Here's what I can tell you this morning: Real estate development is a bit more fun when you don't have to constantly worry about supply-chain issues, access to labor, high inflation, and regularly increasing interest rates. That said, if you just want to buy a super-prime property in one of the world's preeminent global cities, things seem to be just fine:
According to FT, both New York and London have continued to see a rise in super-prime sales this year and both have seen more of these sales in the first 8 months of 2022 compared to all of 2019 (before the pandemic). Note: These charts are showing home sales greater than US$10 million and greater than £5 million, respectively.
On top of this, many or most of these buyers are, apparently, still able to access financing at LTVs of 100% (i.e. no money down). For what it's worth, there is a London mortgage broker quoted in the article saying that he has arranged more 100% mortgages this year than in his entire 20-year career. Turns out that the best way to ensure access to debt is to not need it in the first place.
Charts: FT
I have been writing about the real estate startup Opendoor for many years here on the blog. Another promising startup in this space is Knock, and today it was announced that they just raised a $400 million Series B round (led by Foundry Group).
They share some similarities with Opendoor, but they are also different in that their focus is on home trade-ins. They tell you what your current home is worth, help you find a new home, and then coordinate “a seamless swap.” For more on how they work, go here.
One of the ways in which they are similar to Opendoor is that they front the cash for new home purchases. In the case of Opendoor, they buy your home with the plan of selling it in the future. And with Knock, they buy your home with the understanding that your old home will get sold.
It is certainly a more capital intensive model compared to the way that home sales are handled today. But many investors are clearly betting that it is exactly what is needed to change the status quo.
(Credit to Jeremiah Shamess for sharing the above news with me today.)
Altus Group just released its January (2018) sales figures for the new home market in the Greater Toronto Area.
- 1,251 new homes sold last month. 886 of these (or 70.8%) were condominium apartments (everything from stacked townhouses to high-rises).
- This is down from 2,429 homes in 2017 and 2,118 homes in 2016.
- Almost half of the new home sales (609 homes) came from Toronto alone. And almost all of these (607 homes) were condominium apartments. Only 2 new single-family homes sold in the city last month.
- Benchmark price for single-family homes was $1,229,454, which is a 19.6% increase from January 2017.
- Benchmark price for condominium apartments was $714,430, which is a 40.8% increase from January 2017.
That last increase really stands out. I did a double take.
But as we’ve talked about before, low supply and high prices seem to be pushing more buyers toward condos – and larger ones at that.
Recently we’ve been seeing an increase in both average unit sizes and prices per square foot.
According to Altus, sales of new single-family homes in the GTA last month were the lowest for a January since before 2000.