A Fine Line Between Hope And Delusion
A report from The Real Deal on Florida. “When Argentinian developer Alan Faena announced an ambitious high-end condo project in Miami Beach three years ago, Faena House became a symbol of the heights to which developers could take the luxury market, shattering Miami-Dade’s residential price record with the $60 million sale of its penthouse and selling out its lower units to a who’s who of Wall Street bigwigs. But four months after hedge fund honcho Ken Griffin closed on Faena’s duplex penthouse and the unit beneath it in September 2015, he placed the them back on the market for a total of $73 million. Not long after news broke of Griffin’s sprint for the exit, resale inventory began piling up at the 18-story tower. By early August, $148 million worth of Faena condos were up for grabs, representing about 20 percent of the units in the tower. Some of those have lingered on the MLS for a year now.”
“The same is true for many of Miami’s shiny new luxury buildings. By the count of development tracker CraneSpotters.com, there were nearly 11,000 condo listings (not including preconstruction) in Miami-Dade County east of I-95 in late August. The average asking price was just north of $1 million, or $572 per square foot.”
“PMG Principal Ryan Shear said his firm is in no rush to get out the door with its latest project. The developer is still clearing out the remaining inventory at its four South Florida projects, including Echo Brickell and Muse, which are under construction, as well as its completed projects Echo Aventura and Sage. ‘I hate to say this, but we were lucky,’ Shear said. ‘It’s definitely not as fast as it was, and there’s definitely been some price depression.’”
From Mansion Global. “One might imagine that a Hawaii beachfront vacation home associated with Hollywood A-Lister Julia Roberts would attract multiple bidders. However, it has not yet happened. After lingering on the market for more than 18 months, the actress recently cut the price to $19.5 million from $29.85 million, trying to find an interested buyer. Such cases aren’t rare. On the East Coast, Gwyneth Paltrow and her ex-husband Chris Martin have recently reduced the asking price of their TriBeCa penthouse to $12.85 million from $14.25 million, when it first came to the market in March.”
“Actor Matthew Perry had to settle for $2.85 million less than the original $25 million he thought his Malibu home was worth. Pop singer Katy Perry sold her Los Angeles home for $1.36 million less than the original asking price. Singer and fashion designer Jessica Simpson’s Beverly Hills estate was sold for $6.4 million, almost $1.6 million less than what she had wanted. The list goes on and on. Leonard Steinberg, president of brokerage firm Compass in New York concurred, adding that in the real estate markets, correct pricing is everything. ‘Assuming a celebrity associated property is automatically more valuable than market rates can be hopeful…and there is a fine line between hope and delusion,’ he said.”
The Pocono Record in Pennsylvania. “The once proud and formerly gated Pine Ridge private community in Bushkill is facing dire financial problems as many residents have fallen behind in their homeowners’ association dues leaving the community with a $450,000 budget shotfall. Board members have sought help from local and state officials and, in a recent letter to residents, the association noted that it does not have enough money in its budget to make it through the fiscal year.”
“Board members said state government may have to intervene. ‘I don’t believe many of our residents have ever recovered from the recession,’ said Alexandra Tutuianu, the community manager at Pine Ridge. She added that 147 homeowners in Pine Ridge have lost their homes to foreclosures in three years. ‘We have tried everything in our situation. Once a homeowner files for bankruptcy, you can’t touch them. We’ve asked residents to pay what they can and they have to realize that the community cannot function without the amenities that we need.’”
The Wyofile on Wyoming. “On April 28th, Mark Frausto went to work at Alpha Coal’s Belle Ayr mine, only to learn it was his last day. Along with 37 others at Alpha’s two mines, Frausto was let go. He’d worked 14 years with Peabody Coal, but only one with Alpha. There would be no severance package, no month’s pay, no buffer at all but filing for unemployment. Frausto’s layoff came just one month after Black Thursday, March 31st, when Peabody and Arch Coal cut 465 miners between them. ‘We didn’t know what the future was,’ Frausto says.”
“In real estate, the number of houses on the market has increased steadily over the last six months. In March, there were 417 houses up for sale, close to double what there was a year ago. By August, that number was up to 553. Rental properties still report a slow market, which indicates movement out of the city by more mobile energy or service workers who lost their jobs. Apartment complexes that used to have waitlists now find themselves with vacancies and offer reduced rents.”
“‘People are moving out faster than they’re moving in,’ said Jordan Newell, a leasing agent with Highland Properties, which manages three Gillette apartment buildings with affordable housing. Out of their 200 apartments, 37 are vacant.”
