Summer is a time to slow down and spend time with friends! With all my family members gone, I was fortunate to have some free time to meet up with good ole friends. This is precious time I rarely have! First, I met up with the Foltyns and the McGaritys for a daytime 4th of July get together. Our 3 families have raised our kids together and one by one have seen them go off to college, with Ty and Jack both recently leaving for the Naval Academy and Air Force Academy respectively. The last two left are Jana and Zach! The Foltyns hosted and grilled up some amazing burgers! Next up, I got to meet up with Dr. Adachi over the 4th of July holiday. I have known Dr. Adachi since he first moved here maybe 15 years ago. He first leased, then he bought a home, then he sold that home, and then he bought a bigger home. Then during COVID, he asked me to help him buy a lake house. That was 3.5 years ago and I had not gone there to see it or see him since then so it was a treat to get to spend the 4th of July there and to catch up with how he and his family have been doing. A second outing last week was with Ryan and Elaine! They too, bought a home during COVID and recently hired Annoura Realty to sell it, so that they could move into the city. It was so fun getting to catch up with them at Uchiko last weekend. Two cool things is that it was walking distance to their new place so they just walked right over, and the second cool thing is we went during Happy Hour so we got some great food for some special prices! If you have free time and would like to meet up, I have some free time these days and would love to catch up!
Commercial real estate bargain hunters are snagging offices for ‘extreme’ discounts up to 70% FortuneCommercial real estate has struggled for several years, largely due to the pandemic.Increased remote work and at-home shopping/dining have caused office vacancy rates to hit a 30-year high of 18% in 2023.Many companies have reduced their office space or terminated leases early to adapt to remote and hybrid working norms.Joe Iacono, CEO of Crescit Capital Strategies, states that the office sector is in the worst shape compared to other property types.Office real estate additionally suffers from significant vacancy and reduced demand.The Mortgage Bankers Association projects that $929 billion of the $4.7 trillion in outstanding commercial mortgages will be due this year.Refinancing at higher interest rates will be challenging for landlords.This may be a good time to buy an office building?! Well maybe if your company has workers that still come into the office! NYC is thinking about trimming broker fees for tenants and the real estate industry is not happy Fortune New York City renters often face hefty broker fees before moving into new apartments, even if the broker was hired by the landlord.These broker fees are common in NYC but rare in other cities, where landlords typically cover the commission.A proposed legislation by the New York City Council would require landlords who hire brokers to pay their fees.This change is seen as significant in NYC’s expensive housing market.Renters, making up over two-thirds of NYC households, support the reform, citing high fees for minimal broker services.Agustina Velez, a house cleaner from Queens, highlighted paying $6,000 to switch apartments.Brokers, backed by the Real Estate Board of New York, rallied against the bill, warning it could disrupt the rental market and harm the livelihoods of 25,000 real estate agents.They predict landlords might increase rents or withhold apartments from the market to offset the costs.Approximately half of NYC apartments require tenant-paid broker fees, typically 15% of annual rent.For a Manhattan apartment with a median rent of $4,500, the standard broker fee would be $8,100.The legislation stipulates that only the party hiring the broker would pay the fee, with tenants still responsible if they hire brokers directly. These concrete homes want to take over your subdivision Fast Company Onx started in 2021 and has since sold 600 homes in Texas and Florida.The company recently launched a new factory in Pompano Beach, Florida.Onx plans to build 650 more homes this year and already owns thousands more lots.The company aims to expand to 10 factories across the country in the next seven years.Onx plans to upgrade its annual production to 10,000 homes or more.The company uses higher-quality materials, such as precast concrete walls and factory-made bathroom pods.Onx claims that its modular system allows the completion of a home in 30 days.The company implements vertical integration by owning the land, acting as a developer, running the factories, building the materials, and assembling and selling the homes.Walls from Onx’s Florida factories travel up to 400 miles, which saves waste, time, and labor.Currently, Onx can produce four homes a day. Flooding expected to cost U.S. billions as risks mount Axios Flooding costs the U.S. economy an estimated $179.8 to $496 billion per year in 2023.This amount is over 1% of 2023’s gross domestic product.The insurance industry, businesses, and homeowners are increasingly affected by flooding.Infrastructure upgrades needed for flood protection range from $70 billion to $345 billion.Direct commercial impacts from flooding could cost up to $40 billion a year.Annual damage to homes with federally-backed mortgages is estimated at up to $15.1 billion.The total value of homes lost to sea level rise could be up to $10.8 billion annually.Flood experts agree with these estimates, noting around $100 billion in annualized property damages from flood risk.Including infrastructure damage, repair costs, and lost wages, total economic damages from flooding are in the hundreds of billions.A warming climate is increasing the economic vulnerability and costs of flooding.This is particularly concerning as the Atlantic hurricane season approaches. Big Jump in Insurance Costs Strikes Condos The Wall Street Journal The recent surge in insurance premiums has significantly impacted community associations and condo owners, particularly in areas with high wildfire risks like California and Colorado.Highland Park Community Association in Mission Viejo, California, faced a staggering increase in their insurance quote to over $170,000, which is more than quadruple their previous cost. This has led to a 20% increase in residents’ dues, the maximum allowable rise per year, now at $474 a month. This new policy, while providing substantial property coverage, offers limited protection of only $2 million in the event of wildfire damage.Similarly, The Pines at Keystone in Colorado struggled with a drastic hike in their insurance costs, escalating from about $110,000 to $960,000 within a year. This significant rise prompted the association to impose a special assessment, requiring each household to contribute several thousand dollars to cover the increased premium. Board president Gretchen Davis expressed concerns about the potential challenges of securing insurance renewal in the future.These cases underscore the broader trend of rising condo association fees driven by escalating insurance premiums. An analysis by real-estate tech company Rexera indicates that condo dues have increased by 20% from 2022 to 2024 across 1,800 associations in 44 states. This trend reflects the growing financial burden on homeowners and associations due to the heightened risk and cost of insuring properties in vulnerable areas.
Bitcoin Mining, Data Centers Could Nearly Double Texas Power Demand By 2030 Bisnow ERCOT CEO Pablo Vegas testified in the Senate Committee on Business & Commerce about significant future power grid needs.The power grid demand is expected to grow from 85,000 to 150,000 megawatts within six years.This new projection is much higher than the previously estimated 110,000 megawatts.The Senate had already pushed for an incentive plan to build more dispatchable power based on the 110,000-megawatt projection.The 150,000 megawatts projection is nearly double the current grid capacity.The growth is attributed to population increases, normal business growth, and Artificial Intelligence (AI).Crypto miners and data centers will account for over 50% of the added growth.There is a need to closely examine the impact of these two industries, as they demand significant power while producing few jobs.Crypto mining might generate more revenue from selling electricity back to the grid than from mining operations themselves. Seller who balked at inadequate payout appeals commission deal Inman News Just days after a homebuyer filed an appeal last week, a homeseller is now seeking to overturn a district court’s final approval of nationwide settlements to resolve antitrust claims against major real estate franchisors Anywhere, Keller Williams and RE/MAX.Spring Way Center’s legal filings regarding the appeal so far only notified the courts of the appeal and do not contain any arguments, but the company, which bought a home through an Anywhere-affiliated Coldwell Banker agent, made its views known on April 13, when it filed an objection to the settlements, which add up to $208.5 million.The appeals may delay implementation of the settlements in which Anywhere, RE/MAX and Keller Williams agreed to pay $83.5 million, $55 million and $70 million, respectively.Franchisors’ ‘huge profits’ Spring Way Center said the proposed compensation in the deals is “[w]oefully [i]nsufficient” considering the franchisors’ “huge profits.” For example, the company noted that Realogy’s earnings before interest, taxes, depreciation and amortization (EBITDA) was $5.8 billion during the total damages period from 2015 through 2023.“This enormous EBITDA resulted in large measure from illegal price-fixing,” the filing says.“Remarkably, the proposed settlement amounts to 1.4 percent of the company’s EBITDA. Similarly, RE/MAX has also reported positive EBITDA, adjusted net income, and free cash flow of $928 million over the damages period. However, the proposed settlement amount of $55,000,000 is inexplicably a paltry 6 percent.”The proposed compensation to class members from the brokerage firms amounts to $10.43 and likely less for each member,” the filing said.“Even if the purported [National Association of Realtors] settlement is included, each class member would receive no more than $31.33.‘Free pass’ for franchisees The company also objected to the franchisor settlements releasing franchisees from antitrust claims “in exchange for nothing.”“Nor does the proposed settlement contemplate an injunction forbidding sellers from making offers of compensation to buyer brokers as proposed in the [Department of Justice]’s Statement of Interest in Nosalek,” a major commission case in Massachusetts, the filing says.“Under the proposed settlement, even though they were active participants in the conspiracy, the franchisees will be permitted to retain their profits from the conspiracy they carried out against the plaintiffs.” 70% of agents oppose NAR settlement: Clever Real Estate Housing Wire A new survey from Clever Real Estate reveals differing opinions on NAR’s settlement.70% of real estate agents oppose the settlement, while 67% of consumers support it.61% of consumers agree with the lawsuits’ argument that sellers covering the buyer’s agent commission is unfair and anti-competitive.89% of agents believe the lawsuits’ allegations are invalid.71% of agents expect negative repercussions from the settlement, while only 40% of consumers do.58% of agents think the changes will negatively impact their business; only 15% see a positive impact.44% of consumers supporting the changes believe it will reduce sellers’ financial burden.41% of consumers think the changes will level the playing field between buyers and sellers.32% believe the changes will improve trust in the real estate process.29% feel it will give consumers more flexibility in choosing services.28% believe it will incentivize agents to provide higher-quality services.52% of agents are considering additional service offerings to stay competitive.91% of Americans believe the NAR settlement will impact future homebuyers and sellers.Commonly cited impacts include lower commission rates (30%) and increased competition (26%).66% of first-time buyers surveyed said they couldn’t afford a buyer’s agent commission on top of closing costs and a down payment.
Houston was directly hit by a hurricane on Monday July 8. Most people though Hurricane Beryl would not be so destructive because by the time it came to Texas, it had ‘weakened’ to a Category 1 rating. (In contrast, Hurricane Harvey was a Category 5.) Beryl traveled through the Atlantic Ocean and peaked at a Cat 5, leaving much destruction as it traveled past Grenada, Jamaica, the Cayman Islands, and Tulum. Texas could see it coming to our shores but did not expect it to make a sudden sharp right turn and go straight up through Houston. But it did!
Beryl made landfall near Matagorda with the east side of the eyewall impacting Brazoria County. It produced wind gusts over 60–70 mph (97–113 km/h) with a peak gust of 97 mph (156 km/h) in Brazoria. Significant impacts from Beryl took place in Surfside Beach, where siding was completely ripped off from the second story of a house. Multiple A frame homes along the beach were mostly destroyed as a result of Beryl’s winds. Numerous other structures suffered extensive damage within the town. In Lake Jackson, Beryl’s winds peeled back roofs, knocked down chimneys, and destroyed exterior brick facades.
As Beryl tracked into Texas, Houston was directly impacted by Beryl’s eyewall. More than 2.7 million lost power. Over 8 in (200 mm) of rain fell in and around Houston, but that was enough to make several bayous fill up, overflow, and flood the streets downtown. It was quite the disaster and many went days and days without electricity, while many have to deal with massive clean up from downed fences and trees. School and work was all canceled, as were all scheduled meetings and events. It was time to take off from work and go around to all our rental properties and help everyone clean up. It’s scary to think that this is just the BEGINNING of hurricane season.
The past two weeks had the Annoura Family all over everywhere! Zach is still in Japan (since June 3) and will stay there all the way until August 7. His big news is that he participated in Kodomo Yamakasa, a huge festival in Fukuoka that dates back 770+ years. Wow, very old traditional festival! The peak of the festival takes place on July 15 at 4:59am but all the preparations and practice begin on July 1. The kids version of the festival happens in early July. Zach was very excited to be a leader in his class and he got a good spot carrying the ‘yama’. Meanwhile, Koh flew to Japan on July 3 and will stay in Fukuoka with Zach until they both return together. Koh also participated in Yamakasa and one special thing about this time, is that he got to ride at the top of the ‘yama’ on one of the practice rounds with his family friend Kuchiishi san and Zach! For some extra info on the Hakata Gion Yamakasa festival, see here: https://www.fukuoka-now.com/en/yamakasa/
Joe is still on the west coast, staying at Susan’s cousin’s house in Thousand Oaks and doing his internship with Eugene’s investment banking company. He has made new friends and enjoys his side hustle of buying and selling unique treasurers he finds at thrift stores. He has become quite the specialist for vintage t-shirts, it seems! On the other side of the United States, Ty has made it through his first two weeks of ‘plebe summer’ at the U.S. Naval Academy. Susan was super happy to receive one letter from him and one phone call on July 7 for 30 minutes. Ty spoke of his rigid schedule, the abundant food, and several of the ups and downs he has endured. We are so proud of his dedication and motivation to hang in there and give it his best. In exciting news, Ty spoke to the wrestling coach, who said he could walk on to the wrestling team! We know this make Ty happiest of all.
With Hurricane Beryl hitting Houston last week, Annoura Realty was super busy helping everyone get their homes cleaned up and repaired. Our company specializes not only in helping expat relocate to Houston, but we also help Japanese investors buy properties in Houston. For those investors who buy through us, Annoura Realty offers property management services. Currently in our portfolio, we handle about 85 properties, so when a storm hits, we are super super busy! Hurricane Beryl brought along very strong winds, which caused many wood fences to fall and lots and lots of tree branches (and entire trees!) to fall. All homes required serious yard clean up from all the tree debris.
On a positive note, Team Annoura welcomed many newcomers to Houston in the first two weeks of July. One of our Daikin expats Mr. Homma, moved in successfully to his Memorial area highrise, while his colleague Mr. Yagi opted to be closer to the Daikin headquarters in Waller and chose a brand new apartment in Cypress. On the same day, NOEX expat Mr. Takemoto opted for the suburbs for the excellent Katy area schools, and Dr. Ishigami who will work at Texas Children’s Hospital moved in smoothly to his Medical Center area highrise. Welcome to Houston, everyone!
July 1, Susan had two sales closings: one was Nick Davis’ downtown area condo, who came out with a full price offer, and one was Ryan and Elaine’s amazing two generation Village home in Towne Lake, who came out with an incredible gain after a wise purchase during COVID. On the newcomer side, Susan toured a new intern with NAIND (Nihon Shokubai), who smartly chose a trendy apartment in Clear Lake. How exciting that he will get to spend the next year at the NAI Houston office! Mariko succeeded in finding a nice home for the 6 member Osada family. We wish Dr. Osada a successful experience working at Baylor College of Medicine.
Susan’s personal rental in Clear Lake looks like it will next be rented to our newest Kaneka expat, Mr. Jeong and his family, as the current tenant has obtained their PhD and is moving Colorado at the end of the month. We wish Cody and Megan all the best! Also on the newcomer side of things, we welcome a new Tokio Marine member and a new Benichu expat. Both toured last week with Susan and opted for spacious units in the same Memorial area, convenient to work and to the Japanese supermarket. Friday we almost celebrated the closing of Vivian and Patrick’s home in Marvida. I say almost because the mobile notary accidentally had them sign on front and back, which the lender said no to! Take two was Saturday, so closing and funding is expected on Monday (today), as they drive their way from Connecticut to Houston and should be here by Tuesday. Special thanks to Perry Homes sales consultant Janet Nicholson for helping us every step of the way! Jenn Tran, thank you so much for the referral!
The past 3 days we had four more move ins. First, we offer a warm welcome to Mr. Maruyama of Mitsui. He moved into his Memorial area apartment on Saturday and his family will soon follow! Speaking of families coming, Mr. Mizuta has his family coming soon, so he opted to move into a neighboring apartment with a much larger footprint. Finally, Mr. Takehara moves into his new residence today as well. Congratulations to all of our newcomers!
In other big Annoura Realty news, long time agent Nan Feng has left Annoura Realty Group to join a team that will help her grow her commercial real estate endeavors. We will miss Nan but wish her all the best and much success on her new team.
On the other spectrum, we are super excited to welcome a new member to the team, Joanna King Mitchell! Joanna and Susan went to high school together and Joanna is now a transaction manager for several Houston agents. Joanna will help all of our new expats after they have chosen their homes. There are still many tasks to go: getting electricity, water, gas, renter’s insurance, paying deposits and first month rent, and getting the keys. Joanna will help everyone coordinate all of these tasks from contract to close, and we are super excited to have her join Annoura Realty Group!
