When Buyers See Dozens Of Other People Buying, They Feel Safe And They Feel Validated

A report from ABC Action News in Florida. “The housing market is cooling down. And that became very clear when ABC Action News’ Annette Gutierrez went to several open houses on Sunday afternoon and couldn’t find any buyers. Realtor Amrita Ramassar listed a property in East Tampa about a month ago at around $500,000, but she hasn’t gotten any bites. So, about a week ago, she dropped it by about $25,000 more. ‘It’s a bit frustrating because this is an investment property for us as well, so we are trying to sell it and move onto something else,’ said Ramassar. ‘So I’m kind of like, do I drop it again? Do I wait a little bit more?'”

“Chandler Thompson has been a realtor in Tampa for almost a decade, and said Florida’s housing market isn’t as appealing as it used to be. ‘With interest rates being as high as they are, buyers can’t afford nearly what they could three, four or five years ago, so it’s changed and shifted a little bit,’ said Thompson. ‘I think sellers are getting a little bit of a reality check now. They still think they can get those COVID prices, and that’s just not the case anymore.'”

The Florida Bulldog. “Karina Lopez belongs to a club nobody wants to join: foreclosure defendants who once thought their mortgage problems were over. They most definitely are not. Lopez, 51, is fighting a third foreclosure against the modest home she bought for cash in North Miami’s affluent San Souci district more than 20 years ago. Her mortgage issues began in 2008 when Bank of America offered her a $200,000 home equity line of credit and, later, a loan modification. She never got the loan modification but late fees and insurance mounted until they doubled her outstanding balance. Bank of America filed the first foreclosure but voluntarily dropped it in 2012; a second foreclosure filed by a different nominal creditor popped up in 2017, apparently soon after the filing deadline expired. And so on.”

“‘It’s like being attacked by terrorists. That’s how we all feel,’ Lopez said at a May 7 Zoom meeting of the American Property Owners Network (APON), a grassroots information-sharing and mutual support nonprofit. ‘It’s a major scam,’ said Margery Golant, a Coral Springs foreclosure defense lawyer. ‘People are blindsided and scared to death. They’ve paid their first mortgage down, maybe improved their house. They thought they were in the clear and somehow, out of nowhere, comes this.’ The debt gets ‘flipped and flipped and flipped,’ she said, until property values rebound and investors holding bundles of second mortgages pursue a big payday. ‘They want the principal and all the interest that accrued over all of those years. With a $40,000 loan, now, maybe they want $100,000,’ Golant said. ‘On second mortgages, creditors don’t pay tax and insurance so they had no expenses,’ she said. ‘They just sat there under the radar and let the interest mount up and then went after the whole thing. And now they’re demanding a much larger number and threatening to foreclose, or foreclosing, unless the borrower pays.'”

“Nothing about his business model is nefarious, Miami investment banker David Gordon insists. The website of ArcPe, his private equity firm, says it’s engaged in ‘securitizing over $10 billion of mortgage-backed assets annually.’ ‘I don’t think it’s predatory lending because you’re going to collect on something you own in the first place,’ Gordon said. When property values rise, ‘it’s a win-win for both’ debtor and lender. ‘Why should only the owner of the home see the upside?’ He likened foreclosure to student debt repayment. ‘If someone signs up for a degree that costs $80,000 and studies Taylor Swift, is that the lender’s fault or is that your fault for picking a major you can’t use to get a job?’ he asked.”

The Free Press on California. “Back in the summer of 2017, I bought a 9,500-square-foot parcel of land in the foothills of northeast Los Angeles for $265,000. I paid for this with money from the sale of the house I’d owned with my ex-husband. The idea was to build a modest house of my own. All modesty aside, this is a next-level insane thing to do, but I have always been insane about real estate and I guess I wanted to level up in that department. Even if the project went massively over budget (which it definitely would) I would still be able to get financing on a construction loan and come out in the end with a house worth far more than what I’d put into it. Even if the place was rendered unaffordable thanks to mortgage, insurance, and property taxes, I could put it on the market and make enough profit to buy the aforementioned 800-square-foot house. Never mind that the attendant financial panic would likely shave years off my life.”

“By the time the Fed raised interest rates in 2022, my mid-six-figure project had turned into a seven-figure project. Along the way, my income had dipped into a fraction of its former self. So in the summer of 2023, exactly seven years after purchasing it, I put the whole caboodle on the market. In the pantheon of bad choices, the attempt to build my own house towers above all others. I have lost money in LA real estate, which practically defies the laws of physics. More than 200 days after putting it on the market, I managed to sell my land for $100,000 less than my initial asking price. If you added up the money I spent trying to develop the project over seven years, I probably lost at least $150,000. That those seven years coincided with the biggest run-up in housing values in modern history is a wound I may never stop licking.”

“When the deal finally closed, I was shaken and depleted. Friends I hadn’t seen in a while still asked how the house was coming along, as though it was a relationship whose demise they hadn’t gotten news of, and each time I was transported back to the early days of my divorce, when I’d have to shield my gaze from the pity on people’s faces so as not to crumple under the weight of my own self-pity. But now, curiously, I almost coveted pity. Instead of allaying their concerns with assurances that I was perfectly fine, I took a masochistic pleasure in relaying the extent of the damages. An innocent inquiry like ‘How’s your house coming along? Did you build it?’ would be met with ‘It was an act of spectacular hubris and a catastrophic failure. I lost more than $100,000 and I’ll never own another home in California.’ To which they said the only thing there was to say: ‘I’m so sorry.’ Which was also the last thing I wanted to hear.”

The Globe and Mail in Canada. “The federal government last week made good on its promise to give first-time home buyers a break on the GST on new homes – a move the industry hopes is just one of many lifelines they’ll be thrown. Across the country, thousands of completed homes are sitting unsold, and the industry is hoping the GST break will get sales moving. Rennie Marketing Systems has forecasted nearly 3,500 unsold units will sit on the Vancouver area market by year’s end. In Toronto, the estimate is close to 24,000 unsold units, according to the research and consulting firm Urbanation.”

“Meanwhile, Square Nine Developments is using marketing incentives to unload some sitting inventory. The company slashed prices on 77 units at its completed Belvedere project in Surrey City Centre last Saturday, reducing the price per square foot from $1,000 to $720. The result was a long lineup and the sale of 63 units, half of them to investors, according to Key Marketing, whose president Cam Good has been offering the occasional ‘Condoday’ flash sale discounts as one-off events since the 2008 market downturn, for projects in serious need of a boost. He also recently promoted another Surrey project, SkyLiving by Allure Ventures, that gives buyers the option to sell the unit back to the developer at the original price, or lease the unit back, ensuring cash flow if the buyer is an investor.”

“Back in 2021, Square Nine had sold 200 units at the Belvedere, at the original price. They’d held back the penthouses, hoping to get an even higher, price and chose to rent out the units at the podium level. Now, they’re selling all the units, including the rental. Mr. Good said that servicing the debt on the remaining 77 units would have amounted to about $300,000 a month for the developer. Instead of paying a lender, they’d rather sell off the units at cost or even slightly below and take their money and move on to finding their own deals on reduced-price development sites, said Mr. Good. ‘It’s no big deal. There are 275 homes in the building. They still made money – they sold [about] 200 at a good price. … Everybody wins, the developer made money,’ said Mr. Good.”

“He expects to do several more Condoday promotions this summer. He said he enjoys doing them, because his usual job is ‘making developers rich.’ ‘And 70 per cent of our buyers are first-time homebuyers.'”

BC Business in Canada. “A rare real estate flash sale in Surrey City Centre made waves on May 31. Burnaby-based Square Nine Developments slashed prices on its Belvedere condo tower, drawing hundreds of prospective buyers and investors. The one-day-only event, ‘CONDODAY,’ marked a significant deviation from typical sales approaches in Metro Vancouver’s high-stakes housing market, offering move-in-ready concrete homes at roughly 25 percent below prior pricing. By noon on Saturday, the buzz was palpable. Nearly 200 people had lined up outside the sales centre, some having camped out overnight for a chance at discounted ownership. Priced at an average of $725 per square foot, the units were offered at a steep markdown from the local norm of $1,125 per square foot. Of the 78 homes released, 63 were sold by Monday, an even split between investors and owner-occupiers. The remaining units, including some reclaimed from buyers who failed to close on earlier contracts, are still on the market at the discounted rate.”

“Organized by real estate strategist Cam Good of Key Marketing, the flash sale leveraged a bulk sales model last seen in Metro Vancouver during the 2008 downturn. Back then, Good helped move hundreds of unsold units for developers struggling under market pressure. Sixteen years later, a similar playbook is being deployed under different—but equally volatile—conditions. Buyers are largely driven by a sense of safety and crowd validation, explains Good. ‘When buyers see dozens of other people buying, they feel safe. They want to buy, and they feel validated by all the other people buying at the same time. So, it’s really the selling environment that is the secret sauce of ‘CONDODAY.'”