The shared-office company WeWork is set to trade publicly Thursday, capping a journey to a listing that included the implosion of its initial public offering in 2019, the Wall Street Journal reported. WeWork is going public through a combination with BowX Acquisition Corp., a special-purpose acquisition company. In 2019, WeWork’s IPO fell apart as the company faced questions about its corporate governance and how much it was worth. Now the entity that is making its debut on the New York Stock Exchange has undergone a refresh under Chief Executive Sandeep Mathrani. It has closed locations, renegotiated leases and cut thousands of jobs to reduce expenses during the COVID-19 pandemic. The deal with BowX Acquisition earlier this year gave WeWork a roughly $8 billion equity value. The combination provides WeWork with cash proceeds of about $1.3 billion, the companies said.
Real-estate company Zillow Group Inc. said yesterday that it will stop buying and flipping new houses for the remainder of this year, the Wall Street Journal reported. The online home-listing platform, which got into the business of buying, refurbishing and quickly selling homes more than three years ago, said it would instead focus on closing existing purchase contracts and selling the homes it has on hand. Zillow said that it has stopped the practice because it was experiencing backlogs related to renovating the homes and that it faces constraints for on-the-ground workers. “We’re operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces,” Chief Operating Officer Jeremy Wacksman said. “We have not been exempt from these market and capacity issues.”
Foreclosures are starting to surge as government and private sector programs designed to help homeowners deal with the economic fallout of the COVID-19 pandemic have begun to expire, CNBC.com reported. Mortgage lenders began the foreclosure process on 25,209 properties in the third quarter, a 32% increase from the second quarter. On a year-over-year basis, it’s a 67% increase from the third quarter of 2020, according to ATTOM, a mortgage data firm. While the increases in foreclosures are dramatic, they are coming off extreme lows that were created by the forbearance programs. New foreclosures, also known as starts, usually number around 40,000 per month. They fell to as low as 3,000 to 4,000 in the first year of the pandemic, when forbearance programs were in full force. Government and private-sector relief programs allowed borrowers with financial difficulties to delay their monthly payments for up to 18 months. The missed payments could then be tacked on to the end of the loan period or repaid when the home was sold or the mortgage refinanced.
Close to half a million low-income homeowners in the United States, many of them minorities, are nearing the end of mortgage forbearance plans that allowed them to halt loan payments during the COVID-19 pandemic, presenting a test for the mortgage service firms tasked with helping struggling borrowers move onto payment plans they can afford, Reuters reported. The number of borrowers exiting the plans is expected to surge over coming weeks as people who signed up early on in the pandemic reach the 18-month limit for forbearance. While close to 80% of homeowners who entered programs at some point inthe pandemic have since exited them, the remaining 20% tend to live in areas with higher shares of minorities, or have lower credit scores and lower incomes, research shows. Their missed payments could add up to a "forbearance overhang" of more than $15 billion in postponed mortgage payments, or about $14,200 per person, according to Brookings Institution research. "When coupled with unemployment insurance expiring and other things happening at the same time, it’s not clear that these folks will have an easy time coming out of this," said Amit Seru, a professor at Stanford Graduate School of Business and a senior fellow at the Hoover Institution. Many borrowers will be able to push missed payments to the end of their loans, and others will be able to capitalize on a hot housing market to refinance or even sell their homes. Homeowners facing hardships who signed up for forbearance in later months may still be eligible for additional extensions. The pandemic worsened racial disparities among homeowners. Black and Hispanic homeowners, disproportionately affected by pandemic-related job losses, were 30% more likely to fall behind on mortgages than the average borrower in the early months of the crisis, between April and November of 2020, according to the Federal Reserve Bank of Philadelphia. Some 7.6 million borrowers have been in forbearance at some point during the pandemic, representing about 15% of all mortgage holders, and about 1.25 million borrowers were still in forbearance plans in mid-October, according to Black Knight, a mortgage technology and data provider. It estimates that about 850,000 homeowners who participated in forbearance were in plans set to expire by the end of this year, including those who already exhausted their options. Roughly half of those homeowners have loans backed by the Federal Housing Administration or the Department of Veterans Affairs.
Higher rents after a brief COVID-19 pandemic slump, burdening households and fueling overall inflation, are bad news for the Federal Reserve, possibly making today’s uncomfortably rapid price gains last longer, the New York Times reported. They are also problematic for the White House because they hit households right in their pocketbooks, diminishing well-being and fueling unhappiness among voters. The jump in rents stemmed from a frenzy in the market for owned homes. People tried to buy as the pandemic took hold in the United States, often searching for extra space, but found that houses were in short supply after years of under-building following the housing crisis. That dearth of properties has been exacerbated by work stoppages, supply shortages and labor constraints during the coronavirus era, all of which have kept developers from ramping up production to meet demand. As buyers bid up prices on single-family homes and condominiums, many people who would have otherwise moved toward homeownership found themselves unable to afford it, increasing demand for apartments and home leases. Rents have been further boosted by the large number of people searching for places with more space and home offices during the pandemic, and as millennials in their late 20s and early to mid-30s look for more autonomy. Government stimulus checks and expanded unemployment benefits also helped people amass savings over the course of the pandemic, so they can afford to move. Personal savings as a share of disposable income popped during the crisis, and while the share has come down toward normal levels, it remains slightly elevated at 9.4 percent, compared with about 8 percent just before the pandemic. The combination of factors seems to have created a perfect storm that pushed the Consumer Price Index measure of rent up 0.5 percent just between August and September, the fastest pace in about 20 years. That’s a concern for the Fed, because housing prices tend to move slowly and once they go up, they tend to stay up for a while. Rent data also feed into what is called “owners’ equivalent rent” — which tries to put a price on how much owners would pay for housing if they hadn’t bought a home. Together, housing measures make up about a third of the overall Consumer Price Index.
The first words on the sign — “VACANT PROPERTY” — posted on the front door of a boarded-up rowhouse in Baltimore’s Upton neighborhood may overstate the obvious: The two-story brick home, its front steps sandwiched between tall weeds and a pile of garbage, clearly hasn’t been inhabited for some time. But the QR code sitting in the sign’s bottom right corner is a window to a trove of more expansive information about this building, Bloomberg News reported. Scanning the pattern with a smartphone camera directs the user to a city web page linking to databases on property ownership, building permits, pending court cases and more. While this information is all publicly available, not everyone knows how to navigate these assorted city and state data portals. The QR code signs are being installed by the city on its 17,000-plus properties with vacant building notices. It’s a practical evolution of a project that began as an artistic collaboration: Back in 2013, Baltimore housing activist Carol Ott and a troupe of street artists launched an effort called Wall Hunters, painting murals on vacant buildings that were accompanied by QR codes that led users to information about the building’s owner on Ott’s blog, Baltimore Slumlord Watch. Several new tools are aiming to confront opaque systems that tend to benefit property owners at neighbors’ and tenants’ expense. Some, like Baltimore’s QR code program, boost transparency and help the public hold property owners and landlords accountable. Others are advocate-led projects that aim to shine a spotlight on serial evictors, ward off the long-dreaded eviction cliff of forced displacement, and help tenants weather the huge spike in rents affecting cities nationwide.
A $150 million loan is up for sale on the land beneath the beleaguered Times Square Edition, a luxury hotel and retail property once valued at more than $2 billion that faces foreclosure, Bloomberg News reported. The hotel and the underlying ground are owned separately by entities controlled by Maefield Development. The ground has $900 million in debt, including the $150 million junior loan that’s up for sale, according to loan documents. The mezzanine loan, with a 5.1% interest rate, is in the “fulcrum position” of the debt stack, according to a marketing presentation by Jones Lang LaSalle Inc. That means the lender could take control of the real estate if the borrower defaults on payments.
