Residential Real Estate Continues to Struggle

March 12, 2023

Commercial real estate isn’t the only sector struggling to get back on its feet. Residential is also suffering from a malaise after its pandemic-induced sugar high has been stifled by rising interest rates and limited inventory.

And now, the springtime thaw brokers were hoping for looks more like a deep freeze.

With the jobs report showing stronger than expected figures, the Fed is poised to increase interest rates again in its ongoing effort to combat inflation.

“It’s going to be rocky for a while,” said Greg Heym, chief economist at Brown Harris Stevens. 

To prepare for frigid conditions, Chicago-based @properties Christie’s International Real Estate confirmed last week that it’s tacking on an agent services fee of 1 percent of gross commission income. 

Co-CEO Thad Wong believes the move will help stabilize his firm during uncertain market conditions. 

The troubles extend into the multifamily sector as well. In New York, Sugar Hill Capital Partners is in danger of losing rent-stabilized buildings in Harlem, as it stopped making mortgage payments on some of its properties, Gothamist reported

The firm, which owns at least 50 rent-stabilized buildings in Upper Manhattan, is already facing foreclosure on some of those properties and more could come.

Owners of stabilized apartments are feeling the crunch due to the double whammy, with New York state law making it more difficult to increase rent on stabilized apartments coupled with spiking interest rates.

There are, however, some asset classes that have enough insulation to keep warm. 

In Palm Beach, Kathryn Adams Limbaugh, the widow of late conservative radio host Rush Limbaugh, sold their longtime oceanfront compound for $155 million in an unlisted transaction.

The buyer of the homes — at 1495 North Ocean Boulevard, 1501 North Ocean Boulevard, and 108 Mediterranean Road —  is unknown. Adams Limbaugh began shopping the compound on the down-low around July 2022 with a reported asking price between $150 million and $175 million. 

Edwin Castro may not be well known, but his good fortune is.

Castro, winner of a $2 billion Powerball jackpot, bought a $25.5 million mansion in the Hollywood Hills, according to The nearly $1 billion lump-sum payout Castro received allowed him to buy the 13,600-square-foot estate, which had been listed for nearly $30 million. 

Another duplex at Gary Barnett’s Central Park Tower supertall in New York hit the market with a big ask. The 12,500-square-foot penthouse on the 107th and 108th floors at 217 West 57th Street listed for an eye watering $175 million, the New York Post first reported, citing StreetEasy. 

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