Due to a record low supply of homes on the market, 56% of home buyers face bidding wars in their offers. This is an increase of 52% from December of 2020. More than half of the homes listed go under contract in less than two weeks. Lower interest rates are making expensive homes more affordable, but a low market supply forces homebuyers to act quickly.
With 2.7 million Americans still taking advantage of mortgage forebearance programs as late as mid-January 2021, the reality of a housing crisis looms. The CARES Act programs will end at the end of March unless changes are made to the rules. Most of the programs have a 12-month cap. If no intervention occurs, 600,000 Americans will have to begin paying their mortgages again.
Toll Brothers is proposing a 56-home luxury subdivision in northeast Ann Arbor. The intent is for the development to meet the needs of first time luxury home buyers, retirees, families, and working professionals. The subdivision proposal still needs to go before city staff for review and to Planning Commission and City Council for approval.
The Washtenaw county treasurer declared a moratorium on tax foreclosures for residential, occupied properties. Catherine McClary is amending the Financial Hardship Policy in an effort to assist small business owners, landlords, and homeowners. The moratorium will extend the tax foreclosure deadline to next year.
Briarwood Mall has 17 empty storefronts. Ann Arbor’s only mall has lost several businesses in the first quarter due to an increase in online shopping, high rents and the COVID-19 pandemic. City officials worry about the mall’s future and contemplate alternative uses for the large structure and parking lot. Multi-use ideas include entertainment venues like climbing gyms or laser tag, as well as a retirement community, office, and/or housing spaces that would guarantee consistent foot traffic.
The mall is dead. Actually, in my opinion, the mall has been dead for several years. But no one has bothered to tell the mall.
COVID-19 may have dealt the final blow to malls. But the downward spiral began, quietly, on July 5, 1994: The founding of Amazon.
Amazon provides a virtually limitless selection of consumer products in one location. Gone are the days of leisurely strolling from store to store to find the perfect item. That item is a few clicks away on Amazon. The introduction of Amazon Prime in 2005, with two-day shipping, has accelerated the demise of bricks-and-mortar retail.
In the past year, over 20 national retailers have filed for bankruptcy protection. The next 12 months will be worse. Paycheck Protection Program loans and landlord leniency have merely kicked the can down the road for most retailers. In Metro Detroit, both Partridge Creek and (especially) Fairlane are doomed to fail as currently constituted. Lakeside Mall has already been sold to an owner (for less than $18/sf). The new owner is planning reuse involving “dynamic mixed-use destinations.”
Even the once-untouchable Somerset Collection has been impacted by vacancies, as well as the recent bankruptcy of one anchor (Neiman Marcus), and the potential bankruptcy of a second anchor (Macy’s). Even Nordstrom is not immune to the impact of online retailing, closing 15% of its full-line stores in 2020.
So what is to become of these once-proud regional malls? Expect reuses involving a mix of alternate uses (mega-churches, fitness centers), multi-family residential, and other less desirable uses (waterparks, etc.). One potential user is the villain itself: Amazon. Amazon could be a prime user of anchor space for fulfillment, order pickup, and small-scale retail (4-Star stores). But Amazon will not be paying the rent, and will not be drawing the foot traffic, that malls need to survive as currently constituted.
The mall is dead.
Median prices for residential real estate sales increased in Charlevoix, Otsego, Cheboygan and Emmet counties. The number of residential transactions also increased in three of those counties. The quick rebound in sales once pandemic restrictions eased is due to low supply and high demand and buyers’ desires to relocate to smaller communities. This trend could cause issues if it continues as working-class families may find themselves priced out of the housing market in Northern Michigan.
With the passing of November’s Prop N, which approved the sale of $250 million bonds, demolishing and renovating is set to begin (again) in Detroit. The project starts with $175 million in bonds, and the city plans to sell another $75 million next year. 8,000 homes blighted homes will be destroyed, and another 8,000 salvageable homes will be renovated. The seven companies taking part in the project are headquartered in Detroit. Five of those companies are black-owned.
In a new report, Fitch Ratings estimates that home prices are 5.5% overvalued nationally. However, Michigan is one of the few states where housing is undervalued.
The demand for housing far exceeds the available inventory nationwide. This trend is due, in part, to homeowners’ reluctance to list homes during the pandemic. Metro areas around the United States are overvalued by more than 10%. Las Vegas (28%) and Dallas-Fort Worth (20.24%) are prime examples. Idaho (30-34%) is the highest overvalued state on the list, with Nevada coming in a close second.
Colliers International U.S. states it has commenced legal action against 10 former senior brokers who split from the company to form their own firm, Advantage Commercial Real Estate Services, alleging, among other things breach of fiduciary duty and use of confidential information. Several of the brokers were majority owners in a firm that Colliers acquired in 2016 in an effort to strengthen its presence in West Michigan. The proceedings provide a new slant on what was perceived as an amicable split in January.
