High-Priced Houses Do Not Create Wealth; They Redistribute It

A report from Market Place. “There’s good news and bad news from the housing market today. The good news: Mortgage rates dipped a bit, and sellers are finally selling. The bad news: Buyers still aren’t buying. Potential buyers still can’t afford a new house, said Lance Lambert, co-founder of the housing analytics company ResiClub. ‘We had this period during the pandemic housing boom where home prices went up 40%, 50% nationally,’ said Lambert. He said sure, mortgage rates have dipped a bit, but when you look at housing prices through the lens of how much people are earning, ‘this is one of the worst periods the past two years for housing affordability in almost four decades.'”

The New York Post. “A chill has fallen over the US housing market. The typical American home is selling at its slowest pace in six years, according to a new Redfin report. Mansion Global reveals that the post-2020 heyday of multiple offers, bidding wars and hair-trigger buyers is well and truly over. ‘Because they bought at the peak of the market, they’re overpricing their homes to try to recoup their investment,’ Houston-based Redfin Premier real estate agent Alicia Grifaldo said in the report. ‘Sellers are competing with one another, and buyers are sparse, so pricing your listing reasonably is everything right now.’ Only 27% of buyers paid above the listing price in March — the lowest March share since 2020. Buyers are no longer competing with each other. It’s sellers that need to stand out.”

From CBC News. “Fifteen years ago, Sally Little of Fredericton took over her parents’ trailer in Florida, in the city of Largo, where her parents had spent their winters for two decades. But now, Little and her husband, Dave, have decided to end their time as snowbirds in the wake of increased hostility toward Canadians and a flurry of decisions by U.S. President Donald Trump. Everything started to change in the winter of 2021. Little said some Americans got upset when Canadians wore masks, both inside the park and outside, and often bragged about not getting vaccinations. She said when some Canadians in the park pushed back and encouraged people to read the news and educate themselves about the situation, they were told that news sources, such as CNN and NBC, were ‘fake news.'”

“But the straw that broke the camel’s back, said Little, was with the introduction of Trump’s executive order which directed the Department of Homeland Security to ‘ensure that aliens comply with their duty to register’ if they intended to stay in the U.S. for 30 days or longer. This ultimately pushed Little to sell the trailer. In the park where Little has wintered for so many years, she said other Canadians had a similar idea, and about 14 trailers went up for sale. Four of the Canadian sellers were able to find buyers and won’t be back, she said.”

From Bisnow. “Condo associations across Florida are doing everything they can to avoid the costs tied to the state-mandated Structural Integrity Reserve Study. Instead of moving to comply, boards are stalling, aiming to scale back scopes or pleading with engineers to let them skid by, while others are banking on the hope that enforcement will be delayed or the law rolled back, engineers, consultants and contractors said at Bisnow’s South Florida Condo Summit on Wednesday. Misha Mladenovic, president of m2e Consulting Engineers, said some condo boards have paid only for visual inspections, only to then be forced to find qualified firms and most likely start the process over, not only delaying compliance but increasing the cost. ‘I can’t go and certify something made on somebody else’s assessment,’ Mladenovic said. In one case, a client offered Mladenovic $5K to sign off on a building just to push it forward, he said. ‘It was essentially kicking the can down the road until the legislation either changed or modified to the point where it’s going to be tolerable from a financial standpoint,’ Mladenovic said.”

“The reserve requirements have been nudging the market toward a financial cliff. Besides some buildings needing to cover potentially millions of dollars in repairs, the cost to insure a condo rose by 27.7% between 2022 and 2024. The average cost of a condo association policy has increased by 103%, from $72,570 to $147,381, the Sun Sentinel reported in September. The soaring costs have pushed values for condos 30 years or older into a downward spiral, with average sale prices dropping 21% since 2023, according to an October ISG World report. And while some condo owners have been forced to sell due to the mounting costs of repairs, others are simply playing chicken, seeing how far they can take it before they are penalized by the state, insurers or lenders. ‘There are essentially people who still believe that it will never come to pass,’ Mladenovic said.”

From KSNV. “Homeowners at Renaissance Townhomes in Henderson are facing a hefty financial burden as their homeowners association (HOA) grapples with a $1.3 million repair bill for the community’s water system. The cost is expected to be passed on to residents through a significant assessment of over $16,000 per unit. Attorney Sam Mirejovsky highlighted the widespread nature of such issues, stating, ‘These are happening all over Nevada and the nation.’ Another option for homeowners is to remove the current board and negotiate a new assessment, though this carries its risks. Mirejovsky warned, ‘If they resign and nobody wants to take their place, at that point this goes from bad to worse because nobody’s there to facilitate the improvements. And remember, at the end of the day, that translates into diminished property values.'”

CBS Sacramento in California. “The City of Modesto red-tagged eight decks at a condominium complex where residents are fighting back against a $25,000 HOA assessment fee they say could force them out of their homes. The Walnut Orchards Home Owners Association (HOA) is attempting to charge that assessment fee per household. The HOA stated the assessment would replace rotting staircases and decks, despite residents saying it has been an issue for years. The city has now deemed eight decks unsafe and off-limits. Currently, the 160 homeowners at Walnut Orchards pay over $580 in HOA fees every month. If the majority of residents vote ‘no’ to the assessment, Walnut Orchards HOA said they will increase the monthly fee by 20% each year. That means, in a decade, member fees could total more than $4,000 per month.”

The San Francisco Chronicle in California. “Opportunistic buyers are pouncing and desperate owners are selling office properties in San Francisco amid the continuing market downturn. As one downtown tower sold to a local company Thursday, another skyscraper was being prepped for a sale. Meanwhile, San Francisco developer Shorenstein and investor Blackstone are slated to part with 45 Fremont St., a 34-story skyscraper near Salesforce Tower, the Chronicle has learned. Where the pricing for 45 Fremont will land isn’t clear, but it will likely mirror a handful of recent transactions that have seen once-coveted office properties sell for half or less of their pre-pandemic values. Kyle Kovac, a commercial broker with real estate firm CBRE, pointed to the recent acquisition of the 450 Sansome St. tower in the North Financial District by Hearst Corp. for $47.5 million. Hearst plans to relocate the media companies from their current location in SoMa to 450 Sansome this year. The building previously traded hands for $89 million in 2015.”

Business in Vancouver. “Canada’s trade woes and federal election are weighing on Vancouver’s spring housing market, according to brokerage Royal LePage. ‘We were expecting a pretty robust spring market for 2025 and it’s been just lukewarm up to now,’ said Randy Ryalls, managing broker of Port Moody-based Royal LePage Sterling Realty. ‘There seems to be a lot of buyers just sitting on the fence waiting to see what’s going on. If you add the Canadian federal election on top of [the geopolitical situation], that’s probably enough in the minds of most Canadians to sort of go, ‘OK, well maybe I’ll just kind of sit, and wait and see what happens here.’”

“‘We’ve been getting used to having a chronic undersupply of inventory for buyers, and this year we finally have what would normally be considered a fairly balanced market in terms of the amount of properties for sale to choose from, he said. ‘So fundamentally it’s there, but I think social psychology being what it is, it is definitely having an effect on buyer opinion.'”

The Vanguard. “Irate investors in the early hours of yesterday stormed the office of Crypto Bridge Exchange Smart-Treasures, widely known as CBEX, located at 166, Idimu Road, Seliat Bus Stop in Egbeda-Idimu area of Lagos State, breaking into the premises in search of officials in charge of the crashed trading platform, with yet to be ascertained billions of money. CBEX is an artificial intelligence-powered cryptocurrency trading platform that allows users to buy and sell digital assets with promises of ‘100 per cent returns every month.’ Dele Oyewale, spokesperson of the EFCC, said the anti-graft agency has been receiving numerous calls from Nigerians seeking information and remedies regarding CBEX. He said before the recent outcry and calls, EFCC had profiled the platform and alerted Nigerians about potential ponzi schemes.”

“One of the victims, who simply identified himself as Mr. Segun, about 35 years, lamented the situation calling on relevant authorities to come to the victims’ aid. According to Segun, ‘How do I start now? You bring in naira equivalent of dollars and put it into CBEX account for trading with huge returns of investment. The persons that introduced me has been on the platform for months before it crashed and gained huge amounts already. Someone, even built a house through it. I joined not quite long ago with $1,700, about N1.7 million investment, now I am at crossroads. I got that money from a cooperative loan I collected with the plan of repaying after making my return.'”

From Sky News. “Alan Kohler’s former Melbourne home has been resold at a major loss of $525,000 less than a year after the longtime ABC finance expert sold off the property for a massive payday. Kohler, 72, successfully offloaded the five-bedroom, three-bathroom property in ritzy Hawthorn for a whopping $8.7 million in May 2024. The finance whiz and his wife Deborah Forster reportedly snapped up the home for a mere $1.7 million in 2003, representing a major financial windfall for the former Inside Business host. Less than a year later, the home went under the hammer again in February. On Sunday, The Australian reported that the new buyers paid $8.17 million, representing a $525,000 loss for the owners.”

“Buyers agent Mal James blamed the surprising loss on the ‘stalled’ market for high end homes in Victoria’s capital city. ‘Prices of many homes – not all, but a lot – have recently felt like they’re rolling along on half-flat tyres,’ he told the newspaper. The sale comes a year after Kohler published an essay warning that the country’s housing crisis risked ‘undermining social cohesion.’ ‘High-priced houses do not create wealth; they redistribute it,’ he wrote in the Quarterly Essay. ‘And the level of housing wealth is both meaningless and destructive.'”

“Mr Kohler’s essay went on to suggest ‘purging’the idea of housing to create wealth. ‘It will be impossible to return the price of housing to something less destructive – preferably to what it was when my parents and I bought our first houses – without purging the idea that housing is a means to create wealth as opposed to simply a place to live,’ he wrote.”