January 30, 2018

Weep Not For Them

A report from the Daily Evergreen in Washington. “I’ll admit I’m extremely skeptical when it comes to housing prices in Washington. There are a few apartments I saw while browsing Craigslist that blew my mind. $1,365 for a top floor unit at the Armory Apartments? DABCO’s downtown luxury lofts? To be fair, the pictures showed some dang nice apartments. My confusion was … why here? Who is their target audience? I mean, this is Pullman, not Chicago or Manhattan.”

“The Armory Apartments, owned by Kolde Properties, share similar amenities to the DABCO lofts and therefore a similar audience. CEO Judy Kolde explained she bought the old National Guard building primarily for her hot yoga studio, but saw potential in the unused space.” ‘Let’s just say you come here as a faculty member moving from Brooklyn,’ Kolde said. ‘They’ll look for something like they’re used to. We want to attract good professors and coaches. If you build it, they will come.’”

From the Tennessee Ledger. “Once the city thawed, out-of-town buyers from all directions awakened and descended upon Nashville’s scant inventory. Houses were swarmed with buyers. With the Airbnb craze, money was falling like manna from the sky into investors’ pockets. Much of the city’s prosperity was due to the sudden proliferation of apartment buildings, with cranes crowding the skyline. Most banks and other lenders had decided that there would be no more loans for condominiums, but it seemed any developer that could fog a mirror could revive funding for apartments.”

“Now in the eighth year of the post-recession economy, things are changing. Apartments are beginning to have vacancies with many offering two months free rent to new residents or two months free rent to residents that refer new residents. And don’t forget the free Apple television. With non-owner occupant Airbnbs in peril, there are investors who will not realize the return they need on their properties.”

“Weep not for them. They had their fun while it lasted. Investors with older homes that are long-term rentals are finding the competing apartment incentives are causing their rents to decrease, often to the point that it is not feasible to retain the properties. Look for these properties to begin to flow into the marketplace. As these homes that were former rentals drop in, buyers should beware. The owner investors have never inhabited the houses and have no idea of the shortcomings that the dwellings may have.”

From Bisnow on California. “Experts say the next recession is not a matter of if, but when. Eight years since the last recession and with no end of a healthy economy in sight, those in the industry continue to be cautiously optimistic and bullish in the local Orange County and national economy in the short term. There is one caveat — millennials will be the key to keeping the economy going and growing, commercial real estate experts said at Bisnow’s Orange County State of the Market event.”

“‘I think the traditional definition of a recession is antiquated — two years of negative [gross domestic product] growth and high unemployment rates,’ Steadfast Cos. President Ella Shaw Neyland said, adding that there have been smaller unnoticeable recessions in different sectors of the commercial real estate landscape. ‘I think there’s a new norm as far as what growth will be because I think consumer spending will be less. The millennials don’t tend to have a high income so they don’t tend to buy as much stuff. I think we’re entering a period of new normalcy but not the kind of growth we are expecting.’”

“Meyers Research principal Mollie Carmichael said it is not that millennials do not want to own homes but lack of affordability is a big factor preventing them from doing so. Orange County has to focus on housing that matches their price points, she said. ‘We need to see innovative production solutions, and if we don’t, I think we’re doomed,’ Carmichael said.”

From the Real Deal on New York. “Another slow week in the luxury residential market left January with the lowest number of contracts in six years, according to Olshan Realty’s weekly market report. There were 15 contracts signed at $4 million and above last week, ending the month’s total at 68. That represents a 29 percent decline from a year ago, and the lowest total since January 2012, a month that saw just 40 luxury deals inked.”

“Actor Bruce Willis’ home topped the list with the No. 1 contract for his duplex apartment at 271 Central Park West, which had an asking price of $17.75 million. That’s $1 million less than what he and his wife paid for it back in 2015.”

From Mansion Global on Florida. “Miami-Dade County’s luxury real estate market had a good end of 2017, as sales of property priced above $1 million surged in December, according to a report by the Miami Association of Realtors and the Multiple Listing Service. ‘Strong pent-up demand for Miami luxury single-family and condominiums fueled December’s strong home sales,’ George Jalil, chairman of the board of the Miami Association of Realtors, said in the report. ‘Luxury sellers are becoming more realistic with their asking prices, and buyers are coming off the sidelines.’”

“Luxury condos spent a median of 184 days on the market in December, 10.2% fewer than they did the same time in 2016. Luxury single-family homes, though, spent a median of 225 days on the market, an increase of 106.4% compared to the year prior.”

From WFTV in Florida. “Plans to build luxury apartments in one of Daytona Beach’s poorest neighborhoods are on hold for now. The property is less than half a mile away from Bethune Cookman University. The only sign there are any plans to build something here is a chain link fence around the property—and because of the lack of progress, some doubt the apartments will ever come.”

“Heron Development LLC published renderings of a six-story luxury apartment complex on the two-acre plot of land and presented them to the City Commission last March. Ten months later, the lot remains untouched, with no construction equipment or activity in sight. ‘It is an eyesore compared to what it was,’ said Scott Summers, who lives nearby. ‘At least it had some life. Now it’s dead.’”