When It Goes South, It Goes South Hard

A report from the Philadelphia Inquirer in Pennsylvania. “About half of home listings in Philadelphia and Delaware Counties in August were what Redfin called ‘extra stale,’ meaning the properties hadn’t found a buyer after 60 days. Likewise, about half of homes for sale in August nationwide were still on the market after 60 days. That’s the highest percentage for August since 2019. And August was the fifth straight month in which the share of ‘extra stale’ listings was higher than at the same time the year before. ‘It feels like we’re getting back to normal, not that we’re experiencing a crash,”’ said Jake Markovitz, an associate broker who is on the board of directors for the Greater Philadelphia Association of Realtors. ‘Looking at the big picture, we had a couple crazy years there as a market, as a society. Coming back down from that, when you zoom out a little bit, it’s back to normal. It’s not necessarily a dire situation. It just feels dire because the last couple years were crazy.'”

“But ‘you still have ambitious sellers who don’t want to reconcile that the market has changed since where we were a few years ago,’ he said. ‘If [a home] isn’t priced right and it isn’t taking into account the reality of the market, it’s gonna sit. You can’t be quite as ambitious as we were a couple years ago.'”

The Daily Voice. “In markets north of New York City, including the Hudson Valley counties of Westchester, Putnam, and Dutchess as well as Fairfield County, luxury home sales have experienced a sharp uptick, according to Houlihan Lawrence’s Q3 Luxury Market Report. Greenwich: The number of luxury homes costing $3 million and higher went up 24.6 percent, while the median sale price decreased by 13.7 percent. Putnam and Dutchess counties: The number of luxury homes costing $1 million and higher went up 34.4 percent, while the median sale price went down 4.9 percent. According to Houlihan Lawrence, the reason there weren’t as many high-price bracket sales in each market may have been that there are a ‘finite number of uber-luxury buyers.'”

The Palm Beach Post in Florida. “Question: Our condominium unit caught fire earlier this year. It was electrical, with extensive smoke damage. We hired a contractor to do the restoration, and the contractor presented the HOA with an invoice to do the electrical, plumbing, and drywall, which is their responsibility. Since the association has cruddy insurance, they didn’t want to pay the contractor what he estimated. He already gutted our condo, and we paid our part out of our insurance money, but the association won’t pay him for their portion of the work. So, our condo just sits there half finished. What do we do now to make the association hire their own contractor to do the work so we can get our part of the restoration done and move back in? Signed, D.W.”

“Dear D.W., The problem is that it is expressly the association’s responsibility to make these repairs, and not yours. At this point, I would inform them that the repair of these items is the association’s responsibility, and you would like them to give you a timeline of when they intend to make the repairs. If they refuse, you’ll have no choice but to involve an attorney, because this is an issue that is outside the jurisdiction of the Division of Condominiums. It sounds like this is a big enough project to make the cost of a lawyer worthwhile, but that’s something you’re going to have to calculate.”

The Tampa Bay Times in Florida. “When Lisa Vacante was ready to buy a home in St. Petersburg, she chose the popular Kenwood neighborhood because it was ‘right smack in the middle of a no evacuation zone.’ Over the last 19 years she rode out hurricanes in her 4-bedroom, 2-bath home on 14th Avenue North, but she never experienced one like Hurricane Milton. Her car was fully submerged by heavy rains. Water seeped in under the floors of her home and sewage spewed out of her shower drain. Now, thousands of residents across Tampa Bay who trusted that they lived in neighborhoods that don’t flood — not like those closer to the coast — are shaken this weekend as they assess the damage. Only about 18% of Floridians have flood insurance. That leaves the vast majority of residents, including Vacante, 51, left to pay out of pocket if their homes get drenched in a hurricane.”

From Quartz. “There’s a term that economists like to use: moral hazard. It refers to the practice of creating financial incentives that promote risky behavior. Last week, those incentives for risky economic behavior were on full view as Hurricane Helene and then Hurricane Milton slammed into the southern U.S. So why are residents and businesses rebuilding, time after time, in the same places that were destroyed the last time around? The answer, people who have studied the problem say, is insurance. Even as private insurers flee hurricane zones or raise premiums and lower coverage limits, the federal government, and to a lesser degree the state of Florida, remain as the insurers of last resort.”

“‘This is a classic moral hazard,’ said Simon Buechler, an assistant professor of finance at Miami University in Oxford, Ohio, and an expert on real estate, finance, and catastrophes. That’s because government insurance programs like the NFIP underprice the risk, so homeowners and businesses in flood-prone areas pay below market price for insurance. ‘They basically bail out the people who didn’t have insurance or the people who were not fully covered,’ Buechler said. ‘You know the federal government and the state government are going to come in and help you when you have a disaster, so you don’t care.’ Even worse, Buechler said, the guarantee of a government bailout actually encourages people to take risks they won’t have to pay for. ‘We know from research that it triggers people to move into these areas where you have more of these floods and more exposure to hurricanes, and that’s partly why we see more of these multi-billion dollar events,’ he said.”

Silicon Valley. “In a recent poll of Bay Area residents, nearly half said they were considering leaving in the next few years. Ken Freeze, 69, and Michele Freeze, 68. Sold: A split-level home in Martinez for $750,000 (Originally bought for $167,000 in 1984). Bought: A 3,800 square foot home in Meridian, Idaho, with a five-car garage for $496,000. Ken and Michele Freeze settled in Martinez in 1984. They loved California, and in 2005 bought several acres in Placerville, where they one day hoped to retire. But by the time retirement rolled around, the state had changed too much for them. ‘The homeless situation in downtown Martinez was just getting out of hand,’ Freeze said. ‘Beautiful Marina Park was just littered with needles. People didn’t want to take their families down there.'”

“Mary Ezell-Wallace, 73, and Samuel Wallace Jr., 83. Sold: A four-bed, three-bathroom house in the hills above East Oakland for $575,000 in 2006 (Bought at $106,000). Bought: A 5,500 square-foot home in El Dorado, Arkansas, for $400,000. For nearly four decades, Oakland was Mary Ezell-Wallace’s home. ‘We could get anything we wanted real fast,’ Ezell-Wallace said. ‘I thought Oakland was one of the greatest places there was.’ But in the early 2000s, the city started ‘to feel like a third-world country,’ she said. ‘I didn’t want to wait until everything got worse than it already was.'”

Kelowna Now in Canada. “It’s never good to be pegged as an ‘underperformer’. Yet, that’s exactly what the Kelowna housing market is, according to Francis Braam, the broker-owner of Royal LePage Kelowna. ‘Sales are 45% off their peak. When it goes south in Kelowna, it goes south hard. But, when it comes back, it comes back hard, too.’ Braam admitted he doesn’t have a crystal ball, but he said the comeback won’t be this year or early next. Braam said the real price correction in Kelowna was over two year ago when the average selling price of a single-family home hit a record-high of $1,250,000 in March 2022 and then plunged to $1,050,000 by September 2022. That loss in value of $200,000 in just three months set Kelowna up for the next two years because prices have essentially flatlined since.”

“‘Don’t get me wrong, Kelowna is still unaffordable even with that big adjustment,’ said Braam. ‘And it looks like it will stay that way because prices have held tough for the past two years and will likely stay the same for at least the next while.'”

From CBC News. “Maureen McCartney has been using Airbnb for her travel accommodations for about eight years. But she’s started using hotels instead, after her last few stays didn’t go so well. For a recent visit to Seattle, she booked a basement suite that looked pretty good in the online listing — but in person, felt like something from the set of a Saw movie. She’s not the only one. A Google search for Airbnb on Reddit surfaces complaints above anything else, including ‘Is Airbnb even worth it anymore?,’ ‘Is this the downfall of Airbnb?’ or ‘Staying in a terrible Airbnb right now [Canada].’ Then there’s one of the most recurring insults to injury: requiring guests to clean up after themselves — even if they pay a separate cleaning fee. ‘Take out the garbage. Put everything in the recycle [bin]. Like, it’s as if you’re at home and the whole purpose of the vacation is not to have to do these things. And you don’t have to do them at a hotel,’ said McCartney.”

“For McCartney, however, the bottom line was the price. She says a stay at an Airbnb used to cost her about a third of the cost for a similar hotel room. But now, she’s finding they just aren’t as good a deal as they used to be. For the year ending in August 2024, the average daily rate before fees for all short-term rental listings in Canada was $261.47 — almost 47 per cent higher than in 2019. She adds that a condo building filled with permanent residents is probably healthier for the community, including nearby local and family-owned businesses. ‘I think Airbnb just sucks the life out of a community. And we need to look after the local community before tourism,’ she said.”

The Negotiator. “An off-the-high street estate agency in Wales has closed down after its owner blamed her council’s recent crackdown on second homes as the ‘final nail in the coffin’. Jane Edwards says demand for second homes in Pembrokeshire has collapsed after the county council tripled council tax for those owning this kind of property. She says the consequent slump in demand that this precipitated meant there is little appetite among outsiders to buy second homes in this area of Wales. ‘We went from selling 60 properties in the 2021-22 financial year to just 10 this year,’ she told The Telegraph, revealing that she put in £30,000 of her own money to help keep the company.”

The Daily Record in Scotland. “Residents of Edinburgh’s final city centre scheme have spoken out about how they feel increasingly trapped inside their estate. The neighbourhood was once dominated by low-income families living in social housing, but locals told Edinburgh Live that the estate’s demographic makeup had shifted dramatically over the years. The increased concentration of private landlords and short-term rentals has resulted in a more transitory population than in the past. Many are dissatisfied and have voiced feelings of abandonment since they are surrounded by a costly world that they can no longer enter. Open drug dealing, cutbacks, and the loss of communal space are all important worries.”

“Jim Slaven, a writer, working-class advocate, and 30-year resident of Dumbiedykes, spoke about the changes he has experienced in his area. ‘We have quite a transient population now with a lot of students, private tenants and even Airbnbs,’ the former residents association chair said. ‘You can see Airbnbs going for over £200 a night. We’ve also lost most of our services in the heart of the scheme. You used to have small active businesses including a wee grocers but it is all gone now. For a small while a community group took over a vacant unit and set up a wee shop but then the funding was removed. We don’t have a church, a Post Office, a bus service or shops, nothing is really based here other than smack dealers.'”

The Daily Express. “Thousands of Spaniards took to the streets on Sunday in Madrid to protest against extortionate house prices, as holiday rentals remain the target of angered locals. According to the Spanish Government, 12,000 people participated in the demand for more affordable housing amid fears they are being priced out of the housing market. Nurse Blanca Prieto said, as reported by Reuters: ‘Spaniards cannot live in their own cities. They are forcing us out of the cities. The government has to regulate prices, regulate housing.’ Activists were claiming that Madrid workers now spend half of their yearly earnings on rent, a burden made heavier by the soaring property prices. The Spanish Government announced a crackdown on short-term and seasonal holiday lettings in July, planning to investigate key platforms such as Airbnb and Booking.com to verify their licences.”

ABC News in Australia. “The dream home that Simon had built for his family sits unoccupied and untouched, like a time capsule. The family of four’s clothes are still in their wardrobes, handled only by years of dust. Spoiled food fills the pantry. Books and empty water glasses sit where they were left on bedside tables near half-emptied school bags. The family abandoned their home in May 2022 after Simon was told the residence was allegedly filled with dangerously high levels of mould. They left immediately, taking just the clothes on their back and whatever they could carry and decontaminate.”

“Simon does not want his surname used as he is locked in a lengthy legal dispute in the Victorian Civil and Administrative Tribunal (VCAT) with the home’s builder over allegations of unsafe site practices, a cut sewage stack and spare bricks that were allegedly on-sold on eBay. The ABC has chosen not to name the builder for legal reasons. Simon signed a nine-month contract for the construction of a house in the outer Melbourne suburb of Parkdale in February 2017. More than two-and-a-half years after the start of the build, in September 2019, the family moved in. After numerous delays, disagreements and defects, Simon was ready to put a frustrating build behind him. But around a year later and right in the middle of a global pandemic, things took another turn. ‘I would describe it as the ultimate nightmare,’ Simon said. Simon is suing his builder for more than $800,000 in costs and damages over the home-build saga, while the builder is suing Simon for unpaid bills. ‘You just shake your head and think, ‘What am I going to do with this? Where’s this going to end up?'”

From Reuters. “Chinese finance industry professional Zhang Jing made enough money from a recent stock market rally to consider hopping on the housing ladder but wants to hear more from the government before making a purchase. ‘I still don’t have enough confidence,’ said the 28-year-old, who believes buying a first home will improve his chances of finding a marriage partner. ‘Stocks, real estate and trade are all very unstable,’ said Chen Gengtao, sales manager for property developer Manjinghua. ‘Many people are losing their jobs, young men can’t find job opportunities and there is no room for wage increases. How can they buy houses?'”

“In Shenzhen, where prices are roughly 40% off their peak, some 1,841 provisional new home sales contracts were signed during the period, up 664% from last year, the city’s housing authority said. In the Daya Bay area nearby, new advertising boards read: ‘Home prices are at their lowest point. Now is the time to buy.’ On Saturday, Minister of Finance Lan Foan said the government planned to ‘significantly increase’ debt to revive economic activity though he did not elaborate on size or timing, disappointing many who tuned in. Economists expect the need for 2 trillion to 3 trillion yuan ($283 billion to $424 billion) in additional fiscal stimulus. Some investors said the figure needs to be even higher to sustain the market rally. Lan’s remarks were ‘not a whatever-it-takes moment,’ said UBP senior Asia economist Carlos Casanova.”