Stuck In A Trade
The Press Democrat reports from California. “Sonoma County’s housing market wrapped up the first half of 2014 by once more posting both a drop in sales and a double-digit jump in prices, according to The Press Democrat’s monthly housing report compiled by Pacific Union International VP Rick Laws. While it remains a sellers market, Laws said buyers are cautious and at times have sought concessions. ‘I’ve seen numerous occasions where buyers take a walk,’ he said. ‘And basically it’s that they don’t want to overpay.’”
From Bloomberg. “Alexander Philips joined the rush to buy foreclosed U.S. homes four years ago, spending $40 million on houses in California and Nevada to operate as rentals. Now his firm is getting ready to sell. ‘We didn’t want to be the last one standing when the music stopped,’ Philips said. ‘We view this as a trade, not as a business.’”
“Corporate owners with limited capital or deadlines to repay investors are now selling houses in bulk, or one by one, after a 26 percent surge in prices from a March 2012 low. ‘That consolidation phase will be bigger than the original buy phase,’ Tom Barrack, whose Colony American Homes is the third-largest single-family landlord, said at Bloomberg’s Los Angeles bureau. ‘Now we’ll sweep up everybody over the next two years who got stuck, who says I have home price appreciation, which they do. They bought right, but now they are stuck.’”
The Press Enterprise. “The national housing activist group Right to the City Alliance has released a report that claims the $20 billion that private equity firms have spent to acquire REO-to-rental and single-family rentals since 2012 has created a ‘faceless’ landlord-tenant dynamic in communities hit hardest by the housing collapse. The report was based on canvassing and tenant surveys on 1,402 properties in Los Angeles and Riverside that were owned by the world’s largest private equity firm, The Blackstone Group, or its purchasing subsidiary, THR California.”
“The properties, managed by Blackstone subsidiary Invitation Homes, were largely unaffordable for tenants, the report found. The report found that 33 percent of the tenants said their rent consumed at least 50 percent of their take-home pay, 74 percent had not met their landlord in person, and clauses in rental agreements enabled that landlord to terminate a lease and evict a tenant with a modicum of warning.”
“U.S. Reps. Mark Takano, D-Riverside, said the report confirms what his office found earlier in the year. ‘Rental costs are getting further and further out of reach for working families in the Inland region,’ he said.”
All Gov California. “Home prices calculated by the San Francisco Association of Realtors hit $1 million in 2013, but that excluded condos, which were lolling about somewhere around $850,000. But the good times kept rolling, and DataQuick reported this week that the median for condos and homes combined has breached the magic million-dollar mark and continues headed up. The continued influx of tech employees rolling in stock option money and Asian investors offering all-cash deals drove prices up 13.3% compared to a year ago. That is actually a slower pace than a year ago, when prices were up 23.8% over 2012.”
“San Francisco has been undergoing an intensified gentrification of its less desirable areas as well as bidding wars in its nicer neighborhoods. The result is some of the worst income inequality in the world. The San Francisco Human Services Agency crunched data from the U.S. Census Bureau and the World Bank to determine that San Francisco’s income inequality was on a par with Rwanda.”
The Desert Sun. “The largest unpaid property tax bill in the Coachella Valley belongs to a long-stalled project with ambitions so big, it was once called a ‘city within a city.’ The 50-acre plot in Indio along Highway 111 remains empty scrub land, except for a lonely building with a sign announcing the name of its owner: Polo Square. In July, the property received a notice of power to sell, a red flag warning that it is now on track to be sold at a tax sale auction. Polo Square Partners, however, still has many chances to pay off taxes before the county sets an auction date.”
“The backbone of the project, originally estimated to cost a staggering $850 million, included 350,000 square feet of retail, 200,000 square feet of offices, a 120-room extended stay hotel, a 250-room hotel and 516 condos.’
“The city has no plans to buy the property, Indio Councilman Glenn Miller said. ‘The city’s been in a holding pattern trying to figure out first, who’s going to end up with the property, and second, if they have any wherewithal to develop it out,’ said Indio Mayor Michael Wilson. So the land sits vacant, an eyesore to residents who live near Highway 111. The city fined the property a total $53,540 for nuisance abatements from March to May 2013, in response to complaints from neighbors about loitering vagrants and the overgrown brush being a possible fire hazard.”
The San Francisco Chronicle. “Cory Tschogl was priced out of the San Francisco housing market, so she bought a one-bedroom condo in a gated Palm Springs community 18 months ago. She visits it often and her father lives nearby. She’s rented it occasionally through Airbnb and Flipkey for about a year. The income from guests who paid around $450 a week helped meet her expenses for the mortgage, taxes and insurance. But her current tenant’s stay had issues from the beginning.”
“Tschogl says she has an Airbnb squatter - a guest who rented her vacation condominium, then stopped paying rent, refused to leave and threatened her with legal action. Tschogl realized that she couldn’t legally cut off the electricity, although her SoCal Edison account showed daily usage was triple to quadruple normal. Her father went by the unit several times and photographed it with the sliding glass doors and windows wide open, presumably while the air conditioning was going full blast to combat the 114-degree heat. ‘It’s a horror story,’ said Tschogl, who lives in San Francisco.”
