Looking For A Real Estate Steal
A report from the Boston Globe in Massachusetts. “The rental market in Greater Boston may be topping out over the next few years, according to a forecast this week from online real estate marketplace Ten-X. The report is the latest sign that Boston’s rental market may be plateauing, especially at the high end. New buildings that have opened lately have been offering concessions such as a free month’s rent to woo tenants in a suddenly competitive market for luxury apartments. ‘It’s a classic supply-and-demand scenario,’ said Rick Sharga, Ten-X spokesman and a longtime observer of the real estate market.”
From Forbes. “By Forbes’ count, some two dozen mega-mansions, luxury penthouses, and speculative residences were priced to sell at $100 million or more during the housing recovery. But only a handful of these homes–four that we know of–have actually sold for a nine-figure sum. The remaining $100-million-plus listings have been price-chopped, pulled from the market, or left with ambitious price tags in place. The quiet disappearance of many of these mega-priced listings from the market underscores what most brokers have known all along: there is no $100 million housing market.”
“Now there are plenty of signs that the luxury market has cooled off–and not just at the $100 million price point. In Manhattan, where so many luxury towers are in the pipeline that there is now a glut of supply. In Miami, sales slowed last year, according to Douglas Elliman’s latest market report, with the absorption rate (the number of months it would take to sell all listings) rising to 18.3 from 11.3 months a year earlier. ‘I think the peak buying period has already passed us in South Florida,’ says Peter Zalewski, who owns CraneSpotters, adding of the high-end market: ‘It’s effectively dead on arrival.’”
The New York Times. “It is a scene playing out across the Midwest and the South, where many of the derelict houses have been sold to private investors by government mortgage firms at knockdown prices. Nationwide, more than three million people are estimated to have bought a home through a contract for deed. After the financial crisis, as banks retreated from lending to those with poor credit, this odd corner of the housing market began to draw interest from deep-pocketed investors who sometimes sell the homes for four times the price they paid.”
“Now, complaints are piling up in cities across the country, according to dozens of court records reviewed by The New York Times, as well as interviews with housing lawyers and home buyers in Ohio, Michigan and Minnesota. Kevin Franklyn, 46, of Detroit said he struggled with making repairs on a $44,925 Harbour house in 2011. After falling behind on the payments, he recently agreed to forfeit the contract to the house. The roof, plumbing, electrical system and drywall all needed serious repairs, he said. His fiancée, Lisa Micou, 46, said the home was in greater disrepair than the couple had anticipated. ‘Everybody wants that part of the American dream — everyone wants a piece of that pie,’ she said.”
From Crain’s Detroit in Michigan. “Overseas investors have cooled on buying distressed homes in Detroit after a pair of alleged scams targeting thousands of properties. The alleged scams involved homes purchased for as little as $500, in many cases through Wayne County tax auctions, according to property and federal court records. The properties then were flipped, in one case for as much as $15,000, to investors duped into buying what they believed were bank-foreclosed homes for more than fair market value, court records say.”
“Many victims were left with virtually worthless property saddled with back taxes, liens and blight notices, prosecutors said. One investor lost almost $1 million. ‘Things have cooled,’ said Darin McLeskey, managing partner of Detroit-based Denovo Real Estate, who is helping foreign buyers salvage investments in Detroit homes. ‘A lot of buyers are going down in flames, asking for help.’”
“Hong Kong banker Nelly Roquefort paid $49,500 to a Metro affiliate for a colonial on the city’s west side in May 2012. Months earlier, the Dearborn affiliate had purchased the home from the Wayne County tax auction for $6,901. Roquefort stopped receiving rent payments last year. When rent was paid, it never covered alleged repair bills, Roquefort said. After contacting a real estate agent to dispose of the property, Roquefort discovered the home was stripped and rendered almost unsellable. Roquefort unloaded the home for $20,000 in July. ‘Definitely not going to invest in Detroit ever again, like a lot of foreign investors, I suspect,’ Roquefort wrote in an email.”
“Steve Graysmark, a retired London police officer, says he lost about $130,000 after buying six homes from Metro, lured by the prospect of profiting from Detroit’s rebirth. Graysmark, 55, said he is preparing a lawsuit along with nine other investors. ‘It was a very stupid purchase,’ he wrote in an email to Crain’s. ‘I did get someone to look at the properties before I bought them but they looked at them and said they were OK. However, they were not.’”
CNN Money on Puerto Rico. “Looking for a real estate steal? Try Puerto Rico. And it’s a buyer’s market right now. You can get a 3-bedroom home near the beach for under $100,000. So what’s the catch? For sale signs are everywhere in Puerto Rico. People are fleeing the island because it’s been in a prolonged economic crisis. The situation is reminiscent of what Detroit was like when it filed for bankruptcy in 2013.”
“‘So many houses are empty here,’ says Joaquin Garcia de la Noceda, a locksmith in San Juan, the island’s capital. Joaquin listed his 96-year-old mother’s home in San Juan for $100,000. Hardly anyone looks at it even though it’s in San Juan and has three bedrooms and two bathrooms. The home is one of many bargains in Puerto Rico. It was appraised at $215,000 not long ago, and his mom paid $177,000 for it in 2009.”
“The island has lost over 10% of its population — roughly 440,000 people — in the past decade. Since Puerto Ricans are U.S. citizens, many are simply packing up and moving to Florida, Texas and other states. ‘People are literally leaving their homes empty with the keys in the house,’ says retiree Maria Milagros Rodriquez. They let the bank deal with it.”
“Maria owns a gated home in San Juan with a big garage and yard teeming with flowers. Homes on her block sold for over $1 million only a few years ago. Now people are lucky to get $400,000. The plight is evident on Maria’s block. The home next to hers is empty and she knows of two other vacant properties a few houses down. There are no ‘for sale’ signs yet because most of the homes are in the process of being repossessed by their banks.”
