“Shark Tank” star and real estate mogul Barbara Corcoran issued a stark warning about the future of the commercial real estate market as buyers and sellers head into the summer months.
Appearing on FOX Business’ “The Claman Countdown” this week, Corcoran said the commercial real estate marketis headed towards “trouble.”
Despite a plethora of commercial vacancies in cities, people aren’t going to jump on them for “pennies on the dollar” because there isn’t enough “confidence” to purchase these buildings right now.
“No one really believes it’s going to turn the corner,” she said bluntly. “People are staying home. Our best office buildings in midtown Manhattan are 50% occupied, and in most major cities or in secondary cities, we have a 20% vacancy rate. No one wants to take that chance.”
Corcoran’s stats reflect a larger trend nationally.
According to data obtained by NBC from commercial real estate company JLL, office real estate vacancies in the U.S. reached levels as high as 20% by Q4 of 2022, the highest they’ve been since the Great Recession in 2008-2009.
Corcoran believes that the regional and small banks will be the ones to suffer, as many businesses are unable to afford or are late on mortgage payments to their lenders.
“I don’t see that turning around,” she said. “I think it’s going to be a bit of a bloodbath before it gets better.”
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When it comes to residential real estate, Corcoran said the market is “rebounding” but has an inventory problem. She also noted there is “no relationship” between commercial and residential markets.
“Sellers don’t want to move from their apartment, or their home, because they don’t want to take on higher interest rates,” Corcoran explained. “The people who are going out there and buying are finding they’re overbuilding. They’re having a hard time getting their hands on the house. And right now, what everybody’s afraid of is the high-interest rates. But the minute those interest rates come down, all hell is going to break loose and prices are going to go through the roof.”
Corcoran said she wouldn’t be surprised if housing prices jumped up again by 20% should interest rates drop by two points.
Realtor.com likened Corcoran’s mentality to the “chicken and the egg” riddle caused by the lack of available housing.
“Many sellers report being concerned about finding another home, which may cause some of them to put plans to list on pause,” Realtor.com chief economist Danielle Hale told Insider. “But this reduces the total number of options for buyers in the market.”
Last month, the Fed raised interest rates another 0.25 points, putting the range between 5.00% and 5.25%.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
