The Housing Bubble

A report from the Montreal Gazette in Canada. “It seems like a person can’t throw a rock in downtown Montreal without hitting a new condo project promising state-of-the-art facilities, a rooftop pool, breathtaking views and a communal lounge. It begs the question: Are there too many condos in Montreal? Anecdotally, the answer is yes. ‘There are definitely too many condos,” says Doug Hollingworth, a homeowner who recently swapped his Mile End condo for a semi-detached in N.D.G. ‘I know more people who are leaving (Montreal) than moving here.’”

The Edmonton Journal. “Renters continue to have the upper hand on landlords in Edmonton. Data compiled by an Alberta property management firm, Hope Street Real Estate, shows that the number of rental homes currently on the market has risen to 5,211, up from 3,820 at this time last year. Company president Shamon Kureshi said this is great news for renters with more options and lower rents, but bad news for landlords. And Kureshi doesn’t see that improving any time soon.”

“‘We did this report mainly just to have something on paper to show our clients when they called to say ‘What the hell is going on here?’ Kureshi said. ‘It’s probably a little alarming for many landlords. There are a lot of factors at play, but the cost of a barrel of oil is the main one,’ he said. ‘There are also a lot of condo developers who can’t sell their units and who are now putting them into the rental pool, creating a tidal wave of inventory. Two years ago that could have been a profitable venture for them, but what we have concluded is that selling isn’t really an option.’”

The Calgary Herald. “Rapid construction of new apartments at a time of high unemployment in Calgary has left a raft of rental housing empty, spiking the apartment vacancy rate to levels not seen in a generation, a new report says. More than 2,500 apartment units were empty in October, up by more than a third over last year’s volumes, pushing the vacancy rate to seven per cent, according to the Canadian Mortgage and Housing Corp. It’s now the highest it has been in 25 years, the national housing agency said in its annual rental market report.”

“Calgary was home to 36,500 apartments last month, up by 1,300 units or nearly four per cent over year-ago levels. It was the biggest annual gain in 22 years and the third straight year of expansion in the rental market. ‘The vacancy rate has moved well above historical averages largely due to a rise in supply,’ Richard Cho, analyst with the housing agency, said in a statement. ‘Job losses have spread beyond the energy sector and into other areas of the economy.’”

The Saskatoon Star Phoenix. “Saskatoon’s apartment vacancy rate climbed from 6.5 per cent to 10.3 per cent over the last 12 months, while the average rental rate for an apartment in the city remained steady at about $1,000, the CMHC reported Monday. About 1,391 of the 13,507 apartments in Saskatoon were sitting empty last month. That represents an increase of 522 vacant units from the 869 that were sitting empty in October 2015. ‘Weak economic and labour market conditions have held back rental demand, while increasing supply in both the primary and secondary rental markets has resulted in a significant jump in apartment vacancies this year,’ CMCH analyst Goodson Mwale said.”

The Moose Jaw Times Herald. “On Monday, the CMHC released data about vacancy rates for apartments within Moose Jaw and around the province. It showed that the vacancy rate for Moose Jaw for Oct. 2016 was 3.3 per cent, down from 3.4 per cent in Oct. 2015. The provincial average was 9.4 per cent. Weyburn, Lloydminster, and Estevan all had vacancy rates above 20 per cent, ranging from 20.2 per cent to 27.6 per cent for Estevan.”

The Dawson Creek Mirror. “Apartment vacancy rates in Dawson Creek and Fort St. John are once again the highest in British Columbia according to new data from Canada’s housing agency, but local real estate professionals are divided on whether the numbers accurately reflect the market. Dawson Creek recorded an overall rental vacancy rate of 19.1 per cent in October, 4.5 points higher than the same time last year. Fort St. John, meanwhile, saw its vacancy rates surge from 12.1 per cent to 30.7 per cent. At 34.8 per cent, the town’s vacancy rate for one-bedroom apartments was the highest single rate in the province.”

“Lita Powell of Fort St. John’s Li-car Management Group said the numbers were ‘bang on.’ In fact, the CMHC might be underestimating Fort St. John’s vacancy rates, she said. ‘The real vacancy in Fort St. John is much closer to 35 per cent,’ she said. ‘The CMHC vacancy rate misses a substantial number of units,’ including any buildings smaller than eight units. ‘When you consider the number of duplex units built in the past four years in Fort St. John, I suspect they make up a substantial number of the vacancies,’ she said.”

From CBC News. “One of Nelson Sturge’s tenants recently came into his office to drop off their keys. But there was still six months left on the commercial lease. ‘One of the comments by them was, ‘We can’t even make payroll,’ Sturge said. CBC News spoke with Sturge and other Fort McMurray commercial landlords who have all said they’ve reduced their asking prices by about half.”

“Some of Sturge’s properties sit on one of Fort McMurray’s industrial parks. It’s not hard to spot ‘For sale’ signs hanging along its streets. Property owners like him, who bought or built warehouses and storage buildings during the height of Fort McMurray’s boom, are now stuck paying high mortgages and collecting low rents. ‘It puts us in a bit of a bind right now, especially with the market that’s out there,’ Sturge said. ‘It’s a tenant’s market right now.’”

A report from KPCC in California. “The five year run-up in Southern California housing prices could be coming to an end and homeowners thinking about selling may want to act sooner rather than later, according to economists and a leading real estate broker in Orange County. Even before the election, there had been signs the market was slowing down. But immediately after Trump’s surprise victory, there was a significant development: Mortgage rates rose to their highest levels since the summer of 2015 and appear to be headed farther up as investors flee from bonds to stocks.”

“‘I’ve heard from sellers – some of whom even voted for Trump – who are a little bit nervous because they’ve realized values now exceed 2007, which was the ultimate height,’ said Steven Thomas, realtor and author of the monthly Orange County Housing Report. ‘It feels like values are topping out.’”

The Miami Herald in Florida. “For the past eight months, Miami Beach has waged a war against short-term rentals. Its weapon of choice: $20,000 fines. One property on Meridian Avenue has been walloped three times, totaling $60,000 in fines. The high fines against short-term rentals may lead property owners to rent long-term instead, depreciating the value of the properties because they generate less income from renting, said real-estate broker Ross Milroy.”

“‘This is diluting the rental pool. With more properties available, people have more choices,’ Milroy said. ‘It’s starting to bring down rents. Once rental prices come down, prices will follow. It’s decreasing the value.’”

The New York Post. “Holiday specials aren’t limited to flat-screen TVs. The overpriced Manhattan real-estate scene has left some homes lingering on the market for more than four years, prompting huge price cuts that make them ripe for the picking, according to experts and stats compiled for The Post. ‘Historically, we are now in the midst of the fastest market adjustment ever,’ said Leonard Steinberg, president of the city real-estate giant Compass.”

“The prices of some high-end homes have been slashed nearly in half since hitting the market. A penthouse duplex at 165 Perry St. in the West Village has taken the biggest hit, with its asking price dropping 49.8 percent, from $39.8 million more than a year and a half ago to its current $19.8 million. ‘The natural forces of markets have kicked in on their own,’ Steinberg said.”

“There also have been extreme price drops in the much more affordable range, according to statistics compiled for The Post by real-estate Web site StreetEasy. A one-bedroom, one-bath, 700-square-foot unit at The Beekman, a prewar co-op at 575 Park Ave., has been on and off the market since 2013 and was listed for $500,000 last year. This month, it was slashed by 40 percent, to $300,000.”

“When a property stays on the market for a while, sellers just want to ‘cash out,’ leading to the sudden price drops, experts said. An apartment at the Village’s 150 Charles St. has been on the market the longest — 1,355 days, according to Streeteasy. Its original $8.99 million asking price is now down to $7.95 million. ‘Someone’s loss is another’s gain,’ said Paula Del Nunzio, a top luxury broker with Brown Harris Stevens.”