An XXL-large listing price, Janet Yellen’s not-calming words and an unlikely exodus of Gen Zers into California. From the wild and wooly world of real estate, here are the Hits and Misses for the week of Feb. 5-9.
Hit: Will History Be Made in Florida? The most audacious story of the week involves a new listing in the Sunshine State that could break a U.S. real estate record. The Wall Street Journal reported the 9-acre compound in Naples’ Port Royal that was the estate of Federated Investors founder John Donahue has been listed for $295 million. The property includes three houses, 1,650 feet of waterfront and a private yacht basin. The current U.S. home sale record is the $240 million paid by hedge fund titan Ken Griffin for a penthouse on Billionaires’ Row in Manhattan in 2019 – several other properties since then were listed for higher prices, only to go into discount when no buyers emerged.
Miss: Janet Yellen Says, “Don’t Worry.” The story that inspired the least amount of confidence might have involved Treasury Secretary Janet Yellen when she appeared before the U.S. Senate Banking Committee yesterday to assure lawmakers the nation’s banking system is not at risk despite the prospect of additional bank stress and financial losses stemming from the tumult in the commercial real estate sector. “I hope and believe that this will not end up being a systemic risk to the banking system,” she said, according to a Reuters report. “The exposure of the largest banks is quite low, but there may be smaller banks that are stressed by these developments” – a reference to the selloff by investors in New York Community Bancorp following its fourth quarter loss due to commercial real estate loan defaults. While it would be out of character for Yellen to encourage panic, the current vulnerability system is impossible to ignore and there have already been more than a few hiccups to the banking system during Yellen’s tenure at Treasury.
Hit: A Quartet of Hipsters. The most surprising community development story this week was the launch of the Coalition of Hip Hideaways, which is described as “a collective of distinct, likeminded communities across the country that are collaborating to accelerate thoughtful growth in all forms.” The Northwest Arkansas Council developed this coalition that includes the Colorado Springs Chamber & Economic Development Corp., Tennessee’s Thrive Regional Partnership in Greater Chattanooga and Montana’s Missoula Area Chamber of Commerce. “The Coalition of Hip Hideaways seeks to enhance the quality of life for our citizens, learn from one another and navigate the evolving landscape of our diverse and growing communities — ensuring inclusive growth for the future,” said Nelson Peacock, president and CEO of the Northwest Arkansas Council. More information on this endeavor is now available in this online video.
Miss: Hey, Are You Going the Wrong Way? The oddest story of the week might be the new Zillow data analysis that found California is the second most popular location for Gen Zers seeking to relocate to another state. This goes against the flow of migration trends – in 2022, nearly 215,000 movers left California in 2022, but the state also recorded a net positive gain of nearly 44,000 Gen Z adults who moved there from other states. Most of these young arrivals are renting – the California median rent is $1,856, the highest in the country – and their influx comes at a time when only 15% of California households can afford the state’s $833,170 median-priced home, according to the California Association of Realtors. Go figure!
Miss: Very Dishonest Would-Be Tenants. The most aggravating story this week was a new survey of rental housing providers conducted by the National Multifamily Housing Council (NMHC) found that nearly all respondents (93.3%) have been on the receiving end of fraudulent applications over the last 12 months. The NMHC survey found 84.3% of respondents reporting they have seen applicants falsifying or fabricating pay stubs, employment references or other income documentation, while another 80% observed prospective renters misrepresenting information on applications. The survey also found 70% of rental housing providers dealing with identity theft, fraudulent ID documents or the use of another individual’s personal information from prospective renters. While landlords rarely generate sympathy in popular culture, in this case they really deserve a kind response for having to put up with such nonsense.
In Memoriam: Michael Gill. The saddest story of the week involved Michael Gill, senior vice president for capital markets at the Housing Policy Council, who died over the weekend a few days after he was shot amidst a carjacking spree in Washington, D.C. Gill, who was 56 and the father of three, previously served as a chief of staff to the chairman of the Commodities Futures Trading Commission; Politico reported that he also served on the D.C. Board of Elections and did pro bono work representing undocumented minors in the court system. Gill was a prominent and deeply respected man and his murder is the latest crime tragedy within the nation’s capital city – one of too many cities that is no longer able to maintain any sense of law and order.
