The Oversupply Is Pulling The Market Down
A report from the Palm Beach Post in Florida. “His gubernatorial campaign comes as some in West Palm Beach have soured on Jeff Greene, the real estate mogul who once seemed ready to lead West Palm Beach out of the Great Recession. In 2011, he embarked on a shopping spree that saw him spend more than $200 million on Palm Beach County real estate, mostly in West Palm Beach and Palm Beach. While he has won city permission to build two splashy towers on Quadrille Boulevard and so-called micro-apartments downtown, he has yet to break ground on those projects. Greene, for his part, has grown less bullish about the prospects for his hefty investment in downtown West Palm Beach. ‘It’s not going that great,’ he said Friday.”
“As for the micro-apartment project, Greene said he spent hundreds of thousands of dollars on engineering and design, but he was scared off by a building boom that could add more than 2,000 new apartment units to downtown West Palm Beach. ‘We just don’t have the kind of dynamic economy here that has pushed rents up to the point where it makes sense to build new apartments,’ Greene said. ‘All of these new buildings are putting stress on the market.’”
The Sun Sentinel in Florida. “The stalled Las Olas Ocean Resort near Fort Lauderdale Beach may be close to being sold to a Rhode Island hospitality company after it became the only bidder to make an offer for the property, which is now in Chapter 11 bankruptcy proceedings. The bidder, MHF Properties VI LLC, is an affiliate of Magna Hospitality Group of Rhode Island. The company had agreed to put up the initial offer for an auction that was to take place under the supervision of the U.S. Bankruptcy Court.”
“But after MHF offered $39.1 million, the auction was called off when no one offered a competing bid. Construction on the 12-story, 136-room resort ground to a halt after 550 Seabreeze Development LLC sought protection from its creditors — namely Bancorp Bank — which filed a foreclosure suit against the owner in January. The bank claimed the developer defaulted on a mortgage, which had an unpaid balance of $36.9 million.”
“It remains unclear whether several dozen investors from China will recover anything. Collectively, they contributed $30 million through a U.S.-sponsored foreign investor program that would have yielded immigration visas as a reward for creating jobs at the resort. About a third of them filed a lawsuit in bankruptcy court alleging fraud by Bancorp and four of the developer’s managing members.”
The Commercial Observer on New York. “Developer Rutherford Thompson filed for Chapter 11 bankruptcy protection on Tuesday to prevent the UCC non-judicial foreclosure on his stalled condominium development at One Bennett Park, also known as 29 Overlook Terrace, court documents filed in the U.S Bankruptcy Court for the Southern District of New York show. As previously reported by CO, the foreclosure auction of 100 percent of the ownership entity’s interest in the Hudson Heights property—pledged as collateral for the current debt on the property—was due to take place Wednesday at 11 a.m. at the offices of law firm Kramer Levin, with Ariel Property Advisors overseeing the bidding process. Thompson’s filing was made only a day earlier, ‘on an emergency basis.’”
“The 23-story, 114-unit condo building is still under construction despite completion being anticipated years ago. The project has faced ‘a host of problems involving lenders, cessation of financing, cessation of construction and changing market conditions,’ Thompson’s filing states.”
“Thompson claims in the court filing that the debt wasn’t repaid due to an inability to sell the property. After several extension of the loan’s maturity date the lender declared a default and scheduled a UCC foreclosure auction ‘despite ongoing efforts by me to procure a buyer or new lender for the property,’ Thompson claims.”
“The goal of the Chapter 11 filing is to preserve One Bennett Park’s status quo and allow Thompson ‘one final opportunity to procure a buyer for the property so as not to forfeit a project that still retains a potentially bright future after ten years of turmoil,’ he states in the document.”
From The Real Deal on New York. “The oversupply of high-end condos in Manhattan, Brooklyn and Queens is pulling the luxury market down. A report from Stribling & Associates for the first half of 2018 noted that the high-end condo market logged a nearly 40 percent decrease in transactions, according to Mansion Global. ‘This was the first time in the past six years the condo market saw a reduction in sales,’ Stribling’s Garrett Derderian wrote in the report.”
“The report found the number of sales valued at $5 million or more fell 31 percent in the first six months of the year, according to the brokerage’s numbers. In Manhattan alone, the inventory of condos is slated to hit a recent peak with close to 8,000 units expected to come online in 2019, as The Real Deal reported. Appraisal firm Miller Samuel predicts it would take about 4.5 years to sell the units.”
The Business Insider on New York. “Retail rents across Manhattan continued to fall in 2018’s second quarter, but leasing activity is picking up as landlords come to terms with the market, according to a report from Cushman & Wakefield. ‘We’ve seen more velocity,’ said Steve Soutendijk, a retail broker at the firm. ‘There’s definitely been a shift in landlords’ expectations.’”
“New York City has 16.4 acres of undeveloped land in its central business district — more than other coastal cities including Miami, Los Angeles and Washington, D.C., according to an analysis by Commercial Café that ranked 25 cities across the country. That revelation comes despite the massive development boom in the five boroughs that has outpaced every other metropolitan area on the list. Between 2013 and 2017, New York added 30 million square feet of housing and commercial space, more than triple the total for the next city, Dallas, which saw 8.5 million square feet of new properties.”
‘It remains unclear whether several dozen investors from China will recover anything…About a third of them filed a lawsuit in bankruptcy court alleging fraud by Bancorp and four of the developer’s managing members’
Anything? Fraud?
One of many stories to come about dumfounded Chinese investors losing a bundle of money in US real estate gambling activity…
Without fraud, there could never be massive real estate bubbles. It’s always the fraud that leads to the outrageous price blow-ups.
‘has grown less bullish about the prospects for his hefty investment in downtown West Palm Beach. ‘It’s not going that great’…‘All of these new buildings are putting stress on the market’
Shortage? And this guy bought at crash prices. He can’t make it work cuz there’s too much!
‘Developer Rutherford Thompson filed for Chapter 11 bankruptcy protection on Tuesday to prevent the UCC non-judicial foreclosure on his stalled condominium development at One Bennett Park, also known as 29 Overlook Terrace’
What will it take for NYC media to admit their bubble has popped?
And why didn’t Rutherford just get one of those inventory loans to wait for the big bonanza in the future?
What will it take for NYC media to admit their bubble has popped?
They will not admit it. It might start a discussion on why NYC is less desirable these days. The contributions which the liberal mayor and city council have made to the decline in the city might have to be discussed. While overbuilding is certainly the main cause, it is just not a supply problem it is a demand problem. Combine Trump’s tax changes, China’s crackdown of overseas investment, and then throw in the fact that quality of life has been declining in NYC since the new mayor and you have a big problem finding new buyers.
Mayor Bloomberg Wants Every Billionaire on Earth to Live in New …
https://blogs.wsj.com/…/mayor-bloomberg-wants-every-billionaire-on-earth-to-live-in...
Sep 20, 2013 - Billionaire Mayor Michael Bloomberg said Friday it would be a “godsend” if New York City could lure every other billionaire around the globe.
Globalists gonna globe…
Every billionaire probably *does* live in NYC… and LA, and London, and Dubai, and Lagos. Did John McCain ever figure out how many houses he owns?
similar mayors, similar problems, you think the crime might be a contributing factor to London’s price declines:
https://www.breitbart.com/london/2018/08/17/khans-london-six-arrests-teen-disembowelled-quadruple-stabbing/
“I would like to offer my reassurance to the community that officers are responding robustly…”
I feel so much better after hearing that!
Maybe that’s only because I am not anywhere near London?
Thompson claims in the court filing that the debt wasn’t repaid due to an inability to sell the property.
Such court filings are going to balloon as tapped-out debt donkeys in our oligarch-looted economy find themselves unable and unwilling to pay the extortionate prices being demanded by landlords and sellers.
‘for the first half of 2018 noted that the high-end condo market logged a nearly 40 percent decrease in transactions…The report found the number of sales valued at $5 million or more fell 31 percent in the first six months of the year…In Manhattan alone, the inventory of condos is slated to hit a recent peak with close to 8,000 units expected to come online in 2019, as The Real Deal reported. Appraisal firm Miller Samuel predicts it would take about 4.5 years to sell the units’
But we have one poster here who sees no stress in the US market. Entire towers falling into bankruptcy. Court rooms full of Chinese lose everything. Long planned buildings stalled due to overbuilding. The largest mortgage fraud in over 10 years (notice how the media dropped that like a hot potato). And the real estate recession hasn’t really started outside of New York and Miami Beach.
Correction, Ben: We have a poster who purportsto see no stress in the housing market.
“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
― Upton Sinclair
I’m watching and waiting to see what will happen here in Las Vegas. Just focusing on the Strip…
Genting’s new “Resorts World” is actually being built, much to my surprise. But will it ever actually open? Groundbreaking was in 2015, and the resort was originally supposed to open this year.
The project that was originally supposed to be the Fontainebleau has been sitting unfinished since 2009. A new owner says it will open in 2020 as “The Drew”, apparently run by Marriott. I drove past the site about two weeks ago and I didn’t observe anything new nor any signs of work in progress.
OTOH, the new stadium for the Raiders is making rapid progress… https://www.raiders.com/lasvegas/live-stadium-camera
Supposedly, several major projects should be open by the end of 2020. We’ll see what happens. Bursting bubbles could put the brakes on tourism and some of these projects…kinda like in 2009.
https://www.reviewjournal.com/business/casinos-gaming/6-major-projects-could-reshape-las-vegas-strip-skyline-by-2020/
Saint George, UT Housing Prices Crater 14% YOY As US Housing Market Cracks
https://www.movoto.com/saint-george-ut/market-trends/
what is up with the printing orgy since the 08 crisis? basically every major central bank has printed money trying to get other countries stuff for free.
Just think about it. You sit there and print money and then have other people do your sh@t work. Pretty nice gig.
“Just think about it. You sit there and print money and then have other people do your sh@t work. Pretty nice gig.”
So is loaning out money that isn’t even yours, which is what I do.
And you are correct, having other people do your sh@t work is a pretty nice gig.
Watch & learn. We will not have honest markets, sound money, or affordable housing as long as the Keynesian fraudsters at the Fed control our money issuance.
https://www.rt.com/shows/on-contact/436307-prins-central-banks-collusion/
Are you colluding with the Russians? It is amazing that a few hundred thousand dollars of Facebook ads paid by the Russians can win an election and tens of million if not hundred of millions of dollars of donations to the Hillary campaign from foreign sources did nothing. Of course, we have wasted the taxpayer money for eighteen months trying to show the former while the latter is ignored. The whole reason that Obama went after Russia was it does print stories like your link since it refuses to be part of the globalist agenda and actually believes that Christianity should pay a role in society. The world has certainly changed during my lifetime. China which is actively trying to destroy Christianity is actually protected by the Democrats. Think about it, what is the common denominator here and what does it say about Democratic party leadership?
“No collision!”
Don’t forget that Hillary really wanted to travel to Wisconsin and Michigan for those last days of the 2016 campaign, but the Russians physically tied her down.
It would be more believable if you were telling me that her husband was tying under-age Russian females down.
The rigged system continues.
Uh, that book is not focused on the election, facebook, or any Russian involvement therein.
“In this searing expose, former Wall Street insider Nomi Prins shows how the 2007-2008 financial crisis turbo-boosted the influence of central bankers and triggered a massive shift in the world order.”
My comments are related to the use of the RT source
Governments and central banks buying their own bonds = debt monetization. This is banana republic stuff. Can kicking. Nothing left for the next crisis, but the 1% will make out OK. As for the “peasants”, not so much… Such is life with a rapidly debasing fiat currency.
1) Dire Straits - Money For Nothing music video
https://www.youtube.com/watch?v=lAD6Obi7Cag
“Now look at them yo-yo’s that’s the way you do it
You play the guitar on the MTV
That ain’t workin’ that’s the way you do it
Money for nothin’ and chicks for free
Now that ain’t workin’ that’s the way you do it
Lemme tell ya them guys ain’t dumb
Maybe get a blister on your little finger
Maybe get a blister on your thumb…”
2) How the Grinch Stole Christmas! (1966 TV Movie)
Narrator: As the Grinch took the tree, as he started to shove, he heard a small sound like the coo of a dove. He turned around fast, and he saw a small Who. Little Cindy Lou Who, who was no more than two. She stared at the Grinch and said…
Cindy Lou Who: Santie Claus, why? Why are you taking our Christmas tree? Why?
Narrator: But do you know, that old Grinch was so smart and so slick, that he thought up a lie and he thought it up quick.
Grinch: Why my sweet little tot…
Narrator: The fake Santie Claus lied…
Grinch: …there’s a light on this tree that won’t light on one side. So I’m taking it home to my workshop, my dear. I’ll fix it up there, then I’ll bring it back here.
Narrator: And his fib fooled the child. Then he patted her head, he got her a drink, and he sent her to bed. And when Cindy Lou Who was in bed with her cup, he crupt to the chimney and stuffed the tree up.
Then he went up the chimney himself, the old liar, and the last thing he took was the log for their fire. On their walls, he left nothing but hooks and some wire.
And the one speck of food that he left in the house was a crumb that was even too small for a mouse. Then he did the same thing to the other Whos’ houses: leaving crumbs much too small for the other Whos’ mouses!
‘but the 1% will make out OK’
The most expensive houses have fallen first, faster and farther than any other segment.
That’s what I’m seeing. I live in a nice part of O.C. and watch the 4bed 1800sf+ market. Tons of stuff getting listed 900j up to 1.25, everything sitting, being taken off-market, then relisted lower. Price cuts every day. You can tell who cant afford big cuts because they’re dropping 10k; people who bought pre-bubble and didnt HELOC the S out of their homes will drop it 50k. Still no movement. Pass the popcorn, b*tchez.
OT… Well, at least they’re not pooping in public, like in SF!
So men get these, but women still have to hunt for a toilet?
“Paris installs completely exposed urinals near popular tourist spots”
“Paris has struggled to prevent public or “wild peeing” for years, even implementing an “incivility brigade” to enforce fines for uncouth behavior in 2016.”
https://www.cnbc.com/2018/08/15/paris-installs-completely-exposed-urinals-near-popular-tourist-spots.html
Goldmine of housing, economics, taxes articles in the Los Angeles Times:
What $650,000 buys right now in three L.A. neighborhoods:
http://www.latimes.com/business/realestate/hot-property/la-fi-hp-what-money-buys-20180818-story.html
Over half a million dollars and bars on all the windows? Nice.
With an epidemic of mental illness on the streets, counties struggle to spend huge cash reserves:
http://www.latimes.com/local/california/la-me-mhsa-unspent-balance-20180819-story.html
“Epidemic” of mental illness? California is paradise.
California homeowners get to pass low property taxes to their kids. It’s proved highly profitable to an elite group:
http://www.latimes.com/politics/la-pol-ca-california-property-taxes-elites-201808-htmlstory.html
I got mine, and f* the rest of you. How “progressive.”
Sweet pensions, secrecy laws: L.A. has its own ugly swamp that needs draining, but where’s the leadership?
http://www.latimes.com/local/california/la-me-lopez-drop-leadership-20180818-story.html
Somebody is paying taxes for all of this. Who controls the state legislature? Who controls the city councils?
“With an epidemic of mental illness on the streets …”
Hey! Don’t knock my customer base!
Nahh, I don’t think these folks are, or ever will be, in your customer base. Tarps are cheap, old cardboard boxes and shopping carts even cheaper.
Those are your former customers, before you foreclosed and kicked them into the street.
It was a hell of a job but somebody had to do it.
“To receive the benefit, it isn’t even necessary to live in California. An attorney in Boca Raton, Fla., has advertised the two-bedroom Santa Monica home he inherited from his parents near the Brentwood Country Club for $5,900 a month, which would pay his annual property taxes in a little more than two weeks.”
Sweet deal for him. And for the assorted rich folks mentioned in the article.
The progressives sure know how to run an area. Honestly, $650,000 for those crap shacks. Look I could see it if the wages in LA were twice that of areas where those are $135,000 houses but you see time and time again that wages average ten to twenty per cent higher on the west coast. Sorry I know people object to my saying it but millennials just have to live in around 30 cities to be considered hip on social media and that is a major reason why such cities can get away with such inflated prices. Now, I do believe that a lot of them with eventually figure it out and change their politics and location but it takes time. Then, you will see price reductions in these areas of 70% plus. But it appears for now that most millennials seem to moving even more to socialism thus the correction will be postponed.
Here is some evidence supporting my observation about millennials. We may have a doctor shortage because many millennials are not going to medical school in part because they may not end up in one of the cool cities. Good forbid they may end of practicing in Cleveland. Which not too along ago might have been a great thing:
https://www.nbcnews.com/business/business-news/doctor-out-why-physicians-are-leaving-their-practices-pursue-other-n900921
Excerpt from the article:
Fowler also speaks to the desire among millennials to be in hip, urban locations — a luxury you likely won’t get when you’re fresh out of medical school and in need of a residency.
hip, urban
What about “vibrant,” huh? It’s no good if you don’t use the word “vibrant.”
You are correct. Of course, the person quoted in the article was not a real estate agent so it might be forgiven. On the other hand, given the correlation between “urban” and ambulances, people in the medical field should be able to identify the areas correctly.
Dan, I work with doctors day-in and day-out. We are a trauma-2 hospital. So many of the surgeons and specialists are burnt-out. A major part of the burnout has to do with the clumsy implementation of EMR (electronic medical record).
An excerpt from your article hones in on this:
“Some cite electronic health records (EHRs) as part of the reason — especially old school doctors who don’t pride themselves on their computer skills. ”
“I began to feel like an easily replaceable cog in the healthcare machine. With the [enforcement] of EHRs, I had to spend more time as a scribe. One night a child I was treating had a seizure and I couldn’t get the medicine to enable them to breathe because their chart wasn’t in the system yet. This kid was fixing to die and I, the doctor, couldn’t get the medicine. It was demoralizing.”
If you want to read what I believe is a very accurate synopsis of the state of medicine in the US, this article is about as good as it gets:
https://www.theatlantic.com/health/archive/2018/05/the-burnout-crisis-in-health-care/559880/
Wow, are the security bars and doors included for $650k? Such a deal.
‘he was scared off by a building boom that could add more than 2,000 new apartment units to downtown West Palm Beach’
This reminds me: what happened to Outlier Man? Maybe he got ebola?
Da Boyz are existing the rigged casino before the stampede starts.
http://www.dailymail.co.uk/money/markets/article-6074377/Housebuilding-barons-sell-shares-worth-300m-fears-mount-property-market.html
The bosses of Britain’s top housebuilders have cashed in £300million worth of shares between them over the past year.
Our analysis of share sales by building bosses comes as fears rise of a downturn in the market.
Upmarket housebuilder Berkeley Group’s founder and chairman Tony Pidgley, a former Barnardo’s boy, has sold £65million of shares in the last 12 months, while chief executive Rob Perrins has cashed in £37million.
“Follow the money”!
Portland, OR Rental Rates Crater 9% YOY As China Recession Flattens West Coast
https://www.zillow.com/downtown-portland-or/home-values/
*Select price from dropdown menu on rental chart
Bears need to eat, too…
Chinese stocks are deep in a bear market, but one market watcher spies an entry point
Keris Lahiff
Published 8:01 AM ET Fri, 3 Aug 2018 CNBC.com
China stuck in a bear market: Buy the trade war dip?
The threat of an all-out trade war with the U.S. has taken an axe to Chinese stocks over the summer.
The Shanghai Composite and U.S.-traded FXI large-cap China ETF tumbled more than 20 percent from their January highs, pulling both into a bear market.
One market watcher sees more pain to come, but also spies an opportunity amid the wreckage.
“We’re setting up for a spectacular capitulation in the China shares,” Larry McDonald, editor of the Bear Traps Report, said on CNBC’s “Trading Nation” on Thursday. “We’re going to have a nice washout, I think, within two weeks.”
…
Collectively, they contributed $30 million through a U.S.-sponsored foreign investor program that would have yielded immigration visas as a reward for creating jobs at the resort. About a third of them filed a lawsuit in bankruptcy court alleging fraud by Bancorp and four of the developer’s managing members.”
Sounds like the EB-5 program. I was wondering why foreign investments have been declining so rapidly. Mabye foreign investors got wind of this early on and have been backing off. I heard a rumor this program may end this September but from what I gather this program has been renewed every year since it was first created. My understanding of this program is that it allows Rich foreigners a place to park / bank there money and a free visa to boot.
Eb-5 visa? Kushner family meal ticket.
Interesting article. People are talking openly that the gig is almost up, slowly walking towards the exits. This is a big change from just a month ago - you didn’t see article like this. Might be pay-walled:
https://idahobusinessreview.com/2018/08/17/building-revenue-generating-properties/
“Jack Harty has a mixed message for clients who approach him about building revenue-generating properties.” Harty is the principal of Harty Mortgage Advisors in Boise.
“But Harty also sees signs that the economy has reached a peak, and he advises clients they may be better off selling some of their existing properties at existing high prices rather than risking construction of too many more properties.”
“His message of caution is shared by several others involved in Idaho real estate loans, who believe it’s time for borrowers to factor in the possibility that a market correction may be on the horizon when they plan their projects.”
“There are pressures at work that over time, if unabated, will tend to reduce the value of income-producing properties,” Harty said. “Right now we’re on the crest of a wave. When will the wave break?”
“Harty believes strong growth in Idaho, especially in Treasure Valley, will help to prolong the state’s strong economy. But it’s also clear that building costs are driving rent up to levels that can only be afforded by an “exhaustible” group of wealthy renters.”
“Jeff Newgard, president and CEO of Idaho Falls-based Bank of Idaho, said he’s heard a lot of talk lately about a market correction. Though advises other lenders and borrowers to follow “good fundamentals” and to learn from the Great Recession. For example, he said lenders should make certain their loans aren’t disproportionately high compared with the values of borrowers’ projects.”
“(Before the Great Recession) there was so much money to be made for a bank on development lending, and when things fell apart, everything came down like a house of cards,” Newgard said. “Just because (the economy) has been going this way for a few years doesn’t mean it will continue the same way.”