The Glut Has Indeed Come To Pass
A report from the Charlotte Agenda in North Carolina. “For nearly a decade, Charlotte’s high-end apartment market has boomed. Developers bought up land in the city’s hottest neighborhoods and built luxury communities, each one fancier than the last. Rent continued to climb, and each new building filled up with the crush of young professionals moving to town. Could all that be nearing an end? Industry insiders have been watching for the peak of the market for several years now. There are signs that the peak is finally here — at least in some parts of the market. The latest development: New luxury apartments are increasingly turning to special offers, discounts and incentives to get people in the door.”
“Novel NoDa is offering $2,000 off rent, plus a smart home device. SkyHouse and Novel Stonewall Station are offering two free months rent on some of its units. The Abbey in Montford Park is giving new tenants a $1,000 gift card. And at least a half-dozen other apartments are offering a month of free rent. The apartment communities offering discounts tend to have a few things in common. They were built in the past year. They’re in markets with a lot of construction activity. They charge high prices — generally about $1,200 a month for a studio and $2,000 for a two-bedroom unit.”
“It’s just simply harder to find people who can afford to live there. To make any money on an apartment building in Uptown or South End or NoDa, developers must charge a luxury-priced rent. As we’re finding out, the demand for apartments in that price range has diminished. Fannie Mae recently estimated that the number of new apartment completions would hit a record high in another year or two.”
From Philly Mag in Pennsylvania. “Are you still stunned over Monday evening’s announcement that Dranoff Properties will sell all of its apartment buildings in the Philadelphia area to the Apartment Management and Investment Company of Denver for $445 million? Deep down inside, Carl Dranoff himself might be too, for he wasn’t looking to sell the properties even though the glut of apartments both he and your section editor saw coming last year has indeed come to pass.”
“‘I’m an outlier,’ Dranoff said. ‘I’m not like most developers who build a building, then turn it over to someone else to run. I’m a long-term steward of my properties, and I had no intent of selling them.’ But AIMCO was intent on expanding its presence in the Philadelphia market.”
From Urban Milwaukee in Wisconsin. “It’s obvious that downtown Milwaukee has grown in recent years, but by how much? By quite a bit, it turns out. Department of City Development Commissioner Rocky Marcoux told members of the Common Council that since Mayor Tom Barrett took office in 2004, 11,450 housing units have been constructed in what he calls the greater downtown area. Marcoux, who was presenting a status update on a number of downtown projects, told the committee that 1,487 additional units are ‘in the queue and we believe will be in the ground this year.’”
“Alderwoman Milele A. Coggs asked Marcoux if the housing market is overbuilt. Marcoux responded that he has seen some signs the market is softening, citing deals where tenants can get a month of free rent with a year lease. But overall, the commissioner said the city has a minimal risk even if the market is overbuilt. ‘We have not subsidized the downtown market. The market is acting as the market is going to act,’ Marcoux said.”
“The city will have to increase the supply of homes to increase the population. A recent U.S. Census Bureau report found that Milwaukee County’s population fell for the third straight year, falling to 952,085 residents. The population of the region as a whole has been stagnant in the same time period.”
From RE Business Online. “Developers of student housing properties have been holding steady volumes of new product on their books. According to CoStar Group, developers have added about 22,000 new units each year since 2010. Secondary markets are gradually beginning to see heavier waves of student housing development. In Texas, this trend appears to still be in its infancy. Lubbock and College Station have experienced huge building surges over the past few years, with the former in particular being a hotbed for development. The largest student housing property in the country, the 3,406-bed Park West, opened in College Station this past fall. Irving-based student housing firm Servitas developed that project.”
“‘College Station is moving toward being overbuilt,’ says Matt Myllykangas, senior vice president of development and construction for Servitas. ‘And housing projects seem to be moving further away from campus.’ Brent Little, CEO of student housing development firm Fountain Residential Partners, concurred with those notions, noting that occupancy is down and rents have backtracked in College Station. His firm sees similar levels of activity and competition in Waco, home of Baylor University.”
“‘We looked at Waco recently and there were already five or six student housing deals under construction or in the pipeline,’ he says. ‘And that’s for a school with just 10,000 students.’”
From Seven Days Vermont. “The granite countertops, sparkling appliances and panoramic lake views look like they belong in a posh condo development. Instead these amenities enhance a new six-story, off-campus apartment building that Champlain College is leasing to undergraduates in Burlington. The newly constructed units are helping to finally cool the long-overheated student rental market. More than 2,000 units are in the pipeline. In response, some landlords are cutting rents. Others are waiving deposits and aggressively marketing by doling out free pizza and Red Bull to student renters who aren’t used to being wooed.”
“‘The competition among landlords is markedly increased,’ said Rick Sharp, a longtime Burlington investment-property owner. This spring, for the first time in roughly 20 years, he reduced rents in an effort to find tenants for a pair of four-bedroom apartments. This year, Sharp got no takers from ads on Craigslist. He dropped the rent from $2,800 to $2,700 a month, but still has not found tenants. ‘We may have to go to $2,600,’ he said.”
“Mayor Miro Weinberger, who has pushed for new housing downtown, hails the construction. Weinberger finds the increasing vacancy rate and anecdotes of discounted rents encouraging. ‘That sounds to me like the early stages of a market reconciling, kind of recalibrating to deal with the fact that there’s substantial amounts of new supply,’ Weinberger said.”
The Real Deal on Illinois. “The long-awaited plans from Golub & Company and CIM Group for the Tribune Tower property call for a massive mixed-use development that would transform the area where the Magnificent Mile meets the Chicago River. In addition to all the new retail, luxury hotel rooms and condos, the $1 billion project would include 439 new rental units in the proposed 96-story skyscraper that would go up east of the landmarked tower starting in 2020.’
“But with Chicago’s Downtown rental market already showing some signs of oversupply, will the area be able to handle all the new inventory? Last year, more rental units were delivered Downtown than in any year on record — 4,348 — according to figures from Integra Realty Resources, an appraisal and consulting firm. While the firm expects the pace to slow this year, with a total of about 3,000 units to deliver, it’s projected to rebound in 2019, with about 4,200 new units. The annual average over the past 25 years has been 3,200 new units, according to Integra.”
“And deconversions, like the $60 million, 292-unit deal Golub and USAA Real Estate recently closed at Century Tower, are tipping the inventory balance even more toward rentals in many parts of the city, including Downtown. Kyle Stengle of Marcus & Millichap’s investment, national multifamily and mixed-use group, said the rental boom Downtown is unlikely to last much longer. ‘At some point there’s just going to be too many units and we may already be there. The overall feeling is that the market’s getting over-saturated.’”
From Bisnow on Florida. “‘Palm Beach is completely on fire,’ said Todd Michael Glaser, a high-end homebuilder who made his name in Miami but has lately been concentrating on Palm Beach County. ‘I’ve never seen the amount of $8M to $70M homes as in the last three and a half, four months. It’s staggering.’ It’s not just single-family homes that are hot, but a new wave of high-end condos and mutifamily apartments, especially in downtown West Palm Beach.”
“Kolter Urban President Bob Vail, who is developing the Alexander, said that there is something of an arms race for amenities in the new supply of high-end homes. ‘You see that across the U.S. There are [apartment] buildings in Atlanta, Denver and Dallas that are nicer and more fully amenitized than condominium units, because that’s what it’s going to take to get people to choose that building,’ Vail said. ‘It’s just sort of a differential advantage. It’s really become a race in those more in-demand markets.’”
“Though the market is healthy now, the developers agreed a slowdown is possible as new supply takes time to be absorbed, construction costs rise and actionable sites get harder to find. Low salaries in Palm Beach County mean that not many workers can afford high rents. When an audience member asked whether they were concerned with an economic downturn, Vail responded half-jokingly, ‘Condo developers, we don’t forecast those kind of things, you know what I mean? We’re just go, go go,’ he said. ‘And the faster we go, the faster we get to the closing, and then, I’m not going to say we don’t care, but … ‘ The audience chuckled as he trailed off.”
From the last link:
‘There is also opportunity outside of the high-end market, Avesta Holdings Senior Director Neal Herman said. His company has been buying up apartments from the 1970s and ’80s by the hundreds. It owns about 1,000 in the area of Kirk Road and 10th Avenue North. The company adds new vinyl floors and stone countertops, and updates amenities like old tennis courts.’
“For us, we would really, in the next five years, like to kind of double down on what we’ve been doing in markets like Lake Worth and Palm Springs,” Herman said. “It’s tough to swallow a 5 cap [rate] on those now, when we were buying them at a 7 or whatever in 2013, but we think that has a lot of legs for us as a value-add firm.”
That cap rate doesn’t include financing costs. How many of these guys are borrowing at 5%? Probably not one these days. So why would someone lend money to people who act and think like this?
‘When an audience member asked whether they were concerned with an economic downturn, Vail responded half-jokingly, ‘Condo developers, we don’t forecast those kind of things, you know what I mean? We’re just go, go go,’ he said. ‘And the faster we go, the faster we get to the closing, and then, I’m not going to say we don’t care, but … ‘
A bunch of people who thought their retirement was in the bag are going to be collecting shopping carts in the parking lot.
“And the faster we go, the faster we get to the closing…”
The ABCs of real estate… Always Be Closing!
“A bunch of people who thought their retirement was in the bag are going to be collecting shopping carts in the parking lot.”
U.S. Pension Fund Collapse Isn’t a Distant Prospect. It Could Come in 5 Years https://www.msn.com/en-us/money/markets/us-pension-fund-collapse-isnt-a-distant-prospect-it-could-come-in-5-years/ar-AAw2CYH?li=BBnbfcN
Destroyed by the last eight years of zero interest rates.
But…but..prime the pump
‘he saw a coming oversupply of rental apartments. ‘The statistics were available as early as 2012,’ he said. ‘The money spigot is open all the way, and anyone can get financing for a new project.’
Wasn’t 2012 when the global QE was running full blast?
Ah, but think of all the hefty fees that were collected.
😁
As rates normalize and Baby Boomer die-off ramps up, pension liabilities will shrink, and the pension crisis will melt away before our very eyes.
I’m always amused when solvency depends on annual returns in the 7-8% range. That era is coming to an end. So is the era of retirement.
“So is the era of retirement.”
Enter disability for the shameless.
“So is the era of retirement.”
I guess I got there just in the nick of time!
You got lucky.
Several tens of millions younger than you will never experience that kind of luck, regardless of their fiscal behavior.
Blue you’re in good shape because you own a house outright. Was just talking to some friends who retired some years ago. They still owe 7 years on the house…they refi’s for the kids’ college.
What was striking is that the hubby was surprised that I asked why they were still paying… as if, “OF COURSE it’s the kids college; how come you don’t know that.” The percentage of parents who did this must be very high.
Atlantic Beach, FL Housing Prices Crater 19% YOY
https://www.movoto.com/atlantic-beach-fl/market-trends/
‘Kyle Stengle of Marcus & Millichap’s investment, national multifamily and mixed-use group, said the rental boom Downtown is unlikely to last much longer. ‘At some point there’s just going to be too many units and we may already be there.’
Yes sir, sharp insight like this is why Kyle makes the big bucks.
‘Carl Dranoff himself might be too, for he wasn’t looking to sell the properties even though the glut of apartments both he and your section editor saw coming last year has indeed come to pass.’
And I posted that:
March 1, 2017
From Philadelphia Magazine in Pennsylvania. “‘Those who succeed over the years can steer their way through choppy waters, and that includes things you can’t control.’ Carl Dranoff, the man who said that, should know. The CEO of Dranoff Properties rode historic preservation to national prominence before a change in the law brought his business to its knees. The lessons he learned from that career setback have informed the rise of his business and his development strategy since then.”
“With two exceptions — One Theater Place in Newark, N.J. and One Ardmore Place, work on which will get underway this spring — all of Dranoff’s current and planned projects are condos, a shift he made when he saw a coming oversupply of rental apartments. ‘The statistics were available as early as 2012,’ he said. ‘The money spigot is open all the way, and anyone can get financing for a new project.’”
http://thehousingbubbleblog.com/?p=10012
‘At some point there’s just going to be too many units and we may already be there.’
Which in the not too distant future will result in an harmonious “equilibrium”. Rental Watch is sure of it.
“Dranoff Properties” LMAO!
“…will sell all of its apartment buildings in the Philadelphia area to the Apartment Management and Investment Company of Denver for $445 million…”
Given a developer whose name closely resembles Drainoff, someone should have seen it coming…
I dunno, I rather liked this Dranoff guy when I read about him. While other developers were building OSB crap and disguising the crap with amenities like a “woof roof”
, Dranoff was renovating well-built run-down historic buildings into condos. And he was doing it long before the explosion of Yellenbucks. And he stayed with his buildings instead of turning them for a quick buck. Luxury units, maybe, but IMO we should give him credit for this.
It’s just rather sad that he can no longer compete in this environment, and he’s probably getting old and just wants to sell out.
The good time to get out is past so far as the current cycle goes.
Sure, he may have missed the peak for getting out, but ISTM that the he’s gettin’ out while the gettin’ out is still good.
Does it seem like the Fed is manipulating the long end of the Treasury yield curve to make it flatten without inverting?
Time will tell whether this situation will withstand the test of time.
Just goofing around the internet.
West Vancouver is the ground zero of the Canadian Housing Bubble (IMHO)
https://www.zolo.ca/west-vancouver-real-estate/trends
21% yoy drop in the price of a house (to $2.5 M)
Large increase in days on the market (yoy) - Nearly doubled for house above $2.5 M (which is the AVERAGE!)
Finally a reliable link with truthful information about a reduction in prices. And you didn’t even say “crater” lol.
I think you were directing your comment at this guy ↓↓↓
21%? That’s nothing. South of the border we’ve got;
Portland, OR 97232 Housing Prices Crater 28% YOY As Canadian Housing Correction Heads South
https://www.zillow.com/portland-or-97232/home-values/
https://snag.gy/m5EzRB.jpg
The very definition of a bubble.
These are college students!
+++++
“The granite countertops, sparkling appliances and panoramic lake views look like they belong in a posh condo development. Instead these amenities enhance a new six-story, off-campus apartment building that Champlain College is leasing to undergraduates in Burlington.
“These are college students!”
Student loans! What is needed are more student loan opportunities presented to these Best and the Brightest so as to allow them to fully enjoy their “college experience”.
College experience = Extended adolescence.
Another interesting story about Burlington:
http://www.dailyjournal.net/2018/04/17/vt-exchange-micro-apartments/
A pied-à-terre in the city was typically enough to keep your mistress comfortable while you were up state visiting the dead bedroom, going through the mail and writing the checks.
Translation to the translation.
I was running out of other people’s money.
+++++
“AIMCO came out of left field,” he said. “But as I learned more about them, I became convinced that they were a great company and would be great stewards of these trophy assets. And selling them would allow me to focus more on my future projects.
Translation: That hole at Broad and Spruce will be filled with a building eventually — Dranoff has yet to walk away from a project once he’s started it. What this sale won’t do is fill it with the money he needs to complete it, but what it will do is enable him to devote more time and attention to help that process along.
A sign of the commercial RE bubble or apocalypse?
Notice even Bill Murry AVOIDS Chicago. Why doesn’t he want to pay his fair share of taxes?
++++
Bill Murray and brothers open ‘Caddyshack’-themed restaurant near Chicago
Fox News | 4/18/2018 | Madeline Farber
Good news, ‘Caddyshack’ lovers: Actor Bill Murray and his brothers recently opened a restaurant that’s themed after the 1980 hit film.
The Murray brothers — Bill, Joel, Johnny, Ed, Andy and Brian — officially opened the restaurant on Tuesday, which is located in the Crowne Plaza Hotel on River Road in Rosemont, according to WGN.
The restaurant’s motto? “Eat, Drink and be Murray.”
“The fact that it is called Caddyshack means it has something to do with golf,” the actor said at a press conference at the restaurant’s unveiling, according to the Chicago Tribune. “That feeling of casual fun, I think is what it is.”
The restaurant’s walls are covered in family pictures and posters from some of Murray’s other movies, such as “Groundhog Day.”
Crispy potato golf balls, a double bogey cheeseburger and “Caddyshakes,” among other items, are featured on the menu, WGN reported.
Bill Murray recognizes assets
https://imgur.com/a/u5MmBMP
The 10 year very quietly snuck back to 2.91%
3% is a coming!
Fed up…
The 10-year Treasury could test the stock market’s comeback
- Interest rates are on the rise and once more have caught the attention of stock traders.
- Traders are watching to see if the 10-year Treasury note regains the high yield of this year, just several basis points away.
- Markets will be watching several Fed speakers Friday, after a number of hawkish sounding Fed officials helped drive yields higher this week.
Patti Domm
Published 6 Hours Ago
…
Interest rates are on the rise and once more have caught the attention of stock traders.
My interest income last year went up slightly making my taxes go up a few sections on the tax table. I don’t do stocks.
Realtors are liars.
Why did the Realtor cross the street?
To lie to the first time home buyer on the other side.
If a Realtor is observed lying on the street, what should on do?
Floor the accelerator.
And prepare to shift into reverse after a slight bump?
A man walks into a bar with an alligator on a leash and asks the bartender…
Do you serve Realtors here?
The bartender replies…
We sure do!
The man says…
Great, I’ll have a beer and give me a Realtor for my alligator.
Don’t they lie everywhere?
Only when they’re talking.
’since Mayor Tom Barrett took office in 2004, 11,450 housing units have been constructed in what he calls the greater downtown area. Marcoux…told the committee that 1,487 additional units are ‘in the queue and we believe will be in the ground this year.’
‘The city will have to increase the supply of homes to increase the population. A recent U.S. Census Bureau report found that Milwaukee County’s population fell for the third straight year, falling to 952,085 residents. The population of the region as a whole has been stagnant in the same time period.’
OK.
‘The city will have to increase the supply of homes to increase the population’
Perhaps they have reached “equilibrium”?
Danvers, MA Housing Prices Crater 17% YOY As Boston Area Housing Correction Accelerates
https://www.movoto.com/danvers-ma/market-trends/
Along the lines of Ben’s posts today. If you go to Apartments.com and search for Hollywood, CA, be sure to hold onto your jaw in case it falls to the floor.
When I first moved to CA 30 years ago, Hollywood was where you lived because it was cheap, but you didn’t mention that you actually lived in Hollywood if the subject were to come up in polite society.
Besides the jaw dropping number of units currently for rent, a friend who still lives there was telling me of two massive projects that are currently under construction which will each add (drum roll) 700 additional units (total of 1400). And, these are just two that he knows of within a mile of where he lives.
It’s insane.
There are a lot:
https://www.apartments.com/hollywood-ca/
And look at those prices! How many people out there can pay $5 or $6k a month? This is what I got for the same search on Craigslist:
https://losangeles.craigslist.org/search/apa
1 - 120 / 3000
3000 is the most I’ve seen on CL.
https://losangeles.craigslist.org/search/apa?query=free+rent&availabilityMode=0&sale_date=all+dates
1 - 120 / 2389
Some on the first page are two months free.
$2439 / 1br - 696ft2 - Lofty Living at OLiVE DTLA & 8 Weeks Free Rent! (DTLA)
Live. Love. Evolve. Welcome to OLiVE DTLA
1243 S Olive Street, Los Angeles, CA, 90015
This is a 1 Bedroom, 1 Bath, approximately 658-869 Sq. Ft.
We are now open! Stop by and speak with representatives of the newest community in the South Park district! Begin life in your brand-new apartment home by applying today!
SPECIAL OFFER: Up to 2 months free rent & 6 months free parking! Contact us for details!
Features
- Quartz Countertops
- Ceramic Subway Tile Backsplashes
- Modern, Flat Panel Cabinets
- Spacious Floor Plans
- Stainless Steel Appliances
- Wood-Style Plank Flooring
- Premium Fixtures and Lighting
- Some 2-Story, Loft-Style Units
- Sleek Roller Shades
Community Amenities
- Woof Deck for Pets
- 7th Floor Sun Deck
- Clubhouse
- On-Demand Package Lockers
- Conference Table
- Secure Bicycle Parking
- 24-Hour Fitness Center
- Commissioned Street Art Murals Throughout
- 6th Floor Sun Deck
- Sparkling Pool & Spa
- Wifi Lounge
- Private Underground Parking
- Clubhouse Courtyard
https://losangeles.craigslist.org/lac/apa/d/lofty-living-at-olive-dtla-8/6561139922.html
Anything in the features/ Amenities list worth more than the paper its printed on?
In that part of town, I guess they forgot to mention the homeless pooping on the sidewalk.
Can you bring your “pet” homeless people up to the woof deck for some public defecation? Special bonus - that qualifies as street art too, lol!
Sounds like a deal!
Save $5,000 and pay only $25,000 a year out-of-pocket for a 1 bedroom rental!
Save $5,000 and pay only $25,000 a year out-of-pocket for a 1 bedroom rental!
Yeah it sucks. But it’s all relative. You could be that lady who lost her whole down payment. Although I guess if she can stay in the house long enough without paying she still comes out ahead.
Relative to what? I see little relative difference between a moronic woman who lost her whole down payment on some scheme and some other moron who would pay $25000 annually to live in a 700-square feet abode.
They are both morons. Neither gets my respect.
Given that scenario, I’d have much more respect for those living out of their vehicles. Whether out of necessity or choice.
I’ve been watching these go up all over Hollywood and Downtown LA for years and recently seeing them shoot up in Glendale near where I work.
Absolutely jaw dropping. My friends and I just wonder in amazement about how many people can afford a $3000+ one bedroom apartment.
What I’ve explained before is I had a friend who managed a building in Downtown LA. The scam was to fill it up and then sell it - never to hold it and operate it. A lot of them were Chinese students attending USC, some hipster couples and a bunch of deadbeats who would hop from new building to new building when they stopped paying rent.
Also, got a couple of texts from my buddy in Honolulu that works for a mortgage lender. He’s really thinks he’s about to lose his job. He says the loans have dried up and he’s been leaving the office earlier and earlier lately because of nothing to do.
In addition, I’ve got another friend who has been looking to buy in Palm Springs. He’s excitedly told me prices are coming down. He’s starting to see triple digit prices drops on some properties just under a million dollars. He said a lot of these were $300-400k homes a few years ago where they just slapped up some improvements and asked outrageous prices.
Crossing my fingers hoping this is all finally rolling over…
You can uncross your fingers. It’s happening everywhere.
co-worker just bought a luxury condo in Palm Springs. the plan is to rent it out during peak seasons, and use it as a vacation home during off-peak. Good luck with making that work
With so many too-clever-by-half folks executing exactly the same plan, you have to wonder for how many it is going to work.
I have a friend that was offered a very good job in Santa Monica. for him a career enhancing job.
He and his wife could not find a 2 br apt (baby) with 2 parking spots, within 30 minutes that did not take most of their take home. Granted, knowing his wife, she probably got caught up in the first few (fancy) places they were looking at, and did not want to settle. But still - if folks turn down $150K jobs ….
That’s ridiculous, but also typical of coastal California. San Diego is essentially the same story. Unless you are in the 1% or you live alone with no dependents, you are likely to face an onerous commute-length / housing cost conundrum.
if folks turn down $150K jobs ….
I have the odd idea that’s how much the homeless have to make to afford their lifestyle along the CA beachfronts.
By Douglas Ernst - The Washington Times - Tuesday, April 17, 2018
The famous British recording artist Morrissey sparked a fierce backlash among fans this week by blasting the “loony left” on his website.
A wide-ranging interview posted to “Morrissey Central” on Monday prompted fans of the former The Smiths frontman to throw out albums and vow to snub future projects. Angry music lovers lashed out at the singer for his opinions on London Mayor Sadiq Khan, Brexit, Adolf Hitler and the left’s modern definition of racism.
“As far as racism goes, the modern loony left seem to forget that Hitler was left wing! But of course, we are all called racist now, and the word is actually meaningless,” the singer wrote Monday. “It’s just a way of changing the subject. When someone calls you racist, what they are saying is ‘hmm, you actually have a point, and I don’t know how to answer it, so perhaps if I distract you by calling you a bigot we’ll both forget how enlightened your comment was.’”
Morrissey also commented on the rising crime rate in London and Mr. Khan’s reaction to it.
“London is debased,” the songwriter and animal rights activist said. “The Mayor of London tells us about ‘Neighborhood policin’ — what is ‘policin’? He tells us London is an ‘amazin’ city. What is ‘amazin’? This is the Mayor of London and he cannot talk properly! I saw an interview where he was discussing mental health, and he repeatedly said ‘men’el ’ … he could not say the words ‘mental health’. The Mayor of London! Civilization is over!”
Import massive amounts of people from sh!thole countries and act surprised when your city turns into a sh!thole…
How long before Morrissey has a fatal “accident” courtesy of MI6 and some kebab henchmen, ala the DNC/MS13/Seth Rich playbook?
my signing was today and we record later today. I am a proud homeowner again. Cash will start rolling in via equity!
Similar to the timing of the people that bought tickets on the RMS Titanic. Seriously, I hope I am wrong and this is a good time to buy in your area. At least mortgage rates are still a bargain.
So do you mind identifying the city?
lets name it
NO-DUH
Charlotte is 1/2 ghetto
free coffee now,yo
Condemned California home with holes in roof, mildew, sells for $1.23 million
http://www.foxnews.com/real-estate/2018/04/19/condemned-california-home-with-holes-in-roof-mildew-sells-for-1-23-million.html
It’s a teardown. Whatever value it is alleged to have comes from the lot and not the house.
Here’s the house:
https://www.zillow.com/homedetails/3239-Bruce-Dr-Fremont-CA-94539/25034191_zpid/?fullpage=true
I’ll let the CA posters decide if this lot has a literal million-dollar view.
The article says that the buyer is planning to build a 4000 sq ft “masterpiece” green home. Is there any such thing as a 4000 sq ft green home?
Is there any such thing as a 4000 sq ft green home?
In CA they’re everywhere (cough).
I used to rent a house about a half mile east of there further up the grade in the Mission San Jose area close to Ohlone community college. The nice “view homes” near there are in the Cameron Hills development.
He dropped the rent from $2,800 to $2,700 a month, but still has not found tenants. ‘We may have to go to $2,600,’ he said.
Oh man, blood in the streets…
Maybe they should put in some Commissioned Street Art Murals?
Or a woof deck for pets.
$200 reduction off of $2800 is not even close to “blood in the streets”. It’s less than 10%. If he cannot handle that kind of “loss”, then he’s a moron.
Let me know when he cannot find tenants at $1200 / mo.
This was the more interesting part to me:
‘More than 2,000 units are in the pipeline…This spring, for the first time in roughly 20 years, he reduced rents in an effort to find tenants for a pair of four-bedroom apartments. This year, Sharp got no takers from ads on Craigslist.’
These aren’t the new luxury units. But they are getting hit, for the first time. If his rents are down, imagine what’s going on at the new stuff.
I have no trouble with introducing special assessments/ increased taxes upon those who “own” unoccupied properties.
It’s long overdue. There is no ethical or moral reason to increase the property taxes of others to keep these degenerate gamblers afloat.
They are destroying the country. And doing so with no remorse. Time to turn the tables.
If not that levying taxes, then an immediate return to Glass-Steagall, effectively derailing most get-rich-quick real estate schemes overnight.
The Fed has purposefully neutered itself. The Fed will be of no help.
Apartments with four bedrooms? No wonder they can’t rent them out. Anyone who wants four bedrooms will choose to stretch to buy a house instead. [Especially illegal immigrants who can't afford to rent the 6+ parking spaces they would need.]
In the era of Airbnb I would expect them to be highly rentable. At the right price.
It was definitely sarcasm :-).
Also these properties are valued by NOI. Here’s the magic fairy dust link again:
‘Adding $200,000 in equity overnight:
‘Let’s look back at our example of Farmer Fred. Fred looks at the property he just bought and notices several things. He is currently paying $15,000 per year for property management. He knows that an on-sight resident manager can do the job in exchange for free rent, saving him $8,000 per year. He also decides that his rents are a little below average for the area, so he increases his rent by just $25 per month per unit, bringing in an extra $300 per unit, per year or $7,200 in extra income per year total.’
‘Doing just those two small acts, Farmer Fred immediately begins keeping an extra $15,200 per year. To Farmer Fred’s wallet, this is awesome; but even better, in investment lingo, his net operating income just increased by $15,200. His old NOI was $74,500, but now is $89,700. Now, keeping the same cap rate from before and using the new NOI value, Equation B (NOI/Cap Rate = Market Value) now shows:
‘$89,700/.0667 = 1,344,827.59. Farmer Fred has increased the value of his property from $1,116,941.53 to $1,344,827.59, a total change of over $200,000.’
https://realestateinyourtwenties.com/blog/cap-rates-the-magic-fairy-dust-of-the-investing-world/
This Vermont guy just got whacked by $400/month, and the two units are still empty. What if one sits empty through the semester? This magic fairy dust works in reverse too.
Great that you pointed this out. You should see how some shopping centers are flipped:
Two years prior:
Purchase Price: 15,000,000
NOI: 950,000
CAP: 6.3%
A) Quickly fill several vacancies (bringing average vacancy down from 8% to 3%) by giving away months of rent for free, in return, tenant pays you more than otherwise would, B) Wait for a few leases to expire, replace them with tenants just like #A (offering free rent in return for higher monthly rent they wouldn’t have paid) and/or aggressively market spaces at inflated rents to shop owners you know won’t make it. D) Let yearly ~%5 increases kick in for rest of tenants, all the while knowing some of them will terminate after 2-3-5 year option expires (because those rents were too high). E) A few other tricks here and there.
Two years later (conservatively), put in a glossy OM:
Sale Price: 17,700,000
NOI: 1,120,000
CAP: 6.3%
Wait for unsuspecting (Chinese) investor(s) to swarm in. Ca-ching.
Several years later, A) some tenants ask (new [Chinese] owners) for rent reduction or free rent (just like they got before) after their 2-3-5 year option period ends. B) Some tenants don’t renew and you replace with new tenants that won’t pay the same rents as before. C) Vacancy average goes back to 8%.
Then…
Cost Basis: 17,700,000
NOI: 950,000
CAP: 5.3%
Whoops!
Centennial, CO Housing Prices Crater 9% YOY As Rental Rates Plummet
https://www.movoto.com/centennial-co/market-trends/
http://www.thesaurus.com/browse/plummet
Hello my good friend.
Bradenton, FL Housing Prices Crater 20% YOY
https://www.movoto.com/bradenton-fl/market-trends/
This from Foxnews.com 4/19/18.
“A condemned home in Northern California — with holes in the roof and mildew inside — recently sold for $1.23 million, becoming the latest example of the Bay Area’s tight housing market.
The home in Fremont was originally listed for $1 million but ended up closing at $230,000 over its asking price, listing agent Larry Gallegos told KTVU.”
“David Stark of the Bay East Association of Realtors told KTVU there was “nothing surprising” about the sale.
“It’s a great example of location, location, location,” he said.
Stark told the television station that buying a tear-down to build a dream home reflects a 10-year trend, and that unlike in 2008, current home prices show no indication a crash is coming.”
Foxnews.com 4/11/18
Comments from neighbors regarding a burnt up home in Silicon Valley listed for $800k with multiple offers:
“800k for that…. What has this area come to when a family earning good money cannot even afford to buy even a burnt out wreck,” Cally Jayne wrote. “Greed, pure greed from all concerned right here.
“Meanwhile, 10 blocks in any other direction there are homeless encampments every which way you turn!!! I live down the road from this property and the land is not bloody worth it! Just goes to show you where the Bay Area is now,” Adrian Huang said.”
Progressivism is costly. Wherever liberals run the show, cities and neighborhoods are destroyed.
San Francisco, CA 94109 Housing Prices Crater 16% YOY As Bay Area Tech Wreck Drives Unemployment Higher
https://www.zillow.com/san-francisco-ca-94109/home-values/
*Select price from dropdown menu on first chart
Recently moved to Columbus, Ohio in corporate relocation. Luxury rental units being built all over the place here in suburban columbus, with rental rebate offers, etc. Relocation is supposed to pay for our realtor fees, etc if we buy within a year of moving…but, imo the prices are ridiculous- houses sold for $200k in 2014 are being sold for $280k today! Thus, I told my husband we are going to take advantage of the rental offers and wait until the prices correct. People here in Columbus think they are seriously in the running for the 2nd amazon HQ, lol. Even though we will lose out in approximately $10k in realtor benefits by waiting, i told my husband that was better than possibly loosing $20-50k on a house i dont even like that much (inventory sucks), plus we have the flexibility of renting in case we need to move. Today, my next door neighbor just told me she bought a house here. I didnt want to tell her my concerns about the market here.
Do you guys think I’m being reasonable? Or too cynical? Do you guys think secondary markets (columbus, des moines, etc) are all overpriced today too?
Or too cynical?
Impossible. But keep in mind the market can stay irrational for a LONG time. Which means some of the people successfully picking up nickels in front of steam rollers will look smarter than you.
Do the math.
Average Household Income x 3 should be about the average home price.
Where is Columbus at?
The average income of columbus is $50k, and it’s $150k in New Albany, Ohio where we currently live. The average home price in New Albany is $550k, which I’m pretty certain we would be approved for….but I’m a cheapskate and would rather live in a decent, sturdy home in the 250-325k range and invest the extra money each month. Plus, we make an upper middle class income, and i honestly can’t understand how people can afford house payments of $3-5000/ month and how long they’ll be able to keep that up once somebody is laid off or whatever. I’m also concerned the housing prices have jumped up so crazy in the past couple years…yes, inventory is low, but i dont want to buy an overpriced, POS house now and then try to sell it down the road when inventory opens up. Finally, Columbus, in my opinion, has generally been a cheaper place to live, because it kinda sucks (dreary weather, boring culture, etc).
I’ve been to that part of Ohio. Two things struck me about that area: (1) on the outskirts, traffic is still light (2) the area has retained the full range of housing prices. You can buy anything from a $15K tear-down to a $700K mansion within the same 10-15 mile easy commute to work. City or country. Lots of choices for you.
It also sounds like you’ve avoided the luxury kool-aid, and wouldn’t object to something old and “small.” If, for example, you could find a decent 1700 sq ft in Granville or Johnstown for under $250K, you’d probably do okay right now. But it’s a bad time to go for the McMansion.
Ive considered Johnstown…but the schools arent great. Ideally, I’d buy a 1700 sq ft ranch in a good school district (UA, Olentangy, NA)…but those are going for > $350k when they sold for $250k three years ago. I think it’s nuts and the property taxes here are insane ($650/mon on a $300k house!). I might be willing to swing it if i knew i was actually staying here for more than five years…but frankly, i think ohio kind of sucks and I would really prefer moving back to iowa or minnesota.
“…and i honestly can’t understand how people can afford house payments of $3-5000/ month…”
I’d have a difficult time sleeping well. Financial anxiety.
Recently moved to Columbus, Ohio in corporate relocation. Luxury rental units being built all over the place here in suburban columbus, with rental rebate offers, etc. Relocation is supposed to pay for our realtor fees, etc if we buy within a year of moving…
So big corporations are in cahoots with the RE industry.
Mountlake Terrace, WA Housing Prices Crater 6% YOY On Burgeoning Housing Inventory
https://www.movoto.com/mountlake-terrace-wa/market-trends/
address me as homeowner from now on pal.
You were supposedly living on HELOC money long ago. Now you’ve just purchased a house. I’m calling TROLL.
Instantly underwater
Chi - town -
Yup - just what it needs - some 96 story skyscraper to rival that of the Donald’s Trump Tower. When I packed my box and left just under two years ago there was already an oversupply of rental housing in downtown. And now this group wants to add more?
Calatrava got involved in some Irish outfit that were to build the tallest tower in North America until the hole thing went bust in the Great Recession - and now the site sits as a big fat hole in the midst of a weed infested lot.
This Boul Mich deal also has this going for it…..In The Trump IIRC you can look all the way over to Michigan on a clear day - if this thing goes up the views will be lost from the Trump - hmmmm….Could it be Rummy pay back time?
Kill a cop “like we do in El Salvador”
http://www.nydailynews.com/new-york/ms-13-tells-members-kill-el-salvador-article-1.3943884
Got fundamental transformation? LOLZ
Subprime stages comeback as ‘non-prime’ loans
https://www.youtube.com/watch?v=ng_3DQ9NhOk
Subprime mortgages disappeared following the financial crisis, but now they are coming back, with huge demand from both borrowers and investors.
Loans up to $1.5 million
Cash-out refinance up to $500K
Nothing says subprime like 3% down payment mortgages…… which have been the majority of new mortgages since 2008.
Here’s some text that is associated with the video …
https://www.cnbc.com/2018/04/12/sub-prime-mortgages-morph-into-non-prime-loans-and-demand-soars.html
Here come the home equity locusts.
An interesting snippet …
“Sharga said Carrington will manually underwrite each loan, assessing the individual risks.”
Individual risks they themselves will assess, the same risks they themselves intend to pass on to others after extracting some hefty fees for themselves.
“But it will allow its borrowers to have FICO credit scores as low as 500.”
Ouch.
“The current average for agency-backed mortgages is in the mid-700s. Borrowers can take out loans of up to $1.5 million on single-family homes, townhomes and condominiums. They can also do cash-out refinances, where borrowers tap extra equity in their homes, up to $500,000.”
And the punch line is …
“Recent credit events, like a foreclosure, bankruptcy or a history of late payments are acceptable.”
Keep in mind that these pukes make their money by ORIGINATING the loans, not by KEEPING them.
Loans up to $1.5 million
Cash-out refinance up to $500K
And FICO scores as low as 500!
“non-prime” = not subprime
Pretty damn clever!
Ben Jones: Subprime stages comeback as ‘non-prime’ loans
It’s like how the gambling industry has been pushing hard to change its name to the gaming industry. Or how the plaintiff lawyers’ association, formerly “American Trial Lawyers Association” has changed its name to the “American Association for Justice” (they just got a lady a 200-some thousand dollar award for slipping on a banana peel in a store parking lot).
“A rose by any other name would smell as sweet.”
Wasn’t this originally called “Alt-A?” And it was the first bubble to pop, in Aug 2007, and precipitated the whole collapse.
Baby 🐻 stock market decline?
On the ground in Boise lots of houses got listed today
Is this the red-hot spring sales season in Boise?
Centreville, VA Housing Prices Crater 19% YOY As DC Housing Correction Expands To Fairfax County
https://www.movoto.com/centreville-va/market-trends/
Roh roh…Qualcomm decides the best way to increase profits is to cut costs by shedding workers, rather than increasing revenues through higher prices or sales.
What could this portend for the San Diego economy!?
Why not just change their name to Coincomm or Bitcomm? That should be good for a 50% pop!
FWIW, the people at Qualcomm invented something that is useful and is used by billions of people every day.
Qualcomm
Qualcomm Shares Tank Amid Layoffs
By Jonathan Vanian
April 19, 2018
Qualcomm shares were down on Thursday after the semiconductor company began layoffs and is in the middle of a trade dispute between the U.S. and China over a planned acquisition.
Shares of the mobile chip manufacturer were down 4.6% in midday trading to $52.69 on Thursday.
Qualcomm plans to lay off around 1,500 employees in California as part of a broader push to reduce its expenses by $1 billion and improve its earnings, according to a Bloomberg News report on Wednesday, citing unnamed sources.
…
“Documents filed with California’s Employment Development Department identify 289 layoffs in San Jose and 1,231 in San Diego.”
They’ll feel some pain in San Diego as $1 billion is still a lot of money on down main street.
Is anyone going to step up to the plate, put 3% down and buy a house today?
Coming soon
$500k non-prime home equity locusts.
moving all my sh@t to the new crib today. What a pain in the @ss. Got a uhaul for 29.95 / day. 2 -3 trips possibly. This is real work. Not sitting on your @ss all day behind a desk punching on a keyboard.
my first payment isnt until june 1st. I hope home prices go up fast.
a little music for you today have fun….
https://www.youtube.com/watch?v=91D58RuHyVU
“my first payment isnt until june 1st. I hope home prices go up fast.”
They’re falling.
This is real work.
How well I know the pain & aggravation of moving. I have a simple solution for you - pay me $300 an hour, plus temporary housing, meals, first class air fare out your way, and I will take over your project. This offer expires in 6 hours. Act now!
Walnut Grove, CA Housing Prices Crater 15% YOY As Sacramento Area Housing Glut Expands
https://www.movoto.com/walnut-grove-ca/market-trends/
Fyi Walnut Creek is in the SF Bay Area (East Bay, east of Berkeley). My wife used to play in a very good regional orchestra based there.