Alexis Manrodt

  • Clockwise from right: Hong Kong; Columbo, Sri Lanka; and Zagreb, Croatia (Credit: Wikipedia, iStock)
    Clockwise from right: Hong Kong; Columbo, Sri Lanka; and Zagreb, Croatia (Credit: Wikipedia, iStock)

    It’s been quite the decade economically in many parts of the world, and it shows in the values of homes.

    Home values have more than doubled over the last 10 years in eight countries and territories across the world, according to a New York Times analysis. The analysis ranked places by the percentage increase in home values over the last 10 years, five years, and one year.

    Nowhere have estimated home values increased by more than in Hong Kong. A house there is likely worth 193 percent more today than it was in 2010, according to the Times. In Brazil over that period, home values have shot up 152 percent.

    The other countries where values increased by more than 100 percent are Peru, Chile, Estonia, Colombia, Malaysia, and Iceland. The U.S. didn’t make the top 15 list, but its neighbor to the north has experienced a 74 percent increase in home values.

    Home price growth in the U.S. slowed last year as developers continued to deliver new inventory across the country.

    Homes Sri Lanka have appreciated by 66 percent over the last five years. China, Turkey, Malta, and Iceland weren’t far behind —all saw average annual increases of more than 10 percent over that period.

    Many countries that saw outsized long-term gains did not rank high in appreciation over the last year. Poland, Croatia, Germany, and Puerto Rico topped that category with 11 percent increases.

    Value growth seems to be most consistent in Germany, Chile, and New Zealand — they were the only three countries that were top 15 for growth for each time period. [NYT] – Dennis Lynch

  • Gregory Prosser

  • Vatican police have been raiding church officials’ offices (Credit: iStock)
    Vatican police have been raiding church officials’ offices (Credit: iStock)

    Dan Brown wishes he wrote this one: All the Pope’s men are descending on London over an expensive and failed real estate deal.

    Vatican police raided the home and offices of Vatican state official Alberto Perlasca, who oversaw the Holy See’s European asset portfolio and was involved in the property botched deal, according to the Associated Press.

    The raid comes five months after Vatican police raided several other Vatican offices. No one has been charged.

    It appears the Vatican grossly overpaid for the London property at 60 Sloane Avenue in Chelsea and incurred costly fees in the process. In 2014, the Vatican Secretariat bought a 45 percent stake in the property for roughly $200 million through a fund managed by Raffaele Mincione.

    Mincione had bought the office property just two years earlier for £129 million, but a few months before the Vatican’s investment, the value of the fund’s equity stake in the office building was tripled after an appraisal by CBRE.

    The Vatican deal allowed Mincione to cash out more than his entire initial investment in the property, according to Financial Times. The structure of the deal meant the Vatican paid Mincione millions of dollars in fees after that point as well. Mincione said the deal was transparent and the fees were normal.

    At some point, Mincione began planning to convert the office building into a residential building. He secured permits in 2016, but had to take out expensive debt following the U.K.’s vote on Brexit.

    Two years later, the Vatican bought out Mincione’s share for roughly £168 million. They also took on £100 million in debt owed to a London hedge fund. Still, work hadn’t started on the conversion.

    The Vatican police’s investigation in the deal was triggered when the Secretariat went to the Vatican bank to refinance the debt on the property. [Associated Press, Financial Times]Dennis Lynch

  • Alexis Manrodt

  • Real estate’s micro-investing moment

    February 23, 2020 12:00PM
    Compound CEO Janine Yorio and a Clinton Hill property available to users on Compound
    Compound CEO Janine Yorio and a Clinton Hill property available to users on Compound

    So-called micro-investing in private real estate is an increasingly accessible option for investors looking to diversify their portfolios with small dollar value investments.

    Micro-investing allows investors to buy shares of properties and real estate portfolios with buy-ins as little as $5 in some cases, according to Yahoo Finance. The investments work much like real estate investment trusts, but don’t allow investors to buy in specific properties and do not require the high dollar commitments needed to participate in most REITs.

    “The best portfolios are diversified, and real estate performs very uniquely, in a way that is uncorrelated to the stock market and bonds… We want to offer the same asset class at a lower price point,” said Janine Yorio, founder and CEO of the micro-investment app Compound.

    Compound buys and flips properties and shares those profits with investors. The startup also brings in cash acting as a buy-side broker for purchases and charges a fee to the seller. The New York-based company offers investors the option to invest in four properties in Brooklyn, Austin, and Miami.

    Portland-based CrowdStreet has a similar model — the startup allows investors to buy shares in commercial real estate in the United States. Co-founder Darren Powderly says it’s better for diversification than REITs because those investments are tied to property performance whereas REITs are subject to stock market volatility. The firm recently said it hit a milestone, with $1 billion raised through its platform.

    The micro-investing model is being applied in the private equity sector as well. Startup RealBlocks, which allows investors to buy micro-shares in private equity funds using government-backed currency and cryptocurrency, raised $3.1 million in a fundraising round last year. [Crunchbase, Yahoo Finance] – Dennis Lynch

  • Gregory Prosser

  • High water levels in Lake Michigan erode a walkway and seawall (Credit: Scott Olson/Getty Images)
    High water levels in Lake Michigan erode a walkway and seawall (Credit: Scott Olson/Getty Images)

    Unusually high water levels and waves on the five Great Lakes are ravaging lakeside homes, infrastructure, and businesses. Some are literally washing away.

    Erosion on the shores of the Great Lakes has caused tens of millions of dollars in damage across states from Minnesota to New York, according to the Wall Street Journal. Water levels are linked to above-average rain and snowfall over the last several years caused by warmer temperatures.

    The U.S. Army Corp of Engineers forecasts that lake levels could remain elevated through July. If a bad enough storm hits, some shorelines can see 10- to 20-foot waves.

    Locals worried their properties are spending big bucks to protect their homes. Some are literally lifting them up and moving them from the shoreline. Others are hiring contractors like Randy Vassh to build sea walls and other barriers.

    “I’m just getting call after call after call,” Vassh told the Journal, who added that he’s in the market for more equipment to take on more jobs.

    Michigan’s environmental agency has issued 468 permits for shoreline protection from October through December, compared to 557 for the prior 12-month fiscal year.

    States and municipalities also have work on their plates. Officials in the city of Duluth, Minnesota expect it will cost $30 million to fix the shoreline, a boardwalk, and other public infrastructure that runs along Lake Superior. They’ve brought in 76,000 tons of stones for protective barriers.

    Wisconsin officials estimate $30 million in damages, while Illinois officials estimate $25 million in damages. The governors of both states have declared emergencies that could bring in federal dollars. [WSJ]

  • Kevin Rebong

  • Fredrik Eklund (Credit: Getty Images)
    Fredrik Eklund (Credit: Getty Images)

    “Million Dollar Listings” star broker and recent Los Angeles transplant Fredrik Eklund says condominiums are the new wave in his new West Coast home, where mansions in the hills have been the default in the luxury stratosphere.

    The Douglas Elliman broker told Mansion Global that new projects in L.A.’s tony neighborhoods like Beverly Hills are presenting new options for buyers. Eklund is selling units at the recently built 8899 Beverly building.

    8899 Beverly
    8899 Beverly

    “Vertical living didn’t used to be something people understood there,” Eklund said. “The whole idea of making a decision before a building was done, and having sales galleries before the home could be seen, that’s new.”

    He also thinks L.A. can outdo New York for “mega-luxury homes,” pointing to the big-ticket sales that have closed in the L.A. area recently.

    Earlier this month, Amazon founder Jeff Bezos broke a national record with the $165 million purchase of David Geffen’s Beverly Hills estate (he also bought a $90 million plot of dirt). Between July and December of 2019, three mansions in L.A. County sold for at least $100 million.

    The ultra high-end market ($70 million-plus) is doing well, as are homes in the low $3 million range, he said. “But the more difficult market—not that it’s bad, just tricker—is the $6 million to -$15 million market,” he told Mansion Global.

    Eklund also weighed in on the proliferation of high-end amenities being offered in condos and apartments. Wellness-style amenities are becoming more popular, like IV drips and cryotherapy sessions available to residents at 40 Bleecker in New York.

    As far as advice to buyers, he suggested buyers and sellers be patient and “give it some time.”

    “Brokers, myself included, can be pushy, but you need to take time,” he said. “We’re in a market where you have time to come back a few times and look at a place in different lights and at different times.” [Mansion Global] — Dennis Lynch

  • Alexis Manrodt

  • Boise, Idaho (Credit: iStock)
    Boise, Idaho (Credit: iStock)

    The shift from the nation’s top markets to secondary markets is accelerating.

    Coldwell Banker’s “State of Luxury 2020” report picked out several secondary markets to watch alongside some larger markets that still have room to grow, according to Inman. The top markets to watch are Boise, Idaho; Charlotte, North Carolina; Colorado Springs, Colorado; Cincinnati, Ohio; and Fort Worth, Texas.

    The list was based on an analysis of job and population growth against sales-price-to-list-price ratios, days on market, median list price, and inventory.

    Secondary cities can be attractive to homebuyers for a number of reasons. They’re attractive for buyers who want to live in an urban environment but who can work remotely — they don’t necessarily need to be in the nation’s larger job centers to work high-paying jobs. Secondary markets can get buyers more real estate bang for their buck as well.

    Coldwell Banker isn’t the first to see the trend toward secondary markets. Developers and investors have turned their attention toward smaller markets in search of returns as cap rates compress in the nation’s premier markets. Secondary and suburban markets have outperformed larger markets by various metrics over the last few years, like household income growth and employment growth.

    Still, several larger markets made Coldwell Banker’s list. Malibu and San Diego, California; Austin, Texas; and Arlington, Virginia were picked as markets to watch. Malibu topped markets in terms of price-per-square-foot with a median of $4,269-per-square-foot. [Inman] – Dennis Lynch

  • Kevin Rebong

  • Atherton, California became the first community in the country where the average income topped half a million dollars this year. (Credit: iStock and Google Maps)
    Atherton, California became the first community in the country where the average income topped half a million dollars this year. (Credit: iStock and Google Maps)

    Atherton, California has topped Bloomberg’s Richest Places annual index for four years, but this year is unlike any other. And Atherton is unlike any other place in the country.

    The Silicon Valley town became the first and only community in the country where average annual household income topped half a million dollars — $525,000 to be exact — since the index started in 2017, according to Bloomberg. That’s nearly $75,000 higher than the second-richest community on the list, Scarsdale, New York.

    Atherton’s eye-popping household income is largely a product of the Bay Area tech boom. The town is chock full of billionaires and millionaires who amassed their fortunes in the tech industry.

    A scan of the MLS revealed that the cheapest house currently on the market is listed at $2.5 million. The most expensive property on the market is listed at $32 million.
    Several other Silicon Valley towns and cities made Bloomberg’s list. Two others were in the top five: Hillsborough rose to third place from fifth place last year with an average household income of $430,631, and Los Altos Hills fell one spot to fourth with an average income of $405,073.

    Like Atherton and its neighbors, many of the country’s wealthiest communities are clustered around centers of economy and power — there were 12 counties across the country with at least four communities on the list.

    The New York metro area comprising several counties in New York, Connecticut, and New Jersey had the most with 26. There were 16 communities in the Bay Area on the list, eight in Cook County on the list, and four in Los Angeles County.

    All in all, 16 states had communities on the list. The addition of Lucas and Alamo Heights gave Texas a total of eight communities. [Bloomberg] — Dennis Lynch

  • Alexis Manrodt

  • Medical staff outside of a Beijing hospital in February 2020 (Credit: Getty Images)
    Medical staff outside of a Beijing hospital in February 2020 (Credit: Getty Images)

    The devastating coronavirus outbreak in China is starting to take its toll on some of the country’s biggest landlords.

    Measures meant to curb the spread of the deadly virus have effectively put renting on pause in some parts of the country, while some short-term rental businesses are hurting without the seasonal bumps they banked on, according to Bloomberg.

    The outbreak is also affecting the housing market — year-over-year price growth was the slowest in January since July 2018.

    In Wuhan, the center of the outbreak, rental management company Danke — owned by Phoenix Tree Holdings Ltd — won’t pay rent to landlords for 90 days. Landlords rent units out to the company, which refurbishes, rents and manages them. The company is offering discounts to tenants who sign long-term contracts to drum up business.

    Cities outside Wuhan, the center of the outbreak, have also adopted containment measures. Some rental associations want landlords to waive rents.

    Landlords in Shenzhen and Hangzhou also have to alert authorities of any tenants from Wuhan’s province living in their buildings or face penalties. In some places, landlords are responsible for screening tenants and disinfecting common areas.
    Renters in some cases can’t get into their own units because of lockdowns. Long-term rental startups Ziroom and You+ have received requests for waivers and refunds because they can’t return to their units. Airbnb recently announced it would freeze all business in Beijing for two months as well.

    The financial pressure on those companies could have a knock-on effect — venture capital funds managed by Tencent, Warburg Pincus, and Sequoia Capital are among the investors who have poured billions of dollars into the rental management sector over the last few years.

    In the United States, Coronavirus has not yet had a significant impact on the real estate trade, The Real Deal reported earlier this month.

    [Bloomberg] – Dennis Lynch

  • Matthew Blake and Tina Daunt

  • A federal court judge in LA tossed out Zillow lawsuit filed by developer Bruce Makowsky (Credit: iStock)

    A U.S. District Court judge in Los Angeles tossed out a lawsuit a company tied to Bruce Makowsy filed against Zillow, ending for now a legal battle over the developer’s fabled “Billionaire” spec mansion.

    Judge Otis D. Wright dismissed with prejudice 924 Bel Air LLC’s claim against Zillow for negligence in a written ruling handed down this week.

    The Makowsky-formed LLC claimed in a lawsuit filed last February that Zillow damaged the sales value of “Billionaire” because a user on the widely read real estate listings site repeatedly and falsely stated that the 38,000-square-foot property sold for $90 million.

    Zillow pulled these posts and banned the user who made them, but not before, Makowsky argued, the property’s “elite status” had been damaged.

    But the judge ruled that Zillow was plainly protected by the Communications Decency Act, a federal law that protects websites from being held liable for third-party postings.

    “Reviewing each user’s activity and postings to ensure their accuracy is precisely the kind of activity for which Congress” intended the Communications Decency Act “to provide immunity,” Wright ruled. The judge later added, “The court does not find this to be a close case.”

    Makowsky could not be reached for comment. Makowsky’s lawyer, Ronald Richards, told the Los Angeles Times that his client planned to appeal Wright’s decision.

    The Zillow litigation added to the saga around “Billionaire,” a 12-bedroom, 21-bathroom home with luxury features including a room full of candy and a Louis Vuitton designed bowling alley.

    Makowsy, who made his fortune selling handbags on the QVC network, first put the home on the market in 2017 — listing it at $250 million — at the time the priciest residential real estate listing in the country.

    The handbag mogul then chopped the price to $188 million, and next to $150 million before selling the manse for $94 million last October, or $2,473 square foot — a 62 percent discount from its original $250 million price. The buyer behind the LLC that purchased the mansion is not known.

  • Erin Hudson

  • RE/MAX CEO Adam Contos (Credit: Facebook, iStock)
    RE/MAX CEO Adam Contos (Credit: Facebook, iStock)

    RE/MAX Holdings is taking its latest lead generation play to the robots.

    The company will launch a machine-learning app exclusive to its agents on Monday that uses machine-learning to comb through agents’ pre-existing contact lists and predict who is most likely to sell their home — and tells agents when they should reach out. RE/MAX announced the app on its fourth quarter earnings call Friday.

    “Agents are losing patience on just ‘buying leads,’” said RE/MAX CEO Adam Contos during the call. “In many cases, they have the leads they need.”

    RE/MAX CFO Karri Callahan
    RE/MAX CFO Karri Callahan

    Agents will have to pay a $49 monthly subscription fee to access the app, which will initially only be available in the U.S. On the call, RE/MAX CFO Karri Callahan said the company is subsidizing the cost of the app for agents by 50 percent.

    “We think this is a really compelling opportunity… driving at the heart of lead generation,” said Callahan.

    The app was built by North Carolina-based startup First, which RE/MAX acquired in late December.

    The app, which was developed by First and bears its name, can search through agents’ contact list in three minutes and ascertain where they live and what property they own, its founder Mike Schneider told Inman in December.

    In addition to alerting agents when they should reach out to specific contacts who are most likely to sell, the app also organizes agents’ contacts and provides reports on how much business they do within their network.

    The First app is already on the market and being used by non-RE/MAX agents. Those pre-existing user contracts will expire in 2020 and going forward the app will be exclusive to subscribing agents at RE/MAX, Callahan said.

    First was founded in 2016 and raised $16 million in venture capital funding. Though the financial terms of RE/MAX’s acquisition of First were not disclosed, Callahan said on the earnings call that the company paid using cash on hand and offered up equity.

    The First acquisition comes amid RE/MAX’s broader push in technology investment. In 2018, it acquired booj, a web development and software firm that’s now become a platform of agents tools, including customized agent websites. Earlier this year, it announced a lead referral partnership with Redfin, which was canceled two months in.

    RE/MAX noted during the call that First’s staff would be developing other tools and was part of a bigger push from the brokerage to build its “bench strength” of technologists, according to Callahan.

    Overall, the company reported $68.2 million in revenue, a 34 percent increase year over year compared to 2018’s revenue of $50.8 million. The increase was attributed to RE/MAX mortgage business, Motto, and revenues from ad and marketing platform Marketing Funds, which it acquired in January 2019.

    Expenses grew by 17 percent to $35.2 million year over year. Callahan explained the increase as in part due to higher equity-based compensation and increased legal costs. She noted that for 2020, RE/MAX expects a $4.5 million drag on earnings partly due to legal fees.

    The company was named in two class-action lawsuits last spring alleging that the National Association of Realtors’ buyer broker compensation rules violate antitrust law.

    The company’s total agent count grew 5.3 percent with the addition of more than 6,600 agents to a record figure of over 130,000.

    Write to Erin Hudson at [email protected]

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