent.’

    Die, housing speculator scum.

  13. Their appraised value has dropped from $66 million when the loan was issued in March 2018 to $49.5 million.

    We’re going to need another Memorial Day to honor the trillions in Yellen Bux “value” winging off to whatever debauched currency afterlife awaits the casualties of speculative malinvestment.

  16. The report highlights that over half of investors who purchased pre-construction condos for rental purposes experienced financial losses last year. The circumstances have continued to deteriorate this year with an estimated average loss of $400 per month during Q1.

    Speculator scum hemorrhaging money each month is a thing of terrible beauty.

  17. Mentally I was so damn sick from the inside, I was having breathing issues when I spoke to them. I was having a mini heart attack as you have lost everything in that split second.

    Gosh, as a serene renter, I’m trying to summon a vicarious anxiety attack, but just can’t seem to manage it.

  18. A reader sent these in:

    Thank God California banned plastic straws.

    https://twitter.com/WallStreetSilv/status/1663270837049237504

    Silicon Valley and Wall Street are desperate for a new hype cycle and Artificial Intelligence is their last hope. As one might expect. Highest Number of Companies Citing AI Ever.

    https://twitter.com/SuburbanDrone/status/1663281743594414086

    The Latest Problem for Office REITs: Credit Downgrades – Commercial Observer $SLG $VNO $BXP

    https://twitter.com/ReitBros/status/1663281496248012803

    30% of office space in downtown LA is vacant. No rent is being paid on 1/3 of office space, causing LA’s largest office landlord to default on 3 buildings’ mortgages. A massive deleveraging across US commercial real estate is underway, and lenders with exposure will be crushed.

    https://twitter.com/JoeConsorti/status/1662985168603299841

    My guess is that some interesting reprioritization is taking place amongst young adults who will soon need to start making payments again. Reduced trips to restaurants and Starbucks, cutting a streaming service or two, reduced vacation/discretionary travel, etc. There are lots of ways to reduce spending and be economical, but the question is whether this generation of young adults is prepared to do that or even knows how. Many have never really had to do this before.

    https://twitter.com/AdamKiesel/status/1663251764483854336

    Uncle Sam called, and he wants you to resume payments on your student loans.

    https://twitter.com/dfwaaronlayman/status/1663509525851242496

    Received this DM from an anonymous mortgage loan originator: “Probably 75% of people I see have student debt. Even people age 65+, sometimes their own, sometimes for their kids” Student loan repayments are going to be deflationary for housing. Period.

    https://twitter.com/texasrunnerDFW/status/1663525810593050628

    The question isn’t “will housing prices collapse” it’s “can they ever recover?”

    https://twitter.com/GRomePow/status/1663262152587882498

    If you are in your 30s, live in or near a major metro, and cannot afford to buy a home, you are likely collateral damage of the #Bernanke #Fed that choose to #bailout asset holders in 2008 and #sellout your future.

    https://twitter.com/soldatthetop/status/1663527911595573249

    Pandemic home price bubble deflating
    U.S. home prices rose 0.7% for the year ending March, the smallest 12-month increase since 2012 https://wsj.com/articles/home-prices-rose-in-march-for-second-straight-month-dbc1553a
    YoY declines in:
    Seattle (-12%)
    San Francisco (-11%)
    Las Vegas & Portland, Ore. (-5%)
    Phoenix & Denver (-4%)
    LA (-3%)

    https://twitter.com/NickTimiraos/status/1663531566851563520

    Commercial real estate is melting down fast. Home values next.

    https://twitter.com/elonmusk/status/1663238551406772245

    America is a debt slave nation. You give someone a loan, they’ll take it as long as they can make the payment tomorrow. The problem? People can’t make the payment tomorrow anymore.

    https://twitter.com/GRomePow/status/1663273659514109952

    According to Bloomberg, Adam Neumann took $800-$1B off the table at WeWork. The total market cap of WeWork is now $395M.

    https://twitter.com/awilkinson/status/1662899044950351872

    “Nightmare Unfolds”
    🇨🇦 Housing Market Teeters on the Edge of Collapse as Bond Yields Skyrocket, Leaving Homeowners in Despair. 👇🏽

    https://twitter.com/ShaziGoalie/status/1663396138953711619

    Average monthly student loan payment by degree achieved. The people who owe this money are the largest customers of AirBnB. Seems like a catalyst for discretionary travel spending collapse which could domino into the eventual flooding of STRs to LTR and for sale.

    https://twitter.com/GRomePow/status/1663225598507122690

    I’m going to be getting a lot of this from the Retwit world over the next 6-70months. I can feel it

    https://twitter.com/GRomePow/status/1663389755349024768

    this is sounding just like the end of the 80s boom
    half the builders in Qld are “technically insolvent”

    https://twitter.com/solo_dio_/status/1663094253000720385

    Remember that it was investors that took down the US housing market during the GFC 😉 We are so f*cked in Canada🙃

    https://twitter.com/FORMAFIST/status/1663372968851013632

    $COST CFO: “Historically,…we’ve always seen, when there’s a recession, whether it was ’99 or ’00 or ’09 — ’08, ’09, ’10, we would see — some sales penetration shift from beef to poultry and pork. We have seen some of that now”

    https://twitter.com/TheTranscript_/status/1663562143940362240

    lolololol they increased it by double that in a few months in 2020, then again in 2021, and now they’re taking victory laps over these meaningless numbers over 10 years…10 years…

    https://twitter.com/INArteCarloDoss/status/1663690135433629698

    My main surprise is why the rating agencies have not acted on the US credit rating, or at least placed it under negative watch (other than Fitch ofc, which is kinda irrelevant) not in the context of the debt ceiling circus (case of Fitch) but in the aftermath of SVB and the regionals crisis. US Federal government is now on the hook. There is an implicit insurance to all deposits, under-collateralized loans through BTFP, more exposure through discount window and FHLB. There are currently 4800 banks in the US, 50% of which have negative net assets, they represent $ 11 t in assets and carry a $ 2 t delta of asset market vs book value. Debt ceiling is a side show. Real issue is that US Federal government presided over an unprecedented creation of bank deposits (a 30% jump) through bona fide transfers and way too lose monetary policy, and now finds itself in the position of becoming the facto sugar daddy of the banking system.

    https://twitter.com/INArteCarloDoss/status/1663665859343052800

    Usual clowns are making a whole lot of drama about the impact on consumption from the fading moratorium on student loans payments. While it’s clear that numbers are meaningful, circa $ 140 b / month from Sept, it’s way less than 1% of household consumption in a full year. It will still matter, but important to frame it. The real question is why the f*ck were these payment under moratorium still when inflation had hit double digits, HH were sitting on trillions of excess savings and UR was stuck at historic lows? This amounted to monetary insanity. There is no other words for it.

    https://twitter.com/INArteCarloDoss/status/1663657477399887875

    1007-88 Blue Jays Way, Toronto
    -Sold February 2020 for $645,000
    -Just Re-Sold for $625,000

    https://twitter.com/TOHousingSmash/status/1663752359002996736

    It’s not hard to see the signs, but the timing is so different this cycle due to the unprecedented amount of monetary and fiscal stimulus. People seem to have been numbed to the numbers, but they are breathtaking. This is just insane

    https://twitter.com/trader_mtg/status/1663747111714975745

    Well well well, he’s coming around

    https://twitter.com/GRomePow/status/1663710497508835328

    On 9/7/22 I visited this allegedly 100% @Google occupied ghost-building. Today’s @TreppWire bulletin quoting the @SFBusinessTimes says it’s part of a 1.4 Million sf addition to the local office sublease market.

    https://twitter.com/ShlomoChopp/status/1663702037316485122

    1. 1007-88 Blue Jays Way, Toronto
      -Sold February 2020 for $645,000
      -Just Re-Sold for $625,000

      So all of the 2020 CCP virus bonanza is gone? And 2021. And 2022?

      Oh dear…

    2. Average monthly student loan payment by degree achieved.

      Good graph. The professional degrees cost the most, but don’t they make the most income? Doctors, lawyers, pharmacists, possibly accountants.

    3. “the question is whether this generation of young adults is prepared to do that or even knows how”

      Most of them don’t.

      Where are these people all going to live 10 years from now?

      1. “Many have never really had to do this before… Where are these people all going to live 10 years from now?”

        Never done this before? Weren’t they making payments before the pandemic gave them a reprieve? That said, $500/mo is a solid chunk of change. They can probably cobble $500 together by eliminating the SBUX, streaming, and DoorDash, but barely.
        Perhaps they could eliminate the car, but that’s not easy either (I’ve done it).

        And good question where they are going to live. I’d say they’ll move back in with Mom and Dad but many of them are probably there already.

        1. Nonsense.

          There will be another executive order to defer payments on a new ground. This will give another 2/3 years while another round of litigation ends.

          Student loans will NEVER be paid back.
          FHA loans will NEVER be paid back.

          Just like PPP loans.

          1. “Aren’t people going to judge us? Don’t worry. I know way we can make sure everyone has to live this way!”

            Honestly, I didn’t see that coming. LOL

          4. The Waterfront Property reminds me of Ballona Creek behind the UCLA Boathouse in Marina del Ray. We had a race delayed on the creek because the dead body of an older gentleman was found. The creek was so nasty we sang “row, row, row your boat, swiftly up the creek, careful not to go overboard or your kids will be mutant freaks.” I went overboard once from a coxless pair.

    5. “Uncle Sam called, and he wants you to resume payments on your student loans.”

      Time to put that therapeutic college degree to work. Chop chop!

  19. BTW, looks like Chris Christie is going to toss his hat into the Presidential ring. I don’t think he will last past the Super Tuesday primaries.

    1. Just please don’t toss Michelle Obama, in the race at last minute, as the savior . Probably a dude, still carrying his junk.
      Will the people ever get free and fair elections that aren’t rigged. The two party system a joke because they are on same team.
      And George Washington warned about political parties corrupting the person with the best ideas should win. Lessor of two evils still evil.

      1. When I said “get ready for 8 years of Michelle,” I was NOT advocating for Michelle. I was trying to convey that if the Republicans don’t get their sh$t together, the Dems will win with somebody, for example Michelle, so get ready for it.

  21. $139,000 2 bd 2ba 1,298 sqft
    Price cut: $20K (5/31)
    1954 W Riverbend Cir, Bullhead City, AZ 86442

    https://www.zillow.com/homedetails/1954-W-Riverbend-Cir-Bullhead-City-AZ-86442/8357996_zpid/

    Date Event Price
    5/31/2023 Price change $139,000-12.6%$107/sqft

    5/18/2023 Listed for sale $159,000+17.9%$122/sqft

    5/4/2020 Listing removed $134,900$104/sqft

    4/28/2020 Price change $134,900-3.6%$104/sqft

    3/10/2020 Price change $139,900+5.3%$108/sqft

    2/1/2020 Listed for sale $132,900+101.4%$102/sqft

    4/14/2014 Listing removed $66,000$51/sqft

    12/12/2013 Listed for sale $66,000+209.1%$51/sqft

    7/4/2013 Listing removed $600

    6/4/2013 Listed for rent $600-11.1%

    4/2/2013 Listing removed $675$1/sqft

    1/4/2013 Price change $675+12.5%$1/sqft

    12/28/2012 Price change $600-11.1%

    11/28/2012 Listed for rent $675$1/sqft

    10/4/2012 Sold $21,350-37%$16/sqft

    7/26/2012 Price change $33,900-7.9%$26/sqft

    6/16/2012 Price change $36,800-33%$28/sqft

    6/14/2012 Listed for sale —

    4/10/2012 Sold $54,915+104.1%$42/sqft

    3/24/2012 Price change $26,900-10%$21/sqft

    2/24/2012 Listed for sale $29,900+75.9%$23/sqft

    6/17/2003 Sold $17,000-29.2%$13/sqft

    10/17/2002 Sold $24,000$18/sqft

  23. ‘according to the California Association of Realtors. ‘At the regional level, median home prices continued to drop from a year ago in all major regions’

    via GIPHY

  24. ‘It said lease rates for studio and one-bedroom residential units declined by more than 40 percent in the Bay Area amid dampened demand from local professionals and exodus of Chinese employees from the offshore gaming sector’

    Do you remember that? When we were given never-ending stories of how the Chinese were buying everything and gambled like fools in Macau, every flat spot that legalized it?

  25. Now that US home prices have stopped falling (or so I heard in the MSM) is real estate investing a safe bet again?

    1. DOW 30 -0.41%
      S&P 500 -0.61%
      NASDAQ 100 -0.70%

      Real estate investors are retreating from the housing market at a record pace
      Filip De Mott
      May 31, 2023, 7:30 AM PDT
      Blake Callahan / Getty Images

      – Home purchases by investors fell 48.6% in the first quarter from a year ago, Redfin said.

      That’s the largest annual decline on record going back to 2000.

      – Redfin cited high interest rates as well as declining rents and housing values, which cut into profitability.

      Home purchases by real estate investors fell 48.6% in the first quarter from a year ago, the largest annual decline since Redfin began tracking records in 2000, the company reported.

      The group’s retreat surpassed the market’s overall 40.7% decline in purchases, as elevated interest rates plus declining rents and home values pulled down profitability.

      The conditions also prompted investors to focus on more affordable properties. Low-priced home purchases climbed to a two-year high, and a record 41.1% of investor purchases in the quarter were starter homes.

      “While investors have pumped the brakes on home purchases, they’re still scooping up a bigger share of homes than they were before the pandemic, which can create challenges for individual buyers at a time when there are so few homes for sale,” Redfin Senior Economist Sheharyar Bokhari said in the report.
      …
      https://markets.businessinsider.com/news/stocks/real-estate-investors-housing-market-home-purchases-affordability-interest-rate-2023-5

      1. “That’s the largest annual decline on record going back to 2000.”

        That period encopasses Housing Bubble Collapse 1.0 (2006-2012).

        “…a record 41.1% of investor purchases in the quarter were starter homes.”

        Aside from driving prices out of reach of young American couples who might start families if not priced out of the market, what does an infestor do with a starter home? There should be a law…

        1. Baby alone in a playpen.

          Research
          US births are down again, after the COVID baby bust and rebound
          Melissa S. Kearney and Phillip Levine Wednesday, May 31, 2023

          The COVID-19 pandemic led to an initial decrease in birth rates in the U.S. followed by a partially offsetting rebound, as we documented in our December 2021 Brookings post (based on birth counts through June 2021).

          A similar pattern of an initial, substantial decline in births followed by a rebound in births occurred in many other high-income countries as well. Now, three years after the declaration of the COVID public health emergency in the U.S. and with the benefit of many additional months of data, we take a final look at aggregate birth counts over the course of the pandemic and put that in the context of the long-term decline in U.S. births.
          …
          https://www.brookings.edu/2023/05/31/us-births-are-down-again-after-the-covid-baby-bust-and-rebound/

          1. @Professor Bear:

            I recall in Malcolm Gladwell’s “Outliers” he proposed babies born during downturns where birth rates dropped saw relatively easier routes to success due to less supply of workers.

            Given that, wouldn’t right now be a great time to have children given there will be less labor competition in 20-25 years?

          2. given there will be less labor competition in 20-25

            Not if the borders stay wide open. Plus a lot of menial jobs are going to be replaced by automation.

        2. Aside from driving prices out of reach of young American couples who might start families if not priced out of the market, what does an infestor do with a starter home?

          There is lots of profit in holding the property, getting easy appreciation from free Fed monetary expansion, and charging $100 bucks a pop for a rental application.

          Just deny all the applications. Very productive and good for GDP.

    2. US home prices rose in March for the second month in a row
      By Anna Bahney, CNN
      Updated 10:41 AM EDT, Tue May 30, 2023

      Washington, DC CNN —

      US home prices rose slightly in March, showing a continuing recovery, according to the latest S&P CoreLogic Case-Shiller US National Home Price Index, released Tuesday.

      It’s the second month in a row that prices have increased, after an increase in February that snapped a seven-month streak of month-over-month declines.

      After seasonal adjustment, the national index had an increase of 0.4% in March from February. Both the 10-City and 20-City composites saw increases, too. Before seasonal adjustment, the National Index posted a 1.3% month-over-month increase.

      “Two months of increasing prices do not a definitive recovery make, but March’s results suggest that the decline in home prices that began in June 2022 may have come to an end,” said Craig Lazzara, managing director at S&P DJI. “That said, the challenges posed by current mortgage rates and the continuing possibility of economic weakness are likely to remain a headwind for housing prices for at least the next several months.”
      …
      https://www.cnn.com/2023/05/30/homes/case-shiller-home-price-index-march-2023/index.html

      1. “US home prices rose slightly in March, showing a continuing recovery, according to the latest S&P CoreLogic Case-Shiller US National Home Price Index, released Tuesday.”

        Nothing like basing your recovery narrative on stale data.

    3. Fox Business
      Economy
      Published May 31, 2023 12:11pm EDT
      Mortgage demand plummets as interest rates soar near 7-month high
      Mortgage rates surge to 6.91%, highest level in nearly 7 months
      By Megan Henney FOXBusiness

      A key measure of home-purchase applications tumbled last week as consumer demand cooled in the face of higher mortgage rates.

      The Mortgage Bankers Association’s index of mortgage applications fell 4.6% last week to the lowest level since February, according to new data published Wednesday.

      “Mortgage applications declined almost five percent last week as borrowers remained sensitive to higher rates,” said Joel Kan, MBA’s deputy chief economist. “Since rates have been so volatile and for-sale inventory still scarce, we have yet to see sustained growth in purchase applications.”

      Demand for refinancing also continued to plunge last week, sliding another 5%, according to the survey. Compared with the same time last year, refinance applications are down more than 40%.

      The interest rate-sensitive housing market has cooled rapidly in the wake of the Federal Reserve’s aggressive tightening campaign.

      Policymakers already lifted the benchmark federal funds rate 10 consecutive times and have opened the door to another increase at their June meeting following a slew of stronger-than-expected economic data.

      For months, higher mortgage rates have dampened consumer demand and brought down home prices. As rates have slowly fallen from a peak of 7%, the housing market has shown early signs of stirring back to life.
      US housing

      However, the return to lower mortgage rates has not been smooth. In fact, rates moved significantly higher to start the week, according to a separate MBA survey, with rates surging to 6.91%.

      The spike came before the White House and Republicans struck a deal to lift the federal debt ceiling and avert a first-ever default. Congress still needs to pass the legislation, which has faced pushback from both sides of the aisle.

      Limited inventory has also bolstered demand and prices this month.

      A recent report from Realtor.com showed that the number of available homes on the market in March is down more than 50% from the typical amount before the pandemic began.
      …
      https://www.foxbusiness.com/economy/mortgage-demand-plummets-interest-rates-soar-seven-month-high

      1. “Limited inventory has also bolstered demand and prices this month.”

        I’m scratching my head on what that statement means. Perhaps any one home on the market experiences more demand when few others are available, other things equal?

        The statement conveniently overlooks the reason inventories are so low is that people who refinanced at generationally low rates can’t afford to either sell or move.

  26. San Francisco Mayor London Breed on Wednesday unveiled a two-year budget that increases police and homelessness funding as the city tries to lure businesses back to its hollowed-out downtown.

    This is what is known as “too little, too late”

    1. Here is an interesting tidbit about the mayor’s family (from wikipedia):

      Her brother, Napoleon Brown, is in prison serving a 44-year sentence for a 2000 manslaughter and armed robbery conviction, for which Breed has repeatedly asked for clemency from the governor’s office.

  27. That 2023 Honda Civic Type R at Stevens Creek Honda has been sold, but I don’t know if they got their $25,000 markup. Someone probably got them to shave $5,000 off, and bam, sold!

    1. Even at its $40K MSRP the price seems stiff. Yes, I know, it’s a hot rod, but still.

    3. $40K for a Civic? Yeah I guess it’s a souped up Civic, but … a Civic nonetheless. I spent $24K for a Camry in 2017. I feel as if I got away with highway robbery.

    4. It’s ok, I guess, but I don’t really see what’s so special about it. This whole “scarcity” thing with new cars is a joke. FOMO is played out.

          1. Not in subcompacts. 0-60 under 5 seconds. It’s almost as fast as a V8 Mustang GT. Its suspension is track tuned, which means it will be unpleasant on regular streets. And automatic is not an option.

          2. There are three hot hatch 300 HP competitors that I know of: the Hyundai Elantra N, Toyota GR Corolla and Volkswagen Golf R. They are usually hard to find as they are not produced in large numbers and the all MSRP around $40K. Some people like the Civic as it handles well and is reliable.

            Anyway, $40K+ for a hot hatch is too rich for my blood, plus I’m old and have outgrown the desire. Plus, where would I fly it?

          4. Horsepower and 1/4 mile times are not the reasons why the Civic Type R is so special. It’s faster around a race track than almost anything out there that’s not a super car or street car with special tuning mods.

            https://youtu.be/yU0vBY2hKqM
            https://en.wikipedia.org/wiki/List_of_Nürburgring_Nordschleife_lap_times
            And the Type R can run on a real racetrack all day without blowing up. It’s an amazing car–nothing in its price range comes close to this level of performance.

          5. It’s faster around a race track

            I have heard that it’s very popular in Europe for that reason.

          6. The R was $10K+ more than the GTI. The plus being speeding tickets I don’t need. 😊

          7. I have heard that it’s very popular in Europe for that reason.
            The first Honda Type “R” in this country was the 1994 Acura Integra Type R. Those are now considered classic cars. They had specially built engines that put out almost 200 HP from an 1800cc 4 banger, extensive suspension, chassis, brake and other modifications. Honda basically made a modern version of the Shelby Mustang GT-350s of 1965 & 1966.

            The GT-350s were unlike anything built at the time and even after. They were about $4500 or $1500 more than a regular High Performance Mustang which was a lot of money back then. Today an original 1965 GT-350 can go for over $250,000.

            The first Civic Type R before the current one was just as fast and the current Type R is one of the only instant collectible classic car right out of the showroom. The reason is that they are very modified cars compared to a regular Civic. Compared to the old GT-350, the Type R makes it look like a Model T.

            And the Type R goes faster than almost any sports car of the last 20 years, including Ferraris and Corvettes. It truly is an amazing car that a regular person can buy. That’s why they are going for so much money at the dealers now.

            I could’ve bought a 1998 Integra Type R but got just an ordinary Integra. I needed a commuter car and couldn’t see putting 200,000 miles on a special hot rod like the Type R. Besides, the normal Integras were very good sports cars compared to what used to pass as a “sports car” in the old days.

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