February 23, 2018

When You Tell Them The Price, They Don’t Come Back

It’s Friday desk clearing time for this blogger. “An investment company could score a major victory this week in its alleged hostile takeover of a 1990s Miami Beach condo-hotel. Miami-Dade Circuit Judge Beatrice Butchko has set a three-day trial beginning Tuesday to decide the outcome of foreclosure lawsuits the Schecher Group has brought against 35 unit owners at the Sixty Sixty Resort. The trial is moving forward despite a pending chapter 11 filing by the Sixty Sixty Condominium Association aimed at preventing the owners from losing their units for next to nothing, said association president Maria T. Velez. ‘Schecher has already taken 10 units for free from people who couldn’t handle the stress and gave up in lieu of foreclosure,’ Velez said.”

“Singer-songwriter Mary J. Blige is in contract to sell her gated estate in the affluent New York City suburb of Saddle River, NJ, for a big loss, Gimme Shelter can reveal. Blige bought the chateau-style mansion for $12.3 million in 2008; it was last listed for $6.98 million. The buyer, we hear, is paying less than $6 million — less than half of what she originally paid for it. ‘Someone is getting an incredible deal,’ says a real estate source.”

“The mystery buyer of Manhattan’s most expensive apartment has been revealed: the Wall Street Journal says it’s Dell Technologies founder Michael Dell, who purchased the property for its $100-million asking price. One57 made headlines in 2017 for being home to New York’s largest apartment foreclosure—the original owner was Nigerian oil tycoon Kolawole Akanni Aluko, who was implicated in a money-laundering scheme that included the unit for which he had paid $50.9 million. It was eventually unloaded by its mortgage holder at an auction for $36 million.”

“Then there’s One57’s Unit 83, a 6,240 sq ft spot sold at a $13 million discount in 2016: Bought for $58.5 million in 2015, it ultimately changed hands for $45.8 million. The spectacular price cuts at One57 reflect drops in the super-luxury market over the past few years in New York and across the US. Recent resales have been trading at 25% less than their peak in 2014, according to appraisal firm Miller Samuel. A similar problem was faced by London’s Shard building, the apartment tower built around the same time as One57, which has been trying to sell its ultra-modern, £50-million flats for five years to no avail.”

“Silicon Valley remains far ahead of other regions according to a new study. But high housing prices contributed to a loss of residents in 2016, something the Bay Area has not seen since last decade’s recession. Brian Brennan, vice president of the Silicon Valley Leadership Group, said that it’s a ‘dramatic shift’ from a year earlier. ‘What it does suggest is that we really need to take seriously the things that are causing people to leave, housing prices again being a big driver.’”

“British Columbians who bought homes last year in an attempt to borrow before a federal tightening of mortgage rules could be most at risk if the NDP government’s new housing taxes leads to a drop in prices. ‘The most worrisome is the people who bought in the last year, said University of B.C. professor and economist, Tom Davidoff. ‘Where it matters is when people can’t make payments … and then people start walking away. When people start walking away from their properties, that’s where you get the vicious cycle.’”

“Capital & Counties scrubbed £131 million off the value of its Earls Court development on Wednesday as it paid the price for a still-sluggish London property market. The latest hit, cutting the value of the regeneration scheme to £1 billion, means Capco has written down the scheme by 29% since 2015. Capco has sold half of the 186 flats in the second phase of its Lillie Square scheme. Of these 34 changed hands last year but just seven in the second half of 2017.”

“The number of housing starts in Sweden rose 8 percent to 64,000 in 2017 from 59,518 units the year before, the Statistics Office said. Sweden has seen a construction boom in the last couple of years as builders try to catch up with a rise in the population and cash-in on surging house prices. However, home prices have fallen during the last months, mainly due to a surge in building and new, tougher mortgage rules. In January, prices fell for the fourth month in a row.”

“A mini-survey has revealed a rise in advertisements of real estate worth billions of shillings due for distress sales. At least 50 properties are going under the hammer each week. Dr Adam Mugume, the executive director of research at Bank of Uganda, noted that the real estate sector has been thriving in some sort of a growth bubble.”

“He told The Observer how property prices grew by leaps and bounds up to around 2010. The promise of the country’s oil sector was still alive and demand for prime buildings was thought to continue pushing up. ‘There are those people who borrowed assuming property prices would continue rising and, therefore, sell their properties [at profit]. Those are the people we are talking about whose properties are being sold,’ said Mugume.”

“But even after they have taken on the properties, according to court bailiffs and several commercial banks’ officials we spoke to, there are no buyers. Naboth Apamba, an official at Excel court bailiffs and auctioneers, told The Observer: ‘The market has not been well. People are not buying. People don’t have the money. When you advertise the property, people come, make some inquiries and when you tell them the price, they don’t come back.’”

“He said if they had their way, they would cut the price of properties but by law, a foreclosed property is supposed to be sold at the market value. Another court bailiff said: ‘We have so many properties we haven’t sold that we may stop to take them on.’ Stephen Kaboyo, director at Alpha Capital, echoes similar views noting that people running the economy need to realise that something is not right somewhere. ‘I was reading one of the papers and found a property of someone working in one of the banks being taken over. That should worry us,’ Kaboyo said.”

“Sydney’s property market is set to face its first big test of the year on Saturday, with almost 1000 homes scheduled to go under the hammer. There are 942 properties scheduled for the bumper auction day, an 85 per cent increase on the 510 homes up for grabs last Saturday. Much of the action will take place in the city’s eastern suburbs, where a whopping 186 auctions are scheduled, but buyers will also be spoilt for choice in the inner west where there are 143 homes for sale.”

“Over the year to December the median house price in the inner west fell 2 per cent to $1.61 million, according to Domain Group data. On the lower north shore prices also dropped, falling 2.3 per cent. ‘If vendors’ expectations align with market, the new market, they’ll sell … if they’re trying to grab prices from 12 or 18 months ago, that’s not going to happen,’ said selling agent Brad Gillespie.”