Warren Buffett bets on Cleveland, foreign spending could wane in Seattle, value seekers flock to Pittsburgh, and more...

National market report

Apr.April 01, 2016 01:00 PM
The Flats East Bank, a new apartment complex in downtown Cleveland.

The Flats East Bank, a new apartment complex in downtown Cleveland.

Cleveland

Investor mogul Warren Buffett has placed a bet on Cleveland. His New York-based company, Berkadia Commercial Mortgage, which is part of Berkshire Hathaway, has entered the Ohio city’s real estate market by snapping up mortgage-banking firm RiverCore Capital, according to The Plain Dealer, the local newspaper. The terms of the deal were not disclosed. RiverCore Capital, a small firm that has arranged financing for major downtown projects including the Flats East Bank development, a 23-acre waterfront apartment development, is part of Berkadia’s expansion plan, according to Justin Wheeler, chief executive officer at Berkadia. “Obviously Cleveland’s an interesting market, and it’s one that doesn’t have a lot of national players,” he said. Over the last several years, developers have added more than 1,300 dwellings in the city’s center, taking advantage of strong rental demand and interest in urban living. “The buzzword in our industry is to be a 24-hour city,” Terry Coyne, the Newmark Grubb Knight Frank vice chairman, told WKYC, a local TV station. “We’re probably turning into an 18-hour city. Not quite 24 yet.”

Seattle

Seattle

Seattle

A strong dollar and a spike in property prices may curtail foreign home buyers in Seattle, where the median price of a single-family home jumped 24 percent over the past year to $644,950, according to The Seattle Times. Foreign buyers, led by the Chinese, have accounted for $102 billion in home purchases from April 2014 to March 2015, or 8 percent of total existing sales. But a strengthening dollar is making U.S. real estate even more expensive for overseas buyers, including the Chinese. The report, which drew from a National Association of Realtors research paper, also cited tighter capital controls in China, where there has been an effort to prevent people from moving too much cash offshore. Seattle’s hot property market comes amid record-low inventory. “We cannot continue to sell more homes than we list,” Matthew Gardner, chief economist at Windermere Real Estate, said. “When are we going to start seeing some listings? That scares me more than anything else.”

Steel Tower in Pittsburgh

U.S. Steel Tower in Pittsburgh

Pittsburgh

In search of better returns and a less competitive market, big city investors are pouring their cash into some of Pittsburgh’s most prestigious commercial properties. Since 2010, real estate companies from Munich to San Francisco have paid over $1 billion to acquire more than a dozen properties in or near Downtown Pittsburgh, including iconic trophy purchases such as the U.S. Steel Tower, the city’s tallest building, PPG Place, and One Oxford Centre, the Pittsburgh Post-Gazette reported. “I think it’s a sign that Pittsburgh is finally getting the recognition it deserves for being a very strong, stable market,” Jonathan Kamin, a local real estate attorney, said. In January, San Francisco-based Shorenstein Properties nabbed One Oxford, a distinctive 45-story skyscraper in Downtown Pittsburgh, for $148.7 million. The company has shelled out money in other cities, including $30 million to buy 1407 Broadway, an office tower in New York. “What’s really exciting is that Shorenstein is like the great white shark showing up. That says we’ve made it,” said Jeremy Kronman, a CBRE executive vice president. The investment has served as a capital injection for the city’s tired-looking office towers, some of which have not been refurbished since the 1970s. All told, out-of-town investors have poured an additional quarter of a billion dollars into modernizing buildings. One downside for tenants is possible rent increases.

Flint

Flint, which is in a federal state of emergency due to unsafe levels of lead in the city’s water system, is now grappling with a housing crisis. The Michigan city, 60 miles north of Detroit, has the highest vacancy rate in the country, with 1 in 14 homes vacant. “Homes today are selling for maybe 50% of what they were selling for in 2005,” Rob Moen, an associate broker at Berkshire Hathaway HomeServices, told CNN Money. The median home price in Flint is $14,000. Although Flint, formerly dominated by the auto industry, has suffered from high vacancy rates and weak home prices for years, the housing market had been improving prior to last year’s water pollution discovery. From April 2014 to August 2015, median home sales prices rose to $46,700 from $17,000. By December, however, prices had dropped to $30,700, then dipped further.

Phoenix

Alicia Keys has put her mountainside mansion in Phoenix on the market for $3.85 million. The Grammy Award-winning R&B songstress is selling the 7,881-square-foot home with her hip-hop producer husband, Swizz Beatz. Keys first purchased the four-bedroom home, which she nicknamed “Dreamland,” in 2008 for $3.9 million. The Frank Lloyd Wright-inspired-home features 20-foot windows with views of the mountains and valleys, a six-car garage and an 800-bottle wine cellar.

Los Angeles

Ronald and Nancy Reagan’s former Pacific Palisades property, where the late Republican was showering when he learned he had won the 1980 presidential election, is on the market for $33 million. The Reagans’ original home, a modest 4,700-square-foot house built in the late 1950s, was demolished in 2013 and replaced with a roughly 10,000-square-foot house that now includes staff quarters and a powder room lined with peacock feathers. The current owners bought the property in 2013 for $5.21 million. Nancy died last month.

Martha’s Vineyard

Having racked up $17 million in debt, “NYPD Blue” and “Deadwood” creator David Milch has slashed the asking price for his 22-acre Martha’s Vineyard compound to $6.99 million from $8.95 million. The Emmy-winning producer bought the oceanfront home in 1996 for about $4 million but has since gambled away an estimated $100 million fortune, forcing him to offload his assets, according to Variety. The property has three buildings: an 1880s main house, a guesthouse and a pond-side cottage.

Nashville

Kesha, who is currently embroiled in a messy and costly lawsuit with her former producer Dr. Luke, has sold her secluded 4,800-square-foot Nashville home, which was first listed last year at $1.55 million and last listed at $1.45 million. The 4-bedroom, “Zen-infused” contemporary home was in escrow last month and about to be sold, according to Variety. The musician bought the property in 2010 for $1.4 million.


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