Eviction Moratorium Continues Through July

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The pandemic-inspired nationwide ban on evictions is hanging around for a while longer. The Supreme Court rejected pleas by landlords to end the moratorium with a 5-4 vote to keep the pan in place. The ban is due to expire at the end of July and another extension isn’t expected. In addition, the Treasury Department issued guidance encouraging a streamline distribution of the near $47 billion available for emergency rental assistance. The government is attempting to blunt the impact of the end of the eviction moratorium.

 

Investors Add to Competitive Housing Market

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With limited housing inventory, homebuyers are already over a barrel when shopping for a new home. But add investors into the mix and the market becomes even tougher. Nationally, Metro Detroit has experienced the second-highest increase in the number of investor-purchased homes year over year. Investors are cash buyers who can close more quickly which makes it even harder for buyers getting a mortgage. But for the seller, cash is king and a cash sale allows a seller to move on with their future.

Mall Properties Transition to the Untraditional

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With mall vacancy rate across the U.S. setting new records, it’s no surprise that malls are standing empty or being repurposed. Two new occupants of the Lakeview Mall in Battle Creek are doing just that. A climate-controlled self-storage developer bought the former Macy’s and plans to rent storage units, reachable by an indoor drive-through, and Horrocks Farm Market will move from downtown Battle Creek into the former JC Penney store. This represents the current trend for mall properties. Development experts look toward transitioning these large retail properties into housing, entertainment venues, medical facilities and other non-traditional mall tenants.

 

 

Century-Old 1031 Exchange Tax Break Is On The Chopping Block

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Thanks to a 100-year-old provision in the tax code, real estate investors have been able to roll earnings from the sale of one property into the purchase of another to avoid paying taxes on the gains from the properties they sold. Section 1031 covers a transaction that is commonly called a like-kind exchange and provides a tax deferral on the financial gain of a sale if the proceeds are directly rolled into a similar investment property within 180 days. The Biden administration is taking aim at the tax code in the interest of financial equity. The current administration’s efforts would generate $19.5 billion in tax revenue over 10 years.

Wholesaling Middlemen Descend on Neighborhoods

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States and cities in the U.S. are cracking down on a niche in house-flipping known as wholesaling. The wholesalers do not typically hold real-estate licenses which makes regulation difficult. Wholesalers negotiate with homeowners and then put the homes under contract and sell those contracts to home-flippers. A home that just needs a little upgrade is long gone in today’s market. Instead, wholesalers are targeting homes that aren’t on listing services and need major overhauls. Most are in poorer neighborhoods. There are allegations that some wholesalers mislead struggling homeowners about the value of their property and take advantage of the situation.

Zombie Properties Becoming More Common

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In the first quarter of 2021, 1 in 14,825 homes sat empty during the foreclosure process, but that number is on the rise. In the second quarter, one of every 12,256 homes are zombie properties. The spike may be due to lenders foreclosing on homes that were already abandoned. However, even with the increase, zombie foreclosures are still just a blip on the radar screen. The trend has been seen before when government officials try to delay foreclosure proceedings for so long that distressed borrowers simply abandon the property before the foreclosure can take place.

Real Estate Slow Down In Sight?

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Although nearly 50% of the homes sold for more than their list price in the last four weeks ending May 16, there are signs that housing market demand may be reaching its peak. In the 7-day stretch leading up to May 16, pending sales were down 10%  from four weeks prior. Home prices remain astronomically high, although mortgage rates spiked last week, jumping 6 basis points to 3%. There has also been a slow down in new listings.

Millions Face Eviction & Uncertainty

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As states challenge the federal moratorium on evictions, families across the U.S. don’t know if they’re going to have a place stay.  An avalanche of evictions could soon become a reality as renters owe $53 billion to landlords. The Texas Supreme Court lifted the moratorium on evictions on March 31. As a result, the Dallas-Fort Worth area has the third-most eviction filings in the country. The moratorium is scheduled to be lifted on June 30. According to the Aspen Institute, 40 million Americans are at risk of losing their homes.

 

Investors Continue to Bet on Commercial Real Estate

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A year after the start of the pandemic, high-rise office buildings are near vacant, one of every two hotel rooms is unoccupied, and malls continue to struggle. However, by most measures, the U.S. commercial real-estate market is in solid shape. Prices are already rising again, and the number of foreclosures barely increased. The federal government’s efforts to support the economy protected landlords from steep losses. The support won’t last indefinitely, and investors may be in for a rude awakening when it begins to wane.

 

 

Virtual Evictions Threaten Constitutional Rights

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Across the country, eviction hearings have moved to the computer because public officials don’t want to risk exposure to sick tenants arriving for court appointments.  Lawyers have seen virtual eviction hearings that take as little as 30 seconds. Tenants often don’t have access to computers and have to dial into the hearings with their phones. Many courts only accept documentation online, and tenants who try to submit their records in-person are turned away. Many argue that tenants’ due process rights are violated by the technological and financial barriers of the eviction proceedings.