April 30, 2018

Everywhere You Look, It’s Vacant Houses

A report from Newsday on New York. “The waterfront Hamptons estate known as Villa Maria boasts 11 bedrooms, Carrara-marbled baths, arched windows overlooking formal gardens, a heated pool, tennis court, guesthouse — and a $51 million discount off its original price. The 15-acre former convent in Water Mill, previously owned by the late shoe designer Vince Camuto, was listed in 2008 for $100 million. It sold last month for $49 million to two separate buyers; one paid $36 million for 11 acres, including the 20,000-square-foot main house on Mecox Bay, and the remaining land traded for $13 million, said a spokesman for Sotheby’s International Realty.”

“Other luxury properties also have gotten steep price cuts this year. On Monday, a 10,000-square-foot oceanfront home on 6 acres in East Hampton fetched a closed-sale price of $40 million, according to Sotheby’s, which represented the seller. It was a markdown of $29 million from the 2016 asking price. Lasata, the onetime childhood summer home of Jacqueline Kennedy Onassis, sold in January; a 7-acre piece of the East Hampton estate, including the 10-bedroom home, closed for $24 million, down about $15 million from its 2016 listing price, public records show.”

“‘All the whiplash we’ve been going through . . . makes the high-end buyer pull back,’ said Judi Desiderio, chief executive of Town & Country Real Estate in East Hampton. ‘We’re a luxury item. They don’t need to spend $20 million on a high-end home when they can rent it for $1 million.’”

“It’s a change from the heady days of 2014, when an East Hampton estate sold for $137 million, breaking national home price records. At that time, the median Hamptons home price was posting annual gains of as much as 26.5 percent, rising to $975,000 in the last three months of 2014, a report by Manhattan-based appraisal company Miller Samuel and brokerage Douglas Elliman shows.”

“With such dramatic gains not so long ago, ‘the market got away from some of the sellers in terms of their expectations about what their homes were worth,’ said Martha Gundersen, an associate broker with Brown Harris Stevens in East Hampton.”

From The Real Deal on Florida. “Continuum investor Stuart Eichner just sold his Continuum South Beach unit for $9.3 million, a 28 percent discount off the original ask. Eichner, who invested in the Continuum project, is the brother of developer Ian Bruce Eichner, whose Continuum Company built the $440 million, two-tower condominium in 2002 and 2008. The Eichners first listed the three-bedroom, 3,000-square-foot unit condo in 2016 for $12.9 million, or $4,300 per square foot, the took it off the market for a few months and relisted it the following year for $11.5 million, or $3,800 per square foot. It just sold for about $3,070 a foot.”

“In 2015, his brother, Ian Bruce Eichner, listed his four-story penthouse at the Continuum for $50 million, or $4,519 per square foot. It is no longer on the market.”

The Houston Chronicle in Texas. “Harvey forever changed Houston’s real estate market. It clobbered property values, and it raised them. In February, Sam Scott said goodbye to the Memorial Bend home he and his wife raised three children in and painstakingly renovated over two decades. After Harvey flooded his neighborhood and a nearby wastewater treatment plant overflowed, filthy sludge sat in the house for days. The Scotts felt they had no choice but to tear it down.”

“They put their nearly 10,000-square-foot property up for sale for $550,000, a discount from what lots were selling for pre-Harvey. After dropping the price by $25,000, they accepted a builder’s offer for $500,000. Bernie Otten was able to return to his flooded home in The Woodlands in less than four months, but some of his neighbors still aren’t back. About 100 homes in Otten’s Timarron Lakes neighborhood flooded during Harvey. Some owners sold right away to investors, for a fraction of their homes’ pre-storm value.”

“‘I think there will be more people moving and more people who lease their houses,’ Otten said. ‘The market’s going to be soft.’”

“In Meyerland, one of the neighborhoods hit by flooding three years in a row, 163 homes are for sale or rent, more than 7 percent of the properties there. But still-unoccupied homes make up what’s being called a ’shadow inventory.’ These properties are not being actively marketed, but their owners would sell for the right price.”

The Baltimore Sun in Maryland. “Barbara Stokes stood on the stoop of her home at the edge of the Druid Heights neighborhood of West Baltimore and surveyed the line of row houses across the street. Every one of them was vacant. But that’s not the worst of it. In January, police found the body of a 41-year-old man in one of the houses, dead from an overdose. A week earlier, a 30-year-old man was found dead outside another.”

“Stokes, who grew up in the neighborhood and has lived in her current home for four decades, said the houses are open for people to come and go. ‘They need to do something, because these vacants are creating a lot of problems,’ the 79-year-old retiree said. ‘Everywhere you go, everywhere you look, it’s vacant houses,’ she said. ‘It looks like it’s more vacant houses in the city than occupied houses. It seems like it never changes.’”

“On that last count, Stokes is basically right. In 2010, in the wake of the global financial crisis that wrecked the local housing market, officials counted 16,800 vacant buildings in Baltimore. They decided to take action. Then-Mayor Stephanie Rawlings-Blake launched the much-lauded Vacants to Value program, and the city put millions of dollars from a legal settlement with the banks behind the crisis toward demolishing entire blocks at a time. The state added millions more to bring down more blocks. Pugh, who took office at the end of 2016, has sought to expand that effort.”

“The result? Eight years and tens of millions of dollars later, officials count 16,500 vacant buildings in the city.”

From Maui Now in Hawaii. “Over the last few years, Maui’s housing inventory has dropped to record lows and prices have reached near-record highs, for buyers and renters. A recent report by the Hawai‘i Appleseed Center for Law and Economic Justice states that vacation rental units put pressure on Hawaiʻi’s already-stressed housing market by reducing homes for Hawai‘i residents and driving up rents. The report adds that 1 in 7 housing units on Maui is a vacation rental unit. In Lahaina, it is 1 in 3.”

“Hawaiʻi’s housing costs are among the highest in the nation with workers earning the lowest wages in the country after accounting for cost of living. The Appleseed report adds that the proliferation of short term VRUs—the majority of which are operated by nonresidents—has added another pressure point by further limiting the availability of housing for local families.”

“‘Given the enormous economic incentives, it is inevitable that opportunists will use VRUs to commercialize Hawai‘i’s neighborhoods. Hosts are overwhelmingly speculators and investors who benefit from the escalating price of housing in Hawaiʻi, and our property tax rate, which is the lowest in the nation,’ the report states.”

From CBS SF Bay Area in California. “The Lake Tahoe you see in the vacation ads usually features the famous, pristine lake, snow-capped Sierra Nevada mountains, luxury beachfront residences and nearby ski resorts. The Tahoe you don’t see has blocks of rundown, cheap motels that have become the last resort for the everyday workers who support the local economy. About 75 percent of the homes in the Tahoe Basin are second — vacation homes. In the affluent Tahoe Keys neighborhood, for example, it’s not uncommon to see empty houses. A 4,500 square foot lakefront property on Beach Drive is listed at $6.5 million.”

“Nearly everything South Lake Tahoe resident Christine Grissom, her 11-year-old daughter and her husband own fits into one suitcase. They have been living this way for the past nine months. ‘You know what’s scary is I am the normal and that’s the hard part. You’ve seen what I’ve seen in the Bay Area, I lived in the Bay Area, the majority of us are a half a paycheck away from being on the street,’ she said.”

“She came to Lake Tahoe in search of affordable housing and found work as a Safeway cashier and a bus dispatcher. Today she makes $32,000 a year as a clerk at the El Dorado County recorder’s office. ‘You work and you’re homeless. That’s ironic to me, I just never thought it was going to be this way — especially being an American,’ she said. ‘In all honesty, all I want to do is work 40 hours a week, have four walls and a pizza. I just don’t want to see the carnage of our economy anymore.’”