August 26, 2016

Investors Need To Batten Down The Hatches

It’s Friday desk clearing time for this blogger. “If you’ve been shopping for a home in Boston or its suburbs in the past few years, you probably know how this story ends: cars lining the block and a hundred people at the open house. A dozen offers rushed to the listing agent, many of them above asking price or in cash. And an emotionally taxing, white-knuckle bidding war. When your reasonable offer is rejected, it’s enough to make you cry. ‘It’s really almost a national phenomenon,’ Lawrence Yun, chief economist at the National Association of Realtors, said of the Boston-area market.”

“Could the second attempt be the charm for a million-dollar-plus home sale in Sylvan Park? A $1.28 million listing of a 3,477-square-foot, single-family home at 109 42nd Ave. N. provides the latest test for that neighborhood southwest of downtown Nashville. Barring a major negative global event, Christie Wilson, president of The Wilson Group Real Estate Services doesn’t believe there’s going to be a popping bubble. ‘There are definitely micro markets in Nashville that are experiencing a bubble, and if demand subsides, we will see a typical deflate, but not a pop,’ she said. ‘That is the nature of real estate. It goes up, and it goes down … and still it remains the best investment a person can make.’”

“Reality TV show host and entrepreneur Marcus Lemonis on Monday sold his five-bedroom, 8,225-square-foot mansion in Lake Forest for $2.7 million. Lemonis paid $4.936 million for the mansion in 2005. He first listed it briefly in 2008 for $6.7 million and later relisted it in 2011 for $4.995 million before several price cuts. He then relisted it in 2014 for $4.1 million before taking it off the market. He put it back on the market on May 23 for just below $3 million.”

“Armstrong Realty Management CEO Benjamin Ringel, who’s facing foreclosure on his Southampton mansion, now has another legal woe. Ladder Capital is suing the Midtown-based landlord, claiming he defaulted on a $5.9 million mezzanine loan secured against an Upper West Side retail condo.”

“Detached housing sales have plunged 84 per cent on Vancouver’s West Side and are down 88 per cent in Richmond during the first two weeks of August compared to the same period in 2015. Total detached house sales through the Real Estate Board of Greater Vancouver plunged 71 per cent in the same period. Zolo Realty BC Inc., a real estate firm that tracks average, rather than benchmark, prices in Vancouver’s housing market, reports that as of Aug. 22, the average home price in the city dropped 17.1 per cent from July 25, to $1.1 million.”

“Noted real estate investment analyst Ozzie Jurock said it is likely that there will be a sharp increase in listing inventory in the weeks ahead. ‘As investors, we need to batten down the hatches,’ Jurock told his readers this week.”

“The ‘turmoil’ of the Brexit vote has seen Cambridge house prices fall for the first time in years, prompting fears the city’s housing bubble may be about to burst. Figures released today show the city’s average house price fell from May to June. One city estate agent, who asked not to be named, warned the local market could ’spiral out of control’ if things don’t soon stabilise. He said: ‘Sellers don’t want to accept prices could be coming down, and buyers have been conditioned into thinking Brexit would lead to prices coming down. The effect is, nothing much is really selling.’”

“Rents dropped by an average of KD 60 compared to two months ago in Salmiya, according to a report. Al-Rai’s report quotes Qais Al-Ghanem, Secretary of the Real Estate Association, who previously predicted a drop in rents due to a 30 percent decrease in investment lands’ prices in many areas, in addition to the fact that supply now far exceeds demand. ‘The real estate market has been saturated following the boom in construction investment buildings, and rents will eventually go down following years of rent bubbles,’ he indicated.”

“Rents have dropped considerably in high-end apartments. For instance, in Egmore, where there has a been a huge supply of luxury apartments, rentals over the last one year have dropped from about ₹85,000 to ₹65,000 an apartment. Abdur Ravoof, a property consultant, says the situation is particularly tough in high-end apartments – houses that fetch rent of over a ₹1 lakh a month. As companies and employees cut costs and expenses, rentals are taking a beating. Also, with the continuous increase in supply of apartments, the tenants have a wider choice.”

“‘I am paying a hefty maintenance on the vacant apartment on OMR. I need a tenant now,’ says a desperate apartment owner. His tenant has recently moved out of the two-bedroom unit to a larger apartment for a nominal increase in rent within the same township project. ‘True, this is the story of Chennai’s residential rental market,’ acknowledges Jayant Hemdev, Partner, Hemdev Real Estate, a leading player in the sector.”

“In Abuja, findings show remarkable drop in rents and house prices. At the Federal Housing Estate in Lugbe, where a three-bedroom flat was going for between N700,000 and N900,000 per annum. A tenant, who introduced himself as Luke, said his annual rent was N700,000 but his landlady had asked him to start paying N450,000 in the next rent cycle. According to Lordye Agema-Hur, CEO of Sir Hur Nigeria Limited, a three-bedroom flat sold for N20 million at the Federal Housing Estate in Lugbe, but can now be bought at N17 million.”

“Unfortunately, despite this drop in prices, there is low activity in the market owing to the fact that buyers are not coming up due to lack of cash. ‘It is not a seller’s market any longer,’ Terungwa Sabe, an Abuja-based estate surveyor and valuer, said in a telephone interview.”