January 12, 2017

In The Throes Of A Softening As A Glut Floods The Market

A report from the Dallas Morning News in Texas. “Homebuilders in North Texas and around the country are looking forward to at least a couple more good years for sales and construction. But some tough times could be down the road with a possible recession and another price bubble, a housing industry economist warns. ‘During the next five years, we actually go into a fairly severe cycle of overvaluation,’ said Mark Boud, top economist for housing analyst Metrostudy. ‘This will be hard to avoid.’”

“The median sales price of North Texas preowned homes has jumped more than 40 percent in the last few years and is at a record level. Prices went up an additional 10 percent in 2016. ‘You’ll need to be prepared for more severe recession after the party ends.’ Boud said. ‘We are kind of setting the table for that.’”

The Baltimore Sun in Maryland. “Federal workers in Maryland and across the nation are bracing for reductions in head counts, civil service protections and even salaries when President-elect Donald Trump and Congress turn their attention to government spending later this year. The threats and preliminary steps taken by Congress have created anxiety for many of the government’s 2.1 million employees, including some 300,000 who live in Maryland. ‘The federal government is the core driver of the Maryland economy, whether we like it or not,’ said Richard Clinch, director of the Jacob France Institute at the University of Baltimore. ‘When the federal government gets nervous, employees don’t buy houses, cars and flat-screen TVs.’”

From Forbes on New York. “The upper end of Manhattan’s real estate market has been slumping for months, with apartments in some of the borough’s priciest enclaves languishing on the market before selling. New York’s priciest borough is still in the throes of a softening at the very high end as a glut of expensive condominiums floods the market. The downward decline is forcing developers at some of Manhattan’s priciest condominiums to cut prices.”

“Buyers who signed contracts and completed those purchases at 432 Park Ave., got price reductions averaging 10%, an analysis by appraiser Miller Samuel Inc. showed. A penthouse on the 88th floor of the building sold last month for $60.9m, a 20% price cut from its original asking price. One of the last remaining full-floor apartments at One57, one of a cluster of expensive new condominium towers on Manhattan’s so-called Billionaires’ Row, sold last month for $45.8m, about $12.7m less than its $58.5m asking price.”

The Seattle Times in Washington. “An immigrant from China who had been living in King County has pleaded guilty to visa-fraud charges after federal authorities charged her with using stolen money from overseas to purchase a house on the Eastside. Shilan Zhao, 53, submitted false documents to federal immigration authorities and will forfeit her $900,000 house in Newcastle and give up properties worth tens of millions of dollars in California and New York, the U.S. Attorney’s Office in Los Angeles said. She also will spend up to five years in federal prison.”

“The indictment says she used funds from fraudulent transactions from a grain storehouse in China to buy a four-bedroom house on 113th Avenue Southeast in Newcastle for $525,000 in 2012. Her ex-husband, 53-year-old former Chinese government official Jianjun Qiao, was a director at the grain business in Zhoukou.”

“The pair laundered about $2.2 million in funds from overseas into a Canadian bank account, according to the indictment. Zhao also sold a Bellevue home on 139th Place Southeast for $998,000 in 2014 after the family bought it for $687,000 in 2010, county records show. Zhao lived in Newcastle but also owned a condo in Flushing, N.Y., and several properties in Southern California, the U.S. Attorney’s Office said. The Monterey Park, Calif., properties have a combined value of $28 million, according to the Los Angeles Times.”

“While this specific type of prosecution is rare, there has been no shortage of problems with the EB-5 immigration program, both locally and around the country. Just last week, local developer Lobsang Dargey pleaded guilty after defrauding hundreds of EB-5 investors from China.”

“In June, another Seattle developer, Henry Liebman, was fined $1.24 million for improperly using unlicensed brokers to steer EB-5 investors his way. And in April, a Bellevue immigration lawyer got a $278,000 fine in a similar EB-5 case. Washington is home to the fifth-most EB-5 investors from overseas, with more than 800 investors and family members living in the state, according to a new federal report.”