Sorry, Keep My Deposit, Seek Legal Action

A report from Mansion Global. “In a reversal, mortgage rates in the U.S. ticked back upwards this week after hitting a two-year low in September. Lower mortgage rates might have broken the stalemate between buyers and sellers, as buyers deterred by higher mortgage rates and sellers locked into low-rate loans prepared to come off the sidelines. In September, new listings flooded the market and mortgage rate applications rose in an apparent reaction to the lower rate environment. New listings increased 11.4% nationwide compared to the previous year leading to a 34% increase in active listings, according to Realtor.com. The piled-up inventory was greatest in the southeast, following a monthslong trend, with Florida metros taking the lead: Tampa, Miami and Jacksonville saw active listings jump 74%, 67.9% and 61.9% year over year, respectively.”

ABC 15 in Arizona. “72 Sold CEO Greg Hague told ABC15 that there are more than 18,000 homes on the market currently in the Phoenix Multiple Listing Service (MLS). He said that’s three times more than what it was about three years ago. His number one piece of advice: Consider buying now before you have a lot of competition. For a lot of people though, home ownership can feel so out of reach today, especially that initial chunk of money for a down payment. Hague said, there are ways around that with little or no down payment options. ‘I see it as a real opportunity here in October and November and December to find your perfect home, not have a lot of buyer competition, and then, okay, go ahead and borrow at six percent, give or take, but then refinance next year, get your rate down to five or four and a half [percent],’ Hague said. ‘That to me would be the smart move.'”

The Current in Louisiana. “At this time last year, Lafayette’s ban on short-term rentals was still up in the air. That ban is now in effect, prohibiting operations like Airbnb and VRBO in single-family neighborhoods, just in time for the fall festival season. ‘I had to cancel 25 short-term contracts that were occurring after Oct. 6,’ says Richard Gaspard, a Lafayette STR owner. ‘I can’t let them sit there and not generate revenue of some kind. So, it is concerning,’ says STR owner Pat Mould.”

Market Watch on California. “In his 13 years as a real-estate agent, Scott Goshorn has never seen a home-insurance market this difficult. When he was helping sell an $8 million house in the Westlake section of Los Angeles, Goshorn got quotes from insurance companies so he could give prospective buyers an idea of their potential insurance costs. He was told that wildfire coverage on the property would cost $140,000 a year. A few years earlier, the cost probably would have been $20,000 or less, he said. ‘Selling a home in a fire zone is very difficult,’ Goshorn told MarketWatch. ‘The crazy insurance is now a deal killer.’ The home’s eventual buyer ended up getting a policy that cost a relatively reasonable $60,000 a year by working with an insurance provider that had insured other homes he had owned. Others haven’t been so lucky.”

“Deals have fallen apart often enough due to a lack of insurance coverage that the California Association of Realtors has started allowing buyers to pull out of a contract on a home if they are unable to secure insurance coverage. That allows the buyer to retrieve money placed in escrow.”

The Union Tribune in California. “A Los Angeles developer is seeking to erect a 22-story high-rise with a combination of hotel rooms and apartments above ground-floor shops blocks from the coast in Pacific Beach, flouting a voter-enacted law that has long kept building heights at 30 feet or less in the beach community. The $185 million project, which is currently being reviewed internally by the department, is invoking a state law — State Density Bonus Law — to bypass the neighborhood height limit and coast through the permitting process. The project, which will tower more than 200 feet over its neighbors, is offensive to some community members.”

“‘It’s a big middle finger to the neighborhood,’ said Marcella Bothwell, chair of the Pacific Beach Planning Group and a retired ear, nose and throat surgeon. ‘The thing that’s appalling about this is that they tricked the law by using something that was meant for affordable housing, and they used it for commercial development, for pure profit.’ Bothwell primarily wants to update community members on what’s happening, even though she knows there’s little that can be done. ‘We may end up with this monstrosity,’ she said.”

The Wall Street Journal. “Freddie Mac is set to end its blacklist of Meridian Capital Group after the real-estate broker overhauled its risk and controls, signaling the type of requirements the rest of the industry could soon face as regulators ramp up a broader fraud crackdown. Freddie will resume business with Meridian in January, Meridian said, more than a year after it was banned in response to allegations that some of its brokers falsified client financials to get bigger loans. Fannie Mae also has a blacklist on Meridian, which remains in place, the firm said. Other brokers have since been banned by the mortgage-finance giants.”

“The firm also cut more than 100 employees—or roughly a quarter of the firm—from its workforce. That included around 40% of brokers. ‘I don’t want to imply that everybody who was let go was let go because of some kind of misconduct, that’s not the case,’ Chief Executive Brian Brooks said. But some of them ‘probably don’t belong in the new world. They have come out of an environment that had no oversight and no regulation,’ he said.”

The Globe and Mail in Canada. “Sales of new and as-yet unbuilt condominiums have fallen to decades-long lows in recent months, but a looming and more urgent issue is what to do about thousands of complete or nearly complete unsold apartments and townhouses. ‘You’ve got almost 96,000 units under construction, due to complete and deliver over the next three years,’ in the Toronto-region according Fraser Wilson, a former senior vice-president with preconstruction sales experts International Home Marketing Group. His contacts in the industry are finding that the amount of unsold product is increasing as more and more buyers walk away from their purchase contracts. ‘The developers are now entering a phase where consumers are saying ‘I’m not going to be able to close on this unit. Sorry, keep my deposit, seek legal action.’ We’re just on the forefront of that taking place,’ he said.”

“With Toronto’s condo resale market sitting at nearly seven months of inventory builders can expect these units to sit empty for months, creating a costly drag on balance sheets. Mr. Wilson’s solution is to launch a new auction site – www.inventorycondos.com – to assist buyers and builders find the actual market price of unsold units, a process he acknowledges may result in some losses for builders. ‘They have their bottom line, they have to achieve a certain price,’ he said, noting that some recently completed units are still being marketed at prices per square foot far above anything moving in the resale market. ‘Anybody who’s got a calculator will not be able to make sense of the prices that are being sought.'”

Der Spiegel. “Dietmar Czernich is the right man to turn to if you want to retain access to your money in difficult times. The lawyer from Innsbruck has plenty of experience with wealthy clients and complicated foundation and account structures. Indeed, it is likely that Czernich, 56, could also have been a suitable partner for René Benko. The fallen Austrian real estate magnate is currently in the sights of major investors and banks from around the world, including the sovereign wealth fund from Abu Dhabi – who want several million dollars from him and his company SIGNA. And who would like to pull the last cent out of his pockets.”

“The Kaufhaus Tyrol shopping center is where the investor’s legendary career took off, before it later crashed into a spectacular bankruptcy. Today, the property can at least serve as collateral for hundreds of creditors. All of them believed Benko’s promises of consistent returns. And they lost hundreds of millions. And they have no idea where the money ended up. Benko had attracted investors from around the world with impressive properties, like the Elbtower in Hamburg and the Chrysler Building in New York. Now, his creditors are demanding the return of billions of dollars, some of it from Benko personally.”

“The pursuit of Benko’s millions is a mystery seemingly made for the silver screen. There are the large banks that are sticking their heads in the sand because they are apparently embarrassed by the ill-advised loans they made. There are the billionaires who are fighting to regain their lucre, and others who have resigned themselves to their loss. Including some big names and some familiar faces. Klaus-Michael Kühne, the international logistics billionaire, only says that he ‘allowed himself to be lulled.’ Hans Peter Haselsteiner, formerly the CEO of the construction firm Strabag and one of Benko’s main investors, said in a statement that he had ‘written it off’ and that it was a ‘painful defeat.'”

Domain News in Australia. “Unit values are languishing below their peaks in a string of Sydney and Melbourne suburbs, often where there has been significant new apartment development. An investor-driven boom during the 2010s has created a glut of homes that are less suitable for long-term owner-occupiers, who are not bidding up prices even in a housing crisis. There are 65 unit markets in Sydney and Melbourne where values are below their record highs from last decade, new analysis from property researchers CoreLogic found. In some, there are vendors selling at a loss.”

“In Sydney’s Epping, the median unit value is 18.4 per cent below the peak it reached in May 2017. The median unit value has also slumped in Sydney Olympic Park, down 14.8 per cent. The Melbourne CBD is 8.4 per cent lower than its May 2017 peak, while Southbank (-4.2 per cent) and Docklands (-5.1 per cent) are also lower. ‘There is a lot of supply of relatively cheap property in Sydney and Melbourne; the problem is they don’t meet the needs of today’s buyers because they were developed for a very particular buyer at a particular point in time,’ CoreLogic head of Australian research Eliza Owen said. ‘They stand as kind of a waste, unfortunately, in some of our most precious, convenient sites in Sydney and Melbourne in the middle of a housing crisis. It became pretty clear as that cycle matured that the homes weren’t even good enough for people to live in – in the extreme cases, an Opal Tower.'”

The Indian Express. “A group of at least 10 homebuyers, who have been awaiting possession of their flats in the Amrapali Dream Valley Enchante project of Greater Noida West since 2015, Tuesday approached the Court Receiver’s Office demanding handover of their flats. ‘We were told that the project will be initiated soon,” said another buyer Anuj Maurya, a resident of Vaishali’s Sector 1 who invested in a 2BHK flat in Amrapali Dream Project in 2015. ‘I had taken a loan of Rs 30 lakh to invest in the flat. It has been 10 years. All I have done is to pay the interest to the bank,’ a dejected Maurya said.”

“‘It was easier for the new flat buyers to get the possession as the documentation was done directly with the NBCC and not with Amrapali,’ a distraught Sachin Sharma said. He, like others, booked a 2BHK flat with the Amrapali Valley in 2015. ‘Today, I neither have money nor a house, I have been beaten both ways,’ she said.”