They Got Into The Market At The Peak And Prices Have Now Cooled Off

It’s Friday desk clearing time for this blogger. “Aging South Florida condos face critical issues. Inventory is up. Prices are down, and buyers are weary of aging condo buildings. CBS News Miami reporter Joe Gorchow asked Melina Urban, who has worked as a property manager in South Florida for 30 years: ‘How many [condo associations] do you think of the course of your career were always trying to push for deferred maintenance, saying we’ll get to those big physical issues later down the line?’ ‘At least 50%,’ answered Urban. ‘Now, who’s left holding the bag, the owners.’ Craig Studnicky, ISG World’s CEO, has been selling real estate for 45 years. His firm’s research shows condo sales in buildings 30 years or older in Miami-Dade, Broward, and Palm Beach County are selling 20% below market value. ‘They think they saw bargains, but when they get their bill for special assessment sometime next year, I think they’re gonna realize they bought fool’s gold,’ said Studnicky.”

“Redfin agent Heather Kruayai said she’s seeing about 25% of her deals for nonluxury homes in Jacksonville, Fla. fall apart because of financing challenges. Some sellers are struggling to unload units they bought just a few years ago. This past summer, Kruayai said a $510,000 deal for a four-bedroom home in the Sandalwood neighborhood of the city was nixed after the buyer asked for a $53,000 closing credit at the last minute. The seller had overpaid for the property during the Covid-induced property boom in 2022 and it was already appraising for less than the $525,000 he paid, she said. ‘He was already at a loss. He had no equity left in the home, so he couldn’t fulfill what the buyer wanted,’ she said.”

“According to the Austin Board of Realtors, active home listings in the Austin-Round Rock-San Marcos market increased by 15.4% this year. ‘We have over 12,000 active listings on the market. That’s more than we’ve seen, really, in over a 13-year span,’ Housing Economist Clare Knapp said. ‘Home prices are just a little bit too high still in the Austin market for buyers.’ Despite the median home price dropping by 4.4% to $439,000, and mortgage rates slightly decreasing by half a percentage point, Knapp said it’s not enough to entice buyers like it did during the COVID-19 pandemic. ‘They were flying off the shelves … Stories about homes being sold sight unseen. It’s certainly a different market, in that sense,’ Knapp said.”

“The number of Colorado Springs-area homes listed for sale last month reached a nine-year high. A new Pikes Peak Association of Realtors market trends report showed home listings totaled 3,320 in August, a 37.2% jump over the same month last year. Last month’s listings were the most since 3,378 in August 2015, historical data maintained by The Gazette show. ‘It’s a combination of sellers still optimistic in their pricing, and so there are properties that are out in the market, staying on the market longer because of either optimism on the behalf of the seller, meaning … that they’re priced too high,’ said Dean Weissman, a real estate agent, ‘Or it’s a condition or location issue. You have these outliers that aren’t priced appropriately, that don’t have the right condition that matches the price, that are staying on the market longer, which is driving that inventory up,’ he added.”

“On Thursday — more than three years after Hurricane Ida — New Jersey Gov. Phil Murphy conditionally vetoed legislation that would have provided qualifying residents a 1-year break from making mortgage payments and forestalled foreclosure for homeowners unable to keep up with their bills. ‘The requested changes to this bill mean we don’t qualify. I’ve been to Trenton so many times testifying for this bill, and now I won’t even qualify,’ Leanna Jones, a Milford Ida survivor and New Jersey Organizing Project storm recovery activist, said Thursday noting she felt betrayed and sick. ‘This is what disaster recovery programs and mortgage forbearance are supposed to be there for,’ she added of her current situation. ‘Instead, 3 years later, I’m drowning.'”

“Chris Kraszynski lives in a condo in Prospect Heights, Illinois and said her condo association has falsely accused her of removing the wall-to-wall carpeting, putting her housing at risk. The ABC7 I-Team walked around her apartment and saw the carpeting that she’s being accused of removing firsthand. ‘As you can clearly see, carpeting everywhere,’ Kraszynski said as she showed her condo. She was disappointed by the condo association’s rejection, but she said she was shocked when they alleged in a lawsuit in 2010 that she removed the carpet. Kraszynski said she missed her court appearance because she was sick and the judge sided with the condo board and found Kraszynski in default. ‘The judgement was nearly $40,000,’ she said. With fees, fines, and interest from non-payment, that total grew in nine years up to $588,000, according to court documents from 2021. The condo association has also filed foreclosure documents on Kraszynski’s home. ‘My life has been turned upside down,’ she said.”

“Anticipating pent-up frustration and anger over its proposal to use a South San Jose tiny home site for a jail diversion program, Santa Clara County officials asked residents to join in a ‘mindful minute.’ It did not go well. ‘This is just absolutely unacceptable,’ said resident Jenny Tran. ‘I think I’m going to need another, what is it, minute of breathing after this meeting. My blood pressure has just gone through the roof. You can see by the number of people in this meeting that we do not agree with this.’ ‘There’s transients roaming the street,’ said resident Bill Wilson. ‘There’s people sleeping on the sidewalks that were never there before. You wonder why people have no confidence in the government. It’s because of things like this and people like you who try to push it through.'”

“An under-the-radar tweak to Washington, D.C.’s Emergency Rental Assistance Program passed in 2022 created a loophole that is at the heart of the existential crisis engulfing the District’s affordable housing sector. The new rule barred tenants from being evicted from their homes as long as they had a pending application for ERAP funds, and it removed judges’ discretion to weigh whether a tenant has hope of receiving assistance or whether it would cover their debt. Landlords say tenants and their attorneys have taken advantage of the rule and collectively racked up millions in unpaid rent that there is no hope of recouping. Dantes Partners founder Buwa Binitie said he has seen many tenants ‘taking advantage of just applying’ for ERAP funds. ‘So long as they apply, there’s no reason for them to pay rent,’ Binitie said.”

“Just when it looked like things couldn’t get worse for Destiny USA’s owner, they have. As it struggles to avoid foreclosure on its giant Syracuse mall, Pyramid Management Group just lost control of a nearly identical mall in the New York City area and may soon lose ownership of it. Like Destiny, Palisades is worth a fraction of what it was just a few years ago. And like Destiny, the downstate mall is loaded with debt that Pyramid is having trouble paying off. Pyramid entities borrowed nearly $419 million on Palisades from JPMorgan Chase and Barclays in 2016, a loan that was quickly sold to investors as commercial mortgage-backed securities. The mortgage was set to mature in April 2021, but Pyramid was unable to pay it off.”

“With the losses, the malls have lost much of their market value, which means lenders would be unlikely to get all they are owed if the malls are sold. Palisades was appraised at $881 million when its mortgage was issued in 2016. But it was appraised at $209 million a year ago. Destiny was appraised at $710 million when its mortgage was issued in 2014, but Kroll estimates the mall’s current value at $65.3 million — barely 9% of what it was worth a decade ago.”

“1 Palace Pier Court, No. 3501, Toronto. Asking price: $2,999,000 (July, 2024). Previous asking price: $2,999,000 (February, 2024). Selling price: $2.65-million (July, 2024). Last year, agent Luke Dalinda sold three 2,836-square-foot units in the northeast wing of Palace Place, a 47-storey building on the banks of the Humber River at Lake Ontario. But in February this year he sensed something very different when buyers showed far less enthusiasm for this similar three-bedroom model. ‘As soon as 2024 kicked in, the market for condos died, whether it was one or three bedrooms. No one was making the move,’ said Mr. Dalinda. The unit was taken off the market for a spell, then relisted in July. Within a week, it sold for $2.65-million to downsizers, a steep $349,000 discount off the asking price. The new owners take possession in October. ‘These suites were selling in the $2.8-million range, but the seller was cognizant prices were lower,’ Mr. Dalinda said.”

“According to a report from Canada Mortgage and Housing Corp. (CMHC), delinquency rates – when a homeowner has missed at least three consecutive mortgage payments – in London sat at 0.14 per cent in the first quarter of the year, up from 0.07 per cent in the same quarter of 2022. London’s rate of increase is similar to the one seen across Ontario. According to CMHC, about 2.2 million households, or about 45 per cent of all outstanding mortgages, would be renewing their mortgage in 2024 or 2025. ‘The people that we speaking about purchased during the pandemic years, so they got into the market at the peak and prices have now cooled off,’ said Anthony Passarelli, CMHC’s lead economist for southern Ontario. ‘For them, it could be more of a payment shock if they renew at much higher rates.’ London’s unemployment rate, however, represents an even greater threat that could lead to an increase in delinquency rates in the near future, Passarelli said.”

“Residents of an upmarket newbuild estate claim they have been subjected to ‘awful’ treatment by the developer after being left with huge lists of snags for years. Some have given homebuilder Bellway the nickname ‘Hellway’ amid complaints of collapsing stairways, ‘rollercoaster’ fences, leaking toilets and unsupported floors. Work officially ended on the 100-property Bassingbourn Fields estate last year but purchasers who moved in as much as three years ago are among those furious that problems still haven’t been fixed. Many are now talking of selling their homes, some of which cost nearly £600,000, or are refusing to pay fees to the management company for the development’s upkeep.”

“One young woman, who asked not to be named, revealed the staircase collapsed within weeks of moving in and her husband plunged into the understairs cupboard. ‘The contractor who came to fix it said there was only one screw in each step. There should have been 14,’ she said. ‘We’ll leave as soon as we can – too many bad memories here.’ Stephen McIntyre, 54, has appointed solicitors after living with snags in his four-bedroom home for three years. ‘It’s been one calamitous issue after another. I would not buy a tent off Bellway. I have no faith in their construction skills,’ he added. Sam Dowman, 30, who arrived on the estate with his wife 18 months ago, said the garden fence of their three-bedroom house was too high, leaving them feeling ‘like we were in a prison cell when we were sitting in our living room.'”

“Property Investment Professionals Australia chair Nicola McDougall said at least 14 per cent of investors in their annual investor sentiment survey – out Friday – had bailed on their rentals in the past year, an even bigger sell-off rate than the year before. ‘It’s clear that investors have not only had enough of being the golden gooses to financially fluff up state government bottom lines, but they also are reacting to the myriad rental reforms and property taxes that make holding an investment property either unpalatable or unviable for them,’ Ms McDougall said. The survey found a massive 42.7 per cent of investors were now seeing tight cashflow, while one in 10 were dipping into savings to cover shortfalls.”

“Almost half the members of the Real Estate and Housing Developers’ Association have unsold completed residential units as of June. According to an industry survey carried out by the association, the vast majority of these unsold homes are lots reserved for Bumiputera buyers. Rehda president Ho Hon Sang said 33% of these Bumiputera lots remain unsold even after three years since they were completed. Besides the lots reserved for Bumiputera buyers, Ho said, Rehda members cited low demand and end-financing loans being rejected by banks as the main reasons for the glut of unsold houses. He said the average rate of rejected property loan applications was 31%. ‘That means if you have 100 loan applications, it is likely that there will be 31 cases where the loans will be rejected. Maybe these 31 units need to be resold to other parties, or interested buyers need to find more supporting documents or evidence to support their loans,’ he said.”

“China’s economic plight is deepening, heaping pressure on Beijing to step up support for households or risk getting stuck in a low-growth rut. The root of China’s problems is a still-festering property meltdown that is sapping government revenue, holding back investment and keeping consumers from spending more freely. Economists at Barclays estimate that if home prices nationwide fell in line with the 30% fall recorded in top cities since 2021, then China’s real-estate slump has cost the economy $18 trillion in vanished wealth—a staggering sum that adds up to around $60,000 for the average three-person household in China. ‘It seems like they’re just floundering,’ said Katrina Ell, director of economic research for Asia-Pacific at Moody’s Analytics in Sydney. ‘I can’t see anything that brings me optimism.'”